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Cover Size: 210 x 280 mm / Open Size: 448.5 x 280 mm /       width: 28.5mm
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ʮ̡
Stock Code: 2586
(Incorporated in the British Virgin Islands with limited liability)
GLOBAL
OFFERING
GLOBAL
OFFERING
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers (in alphabetical order)
Joint Bookrunners, and Joint Lead Managers (in alphabetical order)


--- page 2 ---
IMPORTANT
If you are in any doubt about any of the contents in this document, you should obtain independent professional
advice.
Dmall Inc.
ඳ
(Incorporated in the British Virgin Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the Global Offering : 25,774,000 Offer Shares (subject to the Over-allotment
Option)
Number of Hong Kong Offer Shares : 2,577,400 Offer Shares (subject to reallocation)
Number of International Offer Shares : 23,196,600 Offer Shares (subject to reallocation and
the Over-allotment Option)
Offer Price : HK$30.21 per Offer Share plus brokerage of 1%, SFC
transaction levy of 0.0027%, Stock Exchange trading
fee of 0.00565% and AFRC transaction levy of
0.00015% (payable in full on application in Hong Kong
dollars, subject to refund)
Nominal value : US$0.0001 per Share
Stock code : 2586
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers (in alphabetical order)
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 responsibility for the contents of this document, make no representation as to its accuracy or completeness and expressly disclaim an y
liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this document.
A copy of this document, having attached thereto the documents specified in “Documents delivered to the Registrar of Companies and 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 Securities and Futures Commission and the Registrar of
Companies in Hong Kong take no responsibility for the contents of this document or any other document referred to above.
The Offer Price per Offer Share unless otherwise announced will be HK$30.21. Applicants for the Hong Kong Offer Shares may be required to
pay, on application (subject to application channels), the offer price of HK$30.21 for each Hong Kong Offer Share together with a brokerage fee of
1%, a SFC transaction levy of 0.0027%, a Stock Exchange trading fee of 0.00565% and a AFRC transaction levy of 0.00015%.
The Overall Coordinators may, with our consent, reduce the number of Offer Shares being offered under the Global Offering and/or
the Offer Price below that stated in this document at any time on or prior to the morning of the last day for lodging applications under the
Hong Kong Public Offering. In such case, notices of the reduction in the number of Hong Kong Offer Shares being offered under the Global
Offering and/or the Offer Price will be published on the websites of our Company and the Stock Exchange at www.dmall.com and
www.hkexnews.hk as soon as practicable but 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. See “Structure of the Global Offering” and “How to apply for Hong Kong Offer Shares” for further
details.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See
“Underwriting—Underwriting arrangements and expenses—Hong Kong Public Offering—Grounds for termination” for further details.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this document,
including the risk factors set out in “Risk Factors.”
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws of the United States and
may not be offered or sold within or to the United States, or for the account or benefit of U.S. persons (as defined in Regulation S) except in
transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. The Offer Shares are being offered and sold
outside the United States in offshore transactions in accordance with Regulation S.
November 28, 2024


--- page 3 ---
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 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
https://www.dmall.com/. If you require a printed copy of this prospectus, you may download and
print from the website addresses above.
To apply for Hong Kong Offer Shares, you may use one of the following application channels:
Application Channel Platform Target Investors Application Time
HK eIPO White
Form service
www.hkeipo.hk Investors who would like to
receive a physical Share
certificate. Hong Kong Offer
Shares successfully applied
for will be allotted and issued
in your own name.
From 9:00 a.m. on
Thursday, November 28,
2024 to 11:30 a.m. on
Tuesday, December 3,
2024, Hong Kong time.
The latest time for
completing full payment of
application monies will be
12:00 noon on Tuesday,
December 3, 2024, Hong
Kong time.
HKSCC EIPO
channel
Your brokeror custodian
who is a HKSCC
Participant will submit an
EIPO application on your
behalf through HKSCC’s
FINI system in accordance
with your instruction
Investors who would not like
to receive a physical Share
certificate. Hong Kong Offer
Shares successfully applied
for will be allotted and issued
in the name of HKSCC
Nominees, deposited directly
into CCASS and credited to
your designated HKSCC
Participant’s stock account.
Contact your broker or
custodian for the earliest
and latest time for giving
such instructions, as this
m a yv a r yb yb r o k e ro r
custodian.
Our Company 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 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” for further
details of the procedures through which you can apply for the Hong Kong Offer Shares.
IMPORTANT


--- page 4 ---
IMPORTANT
Your application through the HK eIPO White Form service or the HKSCC EIPO channel
service must be for a minimum of 100 Hong Kong Offer Shares and in one of the numbers set out in
the table. If you are applying through the HK eIPO White Form service, you may refer to the table
below for the amount payable for the number of Shares you have selected. You must pay the respective
amount payable on application in full upon application for Hong Kong Offer Shares. If you are
applying through the HKSCC EIPO channel, you are required to prefund your application based on
the amount specified by your broker or custodian, as determined based on the applicable laws and
regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
100 3,051.46 2,000 61,029.33 10,000 305,146.68 300,000 9,154,400.35
200 6,102.93 2,500 76,286.67 20,000 610,293.36 400,000 12,205,867.15
300 9,154.39 3,000 91,544.01 30,000 915,440.04 500,000 15,257,333.93
400 12,205.87 3,500 106,801.33 40,000 1,220,586.71 600,000 18,308,800.71
500 15,257.33 4,000 122,058.67 50,000 1,525,733.39 700,000 21,360,267.50
600 18,308.80 4,500 137,316.00 60,000 1,830,880.07 800,000 24,411,734.28
700 21,360.26 5,000 152,573.34 70,000 2,136,026.75 900,000 27,463,201.06
800 24,411.74 6,000 183,088.00 80,000 2,441,173.43 1,000,000 30,514,667.86
900 27,463.20 7,000 213,602.68 90,000 2,746,320.11 1,100,000 33,566,134.64
1,000 30,514.68 8,000 244,117.34 100,000 3,051,466.79 1,288,700
(1) 39,324,252.46
1,500 45,772.00 9,000 274,632.01 200,000 6,102,933.56
Note:
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC transaction levy. If your
application is successful, brokerage will be paid to the Exchange Participants (as defined in the Listing Rules) or to the HK eIPO White
Form Service Provider (for applications made through the application channel of the HK eIPO White Form Service Provider) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be considered and any
such application is liable to be rejected.


--- page 5 ---
EXPECTED TIMETABLE(1)
Hong Kong Public Offering commences ............. 9:00 a.m. on Thursday, November 28, 2024
Latest time for completing electronic applications under
the HK eIPO White Form service through the
designated website www.hkeipo.hk(2) .............. 11:30 a.m. on Tuesday, December 3, 2024
Application lists of the Hong Kong Public Offering
open(3) ........................................ 11:45 a.m. on Tuesday, December 3, 2024
Latest time to (a) complete payment of HK eIPO White
Form applications by effecting Internet banking
transfer(s) or PPS payment transfer(s) and (b) give
electronic application instructions to HKSCC
(4) ..... 12:00 noon on Tuesday, December 3, 2024
If you are instructing your broker or custodian who is a HKSCC Participant who will submit
an electronic application instructions on your behalf through HKSCC’s FINI system in accordance
with your instruction, 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 of the Hong Kong Public Offering
close(3) ....................................... 12:00 noon on Tuesday, December 3, 2024
Announcement of an indication of the level 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 to be
published on the website of the Stock Exchange at
www.hkexnews.hk and our Company’s website at
https://www.dmall.com/ (5) at or before ............. 11:00 p.m. on Thursday, December 5, 2024
The results of allocations in the Hong Kong Public Offering (with successful applicants’
identification document numbers, where appropriate) to be available through a variety of channels,
including:
 In the announcement to be published on the website of the Stock
Exchange at www.hkexnews.hk and our Company’s website at
https://www.dmall.com/(5) from ..............................
11:00 p.m. on Thursday,
December 5, 2024
 From the “Allotment Results” page at www.hkeipo.hk/IPOResult(or
www.tricor.com.hk/ipo/result)w i t ha“ s e a r c hb yI D ”f u n c t i o nf r o m ......
11:00 p.m. on Thursday,
December 5, 2024
 From the allocation results telephone enquiry line by calling +852
3691 8488 between 9:00 a.m. and 6:00 p.m. from .................
Friday, December 6, 2024, to
Wednesday, December 11, 2024
(excluding Saturday, Sunday and
public holiday in Hong Kong)
Dispatch of Share certificates in respect of wholly or partially successful
applications pursuant to the Hong Kong Public Offering or deposited into
CCASS on or before
(6)(8) ........................................ Thursday, December 5, 2024
HK eIPO White Form e-Auto Refund payment instructions/refund checks
in respect of wholly or partially unsuccessful applications to be dispatched
on or before
(7)(8) ............................................... Friday, December 6, 2024
Dealings in the Shares on the Stock Exchange to commence at ..........
9:00 a.m. on Friday,
December 6, 2024
Notes:
(1) All times and dates refer to Hong Kong local time and date, except as otherwise stated.
i


--- page 6 ---
EXPECTED TIMETABLE(1)
(2) You will not be permitted to submit your application through the designated website at www.hkeipo.hk after 11:30 a.m. on the last day
for submitting applications. If you have already submitted your application and obtained an application reference number from the
designated website at or 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.
(3) If there is a tropical cyclone warning signal number 8 or above, “Extreme Conditions” and/or a “black” rainstorm warning at any time
between 9:00 a.m. and 12:00 noon on Tuesday, December 3, 2024, the application lists will not open on that day. See “How to Apply
for Hong Kong Offer Shares—E. Bad Weather Arrangements” of this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC should refer to “How to
Apply for Hong Kong Offer Shares—A. Application for Hong Kong Offer Shares” of this prospectus.
(5) None of the websites or any of the information contained on the website forms part of this prospectus.
(6) Share certificates are expected to be issued on or before Thursday, December 5, 2024 but will only become valid provided that the
Global Offering has become unconditional in all respects and neither of the Underwriting Agreements has been terminated in
accordance with its terms. Investors who trade Shares on the basis of publicly available allocation details before the receipt of Share
certificates and before they become valid do so entirely of their own risk.
(7) e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful applications.
(8) Applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel should refer to the section headed “How
to Apply for Hong Kong Offer Shares—D. Dispatch/Collection of Share Certificates and Refund of Application Monies” of this
prospectus for details.
Applicants who have applied through the HK eIPO White Form service and paid their applications monies through single bank
accounts may have refund monies (if any) dispatched to the bank account in the form of e-Auto Refund payment instructions.
Applicants who have applied through the HK eIPO White Form service and paid their application monies through multiple bank
accounts may have refund monies (if any) dispatched to the address as specified in their application instructions in the form of refund
checks in favor of the applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own risk.
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares—D. Dispatch/Collection of Share
Certificates and Refund of Application Monies” of this prospectus.
The above expected timetable is a summary only. You should read carefully the sections
headed “Underwriting”, “Structure of the Global Offering” and “How to Apply for Hong Kong
Offer Shares” of this prospectus for details relating to the structure of the Global Offering,
procedures on the applications for Hong Kong Offer Shares and the expected timetable,
including conditions, effect of bad weather and the dispatch of refund checks and Share
certificates.
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, our Company will make an announcement
as soon as practicable thereafter.
ii


--- page 7 ---
CONTENTS
IMPORTANT NOTICE TO PROSPECTIVE INVESTORS
This document is issued by us 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 document
pursuant to the Hong Kong Public Offering. This document may not be used for the purpose of
making, and does not constitute, an offer or invitation in any other jurisdiction or in any other
circumstance. No action has been taken to permit a public offering of the Hong Kong Offer
Shares in any jurisdiction other than Hong Kong and no action has been taken to permit the
distribution of this document in any jurisdiction other than Hong Kong. The distribution of this
document for purposes of a public offering and the offering and sale of the Hong Kong 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.
You should rely only on the information contained in this document 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 document. We have not authorized
anyone to provide you with information that is different from what is contained in this document.
Any information or representations not contained or made in this document must not be relied on
by you as having been authorized by us, the Joint Sponsors, the Overall Coordinators and the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, any of the
Underwriters, any of our or their respective directors, officers, employees, agents or
representatives, or any other parties involved in the Global Offering.
Page
Expected timetable .................................................................... i
Contents ............................................................................ iii
Summary ............................................................................ 1
Definitions ........................................................................... 31
Glossary of technical terms ............................................................. 45
Forward-looking statements ............................................................ 48
Risk factors .......................................................................... 49
Waivers and exemptions ............................................................... 97
Information about this document and the Global Offering ................................... 105
Directors and parties involved in the Global Offering ....................................... 109
Corporate information ................................................................ 116
Industry overview .................................................................... 118
History, reorganization and corporate structure ........................................... 135
Business ............................................................................. 162
Regulations .......................................................................... 267
Relationship with the Controlling Shareholders ............................................ 290
Connected transactions ................................................................ 302
Directors and senior management ....................................................... 330
iii


--- page 8 ---
CONTENTS
Page
Substantial shareholders ............................................................... 343
Share capital ......................................................................... 345
Financial information ................................................................. 348
Cornerstone investor ................................................................. 418
Future plans and use of proceeds ........................................................ 422
Underwriting ........................................................................ 428
Structure of the Global Offering ........................................................ 440
How to apply for Hong Kong Offer Shares ................................................ 449
Appendix I Accountants’ report ......................................................... I-1
Appendix II Unaudited pro forma financial information .................................... II-1
Appendix III Summary of the constitution of our Company and BVI company law ............. III-1
Appendix IV Statutory and general information ........................................... IV-1
Appendix V Documents delivered to the Registrar of Companies and on display ................ V-1
iv


--- page 9 ---
SUMMARY
This summary aims to give you an overview of the information contained in this
document. As it is a summary, it does not contain all the information that may be important to you
and is qualified in its entirety by, and should be read in conjunction with, the full text of this
document. 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 the section headed “Risk Factors” in this document. You should read
that section carefully before you decide to invest in the Offer Shares.
WHO WE ARE
We provide retail digitalization solutions to retailers in the local retail industry. Local retail
refers to the business of selling merchandise to consumers located in close proximity through offline
channels or online channels. We primarily provide solutions in China and have successfully expanded
our businesses to other countries and regions in Asia, comprising Hong Kong SAR, Cambodia,
Singapore, Malaysia, Macau SAR, Indonesia, the Philippines and Brunei. According to Frost &
Sullivan, we were the largest retail digitalization solution provider in China by revenue in 2023, with a
market share of 6.5% and the third largest retail digitalization solution provider in Asia, with a market
share of 4.2%. Retail digitalization solution providers refer to companies that offer digital products and
services designed to enhance and digitalize the operations of local retailers.
We started our business in retail digitalization in collaboration with Wumei Group, a leading
retailer in China, which was our largest customer during the Track Record Period. We have a close
business relationship and have engaged in substantial business transactions with Wumei Group, one of
our Related Parties. Dr. Zhang Wenzhong, our founder, senior advisor and our Controlling
Shareholder, is the controlling shareholder of Wumei Technology Group, Inc., the holding company of
Wumei Group. We implemented our cloud solutions in Wumei Group’s nationwide store network and
our functionalities through their complex operation. Today, we have developed retail digitalization
solutions for customers of various sizes and formats that encompass local retail operations, from
procurement and supply chain management, store and headquarters management, to marketing and
omni-channel sales. Our experience with Wumei Group has inspired us to deliver many popular
modules that are applicable to other retail formats from chained supermarkets, warehouse
supermarkets, department stores to convenience stores, specialty retailers and retailers with new retail
formats, such as membership stores and discount stores. We also serve other major retailers, such as
Chongqing Department Store Group (one of our Related Parties), Yinchuan Xinhua Group (one of our
Related Parties and controlled by Dr. Zhang), and Maidelong Entities (one of our Related Parties and
controlled by Dr. Zhang), as well as well-known brands such as Wellcome, Mannings, Guardian,
Giant, and 7-Eleven (Hong Kong), which operate under the DFI Retail Group. We now cover all major
retail formats, such as convenience stores, department stores, supermarkets and specialty retail, helping
our expanding customer base meet ever-evolving market challenges and provide quality services to
consumers. As a testament to our success, we served 236, 436, 533 and 444 customers for the years
ended December 31, 2021, 2022, 2023 and six months ended June 30, 2024, respectively. We were
loss making during our Track Record Period, mainly attributable to expenses incurred in line with our
rapid growth and development. We have been narrowing the adjusted losses and believe our up front
investment in our growth sets a strong foundation for our future business development and path to
profitability.
1


--- page 10 ---
SUMMARY
OUR SERVICE OFFERINGS
Our retail core service cloud, consisting of our proprietary Dmall OS system and AIoT
solutions, integrates various function that help retailers digitalize and optimize their operation. Under
our Dmall OS system, we provide various service modules designed to help retailers digitalize all
crucial aspects of their operations, from procurement, supply chain and warehouse management to
product display and store operation. For instance, procurement management helps retailers discern
consumer needs and identify changes in user preferences, while supply chain management provides
real-time tracking and demand forecasting. Warehouse management optimizes inventory and enhances
pick-and-pack efficiency, ensuring timely and accurate fulfillment. Merchandise display management
further boosts efficiency by generating merchandise recommendations that tailor to the specific
circumstances of each retailer. Store operations benefit from optimized workflows and staff scheduling
enabled by our store management module. Retailers have the flexibility to select, configure, and
integrate different modules to cater to their unique operational needs and preferences. Together, these
modules enable data-driven decisions, reduce costs for retailers, and improve consumer experiences.
Additionally, we offer AIoT solutions that integrate AI technologies with the Internet of Things
infrastructure to address practical and immediate application scenarios for retailers, thereby improving
in-store management efficiency and enhancing personalized shopping experiences for consumers. For
example, our intelligent loss prevention solutions replace currently labor intensive and less effective
manual monitoring process with remote surveillance and automatic detection of abnormal checkout.
Our intelligent package sorting solutions help optimize the route of package sorting personnel from
shelf to packing table and improve sorting efficiency. Our proprietary Dmall OS system, in conjunction
with AIoT solutions, assists retailers in enhancing productivity, increasing revenue, and reducing costs.
The number of customers using our retail core service cloud increased from 231 in 2021 to 527 in
2023. The number of customers using our retail core service cloud increased from 409 in the six
months ended June 30, 2023 to 430 in the same period in 2024.
BUSINESS DEVELOPMENTS
During the Track Record Period, we also provided e-commerce service cloud and online
marketing services. See “Business—E-commerce service cloud.” By the end of 2023, we phased out
most e-commerce service cloud offerings as customers transitioned their O2O operations in-house,
where they carried out their own daily online store management, such as updating product listings,
maintaining product information, handling inquiries and after-sales, and managing store promotions.
In April 2024, we completed the Restructuring to divest all of our equity in Dmall Fresh
(Beijing), our former VIE. The Restructuring led to the cessation of the operation of the Dmall app and
mini programs, which primarily led to the termination of our online advertising services under the
marketing and advertising service cloud we previously operated and payment processing services
under the retail core service cloud. The financial results of our online advertising services were
classified as discontinued operations in the historical financial information. Following the
Restructuring, we are focused on offering retail core service cloud solutions, while other services, such
as offline marketing, no longer generate significant revenue. See “—Recent Developments.”
REVENUE
During the Track Record Period, we derived our revenue primarily from the provision of our
services of retail core service cloud and e-commerce service cloud. Our revenue increased by 56.6%
from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further increased by 19.4% to
2


--- page 11 ---
SUMMARY
RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million for the six
months ended June 30, 2023 to RMB939.2 million for the six months ended June 30, 2024.
The following table sets forth a breakdown of our revenue by operating segment both in
absolute amount and as a percentage of our revenue for the years/periods presented:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service cloud . . . 438,814 51.7 880,502 66.3 1,298,730 81.9 602,255 78.8 933,185 99.4
- Operating system ....... 288,481 34.0 616,529 46.4 680,043 42.9 330,665 43.3 419,838 44.7
- AIoT solutions .......... 150,333 17.7 263,973 19.9 618,687 39.0 271,600 35.5 513,347 54.7
E-commerce service
cloud ................ 409,312 48.3 447,487 33.7 300,006 18.9 160,465 21.0 4,279 0.4
Others ................. 6 6 * 2 7 5 * (13,379) (0.8) 1,283 0.2 1,698 0.2
Revenue ............... 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Notes:
* Less than 0.1%
Retail core service cloud
During the Track Record Period, we primarily provided Dmall OS system and AIoT solutions
under our retail core service cloud business segment. In 2021, 2022 and 2023 and the six months ended
June 30, 2023 and 2024, revenues from our retail core service cloud solutions were RMB438.8 million,
RMB880.5 million, RMB1,298.7 million, RMB602.3 million and RMB933.2 million, respectively,
representing 51.7%, 66.3%, 81.9%, 78.8% and 99.4% of our revenues in the same years/periods. The
increases in our revenue from retail core service cloud solutions during the Track Record Period was
primarily due to (i) an increase in GMV processed through the operating system (the value of customers’
total sales through both online and offline channels) as a result of (a) a greater number of customers
adopting our operating system as we continue to attract, retain and cooperate with enterprise retail
customers and (b) the expansion of our product portfolio such as the introduction of the distributed e-
commerce system, (ii) an increase in sales generated from greater adoption of our AIoT solutions by
customers as we expanded our AIoT service and product offerings during the Track Record Period,
mainly driven by the increase in subscription fees from (a) intelligent merchandise replenishment
solutions which automates the replenishment with integrated camera and software, (b) intelligent package
sorting solutions which leverage big data algorithms and modeling techniques to enhance overall package
sorting efficiency, (c) intelligent cashier solutions which digitalizes the checkout process and streamlines
personnel management by leveraging several smart store know-how, (d) intelligent cleaning solutions
which combines digital cleaning devices, such as sweeping robot, and labor force in off-line retail
settings and (e) intelligent delivery solutions which offers delivery systems, route and order planning
algorithms, dispatching, and aggregated delivery services, and (iii) an increase in revenue generated from
software development and maintenance services under our operating system segment and associated with
our acquisition of Shenzhen Enjoy in November 2021 and (iv) new customization revenues from existing
customers who demanded additional customized functionalities, such as customized fulfillment system
development based on delivery areas and product attributes, development of tailored technical interfaces
for integration with other platforms, and improvement of user interface and ordering process. For more
information regarding our acquisition of Shenzhen Enjoy, please refer to “History, Reorganization and
Corporate Structure—Acquisitions and Disposals.”
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SUMMARY
E-commerce service cloud
During the Track Record Period, we primarily provided O2O platform service and logistics
services under the e-commerce service cloud business segment. In 2021, 2022, 2023 and the six
months ended June 30, 2023 and 2024, revenues from our e-commerce service cloud solutions were
RMB409.3 million, RMB447.5 million, RMB300.0 million, RMB160.5 million and RMB4.3 million,
respectively, representing 48.3%, 33.7%, 18.9%, 21.0% and 0.5% of our revenues in the same years/
periods. The increase in our revenue from 2021 to 2022 for e-commerce service cloud solutions was
primarily due to (i) the increase in total GMV processed through our O2O platform together with the
expansion of our customer base and (ii) an increase in take rate we charged for certain retailer
customers. In 2022 and 2023, revenue generated from our e-commerce service cloud solutions were
RMB447.5 million and RMB300.0 million, respectively, representing 33.7% and 18.9% of our
revenues in the same years. The decrease in our revenue from e-commerce service cloud solutions was
primarily due to (i) the decrease in O2O platform service fees as a result of certain customers opt to
operate O2O e-commerce business in-house, (ii) the decrease in GMV processed and number of
delivery orders placed through our platform for certain retailer customer and (iii) the cessation of our
O2O e-commerce business we used to provide to DFI Retail Group along with our disposal of DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April 2022. For details, see
“History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI Digital
(Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.” In the six months ended June 30,
2023 and 2024, revenue generated from our e-commerce service cloud solution were RMB160.5
million and RMB4.3 million, respectively, representing 21.0% and 0.5% of our revenues in the same
periods. We experienced the decrease in our revenue from e-commerce service cloud solutions as all of
our customers shifted to operating their e-commerce business in-house by the end of 2023.
By the end of 2023, all our customers had transitioned to in-house O2O operation, where they
manage their own day-to-day O2O operations. Consequently, the bulk of the services we provided
under the e-commerce service clouds, such as the operational support for their online stores and
delivery services, had been phased out by the end of 2023. The remaining services we provided under
the e-commerce service cloud solutions did not generate material revenue in 2024. After the
Restructuring, we do not operate any business under the e-commerce service cloud. See “—Recent
Developments.”
Others
During the Track Record Period, the services we provided under our other business segment
primarily included offline marketing services, offline marketing products and the provision of
discounts and coupons. In 2021, 2022 and 2023, revenue generated from others was RMB0.1 million,
RMB0.3 million and negative RMB13.4 million, respectively. We recorded negative RMB13.4 million
in revenue in 2023 for others primarily due to an amount of RMB18.9 million provided to Chongqing
Department Store representing the equivalent value shortage of marketing resources we collaborated
with third party marketing participants. We entered into a marketing resource collaboration agreement
with Chongqing Department Store in late 2022, pursuant to which we agreed to assist Chongqing
Department Store Group’s marketing activities by gathering marketing resources from third party
market participants (including but not limited to brand owners, payment solution operators, banks and
other businesses or organizations) of not less than RMB50 million in value per calendar year during
the service period from January 1, 2023 to December 31, 2025. In 2023, as the marketing resources
used by consumers of Chongqing Department Store was less than RMB50 million in value due to the
decrease in consumers’ willingness to spend, we paid the resultant value shortage (the part short of
RMB50 million, the “ Value Shortage ”) to Chongqing Department Store. In the six months ended
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SUMMARY
June 30, 2023 and 2024, revenue generated from others was RMB1.3 million and RMB1.7 million,
respectively. See “Business—Others—Marketing Resource Collaboration Agreement with Chongqing
Department Store.”
GROSS PROFIT AND GROSS MARGIN
We had a total gross profit margin of 20.4%, 38.0%, 35.0%, 36.3% and 38.3% in 2021, 2022, 2023
and six months ended June 30, 2023 and 2024, respectively. The overall increase in gross profit margin
during the Track Record Period was driven by our strategic focus on high-gross-margin segments and
greater revenue contribution of our retail core service cloud business, which has a notably high gross profit
margin. The decrease from 2022 to 2023 was due to the increasing adoption of our AIoT solutions by our
customers, which has a relatively lower gross profit margin compared to our other products.
The following table sets forth our gross profit in absolute amounts and as percentages of relevant
segment revenue, or gross margin, for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service
cloud ............ 260,163 59.3 494,570 56.2 541,721 41.7 265,308 44.1 368,566 39.5
Operating system . . 209,300 72.6 436,128 70.7 478,330 70.3 234,728 71.0 322,233 76.8
AIoT solutions(1) . . . 50,863 33.9 58,442 22.2 63,391 10.2 30,580 11.3 46,332 9.0
E-commerce service
cloud ............ (87,490) (21.4) 10,351 2.3 30,858 10.3 12,554 7.8 1,708 39.9
Others ............. 6 6 100.0 275 100.0 (17,878) — (693) (54.0) (11,020) (649.0)
Total .............. 172,739 20.4 505,196 38.0 554,701 35.0 277,169 36.3 359,254 38.3
Note:
(1) AIoT solutions is a type of value-added service we provide, and many of its customers come from our existing Dmall OS customers. As
a result, we anticipate that the selling and marketing and research and development expenses associated with AIoT solutions will be
lower compared to our other existing business operations.
The retail core service cloud solutions segment had a gross profit margin of 59.3% and 56.2% in 2021
and 2022, respectively, driven by increased sales from our AIoT solutions with relatively lower gross margins
including digitalized smart tags and intelligent loss prevention solutions, in comparison to other components of
our retail core service cloud solutions. The retail core service cloud solutions segment had a gross profit
margin of 56.2% and 41.7% in 2022 and 2023, respectively, driven by the launch of additional AIoT solutions
with relatively lower gross margins in comparison to other components of our retail core service cloud
solutions. The retail core service cloud solutions segment had a gross profit margin of 44.1% and 39.5% in the
six months ended June 30, 2023 and 2024, respectively, driven by the expansion of our AIoT solutions which
have relatively lower gross margins in comparison to other components of our retail core service cloud
solutions. Our AIoT solutions initially incur higher costs due to outsourcing and labor needs, which led to
relatively lower gross margin. As these solutions mature, generally within three years based on our estimates,
outsourcing needs decrease, leading to a gradual reduction in costs until they stabilize at a lower level.
The e-commerce service cloud solutions segment had a gross margin of negative 21.4%, 2.3%, 10.3%,
7.8% and 39.9% in 2021, 2022, 2023 and in the six months ended June 30, 2023 and 2024, respectively. The
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SUMMARY
gross loss margin in 2021 and low gross profit margins in 2022 and 2023 were mainly due to high logistics
cost incurred from the delivery service we provided to consumers to fulfill their delivery orders, accounting for
93.6%, 76.6% and 77.8% of revenue from our e-commerce service cloud solutions in 2021, 2022 and 2023,
respectively. The increase in gross margin from 2021 to 2023 is primarily driven by (i) charging a higher
average take rate of 4.5% in 2021 compared to 5.6% in 2023 for customers using our e-commerce service
cloud, which is the result of arm’s-length negotiation with our customers based on the rate of our competitors
and our costs for operating the e-commerce service cloud solutions and (ii) a decrease in logistics cost by
10.5% from RMB383.1 million in 2021 to RMB342.8 million in 2022, and a further decrease by 31.9% from
RMB342.8 million in 2022 to RMB233.5 million in 2023, mainly due to the introduction of our delivery
service bidding process as well as certain customers transitioning to an in-house delivery model in lieu of
using our on-demand delivery service. We adopted a delivery service bidding process in April 2020, which
provides a thorough way for us to evaluate a logistic service provider’s service proposal and competencies.
We collect bids from service providers and select the supplier that best meets our needs with the most
competitive price. As more logistic service providers joined the bidding process, we saw an improvement in
logistic costs during the Track Record Period. In addition, we ceased to provide logistics services under e-
commerce service cloud when customers transitioned their O2O operations in-house, which also contributed
to an increase in the gross margin of our e-commerce service cloud. See “—Recent Developments” and “—
Business Sustainability & Path to Profitability.”
Others had a gross profit margin of 100.0% in 2021 and 2022. We recorded gross loss for 2023
and the six months ended June 30, 2024.
PRICING
Our pricing structure varies depending on the product or service we offer.
Retail core service cloud
Dmall OS . For our Dmall OS system, we offer the option to either charge a percentage of the
customers’ GMV processed by our system or provide a fixed subscription fee tailored to suit
customers’ individual needs or financial situation. The take rate based fee we charge is determined
based on various factors, including, among others, the number and types of modules subscribed by the
customer, the subscription period, the expected customer’s total GMV transacted through our system,
and the size and operational scope of the customer. For customers that adopt the subscription fee based
model, we charge them a service and consultation fee based on various factors, including, among
others, the number and types of modules subscribed by the customer, the subscription period, and the
size and operational scope of the customers. In addition, for customers in need of customization,
implementation, software development and maintenance services, we provide customized services and
charge them a corresponding service fee based on the aggregated work hour or work day involved and
the applicable fee rate per worker per work hour or work day.
AIoT solutions. For our AIoT solutions, other than the Scan-and-Go solutions, we charge either
a one-time payment or a monthly subscription fee. The amount of the fee is determined by several
factors, such as the types of products and/or services provided by us and the retail format, store size,
and operating scope of the customer. For our Scan-and-Go solutions, which allow consumers to
conduct self-checkout and make payments using their phones, we charge a take rate fee that varies
depending on the payment channel used by consumers. Due to retailers’ requirements for collaborating
with different payment providers, we incur different costs. As a result, the take rate we charge
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SUMMARY
customers varies. Consumers can choose from various payment service providers, such as WeChat
Pay, Alipay, and UnionPay, to complete their purchases. This fee is only applicable to customers who
use our Scan-and-Go solutions.
The following table sets forth our revenues from our retail core service cloud by pricing model
in absolute amount and as a percentage of our revenues from our retail core service cloud for the
years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Operating system ...... 288,481 65.7 616,529 70.0 680,043 52.4 330,655 54.9 419,838 44.9
- Take rate ............ 198,172 45.1 429,498 48.8 431,769 33.2 224,344 37.2 240,119 25.7
- Subscription(1) ........ 60,590 13.8 36,471 4.1 89,812 6.9 31,444 5.2 86,160 9.2
- Customization,
implementation,
software development
and maintenance and
others
(2) ............ 29,719 6.8 150,560 17.1 158,462 12.2 74,867 12.5 93,559 10.0
AIoT solutions ........ 150,333 34.3 263,973 30.0 618,687 47.6 271,600 45.1 513,347 55.1
- Take rate ............ 113,894 26.0 105,638 12.0 66,057 5.0 36,624 6.1 28,878 3.1
- Subscription(3) ........ 16,693 3.8 85,885 9.8 516,473 39.8 211,403 35.1 479,418 51.4
- Product sales (4) ....... 19,746 4.5 72,450 8.2 36,157 2.8 23,573 3.9 5,051 0.6
Total revenue for retail
core service cloud ... 438,814 100.0 880,502 100.0 1,298,730 100.0 602,255 100.0 933,185 100.0
Notes:
(1) The decrease in subscription fee we recognized in 2022, as compared to 2021, was primarily due to certain customer switching from
subscription based payment to take rate based payment. The increase in subscription fee in 2023, as compared to 2022, was primarily due
to the text messaging services we provided to meet the business demands of our customers.
(2) Our customization, implementation, software development and maintenance and others revenue increased from RMB29.7 million in
2021 to RMB150.6 million in 2022, mainly attributable to increase in software development and maintenance revenue in association with
our acquisition of Shenzhen Enjoy completed in November 2021, and new customization revenue from existing customers who
demanded additional customized functionalities on our operating system due to respective business needs.
(3) There was a general increase in the subscription fees under our AIoT solutions, mainly attributable to a greater adoption of such solutions
by customers as we expanded our AIoT service during the Track Record Period, including intelligent loss prevention solutions in early
2022, as well as intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions,
intelligent cleaning solutions and intelligent delivery solutions in 2023.
(4) The increase in our product sales under AIoT solutions from RMB19.7 million in 2021 to RMB72.5 million in 2022 resulted from the
expansion of our product offerings of digitalized smart tags in late 2021. The decrease from RMB72.5 million in 2022 to RMB36.2
million in 2023 was mainly due to the majority of our retailer customers’ stores having completed their digitalized smart tags adoption by
2022.
We use the total sales value of our customers as the GMV for determining the fees we charge
our customers. We record our customers’ total value of both offline and online sales to consumers as
the GMV. Offline sales of customers are recorded through point-of-sale system (POS system) and
Scan-and-Go terminals. We also record online sales of our customers through Dmall OS system. For
retail core service cloud solutions, our customers under the take rate fee model generally subscribed at
least to our POS system. We charge a customer a take rate for subscribing our POS system and will
increase the take rate when the customer subscribes for more modules to reflect fees for additional
services we provide through these modules. For customers that do not use the aforementioned product
and services and therefore do not directly produce GMV information, we generally charge them a
subscription fee. We do not set minimum subscription requirement for our customers.
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SUMMARY
E-commerce service cloud
For our e-commerce service cloud, we derived revenue from O2O platform service fees paid by our
customers and delivery fees paid by consumers during the Track Record Period. For O2O platform service
fees, we primarily adopted a take rate fee structure by charging a percentage of the GMV processed by our
e-commerce service cloud. The take rate we charged under the e-commerce service cloud was determined
based on the scope and scale of our customers’ operation. We also charged consumers delivery fee for using
the on-demand delivery services.
The following table sets forth our revenue under our e-commerce service cloud segment in
absolute amount and as a percentage of our total revenue for e-commerce service cloud for the
years/periods indicated:
Years Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Revenue
O2O platform service .......... 310,794 75.9 349,263 78.0 246,909 82.3 130,464 81.3 4,279 100
Logistics .................... 98,518 24.1 98,224 22.0 53,097 17.7 30,001 18.7 — —
Total revenue from e-commerce
service cloud ............... 409,312 100.0 447,487 100.0 300,006 100.0 160,465 100.0 4,279 100.0
Others
During the Track Record Period, the services we provided under our other business segment
primarily included offline marketing services, offline marketing products and the provision of discounts and
coupons. The price of our offline marketing and advertising services, including both advertisement
placement and related consultation services, was determined based on various factors, including, among
others, the format and duration of the advertisement, targeting scope and display location. Our offline
marketing products are priced based on an arm’s length negotiation with our customers based on the type of
products provided and the relevant amount and specifications. See also “Business—Marketing Resource
Collaboration Agreement with Chongqing Department Store.”
KEY OPERATING DATA
The following table sets forth our key operating data for the years/periods indicated:
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
GMV processed through our system (1) (in RMB billions)
- Retail core service cloud
- Operating system (2) ................................... 95.1 123.3 141.9 69.1 76.1 (5)
- Take rate customers (3) ............................... 58.5 106.3 113.5 56.8 48.8
Related Parties .................................... 50.9 81.1 76.7 39.5 28.0
Other Related Party ................................ 6 . 9 22.0 32.8 15.3 19.2
Independent Customers ............................. 0 . 7 3 . 1 4 . 0 2 . 0 1 . 6
- AIoT Solutions ....................................... 14.2 12.6 10.2 5.5 4.9
- E-commerce service cloud* (4) ............................. 6 . 9 8 . 2 4 . 4 2 . 4 —
Related Parties .................................... 5 . 5 7 . 5 4 . 3 2 . 3 —
Other Related Party ................................ 0 . 2 0 . 1 — — —
Independent Customers ............................. 1 . 1 0 . 5 0 . 2 0 . 1 —
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SUMMARY
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
Number of customers (6)
- Retail core service cloud ................................... 2 3 1 4 3 2 5 2 7 4 0 9 4 3 0
- Operating system ....................................... 1 6 4 3 0 0 3 2 4 2 5 1 2 8 3
- AIoT solutions .......................................... 8 4 1 8 8 2 8 1 2 1 4 1 8 4
- E-commerce service cloud* ................................. 4 0 3 5 2 9 2 9 *
- Others .................................................. 3 4 4 2 1 9
Total number of customers (7) .................................... 236 436 533 413 444
Notes:
* The e-commerce cloud service solutions has been immaterial in 2024. By the end of 2023, all our customers had transitioned to in-house
O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house O2O
e-commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material revenue in 2024. In April 2024, we completed the
Restructuring, which led to the divestment of the Dmall app. After the Restructuring, we do not operate any business under the
e-commerce service cloud. See “—Recent Development,” “Business—Retail Core Service Cloud Solutions—Distributed e-commerce
system” and “Business—E-commerce service cloud.”
(1) Refers to the GMV processed by our retail core service cloud and e-commerce service cloud. The provision of other revenue is not
directly associated with GMV as we do not charge our advertising customers based on the GMV processed.
(2) Refers to the GMV processed through our Dmall OS system.
(3) Take rate customers for a given year/period refers to customers that contributed revenue under the take rate fee model in the given
year/period, excluding customers that subscribe only to the membership and product sales management module under the take rate fee
model. GMV from customers that are not take rate customers (i.e. customers that pay fixed subscription fee) accounted for the difference
between GMV attributable to the operating system and take rate customers. The membership and product sales management module is
specifically designed to help large retailers manage consumer profiles and arrange the sales of certain high-value hot sellers. We charge
customers that subscribed to this module a take rate of no less than 1% compared to other modules that have an average take rate ranging
from 0.3% to 0.5% during the Track Record Period to account for the system’s complexity. We exclude the GMV from subscriptions to
our purchase membership and product sales management module that are made on a standalone basis due to (i) the module’s higher take
rate could distort our operating metrics, and (ii) the GMV from these standalone subscriptions is not material to our overall performance.
(4) The decrease in GMV in 2023 compared to that of 2022 was primarily due to (i) certain customers opt to operate O2O e-commerce
business in-house, where they manage their own day-to-day O2O operations, (ii) the cessation of our O2O e-commerce business we used
to provide to DFI Retail Group along with our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
in April 2022 and (iii) our strategic decision to not aggressively expand our e-commerce business. For details, see “Summary—Business
Sustainability & Path to Profitability” and “History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.”
(5) The overall increase in operating system GMV was primarily driven by more customers subscribing to our operating system and our
customers subscribing to additional modules and integrating our services into more stores. We experienced a decline in operating system
GMV from take-rate customers as some Wumart supermarket transitioned to a subscription-based fee model.
(6) Number of customers that have contributed revenue to us in a given year/period, including number of customers we serve through
Shenzhen Enjoy as a result of our acquisition of Shenzhen Enjoy in November 2021. If we remove the number of customers solely using
Shenzhen Enjoy’s products from the calculation, in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, we had retail
core service cloud solutions customer of 86, 162

 259
 213 and 183, respectively, including (i) operating system customer of 23, 39, 60,
47 and 60, respectively, (ii) AIoT solutions customers of 75, 142, 217, 182 and 136, respectively. The number of customers does not
include those from our tax invoice management system services, which was launched in 2023 and generated revenue of RMB10
thousand in 2023 and RMB2.3 million in the six months ended June 30, 2024. We had 14 and 930 tax invoice customers in the second
half of 2023 and the six months ended June 30, 2024, respectively.
(7) Many of our customers use more than one of our cloud service solutions. Therefore eliminations are made to avoid double counting.
OUR CUSTOMERS AND SUPPLIERS
We have a close business relationship and have engaged in substantial business transactions
with the Related Parties. Dr. ZHANG Wenzhong, our founder, senior advisor and our Controlling
Shareholder is a prominent leader in the local retail industry in China and founder and a controlling
shareholder of Wumei Technology Group, Inc., the holding company of Wumei Group. Our customers
are primarily retailers and brand owners. Revenues generated from our five largest customers in each
of 2021, 2022, 2023, and the six months ended June 30, 2024 accounted for 79.4%, 83.3%, 87.2% and
89.6%, respectively, of our revenue during the same years/period. Revenue generated from our largest
customer in each of 2021, 2022, 2023 and the six months ended June 30, 2024 accounted for 60.0%,
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SUMMARY
64.0%, 71.9% and 75.3%, respectively, of our revenue during the same years/period. See “Business—
Customers” and “Business—Our Relationship with the Related Parties.”
During the Track Record Period, we recognized a substantial portion of our revenue from our
cooperation with the Related Parties. The following table sets out the historical revenue contribution of
the Related Parties, Other Related Party and Independent Customers in absolute amount and as
percentage of our revenue during the Track Record Period:
Years Ended December 31, Six Months ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Revenue contribution
Wumei Group ........... 384,055 45.3 561,579 42.3 821,047 51.8 396,454 51.9 484,459 51.6
MDL Wholesale
Group** .............. 86,618 10.2 258,246 19.4 259,471 16.4 125,347 16.4 183,819 19.6
Yinchuan Xinhua Group . . . 38,052 4.5 30,676 2.3 54,944 3.5 27,416 3.6 32,521 3.5
Chongqing Department
Store Group ........... 90,153 10.6 115,094 8.7 62,781 4.0 39,627 5.2 27,684 2.9
B&T Entities ............ — — — — 3,721 0.2 1,101 0.1 5,971 0.6
Dmall Fresh (Beijing) ..... — — — — — — — — 1 2 6 *
Related Parties .............. 598,878 70.6 965,595 72.7 1,201,964 75.9 589,945 77.2 734,580 78.2
Other Related Party ......... 28,198 3.3 95,380 7.2 138,986 8.8 67,815 8.9 79,725 8.5
Independent Customers ...... 221,116 26.1 267,289 20.1 244,407 15.3 106,243 13.9 124,857 13.3
Revenue ................... 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
* Less than 0.1%
** Refers to Maidelong Entities prior to the MDL Reorganization.
Apart from the Chinese mainland, we have successfully expanded our businesses into markets
outside the Chinese mainland, namely Hong Kong SAR, Cambodia, Singapore, Malaysia, Poland,
Macau SAR, Indonesia, the Philippines and Brunei. We are also in the initial stage venturing into
European market through our collaboration with Metro Group, a leading wholesaler headquartered in
Germany. The following table sets forth the breakdown of our revenue by geographic region.
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
The Chinese Mainland . . . 827,936 97.6 1,247,930 94.0 1,462,096 92.2 705,676 92.4 864,121 92.0
Overseas
- Hong Kong ............ 18,312 2.2 76,502 5.8 113,428 7.2 54,013 7.1 60,000 6.4
- Cambodia ............. 9 8 9 0 . 1 2,598 0.2 4,842 0.3 2,628 0.3 2,389 0.3
- Singapore ............. 9 5 5 0 . 1 9 7 1 * 2,309 0.1 948 0.1 4,712 0.5
- Malaysia .............. — — — — 1,687 0.1 — — 223 *
- Poland ................ — — 2 3 9 * 6 6 7 * 6 6 7 0 . 1 2 *
- Macau ................ — — 2 4 * 3 2 8 * 7 1 * 5 5 0 0 . 1
- Indonesia .............. — — — — — — — — 1,260 0.1
- the Philippines .......... — — — — — — — — 5,627 0.6
- Brunei ................ — — — — — — — — 2 7 8 *
Total .................. 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Note:
* Less than 0.1%
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SUMMARY
Our suppliers primarily include labor outsourcing companies, logistics service providers, payment
processing service providers, AIoT product providers , text messaging service providers, cloud service
providers, customer service providers and marketing support providers. Amounts paid to our five largest
suppliers in each of 2021, 2022 and 2023 and the six months ended June 30, 2024 accounted for 14.8%,
15.4%, 27.7%, and 37.4%, respectively, of our purchases from continuing operations during the same years/
period. Amounts paid to our largest suppliers in each of 2021, 2022 and 2023 and the six months ended
June 30, 2024 accounted for 6.5%, 7.8%, 15.3%, and 20.6% of our total purchases from continuing
operations during the same years/period respectively. See “Business—Suppliers.”
OUR RELATIONSHIP WITH THE RELATED PARTIES
During the Track Record Period, we recognized a substantial portion of our revenue from our
cooperation with the Related Parties. Related Parties contributed revenue of RMB598.9 million,
RMB965.6 million, RMB1,202.0 million, RMB589.9 million and RMB734.6 million in 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024, respectively.
Despite the relatively high revenue contribution from the Related Parties to our Group during
the Track Record Period, there is no undue reliance on the Related Parties to conduct our business. We
believe the business relationship between our Group and the Related Parties is mutually beneficial and
dependent. Through extensive collaboration with the Related Parties, we have developed a profound
understanding of their retail operations. Leveraging this knowledge, we offer customized solutions via
our proprietary Dmall OS system to address various operational challenges. Furthermore, our Dmall
OS system is capable of continuous enhancement. Given the magnitude and intricacy of the Related
Parties’ operations, we believe they are reliant on our system and services. It also would pose
significant challenges and incur substantial expenses for the Related Parties to find an alternative retail
digitalization solution provider to replace us. This is primarily because the process would involve
disruptive transitions, extensive training expenditures, and a considerable amount of time to complete.
In addition, we have maintained close and stable business relationship with the Related Parties and do
not expect any material adverse change in such relationship.
Other than the Related Parties, we have entered into cooperation agreements with other leading
retailers in China, other parts of Asia and Europe. The recognition by these leading retailers of our
service capabilities and quality has created a solid foundation for our Group to attract many more
retailer customers outside of the Related Parties. We have implemented strategies to attract more
independent customers. For example, customers can choose selected modules of our product,
encouraging them to subscribe to additional features after experiencing positive results. We create
benchmark case studies that demonstrate the system’s effectiveness, which in turn attracts other
independent retailers. For instance, after deploying our system with a notable retailer in a specific
region, we observed a ripple effect as neighboring businesses adopted our solutions. Additionally, we
are broadening our reach by expanding into various retail sectors, moving from convenience stores,
department stores, supermarkets and specialty retail to include other retail environments, such as
campus retail. The number of our Independent Customers grew from 233 for 2021 to 433 for 2022 and
530 for 2023 and 440 for the six months ended June 30, 2024.
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SUMMARY
BUSINESS SUSTAINABILITY & PATH TO PROFITABILITY
For the Year Ended
December 31,
For the Six Months
Ended June 30
2021 2022 2023 2023 2024
(unaudited)
Growth of revenue ........................... — 56.6% 19.4% — 22.9%
Gross margin (1) .............................. 20.4% 38.0% 35.0% 36.3% 38.3%
Net margin (2) ................................ (213.2%) (67.8%) (47.3%) (76.9%) (51.3%)
Adjusted net margin from continuing operations
(non-IFRS measure)(3) ....................... (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equals gross profit for the year/period divided by revenue for the year/period and multiplied by 100%.
(2) Equals loss for the year from continuing operations divided by revenue for the year/period and multiplied by 100%.
(3) Equals adjusted loss from continuing operations (non-IFRS measures) for the year/period divided by revenue for the year/period and
multiplied by 100%.
In 2015, we began our journey by assisting retailers in setting up and operating e-commerce
platforms, responding to the burgeoning demand for online retail. This initiative served as a pivotal
entry point for achieving our broader goal of helping retailers digitalize all facets of their operations. By
2017, we introduced AIoT solutions, combining hardware and software to enhance retail efficiency in
specific scenarios, such as intelligent price tags that automatically update merchandise prices. In 2018,
we launched the core services now offered under the Dmall OS system, including product management,
product procurement process management, and supply chain management. In 2019, we launched our
proprietary Dmall OS system that addresses the full range of operation needs of retailers. As our
customers have become more accustomed to e-commerce operations, they have shown a tendency to
bring the operation of their ecommerce business in-house, where they manage their own day-to-day
O2O operations, while still requiring technical support to establish their online presence and manage
day-to-day operations. In light of these shifts in our customers’ business models, we introduced the
distributed e-commerce system module in 2022 and intelligent delivery service in 2023.
During the Track Record Period, we have demonstrated our ability to generate revenue and progress
towards achieving profitability. We achieved strong revenue growth as our revenue grew by 56.6% from
RMB848.2 million in 2021 to RMB1,328.3 million in 2022, increased by 19.4% from RMB1,328.3 million in
2022 to RMB1,585.4 million in 2023, and increased by 22.9% from RMB764.0 million in the six months
ended June 30, 2023 to RMB939.2 million in the same period in 2024. We have also improved our gross
margin during the Track Record Period. Our gross margins were 20.4%, 38.0% and 35.0% in 2021, 2022 and
2023, and 36.3% and 38.3% in the six months ended June 30, 2023 and 2024, respectively.
Our net losses from continuing operations decreased from RMB1,808.0 million for 2021 to
RMB900.0 million for 2022, primarily attributable to our continued gross profit improvement
associated with our ongoing strategic focus on our retail core service cloud solutions as well as the
decreases in our selling and marketing expenses attributable to the decrease in promotional incentives
to retail consumers for our e-commerce service cloud solutions and our general efforts to control costs
and optimize our operational efficiency in 2022. Our net losses decreased from RMB900.0 million in
2022 to RMB749.0 million in 2023, and from RMB587.9 million in the six months ended June 30,
2023 to RMB482.2 million in the six months ended June 30, 2024 primarily attributable to the decrease
in our loss from operations due to our concerted efforts to control costs and optimize our operational
efficiency. We had adjusted net losses from continuing operations (non-IFRS measure) of RMB941.6
million, RMB355.9 million, RMB233.3 million, RMB143.9 million and RMB56.4 million in 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively, primarily attributable
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SUMMARY
to expenses incurred in line with the growth and development of our business, including significant
investment in research and development to support the continued development of our proprietary
operating system and marketing resources to grow our customer base for our retail core service cloud
solutions as well as logistic costs for our integrated e-commerce service. We recorded a substantial
decrease in adjusted net losses from continuing operations (non-IFRS measure) and operating cash
outflows in 2022, primarily attributable to our continued gross profit improvement benefitting from
new business under our retail core service cloud solutions as well as our efforts to control costs and
optimize our operational efficiency in 2022, including but not limited to, labor structure optimization
and non-extension of certain office leases. We had a gain from disposal of RMB100.1 million relating
to the disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April
2022, which contributed to decreasing our net loss in 2022. For details, see “History, Reorganization
and Corporate Structure—Acquisitions and Disposals—(4) DFI Digital (Hong Kong) Limited and DFI
Digital (Singapore) PTE. Limited.” Our adjusted net loss from continuing operations (non-IFRS
measure) decreased from RMB355.9 million in 2022 to RMB233.3 million in 2023 and from
RMB143.9 million in the six months ended June 30, 2023 to RMB56.4 million in the same period in
2024, primarily due to our efforts to control costs and optimize our operational efficiency.
We recorded adjusted net margin from continuing operations (non-IFRS measure) of negative
111.0% in 2021, negative 26.8% in 2022, negative 14.7% in 2023, negative 18.8% in the six months
ended June 30, 2023, and negative 6.0% in the six months ended June 30, 2024. We recorded net
liabilities of RMB4,739.2 million, RMB6,077.4 million, RMB6,765.1 million, and RMB7,053.6
million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. The net liabilities
were primarily attributable to the convertible redeemable preferred shares of RMB5,137.2 million,
RMB6,378.7 million, RMB6,965.5 million and RMB7,407.2 million as of December 31, 2021, 2022,
and 2023 and June 30, 2024, respectively, issued pursuant to the Pre-IPO Investments. The convertible
redeemable preferred shares will be redesignated from liabilities to equity as a result of automatic
conversion into ordinary shares upon the Listing such that the net liabilities position would turn into a
net asset position. Our net cash used in operating activities were RMB1,274.7 million, RMB205.5
million, RMB179.2 million and RMB56.7 million for the years ended December 31, 2021, 2022, and
2023 and the six months ended June 30, 2024, respectively. These were primarily attributable to loss
for the year. See “Financial Information—Non-IFRS Measure”, “Financial Information—Liquidity and
Capital Resources—Net Cash Used in Operating Activities” and “Risk Factors—We incurred
significant net losses and generated net operating cash outflows in the past and we may continue to do
so in the future” in this document for more information.
Our accumulated losses of RMB3,446.9 million before the start of Track Record Period were
primarily attributable to costs and expenses associated with our e-commerce services and AIoT
solutions, as well as investment in research and development of our operating system, as we work
towards designing and improving our offerings to customers in the local retail industry and laying a
strong foundation for our business operations. We recorded accumulated losses of
RMB5,199.4 million, RMB6,008.2 million, RMB6,601.5 million, and RMB6,836.4 million as of
December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Our loss-making position
throughout the Track Record Period was attributable to expenses incurred in line with the growth and
development of our business, including significant investment in research and development to support
the continued development of our proprietary operating system, additional headcount across our
internal functions consistent with our accelerated growth, and marketing resources to grow our
customer base and stimulate consumer traffic for our e-commerce platform as well as logistic costs for
our integrated e-commerce service. Our accumulated loss before and our loss-making position during
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SUMMARY
the Track Record Period occurred during a time when we were growing rapidly and invested in
developing high quality products and services to pave the way for our profitability in the long run.
Going forward, we plan to achieve long-term profitability and improve our cash flow position
in view of our net operating cash outflows as of June 30, 2024, with our overall increase in revenue
and through a series of cost control and efficiency enhancement measures, including: (i) refining our
organizational structure to maximize employee potential and streamline responsibilities, (ii) upgrading
our IT infrastructure to improve performance while managing cloud operations costs, and (iii) re-
designing our office space to reduce our lease expense.
Based on our current business model, our revenue growth and profitability primarily rely on:
(i) increasing our business scale, which is in turn driven by (a) the continued expansion of our
customer base, and (b) the increased spending from our customers, and (ii) achieving higher margin
through better operational efficiency and improving our cost structure.
Expanding our customer base. We plan to expand our customer base by relying on our well-
established market recognition and continuously upgraded products and services to meet the latest
customer needs in the local retail market. Leveraging our successful lighthouse examples in
implementing the Dmall OS system with leading retailers in China, we expect to further onboard
regional enterprise retailers in China that will drive our long-term financial growth. We plan on
continuing to grow the number of independent third-party customers and to strengthen our brand and
reputation within the retail digitalization solution industry. Our collaboration with leading enterprise
retailers in the local retail industry deepened our know-hows and continues to facilitate our
development of new modules and incorporate new industry practices. Our lighthouse collaborations
help us to retain existing customers and attract new independent customers. We will continue to build a
pipeline of potential customers for our new AIoT solutions. We expect to attract more customers for
our AIoT solutions through our successful lighthouse collaborations with Wumei Group and
Maidelong Entities in which our solutions assist customers to monitor their operations and enhance
operational efficiency through our equipment powered by artificial intelligence analysis. We further
plan on expanding our regional coverage and establishing new relationships with retailers both in the
Chinese mainland and overseas. In particular, we plan to replicate our business model and expand our
footprint in overseas markets in Southeast Asia and Europe, generating high-quality and sustainable
revenue. For instance, we plan to implement our operating system for DFI Retail Group and another
leading Asian retail conglomerate in Southeast Asia, to expand our product’s coverage in retail stores
across Hong Kong SAR, Cambodia, Singapore, Malaysia, Macau SAR, Indonesia, the Philippines and
Brunei, and to integrate our products with Metro Group in Europe.
Increasing spending of our customers. We launched and continue to launch new and improved
product offerings to enhance customer engagement and increase our customer’s spending. For our
retail core service cloud solutions, we are rolling out new modules and functions and diversifying and
expanding our AIoT solutions. Our AIoT solutions can help retailers, especially existing Dmall OS
customers, reduce costs and increase efficiency. We have launched various services under our AIoT
solution business, such as intelligent merchandise replenishment, package sorting, cashier, loss
prevention, and cleaning. We believe these initiatives can drive rapid revenue growth. We are also
working to improve the gross margin of our AIoT solutions, which is mainly affected by non-recurring
labor costs at the beginning of our new customer’s service life-cycle, as we devote resources to on-
board new customers to our AIoT solutions, which impact will diminish in the long-run as our
collaboration with these customers mature.
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SUMMARY
In addition, our ability to increase spending of our customers is primarily driven by our
customers’ deepening engagement with our product offerings through retail core service cloud. The
dollar-based net retention ratio for our customers was 184% in 2021, 158% in 2022, 117% in 2023 and
123% in the twelve months ended June 30, 2024, as calculated by revenues generated in the given period
by recurring customers (excluding consumers) with the prior period divided by revenues generated in the
prior period by all customers (excluding consumers). Dollar-based net retention ratio measures the ability
of our Company to retain and expand its existing customer base over time and indicates the level of
loyalty among customers and their willingness to continue paying for our offerings. We onboarded
several major customers for deployment of our Dmall OS system in 2021, resulting in the comparably
higher dollar-based net retention ratio in 2021. Our dollar-based net retention rate recorded a decline
from 2022 to 2023, though remaining robust at above 100%. This underscores our ability to continuously
increase customer spending.
We have also built a diversified and evolving slate of product offerings, which allows us to
deepen our relationship with our existing customers. For instance, some of our customers are expected
to pay higher take rates over the years of our cooperation as they subscribe to more modules in their
business operations. Additionally, we enhance customer engagement with our products by cross-selling
additional modular functions that cater to our customers’ needs. For instance, we continue to serve
existing Dmall OS customers by delivering additional modules that would streamline various aspects
of a customer’s retail operations and new AIoT solutions that inject greater efficiency to a customer’s
retail locations. Further, we also included modules in Dmall OS system to support the development and
operation of our customers’ in-house e-commerce business, where they manage their own day-to-day
O2O operations. We plan on enhancing our product and module portfolio to increase our penetration of
existing customers to increase the customers’ GMV processed through our operating system.
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
GMV processed through retail core service cloud (in RMB billions)
— Retail core service cloud
— Operating system(1) .................................. 95.1 123.3 141.9 69.1 76.1 (3)
— Take rate customers (2) ........................... 58.5 106.3 113.5 56.8 48.8
— AIoT Solutions ..................................... 14.2 12.6 10.2 5.5 4.9
Notes:
(1) Refer to the GMV processed through our Dmall OS system.
(2) Take rate customers for a given year/period refers to customers that contributed revenue under the take rate fee model in the given
year/period, excluding customers that subscribe only to the membership and product sales management module under the take rate fee
model. GMV from customers that are not take rate customers (i.e. customers that pay fixed subscription fee) accounted for the difference
between GMV attributable to the operating system and take rate customers. The membership and product sales management module is
specifically designed to help large retailers manage consumer profiles and arrange the sales of certain high-value hot sellers. We charge
customers that subscribed to this module a take rate of no less than 1% compared to other modules that have an average take rate ranging
from 0.3% to 0.5% during the Track Record Period to account for the system’s complexity. We exclude the GMV from subscriptions to
our purchase membership and product sales management module that are made on a standalone basis due to (i) the module’s higher take
rate could distort our operating metrics, and (ii) the GMV from these standalone subscriptions is not material to our overall performance.
(3) The overall increase in operating system GMV was primarily driven by more customers subscribing to our operating system and our
customers subscribing to additional modules and integrating our services into more stores. We experienced a decline in operating system
GMV from take-rate customers as some Wumart supermarket transitioned to a subscription-based fee model.
GMV is a core operating metric in terms of revenue recognition for our operations. The GMV
processed through our operating system increased from RMB95.1 billion in 2021 to RMB123.3 billion
in 2022, RMB141.9 billion in 2023, and further increased from RMB69.1 million in the six months
ended June 30, 2023 to RMB76.1 million in the same period in 2024. We plan to grow the GMV
processed through our operating system given our strategic focus on international expansion in
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SUMMARY
Southeast Asia, our continued expansion into new types of retail and our deepened relationship with
existing customers by enhancing our product and module portfolio.
Our ability to increase spending of our customers during the Track Record Period is also illustrated
by our average take rate, calculated as revenue generated from the take rate pricing model of a business
segment divided by GMV processed through our system. For our operating system under our retail core
service cloud solutions, customers can choose to pay a take rate based fee based on a percentage of the
customer’s GMV processed through our system. As our customers deepen their engagement with our
product offerings, such as adopting a greater number of modules in their use of our operating system or
broadening the scope of their adoption of our products and services, we are able to increase the take rate we
charge such customers and generate greater revenue from these customers. Our operating system’s average
take rate increased from 0.3% in 2021 to 0.4% in 2022, and remained stable at 0.4% in 2023 and further
increased to 0.5% in the six months ended June 30, 2024. The increase in the average take rate of our
operating system was primarily driven by charging customers a higher take rate when adopting more
operating system modules and expanding customer demand for our digitalization solutions.
Improving our operational efficiency. We have strategically focused on the high gross profit
contribution business and generating greater revenue from our retail core service cloud solutions. We
expect the adoption of cost control measures throughout our operations to contribute to the
improvement to our net profit and help us achieve positive cash flow. We have also adopted a range of
strategies to enhance our performance, including retaining key staff who demonstrate exceptional
productivity and possess a deep understanding of the entire business cycle, from research and
development to implementation. Additionally, we constantly refine and improve the cross-function
collaboration among our different business groups—including business development, implementation,
and research and development—in a more collaborative and efficient manner, reducing costs and
expenses while simultaneously achieving substantial revenue growth.
Year Ended
December 31,
Six months
ended
June 30,
2021 2022 2023 2023 2024
Operating expense per customer ( in RMB millions )
—Cost of revenue .............................................. 2 . 9 1 . 9 1 . 9 1 . 2 1 . 3
—Research and development expenses ............................. 2 . 5 1 . 3 1 . 0 0 . 6 0 . 5
—Selling and marketing expenses ................................. 1 . 9 0 . 5 0 . 3 0 . 2 0 . 1
—General and administrative expenses ............................. 0 . 9 0 . 6 0 . 5 0 . 3 0 . 3
Total operating expenses ........................................... 8.1 4.4 3.7 2.3 2.2
Gross profit per customer ( in RMB millions )
—Retail core service cloud ....................................... 1 . 1 1 . 1 1 . 0 0 . 6 0 . 9
—E-commerce service cloud ..................................... ( 2 . 2 ) 0 . 3 1 . 1 0 . 4 *
—Others ..................................................... 0 . 0 0 . 1 (4.5) (0.3) (0.6)
Total gross profit .................................................. 0.7 1.2 1.0 0.7 0.8
Note:
* E-commerce service cloud was immaterial in the six months ended June 30, 2024. By the end of 2023, all our customers had transitioned
to in-house O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house
O2O e-commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material gross profit in 2024.
Taken as a whole, our total gross profit per customer increased from RMB0.7 million in 2021
to RMB1.2 million in 2022 and decreased slightly from RMB1.2 million in 2022 to RMB1.0 million in
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SUMMARY
2023. Our total gross profit per customer increased from RMB0.7 million in the six months ended
June 30, 2023 to RMB0.8 million in the six months ended June 30, 2024.
We expect our net loss to experience a significant increase for the year ending December 31,
2024 primarily due to fair value changes of convertible redeemable preferred shares and fair value
change in financial assets measured at FVPL as a result of the decreased valuation of Guoquan, in
which we made an equity investment. Guoquan Shihui is a home meal products brand in China owned
by Guoquan, offering a variety of ready-to-eat, ready-to-heat, ready-to-cook and prepared ingredients,
with a focus on at-home hotpot and barbecue products. See “Financial Information—Discussion of
Certain Key Items of Consolidated Statements of Financial Position—Other Financial Assets.”
Additionally, we anticipate net cash outflows in 2024. See “Business—Business Sustainability & Path
to Profitability” in this document for more information.
Working Capital Sufficiency
As of June 30, 2024, we had cash and cash equivalents of RMB469.5 million, unutilized bank
loan facilities of RMB266.5 million and current financial assets measured at fair value through profit
or loss of RMB11.2 million. Taking into account the financial resources available to us, including the
estimated net proceeds from the Global Offering, cash flow generated from operations, bank facilities
available to us, cash and cash equivalents on hand, financial assets at fair value through profit or loss,
and after due and careful enquiry, our Directors are of the view that we and our subsidiaries have
sufficient working capital to meet our present needs and for the next 12 months from the date of this
document. We also proactively review and adjust our cash management policy and working capital
needs according to general economic conditions and our short-term business plans. In addition, in view
of our net cash outflows and net losses during the Track Record Period, as well as the expected net
operating cash outflows after the Listing, we plan to ensure our working capital sufficiency by taking
advantage of above-mentioned measures to narrow down our net loss and improve our profitability.
Further, as evidenced by our historical equity financing activities, we are able to obtain investment
from well-known institutions. This also signifies the confidence of prominent investors in our
Company. We believe that potential external financing sources, including those to which we will gain
access after the Listing, will provide additional funding to fuel our business operation and expansion
until we achieve profitability. Taking into account the above, as well as based on the written
confirmation from our Company in respect of working capital sufficiency, the financial due diligence
conducted on the financial information of our Group during the Track Record Period and the
discussion with our Directors, the Joint Sponsors concur with our Directors’ view that we and our
subsidiaries have sufficient working capital to meet our present needs and for the next 12 months from
the date of this document.
OUR STRENGTHS
We believe the following strengths contribute to our success: (i) the largest retail digitalization
solution provider in China with first-mover advantage; (ii) a leading full-spectrum omni-channel retail
digitalization solution provider in China with proven success; (iii) blue-chip retailer customer portfolio;
(iv) continuous refinement of retail technology; (v) proprietary credible SaaS products launched in
overseas markets; and (vi) sophisticated management team with abundant industry experience, high
operational efficiency and strong support from shareholders.
OUR STRATEGIES
We are pursuing the following strategies to achieve our mission: (i) retain and grow with
existing customers through service and product innovation; (ii) expand our enterprise customer
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SUMMARY
portfolio to cover more retail formats and broaden our sales network; (iii) continued investment in
research and technology innovation; (iv) further global expansion; and (v) explore strategic
partnerships and acquisition opportunities.
COMPETITION
The retail digitalization solution industry is highly competitive, fast-evolving and fragmented.
We compete with other service providers on, and continually strengthen our advantages in, the
following principal factors: (i) quality of user experience; (ii) trust and brand recognition; (iii) data
analytics capabilities and technology infrastructure; and (iv) ability to attract and retain customers.
We primarily compete with traditional ERP provider and retail SaaS provider. Traditional ERP
provider and retail SaaS provider mainly offer retail SaaS services including limited functional module
that partially cover the specific scenarios of local retail.
We believe we can outplay the industry peers mainly due to (i) our capability to offer
full-spectrum solutions and achieve complete omni-channel coverage. This capability allows us to
cater to retailers’ ever-evolving needs by providing a single vendor solution that addresses all major
aspects of their operations. By doing so, we eliminate the requirement for multiple vendors, along with
the associated challenges of data silos, increased costs, and the added complexity of managing
technology infrastructure; (ii) our early-mover advantage in the retail digitalization solution industry.
This advantage creates significant barriers to entry for our competitors, as they would be required to
invest substantial time and capital to reach our level of expertise and market presence; (iii) our
collaboration with leading enterprises in the local retail industry deepens our know-hows and facilitates
the development of new modules that incorporate new industry practices, which helps with customer
retention as well as new customer acquisition.
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following tables set forth a summary of the financial information from our consolidated
financial information for the Track Record Period. The summary of consolidated financial data set forth
below should be read together with, and is qualified in its entirety by reference to, the consolidated financial
information in this document, including the related notes. Our consolidated financial information has been
prepared in accordance with IFRS Accounting Standards.
Selected Financial Information from Our Consolidated Statements of Profit or Loss
The following table sets forth our consolidated statements of profit or loss with key line items
in absolute amounts and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Continuing Operations
Revenue ........................ 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Cost of revenue .................. (675,453) (79.6) (823,068) (62.0) (1,030,656) (65.0) (486,834) (63.7) (579,908) (61.7)
- Logistics costs ................ (383,125) (45.2) (342,834) (25.8) (233,454) (14.7) (126,213) (16.5) — —
- Employee benefit expenses ...... (104,458) (12.3) (180,300) (13.6) (132,288) (8.3) (76,475) (10.0) (49,150) (5.2)
- Outsourcing and other labor
costs ....................... (5,073) (0.6) (49,069) (3.7) (465,496) (29.4) (190,698) (25.0) (439,715) (46.8)
- Payment processing costs ........ (67,179) (7.9) (67,901) (5.1) (41,709) (2.6) (21,853) (2.9) (11,944) (1.3)
- Cost of inventories sold ......... (27,528) (3.2) (70,724) (5.3) (31,725) (2.0) (20,719) (2.7) (11,348) (1.2)
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SUMMARY
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
- Cloud service, bandwidth and server
custody fees ................... (46,419) (5.5) (59,514) (4.5) (40,355) (2.5) (21,127) (2.8) (14,804) (1.6)
- Customer service fees ............ (22,535) (2.7) (19,128) (1.4) (11,696) (0.7) (6,060) (0.8) — —
- Others ........................ (19,136) (2.2) (33,598) (2.6) (73,933) (4.8) (23,689) (3.0) (52,947) (5.6)
Gross profit ...................... 172,739 20.4 505,196 38.0 554,701 35.0 277,169 36.3 359,254 38.3
Loss before taxation from continuing
operations ...................... (1,807,276) (213.1) (901,853) (67.9) (752,308) (47.5) (589,786) (77.1) (484,214) (51.5)
Loss for the year/period from
continuing operations ............ (1,808,021) (213.2) (900,024) (67.8) (748,987) (47.3) (587,908) (76.9) (482,206) (51.3)
Discontinued operations
(Loss)/profit for the year/period from
discontinued operations ............ (17,027) (2.0) 59,498 4.5 93,548 5.9 40,032 5.2 233,134 24.8
Loss for the year/period ............ (1,825,048) (215.2) (840,526) (63.3) (655,439) (41.4) (547,876) (71.7) (249,072) (26.5)
Attributable to:
Equity shareholders of the Company (1,750,680) (206.4) (807,406) (60.8) (592,361) (37.4) (512,618) (67.1) (234,875) (25.0)
- Continuing operations ............ (1,733,653) (204.4) (866,904) (65.3) (685,909) (43.3) (552,650) (72.3) (468,009) (49.8)
- Discontinued operations .......... (17,027) (2.0) 59,498 4.5 93,548 5.9 40,032 5.2 233,134 24.8
Non-controlling interests ............. (74,368) (8.8) (33,120) (2.5) (63,078) (4.0) (35,258) (4.6) (14,197) (1.5)
- Continuing operations ............ (74,368) (8.8) (33,120) (2.5) (63,078) (4.0) (35,258) (4.6) (14,197) (1.5)
Non-IFRS Measure
To supplement our consolidated financial statements, which are presented in accordance with
IFRS Accounting Standards, we also use adjusted loss from continuing operations (non-IFRS measure)
and adjusted net margin from continuing operations (non-IFRS measure) as additional financial
measures, which are not required by, or presented in accordance with, the IFRS Accounting Standards.
We believe adjusted loss from continuing operations (non-IFRS measure) provides 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
loss from continuing operations (non-IFRS measure) may not be comparable to similarly titled
measures presented by other companies. The use of adjusted loss from continuing operations (non-
IFRS measure) has limitations as an analytical tool, and you should not consider it in isolation from, or
as a substitute for an analysis of, our results of operations or financial condition as reported under IFRS
Accounting Standards.
We define adjusted loss from continuing operations (non-IFRS measure) as loss for the year/
period from continuing operations adjusted by adding back equity-settled share-based payment
expenses, fair value change of convertible redeemable preferred shares and listing expenses. We
exclude equity-settled share-based payment expenses because they are non-cash in nature, and do not
result in cash outflow. Fair value change of convertible redeemable preferred shares represents fair
value changes of the convertible redeemable preferred shares issued by our Company and relate to the
changes in the valuation of our Company.
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SUMMARY
The following table reconciles adjusted loss from continuing operations (non-IFRS measure)
for the years/periods presented in accordance with IFRS Accounting Standards, which is loss for the
years/periods from continuing operations:
Year Ended December 31, Six Months ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands)
(unaudited)
Loss for the year/period from continuing
operations .............................. (1,808,021) (900,024) (748,987) (587,908) (482,206)
Add:
Equity-settled share-based payment expenses (1) . . . 134,140 12,530 13,620 7,229 8,330
Fair value change of convertible redeemable
preferred shares(2) ........................ 732,280 493,191 476,160 422,261 397,118
Listing expenses(3) .......................... — 38,391 25,859 14,537 20,372
Adjusted loss from continuing operations (non-
IFRS measure) for the year/period ......... (941,601) (355,912) (233,348) (143,881) (56,386)
Adjusted net margin from continuing
operations (non-IFRS measure) ............ (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equity-settled share-based payment expenses mainly represent share-based compensation expenses incurred in connection with our 2016
Share Incentive Plan and 2020 Share Incentive Plan. Equity-settled share-based payment expenses are not expected to result in future
cash payments. The reconciling item is non-cash and does not result in cash outflow, and the adjustment has been consistently made
during the Track Record Period. The significant increase in share-based payment expenses in 2021 was mainly due to our Company
accelerating the vesting of 75,000,000 RSUs in October 2021. It resulted in unrecognized share-based compensation expenses being
recognized for services that our Group would have received over the remainder of the vesting period.
(2) Fair value change of convertible redeemable preferred shares represe nts fair value changes of the convertible redeemable preferred shares
issued by our Company and relate to changes in the valuation of our Company. We do not expect to record any further changes in fair
value of the convertible redeemable preferred shares after the Listin g as such convertible redeemable preferred shares will be converted
from liabilities to equity as a result of the automatic conversion into ordinary shares upon the Listing. The reconciling item is non-cash and
does not result in cash outflow. The convertible redeemable preferred s hares will be redesignated from liabilities to equity as a result of
automatic conversion into ordinary shares upon the Listing such that the net liabilities position would turn into a net asset position.
(3) Listing expenses represent expenses related to the Global Offering.
Our adjusted net losses from continuing operations (non-IFRS measure) amounted to
RMB941.6 million, RMB355.9 million, RMB233.3 million, RMB143.9 million, and RMB56.4 million
in 2021, 2022 and 2023 and the six months ended June 30, 2023, and 2024 respectively. We have
historically recorded adjusted net losses from continuing operations (non-IFRS measure) during the
Track Record Period, primarily attributable to expenses incurred in line with the growth and
development of our business, including significant investment in research and development to support
the continued development of our proprietary operating system and marketing resources to grow our
customer base for our retail core service cloud solutions as well as logistic costs under our integrated e-
commerce service solutions.
In 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, we recorded net losses
from continuing operations of RMB1,808.0 million, RMB900.0 million, RMB749.0 million, RMB587.9
million and RMB482.2 million, respectively. Our net loss from continuing operations decreased from
RMB1,808.0 million in 2021 to RMB900.0 million in 2022, primarily attributable to the decreases in fair
value changes of the convertible redeemable preferred shares and share-based payment expenses, together
with our continued gross profit improvement in retail core service cloud solutions and e-commerce service
cloud solutions as well as our concerted efforts to control costs and optimize our operational efficiency in
2022, including but not limited to, labor structure optimization and decreased promotional incentives to
retail consumers as a result of our strategic decision to control cost and limit investment in our O2O
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SUMMARY
operations. Our net loss from continuing operations decreased from RMB900.0 million in 2022, to
RMB749.0 million in 2023, and from RMB587.9 million in the six months ended June 30, 2023 to
RMB482.2 million in the six months ended June 30, 2024 primarily attributable to the decrease in our loss
from operations due to our concerted efforts to control costs and optimize our operational efficiency. See
“Financial Information—Non-IFRS Measure” in this document for more information.
Summary of the 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 the Accountants’ Report
set out in Appendix I to this document:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Total non-current assets ............................ 632,979 496,240 533,589 516,093
Total current assets ................................ 648,123 810,924 844,183 839,292
Total assets ..................................... 1,281,102 1,307,164 1,377,772 1,355,385
Total non-current liabilities ......................... 104,676 272,689 349,295 137,296
Total current liabilities ............................. 5,915,674 7,111,842 7,793,601 8,271,650
Total liabilities .................................. 6,020,350 7,384,531 8,142,896 8,408,946
Net current liabilities ............................. (5,267,551) (6,300,918) (6,949,418) (7,432,358)
Total assets less current liabilities .................. (4,634,572) (5,804,678) (6,415,829) (6,916,265)
Share capital ..................................... 3 2 3 3 2 3 3 2 3 3 2 3
Reserves ........................................ (4,822,726) (6,160,824) (6,865,150) (7,138,067)
Total deficit attributable to equity shareholders of the
Company ..................................... (4,822,403) (6,160,501) (6,864,827) (7,137,744)
Non-controlling interests ........................... 83,155 83,134 99,703 84,183
Total deficit ..................................... (4,739,248) (6,077,367) (6,765,124) (7,053,561)
We recorded net current liabilities of RMB6,300.9 million as of December 31, 2022 compared
to net current liabilities of RMB5,267.6 million as of December 31, 2021, primarily due to (i) an
increase of RMB1,241.6 million in convertible redeemable preferred shares, (ii) a decrease of
RMB42.2 million in prepayments, deposits and other receivables and (iii) an increase of
RMB14.4 million in our trade payables, partially offset by (i) an increase of RMB164.3 million in our
cash and cash equivalents, (ii) a decrease of RMB57.1 million in our accrued expenses and other
payables and (iii) an increase of RMB47.4 million in our trade receivables. We recorded net current
liabilities of RMB6,300.9 million as of December 31, 2022, compared to net current assets of
RMB6,949.4 million as of December 31, 2023, primarily due to (i) an increase of RMB586.8 million
in convertible redeemable preferred shares, (ii) an increase of RMB132.0 million in bank loans and
other borrowings, (iii) an increase of RMB41.8 million in contract liabilities, (iv) a decrease of
RMB35.2 million in restricted bank deposits and (v) an increase of RMB22.8 million in trade payables,
partially offset by (i) a decrease of RMB111.0 million in accrued expenses and other payables, (ii) an
increase of RMB25.9 million in other financial assets and (iii) an increase of RMB24.5 million in trade
receivables. We recorded net current liabilities of RMB6,949.4 million as of December 31, 2023,
compared to net current liabilities of RMB7,432.4 million as of June 30, 2024, primarily due to (i) an
increase of RMB441.7 million in convertible redeemable preferred shares, (ii) an increase of
RMB151.0 million of convertible bond reclassified from non-current liabilities, (iii) an increase of
RMB79.2 million in bank loans and other borrowings, and (iv) a decrease of RMB63.6 million in cash
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SUMMARY
and cash equivalents, partially offset by (i) a decrease of RMB195.2 million in accrued expenses and
other payables, and (ii) an increase of RMB91.3 million in trade receivables.
We recorded net liabilities of RMB4,739.2 million, RMB6,077.4 million, RMB6,765.1 million
and RMB7,053.6 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
The net liabilities were primarily attributable to the increase in convertible redeemable preferred shares
issued pursuant to the Pre-IPO Investments. The convertible redeemable preferred shares will be
redesignated from liabilities to equity as a result of automatic conversion into ordinary shares upon the
Listing such that the net liabilities position would turn into a net asset position. Our net liabilities
increased from RMB4,739.2 million as of December 31, 2021 to RMB6,077.4 million as of December
31, 2022, primarily due to (i) loss for the year of RMB840.5 million, (ii) other comprehensive loss of
RMB500.0 million representing exchange difference on translation of financial statements,
(iii) purchase of non-controlling interests of RMB96.0 million, representing share buy-back and
cancellation of Retail Technology Asia shares and our purchase of additional 9.93% shares of interests
in Shenzhen Enjoy, and (iv) dividends declared by a subsidiary attributable to non-controlling interests
of RMB4.3 million, representing the dividends paid to the non-controlling shareholders of Shenzhen
Enjoy in May 2022, partially offset by (i) contribution from non-controlling shareholders of
subsidiaries of RMB90.2 million, representing the capital injection into Retail Technology Asia from
the non-controlling shareholder and capital injection into Dmall Zhilian from Beijing Wumart
Supermarket Co., Ltd., and (ii) reserve from equity settled share-based transactions of RMB12.5
million. Our net liabilities increased from RMB6,077.4 million as of December 31, 2022 to
RMB6,765.1 million as of December 31, 2023, primarily due to (i) loss for the year of RMB655.4
million and (ii) other comprehensive income of negative RMB107.7 million representing exchange
difference on translation of financial statements, partially offset by (i) contribution from a non-
controlling shareholder of a subsidiary of RMB59.5 million, representing the capital injection into
Retail Technology Asia from the non-controlling shareholder, and (ii) reserve from equity settled
share-based transactions of RMB13.6 million. Our net liabilities increased from RMB6,765.1 million
as of December 31, 2023 to RMB7,053.6 million as of June 30, 2024, primarily due to (i) loss for the
period of RMB249.1 million, and (ii) other comprehensive income of negative RMB45.2 million,
representing exchange difference on translation of financial statements.
Selected Consolidated Cash Flows Statements Items
The following table sets forth a summary of our cash flows for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands)
(unaudited)
Net cash used in operating activities ................ (1,274,677) (205,501) (179,248) (192,666) (56,743)
Net cash (used in)/generated from investing activities..... (321,400) 68,847 (31,031) (12,150) (6,049)
Net cash generated from financing activities .......... 833,719 282,425 207,061 132,409 144
Net (decrease)/increase in cash and cash
equivalents ................................. (762,358) 145,771 (3,218) (72,407) (62,648)
Cash and cash equivalents at the beginning of the
y e a r / p e r i o d ................................... 1,134,873 368,716 533,054 533,054 533,171
E f f e c to ff o r e i g nc u r r e n c ye x c h a n g er a t ec h a n g e s..........(3,799) 18,567 3,335 3,337 (987)
Cash and cash equivalents at the end of the
year/period .................................. 368,716 533,054 533,171 463,984 469,536
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SUMMARY
Our net cash used in operating activities were RMB1,274.7 million, RMB205.5 million,
RMB179.2 million, RMB192.7 million and RMB56.7 million for the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively. These were primarily
attributable to loss for the year. See “Financial Information—Liquidity and Capital Resources—Net
Cash Used in Operating Activities” in this document for more information.
KEY FINANCIAL RATIOS
The table below sets forth our key financial ratios for the years/periods indicated:
For the Year Ended
December 31,
For the Six Months
Ended June 30
2021 2022 2023 2023 2024
(unaudited)
Growth of revenue ........................... — 56.6% 19.4% — 22.9%
Gross margin (1) ............................. 20.4% 38.0% 35.0% 36.3% 38.3%
Net margin (2) ............................... (213.2%) (67.8%) (47.3%) (76.9%) (51.3%)
Adjusted net margin from continuing operations
(non-IFRS measure) (3) ...................... (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equals gross profit for the year/period divided by revenue for the year/period and multiplied by 100%.
(2) Equals loss for the year from continuing operations divided by revenue for the year/period and multiplied by 100%.
(3) Equals adjusted loss/profit from continuing operations (non-IFRS measures) for the year/period divided by revenue for the year/period
and multiplied by 100%.
RISK FACTORS
There are certain risks involved in our operations, some of which are beyond our control. These
risks can be broadly categorized into: (i) risks relating to our business and industry; (ii) risks relating to
doing business in China; and (iii) risks relating to the Global Offering. We believe that the most
significant risks we face include:
 Our limited operating history and evolving business model in a developing market make it
difficult to evaluate our business and prospects. We cannot guarantee that we will be able
to sustain our historical growth, effectively manage our growth, control our costs and
expenses, or implement our business strategies.
 We incurred significant net losses and generated net operating cash outflows in the past
and we may continue to do so in the future.
 We currently have a relatively concentrated customer base with a limited number of major
customers. The loss of one or more of our major customers, a failure to renew our
agreements with one or more of our major customers, or a failure to expand our customer
base, could negatively affect our results of operations and ability to market our services.
 We heavily rely on the Related Parties and any material changes in our relationships with
the Related Parties would have a material adverse impact on our business, financial
conditions and operating results.
 If we fail to improve and enhance the functionality, performance, reliability, design,
security and scalability of our Dmall OS system, AIoT solutions and other service
offerings in a manner that responds to our customers’ evolving needs, our business and
results of operations may be adversely affected.
 We operate in a dynamic industry and may need to adjust business strategies substantially
based on market development.
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SUMMARY
 We are dependent on the performance of our retailer customers as we generate income from
their transactions processed through us. Operational and financial failures of our retailer
customers may adversely affect our financial condition and results of operation.
 If the market for retail digitalization solutions develops more slowly than we expect or
declines, our business could be adversely affected.
 If we fail to adopt new technologies or adapt our applications, services, and systems to
changing customer preferences or emerging industry standards, or if our efforts to invest in the
development of new technologies are unsuccessful or ineffective, we may need to substantially
increase our research and development expenditure, and our business may be materially and
adversely affected.
 We may incur impairment losses on our intangible assets and goodwill.
PRE-IPO INVESTMENTS
We received multiple series of equity financing from our Pre-IPO Investors to support our
expanding business operations. Our diverse base of Pre-IPO Investors consists of, among others, Tencent,
IDG Capital, Industrial Bank, China Structural Reform Fund and Shenzhen Investment Holding Bay Area
Equity Investment Fund Partnership. As of the Latest Practicable Date, approximately 99.4% of the
proceeds from Pre-IPO Investments had been utilized. On May 27, 2022, we entered into Convertible Bond
Investment Agreements with Beijing Heyin, pursuant to which our Company agreed to issue, and Beijing
Heyin agreed to subscribe for a convertible bond in the principal amount of RMB190.0 million. Our
Company issued such Convertible Bond to Beijing Heyin on June 15, 2022. On March 22, 2024, we
entered into an amendment to the Convertible Bond Investment Agreements with Beijing Heyin, pursuant
to which we agreed to repay RMB50.0 million of the principal amount early and amend the principal
amount of the convertible bond to RMB140.0 million. For further details, please refer to the section headed
“History, Reorganization and Corporate Structure—Pre-IPO Investments” in this document.
OUR CONTROLLING SHAREHOLDERS
Immediately after completion of the Global Offering (assuming the Over-allotment Option is not
exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans),
Dr. Zhang, our founder and senior advisor, will be interested in and control in aggregate 502,452,135
Shares through a number of intermediaries wholly-owned or controlled by him, representing approximately
56.67% of our total issued Shares in aggregate. Therefore, Dr. Zhang, together with such intermediaries,
will constitute a group of Controlling Shareholders of our Company upon the Listing. For further details of
our Controlling Shareholders, please see the section headed “Relationship with the Controlling
Shareholders”.
CONTINUING CONNECTED TRANSACTIONS
We have entered into certain transactions which will constitute non-exempt or partially-exempt
continuing connected transactions of our Company under the Listing Rules following the Listing. We have
applied to the Stock Exchange for, and the Stock Exchange has granted, certain waivers from strict
compliance with Chapter 14A of the Listing Rules in respect of these transactions. For details, see the
section headed “Connected Transactions”.
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SUMMARY
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission to deal in, (i)
the Shares in issue and to be issued pursuant to the Global Offering and upon the exercise of the Over-
allotment Option, (ii) the Shares which may be issued upon conversion of the Convertible Bond and (iii) any
Shares to be issued pursuant to the Share Incentive Plans. We satisfy the market capitalization/revenue test
under Rule 8.05(3) of the Listing Rules with reference to (i) our revenue of RMB1,585.4 million for the year
ended December 31, 2023, which is significantly over HK$500 million as required by Rule 8.05(3) of the
Listing Rules; and (ii) our expected market capitalization at the time of the Listing, which, based on the Offer
Price of HK$30.21, exceeds HK$4 billion as required by Rule 8.05(3) of the Listing Rules.
DIVIDEND
We are a holding company incorporated under the laws of the British Virgin Islands. As a
result, the payment and amount of any future dividends will also depend on the availability of
dividends received from our subsidiaries. PRC laws require that dividends be paid only out of the
profit for the year determined according to the Accounting Standards for Business Enterprises issued
by the Ministry of Finance of the People’s Republic of China. PRC laws also require foreign-invested
enterprises to set aside at least 10% of its after-tax profits, if any, to fund its statutory reserves until the
aggregate amount of such fund reaches 50% of its registered capital, which are not available for
distribution as cash dividends. Dividend distribution to our shareholders is recognized as a liability in
the period in which the dividends are approved by our shareholders or Directors, where appropriate.
During the Track Record Period, no dividends have been paid or declared by our Company.
Any future determination to pay dividends will be made at the discretion of our Directors and
may be based on a number of factors, including our future operations and earnings, capital requirements
and surplus, general financial condition, contractual r estrictions and other factors that our Directors may
deem relevant. As advised by our BVI legal adviser, so long as we satisfy the solvency test, namely, (i)
the value of the our assets exceeds our liabilities, and (ii) we are able to pay our debts as they become due
immediately after the distribution, our Directors may authorize a distribution by way of dividend at a time
and of such an amount as they see fit, subject to our Memorandum and Articles. The declaration,
payment and amount of dividends will be subject to our Directors’ discretion, if they are satisfied, on
reasonable grounds, that immediately after the payment of the dividend, the value of our Company’s
assets will exceed its liabilities and our Company is able to pay its debts as they fall due. Investors should
not purchase our shares with the expectation of receiving cash dividends. We did not declare or pay any
dividends on our shares during the Track Record Period. Currently, we do not have a formal dividend
policy or a fixed dividend distribution ratio.
GLOBAL OFFERING STATISTICS
Based on Offer Price of HK$30.21 Per Share
Our Company’s market capitalization upon completion
of the Global Offering (1) ........................ HK$26,787 million
Unaudited pro forma adjusted net tangible assets per
Share(2) ...................................... HK$0.80
Notes:
(1) The calculation of the market capitalization is based on 886,690,124 Shares expected to be in issue immediately upon completion of the
Global Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued
under the Share Incentive Plans).
(2) The unaudited pro forma adjusted net tangible assets per Share has been arrived at after adjustments referred to in the section headed
“Unaudited Pro Forma Financial Information” in Appendix II and on the basis that 886,690,124 Shares were in issue (being the
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SUMMARY
outstanding 525,150,000 ordinary shares as at June 30, 2024, 335,766,124 ordinary shares being converted from the outstanding
redeemable preferred shares as at June 30, 2024 and 25,774,000 Shares to be issued pursuant to the Global Offering) at the Offer Price of
HK$30.21, assuming that the Global Offering and the conversion of redeemable preferred shares into ordinary shares had been
completed on June 30, 2024, and assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no
Shares are issued under the Share Incentive Plans.
(3) No adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to June 30, 2024.
LISTING EXPENSES
Based on the Offer Price of HK$30.21 per share, the total estimated listing expenses in relation to the
Global Offering is approximately RMB143.1 million, assuming the Over-allotment Option is not exercised.
The total estimated listing expenses will represent approximately 19.9% of the total gross proceeds from the
Global Offering of approximately HK$778.6 million. Out of the total listing expenses, we estimate
approximately RMB116.3 million will be charged to our consolidated statement of profit or loss. The
remaining balance of approximately RMB26.8 million, which mainly includes underwriting commission, is
expected to be accounted for as a deduction from equity upon the completion of the Global Offering. These
listing expenses mainly comprise professional fees paid and payable to the professional parties for their
services rendered in relation to the Listing and the Global Offering which are non-underwriting related
expenses, including fees for legal advisers, Reporting Accountants and internal control consultant of
RMB77.4 million, and other non-underwriting-related fees of RMB42.3 million, as well as the underwriting
commission (including SFC transaction levy, AFRC transaction levy, and Stock Exchange trading fee) of
RMB23.4 million, payable to the Underwriters in connection with the offering of Offer Shares under the
Global Offering.
USE OF PROCEEDS
With an Offer Price of HK$30.21 per Offer Share, we estimate that we will receive net
proceeds of approximately HK$623.7 million from the Global Offering after deducting the
underwriting commissions and fees, and other estimated expenses in connection with the Global
Offering and assuming that the Over-allotment Option is not exercised. In line with our strategies, we
intend to use our proceeds from the Global Offering for the purposes and in the amounts set out below:
 Approximately 42.1%, or HK$262.6 million, to develop new applications and new service
modules;
 Approximately 30.0%, or HK$187.1 million, for talent acquisition associated with the
expansion of our operations;
 Approximately 10.0%, or HK$62.4 million, to selectively pursue strategic cooperation,
investments and acquisitions that are complementary to our organic growth strategies,
particularly those that can complement our product offerings, strengthen our technology
capabilities, and solidify our market position;
 Approximately 7.9%, or HK$49.3 million, to expand our sales network and further
strengthen our brand reputation; and
 Approximately 10.0%, or HK$62.4 million, for working capital and general corporate
purposes.
For details, please see the section headed “Future Plans and Use of Proceeds” in this document.
26


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SUMMARY
RECENT DEVELOPMENTS
Product Optimization and Restructuring
During the Track Record Period, we provided e-commerce cloud solutions, assisting retailers
in developing the necessary systems to establish a virtual presence, managing the daily operations of
their online stores, and offering delivery services. By the end of 2023, we completed a series of
product optimizations to further align our product and service offerings with our objective of
promoting our digitalization solutions, which have always been the primary focus of our business.
Our strategic focus also aligns with the business models of our customers as they gradually
transitioned their O2O operation in-house, where they manage their own day-to-day O2O operations.
As our customers have grown more accustomed to e-commerce operations, they have shown a
tendency to bring the operation of their e-commerce business in-house, while still requiring technical
support to establish their online presence and manage day-to-day operations. In response to these
changes in our customers’ business model and to advance our goal of enabling retailers to carry out
online and offline omnichannel operation, we have been providing the distributed e-commerce
system module under our retail core service cloud solutions to those customers who chose to operate
their O2O operation in house. By the end of 2023, all our customers had transitioned to in-house
O2O operation. Consequently, the bulk of the services we provided under the e-commerce service
clouds during the Track Record Period, such as O2O platform operation services and delivery
services, had been phased out by the end of 2023. We believe that these modifications and
optimizations of our product offerings enhance our competitiveness amid the evolving industry
landscape and contribute to our profitability, ultimately benefiting our shareholders in the long term.
Dmall Fresh (Beijing) was primarily engaged in the operation of the Dmall app before the
Restructuring. Prior to 2024, the Dmall app was primarily associated with online advertising services
under the marketing and advertising service cloud we previously operated, e-commerce service
cloud solutions and payment processing services under the retail core service cloud solutions. In
April 2024, we conducted a series of restructuring transactions to divest all of our equity interests in
Dmall Fresh (Beijing), our former VIE, to minimize the underlying legal and regulatory risks. The
Restructuring led to the divestment of the Dmall app and mini programs. At the time of the
Restructuring, due to the product optimizations we completed by the end of 2023, Dmall app was
primarily associated with the provision of online advertising services under the marketing and
advertising service cloud we previously operated and payment processing services under the retail
core service cloud. Revenue from such payment processing services was RMB27.4 million,
RMB56.2 million, RMB36.1 million, RMB19.6 million and RMB14.7 million in 2021, 2022, 2023
and the six months ended June 30, 2023 and 2024, respectively. Gross profit from such payment
processing services was negative RMB18.2 million, RMB8.4 million, RMB4.7 million,
RMB4.5 million and RMB2.9 million in 2021, 2022, 2023 and the six months ended June 30, 2023
and 2024, respectively. Payment processing services do not represent a separate major line of
business. As a result, the financial results of payment processing services were not categorized as
discontinued operations in accordance with IFRS Accounting Standards.
The financial results of our online advertising services were classified as discontinued
operations in the historical financial information. Please also refer to the following table which sets
forth the results of the discontinued operations.
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SUMMARY
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB RMB RMB RMB RMB
(in thousands, except percentages)
(unaudited)
Revenue 196,400 172,695 164,334 76,721 41,781
Cost of revenue ................................. (11,110) (8,767) (6,552) (1,472) (2,510)
Gross profit .................................... 185,290 163,928 157,782 75,249 39,271
(Loss)/profit for the year/period from discontinued
operations ................................... (17,027) 59,498 93,548 40,032 233,134
We believe that the discontinued operation did not have a material impact on our business, as it
has always been our strategic goal to focus on providing digitalization solutions to our customers.
Online advertising services have not been a key service offering but rather a complementary service we
offered to round out our service portfolio. We believe that it is in our best interest to divest the online
advertising services to focus on our core strategic business development and to minimize the
underlying legal and regulatory risks of the contractual arrangements. See “Risk Factors—Risks
Relating to Our Corporate Structure—If the PRC government determines that the historical contractual
arrangements with the former VIE did not comply with PRC regulation, or if these regulations change
or are interpreted differently in the future, we could be subject to severe penalties retroactively” and
“History, Reorganization and Corporate Structure—Restructuring.” We believe our business would
benefit from the Product Optimization and the Restructuring in the long term as we concentrate our
resources on our retail core service cloud solutions and on supporting retailers in digitalizing their
operations through our Dmall OS system. After the Restructuring, we do not operate any business
under the e-commerce service cloud and the remaining offline advertising services are immaterial to
our business and operational results.
Other Business Development
We have been continually enhancing our product offerings and improving synergies among
different modules and solutions. For example, we introduced AI-based remote assistance service to
assist consumers in navigating and locating items within unmanned stores, thereby enhancing our
intelligent loss prevention solutions and improving the overall consumer experience. Many of our
customers, such as Luosen (China) Investment Co., Ltd. (“ Luosen”), have subscribed to additional
services from us, demonstrating the strength of our product and service offerings. For example,
Pangdonglai originally subscribed to modules including supplier management, merchandise
management, and membership management modules in 2022, and in 2024 subscribed to additional
modules, including warehouse management, store management, merchandise display management,
inventory management and automatic replenishment. Subscribing to additional modules creates
synergies that enhance retailers’ overall operational efficiency and effectiveness. By integrating
various modules and work processes, we allow customers to gain a more comprehensive view of their
operations, leading to better-informed decision-making and streamlined business processes. We also
expanded our business to Brunei and Indonesia.
To the best of our knowledge, since June 30, 2024 (being the date on which the latest
consolidated financial information of our Group was prepared) and up to the date of this prospectus,
there has been no material adverse change in our business operations, the business environment in
which we operate, as well as our financial or trading position, indebtedness, mortgage, contingent
28


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SUMMARY
liabilities, or guarantees. We expect our net loss to experience a significant increase for the year ending
December 31, 2024 primarily due to fair value changes of convertible redeemable preferred shares.
Recent Regulatory Development on Cybersecurity and Cyber Data Security
On December 28, 2021, thirteen government authorities, including the CAC, jointly released
the Cybersecurity Review Measures () (the “ Cybersecurity Review
Measures”), which took effect on February 15, 2022. After the Restructuring, we still provide
digitalization solutions at the request of customers, and the provision of such services necessitates us to
process certain consumer information on behalf of our customers. For example, for customers that
subscribe to our consumer membership management module, our system records consumer personal
information, order data, and loyalty points according to the customers’s requirements. On March 22,
2024, the CAC promulgated the Provisions on Promoting and Regulating Cross-Border Data Flows
(
קܿ׮) to regulate the outbound provision of data. We are not involved in
any cross-border transfer of consumer or retailer data collected during the operation of our domestic
business. In terms of data compliance, please see “Risk Factor—Because we receive, store and process
data, some of which contain sensitive personal information, we face concerns over the collection,
improper use or disclosure of personal information, which could discourage current and potential users
from using our services and technology platforms, damage our reputation, face regulatory scrutiny, and
in turn materially and adversely affect our business, financial condition and results of operations.”
On September 24, 2024, the CAC announced the Regulations on the Administration of Cyber
Data Security (
ၣഖᅰኽτΌ၍ଣૢԷ) (the “ Cyber Data Security Regulations ”), which will
become effective on January 1, 2025. These regulations stipulate that cyber data processors who carry
out cyber data processing activities that affect or may affect national security shall undergo national
security review in accordance with relevant state regulations. Although our data processing activities
have not been determined to affect or potentially affect national security, as a cyber data processor, we
are still required to comply with other relevant provisions of the Cyber Data Security Regulations.
IMPACT OF THE COVID-19 PANDEMIC
The COVID-19 pandemic has materially and adversely affected China and many parts of the
world, leading to widespread lockdowns.
Our Directors are of the view that the overall impact of the COVID-19 pandemic on our business
operation and financial performance had been immaterial, on the basis that (i) we achieved significant
growth in our revenue from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, during which the
COVID-19 pandemic had the most severe impact on our operations, (ii) our customer engagement and
business development efforts resulted in the number of our customers growing from 236 in 2021 to 436 in
2022, (iii) our business operations had fully resumed since China began to modify the COVID policy at the
end of 2022, and (iv) the negative impact of COVID-19 on our operations and revenue related to offline
retail stores was balanced to a certain extent by the increased adoption of our solutions for online retail
formats. Based on the information available as at the Latest Practicable Date, we believe that the COVID-
19 did not and will not have material adverse impact on our business operations and financial performance.
See “Risk Factors—Risks Relating to our Business and Industry—Our business had been affected by the
COVID-19 pandemic.” For details, please see the section headed “Financial Information—Impact of the
COVID-19 Pandemic.”
29


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SUMMARY
NO MATERIAL ADVERSE CHANGE
After due and careful consideration, our Directors confirm that, up to the date of this
prospectus, there has been no material adverse change in our financial or trading position or prospects
since June 30, 2024 which would materially affect the information as set out in the Accountants’
Report included in Appendix I to this document.
30


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DEFINITIONS
In this document, unless the context otherwise requires, the following terms shall have the
following meanings. Certain technical terms are explained in “Glossary of technical terms.”
“2016 Share Incentive Plan” the share incentive plan approved and adopted by the
shareholders on January 8, 2016, the principal terms of
which are set out in “Statutory and General Information—
D. Share Incentive Plans” in Appendix IV
“2020 Share Incentive Plan” the share incentive plan approved and adopted by the
Shareholders on April 2, 2021, the principal terms of which
are set out in “Statutory and General Information—D.
Share Incentive Plans” in Appendix IV
“2024 First Share Incentive Plan” the post-IPO share incentive plan our Company adopted on
November 27, 2024 and will take effect on the Listing
Date, as amended from time to time, the principal terms of
which are set out in “Statutory and general information—
D. Share Incentive Plans” in Appendix IV
“2024 Second Share Incentive Plan” the post-IPO share incentive plan our Company adopted on
November 27, 2024, as amended from time to time, the
principal terms of which are set out in “Statutory and
general information—D. Share Incentive Plans” in
Appendix IV
“Accountants’ Report” the accountants’ report of our Company, the text of which
is set out in Appendix I to this document
“affiliate(s)” with respect to any specified person, 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 Report Council
“Articles” or “Articles of
Association”
the articles of association of our Company conditionally
adopted on November 27, 2024 with effect from the Listing
Date
“Asia” a major eastern constituent of the continent of Eurasia
including 47 states, such as China, India, Indonesia, Iran,
Japan, South Korea, Malaysia, Nepal, Singapore, Thailand
and Turkey
“associate(s)” has the meaning ascribed to it under the Listing Rules
“B&T Entities” Entities that manage and operate stores bearing the brand of
B&T (
֢in the PRC
“Board” or “Board of Directors” the board of Directors
31


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DEFINITIONS
“business day” any day (other than a Saturday, Sunday or public holiday in
Hong Kong) on which banks in Hong Kong are generally
open for normal banking business
“BVI” the British Virgin Islands
“CAC” the Cyberspace Administration of China (
ʕശɛ͏΍ձ਷਷
܃)
CAGR” compound annual growth rate
“Capital Market Intermediary(ies)” the capital market intermediaries participating in the Global
Offering and has the meaning ascribed thereto under the
Listing Rules
“CCASS” the Central Clearing and Settlement System established and
operated by HKSCC
“China” or “the PRC” the People’s Republic of China, and for the purposes of this
document only, except where the context requires
otherwise, refers to China or the PRC exclude Hong Kong,
the Macao Special Administrative Region of the People’s
Republic of China and Taiwan
“Chongqing Department Store” Chongqing Department Store Co., Ltd. (
΅
ʮ̡), a company established with limited liability in
the PRC on August 11, 1992 and listed on the Shanghai
Stock Exchange (stock code: 600729)
“Chongqing Department Store Group” Chongqing Department Store and its subsidiaries
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amend or supplemented 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 amend or supplemented from time to time
“Company,” “our Company,” or “the
Company”
Dmall Inc. (
ඳ), a business company
incorporated in the BVI on February 5, 2015
“connected person(s)” has the meaning ascribed to it under the Listing Rules
“connected transaction(s)” has the meaning ascribed to it under the Listing Rules
“former Consolidated Affiliated Entity”
or “former VIE”
Dmall Fresh (Beijing), the financial accounts of which have
been consolidated and accounted for as if it is a subsidiary
of our Company by virtue of the historical contractual
arrangements
32


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DEFINITIONS
“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rules and
except where the content requires otherwise, refers to
Dr. Zhang and the intermediary companies through which
Dr. Zhang holds his interest in the Company, namely,
Celestial Limited, Odor Nice Limited, Retail Enterprise
Corporation Limited, D&W Inc., Interface Holding Inc.,
Wumei Southern Technology Company Limited* (
یߕي
ப΂ʮ̡), Wumei Technology, Beijing
Zhongsheng Huate Technology Company Limited* ( ̏ԯʕ
ʮ̡) and Beijing Jingxi Guigu Technology
Company Limited* (ʮ̡), as further
detailed in the section headed “Relationship with the
Controlling Shareholders”
“Convertible Bond” the convertible bond issued by our Company to Beijing
Heyin, particulars of which are set out in the section headed
“History, Reorganization and Corporate Structure—
Pre-IPO Investments” in this prospectus, and collectively
the “Convertible Bond”
“COVID-19” Novel Coronavirus (COVID-19) or Novel Coronavirus
Pneumonia, a respiratory illness caused by a new strain of
coronavirus and characterized especially by fever, cough,
and shortness of breath and may progress to pneumonia and
respiratory failure
“CSRC” the China Securities Regulatory Commission (
ʕ਷ᗇՎ္
ึ)
“DFI Retail Group” DFI Retail Group Holdings Limited and its subsidiaries.
DFI Retail Group is referred to as “Other Related Party” in
this prospectus because it is a substantial shareholder of our
non-wholly owned subsidiary Retail Technology Asia,
making it our core connected person
“Dingmo Shanghai” Dingmo (Shanghai) Technology Co., Ltd. (
߅
ʮ̡), a company established with limited liability in
the PRC on March 10, 2020 and an indirect wholly owned
subsidiary of our Company
“Director(s)” the director(s) of our Company
“Dmall BVI” DMALL ASIA INC., a business company incorporated in
the BVI on April 7, 2015 and an indirect wholly owned
subsidiary of our Company
“Dmall Cayman” DMALL CHINA INC., an exempted company with limited
liability incorporated in the Cayman Islands on March 26,
2015 and a direct wholly owned subsidiary of our
Company
33


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DEFINITIONS
“Dmall Fresh (Beijing)” Dmall Fresh (Beijing) E-commerce Co., Ltd. ( εᓃอᒻ̏
ʮ̡), a company established with
limited liability in the PRC on May 15, 2015. It is owned
by Mr. Zhang and Ms. LU as to 51% and 49%, respectively
“Dmall Fresh (Shenzhen)” Dmall Fresh (Shenzhen) E-commerce Co., Ltd. (
εᓃอᒻ
ʮ̡), a company established with
limited liability in the PRC on March 26, 2020 and a
former wholly owned subsidiary of Dmall Fresh (Beijing)
which was disposed of on August 30, 2023
“Dmall HK” Dmall Hong Kong Limited, a company with limited
liability incorporated in Hong Kong on April 28, 2015 and
an indirect wholly owned subsidiary of our Company
“Dmall Life Beijing” Dmall Life (Beijing) Technology Co., Ltd. (
̏
ʮ̡), a company established with limited
liability in the PRC on January 6, 2015 and an indirect
wholly owned subsidiary of our Company
“Dmall Life Chengdu” Dmall Life (Chengdu) Technology Co., Ltd. (
ϓ
ʮ̡), a company established with limited
liability in the PRC on April 2, 2015 and an indirect wholly
owned subsidiary of our Company
“Dmall Life Digital” Dmall Life (China) Digital Technology Co., Ltd. (
ݺ
ʮ̡), a company established with
limited liability in the PRC on February 13, 2019 and an
indirect wholly owned subsidiary of our Company
“Dmall Life Network” or the “WFOE” Dmall Life (China) Network Technology Co., Ltd. (
εᓃ͛
ʮ̡), a company established with
limited liability in the PRC on September 7, 2015, an
indirect wholly owned subsidiary of our Company and the
WFOE of the Company
“Dmall Life Tianjin” Dmall Life (Tianjin) New Energy Tec hnology Co., Ltd. (
εᓃ
ʮ̡), a company established
with limited liability in the PRC on August 11, 2023, and an
indirect wholly owned subsidiary of our Company
“Dmall Life Wuhan” Dmall Life (Wuhan) Technology Co., Ltd. (
؛
ʮ̡), a company established with limited
liability in the PRC on May 6, 2019, and an indirect wholly
owned subsidiary of our Company
“Dmall OS system” a cloud-based operating system software proprietarily
developed to digitalize retailers’ operations and support
intelligent business decision making utilizing omni-channel
data
34


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DEFINITIONS
“Dmall (Shenzhen) Digital” Dmall (Shenzhen) Digital Technology Co., Ltd. ( εᓃଉ
ʮ̡), a company established with
limited in the PRC on April 2, 2019 and an indirect wholly
owned subsidiary of our Company
“Dmall Zhilian” Dmall Zhilian (Beijing) Technology Co., Ltd. (
εᓃ౽ᑌ
ʮ̡), a company established with limited
liability in the PRC on September 19, 2017 with former
name as Beijing Weisheng Technology Co., Ltd. (
̏ԯฆ᳅
ʮ̡) and changed its name on August 22, 2022,
in which we and Beijing Wumart Supermarket Co., Ltd.
hold 80% and 20% equity interest each. Beijing Wumart
Supermarket Co., Ltd. is beneficially owned by Wumei
Technology Group, Inc. which is controlled by Dr. Zhang
“DRGML” DFI Retail Group Management Limited (formerly known
as Dairy Farm Management Limited), a subsidiary of DFI
Retail Group Holdings Limited
“DRGMSL” DFI Retail Group Management Services Limited (formerly
known as Dairy Farm Management Services Limited), a
member of the DFI Retail Group
“Dr. Zhang” Dr. ZHANG Wenzhong (
ੵ˖ʕ), our founder, senior
advisor and our Controlling Shareholder
“Dr. Zhang’s PRC Litigation Legal
Counsel”
Professor Zuo Jianwei
“EIT” enterprise income tax
“Extreme Conditions” the occurrence of “extreme conditions” as announced by
any government authority of Hong Kong due to serious
disruption of public transport services, extensive flooding,
major landslides, large-scale power outage or any other
adverse conditions before Typhoon Signal No. 8 or above
is replaced with Typhoon Signal No. 3 or below
“FINI” Fast Interface for New Issuance, which is an online
platform operated by HKSCC that is mandatory for
admission to trading and, where applicable, the collection
and processing of specified information on subscription in
and settlement for all new listings
“Global Offering” the Hong Kong Public Offering and the International Offering
“Group,” “our Group,” “the Group,”
“we,” “us,” or “our”
the Company, its subsidiaries and (where applicable)
former consolidated affiliated entities from time to time,
and where the context requires, in respect of the period
35


--- page 44 ---
DEFINITIONS
prior to our Company becoming the holding company of its
present subsidiaries, such subsidiaries as if they were
subsidiaries of our Company at the relevant time
“Guoquan” Guoquan Food (Shanghai) Co., Ltd.
΅
ʮ̡) (HKEX: 2517), formerly known as Guoquan
Supply Chain (Shanghai) Co., Ltd. ( ᒢਸ਼ԶᏐᗡɪऎϞ
ʮ̡), a company established under the laws of the PRC
on July 11, 2019 with limited liability
“Guoquan Shihui” A home meal products brand in China owned by Guoquan,
offering a variety of ready-to-eat, ready-to-heat, ready-to-
cook and prepared ingredients, with a focus on at-home
hotpot and barbecue products
“HK” or “Hong Kong” the Hong Kong Special Administrative Region of the
People’s Republic of China
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued in
the applicant’s own name, submitted online through 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 on the designated website at
www.hkeipo.hk
“HK$,” “HK dollars” or “Hong Kong
dollars”
Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited
“HKSCC 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 designated HKSCC Participant’s
stock account through causing HKSCC Nominees to apply on
your behalf, including by instructing your broker or custodian
who is a HKSCC Participant to give electronic application
instructions via HKSCC’s FINI system to apply for the Hong
Kong Offer Shares on your behalf
“HKSCC Nominees” HKSCC Nominees Limited
“HKSCC Operational Procedures” the operational procedures of HKSCC, containing the
practices, procedures and administrative or other requirements
relating to HKSCC’s services and the operations and
functions of CCASS, FINI or any other platform, facility or
system established, operated and/or otherwise provided by or
through HKSCC, as from time to time in force
36


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DEFINITIONS
“HKSCC Participants” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong Offer Shares” the 2,577,400 Shares being initially offered for subscription
in the Hong Kong Public Offering (subject to reallocation
and adjustments 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 (plus
brokerage of 1%, SFC transaction levy of 0.0027% and
Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015%) on the terms and subject to
the conditions described in this document, as further
described in “Structure of the Global Offering—The Hong
Kong Public Offering”
“Hong Kong Share Registrar” Tricor Investor Services Limited
“Hong Kong Takeovers Code” or
“Takeovers Code”
Codes on Takeovers and Mergers and Share Buy-backs
issued by the SFC
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering as
listed in “Underwriting—Hong Kong Underwriters”
“Hong Kong Underwriting Agreement” the underwriting agreement dated November 26, 2024
relating to the Hong Kong Public Offering, entered into by
our Company, our Controlling Shareholders, the Joint
Sponsors, the Overall Coordinators and the Hong Kong
Underwriters, as further described in “Underwriting—
Underwriting arrangements and expenses—Hong Kong
Public Offering—Hong Kong Underwriting Agreement”
“HNTE” the High and New Technology Enterprise
“ICP License” the value-added telecommunications business operating
license (
ุਕ຾ᐄ஢̙ᗇ) for internet
information service
“IFRS Accounting Standards” IFRS Accounting Standards as issued by the International
Accounting Standards Board
“Independent Customer” customers other than the Related Parties and Other Related
Party
“Independent Third Party(ies)” any entity or person who is not a connected person of our
Company or an associate of such person within the
meaning ascribed to it under the Listing Rules
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DEFINITIONS
“Industry Consultant” or “Frost &
Sullivan”
Frost & Sullivan International Limited
“Industry Report” or “Frost & Sullivan
Report”
the report prepared by the Industry Consultant
“International Offer Shares” the 23,196,600 Shares being initially offered for
subscription under the International Offering together,
where relevant, with any additional Shares that may be sold
pursuant to any exercise of the Over-allotment Option
(subject to reallocation and adjustments as described in
“Structure of the Global Offering”)
“International Offering” the conditional placing of the International Offer Shares 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 underwriters of the International Offering
“International Underwriting Agreement” the international underwriting agreement relating to the
International Offering, which is expected to be entered into
by, among others, our Company, the Overall Coordinators
and the International Underwriters, as further described in
“Underwriting—International Offering”
“Joint Bookrunners,” “Joint Global
Coordinators,” “Joint Lead Managers”
the joint bookrunners, the joint global coordinators, and the
joint lead managers, respectively, as named in “Directors
and parties involved in the Global Offering”
“Joint Sponsors” the Joint Sponsors of the Listing as named in “Directors
and parties involved in the Global Offering”
“Latest Practicable Date” November 18, 2024, the latest practicable date for
ascertaining certain information in this document before its
publication
“Laws” all laws, statutes, legislation, ordinances, rules, regulations,
guidelines, opinions, notices, circulars, directives, requests,
orders, judgments, decrees, or rulings of any Governmental
Authority (including the Stock Exchange and the SFC) of
all relevant jurisdictions
“Listing” the listing of the Shares on the Main Board
“Listing Committee” the Listing Committee of the Stock Exchange
“Listing Date” the date, expected to be on or about Friday, December 6,
2024, on which the Shares are to be listed and on which
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--- page 47 ---
DEFINITIONS
dealings in the Shares are to be first permitted to take place
on the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
“M&A Rules” the Rules on Merger and Acquisition of Domestic
Enterprises by Foreign Investors (Իᒅྤ
) promulgated by the MOFCOM and other
governmental authorities on August 8, 2006, effective on
September 8, 2006, and subsequently amended on June 22,
2009
“Main Board” the stock exchange (excluding the option market) operated
by the Stock Exchange which is independent from and
operates in parallel with the Growth Enterprise Market of
the Stock Exchange
“MDL Reorganization” an intra-group reorganization concerning Wumei Group
and Maidelong Entities completed in June 2024
“Memorandum” or “Memorandum of
Association”
the memorandum of association of our Company
conditionally adopted on November 27, 2024, with effect
from the Listing Date
“Maidelong Entities” prior to the MDL Reorganization, en tities that manage and
operate stores bearing the brand of Maidelong (
௥ᅃᎲ)i nt h e
PRC and WM Holding (HK) Limited, which is the holding
company of these entities. WM Holding (HK) Limited is a
wholly owned subsidiary of Wumei Technology. In June
2024, Wumei Group and Maidelong Entities completed an
intra-group reorganization. See “Connected Transactions —
A1. Wumei Retail Core Service Cloud Framework
Agreement — Historical amounts, annual caps and basis of
annual caps”
“MDL Wholesale Limited” an exempted company incorporated under the laws of the
Cayman Islands with limited liability on July 24, 2019,
formerly known as WM Tech Corporation Limited and
WM International Holding Corporation Limited
“MDL Wholesale Group” MDL Wholesale Limited and its subsidiaries
“Metro Group” a leading wholesaler headquartered in Germany and for the
avoidance of doubt, the Maidelong Entities (or after the
MDL Reorganization, MDL Wholesale Group), which is
our connected person, do not form part of, nor are they
controlled by, the Metro Group. We have been providing
online-to-offline integration solution services and AIoT
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DEFINITIONS
solutions to the Maidelong Entities since 2018, and the
Dmall OS system to the Maidelong Entities since 2021
“MIIT” or “MII” Ministry of Industry and Information Technology of the
PRC (ʷ௅) (formerly known as
the Ministry of Information Industry of the PRC ( ʕശɛ͏
ପุ௅))
“MOFCOM” the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠ
ਕ௅) (formerly known as the Ministry of Foreign Trade
and Economic Cooperation of the PRC ( ʕശɛ͏΍ձ਷࿁
௅))
“Mr. Zhang” Mr. ZHANG Feng (ࢤour co-founder, executive
Director and president, nephew of Dr. Zhang
“NDRC” the National Development and Reform Commission ( ʕശ
ึ)
“Offer Price” the offer price per Offer Share (exclusive of brokerage,
SFC transaction levy, Stock Exchange trading fee and
AFRC transaction levy) of HK$30.21, at which Hong Kong
Offer Shares are to be subscribed for pursuant to the Hong
Kong Public Offering and International Offer Shares are to
be offered pursuant to the International Offering, to be
determined as described in “Structure of the Global
Offering—Pricing and allocation”
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares together, where relevant, with any additional Shares
to be issued by our Company pursuant to the exercise of the
Over-allotment Option
“Other Related Party” DFI Retail Group. DFI Retail Group is referred to as
“Other Related Party” in this prospectus because it is a
substantial shareholder of our non-wholly owned
subsidiary, Retail Technology Asia, making it our core
connected person
“Overall Coordinators” the Overall Coordinators of the Global Offering as named
in “Directors and parties involved in the Global Offering”
“Over-allotment Option” the option expected to be granted by our Company to the
International Underwriters, exercisable by the Overall
Coordinators on behalf of the International Underwriters
for up to 30 days from the day following the last day for the
lodging of applications under the Hong Kong Public
Offering, to require our Company to allot and issue up to an
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DEFINITIONS
aggregate of 3,866,100 additional Shares (representing 15%
of the number of the initial Offer Shares) to the
International Underwriters to, among other things, cover
over-allocations in the International Offering, if any, details
of which are described in “Structure of the Global
Offering—Over-allotment Option”
“PRC Legal Adviser” our Company’s legal adviser on PRC laws, as named in
“Directors and parties involved in the Global Offering”
“Pre-IPO Investment(s)” the investment(s) in our Company undertaken by the
Pre-IPO Investors prior to this initial public offering, the
details of which are set out in “History, Reorganization and
Corporate Structure”
“Pre-IPO Investor(s)” the investors in our Company prior to our Listing, as set out
in “History, Reorganization and Corporate Structure”
“Preferred Shares” the series A preferred shares, the series B preferred shares,
the series B+ preferred shares, the series B++ preferred
shares, the series C preferred shares and series C+ preferred
shares of our Company, with a par value of US$0.0001
each
“Product Optimization” a series of product optimization measures we completed by
the end of 2023, which included gradually phasing out our
O2O platform operation services and delivery services
from the e-commerce service cloud. See “Summary—
Recent Developments.”
“Qualified IPO” an initial public offering by the Company with a market
capitalization of no less than US$3.4 billion and a capital
raising of no less than US$100 million
“Regulation S” Regulation S under the U.S. Securities Act
“Related Parties” (i) customers who were associates, as of the date of this
prospectus, of Dr. Zhang, our Controlling Shareholder,
namely, Wumei Group, MDL Wholesale Group (or
Maidelong Entities, prior to the MDL Reorganization),
Yinchuan Xinhua Group and B&T Entities, (ii) Chongqing
Department Store Group, a former associate to Dr. Zhang
and (iii) after the Restructuring, Dmall Fresh (Beijing), an
associate of Mr. Zhang
“Restructuring” the series of restructuring transactions in April 2024 as
described under “History, Reorganization and Corporate
Structure—Restructuring”
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DEFINITIONS
“Retail Technology Asia” Retail Technology Asia Limited, a company with limited
liability incorporated in Hong Kong on January 14, 2020,
in which Dmall HK holds 69.5% equity interest and
DRGML holds 30.5% equity interest, respectively.
“RMB” or “Renminbi” Renminbi, the lawful currency of China
“SAFE” the State Administration for Foreign Exchange of the PRC
(
̮ි၍ଣ҅)
“SAFE Circular 37” the Circular on Relevant Issues Concerning Foreign Exchange
Control on Domestic Residents’ Offshore Investment and
Financing and Roundtrip Investment through Special Purpose
Vehicles (
ʮ̡
 )
promulgated by SAFE with effect from July 4, 2014
“SAIC” State Administration of Industry and Commerce of the
People’s Republic of China (݁
၍ଣᐼ҅), now known as State Administration of Market
Regulation (̹ఙ္ຖ၍ଣᐼ҅)
“SAMR” the State Administration for Market Regulation of the PRC
(̹ఙ္ຖ၍ଣᐼ҅)
“SEC” the Securities and Exchange Commission of the United
States
“SFC” Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
Securities and Futures Ordinance (Chapter 571 of the Laws
of Hong Kong)
“Share(s)” or “Ordinary Share(s)” ordinary shares of the Company with a par value of
US$0.0001 each
“Shareholder(s)” holder(s) of our Share(s)
“Share Incentive Plans” the 2016 Share Incentive Plan, the 2020 Share Incentive
Plan, the 2024 First Share Incentive Plan and the 2024
Second Share Incentive Plan
“Shenzhen Enjoy” Shenzhen Enjoy Information Technology Co., Ltd. (
ଉέ̹
ʮ̡), a company established with
limited liability on August 5, 2002 and listed on the
National Equities Exchange and Quotations (stock code:
870111)
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DEFINITIONS
“Shenzhen Shuzhi Xunke Retail” Shenzhen Shuzhi Xunke Retail Technology Development
Co., Ltd. (ʮ̡), a company
established with limited liability on April 27, 2020 and a
wholly-owned subsidiary of Retail Technology Asia
“Shenzhen Xintonglu” Shenzhen Xintonglu Supply Chain Technology Co., Ltd.
(
ʮ̡), a company established
with limited liability on May 28, 2019 and a wholly-owned
subsidiary of Dmall (Shenzhen) Digital
“STA” State Taxation Administration of the PRC (
ʕശɛ͏΍ձ਷
೼ਕᐼ҅)
“Stabilizing Manager” UBS AG Hong Kong Branch
“Stock Exchange” or “Hong Kong Stock
Exchange”
The Stock Exchange of Hong Kong Limited
“subsidiary” or “subsidiaries” has the meaning ascribed to it in section 15 of the
Companies Ordinance
“substantial shareholder(s)” unless otherwise stated, has the meaning ascribed to it in
the Listing Rules
“Track Record Period” the three years ended December 31, 2021, 2022 and 2023
and the six months ended June 30, 2024
“U.S.,” “US” or “United States” the United States of America, its territories, its possessions
and all areas subject to its jurisdictions
“U.S. dollars,” “US dollars” or “US$” United States dollars, the lawful currency of the United
States
“U.S. Securities Act” United States Securities Act of 1933 and the rules and
regulations promulgated thereunder
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“VAT” value-added tax
“WM Holding HK” WM Holding (HK) Limited, a company with limited
liability incorporated in Hong Kong on July 2, 2019 and a
wholly owned subsidiary of Wumei Technology
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DEFINITIONS
“Wumei Group” Wumei Technology and its subsidiaries, excluding MDL
Wholesale Group (or Maidelong Entities prior to the MDL
Reorganization), Yinchuan Xinhua Group and B&T
Entities where the context requires otherwise and for the
purposes of this document only
“Wumei Technology” Wumei Technology Group, Inc. (
ʮ̡), a
company founded by Dr. Zhang and established with
limited liability in the PRC on October 6, 1994
“Yinchuan Xinhua” Yinchuan Xinhua Commercial (Group) Co., Ltd. (
ვʇอശ
ʮ̡), a company established with
limited liability in the PRC on January 3, 1997 and listed
on the Shanghai Stock Exchange (stock code: 600785)
“Yinchuan Xinhua Group” Yinchuan Xinhua and its subsidiaries
“Zhilian Wuhan” Dmall Zhilian (Wuhan) Technology Co., Ltd. (
εᓃ౽ᑌ
ʮ̡), a company established with
limited liability in the PRC on September 28, 2017 with
former name as Weisheng (Wuhan) Technology Co., Ltd.
(
ʮ̡) and changed its name on
April 6, 2023, a wholly owned subsidiary of Dmall Zhilian
“%” per cent
* For identification purposes only
In this document, the terms “associate(s),” “close associate(s),” “connected person(s),”
“connected transaction(s),” “core connected person(s),” “controlling shareholder(s),”
“subsidiary(ies)” and “substantial shareholder(s)” shall have the meanings given to such terms in the
Listing Rules, unless the context otherwise requires.
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GLOSSARY OF TECHNICAL TERMS
This glossary contains definitions of certain technical terms used in this document in
connection with us and our business. These may not correspond to standard industry definitions,
and may not be comparable to similarly terms adopted by other companies.
“AI” artificial intelligence
“AIoT” artificial intelligence of things
“API” application programming interface, a set of clearly defined
methods of communication between various software
components
“B2C” business to consumer, a type of commerce transaction in
which businesses sell products or services directly to
consumers
“cash-free and debt-free basis” a financial approach used to determine the value of a
company by excluding its cash reserves and debt
obligations from the valuation
“convenience store” a small-scale integrated retail format that mainly sells
ready-to-eat products and caters to the convenience needs
of consumers
“customer” customer from continuing operations, excluding customer
from discontinued operations
“department store” a retail format that mainly offers branded clothing and
apparel, cosmetics, home furnishings, bags, footwear,
jewelry, watches, etc., and is uniformly operated to satisfy
consumers’ diversified needs for quality goods
“distributed e-commerce retail” a retail format that builds warehouses that are located near
the end consumer and offer on-demand home delivery
service to greatly assure the freshness of the products
“dollar-based net retention ratio” revenues generated in the given period by recurring
customers (excluding consumers) with the prior period
divided by revenues generated by all customers (excluding
consumers) in the prior period
“DTC” direct-to-consumer
“ERP” enterprise resource planning, a business process
management software that allows an organization to use a
system of integrated applications to manage the business
and digitalize back-office functions relating to technology,
services, and employee management
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GLOSSARY OF TECHNICAL TERMS
“forecourt retailers” a small-scale retail format adjacent to petrol stations,
mainly serving drivers and passengers
“GMV” gross merchandise volume, the total value of merchandise
sold in a given period, regardless of whether the goods are
settled or returned
“IAM security” identity and access management (IAM) security, an
essential part of overall IT security that manages digital
identities and user access to data, systems, and resources
within an organization. IAM security includes the policies,
programs, and technologies that reduce identity-related
access risks within a business. IAM programs enable
organizations to mitigate risks, improve compliance, and
increase efficiencies across the enterprise
“ISV(s)” independent software vendors
“IT” information technology
“IoT” internet of things, the network of physical devices with
information-sensing capabilities such as two-dimensional
code reading, radio frequency identification (RFID),
infrared sensors and laser scanners to realize intelligent
identification, positioning, tracking, monitoring and
management
“module” in the context of describing our technology infrastructure, a
module refers to a part of a system or application that can
operate to support specific functionality. Each module
performs a specific function or set of functions and can be
combined with other modules to meet the needs of
customers
“on-demand” to allow customers to purchase products immediately when
a need surfaces, anywhere and anytime
“omni-channel” online and offline channels
“O2O” online to offline. In the context of retail e-commerce, an
O2O business model involves strategies where retailers
interact with consumers through digital platforms such as
websites, apps, and social media and deliver the purchased
goods to the consumer’s physical location or offering
services that require an in-person component, such as
picking up orders at a store
“revenue” except as otherwise indicated, our revenue from continuing
operations, excluding the revenue from discontinued
operations
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GLOSSARY OF TECHNICAL TERMS
“SaaS” software as a service, a cloud-based software licensing and
delivery model in which software and associated data are
centrally hosted
“specialty retail” a retail format that offers specific categories or related
categories of goods and services, including apparel and
footwear specialist retailers, electronics and appliance
specialist retailers, health and beauty specialist retailers,
home and garden specialist retailers and others
“supermarket” a retail format that sells food and daily necessities to meet
the needs of consumers in their daily lives. It is usually sold
on open shelves, and can also be sold online at the same
time. Food processing services and on-site dining services
are available in the stores
“warehouse clubs” a retail format that usually occupy a large area, mainly sells
daily necessities in large packages and generally adopts
membership business
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FORWARD-LOOKING STATEMENTS
Certain statements in this document are forward-looking statements that are, by their nature,
subject to significant risks and uncertainties. Any statements that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as “will,” “expect,” “anticipate,” “estimate,”
“believe,” “going forward,” “ought to,” “may,” “seek,” “should,” “intend,” “plan,” “projection,”
“could,” “vision,” “goals,” “aim,” “aspire,” “objective,” “target,” “schedules” and “outlook”) are not
historical facts, are forward-looking and may involve estimates and assumptions and are subject to
risks (including but not limited to the risk factors detailed in this document), uncertainties and other
factors some of which are beyond our Company’s control and which are difficult to predict.
Accordingly, these factors could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements.
Our forward-looking statements have been based on assumptions and factors concerning future
events that may prove to be inaccurate. Those assumptions and factors are based on information
currently available to us about the businesses that we operate. The risks, uncertainties and other
factors, many of which are beyond our control, that could influence actual results include, but are not
limited to:
 our mission, goals, strategies and our ability to implement them;
 our future business development and prospects, financial condition and results of
operations;
 the expected growth of the retail digitalization solution industry in Asia and China;
 expected changes in our revenues, costs or expenditures;
 our expectations regarding demand for and market acceptance of our products and
services;
 our expectations regarding our relationships with users, customers and third-party business
partners;
 competition in our industry;
 changes to regulatory and operating conditions in the industry and geographical markets in
which we operate; and
 all other risks and uncertainties described in the section headed “Risk Factors.”
Since actual results or outcomes could differ materially from those expressed in any forward-
looking statements, we strongly caution investors against placing undue reliance on any such forward-
looking statements. Any forward-looking statement speaks only as of the date on which such statement
is made, and, except as required by the Listing Rules, we undertake no obligation to update any
forward-looking statement or statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. Statements of or references to
our intentions or those of any of our Directors are made as of the date of this document. Any such
intentions may change in light of future developments.
All forward-looking statements in this document are expressly qualified by reference to this
cautionary statement.
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RISK FACTORS
An investment in our Shares involves significant risks. You should carefully consider all of
the information set out in this document before making an investment in the Shares, including the
risks and uncertainties described below in respect of our business and our industry and the
Global Offering. You should pay particular attention to the fact that we are a company
incorporated and registered in the British Virgin Islands and that our principal operations are
conducted in China and are governed by a legal and regulatory environment that in some
respects differs from what prevails in other countries. Our business could be affected materially
and adversely by any of these risks.
Risks Relating to Our Business and Industry
Our limited operating history and evolving business model in a developing market make it difficult
to evaluate our business and prospects. We cannot guarantee that we will be able to sustain our
historical growth, effectively manage our growth, control our costs and expenses, or implement our
business strategies.
We commenced our operations in 2015 and developed the core modules of the Dmall OS
system in 2018. As we only have limited historical financial data, it is difficult to predict our future
revenues and appropriate budget for our costs and expenses, and our evaluation of our business and
prediction about the future performance may not be as accurate as they would be if we had a longer
operating history. In the event that actual results differ from our evaluation or we adjust our estimates
in future periods, our results of operations and financial position could be materially affected and the
investors’ perception of our business and future prospects could differ materially from their
expectations.
We have been actively exploring and expanding our services. During the Track Record Period,
we conducted a series of product optimizations to further align our product and service offerings with
our objective of promoting our digitalization solutions, which have always been the primary focus of
our business. As a result of these changes, combined with shifts in our customers’ business models, we
ceased to provide most of the services under our e-commerce service cloud solutions by the end of
2023. Additionally, in April 2024, we conducted a series of restructuring transactions to divest our
online advertising services and ceased the operation of the Dmall app and mini programs. Our evolving
business makes it difficult to evaluate the risks and challenges we may encounter. The risks and
uncertainties we may face include challenges to our ability to successfully develop new service
features and expand our service offerings to enhance the experience of our customers, to attract new
retailers in a cost-effective manner, to anticipate and respond to macroeconomic changes and changes
in local markets where we operate, to successfully expand our geographic reach and to forecast our
revenue and manage capital expenditures for our current and future operations. We cannot be sure that
we will be successful in addressing these and other challenges we may face in the future, and our
business may be adversely affected if we do not manage these risks successfully. In addition, we may
not achieve sufficient revenue or maintain positive cash flows from operations or profitability in any
given period, or at all.
We incurred significant net losses and generated net operating cash outflows in the past and we may
continue to do so in the future.
We have incurred net losses and negative cash flows in the past. We incurred net losses from
continuing operations of RMB1,808.0 million, RMB900.0 million, RMB749.0 million, and RMB482.2
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RISK FACTORS
million in 2021, 2022, and 2023 and the six months ended June 30, 2024, respectively. Our net cash
used in operating activities were RMB1,274.7 million, RMB205.5 million, RMB179.2 million,
RMB192.7 million and RMB56.7 million in 2021, 2022, 2023, and the six months ended June 30,
2023 and 2024, respectively.
Our ability to achieve profitability and generate net operating cash inflows is affected by various
factors, many of which are beyond our control, such as the continual development of the industry and
markets in which we operate, development in the macroeconomic and regulatory environment or
competitive dynamics and our ability to respond to these changes in a timely and effective manner. We
also expect our costs and expenses to increase due to our continued investment in services, technology
and development. We cannot assure you that we will be able to achieve or maintain profitability or
positive cash flow in the future. Among other expected cost increases, we intend to continue to invest for
the foreseeable future in our Dmall OS system and other technology applications to offer additional
value-added services and to support an even larger service portfolio. If we cannot successfully offset our
increased costs and expenses with a significant increase in revenues, our financial condition and results of
operations may be materially and adversely affected, and we may not be able to achieve profitability or
net operating cash inflows in the future.
We currently have a relatively concentrated customer base with a limited number of major
customers. The loss of one or more of our major customers, a failure to renew our agreements with
one or more of our major customers, or a failure to expand our customer base, could negatively
affect our results of operations and ability to market our services.
We currently derive a substantial portion of our revenue from a limited number of major
customers, including Wumei Group, Maidelong Entities, Chongqing Department Store Group,
Yinchuan Xinhua Group from China and DFI Retail Group in selected Asia markets. Although we plan
to expand and diversify our customer base, we still expect to be reliant on our major customers for the
foreseeable future. In particular, we expect Wumei Group to continue to account for a substantial
portion of our revenues. In 2021, 2022, 2023, and the six months ended June 30, 2024, 79.4%, 83.3%,
87.2% and 89.6%, respectively, of our revenues were derived from services provided to our top five
customers, including Wumei Group. If our business relationships with Wumei Group and other major
customers are terminated or curtailed, the revenue we derive from providing services to them may
significantly decrease.
The decrease in the amount of business we do with these limited number of major customers,
the loss or reduction in magnitude of any commercial arrangements with them, the deterioration of our
relationships with any major customers, the failure to renew our agreements with one or more of our
major customers, or any material negative trends in markets in which these customers operate, could
materially disrupt our operations and our revenue and cash flows from operating activities could be
significantly reduced. If we cannot find other potential customers with similar scopes and scales of
demand and commercial terms on a timely basis, or at all, the loss of business from any one of such
customers could have a material adverse effect on our business and results of operations, as well as our
ability to attract and retain other customers. In addition, any of the foregoing risks may strain our
managerial, financial, operational and other resources. If we fail to manage such reduction in revenue
or deterioration of our relationships with our major customers, our brand and reputation could also be
materially harmed.
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RISK FACTORS
We heavily rely on the Related Parties and any material changes in our relationships with the
Related Parties would have a material adverse impact on our business, financial conditions and
operating results.
We have a close business relationship and have engaged in substantial business transactions
with the Related Parties for the Track Record Period and expect to continue our business relationship
with them in the future. During the Track Record Period, a substantial portion of our net revenue was
derived from the Related Parties and Wumei Group was also the largest customers of our Group. For
the years ended December 31, 2021, 2022, 2023 and the six months ended June 30, 2024, (i) our
revenue from Wumei Group amounted to RMB384.1 million, RMB561.6 million, RMB821.0 million
and RMB484.5 million, respectively, representing 45.3%,
42.3%, 51.8% and 51.6% of our revenues for the same years/period, (ii) our revenue from Maidelong
Entities (or MDL Wholesale Group, after the MDL Reorganization) amounted to RMB86.6 million,
RMB258.2 million, RMB259.5 million and RMB183.8 million, respectively, representing 10.2%, 19.4%,
16.4% and 19.6% of our revenues for the same years/period, (iii) our revenue from Yinchuan Xinhua Group
amounted to RMB38.1 million, RMB30.7 million, RMB54.9 million and RMB32.5 million, respectively,
representing 4.5%, 2.3%, 3.5% and 3.5% of our revenues for the same years/period, (iv) our revenue from
Chongqing Department Store Group amounted to RMB90.2 million, RMB115.1 million, RMB62.8 million
and RMB27.7 million, respectively, representing 10.6%, 8.7%, 4.0% and 2.9% of our revenues for the same
years/period, (v) our revenue from B&T Entities amounted to nil, nil, RMB3.7 million and
RMB6.0 million, respectively, representing nil, nil, 0.2% and 0.6% of our revenues for the same years/
period, and (vi) our revenue from Dmall Fresh (Beijing) amounted to nil, nil, nil and RMB0.1 million,
respectively, representing nil, nil, nil and less than 0.1% of our revenues for the same years/period. We
expect to increase business transactions with the Related Parties going forward. For further details, please
refer to the sections headed “Business—Our Relationship with the Related Parties—Cooperation with the
Related Parties” and “Business—Customers” of this document.
During the course of our operations, we have also received loans from Wumei Group. Please
refer to “Financial Information—Indebtedness” in this document for the historical amounts of the loans
from Wumei Group. As of the Latest Practicable Date, the Group has fully repaid the loans borrowed
from Wumei Group. In addition, we expect the business transactions with the Related Parties to
continue. We have entered into various framework agreements with the Related Parties, which govern
the connected transactions between us and the Related Parties. For details, please refer to the section
headed “Connected Transactions” in this document. Although our cooperative relationships with the
Related Parties remain stable, there is no assurance that we will be able to maintain such relationships
and that these Related Parties will continue to purchase services from us on the same level going
forward. In addition, any deterioration in our cooperative relationship with any Related Parties in the
future may require us to build new relationships with other retailers, which is subject to uncertainties
and could be time-consuming. As a result, our business, financial condition and results of operations
could be adversely affected.
If we fail to improve and enhance the functionality, performance, reliability, design, security and
scalability of our Dmall OS system, AIoT solutions, and other service offerings in a manner that
responds to our customers’ evolving needs, our business and results of operations may be adversely
affected.
The markets in which we compete are characterized by constant changes and innovation and
we expect them to continue to evolve rapidly. Our success has been based on our ability to identify and
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RISK FACTORS
anticipate the needs of retailers and design and upgrade our Dmall OS system, AIoT solutions, and
other service offerings that provide them with the tools they need to manage their businesses. Our
ability to attract new business customers, retain existing business customers and increase revenue from
our customers will depend in large part on our ability to continue to improve and enhance the
functionality, performance, reliability, design, security and scalability of our Dmall OS system, AIoT
solutions, and other service offerings.
We may experience difficulties with software development that could delay or prevent the
development, introduction or implementation of new solutions and enhancements. Software
development involves a significant amount of time for our research and development team, as it can
take our developers months to develop, code and test new products and integrate them into our
technology systems. We must also continually update, test and enhance our technology systems. The
continual improvement and enhancement of our technology systems requires significant investment
and we may not have the resources to make such investment. To the extent we are not able to improve
and enhance the functionality, performance, reliability, design, security and scalability of our Dmall
OS system, AIoT solutions, and other service offerings in a manner that responds to our customers’
evolving needs, our business, operating results and financial condition may be adversely affected.
We operate in a dynamic industry and may need to adjust business strategies substantially based on
market development.
We may need to make significant adjustments to our business strategies in response to market
developments or to further our long term goals. For example, we have conducted a series of product
optimizations to further align our product and service offerings with our objective of promoting our
retail digitalization solutions, in response to shifts in our customers’ business operations as they
transitioned their O2O operations in-house, where they manage their own day-to-day O2O operations.
As a result of our customers opting for in-house O2O e-commerce business, we ceased to provide
system and delivery services under the e-commerce service cloud solutions for those customers
accordingly, but we provide distributed e-commerce system and other services to them if they decide to
subscribe to such services. See “Summary—Recent Development,” “Business—Business
Sustainability & Path to Profitability” and “Financial Information—Description of Major Components
of Our Results of Continuing Operations.” In April 2024, we commenced and completed the
Restructuring, which resulted in the divestment of the online marketing and advertising related
services. Furthermore, in our pursuit of growth and the exploration of new market opportunities, we
have expanded and plan to continue to expand into new territories and introduce innovative solutions.
However, these strategic decisions could result in substantial costs and a diversion of our
management’s attention and resources. In addition, our existing business may not continue due to our
strategy adjustments, and as a result, we will not receive revenue for ceased business. There is no
guarantee that our new business initiatives or strategic transformations could lead to an improvement in
our financial performance.
We are dependent on the performance of our retailer customers as we generate income from their
transactions processed through us. Operational and financial failures of our retailer customers may
adversely affect our financial condition and results of operation.
The rapidly changing market trends require our retailer customers to optimize their product
offerings to meet the constantly evolving consumer preferences and demand, thereby maximizing their
sales volume. Our success is dependent on the ability of our retailer customers to anticipate, identify
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and respond to the latest market trends and consumer preferences and to adjust their merchandise and
service offerings in a timely manner to stay competitive. The failure of our customers to anticipate,
identify or react swiftly and appropriately to new and changing consumer demands or market trends,
and to translate such trends and demands into product and service offerings may lead to lower demand
for the customers’ merchandise, which could cause, among other things, declines in the volume of
transactions conducted through our platform. Consequently, these operational failures of our customers
could harm our financial condition and results of operations as we generate revenue from take rates we
charge our customers on transactions conducted through our platform. In addition, if our retailer
customers are not able to effectively implement and utilize the services that we provide to improve
their operational efficiency and decision-making capabilities as intended, the unsatisfactory
performance of these customers may also negatively and materially affect our results of operations. For
new customers, it would also take time to implement and train all relevant staff to operate the SaaS
system to reach a desirable level of stability.
If the market for retail digitalization solutions develops more slowly than we expect or declines, our
business could be adversely affected.
The market for retail digitalization solutions in and outside China is in a relatively early, fast-
evolving and competitive stage. This makes it difficult to evaluate our current business and future
prospects. In addition, we have limited insight into emerging trends that may adversely affect our
business, financial condition, results of operations and prospects. We have encountered and will
continue to encounter risks and difficulties frequently experienced by growing companies in rapidly
changing industries, including unpredictable and volatile revenues and increased expenses as we
continue to grow our business. The viability and demand for our products and services may be affected
by many factors outside of our control, such as market acceptance, cost competitiveness, and reliability
and performance of our products and services. If the market for retail digitalization solutions develops
more slowly than we expect or declines, our business and results of operations could be adversely
affected.
If we fail to adopt new technologies or adapt our applications, services, and systems to changing
customer preferences or emerging industry standar ds, or if our efforts to invest in the development
of new technologies are unsuccessful or ineffective, we may need to substantially increase our
research and development expenditure, and our business may be materially and adversely
affected.
To remain competitive, we must continue to enhance and improve the responsiveness,
functionality and features of our applications, systems and technologies. The retail digitalization
solution industry is characterized by rapid technological evolution, changes in client and consumer
requirements and preferences, frequent introductions of new products and services embodying new
technologies and the emergence of new industry standards and practices, any of which could render
our existing technologies and systems obsolete. Our success will depend, in part, on our ability to
identify, develop, acquire or license leading technologies useful to our business, and respond to
technological advances and emerging industry standards and practices, such as mobile internet, in a
cost-effective and timely way. The development of systems, applications and other proprietary
technology entails significant technical and business risks. We cannot assure you that we will be able
to use new technologies effectively or adapt our applications, proprietary technologies and systems to
meet customer requirements or emerging industry standards. If we are unable to adapt in a cost-
effective and timely manner in response to changing market conditions or customer requirements,
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whether for technical, legal, financial or other reasons, our business, prospects, financial condition and
results of operations may be materially and adversely affected.
We may incur impairment losses on our intangible assets and goodwill.
Our intangible assets consist of customer relationship, technological know-how and software,
that were primarily acquired through (i) the disposal of Dmall Fresh (Beijing) in April 2024 and
(ii) acquisition of Shenzhen Enjoy in November 2021, both recognized at fair value at the date of its
disposal or acquisition and are subsequently amortized on a straight-line basis. We recorded intangible
assets of RMB105.3 million, RMB93.2 million, RMB83.7 million and RMB158.0 million as of
December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Goodwill arising from
acquisitions represents the excess of the sum of the consideration transferred, the amount of any non-
controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previous held
equity interest in the acquiree, if any, over the net amount of the identifiable assets acquired and the
liabilities assumed as of the acquisition date. As of December 31, 2021, 2022 and 2023 and June 30,
2024, we had goodwill of RMB151.9 million, RMB151.9 million, RMB152.0 million and RMB152.0
million, respectively. Intangible assets and goodwill impairment reviews are undertaken annually or
more frequently if events or changes in circumstances indicate a potential impairment. No impairment
was recognized in respect of the intangible assets and goodwill as of June 30, 2024. The assessment of
impairment losses involves a significant degree of management judgments as well as estimates in
determining the key assumptions, and unpredictable adverse changes in the future may also result in
decreases in the value of our intangible assets and goodwill. Therefore, we cannot assure you that these
assumptions and estimates would not result in outcomes that require a material adjustment to the
carrying amounts of these intangible assets and goodwill in the future, which may in turn result in
impairment losses. Significant impairment losses on intangible assets and goodwill may have a
material adverse effect on our financial condition and results of operations, and may in turn limit our
ability to obtain financing in the future.
Any harm to our brand or reputation may materially and adversely affect our business and results of
operations.
We believe that the recognition and reputation of the Dmall (“
ε㵩”) brand among our retailer
customers, consumers, suppliers and third-party service providers have contributed significantly to the
growth and success of our business. Maintaining and enhancing the recognition and reputation of our
brand are critical to our business and competitiveness. Many factors, some of which are beyond our
control, are important to maintaining and enhancing our brand and may negatively impact our brand if
not properly managed. These factors include our ability to:
 maintain and enhance our technology systems as the needs of retailers are constantly
evolving;
 maintain and provide stable and reliable technology support to our users;
 provide a superior shopping experience to consumers and ensure their data security;
 maintain and grow our business customers and consumer base and keep them highly
engaged;
 maintain the popularity, attractiveness, diversity, quality and authenticity of our product
and service offerings;
 maintain the efficiency, reliability and quality of services we provide to our customers;
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 maintain or improve consumers’ satisfaction with our after-sale services;
 increase brand awareness through marketing and brand promotion activities; and
 preserve our reputation and goodwill in the event of any negative publicity on service
offerings, product quality, price or authenticity, data privacy and security, our industry and
other players within the industry or other issues affecting us or our peers.
On April 1, 2024, we entered into a trademark licensing agreement with Dmall Fresh (Beijing)
pursuant to which we granted a non-transferable license to Dmall Fresh (Beijing) for the use of a
number of trademarks relating to our Dmall brand for an indefinite term. See “Connected
Transactions—F2. Trademark Licensing Agreement.” Although we monitor and restrict the activities
of Dmall Fresh (Beijing) through the trademark licensing agreement, Dmall Fresh (Beijing) may
misuse our trademarks, improperly modify our trademarks, make critical statements about our brand,
or present our brand in a context that may tarnish our reputation. This may result in dilution or
tarnishment of our intellectual property. Dmall Fresh (Beijing)’s noncompliance with the terms and
conditions of the trademark licensing agreement may reduce the reputation of our brand.
Public perception that non-authentic, counterfeit or defective goods are sold in connection with
our brand or that we or our third-party service providers do not provide satisfactory customer service,
even if factually incorrect or based on isolated incidents, could damage our reputation, diminish the
value of our brand, undermine the trust and credibility we have established and have a negative impact
on our ability to attract new business customers and consumers or retain our current business
customers and consumers. If we are unable to maintain our reputation, enhance our brand recognition
or increase positive awareness of our operating system, platform, products and services, it may be
difficult to maintain and grow our business customers and consumer base, and our business and growth
prospects may be materially and adversely affected.
We recorded net liabilities and net current liabilities during the Track Record Period.
As of December 31, 2021, 2022 and 2023, and June 30, 2024, we had net liabilities of
RMB4,739.2 million, RMB6,077.4 million, RMB6,765.1 million and RMB7,053.6 million,
respectively. We also recorded net current liabilities of RMB5,267.6 million, RMB6,300.9 million,
RMB6,949.4 million and RMB7,432.4 million as of December 31, 2021, 2022 and 2023 and June 30,
2024. Our net liabilities and net current liabilities as of December 31, 2021, 2022 and 2023, and
June 30, 2024, was primarily in relation to the convertible redeemable preferred shares of RMB5,137.2
million, RMB6,378.7 million, RMB6,965.5 million and RMB7,407.2 million as of the same dates,
respectively. Although the convertible redeemable preferred shares will automatically convert into
ordinary shares upon the Listing, and no further loss or gain on fair value change of convertible
redeemable preferred shares is expected to be recognized afterwards, we cannot assure you that we will
not record net liabilities or net current liabilities in the future. If we are unable to maintain adequate
working capital or obtain sufficient financings, we may not have sufficient cash flows to fund our
business, operations and capital expenditure and our business and financial position may be adversely
affected.
In addition, net current liabilities may expose us to certain liquidity risks and may constrain our
operational flexibility, as well as adversely affect our ability to expand our business. If we do not have
sufficient working capital to meet future financial needs, we may need to resort to external funding.
Our inability to obtain additional external borrowings on a timely basis and on acceptable terms, or at
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all, may force us to abandon our development and expansion plans, and our businesses, financial
positions and results of operations may be materially and adversely affected.
We face increasingly intense competition, and if we fail to compete effectively against current and
future competitors, our business and results of operations may be adversely affected.
The markets for retail digitalization solutions are competitive and characterized by rapid market
changes and technology evolution, giving rise to new market entrants and well-funded competitors and
the introduction of new business models disruptive to our business. Market players compete to attract,
engage and retain retailers. They may be well-established and be able to devote greater resources to the
development, promotion and sale of offerings and offer lower prices than we do, which could
adversely affect our results of operations. If we cannot equip us with necessary resources and skills, we
may lose market share as competition increases.
Our current and potential competitors may also establish cooperative or strategic relationships
among themselves or with third parties that may further enhance their resources and offerings. If we
are unable to anticipate or react to these competitive challenges, our competitive position could
weaken, or fail to improve, and we could experience a decline in growth that could adversely affect our
business, financial condition and results of operations.
Our business is subject to the complex and evolving laws and regulations in China. Many of these
laws and regulations are subject to amendment, and could result in claims, changes to our business
practices, monetary penalties, increased cost of operations, or declines in customer engagement, or
otherwise harm our business.
We are subject to a variety of laws and regulations that involve matters important to or may
otherwise impact our business, including, among others, provision of value-added telecommunications
services, user privacy protection, foreign exchange, taxation, anti-corruption, anti-bribery, sanctions
and similar matters. Many of these laws and regulations are subject to amendment. These laws
continue to develop, and the PRC government may adopt other rules and regulations in the future. See
“Regulations.” The introduction of new services, expansion of our activities in certain jurisdictions, or
other actions that we may take may subject us to additional laws, regulations, or other government
scrutiny. In addition, foreign laws and regulations can impose different obligations or be more
restrictive than those in the PRC.
The promulgation of new laws or regulations, in each case that restrict or otherwise
unfavorably impact the ability or manner in which we provide our products and services could
require us to change certain aspects of our business to ensure compliance, which could decrease
demand for our products and services, reduce revenues, increase costs, require us to obtain more
licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any
new or more stringent measures are required to be implemented, our business, financial condition
and results of operations could be adversely affected.
Due to the developments in the regulatory environment of the industry in which we operate,
there can be no assurance that we would be able to maintain our existing approvals, permits and
licenses or obtain any new approvals, permits and licenses if required by any future laws or
regulations. If we fail to obtain and maintain approvals, licenses or permits required for our business,
we could be subject to liabilities, fines, penalties and operational disruptions, or we could be required
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to modify our business model, which could materially and adversely affect our business, financial
condition and results of operations. See “—Any lack of requisite approvals, licenses or permits
applicable to our business may materially and adversely affect our daily operations and hinder our
growth.”
Because we receive, store and process data, some of which contain sensitive personal information,
we face concerns over the collection, improper use or disclosure of personal information, which
could discourage current and potential users from using our services and technology platforms,
damage our reputation, face regulatory scrutiny, and in turn materially and adversely affect our
business, financial condition and results of operations.
We are subject to laws, regulations, guidelines and industry recommendations relating to
personal information protection in various countries and regions where we operate, namely the Chinese
mainland, Hong Kong SAR, Cambodia, Singapore, Malaysia, Poland, Macau SAR, Indonesia, the
Philippines and Brunei. Concerns or claims about our practices with regard to the collection, storage,
processing or use of personal information or other privacy-related matters, even if unfounded, could
damage our reputation and results of operations.
As a part of our services under the retail core service cloud solutions, we receive, store and
process personal information and other data at the request and on behalf of our Dmall OS system
customers. For instance, we generate and maintain credentials to access Dmall OS front-end
applications with employee personal information provided by our customers. Additionally, we may
have access to consumer personal information if customers use our consumer membership
management service or distributed e-commerce system service. Our internal control procedure aims to
ensure compliance with all applicable laws and regulations at all times in relation to the proper
collection, use and storage of the personal data we collected. We expect to continue expending
significant resources to protect against security breaches. The risk that these types of events could
seriously harm our business is likely to increase as we expand the scope of services we offer and as we
increase the size of our customer base.
The regulatory requirements regarding the protection of personal information are constantly
evolving and can be subject to new rules or interpretations from time to time, the extent of our
responsibilities in that regard will then be subject to the new rules or interpretations. The important PRC
laws and regulations on data protection, data privacy, and/or information security currently in effect that
we are subject to include, among others, the Cyber Security Law (
),
which took effect on June 1, 2017; Personal Information Protection Law (ᚐ
), or the PIPL, which took effect on November 1, 2021; and Data Security Law ( ʕശɛ͏΍ձ਷ᅰ
), which took effect on September 1, 2021. These laws impose on the owners and
administrators of networks, network service providers, and personal information processors various
personal information protection obligations, res trictions on the collection and use of personal
information, and requirements to take steps to prevent personal data from being divulged, stolen, or
tampered with. In particular, PIPL also put forth the requirement of obtaining separate consent from
individuals before sharing their personal information with other third parties.
We may also be subject to more stringent personal data protection laws, regulations, and
requirements in the near future given the recent legislative developments in this field. With the
promulgation of the Opinions on Strictly Combating Illegal Securities Activities in Accordance with
the Law (
จԈ) on July 6, 2021 by the General Office of the CPC
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Central Committee and the General Office of the State Council of the PRC, or the July 6 Opinion,
offshore-listed China-based companies (ʮ̡) have been experiencing a heightened scrutiny
over their compliance with laws and regulations regarding data security, cross-border data transfer and
management of confidential information from PRC regulatory authorities. Such laws and regulations
are expected to undergo further amendment, which may require increased information responsibilities
and stronger cross-border information management mechanism and process from us. The
Cybersecurity Review Measures (
) that took effect from February 15, 2022
stipulates that an internet platform operator who possesses more than one million users’ personal
information must report to the cyber security review office for a cyber security review if it intends to
be listed abroad (
਷̮ɪ̹). The Cybersecurity Review Measures further stipulate that critical
information infrastructure operators that procure internet products and services, and network platform
operators engaging in data processing activities, shall be subject to the cybersecurity review if their
activities affect or may affect national security. In addition, the relevant government authorities may
initiate the cybersecurity review against the relevant operators if the authorities believe that the
network products or services or data processing activities of such operators affect or may affect
national security. As of the Latest Practicable Date, we had not been notified by any authorities of
being classified as a critical information infrastructure operator. Furthermore, we only collect personal
information and operational data that is unrelated to activities affecting national security, and we do not
process any core or important data as defined by the Data Security Law. While the Cybersecurity
Review Measures do not apply to listings in Hong Kong such as the Listing, we cannot guarantee that
we will not be subject to cybersecurity review for our future capital raising activities or if new rules or
regulations promulgated in the future will impose additional compliance requirements on us.
Pursuant to the Security Assessment Measures for Cross-border Data Transfers (
ᅰኽ̈ྤτ
), 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 the CAC for security
assessment of outbound data: (i) where a data processor provides critical data abroad, (ii) where a
critical 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. The
CAC issued the Measures on the Standard Contract for Cross-border Transfer of Personal Information
(
) on February 24, 2023, which became effective on June 1, 2023 and
applies to the provision of personal information by personal information processors to overseas
recipients by concluding a standard contract for outbound transfer of personal information (hereinafter
referred to as “Standard Contracts”). Personal information processor shall apply for filing with the
cyberspace administration at the provincial level within 10 working days of the effective date of the
standard contract. The following materials shall be submitted for filing: (1) the standard contract, and
(2) the personal information protection impact assessment report.
According to the Provisions on Promoting and Regulating Cross-Border Data Flows (
ආձ
) (Decree No. 16 of the Cyberspace Administration of China) promulgated by
the CAC and came into effect on March 22, 2024, data processors shall declare security assessment for
the outbound provision of data if any of the following conditions is met unless the circumstance falls
under Article 3, 4, 5, or 6 of the Provisions: (i) where a critical information infrastructure operator
(hereinafter referred to as a “CIIO”) provides personal information or important data abroad; (ii) where
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a data processor other than an operator of critical information infrastructure provide important data
abroad, or, since January 1 of the current year, such a non-CIIO data processor has provided personal
information (excluding sensitive personal information) of not less than one million people or sensitive
personal information of not less than 10,000 people to overseas recipients.
Where a non-CIIO data processor provides personal information (excluding sensitive personal
information) overseas of not less than 100,000 but less than 1 million persons, or provide sensitive personal
information overseas of less than 10,000 persons, cumulatively since January 1 of the current year, such a
data processor shall conclude a standard contract with the overseas recipients or obtain a certification on
protection of personal information in accordance with the law. However, where the circumstance falls under
Article 3, 4, 5 or 6 of the Provisions, such provisions shall apply. In addition, On September 24, 2024, the
CAC announced the Cyber Data Security Regulations, which will become effective on January 1, 2025.
These regulations stipulate that cyber data processors who carry out cyber data processing activities that
affect or may affect national security shall undergo national security review in accordance with relevant
state regulations. After the Restructuring, we still provide digitalization solutions at the request of
customers, and the provision of such services necessitates us to process certain consumer information on
behalf of our customers. For example, for customers that subscribe to our consumer membership
management module, our system records consumer personal information, order data, and loyalty points
according to the customers’s requirements. Consequently, we process certain personal information of the
consumers. We currently possess the personal information of over one million users. However, the Cyber
Data Security Regulations provides no further explanation or interpretation as to how to determine what
constitutes “affecting national security”. As of the Latest Practicable Date, the Cyber Data Security
Regulations had just been formally adopted. Substantialuncertainties exist with respect to its interpretation
and implementation. We cannot assure you that the formally adopted Cyber Data Security Regulations will
not negatively affect us. At this stage, we are unable to predict the possible impact of these laws and
regulations, if any, and we are monitoring and assessing the rulemaking process closely.
The interpretation and application of the aforementioned data privacy and information security
laws and regulations and any new related laws and regulations in the future are generally complex and
evolving, and our practice may become inconsistent with them. For detailed information on these new
laws and regulations, see “Regulations—Regulations on Cybersecurity, Information Security, Privacy
and Data Protection.” In the case of legal or regulatory noncompliance in this regard, in addition to the
possibility of fines, we could face an order or rectification guidance requiring that we change our
practices, which could have an adverse effect on our business and results of operations. Complying
with data protection laws and regulations could also cause us to incur substantial costs or require us to
change our business practices in a manner materially adverse to our business. We may need to make
adjustments to our product and service offerings to comply with data security requirements and other
laws and regulations from time to time.
In addition, as laws and regulations in China on the protection of privacy and data are
constantly evolving, complying with new laws and regulations could cause us to incur substantial costs
or require us to change our business practices in a manner materially adverse to our business.
Moreover, we could be required to disclose certain personal information to PRC governmental
authorities for the purpose of, among others, safeguarding the national security, investigating crimes,
investigating infringement of information network communication rights, and cooperating with the
supervision and inspection of telecommunication regulatory authorities.
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If our expansion into new geographical areas, new product or service categories is not successful,
our business and prospects may be materially and adversely affected.
Our expansion into new geographical areas involves new risks and challenges associated with
such new markets, such as our business model may not be acceptable to residents in lower-tier cities
and towns in China, there may be a lack of demand for local on-demand retail and delivery, the order
density in those smaller, less developed areas may not be sufficient to allow us to operate in a cost-
efficient manner, and we may need to adjust our pricing methodologies to adapt to local economic
conditions. We cannot assure you that we will be able to execute our business strategy or that our
service offerings will be successful in such markets. In addition, our lack of relevant customers or
familiarity with retailers and the market dynamics of these areas may make it more difficult for us to
keep pace with local demands and preferences. Any failure in our expansion into new geographical
areas could materially and adversely affect our business and prospects.
Our international expansion strategy and ability to conduct business in international markets may
be adversely affected by legal, regulatory, political and economic risks.
International expansion is a significant component of our growth strategy and may require
significant capital investment, which could strain our resources and adversely impact current
performance, while adding complexity to our current operations. Leveraging our successful experience
in the Chinese mainland, we have expanded into markets outside the Chinese mainland comprising
Hong Kong SAR, Cambodia, Singapore, Malaysia, Poland, Macau SAR, Indonesia, the Philippines
and Brunei. We are also in the initial stage of expansion into the European market through our
collaboration with the Metro Group, a leading wholesaler headquartered in Germany. We are therefore
subject to the laws and regulations of the foreign countries in which we operate in addition to PRC
laws and regulations. We have limited experience operating in overseas markets and may face
competition from major, established competitors in these markets. These competitors usually have
more experience and resources for their business operations in those markets. In addition, the real
estate, employment and labor, transportation and logistics, regulatory, and other operating
requirements in these markets differ significantly from those in the Chinese mainland. In particular, we
face regulatory uncertainties and may incur substantial compliance costs when we enter into a new
overseas market. Regulations in different overseas markets could vary significantly. We have to
closely monitor changes in local laws and complete all necessary procedures and filings accordingly.
Furthermore, we may also from time to time encounter legal disputes with various parties in overseas
markets in our ordinary course of business operations. If any of our overseas operations, or our
associates or agents, violate such local laws and regulations, we could become subject to sanctions or
other penalties, which could negatively affect our reputation, business and operating results.
In addition, we may face operational issues that could have a material adverse effect on our
reputation, business and results of operations, if we fail to address certain factors including, but not
limited to, the following:
 difficulties in developing, staffing and simultaneously managing a foreign operation as a
result of distance, language and cultural differences;
 challenges in formulating effective local sales and marketing strategies targeting users
from various jurisdictions and cultures, who have a diverse range of preferences and
demands;
 challenges in identifying appropriate local business partners and establishing and
maintaining good working relationships with them;
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 dependence on local platforms in marketing our international products and services
overseas;
 challenges in selecting suitable geographical regions for international business;
 longer customer payment cycles;
 compliance with applicable data privacy laws and regulations and unexpected changes or
interpretations in such laws and regulations;
 currency exchange rate fluctuations;
 political or social unrest or economic instability;
 uncertain tax liabilities;
 protectionist or national security policies that restrict our ability to (i) invest in or acquire
companies; (ii) develop, import or export certain technologies; or (iii) utilize technologies
that are deemed by local governmental regulators to pose a threat to their national security;
 compliance with applicable foreign laws and regulations and unexpected changes in laws
or regulations, including compliance with privacy laws and data security laws, including
the European Union General Data Protection Regulation, or GDPR, and compliance costs
across different legal systems;
 differing, complex and potentially adverse customs, import/export laws, tax rules and
regulations or other trade barriers or restrictions which may be applicable to transactions
conducted through our international and cross-border platforms, related compliance
obligations and consequences of non-compliance, and any new developments in these
areas; and
 increased costs associated with doing business in foreign jurisdictions.
One or more of these factors could harm our overseas operations and, consequently, could harm
our overall results of operations.
If we are unable to continue to improve customer experience and maintain a consistently high level
of customer satisfaction and a well-functioning customer service team, our brand, business and
results of operations may be materially and adversely affected.
Our success depends upon our ability to continue to improve customer experience. Our ability
to constantly improve customer experience depends on our ability to maintain a consistently high level
of customer satisfaction and a well-functioning customer service team.
An important way to improve customer experience and attract more customers is to introduce
innovative services and features that are useful for our business customers and improve their customer
acquisition capabilities and achieve higher sales. To develop, support and maintain such services and
features often requires implementation of new technologies, and we intend to continue to devote
resources to the development of additional technologies and services. However, implementation of
new technologies in our service portfolios may take a long time and may involve technical challenges
and large amounts of capital and personnel resources. We may not be able to effectively integrate new
technologies on a timely basis, or at all, which may decrease customer satisfaction with our services.
Such technologies, even if integrated, may not function as expected or may be unable to attract and
retain a substantial number of customers to use our products and services.
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In addition, we must also continue to respond promptly to evolving customer preferences,
enhance the customer friendliness of our Dmall OS system and otherwise continue to improve our
technology systems, all of which may require us to incur substantial costs and expenses.
We cannot assure you that our efforts to improve customer experience and increase customer
base will always be successful. We also cannot predict whether our new products, services and features
will be well received by customers consistently, or whether we will be successful in cost-effectively
implementing new technologies, enhancing customer friendliness of our technology systems, and
otherwise improving our technology systems. If we cannot continue to improve customer experience
and maintain a consistently high level of customer satisfaction and a well-functioning customer service
team, we may not be able to retain or attract customers, and our brand, business, financial condition
and results of operations may be materially and adversely affected.
We may fail to successfully roll out, upgrade, and expand our service offerings to retailers, which
may materially and adversely affect our business and results of operations.
We have been constantly introducing new services to retailers to solidify our relationship
with them. For example, we have utilized our big data technology to help retailers establish omni-
channel membership programs across channels. Together with our advanced Internet of Things
capabilities, we help retailers to target and communicate with consumers for devising effective
marketing initiatives. We have experienced rapid growth in this new business offering. However, our
expansion of new service offerings may result in unseen risks, challenges and uncertainties along
with our expansion into relatively new business areas.
We may incur additional capital expenditure to support the expansion of our new value-added
services to retailers. In addition, due to the limited operating history of these new business offerings, it
is difficult to predict future revenues, which could be subject to seasonality. Any failure in managing
expenditures and evaluating demands could materially and adversely affect the prospects of achieving
profitability of and recouping our investments in these value-added services and our overall financial
condition.
In addition, the expansion of service offerings may strain our managerial, financial, operational
and other resources. If we fail to manage such expansion successfully, our growth potential, business
and results of operations may be materially and adversely affected.
Failures or mishaps in store and product management, supply chain management, marketing,
quality control and other activities or any regulatory or other non-compliance of our retailer
customers while using our services could harm our brand and reputation, adversely affect our
business and prospects, and subject us to potential liability.
Our solutions are designed to help retailers in a number of key aspects of their operations, such
as store and product management, supply chain management, marketing and other activities. If any
retailers fail to correctly and effectively implement our solutions as intended, or, even if they are
correctly and effectively implemented, any retailer customers or their employees commit any
operational mistakes, have any mishaps or engage in non-compliant conduct while using our solutions,
we may be subject to reputational harm and potential liability. For example, concerns or claims
regarding the quality or safety of the merchandise offered by our retailer customers through our
platform, even if factually incorrect or based on isolated incidents, could reduce consumer confidence
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in our platform and subject us to reputational harm. Failures or mishaps in store and product
management, supply chain management, marketing, quality control and other activities or any
regulatory or other non-compliance of our retailer customers while using our services could harm our
brand and reputation, adversely affect our business and prospects and subject us to potential liability.
Our business had been affected by the COVID-19 pandemic.
COVID-19 had a severe and negative impact on the global economy, including China, in the
first half of 2020. New COVID-19 variants have also emerged across the globe, potentially extending
the period where COVID-19 will negatively impact the global economy. We took a series of measures
to protect our employees, including temporarily closing our offices, facilitating remote working
arrangements for our employees, and reducing business meetings and travels. The population in most
of the major cities was locked down to a greater or lesser extent at various times and opportunities for
discretionary consumption were extremely limited. Our operations have, to a certain extent, been
impacted by delays in business activities, commercial transactions and general uncertainties
surrounding the duration of the governments’ extended business and travel restrictions. For example,
with reduced retail consumer foot traffic in offline retail stores as a result of COVID-19 containment
measures in stores or the closure of retail stores, our revenue generated from take rate customers
suffered as a result of a general reduction of GMV processed through our system. In addition, the
COVID-19 pandemic disrupted our ability to work on-site for system implementation and launch. It
also hampered our customer outreach and follow-up initiatives to a certain extent. The travel
restrictions also resulted in the reduction in size or even cancelation of our offline events, which
temporarily adversely affected our marketing activities.
China began to modify its COVID-19 policy at the end of 2022, and most of the travel
restrictions and quarantine requirements were lifted in December 2022. The extent to which the
pandemic impacts our results of operations going forward will depend on future developments which
are highly uncertain and unpredictable, including the frequency, duration and extent of outbreaks of
COVID-19, the appearance of new variants with different characteristics, the effectiveness of efforts to
contain or treat cases, and future actions that may be taken in response to these developments. Our
business may be impacted in a materially negative way as consumers curtail their retail consumption
behavior in response to potential economic hardship.
Our business is sensitive to economic conditions. A severe or prolonged downturn in the global
economy could materially and adversely affect our business, financial condition and results of
operations.
COVID-19 had a severe and negative impact on the global economy. Even before the outbreak
of COVID-19, the global macroeconomic environment was facing numerous challenges. There is
considerable uncertainty over the long-term effects of the monetary and fiscal policies adopted by the
central banks and financial authorities of some of the world’s leading economies. The conflict in
Ukraine and the imposition of broad economic sanctions on Russia could raise energy prices and
disrupt global markets. Unrest, terrorist threats and the potential for war in the Middle East and
elsewhere may increase market volatility across the globe. There have also been concerns about the
relationship between China and other countries, including the surrounding Asian countries, which may
potentially have economic effects. In particular, there is significant uncertainty about the future
relationship between China and the United States with respect to trade policies, treaties, government
regulations and tariffs. Any further escalation in trade tensions between China and the U.S. or a trade
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war, or the perception that such escalation or trade war could occur, may have negative impact on the
economies of not only the two countries concerned, but the global economy as a whole. There have
been further uncertainties related to the U.S. Federal Reserve’s monetary policies in response to market
conditions under the impact of COVID-19. It is unclear whether these challenges and uncertainties will
be contained or resolved and what effects they may have on the global political and economic
conditions in the long term. Economic conditions in China are sensitive to global economic conditions,
as well as the expected or perceived overall economic growth rate in China. Any severe or prolonged
slowdown in the global or Chinese economy may materially and adversely affect our business, results
of operations and financial condition. In addition, continued turbulence in the international markets
may adversely affect our ability to access capital markets to meet liquidity needs.
If we fail to create, expand, and take advantage of cross-selling opportunities by introducing and
selling other services to existing customers using our retail digitalization solutions, our business and
financial prospects may be adversely affected.
We generate customer leads and promote our brand awareness primarily through
word-of-mouth referrals by existing customers, as well as online and offline marketing activities. We
also have a dedicated sales team, customer success team, and a business development team that
leverage existing customer relationship and industry reputation to convert sales leads into paying
customers and to create cross-selling opportunities, which allow us to attract new customers and
maintain a high customer retention rate in a cost-efficient manner. For example, we started to provide
online-to-offline solutions and AIoT solutions services to Zhongbai Holdings Group Co., Ltd.
(“Zhongbai”), a leading retailer in China, in 2017 and further expanded the services to provide Dmall
OS system to Zhongbai in 2021. We have established a long-term and stable cooperative relationship
with Zhongbai as of the Latest Practicable Date. If we are unable to create, expand, and take advantage
of cross-selling opportunities by introducing and selling more services to existing customers, our
revenue growth from existing customers may stagnate, and our business, financial performance and
prospects may be adversely affected as a result.
Any lack of requisite approvals, licenses or permits applicable to our business may materially and
adversely affect our daily operations and hinder our growth.
Our business is subject to governmental supervision and regulation by the relevant PRC
governmental authorities, including the Ministry of Commerce, or MOFCOM, the Ministry of Industry
and Information Technology, or the MIIT, the Cyberspace Administration of China, or the CAC, the
SAMR, and other governmental authorities in charge of the relevant categories of products sold by us.
Together, these government authorities promulgate and enforce regulations that cover many aspects of
the operation of online retail, including entry into the online retail industry, the scope of permissible
business activities, licenses and permits for various business activities, and foreign investment. We are
required to hold a number of licenses and permits in connection with our business operation.
According to the Measures for the Administration of Payment Services of Non-Financial Institutions,
non-financial institutions are required to obtain the Payment Business Permit to provide payment
services.
As of the Latest Practicable Date, we have obtained approvals, licenses and permits that are
required for our business operations. In addition, according to the Administrative Regulation of the
PRC on the Registration of Market Entities (
ʕശɛ͏΍ձ਷̹ఙ˴᜗೮া၍ଣૢԷ) and Measures on
Penalties for Business Operations without Necessary License/Permit (جany
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operation site established in addition to our domicile shall be registered with SAMR as a branch office.
Any perceived or actual failure to complete such registration may subject us to fines and penalties,
which may adversely affect our business operations. As the industry in which we operate is still
evolving in China, new laws and regulations may be adopted from time to time to require additional
licenses and permits other than those we currently have, and to address new issues that arise from time
to time. If the competent authority (i) considers us to be in violation of any PRC laws or regulations
due to the insufficient scope of our license, (ii) deems that we are operating without the proper
approvals, licenses or permits according to the laws and regulations, or (iii) promulgates new laws and
regulations that require additional approvals or licenses or imposes additional restrictions on the
operation of any part of our business, it has the power, among other things, to levy fines, confiscate our
income, revoke our business licenses, and require us to discontinue our relevant business or impose
restrictions on the affected portion of our business. Any of these and other regulatory actions, including
issuance of official notices, change of policies, promulgation of regulations and imposition of
sanctions, may adversely affect our business and have a material and adverse effect on our results of
operations. In addition, if we are to use new or additional domain names to conduct our business, we
would have to apply for the same set of government authorizations or amend the current ones.
We are dependent on the continued services and performance of our senior management and other
key employees, the loss of any of whom could adversely affect our business, operating results and
financial condition.
Our future performance depends on the continued services and contributions of our senior
management and other key employees to execute on our business plan and to identify and pursue new
opportunities and product innovations. The loss of services of senior management or other key
employees could significantly delay or prevent the achievement of our strategic objectives. In addition,
some of the members of our current senior management team have only been working together for a
short period of time, which could adversely impact our ability to achieve our goals. From time to time,
there may be changes in our senior management team resulting from the hiring or departure of
executives, which could disrupt our business. We do not maintain key person life insurance policies on
our employees. The loss of the services of one or more members of our senior management or other
key employees for any reason could adversely affect our business, financial condition and operating
results and require significant amounts of time, training and resources to find suitable replacements and
integrate them within our business, and could affect our corporate culture.
In addition, we will continue to recruit qualified personnel to support our business operations
and planned business growth. If we are unable to recruit, train and retain sufficient qualified personnel
while controlling our labor costs, our business may be materially and adversely affected.
We recorded other net income/(loss) from gain on disposal of subsidiaries during the Track Record
Period, which was non-recurring in nature.
In 2022, we recorded a gain of RMB100.1 million as a result of the disposal of our equity
interest in DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited. For details,
see “History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI Digital
(Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.” We did not record any gain on
disposal of subsidiaries in 2021 and recorded a loss on disposal of a subsidiary of RMB1 thousand in
2023, and we cannot assure you that we will record such gains in the future. Additionally, in April
2024, we commenced and completed the Restructuring, which resulted in the divestment of our online
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marketing business, and the financial results of our online advertising services were classified as
discontinued operations in the historical financial information. In 2022, 2023 and the six months ended
June 30, 2024, we recorded net profit for the year/period from discontinued operations of
RMB59.5 million, RMB93.5 million and RMB233.1 million, respectively. We recorded net loss for the
year from discontinued operations of RMB17.0 million in 2021. As such items contributed to loss for
the year/period during the Track Record Period, the non-recurring nature of such items may affect our
profitability. Hence, our business, financial condition and results of operations could be affected as a
result of the non-recurring nature of gain on disposal of subsidiaries.
We operate business in Asia market through joint venture structure, and our operational and
financial results will be affected by how the arrangements are managed.
A significant portion of our Asia market business is operated through Retail Technology Asia,
one of our subsidiaries whose financial statements has been consolidated into our financial statements
since its establishment. Pursuant to the joint venture agreement entered into between Dmall HK and
DRGML dated December 3, 2019, Retail Technology Asia was incorporated in Hong Kong on January
14, 2020 to provide retailers outside China with a cloud-based retail platform relating to the digital
transformation of customer experiences. The board of Retail Technology Asia is responsible for the
overall management of the joint venture, which shall consist of seven directors, of which Dmall HK
may appoint four directors and DRGML may appoint three directors. In respect of Dmall HK, Dmall
HK may appoint the chief executive officer, chief financial officer and the chief technology officer of
Retail Technology Asia. As of the date of this prospectus, it was held by Dmall HK as to 69.5% and
DRGML as to 30.5%, respectively. The success of our joint venture depends on a number of factors,
including both parties’ willingness and ability to contribute their knowledge and expertise with respect
to operations, marketing and brand building, willingness to honor their commitments under the JV
Agreement, and the extent to which the parties cooperate in operational and strategic decisions with
respect to the target markets. If we become engaged in material disagreements with DFI Retail Group,
the operational and financial results of the underlying business may be adversely affected.
We may engage in acquisitions, investments or strategic alliances in the future, which could require
significant management attention and materially and adversely affect our business and results of
operations.
We may identify strategic partners to form strategic alliances, and invest in or acquire
additional assets, technologies or businesses that are complementary to our existing business. These
transactions may involve minority investments in other companies, acquisitions of controlling stakes in
other companies or acquisitions of selected assets.
Any future strategic alliances, investments or acquisitions and the subsequent integration of the
new assets and businesses obtained or developed from such transactions into our own business may
divert management from its primary responsibilities and subject us to additional liabilities. In addition,
the costs of identifying and consummating investments and acquisitions may be significant. We may
also incur costs and experience uncertainties in completing necessary registrations and obtaining
necessary approvals from relevant government authorities in China and elsewhere in the world. The
costs and duration of integrating newly acquired assets and businesses could also materially exceed our
expectations. Any such negative developments could have a material adverse effect on our business,
financial condition, results of operations and cash flow.
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We are subject to credit risk with respect to trade receivables and prepayments, deposits and other
receivables.
During the Track Record Period, our trade receivables primarily represent outstanding
receivables associated with our retail core service cloud solutions and marketing and advertising
service and our prepayments, deposits and other receivables primarily consist of receivable from a
supplier, deductible input value-added tax, receivable from third party payment platform, receivables
from retailers and advertisers, lease and security deposits and others. As of December 31, 2021, 2022
and 2023 and June 30, 2024, we recorded trade receivables of RMB93.2 million, RMB140.6 million,
RMB165.1 million and RMB256.5 million, respectively, and the current and non-current prepayments,
deposits and other receivables of RMB117.4 million, RMB86.0 million, RMB95.6 million and
RMB94.6 million, respectively. Although we have initiated proactive and periodic communication
with our customers for payments, there can be no assurance that all such amounts due to us would be
settled on time, or that such amounts will not continue to increase in the future. Our performance,
liquidity and profitability would be adversely affected if significant amounts due to us are not settled
on time, substantial impairment is incurred or if any of these customers goes bankruptcy or undergoes
credit deterioration.
Fair value changes in our Convertible Bond issued to the Convertible Bond investor and related
valuation uncertainty due to unobservable inputs of our Convertible Bond may affect our financial
condition and results of operations.
In June 2022, our Company issued Convertible Bond to the Convertible Bond Investor pursuant
to an convertible bond investment agreement and in March 2024, we entered into an amendment to the
convertible bond investment agreement with the Convertible Bond Investor. For more details, please
see the section headed “History, Reorganization and Corporate Structure—Pre-IPO Investments—
Issuance of Convertible Bond” of this document.
The Convertible Bond was initially bifurcated into liabilities and derivative components upon
issuance. At initial recognition the derivative component of the Convertible Bond is measured at fair
value and presented as part of derivative financial instruments. Any excess of proceeds over the
amount initially recognized as the derivative component is recognized as the liability component. The
derivative component is subsequently remeasured at fair value in profit or loss. The liability
component is subsequently carried at amortized cost. The Group applied the discounted cash flow
valuation approach to determine the underlying equity value of the Group while the binomial pricing
model was adopted to determine the fair value of the derivative components of the Convertible Bond,
and the key valuation assumptions used included exercise price, expected volatility, dividend yield,
maturity period and bond yield. Any change in the assumptions may lead to different valuation results
and, in turn, changes in the fair value of these financial instruments issued to investor. The risk factors
that influence bond yield include, but are not limited to, parameters such as the yield from comparable
bonds, as well as premiums such as liquidity premium, country premium and specific premium. Due to
the use of unobservable inputs to determine the discount rate in the valuation of our Convertible Bond,
there is inherent uncertainty in the valuation. Upon conversion the Convertible Bond will be
reclassified and re-designated to ordinary shares of the Company and the conversion is a non-cash
transaction. On or after 180 days upon the completion of the Qualified IPO, the holder of the
Convertible Bond shall have the right to convert the outstanding principal amount of the Convertible
Bond into such number of Shares at any time before the maturity date pursuant to the terms of the
Convertible Bond. For details about our Shares expected to be allotted and issued upon conversion of
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the Convertible Bond, please see “History, Reorganization and Corporate Structure—Pre-IPO
Investments—Issuance of Convertible Bond.” To the extent we need to revalue the Convertible Bond
prior to their conversion, any change in fair value of Convertible Bond and related valuation
uncertainty could materially affect our financial position and performance.
Further, before the maturity date of the Convertible Bond, the holder of the Convertible Bond
may require the early redemption of the Convertible Bond by depositing a notice of redemption at its
principal amount plus accrued interest on June 14, 2025 or June 14, 2026. If the Convertible Bond is to
be redeemed, the redemption amount shall be the principal amounting to RMB140,000,000 plus total
accrued and unpaid interest calculated at 5.8% per annum on the principal. The redemption of the
Convertible Bond, if triggered, would reduce the Group’s cash position.
In addition, during the Track Record Period, we issued convertible redeemable preferred
shares, all of which are designated as financial liabilities at fair value through profit or loss. During the
Track Record Period, our fair value change of convertible redeemable preferred shares were negative
RMB732.3 million, negative RMB493.2 million, negative RMB476.2 million, negative RMB422.3
million and negative RMB397.1 million in 2021, 2022, 2023, and the six months ended June 30, 2023
and 2024, respectively. After the automatic conversion of the convertible redeemable preferred shares
into Shares upon the Listing, which will result in a net asset position, we do not expect to recognize
any further loss or gain on fair value changes from the convertible redeemable preferred shares in the
future.
Our results of operations, financial condition and prospects may be adversely affected by fair value
changes of our financial assets and valuation uncertainty due to the use of unobservable inputs.
We made investments in certain financial assets during the Track Record Period and recorded
current financial assets at fair value measured through profit or loss of RMB15.1 million, RMB9.0
million, RMB34.9 million and RMB11.2 million as of December 31, 2021, 2022 and 2023, and
June 30, 2024 respectively, and non-current financial assets at fair value through profit or loss of
RMB140.7 million, RMB153.2 million, RMB196.6 million and RMB109.7 million, respectively. Our
financial assets at fair value through profit or loss mainly consist of (i) wealth management products
purchased from banks in the PRC and (ii) equity investment in Guoquan Food (Shanghai) Co., Ltd.,
formerly known as Guoquan Supply Chain (Shanghai) Co., Ltd. (“ Guoquan”). The fair value of
wealth management products is calculated by discounting the expected future cash flows. The key
input used by the Group for wealth management products is the expected rate of return. As of
December 31, 2021 and 2022, the Group determines the fair value of investment in Guoquan by
reference to its recent transaction prices or using a backsolve method based on assumptions that are not
supported by observable market prices or rates. As of December 31, 2023 and June 30, 2024, the fair
value of the investment in Guoquan is determined based on the closing market price of its shares.
Going forward, we may continue to invest in financial assets. We plan to make investment decisions
related to the purchase of financial assets on a case-by-case basis. We cannot assure you that market
conditions and regulatory environment will result in fair value gains on the financial assets we invest in
or we will not incur any fair value losses on our investments in the financial assets in the future. If we
incur such fair value losses, our results of operations, financial condition and prospects may be
adversely affected.
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We may not be able to fulfil our obligation in respect of the contract liabilities, which may impact
our cash position.
We recognize a contract liability when we receive or have an unconditional right to receive
non-refundable consideration from a customer prior to us rendering related products and services to
them. Contract liabilities are then reclassified as revenue when we perform our services under the
contracts, which means transferring control of the related products or services to the customer. We
recorded contract liabilities of RMB44.5 million, RMB49.5 million, RMB91.3 million and
RMB78.6 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. If we fail
to fulfill our obligations or if our customers dispute the services we provided, we may not be able to
reclassify the full amount of contract liabilities as revenue, and we will have to refund all or a portion
of the payments made by our customers, which will adversely affect our results of operations, liquidity
and financial position.
The proper functioning of our technologies and operation systems is essential to our business. Any
failure to maintain the satisfactory performance of our applications and operation systems could
materially and adversely affect our business and reputation.
The proper functioning of our information technology (IT) systems is essential to our business.
The satisfactory performance, reliability and availability of our IT systems are critical to our success,
ability to attract and retain retailers and consumers and ability to maintain and deliver consistent
services on our technology systems. However, our technology infrastructure may fail to keep pace with
increased operations on our operating system and frequent transactions on our platform, in particular
with respect to our new service offerings or in association with traffic and order surges during
promotional events and holiday seasons, and therefore our users may experience delays as we seek to
source additional capacity, which would adversely affect our results of operations as well as our
reputation.
We may be unable to monitor and ensure high-quality maintenance and upgrade of our IT
systems and infrastructure on a real-time basis, and users may experience service outages and delays in
accessing and using our technology systems. In addition, we may experience surges in online traffic
and orders associated with promotional activities and generally as the platform grows, which can put
additional demand on our e-commerce platform at specific times. Our technology or infrastructure may
not function properly at all times. Any system interruptions caused by telecommunications failures,
computer viruses, physical or electronic break-ins or other attempts to harm our systems could result in
the unavailability or slowdown of our technology systems or reduced order fulfillment performance,
which in turn could reduce the volume of products sold and the attractiveness of product offerings on
our platform. Any of such occurrences could cause severe disruption to our daily operations. As a
result, our reputation may be materially and adversely affected, market share could decline and we
could be subject to liability claims. In addition, in order to ensure that our technology infrastructure can
be comprehensively and rapidly upgraded, we need to constantly enhance our technology. Otherwise,
we face the risk of our technology infrastructure becoming unstable and susceptible to security
breaches, which we may be unable to identify or rectify rapidly and effectively. Such instability or
susceptibility could create serious challenges to the security and uninterrupted operation of our
operating system, platform and other services, which could materially and adversely affect our
business and reputation.
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If the software used in our Dmall OS system and other internal technology systems contains
undetected programming errors or vulnerabilities, we may lose revenue and market acceptance and
may incur costs to defend or settle claims with our retailer customers.
The software used in our Dmall OS system and other internal technology systems may contain
errors, defects, security vulnerabilities or software bugs that are difficult to detect and correct,
particularly when new versions or enhancements are released. Despite internal testing, our Dmall OS
system and other internal technology systems may still contain serious errors or defects, security
vulnerabilities or software bugs that we may be unable to successfully correct in a timely manner or at
all, which could result in lost revenue, significant expenditures of capital, a delay or loss in market
acceptance and damage to our reputation and brand, any of which could have an adverse effect on our
business, financial condition and results of operations. Furthermore, our Dmall OS system is a multi-
tenant cloud based system that allows us to deploy new versions and enhancements to all of our retailer
customers simultaneously. To the extent we deploy new versions or enhancements that contain errors,
defects, security vulnerabilities or software bugs to all of our business customers simultaneously, the
consequences would be more severe than if such versions or enhancements were only deployed to a
smaller number of our business customers.
Since retailers use our services for processes that are critical to their businesses, errors, defects,
security vulnerabilities, service interruptions or software bugs in our operating system or platform
could result in losses to our business customers. They may seek significant compensation from us for
any losses they suffer or cease conducting business with us altogether. Any errors, defects, security
vulnerabilities or software bugs contained in our Dmall OS system may also deteriorate user
experience, which may discourage consumers from using our services. Further, business customers and
consumers using our Dmall OS system could share information about bad experiences on social media,
which could result in damage to our reputation and loss of future sales. A claim brought against us by
any of our users would likely be time-consuming and costly to defend and could seriously damage our
reputation and brand, making it harder for us to sell our products and services.
We rely on computer hardware, purchased or leased, and software licensed from and services
rendered by third parties in order to provide our solutions and run our business, sometimes by a
single-source supplier.
We rely on computer hardware, purchased or leased, and software licensed from and services
rendered by third-parties in order to provide our solutions and run our business, sometimes by a single-
source supplier. Third-party hardware, software and services may not continue to be available on
commercially reasonable terms, or at all. Any loss of the right to use or any failures of third-party
hardware, software or services could result in delays in our ability to provide our solutions or run our
business until equivalent hardware, software or services are developed by us or, if available, identified,
obtained and integrated, which could be costly and time-consuming and may not result in an equivalent
solution, any of which could cause an adverse effect on our business and operating results. Further,
retailers could assert claims against us in connection with such service disruption or cease conducting
business with us altogether. Even if not successful, a claim brought against us by any of our business
customers would likely be time-consuming and costly to defend and could seriously damage our
reputation and brand, making it harder for us to sell our solutions.
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We depend on data centers and cloud computing services provided by third parties and any
disruption in the operation of these facilities could adversely affect our business.
We currently manage our services and serves our business customers leveraging data centers
and cloud computing facilities rented from third-party vendors. We may experience failures at the
third-party data centers where our hardware is deployed from time to time. Data centers are vulnerable
to damage or interruption from human error, intentional bad acts, earthquakes, hurricanes, floods, fires,
war, terrorist attacks, power losses, hardware failures, systems failures, telecommunications failures
and similar events. Any of these events could result in lengthy interruptions in our services. Changes in
law or regulations applicable to data centers in various jurisdictions could also cause a disruption in
service. We also collaborate with or receive open source software services from online map providers,
social media access portal providers and payment processing providers.
Any interruption or delay, most of which are beyond our control, in the functionality of these
third-party services may lead to system interruptions, website slowdown or unavailability, delays or
errors in transaction processing, loss of data or the inability to accept and fulfill orders. Interruptions in
our services would reduce our revenue, subject us to potential liability and adversely affect our ability
to retain our business customers and consumers or attract new business customers and consumers. The
performance, reliability and availability of our platform is critical to our reputation and ability to attract
and retain business customers and consumers. Retailers and consumers could share information about
bad experiences on social media, which could result in damage to our reputation and loss of future
sales. If we are unable to maintain our arrangements with third-party service providers and vendors on
commercially reasonable terms, we may be required to transfer to new data centers and cloud-
computing facilities and we may incur costs and possible service interruption in connection with doing
so.
Computer and mobile malware, viruses, hacking and phishing attacks, spamming and improper or
illegal use of our Dmall OS system and other technology systems may affect customer experience,
which could reduce our ability to attract customers and materially and adversely affect our business,
financial condition and results of operations.
Computer and mobile malware, viruses, hacking and phishing attacks have become more
prevalent in our industry. Although there have been no such incidents in the past, it is difficult to
determine what, if any, harm may result from a futu re interruption or attack, any failure to maintain
performance, reliability, security and availability of our Dmall OS system and other technology systems
to the satisfaction of our business customers and consumers may affect customer experience, which could
reduce our ability to attract business customers and a dvertisers and materially and adversely affect our
business, financial condition and results of operations.
The performance of our technology systems depends on a variety of third-party service providers.
Service interruptions, failures, or constraints of these service providers could severely harm our
business and prospects.
The stability, reliability and competitiveness of our technology systems depend on a variety of
third-party service providers, such as IT service providers, AIoT device vendors, and logistics service
providers in connection with online-to-offline e-commerce services. If we are to experience failures,
breakdowns, substandard performance or other adverse events affecting third-party service providers, it
could incur significant losses due to disruptions in our technology systems and business. These risks
may be further exacerbated by the deployment and continued refinement of cloud-based retail
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solutions. In a cloud computing environment, we may be subject to outages by third-party IT and cloud
service providers and security breaches to our technology systems. Unauthorized parties may obtain
access to our technology systems by circumventing the systems used by our third-party service
providers. The merchandise on our e-commerce platform are supplied and shipped directly from
retailers to our buyers. We and our retail partners may use third-party logistics service providers to
fulfill and deliver orders placed with us. Interruptions to or failures in third-party logistics services
could prevent timely and successful delivery of the ordered products to our buyers. As we do not
directly control or manage the operations of these third-party logistics service providers, we may not be
able to guarantee their performance. Any failure to provide satisfactory services to our buyers, such as
delays in delivery, product damage or product loss during transit, may damage our reputation and
cause us to lose buyers, and may ultimately adversely affect our results of operations and market
acceptance of our services.
Our Dmall OS system and other internal technology systems contain open source software, which
may pose particular risk to our proprietary software features and functionalities in a manner that
negatively affects our business.
We use open source software in our Dmall OS system and other internal technology systems
and will continue to use open source software in the future. The licenses applicable to our use of open
source software may require the source code that is developed using open source software be made
available to the public and that any modifications or derivative works to certain open source software
continue to be licensed under open source licenses. From time to time, we may face claims from
external parties claiming infringement of their intellectual property rights, or demanding the release or
license of the open source software or derivative works that we developed using such software (which
could include our proprietary source code) or otherwise seeking to enforce the terms of the applicable
open source license. Our use of open source software may also present additional security risks
because the source code for open source software is publicly available, which may make it easier for
hackers and other parties to determine how to breach our website and technology systems that rely on
open source software. Any of these risks could be difficult to eliminate or manage, and, if not
addressed, could have a material adverse effect on our business, results of operations, financial
condition and prospects.
We may be obligated to disclose our proprietary software to our business partner.
Pursuant to our joint venture agreement with DRGML and the technology framework and
license agreement for retail spine technology, as amended, DRGML became a third-party beneficiary
of a security token escrow agreement under which we may place the security token which may be used
to gain access to our proprietary software and control the operating environment of such software for
certain of our solutions used by Retail Technology Asia in escrow with a third party and the security
token may be released to DRGML upon the occurrence of specified events, such as in situations of our
bankruptcy or insolvency or our failure to support or maintain our solutions. We delivered the security
token to the escrow agent. Disclosing the content of our software may limit the intellectual property
protection we can obtain or maintain for our source code or our solutions containing that source code
and may facilitate intellectual property infringement, misappropriation or other violation claims against
us. Each of these could have a material adverse effect on our business, financial condition and results
of operations. See “Business—Joint venture agreement of Retail Technology Asia.”
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We have been and may again, from time to time, be subject to legal proceedings during the course of
our business operations. Our directors, management, shareholders and employees may also again
from time to time be subject to legal proceedings, which could adversely affect our reputation and
results of operations.
We have been and may continue to be, subject to litigations, regulatory actions, disputes or
claims of various types brought by relevant regulatory authorities or our competitors, business
customers, consumers, suppliers, content creators, employees, or other third parties against us during
our business operations. During the Track Record Period, a subsidiary of our Company were involved
in a contractual dispute lawsuit with a mobile phone supplier of our Company’s legacy commodity
business, and certain disputed assets of RMB55.7 million were frozen by the court from the
subsidiary’s bank account. In September 2022, the court dismissed the case based on the findings of a
court-commissioned forensic appraisal that the seal used in the evidentiary documents presented in the
lawsuit did not match with our subsidiary’s authentic company seal, and disputed assets were unfrozen
in October 2022. None of our shareholders, directors or senior management or any of their associates
were involved in the seal’s forgery leading up to the lawsuit. We incurred approximately RMB1.4
million in legal fees and RMB0.1 million in forensic appraisal fees as a result of this lawsuit. There is
no assurance whether or not we will be subject to further legal proceedings in the future. Subsequently,
we have adopted rectification measures and established standardized supplies procurement
management policies, including but not limited to background and authorization verification for our
suppliers, inspections for goods delivered, and adoption of policies for employees to safeguard
company information. See “Financial Information—Liquidity and Capital Resources.”
Our directors, management, shareholders and employees may also again from time to time be
subject to legal proceedings. Such regulatory actions, disputes, allegations, complaints, or legal
proceedings may divert our management team’s attention, and may damage our reputation, evolve into
litigation or otherwise have a material adverse impact on our reputation and business. Litigation is
expensive, may subject us to the risk of significant damages, requires significant managerial resources
and attention, and could materially and adversely affect our business, financial condition and results of
operations. The outcomes of actions we institutes may not be successful or favorable to us. Lawsuits
against us may also generate negative publicity that significantly harms our reputation, which may
adversely affect our customer base.
We may increasingly become a target for public scrutiny, including complaints to regulatory
agencies, negative media coverage, and malicious reports, all of which could severely damage our
reputation and materially and adversely affect our business and prospects.
The rapid growth of our service platform as well as increased publicity about our business
create the possibility of heightened attention from the public, regulators and the media. Heightened
regulatory and public concerns over consumer protection, consumer safety and data privacy and
security issues may subject us to additional legal and social responsibilities and increased scrutiny and
negative publicity over these issues, due to the large number of transactions that take place on our
platform and the increasing scope of our overall business operations. We may become the target of
detrimental conduct by third parties, which include complaints, anonymous or otherwise, to regulatory
agencies. We may be subject to government or regulatory investigation as a result of such third-party
conduct and may be required to expend significant time and incur substantial costs to address such
third-party conduct, and there is no assurance that we will be able to conclusively refute each of the
allegations within a reasonable period of time, or at all. Moreover, as our business expands and grows,
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we may be exposed to heightened public scrutiny in jurisdictions where we already operate as well as
in new jurisdictions where we may operate. There is no assurance that we would not become a target
for regulatory or public scrutiny in the future or that scrutiny and public exposure would not severely
damage our reputation as well as our business and prospects. Any illegal or immoral conduct by our
management or employees could also result in negative publicity and thus harm our public image and
reputation.
In addition, allegations made, directly or indirectly, against us, may be posted in social media
or on blogs or websites by anyone, whether or not related to us, on an anonymous basis. Consumers
value readily available information concerning retailers and their goods and services and often act on
such information without further investigation or authentication and without regard to its accuracy. The
availability of information on social media platforms and devices is virtually immediate, as is its
impact. Social media platforms and devices immediately publish the content their subscribers and
participants post, often without filters or checks on the accuracy of the content posted. Information
posted may be inaccurate and adverse to us, and may harm our financial performance, prospects or
business. The harm may be immediate without affording us an opportunity for redress or correction.
Our reputation may be negatively affected as a result of the public dissemination of anonymous
allegations or malicious statements about our business, which in turn may cause us to lose market
share, customers and revenues.
Our operating results are subject to seasonality, which may affect our business and operating
results.
We have historically experienced mild seasonality in our business, mainly correlating to the
seasonality patterns associated with the retail industry in China. The seasonality may become less
predictable and more volatile as we enter into additional international markets. Seasonality makes it
challenging to accurately and timely estimate customer demands and manage our capacity accordingly.
We make planning and spending decisions, including capacity management and other resource
requirements, based on our estimates of customer demand. Failure to meet demand associated with
seasonality in a timely manner may adversely affect our financial condition and results of operations.
Our financial condition and results of operations for future periods may continue to fluctuate. As a
result, our results of operations may fluctuate from time to time due to seasonality.
Our operating metrics are subject to inherent challenges in different methods of measurement, and
real or perceived inaccuracies in those metrics may materially and adversely affect our business and
operating results.
We rely on certain key operating metrics, such as GMV and number of customers, among
others, to evaluate the performance of our business. Our operating metrics may differ from estimates
published by third parties or from similarly titled metrics used by other companies due to differences
in methodology and assumptions. We calculate these operating metrics using internal company data.
There are inherent challenges in measuring such key metrics and company data, and measurement of
such metrics and data may be susceptible to delays and technical errors. If we discover material
inaccuracies in the operating metrics we use, or if they are perceived to be inaccurate, our reputation
may be harmed and our evaluation methods and results may be impaired, which could negatively
affect our business. If investors make investment decisions based on operating metrics we disclose
that are inaccurate, we may also face potential lawsuits or disputes.
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We may need to raise additional funds to pursue our growth strategy or continue our operations,
and we may be unable to raise capital when needed or on acceptable terms.
From time to time, we may seek additional equity or debt financing to fund our growth,
enhance our platform, respond to competitive pressures or make acquisitions or other investments. Our
business plans may change, general economic, financial or political conditions in our markets may
change or other circumstances may arise, in each case that has a material adverse effect on our cash
flows and the anticipated cash needs of our business. Any of these events or circumstances could result
in significant additional funding needs, requiring us to raise additional capital. We cannot predict the
timing or amount of any such capital requirements at this time. If financing is not available on
satisfactory terms, or at all, we may be unable to expand our business at the rate desired and our results
of operations may suffer. Financing through issuances of equity securities would be dilutive to holders
of our shares.
We may be unable to obtain, maintain and protect our intellectual property rights and proprietary
information or prevent third-parties from making unauthorized use of our technology.
We regard our trademarks, copyrights, patents, domain names, know-how, proprietary
technologies, and similar intellectual property as critical to our success, and we rely on a combination
of intellectual property laws and contractual arrangements, including confidentiality and invention
assignment with our employees and others, to protect our proprietary rights. Any of our intellectual
property rights could be challenged, invalidated, circumvented or misappropriated, or such intellectual
property may not be sufficient to provide us with competitive advantages. In addition, there can be no
assurance that (i) our application for registration of trademarks, patents, and other intellectual property
rights will be approved, (ii) any intellectual property rights will be adequately protected, or (iii) such
intellectual property rights will not be challenged by third parties or found by a judicial authority to be
invalid or unenforceable. Further, because of the rapid pace of technological change in the relevant
industry, parts of our business rely on technologies developed or licensed by third parties, and we may
not be able to obtain or continue to obtain licenses and technologies from these third parties at all or on
reasonable terms.
According to the applicable administrative laws relating to intellectual property, it may take
months or even years to register, maintain and enforce intellectual property rights in China.
Confidentiality, invention assignment and non-compete agreements may be breached by
counterparties, and there may not be adequate remedies available to us for any such breach. Policing
any unauthorized use of intellectual property is difficult and costly and the steps we may take may be
inadequate to prevent the infringement or misappropriation of our intellectual property. In the event
that we resort to litigation to enforce our intellectual property rights, such litigation could result in
substantial costs and a diversion of our management and financial resources, and could put our
intellectual property at risk of being invalidated or narrowed in scope. We can provide no assurance
that we will prevail in such litigation, and even if we do prevail, we may not obtain a meaningful
recovery. In addition, our trade secrets may be leaked or otherwise become available to, or be
independently discovered by, our competitors. Any failure in maintaining, protecting or enforcing our
intellectual property rights could have a material adverse effect on our business, financial condition
and results of operations.
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We may be subject to intellectual property infringement claims or other allegations by third parties,
which may materially and adversely affect our business, financial condition and prospects.
There is no assurance that our operations or any aspects of our business do not or will not
infringe upon or otherwise violate patents, copyrights or other intellectual property rights held by third
parties. Although we have not been subject to legal proceedings or claims relating to the intellectual
property rights of others in the past, there is no assurance that we will not be subject to such legal
disputes in the future. In addition, there may be other third-party intellectual property that is infringed
by products offered by our retailer customers and their services or other aspects of their business.
There could also be existing patents of which we are not aware that our products may inadvertently
infringe. We cannot assure you that holders of patents purportedly relating to some aspect of our
technology platform or business, if any such holders exist, would not seek to enforce such patents
against us. Further, the application and interpretation of China’s patent laws and the procedures and
standards for granting patents in China are still evolving, and we cannot assure you that PRC courts or
regulatory authorities would agree with our analysis. If we are found to have violated the intellectual
property rights of others, we may be subject to liability for our infringement activities or may be
prohibited from using such intellectual property, and may incur licensing fees or be forced to develop
alternatives of our own. In addition, we may incur significant expenses, and may be forced to divert
management’s time and other resources from our business and operations to defend against these
infringement claims, regardless of their merits. Successful infringement or licensing claims made
against us may result in significant monetary liabilities and may materially disrupt our business and
operations by restricting or prohibiting our use of the intellectual property in question.
Our employees, third-party service providers, and customers may engage in intentional or negligent
misconduct or other improper activities on our platform, or violate laws, our internal policies or
policies of our customers, which could impair the quality of our service, cause us to lose customers
or subject us to liability.
We have limited control over the behavior of our employees, third-party service providers and
our customers. To the extent any improper behavior is associated with our services, platform,
technology systems, or programs embedded in third-party websites or online channels, our ability to
protect our brand image and reputation may be limited. In addition, if any consumers suffer or allege to
have suffered physical, financial or emotional harm following contact initiated through our platform by
intentional or negligent misconduct or other improper activities conducted by our employees, third-
party service providers or business customers, we may face civil lawsuits or other liabilities initiated
by the affected individual or governmental or regulatory actions against us. In response to allegations
of illegal or inappropriate activities conducted on our websites or any negative media coverage about
us, the governmental authorities may supervise and hold us liable for non-compliance with laws and
regulations concerning the dissemination of information on the internet and subject us to administrative
penalties or other sanctions, such as fines and penalties on our operations, requiring us to restrict or
discontinue some of the content, features and services provided through our platforms or websites. As
a result, our business may suffer and our brand image, business customer base, consumer base, results
of operations and financial condition may be materially and adversely affected.
We are exposed to the risk of other types of fraud or other misconduct by employees, third-
party service providers, and our business customers. Other types of misconduct include, but are not
limited to, intentionally failing to comply with government regulations, engaging in unauthorized
activities, such as mishandling consumer records and data, and making misrepresentations on our
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service platform, all of which could harm our business and reputation. It is not always possible to deter
misconduct by employees, third-party service providers, and our business customers, and such risks are
greater with respect to misconduct, improper activities and misuse of our services and data by our
third-party service providers and business customers, over whom we have less control as they are not
our own employees. Although we set out confidentiality and conduct requirements for third-party
service providers and our business customers in our agreements with third-party service providers and
our service agreements with business customers, such efforts may not be effective in controlling and
deterring misconduct and improper activities. The precautions we take to prevent and detect
misconduct by employees, third-party service providers, and our business customers may not be
effective in controlling unknown or unmanaged risks or losses, which could harm our business,
financial condition and results of operations.
We received government grants during the Track Record Period, and we may not receive such
grants in the future.
In 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, we recognized
government grants and tax preference of RMB15.9 million, RMB52.8 million, RMB71.7 million,
RMB22.6 million and RMB26.5 million, respectively, primarily representing unconditional cash
awards granted by the local authorities in the PRC and utilization of additional deductible input value-
added tax. During the years ended December 31, 2021, 2022 and 2023, and the six months ended June
30, 2024, government grants mainly represented subsidies received from government for encouraging
foreign investment and technology research activities. Our eligibility for government grants is
dependent on a variety of factors, including relevant government policies and availability of funding at
different granting authorities. In addition, the policies according to which we received government
grants may be halted by the relevant government authorities according to laws and regulations. We
cannot assure you that we will continue to receive such government grants or receive similar level of
government grants, or at all, in the future. Any loss of or reduction in government grants may have an
adverse effect on our results of operations and financial condition.
We have granted, and may continue to grant options and other types of awards under our share
incentive plan, which may result in increased share-based compensation expenses and dilute
shareholdings.
In order to attract and retain qualified employees, provide incentives to our directors, officers,
employees and consultants, and promote the success of our business, we adopted our 2016 Share
Incentive Plan and the 2020 Share Incentive Plan. As of the Latest Practicable Date, 60,942,000 Shares
underlying the outstanding options to purchase our ordinary shares and 18,065,309 Shares underlying
outstanding restricted shares units have been granted and outstanding, excluding options that were
forfeited or canceled after the relevant grant dates. For the years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2023 and 2024, we recorded RMB134.1 million,
RMB12.5 million, RMB11.3 million, RMB6.9 million and RMB6.6 million in share-based payment
expenses, respectively.
We believe the granting of share-based awards is of significant importance to our ability to
attract and retain key personnel and employees, and we will continue to grant share-based awards to
employees in the future. As a result, our expenses associated with share-based payment expenses may
increase, which may have an adverse effect on our results of operations and potential dilution effect on
the Shareholders’ interest in our Company.
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While we endeavor to maintain an effective system of internal control, our efforts to improve it may
not entirely eliminate all associated risks.
Our success depends on our ability to effectively utilize our standardized management system,
information systems, resources and internal controls. As we continue to expand, we will need to
modify and improve our financial and managerial controls, reporting systems and procedures and other
internal controls and compliance procedures to meet our evolving business needs. Our efforts in
improving our internal control system may not result in elimination of all risks. For example, we
received a contractual dispute lawsuit in March 2021 against one of our subsidiaries claiming for
alleged promised payments under a purchase order with a maximum claim amount of RMB56.7
million based on the pleading claim. We believe the plaintiff was deceived by imposters with forged
seals without verifying the authenticity and validity of the purchase order, and we reported the incident
to the local police authority. The lawsuit has been dismissed in September 2022 and we incurred
approximately RMB1.4 million in legal fees and RMB0.1 million in forensic appraisal fees as a result
of this lawsuit. While we successfully defended ourselves in this case, we cannot guarantee that similar
incidents would not happen again in the future.
Increasing focus with respect to environmental, social and governance matters may impose
additional costs on us or expose us to additional risks.
The PRC government and public advocacy groups have been increasingly focused on
environment, social and governance, or ESG, issues in recent years, making our business more
sensitive to ESG issues and changes in governmental policies and laws and regulations associated with
environment protection and other ESG-related matters. Investor advocacy groups, certain institutional
investors, investment funds, and other influential investors are also increasingly focused on ESG
practices and in recent years have placed increasing importance on the implications and social cost of
their investments. Regardless of the industry, increased focus from investors and the PRC government
on ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital
or to not commit capital as a result of their assessment of a company’s ESG practices. Any ESG
concern or issue could increase our regulatory compliance costs.
Our use of some leased properties could be challenged by third parties or government authorities,
which may cause interruptions to our business operations.
Certain lessors of our leased properties have not provided us with their property ownership
certificates or any other documentation proving their right to lease those properties to us. If our lessors
are not the owners of the properties and they have not obtained consents from the owners or their
lessors or permits from the relevant government authorities, our leases could be invalidated. If this
occurs, we may have to renegotiate the leases with the owners or the parties who have the right to lease
the properties, and the terms of the new leases may be less favorable to us. We may not be able to find
alternative properties to lease in a timely and reliable manner, or at all. As of the Latest Practicable
Date, one of our leased properties in the Chinese mainland with an aggregate gross floor area of
approximately 392.93 square meters were subject to potential title defects, representing approximately
3.9% of the total gross floor area of our leased properties in the Chinese mainland. The lessors of such
leased properties had not provided us with the relevant real estate registration certificates for the leased
properties or proof of authorizations from the property owners to sublease the properties to us. During
the Track Record Period and up to the Latest Practicable Date, we had not encountered any safety
issues or disputes with respect to these defective leased properties. In addition, some of our leased
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properties have not been registered with the relevant PRC government authorities as required by PRC
law, which may expose us to potential fines if we fail to remediate after receiving any notice from the
relevant PRC government authorities. As of the Latest Practicable Date, 7 out of our 12 leased
properties in the PRC have not been registered or filed with the relevant land and real estate
administration bureaus in the PRC. These properties are used for office space and have an aggregate
gross floor area of approximately 5,130.7 square meters, accounting for approximately 50.3% of the
total gross floor area of our leased properties in the PRC. While the lack of registration will not affect
the validity of the lease agreements or result in us being required to vacate the leased properties, we
may be ordered by the relevant government authorities to register the relevant leases within a
prescribed period, failing which we may be subject to a fine ranging from RMB1,000 to RMB10,000
for each unregistered lease. The aggregate amount of maximum potential fine will be approximately
RMB70,000.
As of the Latest Practicable Date, we were not aware of any claims or actions being
contemplated or initiated by government authorities, property owners or any other third parties with
respect to our leasehold interests in or use of such properties. However, we cannot assure you that our
use of such leased properties will not be challenged. In the event that our use of properties is
successfully challenged, we may be subject to fines and forced to relocate the affected operations. In
addition, we may become involved in disputes with the property owners or third parties who otherwise
have rights to or interests in our leased properties. We can provide no assurance that we will be able to
find suitable replacement sites on terms acceptable to us on a timely basis, or at all, or that we will not
be subject to liability resulting from third parties’ challenges on our use of such properties. As a result,
our business, financial condition and results of operations may be adversely affected.
We face risks related to natural disasters, health epidemics and other outbreaks, which could
significantly disrupt our operations.
In addition to the impact of COVID-19, our business could be materially and adversely affected
by natural disasters, other health epidemics or other public safety concerns affecting China and other
parts of the world. Natural disasters may give rise to server interruptions, breakdowns, system failures,
technology platform failures, internet failures or other operation interruptions for us and our service
providers, which could cause the loss or corruption of data or malfunction of software or hardware as
well as adversely affect our ability and the ability of our service providers to conduct daily operations
and to deliver our products and service offerings. Our business could also be adversely affected if our
employees or the employees of our service providers are affected by health epidemics. In addition, our
results of operations could be adversely affected to the extent that any health epidemic harms the
Chinese or global economy in general.
Most of our system hardware and the back-up systems supplied by third-party cloud service
providers are hosted in facilities located in China. Consequently, if any natural disasters, health
epidemics or other public safety concerns were to affect China and Beijing in particular, our operation
may experience material disruptions, which may materially and adversely affect our business, financial
condition and results of operations.
We have limited insurance coverage, which could expose us to significant costs and business
disruption.
We provide social insurance for our employees as required by PRC law, and we also provide
supplemental commercial medical insurance for our employees. We do not maintain business
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interruption insurance or key-man insurance. We consider this practice to be reasonable in light of the
nature of our business, which is in line with the practices of other companies of similar size in the same
industry in China. In addition, insurance companies in China currently offer limited business-related
insurance products. Any uninsured occurrence of business disruption, litigation or natural disaster, or
significant damages to our uninsured equipment or facilities could disrupt our business operations,
requiring us to incur substantial costs and divert our resources, which could have an adverse effect on
our business, financial condition and results of operations.
Risks Relating to Our Corporate Structure
If the PRC government determines that the historical contractual arrangements with the former VIE
did not comply with PRC regulation, or if these regulations change or are interpreted differently in
the future, we could be subject to severe penalties retroactively.
We are a holding company incorporated under the laws of the British Virgin Islands with
operations primarily conducted by our subsidiaries and, historically, through contractual arrangements
with our former VIE based in the Chinese mainland. As a result, investors face unique risks associated
with our holding company structure. The PRC regulatory authorities could disallow our holding
company structure, which could have an adverse effect on our business, financial condition and results
of operations. PRC laws and regulations restrict and impose conditions on foreign investment in value
added telecommunication services, such as the provision of advertising services and online transaction
processing businesses (i.e., operating an e-commerce platform). In order to comply with PRC
regulatory requirements, we primarily operated these businesses in the Chinese mainland through the
former VIE.
In order to streamline our corporate structure, focus our corporate resources on the development
of our retail core service cloud solutions, and reduce risks associated with our former VIE and the
contractual arrangements, we completed the Restructuring to terminate the contractual arrangements
with the former VIE. In April 2024, Shenzhen Xintonglu, our former VIE and Mr. ZHANG Feng and
Ms. LU Yuxin entered into a termination agreement for the contractual arrangements, pursuant to
which we will no longer have effective control over our former VIE. Subsequently, Shenzhen
Xintonglu transferred 50% equity interests in our former VIE to Mr. ZHANG Feng and Ms. LU Yuxin
at a consideration based on the valuation by an independent third-party valuation firm. Immediately
following this transfer, we no longer hold, directly or indirectly, any interest in our former VIE.
We, through the former VIE, had been historically subject to a series of contractual
arrangements with the former VIE and Mr. ZHANG Feng and Ms. LU Yuxin until April 2024.
Because of these contractual arrangements, we were considered as the primary beneficiary of the
former VIE and the financial statements of the former VIE were consolidated as part of our financial
statements during the Track Record Period. See “History, Reorganization and Corporate Structure—
Restructuring.”
Although we have completed the Restructuring in April 2024, the interpretation and application
of current and future PRC laws and regulations relating to the arrangements that established the former
VIE for our operations in the Chinese mainland remain evolving, including potential future actions by
the PRC government, which may retroactively affect the enforceability and legality of our historical
contractual arrangements with the former VIE. If the PRC government finds such agreements non-
compliant with PRC laws and regulations, or if these law and regulations develop in the future, and
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such development is retroactively applied to our historical contractual arrangements, we could be
subject to severe penalties and our control over the former VIE may be rendered ineffective.
Risks Relating to Doing Business in China
Changes in China’s economic, political or social conditions, or government policies could materially
and adversely affect our business and results of operations.
We expect that our revenues will be primarily derived in China and most of our operations will
continue to be conducted in China. Accordingly, our results of operations, financial condition and
prospects are influenced by economic, political and legal developments in China. The Chinese
economy may differ from the economies of other countries in terms of the government’s
implementation of macroeconomic measures, including but not limited to the regulation of foreign
exchange. A portion of productive assets in China is owned by the government, and the Chinese
government plays a role in China’s industrial development and economic growth through the
implementation of industrial policies that allocate resources and set monetary and fiscal policies.
Changes in economic conditions in China, in the policies of the Chinese government or in the laws and
regulations in China could have a material effect on the overall economic growth of China. Such
developments may adversely affect our business and operating results, leading to reduction in demand
for our services and solutions and adversely affect our competitive position.
The Chinese government has implemented various measures, such as interest rate adjustment,
to encourage economic growth and guide the allocation of resources. Some of these measures may
benefit the overall Chinese economy, but may have a negative effect on us. Decreased global economic
activity, including in China, or decreased economic activity in the jurisdictions where we operate may
have an adverse impact on our business and results of operations.
The legal system in any jurisdiction we operate in may affect the legal protections available to us or
impose additional requirements and obligations on our business, which may materially and
adversely affect our business, financial condition, and results of operations.
The legal protections available to us and the operations of our business may be affected by the
legal system in the local jurisdiction we operate in. We conduct our business primarily through our
PRC subsidiaries and, historically, the VIE in China. Our operations in China are governed by PRC
laws and regulations. The legal system in China is a civil law system based on written statutes. Unlike
common law systems, it is a system in which decided legal cases may be cited for reference but have
limited precedential value. The legal system in China is developing, and the interpretations of laws,
regulations, and rules are evolving. However, these laws, regulations, and legal requirements are
subject to amendment from time to time and their interpretation and enforcement are evolving, which
may limit the legal protections available to us. In addition, we cannot predict the effect of future
developments in the PRC legal system, particularly with regard to internet-related industries, including
the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or
the preemption of local regulations by national laws. Such unpredictability towards our contractual,
property (including intellectual property) and procedural rights could adversely affect our business and
impede our ability to continue our operations. Furthermore, the litigation may result in substantial costs
and diversion of resources and management attention.
In addition, new laws and regulations may be enacted from time to time. In particular, the
government authorities may continue to promulgate new laws, regulations, rules and guidelines
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governing internet companies with respect to a wide range of issues, such as intellectual property,
competition and antitrust, privacy and data protection, and other matters, which may result in
additional obligations imposed on it. Compliance with these laws, regulations, rules, guidelines, and
implementations may be costly, and any incompliance or associated inquiries, investigations, and other
governmental actions may divert significant management time and attention and our financial
resources, bring negative publicity, subject us to liabilities or administrative penalties, or materially
and adversely affect our business, financial condition, and results of operations.
The approval of the China Securities Regulatory Commission or other PRC government authorities
may be required in connection with this offering and our future capital raising activities under PRC
law, and, if required, we cannot predict whether or for how long we will be able to obtain such
approval.
The M&A Rules require the offshore special purpose vehicle that is controlled by PRC
companies or individuals formed for the purpose of seeking a public listing on an overseas stock
exchange through acquisitions of PRC domestic companies of the aforementioned PRC companies or
individuals using shares of such special purpose vehicle or shares held by its shareholders as a
consideration to obtain CSRC approval prior to the listing and trading of such special purpose vehicle’s
securities on an overseas stock exchange. The interpretation and application of the regulations remain
evolving, and this offering may ultimately require approval of the CSRC. If the CSRC approval is
required, it is uncertain whether we can or how long it will take us to obtain the approval. Any failure
to obtain or delay in obtaining the CSRC approval for this offering if such approval is required, would
subject us to sanctions imposed by the CSRC or other PRC regulatory authorities, which could include
fines and penalties on our operations in the PRC, restrictions or limitations on our ability to pay
dividends outside of the PRC, and other forms of sanctions that may materially and adversely affect
our business, financial condition, and results of operations.
Our PRC Legal Adviser has advised us that, based on its understanding of the PRC laws and
regulations currently in effect, such CSRC approval under the M&A Rules will not be required for this
offering given that (i) our wholly foreign owned enterprises were not established through a merger or
acquisition of equity interests or assets of a PRC domestic company owned by PRC companies or
individuals as defined under the M&A Rules using equities or shares as consideration, and (ii) no
provision in the M&A Rules clearly classifies contractual arrangements as a type of transaction subject
to its regulation. However, our PRC Legal Adviser further advised that the interpretation and
implementation of the M&A Rules and other PRC laws and regulations are still evolving, and new
rules or regulations promulgated in the future may impose additional requirement on us. If it is
determined that the CSRC approval under the M&A Rules is required for this offering, we may face
regulatory actions or other sanctions from the CSRC or other PRC regulatory authorities.
In addition, some of our future financing activities may also need to be filed with and/or
reported to CSRC according to the Overseas Listing Filing Rules. Since the Overseas Listing Filing
Rules have recently been released, we cannot assure you that we will not be required to complete the
filing procedures with and report relevant information to the CSRC to maintain the listing status of our
other securities, or to conduct any overseas securities offerings in the future.
Moreover, if the CSRC or other regulatory authorities later promulgate new rules or
explanations requiring that we obtain their approvals or accomplish the required filing or other
regulatory procedures for this offering or future financing activities, we may be unable to fulfill such
requirements in a timely manner or at all.
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We may be classified as a “PRC resident enterprise” for PRC enterprise income tax purposes, which
could result in unfavorable tax consequences to us and our shareholders and have a material
adverse effect on our results of operations and the value of your investment.
Under the People’s Republic of China Enterprise Income Tax Law, or the EIT Law,
promulgated on March 16, 2007, and came into effect on January 1, 2008, and was most recently
amended on December 29, 2018, which became effective on the same date, an enterprise established
outside China whose “de facto management body” is located in China is considered a “PRC resident
enterprise” and will generally be subject to the uniform 25% enterprise income tax rate, or the EIT rate,
on its global income. Under the implementation rules of the EIT Law, “de facto management body” is
defined as the organization body that effectively exercises full and overall management and substantial
control over such aspects as the business operations, personnel, accounting and properties of the
enterprise.
On April 22, 2009, State Administration of Taxation, or STA, released the Notice Regarding
the Determination of Chinese-Controlled Offshore Incorporated Enterprises as People’s Republic of
China Tax Resident Enterprises on the Basis of De Facto Management Bodies, or STA Circular 82 ,
that sets out the standards and procedures for determining whether the “de facto management body” of
an enterprise registered outside of China and controlled by PRC enterprises or PRC enterprise groups
is located within China. Further to STA Circular 82, on July 27, 2011, STA issued the Administrative
Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident
Enterprises (Trial), or STA Bulletin 45, to provide more guidance on the implementation of STA
Circular 82; the bulletin became effective on September 1, 2011 and revised on June 15, 2018. STA
Bulletin 45 clarified certain issues in the areas of resident status determination, post-determination
administration and competent tax authorities’ procedures.
Under STA Circular 82, a foreign enterprise controlled by a PRC enterprise or PRC enterprise
group is considered a PRC resident enterprise if all of the following apply: (i) the senior management
and core management departments in charge of daily operations are located mainly within China,
(ii) financial and human resources decisions are subject to determination or approval by persons or
bodies in China, (iii) major assets, accounting books, company seals, and minutes and files of board
and shareholders’ meetings are located or kept within China, and (iv) at least half of the enterprise’s
directors with voting rights or senior management reside within China. STA Bulletin 45 specifies that
when provided with a copy of Chinese tax resident determination certificate from a resident Chinese
controlled offshore incorporated enterprise, the payer should not withhold 10% income tax when
paying the Chinese-sourced dividends, interest, royalties, etc. to the PRC controlled offshore
incorporated enterprise.
Although Circular 82 and STA Bulletin 45 explicitly provide that the above standards only
apply to enterprises which are registered outside of China and controlled by PRC enterprises or PRC
enterprise groups, not those controlled by PRC individuals or foreign individuals, Circular 82 and STA
Bulletin 45 may reflect STA’s criteria for how the “de facto management body” test should be applied
in determining the tax residence of foreign enterprises in general, regardless of whether they are
controlled by PRC enterprises or PRC enterprise groups or by PRC or foreign individuals.
We believe that we are not a PRC resident enterprise for PRC tax purposes. However, the tax
resident status of an enterprise is subject to determination by the PRC tax authorities and the
interpretation of the term “de facto management body” is evolving. If the PRC tax authorities
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determine that we were treated as a PRC resident enterprise for PRC enterprise income tax purposes,
the 25% PRC enterprise income tax on our global taxable income could materially and adversely affect
our ability to satisfy any cash requirements we may have.
PRC laws and regulations establish relevant procedures for some acquisitions of PRC companies by
foreign investors, which could affect us in our pursuit for growth through acquisitions in China to a
certain extent.
A number of PRC laws and regulations, including Regulations on Mergers and Acquisitions of
Domestic Enterprises by Foreign Investors, or the M&A Rules, adopted by six agencies in 2006 and
amended in 2009, the Anti-monopoly Law promulgated by the SCNPC in August 2007 and effective in
August 2008, the Rules of Ministry of Commerce on Implementation of Security Review System of
Mergers and Acquisitions of Domestic Enterprises by Foreign Investors promulgated by the
MOFCOM in August 2011 and effective in September 2011, and the Measures for the Security Review
of Foreign Investment promulgated by the NDRC and the MOFCOM in December 2020 and effective
in January 2021 have established procedures and requirements that any merger and acquisition
activities in China by foreign investors shall comply with. These include requirements in some
instances that the approval from the MOFCOM be obtained in circumstances where overseas
companies established or controlled by PRC enterprises or residents acquire affiliated domestic
companies. PRC laws and regulations also require certain merger and acquisition transactions
involving an industry that implicates national security to be subject to merger control review or
security review.
We have grown and may continue to grow our business by acquiring complementary
businesses. Complying with the requirements of the above-mentioned regulations and other relevant
rules to complete such transactions could be time-consuming, and any required approval processes,
including obtaining approval from the Ministry of Commerce or its local counterparts may delay or
inhibit our ability to complete such transactions. It is unclear whether our business would be deemed to
be in an industry that raises “national defense and security” or “national security” concerns. However,
relevant government agencies may publish explanations in the future determining that our business is
in an industry subject to the security review, in which case our future acquisitions in China, including
those by way of entering into contractual control arrangements with target entities, may be closely
scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share
through future acquisitions would as such be materially and adversely affected.
The scrutiny over acquisition transactions by the tax authorities may have a negative impact on our
business operations, our acquisition or restructuring strategy or the value of your investment in us.
On February 3, 2015, STA issued the Bulletin on Issues of Enterprise Income Tax on Indirect
Transfers of Assets by Non-PRC Resident Enterprises, or STA Bulletin 7, which provided
comprehensive guidelines relating to, and also heightened the PRC tax authorities’ scrutiny over,
indirect transfers by a non-resident enterprise of PRC taxable assets. Under STA Bulletin 7, the PRC
tax authorities are entitled to reclassify the nature of an indirect transfer of PRC taxable assets, when a
non-resident enterprise transfers PRC taxable assets indirectly by disposing of equity interests in an
overseas holding company directly or indirectly holding such PRC taxable assets, by disregarding the
existence of such overseas holding company and considering the transaction to be a direct transfer of
PRC taxable assets and without any other reasonable commercial purpose. However, STA Bulletin 7
contains certain exemptions, including (i) where a non-resident enterprise derives income from the
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indirect transfer of PRC taxable assets by acquiring and selling shares of an overseas listed company
which holds such PRC taxable assets on a public market, and (ii) where there is an indirect transfer of
PRC taxable assets, but if the non-resident enterprise had directly held and disposed of such PRC
taxable assets, the income from the transfer would have been exempted from PRC enterprise income
tax under an applicable tax treaty or arrangement.
On October 17, 2017, STA issued the Announcement on Issues Concerning the Withholding of
Enterprise Income Tax at Source on Non-PRC Resident Enterprises, or STA Circular 37, which
became effective on December 1, 2017 and abolish certain provisions in STA Bulletin 7. STA Circular
37 further clarifies the practice and procedure of withholding non-resident enterprise income tax.
Pursuant to STA Circular 37, where the party responsible to deduct such income tax did not or was
unable to make such deduction, or the non-resident enterprise receiving such income failed to declare
and pay the taxes that should have been deducted to the relevant tax authority, both parties may be
subject to penalties. The taxable gain is calculated as balance of the total income from such transfer net
of the net book value of equity interest.
Discontinuation of preferential tax treatments we currently enjoy or other unfavorable changes in
tax law could result in additional compliance obligations and costs.
A number of our PRC operating entities enjoy various types of preferential tax treatment
pursuant to the prevailing PRC tax laws. Our PRC subsidiaries may, if they meet the relevant
requirements, qualify for certain preferential tax treatment.
According to PRC laws and regulations, enterprises engage in research and development activities
are currently entitled to claim 100% or 200% of the research and development expenses incurred in a year
as tax deductible expenses in determining the taxable income for that year (“Super Deduction”). Certain of
our PRC operating entities have claimed such Super Deduction in ascertaining their tax assessable profits.
Certain of our PRC operating entities are certified as a “high and new technology enterprise,” and therefore
are entitled to a preferential income tax rate of 15%. Certain subsidiaries are qualified as “Small Low-profit
Enterprise” and are subject to preferential income tax rate. For the years ended December 31, 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024, the effect of preferential tax rate were negative
RMB76.5 million, negative RMB21.5 million, RMB5.7 million, RMB2.8 million and RMB48.1 million,
respectively. If these entities fail to maintain their respective qualifications under the relevant PRC laws and
regulations, their applicable enterprise income tax rates may increase to up to 25%, which could have a
material adverse effect on our financial condition.
If we cannot fully comply with the PRC regulations of loans and direct investment by offshore
holding companies to PRC entities, we may be delayed or prevented from using the proceeds of the
Global Offering to make loans or additional capital contributions to our PRC operating entities,
which could materially and adversely affect our liquidity and our ability to fund and expand our
business.
We may transfer funds to our PRC operating entities or finance our PRC operating entities by
means of shareholders’ loans or capital contributions after completion of the Global Offering. Any
loans to our PRC operating entities, which are foreign-invested enterprises, cannot exceed a statutory
limit, and shall be filed with the local counterparts of the State Administration of Foreign Exchange, or
SAFE, or filed with SAFE in our information system. Furthermore, any capital contributions we make
to our PRC subsidiaries shall be registered with the local administration for market regulation, or
reported to the local ministry of commerce department.
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On March 30, 2015, SAFE promulgated the Circular on Reforming the Administration
Measures on Conversion of Foreign Exchange Registered Capital of Foreign-invested Enterprises, or
SAFE Circular 19. SAFE Circular 19, however, allows foreign invested enterprises in China to use
their registered capital settled in RMB converted from foreign currencies to make domestic equity
investments, but the registered capital of a foreign invested company settled in RMB converted from
foreign currencies remains not allowed to be used, among other things, for investment in the security
markets, or offering entrustment loans, unless otherwise regulated by other laws and regulations. On
June 9, 2016, SAFE further issued the Circular of the State Administration of Foreign Exchange on
Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital
Accounts, or SAFE Circular 16, which, among other things, amended certain provisions of Circular 19.
According to SAFE Circular 19 and SAFE Circular 16, the flow and use of the RMB capital converted
from foreign currency-denominated registered capital of a foreign invested company is regulated such
that Renminbi capital may not be used for purposes beyond our business scope or to provide loans to
non-affiliates unless otherwise permitted under our business scope. On October 23, 2019, SAFE
promulgated the Circular of the State Administration of Foreign Exchange on Further Promoting the
Facilitation of Cross-Border Trade and Investment, or SAFE Circular 28, which removes the
restrictions on domestic equity investments by non-investment foreign-invested enterprises with their
capital funds, provided that certain conditions are met. If we cannot comply with the applicable foreign
exchange circulars and rules that may affect our ability to transfer the net proceeds from the Global
Offering to our PRC subsidiaries and convert the net proceeds into Renminbi, which may adversely
affect our business, financial condition, and results of operations.
We may be subject to penalties, including restriction on our ability to inject capital into our PRC
subsidiaries and our PRC subsidiaries’ ability to distribute profits to us, if our resident shareholders
or beneficial owners in China fail to comply with relevant PRC foreign exchange regulations.
SAFE issued the Notice on Relevant Issues Concerning Foreign Exchange Administration for
Domestic Residents to Engage in Overseas Investment, Financing and Round-Trip Investment via
Special Purpose Vehicles, or SAFE Circular 37, effective on July 4, 2014. The SAFE Circular 37
requires PRC residents, including PRC individuals and institutions, to register with SAFE or our local
branches in connection with their direct establishment or indirect control of an offshore special purpose
vehicle, for the purpose of overseas investment and financing, with such PRC residents’ legally owned
assets or equity interests in domestic enterprises or offshore assets or interests, and also requires the
foreign-invested enterprise that is established through round trip investment to truthfully disclose our
controller(s). In addition, such PRC residents must update their foreign exchange registrations with
SAFE or our local branches when the offshore special purpose vehicle in which such residents directly
hold the equity interests undergoes material events relating to any change of basic information
(including change of such PRC individual shareholder, name and operation term), increases or
decreases in investment amount, share transfers or exchanges, or mergers or divisions.
If any shareholder holding interest in an offshore special purpose vehicle, who is a PRC
resident as determined by Circular 37, fails to fulfill the required foreign exchange registration with the
local SAFE branches, or fails to disclose or misrepresentation of the controller(s) of the foreign-
invested enterprise that is established through round-trip investment, the PRC subsidiaries of that
offshore special purpose vehicle may be prohibited from distributing their profits and dividends to their
offshore parent company or from carrying out other subsequent cross-border foreign exchange
activities, and the offshore special purpose vehicle may be restricted in our ability to contribute
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additional capital to our PRC subsidiaries. Moreover, failure to comply with SAFE registration
described above could result in liability under PRC laws for evasion of applicable foreign exchange
restrictions.
On February 28, 2015, SAFE promulgated a Notice on Further Simplifying and Improving
Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, effective from
June 1, 2015. In accordance with SAFE Notice 13, entities and individuals are required to apply for
foreign exchange registration of foreign direct investment and overseas direct investment, including
those required under Circular 37, with qualified banks, instead of SAFE or its local branches. The
qualified banks, under the supervision of SAFE, directly examine the applications and conduct the
registration.
Pursuant to the Measures for Administration of Outbound Investment published by the
MOFCOM in August 2014, and the Administrative Measures for Outbound Investment of Enterprises
published by the NDRC in December 2017, any outbound investment of PRC enterprises must be
approved by or filed with MOFCOM, NDRC or their local branches.
We may not be fully informed of the identities of all our shareholders or beneficial owners who
are PRC residents, and therefore, we may not be able to identify all our shareholders or beneficial
owners who are PRC residents to ensure their compliance with Circular 37 or other outbound
investment related rules. In addition, we cannot provide any assurance that all of our shareholders and
beneficial owners who are PRC residents will comply with our request to make, obtain or update any
applicable registrations or comply with other requirements required by the Circular 37 or other
outbound investment related rules in a timely manner. Even if our shareholders and beneficial owners
who are PRC residents comply with such request, it cannot provide any assurance that they will
successfully obtain or update any registration required by the Circular 37 or other outbound investment
related rules in a timely manner due to many factors, including those beyond our and their control. If
any of our shareholders who are a PRC resident fails to fulfill the requirements of such regulations,
they could be subject to fines or legal sanctions, the investments of such beneficial owners in us could
be subject to suspension or termination, our PRC subsidiaries may be prohibited from distributing their
profits and dividends to it or from carrying out other cross-border investment activities, and it may be
restricted in our ability to contribute additional capital to our PRC subsidiaries, which may adversely
affect our business.
We principally rely on dividends and other distributions on equity paid by our PRC subsidiaries to
fund any cash and financing requirements we may have. Any limitation on the ability of our PRC
subsidiaries to make payments to us could have a material adverse effect on our ability to conduct
our business or financial condition.
We are a holding company, and we principally rely on dividends and other distributions on
equity that may be paid by our PRC subsidiaries and, historically, remittances from our former VIE for
our cash and financing requirements, including the funds necessary to pay dividends and other cash
distributions to the holders of our ordinary shares and service any debt we may incur. If any of our
PRC subsidiaries or our subsidiaries incur debt on their own behalf in the future, the instruments
governing the debt may restrict their ability to pay dividends or make other distributions to it.
Under PRC laws and regulations, wholly foreign-owned enterprises in China, may pay
dividends only out of their accumulated after-tax profits as determined in accordance with PRC
accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set
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aside at least 10% of its after-tax profits each year, after making up previous years’ accumulated
losses, if any, to fund certain statutory reserve funds, until the aggregate amount of such a fund reaches
50% of its registered capital. At the discretion of the wholly foreign-owned enterprise, it may allocate a
portion of its after-tax profits based on the Accounting Standards for Business Enterprises issued by
the Ministry of Finance of the People’s Republic of China to enterprise expansion funds, and staff
welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as
cash dividends. Any limitation on the ability of our wholly-owned PRC subsidiaries to pay dividends
or make other distributions to us could materially and adversely limit our ability to grow, make
investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund
and conduct our business.
The currency conversion system may affect our operation and financial results.
The PRC government imposes regulations on the convertibility of Renminbi into foreign
currencies and the remittance of currency out of China. We receive substantially all of our revenue in
Renminbi. Under our current corporate structure, our income is primarily derived from dividend
payments from our PRC subsidiaries. We may convert a portion of our revenue into other currencies to
meet our foreign currency obligations, such as payments of dividends declared in respect of our shares,
if any. If we cannot comply with the regulations on the foreign currency, it may affect the ability of our
PRC subsidiaries to remit foreign currency to pay dividends or other payments, or otherwise satisfy
their foreign currency denominated obligations.
Under existing PRC foreign exchange regulations, payments of current account items,
including profit distributions, interest payments, and trade and service-related foreign exchange
transactions, can be made in foreign currencies without prior SAFE approval by complying with
certain procedural requirements. However, approval from or registration or filings with competent
government authorities is required where Renminbi is to be converted into foreign currency and
remitted out of China to pay capital expenses such as the repayment of loans denominated in foreign
currencies. Pursuant to SAFE Circular 19, a foreign-invested enterprise may convert up to 100% of the
foreign currency in its capital account into Renminbi on a discretionary basis according to the actual
needs. The SAFE Circular 16 provides for an integrated standard for conversion of foreign exchange
under capital account items on a discretionary basis, which applies to all enterprises registered in
China. In addition, SAFE Circular 16 has narrowed the scope of purposes for which an enterprise must
not use the Renminbi funds so converted, which include, among others, (i) payment for expenditure
beyond its business scope or otherwise as prohibited by the applicable laws and regulations,
(ii) investment in securities or other financial products other than banks’ principal-secured products,
(iii) provision of loans to non-affiliated enterprises, except where it is expressly permitted in the
business scope of the enterprise, and (iv) construction or purchase of non-self-used real properties,
except for real estate developers. If any new foreign exchange rules or regulations circulated by
competent authorities in future affect us from obtaining sufficient foreign currencies to satisfy our
foreign currency needs, we may not be able to pay dividends in foreign currencies to our shareholders.
Fluctuations in exchange rates could affect our results of operations and the value of your
investment.
The conversion of Renminbi into foreign currencies, including Hong Kong dollars, is based on
rates set by the People’s Bank of China. The Renminbi is subject to fluctuation against the Hong Kong
dollar, at times significantly and unpredictably. The value of Renminbi against the Hong Kong dollar
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and other currencies is affected by changes in China’s political and economic conditions and by
China’s foreign exchange policies, among other things. We cannot assure you that the exchange rate of
Renminbi will not fluctuate significantly in value against the Hong Kong dollar in the future. It is
difficult to predict how market forces or foreign exchange policy may impact the exchange rate
between Renminbi and Hong Kong dollar in the future.
Any fluctuation in the exchange rate of Renminbi may materially and adversely affect our
revenues, earnings and financial position, and the value of, and any dividends payable on, our Shares
in Hong Kong dollars. For example, to the extent that we need to convert the Hong Kong dollars we
receive into Renminbi to pay our operating expenses, appreciation of Renminbi against the Hong Kong
dollar would have an adverse effect on the Renminbi amount we would receive from the conversion.
Conversely, a significant depreciation of Renminbi against the Hong Kong dollar may significantly
reduce the Hong Kong dollar equivalent of our earnings, which in turn could adversely affect the price
of our Shares.
Very limited hedging options are available to reduce our exposure to exchange rate
fluctuations. To date, we have not entered into any hedging transactions in an effort to reduce our
exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in
the future, the availability and effectiveness of these hedges may be limited and we may not be able to
adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified
by PRC foreign exchange regulations that affect our ability to convert Renminbi into foreign currency.
As a result, fluctuations in exchange rates may affect your investment.
During the Track Record Period, a substantial part of our revenues and expenditures were
denominated in Renminbi, while the net proceeds from the Global Offering will be in Hong Kong
dollars. Fluctuations in the exchange rate between the Renminbi and the Hong Kong dollar will affect
the relative purchasing power in Renminbi terms of the proceeds from the Global Offering.
Fluctuations in the exchange rate may also cause us to incur foreign exchange losses and affect the
relative value of any dividend issued by our subsidiaries. In addition, fluctuation in the exchange rate
of Renminbi relative to Hong Kong dollars would affect our financial results in Hong Kong dollar
terms without giving effect to any underlying change in our business or results of operations. We
recorded exchange difference on translation of financial statements of RMB100.6 million, negative
RMB500.0 million, negative RMB107.7 million and negative RMB45.2 million in 2021, 2022, 2023,
and the six months ended June 30, 2024 respectively, as other comprehensive income in our
consolidated statements of comprehensive income which is primarily a result of translation of financial
statements of the companies within the Group into the presentation currency of the Group, which is
Renminbi.
Failure to fully comply with PRC laws and regulations on various employee benefit plans as
required by PRC regulations may subject us to penalties.
Pursuant to the relevant rules in the PRC Social Insurance Law and Regulations on the
Administration of Housing Provident Fund and other applicable laws and regulations, companies
operating in China are required to participate in various government sponsored employee benefit plans,
including certain social insurance, housing funds and other welfare-oriented payment obligations, and
contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and
allowances, of their employees up to a maximum amount specified by the local government from time
to time at locations where the businesses are operated. The requirement of employee benefit plans has
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not been implemented consistently by the local governments in China given the different levels of
economic development in different locations. In addition, companies should contribute to the employee
benefit plans for their employees on their own.
During the Track Record Period, certain of our PRC operating entities failed to make
contributions to the social insurance and housing provident funds in full amount as required by the
relevant PRC laws and regulations. For the years ended December 31, 2021, 2022 and 2023, we
recorded provisions of RMB0.4 million, RMB3.9 million and RMB0.5 million for social insurance
and housing provident fund shortfall. We may be subject to late fees, pecuniary penalties or other
administrative actions for such noncompliance. The aggregate maximum penalty for social
insurance shortfall was RMB0.9 million, RMB9.3 million and RMB1.1 million for the years ended
December 31, 2021, 2022 and 2023, respectively. We have completed the rectification of such
non-compliance in July 2023. See “Business—Employees—Social Insurance and Housing
Provident Fund” for further details. In addition, certain of our PRC subsidiaries and consolidated
variable interest entities have engaged several our other PRC operating entities and/or third-party
human resources agencies to make social insurance and housing fund contributions for some of
their employees in the past. As of the Latest Practicable Date, we have discontinued such practice.
However, if the relevant PRC authorities determine that such practice fail to make full employee
benefit plans contributions as required by relevant laws and regulations, we may be ordered by the
relevant authorities to make up for employee benefit plans contributions and we may be subject to
fines and legal sanctions in relation to our noncompliance. Nevertheless, we cannot predict
whether and/or how such Third-Party Arrangement would be penalized or fined under the PRC
laws and regulations in practice. The application and implementation of laws and regulations in
this regard are still evolving and thus it may not be practical for us to estimate the maximum
potential fine or penalty quantitatively. As a result, our business, financial condition and results of
operations may be adversely affected.
Evolving PRC laws and regulations on labor dispatch may expose us to potential penalties.
The use of employees of third-party labor dispatch agencies, who are known in China as
“dispatched workers,” is mainly regulated by the Interim Provisions on Labor Dispatch which was
promulgated by the Ministry of Human Resources and Social Security on January 27, 2014. It provides
that an employer may use dispatched workers for temporary, auxiliary or substitute positions. It further
provides that the number of dispatched workers an employer may use shall not exceed 10% of its total
labor force. See “Regulations—Regulations on Employment and Social Welfare—The Labor Contract
Law.” During the Track Record Period, the number of dispatched workers engaged by us had exceeded
the 10% regulatory threshold from time to time. We have formulated and implemented a plan to
contain the number of dispatched workers and stay compliant. As of the Latest Practicable Date, our
subsidiary had reduced the number of dispatched workers to below the 10% legal limit and none of our
subsidiaries had received any notice or been subject to any administrative penalties or other
disciplinary actions in relation to labor and social security from government authorities. As the
application and interpretation of the PRC Labor Contract Law and the Interim Provisions on Labor
Dispatch are evolving, we cannot assure you that the government authorities will not find us to be in
violation of the relevant regulations. If we are found to be in violation of any relevant laws or
regulations, we could be ordered to rectify within a specified period of time, and could be subject to
fines if we fail to do so, which could have a material adverse effect to our business, financial condition
and results of operations.
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Increases in labor costs and enforcement of stricter labor laws and regulations may adversely affect
our business and our profitability.
China’s overall economy and the average wage have increased in recent years and are expected
to continue to grow. The average wage level for our employees has also increased in recent years. We
expect that our labor costs, including wages and employee benefits, will continue to increase. Unless
we are able to pass on these increased labor costs to our customers who pay for our services, our
profitability and results of operations may be materially and adversely affected. Further, pursuant to the
PRC Labor Contract Law, as amended, or the Labor Contract law, and its implementation rules,
employers are subject to various requirements in terms of signing labor contracts, minimum wages,
paying remuneration, determining the term of employees’ probation and unilaterally terminating labor
contracts. In the event that we decide to terminate 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 affect those changes in a desirable or cost-effective manner, which could adversely affect our
business and results of operations.
It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
Shareholder claims or regulatory investigations that are common in common law jurisdictions,
including securities law class actions and fraud claims, may be difficult to pursue in China due to the
absence of reciprocal arrangements between overseas regulators and PRC authorities. It may be
difficult for overseas regulators to conduct investigations or collect evidence within China. According
to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no
overseas securities regulator is allowed to directly conduct investigations or evidence collection
activities within the territory of the PRC and no entities or individuals may provide documents or
materials in connection with securities activities without proper authorization as stipulated under
Article 177. While detailed interpretation of or implementation rules under Article 177 have yet to be
promulgated, the inability of an overseas securities regulator to directly conduct investigations or
collect evidence within China may further increase difficulties faced by you in protecting your
interests.
We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises
by their non-PRC holding companies.
On February 3, 2015, the STA issued the Public Notice Regarding Certain Corporate Income
Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises, or STA Bulletin 7.
STA Bulletin 7 extends its tax jurisdiction to transactions involving the transfer of taxable assets
through offshore transfer of a foreign intermediate holding company. In addition, STA Bulletin 7
provides certain criteria on how to assess reasonable commercial purposes and has introduced safe
harbors for internal group restructurings and the purchase and sale of equity through a public securities
market. STA Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person
who is obligated to pay for the transfer) of taxable assets. On October 17, 2017, the STA issued the
Announcement of the State Administration of Taxation on Issues Concerning the Withholding of
Non-resident Enterprise Income Tax at Source, or STA Bulletin 37, which came into effect on
December 1, 2017. STA Bulletin 37 further clarifies the practice and procedure of the withholding of
non-resident enterprise income tax.
Where a non-resident enterprise transfers taxable asset indirectly by disposing of the equity
interests of an overseas holding company, which is an Indirect Transfer, the non-resident enterprise as
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either transferor or transferee, or the PRC entity that directly owns the taxable assets, may report such
Indirect Transfer to the relevant tax authority. Using a “substance over form” principle, the PRC tax
authority may disregard the existence of the overseas holding company if it lacks a reasonable
commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax.
As a result, gains derived from such Indirect Transfer may be subject to PRC enterprise income tax,
and the transferee or other person who is obligated to pay for the transfer is obligated to withhold the
applicable taxes, currently at a rate of 10% for the transfer of equity interests in a PRC resident
enterprise.
We face uncertainties as to the reporting and other implications of certain past and future
transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in
our offshore subsidiaries and investments. For transfer of shares in our company by investors who are
non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under STA
Bulletin 7 and/or STA Bulletin 37. As a result, we may be required to expend valuable resources to
comply with STA Bulletin 7 and/or STA Bulletin 37, or to establish that we and our non-PRC resident
investors should not be taxed under these circulars, which may have a material adverse effect on our
financial condition and results of operations.
If the custodians or authorized users of controlling non-tangible assets of our Company, including
our corporate chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these
assets, our business and operations could be materially and adversely affected.
Under PRC laws, legal documents for corporate transactions are executed using the chop or
seal of the signing entity or with the signature of a legal representative whose designation is registered
and filed with the relevant branch of the SAMR. In order to secure the use of our chops and seals, we
have established internal control procedures and rules for using these chops and seals. In any event that
the chops and seals are intended to be used, the responsible personnel will submit the application
which will then be verified and approved by authorized employees in accordance with our internal
control procedures and rules. In addition, in order to maintain the physical security of our chops, we
generally have them stored in secure locations accessible only to authorized employees. Although we
monitor such authorized employees, the procedures may not be sufficient to prevent all instances of
abuse or negligence. There is a risk that our employees could abuse their authority, for example, by
entering into a contract not approved by us, seeking to gain control of any of our subsidiaries, or
forging our chops and seals for illegal purposes. If any employee obtains, misuses or misappropriates
our chops and seals or other controlling non-tangible assets for whatever reason, we could experience
disruption to our normal business operations. We may have to take corporate or legal action, which
could involve significant time and resources to resolve and divert management from our operations. In
addition, the affected entity may not be able to recover corporate assets that are sold or transferred out
of our control in the event of such a misappropriation if a transferee relies on the apparent authority of
the representative and acts in good faith.
Risks Relating to the Global Offering
There has been no prior public market for our Shares prior to the Global Offering, and you may not
be able to resell our Shares at or above the price you pay, or at all.
Prior to the completion of the Global Offering, there has been no public market for our Shares.
There can be no guarantee that an active trading market for our Shares will develop or be sustained
after completion of the Global Offering. The Offer Price is the result of negotiations between our
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company and Joint Global Coordinators (for themselves and on behalf of the Underwriters), which
may not be indicative of the price at which our Shares will be traded following the completion of the
Global Offering. The market price of our Shares may drop below the Offer Price at any time after
completion of the Global Offering.
The trading price of the Shares may be volatile, which could result in substantial losses to you.
The trading price of our Shares may be volatile and could fluctuate widely in response to
factors beyond our control, including general market conditions of the securities markets in Hong
Kong SAR, the Chinese mainland, the United States and elsewhere in the world. In particular, the
performances of and fluctuations in the market prices of other companies with business operations
located mainly in the Chinese mainland that have listed their securities in Hong Kong may affect the
volatilities in the price and trading volumes of our Shares. A number of the Chinese mainland-based
companies have listed their securities, and some are in the process of preparing for listing their
securities, in Hong Kong. Some of these companies have experienced significant volatility, including
significant price declines after their initial public offerings. The trading performances of the securities
of these companies at the time of or after their offerings may affect the overall investor sentiment
towards the Chinese mainland-based companies listed in Hong Kong and consequently may impact the
trading performance of our Shares. These broad market and industry factors may significantly affect
the market price and volatility of our Shares, regardless of our actual operating performance.
The actual or perceived sale or availability for sale of substantial amounts of our Shares, especially
by our directors, executive officers and substantial shareholders, could adversely affect the market
price of our Shares.
Future sales of a substantial number of our Shares, especially by our directors, executive
officers and substantial shareholders, or the perception or anticipation of such sales, could negatively
impact the market price of our Shares in Hong Kong and our ability to raise equity capital in the future
at a time and price that we deem appropriate.
The Shares held by our substantial shareholders are subject to certain lock-up periods beginning
on the date on which trading in our Shares commences on the Stock Exchange. While we currently are
not aware of any intention of such persons to dispose of significant amounts of their Shares after the
expiry of the lock-up periods, we cannot assure you that they will not dispose of any Shares they may
own now or in the future. In addition, certain existing shareholders of our Shares are not subject to
lock-up agreements. Market sale of Shares by such shareholders and the availability of these Shares for
future sale may have negative impact on the market price of our Shares. See “History, Reorganization
and Corporate Structure—Pre-IPO Investments” for more details of the existing shareholders not
subject to lock-up agreements.
You will incur immediate and substantial dilution and may experience further dilution in the future.
As the Offer Price of our Shares is higher than the net tangible book value per share of our
Shares immediately prior to the Global Offering, purchasers of our Shares in the Global Offering will
experience an immediate dilution. If we issue additional Shares in the future, purchasers of our Shares
in the Global Offering may experience further dilution in their shareholding percentage.
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RISK FACTORS
If securities or industry analysts cease to publish research or reports about our business, or if they
adversely change their recommendations regarding our Shares, the market price for our Shares and
trading volume could decline.
The trading market for our Shares will depend in part on the research and reports that securities
or industry analysts publish about us or our business. If research analysts do not establish and maintain
adequate research coverage or if one or more of the analysts who covers us downgrades our Shares or
publishes inaccurate or unfavorable research about our business, the market price for our Shares would
likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports
on us regularly, we could lose visibility in the financial markets, which, in turn, could cause the market
price or trading volume for our Shares to decline.
We cannot assure you that we will declare and distribute any amount of dividends in the future and
you may have to rely on price appreciation of our Shares for return on your investment.
We currently intend to retain most, if not all, of our available funds and any future earnings to
fund the development and growth of our business. As a result, we have not yet adopted a dividend
policy with respect to future dividends. Therefore, you should not rely on an investment in our Shares
as a source for any future dividend income.
Our board of directors has discretion as to whether to distribute dividends, subject to the
provisions of the memorandum and articles of association of our Company and certain restrictions
under the British Virgin Islands law, namely that our Company may only pay dividends if it satisfies
the solvency test under the British Virgin Islands law, meaning that (i) the value of our Company’s
assets exceeds its liabilities, and (ii) our Company is able to pay its debts as they fall due immediately
after the distribution of dividends. In addition, our shareholders may by ordinary resolution declare a
dividend, but no dividend may exceed the amount recommended by our board of directors. Even if our
board of directors decides to declare and pay dividends, the timing, amount and form of future
dividends, if any, will depend on, among other things, our future results of operations and cash flow,
our capital requirements and surplus, the amount of distributions, if any, received by us from our
subsidiary, our financial condition, contractual restrictions and other factors deemed relevant by our
board of directors. Accordingly, the return on your investment in our Shares will likely depend entirely
upon any future price appreciation of our Shares. There is no guarantee that our Shares will appreciate
in value or even maintain the price at which you purchased the Shares. You may not realize a return on
your investment in our Shares and you may even lose your entire investment in our Shares.
We have no experience operating as a public company, and we may incur increased costs as a result
of becoming a public company.
We have no experience conducting our operations as a public company. As a result of the
Listing on the Hong Kong Stock Exchange, we may face enhanced administrative and compliance
requirements, which may make us incur substantial related costs and expenses that we did not incur as
a private company. We expect rules and regulations applicable to public companies to increase our
accounting, legal and financial compliance costs and to make certain corporate activities more time-
consuming and costly. Our management may be required to devote substantial time and attention to our
public company reporting obligations and other compliance matters. We will evaluate and monitor
developments with respect to these rules and regulations, but we cannot predict or estimate the amount
of additional costs we may incur or the timing of such costs. Our reporting and other compliance
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obligations as a public company may place a significant strain on our management, operational and
financial resources and systems for the foreseeable future.
We may be subject to securities litigation, which is expensive and could divert management
attention.
Companies that have experienced volatility in the volume and market price of their shares have
been subject to an increased incidence of securities class action litigation. We may be the target of this
type of litigation in the future. Securities litigation against us could result in substantial costs and divert
our management’s attention from other business concerns, and, if adversely determined, could have a
material adverse effect on our business, financial condition and results of operations.
There can be no assurance of the accuracy or completeness of certain facts, forecasts and other
statistics obtained from official government sources contained in this document.
This document, particularly the section headed “Industry Overview,” contains information and
statistics relating to the retail cloud solution and retail digitalization solution industry. Such
information and statistics have been derived from third-party reports, either commissioned by us or
publicly accessible, and other publicly available sources. We believe that the sources of the
information are appropriate sources for such information, and we have taken reasonable care in
extracting and reproducing such information. However, we cannot guarantee the quality or reliability
of the information from official government sources. Such information has not been independently
verified by us, the Joint Global Coordinators, the Joint Sponsors, the Joint Bookrunners and the
Underwriters or any other party involved in the Global Offering, and no representation is given as to its
accuracy. Collection methods of such information may be flawed or ineffective, or there may be
discrepancies between published information and market practice, which may result in the statistics
being inaccurate or not comparable to statistics produced for other economies. You should therefore
not place undue reliance on information from official government sources. In addition, we cannot
assure you that such information is stated or compiled on the same basis or with the same degree of
accuracy as similar statistics presented elsewhere. In any event, you should consider carefully the
importance placed on such information or statistics.
You may face difficulties in protecting your interests, and your ability to protect your rights through
Hong Kong courts may be limited, because we are incorporated under British Virgin Islands.
We are a BVI business company incorporated under the laws of the British Virgin Islands
with limited liability. Our corporate affairs are governed by, among others, our Memorandum and
Articles of Association as well as the BVI Business Companies Act and the common laws applicable
in the BVI. The laws of the BVI relating to the protection of the interests of minority shareholders
may differ from those of Hong Kong or other jurisdictions where investors may be located. As such,
minority Shareholders may not enjoy the same rights as pursuant to the laws of Hong Kong or such
other jurisdictions. For a discussion of significant differences between the provisions of the
Companies Act and the laws applicable to companies incorporated in Hong Kong, see “Summary of
the Constitution of our Company and BVI Company Law” in Appendix III to this document.
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You should read the entire document carefully and should not rely on any information contained in
press articles or other media regarding us and the Global Offering.
We strongly caution you not to rely on any information contained in press articles or other
media regarding us and the Global Offering. Prior to the publication of this document, there has been
press and media coverage regarding us and the Global Offering. Such press and media coverage may
include references to certain information that does not appear in this document, including certain
operating and financial information and projections, valuations and other information. We have not
authorized the disclosure of any such information in the press or media and do not accept any
responsibility for any such press or media coverage or the accuracy or completeness of any such
information or publication. We make no representation as to the appropriateness, accuracy,
completeness or reliability of any such information or publication. To the extent that any such
information is inconsistent or conflicts with the information contained in this document, we disclaim
responsibility for it and you should not rely on such information.
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WAIVERS AND EXEMPTIONS
In preparation for the Listing, we have sought the following waivers from strict compliance
with the Listing Rules and exemptions from the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
MANAGEMENT PRESENCE IN HONG KONG
Pursuant to Rule 8.12 of the Listing Rules, an issuer must have a sufficient management
presence in Hong Kong. This will normally mean that at least two of its executive directors must be
ordinarily resident in Hong Kong. We do not have sufficient management presence in Hong Kong for
the purposes of Rule 8.12 of the Listing Rules.
Our Group’s management headquarters, senior management, business operations and assets are
primarily based outside Hong Kong SAR, in the Chinese mainland. The Directors consider that the
appointment of executive director(s) who will be ordinarily resident in Hong Kong would not be
beneficial to, or appropriate for, our Group and therefore would not be in the best interests of our
Company or the Shareholders as a whole.
Accordingly, we have applied for, and the Stock Exchange has granted, a waiver from strict
compliance with Rule 8.12 of the Listing Rules. We will ensure that there is an effective channel of
communication between us and the Stock Exchange in accordance with paragraph 10 of Chapter 3.10 of
the Guide for New Listing Applications issued by the Stock Exchange by way of the following
arrangements:
(a) pursuant to Rule 3.05 of the Listing Rules, our Company has appointed and will continue
to maintain two authorized representatives who shall act at all times as the principal
channel of communication with the Stock Exchange. Each of our authorized
representatives will be readily contactable by the Stock Exchange by telephone, facsimile
and/or e-mail to deal promptly with enquiries from the Stock Exchange. Both of our
authorized representatives are authorized to communicate on our behalf with the Stock
Exchange. At present, our two authorized representatives are Mr. ZHANG Feng, our
executive Director and President, and Ms. WANG Yi, one of our joint company
secretaries;
(b) pursuant to Rule 3.20 of the Listing Rules, each Director will provide their contact
information to the Stock Exchange and to the authorized representatives. This will ensure
that the Stock Exchange and the authorized representatives should have means for
contacting all Directors promptly at all times as and when required;
(c) we will ensure that each Director who is not ordinarily resident in Hong Kong possesses or
can apply for valid travel documents to visit Hong Kong and can meet with the Stock
Exchange within a reasonable period;
(d) pursuant to Rule 3A.19 of the Listing Rules, our Company has retained the services of
Somerley Capital Limited as compliance adviser (the “ Compliance Adviser ”), who will
act as an additional channel of communication with the Stock Exchange. The Compliance
Adviser will provide our Company with professional advice on ongoing compliance with
the Listing Rules. We will ensure that the Compliance Adviser has prompt access to our
Company’s authorized representatives and Directors. We will provide the Compliance
Adviser with such information and assistance as the Compliance Adviser may need or may
reasonably request in connection with the performance of the Compliance Adviser’s
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duties. The Compliance Adviser will also provide advice to our Company when consulted
by our Company in compliance with Rule 3A.23 of the Listing Rules; and
(e) meetings between the Stock Exchange and the Directors can be arranged through the
authorized representatives or the Compliance Adviser, or directly with the Directors within
a reasonable time frame. We will inform the Stock Exchange as soon as practicable in
respect of any change in the authorized representatives and/or the Compliance Adviser in
accordance with the Listing Rules.
JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, the company secretary must be an
individual who, by virtue of their academic or professional qualifications or relevant experience, is, in
the opinion of the Stock Exchange, capable of discharging the functions of company secretary.
Pursuant to Note 1 to Rule 3.28 of the Listing Rules, the 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); and
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Pursuant to Note 2 to Rule 3.28 of the Listing Rules, in assessing “relevant experience”, the
Stock Exchange will consider the individual’s:
(a) length of employment with the issuer and other issuers and the roles they played;
(b) familiarity with the Listing Rules and other relevant law and regulations including the
Securities and Futures Ordinance, Companies Ordinance, 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 Listing Rules; and
(d) professional qualifications in other jurisdictions.
Our Company appointed Ms. Wang Yi, our vice president and board secretary, and Ms. Au
Wing Sze as joint company secretaries of our Company with effect from December 5, 2022 and the
Listing Date, respectively. Please refer to the section headed “Directors and senior management—
Senior Management” for Ms. Wang’s biography, and the section “Directors and senior management—
Joint company secretaries” for Ms. Au’s biography.
Ms. Au is an associate of both The Hong Kong Chartered Governance Institute and The
Chartered Governance Institute in the United Kingdom. Ms. Au therefore meets the qualification
requirements under Rule 3.28 Note 1 of the Listing Rules and is in compliance with Rule 8.17 of the
Listing Rules.
Accordingly, while Ms. Wang does not possess the formal qualifications required of a company
secretary under Rule 3.28 of the Listing Rules, we have applied to the Stock Exchange for, and the
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Stock Exchange has granted, a waiver from strict compliance with the requirements under Rules 3.28
and 8.17 of the Listing Rules such that Ms. Wang may be appointed as a joint company secretary of
our Company.
The waiver was granted for a three-year period from the Listing Date on the conditions that:
(i) Ms. Au is appointed as a joint company secretary to assist Ms. Wang in discharging her functions as
a company secretary and in gaining the relevant experience under Rule 3.28 of the Listing Rules; the
waiver will be revoked immediately if Ms. Au, during the three-year period, ceases to provide
assistance to Ms. Wang as the joint company secretary; and (ii) the waiver will be revoked if there are
material breaches of the Listing Rules by our Company. In addition, Ms. Wang will comply with the
annual professional training requirement under Rule 3.29 of the Listing Rules and will enhance her
knowledge of the Listing Rules during the three-year period from the Listing Date. Our Company will
further ensure that Ms. Wang has access to the relevant training and support that would enhance her
understanding of the Listing Rules and the duties of a company secretary of an issuer listed on the
Stock Exchange. Before the end of the three-year period, the qualifications and experience of
Ms. Wang and the need for on-going assistance of Ms. Au will be further evaluated by our Company.
We will demonstrate Ms. Wang, having benefited from the assistance of Ms. Au for the preceding
three years, will have acquired the skills necessary to carry out the duties of company secretary and the
relevant experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so that a further
waiver will not be necessary.
CONNECTED TRANSACTIONS
We have entered into certain transactions which will constitute continuing connected
transactions of our Company under the Listing Rules following the completion of the Global Offering.
We have applied to the Stock Exchange for, and the Stock Exchange has granted, waivers from strict
compliance with Chapter 14A of the Listing Rules, the details and conditions of which are set out in
the sub-section “—Waivers” in the “Connected Transactions” section of this document. For further
details in this respect, see the section headed “Connected Transactions”.
WAIVER AND EXEMPTION IN RELATION TO THE SHARE INCENTIVE PLANS
The Listing Rules and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
prescribes certain disclosure requirements in relation to the share options granted by the Company:
(a) Rule 17.02(1)(b) of the Listing Rules stipulates that all the terms of a scheme must be
clearly set out in this document. The Company is also required to disclose in this
document full details of all outstanding options and awards and their potential dilution
effect on the shareholdings upon listing as well as the impact on the earnings per share
arising from the exercise of such outstanding options or awards.
(b) Paragraph 27 of Appendix D1A to the Listing Rules requires the Company to set out in
this document particulars of any capital of any member of the Group that is under option,
or agreed conditionally or unconditionally to be put under option, including the
consideration for which the option was or will be granted and the price and duration of the
option, and the name and address of the grantee.
(c) Paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance requires the Company to set out in this document,
among other things, details of the number, description and amount of any shares in or
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debentures of the Company which any person has, or is entitled to be given, an option to
subscribe for, together with the certain particulars of the option, namely the period during
which it is exercisable, the price to be paid for shares and debentures subscribed for under
it, the consideration (if any) given or to be given for it or for the right to it and the names
and addresses of the persons to whom it was given.
As of the Latest Practicable Date, our Company had granted options under the 2016 Share
Incentive Plan and the 2020 Share Incentive Plan (together, the “ Relevant Plans ”) to 1,108 grantees,
including two Director and/or members of the senior management of the Company, 1,105 other
employees and one consultant of our Group. The aggregate number of Shares underlying the
outstanding options as of the Latest Practicable Date was 60,942,000 Shares, and none of such options
have been exercised. The Shares underlying the outstanding options represent 6.87% of the total
number of Shares in issue immediately after completion of the Global Offering (assuming the Over-
allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are
issued under the Share Incentive Plans). For further details of our Share Incentive Plans, see the section
headed “Statutory and General Information—D. Share Incentive Plans” in Appendix IV.
Our Company has applied to the Stock Exchange and the SFC, respectively for, (i) a waiver
from strict compliance with the disclosure requirements under Rule 17.02(1)(b) of, and paragraph 27 of
Appendix D1A to, the Listing Rules in relation to the options granted under the Relevant Plans (the
“ESOP Waiver ”); and (ii) a certificate of exemption under section 342A of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance exempting the Company from strict compliance with the
disclosure requirements under paragraph 10(d) of Part I of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance in relation to the options granted under the
Relevant Plans (the “ ESOP Exemption ”), on the ground that strict compliance with the above
requirements would be unduly burdensome for our Company for the following reasons:
(a) given that over one thousand grantees are involved, strict compliance with the disclosure
requirements to set out full details of all the grantees under the Relevant Plans in this
document on an individual basis would be costly and unduly burdensome for the Company
in light of a significant increase in cost and timing for information compilation, and
prospectus preparation and printing;
(b) as of the Latest Practicable Date among all the grantees, two grantees were Director and/or
members of the senior management of our Company and the remaining 1,106 grantees
were current or former employees or consultant of our Group or other eligible persons and
are not connected persons of our Company. As such, strict compliance with Rule
17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the Listing Rules and paragraph 10
of Part I of the Third Schedule to the Companies Ordinance to disclose names, addresses,
and entitlements on an individual basis in the prospectus will require substantial number of
pages of additional disclosure while such disclosure does not provide any material
information to the investing public;
(c) the grant and exercise in full of the options granted under the Relevant Plans would not
cause any material adverse impact on the financial position of our Company;
(d) non-compliance with the above disclosure requirements would not prevent us from
providing the potential investors with an informed assessment of the activities, assets,
liabilities, financial position, management and prospects of our Company; and
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(e) material information relating to the options under the Relevant Plans will be disclosed in
this document, including the total number of Shares that may be issued pursuant to the
Relevant Plans, the exercise price per Share, the potential dilution effect on the
shareholding and impact on the earnings per Share upon the full exercise of the options
granted under the Relevant Plans. The Directors consider that the information that is
reasonably necessary for the potential investors to make an informed assessment of our
Company in their investment decision making process has been included in this document.
In light of the above, our Directors are of the view that the grant of the ESOP Waiver and the
ESOP Exemption will not prejudice the interests of the investing public.
The Stock Exchange has granted to our Company the ESOP Waiver on the condition that:
(a) on an individual basis, full details of the options granted under the Relevant Plans to
(1) each of our Directors, senior management and other connected persons of our
Company, (2) consultant(s) of the Group and (3) grantees who have been granted options
to subscribe for one million Shares or more will be disclosed in the section headed
“Statutory and General Information—D. Share Incentive Plans” in Appendix IV as
required under Rule 17.02(1)(b) of, and paragraph 27 of Appendix D1A to, the Listing
Rules, and paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance;
(b) in respect of the options granted under the Relevant Plans to the remaining grantees (other
than those set out in (a) above), disclosure will be made on an aggregate basis, and
categorized into lots based on number of Shares underlying each individual grantee, being
(i) up to 200,000 Shares, (ii) 200,001 to 400,000 Shares and (iii) 400,001 to 999,999
Shares, and for each lot of Shares, the following details are disclosed in this prospectus,
including (1) the aggregate number of such grantees and the number of Shares subject to
the options granted to them under the Relevant Plans, (2) the consideration (if any) paid
for the grant of the options under the Relevant Plans, and (3) the exercise period and the
exercise price for the options granted under the Relevant Plans;
(c) the aggregate number of Shares underlying the outstanding options granted under the
Relevant Plans and the percentage of the Company’s total issued Shares as of the Latest
Practicable Date will be disclosed in this document;
(d) the dilutive effect and impact on earnings per Share upon the full exercise of the options
under the Relevant Plans will be disclosed in the section headed “Statutory and General
Information—D. Share Incentive Plans” in Appendix IV;
(e) a summary of the major terms of the Relevant Plans will be disclosed in the section
headed “Statutory and General Information—D. Share Incentive Plans” in Appendix IV;
(f) the particulars of this waiver will be disclosed in this document;
(g) a list of all the grantees (including those persons whose details have already been
disclosed) containing all the particulars as required under paragraph 10 of Part I of the
Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance
will be made available for physical public inspection in accordance with “Documents
delivered to the Registrar of Companies and on Display—Document available for
inspection” in Appendix V of this document; and
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(h) the grant of certificate of exemption under the Companies (Winding Up and Miscellaneous
Provisions) Ordinance from the SFC exempting the Company from the disclosure
requirements provided in paragraph 10(d) of Part I of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
The SFC has granted the ESOP Exemption on condition that:
(a) on an individual basis, full details of the options under the Relevant Plans granted to
(1) each of our Directors, senior management and other connected persons of our
Company, (2) consultant(s) of the Group and (3) grantees who have been granted options
to subscribe for one million Shares or more will be disclosed in the section headed
“Statutory and General Information—D. Share Incentive Plans” in Appendix IV as
required by paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance; and
(b) in respect of the options granted under the Relevant Plans to the remaining grantees (other
than those set out in (a) above), disclosure will be made on an aggregate basis, and
categorized into lots based on number of Shares underlying each individual grantee, being
(i) up to 200,000 Shares, (ii) 200,001 to 400,000 Shares and (iii) 400,001 to 999,999
Shares, and for each lot of Shares, the following details are disclosed in this prospectus,
including (1) the aggregate number of such grantees and the number of Shares subject to
the options granted to them under the Relevant Plans, (2) the consideration (if any) paid
for the grant of the options under the Relevant Plans, and (3) the exercise period and the
exercise price for the options granted under the Relevant Plans;
(c) a list of all the grantees (including those persons whose details have already been
disclosed) containing all the particulars as required under paragraph 10 of Part I of the
Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance
will be made available for physical public inspection in accordance with “Documents
delivered to the Registrar of Companies and on Display—Document available for
inspection” in Appendix V of this document; and
(d) the particulars of this exemption will be disclosed in this document and this document will
be issued on or before November 28, 2024.
CORNERSTONE SUBSCRIPTION BY A CLOSE ASSOCIATE OF A SUBSTANTIAL
SHAREHOLDER OF OUR SUBSIDIARY
Rule 9.09 of the Listing Rules provides that there must be no dealing in the securities for which
listing is sought by any core connected person of an issuer (except as permitted by Rule 7.11 of the
Listing Rules) from 4 clear business days before the expected hearing date until listing is granted.
Paragraph 27 of Chapter 4.15 of the Guide provides that placings to cornerstone investors are
generally permitted provided that, among others, each investor will not have any board representation
in the listing applicant, and is independent of the listing applicant, its connected persons and their
respective associates.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance with
Rule 9.09(b) of the Listing Rules in relation to the subscription of the Shares in the Global Offering
through the Cornerstone Investment by the Cornerstone Investor (being a close associate of DRGML, a
102


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WAIVERS AND EXEMPTIONS
substantial shareholder of Retail Technology Asia, our subsidiary) on, among other things, the
following bases:
(i) The terms of the Cornerstone Investment by the Cornerstone Investor will be made at the
Offer Price and will be subject to a lock-up period of six months. Our Company confirms
that no preferential treatment or special benefit has been or will be, directly or indirectly,
given to DFI Retail Group during our Company’s bookbuilding and Shares allocation
processes, other than the assured entitlement under a cornerstone investment following the
principles set out in Chapter 4.15 of the Guide For New Listing Applicants issued by the
Stock Exchange (the “Guide”);
(ii) DFI Retail Group does not currently hold any shares in our Company (at the issuer level),
and does not appoint, and will not be entitled to any right to appoint, any Director or other
senior management members of our Company, and has not been and will not be granted
any special shareholder rights in respect of our Company. DFI Retail Group also does not
have any relationship with any Director or other senior management members of our
Company. DFI Retail Group has no control over, nor is it involved in, (i) the management
and operation of our Company (other than the management and operation of Retail
Technology Asia) and (ii) the preparation for Listing, and cannot exert any influence
during our Company’s bookbuilding and Shares allocation processes;
(iii) Although DFI Retail Group is a core connected person of our Company under the Listing
Rules and hence still falls within the requirements of Rule 9.09 of the Listing Rules, it is in
fact not a connected person under Chapter 14A of the Listing Rules as a minority
shareholder of an insignificant subsidiary in recognition of the fact that as a minority
shareholder of an insignificant subsidiary it does not have the ability to unduly influence
our Company. DFI Retail Group takes a more passive investment position in Retail
Technology Asia. Other than being a minority shareholder of Retail Technology Asia, DFI
Retail Group is an independent third party;
(iv) DFI Retail Group maintains a generic business relationship, similar to other independent
customers, with our Group. DFI Retail Group, as a minority shareholder of Retail
Technology Asia and one of the business partners of our Company, only has access to
business information relating to the operation of RTA and other business collaboration
with our Company. DFI Retail Group does not, and will not have, access to any material
non-public information regarding the Global Offering;
(v) The Cornerstone Investment would not give DFI Retail Group the ability to exert
influence on our Company’s overall bookbuilding and allocation processes by virtue of its
investment. Our Company confirms that the Cornerstone Investment does not impact our
Group’s plan on the Listing, including the listing timetable, the pricing of the Offer Shares
and the offer size;
(vi) Notwithstanding the Cornerstone Investment, DFI Retail Group will not become a
substantial shareholder of our Company (at the issuer level) and will remain as a core
connected person of our Company by virtue of its minority interests in an insignificant
subsidiary upon the Listing. While the Shares to be held by DFI Retail Group will not be
counted as part of the public float of our Company for the purpose of Rule 8.24 of the
Listing Rules, there will be sufficient public float of our Company upon the Listing for the
purpose of Rule 8.08(1) of the Listing Rules;
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WAIVERS AND EXEMPTIONS
(vii) DFI Retail Group will not apply for additional Shares under the International Offering
tranche of the Global Offering;
(viii) our Company will duly disclose in this prospectus the Cornerstone Investment and the
reasons for applying this waiver and the conditions attached to it.
For further information about the cornerstone investment by the Cornerstone Investor, see
“Cornerstone Investor” in this prospectus.
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INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS DOCUMENT
This document, for which our Directors (including any proposed directors who are named as
such in this document) collectively and individually accept full responsibility, includes particulars
given in compliance with 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 Listing Rules for the purpose of giving information with regard to our Group. Our Directors,
having made all reasonable enquiries, confirm that to the best of their knowledge and belief the
information contained in this document is accurate and complete in all material respects and not
misleading or deceptive, and that there are no other matters the omission of which would make any
statement herein or this document misleading.
CSRC FILING
We have filed the required documents with the CSRC, and we have received a filing notice
from the CSRC dated July 5, 2024, confirming our completion of the filing procedures for the Global
Offering and the application for listing of the Shares on the Stock Exchange.
THE HONG KONG PUBLIC OFFERING AND THIS DOCUMENT
This document 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 document
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 document and 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 document, 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, the Underwriters, the Capital Market Intermediaries and any of their respective
directors, agents, employees or advisers or any other party involved in the Global Offering.
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
under 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 terms and conditions of
the International Underwriting Agreement, which is expected to be entered into on or around Wednesday,
December 4, 2024. For full information about the Underwriters and the underwriting arrangement, please
see the section headed “Underwriting” in this document.
Neither the delivery of this document nor any offering, sale or delivery made in connection
with the 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
document or imply that the information contained in this document is correct as of any date subsequent
to the date of this document.
Procedures for application for Hong Kong Offer Shares
The procedures for applying for Hong Kong Offer Shares are set forth in the section headed in
“How to Apply for Hong Kong Offer Shares” in this document.
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INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
Structure and conditions of the Global Offering
Details of the structure of the Global Offering, including its conditions, are set forth in the
section headed “Structure of the Global Offering” in this document.
Over-allotment Option and Stabilization
Details of the arrangements relating to the Over-allotment Option and stabilization are set forth
in the section headed “Structure of the Global Offering” in this document. Assuming that the Over-
allotment Option is exercised in full, our Company may be required to allot and issue up to an
aggregate of 3,866,100 additional Shares.
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/her acquisition of Offer Shares to, confirm that he/she is aware of
the restrictions on offers of the Offer Shares described in this document.
No action has been taken to permit a public offering of the Offer Shares or the general
distribution of this document in any jurisdiction other than in Hong Kong. Accordingly, this document
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 document 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.
Application for Listing of the Shares on the Stock Exchange
We have applied to the Stock Exchange for the granting of the listing of, and permission to deal
in, (i) the Shares in issue and to be issued pursuant to the Global Offering and upon the exercise of the
Over-allotment Option, (ii) the Shares which may be issued upon conversion of the Convertible Bond
and (iii) any Shares to be issued pursuant to the Share Incentive Plans.
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.
Commencement of dealings in the Shares
Dealings in the Shares on the Stock Exchange are expected to commence on Friday,
December 6, 2024. The Shares will be traded in board lots of 100 Shares each. The stock code of the
Shares will be 2586.
Shares will be eligible for admission into CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares and we comply
with the stock admission requirements of HKSCC, the 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 Stock Exchange
is required to take place in CCASS on the second settlement day after any trading day. All activities
106


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INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
under CCASS are subject to the General Rules of HKSCC and HKSCC Operational Procedures in
effect from time to time. Investors should seek the advice of their stockbroker or other professional
advisers for details of the settlement arrangement as such arrangements may affect their rights and
interests. All necessary arrangements have been made to enable the Shares to be admitted into CCASS.
Professional tax advice recommended
You should consult your professional advisers if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding or disposing of, or dealing in, the 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 Shares or your exercise of any rights attaching to the Shares.
Register of members and stamp duty
Our principal register of members will be maintained by our principal share registrar, Harneys
Fiduciary (Cayman) Limited and our Hong Kong register of members will be maintained by the Hong
Kong Share Registrar, Tricor Investor Services Limited, in Hong Kong. Unless the Directors otherwise
agree, all transfer and other documents of title of Shares must be lodged for registration with and
registered by the Hong Kong Share Registrar and may not be lodged in the BVI. Dealings in our
Shares registered in our Hong Kong register of members will be subject to Hong Kong stamp duty.
EXCHANGE RATE CONVERSION
Unless otherwise specified, this document contains certain translations for the convenience
purposes at the following rates:
RMB7.1907: US$1.00
RMB0.9237: HK$1.00
No representation is made that any amounts in HK$, RMB and US$ can be or could have been
converted at the relevant dates at the above rates or any other rates at all.
TRANSLATION
If there is any inconsistency between the English version of this document and the Chinese
translation of this document, the English version of this document shall prevail unless otherwise stated.
However, the English names of any laws and regulations, Governmental Authorities, institutions,
natural persons or other entities for which no official English translation exists are unofficial
translations for your reference only and their names in the original language shall prevail. In particular,
the English names of PRC entities, PRC laws and regulations, and PRC governmental authorities
referred to in this document are translations from their Chinese names and are for identification
purposes; if there is any inconsistency, the Chinese names shall prevail.
107


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INFORMATION ABOUT THIS DOCUMENT AND THE GLOBAL OFFERING
ROUNDING
Certain amounts and percentage figures included in this document have been subject to
rounding adjustments, or have been rounded to a set number of decimal places. Accordingly, figures
shown as totals in certain tables may not be an arithmetic aggregation of the figures preceding them.
Any discrepancies in any table or chart in this document between total and sum of amounts listed
therein are due to rounding.
108


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
DIRECTORS
Name Address Nationality
Executive Director
Mr. ZHANG Feng (ࢤNo. 101, Gate 2,
Building 5, Yard 65
Jingyang East Street
Shijingshan District
Beijing, China
Chinese
Non-executive Directors
Mr. Curtis Alan FERGUSON 718 Yuyuan Road, House No. 5
Changning District
Shanghai, China
American
Mr. CHEN Zhiyu (
௓қρ) Room 403,
No. 100-1, Huacui Street,
Jianye Road,
Tianhe District, Guangzhou,
Guangdong, China
Chinese
Ms. SUN Yuhan (
ρў) No. 424, Gate 4
3rd Floor, No. 120
Yangrouhutong, Xicheng District
Beijing, China
Chinese
Mr. WANG Zhenghao (
ˮ͍ख) Room 1605, Unit 1
Building 3, Yard 2
Lianhuahe Hutong
Xicheng District
Beijing, China
Chinese
Independent Non-executive Directors
Dr. HOU Yang (
ජ) 1-3-2, No. 26-12, Wu’ai Street
Shenhe District, Shenyang
Liaoning, China
Chinese
Ms. CAI Lin (
ᇹ೙ Flat 5A, Tower 11, Avignon
1 Kwun Chui Road, Tuen Mun
New Territories, Hong Kong
Chinese
Dr. MAO Jiye ( ˣਿุ) No. 6-2-1701
The First Skyview West Mountain
Fengxiu East Road
Haidian District
Beijing, China
Canadian
Mr. LI Wei (
ҽၪ) Room 3301, No. 6, Lane 500
Zhongshan South 1st Road
Huangpu District
Shanghai, China
Chinese
See “Directors and Senior Management” for further details.
109


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors UBS Securities Hong Kong Limited
52/F Two International Finance Centre
8 Finance Street
Central, Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central, Hong Kong
China Merchants Securities (HK) Co., Limited
48/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
Overall Coordinators UBS AG Hong Kong Branch
52/F Two International Finance Centre
8 Finance Street
Central, Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central, Hong Kong
China Merchants Securities (HK) Co., Limited
48/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
China International Capital Corporation Hong Kong
Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
110


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Global Coordinators UBS AG Hong Kong Branch
52/F Two International Finance Centre
8 Finance Street
Central, Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central, Hong Kong
China Merchants Securities (HK) Co., Limited
48/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
China International Capital Corporation Hong Kong
Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
Haitong International Securities Company Limited
22/F, Li Po Chun Chambers
189 Des Voeux Road Central
Hong Kong
Joint Bookrunners, Joint Lead
Managers and Capital Market
Intermediaries
UBS AG Hong Kong Branch
52/F Two International Finance Centre
8 Finance Street
Central, Hong Kong
111


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central, Hong Kong
China Merchants Securities (HK) Co., Limited
48/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
China International Capital Corporation Hong Kong
Securities Limited
29/F, One International Finance Centre
1 Harbour View Street
Central
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
CMBC Securities Company Limited
45/F, One Exchange Square
8 Connaught Place
Central
Hong Kong
Haitong International Securities Company Limited
22/F, Li Po Chun Chambers
189 Des Voeux Road Central
Hong Kong
ABCI Capital Limited
(Only as a Joint Bookrunner)
11/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
112


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
ABCI Securities Company Limited
(Only as a Joint Lead Manager)
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central
Hong Kong
BOCOM International Securities Limited
9/F, Man Yee Building
68 Des Voeux Road Central
Hong Kong
Central China International Securities Co., Limited
Room 1304, 13/F, Admiralty Centre Tower 1
18 Harcourt Road
Admiralty
Hong Kong
China Galaxy International Securities (Hong Kong)
Co., Limited
20/F, Wing On Centre
111 Connaught Road Central
Hong Kong
Futu Securities International (Hong Kong) Limited
34/F, United Centre
No. 95 Queensway
Admiralty
Hong Kong
GF Securities (Hong Kong) Brokerage Limited
27/F, GF Tower
81 Lockhart Road
Wan Chai
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
113


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
Orient Securities (Hong Kong) Limited
28/F-29/F
100 Queen’s Road Central
Central
Hong Kong
Patrons Securities Limited
Unit 3214, 32/F., Cosco Tower
183 Queen’s Road Central
Sheung Wan
Hong Kong
Ruibang Securities Limited
9/F, Sang Woo Building
227-228 Gloucester Road
Wan Chai
Hong Kong
Shenwan Hongyuan Securities (H.K.) Limited
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower, One Hennessy
1 Hennessy Road
Hong Kong
Tiger Brokers (HK) Global Limited
1/F, No. 308 Des Voeux Road Central
Sheung Wan
Hong Kong
UOB Kay Hian (Hong Kong) Limited
6/F, Harcourt House
39 Gloucester Road
Hong Kong
Legal Advisers to our Company As to Hong Kong and U.S. laws
Skadden, Arps, Slate, Meagher & Flom and affiliates
42/F, Edinburgh Tower
The Landmark
15 Queen’s Road Central
Central, Hong Kong
As to PRC law
Haiwen & Partners
20/F, Fortune Financial Center
5 Dong San Huan Central Road
Chaoyang District
Beijing, China
114


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
As to PRC law in respect of data compliance
Grandall Law Firm (Beijing)
9/F, Taikang Financial Tower
No.38 North Dongsanhuan Road
Beijing, China
As to the BVI law
Harney Westwood & Riegels
3501 The Center
99 Queen’s Road Central
Hong Kong
Legal Advisers to the Joint Sponsors
and the Underwriters
As to Hong Kong and U.S. laws
Slaughter and May
47/F Jardine House
One Connaught Place
Central, Hong Kong
As to PRC law
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road
Beijing, China
Reporting Accountants and
independent auditor
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road, Central
Hong Kong
Industry Consultant Frost & Sullivan International Limited
Suite 3006, Two Exchange Square
8 Connaught Place
Central, Hong Kong
Receiving bank CMB Wing Lung Bank Limited
45 Des Voeux Road
Central
Hong Kong
115


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CORPORATE INFORMATION
Headquarters Floor 8, Block B
Haidian Culture and Art Building
No. 28, Zhongguancun Street, Haidian District
Beijing, China
Principal place of business in
Hong Kong
Unit 717-718, Level 7, Core F
Cyberport 3, 100 Cyberport Road
Hong Kong
Registered office in the BVI Craigmuir Chambers
P.O. Box 71
Road Town, Tortola
VG 1110, British Virgin Islands
Company website https://www.dmall.com/
(the information contained on this website does not form
part of this document)
Joint company secretaries Ms. WANG Yi
Floor 8, Block B
Haidian Culture and Art Building
No. 28, Zhongguancun Street, Haidian District
Beijing, China
Ms. AU Wing Sze
31/F, Tower Two
Times Square
1 Matheson Street
Causeway Bay, Hong Kong
Authorized representatives Mr. ZHANG Feng
Floor 8, Block B
Haidian Culture and Art Building
No. 28, Zhongguancun Street, Haidian District
Beijing, China
Ms. WANG Yi
Floor 8, Block B
Haidian Culture and Art Building
No. 28, Zhongguancun Street, Haidian District
Beijing, China
Audit committee Ms. CAI Lin (Chairperson)
Dr. HOU Yang
Mr. LI Wei
Remuneration committee Dr. MAO Jiye (Chairperson)
Dr. HOU Yang
Mr. ZHANG Feng
116


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CORPORATE INFORMATION
Nomination committee Mr. Curtis Alan FERGUSON (Chairperson)
Dr. MAO Jiye
Ms. CAI Lin
Principal Share Registrar Harneys Fiduciary (Cayman) Limited
4th Floor, Harbour Place
103 South Church Street
P.O. Box 10240
Grand Cayman, KY1-1002
Cayman Islands
Hong Kong Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Compliance adviser Somerley Capital Limited
20/F, China Building
29 Queen’s Road Central
Hong Kong
Principal banks Industrial Bank Co., Ltd., Beijing Haidian Branch
No. 30, Haidian South Road, Haidian District
Beijing, China
Bank of Beijing Zhongguancun Science Park Branch
1/F Block B, Haidian Culture and Art Building
No. 28, Zhongguancun Street, Haidian District
Beijing, China
117


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INDUSTRY OVERVIEW
The information and statistics set out in this section and other sections of this document
were extracted from different official government publications, available sources from public
market research and other sources from independent suppliers, and from the independent
industry report prepared by Frost & Sullivan (the “Frost & Sullivan Report”). We engaged Frost
& Sullivan for preparing the Frost & Sullivan Report in respect of the Global Offering. We
believe that the sources of the information in this section and other sections of this document are
appropriate sources for such information, and we have taken reasonable care in extracting and
reproducing such information. We have no reason to believe that such information is false or
misleading or that any fact has been omitted that would render such information false or
misleading. The information from official government sources has not been independently verified
by us, the Joint Sponsors, or any of our or their respective directors, officers, representatives,
employees, agents or professional advisers, or any other person or party involved in the Global
Offering, and no representation is given as to the accuracy of such information.
THE LOCAL RETAIL INDUSTRY IN CHINA AND ASIA
Overview of Local Retail Industry
The local retail is an indispensable part of everyone’s daily life. It is defined as the business of
selling merchandise to the consumers through offline channels or online channels. The modern local
retail industry is consisted of three key participants: local retailers, brand owners and consumers. Local
retailers help brand owners distribute their merchandise, and consumers can purchase merchandise in
local retailer’s offline stores or place online orders and receive the purchases through either pick-up or
delivery from fulfillment centers typically within five kilometers radius of proximity. The local retail
industry is a part of the retail industry, which comprises a variety of store-based retail formats and
distributed e-commerce retail. It excludes non-store-based retail formats that are primarily dominated
by centralized e-commerce retail and other non-store based retail formats such as TV shopping,
vending machines, etc. Different from centralized e-commerce retailers, distributed e-commerce
retailers refers to retailers who construct warehouses located in close proximity to neighborhoods for
optimal product freshness.
Industry Segmentation
Retail Industry
Local Retail Industry
Local retail industry includes:
• Store-based retail.
 Distributed e-commerce retail.
Retail industry includes:
 Store-based retail, and store-based retail mainly includes supermarkets, convenience stores, department stores,
specialty retail, etc.
 Non-store-based retail, and non-store-based retail mainly includes centralized e-commerce retail, distributed
e-commerce retail, and others.
.
Beside overlap parts, this area includes:
 Centralized e-commerce retail.
 Other non-store-based retail formats such as TV shopping,
vending machines, etc.
In Asia, the local retail industry has been growing steadily over the past few years. According
to Frost & Sullivan, the market size of the local retail industry in Asia increased from RMB30.0 trillion
118


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INDUSTRY OVERVIEW
in 2018 to RMB31.1 trillion in 2023, at a CAGR of 0.8% after taking a negative 5.2% hit in 2020 due
to the outbreak of COVID-19. Driven by the recovery of consumption after the COVID-19 pandemic,
it is estimated that the market size of the local retail industry by sales value in Asia will rebound and
grow at a CAGR of 1.4% from 2024 to 2028, reaching RMB33.5 trillion in 2028.
Market Size of Local Retail Industry by Sales, Breakdown by Retail Format (Asia)
Trillion RMB,  2018-2028E
0.9 0.8
3.7
12.4
10.8
0.2
2019
0.10.9 0.8
1.6
3.8
11.5
9.8
0.3
2020
0.11.0 0.9
1.7
4.0
12.1
10.2
0.5
2021
0.11.0 0.9
1.8
4.0
12.2
10.1
0.6
2022
0.11.0 0.9
1.9
3.9
12.3
10.3
0.7
2023
1.7
0.1 1.1 0.90.9 1.9
4.1
12.5
10.2
0.8
2024E
0.1
0.8
1.1 1.0
1.7
2.0
4.2
12.7
10.3
0.9
2025E
0.1
3.7
1.1 1.0
12.2
2.0
4.3
12.9
10.3
1.0
2026E
0.2
10.6
1.1
1.0
0.2
2.0
4.4
13.0
10.3
1.1
2027E
0.2
2018
1.2
1.00.1 2.1
0.1
13.1
10.3
1.2
2028E
30.0 30.5
28.9
30.4 30.7 31.1 31.7 32.2 32.7 33.1 33.5
4.5
CAGR 2018-2023 2024E-2028E
Forecourt Retailers 6.6% 5.9%
Convenience Store 2.7% 2.6%
Warehouse Clubs 3.0% 3.0%
Department Store 2.2% 2.0%
Supermarket 1.4% 1.9%
Specialty Retail(1) 0.3% 1.2%
Distributed E-commerce Retail 32.8% 11.3%
Total 0.8% 1.4%
Forecourt Retailers
Convenience Store
Warehouse Clubs
Department Store
Supermarket
Specialty Retail
(1)
Others
Distributed E-commerce Retail
Source: Asian Development Bank, Frost & Sullivan Report
Note:
(1) Specialty Retail includes apparel and footwear specialist retailers, electronics and appliance specialist retailers, health and beauty
specialist retailers, home and garden specialist retailers, and other specialists.
In China, the market size of the local retail industry increased from RMB12.2 trillion in 2018 to
RMB13.4 trillion in 2023, at a CAGR of 1.8% after taking a COVID-19-induced negative 3.6% hit in
2022. With the projected resumption to the growth in Chinese economy, the market size of the local
retail industry is expected to grow at a CAGR of 3.8% in the period from 2024 to 2028, reaching
RMB16.4 trillion by the end of 2028.
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Market Size of Local Retail Industry by Sales, Breakdown by Retail Format (China)
Trillion RMB,  2018-2028E
0.10.5
2.5
6.9
1.6
0.2
2019
0.1
0.10.5
1.0
2.6
6.5
1.4
0.3
2020
0.1
0.20.5
1.0
2.7
6.9
1.5
0.4
2021
0.1
0.20.6
1.0
2.6
6.6
1.4
0.5
2022
0.1
0.20.5
1.1
2.5
6.9
1.5
0.6
2023
1.0
0.1
0.2
0.1
0.6
1.1
2.7
7.2
1.5
0.7
2024E
0.1
0.5
0.3
1.0
0.6
1.2
2.8
7.4
1.5
0.8
2025E
0.1
2.4
0.3
6.5
0.6
1.3
2.9
7.7
1.6
0.8
2026E
0.1
1.5
0.3
0.2
0.6
1.3
3.0
7.9
1.6
0.9
2027E
0.1
2018
0.3
0.1
0.6
1.40.1
8.1
1.7
1.0
2028E
12.2
12.9 12.6
13.3 12.8 13.4
14.1
14.7 15.3 15.8 16.4
3.2
CAGR 2018-2023 2024E -2028E
Forecourt Retailers 7.0% 6.8%
Convenience Store 11.0% 10.8%
Warehouse Clubs 3.5% 3.2%
Department Store 1.1% 4.6%
Supermarket 1.1% 4.0%
Specialty Retail(1) 1.1% 2.9%
Distributed E-commerce Retail 30.8% 10.1%
Total 1.8% 3.8%
Forecourt Retailers
Convenience Store
Warehouse Clubs
Department Store
Supermarket
Specialty Retail(1)
Others
Distributed E-commerce Retail
Source: Asian Development Bank, National Bureau of Statistics of China, Frost & Sullivan Report
Note:
(1) Specialty Retail includes apparel and footwear specialist retailers, electronics and appliance specialist retailers, health and beauty
specialist retailers, home and garden specialist retailers and other specialists.
Pain Points of Local Retail Market in China and Asia
The key local retail participants face different pain points that remain unsolved by the industry
product offerings:
For Local Retailers
 Rising operational challenges amid intensifying competition. With rapidly changing market
dynamics, increasing consumer demands and the competition from new market players, the
offline retailers seek digital transformation to stay competitive. Yet developing in-house IT
infrastructure can either be costly or require high degree of technology know-how which
local retailers lack.
 Increasing need for data-driven business decision making. Many local retailers overly rely on
insights and experience of senior store managers in day-to-day operation, which is individually
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dependent and not scientifically proven. Some local retailers adopt on-premise solutions from
multiple vendors for different functions, which leads to segregated data storage, maintenance
and processing. Over time, this results in inconsistent data formats, data silos, insecure data
storage and management, and ultimately inaccurate data output that could lead to wrong
business decisions and undermines store management.
 Lack of omni-channel service capabilities. The shifting consumer behavior to online purchase
has made it necessary for local retailers to establish online channels. However, many local
retailers lack omni-channel capabilities, either without digital storefronts or have inadequate
infrastructure to unify data across channels and support consumer management, which results
in inferior shopping experience and loss of sales.
 Lack of robust security systems . Weak data security and system security can lead to security
threats, resulting in unauthorized access, use, theft and tampering of data and systems that can
compromise operations. As local retailers’ security awareness increase, they are looking for
solutions to safeguard their data and networks from downtime, interference or malicious
intrusion.
For Consumers
 Greater focus on quality and convenience. With higher disposable income, consumers are
increasing their discretionary expenditures, demanding better quality items and expecting more
convenient and customized shopping experience. This further gives rise to the need for local
retailers to provide integrated online and offline shopping solutions with intuitive user
interfaces, personalized product recommendation and speedy on-demand deliveries that bring
products straight to consumers’ doorsteps.
Local Retail Digitalization Rate in China and Asia
Due to the complex nature and the gigantic size of the local retail industry in China, the
digitalization rate of the local retail industry is relatively low in comparison to other industries in China
and the global counterparts.
According to Frost & Sullivan, the local retail digitalization rate in China and Asia, was 3.1%
and 4.5% in 2023, respectively, significantly lower than that of 13.3% in the U.S. The digitalization
rate of other industries in China, for example, the e-commerce, catering, and transportation industries
in 2023 is 7.7%, 5.1% and 7.1%, respectively, all significantly higher than that of 3.1% of the local
retail industry. Given the rising demands of the local retailers, their digitalization related IT spending is
expected to increase at a CAGR of 5.7% from 2024 to 2028 as compared to that of 2.6% in the U.S.
during the same period.
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RETAIL CLOUD SOLUTION INDUSTRY IN CHINA AND ASIA
Overview of Retail Cloud Solution Industry
Retail
Cloud
Solution
Provider
Consumers
Promotion service
Service Fee
Provide online shopping platform to sell
merchandise to consumers
Charge merchants a commission on a pro-rata basis or
charge a fixed fee on a regular basis
Provide an online shopping platform with a
close-range delivery
Obtain online user traffic and charge the corresponding
delivery fee for the O2O order
Offering merchandise for consumers
Increase in GMV to boost revenue of local retailers
Provide a in-store purchase
with a better shopping experience
Obtain offline user traffic and generate advertising
revenue through digital display on advertisers
Payment service for retailers
Service fee
Hardware equipment revenue and corresponding
commission rate/commission fee based on the GMV
Product management, store management system
and customer management system
Provide supply chain management system by
connect customer’s demand and inventory
Service fee
 Local
Retailer
Retail SaaS
Marketing
On-demand
E-commerce
Brand
Owner
Source: Frost & Sullivan Report
Retail cloud solution refers to cloud-based solution that assists retailers and brand owners in the
local retail industry to achieve digital transformation in their daily operations and thereby address pain
points related to customer retention, operational efficiency, decision-making response speed,
advertising efficiency and data silos to provide value to all participants in the local retail industry.
Retail cloud solution includes retail SaaS, value-added services in marketing and advertising as well as
on-demand e-commerce services. Retail SaaS as the core service component of the retail cloud
solution, helps customers in the local retail industry develop configurable function modules that cater
to their business needs and achieve digital transformation.
Market Size of Retail Cloud Solution Industry in China and Asia
The retail cloud solution market has maintained sustainable strong growth historically and is
expected to continue to grow in the near future. Favorable policies, well-established cloud
infrastructure and growing digitalization demands will be the key industry growth catalysts.
The market size in terms of GMV represents the total transaction volume facilitated by local
retail cloud solution providers in the local retail industry. In terms of GMV, the market size of the retail
cloud solution industry in China increased from RMB186.5 billion in 2018 to RMB856.7 billion in
2023, at a CAGR of 35.7%. The market size is expected to grow at a CAGR of 26.9% in the period
from 2024 to 2028, reaching RMB2,800.1 billion by 2028. As for Asia, the market size of the retail
cloud solution industry in terms of GMV increased from RMB383.4 billion in 2018 to RMB1,439.0
billion in 2023, at a CAGR of 30.3%. The market size is expected to grow at a CAGR of 22.4% in the
period from 2024 to 2028, reaching RMB3,920.4 billion by 2028.
In terms of revenue, the market size of the retail cloud solution industry in China increased
from RMB3.4 billion in 2018 to RMB19.0 billion in 2023, at a CAGR of 40.8%. The market size is
expected to grow at a CAGR of 28.8% from 2024 to 2028, reaching RMB67.0 billion by 2028. As for
Asia, the market size of the retail cloud solution industry increased from RMB6.1 billion in 2018 to
RMB29.7 billion in 2023, at a CAGR of 37.1%. The market size is expected to grow at a CAGR of
23.9% from 2024 to 2028, reaching RMB86.3 billion by 2028.
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Growth Drivers for Retail Cloud Solution Industry in China and Asia
 Favorable Policy Support. Asian countries, notably China, have implemented regulations and
policies that significantly promote the development of the Internet and data intelligence sectors.
China, being the largest market for retail cloud solutions in Asia, has seen its competitive
landscape enhanced through initiatives like the Outline of the 14th Five-Year Plan (2021-2025)
for National Economic and Social Development and Vision 2035 of the PRC
ʕ਷਷͏຾᏶ձ
ʞϋ஝ྌձ 2035. These strategic plans emphasize the
imperative to embrace the digital era, harness the potential of big data, fortify cyberspace
capabilities, and expedite the creation of a digital economy, society, and governance framework.
 Well Established Cloud Infrastructure Serving as a Basis. Favorable governmental policies
towards cloud computing technology have spurred the digitization transformation and addressed
the intricate management needs of enterprises. This has catalyzed a surge in demand for cloud
technology, leading to significant service expansions by cloud companies to cater to Chinese
consumers and businesses. Front-runners have esta blished robust cloud infrastructures, enabling
retail cloud solution providers to pivot towards innovative product development. This focus on
innovation is pivotal for the industry’s accelerated growth in China.
Entry Barriers for Retail Cloud Solution Industry in China and Asia
 Intensive long-term R&D commitment. Retail cloud solution providers with advanced IT
infrastructure and strong data analytics capabilities can better collect, integrate and analyze data
across different links of the local retailers’ business process to develop more accurate, holistic, and
actionable insights. However, they need to make sustained long-term investment to build a native
cloud architecture, adopt large-scale application, and develop constant function upgrades to help
address evolving customer demand amid changing market environment. As such, large amount of
capital must be continuously invested in products research and development and cultivating
technical talents, among others. Huge capital commitment poses a high barrier to new entrants.
 Deep industry know-how and expertise. Retail cloud solution providers develop deep
understandings of local retail industry pain points through years of working with local retailers
and brand owners of different sizes and formats, which enable them to provide end-to-end and
pragmatic solutions to address their needs. Domain knowledge and the time required to build
the industry expertise that underpins retail cloud solutions prevents potential entrants from
competing with incumbents.
 Strong brand recognition and large customer base. Existing market players have built brand
recognition and established customer base. This customer base is typically highly loyal as
switching vendor implies significant cost and risks of consumer loss. In addition, incumbents
may likely have developed stronger research or product development capability, as they
upgrade their solutions through various operations of their local retailer customers, which
reinforces their market position.
Market Opportunities for Retail Cloud Solution Industry in China and Asia
 Navigating the Complexity of the Local Retail Market. The local retail market is characterized
by its complexity, from extensive supplier management chains to diverse sales channel
configurations. Large local retail entities face the necessity of connecting with a wider array of
suppliers, while smaller local retailers must allocate substantial capital to secure stable supply
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chains. Additionally, the significant regional disparities in geography, consumer behavior, and
economic development levels further compound this complexity. Retail cloud solution
providers have the opportunity to leverage these challenges by offering integrated resources and
management solutions to streamline and expand retail operations.
 Embracing the AI Era for Enhanced Agility. The advent of Artificial Intelligence (AI) has
ushered in a new era of opportunity for the retail cloud solution industry. AI and machine
learning algorithms are being increasingly integrated into retail cloud solutions, providing deep
insights into customer behaviors, preferences, and purchasing trends. This enables local
retailers to more accurately predict customer needs and offer seamless, personalized shopping
experiences that boost customer satisfaction and loyalty. On the operational front, AI facilitates
price optimization, fraud detection, workforce training, and scalability, thereby enabling local
retailers to achieve greater agility in their operations.
Future Trends for Retail Cloud Solution Industry in China and Asia
 Growing Importance of Omni-channel Capabilities. Online shopping has become a pivotal
strategic direction for many local retailers and brand owners. The realization is dawning that
e-commerce extends beyond merely setting up online channels; it encompasses the digital
transformation of the entire spectrum of core operational capabilities. Retail cloud solution
providers play a crucial role in this transformation by developing omni-channel service
capabilities. These capabilities allow local retailers and brand owners to sell products online,
establish digital storefronts, and integrate data across omni-channels for enhanced data insights.
The ability to make enterprise decisions based on real-time operational data improves
efficiency and delivers better operating results.
 Focus on Customer Success Contributing to a More Sustainable Business Model. Retail cloud
solution providers are increasingly embracing a mindset focused on customer success to foster
long-term, beneficial relationships with their clientele. Providers that align their revenue
models with the success of their customers’ businesses stand to benefit from the growth of local
retailers and brand owners. For instance, through a take-rate-fee model, retail cloud solution
providers gain from the commercial expansion of their clients and are incentivized to offer
superior cloud solutions. This approach not only enhances the relationship between providers
and clients but also fosters a sustainable business model centered on a win-win situation.
Competitive Landscape of Retail Cloud Solution Industry in China and Asia
According to Frost & Sullivan, we are the largest retail cloud solution provider in China by
GMV, with a market share of 13.3% in 2023. Meanwhile, we have successfully expanded our
businesses to other countries and regions in Asia, comprising Hong Kong SAR, Cambodia, Singapore,
Malaysia, Macau SAR, Indonesia, the Philippines and Brunei. The expansion has allowed us to
become the largest retail cloud solution provider in Asia by GMV in 2023, occupied a market share of
10.9%, according to Frost & Sullivan.
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According to Frost & Sullivan, the top 5 retail cloud solution providers in Asia held a market
share of 28.3% in terms of GMV in 2023. Top 5 retail cloud solution providers in Asia by GMV is
illustrated in the following:
Top 5 Retail Cloud Solution Providers in Asia, by GMV (2023)
Ranking Name Market Share
1 Our Company 10.9%
2 Company A (1) 5.0%
3 Company B (2) 4.8%
4 Company C (3) 4.8%
5 Company D (4) 2.8%
Source: Frost & Sullivan Report
Notes:
(1) Company A: A listed ERP company founded in 1972 and listed on the New York Stock Exchange. This company mainly provides cloud
solutions as well as other core applications and services to help customers establish digitalized operations.
(2) Company B: A listed retail cloud solution company founded in 2014 and listed on the Nasdaq Stock Exchange. This company provides
retail cloud solutions, SaaS products, on-demand e-commerce service, and other technology-based products and services to help local
retailers achieve digitalization.
(3) Company C: A listed cloud solution company founded in 1998 and listed on the Nasdaq Stock Exchange. This company provides cloud
solutions for various industries, including retail, consumer packaged goods, financial services, etc., to help customers establish
digitalized operations.
(4) Company D: A listed ERP company founded in 1993 and listed on the Hong Kong Exchange. This company provides cloud solutions as
well as other products and services to help customers establish digitalized operations
According to Frost & Sullivan, the top 5 retail cloud solution providers in China held a market
share of 35.6% in terms of GMV in 2023. Top 5 retail cloud solution providers in China by GMV is
illustrated in the following:
Top 5 Retail Cloud Solution Providers in China, by GMV (2023)
Ranking Name Market Share
1 Our Company 13.3%
2 Company B 8.1%
3 Company A 4.9%
4 Company D 4.7%
5 Company E (1) 4.5%
Source: Frost & Sullivan Report
Notej
(1) Company E: A private retail SaaS company founded in 2012. This company provides comprehensive retail digitalized modules and
services to help retailers establish digitalized retail operations.
RETAIL DIGITALIZATION SOLUTION INDUSTRY IN CHINA AND ASIA
Overview of Retail Digitalization Industry
Retail Digitalization Solution Industry refers to a digitalization solution that is designed to aid local
retailers in establishing digitally integrated reta il operations. This is achieved through the provision of
configurable SaaS modules, optional collaboration with supplementary hardware or software, or the
development of tailored solutions to meet customers’ unique requirements. The primary objective is to
enhance local retailers’ operational performance, st rengthen cost-reduction, and further realize revenue
growth, while ultimately improving the shopping experience for end consumers. Retail digitalization
solutions mainly include retail SaaS, retail location digitalization solutions and other related value-added
service, which can be sold on a standalone basis or as part of a solution package.
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Retail SaaS is the core service component of the retail digitalization solution industry. Retail
SaaS providers are dedicated to serving customers in the local retail industry by developing
configurable function modules that cater to the business needs of local retailers and a wide range of
digital transformation along the local retail value chain. Meanwhile, retail location digitalization
solution encompasses a suite of hardware and software designed to assist local retailers in establishing
digitally integrated retail locations, enhance store management efficiency, and improve the shopping
experience. These solutions primarily leverage IoT (internet-of-things) devices which are equipped
with sensors and processing capabilities and further facilitate task performance by embedded software.
The major characteristics of IoT devices can connect and exchange data with other internet-enabled
devices over communication networks that optimize various tasks within the retail process. Retail
location digitalization solutions can be collaborated with retail SaaS to achieve full spectrum
digitalized integration of local retail scenarios which include supply chain management, production
management, store management, etc.
Business Model Analysis of Retail Digitalization Solution Industry
The three primary business models in the retail digitalization solution industry are the
subscription model, take rate model, and fixed fee model. The subscription model involves customers
paying a recurring weekly, monthly, or annual fee for use to retail digitalization solution, with the
flexibility to renew or cancel as needed. The take rate model charges a pre-agreed percentage of local
retailers’ GMV processed by the digitalization solution. The fixed fee model is utilized for custom
development projects tailored to specific customer needs, with revenue recognized at point of sale or
over the contractual term.
Market Size of Retail Digitalization Solution Industry in China and Asia
In terms of revenue, the market size of the retail digitalization solution industry in China
increased from RMB4.8 billion in 2018 to RMB18.7 billion in 2023, at a CAGR of 31.0% and is
expected to further grow at a CAGR of 27.7% in the period from 2024 to 2028, reaching
RMB61.8 billion in 2028.
Market Size of Retail Digitalization Solution Industry in China, by Revenue
Billion RMB, 2018-2028E
4.8 6.5 9.2
14.3 16.4 18.7
23.2
31.8
40.3
50.3
61.8
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
CAGR 2018-2023 2024E-2028E
Retail Digitalization Solution Industry in China 31.0% 27.7%
Source: Frost & Sullivan Report
In terms of revenue, the market size of the retail digitalization solution industry in Asia
increased from RMB8.8 billion in 2018 to RMB31.0 billion in 2023, at a CAGR of 28.5% and is
expected to further grow at a CAGR of 21.1% in the period from 2024 to 2028, reaching
RMB80.0 billion in 2028.
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Market Size of Retail Digitalization Solution Industry in Asia, by Revenue
Billion RMB, 2018-2028E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
8.8 11.1
15.6
23.4 27.2 31.0
37.2
47.4
57.5
68.4
80.0
CAGR 2018-2023 2024E-2028E
Retail Digitalization Solution Industry in Asia 28.5% 21.1%
Source: Frost & Sullivan Report
Retail Cloud Solution Industry and Retail Digitalization Solution Industry
Market players in both the retail cloud solution industry and retail digitalization industry
operate within the local retail sector, offering retail SaaS as the essential service component of the
retail digitalization solution industry. While retail cloud solution providers offer services not only to
local retailers but also to other participants such as brand owners and consumers, retail digitalization
service providers specialize in delivering solutions to assist local retailers in establishing digitally
integrated retail operations both online and offline, across various retail scenarios, and optimizing their
operations across all retail processes. Post-Restructuring, our primary focus is directed towards
providing specialized retail digitalization services tailored specifically to local retailers, reflecting our
commitment to enhancing their digital capabilities and streamlining their overall retail operations.
Industry Segmentation
Retail Digitalization
Solution Industry
Retail Cloud Solution
Industry
 Retail SaaS Service
 Including supplemental software or/and hardware is designed
to streamline the adoption of retail cloud solution, that might
sell at standalone basis or a solution package.
 Other related retail
digitalization solution
and value-added
service to help local
retailers to build
digitalized retail
operation.
 On-demand e-commerce service (O2O)
 Marketing and Advertising (cloud-based
service, mainly through on-demand e-
commerce platform)
Characteristics between retail cloud solution providers
and retail digitalization solution providers:
 Local retailers
Target
Customers
Service Nature
 Offer a comprehensive
set of service includes
retail SaaS, value-added
services in marketing
and advertising as
well as on-demand
e-commerce services.
 Local retailers, brand
owners, and
consumers
 Specialize in delivering
digitalization solutions
to assist local retailers
in establishing digitally
integrated retail
operations.
Retail Digitalization
Solution Providers
Retail Cloud
Solution Providers
Growth Drivers for Retail Digitalization Solution Industry in China and Asia
 Technology and Data-driven Innovation. Retail digitalization solution refers to a digitalization
solution that is designed to aid local retailers in establishing digitally integrated retail
operations. This is achieved through the provision of configurable SaaS modules, optional
collaboration with supplementary hardware or software, or the development of tailored
solutions to meet customers’ unique requirements. With local retail business insights and
market intelligence based on AI and big data analytics, local retailers are better poised to
enhance their operational performance, strengthen cost-reduction, and ultimately improve the
shopping experience for end consumers.
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 Rising Demands for Intelligent Shopping Experience. With the development of technology,
consumers expect to get a more personalized, intelligent, and convenient shopping experience
in stores. Retail digitalization solution providers offer software services to local retailers to
analyze consumers’ behavioural data promptly and provide customized recommendations. At
the same time, retail digitalization solution providers are able to offer local retailers with
advanced hardware products such as AIoT-enabled shopping carts and scan-and-go solutions to
simplify the shopping process and improve the intelligence and convenience of shopping.
Retail digitalization encompasses a suite of hardware and software designed to assist local
retailers in establishing digitally integrated retail locations, enhance store management
efficiency, and improve the shopping experience constantly.
Entry Barriers for Retail Digitalization Solution Industry in China and Asia
 Omni-channel Barrier. Omni-channel ability enables local retailers to realize full data
synchronization and break data silos. It necessitates that retail digitalization solution providers
possess not only data acquisition and analysis capabilities but also a comprehensive
understanding of the depth and diversity of retail channels. Additionally, they must have multi-
dimensional, in-depth data usage and analysis capabilities to further accomplish multi-channel
data synergy. Most new entrants in this industry without much retail experience have difficulty
in gaining a deep understanding of local retailers’ multiple channels.
 Financial Barrier. For retail digitalization solution providers to build a native cloud architecture
and realize large-scale adoption of product applications, it is a long-term continuous investment,
which requires continuous adaptation to business development and environmental changes, and
continuous high-speed iteration. Therefore, a large amount of capital must be invested in product
R&D, cultivating professional talents, improving management capabilities, etc. The huge capital
requirement poses a barrier to new entrants to the industry.
Market Opportunities for Retail Digitalization Solution Industry in China and Asia
 Seamless Integration of Hardware and Software. Local retailers often operate with legacy
hardware that may not be compatible with newer retail software. Vendor fragmentation
exacerbates this issue, as local retailers purchase hardware and software from different vendors,
each with various standards and protocols. This challenge presents significant market
opportunities in the integration of hardware and software to achieve a coordinated effect. For
example, hardware such as automated checkout systems can be combined with software for
inventory management to reduce waste and prevent stockouts, thereby increasing workflow
efficiency and creating streamlined operations through seamless integration.
 Complete Product Matrix to Meet the Needs of Local Retailers in All Scenarios and Links.
Retail digitalization solution providers with a complete product matrix can explore more market
opportunities and meet the diverse needs of local retailers across various scenarios, from the
supply chain to end consumers. This includes solutions such as supply chain optimization and
customer relationship management. As more local retailers adopt e-commerce, digitalization
solution providers offer integrated omni-channel solutions that enable local retailers to
seamlessly manage their online and offline operations. These solutions encompass a product
matrix of hardware and software to support functions like click-and-collect, ship-to-store, and
inventory visibility across channels. Therefore, applying a full product matrix to local retailers
represents a growing market opportunity.
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Future Trends for Retail Digitalization Solution Industry in China and Asia
 Growing Adoption of Retail Digitalization Solutions due to Evolving Customer Needs. As local
retail business scenarios diversify and competition intensifies, local retailers and brand owners
are accelerating their digitalization process. They increasingly seek solution providers that are
capable of offering related retail digitalization solutions and value-added services to help local
retailers build digitalized retail operations, such as advanced hardware products supported by
hi-tech to underpin nimble and cost-effective customization and constant upgrades. Retail
digitalization solution providers will also focus more on the development of product features
and the application of artificial intelligence, business intelligence, and other innovative
technologies to fulfill retailers, brand owners, and consumers’ evolving needs.
 Growing Importance of Synergy between Hardware and Software in Establishing Digitally
Retail Location. The synergy between hardware and software is increasingly crucial in
establishing digitally optimized retail locations. For example, the real-time data collected on
customer behaviors and store conditions by hardware devices equipped with sensors processed
by sophisticated software offers insights that can be used to optimize store layout, manage
inventory more effectively, and tailor marketing strategies to consumers. Also, on regulatory
compliance, hardware-software systems can track and store data securely, ensuring that local
retailers adhere to legal requirements and protect customer information. Therefore, the
integrated approach is essential for local retailers to thrive in the rapidly evolving digital
landscape.
Competitive Landscape of Retail Digitalization Solution Industry in China and Asia
According to Frost & Sullivan, the top 5 retail digitalization solution providers in Asia held a
market share of 19.0% in terms of revenue in 2023. According to Frost & Sullivan, we were the third
largest retail digitalization solution provider in terms of revenue in Asia in 2023. Top 5 retail
digitalization solution providers in Asia by revenue is illustrated in the following:
Top 5 Retail Digitalization Solution Providers in Asia, by Revenue (2023)
*
Ranking Name Market Share
1 Company C 5.4%
2 Company A 4.4%
3 Our Company 4.2%
4 Company D 2.6%
5 Company E 2.5%
Source: Frost & Sullivan Report
* Unlike retail cloud solution providers, whose GMV can be recorded as services are provided to both business customers and consumers,
retail digitalization solution service providers only offer software and hardware to business customers. These providers generally cannot
track the final transaction of merchandise. Consequently, GMV information is typically not available for retail digitalization solution
providers.
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According to Frost & Sullivan, the top 5 retail digitalization solution providers in China held a
market share of 23.2% in terms of revenue in 2023. According to Frost & Sullivan, we were the largest
retail digitalization solution provider in terms of revenue in China in 2023. Top 5 retail digitalization
solution providers in China by revenue is illustrated in the following:
Top 5 Retail Digitalization Solution Providers in China, by Revenue (2023)
Ranking Name Market Share
1 Our Company 6.5%
2 Company A 5.0%
3 Company D 4.4%
4 Company E 4.1%
5 Company F (1) 3.3%
Source: Frost & Sullivan Report
Notej
(1) Company F: A listed retail SaaS company founded in 2013 and listed on the Hong Kong Exchange, This company provides
comprehensive retail digitalized modules and supplementary services to help retailers establish digitalization retail operations.
Overview of Retail SaaS Industry
Software-as-a-Service, or SaaS, is a cloud-based method of providing software to users. Based
on target customers, the industry players can be classified into vertical SaaS provider and general SaaS
provider

 General SaaS providers serve customers with standardized solutions offered across multiple
industries, such as CRM (customer relationship management), ERP (enterprise resource planning),
HRM (human resource management), SCM (supply chain management), etc.
 Vertical SaaS providers focus exclusively on serving customers in particular industries, such as
retail, real-estate and manufacturing. Vertical SaaS providers offer a suite of function modules
which specifically dedicated to fit the characteristics of the industry.
General SaaS Vertical SaaS
Core
Competitiveness
Marketing
Mode
Target
Customers
 Powerful product features.
 General SaaS can take advantage of the technology and experience of the software
industry to provide common functionality that is applicable to different industries.
 Industry know-how.
 Vertical SaaS focuses on one or a few industries, based on the digital needs of business
scenarios in specific industries, and targeted to solve industry pain points. It is easy to
build competitive barriers due to increasing industry knowledge and investment.
 To serve as many customers as possible.  To serve a certain type of customer well.
 General SaaS is designed to provide a wide ra nge of services. There are many different
types of businesses that choose to use general SaaS solutions, such as supply chains,
retailers and manufacturers.
 Vertical SaaS was developed by people with expertise in the specific industry it targets
and is specifically designed for clear industry segments. Rather than covering a broad
product category, Vertical SaaS aims to focus more on industry vertical markets.
 General SaaS needs to try to reach different target audiences individually through
multiple marketing campaigns, such as automated marketing emails, marketing
campaigns and other search engine optimization/service strategies.
 Vertical SaaS takes a less resource-intensive approach to marketing than the general
SaaS model. Vertical SaaS campaigns focus on customer success stories because the
target customers are homogeneous.
Commercial
Purpose
Source: Frost & Sullivan Report
Vertical SaaS products are developed to cater to the needs of specific industries, such as the
retail industry, real estate industry, and others, or to service a certain type of customer. Unlike general
SaaS providers, vertical SaaS providers normally focus on one or a few industries based on the digital
needs of business scenarios in specific industries, and target to solve industry pain points. It is easier to
build competitive barriers due to increasing industry knowledge and investment.
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Retail SaaS, as the core service component of the retail digitalization solution industry, is
dedicated to serving customers in the local retail industry by developing configurable function modules
that cater to the business needs of local retailers and a wide range of digital transformation along the
local retail value chain. The local retail industry has witnessed an increasing adoption of retail SaaS as
local retailers are eager to utilize digitalization solutions to enhance operational performance,
strengthen cost-reduction, and better serve end-consumers. The market size of retail SaaS industry in
terms of revenue in China increased at a CAGR of 40.0% from 2018 to 2023.
Market Size of Retail SaaS Industry in China and Asia
In terms of revenue, the market size of the retail SaaS industry in China increased from
RMB1.8 billion in 2018 to RMB9.7 billion in 2023, at a CAGR of 40.0% and is expected to further
grow at a CAGR of 34.7% in the period from 2024 to 2028, reaching RMB43.4 billion in 2028.
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
9.7
1.8 2.7 4.3
7.3 8.4
13.2
19.2
25.9
33.9
43.4
Market Size of Retail SaaS Industry in China, by Revenue
Billion RMB, 2018-2028E
CAGR 2018-2023 2024E-2028E
Retail SaaS Industry in China 40.0% 34.7%
Source: Frost & Sullivan Report
In terms of revenue, the market size of the retail SaaS solution industry in Asia increased from
RMB3.5 billion in 2018 to RMB16.9 billion in 2023, at a CAGR of 36.9% and is expected to further
grow at a CAGR of 27.2% in the period from 2024 to 2028, reaching RMB57.0 billion in 2028.
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
16.9
3.5 4.8
7.7
12.3 14.6
21.7
29.7
38.0
47.0
57.0
CAGR 2018-2023 2024E-2028E
Retail SaaS Industry in Asia 36.9% 27.2%
Market Size of Retail SaaS Industry in Asia, by Revenue
Billion RMB, 2018-2028E
Source: Frost & Sullivan Report
Key Growth Driver of Retail SaaS Industry in China and Asia
 Digital Transformation in Local Retail. To enhance customer stability and loyalty, operational
efficiency, advertising effectiveness, acquire data-driven insights and reduce service response
time, local retailers need to carry out digital transformation to overcome the limitations of
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INDUSTRY OVERVIEW
traditional retail model. This would allow them join the trend of digital economy that accurately
matches supply and demand, and integrate digital technology into the development of the local
retail industry.
 Flexible IT Support. To utilize on-premise deployments, local retailers have to establish a
professional operation team to offer technical support for the deployments. The expenditure of
building an IT operations and maintenance team cannot meet the local retailers’ recent
preference for flexible pay-as-you-go services. By applying cloud-based deployments instead,
local retailers no longer require operations and maintenance staff to work on-site. The IT
maintenance services for cloud-based SaaS products would be flexibly configured and charge
on-demand.
 Business Process Optimization. Rapidly evolving retail market needs and shifts in the economy
have generated the need for improved business processes. SaaS solutions have been a
significant impact in the local retail landscape, helping online and offline retailers in critical
business applications. For local retailers, cloud-based SaaS solutions assist them in managing
complex supplier networks, consumers’ convenience expectations and other varying
requirements. Retail SaaS adoption has been redefining workflows and businesses, establishing
new trends.
Entry Barriers for Retail SaaS Industry in China and Asia
 Profound Industry Insights and Competency. Retail SaaS is a modern service industry that
integrates technology, management, operation, and sales, which has the characteristics of strong
comprehensiveness. Retail SaaS providers that exclusively focus on serving the local retail
industry in China leverage their extensive industry knowledge and deep understanding of local
retailers’ complex and evolving business models and the latest industry trends. Therefore, they
are well-positioned to provide value-added products and services, address local retailers’
diverse and emerging needs, and capture market opportunities.
 Technical R&D Barrier. Retail SaaS is a knowledge-intensive and technology-application-
oriented industry which helps enterprises to integrate data and realize efficient and accurate
retail management. The core software products involve natural language processing, distributed
service frameworks, image recognition, big data analytics, and other technical fields. It is
necessary to establish a continuous and effective R&D and innovation system with relatively
high technical threshold. For new entrants in the industry, it is difficult to gather, build, and
nurture talents in a short period of time.
Market Opportunities for Retail SaaS Industry in China and Asia
 Multiple Policies Urging to Accelerate Digital Transformation. In 2023, the State Council
issued the “Overall Layout Plan for the Construction of Digital China” (
ண዆᜗б
҅஝ྌ), highlighting the need to accelerate the digital transformation of traditional industries
and expedite digital development. The development of the digital economy has been
consistently emphasized in government work reports. Retail SaaS acts as a crucial driver for
enterprise digital upgrades, unlocking the potential of business data value and providing
tailored solutions. Digital transformation presents significant growth opportunities for the local
retail market.
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 Customization and Integration. Numerous retail SaaS providers offer customizable solutions
that can be tailored to meet the specific needs of various retail businesses. These solutions are
designed to integrate seamlessly with existing systems, ensuring better coordination and data
flow. For instance, feature customization allows local retailers to activate or deactivate specific
functionalities based on their requirements, such as inventory management and e-commerce
integration. Additionally, batch data transfer enables information updates at specified intervals,
presenting significant market opportunities for industry evolution.
Future Trend of Retail SaaS Industry in China and Asia
 Regeneration of Business Model. Retail SaaS providers are seeking to diversify their business
model by launching more value-added services. Many industry participants have expanded
their product portfolio through establishing O2O platform or developing related hardware
products for the purposes of risk diversification and income increase.
 Focus on Product Capability. Influenced by the trend of the Internet industry in China, many
retail SaaS providers have adopted a prevalent strategy that uses an unprofitable model first to
acquire customers and then seeks to monetize its traffic through other means when its customer
base is large enough. This strategy results in less optimal products and is unable to form a
sustainable business model with an emphasis on service excellence. In the future, the focus of
retail SaaS providers should return to the building of their product capabilities.
 Integration of Cloud and On-premises Products. Many retail SaaS providers are striving to
integrate their own cloud-based products with the on-premises software products used by their
customers. This integration aims to combine online and offline data, including consumer data,
operational information, and warehouse data, to form a closed loop of compatible data.
Ultimately, this integration could improve operational efficiency and reduce costs.
REPORT COMMISSIONED BY FROST & SULLIVAN
We commissioned Frost & Sullivan to conduct a detailed research and analysis of retail cloud
solution industry in which we operate. Frost & Sullivan is an independent global market research and
consulting company which was founded in 1961 and is based in the United States. Services provided
by Frost & Sullivan include market assessments, competitive benchmarking, and strategic and market
planning for a variety of industries. We have agreed to pay a fee of US$152,400 to Frost & Sullivan in
connection with the preparation of the Frost & Sullivan Report. We are of the view that the payment of
such fee does not impair the fairness of the conclusions drawn in the Frost & Sullivan Report. The
commissioned report was prepared by Frost & Sullivan independent of the influence of the Company
and other interested parties. We have extracted certain information from the Frost & Sullivan Report in
this section, as well as in the sections headed “Summary,” “Risk Factors,” “Business,” “Financial
Information” and elsewhere in this document to provide our potential investors with a more
comprehensive presentation of the industry in which we operate. Except as otherwise noted, all of the
data and forecasts contained in this section are derived from the Frost & Sullivan Report.
Frost & Sullivan prepared its report based on its in-house database, independent third party
reports and publicly available data from reputable industry organizations. Where necessary, Frost &
Sullivan contacts companies operating in the industry to gather and synthesize information in relation
to the market, prices and other relevant information. Frost & Sullivan believes that the basic
assumptions used in preparing the Frost & Sullivan Report, including those used to make future
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INDUSTRY OVERVIEW
projections, are factual, correct and not misleading. Frost & Sullivan has independently analyzed the
information, but the accuracy of the conclusions of its review largely relies on the accuracy of the
information collected. Frost & Sullivan’s research may be affected by the accuracy of these
assumptions and the choice of these primary and secondary sources.
During the preparation of the Frost & Sullivan Report, Frost & Sullivan performed both
primary and secondary research, and obtained knowledge, statistics, information on and industry
insights into Asia’s and China’s retail cloud solution industry and retail digitalization industry in which
we operate. Primary research involved interviewing key industry experts and leading industry
participants. Secondary research involved reviewing company reports, independent research reports,
and data based on Frost & Sullivan’s own research database. The Frost & Sullivan Report was
compiled based on the following assumptions: (1) the overall social, economic, and political
environment in China is expected to remain stable during the forecast period; (2) relevant key drivers
are likely to drive the continued growth of China’s retail cloud solution market throughout the forecast
period; and (3) there is no extreme force majeure or unforeseen industry regulations in which the
industry may be affected in either a dramatic or fundamental way. For the avoidance of doubt, impacts
of the COVID-19 outbreak have been taken into account when compiling information in the Frost &
Sullivan Report.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
OVERVIEW
Our Company was incorporated in the BVI on February 5, 2015 and became the holding
company of our subsidiaries. Dmall Life Digital and Dmall Life Network are the onshore holding
companies of our Group and we have established a number of operating subsidiaries in the PRC.
During the Track Record Period, we operated our business through three main segments: retail core
service cloud, e-commerce service cloud and others. During the Track Record Period, we conducted a
series of product optimizations to further align our product and service offerings with our objective of
promoting our retail digitalization solutions, which have always been the primary focus of our
business. Consequently, the bulk of the services we provided under the e-commerce service clouds,
such as O2O platform operation services and delivery services, had been phased out by the end of
2023. In April 2024, we conducted a series of restructuring transactions to divest all of our equity
interests in Dmall Fresh (Beijing), our former VIE, to minimize the underlying legal and regulatory
risks. The Restructuring led to the cessation of the operation of the Dmall app and mini programs. At
the time of the Restructuring, Dmall app was primarily associated with the provision of online
advertising services under the marketing and advertising service cloud we previously operated and
payment processing services under the retail core service cloud. See “Recent Development,”
“Business—Others” and “Business—E-commerce service cloud.”
KEY BUSINESS MILESTONES
The following is a summary of our key business development milestones:
Year Event
2015 Our Company was founded, and we commenced business operation and introduced our services to
retailers and brand owners.
We started to provide services to Wumei Group.
2016 We began to fully digitalize our technology systems and started to provide online-to-offline integration
services to retailers.
2017 We started to provide online-to-offline solutions services and AIoT solutions to Wumei Group.
We reached a strategic cooperation with Zhongbai (1).
2018 We developed the core modules of the Dmall OS system.
We started to provide online-to-offline integration solutions services and AIoT solutions to the
Maidelong Entities and Yinchuan Xinhua Group.
2019 We launched our proprietary one-stop Dmall OS system that addresses the full range of operational
needs of a retailer.
We started to provide online-to-offline solutions services and AIoT solutions to Chongqing Department Store
Group.
We started to provide Dmall OS system and deployed to Wumei Group.
We established Retail Technology Asia with DFI Retail Group Management Limited (“ DRGML”,
formerly known as Dairy Farm Management Limited, together with each of its subsidiaries,
collectively referred to as “ DFI Retail Group ”). DFI Retail Group is a leading pan-Asian retailer
operating under a number of well-known brands, such as Wellcome, Mannings, Giant and Guardian.
DFI Retail Group also owns and operates the 7-Eleven franchises in select Asian markets.
2020 We expanded our business into Hong Kong SAR.
We entered into cooperation agreement with 7-Eleven (Guangdong) and became its sole digital service
provider.
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Year Event
2021 We expanded our business into Cambodia and Singapore.
We expanded our business into the European market by cooperating with the Metro Group.
We started to provide Dmall OS system to Maidelong Entities, Yinchuan Xinhua Group and Chongqing
Department Store Group.
We entered into cooperation with Guoquan Shihui, a well-known food and ingredient brand in China.
(2)
We entered into a series of equity transfer agreements to acquire 51% equity interest in Shenzhen
Enjoy.
2022 We expanded our business into Macau SAR.
We started to provide Dmall OS system to Metro Group stores in Poland.
2023 We entered into a framework agreement with Metro Digital GmbH, the digital service provider for all
companies of the Metro AG, to provide retail digitalization solution for franchise customers of Metro
Group. We have further entered into different module agreements with Metro Group to progressively
integrate our services into around 500 stores in Poland.
SM Group became one of our customers.
2024 We commenced and completed the Restructuring, which resulted in the divestment of all of our equity
interests in Dmall Fresh (Beijing), our former VIE.
Notes:
(1) Zhongbai is a leading retailer in China and an independent third party of the Company. Given Zhongbai’s prominent position in the
domestic retail industry and our market-leading comprehensive retail digitalization solutions, we have established a strategic cooperation
to assist Zhongbai in undertaking digitalization initiatives in several areas of their business, including supply chain management,
warehousing and logistics, online delivery, membership services and product management.
(2) Guoquan Shihui is a home meal products brand in China owned by Guoquan (HKEX: 2517), offering a variety of ready-to-eat, ready-to-
heat, ready-to-cook and prepared ingredients, with a focus on at-home hotpot and barbecue products. Our collaboration with Guoquan
Shihui was initiated based on their recognition of our expertise in digital consultancy and system development services. The scope of our
collaboration involves the digitization of their membership, product and store operations. The fair value of the equity investment we
made in Guoquan with the principal amount of RMB129.4 million was RMB140.7 million, RMB153.2 million, RMB196.6 million and
RMB109.7 million as of December 31, 2021, 2022, 2023 and June 30, 2024, respectively. For our investment in Guoquan, we have no
significant influence, joint control or control over the relevant entity based on the fact that we do not participate in any operating and
financial policies of the relevant entity nor exercise our influence on the operating and financial policies or have representation on the
board of directors of the relevant entity. Guoquan Enterprise Consulting (Shanghai) Co., Ltd. is a wholly owned subsidiary of Guoquan,
and held convertible redeemable preferred shares of our Company as of the Latest Practicable Date.
OUR PRINCIPAL SUBSIDIARIES AND OPERATING ENTITIES
As of the Latest Practicable Date, we have 27 subsidiaries. Set forth below are certain details of
our principal subsidiaries during the Track Record Period and as of the Latest Practicable Date:
Company
Principal business
activities
Place of
establishment
Date of
establishment
Ownership
percentage
held by the
Group
Dmall (Shenzhen) Digital Development of retail core
service cloud, and
e-commerce service cloud
PRC April 2, 2019 100%
Dmall Life Network The WFOE / research and
development
PRC September 7, 2015 100%
Shenzhen Enjoy
(1) Software development and
maintenance services
PRC August 5, 2002 49.75%
Note:
(1) Shenzhen Enjoy is owned by Shenzhen Xintonglu, SUN Kewei, Shenzhen Jieyi Zhicheng Investment Management Center (Limited
Partnership), ZHANG Weiguo, ZHENG Yu, LIU Yinglin, LIU Gang, XU Gaoping, XIAO Jiancai, LUO Liang, ZHANG Shu, LI Ting,
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YU Lehua, ZHANG Guixiang, WU Zhangshun, HOU Jian, BI Zhongliang, WANG Yafeng, JIANG Yafei and other minority
shareholders as to 49.75%, 17.09%, 8.00%, 6.15%, 5.73%, 2.31%, 2.12%, 1.52%, 0.80%, 0.79%, 0.78%, 0.78%, 0.73%, 0.61%, 0.40%,
0.39%, 0.31%, 0.29% and 0.20%, respectively. SUN Kewei, Shenzhen Jieyi Zhicheng Investment Management Center (Limited
Partnership), ZHANG Weiguo, ZHENG Yu, LIU Yinglin, LIU Gang, XU Gaoping, XIAO Jiancai, LUO Liang, ZHANG Shu, LI Ting,
YU Lehua, ZHANG Guixiang, WU Zhangshun, HOU Jian, BI Zhongliang, WANG Yafeng, JIANG Yafei and other minority
shareholders are independent third parties.
OUR CORPORATE DEVELOPMENT
Establishment of our Company, Dmall Cayman, Dmall BVI and Dmall HK
(1) Our Company
Our Company was incorporated in the BVI with limited liability on February 5, 2015 and
became the holding company of our Group. On the date of incorporation, 485,075,000 ordinary shares
and 14,925,000 ordinary shares of our Company, each with a par value of US$0.0001, were each
allotted and issued at par to CyberAge Limited which was wholly-owned by Dr. Zhang and Hong Xing
Capital Holdings I, Ltd., a pre-IPO investor at the time, which is controlled by IDG-Accel China
Capital II Investors L.P. For subsequent shareholding changes of our Company as part of the
Reorganization and Pre-IPO Investment, see “—Reorganization” and “—Pre-IPO Investments” in this
section.
(2) Dmall Cayman
Dmall Cayman was incorporated in the Cayman Islands as an exempted company with limited
liability on March 26, 2015 and became the holding company of Dmall BVI.
(3) Dmall BVI
Dmall BVI was incorporated in the BVI on April 7, 2015 by Dmall Cayman to act as a holding
company of Dmall HK.
(4) Dmall HK
Dmall HK was incorporated in Hong Kong with limited liability on April 28, 2015 by Dmall
BVI to act as a holding company of our subsidiaries in Hong Kong and PRC.
Establishment of our Principal Subsidiaries
(1) Dmall (Shenzhen) Digital
Dmall (Shenzhen) Digital was established in PRC on April 2, 2019 by Dmall Life Digital for
development of retail core service cloud and e-commerce service cloud. Dmall (Shenzhen) Digital has
undergone several capital increases and, as of the Latest Practicable Date, has a registered capital of
RMB2.6 billion. Dmall Life Digital transferred 100% equity interests of Dmall (Shenzhen) Digital to Dmall
Life Beijing and completed the business registration change on January 4, 2024. As of the Latest
Practicable Date, Dmall Life Beijing holds 100% equity interests of Dmall (Shenzhen) Digital.
(2) Dmall Life Network
Dmall Life Network was established in PRC on September 7, 2015 by Dmall HK for research
and development. Dmall Life Network has undergone several capital increases and several capital
decrease and, as of the Latest Practicable Date, has a registered capital of US$178.0 million. Dmall
Life Network has been wholly-owned by Dmall HK since its incorporation.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
(3) Shenzhen Enjoy
Shenzhen Enjoy was established in PRC on August 5, 2002 for software development and
maintenance services. Shenzhen Enjoy has undergone several capital increases and, as of the Latest
Practicable Date, has a registered capital of RMB25.0 million. As of the Latest Practicable Date,
Shenzhen Enjoy was held by Shenzhen Xintonglu as to 49.75%. See “—Acquisitions and Disposals—
Shenzhen Enjoy” in this section for further details.
For details of the changes in shareholding in our principal subsidiaries, see “Statutory and
General Information—A. Further Information about Our Group—2. Changes in the number of issued
shares of our Company” in Appendix IV to this document.
Recent Expansion in Asia
(1) Retail Technology Asia
On December 3, 2019, Dmall HK and DRGML entered into a joint venture agreement (“ Initial
Agreement”) pursuant to which Dmall HK and DRGML agreed to form a joint venture for the purpose
of providing technology solutions and services for retailers outside China to help them with the digital
transformation of operational processes and marketing, supply, payment and merchandise
management. The Initial Agreement was further amended and restated on April 1, 2022 together with
Retail Technology Asia becoming a party to that agreement (the “ JV Agreement”). DFI Retail Group
is a leading pan-Asian retailer operating under a number of well-known brands, such as Wellcome,
Mannings, Giant and Guardian. DFI Retail Group also owns and operates the 7-Eleven franchises in
select Asian markets.
Pursuant to the Initial Agreement, Retail Technology Asia was incorporated in Hong Kong on
January 14, 2020 to provide retailers with a cloud-based retail platform relating to the digital
transformation of customer experiences. At the time of incorporation, Retail Technology Asia was held
by Dmall HK as to 50% and DRGML as to 50%, respectively.
After the formation of Retail Technology Asia in 2020, the parties agreed under a share and
business transfer agreement dated April 4, 2022 (the “ SBTA”) entered into between DRGML, Dmall
HK, and Retail Technology Asia that Dmall HK shall increase its shareholding in Retail Technology
Asia from 50% to 58.5% (while DRGML’s interest in Retail Technology Asia would decrease from 50%
to 41.5%) through share buyback by Retail Technology Asia in May 2022. Under the SBTA, DRGML
also has the right to require Dmall HK to increase its interest in Retail Technology Asia from 58.5% to
67% at any time after the date falling nine months after May 2022 (February 2023) and before the date
falling thirty months after May 2022 (November 2024). In May 2022, Retail Technology Asia bought
back 4,358,974 of its shares from DRGML and canceled those shares pursuant to the SBTA. On
September 22, 2023, an amendment agreement to the SBTA (the “ Amendment Agreement ”) was
executed, pursuant to which, among other things, Dmall HK shall subscribe for shares in Retail
Technology Asia for an amount of US$10,509,093 such that its shareholding in Retail Technology Asia
would increase to 67%. As we expect to service and empower retail companies in Southeast Asia in the
future and reduce reliance on retailers (e.g. DRGML) being joint venture partners, and considering that
the business of Retail Technology Asia has expanded to broader overseas markets, Dmall HK has
continually been entering into discussions with DRGML about the prospect of further strengthening
Dmall HK’s control over Retail Technology Asia and deepening the integration of Retail Technology
Asia’s technology architecture and solutions into those of Dmall, which would be in the best interest of
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our Company and our shareholders. Mutual discussions between the parties continued since March 2024
to finalize the terms and details for Dmall HK to incr ease its interest in Retail Technology Asia through
an acquisition of shares in Retail Technology Asia held by DRGML instead of the original proposal in
the SBTA and the Amendment Agreement. After due discussion among the parties following the SBTA
and the Amendment Agreement, as well as reference being made to an independent valuation report on
Retail Technology Asia, in November 2024, terms and conditions of the acquisition have been arrived at
after arm’s length negotiation between the parties for Dmall HK to acquire 11% of shares of Retail
Technology Asia at a consideration of USD10,308,000 from DRGML (“the Acquisition”). The
Acquisition is a continuation and testament of Dmall HK’s strategy to gaining further control over the
decision-making, strategic direction and operational management of Retail Technology Asia through
increasing its shareholding in Retail Technology Asia. After the completion of the Acquisition and as of
the date of this prospectus, Retail Technology Asia is held by Dmall HK as to 69.5% and DRGML as to
30.5%, respectively.
The financial statements of Retail Technology Asia has been consolidated into our financial
statements since its establishment. For further details of the Joint Venture Agreement, see “Business—
Joint venture agreement of Retail Technology Asia.”
(2) Dmall Digital International Pte. Limited
Dmall Digital International Pte. Limited was incorporated in Singapore with limited liability on
October 26, 2022 by Dmall BVI to expand our overseas business.
(3) Dmall Digital Philippines Inc.
Dmall Digital Philippines Inc. was incorporated in Philippines with limited liability on
December 11, 2023 by Dmall Digital International Pte. Limited to expand our overseas business.
Recent Expansion in Europe
(1) Dmall Digital Europe Kft.
Dmall Digital Europe Kft. was incorporated in Hungary with limited liability on December 21,
2022 by Dmall Digital International Pte. Limited to expand our business into the European market.
ACQUISITIONS AND DISPOSALS
(1) Shenzhen Enjoy
Established in 2002, Shenzhen Enjoy, as an ERP provider, has accumulated extensive industry
experience, customer resources and technical capabilities in the retail industry. On May 18, 2021, in
order to achieve business synergies and better focus on our core business, expand our enterprise
customer portfolio to cover more retail formats and broaden our sales network, and to expand our
independent customer base, Shenzhen Xintonglu entered into a series of share purchase agreements
with Shenzhen Jieyi Zhicheng Investment Management Center (Limited Partnership) and certain
individual shareholders of Shenzhen Enjoy, Mr. SUN Kewei, Mr. ZHANG Weiguo, Ms. XU Jing,
Mr. ZHENG Yu, Ms. LIU Yinglin, Mr. LIU Gang, Mr. XIAO Jiancai, Mr. XU Gaoping, Mr. LUO
Liang and Ms. SHI Qihong, each an independent third party, to acquire 51% equity interest in
Shenzhen Enjoy for a cash consideration of RMB248.88 million.
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Shenzhen Jieyi Zhicheng Investment Management Center (Limited Partnership) is the
employee shareholding platform of Shenzhen Enjoy, with Mr. Sun Kewei as the executing partner. It is
ultimately beneficially owned by a number of employees of Shenzhen Enjoy, each of whom an
independent third party. The vendors of Shenzhen Enjoy do not have past or present relationship,
including, without limitation, family, business, financing, employment or otherwise with the Company,
their subsidiaries, shareholders, directors, senior management or any of their respective associates. The
consideration was determined after arm’s length negotiation with reference to a valuation report issued
by an independent valuer dated April 26, 2021 and was settled in three tranches. As per the valuation
report conducted using the market approach, it has been determined that the fair value of the equity
interest held by all shareholders of Shenzhen Enjoy as of December 31, 2020, amounts to RMB528
million. According to the aforementioned report, both parties have agreed to a delivery price of
RMB20 per share for a 51% equity interest in Shenzhen Enjoy, which corresponds to 12.444 million
shares, thus resulting in a total consideration of RMB248.88 million.
On August 5, 2021, Shenzhen Xintonglu acquired 21.03% equity interest in Shenzhen Enjoy
for a consideration of RMB102,640,000 (“ Tranche One ”). On November 26, 2021, Shenzhen
Xintonglu acquired additional 20.04% equity interest in Shenzhen Enjoy for a consideration of
RMB97,760,000 (“ Tranche Two ”). On November 26, 2021, the former controlling shareholder of
Shenzhen Enjoy delegated his 9.93% of voting rights, representing 2,424,000 shares of Shenzhen
Enjoy, to Shenzhen Xintonglu pursuant to the voting rights delegation agreement to allow the
Company to obtain control over Shenzhen Enjoy. As a result, Shenzhen Xintonglu was entitled to 51%
of voting rights at the shareholders’ meetings, effective as of the date of the agreement until the
settlement of Tranche Three. This enabled us to consolidate the financial statements of Shenzhen
Enjoy into our financial statements, effective from November 26, 2021. On November 4, 2022,
Shenzhen Xintonglu subscribed the remaining 9.93% equity interest in Shenzhen Enjoy and the
consideration of RMB48,480,000 was fully settled on November 11, 2022 (“ Tranche Three ”). Upon
completion of such transfer, Shenzhen Enjoy became owned as to 51% by Shenzhen Xintonglu. In
November 2022, Shenzhen Enjoy planned to grant options or other types of awards to its employees,
potentially diluting the Company’s 51% equity interest and resulting in its loss of control over
Shenzhen Enjoy.
To maintain the Group’s stable control over Shenzhen Enjoy, on November 24, 2022, the
former controlling shareholder of Shenzhen Enjoy further delegated his 3.9% of voting rights,
representing 976,000 Shares of Shenzhen Enjoy, to Shenzhen Xintonglu pursuant to certain voting
rights delegation agreement, resulting in a total of 55% of voting rights.
On May 25, 2023, Shenzhen Enjoy approved a share incentive plan granting up to 613,000
restricted shares, which would dilute the Company’s shareholding in Shenzhen Enjoy to 49.75%. The
grant was made to eight grantees, including a director (who is also a senior manager), three other
senior managers and four core employees of Shenzhen Enjoy. The exercise price of the restricted
shares is RMB8.5 per share; the unlocking of the restricted shares is subject to certain performance
targets and will take place in two equal installments over 24 months after the date on which the
registration procedures for the restricted shares are completed. On July 19, 2023, the required
registration procedures with China Securities Depository and Clearing Corporation Limited in respect
of the said restricted shares was completed and the 613,000 restricted shares became issued on the
same day. However, with the delegation of the additional 3.9% of voting rights, the Company
maintained control over Shenzhen Enjoy. Pursuant to certain voting rights delegation agreement, the
former controlling shareholder of Shenzhen Enjoy will increase the number of shares for which he
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
delegates his voting rights to the Group to maintain its voting rights in Shenzhen Enjoy no less than
51% if Shenzhen Enjoy implements other equity incentive plans in the future that dilute the Group’s
shares.
Leveraging the Group’s platform advantages, rich industry experience and technological
expertise, Shenzhen Enjoy has been able to reach out to recognized retail customers that were only
available on the Group’s platform and has enabled it to promote the research and development of new
products as well as the iterative upgrading of its existing products. Moreover, maintaining stable
control and management is crucial for the implementation of Shenzhen Enjoy’s strategic development
plans. Therefore, it is in the best interests of Shenzhen Enjoy’s technology and business growth for the
Group to retain control over it.
As advised by our PRC Legal Adviser, the acquisition has been properly and legally completed
and settled and all necessary regulatory approvals required under PRC laws have been obtained.
(2) Shandong Orange Bay
Shandong Orange Bay Information Technology Co., Ltd. (“ Shandong Orange Bay ”) is an
investment holding company, the main asset being equity interest in a company engaged in the
development of telecommunications facilities, and was owned by the Company, Mr. WANG Hui and
Ms. LIU Wenfeng as to 50%, 25% and 25%, respectively. On August 15, 2022, in order to improve
Shenzhen Enjoy’s overall operation and management efficiency of its assets, Shenzhen Enjoy entered
into an equity transfer agreement with Mr. WANG Hui and Ms. LIU Wenfeng, each an independent
third party, to acquire 50% equity interest in Shandong Orange Bay, for a cash consideration of
approximately RMB9.0 million. The consideration was determined based on arm’s length negotiations
between the vendors and Shenzhen Enjoy taking into account a number of factors including the paid-in
share capital of the Orange Bay and the value of Shandong Orange Bay’s assets and was fully settled
on September 23, 2022. Upon completion of such transfer, Shandong Orange Bay became wholly-
owned by Shenzhen Enjoy and it completed the change in registration with the relevant local
Administration for Market Regulation on October 24, 2022. On December 8, 2022, we completed the
relevant business and financial handover with Shandong Orange Bay and consolidated the financial
statements of Shandong Orange Bay into our financial statements.
As advised by our PRC Legal Adviser, the acquisition has been properly and legally completed
and settled and all necessary regulatory approvals required under PRC laws have been obtained.
(3) Beijing Xianmei Technology Service Co., Ltd.
Pursuant to the equity transfer agreement dated February 21, 2023, Dmall Zhilian acquired 55%
equity interest in Beijing Xianmei Technology Service Co., Ltd. from Beijing Liansheng Yingke
Decoration Construction Engineering Co., Ltd. and Shanghai Gaussian Automation Technology
Development Co., Ltd., at a consideration of RMB2.77 million to develop intelligent cleaning
business. The consideration was determined after arm’s length negotiation with reference to the
valuation as assessed by an independent professional valuer and the registered capital of Beijing
Xianmei Technology Service Co., Ltd. Beijing Liansheng Yingke Decoration Construction
Engineering Co., Ltd. is controlled by Wumei Technology and is ultimately beneficially owned by Dr.
Zhang. Shanghai Gaussian Automation Technology Development Co., Ltd. is ultimately beneficially
owned by Mr. CHENG Haotian, an independent third party of the Company. Upon completion of such
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
transfer, Beijing Xianmei Technology Service Co., Ltd. became owned as to 55% by Dmall Zhilian
and 45% by Shanghai Gaussian Automation Technology Development Co., Ltd. The change in
registration with the relevant local Administration for Market Regulation was completed on
February 22, 2023 and Beijing Xianmei Technology Service Co., Ltd. became a subsidiary of our
Company on February 28, 2023.
As advised by our PRC Legal Adviser, the acquisition has been properly and legally completed
and settled and all necessary regulatory approvals required under PRC laws have been obtained.
(4) DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
Pursuant to the share and business transfer agreement dated April 4, 2022, DFI Retail Group
acquired 100% equity interest in each of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore)
PTE. Limited from Retail Technology Asia for a consideration valued at US$6.9 million. DFI Digital
(Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited were established as subsidiaries of Retail
Technology Asia under the joint venture agreement entered into between our Group and DFI Retail Group
and served as operating subsidiaries of Retail Technology Asia to provide Dmall OS solutions and O2O e-
commerce business services to DFI Retail Group. Dmall OS solutions are cloud-based operating system
services that help digitalize DFI Retail Group’s operations and support intelligent business decision making,
while O2O e-commerce mainly refers to online ordering and delivery services that help to sell products to
consumers online via software and digital applications. The consideration was determined based on arm’s
length negotiation between our Company and DFI Retail Group, taking into account the net present value of
the Dmall OS solutions and O2O e-commerce business services held by the two entities being disposed of,
on a cash-free and debt-free basis. Based on the arm’s length negotiation between our Group and DFI Retail
Group, it was decided that our Group would focus on Dmall OS solutions while DFI Retail Group would
take over the O2O business. As a result, DFI Digital (Hong Kong) Limited and DFI Digital (Singapore)
PTE. Limited were disposed to DFI Retail Group and all the cloud-based operating system services
businesses were ceased. Post-transaction, our Group continued to provide Dmall OS solutions to DFI Retail
Group through Retail Technology Asia. Upon completion of the transfer, DFI Digital (Hong Kong) Limited
and DFI Digital (Singapore) PTE. Limited became wholly-owned by DFI Retail Group. For more
information, please refer to “Financial Information—Description of Major Components of Our Results of
Operations—Other net income/(loss)—Disposal of DFI Digital (Hong Kong) Limited and DFI Digital
(Singapore) PTE. Limited” in this document.
(5) Dmall (Shenzhen) Development
Pursuant to the equity transfer agreement dated October 31, 2022, Wumei South Commercial
Co., Ltd. (“ Wumei South Commercial ”), a subsidiary of Wumei Technology, acquired 100% equity
interest in Dmall (Shenzhen) Development Co., Ltd. (“ Dmall (Shenzhen) Development ”) from our
Group, for a cash consideration of RMB79.8 million. The consideration was determined after arm’s
length negotiation between our Group and Wumei South Commercial, with reference to the net asset
value of Dmall (Shenzhen) Development as determined by an independent valuer and has been fully
settled. Assets held for sale mainly consist of investment properties in Shenzhen, Guangdong, and cash
and cash equivalents. On November 16, 2022, our Group completed the equity transfer of Dmall
(Shenzhen) Development to Wumei South Commercial. The disposal of Dmall (Shenzhen)
Development to Wumei South Commercial would not lead to competing interest between our
Company and Wumei South Commercial as Dmall (Shenzhen) Development had not conducted any
material operational activities. The comparatively high net asset value of Dmall (Shenzhen)
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Development is attributable to the investment properties held in Shenzhen, Guangdong, and it did not
hold any in-house intellectual property at the time of the disposal. Wumei South Commercial acquired
Dmall (Shenzhen) Development in order to expand its operational scale and achieve business synergies
as it already owns several other investment properties in the same region. We initially acquired
properties in the Shenzhen region with the intention of expanding our workforce in the area. However,
as we did not end up recruiting as many employees as anticipated, we opted to rent properties to
accommodate our employees in Shenzhen instead of using the acquired properties. This led to a
strategic reevaluation of the use and classification of these properties and in 2022, the equity transfer.
Our Directors believe that this equity transfer was in the best interest of the Company as it provided
additional liquidity, enabling us to execute our business plan and concentrate on our key operations.
During the Track Record Period and up to the Latest Practicable Date, save as disclosed above,
we did not conduct any other acquisitions, disposals or mergers that we consider to be material to us.
In particular, for acquisitions conducted during the Track Record Period, none of them if made by us as
a listed company on the Stock Exchange would have been classified as a major transaction or a very
substantial acquisition under Chapter 14 of the Listing Rules. To the best knowledge of our Directors,
none of the divested entities were involved in any material non-compliance incidents during the Track
Record Period and up to the time of their disposal.
REORGANIZATION
The following chart sets forth our Group’s simplified corporate and shareholding structure
immediately prior to the commencement of the Reorganization:
100%
100%
100%
100%
100%
Onshore
Offshore
Dmall Inc.
(BVI)
Dmall Cayman
(Cayman Islands)
Dmall BVI
(BVI)
Dmall HK
(Hong Kong)
Dmall Life Digital
Dmall (Shenzhen) Digital
Shenzhen Xintonglu
Dmall Fresh (Beijing)(1)
Dmall Life Network
Dmall Fresh (Shenzhen)
100%
First
Contractual
Arrangements
100% 100%
Retail Technology Asia
(Hong Kong)
58.5%
Note:
(1) Dmall Fresh (Beijing) was owned by Mr. Zhang, Ms. LU Yuxin and Dr. Zhang as to 51%, 44% and 5%, respectively. Ms. LU Yuxin is
an employee of the Company.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
The principal steps of the Reorganization, carried out in preparation for the Listing are set out below.
Transfer of 50% Equity Interest in Dmall Fresh (Beijing)
On October 21, 2022, Mr. Zhang, Ms. LU Yuxin and Dr. Zhang transferred their 6%, 39% and
5% equity interests in Dmall Fresh (Beijing) to Shenzhen Xintonglu at a consideration of
RMB0.6 million, RMB3.9 million and RMB0.5 million, respectively. The consideration for each of the
aforementioned transfers was determined based on the registered capital of Dmall Fresh (Beijing) and
has been fully settled. Subsequent to the transfer, Dmall Fresh (Beijing) is owned by Mr. Zhang,
Ms. LU Yuxin and Shenzhen Xintonglu as to 45%, 5% and 50%, respectively.
Termination of the First Contractual Arrangements and Implementation of the Second
Contractual Arrangements
Dmall Fresh (Beijing) held ICP licenses for the offering of online advertising business through
Dmall app and mini-programs. Due to foreign investment restrictions on ICP licenses, we historically
controlled Dmall Fresh (Beijing) through contractual arrangements. During the Track Record Period,
Dmall Fresh (Beijing) operated the Dmall app and mini-programs. The Dmall app and mini-programs
provided a platform for retailers to sale their products to consumers. We also provided online
advertising services for retailers and brand owners to place advertisements on the Dmall app and mini-
programs and assisted retailers in the management of their virtual stores.
On October 21, 2022, Dmall Life Network entered into a termination agreement of contractual
agreements with Dmall Fresh (Beijing) and the then shareholders of Dmall Fresh (Beijing) to terminate the
series of contractual arrangements entered into between Dmall Life Network, Dr. Zhang, Mr. Zhang and
Ms. LU Yuxin (the “First Contractual Arrangements”) in order to comply with the then applicable PRC
laws and regulations while maintaining effective control over all of our operations. On October 21, 2022,
Shenzhen Xintonglu signed a series of new contractual arrangements with Dmall Fresh (Beijing) and its
shareholders in order to exercise and maintain control over the operation of Dmall Fresh (Beijing) and to
obtain economic benefits from Dmall Fresh (Beijing) (the “Second Contractual Arrangements”).
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
RESTRUCTURING
The following chart sets forth our Group’s simplified corporate and shareholding structure
immediately prior to the commencement of the Restructuring:
Shareholders of the Group
Dmall Inc. (BVI)
Dmall China Inc. (Cayman)
Dmall Asia Inc. (BVI)
Dmall Hong Kong Limited (HK)
Dmall Life Digital
Dmall (Shenzhen) Digital
Shenzhen Xintonglu Dmall Fresh (Beijing)(1)
100%
100%
100%
100%
100%
100%
100%
Offshore
Onshore
Dmall Life Beijing
100%
Second
Contractual
Arrangements
50%
Note:
(1) Dmall Fresh (Beijing) was owned by the Mr. Zhang as to 45%, Ms. LU Yuxin as to 5% and Shenzhen Xintonglu as to 50%. Ms. LU
Yuxin is an employee of our Company.
The principal steps of the Restructuring are set out below.
Termination of the Second Contractual Arrangements
On April 18, 2024, Mr. Zhang and Ms. LU Yuxin registered for the release of equity interests
in Dmall Fresh (Beijing) from pledge under certain equity pledge agreement in connection with the
Second Contractual Arrangements. On April 23, 2024, Mr. Zhang and Ms. LU Yuxin repaid all loans
acquired from Shenzhen Xintonglu under certain loan agreements in connection with the Second
Contractual Arrangements. Shenzhen Xintonglu, Dmall Fresh (Beijing), Mr. Zhang and Ms. LU Yuxin
entered in to a termination agreement for the Second Contractual Arrangements on April 24, 2024,
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
pursuant to which our Company will no longer have effective control over, Dmall Fresh (Beijing).
Immediately following the termination of the Second Contractual Arrangements, we no longer enjoy
any rights in connection with the Second Contractual Arrangements.
Transfer of 50% Equity Interest in Dmall Fresh (Beijing) by Shenzhen Xintonglu
To minimize the underlying legal and regulatory risks, on April 24, 2024, Shenzhen Xintonglu
transferred its 50% equity interests in Dmall Fresh (Beijing) to Mr. Zhang at a consideration RMB1
and to Ms. LU Yuxin at a consideration of RMB1, respectively. The consideration for the transfer was
determined based on the valuation of Dmall Fresh (Beijing) by PricewaterhouseCoopers Consultants
(Shenzhen) Limited Beijing Branch. Immediately following the transfer, we no longer hold, directly or
indirectly, any interest in Dmall Fresh (Beijing); Mr. Zhang holds 51% and Ms. LU Yuxin holds 49%
equity interests in Dmall Fresh (Beijing). The market value of the total equity of Dmall Fresh (Beijing)
was assessed using both the income approach and the market approach. Under the income approach
valuation, the valuer considered the Dmall Fresh (Beijing)’s cash flows as well as its asset and liability
position. Based on its analysis, the valuer has determined the equity value of Dmall Fresh (Beijing)
was negative RMB10.11 million. The major assumptions adopted for the valuation include the
business and revenue model of Dmall Fresh (Beijing), the accuracy of the future performance
assessment provided by the management of Dmall Fresh (Beijing) and the expectation that there will
be no significant changes in relevant laws and regulations, industry policies, fiscal and monetary
policies, or the economic environment during the forecast period.
Compliance with PRC laws
Our PRC Legal Advisor has confirmed that all requisite approvals or filings have been obtained
or made in accordance with PRC laws and regulations in all material aspects regarding our
Reorganization as set out above in “—Reorganization,” and the Restructuring as set out above in
“—Restructuring.”
Transactions with Dmall Fresh (Beijing) after Restructuring
After the Restructuring and following the Listing, our Group will carry out certain transactions
with Dmall Fresh (Beijing) (including its subsidiaries). Please see the sections headed “Connected
Transactions—Dmall Fresh Retail Core Service Cloud Framework Agreement” and “Connected
Transactions—Trademark Licensing Agreement” in this document for further details.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
SHAREHOLDING OF OUR COMPANY
Set forth below is a summary of the shareholding structure of our Company as of the date of
this document:
Shareholders
Ordinary
Shares
Series A
Preferred
Shares
Series B
Preferred
Shares
Series B+
Preferred
Shares
Series B++
Preferred
Shares
Series C
Preferred
Shares
Series C+
Preferred
Shares
Total
number of
Shares(1)
Ownership
percentage
as of
the Latest
Practicable
Date(2)
Celestial Limited ........................ 423,470,475 ———— —— 423,470,475 49.19%
ULTRON AGE INC. ..................... 13,500,000 ———— —— 13,500,000 1.57%
Odor Nice Limited ....................... — 68,880,650 — — — — — 68,880,650 8.00%
IDG USD Fund Shareholders (4)
Lovely Tree Holdings Limited ........... — 37,119,350 — — — — — 37,119,350 4.31%
OLIVE SPARK LIMITED .............. 13,179,525 ———— —— 13,179,525 1.53%
IDG-Accel China Capital II L.P. .......... — — 2,417,424 — — — 1,233,643 3,651,067 0.42%
IDG-Accel China Capital II Investors
L.P. .............................. — — 107,828 — — — 55,034 162,862 0.02%
HANDY CLOUD LIMITED ............ — ———— 1,196,429 — 1,196,429 0.14%
BRAVE GIANT LIMITED ................ — ———— 10,714,286 — 10,714,286 1.24%
Retail Enterprise Corporation Limited (5) ...... — — 10,101,010 — — — — 10,101,010 1.17%
Image Frame Investment (HK) Limited (ݖ
࿴ҳ༟(ಥ)ʮ̡)(6) ................ — — 22,727,273 — — 5,357,143 — 28,084,416 3.26%
CCC Axiom Limited ..................... — — 5,050,505 — — — — 5,050,505 0.59%
Shenzhen Investment Holding Bay Area Equity
Investment Fund Partnership (Limited
Partnership) (
Υྫ
Υྫ) ..................... — — — 22,727,273 — — — 22,727,273 2.64%
GREATER ASCEND LIMITED ........... — — — 2,777,778 — — — 2,777,778 0.32%
BIG COSMOS GLOBAL LIMITED ( ɽρᐑଢ
ʮ̡) ............................ — — — — 15,600,000 — — 15,600,000 1.81%
FOR JOY DEVELOP LIMITED (Ϟ
ʮ̡) .............................. — — — — 2,799,621 — — 2,799,621 0.33%
HENGAN MEGA JUMBO INVESTMENTS
LIMITED (ʮ̡) ........ — ———— 8,571,429 — 8,571,429 1.00%
PAK YUEN ASSET MANAGEMENT
LIMITED (ʮ̡) ........ — ———— 3,571,429 — 3,571,429 0.41%
Ultimate Lenovo Limited ................. — ———— 1,785,714 — 1,785,714 0.21%
CHAIN SUCCESS LIMITED
(ʮ̡)........................ — ———— 1,071,429 — 1,071,429 0.12%
Shanghai Xingwu Enterprise Management
Center (Limited Partnership) ( ɪऎጳᗯΆุ
၍ଣʕː(Υྫ) ) ................... — ———— 28,571,429 — 28,571,429 3.32%
Shenzhen Guanling Bafang Investment Center
(Limited Partnership) ( ଉέ̹၍ჯɞ˙
Υྫ) ................. — ———— 1,785,714 — 1,785,714 0.21%
Beijing Xintiandi Investment Fund
Management Co., Ltd. (ږ
ʮ̡) ........................ — ———— 1,428,571 — 1,428,571 0.17%
Beijing Fengjin Investment Co., Ltd. (ږ
ʮ̡) ........................ — ———— 1,071,429 — 1,071,429 0.12%
EverestLu Holding Limited (ʮ
̡) ................................. — ———— 25,000,000 — 25,000,000 2.90%
BLISS MOMENT LIMITED .............. — ———— 3,571,429 — 3,571,429 0.41%
Futian Guiding Fund (ږ
ʮ̡) ........................ — ———— 964,286 — 964,286 0.11%
CMBC INTERNATIONAL HOLDINGS
LIMITED (ʮ̡) . . . . — ———— 1,785,714 — 1,785,714 0.21%
CNCB (Hong Kong) Investment Limited (ڦ
ვ(ಥ)ʮ̡) ................ — ———— 3,571,429 — 3,571,429 0.41%
KINGDEE INTERNATIONAL SOFTWARE
GROUP COMPANY LIMITED (ሁ਷ყழ
ʮ̡)....................... — ———— 8,214,286 — 8,214,286 0.95%
INVESTOR GUIDANCE LIMITED ........ — ———— 1,428,571 — 1,428,571 0.17%
Yunhui Limited ......................... — ———— 8,571,429 — 8,571,429 1.00%
Pluto Connection Limited ................. — ———— 4,821,429 — 4,821,429 0.56%
Beijing Hua’an Shidai Industrial Investment
Center (Limited Partnership) (˾
Υྫ).............. — ———— 1,906,633 — 1,906,633 0.22%
Guoquan Enterprise Consulting (Shanghai)
Co., Ltd. ( ᒢਸ਼Άุፔ༔(ɪऎ)ʮ̡)(7) . . — ———— 7,142,857 — 7,142,857 0.83%
Springs Global Emerging Opportunities
Fund ................................ — ———— — 3,865,979 3,865,979 0.45%
UniWill Ventures LLC ................... — ———— — 257,732 257,732 0.03%
Jade Elephant Investment Company Limited . . — ———— — 5,154,639 5,154,639 0.60%
WORLD GENIUS LIMITED .............. — ———— — 2,577,320 2,577,320 0.30%
Enjoyitglobal Limited (ʮ̡) . . . . — ———— — 210,000 210,000 0.02%
Vigorous Link Group Limited (8) ............ 75,000,000 ———— —— 75,000,000 8.71%
Total ................................. 525,150,000 106,000,000 40,404,040 25,505,051 18,399,621 132,103,065 13,354,347 860,916,124 100.00%
Notes:
(1) Assuming one-to-one conversion of Preferred Shares into Ordinary Shares, without taking into account the Shares to be allotted and
issued under the Global Offering, the Shares which may be issued upon the conversion of the Convertible Bond, the Share Incentive
Plans and the Over-allotment Option.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
(2) Based on the assumption that each Preferred Share will be converted into one Ordinary Share upon the Global Offering becoming
unconditional and all Preferred Shares will automatically be converted into the same number of Ordinary Shares upon Listing.
(3) After one-to-one conversion of Preferred Shares into Ordinary Shares, without taking into account the Shares which may be issued upon
the conversion of the Convertible Bond and the shares to be allotted and issued under the Share Incentive Plans and the Over-allotment
Option.
(4) IDG USD Fund Shareholders include Lovely Tree Holdings Limited, OLIVER SPARK LIMITED, IDG-Accel China Capital II L.P.,
IDG-Accel China Capital II Investors L.P. and HANDY CLOUD LIMITED.
(5) Retail Enterprise Corporation Limited, our Controlling Shareholder, acquired these Shares on September 24, 2020 from an independent
third party.
(6) Image Frame Investment (HK) Limited is ultimately controlled by Tencent Holdings Ltd, a global technology company listed on the
Stock Exchange (stock code: 00700).
(7) Guoquan Enterprise Consulting (Shanghai) Co., Ltd. is a wholly owned subsidiary of Guoquan. The fair value of the equity investment
we made in Guoquan with principal amount of RMB129.4 million is RMB140.7 million, RMB153.2 million, RMB 196.6 million and
RMB109.7 million as of December 31, 2021, 2022, 2023 and June 30 2024, respectively. For our investment in Guoquan, we have no
significant influence, joint control or control over the relevant entity based on the fact that we do not participate in any operating and
financial policies of the relevant entity nor exercise our influence on the operating and financial policies or have representation on the
board of directors of the relevant entity.
(8) Vigorous Link Group Limited, a limited liability company incorporated under the laws of the BVI, is wholly-owned by a trust which
holds Shares (which have fully vested) for the benefit of certain Directors, senior management and employees of our Group. Of the
Shares held by Vigorous Link Group Limited, 5,000,000 are held for the benefit of Mr. Zhang, our co-founder, executive Director and
president, and 3,698,734 are held for the benefit of Mr. CHEN Zhiyu, our non-executive Director, and the remaining 66,301,266 Shares
are held for the benefit of certain employees, former employees and senior management of our Group. The trust serves the purpose of
easier administrative management of the relevant Shares, from both the perspective of the Company and of the beneficiaries (most of
whom only hold a small number of Shares). Pursuant to the relevant trust arrangement, the exercise of the voting rights attached to all the
Shares held by Vigorous Link Group Limited is ultimately directed and controlled by the Board as the beneficiaries believe the Board
would apply the voting rights in the interest of the Company and Shareholders as a whole.
PRE-IPO INVESTMENTS
Overview
We have received three rounds of Pre-IPO Investments since our establishment, which are
summarized below. All of our Pre-IPO Investors were issued Preferred Shares in our Company
pursuant to the Pre-IPO Investments.
Round
Date of
Investment
Agreement(1)
Date of
Completion(2)
Total Number of
Shares under the
Investment
Agreement
Approximate
Amount Raised
Cost per
Share Paid to
the Company
Post-money
valuation of the
Group at Each
Round of Pre-IPO
Investment(3)
Discount
to the
Offer
Price(4)
1. Series A April 2015 May 9, 2017 106,000,000 Series A
Preferred Shares
US$106.0 million US$1.00 US$606.0 million 74.2%
2. Series B July 2018 September 28, 2018 40,404,040 Series B
Preferred Shares
US$80.0 million US$1.98 US$1,280.0 million 49.0%
December 2018 April 15, 2019 25,505,051 Series B+
Preferred Shares
US$50.5 million US$1.98 US$1,330.5 million 49.0%
July 2019 November 10, 2020 18,399,621 Series B++
Preferred Shares
US$46.0 million US$2.50 US$1,726.0 million 35.6%
3. Series C August 2020 September 30, 2021 132,103,065 Series C
Preferred Shares
US$369.9 million US$2.80 US$2,302.9 million 27.8%
October 2021 November 8, 2022 13,354,347 Series C+
Preferred Shares
US$51.8 million US$3.88 US$3,051.8 million 0.0%
Notes:
(1) It represents the date of the first Investment Agreement for each tranche.
(2) It represents the date which the consideration for each tranche had been fully settled.
(3) The post-money valuation is the value of our Company after the completion of the relevant Pre-IPO Investment, which is equal to the
sum of the pre-money valuation and the amount of relevant Pre-IPO Investments. The pre-money valuation was determined by the
relevant Pre-IPO Investor through arm’s length negotiations between the parties based on the valuation of our Company at the time of the
investment, taking into account the timing of the investment, the then status of the businesses carried out by our Group, the outlook and
growth potential of our Group and the industry in which we operate in.
(4) With an Offer Price of HK$30.21; and assuming the Preferred Shares are converted to Ordinary Shares on a one-to-one basis.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Principal Terms of the Pre-IPO Investments and Pre-IPO Investors’ Rights
Basis of consideration The consideration for the Pre-IPO Investments was determined based on arm’s
length negotiations between our Company and the Pre-IPO Investors after
taking into consideration the timing of the investments and the status of our
business and operating entities.
Use of proceeds from the
Pre-IPO Investments
We utilized the proceeds from the Pre-IPO Investments for the operations of our
Company and in accordance with the business plan or budget as approved by the
Board. As of the Latest Practicable Date, 0.6% of the funds raised from the
Pre-IPO Investments have not been utilized.
Lock-up The terms of the agreement under the Pre-IPO Investments did not impose any
lock up obligations over the Shares held by any of the Pre-IPO Investors upon
Listing.
Strategic benefits of the
Pre-IPO Investors brought
to our Company
At the time of the Pre-IPO Investments, our Directors were of the view that in
addition to providing working capital for our Company’s continued growth, our
Company could also benefit from the knowledge and experience of our Pre-IPO
Investors. Our Pre-IPO Investors include renowned companies in relevant
industries, which can help us achieve business synergies, and professional
strategic investors, which can provide us with professional advice on our
Group’s development and improve our corporate governance, financial
reporting and internal control.
Our Directors were also of the view that our Company could benefit from the
Pre-IPO Investments as the Pre-IPO Investor’s investments demonstrated their
confidence in the operations of our Company and served as an endorsement of
our Company’s performance, strength and prospects.
Special Rights of the Pre-IPO Investors
All of our Pre-IPO Investors are currently bound by the terms of the currently effective articles
of association of the Company, which will be replaced by our Articles effective upon the completion of
the Global Offering. Pursuant to our amended and restated shareholders agreement dated October 29,
2021 entered into, among others, by the Company, holders of the Ordinary Shares and Preferred Shares
(the “Shareholders Agreement”), the Pre-IPO Investors were granted certain special rights in relation
to the Company, which would automatically terminate on, inter alia, the occurrence of a Qualified IPO.
The divestment rights granted to the Pre-IPO Investors under the Shareholders Agreement have
been suspended immediately prior to the first submission of the listing application form to the Stock
Exchange for the purpose of the Global Offering, and will only be exercisable if the Listing does not
take place, otherwise such divestment rights will terminate upon the Listing. All other special rights
under the Pre-IPO Investments that shall cease to be effective and be discontinued upon the Listing in
accordance with the Pre-IPO Investment Guidance (as defined and set out in Chapter 4.2 of the Guide
For New Listing Applicants issued by the Stock Exchange), including customary rights of first refusal,
co-sale rights, pre-emptive rights, information rights, together with any restriction on our Company to
issue or offer any shares options, warrants and rights to any direct competitor of a pre-IPO Investor,
shall cease to be effective and be discontinued upon the Listing in accordance with the terms of the
Shareholders Agreement.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Public Float
Upon the completion of the Global Offering (assuming the Over-allotment Option is not
exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive
Plans), the Shares held by certain of our Shareholders who are, or are indirectly controlled by, our core
connected persons, will not be counted towards the public float. Details of these Shareholders and their
controllers as of the Latest Practicable Date are set out below:
 Celestial Limited, controlled by Dr. Zhang, our founder, holding 49.19% of the issued
shares of our Company;
 Odor Nice Limited, controlled by Dr. Zhang, our founder, holding 8.00% of the issued
shares of our Company;
 Retail Enterprise Corporation Limited, controlled by Dr. Zhang, our founder, holding
1.17% of the issued shares of our Company;
 Vigorous Link Group Limited, holding 8.71% of the issued shares of our Company.
Vigorous Link Group Limited is a company wholly-owned by a trust which holds Shares
for the benefit of certain Directors, senior management and employees of our Group;
pursuant to the relevant trust arrangement, the exercise of the voting rights attached to all
the Shares held by it is ultimately directed and controlled by the Board.
Save as provided above, upon the completion of the Global Offering (assuming the Over-
allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued
under the Share Incentive Plans), the Pre-IPO Investors and other shareholders will collectively hold
283,463,989 Shares or approximately 31.97% of the issued shares of our Company.
Save as disclosed above, no other Pre-IPO Investor is a core connected person of our Company,
as defined under the Listing Rules. Therefore, the Shares held by the other Pre-IPO Investors will
count towards the public float.
Joint Sponsors’ Confirmation
On the basis that (i) the consideration for the Pre-IPO Investments was irrevocably settled more
than 28 clear days before the first submission of the listing application form to the Stock Exchange for
the Global Offering by our Company, and (ii) the divestment rights granted to the Pre-IPO Investors
under the Shareholders Agreement have been suspended immediately prior to the first submission of
the listing application form to the Stock Exchange for the purpose of the Global Offering, and will only
be exercisable if the Listing does not take place, otherwise such divestment rights will terminate upon
the Listing. All other special rights under the Pre-IPO Investments shall cease to be effective and be
discontinued upon the Listing, the Joint Sponsors are of the view that the Pre-IPO Investments are in
compliance with Chapter 4.2 of the Guide for New Listing Applicants published by the Stock
Exchange (the “Pre-IPO Investment Guidance”).
Information on the Principal Pre-IPO Investors
Set out below is a description of our principal Pre-IPO Investors, being private equity funds and
corporations, that have made meaningful investments in our Company (each holding more than 2% of
our total issued and outstanding Shares immediately prior to the Global Offering).
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Image Frame Investment (HK) Limited
Image Frame Investment (HK) Limited, a limited liability company incorporated under the
laws of Hong Kong, is a wholly-owned subsidiary of Tencent Holdings Limited (“ Tencent”), a
company listed on the Hong Kong Stock Exchange (stock code: 00700). Tencent is a leading provider
of Internet value-added services in China, including communications and social, digital content,
advertising, fintech and cloud services. As of the date of this document, the Image Frame Investment
(HK) Limited holds approximately 3.26% of the total issued and outstanding shares of our Company.
IDG USD Fund Shareholders and Brave Giant Limited
Lovely Tree Holdings Limited and Olive Spark Limited, each a private company incorporated
in the BVI, are investment holding companies of USD funds ultimately controlled by Mr. HO Chi Sing
and Mr. ZHOU Quan. IDG-Accel China Capital II L.P. holds more than 78% equity interests in each
of Lovely Tree Holdings Limited and Olive Spark Limited. IDG-Accel China Capital II L.P. and IDG-
Accel China Capital II Investors L.P., each a limited partnership established in the Cayman Islands, are
ultimately controlled by Mr. HO Chi Sing and Mr. ZHOU Quan. IDG-Accel China Capital II L.P. has
over 100 limited partners, each of which, to the Company’s knowledge, is an independent third party
and none of which holds more than 10% partnership interest in it. Handy Cloud Limited, a private
company incorporated in the BVI, is an investment holding company, the voting shares of which are
wholly owned by Direct Galore Limited, also a BVI company, which is in turn ultimately owned and
ultimately controlled by Mr. HO Chi Sing. Mr. ZHOU Quan is a partner of IDG Capital and Mr. HO
Chi Sing is the chief financial officer of IDG Capital. As of the date of this document, Lovely Tree
Holdings Limited, Olive Spark Limited, IDG-Accel China Capital II L.P., IDG-Accel China Capital II
Investors L.P. and Handy Cloud Limited (together, the “ IDG USD Fund Shareholders ”) in aggregate
hold approximately 6.42% of the total issued and outstanding shares of our Company. Brave Giant
Limited, a private company incorporated in the BVI, is wholly owned by a RMB fund (“ Aiqi RMB
Fund”) managed by Harmony Aiqi Investment Management (Beijing) Co., Ltd. which is ultimately
owned by Mr. WANG Jingbo, Mr. NIU Kuiguang, Mr. LIN Dongliang and Mr. LI Jianguang, all of
whom are partners in IDG Capital, as to 20.72%, 20.72%, 16.96% and 41.6%, respectively. The Aiqi
RMB Fund has six limited partners out of which only one limited partner holds more than 30% limited
partnership interests in it and each of the limited partners, to the Company’s knowledge, is an
independent third party. Each of Mr. ZHOU Quan, Mr. HO Chi Sing, Mr. WANG Jingbo, Mr. NIU
Kuiguang, Mr. LIN Dongliang and Mr. LI Jianguang is an independent third party. IDG Capital is a
world-leading private equity investment institution that has been developing venture capital business as
a pioneer in China since 1993. As of the date of this document, Brave Giant Limited holds
approximately 1.24% of the total issued and outstanding shares of our Company.
Shanghai Xingwu Enterprise Management Center (Limited Partnership)
Shanghai Xingwu Enterprise Management Center (Limited Partnership) is a limited partnership
incorporated in the PRC. Shanghai Xingwu Enterprise Management Center (Limited Partnership) is a
wholly-owned subsidiary of Industrial Guoxin Asset Management Co., Ltd. which is ultimately owned
by Industrial Bank Co., Ltd. (“ Industrial Bank ”), a company listed on the Shanghai Stock Exchange
(stock code: 601166), providing clients with equity investment, asset management, investment
management, investment advisory and other comprehensive financial services. Xingtou (Beijing) Asset
Management Co., Ltd. and Fuzhou Economic and Technological Development Zone Xingrui Hesheng
Equity Investment Partnership (Limited Partnership) are Shanghai Xingwu Enterprise Management
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Center (Limited Partnership)’s general partner and limited partner, and hold approximately 0.2% and
99.8% equity interest in it, respectively. Each of Xingtou (Beijing) Asset Management Co., Ltd. and
Fuzhou Economic and Technological Development Zone Xingrui Hesheng Equity Investment
Partnership (Limited Partnership) is an independent third party. As of the date of this document,
Shanghai Xingwu Enterprise Management Center (Limited Partnership) holds approximately 3.32% of
the total issued and outstanding shares of our Company.
EverestLu Holding Limited
EverestLu Holding Limited is a company incorporated under the laws of Hong Kong with
limited liability. It is ultimately controlled by China Structural Reform Fund Corporation Limited (
ʕ਷
ʮ̡)( “China Structural Reform Fund ”), a company incorporated in
the PRC and the shares of which are held by several state-owned enterprises and ultimately indirectly
held by the State-owned Assets Supervision and Administration Commission of the State Council of
the PRC. It is mainly engaged in business activities including non-public fund raising, equity
investment, project investment, capital management, investment consulting and enterprise management
consulting. As of the date of this document, EverestLu Holding Limited holds approximately 2.90% of
the total issued and outstanding shares of our Company.
Shenzhen Investment Holding Bay Area Equity Investment Fund Partnership
Shenzhen Investment Holding Bay Area Equity Investment Fund Partnership is a limited
partnership incorporated in the PRC. Shenzhen Investment Holding Bay Area Equity Investment Fund
Partnership is a capital investment company wholly owned by State-owned Assets Supervision and
Administration Commission of Shenzhen Municipal People’s Government (
਷Ϟ༟ପ္
ึ), which mainly engaged in science and technology finance, science and technology parks
and technology industry. Shenzhen Investment Holding Capital Co., Ltd. and Shenzhen Investment
Holdings Co., Ltd. are Shenzhen Investment Holding Bay Area Equity Investment Fund Partnership’s
general partner and limited partner, and hold approximately 0.17% and 99.83% equity interest in it,
respectively. Each of Shenzhen Investment Holding Capital Co., Ltd. and Shenzhen Investment
Holdings Co., Ltd. is an independent third party. As of the date of this document, Shenzhen Investment
Holding Bay Area Equity Investment Fund Partnership holds approximately 2.64% of the total issued
and outstanding shares of our Company.
Issuance of Convertible Bond
On May 27, 2022, Dmall Life Network and Beijing Heyin Investment Fund (“ Beijing Heyin”,
or the “Convertible Bond Investor ”) entered into a convertible bond investment agreement and on the
same day, our Company, Beijing Heyin and Dmall Life Network entered into a convertible bond
investment tripartite agreement (together, the “ Convertible Bond Investment Agreements ”),
pursuant to which our Company agreed to issue, and Beijing Heyin agreed to subscribe for a
convertible bond in the principal amount of RMB190 million (the “ Convertible Bond ”). Our
Company issued such Convertible Bond to Beijing Heyin on June 15, 2022. On March 22, 2024, our
Company, Beijing Heyin and Dmall Life Network entered into a tripartite amendment to the
Convertible Bond Investment Agreements, pursuant to which we repaid RMB50.0 million of the
principal amount, as well as interests accrued since June 15, 2023 to Beijing Heyin by June 15, 2024.
Following the early repayment of this partial principal amount, the principal amount of the Convertible
Bond subscribed for by Beijing Heyin is amended and reduced to RMB140.0 million.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Our Directors confirmed that the terms of the Convertible Bond were arrived at arm’s length
negotiation between our Company, Beijing Heyin and Dmall Life Network. A summary of the
principal terms and conditions of the Convertible Bond, as amended, are set out below:
Convertible Bond Investor Beijing Heyin
Registered address of the
Convertible Bond Investor
No. 9, 7th Floor, Building 17,
No. 30 Shixing Street,
Shijingshan District, Beijing
Issuance date of the Convertible
Bond
June 15, 2022 (as amended on March 22, 2024)
Amount of consideration paid RMB140,000,000 (US$19,318,072)
Basis of consideration (1) The consideration represents 100% of the principal amount of
the Convertible Bond subscribed for by Beijing Heyin,
excluding RMB50,000,000 of which our Company repaid early
pursuant to the amendment to the Convertible Bond Investment
Agreements.
Payment date of the consideration June 15, 2022
Interest and interest payment dates 5.8% per annum payable on June 14 of each year, commencing
on June 14, 2023. The cash interest shall accrue on a daily basis
on the principal amount outstanding starting from the issuance
date based on the actual number of days elapsed over a base of
360 days.
Maturity date June 14, 2027
Mandatory early redemption date June 14, 2025 or June 14, 2026
Transferability The Convertible Bond may not be transferred by Beijing Heyin,
except to persons or entities controlling or controlled by or
under common control with Beijing Heyin, excluding the
Company’s competitors.
Conversion right On or after 180 days upon the completion of the Qualified IPO (as
defined below), Beijing Heyin shall have the right (“ Conversion
Right”) to convert the outstanding principal amount of the
Convertible Bond into such number of Shares (“ Conversion
Shares”) at any time before the Maturity Date pursuant to the
terms of the Convertible Bond. The Group may, based on the
consensus with Beijing Heyin, repay the Convertible Bond by
depositing a notice of repayment at the principal amount plus
accrued interest at any time after June 14, 2025.
If, at any time from 180 days following the completion of a
Qualified IPO until the Maturity Date, the closing price per
Share, as traded on the Stock Exchange, equals or exceeds
US$5.1 for each trading day and the average closing price per
Share of the previous 20 consecutive trading days also meets
this requirement, then the Group shall have the right to exercise
its option to require Beijing Heyin to convert the Convertible
Bond into the Company’s shares.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
The trigger share price of US$5.1 was determined after arm’s
length negotiation with reference to 130% of the fixed
conversion price of US$3.93 per Share taking into account
market conditions and the Company’s growth prospects.
Determination of the number of
Conversion Shares
The number of Conversion Shares to be issued by our Company
to Beijing Heyin shall be equal to the quotient of (i) the
outstanding principal amount of the Convertible Bond subject to
the Conversion Right divided by (ii) the conversion price,
rounded to the smaller whole share, and Beijing Heyin shall be
responsible for all taxes and encumbrances.
Conversion price The initial conversion price upon issuance of the Convertible
Bond shall be US$3.93 per Share, subject to anti-dilution
adjustments as follows:
(a) If and whenever there is any change to the nominal value
per Share as a result of any consolidation or subdivision:
ACP = A / B
ACP = the adjusted conversion price
A = the adjusted nominal value
B = the nominal value prior to the adjustment
(b) If and whenever the Company issues (other than in lieu of
cash dividends) any Share credited as fully paid by
capitalizing any profit or reserve (including any share
premium or capital redemption reserve):
ACP = C / (C + D)
ACP = the adjusted conversion price
C = the total nominal value of the Shares issued
immediately preceding such issuance
D = the total nominal value of the Share newly issued in
such capitalization
(c) If and whenever the Company is required to make any
capital distribution in respect of the Shares (whether by
reduction of capital or otherwise) to their holders (except
to the extent that the Conversion Price is subject to
adjustment under forementioned (b) ), or to grant to
applicable bondholders the right to acquire any cash assets
of the Company or any of its subsidiaries:
ACP = (E - F) / E
E = the Market Price on the day of announcement of such
capital distribution or grant or, in the absence of any such
announcement, on the day immediately following the date
of such capital distribution or grant
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
F = the fair value of the portion of the capital distribution
attributable to one Share or of the applicable rights on the
day of such announcement or the day immediately
thereafter, in each case as determined in good faith by the
Company’s auditors
If more than one event would result in more than one
adjustment set forth above, the Conversion Price shall be
adjusted cumulatively based on each of such events.
“Market Price” means the average closing price of each
share on the Stock Exchange on each of the last five
trading days when the shares are traded on the Stock
Exchange as of the relevant trading day immediately
before the determination of the market price.
Redemption right (1) Redemption at maturity
The redemption amount shall be the principal amount plus any
accrued and unpaid interest calculated at the rate of 5.8% per
annum. The Company must redeem the Convertible Bond and
pay the redemption amount to Beijing Heyin no later than the
Maturity Date.
(2) Early redemption
Beijing Heyin has the right to require the Company to redeem
the Convertible Bond before its Maturity Date by providing a
written notice of redemption. The notice must be deposited
between five business days prior to two months before the
Mandatory Early Redemption Date and five business days after
two months before the Mandatory Early Redemption Date.
If Beijing Heyin exercises its right to early redemption, the
redemption amount shall be the outstanding principal amount of
RMB140,000,000 plus any accrued and unpaid interest
calculated at 5.8% per annum on the principal. The Company
must repay the redemption amount to Beijing Heyin on the
Mandatory Early Redemption Date.
Effective cost per Share paid US$3.93
Premium to the Offer Price (2) 1.29%
Use of net proceeds and its utilization
by our Company
As of the Latest Practicable Date, approximately 0.7% of the
proceeds has been used for asset purchases, approximately
53.3% of the proceeds has been used for general working
capital purposes and the remaining will be used for our general
working capital purposes.
Effective shareholding upon Listing,
assuming the Convertible Bond is
fully converted into Shares at a
conversion price of US$3.93 per
share;
Up to 5,011,029 Shares, representing approximately 0.57% of
the enlarged issued shares of our Company upon Listing
(Assuming the Overallotment Option is not exercised, and no
Shares are issued under the Share Incentive Plans)
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Lock-up period The Conversion Shares to be held by Beijing Heyin upon
conversion of its Convertible Bond are not subject to any
lock-up pursuant to the terms of the Convertible Bond.
Strategic benefits brought by the
Convertible Bond Investor
We are of the view that our Company can benefit from the
issuance of Convertible Bond by receiving additional general
working capital, and the investment from Beijing Heyin
demonstrates its confidence in our Group’s operation and serves
as an endorsement of our Company’s strengths and prospects.
Notes:
(1) The consideration was determined after arm’s length negotiatio n with reference to the paid-up share capital of our Company as of
May 27, 2022 and the Company’s operating conditions, and performance growth, among others.
(2) The premium to the Offer Price is calculated based on the Offer Price of HK$30.21.
During the Track Record Period and up to the Latest Practicable Date, we funded our cash
requirements principally from cash generated from our business operations and funds raised through
private placements and bank loans. We had cash and cash equivalents of RMB368.7 million,
RMB533.1 million, RMB533.2 million and RMB469.5 million as of December 31, 2021, 2022, 2023,
and June 30, 2024, respectively. After the Global Offering, we intend to finance our future capital
requirements through cash generated from our business operations, the net proceeds of approximately
HK$623.7 million received from the Global Offering based on the Offer Price of HK$30.21 per Offer
Share, and other future equity or debt financings, including unutilized bank loan facilities. Taking into
account of our existing cash position and net proceeds from the Global Offering, we believe we will be
able to meet our obligations under the Convertible Bond Investment Agreements.
Rights of the Convertible Bond Investor
The principal special rights granted to Beijing Heyin include customary negative covenants and
information rights. All special rights granted to Beijing Heyin will terminate upon the Listing. To the
best knowledge of our Directors after making reasonable inquiries, Beijing Heyin will exercise the
conversion right under the Convertible Bond in compliance with the Listing Rule.
Public Float
Upon completion of the Global Offering and assuming full conversion of Convertible Bond
(assuming the Over-allotment Option is not exercised and no Shares are issued under the Share
Incentive Plans), Beijing Heyin will hold less than 10% of our enlarged issued shares. Beijing Heyin is
not a core connected person of the Company; its subscription and (if any) conversion of the
Convertible Bond was not and will not be funded directly or indirectly by any core connected person of
the Company; and it is not accustomed to take instructions from a core connected person in relation to
the acquisition, disposal, voting or other disposition of any securities of the Company. Therefore, the
Shares into which the Convertible Bond are converted to be held by Beijing Heyin will count towards
the public float of our Company according to Rule 8.08 of the Listing Rules.
Information about the Convertible Bond Investor
Beijing Heyin is a strategic investor founded in 2014. Beijing Heyin invests in leading
enterprises across various industries, sectors, and niche markets, as well as promising projects in the
healthcare and media culture fields, by leveraging a multi-tiered approach to engaging with the capital
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
markets. Beijing Heyin, standing for benefits of Beijing Radio and Television Station ( ̏ԯᄿᅧཥൖ
̨), is managed by Chord Capital, which mainly focuses on investment of culture, health, science and
technology industries and Chord Capital’s ultimate beneficial owner is Mr. HUANG Hao, an
independent third party. Chord Capital, Beijing Heyin’s general partner, holds 0.06% of Beijing
Heyin’s equity interest. Beijing Broadcasting Group Co., Ltd. (
ʮ̡), Beijing Time
Co., Ltd. (ʮ̡) and Beijing Television Industry Development Group Co., Ltd. ( ̏ԯཥൖ
ʮ̡), each a limited partner of Beijing Heyin, holds 42.81%, 41.69% and 15.45% of
Beijing Heyin’s equity interest, respectively. Founded in 2014, Chord Capital is a private asset
management institution registered with the Asset Management Association of China. Chord Capital
currently manages several RMB equity investment funds, including Beijing Heyin and Beiguang
Wenzi Gehua Fund
, with total assets under management exceeding RMB1.2
billion. Beijing Heyin is not a connected person of our Company.
Joint Sponsors’ Confirmation
On the basis that (i) the consideration for the issuance of the Convertible Bond was irrevocably
settled more than 28 clear days before the first submission of the listing application form to the Stock
Exchange for the Global Offering by our Company; (ii) additional disclosure has been made in the
“Risk Factors” and “Financial Information” sections of this prospectus; and (iii) the conversion price
for the Convertible Bond is at a fixed dollar amount, the Joint Sponsors are of the view that the
issuance of Convertible Bond is in compliance with the Pre-IPO Investment Guidance.
SAFE REGISTRATION IN THE PRC
Pursuant to the SAFE Circular 37 promulgated by SAFE and which became effective on July 4,
2014, (i) a PRC resident must register with the local SAFE branch before he or she contributes assets
or equity interests in an overseas special purpose vehicle (the “ Overseas SPV ”) that is directly
established or indirectly controlled by the PRC resident for the purpose of conducting investment or
financing, and (ii) following the initial registration, the PRC resident is also required to register with
the local SAFE branch for any major change in respect of the Overseas SPV, including, among other
things, a change of the Overseas SPV’s PRC resident shareholder(s), the name of the Overseas SPV,
terms of operation, or any increase or reduction of the Overseas SPV’s capital, share transfer or swap,
and merger or division. Pursuant to SAFE Circular 37, failure to comply with these registration
procedures may result in penalties. In addition, due to such failure to comply with the registration
procedures, the PRC subsidiaries of that Overseas SPV may be prohibited from distributing their
profits and dividends to their offshore parent company or from carrying out other subsequent cross-
border foreign exchange activities, and the Overseas SPV and its offshore subsidiary may be restricted
in their ability to contribute additional capital to their PRC subsidiaries.
Pursuant to the Notice on Further Simplifying and Improving the Administration of the Foreign
Exchange Concerning Direct Investment promulgated by SAFE, which became effective on June 1,
2015, the power to accept SAFE registration was delegated from local SAFE to qualified local banks
where the assets or interest in the domestic entity was located. Our PRC Legal Advisor has advised
that Mr. ZHANG Bin, who is a PRC resident, has completed his initial foreign exchange registration in
respect of his incorporation of Ultron Age Inc. as required under SAFE Circular 37 on November 3,
2015.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
M&A RULES
Under the M&A Rules, a foreign investor is required to obtain necessary approvals when:
(i) a foreign investor acquires equity in a domestic non-foreign invested enterprise thereby
converting it into a foreign-invested enterprise, or subscribes for new equity in a domestic enterprise
via an increase of registered capital thereby converting it into a foreign-invested enterprise; or
(ii) a foreign investor establishes a foreign-invested enterprise which purchases and operates
the assets of a domestic enterprise, or which purchases the assets of a domestic enterprise and injects
those assets to establish a foreign-invested enterprise.
The M&A Rules further purport to require that an offshore special vehicle, or a special purpose
vehicle, formed for listing purposes and controlled directly or indirectly by PRC companies or
individuals, shall obtain the approval of the CSRC prior to the listing and trading of such special
purpose vehicle’s securities on an overseas stock exchange, in the event that the special purpose
vehicle acquires shares of or equity interests in the PRC companies in exchange for the shares of
offshore companies.
Given that (i) the CSRC currently has not issued any definitive rule or interpretation concerning
whether the proposed listing is subject to the M&A Rules, (ii) our wholly foreign owned enterprises
were not established through a merger or acquisition of equity interest or assets of a PRC domestic
company owned by PRC companies or individuals as defined under the M&A Rules using equities or
shares as consideration, and (iii) no provision in the M&A Rules clearly classifies contractual
arrangements as a type of transaction subject to the M&A Rules, our PRC Legal Adviser is of the
opinion that based on its understanding of the current PRC laws and regulations, prior CSRC approval
for the Global Offering is not required under the M&A Rules. However, our PRC Legal Adviser
further advises that the interpretation and implementation of the M&A Rules and other PRC laws and
regulations are still evolving, and new rules or regulations promulgated in the future may impose
additional requirement on us.
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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
CORPORATE STRUCTURE
Corporate Structure Before the Global Offering
The following diagram illustrates the corporate and shareholding structure of our Group immediately prior to completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share
Incentive Plans):
2.90%1.24% 3.32% 3.26% 2.64% 1.81% 1.57% 9.76% 8.71%
100%
100%
Onshore
Offshore
Vigorous
Link
Group
Limited
Other Pre-
IPO
Investors
and
Shareholders
Aiqi
RMB
Fund(2)
IDG
USD
Fund
Shareholders(2)
Shenzhen
Investment
Holding Bay Area
Equity Investment
Fund Partnership
(Limited Partnership)
Image
Frame
Investment
(HK)
Limited
Shanghai
Xingwu
Enterprise
Management
Center (Limited
Partnership)
Ultron
Age Inc.
Big
Cosmos
Global
Limited
Dmall Inc.
(BVI)
Dmall Cayman
(Cayman Islands)
Dmall BVI
(BVI)
Dmall HK
(Hong Kong)
Dmall Life Digital
6.43%
EverestLu
Holding
Limited
Mr. Zhang Bin(3)
100%
100%
Dmall Life Network
100%
Dmall (Ningbo) New Energy
Technology Co., Ltd.
100%
100%
100%
100%Dmall Digital International Pte. Limited
(Singapore)
99.99%Dmall Digital Philippines Inc.(9)
(Philippines)
100%
69.5%
Shenzhen Digital Technology Retail
Technology Development Co., Ltd.
100%
Retail Technology Asia(4)
(Hong Kong)
Digital Retail Technology
(Hong Kong) Limited
(Hong Kong)
100%
1.17%49.19%
33.56%
Celestial
Limited
Retail Enterprise
Corporation Limited
Dr. Zhang
100%
D&W Inc.
Interface
Holding Inc. Odor Nice
Limited
66.44%100%
100%
8.00%
100%
Wumei Southern Technology
Company Limited
99%
100%
Beijing Zhongsheng Huate
Technology Company Limited
100%
Beijing Jingxi Guigu Technology
Company Limited
19.40%
77.61%1%
100% 100%
Tencent China Structural
Reform Fund
100%
100%
Industrial Bank
Industrial Guoxin
Asset Management
Co., Ltd.
100%
Dmall (Shenzhen) Digital
Dmall Digital Europe Kft.
(Hungary)
Wumei Technology(1)
Dmall Life Tianjin
100%
Dmall Life Chengdu
100%100%
Dmall Life Beijing
100%80%100%
Dmall Zhilian(5) Shenzhen Xintonglu
100%
Dmall Life WuhanDingmo Shanghai
Shenzhen Firefly
Circulation Information
Technology Co., Ltd.(10)
60%
Shandong Orange Bay(7)
100% 100%
Jinan Enjoy Information
Technology Co., Ltd.
Shenzhen Enjoy Data
Technology Co., Ltd
Shenzhen Enjoy(6)
100%
49.75%
Zhilian Wuhan
Beijing Xianmei
Technology Service
Co., Ltd.(8)
100% 55%
159


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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Notes:
(1) Wumei Technology is owned by Dr. Zhang and Beijing Muhong Management Consulting Co., Ltd. as to approximately 97.02% and 2.98%, respectively. Bei jing Muhong Management Consulting Co.,
Ltd. is ultimately beneficially owned by Mr. LIN Dongliang and Mr. WU Guangze as to 66.66% and 33.34%, respectively. Mr. LIN Dongliang is an independen t third party. Mr. WU Guangze is a
former director of the Company.
(2) IDG USD Fund Shareholders include Lovely Tree Holdings Limited, Olive Spark Limited, IDG-Accel China Capital II L.P., IDG-Accel China Capital II Investors L.P. and Handy Cloud Limited. Brave
Giant Limited is a Aiqi RMB Fund shareholder. See “—Information on the Principal Pre-IPO Investors” in this section for further details.
(3) Mr. ZHANG Bin is brother of Dr. Zhang.
(4) Retail Technology Asia is owned by Dmall HK and DRGML as to 69.5% and 30.5% equity interest, respectively.
(5) Formerly known as Beijing Weisheng Technology Co., Ltd. (
ʮ̡). Dmall Zhilian is owned as to 80% by Dmall (Shenzhen) Digital and 20% by Beijing Wumart Supermarket Co.,
Ltd., respectively. Beijing Wumart Supermarket Co., Ltd. is beneficially owned by Wumei Technology Group, Inc. which is controlled by Dr. Zhang.
(6) The Company holds 49.75% of shareholdings in Shenzhen Enjoy, however, with the delegation of the additional 3.9% of voting rights, the Company mai ntained control over Shenzhen Enjoy. See
“—Acquisitions and Disposals” in this section for further details.
(7) Shenzhen Enjoy entered into an equity transfer agreement to acquire 50% equity interest in Shandong Orange Bay on August 15, 2022. See “—Acquisiti ons and Disposals” in this section for further
details.
(8) Dmall Zhilian completed its acquisition of Beijing Xianmei Technology Service Co., Ltd. and the change in registration with the relevant local Ad ministration for Market Regulation on February 22,
2023. See “—Acquisitions and Disposals” in this section for further details. Beijing Xianmei Technology Service Co., Ltd. is owned as to 55% by Dmall Z hilian and 45% by Shanghai Gaussian
Automation Technology Development Co., Ltd., respectively. Shanghai Gaussian Automation Technology Development Co., Ltd. is an independent thir d party.
(9) Dmall Digital Philippines Inc. is owned as to over 99.99% by Dmall Digital International Pte. Limited and less than 0.01% by Mr. Marcus SPURRELL and Mr. PENG Yi-Jung, respectively. Mr. Marcus
SPURRELL and Mr. PENG Yi-Jung are independent third parties.
(10) Shenzhen Firefly Circulation Information Technology Co., Ltd. is owned as to 60% by Shenzhen Enjoy and 40% by Ms. LI Xue, respectively. Ms. LI Xue i s an independent third party.
160


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HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
Corporate structure immediately following the Global Offering
The following diagram illustrates the corporate and shareholding structure of our Group immediately following completion of the Global Offering
(assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans):
2.82%1.21% 3.22% 3.17% 2.56% 1.76% 1.52% 10.68% 8.46%
100%
100%
100%
100%
Onshore
Offshore
Vigorous
Link
Group
Limited
Other Pre-
IPO
Investors
and
Shareholders
Aiqi
RMB
Fund(2)
IDG
USD
Fund
Shareholders(2)
Shenzhen
Investment
Holding Bay Area
Equity Investment
Fund Partnership
(Limited Partnership)
Image
Frame
Investment
(HK)
Limited
Shanghai
Xingwu
Enterprise
Management
Center (Limited
Partnership)
Ultron
Age Inc.
Big
Cosmos
Global
Limited
Dmall Inc.
(BVI)
Dmall Cayman
(Cayman Islands)
Dmall BVI
(BVI)
Dmall HK
(Hong Kong)
Retail Technology Asia(4)
(Hong Kong)
Digital Retail Technology
(Hong Kong) Limited
(Hong Kong)
6.24%
EverestLu
Holding
Limited
Tencent China Structural
Reform Fund Mr. Zhang Bin
(3)
100%
Industrial Bank
100%
100%
69.5%
100%
100%
Public
Shareholders
2.91%
100%
33.56%
Celestial
Limited
Retail Enterprise
Corporation Limited
Dr. Zhang
100%
D&W Inc.
Interface
Holding Inc. Odor Nice
Limited
66.44%100%
100%
7.77%
100%
Wumei Southern Technology
Company Limited
Wumei Technology(1)
99%
100%
Beijing Zhongsheng Huate
Technology Company Limited
100%
Beijing Jingxi Guigu Technology
Company Limited
19.40%
77.61%1%
47.76% 1.14%
Industrial Guoxin
Asset Management
Co., Ltd.
100%Dmall Digital International Pte. Limited
(Singapore)
Dmall Digital Europe Kft.
(Hungary)
Dmall Digital Philippines Inc.(9)
(Philippines)
99.99%
100%
Dmall Life Digital
100%
Dmall Life Network
100%
Dmall (Ningbo) New Energy
Technology Co., Ltd.
100%
Shenzhen Digital Technology Retail
Technology Development Co., Ltd.
100%
100%
Dmall (Shenzhen) Digital
Dmall Life Tianjin
100%
Dmall Life Chengdu
100%100%
Dmall Life Beijing
100%80%100%
Dmall Zhilian(5) Shenzhen Xintonglu
100%
Dmall Life WuhanDingmo Shanghai
100%
Jinan Enjoy Information
Technology Co., Ltd.
Shenzhen Enjoy Data
Technology Co., Ltd
Shenzhen Enjoy(6)
100%
Shenzhen Firefly
Circulation Information
Technology Co., Ltd.(10)
60%
Shandong Orange Bay(7)
100%
49.75%
Zhilian Wuhan
Beijing Xianmei
Technology Service
Co., Ltd.(8)
100% 55%
Notes (1) to (10): See Notes (1)-(10) in preceding pages under the paragraphs headed “—Corporate Structure Before the Global Offering” in this section.
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BUSINESS
WHO WE ARE
We provide retail digitalization solutions to retailers in the local retail industry. We have
successfully expanded our businesses to other countries and regions in Asia, comprising Hong Kong
SAR, Cambodia, Singapore, Malaysia, Macau SAR, Indonesia, the Philippines and Brunei. According
to Frost & Sullivan, we are the largest retail digitalization solution provider in China by revenue, with
a market share of 6.5% in 2023. Post-Restructuring, we focus on providing full spectrum retail
digitalization solutions to retailers.
Our Company, founded in 2015, is an industry pioneer that develops retail digitalization
solutions in response to four key industry needs — (i) to upgrade consumer experience, (ii) to enhance
operational efficiency, (iii) to safeguard system security, and (iv) to fulfill ESG responsibility. We
distinguish ourselves from our competitors through achieving full-spectrum coverage, incorporating
industry practices, facilitating intelligent data-driven business decision making, and continuous product
development, which help retailers drive revenue growth and reduce costs. According to Frost &
Sullivan, we were the largest retail digitalization solution provider in terms of revenue in China in
2023, and a leading full-spectrum omni-channel retail digitalization solution provider in China and
Asia. Full spectrum coverage refers to our capability to address retailers’ needs across major critical
parts of their operations. Broad operational modules coverage enables us to reach diverse customer
base in the industry and thus obtain deep retail know-how. We continuously improve our SaaS
modules based on our deep understanding of the retail industry and technological advancements to
deliver tangible and measurable improvements to retailers.
We started our business in retail digitalization in collaboration with Wumei Group, a leading
retailer in China, which was our largest customer during the Track Record Period. We implemented
our cloud solutions in Wumei Group’s nationwide store network and our functionalities through their
complex operation. Today, we have developed comprehensive retail digitalization solutions for
customers of various sizes and formats that encompass local retail operations, from procurement and
supply chain management, store and headquarters management, to marketing and omni-channel sales.
Our experience with Wumei Group has inspired us to deliver many popular modules that are applicable
to other retail formats from chained supermarkets, warehouse supermarkets, department stores to
convenience stores, specialty retailers and retailers with new retail formats. We also serve other major
retailers, such as Chongqing Department Store Group, Yinchuan Xinhua Group, and Maidelong
Entities, as well as well-known brands such as Wellcome, Mannings, Guardian, Giant, and 7-Eleven
(Hong Kong), which operate under the DFI Retail Group. We now cover all major retail formats,
helping our expanding customer base meet ever-evolving market challenges and provide quality
services to consumers. As a testament to our success, we served 444 customers in the six months ended
June 30, 2024. The dollar-based net retention ratio was 184% in 2021, 158% in 2022, 117% in 2023
and 123% in the twelve months ended June 30, 2024, remaining robust at above 100%, which
underscores our ability to further increase customer spending.
OUR MARKET
The local retail industry serves the massive consumer population who have demand for the
purchase of necessities. This is high-frequency spending by nature that can happen every week or even
day, creating stable and inelastic demand across economic cycles. According to Frost & Sullivan, the
local retail industry is one of the largest industries in the world with its market share in Asia increasing
from RMB30.0 trillion in 2018 to RMB31.1 trillion in 2023, at a CAGR of 0.8%. The market size of
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the local retail industry in China increased from RMB12.2 trillion in 2018 to RMB13.4 trillion in 2023,
achieving a CAGR of 1.8%.
The growth of mobile technology and e-commerce has led to a shift in consumer purchase
behavior from offline to online. This has created additional complexity for operators, who need to
adapt their business processes and system structures to achieve data-driven operations. As a result,
operators are increasingly adopting digital transformation to enhance their overall operations.
However, this also exposes their systems to external environments, which poses greater data security
challenges. Therefore, operators require higher IT security standards to ensure the safety of their data.
Currently, traditional enterprise software developers and horizontal SaaS providers cannot fully
meet the market’s needs. Traditional software providers require significant upfront investment for
customized system development and high maintenance costs for continuous upgrade. On the other hand,
horizontal SaaS solutions as a one-size-fit-all approach lack industry-specific know-how. In addition, retail
digitalization is still low, with retailers’ digitalization rate at 3.1% and 4.5% in China and Asia, respectively,
which is significantly lower than that of 13.3% in the U.S., demonstrating significant upside potential. The
local retail industry has progressed and thrived through technological advancements in the past, and we
believe that digitalization is the next step. Our approach as retail specific solution provider provides an
affordable yet advanced solution, which we believe will meet the unfulfilled demands.
OUR DIFFERENTIATED APPROACH
Our retail digitalization solution is retail centric. Our solutions are designed with retailers’
perspectives in mind, addressing the challenges they face in daily operations. Our expertise in retail
stems from our work with renowned retailers like Wumei Group and DFI Retail Group, where we
gather realtime feedback and continually enhance our solutions based on the feedback. We believe in
the power of data and emphasize on integrating data across retail operations into actionable insights.
Our modules are enhanced based on know-how and insights developed through dealing with the
complex local retail formats. We believe this deep insight into day-to-day retail operation makes our
solution highly specific to operators. We aspire to create value to retailers and consumers:
 Upgrade consumer experience. We help retailers develop omni-channel capabilities to
allow consumers to shop anywhere anytime. In addition, our solution measures critical
customer experience metrics, such as on-time rate, order fulfillment rate, customer service
level and offline shopping behavioral data captured by our AIoT solutions. We help
retailers gain better understanding of their customers across channels, which allow them to
provide more customized services and better customer experience.
 Enhance operational efficiency.Our retail core service cloud solution helps retailers simplify
operation, improve efficiency and integrate data across every aspects of their operation from
online to offline. Our software provides a comprehensive overview of crucial data that
measures business performance. With this data insight, we assist retailers simplify redundant
processes, automate manual tasks, and optimize allocation of resources. In addition, we
apply proprietary algorithm on data and make recommendations for operation improvement
such as reducing inventory turnover days, streamlining procurement and optimizing
merchandise display.
 Safeguard system security.We are committed to protecting information security, including data
security, system security, identity and access management (IAM) security and security
awareness training of our customers. We use various encryption technologies to provide our
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customers with a reliable, stable and secure digital operation environment to store, maintain and
use their important business information and consumer information. We help customers
promptly detect inappropriate access, policy violations or weak controls that put their operations
at risk. We also provide IT security trainings to the employees of our customers to reduce
occurrence of security incidents caused by human error or employees’ lack of security
awareness.
 Address ESG responsibilities. We help retailers to better address their ESG responsibilities, by
for example, enabling them to achieve fully paperless operations to create a green office
environment, data-driven employee management and low carbon operations, and trace the
movement of food products to improve food safety. Meanwhile, we help them to optimize
operation decision-making to reduce wastage and inventory turnover days and analyze energy
consumption data to achieve low-carbon operation. We are also committed to social
responsibility by enhancing elderly’s digital consumption experiences through assistive
functions, providing emergency support such as resolving grocery shopping difficulties during
COVID-19 lockdown.
Our Retail Digitalization Solutions
Cloud-based Highly scalableModularizedAI-driven Easy to deploy
Retail Core
Service Cloud
Product Highlights
Customer
Store
Supply Chain
Headquarter
Infrastructure
Private Traffic
Management
Marketing and
Promotion
APP/ Mini-Program
Development
Third-party
Channel
Management
Consumer
Membership
Management
Inventory
Management
Picking and
ShipmentStore Operation AIoT Smart Payment
Warehouse
Management
System
Order ExecutionLogistics
Management
Transportation
Management
System
Automatic
Replenishment
Procurement and Inventory
Management
Integrated Financial
Management System User Service
Data Middleware Cloud-based management Open API Platform
Our retail core service cloud which predicates on our proprietary Dmall SaaS operating system
helps retailers manage full operation process.
Retailers in China lack digital technology infrastructure and heavily rely on manual processes
and human judgement for business decision making, which can cause low efficiency, increased
reliance on human experience, and increased possibilities of human error, making it difficult for large
retailers to operate efficiently on a large scale. Our retail core service cloud, consisting of our
proprietary Dmall OS system, and AIoT solutions, integrates an array of functionalities that help
retailers digitalize and optimize their operation. Our Dmall OS system, which contains service
components such as product procurement process management, supply chain management, product
management, store management, consumer membership management and headquarters management,
address the most critical parts of retailer’s daily operations. For example, the inventory auto
replenishment management module of supply chain management component helps retailers facilitate
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dynamic inventory planning and automatic issuance of re-stocking orders taking into account factors
such as sales prediction, inventory level and seasonality, supported by our sales prediction algorithm.
AIoT solutions help retailers build digitally integrated retail locations that consolidate offline data to
achieve more efficient store management. Such integrated approach helps retailers improve efficiency,
boost revenue and cut costs. For example, our AIoT solutions integrate with Dmall OS, links sales
orders from the consumer end to the warehouse on the supply end. This enables retailers to track
inventory levels in real-time, reducing stock-out rates and increasing sales revenue. This is the result of
a multi-year development cycle tracing back to our cooperation with Wumei Group in 2015. We
undergone continuous system development to accommodate retail clients across multiple retail
formats. The number of customers using our retail core service cloud increased from 231 in 2021, 432
in 2022 to 527 in 2023 and increased from 409 in the six months ended June 30, 2023 to 430 in the
same period in 2024.
Our Retail-centric Technologies
 Retail centric. Our solutions are designed from the perspectives of retailers in response to
the pain points they encounter in daily operation. Our retail expertise comes from our
experience serving leading retailers, such as Wumei Group and DFI Retail Group, where
we collect feedback real time and upgrade our solutions incorporating such feedback. We
are also founded, guided, and managed by a team of retail veterans with first-hand
understanding of the industry. As a result, we become the pioneer in many adoptions of
new retail technologies. We were the first and the only one among our top industry peers
to introduce digitalized supplier auction, intelligent fast food area planning, intelligent
merchandise display, and AloT-enabled shopping cart, according to Frost & Sullivan.
 Data-driven. Our Dmall OS system helps enterprise customers track, collect and convert
real-time data from online and offline operations into actionable insights and break data
silos across different parts of our customers’ business. With the help of our solutions,
customers can take a data-driven approach to manage and optimize their daily operations,
resulting in tangible improvements in operating performance. They can also enjoy
significant advantages over their competitors, such as broader, deeper, more relevant, and
more consistent data.
 AI-powered. We believe we are also at the forefront of harnessing AI technology to
enhance efficiency and innovation for retailers across various stages of their operations.
For example, for products with a limited shelf life, unsold inventory represents a
significant challenge for retailers. Our AI algorithms assist customers in addressing this
issue by analyzing remaining stock and historical sales data to determine optimal
promotional pricing. Addressing a common pain point in the retail sector, we have also
improved how customer service quality is assessed. Traditionally, quality checks involved
manually listening to each customer service call and subjectively scoring them, a process
that was not only time-consuming but also lacked objectivity and required substantial
manpower for comprehensive coverage. Leveraging AI, we categorize calls by scenarios,
set scoring standards, and have successfully automated the quality assurance process for
customer service interactions. We have expanded the application of AI across various
other dimensions of our operations and product offerings. For instance, we’ve introduced
an AI-based remote assistance service, designed to assist consumers in navigating and
locating items within unmanned stores. Moreover, we have adopted cutting-edge AI-
powered tools to streamline and enhance our coding process. By continually refining our
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AI tools and techniques, we strive to deliver value and innovation to our customers,
helping them achieve their operational objectives more effectively and efficiently.
 Advanced and constantly improving . Our strong in-house research and development
capabilities allow us to develop and continually enhance our Dmall OS system to incorporate
industry practices across multiple retail formats, and translate these know-how into deployable
SaaS modules that help meet customers’ evolving needs. Despite the challenging macro
environment, we are committed to intense research and development efforts in expanding
Dmall OS functionalities in order to better serve our retail clients. For example, in 2022, we
generally performed major updates on a bi-weekly basis with multiple function updates each
batch.
 Modularized open platform . Our infrastructure enables rapid and cost-effective
implementation and allows us to scale up our capacity and provide system updates in a
flexible and timely manner. The Dmall OS system consists of independently configurable
modules that allow retailers to freely choose, configure, and consolidate different modules
to meet their own unique operational needs and preferences, making our offerings highly
adaptable for retailers of various sizes, types and operational complexity. Thus, we enable
our customers to achieve customization and rapidly respond to new market changes
without high development cost.
 Security. To address the increased safety concern brought by multi-scenario applications
in the retail industry, we help our customers enhance their data security, system security,
identity and access management (IAM) security and security awareness training through
various encryption and firewall technologies.
Our Customer Base
We strategically focus on blue-chip retailers. Our customer portfolio includes Wumei Group,
Maidelong Entities and DFI Retail Group. Our long term partnerships with these lighthouse customers
has enabled us to develop operating system capable of serving the most complicated operations across
different retail formats. Building on these credentials, we have expanded our retail formats coverage,
from chained supermarkets, warehouse supermarkets, department stores to convenience stores,
specialty retailers and retailers with new retail formats. We focus on building long term relationship
with leading retailers with the most sophisticated practice in the marketplace. In 2021, 2022, 2023 and
the six months ended June 30, 2024, we had 236, 436, 533 and 444 customers, respectively including
231, 432, 527 and 430 from retail core service cloud. We believe our retail digitalization solution is
highly adaptable in overseas markets. We have successfully expanded our businesses to Hong Kong
SAR, Cambodia, Singapore, Malaysia, Poland, Macau SAR, Indonesia, the Philippines and Brunei. We
are also in the initial stage of expansion into the European market through our collaboration with the
Metro Group, a leading wholesaler headquartered in Germany.
The dollar-based net retention ratio, which represents revenues generated by recurring customers
(excluding consumers) divided by revenues generated by all customers (excluding consumers) in the
prior period, was 184% in 2021, 158% in 2022, 117% in 2023, and 123% in the twelve months ended
June 30, 2024. Dollar-based net retention ratio measures the ability of our Company to retain and expand
its existing customer base over time and indicates the level of loyalty among customers and their
willingness to continue paying for our offerings. We onboarded several major customers for deployment
of our Dmall OS system in 2021 resulting in a comparably higher dollar-based net retention ratio in 2021.
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The decrease in dollar-based net retention ratio in 2022 was mainly due to organic growth of our existing
business and expansion in our AIoT solution offerings which may not generate a sales volume as
significant as compared to our operating system. In 2022 and 2023, we recorded overall dollar-based net
retention ratio of 158% and 117%, respectively, and Related Parties’ dollar-based net retention ratio of
161% and 124%, respectively. Our overall dollar-based net retention ratio decreased in 2023 compared to
2022, primarily due to (i) the decrease in O2O platform service fees as a result of certain customers opt to
operate O2O e-commerce business in-house, where they manage their own day-to-day O2O operations,
(ii) the decrease in GMV processed and number of delivery orders placed through our O2O platform for
certain retailer customer. In addition, the incr eased revenue of operating system from additional
purchases of our operating system modules and the increased of AIoT solutions sales from intelligent loss
prevention and digitalized smart tags, resulting in a comparably higher dollar-based net retention ratio in
2022. In the twelve months ended June 30, 2024, dollar-based net retention ratio increased to 123% due
to the increases in revenue from retail core service cloud solutions as a result of our continuous business
expansion of our operating system and AIoT solutions. We plan to adopt a series of measures to improve
our dollar-based net retention ratio. For example, we will maintain a focus on targeting retailers through a
key accounts strategy. We believe this approach ensures personalized attention and tailored solutions,
fostering long-term partnerships and increasing customer loyalty. We also plan to utilize our one-stop
retail digitalization solutions to enhance customer engagement by cross-selling additional modular
functions. We will identify specific customer needs, and offer relevant modules that streamline various
aspects of their retail operations to increase customer spending and loyalty. We will also continue to
invest in the development and enrichment of the existing portfolio of solutions. We will continuously
refine and enhance modules and functionalities to address the diverse and evolving needs of customers,
which we believe will attract more customers, increase sales, and have a long-term positive impact on
business growth.
OUR OPERATION AND FINANCIAL OVERVIEW
We experienced significant growth during the Track Record Period. Our revenue increased by
56.6% from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further increased by
19.4% to RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million in
the six months ended June 30, 2023 to RMB939.2 million in the same period in 2024. As we grow our
high-margin retail core service cloud segment and experience an increase in our operating leverage,
our gross profit margin was 20.4% in 2021, 38.0% in 2022, 35.0% in 2023, 36.3% in the six months
ended June 30, 2023 and 38.3% in the six months ended June 30, 2024. The decrease from 2022 to
2023 was due to the change in our product mix with greater adoption of our AIoT solutions by our
customers, which has a relatively lower gross profit margin compared to our other products.
OUR STRENGTHS
We believe the following strengths contribute to our success:
Leading retail digitalization solution provider in China and Asia with first-mover advantage
We are the pioneer and leader in driving the digitalization of the local retail industry in China.
Since our founding in 2015, we have helped thousands of retail stores across multiple retail formats to
embrace the way digital retail operated. Through the past eight years, we have learned firsthand the
day-to-day pain points different retailers faced and have built such understandings into our Dmall OS
which continues to expand. Our first-mover advantage brings us deeper industry knowledge and better
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retail-tailored cloud solutions. We have successfully expanded our businesses to other countries and
regions in Asia, comprising Hong Kong SAR, Cambodia, Singapore, Malaysia, Macau SAR,
Indonesia, the Philippines and Brunei. In the six months ended June 30, 2024, we served 444
customers that used our retail digitalization solutions. We also witnessed significant growth during the
Track Record Period. The GMV processed through our operating system increased from approximately
RMB95.1 billion in 2021 to RMB123.3 billion in 2022, and further increased to RMB141.9 billion in
2023. During the six months ended June 30, 2023 and 2024, the GMV processed through our operating
system increased from RMB69.1 billion to RMB76.1 billion. Our revenue increased by 56.6% from
RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further increased by 19.4% to
RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million in the six
months ended June 30, 2023 to RMB939.2 million in the same period in 2024.
Our products and services are well recognized by the market. For example, in 2022, we won
awards of “ CCF Science and Technology Achievement Award,” “2023 Top 10 SaaS Service
Innovation Cases, ”“ 2022 China Federation of Logistics and Procurement Scientific and
Technological Progress”, “2021 New Retail Service Provider Top 30,” “2021 Chinese most valuable
new brands—Digitalization / marketing service provider Top 20” and “2021 Asian Retail Awards—
Digital Initiative of the Year,” among others. In particular, our project on “Digital Intelligence
Integration Innovative Technology and Industrial Application of Brick and Mortar Retail Business
Distribution” won the first prize of “2022 China Federation of Logistics and Procurement Scientific
and Technological Progress.” This award was established by the China Federation of Logistics and
Procurement in 2002, upon the approval of the State Ministry of Science and Technology of China
(“SMST”), as the only SMST-authorized and registered award granted to private-sector funded
projects and initiatives in the logistics industry. Based on our solid performance in international
markets, we have gained recognition in the World Unicorn Enterprise Development Report 2024
released by Great Wall Strategy Consultants. We secured the top position in the digital operations
category for enterprises and ranked 229th overall on the global list.
A leading full-spectrum omni-channel retail digitalization solution provider in China with
proven success
We are a leading full-spectrum omni-channel retail digitalization solution provider in China,
according to Frost & Sullivan. Full-spectrum coverage refers to our capability to address retailers’
needs across major critical parts of their operations. Contrary to the general purpose point solutions
offered by traditional software or horizontal SaaS providers, our integrated solution is local retail
specific, integrated across major operations and data driven.
 Comprehensive functionalities. Our Dmall OS provides SaaS solutions with the capability to
integrate with retailer operation to address its major operational needs, from procurement,
supply chain and warehouse management to product display and store operation, to
interaction with consumer online and offline. Compared to function-specific providers that
cover limited retail scenarios and provide a limited set of retail functions, such as warehouse
management software, our solution package allows retailers to obtain holistic and timely
access to data across major operations to make more informed decisions to improve their
operation, with tangible results such as increased sales, improved inventory turnover and
lower out-of-stock rate that help retailers deliver better user experience and drive repeat
sales. Compared to general horizontal SaaS products which cater to enterprises’ demands
across industries, we provide solution covering the value chain in the local retail industry.
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By covering the best industry standards and facilitating real-time data synchronization, we
generate industry specific insights which help retailers improve their operational
performance.
 Omni-channel coverage . Our solutions support retailers in managing offline and online
operations. Our retail core service cloud leverages our Dmall OS system and AIoT
solutions to help retailers manage their offline retail operation. We also assist retailers in
establishing and managing their virtual storefronts to directly engage with online
consumers. The underlying data captured across their online and offline omni-channel
operations are consolidated to help retailers gain a single panoramic view of a retailer’s
business, which simplifies retail management process and improves operation efficiency.
 Proven success . Throughout the years, we have expanded and upgraded our retail
digitalization solution that has successfully helped our customers digitalize their
operations. We are the sole retail digitalization solution provider for many of our
customers and our solutions are adopted by retailers of different retail formats across
hundreds of cities. The GMV processed through our operating system increased from
approximately RMB95.1 billion in 2021 to RMB123.3 billion in 2022 and RMB141.9
billion in 2023. During the six months ended June 30, 2023 and 2024, the GMV processed
through our operating system increased from RMB69.1 billion to RMB76.1 billion. Total
number of customers we served increased from 236 in 2021 to 436 in 2022, and further to
533 in 2023. We served 444 customers in the six months ended June 30, 2024. Please also
refer to “—Our Service Offerings” for tangible improvement in operating results powered
by our solutions.
Our technology driven retail has been the key factor to our business’ success. We are founded,
guided, and managed by a team of retail veterans. We have accumulated in-depth industry know-how
in retail technology through our eight years of solving complex operational problems for leading
retailers in China, most notably Wumei Group. By working closely with Wumei Group, we have been
able to obtain valuable insights into the challenges that retailers face and have used this knowledge to
refine our technology and product roadmap. As a result, we have been able to develop solutions that
help us drive the digitalization of Wumei Group through the continuous development of our products
and the expansion of our service offerings and also acquire new customers and establish ourselves as a
leader in the retail technology industry. We believe this strategic partnership has been instrumental in
guiding our product roadmap, honing our technology and catapulting our customer acquisition as
lighthouse example.
Blue-chip retailer customer portfolio
According to Frost & Sullivan, the local retail market comprises various types of retailers, such
as non-chain retailers, chain retailers, distributed e-commerce retailers, and mom-and-pop shops.
Among these, chain retailers, represented by major players like 7-Eleven, hold the largest market share
of 46.9% of store-based local retail market in 2023. These retailers prioritize standardized management
to provide top-notch service to their customers across all stores. As a result, they are willing to pay for
full-spectrum omni-channel solutions to streamline their operations from headquarters to local stores.
Full-spectrum coverage refers to our capability to address retailers’ needs across major critical parts of
their operations. The broadest operational modules coverage among peers enables us to cover diverse
customer base. Their demand for sophisticated products also creates significant entry barrier, high
switching cost and strong customer loyalty. We strategically focus on these blue-chip retailers and seek
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to collaborate with them to establish a strong reputation in the market and attract other retailers.
Through our lighthouse partnership with Wumei Group, we have accumulated on-the-ground
experience in improving retail operation with technology in software, hardware and proprietary
algorithm. Our success in digitizing Wumei Group lends us the most relevant credentials in improving
efficiency and profitability of retailers and help us secure new blue-chip customers. For example, we
have since collaborated with other leading blue-chip retailers such as Maidelong Entities, Chongqing
Department Store, Yinchuan Xinhua from China and DFI Retail Group in selected Asia markets. We
have also expanded rapidly to work with customers across diverse retail formats, including chained
supermarkets, warehouse supermarkets, department stores, convenience stores, specialty retailers and
new retail formats, among others.
We grow with the success of our customers. For our Dmall OS system, we offer the option to either
charge a percentage of the customers’ GMV processed by our system or provide a fixed subscription fee
tailored to suit customers’ individual needs or financial situation. The take rate fee structure aligns our interests
with those of our customers while allowing us to capture a part of our customers’ growing sales volume. This
helps customers with lower upfront costs for our products and services and generate revenue growth through
the synergetic growth of our customers’ sales volume after adopting our operating system. Customers can also
choose the subscription payment model and pay a service and consultation fee based on various factors,
including, among others, the number and types of modules subscribed by the customer, the subscription period
and the size and operational scope of the customers. The fixed subscription fee sets clearer expectations that
can help with customers’ budgeting and planning and provide transparency in billing. We enter into different
fee arrangements with different customers to offer more flexibility in pricing structures, allowing them to
choose a fee arrangement that better suits their needs. In addition, as our relationship deepens with our existing
customers, we understand their business better and are able to cross-sell additional modules and
functionalities, leading to a high revenue retention. In 2021, 2022, 2023 and the twelve months ended June 30,
2024, we had achieved 184%, 158%, 117% and 123% dollar-based net retention ratio, respectively.
We have diverse business development channels including key accounts BD, industry
conferences, business partners, and independent software vendors (ISV). We collaborate with ISVs to
draw on their localized knowledge and mobilize their local resources to acquire customers, increase
customer touchpoints and respond to customer needs effectively and efficiently. We also cooperate
with public cloud providers. By integrating our Dmall OS solutions into their platforms and solution
packages, we can leverage their wide customer base to further promote our products.
Continuous refinement of retail technology
We embrace retail technology and continually improve our technological capabilities. Our
research and development expenses were RMB588.6 million, RMB586.3 million, RMB520.9 million,
RMB266.1 million and RMB203.5 million in 2021, 2022, 2023 and the six months ended June 30, 2023
and 2024, respectively. As of June 30, 2024, we had five research and development centers with 908
research and development employees. Our technology is advanced, comprehensive and secured.
 Advanced. We focus on using technology to create business value for retailers. For
example, our algorithm-driven data analytics generates omni-channel operating insights
which can lead to increased efficiency. Our sales forecast modules make sales projection
based on a wide range of parameters including historical sales data, inventory level,
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product categories and customer profiles within store proximity. We have also pioneered
many industry-first applications. According to Frost & Sullivan, we are:
 the first and only one amongst top players in the industry to develop and adopt
modules of digitalized supplier auction, intelligent fast food area planning, intelligent
merchandise display, and AIoT-enabled shopping cart; and
 one of the first amongst top players in the industry to develop and adopt modules of
algorithmic sales prediction, intelligent merchandise selection, intelligent warehouse
management, intelligent fulfillment and distribution scheduling, and container unified
scheduling system.
 Comprehensive. With unified integration of software, hardware and services, we help to
reduce deficiencies across local retail operation. We have independently configurable
modules covering all key retail scenarios, including supply chain management, warehouse
management, product management, store management, customer membership management
and AIoT solutions. Compared to traditional ERP providers who primarily offer offline
distribution channel coverage and function-specific cloud solution providers who mainly
cover online scenarios, we integrate data across both online and offline channels, break data
silos and connect upstream and downstream partners, encouraging innovation and win-win
cooperation.
 Secured. Retailers opening up their IT infrastructure to third party systems are exposed to
cybersecurity risk. Our Dmall OS system integrates data and privacy protection functions
to ensure IT security, including information security, system security, IAM security, and
security awareness training, in compliance with laws and regulations. The system ensures
the safety of customer data through encryption and data transmission processes,
preventing the leakage of sensitive business information. Additionally, a robust firewall is
established to enhance anti-attack capability and avoid system downtime. The system also
provides an identity and access management system for role-based access control,
allowing customers to manage risks and prevent security accidents. Moreover, IT security
training is provided to raise awareness and mitigate user risk, helping employees to
combat security breaches and lower associated risks.
 Constantly refining. We constantly refine the functionalities of our cloud modules guided
by market developments and our customer needs. For example, in 2022, we generally
performed major updates on a bi-weekly basis with multiple function updates each batch.
Unlike the traditional ERP players whose system is built on-premise and relatively static,
our Dmall OS system is constantly developing to incorporate latest industry best practices.
The abovementioned technology capabilities have enabled us to build powerful products to
better serve our customers and help them achieve better business outcome.
Proprietary credible SaaS products launched in overseas markets
Our deep industry know-how accumulated through cooperation with retailers in China gives us
a competitive edge in rapid replication of our business model in other countries and regions. We began
our overseas expansion with our Chinese customers’ overseas affiliates, before expanding to serve
other well-known international retailers. Our solutions have been successfully implemented in leading
retailers in China, driving their digital transformation and streamlining their day-to-day operations. We
believe that our retail digitalization solutions can be easily adapted to other countries, as retailers
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around the world face similar pain points in digitalizing their operations and meeting the evolving
needs of consumers. In addition, our solutions are designed to be flexible and adaptable to the unique
needs of different customer and market. With extensive experience in the retail technology industry,
we have the expertise to customize our solutions to meet the specific needs of retailers in different
countries. Our technological prowess also supports the constant upgrade of our systems to address
differences in customer demands. As we expand our operations globally, we believe we will continue
to drive the digitalization of retail operations around the world, providing retailers with the necessary
tools to meet their customers’ needs and improve efficiency in the digital era.
According to Frost & Sullivan, we were one of the leading PRC-based player among our peers
to expand our retail SaaS business into other markets outside the PRC. As of June 30, 2024, we had
established our footprint in nine countries or regions outside the Chinese mainland, comprising Hong
Kong SAR, Cambodia, Singapore, Malaysia, Poland, Macau SAR, Indonesia, the Philippines and
Brunei. We are also in the initial stage of expansion into the European market through our
collaboration with the Metro Group, a leading wholesaler headquartered in Germany. As of June 30,
2024, 10 Metro Group stores in Poland had implemented our system.
Sophisticated management team with abundant industry experience, high operational efficiency
and strong support from shareholders
Our management team comprises of prominent thought leaders across offline retail
management as well as internet and software technology industries. As we continue our international
expansion outside of China, we have assembled a leadership team with track record in both China and
international markets.
Mr. Curtis Alan Ferguson, our Chairman and non-executive Director, is a thought-leader in the
consumer space. Mr. Ferguson is currently a managing partner of Ventech China Ltd., a venture capital
firm based in China, since February 2021, and a director of The American Chamber of Commerce in
Shanghai, since 2020. Prior to that, he served multiple executive roles at Coca-Cola Company (NYSE:
KO) for more than 37 years, including as the president of The Coca-Cola Greater China and Korea and
as the president of The Coca-Cola Middle East and North Africa.
Mr. ZHANG Feng, our co-founder, executive Director and president, is a pioneer in executing
new digital retail strategies, including “distributed e-commerce” and “online and offline integration.”
He had accumulated extensive experience in the retail industry prior to joining our Company and
continues to oversee the growth of the Company.
Mr. Dirk Van den Berghe, our non-executive senior advisor, held top executive positions at
Walmart Inc., including Executive Vice President and Regional Chief Executive Officer of Walmart
Canada and Asia. He also served as President and Chief Executive Officer for Walmart China.
Dr. ZHANG Wenzhong, our Founder and senior advisor. Dr. Zhang is a prominent leader in the
local retail industry in China, with more than 30 years of local retail experience. He founded Wumei
Technology in 1994 and assumes leadership roles in several leading retail brands in China. Combining
his insights into local retail industry as well as the international exposure from his postdoctoral
research at Stanford University, he founded our Company in 2015 to spearhead retail digitalization in
China. Dr. Zhang’s strategic vision, business acumen and leadership have guided our Company’s
development since its founding. Dr. Zhang is also a highly regarded figure in China’s retail industry.
He currently serves as the honorary chairman of China General Chamber of Commerce (
ʕ਷ਠุᑌΥ
ึ), the chairman of Nankai Alumni Business Association, a Consumer Goods Forum China board
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member and holds a tenure position on the board of Nankai University in China. Dr. Zhang has won
various awards, including “ Top 10 China Economic Person of the Year in 2018, ”“ Man of the year in
China’s Business News in 2018 ,” “A Role Model for Business Leaders in 2018 ,” “Man of The Year in
Chinese Retailing in 2019-2020, ”“ 25 most influential enterprise leaders in 2019 ,” “70th anniversary
outstanding business people in 2019 ,” among others.
With the guidance of our management team, we have infused critical steps of our operations
with advanced technology to propel our operational efficiency. We have digitalized each critical step
of our key operation functions and developed technology infrastructure in support of our employees to
achieve operational excellence through automatic systems. By utilizing such data-driven tools, our
employees are able to maximize their efficiency throughout daily operations and realized high
scalability. We also gain strong support from our shareholders including leading technology companies
such as Tencent, Kingdee and Lenovo as well as top financial investors, including China Industrial
Bank, China Structural Reform Fund, and IDG Capital. We are also committed to attracting new
talents and professionals to support our innovation and growth. For further information, see “Directors
and Senior Management.”
OUR STRATEGIES
We are pursuing the following strategies to achieve our mission:
Retain and grow with existing customers through market-leading service and product innovation
We aim to continuously expand our OS system modules, provide additional value-added
services to help our customers grow and capture more selling opportunities. In particular, we plan to
develop new modules and upgrade existing modules that target to drive smart operation and
automation and increase efficiency. We will also develop specialized modules that meet the needs of
retailers to operate under different formats. For example, we have been upgrading our product
offerings to enable intelligent decision-making, including intelligent merchandise display and fast food
area planning. Intelligent merchandise display module helps retailers arrange and adjust product
placement to reflect consumers’ changing needs. Fast food area planning module enables retailers to
more accurately predict hot sellers and arrange for the preparation process accordingly to reduce waste
and save cost. We have also launched the intelligent loss prevention products and related services in
2022 which can help retailers access video, image and order information to detect theft and protect
retailers’ assets.
Expand our enterprise customer portfolio to cover more retail formats and broaden our sales
network
We plan to leverage the success and experience from our existing customers in our future
customer acquisition process. We intend to expand into new retail formats, broaden our sales network
and collaborate with more players in the retail value chain to increase customer touchpoints and selling
opportunities.
 Retail format / size coverage . We will accelerate our horizontal expansion into
direct-to-consumer, or DTC, and business-to-consumer, or B2C, stores to serve retailers
with different retail formats. Our service packages with varying functionalities at different
price points catering to the needs of customers of different sizes, retail formats, and
budgets. We will also develop more specialized modules and services to tap into
additional retail verticals to further expand our addressable market.
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 Sales network expansion . We will further expand our sales network of the direct sales
team and cooperate with ISVs, to increase selling and expand our presence in the more
fragmented regional markets.
We believe that growing our enterprise customer portfolio will help further deepen our retail
insights, which will in turn refine our product and service offerings to drive revenue growth.
Continued investment in research and technology innovation
We invest heavily in technology innovations and research and development, which are the
foundation of our business and are essential to our growth. We will continue to invest in technology
and utilize the power of cloud infrastructure, AI capabilities, and data analytics algorithms to better
serve our customers and stay ahead of competition. We will also continue to invest in and apply AI,
big data and AIoT technology to develop new applications and new service modules. We will further
invest in research and development by applying new technologies such as machine learning, natural
language processing, computer vision, edge computing, artificial reality and virtual reality in our
product development. In addition, as the volume of data processed by us continues to grow, we will
concurrently scale up our network infrastructure to support this growth. Finally, we plan to continue to
recruit top-notch industry talents, including researchers and experienced engineers and top graduates
from world-renowned institutions for these purposes.
Further global expansion
To penetrate into unaddressed global markets, we plan to further enhance localized marketing
efforts and technology capabilities to meet the needs of overseas retailers. We have also developed an
English version of the Dmall OS system, and are developing our overseas business development team
with local market know-how and expanding our research and development team focusing on overseas
market development.
We plan to leverage our established connections with international players to expand our
footprints in new markets, such as the United Arab Emirates. For example, building on our strong
collaboration with Maidelong Entities we expanded our business into the European market by
cooperating with the Metro Group. As of December 31, 2023, 10 Metro Group stores in Poland had
implemented our system. In August 2023, SM Group became one of our customers. In addition, we
plan to use our projects with DFI Retail Group as a show case to continue to grow our presence in
Southeast Asian markets. We will also further explore cross-border opportunities and collaborate with
local partners to better understand the nuances of local retail markets and develop localized knowledge.
Explore strategic partnerships and acquisition opportunities
We will selectively pursue strategic cooperation, investments and acquisitions that are
complementary to our organic growth strategies, particularly those that can complement our product
offerings, strengthen our technology capabilities and solidify our market position. We will continue to
seek out potential businesses and assets that are complementary to and have synergies with our current
business and that will help us attract and retain customers. We intend to focus on players with a solid
track record and significant growth potential to achieve synergies. In selecting investment targets or
partners, we generally consider factors including suitability with our strategic planning, degree of
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potential synergies, market position, management team experience, valuation, historical operating
metrics, and financial performance. Through strategic acquisition and cooperation, we aim to further
enhance our products and services and strengthen our market leadership.
OUR SERVICE OFFERINGS
We provide retail core service cloud solutions that are anchored on Dmall OS software and
AIoT solutions. Retail core service cloud solutions is an integrated solution that delivers
comprehensive data insights that encompass a wide range of areas, including, for example, supply
chain management, store management, and e-commerce operations. We offer key indicator reports that
track sales and report abnormal indicators, providing multi-scenario, multi-dimensional indicator
analysis that covers major aspects of retail operations from procurement process to product sales. For
example, in the supply chain management process, we conduct sales and inventory analysis, and
inventory aging analysis to help retailers understand inventory structure and cost, and better control
inventory and costs at the company level. We also perform anomaly analysis, which includes shortage
analysis and timely identification and reporting of negative inventory, excess inventory, slow-moving
inventory, unsold inventory and other situations. This helps retailers promptly identify shortages and
abnormal products, pinpoint the true reasons for anomalies, and better address sales losses caused by
these abnormal products or inventory situations. By utilizing our services, businesses can gain a better
understanding of its current state of operations, enabling actionable improvement.
During the Track Record Period, we also provided e-commerce service cloud solutions and
online marketing services. By the end of 2023, we phased out most e-commerce service cloud
offerings as customers transitioned their O2O operations in-house, where they carried out their own
daily online store management, such as updating product listings, maintaining product information,
handling inquiries and after-sales, and managing store promotions.
In April 2024, we completed the Restructuring to divest all of our equity in Dmall Fresh
(Beijing), our former VIE. The Restructuring led to the cessation of the operation of the Dmall app and
mini programs, which primarily led to the termination of our online advertising services under the
marketing and advertising service cloud we previously operated and payment processing services
under the retail core service cloud. The financial results of our online advertising services were
classified as discontinued operations in the historical financial information. Following the
Restructuring, we are focused on offering retail core service cloud solutions, while other services, such
as offline marketing, no longer generate significant revenue.
See “Summary—Recent Development,” “Business—Others” and “Business—E-commerce
service cloud.”
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KEY OPERATING METRICS
The following table sets forth our customers served for the years indicated:
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
GMV processed through our system (1) (in RMB billions)
- Retail core service cloud
- Operating system (2) ................................... 95.1 123.3 141.9 69.1 76.1 (5)
- Take rate customers (3) ............................... 58.5 106.3 113.5 56.8 48.8
Related Parties .................................... 50.9 81.1 76.7 39.5 28.0
Other Related Party ................................ 6.9 22.0 32.8 15.3 19.2
Independent Customers ............................. 0.7 3.1 4.0 2.0 1.6
- AIoT Solutions ....................................... 14.2 12.6 10.2 5.5 4.9
- E-commerce service cloud* (4) ............................. 6 . 9 8 . 2 4 . 4 2 . 4 —
Related Parties .................................... 5 . 5 7 . 5 4 . 3 2 . 3 —
Other Related Party ................................ 0 . 2 0 . 1 — — —
Independent Customers ............................. 1 . 1 0 . 5 0 . 2 0 . 1 —
Number of customers (6)
- Retail core service cloud ................................. 2 3 1 4 3 2 5 2 7 4 0 9 4 3 0
- Operating system ..................................... 1 6 4 3 0 0 3 2 4 2 5 1 2 8 3
- AIoT solutions ....................................... 8 4 1 8 8 2 8 1 2 1 4 1 8 4
- E-commerce service cloud* ............................... 4 0 3 5 2 9 2 9 *
- Others ................................................ 3 4 4 2 1 9
Total number of customers (7) ................................. 236 436 533 413 444
Notes:
* The e-commerce cloud service solutions has been immaterial in 2024. By the end of 2023, all our customers had transitioned to in-house
O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material revenue in 2024. After the Restructuring, we do not
operate any business under the e-commerce service cloud. See “Summary—Recent Developments,” “Business—Retail Core Service
Cloud Solutions—Distributed e-commerce system” and “Business—E-commerce Service Cloud Solutions.”
(1) Refers to the GMV processed by our retail core service cloud and e-commerce service cloud. The provision of other revenue is not
directly associated with GMV as we do not charge our advertising customers based on the GMV processed.
(2) Refers to the GMV processed through our Dmall OS system.
(3) Take rate customers for a given year/period refers to customers that contributed revenue under the take rate fee model in the given year/
period, excluding customers that subscribe only to the membership and product sales management module under the take rate fee model.
GMV from customers that are not take rate customers (i.e. customers that pay fixed subscription fee) accounted for the difference
between GMV attributable to the operating system and take rate customers. The membership and product sales management module is
specifically designed to help large retailers manage consumer profiles and arrange the sales of certain high-value hot sellers. We charge
customers that subscribed to this module a take rate of no less than 1% compared to other modules that have an average take rate ranging
from 0.3% to 0.5% during the Track Record Period to account for the system’s complexity. We exclude the GMV from subscriptions to
our purchase membership and product sales management module that are made on a standalone basis due to (i) the module’s higher take
rate could distort our operating metrics, and (ii) the GMV from these standalone subscriptions is not material to our overall performance.
(4) The decrease in GMV in 2023 compared to that of 2022 was primarily due to (i) certain customers opting to operate O2O e-commerce
business in-house, where they manage their own day-to-day O2O operations, (ii) the cessation of our O2O e-commerce business we used
to provide to DFI Retail Group along with our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
in April 2022 and (iii) our strategic decision to not aggressively expand our e-commerce business. For details, see “Summary—Business
Sustainability & Path to Profitability” and “History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.
(5) The overall increase in operating system GMV was primarily driven by more customers subscribing to our operating system and our
customers subscribing to additional modules and integrating our services into more stores. We experienced a decline in operating system
GMV from take-rate customers as some Wumart supermarket transitioned to a subscription-based fee model.
(6) Number of customers that have contributed revenue to us in a given year/period, including number of customers we serve through
Shenzhen Enjoy as a result of our acquisition of Shenzhen Enjoy in November 2021. If we remove the number of customers solely using
Shenzhen Enjoy’s products from the calculation, in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, we had retail
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core service cloud solutions customer of 86, 162, 259, 213 and 183, respectively, including (i) operating system customer of 23, 39, 60,
47 and 60, respectively, (ii) AIoT solutions customers of 75, 142, 217, 182 and 136, respectively. The number of customers does not
include those from our tax invoice management system services, which was launched in 2023 and generated revenue of RMB10
thousand in 2023 and RMB2.3 million in the six months ended June 30, 2024. We had 14 and 930 tax invoice customers in the second
half of 2023 and the six months ended June 30, 2024, respectively.
(7) Many of our customers use more than one of our cloud service solutions. Therefore eliminations are made to avoid double counting.
The following table sets forth our revenues by operating segments in absolute amount and as a
percentage of our revenue for the years indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service cloud ................. 438,814 51.7 880,502 66.3 1,298,730 81.9 602,255 78.8 933,185 99.4
- Operating system ..................... 288,481 34.0 616,529 46.4 680,043 42.9 330,655 43.3 419,838 44.7
- Take rate ........................ 198,172 23.4 429,498 32.3 431,769 27.2 224,345 29.4 240,119 25.6
- Subscription(1) .................... 60,590 5.8 36,471 2.5 89,812 5.1 31,444 4.1 86,160 9.2
- Customization, implementation,
software development and
maintenance and others
(2) .......... 29,719 2.8 150,560 10.0 158,462 9.1 74,867 9.8 93,559 9.9
- AIoT solutions ........................ 150,333 17.7 263,973 19.9 618,687 39.0 271,600 35.5 513,347 54.7
- Take rate(3) ...................... 113,894 10.9 105,638 7.0 66,057 3.8 36,624 4.8 28,878 3.1
- Subscription(4) .................... 16,693 1.6 85,885 5.8 516,473 29.5 211,403 27.7 479,418 51.1
- Product sales(5) ................... 19,746 1.9 72,450 4.8 36,157 2.1 23,573 3.0 5,051 0.5
E-commerce service cloud** ............. 409,312 48.3 447,487 33.7 300,006 18.9 160,465 21.0 4,279 0.4
Others ............................... 6 6 * 2 7 5 * (13,379) (0.8) 1,283 0.2 1,698 0.2
Revenue ............................. 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Notes:
* Lees than 0.1%
** By the end of 2023, all our customers had transitioned to in-h ouse O2O operation, where they manage their own day-to-day O2O
operations. As a result of our customers opting for in-house O2O e-commerce business, we ceased to provide system and delivery services
under the e-commerce service cloud solutions for those customers acco rdingly, but we provide distributed e-commerce system and other
services to them if they decide to subscribe to such services. Conse quently, the bulk of the services we provided under the e-commerce
service clouds during the Track Record Period, such as the operational support for their online stores and delivery services, had been
phased out by the end of 2023. The remaining services we provided under the e-commerce service cloud solutions did not generate material
revenue in 2024. In April 2024, we completed the Restructuring, which l ed to the divestment of the Dmall app. After the Restructuring, we
do not operate any business under the e-commerce service cloud. See “Summary—Recent Developments” and “Business—Others.”
(1) The decrease in subscription fee we recognized in 2022, as compared to 2021, was primarily due to certain customer switching from
subscription based payment to take rate based payment. The increase in subscription fee in 2023, as compared to 2022, was primarily due
to the text messaging services we provided to meet the business demands of our customers.
(2) Our customization, implementation, software development and maintenance and others revenue increased from RMB29.7 million in
2021 to RMB150.6 million in 2022, mainly attributable to increase in software development and maintenance revenue in association with
our acquisition of Shenzhen Enjoy completed in November 2021, and new customization revenue from existing customers who
demanded additional customized functionalities on our operating system due to respective business needs.
(3) The decrease in our take rate revenue under AIoT solutions from RMB105.6 million in 2022 to RMB66.1 million in 2023, mainly
attributable to the decrease in the GMV processed through our Scan-and-Go solutions from our retailer customers.
(4) There was a general increase in the subscription fees under our AIoT solutions, mainly attributable to a greater adoption of such solutions
by customers as we expanded our AIoT service during the Track Record Period, including intelligent loss prevention solutions in early
2022, as well as intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions,
intelligent cleaning solutions and intelligent delivery solutions in 2023.
(5) The increase in our product sales under AIoT solutions from RMB19.7 million in 2021 to RMB72.5 million in 2022 was resulted from
the expansion of our product offerings of digitalized smart tags in late 2021. The decrease from RMB72.5 million in 2022 to RMB36.2
million in 2023 was mainly due to the majority of our retailer customers’ stores having completed their digitalized smart tags adoption by
2022.
Pricing
Our pricing structure varies depending on the product or service we offer. Our pricing policies are
the same for Independent Customers, Related Parties and Other Related Party.
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Retail core service cloud
Dmall OS . For our Dmall OS system, we offer the option to either charge a percentage of the
customers’ GMV processed by our system or provide a fixed subscription fee tailored to suit
customers’ individual needs or financial situation. The take rate based fee we charge is determined
based on various factors, including, among others, the number and types of modules subscribed by the
customer, the subscription period, the expected customer’s total GMV transacted through our system,
and the size and operational scope of the customer. The average take rate we charged our customers
who adopt a take rate pricing model for our operating system, which represent revenue generated from
our take rate pricing model divided by corresponding GMV processed by our operating system, was
0.3%, 0.4%, 0.4% and 0.5% in 2021, 2022, 2023 and the six months ended June 30, 2024, respectively.
For customers who choose the subscription fee based model, we charge them a service and
consultation fee which is determined based on various factors, including, among others, the number
and types of modules subscribed by the customer, the subscription period and the size and operational
scope of the customers. In addition, for customers in need of customization, implementation, software
development and maintenance services, we provide customized services and charge them a
corresponding service fee based on the aggregated work hour or work day involved and the applicable
fee rate per worker per work hour or work day.
AIoT solutions . For our AIoT solutions, other than the Scan-and-Go solutions, we charge a fee
can either be a one-time payment or a fixed monthly subscription fee. The amount of the fee is
determined by several factors, such as the types of products and/or services provided by us and the
retail format, store size, and operating scope of the customer. For our Scan-and-Go solutions, we
charge a take rate fee that varies depending on the payment channel used by consumers. Consumers
can choose from various payment service providers, such as WeChat Pay, Alipay, and UnionPay, to
complete their purchases. The take rate we charge customers varies, as different payment service
providers impose different transaction fees. This fee is only applicable to customers who use our Scan-
and-Go solutions.
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The following table sets forth our revenues from our retail core service cloud by pricing model
in absolute amount and as a percentage of our revenues from our retail core service cloud for the years
indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Operating system ....................... 288,481 65.7 616,529 70.0 680,043 52.4 330,655 54.9 419,838 44.9
- Take rate ............................ 198,172 45.1 429,498 48.8 431,769 33.3 224,344 37.2 240,119 25.7
Related Parties ..................... 173,422 39.5 352,376 40.0 326,080 29.2 175,393 29.1 184,879 19.8
Other Related Party ................. 12,207 2.7 59,712 6.8 85,162 6.6 39,234 4.2 46,997 5.0
Independent Customers .............. 12,543 2.9 17,410 2.0 20,527 1.5 9,717 3.9 8,243 0.9
- Subscription(1) ........................ 60,590 13.8 36,471 4.1 89,812 6.9 31,444 5.2 86,160 9.2
Related Parties ..................... 57,877 13.2 28,896 3.3 54,730 4.2 26,503 4.4 49,603 5.3
Other Related Party ................. — — — — 2 2 * 3 * 1 *
Independent Customers .............. 2,713 0.6 7,575 0.8 35,082 2.7 4,938 0.8 36,556 3.9
- Customization, implementation, software
development and maintenance and
others
(2) ............................ 29,719 6.8 150,560 17.1 158,462 12.2 74,867 12.5 93,559 10.0
Related Parties ..................... — — 32,164 3.7 23,280 1.8 13,000 2.2 10,419 1.1
Other Related Party ................. 2,974 0.7 28,056 3.1 53,792 4.1 28,578 3.1 32,290 3.5
Independent Customers .............. 26,745 6.1 90,340 10.3 81,390 6.3 61,867 7.2 50,850 5.4
AIoT Solutions ......................... 150,333 34.3 263,973 30.0 618,687 47.6 271,600 45.1 513,347 55.1
- Take rate(3) ........................... 113,894 26.0 105,638 12.0 66,057 5.0 36,624 6.1 28,878 3.1
Related Parties ..................... 102,731 23.5 95,970 10.9 60,392 4.7 33,265 5.5 27,962 3.0
Other Related Party ................. — — — — — — — — — —
Independent Customers .............. 11,163 2.5 9,668 1.1 5,665 0.3 3,359 0.6 916 0.1
- Subscription(4) ........................ 16,693 3.8 85,885 9.8 516,473 39.8 211,403 35.1 479,418 51.4
Related Parties ..................... 3,535 0.8 84,213 9.6 512,098 39.5 210,064 34.9 461,853 49.5
Other Related Party ................. 7 9 * — — — — — — — —
Independent Customers .............. 13,079 3.0 1,671 0.2 4,375 0.3 1,339 0.2 17,565 1.9
- Product sales(5) ....................... 19,746 4.5 72,450 8.2 36,157 2.8 23,573 3.9 5,051 0.6
Related Parties ..................... 14,895 3.4 58,999 6.7 8,801 0.7 7,596 1.3 1,684 0.2
Other Related Party ................. 1 1 * 2 1 * 1 0 * — — 4 3 7 *
Independent Customers .............. 4,840 1.1 13,430 1.5 27,346 2.1 15,977 2.6 2,930 0.4
Total revenue for retail core service
cloud .............................. 438,814 100.0 880,502 100.0 1,298,730 100.0 602,255 100.0 933,185 100.0
Notes:
(1) The decrease in subscription fee we recognized in 2022, as compared to 2021, was primarily due to certain customer switching from
subscription based payment to take rate based payment. The increase in subscription fee in 2023, as compared to 2022, was primarily due
to the text messaging services we provided to meet the business demands of our customers.
(2) Our customization, implementation, software development and maintenance and others revenue increased from RMB29.7 million in
2021 to RMB150.6 million in 2022, mainly attributable to increase in software development and maintenance revenue stream in
association with our acquisition of Shenzhen Enjoy completed in November 2021, and new customization revenue from existing
customers who demanded additional customized functionalities on our operating system due to respective business needs.
(3) The decrease in our take rate revenue under AIoT solutions from RMB105.6 million in 2022 to RMB66.1 million in 2023, was mainly
attributable to the decrease in the GMV processed through our Scan-and-Go solutions from our retailer customers.
(4) There was a general increase in the subscription fees under our AIoT solutions, mainly attributable to a greater adoption of such solutions
by customers as we expanded our AIoT service during the Track Record Period, including intelligent loss prevention solutions in early
2022, as well as intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions,
intelligent cleaning solutions and intelligent delivery solutions in 2023.
(5) The increase in our product sales under AIoT solutions from RMB19.7 million in 2021 to RMB72.5 million in 2022 resulted from the
expansion of our product offerings of digitalized smart tags in late 2021. The decrease from RMB72.5 million in 2022 to
RMB36.2 million in 2023 was mainly due to the majority of our retailer customers’ stores having completed their digitalized smart tags
adoption by 2022.
We use the total sales value of our customers as the GMV for determining the fees we charge
our customers. We record our customers’ total value of both offline and online sales to consumers as
the GMV. Offline sales of customers are recorded through point-of-sale system (POS system) and
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Scan-and-Go terminals. We also record online sales of our customers through Dmall OS. For retail
core service cloud solutions, our customers under the take rate fee model generally subscribed at least
to our POS system. We charge a customer a take rate for subscribing our POS system and will increase
the take rate when the customer subscribes for more modules to reflect fees for additional services we
provide through these modules. For customers that do not use the aforementioned product and services
and therefore do not directly produce GMV information, we generally charge them a subscription fee.
We do not set minimum subscription requirement for our customers.
We determine the price of each offering based on several factors, including the market price of
comparable products or services, the cost of developing and providing the offering, and the potential benefit
our solutions bring to the customer. Customers are then charged a fee based on various factors, such as the
mix of offerings they adopt, the expected gross merchandise volume, and the scope of implementation.
Customers may adopt different sets of offerings and implement them in various scopes based on factors
such as business scale, operation complexity, and budget. We offer a flexible fee model to accommodate
different customer needs, including take rate and subscription models, depending on their business
considerations. For example, some customers might prefer a fixed fee, as it sets clear expectations and
assists with budgeting and planning. Some companies may opt for a fixed subscription fee due to internal
approval requirements. There are situations where tracking customers’ GMV may not be possible. In such
cases, charging a fixed service fee offers more transparency in billing. Ultimately, the decision to establish
various fee arrangements with different customers depends on factors such as the nature of their purchases,
their business requirements, and the outcome of negotiations.
Retail Core Services Cloud Offerings Functions Rationale for adopting this pricing model Pricing basis
Operating system
Take rate Dmall OS
system
Product procurement
process management;
supply chain
management; product
management; store
management;
consumer
membership
management;
headquarters
management;
distributed
e-commerce system
and others.
This model aligns our interests with those of our
customers while retaining earning upside
potential as the customers’ businesses grow. A
take rate fee structure allows us to attract
customers with lower upfront cost for its
products and services and to generate revenue
by capturing a part of the customers’ growing
sales volume. It reduces customers’ early-stage
investments in implementing its retail core
service cloud as the structure does not require a
large lump-sum payment at the time of
implementation. As a result, our customers are
more willing to buy in to our operating system
at an early stage of the digitalization of their
operations. We adopt the take rate fee structure
also with the objective to generate revenue
growth through the synergetic growth of its
customers’ sales volume after adopting the
Company’s operating system. Our interests are
aligned with those of our customers as
customers’ sales increase with the support of our
products and services, resulting in us generating
greater revenue calculated as a percentage of
such increasing GMVs. Therefore, we believe a
take rate fee structure is a sound pricing
approach as it not only allows us to grow our
customer base with lower initial costs but also to
benefit from the long-term growth and success
of our customers after adopting our system.
The fee we charge
is determined
based on various
factors, including,
among others, the
number and types
of modules
subscribed by the
customer, the
subscription
period, the
expected
customer’s total
GMV transacted
through our
platform, and the
size and
operational scope
of the customer.
Subscription Dmall OS
system
Product procurement
process management;
supply chain
management; product
management; store
For certain customers, we charge them a fixed
subscription fee. We enter into different fee
arrangements with different customers to offer
more flexibility in pricing structures, allowing
them to choose a fee arrangement that better
The fee we charge
is determined
based on various
factors, including,
among others, the
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Retail Core Services Cloud Offerings Functions Rationale for adopting this pricing model Pricing basis
management;
consumer
membership
management;
headquarters
management and
others.
suits their needs. For example, customers may
prefer fixed fee, which set clearer expectations
that can help with budgeting and planning.
Internal approval requirements may also lead
certain companies to choose a fixed subscription
fee. In certain situations, we may not be able to
track customers’ GMV. Charging such
customers a fixed service fee will thus provide
more transparency in billing. Ultimately, the
decision to enter into different fee arrangements
with different customers depend on the nature of
the products or services they purchase, their
business needs and the negotiation result.
number and types
of modules
subscribed by the
customer, the
subscription period
and the size and
operational scope
of the customers.
Customization,
implementation,
software development
and maintenance
services
System
customization
and
implementation
services and
software
development
and
maintenance
services
System customization
and implementation
services and software
development and
maintenance services
that help retailers
improve operation
efficiency.
We charge a fixed service fee for system
customization and implementation services and
software development and maintenance
services. This pricing model accounts for the
cost we incurred to provide such services and is
in line with industry practice, according to Frost
& Sullivan.
Service fee is
determined based
the aggregated
work hour or work
day involved and
the applicable fee
rate per worker per
work hour or work
day.
AIoT Scan-and-Go
solutions
Scan-and-Go
solutions provide self-
checkout services.
We charge a take rate based fee for our
Scan-and-Go solutions. This model aligns our
interests with those of our customers while
retaining earning upside potential as the
customers’ businesses grow. See above for more
details on the reasons for the adoption a take
rate based fee model.
Take rate varies
depending on the
payment channel
used by
consumers.
Intelligent
loss
prevention
solutions and
others
Combined solutions
of AIoT hardware and
services that help
retailers build
digitally integrated
retail locations that
improve in-store
management
efficiency and
enhance personalized
shopping experiences
for consumers.
Other than Scan-and-Go solutions, we charge a
fixed fee for our other AIoT solutions. This
pricing model accounts for the cost we incurred.
In addition, other than Scan-and-Go solutions,
we generally do not process GMV in connection
with our AIoT solutions.
Fixed fee is
determined by
several factors,
such as the types
of products and/or
services provided
by us and the retail
format, store size,
and operating
scope of the
customer.
E-commerce service cloud
For our e-commerce service cloud, we derived revenue from O2O platform service fees paid by
our customers and delivery fees paid by consumers during the Track Record Period. For O2O platform
service fees, we primarily adopted a take rate fee structure by charging a percentage of the GMV
processed by our e-commerce service cloud.
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The following table sets forth our revenue under our e-commerce service cloud by types of
services in absolute amount and as a percentage of our total revenue for e-commerce service cloud for
the years/periods indicated:
Years Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Revenue
O2O platform service ........ 310,794 75.9 349,263 78.0 246,909 82.3 130,464 81.3 4,279 100
— Related Parties ....... 240,724 58.8 310,996 69.5 234,107 78.0 123,566 77.0 1,991 46.5
— Other Related Party . . . 10,870 2.6 6,495 1.4 — — ————
— Independent
Customers ........... 59,200 14.5 31,772 7.1 12,802 4.3 6,898 4.3 2,288 53.5
Logistics .................. 98,518 24.1 98,224 22.0 53,097 17.7 30,001 18.7 — —
Total revenue from
e-commerce service
cloud ................... 409,312 100.0 447,487 100.0 300,006 100.0 160,465 100.0 4,279 100.0
Our O2O platform service revenue represented take rate revenue we charged our retailer
customers based on the GMV of products sold for the integrated e-commerce service cloud solutions.
We recorded online sales of our customers as GMV when consumers complete orders and make
payments online. The average take rate we charged for our e-commerce service cloud, which represent
O2O platform service revenue divided by GMV processed under our e-commerce service cloud, was
4.5%, 4.3%, 5.6% in 2021, 2022 and 2023, respectively. We did not generate any GMV under the e-
commerce service cloud solutions in 2024 as we ceased to provide system and delivery services under
the e-commerce service cloud solutions for our customers. Our e-commerce service cloud solutions
helped our customers to construct and operate their own online marketplace and engaged logistics
service providers for delivering orders if retailers subscribe to our delivery services, which are all
components integral to our omni-channel retail digitalization solutions. Accordingly, our O2O platform
service revenue represented the all-inclusive fee that we charge for all the aforementioned services. We
did not charge each of these services individually, nor did we identify the delivery service under our
integrated e-commerce service cloud solutions as a standalone performance obligation.
Our logistics revenue represented the delivery fee we charged our consumers who transact
through our O2O platform upon completion of each delivery order, and was determined based on
factors such as size, weight, distance and location characteristics of the delivery order, as well as
packaging fees.
The table below sets forth our pricing model for our e-commerce service cloud solutions during
the Track Record Period.
E-Commerce Services Cloud Offerings Functions Rationale for adopting this pricing model Pricing basis
O2O platform O2O platform
services
Provide retailer
customers with access
to the large online
marketplace on Dmall
mobile app or mini-
programs, help
customers to construct
and operate their own
online marketplace,
We charge a take rate based fee for customers
of our O2O platform services. This model
aligns our interests with those of our
customers while retaining earning upside
potential as the customers’ businesses grow.
See above for more details on the reasons for
the adoption a take rate based fee model.
Take rate is
generally the same
for customers that
subscribe to the
same services.
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E-Commerce Services Cloud Offerings Functions Rationale for adopting this pricing model Pricing basis
provide customer
services and engage
logistics service
providers for
delivering orders if
retailers subscribe to
our delivery services.
Logistics Logistic
services
Deliver goods from
warehouse to
consumers in
collaboration with
third-party logistics
providers.
We charge delivery fee and packaging fee to
consumers who transact through our O2O
platform upon completion of each delivery
order. This pricing model accounts for the cost
we incurred to provide such services and is in
line with industry practice, according to Frost
& Sullivan.
Delivery fee is
determined based
on factors such as
size, weight,
distance and
location
characteristics of
the delivery order.
By the end of 2023, all our customers under the e-commerce service cloud solutions had
transitioned to in-house O2O operation, where they manage their own day-to-day O2O operations,
including updating product listings, maintaining product information, handling inquiries and after-
sales, and managing store promotions. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service
cloud solutions for those customers accordingly, but we provide distributed e-commerce system and
other services to them if they decide to subscribe to such services. Consequently, the bulk of the
services we provided under the e-commerce service clouds during the Track Record Period, such as the
operational support for their online stores and delivery services, had been phased out. As we phased
out the bulk of services provided under the e-commerce service clouds by the end of 2023, the
remaining services we provided under the e-commerce service cloud solutions did not generate
material revenue in 2024. After the Restructuring, we do not operate any business under the e-
commerce service cloud. “Summary—Recent Development.”
Others
During the Track Record Period, the services we provided under our other business segment
primarily included offline marketing services, offline marketing products and the provision of
discounts, coupons and shopping and payment subsidies. The price of our offline marketing and
advertising services, including both advertisement placement and related consultation services, was
determined based on various factors, including, among others, the format and duration of the
advertisement, targeting scope and display location. Our offline marketing products are priced based
on an arm’s length negotiation with our customers based on the type of products provided and the
relevant amount and specifications. See also “Business—Marketing Resource Collaboration
Agreement with Chongqing Department Store.”
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The following table sets forth our revenue by customers in absolute amount and as a percentage
of our revenue for others for the years indicated:
Years Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Revenue
Related Parties ............. 110,565 56.3 103,591 59.9 89,715 59.4 37 2.9 3,811 (224.4)
Other Related Party ......... — — — — ———— — —
Independent Customers ...... 85,901 43.7 69,379 40.1 61,240 40.6 1,246 97.1 (5,509) 324.4
Total revenue from others ... 196,466 100.0 172,970 100.0 150,955 100.0 1,283 100.0 1,698 100.0
Retail core service cloud
Our retail core service cloud integrates an array of functionalities that help retailers digitalize
and optimize their omni-channel operation. Our proprietary Dmall OS system works alongside with
AIoT solutions to help retailers improve productivities, boost revenue and cut costs. Retailers can
freely choose, configure, and consolidate different modules to meet their own unique operational needs
and preferences.
Service Advantages
Our retail core service cloud solutions help local retailers boost the operational performance
through comprehensive digitalization solution packages, highly flexible configurations, constantly
upgrading functionalities and expansion of new revenue stream.
 All-encompassing and integrated solutions enabling more efficient business decisions .
We provide omni-channel services covering all key aspects of retail operation
management. The integrated service offerings replaced legacy solutions that are
disconnected among different functions, and increase overall operational efficiency of
customers and improve their experience. In addition, our proprietary Dmall OS system
consists of highly configurable modules that can be independently selected, modified, or
replaced by retailers based on their own daily needs and preferences, providing retailers
the flexibility they desire based on their retail formats and operation needs. We also help
retailers obtain valuable insights on their omni-channel operation. By adopting the
Dmall OS System with its associated in store consumer-facing AloT solutions, retailers
can access an integrated pool of data. Leveraging our strong big data analytics and
artificial intelligence capabilities, the Dmall OS system can aggregate and group data by
relevance, standardize data output and convert them to actionable initiatives to guide
their daily operations and help our customers to meet the evolving market challenges.
 Versatile solutions backed by deep retail know-how. Our retail SaaS offerings are
adaptable to the highly complex operating environment in the retail industry, as they are
derived from ongoing accumulation of industry know-how through years of cooperation
with retailers across multiple formats and deep consumer insights. Our most prominent
enterprise customers include Wumei Group, Maidelong Entities and DFI Retail Group.
We serve customers across super markets, warehouse-style super markets, convenience
stores and DTC stores, among others. As a leading full-spectrum retail digitalization
solution provider in China according to Frost & Sullivan, broad operational modules
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coverage enables us to reach the diverse customer base in the industry, and thus obtain
deep retail know-how. The long term stable working relationship with retailers on such a
massive scale allows us to constantly absorb new industry practices, which are developed
into regular Dmall OS system functionalities updates to address the dynamic changes in
the retail industry. In particular, with the substantive retail know-how and the diverse
consumer base, our Dmall OS system reduces the human factors in business decision
making by deploying standard, constantly improving SaaS modules to assist retailers in
their daily operation.
 Data protection and system security. Compared with the traditional local independent
deployment of retail information, the Dmall OS system integrates data and privacy
protection functions in compliance with legal regulations. This together with various
encryption technologies and firewalls, effectively guarantee the overall IT security,
including information security, system security, IAM security and security awareness
training.
 Information security: We protect the safety of our customers’ data and ensure their
data management is in compliance with applicable laws and regulations through the
encryption of data and the data transmission process. We also prevent the leakage of
important business information, such as purchase price, selling price and profit of our
customers.
 System security: We enhance the anti-attack capability of our and our customer’s
system by establishing robust firewall to resist cyber attacks, avoid system downtime
and other incidents that negatively impact customers’ system operation.
 Identity and access management security: We provide identity and access
management system, that helps our customers conduct role-based access control.
With IAM, our customers can better control and manage the risks of operators at
different levels and avoid the occurrence of security accidents caused by poor
management of identities and employees’ access to data, systems, and resources.
 Security awareness training: We provide supplementary services and IT security
training to the employees of our customers to raise IT security awareness and prevent
and mitigate user risk. We believe this can help the employees of our customers to
understand the role they play in helping to combat security breaches and lower the
security risks associated with their actions.
 ESG-conscious solutions helping clients to achieve ESG goals. We are the strong advocate
for green operation and have devoted efforts to help retailers build sustainable office,
achieve intelligent energy-saving, and maintain low-carbon operation.
 Paperless operation: Our Dmall OS brings the traditional cumbersome offline
process online by digitizing retailers’ entire operation, and helps them achieve
paperless operation, including among others, paperless contract signing, store
operation and warehouse operation. We also developed the e-receipt feature which
allows retailers to issue receipt to consumers through Weixin or Alipay. After using
our e-receipt feature, 7-Eleven (Guangdong) was able to reduce paper usage by 60 to
70 tons per year. This greatly helps retailers improve their daily operation efficiency,
reduces the use of paper and protect against deforestation.
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 Intelligent energy saving: We connect to the energy systems and terminal devices of
retailers, to ensure their energy consumption data can be visualized and analyzed in
real time. This allows retailers consume energy as needed and on demand, thus
improving energy use efficiency, effectively reducing energy consumption, and
achieving low-carbon operation.
We are conscious of food waste’s impact to our planet and are committed to helping retailers
reduce food waste and loss, and at the same time lower costs and increase operational efficiency.
 Shelf life management: Through digitalization, we assist retailers improve product
shelf life management, by supporting the customization of flexible product expiration
strategies and generating discounts for groceries nearing the expiration date, which
intelligently and effectively reduces commodity loss, and at the same time reduces
the waste of food.
 Intelligent supply chain: Through the digitalization of the supply chain, we help
retailers improve the visibility of supply chain operation, which together with AI
algorithm intelligent prediction, improve the accuracy of merchandise ordering. This
not only effectively enables retailers to reduce the out-of-stock rate and improve sales
performance; but also reduces the inventory turnover days, improves the efficiency of
inventory turnover, minimizes the loss of goods during circulation, thereby
supporting the improvement of overall operational efficiency of retailers.
We are an enterprise with deep social sensitivity; we care for the elderly, focus on food safety
and support the community through emergency response.
 Elderly care: We enhanced our app and smart AIoT to provide easy-to-use and
elderly-friendly interface, and promote the use of internet and cellular technology in
the elderly user group.
 Emergency protection: In emergency situation, such as epidemics and extreme
weather, we reconfigure and optimize the deployment of delivery capacity in terms of
space and time, effectively meeting the basic needs of people. For example, in April
and May 2022, Guangzhou was severely impacted by the COVID-19 pandemic, our
Dmall R&D team promptly switched the warehouse supply of 7-Eleven (Guangdong)
from Guangzhou to Foshan. Our products and services played an important role in the
Foshan warehouse expansion, doubling the amount of stores it supplied from over
500 stores to over 1,000 stores as of June 2022.
 Food safety: Through digitalized commodity tracking, we enable retailers to follow
the movement of a food product from the source to users covering all steps in the
supply chain, especially for agricultural products and cold chain transportation,
underpinning the continuous improvement of domestic food safety.
Service Components
(a) Product procurement process management:
Our Dmall OS system facilitates the two-way data connection between retail and supply
through comprehensive digitalization. Through data mining and analysis of online and offline
consumption behavior of consumers, our solutions help retailers discern consumer needs, identify
changes in user preferences, minimize homogeneous suppliers, brands and products, reduce the
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procurement of less popular products, promote products with higher consumer demand, and analyze
contribution by brand. The strong collaboration between retailers and suppliers can precisely guide
product procurement and enable the establishment of extensive supplier networks that cater to
consumer demand. This helps retailers grow sales, seize new consumer trends, create appealing new
brands and promote star products. At the macro level, joint demand forecasting, intelligent product
selection, intelligent replenishment and other functions work together to construct an efficient and
collaborative procurement supply chain management system which significantly improves
procurement and retail efficiency. At the same time, our data-enabled solutions help more in-depth and
efficient integration between product display, promotion, marketing and settlement, enabling us to
form deep cooperation with retailers at the daily operation level.
A retailer’s retailer-supplier collaboration is solidified and optimized through Dmall OS
system’s supplier auction system. The traditional bidding process can take significant time and
resources due to the large amount of information needed to be analyzed manually. To improve on
traditional supplier selection and procurement methods, we have developed a digitalized supplier
auction system that facilitates an online, live auction process where retailers launch products online for
bidding, suppliers remotely submit bids for different products and retailers evaluate supplier proposals
utilizing our Dmall OS system. Retailers need to subscribe to our services to access and use the
supplier auction system while suppliers do not need to subscribe for our solutions to participate in the
auction process. We also do not charge suppliers any fee for using the supplier auction system. The
open and transparent bidding process removes geographical restrictions, creates competitive tension
among suppliers, lowers compliance risks such as risks relating to under-the-table transactions, and
helps retailers obtain the best pricing through fair and open process.
Set forth below is an illustration of our supplier auction system:
Purchases and
Sales Platform
The List of Suppliers
Suppliers
Management
Contracts
Suppliers & Retailers
Synergy Platform
Replenishment
Reminder
Details of the Contract
(b) Supply chain management
(i) Logistics Management
Our retail core service cloud solutions help retailers digitalize their order fulfillment and
distribution functions, which improve logistics efficiency and accuracy while also saving staffing
costs. The traditional order fulfillment process is heavily reliant on personal experience of individual
delivery personnel and could not maximize routing efficiency. Our intelligent fulfillment and
distribution scheduling system helps retailers optimize delivery routes by collecting historical order
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data and accurately predicting peak sales and delivery volume to allow optimal planning for order
packaging, delivery staff dispatching and delivery routing. As a result, retailers could ensure more
accurate delivery and reduce the average time required for delivery staff to fulfill each order. Such
dynamic delivery staff assignment saves retailers costs in having excess delivery staff on stand-by
during non-peak times and increases consumer satisfaction by improving online order fulfillment
timeliness. By digitally upgrading the logistics function, we helped Wumei Group to streamline their
workflows, reduce downtime and improve the utilization of their staff force. For example, our solution
help suppliers of Wumei Group confirm delivery information such as the quantity, shelf life, and
receiving dock in advance. This increases collaboration between suppliers and warehouses, making it
more efficient and reducing the need for warehouse staff to manually enter information. We also
introduced self-service options for suppliers during the warehouse receiving process, which not only
improves supplier satisfaction but also greatly reduces the time and resources needed for offline
coordination between suppliers and warehouse staff. For the warehouse shelving process, our
algorithms optimize Wumei Group’s storage space and reduce the workload of warehouse staff. We
also support Wumei Group with intelligent hardware and algorithms during the stock picking process,
which mobilizes on-site employee through data. Collectively, our solutions helped Wumei Group save
labor costs of over RMB10 million each year.
We also helped 7-Eleven (Guangdong) to effectively manage their delivery services and realize
robust growth. Our modules help 7-Eleven (Guangdong) set up a central system that streamlines the
process from order processing to inventory picking, sorting, packing and delivery. With the help of our
solutions, store staff were able to handle multiple tasks, effectively improving the store’s performance
and boosting delivery capabilities. The integration between online system and offline stores also
enabled the synchronization of information, including information on store inventory, promotion
activities and customer orders, improving overall customer experience. Within six months after
adopting service module, as of June 2022, 7-Eleven (Guangdong) was able to seamlessly integrate
their online operation with major third-party platforms, which allowed the company to reach new user
base and opened up new source of revenue stream. As a result, 7-Eleven (Guangdong) achieved 300%
growth in single day takeaway orders.
(ii)
Inventory Management
By utilizing big data analytics and artificial intelligence capabilities, our Dmall OS system is
able to reshape the supply chain management for retailers. Our digitalized inventory auto
replenishment module seeks to address the long existing industry pain points such as high inventory
backlog and out-of-stock rate.
The inventory auto replenishment module helps retailers minimize lost sales opportunities by
facilitating dynamic inventory planning and automatic issuance of re-stocking orders in response to real-
time market demand. Supported by an algorithmic sales prediction model, our automated inventory
replenishment system takes into account a wide range of parameters such as inventory level, product
category, and seasonality to automatically make precise sales predictions and inventory replenishment
plans for each store. The system also automatically generates procurement orders to suppliers to ease
manual workload. During promotion seasons, the inventory replenishment system will also prepare for
the sales peaks ahead of time by making orders for hot sellers in advance based on inventory levels and
sales predictions. Retailers can therefore handle the increased stock, traffic, orders, and returns more
efficiently and achieve higher sales during the promotion season. We also optimize stocking strategies for
different types of merchandise, such as best seller items, slow moving items, promotion items and new
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items. Based on feedback provided by Wumei Group, Wumei Group was able to reduce its inventory
turnover days from around 35 days before the adoption of our intelligent inventory replenishment module
to lower than 21 days on average. Our solution also helped Wumei Group reduce its out-of-stock rate
from about 7% prior to the adoption of our services to lower than 2%.
Set forth below is an illustration of our inventory auto replenishment module:
Big Data Algorithm Cleaning
Calculate Estimated Sales
Weather/ Supplier Schedule/ Public
Holidays
Calculate Product Replenishment
Suggested Volume
Historical Sales Data of Stores and
Products
Order Submit the OrdersMerchandise Category
The Grouping of
Goods Currently on
Shelf
Minimum Number of
the Orders
Maximum Number of
the Order The Order Schedule
Merchandise Number
(iii) Warehouse management
The warehouse management system consolidates inventory management, transfers, and
replenishment using real-time data inputs and analysis. The system records product inventory’s
warehouse location, manufacture and expiration dates and quantity, which could be routinely examined
for retailers to maintain detailed knowledge of their warehouse operations. We also employ intelligent
algorithms to improve warehouse management efficiency, which optimizes warehouse layout and
inventory placement by placing similar-sized inventory units near each other to allow for more
efficient bulk packaging and shipment. This helps minimize space wastage, shorten inventory picking
time and make frequent delivery easier. Due to the finite nature of warehouse space, any inventory
turnover improvement will yield operating efficiency gains for retailers. Wumei Group was able to
improve its warehouse operation efficiency and reduce the cost of consumables by using our
warehouse management solution.
Our AI powered solution guides the on-site operation of employees and helped Wumei Group
improve its overall on-site operation efficiency by 20%. Wumei Group also observed improvement in
utilization rate of warehouses by 10%, leading to an increase in warehouse space available for daily
operation and leasing. After using our products and services, 7-Eleven (Guangdong) also experienced
an improvement in its warehouse management efficiency. For example, in April and May 2022,
Guangzhou was severely impacted by the COVID-19 pandemic, our Dmall R&D team promptly
switched the warehouse supply from Guangzhou to Foshan. Our AI powered solution played an
important role in the Foshan warehouse expansion, doubling the amount of stores it supplied from over
500 stores to over 1,000 stores as of June 2022. Additionally, the implementation of our solution
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assisted in achieving the reduction in the frozen goods sorting time by 28% per hour, and a 30%
increase in frozen warehouses utilization.
(c) Product management
(i) Merchandise selection
Our intelligent merchandise selection system helps boost revenue for retailers by
optimizing their merchandise selection. The module factors in differences in retail format, store
location, store size, and consumer shopping behaviors, among others, and then generates
merchandise recommendations that tailor to the specific circumstances of each retailer. In
addition, we provide comprehensive quantitative and qualitative analytical tools to help
retailers refine their merchandise selection based on factors such as prevailing market prices,
popular product categories, sales volumes, and inventory levels. Such data-driven process
allows retailers to gain insights into evolving market trends, understand complex customer
needs, and dynamically and optimally adjust their procurement plans to drive higher sales.
The following screen shots illustrate some of the functions we offer through our
intelligent merchandise selection system:
Off-line Top
Selling
Merchandise
Off-line Top
Selling
Merchandise
Off-line Top
Selling
Merchandise
Upcoming
Merchandise with
Promotion Discounts
Increase the
Coverage of the
Sub-classification
Off-line New
Merchandise
Seasonal
Merchandise
Holiday
Merchandise
Unsearchable
Merchandise
Intelligent
Merchandise
Selection
(ii) Merchandise display planning and management
We offer retailers centralized control over the merchandise management for each store,
and apply data-driven algorithms to recommend store layouts and merchandise display
arrangements to reduce manual labor time, increase product variety and boost offline store
sales.
The Dmall OS system is capable of analyzing a massive amount of authentic omni-
channel transaction data to compute the relatedness degrees between each pair of products,
which is used to generate an entire merchandise display arrangement plan on a store-by-store
basis. Traditionally, creating new product placement plans is very labor-intensive so that
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retailers may only evaluate and change shelf displays on a quarterly basis. Post Dmall OS
system adoption, retailers can utilize its automated display feature to generate display
recommendation on a daily basis to keep up with new consumer preferences and market trends
and drive up the sales. In addition, it is costly and logistically difficult for managers to check
whether each store have arranged the merchandise as requested according to a predetermined
plan. Our system enables retailers to obtain a realtime overview of merchandise display to
check if there is any deviation from existing plans. As a result of using our intelligent
merchandise display planning and management module, Wumei Group was able to reduce a
total of around 500 hours per month on average by replacing the use of printed hardcopy
display plans with electronic versions produced from the module and reorienting store staffs
toward providing better shopping experience for customers. In addition, Wumei Group also
observed reduced management expenses, lower time spent on spot checks, and increased sales
per square meter in trial stores relative to those that did not adopt the module. With image
verification covering over 300 stores, our service allows Wumei Group to achieve a closed-loop
product inspection process with 95% accuracy rate for merchandize display as of December
2021. During the same period, Wumei Group also reduced its floor planning labor costs by
50% with 10 people managing the blueprints of over 300 stores.
Set forth below is an illustration of our merchandise display planning and management
solutions:
Differentiated Display SuggestionsCreate Charts Automatically
Display Chart Open Shelves Shelf Layers
Different
Merchandise
Names
Dispaly Preview
The First Shelf The Second Shelf The Third Shelf
Total Amount of
Merchandise
Product Placement
Details
Proper Display
Wrong Display
Same Products
Unlike traditional retail stores where it is costly and logistically difficult for managers to
check whether each store have arranged the merchandise as requested, the Dmall OS system
enables them to obtain a real-time overview of merchandise display to check if there is any
deviation from existing plans. With this benefit, managers can view each store shelf virtually,
assign display arrangement tasks to sales assistants and ensure that they complete the task
diligently via the Dmall OS mobile app.
(d) Store management
Our store management module helps improve the overall operational and managerial efficiency
of offline stores. Multichannel retail operation has created new complex challenges for store
management since store staff need to undertake greater number of functions concurrently, including
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receiving and stocking goods, managing inventories, keeping track of promotional offers, handling
fulfillment-related responsibilities, among others.
Utilizing the real-time data synchronization feature of the Dmall OS system, the store
management module works with other modules to serve as a nerve center for retailers to optimize
workflows, reduce administrative burdens and achieve intelligent personnel management. For example,
the store management module will automatically process the replenishment request initiated by the
inventory auto replenishment module and forward the action request to responsible staff for further
action. The module will send periodic reminder to staff and will only notify the superiors when the
tasks are not completed within a specific amount of time. In addition to easing workload, the module
also helps store management keeps track of tasks that each staff completed and provides a quantitative,
transparent and result-orientated analysis, which enable fairer performance evaluations that is
ultimately efficiency-enhancing for retailers. After adopting our store management module and
intelligent fulfillment and distribution scheduling module, Wumei Group was able to fulfill
approximately 98% of its orders on a timely basis for its offline stores in Beijing, which is significantly
higher than the industry average of approximately 75%, according to Frost & Sullivan. The adoption of
the module also helped reduced its online order picking time by 40% from 25 minutes per order to 15
minutes per order.
Set forth below is an illustration of the key functions of our store management system:
HQ Planning Store Execution Feedback Collection Spot Check
AI-powered
Shelf Merchandise Recognition
1 2
 3 4 5
Further, we also help retailers optimize their fast food area operation. Our fast food
management module helps retailers to more accurately predict hot-sellers and the most optimal time to
prepare them. This will help increase the product mix to boost sales and reduce the wastes of fast food
in light of their perishable nature. Furthermore, these stores are able to reduce labor and training costs
and increase headcount efficiency, allowing their fast food area personnel to reorient towards customer
services and sales.
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The following screenshots illustrate some of the functions we offer through our fast food area
planning system:
Recommended
Amount
Recommended
CategoriesConvenience Store
Merchandise Names
Lunch Time
Period
Recommended
Categories of
Production
Convenience Store
Actual
Processed
Categories
Recommended
Process Amount
Actual Processed
Amount
(e) Consumer membership management
The Dmall OS system helps retailers to create their own private traffic pool using our customer
membership module, which allow them to better retain customers and increase their purchase
frequency via a variety of loyalty programs. As consumers browse products or make purchases, such as
ordering grocery deliveries or using our self-checkout services in store, the module automatically
synchronizes and updates member profiles with information such as credits, purchase history,
membership rights and gift vouchers, and payment records across multiple platforms and systems. This
allows retailers to gain a more comprehensive understanding of their consumer behaviors, and apply
such valuable insights in their product selection. After adopting our consumer membership
management module, from July 2020 to July 2021, 7-Eleven (Guangdong) increased its members by
20%.
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Set forth below is an illustration of our consumer membership management system:
Customer Center Member Benefits List Introduction of Member
Benefits
(f) Headquarters management
Our headquarters management module enables enterprise retailers to achieve timely and
efficient coordination between their headquarters and their offline retail locations. With a large
network of offline stores, enterprise retailers suffer from steep communication barriers and lack of
information transparency when their central management seeks to implement specific actions at
storefront. The headquarters management module is a real-time, data-driven solution for these retailers
to optimize their top-down workflow and bottom-up feedback.
This module allows retailers to centralize their decision-making process and streamline
storefront management tasks. With the support of contemporaneous data collection and analysis of the
Dmall OS system, retailer headquarters can make well-informed decisions on how to maximize profits
and business opportunities. For instance, once Dmall OS captures certain storefronts’ merchandise
arrangements, the headquarter could in turn decide to auction remaining available retail space to
suppliers. At the same time, the retailer headquarters may dispatch its decision to make any storefront
adjustments to the responsible store staff as real-time tasks in the Dmall OS system, eliminating delay
in communication and reducing misunderstanding of headquarter directives at the storefront level. The
retailer headquarter, as a result, could expedite its network-wide execution of central commands
promptly and accurately.
The module also provides a retailer headquarter with visualized, quantitative feedback on the
actual execution of its directives. The headquarter could monitor each task’s progress with the
corresponding responsible store staff; the module helps the headquarter to control for delayed or
incomplete tasks by automatically elevating the issue for management review. The headquarter could
further assess each task’s completion with the Dmall OS system’s visual data analysis tool, which
equips the headquarter with detailed knowledge on the performance of its retail network for future
decision-making scenarios.
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Set forth below is an illustration of our headquarters management module:
Operating Results
Overview
Operating Results
Overview for
Yesterday
Operating Results
Overview for Last
Month
Operating Trend
Analysis
(g) Distributed e-commerce system
Our distributed e-commerce system enables retailers and brand owners to seamlessly create and
operate their online stores, including developing their own Apps, creating mini-programs, and
operating online stores on third-party platforms.
Our distributed e-commerce system provides retailers and brand owners with four
comprehensive sub-systems covering the full cycle of online store development and operation:
Online Marketplace System: Develop and deploy user-friendly, visually appealing, and fully
functional online stores at ease.
Store Operation System: Manage online representation of a brand or product, including
product information, pricing, images, and reviews, in the e-commerce environment (i.e. digital
shelf). Manage promotional activities, orders and inventory. This enhances user experience,
helping retailers expand their user base.
Order Fulfillment System: Automatically and intelligently process orders and route action
requests to appropriate retail store staff at the right time. For example, the system provides
precise instructions to staff regarding the timing for picking up and packaging orders to ensure
the preservation of the food quality of refrigerated items. By doing so, the system optimizes the
fulfillment process by coordinating the handling of orders in a way that improves employee
staffing efficiency and minimizes the exposure of perishable items to ambient conditions.
Delivery System: Manage and arrange delivery information for online orders. Leveraging the
delivery system, retailers can efficiently arrange own staff or connect with third party delivery
providers for delivery of online order.
Our distributed e-commerce system helps retailers and brand owners to establish a strong
online presence, effectively connecting with a wide and diverse consumer audience.
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Please refer to the table below for a comparison of the major services under the distributed
e-commerce system and the e-commerce service cloud solutions.
Distributed e-commerce system E-commerce service cloud solution
Services
System We help retailers develop their own e-
commerce trading platform and provide
online systems, store operation systems,
order fulfillment systems, and delivery
systems, or offer the above systems to help
retailers integrate and go live on third-party
platforms.
We require retailers to on board Dmall app,
and we used online systems, store
operation systems, order fulfillment
systems, and delivery systems to provide
e-commerce services.
Operation N/A We also handle the day-to-day operations
of virtual stores on behalf of retailers. This
includes providing consumer support to
address queries and resolve issues,
managing orders and inventory,
maintaining the e-commerce platform, and
keeping product listings up-to-date.
Delivery N/A We engage logistics service providers for
delivering orders for consumers.
Customer types
Retailers Retailers and consumers
Pricing
To retailers We charge retailers a take-rate-based fee.
The take rate we charge retailers for the
distributed e-commerce system is generally
lower than the take rate we historically
charged under our e-commerce service
cloud solutions, as we do not provide
delivery services under the distributed
e-commerce system.
We charge retailers a take rate based fee
for our O2O platform services.
To consumers N/A We charge consumers a delivery fee and
packaging fee upon the completion of each
delivery order. Delivery fee is determined
based on factors such as size, weight,
distance and location characteristics of the
delivery order.
(h) AIoT solutions
Our domestic retail cloud business is divided into two categories: retail core operating system, a
digital infrastructure that generally has a lower fee compared to the retailers’ existing IT spendings and
value-added services that create value by way of cost reduction, efficiency improvement, and revenue
increase for retail enterprises. The AIoT solution is a typical value-added service provided by us.
According to Frost & Sullivan, for domestic brick-and-mortar retail enterprises, the annual
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comprehensive IT expenditure accounts for only about 1% of their annual revenue, while expenditures
on labor, energy, and losses account for approximately 15% of their annual revenue. Among them,
labor costs alone make up about 10% of the annual revenue of retail enterprises, according to Frost &
Sullivan. Our value-added services focus on this 15% cost budget. Through our powerful digital
capabilities and intelligent devices, a new retail business management model driven by data, task
assignment, hierarchical problem-solving, and real-time response has been created. This model
quantifies and highly leverages the work of a large number of retail employees, significantly improving
operational efficiency and helping retail enterprises optimize their cost structure. In return, we receive
service fees. This new model is a combination of systems and manpower, and we need stronger control
over manpower during the launching period of our AIoT solutions to effectively promote it. Therefore,
there may be an increase in the use of outsourcing service providers and related outsourcing and other
labor costs during the initial stage of promoting and launching our AIoT solutions with our customers.
Once the AIoT solutions business matures, we will adopt a model based on system services combined
with the retail enterprise’s own employees, or continue to provide comprehensive services including
both our intelligent devices and outsourced labor support based on the retail enterprise’s needs.
Through our AIoT solutions, retailers can build digitally integrated retail locations that improve
in-store management efficiency and enhance personalized shopping experiences for consumers. Our
main AIoT solutions include digitalized smart tags, AIoT-enabled shopping carts, Scan-and-Go
solutions and intelligent loss prevention solutions. For example, we replaced paper price tags with
digitalized smart tags in offline stores, allowing retailers to more swiftly adjust prices on different
types of products in response to consumer demand changes and promotions. Our AIoT solutions also
work together with our Dmall OS system to track inventory level, provide real-time updates and
automatically initiate re-stocking orders when the inventory level drops under a certain threshold.
Leveraging the proprietary AIoT-enabled shopping carts, retailers can also trace the footprints of
consumers in physical stores, collect and analyze important information such as trending product
location, user movement patterns, most visited shelf location, and items that are most likely to be
bought together. As such, we enable retailers to record, retain and analyze these data from physical
stores just as e-commerce platforms would from online shoppers. We sell smart hardware products,
such as digitalized smart tags, AIoT-enabled shopping carts and intelligent loss prevention lamp post
(lamp post that leverages visual AI algorithms to identify unusual activities) and adopt a cost-plus
pricing. The listing price takes into account the cost of hardware procurement, system development and
integration, delivery, and business coordination. Each transaction is priced on a case-by-case basis
using the cost plus method.
Our AIoT solutions also help retailers to improve checkout management with our proprietary
smart Scan-and-Go solutions to improve their checkout efficiency. Consumers using such Scan-and-Go
solutions can choose to use self-checkout services without wasting time in lines and dealing with
cashiers. Data gathered during the self-checkout process helps retailers to develop more comprehensive
consumer profile. This allows retailers to adopt more tailored marketing strategy that captivate
consumer interest and provide more personalized shopping experience. We charge our Scan-and-Go
solutions based on take rate. In addition, we launched intelligent customer services that assign
customer service personnel to handle consumer complaints and provide intelligent customer service
quality assessment. Customer services we provide include addressing consumer complaints and
responding to pre-sale and post-sale enquiries from consumers relating to their purchases from our
retailer customers. Addressing a common pain point in the retail sector, we have also improved how
customer service quality is assessed. Traditionally, quality checks involved manually listening to each
customer service call and subjectively scoring them, a process that was not only time-consuming but
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also lacked objectivity and required substantial manpower for comprehensive coverage. We automate
the quality assessment process by categorizing calls into specific scenarios and establishing
standardized scoring criteria, leveraging our AI capabilities.
We also launched intelligent loss prevention products and related services in 2022. Our
intelligent loss prevention solution is an integrated solution that replaces currently labor intensive and
ineffective manual monitoring process in retailers’ checkout area, with a cost efficient digital approach
leveraging hardware, software, artificial intelligence and services. The solution contains surveillance
cameras installed on self-checkout machines that shoot consumer checkout video. Our intelligent loss
prevention solution analyzes consumer checkout behavior using both the video and consumer order
and payment information provided by our self-checkout system and warns retailers of suspicious
transactions. After using our AIoT solutions, Wumei Group replaced 285 regular checkout counters
requiring manual labor with 628 self-checkout counters. As of August 2021, Wumei Group reduced the
need of more than 500 cashiers, and saved labor costs. We also launched intelligent cleaning solutions,
intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent
cashier solutions and intelligent delivery solutions. The table below sets forth the key features of our
major new AIoT initiatives.
New AIoT Initiatives Description Pricing
Intelligent loss prevention solutions An integrated solution that replaces currently
labor intensive and ineffective manual
monitoring process with a cost-efficient digital
approach leveraging Internet of Things,
artificial intelligence and big data. Major
products include
 Remote surveillance: support remote
viewing and monitoring the stores with
customized monitoring scenes
 Intelligent inspection: support a variety of
online and offline inspection methods
 Self-service night collection: replace the
night duty personnel for door watching &
opening, effectively saving labor cost
 Safety channel blockage monitoring:
effectively prevent potential safety
hazards and trace abnormal situations
 Smoke and flame alarm: identify the fire
point in real time and sound alarms
automatically to minimize potential
hazard-related damages
 Intelligent anti-loss light poles:
automatically identify abnormal checkout
orders for self-service purchases
Subscription based fee:
subscription fee
depends on factors
such as store area,
service content, and
city location
Intelligent cleaning solutions An integrated cleaning solution combining
digital devices and labor force for offline retail
scenarios such as supermarkets. Services
include leasing of sweeping robot, and cloud-
based management of cleaning devices and
Subscription based fee:
subscription fee
depends on factors
such as store area, the
number of cleaning
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New AIoT Initiatives Description Pricing
related operation services. It helps schedule,
monitor, and optimize cleaning tasks
throughout retail spaces. This solution
enhances store cleanliness efficiency while
reducing overall cleaning costs. The system
addresses several longstanding pain points in
traditional store cleaning practices: previously,
staff scheduling was rudimentary, work
accountability was difficult to trace, there was
a lack of detailed task planning, and staff often
had overlapping responsibilities, resulting in
poor overall efficiency. By implementing this
smart system, retailers can overcome these
challenges, ensuring a more organized,
efficient, and cost-effective approach to
maintaining store cleanliness, ultimately
improving both the shopping environment and
operational productivity.
staff required, and the
type and quantity of
robots needed
Intelligent merchandise
replenishment solutions
This solution digitalizes the product
replenishment process, integrating cameras and
specialized software with restocking
algorithms and a task triggering system. The
system incorporates various data collection
methods, including new stock arrival tracking,
sales calculations, and out-of-stock detection.
It then automatically distributes replenishment
tasks to employees based on this data. As a
result, the solution achieves automated and
quantifiable inventory management,
streamlining the entire restocking process and
improving overall operational efficiency in
retail environments. Besides, by applying this
replenishment function, the customers could
perform real-time monitoring on merchandise
replenishment, and optimize the payroll
structure and offer better incentive plan to the
workers to improve operating efficiency, which
would also help the customer on their cost
decreasing and benefit increasing program.
Subscription based fee:
subscription fee
determined by the
average daily sales of
the store
Intelligent package sorting solutions A holistic package sorting service solution
including setting up intelligent shelves for
retailer’s O2O business. Leveraging advanced
big data algorithms and modeling techniques,
the system identifies and locates products
based on order priority and inventory status. It
then utilizes automated equipment for sorting
and distribution. This process optimizes the
route for sorting personnel from shelves to
packing stations, enhancing overall package
sorting efficiency. By streamlining the entire
workflow from product identification to final
Fixed fee per item
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New AIoT Initiatives Description Pricing
packaging, this solution enables retailers to
meet the demands of modern e-commerce
while improving operational productivity and
accuracy
Intelligent cashier solutions Compared to our scan-and-go solutions which
enhance customer checkout experiences, our
intelligent cashier solutions focus on
optimizing internal operations to streamline the
checkout process, improving overall efficiency.
Our system implements smart scheduling for
cashiers based on customer traffic patterns. It
visualizes employee work content for easier
tracking and provides AI-powered scheduling
and dispatch to assign tasks to individual
employees, aligning human resource
arrangements with staffing needs. The system
also tracks detailed performance metrics,
including piece-rate work volumes and
performance bonuses. In addition, we help
customers tags employee efficiency and skills,
creating comprehensive profiles for each
employee of the customers.
Subscription based fee:
subscription fee
determined by the
average daily sales of
the store
Intelligent delivery solutions For delivery services where we station service
riders full-time at supermarkets and stores of
our customers (see Type B of the delivery
service agreement): Based on the scale and
profile of the retailer’s orders, our intelligent
delivery solutions provide a comprehensive
fulfillment plan that includes a delivery
system, dynamic route planning algorithms,
dispatching, and aggregated delivery services.
The solution arranges efficient and timely
delivery through analyzing various factors
including traffic conditions, anticipated
demand fluctuations, delivery windows and
delivery capacity. The order assignment
algorithm developed by us assigns orders based
on the type of rider, order urgency, distance,
and the rider’s current status and availability.
Riders are also graded based on their
performance, reliability, and consumer
feedback. Those with higher ratings and
consistent service quality are given priority for
order assignments. The delivery service,
including the recruitment and management of
riders, is handled by third-party logistic
providers which we collaborate with. Our
solutions reduce operational costs for retailers
and enhance consumer satisfaction by
providing accurate delivery estimates to
consumers and minimizing delays.
Subscription based fee:
subscription fee
determined by the
number of orders
delivered for the
retailers and the price
per order
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New AIoT Initiatives Description Pricing
We offer a supplementary delivery service
collaborating with third-party logistics service
providers where the riders assigned and route
plannings are conducted by such third party
logistics service providers using their own
system. (see Type A of the delivery service
agreement). We have developed a logistics
management platform that connects retailers’
delivery orders with logistics service providers.
This platform allows retailers to conveniently
and independently select their preferred
logistics provider. Under this arrangement,
customers submit service requests through our
logistics management platform to the logistic
service provider, and the logistics service
provider handles order assignment and route
planning. This option is primarily employed
when customers occasionally require additional
riders to fulfill temporary high volume delivery
demands, have minimal delivery requests or
prefer using logistic services on an as-needed
basis.
We do not employ or have any contractual
relationship with riders under either type of
delivery arrangement. The riders are provided
by third-party logistics service providers.
The graphic below illustrates the interconnectivity between our Dmall OS system and AIoT
solutions:
Customers flow
camera
Dual-screen manual
cashier
Self-checkout
machine
Digitalized smart tags
AIoT-enabled
shopping carts
Interactive
marketing screen
Dmall OS
Weighting at
checkout
AI intelligent
scales
Intelligent cashier
Intelligent inspection
 Sweeping robot and
cleaning devices
Intelligent cleaning
solutions
Intelligent loss
prevention solutions
Intelligent merchandise
replenishment solutions
Intelligent package
sorting solutions
Intelligent cashier
solutions
Intelligent shelves
New solutions launched in 2023
A
I
 i
 t
 l
li
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The following reflects the key terms of the two types of delivery service agreements we have
entered into with third-party logistics service providers for our intelligent delivery solutions:
Key Terms Descriptions
Type A
Service type In cities and regions that are within the logistic provider’s delivery
capacity coverage, we submit service requests on the logistic provider’s
designated platform and the logistic service provider shall provide
delivery services. The logistic provider shall pick up parcels and
deliver to the consumers. The logistic provider may engage third-party
contractors for such delivery services, provided that it shall ensure that
such services meet the standards agreed under this agreement.
Pricing terms Delivery service fee of an order is generally calculated based on the
city/ region where the order is placed, distance and weight. We are
charged an additional fee for orders placed around the time of Spring
Festival. The calculation method also applies to parcels returned from
the consumers and confirmed by us.
We have the option to cancel orders, while delivery service fees are
still charged for orders cancelled after the logistic provider or its third-
party contractors have picked up the parcel. We are generally entitled
to file complaints on the logistic provider’s designated platform and
receive refunds from the logistic provider under agreed circumstances.
We shall pay delivery service fees and receive refunds on a monthly
basis. We are generally granted a credit term of 30 days.
Term and renewal Generally one year subject to automatic renewal.
Termination This agreement may be terminated either by mutual consent or due to a
failure to reach a consensus on updated pricing terms proposed by the
logistic provider from time to time.
Penalty Either party may be liable for penalty if the other party breaches the
agreement, in the amount equal to damages incurred by the non-
breaching party. We may be liable for penalty if we delay in delivery
service fee payment.
Type B
Service type O2O delivery service . The logistic service provider is required to
station its delivery service riders full-time at supermarkets and stores as
designated by us. The logistic provider and its riders shall provide
delivery services and to deliver parcels on our behalf.
Pricing terms The delivery service fee for an order typically comprises a base fee
predetermined for each supermarket and store under this agreement,
plus additional fees for overweight parcels. We provide service fees
only for successful deliveries. Service fees will not be paid for
deliveries that are not completed, such as those resulting from
consumer rejection. We will verify incomplete deliveries with the
logistics service providers before making payments. During
promotional periods, such as the Spring Festival, summer, and winter,
we may also provide subsidies to the logistic provider. The logistic
provider is required to compensate us with policy-based penalties for
any breaches of contract, such as delayed deliveries, according to the
criteria established in this agreement.
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Key Terms Descriptions
The pricing terms may be subject to quarterly adjustments, provided
the logistic provider gives prior notice and we give our consent or are
deemed to have consented.
The delivery service fee shall be settled on a monthly basis.
Term and renewal Generally one year. Parties may negotiate to determine whether to
renew the agreement 30 days prior to the expiration of the contract.
Termination Either party may terminate the agreement upon breaching by the other
party under certain circumstance.
Penalty Either party may be liable for penalty if the other party breaches the
agreement, in the amount equal to damages incurred by the non-
breaching party.
(i) Others
The Dmall OS system also features a wide range of other functionalities, including site
selection for new stores, rebate vouchers processing, and franchising management, helping retailers of
varying needs to optimize their operational management. In addition, we provide text messaging
services to our customers which involve distribution of product and promotion information through
non Internet channels to consumers. The distribution of information is carried out by third party service
providers that are engaged by us. We have developed a messaging management service platform that
offers SMS API development, technical support, and a data transmission dashboard, enhancing
message delivery rates. We charge our customers based on the number of messages sent. We provide
retailers with a tax invoice management system that integrates business settlement statements with the
invoicing process. This system automatically assists retailers in invoice splitting, amount calculation,
and can directly connect to the retailer’s system for invoice issuance. Furthermore, it offers features
including invoice verification, authentication, and statistical query. We also provide diversified
software development services to warehouse supermarkets, department stores and convenience stores,
and aim to expand our services in lower tier cities through our subsidiary, Shenzhen Enjoy.
E-commerce service cloud
During the Track Record Period, we provided integrated services under our e-commerce
service cloud to retailers, encompassing the establishment of virtual storefronts, as well as the
operational support for their online stores and delivery services.
As our customers have grown more accustomed to e-commerce operations, they have shown a
tendency to bring the operation of their e-commerce business in-house, where they manage their own
day-to-day O2O operations, while still requiring technical support to establish their online presence
and manage day-to-day operations. In light of these shifts in our customers’ business models and to
continue advancing our goal of enabling retailers to carry out online and offline omnichannel
operation, we have been providing the distributed e-commerce system module under our retail core
service cloud solutions.
By the end of 2023, all our customers under the e-commerce service cloud solutions had
transitioned to in-house O2O operation, where they manage their own day-to-day O2O operations. As
a result of our customers opting for in-house O2O e-commerce business, we ceased to provide system
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and delivery services under the e-commerce service cloud solutions for those customers accordingly,
but we provide distributed e-commerce system and other services to them if they decide to subscribe to
such services. Consequently, the bulk of the services we provided under the e-commerce service
clouds during the Track Record Period, such as the operational support for their online stores and
delivery services, had been phased out. As we phased out the bulk of services provided under the e-
commerce service clouds by the end of 2023, the remaining services we provided under the e-
commerce service cloud solutions did not generate material revenue in 2024. After the Restructuring,
we do not operate any business under the e-commerce service cloud.
Others
During the Track Record Period, the services we provided under our other business segment
primarily included offline marketing services, offline marketing products and the provision of
discounts and coupons.
Set forth below is a summary of typical terms of the framework offline marketing agreements
we enter into with our customers under which we are responsible for the design and execution of
offline marketing activities.
Key Terms Description
Tenure Ranging from one year to three years.
Service Type Design and execution of offline marketing activities.
Pricing The price of each marketing event to be separately
negotiated and agreed between parties prior to each
marketing event.
Payment Terms Settlement is required after the completion of each
marketing event.
Termination The agreement shall be terminated in the event of
bankruptcy, liquidation, dissolution, force majeure or
otherwise as required by laws and regulations. The
agreement may also be terminated by the non-breaching
party upon the breaching party’s failure to cure a breach of
contract.
Termination of the agreement would not affect payment
already made under the agreement.
Standard Terms and Conditions Other standard terms and conditions form part of the
agreement, which stipulate issues including representations
and warranties of both parties, intellectual property rights
and dispute resolutions.
Marketing Resource Collaboration Agreement with Chongqing Department Store
On November 30, 2022, Dmall (Shenzhen) Digital entered into a marketing resource collaboration
agreement (the “Marketing Resource Collaboration Agreement”) with Chongqing Department Store (for
itself and on behalf of the other group members of Chongqing Department Store Group).
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Pursuant to the Marketing Resource Collaboration Agreement, Dmall (Shenzhen) Digital
agrees to assist Chongqing Department Store Group’s marketing activities by gathering marketing
resources from third party market participants (including but not limited to brand owners, payment
solution operators, banks and other businesses or organizations) during the service period from
January 1, 2023 to December 31, 2025. The value of the marketing resources is based on the amount of
the marketing subsidies (including but not limited to payments or coupons) used by Chongqing
Department Store Group from such market participants. We determined a RMB50 million threshold for
each calendar year comprising the service period based on the amount of merchandise coupon
resources we estimated we could gather in 2023, multiplied by the estimated merchandise coupon
usage rate. Separate agreement may be entered into for each specific collaboration among Dmall
(Shenzhen) Digital, Chongqing Department Store and the relevant third party market participant which
will set out the precise scope and format of the collaboration.
The collaboration typically takes place in the following manner: we liaise with third party
market participants, such as brand owners, payment solution operators or banks, to gather marketing
resources, such as product discounts, bank coupons, other promotional coupons, cash vouchers and so
on. We then pass these marketing resources to Chongqing Department Store Group, so that Chongqing
Department Store Group could make these marketing resources available as promotional materials or
shopping rewards in its e-store to the shoppers and customers. Hence these marketing resources
support Chongqing Department Store Group’s marketing efforts by providing shopping subsidies to
attract and retain customers and potential customers.
Reasons for the transactions
Due to the nature of our businesses, we have business relations with a large number of high
calibre brand operators, payment channel operators and other businesses and enterprises which may
bring quality marketing business and opportunities. However, as we are not retailers, we are not able to
use or directly benefit from these marketing resources; we are only able to monetize these marketing
resources if we direct them to retailers (such as Chongqing Department Store Group) who are able to
make use of these marketing resources. As such, we entered into this performance-based agreement
with Chongqing Department Store Group to explore new collaborative approaches which represents a
unique arrangement in our business operations. This exclusive collaboration underscores our
commitment to exploring innovative business models that create mutual value and drive growth. It
allows us to utilize our marketing resources to expand our potential source of revenue while providing
shopping and other subsidies to Chongqing Department Store Group to help it attract and retain
consumers. We do not have similar performance-based contracts with other retailers, nor do we
currently plan to enter into such agreements with other retailers.
Pricing terms
The pricing terms of the marketing resource collaboration are that, if, in a calendar year,
(i) Chongqing Department Store Group used marketing resources that Dmall (Shenzhen) Digital have
gathered of more than RMB50 million in value (the part in excess of RMB50 million, the “ Value
Surplus”), Chongqing Department Store shall pay 50% of the Value Surplus to Dmall (Shenzhen)
Digital; (ii) Chongqing Department Store Group used marketing resources that Dmall (Shenzhen)
Digital have gathered of less than RMB50 million in value (the part short of RMB50 million, the
“Value Shortage”), Dmall (Shenzhen) Digital shall pay the Value Shortage to Chongqing Department
Store. As mentioned above, the value of the marketing resources is based on the amount of the
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marketing subsidies (such as the value of the discount, coupon, cash voucher etc.) in aggregate used by
consumers of Chongqing Department Store Group pursuant to the Marketing Resource Collaboration
Agreement. For the avoidance of doubt, RMB50 million is merely the threshold for determining the
Value Surplus and the Value Shortage and is not the target transaction value under the Marketing
Resource Collaboration Agreement.
The pricing and other terms in the Marketing Resource Collaboration Agreement were
determined based on arm’s length negotiation between the parties, with reference to factors such as the
Company’s expectation as to the marketing resource it may gather during the collaboration period. The
threshold of RMB50 million was accepted by the Company during the negotiation as it was the
minimum amount of marketing resources that the Company estimated, just before the time of entering
into the Marketing Resource Collaboration Agreement (i.e. in late 2022), it could gather in the 2023
year; it also estimated that the amount should follow a growing trend beyond 2023. The Directors
consider the terms and conditions of the Marketing Resource Collaboration Agreement are fair and
reasonable and based on normal commercial terms, and that the Marketing Resource Collaboration
Agreement and the transactions contemplated thereunder is in the best interests of our Company and
the Shareholders as a whole. According to Frost & Sullivan, it is not uncommon for parties to enter
into this type of agreement. These contingent payment agreements are used in various business
collaboration contexts. We and Chongqing Department Store are currently using the value of
marketing resources gathered as a payment criterion.
The following table reflects the key terms of the Marketing Resource Collaboration Agreement:
Key Terms Descriptions
Service type We shall leverage our business relations with third party market
participants, such as brand owners, payment solution operators
and banks, to gather marketing resources for Chongqing
Department Store Group. Such marketing resources will be used
as promotional materials or shopping rewards in Chongqing
Department Store Group’s virtual stores.
Pricing terms If there is a Value Surplus, Chongqing Department Store shall pay
us 50% of the Value Surplus. If there is a Value Shortage, we
shall reimburse Chongqing Department Store an amount equal to
the Value Shortage.
Term and renewal Three years, from January 1, 2023 to December 31, 2025.
If we decide not to renew the agreement, we shall provide a
written notice to Chongqing Department Store at least one year
before the expiration of the contract.
Termination Neither party could unilaterally terminate the agreement without
the written consent of the other party or unless otherwise provided
in the agreement.
Penalty Any direct or indirect violation of any terms of this agreement, or
failure to undertake, or timely and adequately undertake any
obligations under this agreement constitutes a breach of contract.
The non-breaching party has the right to issue a written notice
demanding that the breaching party rectify the breach and take
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Key Terms Descriptions
sufficient, effective, and timely measures to eliminate the
consequences of the breach and compensate the non-breaching
party for any losses incurred due to the breach.
If Chongqing Department Store fails to pay 50% of the Value
Surplus to us in time, a penalty of 0.05% per day of such overdue
amount will be imposed.
If we fail to pay Chongqing Department Store the Value Shortage
in time, a penalty of 0.05% per day of such overdue amount will
be imposed.
Standard Terms and Conditions Other standard terms and conditions form part of the agreement,
which stipulates issues about confidentiality obligation,
intellectual property rights, data protection and dispute
resolutions.
In 2023, we paid an amount of RMB18.9 million to Chongqing Department Store which
represent the equivalent value shortage of marketing resources. The lower merchandise coupon usage
rate in 2023 was primarily due to the decrease in consumers’ willingness to spend. Based on our
projections, we anticipate falling short of the RMB50 million threshold in 2024. Consequently, we
recorded a negative revenue, representing the estimated equivalent value shortage of marketing
resources to be paid to Chongqing Department Store, of RMB13.2 million for the six months ended
June 30, 2024.
Transition of Online Advertising Services
To faciliate the termination of our collaboration with advertising customers for online advertising
services and transfer the business to Dmall Fresh (Beijing), we entered into an agency cooperation
agreement with Dmall Fresh (Beijing). The following reflects the salient terms of the agreement:
Key Terms Descriptions
Service type We may acquire advertising customers in our own name, enter into
agreements with them, and collect fees. Upon establishing
cooperation with brands or brand partners, we will notify Dmall
Fresh (Beijing) of the brand information in writing and remit the
relevant marketing fees to Dmall Fresh (Beijing). Dmall Fresh
(Beijing) shall execute the relevant marketing activities per the
agreed terms.
Pricing terms Upon receiving payment from the advertising customer, we will
retain 1% of the service fee as an agency fee, and the remaining
amount will be paid to Dmall Fresh (Beijing) as marketing activity
execution fees. Our payment to Dmall Fresh (Beijing) is
contingent upon receiving full payment from the advertising
customer. If, for any reason, we are required to refund such fee,
Dmall Fresh (Beijing) shall return the corresponding amount to us.
Term and renewal The agreement will terminate on December 31, 2024, or upon the
expiration of our contracts with our advertising customers,
whichever is earlier.
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Key Terms Descriptions
Penalty Any direct or indirect violation of any terms of this agreement, or
failure to undertake, or timely and adequately undertake any
obligations under this agreement constitutes a breach of contract.
The non-breaching party has the right to issue a written notice
demanding that the breaching party rectify the breach and take
sufficient, effective, and timely measures to eliminate the
consequences of the breach and compensate the non-breaching
party for any losses incurred due to the breach.
This arrangement is covered under the Dmall Fresh Marketing Resource Framework
Agreement as disclosed more particularly under the section headed “Connected Transactions — F3.
Dmall Fresh Marketing Resource Framework Agreement”.
Discontinued Operations
During the Track Record Period, we offered online marketing and advertising services that
allow customers to market their products and services through advertising on our Dmall mobile app
and mini-programs. In April 2024, we conducted a series of restructuring transactions to divest all of
our equity interests in Dmall Fresh (Beijing), our former VIE, to minimize the underlying legal and
regulatory risks. The Restructuring led to the divestment of the online advertising services and the
cessation of the operation of the Dmall app and mini programs. See “Summary—Recent
Developments” and “History, Reorganization and Corporate Structure—Acquisitions and Disposals.
BUSINESS SUSTAINABILITY & PATH TO PROFITABILITY
For the Year Ended
December 31,
For the Six Months
Ended June 30
2021 2022 2023 2023 2024
(unaudited)
Growth of revenue ........................... — 56.6% 19.4% — 22.9%
Gross margin (1) ............................. 20.4% 38.0% 35.0% 36.3% 38.3%
Net margin (2) ............................... (213.2%) (67.8%) (47.3%) (76.9%) (51.3%)
Adjusted net margin from continuing operations
(non-IFRS measure) (3) ...................... (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equals gross profit for the year/period divided by revenue for the year/period and multiplied by 100%.
(2) Equals loss for the year/period from continuing operations divided by revenue for the year/period and multiplied by 100%.
(3) Equals adjusted loss from continuing operations (non-IFRS measures) for the year/period divided by revenue for the year/period and
multiplied by 100%.
In 2015, we began our journey by assisting retailers in setting up and operating e-commerce
platforms, responding to the burgeoning demand for online retail. This initiative served as a pivotal
entry point for achieving our broader goal of helping retailers digitalize all facets of their operations.
By 2017, we introduced AIoT solutions, combining hardware and software to enhance retail efficiency
in specific scenarios, such as intelligent price tags that automatically update merchandise prices. In
2018, we launched the core services now offered under the Dmall OS system, including product
management, product procurement process management, and supply chain management. In 2019, we
launched our proprietary Dmall OS system that addresses the full range of operation needs of retailers.
As our customers have become more accustomed to e-commerce operations, they have shown a
tendency to bring the operation of their ecommerce business in-house, where they manage their own
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day-to-day O2O operations, while still requiring technical support to establish their online presence
and manage day-to-day operations. In light of these shifts in our customers’ business models, we
introduced the distributed e-commerce system module in 2022 and intelligent delivery service solution
in 2023. We expect to continue to strategically focus on the growth and development of our retail core
service cloud. During the Track Record Period, we have demonstrated our ability to generate revenue
and progress towards achieving profitability. We achieved strong revenue growth as our revenue grew
by 56.6% from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further increased by
19.4% to RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million in
the six months ended June 30, 2023 to RMB939.2 million in the six months ended June 30, 2024. We
have also improved our gross margin during the Track Record Period. Our gross margins were 20.4%,
38.0%, 35.0%, 36.3% and 38.3% in the years ended December 31, 2021, 2022, 2023 and the six
months ended June 30, 2023 and 2024, respectively. Our net margin from continuing operations
improved from negative 213.2% in 2021 to negative 67.8% in 2022, negative 47.3% in 2023 and
improved from negative 76.9% in the six months ended June 30, 2023 to negative 51.3% in the same
period in 2024.
In 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024, we recorded net losses
from continuing operations of RMB1,808.0 million, RMB900.0 million, RMB749.0 million,
RMB587.9 million and RMB482.2 million, respectively. Our net losses from continuing operations
decreased from RMB1,808.0 million for the year ended December 31, 2021 to RMB900.0 million for
the year ended December 31, 2022, primarily attributable to our continued gross profit improvement
associated with our ongoing strategic focus on our retail core service cloud solutions as well as the
decreases in our selling and marketing expenses attributable to the decrease in promotional incentives
to retail consumers for our e-commerce service cloud solutions and our general efforts to control costs
and optimize our operational efficiency in 2022. Our net losses from continuing operations decreased
from RMB900.0 million for the year ended December 31, 2022 to RMB749.0 million for the year
ended December 31, 2023, primarily attributable to the decrease in our loss from operations due to our
concerted efforts to control costs and optimize our operational efficiency. Our net losses from
continuing operations decreased from RMB587.9 million in the six months ended June 30, 2023 to
RMB482.2 million in the six months ended June 30, 2024, primarily attributable to the decrease in our
loss from operations due to our concerted efforts to control costs and optimize our operational
efficiency and the cessation of the e-commerce service cloud solutions. We had adjusted net losses
from continuing operations (non-IFRS measure) of RMB941.6 million, RMB355.9 million and
RMB233.3 million in 2021, 2022 and 2023, respectively, primarily attributable to expenses incurred in
line with the growth and development of our business, including significant investment in research and
development to support the continued development of our proprietary operating system and marketing
resources to grow our customer base for our retail core service cloud solutions as well as logistic costs
for our integrated e-commerce service. We recorded adjusted net losses from continuing operations
(non-IFRS measures) of RMB143.9 million and RMB56.4 million in the six months ended June 30,
2023 and 2024, primarily attributable to our continuing investment in research and development to
strengthen our technological and research and development capabilities and expenses associated with
general and administration due to the growth of our AloT solutions business. Our adjusted net margin
from continuing operations (non-IFRS measure) significantly improved from negative 111.0% in 2021
to negative 26.8% in 2022, and further to negative 14.7% in 2023. Our adjusted net profit margin from
continuing operations (non-IFRS) measures improved from negative 18.8% in the six months ended
June 30, 2023 to negative 6.0% in the same period in 2024.
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We recorded net liabilities of RMB4,739.2 million, RMB6,077.4 million, RMB6,765.1 million,
and RMB7,053.6 million, as of December 31, 2021, 2022, 2023 and June 30, 2024 respectively. The
net liabilities were primarily attributable to the convertible redeemable preferred shares of
RMB5,137.2 million, RMB6,378.7 million, RMB6,965.5 million and RMB7,407.2 million as of
December 31, 2021, 2022, 2023 and June 30, 2024, respectively, issued pursuant to our pre-IPO
fundraising. The convertible redeemable preferred shares will be redesignated from liabilities to equity
as a result of automatic conversion into ordinary shares upon the Listing such that the net liabilities
position would turn into a net asset position.
Our net cash used in operating activities were RMB1,274.7 million, RMB205.5 million,
RMB179.2 million, RMB192.7 million and RMB56.7 million for the years ended December 31, 2021,
2022, 2023 and for the six months ended June 30, 2023 and 2024, respectively. These were primarily
attributable to loss for the year. Based on our financial performance during the Track Record Period, our
management considers that we are striding towards achieving profitability. However, our future
profitability is uncertain and subject to various factors, including our ability to effectively monetize our
product and service offerings and sustainably grow revenues in a cost-effective way. Despite our
expanding business scale, we may continue to incur net losses and net operating cash outflow in the
foreseeable future as described above. See “Financial Information—Non-IFRS Measure” and “Risk
Factors—We incurred significant net losses and generated net operating cash outflows in the past and we
may continue to do so in the future” in this document for more information.
Our accumulated losses of RMB3,446.9 million before the start of Track Record Period were
primarily attributable to costs and expenses associated with our e-commerce services and AIoT solutions,
as well as investment in research and development of our operating system, as we work towards
designing and improving our offerings to customers in the local retail industry and laying a strong
foundation for our business operations. We recorded accumulated losses of RMB5,199.4 million,
RMB6,008.2 million, RMB6,601.5 million and RMB6,836.4 million as of December 31, 2021, 2022,
2023, and June 30, 2024, respectively. Our loss-making position was attributable to expenses incurred in
line with the growth and development of our business, including significant investment in research and
development to support the continued development of our proprietary operating system, additional
headcount across our internal functions consistent with our accelerated growth, and marketing resources
to grow our customer base and stimulate consumer traffic for our e-commerce platform as well as logistic
costs for our integrated ecommerce service. Our accumulated loss before and our loss-making position
during the Track Record Period occurred during a time when we were growing rapidly and invested in
developing high quality products and services to pave the way for our profitability in the long run.
We recorded a substantial decrease in adjusted net losses from continuing operations (non-
IFRS measure) and operating cash outflows during the Track Record Period, primarily attributable to
our continued gross profit improvement benefitting from new business under our retail core service
cloud solutions as well as our concerted efforts to control costs and optimize our operational efficiency,
including but not limited to, labor structure optimization and non-extension of certain office leases.
According to Frost & Sullivan, the local retail industry is one of the largest industries in the
world with its market share in Asia increasing from RMB30.0 trillion in 2018 to RMB31.1 trillion in
2023, at a CAGR of 0.8%. The market size of the local retail industry in China increased from
RMB12.2 trillion in 2018 to RMB13.4 trillion in 2023, achieving a CAGR of 1.8%. In terms of
revenue, the market size of the retail digitalization solution industry in China increased from RMB4.8
billion in 2018 to RMB18.7 billion in 2023, at a CAGR of 31.0 % and is expected to further grow at a
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CAGR of 27.7 % in the period from 2024 to 2028, reaching RMB61.8 billion in 2028. Driven by the
recovery of consumption after the COVID-19 pandemic, it is estimated that the market size of the local
retail industry by sales value in Asia and China will rebound and regain growth at a similar rate as pre-
pandemic levels.
Significant market opportunity arises as the local retail industry’s retail digitalization rate
remains low. As of today, retailers still face many pain points that remain unsolved such as increasing
needs for data-driven business decision making, lack of omni-channel service capabilities, lack of
robust security system and lack consumer insights hence high consumer acquisition costs for brand
owners. However, due to the complex nature and the large size of the local retail industry in Asia and
in China, the digitalization rate of the local retail industry is relatively low. According to Frost &
Sullivan, retailers’ digitalization rate in China and Asia was 3.1% and 4.5% in 2023, respectively, and
significantly lower than that of 13.3% in the U.S. Retail digitalization solutions assist retailers and
brand owners in the local retail industry to achieve digital transformation in their daily operations and
address pain points in urgent need. The industry is in hope to have an full-spectrum omni-channel retail
digitalization solution that could solve their pain points and cover their functions such as supply chain
management, product management, store management and consumer membership management, which
makes retail digitalization solution provider like us have great potential.
We developed our solutions specifically for the local retail industry. Our full-spectrum omni-
channel retail digitalization solutions have been a proven success for retailers of various sizes and
formats. We focus on offering our products and services to warehouse clubs, supermarkets and
convenience stores in the local retail industry. Full-spectrum coverage refers to our capability to
address retailers’ needs across all critical parts of their operations. Our retail digitalization solutions
enable retailers to standardize operations, drive revenue growth, reduce costs, and prosper in a market
environment that demands advanced digitalized retail management and improved digital retail
consumer experience. The functions and advantages of our solutions comport with the operational
needs of enterprise retailers operating warehouses, supermarkets and convenience stores to streamline
their internal operations and provide quality service to consumers in all their stores. Supported by our
lighthouse examples in the local retail industry and our improving industry know-how, we expect to
deepen and widen our coverage of different retail formats and reach additional enterprise retailers,
including forecourt retail and specialty retail. As digital systems and data-driven management tools
help retailers better navigate problems such as complex supply chain, regional differences and varieties
of sales channels, the retailers’ digitalization-related IT spending is expected to increase at a CAGR of
5.7% from 2024 to 2028 as compared to that of 2.6% in the U.S. during the same period. We expect
our current and potential customers will allocate more resources to invest in IT upgrades and purchase
new IT products and services. To fully capture this growing opportunity, we have been focusing on
developing a comprehensive and growing slate of products and services that would lay a strong
foundation for our long-term development and profitability, instead of seeking immediate financial
returns.
We operate in the retail digitalization solution industry, which has maintained sustainable
growth and is expected to continue to grow in the near future with favorable policies, well-established
cloud infrastructure and growing digitalization demands. We have successfully expanded our
businesses to other countries and regions in Asia, comprising Hong Kong SAR, Cambodia, Singapore,
Malaysia, Macau SAR, Indonesia, the Philippines and Brunei. The historical market share
improvement showcases our ability to out pace our peers in taking up white market space. The
penetration rate of retail digitalization solutions is also expected to grow in both Asia and China,
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driven by the evolution of retail digitalization solutions, technology-driven innovation and growing
needs of digitalization. In terms of revenue, the market size of the retail digitalization solution industry
in China increased from RMB4.8 billion in 2018 to RMB18.7 billion in 2023, at a CAGR of 31.0 %. In
terms of revenue, the market size of the retail digitalization solution industry in Asia increased from
RMB8.8 billion in 2018 to RMB31.0 billion in 2023, at a CAGR of 28.5%. The market size of the
retail digitalization solution industry in both Asia and China in terms of revenue is expected to grow
further at a steady rate.
We compete in the retail digitalization solution industry in which almost all of the current
market participants are loss-making after 10 years of establishment. We have shown faster revenue
growth than our peers competing in this industry, which have generally only achieved an average
revenue growth rate of 30% from 2020 to 2021, and an average revenue growth rate of 11% from 2021
to 2022. To sustain our business operations and work towards achieving profitability, we refine our
products offerings and establish our strong market foundation through collaboration with leading
retailers. We test and improve our solutions’ functionalities when working closely with Wumei Group
and its complex operations, and we develop deep industry know-how through such practice, allowing
us to differentiate ourselves from other market participants competing in the same industry.
Additionally, we have secured contracts with well-known international retailers such as DFI Retail
Group and Metro Group, making us one of the first Chinese SaaS companies with a successful
overseas expansion. Our successful collaboration with major international customers demonstrate the
strength and adaptability of our solutions. Our relationship with Independent Customers continues to
allow us to build our market reputation outside our shareholders group and achieve business results. As
a result, we distinguish ourselves from our industry peers through (i) our ability to provide a
comprehensive suite of product offerings, accompanied with our persistent improvement of our
products, to address retailers’ evolving needs across different scenarios of the local retail industry. This
broad scope of offerings have the advantage of breaking operational silos to achieve real-time data
synchronization across different sales channels for our customers, allowing our customers to manage
their operations in an efficient manner. In comparison, our peers do not have a comprehensive and in-
depth understanding of customer needs because they generally offer function-specific products and
services such as warehouse management software or customer relationship management alone. Such
products and services cannot fully integrate into all aspects of a retailer’s operations and may result in
a retailer missing sales opportunities due to lack of comprehensive data analysis; (ii) our market
reputation as an early-mover in the retail digitalization solution industry, which is strengthened by our
focus on needs of the industry since our initial collaboration with Wumei Group. Our devotion to the
retail digitalization solution industry since our inception distinguishes our offerings to retailers as
compared to our competitors, and has created a high barrier to entry for other players entering the
market, and (iii) our collaboration with leading enterprise retailers in the local retail industry, which
deepened our know-hows and continues to facilitate our development of new modules and incorporate
new industry practices. Our lighthouse collaborations help us to retain existing customers and attract
new independent customers. Our experience servicing large retailer customers gives us a competitive
edge as compared to our industry competitor, who generally serve small to mid-size retailers.
Our competitive market position is illustrated further by our collaboration with Maidelong
Entities, which adopted our operating system and related products and services because (i) the overall
cost of our Dmall OS system is low as compared to their self-developed system, (ii) Dmall OS system
enables Maidelong Entities to integrate online and offline operations in a smooth and efficient manner.
Maidelong Entities would have to adopt multiple solutions from different suppliers to manage different
segments of its operations without Dmall OS system, and (iii) Dmall OS system continues to update its
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functions and modules, which is compatible with their evolving needs and demands and helps them to
rapidly launch new functions and keep up with market changes.
Going forward, we plan to achieve long-term profitability and improve our cash flow position
in view of our net operating cash outflows as of June 30, 2024 with our overall increase in revenue and
through a series of cost control and efficiency enhancement measures, including: (i) refining our
organizational structure to maximize employee potential and streamline responsibilities, (ii) upgrading
our IT infrastructure to improve performance while managing cloud operations costs, and (iii) re-
designing our office space to reduce our lease expense.
Based on our current business model, as well as our market outlook, our revenue growth and
profitability primarily rely on: (i) increasing our business scale, which is in turn driven by (a) the
continued expansion of our customer base, and (b) the increased spending from our customers, and (ii)
achieving higher margin through better operational efficiency and improving our cost structure.
Increasing our business scale
Expanding our customer base
The opportunity from local retail digitalization is massive and there is a strong demand for
digital transformation among retailers. Driven by a need to adapt to the rapidly changing market
dynamics, retailers are embracing digital transformation and increasing relevant technology
infrastructure spending. Our total number of customers in 2021, 2022, 2023 and in the six months
ended June 30, 2023 and 2024 was 236, 436, 533, 413 and 444, respectively.
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
Number of customers (1)
- Retail core service cloud .............................. 2 3 1 4 3 2 5 2 7 4 0 9 4 3 0
- Operating system ................................. 1 6 4 3 0 0 3 2 4 2 5 1 2 8 3
- AIoT solutions .................................... 8 4 1 8 8 2 8 1 2 1 4 1 8 4
- E-commerce service cloud* ........................... 4 0 3 5 2 9 2 9 *
- Others ............................................ 3442 1 9
Total number of customers (2) .............................. 236 436 533 413 444
Notes:
* The e-commerce cloud service solutions has been immaterial in 2024. By the end of 2023, all our customers had transitioned to in-house
O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material revenue in 2024. In April 2024, we completed the
Restructuring, which led to the divestment of the Dmall app. After the Restructuring, we do not operate any business under the e-
commerce service cloud. See “Summary—Recent Development,” “Business—Retail Core Service Cloud Solutions—Distributed e-
commerce system” and “Business—E-commerce service cloud.”
(1) Number of customers that have contributed revenue to us in a given year/period, including number of customers we serve through
Shenzhen Enjoy as a result of our acquisition of Shenzhen Enjoy in November 2021. If we remove the number of customers solely using
Shenzhen Enjoy’s products from the calculation, in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, we had retail
core service cloud solutions customer of 86, 162, 259, 213 and 183, respectively, including (i) operating system customer of 23, 39, 60,
47 and 60, respectively, (ii) AIoT solutions customers of 75, 142, 217, 182 and 136, respectively. The number of customers does not
include those from our tax invoice management system services, which was launched in 2023 and generated revenue of RMB10
thousand in 2023 and RMB2.3 million in the six months ended June 30, 2024. We had 14 and 930 tax invoice customers in the second
half of 2023 and the six months ended June 30, 2024, respectively.
(2) Many of our customers use more than one of our cloud service solutions. Therefore eliminations are made to avoid double counting.
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We regard the number of customers as a key operating metric for measuring the scale of our
business operations. During the Track Record Period, the number of customers under our retail core
services cloud increased due to new customers associated with the acquisition of Shenzhen Enjoy in
November 2021 as well as our successful efforts to attract, retain and cooperate with enterprise retailer
customers through expanded business development channels, relying on the Company’s brand and
reputation. The number of customers adopting our operating system increased from 164 in 2021 to 300
in 2022, and further increased to 324 in 2023. The number of customers adopting our operating system
increased from 251 in the six months ended June 30, 2023 to 283 in the six months ended June 30,
2024; further, the number of customers adopting our AIoT solutions increased from 84 in 2021 to 188
in 2022, and further increased to 281 in 2023. The number of customers adopting our AIoT solutions
decreased from 214 in the six months ended June 30, 2023 to 184 in the six months ended June 30,
2024, primarily due to the decrease in the sales of smart hardware products. The decrease was
primarily due to the non-recurring nature of these purchases. Customers typically do not need to buy
these products repeatedly, leading to a natural decline in sales over time. We will continue to build a
pipeline of potential customers for our new AIoT solutions. We expect to attract more customers for
our AIoT solutions through our successful lighthouse collaborations with Wumei Group and
Maidelong Entities in which our solutions assist customers to monitor their operations and enhance
operational efficiency through our equipment powered by artificial intelligence analysis.
We plan to further expand our customer base, relying on our well-established market
recognition and our continuously upgraded products and services to meet the latest customer needs in
the local retail market. Since our incorporation, we have had the early opportunity to work with leading
enterprise retailers in the local retail industry. Our collaborations with major retailers such as Wumei
Group, Maidelong Entities, Chongqing Department Store Group and Yinchuan Xinhua Group, become
our lighthouse examples and help us build a strong market reputation, which then help attract more
customers for our business. We signed new contracts with retail leaders to provide our Dmall OS
system, including Xuchang Pangdonglai Commerce & Trade Co., Ltd., a leading regional retailer in
Henan province, Henan Dennis Department Store Co. Ltd., a department store chain operating in the
Chinese mainland and a subsidiary of Dongyu Group, which is a business conglomerate headquartered
in Taiwan, China, Lianhua Supermarket Holdings Co., Ltd., a retailer that operates hypermarkets,
supermarkets and convenience stores in the Chinese mainland, Harbin Churin Leaderfoods Co., Ltd. a
well-known retailer enterprise with a history of 120 years, Lishui Wanjiahui, a renowned supermarket
chain based in Zhejiang province

 Better Life Group, a leading retail enterprise that operates in
multiple business formats, is deeply rooted in the retail industry and is dedicated to digital
transformation, and Luosen (China) Investment Co., Ltd. (“ Luosen”), a convenience store franchise
chain company headquartered in Japan with extensive store network in China. For details, see
“Business—Business Sustainability & Path to Profitability—Software Technology Services
Framework Agreement with Luosen (China) Investment Co., Ltd.” Leveraging our successful
lighthouse examples in implementing the Dmall OS system with leading retailers in China, we also
expect to further onboard regional enterprise retailers that will drive our long-term financial growth.
We plan on continuing to grow the number of independent third-party customers and to strengthen our
brand and reputation within the retail digitalization solution industry. We continue to build initial
business relationships, especially for our retail core service cloud solutions. We work towards
understanding the technological needs and operational demands of such potential new customer
through on-going pilot of our operating system and expect to enter into a long-term strategic
partnership moving forward.
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New customers integrating our operating system into their retail operations would lead to new
streams of GMV processed through our operating system, which in turn increases our revenue
generated from our retail core service cloud solutions. With our accumulated industry know-how, we
also plan to expand into new retail formats, broaden our sales network and collaborate with more
players in the retail value chain to increase customer touchpoints and selling opportunities.
Specifically, we expect to design and implement new AIoT solutions to create new streams of revenue.
We will introduce expanded marketing channels as we launch offline marketing and promotional
services with partner stores, and banks. Leveraging our market-proven business model and slate of
products, we further plan on expanding our regional coverage and establish new relationships with
retailers both in China and overseas. In particular, we plan to replicate our business model and expand
our footprint in overseas markets in Asia. We are focused on promoting our operating system with
customers to expand our product’s coverage in retail stores across Hong Kong SAR, Cambodia,
Singapore, Malaysia, Poland, Macau SAR, Indonesia, Philippines and Brunei. For instance, we plan to
implement our operating system for DFI Retail Group in Southeast Asia and Metro Group in Europe.
As a result, revenue contribution from our business operations outside of the Chinese mainland is
expected to grow. We are also exploring strategic partnerships opportunities to allow us to reach
additional customers.
Increasing spending of our customers
Our ability to increase spending of our customers is primarily driven by our customers’
deepening engagement with our product offerings through retail core service cloud. The dollar-based
net retention ratio for our customers was 184% in 2021, 158% in 2022, 117% in 2023 and 123% in the
twelve months ended June 30, 2024, as calculated by revenues generated in the given period by
recurring customers (excluding consumers) with the prior period divided by revenues generated in the
prior period by all customers (excluding consumers). Dollar-based net retention ratio measures the
ability of our Company to retain and expand its existing customer base over time and indicates the
level of loyalty among customers and their willingness to continue paying for our offerings. We
onboarded several major customers for deployment of our Dmall OS system in 2021. Our dollar-based
net retention rate declined in 2022 and 2023, though remaining robust at above 100%. This
underscores our ability to further increase customer spending.
We have also built a diversified and evolving slate of product offerings, which allows us to
deepen our relationship with our existing customers. For instance, some of our customers are expected
to pay higher take rates over the years of our cooperation as they adopt an increasingly comprehensive
set of our products and modules in their business operations. Additionally, we enhance customer
engagement with our products by cross-selling additional modular functions that cater to our
customers’ needs. For instance, we continue to serve existing Dmall OS customers by delivering
additional modules that would streamline various aspects of a customer’s retail operations and new
AIoT solutions that inject greater efficiency to a customer’s retail locations. Further, we also included
modules to support our customers’ in-house e-commerce operations in our Dmall OS system to
continue to meet our customers’ demand to enhance their online retail operations. We plan on
enhancing our product and module portfolio to increase our penetration of existing customers to
increase the customers’ GMV processed through our operating system.
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Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
GMV processed through our system (1) (in RMB billions)
- Retail core service cloud
- Operating system (2) ................................... 95.1 123.3 141.9 69.1 76.1 (5)
- Take rate customers (3) ................................. 58.5 106.3 113.5 56.8 48.8
Related Parties .................................... 50.9 81.1 76.7 39.5 28.0
Other Related Party ................................ 6 . 9 22.0 32.8 15.3 19.2
Independent Customers ............................. 0 . 7 3 . 1 4 . 0 2 . 0 1 . 6
- AIoT Solutions ....................................... 14.2 12.6 10.2 5.5 4.9
- E-commerce service cloud* (4) ............................. 6 . 9 8 . 2 4 . 4 2 . 4 —
Related Parties .................................... 5 . 5 7 . 5 4 . 3 2 . 3 —
Other Related Party ................................ 0 . 2 0 . 1 — — —
Independent Customers ............................. 1 . 1 0 . 5 0 . 2 0 . 1 —
Notes:
* The e-commerce cloud service solutions has been immaterial in 2024. By the end of 2023, all our customers had transitioned to in-house
O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material revenue in 2024. In April 2024, we completed the
Restructuring, which led to the divestment of the Dmall app. After the Restructuring, we do not operate any business under the
e-commerce service cloud. See “Summary—Recent Development,” “Business—Retail Core Service Cloud Solutions—Distributed e-
commerce” and “Business—E-commerce service cloud.”
(1) Refers to the GMV processed by our retail core service cloud and e-commerce service cloud. The provision of other revenue is not
directly associated with GMV as we do not charge our advertising customers based on the GMV processed.
(2) Refers to the GMV processed through our Dmall OS system.
(3) Take rate customers for a given year/period refers to customers that contributed revenue under the take rate fee model in the given year/
period, excluding customers that subscribe only to the membership and product sales management module under the take rate fee model.
GMV from customers that are not take rate customers (i.e. customers that pay fixed subscription fee) accounted for the difference
between GMV attributable to the operating system and take rate customers. The membership and product sales management module is
specifically designed to help large retailers manage consumer profiles and arrange the sales of certain high-value hot sellers. We charge
customers that subscribed to this module a take rate of no less than 1% compared to other modules that have an average take rate ranging
from 0.3% to 0.5% during the Track Record Period to account for the system’s complexity. We exclude the GMV from subscriptions to
our purchase membership and product sales management module that are made on a standalone basis due to (i) the module’s higher take
rate could distort our operating metrics, and (ii) the GMV from these standalone subscriptions is not material to our overall performance.
(4) The decrease in GMV in 2023 compared to that of 2022 was primarily due to (i) certain customers opt to operate O2O e-commerce
business in-house, where they manage their own day-to-day O2O operations, (ii) the cessation of our O2O e-commerce business we used
to provide to DFI Retail Group along with our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
in April 2022 and (iii) our strategic decision to not aggressively expand our e-commerce business. For details, see “Summary—Business
Sustainability & Path to Profitability” and “History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.”
(5) The overall increase in operating system GMV was primarily driven by more customers subscribing to our operating system and our
customers subscribing to additional modules and integrating our services into more stores. We experienced a decline in operating system
GMV from take-rate customers as some Wumart supermarket transitioned to a subscription-based fee model.
GMV is a core operating metric in terms of revenue recognition for our operations. The GMV
processed through our operating system increased from approximately RMB95.1 billion in 2021 to
RMB123.3 billion in 2022, and further increased to RMB141.9 billion in 2023. The GMV processed
through our operating system increased from RMB69.1 billion in the six months ended June 30, 2023
to RMB76.1 billion in the six months ended June 30, 2024. We plan to grow the GMV processed
through our operating system given our strategic focus on international expansion in Southeast Asia,
our continued expansion into new types of retail and our deepened relationship with existing customers
by enhancing our product and module portfolio. Specifically, we have expanded and expect to expand
further into types of retail in which we previously had limited market presence, including convenience
stores, as illustrated by our recent partnership with Luosen, and specialty retail, as illustrated by our
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strategic partnership with Guoquan Shihui. The GMV processed through our e-commerce service
cloud decreased since 2023 primarily attributable to our strategic decision to not expand our O2O
business and certain customers opt to operate O2O e-commerce business in-house, where they manage
their own day-to-day O2O operations. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service
cloud solutions for those customers accordingly, but we provide distributed e-commerce system and
other services to them if they decide to subscribe to such services. We do not conduct any business
under the e-commerce service cloud after the Restructuring.
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
RMB RMB RMB RMB RMB
GMV per customer under the retail core service cloud (in
RMB millions)
—Operating system (1) ......................... 4,135.9 3,161.5 2,365.4 1,470.2 1,269.0
—AIoT solutions (2) ............................ 235.9 238.0 276.1 149.4 408.1
Notes:
(1) Our operating system GMV per customer is calculated by dividing the GMV processed through our Dmall OS system with the number of
customers using our operating system.
(2) Our AIoT solutions GMV per customer is calculated by dividing the GMV processed through our Scan-and-Go module with the number
of customers using our Scan-and-Go solutions.
Further, our operating system GMV per customer were RMB4,135.9 million, RMB3,161.5
million, RMB2,365.4 million RMB1,470.2 million and RMB1,269.0 million in 2021, 2022, 2023, and
the six months ended June 30, 2023 and 2024, respectively. The decrease in our GMV per customer for
the operating system during the Track Record Period is mainly attributable to an increasing number of
customers adopting our operating system who are smaller in business scope and generate less sales in
comparison to our early customers such as Wumei Group. We expect our operating system GMV per
customer to grow, in line with the expected growth of our total GMV as we focus on international
expansion in Southeast Asia, continued expansion of our customer base into new types of retail and
deepening relationship with existing customers by enhancing our product and module portfolio.
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
Average take rate of the retail core service cloud (%)
—Take rate customers operating system ................ 0 . 3 0 . 4 0 . 4 0 . 4 0 . 5
Our ability to increase spending of our customers during the Track Record Period is also
illustrated by our average take rate, calculated as revenue generated from the take rate pricing model of a
business segment divided by GMV processed through our system. For our operating system under our
retail core service cloud solutions, customers can choose to pay a take rate based fee based on a
percentage of the customer’s GMV processed through our system. As our customers deepen their
engagement with our product offerings, such as adopting a greater number of modules in their use of our
operating system or broadening the scope of their adoption of our products and services, we are able to
increase the take rate we charge such customers and generate greater revenue from these customers.
Consequently, our average take rate generally indicates increased customers spending on our products
and services.
Our operating system had an average take rate of approximately 0.3%, 0.4%, 0.4%, 0.4% and
0.5% in 2021, 2022, 2023, and the six months ended June 30, 2023 and 2024 respectively. The
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increase in the average take rate of our operating system was primarily driven by charging customers a
higher take rate when adopting more operating system modules and expanding customer demand for
our complex one-stop digitalization solutions.
Our collaboration with Chongqing Department Store Group is one of the examples that
demonstrates our ability to accelerate customer success and increase the spending of our customers.
Chongqing Department Store Group is an enterprise retailer that operates multiple types of retail and
adopted our retail core service cloud solutions in its supermarket segment. It successfully accumulated
over 14 million members through our Dmall OS system. In October 2022, we began delivering
additional operation digitalization modules to Chongqing Department Store Group in all business
segments, including its headquarter, supermarkets, department stores, and electronic appliance and car
trade businesses. The additional operation digitalization modules include functions on sales
management, consumer membership management, coupon management, headquarter management and
cross-segment integration. The Chongqing Department Store Group applied such digitalized sales and
marketing tools and solutions to reach its members in all business segments. The full integration of our
operating system with all retail segments of Chongqing Department Store Group resulted in the
pooling of consumer traffic across different retail segments and allowed it to efficiently use marketing
resources to reach online and off-line consumers to increase sales in multiple segments of its
operations. Chongqing Department Store Group adopted our Dmall OS system to achieve high
digitalization of its retail business and augmented its ability to provide a full range of local retail
services. Additionally, Chongqing Department Store achieved the full digitalization of its electronic
appliance sales and car trade businesses using our comprehensive modules for the Dmall OS system.
After Chongqing Department Store Group broadened its adoption of our retail core service cloud
solutions, we entered into additional contract with annual amount of RMB29 million. Chongqing
Department Store Group’s increasing integration with our retail core service cloud solutions indicates
that our ability to provide omni-channel services covering all key aspects of retail operation
management for our customers, together with our industry know-how across various types of retail,
allows us to continue to retain our customers and increase their spending on our products and services.
Our ability to increase customer spending is reflected in the revenue we generate per customer.
We aim to continually improve gross profit and decrease operating expenses per customer as we
gradually achieve economies of scale.
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
Revenue per customer ( in RMB millions )
—Retail core service cloud ................................ 1 . 9 2 . 0 2 . 5 1 . 5 2 . 2
—Operating system ................................... 1 . 8 2 . 1 2 . 1 1 . 3 1 . 5
—AIoT solutions ...................................... 1 . 8 1 . 4 2 . 2 1 . 3 2 . 8
—E-commerce service cloud ............................... 10.2 12.8 10.3 5.5 *
—Others ................................................ 0 . 0 0 . 1 (3.3) 0.6 0.1
Total Revenue ............................................... 3.6 3.0 3.0 1.8 2.1
Gross profit per customer ( in RMB millions )
—Retail core service cloud .................................. 1 . 1 1 . 1 1 . 0 0 . 6 0 . 9
—E-commerce service cloud ................................ ( 2 . 2 ) 0 . 3 1 . 1 0 . 4 *
—Others ................................................ 0 . 0 0 . 1 (4.5) (0.3) (0.6)
Total gross profit ............................................ 0.7 1.2 1.0 0.7 0.8
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Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
Operating expense per customer ( in RMB millions )
—Cost of revenue .......................................... 2 . 9 1 . 9 1 . 9 1 . 2 1 . 3
—Research and development expenses ......................... 2 . 5 1 . 3 1 . 0 0 . 6 0 . 5
—Selling and marketing expenses ............................. 1 . 9 0 . 5 0 . 3 0 . 2 0 . 1
—General and administrative expenses ......................... 0 . 9 0 . 6 0 . 5 0 . 3 0 . 3
Total operating expenses ....................................... 8.1 4.4 3.7 2.3 2.2
Note:
* E-commerce service cloud was immaterial in the six months ended June 30, 2024. By the end of 2023, all our customers had transitioned
to in-house O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house
O2O e-commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material gross profit in 2024.
Revenue per customer is calculated as the business segment’s revenue divided by the segment’s
number of customers. Revenue per customer for our operating system were RMB1.8 million, RMB2.1
million, RMB2.1 million, RMB1.3 million and RMB1.5 million in 2021, 2022, 2023 and the six
months ended June 30, 2023 and 2024, respectively. Revenue per customer for our AIoT solutions was
approximately RMB1.8 million in 2021, RMB1.4 million in 2022, RMB2.2 million in 2023, RMB1.3
million in the six months ended June 30, 2023, and RMB2.8 million in the six months ended June 30,
2024. The decrease from 2021 to 2022 was mainly attributable to the significant increase in the number
of our AIoT customers from 84 in 2021 to 188 in 2022. We expect our revenue per customer for AIoT
solutions to increase as (i) existing customers pay more as they adopt additional functionalities; and (ii)
new revenue generated from new AIoT initiatives starting from 2022. We launched and continue to
launch new and improved product offerings to enhance customer engagement and increase our revenue
per customer. For instance, we are working on rolling out new modules and functions, and diversifying
and expanding our AIoT solutions, such as intelligent loss prevention solutions, intelligent energy
saving solutions, intelligent merchandise replenishment solutions, intelligent package sorting solutions
and intelligent cashier solutions, which all provide customers with a combined solution of AIoT
hardware and services. We launched our intelligent loss prevention solutions in 2022 and our
intelligent merchandise replenishment solutions, intelligent package sorting solutions and intelligent
cashier solutions in 2023 with Wumei Group. We expect accelerated business and financials growth
from these new AIoT initiatives based on initial feedback we receive from early adopters of these
solutions. For details on intelligent loss prevention solutions and other AIoT initiatives we launched,
see “Business—Retail Core Service Cloud—Service Components—AIoT Solutions.” We began the
trial implementation of our intelligent energy saving solutions with Wumei Group and Maidelong
Entities. The intelligent energy saving solutions is an integrated solution that connects to the energy
systems and terminal devices of our customers to ensure their energy consumption data can be
visualized and analyzed in real time, allowing our customers to consume energy as needed and on
demand, which improves energy-use efficiency, reduces energy consumption and facilitates low-
carbon operation. Our AIoT solutions can help retailers, especially existing Dmall OS customers,
reduce costs and increase efficiency. We are also working to improve the gross margin of our AIoT
solutions. We continue to build a pipeline of potential customers in relation to these new initiatives.
Revenue per customer for our e-commerce service cloud were RMB10.2 million,
RMB12.8 million and RMB10.3 million in 2021, 2022 and 2023, respectively. The decrease from 2022
to 2023 was mainly due to (i) certain customers opt to operate O2O e-commerce business in-house,
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where they manage their own day-to-day O2O operations, (ii) the decrease in GMV processed and
number of delivery orders placed through our platform for certain retailer customer and (iii) the
cessation of our O2O e-commerce business we used to provide to DFI Retail Group along with our
disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April 2022.
We do not conduct any business under the e-commerce service cloud after the Restructuring.
The gross profit per customer for our retail core service cloud solutions decreased from 2022 to
2023 was primarily due to the continued growth of our operating system customer base which includes
customers of smaller size, which led to smaller gross profit generated from such customers in
comparison to our early customers who are major retailers with substantial business size. Our total
gross profit per customer increased from RMB0.7 million in 2021 to RMB1.2 million in 2022. The
total gross profit per customer decreased slightly from RMB1.2 million in 2022 to RMB1.0 million in
2023, primarily due to the continued growth of our operating system customer base which includes
customers of smaller size. The total gross profit per customer increased from RMB0.7 million in the
six months ended June 30, 2023 to RMB0.8 million.
Improving our operational efficiency
We believe our improving gross margins demonstrate the effectiveness of our product mix
development and cost control measures. During the Track Record Period, our gross profit margins
were 20.4%, 38.0%, 35.0%, 36.3% and 38.3% in the years ended December 31, 2021, 2022, 2023 and
the six months ended June 30, 2023 and 2024, respectively. We have strategically shifted towards high
gross profit contribution business and focused on generating greater revenue from our retail core
service cloud solutions. Revenues generated from our retail core service cloud solutions as percentages
of our revenue were 51.7%, 66.3%, 81.9%, 78.8% and 99.4% in the years ended December 31, 2021,
2022, 2023 and the six months ended June 30, 2023 and 2024, respectively. We expect revenue
contribution from our retail core service cloud to remain at a high level. The retail core service cloud
solutions segment had a gross profit margin of 59.3%, 56.2%, 41.7% and 39.5% in 2021, 2022, 2023
and six months ended June 30, 2024 respectively. The decrease was primarily driven by increased sales
from our AIoT solutions with relatively lower gross margins, in comparison to other components of
our retail core service cloud solutions. We expect our gross margin to improve given economics of
scale and operation efficiencies and as result of the cessation of our e-commerce service cloud
solutions which had lower gross margins. The gross profit contributed by our AIoT solutions is
expected to enhance our overall profitability.
During the Track Record Period, we conducted a series of product optimizations to further
align our product and service offerings with our objective of promoting our retail digitalization
solutions, which have always been the primary focus of our business. The e-commerce service cloud
solutions segment had a gross margin of negative 21.4%, 2.3%, 10.3%, 7.8% and 39.9% in 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024, respectively. The increase in gross margin
was primarily driven by a higher take rate we charged for customers using our e-commerce service
cloud, and a decrease in logistics cost, mainly due to the introduction of our delivery service bidding
process as well as customers transitioning to an in-house delivery model in lieu of using our on-
demand delivery service. We do not conduct any business under the e-commerce service cloud after
the Restructuring.
We have also adopted a range of strategies to enhance our performance, including retaining key
staff who demonstrate exceptional productivity and possess a comprehensive understanding of the entire
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business cycle, from research and development to implementation. Additionally, we constantly refine and
improve the cross-function collaboration among our different business groups—including business
development, implementation, and research and development—in a more collaborative and efficient
manner, reducing costs and expenses while simultaneously achieving substantial revenue growth.
The following table sets forth details of our selling and marketing expenses both in absolute
amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Expenses of promotion and marketing
activities ......................... 245,246 28.9 118,358 8.9 48,002 3.0 29,737 3.9 2,075 0.2
Employee benefit expenses ............ 177,243 20.9 101,806 7.7 80,980 5.1 44,832 5.9 30,108 3.2
Others ............................. 22,416 2.7 18,405 1.4 21,941 1.4 10,044 1.3 10,782 1.2
Total .............................. 444,905 52.5 238,569 18.0 150,923 9.5 84,613 11.1 42,965 4.6
We expect reduced selling and marketing expenses as a percentage of our revenue as we focus on
developing our relationship with enterprise retaile r. Our selling and marketing expenses as a percentage
of revenue decreased from 52.5% in 2021 to 18.0% in 2022, and further to 9.5% in 2023, and decreased
from 11.1% in the six months ended June 30, 2023 to 4.6% in the same period in 2024. Specifically, our
expenses for promotion and marketing activities as a percentage of revenue decreased from 28.9% in
2021 to 8.9% in 2022 and further to 3.0% in 2023, and decreased from 3.9% in the six months ended
June 30, 2023 to 0.2% in the same period in 2024, as a result of (i) the decrease in promotion and
marketing expenses due to reduced promotional incentives to retail consumers and our strategic decision
to limit investment in our O2O operations and (ii) the decrease in employee benefit expenses due to our
efforts to control costs and optimize our operational efficiency. Promotion and marketing expenses
experienced a major decline as we completed the Restructuring and substantially reduced promotion and
marketing expenses as a result of the divestment of the online marketing service. We expect to continue
to expand our business by developing and maintaining our relationship with major customers and limit
selling and marketing expenses used for attracting new customers, and we expect our selling and
marketing expenses as a percentage of our revenue to continue to decrease. Going forward, we expect to
continually evaluate and monitor the cost-efficiency of our marketing spending as we have achieved
strong network effects among customers.
The following table sets forth a breakdown of our general and administrative expenses both in
absolute amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Employee benefit expenses ......... 126,855 15.0 145,910 11.0 185,373 11.7 73,645 9.6 86,473 9.2
Depreciation and amortization ...... 30,503 3.6 23,489 1.8 15,686 1.0 7,888 1.0 6,112 0.7
Professional fees ................. 34,370 4.1 54,709 4.1 34,572 2.2 18,672 2.4 23,649 2.5
Expenses relating to short-term leases
and leases of low-value assets (1) . . . 5,977 0.7 4,312 0.3 3,852 0.2 1,924 0.3 1,234 0.1
Outsourcing and other labor costs .... 7 1 5 0 . 1 8,069 0.6 1,856 0.1 411 0.1 8,503 0.9
Others ......................... 10,151 1.1 15,210 1.1 18,074 1.2 7,977 1.1 7,280 0.8
Total .......................... 208,571 24.6 251,699 18.9 259,413 16.4 110,517 14.5 133,251 14.2
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Note:
(1) Expenses relating to short-term leases and leases of low-value assets are internally allocated to different functions for their respective
uses and are respectively recorded under cost of revenue, general and administration expenses, research and development expenses, or
selling and marketing expenses, if any.
Our general and administrative expenses as a percentage of revenue decreased from 24.6% in
2021 to 18.9% in 2022, and further to 16.4% in 2023. Our general and administrative expenses as a
percentage of revenue decreased from 14.5% in the six months ended June 30, 2023 to 14.2% in the
same period in 2024. The decrease in our general and administrative expenses as a percentage of total
revenue was primarily due to our continuous efforts to enhance cross-functional management
efficiency by optimizing our labor structure and consolidating employee responsibilities.
The following table sets forth a breakdown of our research and development expenses both in
absolute amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Employee benefit expenses . . . 531,312 62.6 535,104 40.3 472,980 29.8 240,441 31.5 183,460 19.5
Cloud service, bandwidth and
server custody fees ....... 16,736 2.0 13,967 1.1 17,186 1.1 7,925 1.0 6,300 0.7
Depreciation and
amortization ............. 18,572 2.2 17,492 1.2 11,850 0.7 7,671 1.0 5,952 0.6
Expenses relating to short-term
leases and leases of
low-value assets
(1) ........ 6,746 0.8 7,564 0.6 6,080 0.4 3,441 0.5 2,064 0.2
Outsourcing and other labor
costs ................... 2,553 0.3 1,590 0.1 1,939 0.1 1,356 0.2 128 *
Others ................... 12,692 1.5 10,613 0.8 10,852 0.8 5,253 0.6 5,623 0.7
Total .................... 588,611 69.4 586,330 44.1 520,887 32.9 266,087 34.8 203,527 21.7
Note:
(1) Expenses relating to short-term leases and leases of low-value assets a re internally allocated to different functions for their respective usesand
are respectively recorded under cost of revenue, general and administ ration expenses, research and development expenses, or selling and
marketing expenses, if any.
Our research and development expenses as a percentage of revenue decreased from 69.4% in
2021 to 44.1% in 2022, and further to 32.9% in 2023. Our research and development expenses as a
percentage of revenue decreased from 34.8% in the six months ended June 30, 2023 to 21.7% in the
same period in 2024. We expect our research and development expenses as a percentage of our
revenue to decline because we have accumulated technological capabilities through prior investments
and are able to replicate and upgrade our product offerings without significant further investments.
As a result, we witnessed an improvement in our net margin from continuing operations from
negative 213.2% in 2021 to negative 67.8% in 2022. Further, due to the decrease in fair value change
of convertible redeemable preferred shares and our continued gross profit improvement as well as our
concerted efforts to control costs and optimize our operational efficiency, our net margin from
continuing operations improved from negative 67.8% in 2022 to negative 47.3% in 2023. Our net
margin from continuing operations improved and from negative 76.9% in the six months ended
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June 30, 2023 to negative 51.3% in the same period in 2024. Our adjusted net profit margin from
continuing operations (non-IFRS measures) improved from negative 111.0% in 2021 to negative
26.8% in 2022 and negative 14.7% in 2023 given our increasing gross profit and cost optimization in
our sales and marketing expenses, research and department and general and administrative expenses.
Our adjusted net profit margin from continuing operations (non-IFRS measures) further improved from
negative 18.8% in the six months ended June 30, 2023 to 6.0% in the same period in 2024.
In summary, as demonstrated during the Track Record Period, the above measures have proven
to be generally effective in improving our profitability. We will continue to focus on growing our retail
core service cloud solutions after the Restructuring and the adoption of additional cost control
measures throughout our operations to contribute to the improvement to our net profit and help us
achieve positive cash flow. With our improving profitability, we also expect our operating cash flow to
improve concurrently, and to achieve positive cash flow from operating activities as our business scale
continues to expand and our revenue continues to ramp up.
We expect to incur net loss for the year ending December 31, 2024 primarily due to fair value
changes of convertible redeemable preferred shares and fair value change in financial assets measured
at FVPL as a result of the decreased valuation of Guoquan, in which we made an equity investment.
Guoquan Shihui is a home meal products brand in China owned by Guoquan, offering a variety of
ready-to-eat, ready-to-heat, ready-to-cook and prepared ingredients, with a focus on at-home hotpot
and barbecue products. See “Financial Information—Discussion of Certain Key Items of Consolidated
Statements of Financial Position—Other Financial Assets.” Additionally, we anticipate net cash
outflows in 2024.
The forgoing forward-looking statements on our business sustainability and profitability
forecast are based on assumptions regarding our present and future business strategies and the
economic environment in which we operate. Our future financial position and results of operations
may be affected by complicated factors and may be subject to risks and uncertainties discussed in the
section headed “Risk Factors” in this document, many of which are beyond our control.
Working Capital Sufficiency
As of June 30, 2024, we had cash and cash equivalents of RMB469.5 million, unutilized bank
loan facilities of RMB266.5 million and current financial assets measured at fair value through profit
or loss of RMB11.2 million. Taking into account the financial resources available to us, including the
estimated net proceeds from the Global Offering, cash flow generated from operations, bank facilities
available to us, cash and cash equivalents on hand, financial assets at fair value through profit or loss,
and after due and careful enquiry, our Directors are of the view that we and our subsidiaries have
sufficient working capital to meet our present needs and for the next 12 months from the date of this
document. We also proactively review and adjust our cash management policy and working capital
needs according to general economic conditions and our short-term business plans. In addition, in view
of our net cash outflows and net losses during the Track Record Period, as well as the expected net
operating cash outflows after the Listing, we plan to ensure our working capital sufficiency by taking
advantage of above-mentioned measures to narrow down our net loss and improve our profitability.
Further, as evidenced by our historical equity financing activities, we are able to obtain investment
from well-known institutions. This also signifies the confidence of prominent investors in our
Company. We believe that potential external financing sources, including those to which we will gain
access after the Listing, will provide additional funding to fuel our business operation and expansion
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until we achieve profitability. Taking into account the above, as well as based on the written
confirmation from our Company in respect of working capital sufficiency, the financial due diligence
conducted on the financial information of our Group during the Track Record Period and the
discussion with our Directors, the Joint Sponsors concur with our Directors’ view that we and our
subsidiaries have sufficient working capital to meet our present needs and for the next 12 months from
the date of this document.
OUR TECHNOLOGIES
Strong Research and Development Capabilities
We have invested heavily in research and development, and have achieved tangible results
showcasing technology leadership. As of June 30, 2024, we had five research and development centers
with 908 R&D staff. We conduct research and development in house. In 2021, 2022, 2023 and the six
months ended June 30, 2023 and 2024, our research and developments expenses amounted to
RMB588.6 million, RMB586.3 million, RMB520.9 million, RMB266.1 million and RMB203.5
million, representing 69.4%, 44.1%, 32.9%, 34.8% and 21.7% of our revenues, respectively. The core
technology team has rich industry experience from leading technology companies based in China and
abroad.
Robust, Scalable, and Easily Deployable Technology Architecture
Our Dmall OS system is cloud-based, modularized, and open-platform in nature, which allows
it to have highly configurable and flexible functionalities with easy deployment and upgradability. Our
Dmall OS system are adopted by retailers of various sizes, formats, and types and at different
organizational levels. Such modularized design makes our operating system widely adaptable to a
diverse range of retailers compared to a traditional monolithic design. It also allows us to provide
customized solutions with minimal need to customize our project for each customer. We also provide
an open application programming interface (API) for our customers, which makes our solutions highly
flexible and extensible. To adopt our solutions, customers can use the open API to conveniently
integrate modules of the Dmall OS system into their existing technology systems. Finally, any new
retail know-how obtained from our customers can be easily reflected in the existing module updates or
new SaaS module rollouts. These traits allow us to grow with our customers, constantly upgrade their
full spectrum of operational capabilities, and stay competitive in their respective market verticals.
Powerful Data Insights
Our multi-dimensional big data analytics capabilities have enabled us to develop powerful data
insights and consistently improve the service capabilities of the Dmall OS system. According to
Frost & Sullivan, we enjoy significant data advantages in terms of breadth, depth, relevance, and
continuity over our competitors. By continually serving and partnering with retailers, we are able to
reach a wide spectrum of transactional data, whether online or offline, current or historical, while our
competitors normally only focus on online data sources. Based on the frequent, high-quality
interactions consumers have with our retailer customers, we have developed a comprehensive data
depositary and gained data insights from such interactions. As a result of these data insights, we are
able to engage in targeted data analytics for the specific retailer, achieving a level of granularity that is
otherwise hard to achieve for our retailer customers. We have also leveraged our data collection and
analytics capabilities and our team of engineers that have been heavily involved in retail businesses to
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optimize system performance for our customers. By utilizing the on-the-ground experiences of our
engineers, we are able to make the most of our massive data depository and gain deeper insights that
drive targeted solutions for our retailer customers.
SALES AND MARKETING
We generate customer leads and promotes our brand awareness primarily through brand
reputation established through cooperation with top retailer customers and online and offline marketing
activities. As of June 30, 2024, we had a sales and marketing team of 103 personnel. We have a
dedicated sales team, customer success team, and a business development team that leverage existing
customer relationship and industry reputation to convert sales leads into paying customers and to create
selling opportunities. Our sales, marketing and brand promotion efforts primarily include:
(i) sponsorships and participation in industry conferences, executive events and trade shows; (ii) online
search engine marketing; (iii) public relations and social media initiatives; and (iv) cooperative
marketing efforts with customers, including channel marketing campaigns and joint seminars.
Our sales and marketing strategies are highly scalable, and we rely on both new customer
acquisition and “land and expand” strategies. With the “land and expand” strategy, we expand
customer base by establishing reputation with key customers. Over time, as we develop closer
relationship with our customers built on value creation, trust, and great customer experience, we
understand these customers better, in terms of the challenges they face during their day-to-day
operations and the solutions they need to address the problems. We are thus able to provide better and
more tailored services as we upgrade our product and service offerings. We will also use this as a
foundation for us to identify new opportunities and expand our customer reach. We will also expand
our coverage in new retail formats such as DTC and discount stores to expand market opportunities.
We have also worked closely with consulting companies, such as cloud service providers and ISVs to
increase customer touch point. For retail core service cloud solutions, we also provide free or low-cost
trial modules to acquire customers and demonstrate our value, and then help the customers install the
Dmall OS system. The majority of the contracts we entered into with customers of the Dmall OS
system are three years or longer. We believe our high quality services bring selling opportunities
among our product and service offerings across modules and different cloud solutions.
INTELLECTUAL PROPERTY
We highly values our intellectual property rights, which are fundamental to our success and
competitiveness. Our intellectual property includes trademarks, trademark applications, patents, and patent
applications related to our brands and services, software copyrights and other intellectual property rights
and licenses. We rely on a combination of copyright and trademark law, trade secret protection and
confidentiality agreements with employees to protect our intellectual property rights. As of the Latest
Practicable Date, we held 282 registered trademarks, 142 registered patents, 298 software copyrights and 10
domain names.
We did not have any material disputes or any other pending material legal proceedings
regarding intellectual property rights with third parties during the Track Record Period and up to the
Latest Practicable Date.
OUR RELATIONSHIP WITH THE RELATED PARTIES
During the Track Record Period, we recognized a substantial portion of our revenue from our
cooperation with the Related Parties. Related Parties contributed revenue of RMB598.9 million,
RMB965.6 million, RMB1,202.0 million and RMB734.6 million in 2021

 2022, 2023 and the six
months ended June 30, 2024, respectively.
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Despite the relatively high revenue contribution from the Related Parties to our Group during
the Track Record Period, there is no undue reliance on the Related Parties to conduct our business. We
believe the business relationship between our Group and the Related Parties is mutually beneficial and
dependent. Through extensive collaboration with the Related Parties, we have developed a profound
understanding of their retail operations. Leveraging this knowledge, we offer customized solutions via
our proprietary Dmall OS system to address various operational challenges. Furthermore, our Dmall
OS system is capable of continuous enhancement. Given the magnitude and intricacy of the Related
Parties’ operations, we believe they are reliant on our system and services. It also would pose
significant challenges and incur substantial expenses for the Related Parties to find an alternative retail
digitalization solution provider to replace us. This is primarily because the process would involve
disruptive transitions, extensive training expenditures, and a considerable amount of time to complete.
In addition, we have maintained close and stable business relationship with the Related Parties and do
not expect any material adverse change in such relationship.
Other than the Related Parties, we have entered into cooperation agreements with other leading
retailers in China, other parts of Asia and Europe. The recognition by these leading retailers of our
service capabilities and quality has created a solid foundation for our Group to attract many more
retailer customers outside of the Related Parties.
The Related Parties
As of June 30, 2024, our Related Parties include Wumei Group, MDL Wholesale Group,
Chongqing Department Store Group, Yinchuan Xinhua Group, B&T Entities and Dmall Fresh (Beijing):
(a) Wumei Technology Group, Inc. (
ʮ̡), a company incorporated in the
PRC with limited liability (“ Wumei Technology”) was founded by Dr. Zhang in 1994 and
an associate of Dr. Zhang;
(b) MDL Wholesale Limited (“ MDL Wholesale”, together with its subsidiaries, “ MDL
Wholesale Group”) is a subsidiary of Wumei Technology, and hence it (including its
subsidiaries) is an associate of Dr. Zhang;
(c) Yinchuan Xinhua Commercial (Group) Co., Ltd. (ʮ̡)
(Shanghai Stock Exchange: 600785) (“ Yinchuan Xinhua ”, together with its subsidiaries,
the “Yinchuan Xinhua Group”), which is an associate of Dr. Zhang;
(d) Chongqing Department Store Co., Ltd. (ʮ̡) (Shanghai Stock
Exchange: 600729) (“ Chongqing Department Store ”, together with its subsidiaries, the
“Chongqing Department Store Group ”), which is a former associate of Dr. Zhang;
(e) Entities that manage and operate stores bearing the brand of B&T (֢in the PRC
(collectively, “B&T Entities”), which is an associate of Dr. Zhang; and
(f) Dmall Fresh (Beijing), our former VIE, which is an associate of Mr. Zhang.
Wumei Group, MDL Wholesale Group and B&T Entities operate their business mainly under three
brands: (a) Wumart (ߕيwhich focuses on supplying fresh food and fast-moving consumer goods to
local communities and consumers, (b) Maidelong (௥ᅃᎲ), which targets middle- and upper-middle class
consumers and business customers and provides them with value-for-money merchandise including fresh
foods and fast-moving consumer goods with private label merchandise and imported merchandise, and (c)
B&T (
֢a home decor and building materials retailer. Dr. Zhang, through his intermediary
companies, holds approximately 97% of the equity interest in Wumei Technology as of June 30, 2024.
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Yinchuan Xinhua Group is mainly engaged in the business of department stores, supermarkets
and electronics retail. It has department stores, supermarkets and electronics stores, mainly located in
the Ningxia Hui Autonomous Region and surrounding provinces such as Shaanxi, Gansu, Inner
Mongolia and Qinghai. Yinchuan Xinhua was listed on the Shanghai Stock Exchange in 1997. Wumei
Group holds approximately 42.1% of the equity interest in Yinchuan Xinhua as of June 30, 2024.
Chongqing Department Store Group is mainly engaged in the business of department stores,
supermarkets, electrical appliances and automobile trade. Chongqing Department Store Group owns
famous brands and trademarks such as Chongqing Department Store (
ᅅϵ஬) and New Century
Department Store (ϵ஬). It has shopping malls and stores with a wide geographical coverage in
China, including in Chongqing, Sichuan, Guizhou, Hubei and so on. Chongqing Department Store was
listed on the Shanghai Stock Exchange in 1996. Dr. Zhang is a director and the chairman of the board
of directors of Chongqing Department Store. Chongqing Department Store was held as to
approximately 51.4% by Chongqing General Trading (Group) Company Limited (
ٟ(ණྠ)ࠢ
ʮ̡), which was in turn held as to 44.5% by Wumei Group as of December 31, 2023. As of March 9,
2024, Chongqing Department Store was held as to 24.89% by Wumei Group.
Dmall Fresh (Beijing) is mainly engaged in the provision of online marketing and advertising
services and the operation of the Dmall app. Mr. Zhang and Ms. LU Yuxin holds approximately 51%
and 49%, respectively, of the equity interest in Dmall Fresh (Beijing) as of June 30, 2024.
Cooperation with the Related Parties
We have engaged in substantial business transactions with the Related Parties for the Track
Record Period and expects to continue our business relationship with them in the future. In line with
the arrangements with our customers, we have entered into cooperation agreements with the Related
Parties. For further information, see “—Customers.”
During the Track Record Period, we recognized a substantial portion of our revenue from our
cooperation with the Related Parties. The following table sets out the historical revenue contribution of
the Related Parties, Other Related Party and Independent Customers in absolute amount and as
percentage of our revenue during the Track Record Period:
Year Ended December 31, Six Months ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(RMB in thousands except for percentages)
(unaudited)
Revenue contribution
Wumei Group ............. .384,055 45.3 561,579 42.3 821,047 51.8 396,454 51.9 484,459 51.6
MDL Wholesale Group** .... 86,618 10.2 258,246 19.4 259,471 16.4 125,347 16.4 183,819 19.6
Yinchuan Xinhua Group ..... 38,052 4.5 30,676 2.3 54,944 3.5 27,416 3.6 32,521 3.5
Chongqing Department Store
Group .................. 90,153 10.6 115,094 8.7 62,781 4.0 39,627 5.2 27,684 2.9
B&T Entities .............. — — — — 3,721 0.2 1,101 0.1 5,971 0.6
Dmall Fresh (Beijing) ....... — — — — — — — — 1 2 6 *
Related Parties ................ 598,878 70.6 965,595 72.7 1,201,964 75.9 589,945 77.2 734,580 78.2
Other Related Party ............ 28,198 3.3 95,380 7.2 138,986 8.8 67,815 8.9 79,725 8.5
Independent Customers ......... 221,116 26.1 267,289 20.1 244,407 15.3 106,243 13.9 124,857 13.3
Revenue ...................... 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
* Less than 0.1%
** Refers to Maidelong Entities prior to the MDL Reorganization.
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The revenue contribution from Related Parties increased at a higher pace than that from
Independent Customers primarily due to the expansion of our new AIoT solutions. Since these Related
Parties are larger in scale, they contributed more revenue when adopting the new AIoT services. We
gain valuable experience, insights, and constructive feedbacks which are essential for refining and
enhancing its AIoT offerings from these Related Parties, as they typically operate a broader range of
retail formats, manage more complex operations, and have diverse needs. This diversity and
complexity enable us to better understand various operational challenges and optimize its solutions
accordingly. We anticipate accelerated business and financial growth from these new AIoT initiatives
based on the initial feedbacks we receive from early adopters of these solutions. As these offerings
mature and demonstrate proven success in complex retail environments, we expect to attract a larger
number of Independent Customers to adopt our AIoT solutions, thereby broadening our market reach
and revenue.
Relationship with the Related Parties
Mutually beneficial and dependent business relationship
Our cooperation with the Related Parties is the natural result of our and the Related Parties’
positions in our respective markets. We have successfully expanded our businesses to other countries
and regions in Asia, comprising Hong Kong SAR, Cambodia, Singapore, Malaysia, Macau SAR,
Indonesia, the Philippines and Brunei. Such unique market positioning makes us the go-to choice for
the local leading retailers such as the Related Parties. The Related Parties, on the other hand, are
among the top retailers in China, with thousands of malls and stores across China and owning a wide
array of well-known brands and trademarks in China.
We believe the business relationship between our Group and the Related Parties is mutually
beneficial and dependent for the following reasons:
 Deep understanding of retail operations. With substantial business cooperation with the
Related Parties, we have accumulated deep understanding of the Related Parties’ retail
operations, and have provided transformative solutions based on such understanding to the
Related Parties regarding various aspects of their operations through our proprietary Dmall
OS system. These solutions include developing mobile applications and mini-programs for
the Related Parties, designing and enhancing their marketing and promotional campaigns
and efforts, optimizing their merchandise selection and display, and otherwise improving
their digitalized operational capabilities in terms of store operations (including payment),
supply chain (including coordination between retailers and their suppliers), and consumer
interaction and traffic, among others. Our retail know-how and in-depth understanding of
the Related Parties’ business operations have allowed us to provide better services to and
deepen our collaboration with the Related Parties. This is demonstrated through (i) the
increase in GMV processed through our solutions and (ii) the increase in take rate
reflecting the increase in the number of and the complexity of the SaaS solutions we
provide. In addition, our new service offerings designed and launched based on our in-
depth understanding of the needs of our customers have allowed the Company to deepen
the collaboration with customers. For example, we launched the intelligent loss prevention
solutions in 2022 to help retailers access video, image and order information to detect theft
and protect retailers’ assets.
 Advanced system catering to complex retail operations. Our Dmall OS system is modularly
configured to support constant upgrade in response to the increasingly complex
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organizational and technological infrastructure of retailers. The scale and complexity of
operations of the Related Parties render them reliant on our system and services.
 High switching cost. As a retail digitalization solution provider, our services are deeply
integrated into the day-to-day operations of the Related Parties. Replacing our system
would result in significant disruptions that could lead to substantial loss in revenue and
reputation for Related Parties. Additionally, training all the relevant staff to operate a new
system would require additional costs and time. The learning curve associated with a new
system can be steep, leading to decreased productivity during the transition period.
Moreover, any replacement SaaS system would also require time to reach a desirable level
of stability, potentially causing further delays and disruptions. Furthermore, the data-
driven algorithms that we have helped the Related Parties develop and maintain are crucial
for their business strategies. These algorithms provide valuable insights and support
decision-making processes. Discontinue cooperation with us could hinder their ability to
execute their strategies effectively. In addition, operational modules provided by us are
fully adapted to customers’ system and may not be adapted to systems or modules
provided by other providers. Incompatibility between systems and modules may cause
problems such as data silos, instead reducing operational efficiency. When a customer
wants to replace a specific module, it may even need to replace the entire operating
system, which is a very high switching cost for the customer. On the other hand, we have
in-depth understanding of our customers’ needs and business requirements before
providing products and services. After changing retail digitalization solution providers,
customers need to spend a lot of time again to communicate with the provider in detail
about their needs, and the time and labor costs incurred are higher. Considering these
factors, it would be difficult and costly for the Related Parties to replace us as their retail
digitalization solution provider. The disruption, training costs, and time required to reach
stability would have a significant impact on their operations, revenue, and overall
reputation.
Long-term strategic business relationship
We have maintained close and stable business relationship with the Related Parties. We first
started to provide services to (a) the Wumei Group in 2015, (b) the Maidelong Entities in 2018, (c) the
Yinchuan Xinhua Group in 2018; (d) the Chongqing Department Store Group in 2019; (e) B&T
Entities in 2022; and (f) Dmall Fresh (Beijing) after the Restructuring.
The majority of the business contracts currently in effect between our Group and the Related
Parties have a term of three years or above. The contracts may be terminated in one or more of the
following scenarios: (a) by either party in writing where there is a force majeure event that lasts for an
extended period and the parties could not reach agreement over whether to continue the performance of
the contract; (b) by either party in writing where the contract is unable to be performed for no fault of
either party and the situation could not be remedied after an agreed period; (c) by the party not in
breach of the contract if the other party commits a breach of the contract; and (d) by mutual agreement
of the parties. No business contracts with the Related Parties have been terminated to date.
In view of the long-standing and complementary business relationship between our Group and
the Related Parties, our Directors currently do not expect any material adverse change in such
relationship and the risk of termination of the relationship is remote. See “Risk Factors––Risks
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Relating to Our Business and Industry—We currently have a relatively concentrated customer base
with a limited number of major customers. The loss of one or more of our major customers, a failure to
renew our agreements with one or more of our major customers, or a failure to expand our customer
base, could negatively affect our results of operations and ability to market our services.”
Our continuously expanding customer base
Despite the relatively high revenue contribution from the Related Parties to our Group during
the Track Record Period, there is no undue reliance on the Related Parties to conduct our business.
Other than the Related Parties, we have entered into cooperation agreements with other leading
retailers in China, other parts of Asia and Europe. The recognition by these leading retailers of our
service capabilities and quality has created a solid foundation for our Group to attract many more
retailer customers outside of the Related Parties. We are able to provide similar transformative
solutions provided to the Related Parties to new customers. We have developed deep industry know-
how and expertise working with top retailers, including the Related Parties, and are able to translate
such know-how into standard SaaS modules that offer the same functions that can be easily adopted by
all of our customers and further customized based on individualized operating needs.
We have achieved rapid growth in revenue from Independent Customers. Our revenue
increased by 56.6% from RMB848.2 million in 2021 to RMB1,328.3 million, by 19.4% from
RMB1,328.3 million in 2022 to RMB1,585.4 million in 2023 and by 22.9% from RMB764.0 million in
the six months ended June 30, 2023 to RMB939.2 million in the six months ended June 30, 2024. Our
revenue from Independent Customers was RMB221.1 million, RMB 267.3 million, RMB
244.4 million, RMB 106.2 million and RMB 124.9 million in 2021, 2022, 2023, the six months ended
June 30, 2023 and 2024, respectively. The number of our customers grew from 236 in 2021 to 436 in
2022, and further to 533 in 2023. The number of our customers increased from 413 in the six months
ended June 30, 2023 to 444 in the same period in 2024. By leveraging the deep retail know-how,
technology, and abundant experience cooperating with top retailers, we have acquired a sizeable
number of new Independent Customers. The number of our Independent Customers grew from 233 for
2021 to 433 for 2022 and 530 for 2023 and 440 for the six months ended June 30, 2024.
In particular, we reached a strategic cooperation with Zhongbai in 2017. Through adoption of
the supplier auction module, Zhongbai achieved measurable improvements in its 2022 Chinese New
Year supplier acquisition event by exceeding its transaction volume target by approximately 7% (or an
increase of approximately 20% on a year-over-year basis). Our supplier auction module helps it create
a fairer and more transparent auction process compared to its traditional offline auction model,
enabling a convenient process that supported 285 suppliers of Zhongbai to publicly submit their bids at
the same time. The same module also enabled Zhongbai to review 776 bid proposals, automatically
rank and screen the highest bidder, helping it to automate and expedite its supplier selection process.
We entered into cooperation agreement with 7-Eleven (Guangdong) and became its sole digital
service provider in 2020. We provide it with solutions relating to logistics management, warehouse
management and consumer membership management etc. We helped 7-Eleven (Guangdong) improve
the operation efficiency of their delivery service. Within the six months after adopting our service
module in logistics management, as of June 2022, 7-Eleven (Guangdong) was able to achieve an
increase over 300% of single day takeaway orders. We also help it with warehouse management. After
using our products and services, 7-Eleven (Guangdong) experienced an improvement in its warehouse
management efficiency. For example, our products and services played an important role in the Foshan
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warehouse expansion, doubling the amount of stores it supplied from over 500 stores to over 1,000
stores as of June 2022. Additionally, the implementation of our solution assisted in achieving the
reduction in the frozen goods sorting time by 28% per hour, and a 30% increase in frozen warehouses
utilization.
Retailer A, one of the Company’s Independent Customer, established cooperation with the
Company and launched OS system in May 2021, with revenue contribution of approximately RMB360
thousand per year. We successfully deepen the business cooperation with and increase the revenue
contribution from Retailer A. Retailer A adopted our warehouse management module in June 2021,
with revenue contribution of approximately RMB130 thousand per year. In August 2022, Retailer A
launched another new module with revenue contribution of approximately RMB53 thousand per year.
In February, 2023, Retailer A launched intelligent loss prevention with revenue contribution of
approximately RMB680 thousand per year.
In 2023, we entered into contracts with new Independent Customers including Xuchang
Pangdonglai Commerce & Trade Co., Ltd., a leading regional retailer in Henan Province, Henan
Dennis Department Store Co. Ltd., a department store chain operating in the Chinese mainland and a
subsidiary of Dongyu Group, which is a leading business conglomerate headquartered in Taiwan,
China, Lianhua Supermarket Holdings Co., Ltd., a retailer that operates hypermarkets, supermarkets
and convenience stores in the Chinese mainland, Harbin Churin Leaderfoods Co., Ltd. a well-known
retailer enterprise with a history of 120 years and Luosen.
In addition, we are making good progress with exporting our digitalization solutions in overseas
markets in Asia and Europe. We have established Retail Technology Asia with DFI Retail Group
Management Limited to provide technology solutions and services for retailers outside China to help
them with the digital transformation of operational processes and marketing, supply, payment and
merchandise management since 2019. And we also expanded our business into the European market by
cooperating with the Metro Group. In August 2023, SM Group became one of our customers.
JOINT VENTURE AGREEMENT OF RETAIL TECHNOLOGY ASIA
On December 3, 2019, Dmall HK and DFI Retail Group Management Limited (“ DRGML”,
formerly known as Dairy Farm Management Limited) entered into a joint venture agreement (“ Initial
Agreement”) pursuant to which Dmall HK and DRGML agreed to form a joint venture for the purpose
of providing technology solutions and services for retailers outside China to help them with the digital
transformation of operational processes and marketing, supply, payment and merchandise
management. The Initial Agreement was further amended and restated on April 1, 2022 together with
Retail Technology Asia becoming a party to that agreement (the “ JV Agreement”). Pursuant to the JV
Agreement, the board of the joint venture is responsible for the overall management of the joint
venture, which consists of seven directors, of which Dmall HK may appoint four directors and
DRGML may appoint three directors. In respect of Dmall HK, Dmall HK may appoint the chief
executive officer, chief financial officer and the chief technology officer of the joint venture.
Pursuant to the Initial Agreement, Retail Technology Asia was incorporated in Hong Kong on
January 14, 2020 to provide retailers technology solutions and services for retailers with a digital retail
platform relating to the digital transformation of customer experiences including operational processes,
marketing, supply, payment, and merchandise services. The territorial scope of the services provided
by Dmall HK to DRGML and its affiliates (“ Territories”) is limited to Brunei, Cambodia, Hong Kong
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SAR, Indonesia, Laos, Macau SAR, Malaysia, Myanmar, the Philippines, Singapore, Taiwan,
Thailand, and Vietnam, and for the avoidance of doubt specifically excludes the Chinese mainland. At
the time of incorporation, Retail Technology Asia was held by Dmall HK as to 50% and DRGML as to
50%, respectively.
DFI Retail Group Management Services Limited (“ DRGMSL”; formerly known as Dairy Farm
Management Services Limited) and Retail Technology Asia entered into a master retail user services
agreement dated January 1, 2021, which was amended and restated with effect from April 1, 2022, for
the efficient procurement of technology solutions and services from the Company to DRGMSL and its
affiliates (each a “ DFI Group Member ”) in the Territories (the “ DFI Master Agreement ”). From
time to time, DRGMSL may invite Retail Technology Asia to discuss potential services required by
DFI Group Members in the Territories. Upon such request, the parties shall promptly proceed to
discuss and, if mutually agreeable, the parties will direct and procure the appropriate DFI Group
Member and Retail Technology Asia and/or its affiliates, as the case may be, to negotiate and execute a
local country retail user services agreement (the “ LCA”) and/or statements of work (the “ SOW”),
based on the terms and conditions as stated in the DFI Master Agreement. The following reflects the
salient terms of the DFI Master Agreement between Retail Technology Asia and DRGMSL.
Key Terms Descriptions
Service type Retail core service cloud solutions, including services relating to the enhancement
and optimisation of the efficiency and effectiveness of the warehousing and retail
operations of DFI Group Members (including POS, Store Ops, WMS and ERP
modules). Each SOW shall set out the details of the services to be provided by Retail
Technology Asia and the other applicable commercial terms.
Pricing terms Each SOW shall specify fees and payment schedule, subscription term (if
applicable), including whether fees will be charged on the basis of fixed price, time
and materials or a subscription service or take rate, which shall be calculated based
on the rates agreed in an SOW or as set forth in the schedule of the DFI Master
Agreement.
Term and renewal The DFI Master Agreement has a term of five years, and shall automatically renew
(i) for an additional consecutive five-year period unless terminated by DRGMSL
upon at least 90 days written notice to Retail Technology Asia prior to the end of the
initial term, and (ii) for an additional consecutive one-year period after the first
renewal term unless terminated by either party upon at least 90 days written notice to
the other party prior to the end of the first renewal term or any subsequent renewal
term, as applicable.
Each LCA/SOW will be subject to its own term/subscription period as specified in
the LCA/SOW. The standard term for any subscription services is six years but
subject to each party’s rights of termination under the LCA/SOW.
Termination Either party may terminate the DFI Master Agreement without incurring further
liability of any kind at any time if at such time there have been no current SOWs in
effect in the preceding period of 24 consecutive months, by delivering written notice
to the other party.
DRGMSL may also terminate the DFI Master Agreement in the event that (i) Retail
Technology Asia becomes insolvent or unable to pay its debts as they fall due; (ii)
any LCA(s) or SOW(s) in the Territories is/are terminated by the relevant DFI Group
Member as a result of a material breach by the relevant affiliate of Retail Technology
Asia and the losses incurred by the relevant DFI Group Member(s) caused by such
material breach(es) represent a material loss to DRGMSL and its affiliates in the
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Key Terms Descriptions
context of the aggregate revenue under all the LCAs and SOWs then in effect in the
territories; (iii) Retail Technology Asia commits any material breach of the DFI
Master Agreement which (if capable of cure) is not cured within 30 days of written
notice from DRGMSL.
Retail Technology Asia may also terminate the DFI Master Agreement in the event
that (i) DRGMSL becomes insolvent or unable to pay its debts as they fall due; (ii)
DRGMSL commits any material breach of the DFI Master Agreement which (if
capable of cure) is not cured within 30 days of written notice from Retail Technology
Asia.
Each LCA/SOW will be subject to its own termination rights as specified in the
LCA/SOW.
Penalty In the event that any affiliate of Retail Technology Asia (“ OpCo”) fails to perform
the services, provide relevant deliverables or comply with any of its other obligations
in accordance with the timetable or other requirements set out in an SOW (“ JV Non-
Performance”), then upon DRGMSL’s written demand:
(a) Retail Technology Asia shall perform the services and/or other obligations in
question (or procure such performance by an approved sub-contractor) as soon as
commercially practicable; and
(b) Retail Technology Asia shall indemnify DRGMSL and the relevant DFI Group
Member against all losses, liabilities, claims, damages, costs and expenses howsoever
arising out of the JV Non-Performance, provided always that the liability of Retail
Technology Asia herein shall be subject to:
(i) the same limitations, exclusions and caps as applicable to the liability of the
OpCo under the applicable service terms, the applicable LCA and relevant
SOW; and
(ii) any damages already recovered by the relevant DFI Group Member from the
relevant OpCo.
Retail Technology Asia hereby waives any right available to it under any applicable
law which might otherwise require DRGMSL or the relevant DFI Group Member to
proceed against the OpCo prior to exercising its rights set forth herein.
The DFI Master Agreement is legally binding and does not provide any minimum purchase
amount.
In May 2022, Retail Technology Asia bought back 4,358,974 of its shares from DRGML and
canceled those shares. The financial statements of Retail Technology Asia has been consolidated into our
financial statements since its establishment. In 2021, 2022, 2023 and the six months ended June 30, 2024,
our revenue generated from Retail Technology Asia was RMB20.3 million, RMB74.4 million, RMB113.8
million and RMB65.3 million, respectively. In November 2024, DRGML and Dmall HK entered into a
share purchase agreement, pursuant to which DRGML shall transfer, and Dmall HK shall purchase shares
of Retail Technology Asia (the “ Acquisition”). See “History, Reorganization and Corporate Structure—
Our Corporate Development—Recent Expansion in Asia—(1) Retail Technology Asia.” After the
completion of the Acquisition and as of the date of this prospectus, Retail Technology Asia is held by
Dmall HK as to 69.5% and DRGML as to 30.5%, respectively. See “History, Reorganization and Corporate
Structure—Our Corporate Development—Recent Expansion in Asia—(1) Retail Technology Asia.”
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Software Technology Services Framework Agreement with Luosen (China) Investment Co., Ltd.
We entered into a software technology services framework agreement (the “ Software
Technology Services Agreement ”, hereinafter referred to as the “ Framework Agreement ”) with
Luosen (China) Investment Co., Ltd. (“ Luosen”), a convenience store franchise chain company
headquartered in Japan, in December 2022. Pursuant to the Framework Agreement, we undertake to
develop and implement software upon the request of Luosen. The Framework Agreement generally
provides for the obligations, conditions, and representations and warranties between us and Luosen in
furtherance of delivering software technology to Luosen, with a term of one year and including an
annual automatic extension provision for one additional year. We may enter into individual
implementation agreements (each agreement, an “ Implementation Agreement ”) with Luosen under
the Framework Agreement to deliver software as requested by Luosen. Each Implementation
Agreement shall provide for the specific payment terms and performance period for each software
requested.
The Framework Agreement could be terminated if (i) there has been a breach of contract and
the breaching party fails to cure the breach, (ii) either party’s property and assets have been foreclosed
or a judgment against the party has been enforced, (iii) either party undergoes bankruptcy, dissolution,
merger or suspension of relevant business licenses by the government authorities, (iv) either party’s
conduct materially undermines commercial trust and honesty with the other party, or (v) either party
suspends operations or dissolves. Luosen may also terminate the Framework Agreement upon payment
of corresponding fees to us based on progress made in delivering the software.
We entered into the first Implementation Agreement with Luosen in 2022 to implement the first
phase of our collaboration. The following reflects the salient terms of this Implementation Agreement:
Key Terms Descriptions
Service type Retail core service cloud solutions, including services relating to the
design, implementation and maintenance of the Dmall OS system for
Luosen (the “OBP Program”).
Pricing terms Customization, implementation, software development and maintenance
fee charged to Luosen for the design, testing, and delivery of the OBP
Program to Luosen, payable in four installments.
Term and renewal / Service Period Approximately ten months, which could be extended upon mutual
agreement by us and Luosen until the delivery of the OBP Program.
Termination The first Implementation Agreement is legally binding and may be
terminated by mutual agreement upon completion of payment by Luosen
for the corresponding progress made on the development of the OBP
Program. It may also be terminated for force majeure reasons.
Penalty Either party may be liable for penalty if either party breaches the
agreement resulting in damages to the non-breaching party, in the
amount equal to damages incurred by the non-breaching party. Luosen
may be liable for penalty if there is a delay in payment; we may be liable
for penalty if there is a delay in delivering the software. The total amount
of penalty we may be liable to shall not exceed revenue derived from
Luosen for the 12 months immediately preceding the event leading to the
penalty.
The Framework Agreement and the first Implementation Agreement do not provide any
minimum purchase amount.
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CUSTOMERS
We have a close business relationship and have engaged in substantial business transactions
with the Related Parties. Dr. ZHANG Wenzhong, our founder, senior advisor and our Controlling
Shareholder is a prominent leader in the local retail industry in China and founder and a controlling
shareholder of Wumei Technology Group, Inc., the holding company of Wumei Group. Our customers
are primarily retailers and brand owners. Revenues generated from our five largest customers for each
of the years ended December 31, 2021, 2022, 2023 and the six months ended June 30, 2024 accounted
for 79.4%, 83.3%, 87.2% and 89.6%, respectively, of our revenue during the same years/period.
Revenue generated from each of our largest customer for the years ended December 31, 2021, 2022,
2023 and the six months ended June 30, 2024 accounted for 60.0%, 64.0%, 71.9% and 75.3%,
respectively, of our revenue during the same years/period. See “—Our Relationship with the Related
Parties.”
The following table sets forth the details of our five largest customers during each year/period
of the Track Record Period:
Customer
Principal
business
Approximate
years of
relationship
Revenue
amount
(RMB’000)
Revenue
from the
customer
as % of
our
revenue
Nature
of
revenue
Cost and
expenses
paid to
the
customer
(RMB’000)
Cost and
expenses
paid to
the
customer
as % of
our cost
of sales
and
expenses
from
Nature of
purchase
Six Months Period Ended June 30, 2024
Entities
controlled by
Dr. Zhang
(1)(2)
Operates department
stores, supermarkets,
household electrical
appliances, home
appliances and home
decoration materials.
9 years 706,770 75.3% Retail core
service cloud; E-
commerce service
cloud and Others
7,936 0.8% Promotion,
leases and
others
DFI Retail
Group
Operates under a
number of well-known
brands across food,
health and beauty, home
furnishings, restaurants
and other retailing.
5 years 79,725 8.5% Retail core
service cloud
—— —
Chongqing
Department
Store Group
Operates department
stores and supermarkets,
as well as the wholesale
and retail of electrical
appliances. It is also
involved in hotel, food,
electronic device and
labor protection
businesses.
6 years 27,684 2.9% Retail core
service cloud; E-
commerce service
cloud and Others
—— —
Customer A Operates internet
information services;
personal business
services; Internet data
services; network
technology services;
software development;
value-added
telecommunications
business, etc.
1 year 14,764 1.6% Retail core
service cloud
—— —
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Customer
Principal
business
Approximate
years of
relationship
Revenue
amount
(RMB’000)
Revenue
from the
customer
as % of
our
revenue
Nature
of
revenue
Cost and
expenses
paid to
the
customer
(RMB’000)
Cost and
expenses
paid to
the
customer
as % of
our cost
of sales
and
expenses
from
Nature of
purchase
Customer B Operates professional
cleaning, washing and
disinfection
services; housekeeping
services; property
management; landscape
and greening
engineering
construction;
machinery and
equipment rental; urban
greening management;
electronic and
mechanical equipment
maintenance, etc.
1 year 12,052 1.3% Retail core service
cloud
—— —
Year Ended December 31, 2023
Entities
controlled by
Dr. Zhang
(1)(2)
Operates department
stores, supermarkets,
household electrical
appliances, home
appliances and home
decoration materials.
9 years 1,139,183 71.9% Retail core service
cloud and
E-commerce
service cloud
29,353 1.5% Logistics,
promotion,
marketing
services,
leases and
others
DFI Retail
Group
Operates under a
number of well-known
brands across food,
health and beauty,
home furnishings,
restaurants and other
retailing.
5 years 138,986 8.8% Retail core service
cloud
—— —
Chongqing
Department
Store Group
(2)
Operates department
stores and
supermarkets, as well
as the wholesale and
retail of electrical
appliances. It is also
involved in hotel, food,
electronic device and
labor protection
businesses.
6 years 62,781 4.0% Retail core service
cloud;
E-commerce
service cloud and
Others
32 * Promotion
and
Marketing
services
Customer C Operates development,
production, processing,
sales and engineering
services of electronic
products,
communication system
equipment, financial
terminal equipment,
intelligent robots,
security equipment;
research and
development,
production, processing
and sales of medical
devices, etc.
4 years 20,642 1.3% Retail core service
cloud
—— —
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Customer
Principal
business
Approximate
years of
relationship
Revenue
amount
(RMB’000)
Revenue
from the
customer
as % of
our
revenue
Nature
of
revenue
Cost and
expenses
paid to
the
customer
(RMB’000)
Cost and
expenses
paid to
the
customer
as % of
our cost
of sales
and
expenses
from
Nature of
purchase
Customer D(2) Operates
e-commerce,
e-payment,
payment
settlement
and clearing
system
technology
development
6 years 18,758 1.2% Retail core service cloud 20,318 1.0% Payment
processing
costs
Year ended December 31, 2022
Entities
controlled by
Dr. Zhang
(1)(2)
Operates
department
stores,
supermarkets,
household
electrical
appliances,
home
appliances
and home
decoration
materials.
9 years 850,501 64.0% Retail core service cloud
and E-commerce service
cloud
25,796 1.4% Logistics,
promotion,
marketing
services,
leases and
others
Chongqing
Department
Store Group
Operates
department
stores and
supermarkets,
as well as the
wholesale
and retail of
electrical
appliances. It
is also
involved in
hotel, food,
electronic
device and
labor
protection
businesses.
6 years 115,094 8.7% Retail core service cloud
and E-commerce service
cloud
—— —
DFI Retail
Group
(2)
Operates
under a
number of
well-known
brands across
food, health
and beauty,
home
furnishings,
restaurants
and other
retailing.
5 years 95,380 7.2% Retail core service cloud
and E-commerce service
cloud
10
186 0.5% Consultancy
services,
customer
services,
logistic and
others
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Customer
Principal
business
Approximate
years of
relationship
Revenue
amount
(RMB’000)
Revenue
from the
customer
as % of
our
revenue
Nature
of
revenue
Cost and
expenses
paid to
the
customer
(RMB’000)
Cost and
expenses
paid to
the
customer
as % of
our cost
of sales
and
expenses
from
Nature of
purchase
Zhongbai
Holdings
Group Co.,
Ltd
Owns and
operates several
department
stores and
supermarkets.
As well as
operating
pharmaceuticals
manufacturing,
real estate
development,
and property
management
through its
subsidiaries, the
Company also.
7 years 24,996 1.9% Retail core service cloud
and E-commerce service
cloud
—— —
Customer E Operates food
sales; liquor
business; food
internet sales;
supply chain
management
services, etc.
2 years 20,306 1.5% Retail core service cloud — — —
Year ended December 31, 2021
Entities
controlled by
Dr. Zhang
(1)(2)
Operates
department
stores,
supermarkets,
household
electrical
appliances,
home
appliances and
home
decoration
materials.
9 years 508,725 60.0% Retail core service cloud
and E-commerce service
cloud
50,746 2.6% Logistics,
promotion,
marketing
services,
leases and
others
Chongqing
Department
Store Group
(2)
Operates
department
stores and
supermarkets,
as well as the
wholesale and
retail of
electrical
appliances. It is
also involved in
hotel, food,
electronic
device and
labor protection
businesses.
6 years 90,153 10.6% Retail core service cloud
and E-commerce service
cloud
1
610 0.1% Logistic
and others
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Customer
Principal
business
Approximate
years of
relationship
Revenue
amount
(RMB’000)
Revenue
from the
customer
as % of
our
revenue
Nature
of
revenue
Cost and
expenses
paid to
the
customer
(RMB’000)
Cost and
expenses
paid to
the
customer
as % of
our cost
of sales
and
expenses
from
Nature of
purchase
DFI Retail
Group
Operates under
a number of
well-known
brands across
food, health and
beauty, home
furnishings,
restaurants and
other retailing.
5 years 28,198 3.3% Retail core service cloud
and E-commerce service
cloud
—— —
Zhongbai
Holdings
Group Co.,
Ltd
Owns and
operates several
department
stores and
supermarkets.
As well as
operating
pharmaceuticals
manufacturing,
real estate
development,
and property
management
through its
subsidiaries, the
Company also.
7 years 24,083 2.8% Retail core service cloud
and E-commerce service
cloud
—— —
Customer D
(2) Operates
e-commerce,
e-payment,
payment
settlement and
clearing system
technology
development
6 years 22,606 2.7% Retail core service cloud 42,592 2.2% Payment
processing
costs
Note:
* Less than 0.1%.
(1) Entities controlled by Dr. Zhang include Wumei Group, MDL Wholesale Group, Yinchuan Xinhua Group and B&T Entities.
(2) Overlapping customers and suppliers, (i.e. who served as both our customers and suppliers) in a specified year/period.
For further details of our overlapping customers and suppliers, see “—Overlapping Customers
and Suppliers” in this section.
Save as disclosed in “—Our Relationship with the Related Parties,” none of our Directors, their
associates or any of our shareholders (who owned or to the knowledge of Directors had owned more
than 5% of our issued shares) had any interest in any of our five largest clients during the Track Record
Period and up to the Latest Practicable Date. See “Risk Factors—Risks Relating to Our Business and
Industry—We currently have a relatively concentrated customer base with a limited number of major
customers. The loss of one or more of our major customers, a failure to renew our agreements with one
or more of our major customers, or a failure to expand our customer base, could negatively affect our
results of operations and ability to market our services.”
We typically enter into cooperation agreements with our customers, including Related Parties.
The agreements cover various terms including contracting parties, tenure, scope of services, fee rate
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(typically with reference to standardized pricing, but is also frequently customized based on
circumstances and preferences of each customer), and payment terms, among other things. The
following reflects the salient terms of the cooperation agreements:
Key Terms Description
Service Retail core service cloud solutions : provide retail digitalization solution
package containing modules that customers can subscribe.
Pricing With reference to standardized pricing for the relevant services or fee
rates otherwise agreed between the parties, subject to the following
adjustments:
 Potential additional service fees if customization required
 Fee adjustments upon force majeure
We adopt the same pricing policies for Independent Customers, Related
Parties and Other Related Party.
Payment terms settlement period ranging from monthly, quarterly to annually
Term and renewal Ranging from one year to five years, subject to automatically renewal
unless objected by either party.
Termination May be terminated by either party upon 30-day notice under certain
circumstances
SUPPLIERS
Our suppliers primarily include labor outsourcing companies, logistics service providers,
payment processing service providers, AIoT product providers, text messaging service providers, cloud
service providers, customer service providers and marketing support providers. Personnel outsourced
from labor outsourcing companies are used by us to support (i) our AIoT solutions, which involve in-
store personnel deployment in addition to digital services, and (ii) our e-commerce service cloud
solutions where we stimulated traffic for our O2O platform via offline promotions. Amounts paid to
our five largest suppliers for each of the years ended December 31, 2021, 2022, 2023 and the six
months ended June 30, 2024 accounted for 14.8%, 15.4%, 27.7% and 37.4% respectively, of our total
purchases from continuing operations during the same years/period. Amounts paid to our largest
suppliers for each of the years ended December 31, 2021, 2022, 2023 and the six months ended
June 30, 2024 accounted for 6.5%, 7.8%, 15.3% and 20.6% of our total purchases from continuing
operations during the same years/period, respectively.
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The following table sets forth the details of our five largest suppliers during each year/period of
the Track Record Period:
Supplier
Principal
business
Approximate
years of
relationship
Purchase
amount
RMB’000
(excluding
value
added tax)
Purchase
amount
as % of
our total
purchase
Type of products/
services
Revenue
from the
supplier
Revenue
from the
supplier as
% of our
revenue Nature of revenue
Six Months Period Ended June 30, 2024
Supplier A Operates
employment
intermediary
services,
construction labor
subcontracting,
human resources
services, etc.
2 years 198,032 20.6% Outsourcing and
other labor costs
—— —
Supplier B Operates technology
promotion, technical
services, labor
dispatch,
employment
intermediary, foreign
labor cooperation
7 years 94,296 9.8% Outsourcing and
other labor costs
—— —
Supplier C Operates urban
delivery and
transportation
services, road freight
transportation,
general warehousing
services, etc.
4 years 25,035 2.6% Outsourcing and
other labor costs
—— —
Supplier D Operates human
resources services,
labor services,
software outsourcing
services, etc.
1 years 24,943 2.6% Outsourcing and
other labor costs
—— —
Supplier E Operates
value-added
telecommunications
business, software
development,
technical
services, etc.
1 years 17,196 1.8% SMS cost incurred
for OS customers
—— —
Year Ended December 31, 2023
Supplier A Operates
employment
intermediary
services,
construction labor
subcontracting,
human resources
services, etc.
2 years 299,242 15.3% Outsourcing and
other labor costs
—— —
Supplier B Operates technology
promotion, technical
services, labor
dispatch,
employment
intermediary, foreign
labor cooperation
7 years 146,178 7.5% Logistics costs — — —
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Supplier
Principal
business
Approximate
years of
relationship
Purchase
amount
RMB’000
(excluding
value
added tax)
Purchase
amount
as % of
our total
purchase
Type of products/
services
Revenue
from the
supplier
Revenue
from the
supplier as
% of our
revenue Nature of revenue
Supplier F Operates
employment
intermediary
services, labor
dispatch services,
foreign labor
cooperation
2 years 41,769 2.1% Outsourcing and
other labor costs
—— —
Entities
controlled
by Dr.
Zhang
(1)(2)
Operating
department stores,
supermarkets, home
appliances, home
decoration and home
building materials
9 years 29,353 1.5% Logistics,
promotion,
marketing
services, leases
and others
1,139,183 71.9% Retail core service
cloud and
E-commerce
service cloud
Supplier G Operates labor
dispatch, labor
subcontracting, labor
outsourcing, human
resource information
consulting, human
resource services and
management
services, etc.
3 years 25,560 1.3% Outsourcing and
other labor costs
—— —
Year Ended December 31, 2022
Supplier B Operates technology
promotion, technical
services, labor
dispatch,
employment
intermediary, foreign
labor cooperation
7 years 147,677 7.8% Logistics costs — — —
Customer D(2) Operates
e-commerce,
e-payment, technical
development of
payment settlement
and clearing systems
6 years 41,336 2.2% Payment
processing costs
17,559 1.3% Retail core service
cloud and
E-commerce
service cloud
Supplier H(2) Operates research
and development,
production and sale
of electronic price
tags, smart shelves,
self-service cash
registers, intelligent
equipment, computer
hardware and
auxiliary equipment,
and communication
equipment.
2 years 40,372 2.1% AIoT product
costs
84 * Retail core service
cloud
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Supplier
Principal
business
Approximate
years of
relationship
Purchase
amount
RMB’000
(excluding
value
added tax)
Purchase
amount
as % of
our total
purchase
Type of products/
services
Revenue
from the
supplier
Revenue
from the
supplier as
% of our
revenue Nature of revenue
Supplier I(2) Operates mobile
telecommunications,
broadband network
technology services;
computers, software
and auxiliary
equipment,
communications
equipment
5 years 35,710 1.9% Cloud services,
bandwidth and
server custody
fees & SMS
platform service
and customer
services support
fees
6 * Retail core service
cloud
Entities
controlled
by Dr.
Zhang
(1)(2)
Operating
department stores,
supermarkets, home
appliances, home
decoration and home
building materials
9 years 25,796 1.4% Logistics,
promotion,
marketing
services, leases
and others
850,501 64.0% Retail core service
cloud and
E-commerce
service cloud
Year Ended December 31, 2021
Supplier B Operates technology
promotion, technical
services, labor
dispatch,
employment
intermediary, foreign
labor cooperation
7 years 124,959 6.5% Logistics costs — — —
Entities
controlled
by Dr.
Zhang
(1)(2)
Operating
department stores,
supermarkets, home
appliances, home
decoration and home
building materials
9 years 50,746 2.6% Logistics,
promotion,
marketing
services, leases
and others
508,725 60.0% Retail core service
cloud and
E-commerce
service cloud
Customer D(2) Operates
e-commerce,
e-payment, technical
development of
payment settlement
and clearing systems
6 years 42,592 2.2% Payment
processing costs
22,606 2.7% Retail core service
cloud
Supplier I Operates mobile
telecommunications,
broadband network
technology services;
computers, software
and auxiliary
equipment,
communications
equipment
5 years 42,448 2.2% Cloud services,
bandwidth and
server custody
fees & SMS
platform service
and customer
services support
fees
—— —
Supplier J(2) Operates internet
payment, mobile
phone payment, bank
card acceptance,
issuance and
acceptance of
prepaid cards
5 years 24,624 1.3% Payment
processing costs
7,472 0.9% Retail core service
cloud
Note:
* Less than 0.1%.
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(1) Entities controlled by Dr. Zhang included Wumei Group, MDL Wholesale Group, Yinchuan Xinhua Group and B&T Entities.
(2) Overlapping customers and suppliers, (i.e. who served as both our customers and suppliers) in a specified year/period.
We believe we have sufficient alternative suppliers for our business that can provide us with
substitutes of comparable quality and prices. During the Track Record Period, we did not experience
any disruption to our business as a result of any significant shortage or delay in supply of the related
logistics resources.
During the Track Record Period and up to the Latest Practicable Date, none of our Directors,
their associates or any of our shareholders (who owned or to the knowledge of our Directors had
owned more than 5% of our issued shares) had any interest in our five largest suppliers other than
entities controlled by Dr. Zhang.
OVERLAPPING CUSTOMERS AND SUPPLIERS
In 2021, 2022, 2023 and the six months ended June 30, 2024, to the best knowledge and belief
of our Directors, three, two, three and one of our top five customers were also our suppliers in the
respective years. During the same years/periods, our purchases from such customers accounted for
4.9%, 1.9%, 2.5% and 0.8%, respectively, of our total purchases from continuing operations, and our
total sales to such customers accounted for 73.3%, 71.2%, 77.1% and 75.3%, respectively, of our
revenue. During the Track Record Period, the services we provided to such customers mainly included
retail core service cloud, e-commerce service cloud and others, and the nature of our purchases from
them mainly included logistics, promotion, marketing services, leases, payment processing,
consultancy services, customer services, and others. See “—Customers.”
In 2021, 2022, 2023 and the six months ended June 30, 2024, to the best knowledge and belief
of our Directors, three, four, one and nil of our top five suppliers were also our customers in the
respective years. During the same years/periods, our purchases from such suppliers accounted for
6.1%, 7.6%, 1.5% and nil, respectively, of our total purchases from continuing operations and our sales
to these suppliers accounted for 63.6%, 65.3%, 71.9% and nil of our revenue, respectively. See
“—Suppliers.”
According to Frost & Sullivan, it is a market practice in the retail industry that retailers, retail
digitalization solution providers and payment processing suppliers transact with each other as suppliers
and customers. Our Directors confirmed that negotiations of the terms of our purchases from and sales
to these suppliers and customers were conducted separately and as a result, the purchases and sales
were neither connected with nor conditional upon each other.
HEALTH, WORK SAFETY, SOCIAL AND ENVIRONMENTAL MATTERS
We do not operate any production facilities. We are not subject to significant health, work
safety, social or environmental risks. To ensure compliance with applicable laws and regulations, from
time to time, our human resources department would, if necessary, adjust our human resources policies
to accommodate material changes to relevant labor and work 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 in relation to health, work safety, social or
environmental regulations, and have not had any accident, or claim for personal or property damage
made by our employees which had materially and adversely affected our financial condition or
business operations.
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ENVIRONMENTAL, SOCIAL, AND GOVERNANCE
We are dedicated to corporate social responsibilities, environmental awareness, and long-term
sustainable development. Being a socially responsible company is an integral part of our business and
has been our core value since our inception. We have taken various initiatives and practices to promote
our value.
ESG Governance
We plan to further improve the robustness of our ESG governance framework and policies.
Our Board of Directors, more than one-third of whom are independent directors, is responsible
for the setting up, implementation and monitoring of our overall ESG-related policies, strategies, action
plans and mitigating measures, and overseeing the compliance with ESG reporting requirements, to
ensure the effectiveness of our ESG governance and its alignment with our core ESG values.
We expect to establish an ESG team, which comprises of senior management and staff with
insightful understanding of the evolving ESG topics and standards. The ESG team will report to and
communicate with the Board on ESG-related matters, and is expected to assist the Board to (i) engage
with our stakeholders and assess the ESG materiality of certain topics, in order to identify important
subject areas for our Company, (ii) evaluate ESG-related risks and opportunities relating to our
business and industry, (iii) set ESG goals and objectives, both qualitative and quantitative, and
coordinate internally to formulate strategies and mitigating measures with recommended actions to
take, (iv) review, monitor and manage ESG goals, and (v) make appropriate updates to ESG policies,
strategies, action plans and mitigating measures from time to time to reflect the latest development of
our business, industry standards and regulatory requirements. Upon Listing, we will publish an ESG
report annually to comprehensively disclose, discuss and analyze our ESG-related policy
implementation, performance, and other important matters of the respective year.
We also plan to engage with relevant regulatory authorities to seek clarification on any
regulatory changes and requirements on a regular basis.
ESG Risk Identification and Assessment
We actively identify and monitor the actual and potential ESG-related risks to our business and
financial condition. We take these risks into consideration of our overall strategies. We may also
engage independent external advisors to evaluate ESG-related risks and review our existing strategy,
targets, and internal control measures. We intend to implement necessary improvements to mitigate or
transfer any significant ESG-related risks identified. The ESG team will be responsible for the
continual assessment of ESG-related risks on a regular basis and the implementation of our ESG
policies.
Potential climate-related risks and opportunities
We recognize the importance of preserving the natural environment, conserving natural
resources and protecting global ecosystems to create a sustainable society for our future generations.
We endeavor to reduce any negative impact on the environment through our commitment to energy
saving and sustainable development. Since we do not operate in a highly-polluting industry, during the
Track Record Period and up to the Latest Practicable Date, we had not been subject to any fines or
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other penalties due to non-compliance in relation to health, work safety or environment regulations and
had not had any incident, or received any claim for personal or property damage made by our
employees which had materially and adversely affected our financial condition or business operations.
It is also expected that the climate-related risks such as extreme weather conditions would not have a
material impact on our operation in the short, medium and long term. Nonetheless, our management
have been assessing and managing business risks and opportunities as we understand that the adverse
impact of the global climate change may eventually impact our business operations. As such, we have
identified the following ESG-related risks and opportunities over the short, medium and long term that
may impact our business and our responses and measure we may implement to mitigate these risks.
Short-term risks: energy usage leading to higher operational costs
Many businesses in some countries or regions are coping with shortage of energy and a
significant increase in the operational costs associated therewith. The global temperature may further
increase due to the climate change, leading to a higher consumption level of electricity, which may
result in, among others, an increase in our operating costs associated with electricity usage. Our
customers may also have to deal with rising costs due to climate change.
To combat climate-related risks, we have implemented internal policies to reduce our carbon
footprint through a number of measures. See “environmental protection” below for more information.
Middle-term risks: policy changes leading to compliance and reputation risks
We face potential risks related to the overall trend into a lower-carbon economy, which can be
prompted by, for example, changes in climate policies, technology, or market sentiment. The laws and
regulations on environmental protection may change from time to time, and any change may increase
our compliance costs and litigation risks in our operations. If we are in breach of any environmental
laws and regulations, or face any threatened claims in this regard, our business and reputation could be
adversely affected. Additionally, global investors and the general public are increasingly concerned
about environmental performance, climate change and other topics, As a top player in the retail cloud
solution industry, any inaction or slow response to the environmental performance could affect our
reputation among the investors and the general public, which may have a material and adverse impact
on our business, financial performance and results of operation.
Since we do not operate in a highly-polluting industry, we believe our exposure to such middle-
term risks is limited. Nevertheless, to proactively address such risks, we have analyzed climate-related
risks and studied the possible impact on reputation and taken the next steps. Our legal team has also
stayed abreast of the latest laws and regulations on environmental protection and will organize
company-wide training sessions on any changes in the laws and regulations on environmental
protection to proactively address ESG-related and compliance risks.
Long-term risks: extreme weather conditions leading to operational disruptions or loss of assets
The global temperature increase may also result in more unpredictable weather conditions, such
as frequent and severe occurrences of typhoons, hurricanes, droughts, flooding, and increased rainfall.
Climate change may lead to operation instability and higher costs in the long term. Under certain
circumstances, extreme weather conditions may result in suspension of our operations.
During the Track Record Period, we were not aware of any actual climate-related risks or
damages that had adversely affected our business, results of operations and financial condition. Our
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Directors will continue to exert their efforts on environmental protection and mitigating climate-related
risks to our business operations.
Other ESG-related risks and opportunities
In addition to the climate-related risks, we have also identified the following ESG-related risks
and opportunities in relation to our business.
Employee welfare. We face the risk of losing talents and increased recruitment costs if we fail
to promote the welfare of our employees, which may further lead to the risk of losing productivity and
innovation that are essential to the sustainable development of our business in the medium and long
term. We strive to attract and retain talents and cultivate their skills by providing them with reasonable
career development paths, adequate training and fairly evaluating their performance. We also strive to
provide employees with a safe and healthy work environment.
Business Ethics and Anti-Corruption. We face regulatory risks associated with maintaining
good business ethics and avoiding corruption. Outstanding business ethics may promote healthy
competition in the market and yield a positive business image for us, whereas failure to uphold ethical
practices may damage our brand reputation, cause the loss of growth opportunities and may even incur
litigation costs in the short and medium term.
Data Security and Privacy Protection. We face risks of the leakage of data and personal
information of users, which may damage our brand reputation, financial condition and business
operations in the short and medium term. The Dmall OS system has obtained the record certificate of
network system security level protection supervised by the Ministry of Public Security of the People’s
Republic of China on June 15, 2022. We have leveraged our technological capabilities and have
established stringent internal protocols to strengthen data security and privacy protection and mitigate
such risks.
ESG Opportunities and Initiatives. We believe our solutions present significant ESG
opportunities by optimizing energy consumption and promoting sustainable practices in retail stores.
This is an area where we will continue to devote efforts, thereby not only controlling our own
consumption but also helping more enterprises meet their ESG goals. By evaluating the energy usage
of air conditioning, refrigeration, lighting, and electronics, our system visualizes and analyzes
consumption trends, identifying high-energy facilities and generating efficient solutions. This not only
reduces energy waste but also ensures the automatic control of air conditioners for optimal comfort and
real-time monitoring of refrigerators for food safety. Moreover, we champion the reduction of paper
usage through our innovative e-receipt feature and encourage in-store pick-up options while reminding
consumers to bring reusable bags. Our efforts extend to packaging reduction, advocating for minimal
bag usage and the adoption of alternatives like ropes for tying products. These initiatives collectively
enhance our ESG profile, demonstrating a commitment to environmental stewardship, social
responsibility, and governance.
Metrics and Targets
The ESG team will set targets for each important subject area at the beginning of each financial
year in accordance with the disclosure requirements of Appendix C2 to the Listing Rules and other
relevant rules and regulations upon the Listing. The relevant targets on important subject areas will be
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reviewed by the Board on an annual basis to ensure that they remain suitable to the sustainable
development of our business and align with our core ESG values. In order to set measurable, balanced
and consistent targets, we aim to take into account the respective historical levels of the quantitative
metrics in each subject area and consider prudently our business plans and the latest ESG trends of the
industry.
The primary resources we utilize include electricity and water consumed during our ordinary
course of business which does not include consumptions of our leased data centers and servers, as such
consumption is borne directly by the lessor. The table below sets forth our energy and water
consumption for the periods indicated.
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2024
Energy consumption ( MWh) ................................ 6 8 1 8 8 8 9 6 9 3 8 8
Energy consumption per unit of revenue ( MWh/RMB in million ) .... 0.80 0.67 0.61 0.41
Water consumption ( tons) * ................................. 4,044 4,002 6,230 1,763**
Water consumption per unit of revenue ( tons/RMB in million ) * ..... 4.77 3.01 3.93 1.88**
Notes:
* The water usage figures exclude the Chengdu office’s consumption due to shared water metering with other companies in the building,
making individual tracking unfeasible.
** The water usage figure for the six months ended June 30, 2024 also does not include the water consumption of the Shenzhen office due
to the relocation of the Shenzhen office in January 2024.
We intend to keep the level of our energy and water consumption between 80% and 120% of
that in 2023 and the level of our energy and water consumption per unit of revenue between 60% and
100% of that in 2023.
We are committed to fostering a disability-inclusive workplace. The table below sets forth the
number of employees with disabilities during the Track Record Period.
As of December 31, As of June 30,
2021 2022 2023 2024
Number of employees with disabilities
(as percentage of total employees) . . 21 (0.8%) 20 (0.9%) 13 (0.7%) 13 (0.8%)
We encourage employees to host and attend virtual meetings instead of physical ones which we
believe contributes to our ESG practice. By minimizing the need for business travel, virtual meetings
directly reduce our carbon footprint. In addition to environmental benefits, promoting virtual meetings
supports the social aspect of our ESG goals. Virtual meetings enable greater inclusivity and
accessibility, allowing employees from different geographical locations to actively participate in
discussions and decision-making processes. This inclusive approach fosters diversity and equality
within our workforce, aligning with our social responsibility objectives and contributing to a more
equitable and inclusive work environment. The table below sets forth the total duration of employee
participation in online meetings during the Track Record Period.
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Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2024
Total duration of employee
participation in online meetings*
(minutes) (average employee
participation in online
meetings) .................... — 19,877,878 (8,768) 14,924,580 (8,232) 5,356,274 (3,262)
Note:
* Based on meetings participated by employees through the video meeting app subscribed by us. Such information is unavailable for 2021.
Social Responsibility
We are committed to promoting social responsibility and incorporating social values as an
integral part of our business and corporate culture. We believe social responsibility is vital to our
ability to create sustainable value for our stakeholders. We have launched a number of initiatives
aiming to support our employees and the community.
Employee caring
We have been committed to creating a safe, inclusive and equal working environment for our
employees, protecting their rights and interests and facilitating their career development.
We support individual development of our employees by providing them with both on-boarding
and regular trainings and clear promotion channels to support their growth and upward mobility. We also
advocate for balanced working culture through organizing recreational and sports activities from time to
time so that our employees have the opportunity to explore and pursue their hobbies. We conduct
employee assessments regularly and provide promotion as appropriate based on their performance.
We are committed to creating a fair and equal workplace to protect our employee’s rights and
interests promote diversity and inclusivity within our workforce. We have in place internal policies in
compliance with applicable laws and regulations with regard to the employees’ labor rights and
interests. We have also implemented policies requiring that each employee treated equally and fairly in
employment, compensation and promotion, regardless of their background.
We are also deeply committed to fostering a disability-inclusive workplace that not only
accommodates but also appreciates the diverse needs and contributions of all our employees, including
those with disabilities. We encourage open, respectful communication and aim to create a culture
where every employee feels valued and supported.
Public welfare/ Charitable efforts
We actively participate in socially responsible projects which align with our core value and
utilize our technology offerings to serve the community at large. We believe it is our responsibility to
stand out in difficult times and our commitment to society is embodied in our efforts during the
COVID-19 outbreak.
Together with Zhongbai Holdings Group Co., Ltd., we initiated contactless delivery services
and launched service models such as community-based delivery, a model that suits people’s
community group-buying needs, under which residents at the same address band together to bulk
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purchase groceries from retailers. We have served more than 100 communities since the outbreak of
the COVID-19 pandemic. In addition, we partnered with the All-China Women’s Federation to donate
and deliver necessities and other supplies to family members of the front line healthcare workers
during the lockdown.
Corporate Governance
We are committed to fostering a culture of inclusivity and robust decision-making. We have a
board comprising four independent directors and two female directors with multifaceted backgrounds.
This includes directors with substantial experience in running businesses in multinational corporations
across diverse sectors, as well as individuals with a technical and finance background, enriching the
board’s expertise and insights. Recognizing the pivotal role of a diverse board in enhancing internal
governance, we are steadfast in our commitment to prioritizing diversity within our board. This
commitment underscores our belief in the value of varied perspectives and experiences in driving
effective decision-making processes and fostering strategic guidance.
Environmental protection
We monitor environmental, social and climate-related risks and opportunities that may impact
on our business, strategy and financial performance and evaluate the magnitude of resulting impact
over the short, medium and long-term horizon. We take these issues into account when developing our
business strategy and may adjust our strategy in a particular region or city in response to changing
environmental, social and climate-related landscape.
We recognize the importance of contributing to sustainable development for the benefit of our
society and environment. With this in mind, we strive to minimize the impact of our operations on the
environment and promote sustainability and environmental awareness at all levels of our organization.
We are committed to sustainability as part of our corporate strategy, and we strive to cultivate a
sustainable mindset among our employees and work environment. We have conducted a series of
campaigns that aim to reduce waste and carbon emissions of both our company and our employees,
including trash-sorting in all of our offices, water reduction, and carbon emission reduction. We have
established several protocols in our offices in our effort to reduce water usage. We placed signs to
remind our employees to reduce their water usage.
Though we believe our exposure to climate-related risks is limited, we are committed to carbon
mitigation measures and will continue to explore ways to further improve energy efficiency. We ask
our employees to be mindful of the environment when consuming office supplies, such as using
double-sided printing and only printing when necessary. In our offices, we have internal policies for
when and how air conditioners are to be used, based on temperature and time. We do not expect to
incur significant costs for the compliance with applicable environmental protection rules and
regulations in the future.
We also help our retail customers conserve energy through energy management solutions. Our
solutions operating on an integrated energy monitoring system which evaluates the energy
consumption of air conditioning, refrigeration, lighting and electronics in retail stores. Through
visualizing the energy consumption data of retail stores, the system automatically traces high energy
consumption facilities and analyzes the energy consumption trend and generates energy efficient
solutions. Our solutions ultimately help retail stores automatically control air conditioners to keep store
temperature at a comfortable level, monitor the refrigerators in real-time to ensure food safety and
automatically adjust lighting according to the diurnal pattern.
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In addition, we present financial data related to the energy consumption of stores and provide
graded alarms based on the level of consumption of each facility to identify energy inefficiencies in
real time. We also generate weekly report summarizing energy and sustainability data for easy tracking
and prompt recording. As a result, we are able to help our customers improve ESG performance, lower
energy costs and reach their sustainability goals through our integrated solutions. For example, we
stored devices onto more than 1,200 energy meters of retailer B, a leading warehouse-styled
supermarket stores, covering approximately all of the stores. Sensor data is fed through our proprietary
system to produce actionable and benchmarkable insights into retailer B’s energy usage patterns. The
prompt monitor and report of energy use data have helped retailer B form concrete insights into how its
business is performing in terms of energy use and formulate and execute strategies to lower energy
consumption. We also help retailers to reduce paper usage in its day-to-day operations. For example,
we developed the e-receipt feature which allows retailers to issue receipt to consumers through Weixin
or Alipay. We have also digitalized document workflows for retailers. For example, we provide real-
time inventory information that can be accessed by all relevant employees on their phones or tablets,
which reduced the needs for printing. The adoption of our services have helped retailer B reduce paper
spending of more than RMB500,000 on an annual basis for its eight warehouses. We also introduced
digitalized smart tags that are connected to retailers’ computer database through wireless network.
Digitalized smart tags display the latest price information of the items accurately in real time, reducing
the needs for constant changing of paper tags.
We have been a strong advocate for reducing single-use plastics and packaging. We
recommend retailers to provide in-store pick-up options and remind consumers to bring their own
baskets or bags to the store. We also assist retailers to identify opportunities to reduce packaging in
their operations and find viable alternatives. For example, we request retailers to limit the number of
bags used by avoiding over packaging and tying products with ropes when possible. In addition, we are
working on setting standards for the use of shopping bags. In particular, we target to adopt measures to
prohibit the use of over-sized bags for product packaging to reduce waste. We will continue to promote
the use of reusable bags and recommend retailers to provide in-store pick-up options. Many retailers
we collaborate with have also started to use non-woven shopping bags of various sizes, which are
biodegradable and can be easily washed and re-used.
COMPETITION
The retail digitalization solution industry is highly competitive, fast-evolving and fragmented.
We compete with other service providers on, and continually strengthen our advantages in, the
following principal factors, including (i) quality of user experience; (ii) trust and brand recognition;
(iii) data analytics capabilities and technology infrastructure; and (iv) ability to attract and retain
customers.
We primarily compete with traditional ERP provider and retail SaaS provider. Traditional ERP
provider and retail SaaS provider mainly offer retail SaaS services including limited functional module
that partially cover the specific scenarios of local retail. We face competition from our peers in various
aspects, including customer acquisition and retention, technology innovation, product pricing, and
talent pool. However, we believe we can effectively compete against them due to our unique strengths,
including our full-spectrum service capacity and omni-channel coverage of solutions.
Full-spectrum service capacity . Our one-stop Dmall OS system provides full-spectrum service
capacity, covering the full range of operational needs across the local retail business chain. This is in
contrast to traditional software providers who offer point solutions that are siloed and disconnected
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across different systems. Our integrated full-spectrum platform increases overall operational efficiency
for customers, improves their experience, and enhances customer stickiness.
Omni-channel coverage . Additionally, our solutions cover traditional offline stores and online
channels, providing omni-channel coverage that distinguishes us from our peers. Our approach allows
us to aggregate, connect, and analyze transaction information holistically across all retail channels for
retailers to make informed business decisions, improve productivity, and reduce costs. See “Risk
Factors—Risks Relating to Our Business and Industry—We face increasingly intense competition, and
if we fail to compete effectively against current and future competitors, our business and results of
operations may be adversely affected.” For more information of the competitive landscape of our
industries, see “Industry Overview.”
EMPLOYEES
We had a total of 1,642 employees and most of them are located in China as of June 30, 2024.
The following table sets forth the numbers of our full-time employees categorized by function as of
June 30, 2024.
Function Number of Employees Percentage
Sales and marketing ................................................ 1 0 3 6.3%
Research and development .......................................... 9 0 8 55.3%
Operations ....................................................... 4 1 6 25.3%
General and administrative .......................................... 2 1 5 13.1%
Total ........................................................... 1,642 100.0%
Our success depends on our ability to attract, motivate, train and retain qualified personnel. We
adopt high standards in recruitment with strict procedures to ensure the quality of new hires. We use
various methods for our recruitment, including campus recruitment, online recruitment, internal
recommendation and recruitment through headhunter firms or agents, to satisfy our demand for
different types of talents.
We believe we offer our employees competitive compensation packages and an environment
that encourages self-development and creativity. We provide training programs for our employees in
order to enhance their professional and technical skills and understanding of our industry. We design
and offer different training programs for employees at different positions and departments based on
their differing needs. As a result, we have generally been able to attract and retain qualified personnel.
Our employees are not currently represented by any labor union. We believe that we maintain a good
working relationship with our employees, and we have not experienced any work stoppages due to
labor disputes in the past.
As required by regulations in China, we participate in various employee social insurance plans
that are organized by applicable municipal and provincial governments for our PRC-based employees,
including pension, unemployment insurance, childbirth insurance, work-related injury insurance,
medical insurance and housing insurance. We are required under PRC law to make contributions from
time to time to employee benefit plans for our PRC-based employees at specified percentages of the
salaries, bonuses and certain allowances of such employees, up to a maximum amount specified by the
local governments in China. Bonuses are generally discretionary and based in part on employee
performance and in part on the overall performance of our business. We have granted, and plan to
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continue to grant, share-based incentive awards to our employees in the future to incentivize their
contributions to our growth and development.
We enter into standard employment agreements with our employees. We also enter into
standard confidentiality agreements with our senior management in accordance with market practice.
Social Insurance and Housing Provident Fund
According to the Social Insurance Law of the PRC (جand other
relevant regulations, we are required to provide our employees with welfare schemes covering social
insurance. According to the Administrative Regulations on Housing Provident Funds (
၍ଣ
ૢԷ), we are required to make housing provident fund for our employees. During the Track Record
Period, we failed to make contributions to the social insurance and housing provident funds in full
amount as required by the relevant PRC laws and regulations. This non-compliance incident occurred
primarily because of: (i) inadvertent oversight of the relevant PRC laws and regulations; and
(ii) inconsistent interpretation by local authorities in the PRC of the relevant laws.
Under PRC laws and regulations, we might be subject to late fees and fines for not making social
insurance contributions in full amount in a timely manner. If any competent government authority is of
the view that the social insurance payments we made for our employees do not satisfy the requirements
under relevant PRC laws and regulations, we might be ordered to pay the unpaid amount within a certain
period and a late fee that equals to 0.05% of the total unpaid amount per day. For the years ended
December 31, 2021, 2022 and 2023, we recorded provisions of RMB0.4 million, RMB3.9 million, and
RMB0.5 million for social insurance and housing provident fund shortfall, respectively. If we fail to pay
the unpaid amount or the late fee, we may be subject to a fine ranging between one to three times of the
total unpaid amount of the social insurance fund contribution. The aggregate maximum penalty for social
insurance shortfall was RMB0.9 million, RMB9.3 million, and RMB1.1 million for the years ended
December 31, 2021, 2022 and 2023, respectively. The increase in the amount of the shortfall in social
security and housing fund contributions in 2022 reflected Shenzhen Enjoy’s shortfall after our acquisition
of Shenzhen Enjoy in November 2021. If any competent government authority is of the view that the
housing provident funds we made for our employees do not satisfy the requirements under relevant PRC
laws and regulations, we might be ordered to pay the unpaid amount within a certain period. If we fail to
do so upon the expiration of the abovementioned time limit, further application will be made to the
People’s Court for compulsory enforcement. If we were ordered to make payment for inadequate social
insurance and/or housing provident contribution, we will do so promptly and within the prescribed time
period. We have completed rectifying non-compliant issues relating to social security and achieved
compliance in July 2023.
In addition, certain of our PRC subsidiaries and consolidated variable interest entities have
engaged our other PRC operating entities and/or third-party human resources agencies to make social
insurance and housing fund contributions for some of their employees (the “ Third-Party
Arrangement”) in the past. Due to our lack of branch offices or subsidiaries in certain regions, we
were unable to make social security and housing provident fund contributions for those employees
under relevant laws and regulations. As of December 31, 2021, we had 170 employees whose social
security and housing provident fund contributions were made through Third-Party Arrangement,
representing 6.4% of our total employees. The employees subject to the Third-Party Arrangement
mainly came from our acquisition of Shenzhen Enjoy in November 2021. Social security and housing
provident fund contributions made by our other PRC operating entities and/or third-party human
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resources agencies were RMB2.1 million and RMB1.1 million in 2021 and 2022, respectively. As of
December 31, 2022, we had rectified such non-compliance. Such Third-Party Arrangement although
not uncommon in China, was not in strict compliance with relevant PRC laws and regulations. If the
Third-Party Arrangement is challenged by government authorities, we may be deemed to fail to
discharge our obligations in relation to the payment of social insurance and housing provident funds
through our own accounts as an employer, and we may be ordered by the relevant authorities to make
up for employee benefit plans contributions and we may be subject to fines and legal sanctions in
relation to our noncompliance. Nevertheless, uncertainties still exist in relation to whether and/or how
such Third-Party Arrangement would be penalized or fined under the PRC laws and regulations in
practice, we may face uncertainties as to the application and implementation of laws and regulations in
this regard and thus may not be practical for us to estimate the maximum potential fine or penalty
quantitatively. If we were ordered to make such payment, we will do so promptly and within the
prescribed time period. See “Risk Factors—Risks Relating to Doing Business in China—Failure to
fully comply with PRC laws and regulations on various employee benefit plans as required by PRC
regulations may subject us to penalties.”
Dispatched Workers
We also dispatched workers from employment agencies in the PRC during the Track Record
Period. We entered into service agreements with certain independent human resources service
providers to engage dispatched workers. According to the service agreements, the individuals
dispatched by the service providers are employees of such providers. The service providers are
therefore required to bear the costs of salaries, social insurance and housing provident funds or other
employee benefits of these dispatched workers, while we are responsible for paying service fees to
such employment agencies. We have entered into agreements with labor dispatch agencies. We
consistently conduct job training for dispatched workers as per the agreement. We evaluate the
performance of the dispatched workers during their probationary period and monitor for any violations
during their service period, including serious breaches of our rules or behavior that significantly
impacts the work assigned to us. In such instances, we have the option to inform the labor dispatch
agency to terminate the collaboration with the dispatched worker.
During the Track Record Period, the number of dispatched workers engaged by us had
exceeded the 10% regulatory threshold. The non-compliance was the result of a genuine mistake in
interpreting the legal requirements for calculating the percentage of dispatched workers for the branch
office of a subsidiary. According to the Interim Provisions on Labor Dispatch (
֛the
“Interim Provisions”) issued on January 24, 2014 and implemented on March 1, 2014 by the Ministry
of Human Resources and Social Security, the number of the dispatched workers shall not exceed 10%
of the total number of the employees. As a result, we may be ordered to rectify the non-compliance by
entering into written employment contracts with those who are willing to do so among our dispatched
workers, and if we fail to rectify within the time period specified by the labor authority, we might be
subject to a penalty ranging from RMB5,000 to RMB10,000 per dispatched worker. The average
number of our dispatched workers above the regulatory threshold per month was 2 for April and May
2020, 72 between February 2021 to December 2021 and 76 for January and February 2022. We were
in full compliance with laws and regulations on dispatched workers for the rest of the Track Record
Period and up till the Latest Practicable Date. The number of the aggregate maximum penalty of the
Company for the non-compliance relating to dispatched workers is RMB1.0 million. If we were
ordered to make such payment, we will do so promptly and within the prescribed time period. See
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“Risk Factors—Risks Relating to Doing Business in China—Evolving PRC laws and regulations on
labor dispatch may expose us to potential penalties.”
To rectify the situation, we have minimized labor dispatch activities under the labor dispatch
agreements with our employment agents. As of the Latest Practicable Date, the dispatched staff under
the labor dispatch agreements with our PRC subsidiaries accounted for less than 10% of the total
number of the staff thereof. As of the Latest Practicable Date, we continue to deploy a small number of
dispatched workers to regions without established subsidiaries or branches. This helps provide
supplemental after-sales and operational maintenance of system services, ensuring more convenient
customer service and seamless communication with the headquarters. Additionally, opting to deploy
dispatched workers in these regions, rather than establishing physical companies, allows us to
effectively manage operational costs while meeting customer needs. As (i) we had not received any
notice of rectification in relation to our labor dispatch activities from any governmental authorities; and
(ii) we had lowered the percentage of dispatched workers engaged by our PRC subsidiaries to below
the threshold as of the Latest Practicable Date, our PRC Legal Adviser is of the view that the
possibility of us being penalized for our non-compliance of dispatched workers during the Track
Record Period pursuant to the Interim Provisions and the Labor Contract Law is low.
PROPERTIES
Owned Properties
As of the Latest Practicable Date, we owned three properties in Jinan, Shandong, with an
aggregate gross floor area of approximately 584 square meters to support our business operations.
These properties are primarily used for non-property activities as defined under Rule 5.01(2) of the
Listing Rules. The following table sets forth a summary of the properties owned by our Group in the
PRC as of the Latest Practicable Date:
Location Usage
Approximate gross floor
area (sq.m)
Jinan, Shandong ....................... Commercial Business 509
Jinan, Shandong ....................... Garage 38
Jinan, Shandong ....................... Garage 37
Total 584
Our Directors confirmed that no single property interest that forms part of non-property
activities has a carrying amount of 15% or more and no single property interest that forms part of
property activities has a carrying amount of 1% or more, of the total assets. Accordingly, we are not
required by Chapter 5 of the Listing Rules to value or include in this document any valuation report of
our other property interests, and, pursuant to section 6(2) of the Companies Ordinance (Exemption of
Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the Laws of
Hong Kong), this document is exempted from compliance with the requirements of section 342(1)(b)
of the Companies (Miscellaneous Provisions) Ordinance and paragraph 34(2) of the Third Schedule to
the Companies (Miscellaneous Provisions) Ordinance.
Leased Properties
Leased properties in the Chinese mainland
Our corporate headquarters is located in Beijing, China, where we lease office space with an
area of approximately 3,719.76 square meters. We generally make rental payments on a monthly,
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quarterly or semi-annual basis. In addition, as of the Latest Practicable Date, we also leased properties
in seven other cities in the Chinese mainland with a total gross floor area of approximately 6,472.04
square meters. The properties we lease are mainly used as office space. We believe that our existing
facilities are generally adequate to meet our current needs, but we expect to seek additional space as
needed to accommodate future growth.
Title Defects of Leased Properties
As of the Latest Practicable Date, one of our leased properties in the Chinese mainland with an
aggregate gross floor area of approximately 392.93 square meters were subject to potential title defects,
representing approximately 3.9% of the total gross floor area of our leased properties in the Chinese
mainland. The lessors of one of our leased properties had not provided us with the relevant real estate
registration certificates for the leased properties or proof of authorizations from the property owners to
sublease the properties to us. Such non-compliance occurred mainly as a result of lessors’ misplaced
documentations and we have communicated with lessors and will continue to urge them to take
measures to procure replacement of relevant documents and certificates. During the Track Record
Period and up to the Latest Practicable Date, we had not encountered any safety issues or disputes with
respect to these defective leased properties. Our lessors’ failure to provide the relevant real estate
registration certificates for the properties we leased or proof of authorizations from the property owners
to sublease the properties to us does not result in any discount on the rents we contracted to pay. Based
on our experience and knowledge, proper real estate registration certificates or proof of authorizations
does not result in any material premium on the rents charged by the lessors.
As advised by our PRC Legal Adviser, without real estate registration 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 leases. In addition, if the lessors do not have the
requisite rights to lease these defective leased properties, the relevant lease agreements may be deemed
invalid, and as a result we may be required to vacate these defective leased properties and relocate. See
“Risk Factors—Risks Relating to Our Business and Industry—Our use of some leased properties could
be challenged by third parties or government authorities, which may cause interruptions to our business
operations.” If the relevant PRC subsidiaries renting such properties were not able to continue using
such properties due to the title defects, we believe we are able to identify alternative leasing of other
suitable properties in the same locality in a timely manner. Our Directors believe that the costs of the
relocation would be negligible. Additionally, it is the lessors’ responsibility to obtain the title
certificates to enter into the leases, and, as a tenant, we are unable to obtain the relevant certificates on
behalf of the lessors and will not be subject to any administrative punishment or penalties in this
regard. These statutory protections significantly mitigate our risks arising from these defective leased
properties due to claims for vacation from the legal owners of the properties. See “Risk Factors—Risks
Relating to Our Business and Industry—Our use of some leased properties could be challenged by
third parties or government authorities, which may cause interruptions to our business operations.”
Having considered the foregoing, our Directors believe that these title defects described above
will not, individually or in the aggregate, materially affect our business and results of operation, on the
grounds that: (i) during the Track Record Period and up to the Latest Practicable Date, to the best
knowledge of our Directors, our leases with respect to these defective leased properties had never been
challenged by any third parties, (ii) given that a substantial portion of our landlords are sizeable
commercial real estate developers, we believe the risk that we are required to vacate and relocate from
these premises is remote, (iii) we are able to find alternative premises for relocation in a timely manner
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and the relocation is not expected be costly, and (iv) we have enhanced our internal control measures
and procedures to prevent the leasing of properties with title defects. If the relevant PRC subsidiaries
renting such properties were not able to continue using such properties due to the title defects, we
believe we are able to identify alternative leasing of other suitable properties in the same locality in a
timely manner. Our Directors believe that the costs of the relocation would be not material and there
would be no material impact on us if we are forced to relocate.
Lease Registration
As of the Latest Practicable Date, seven out of our 12 leased properties in the PRC have not
been registered or filed with the relevant land and real estate administration bureaus in the PRC. These
properties are used for office space and have an aggregate gross floor area of approximately 5,130.7
square meters, accounting for approximately 50.3% of the total gross floor area of our leased properties
in the PRC. Our lessors’ failure to provide the necessary documents for us to register the leases does
not result in any reduction in rent. Similarly, in our experience, the proper registration of leases does
not result in any material increase in the rent charged by the relevant lessor.
As advised by our PRC Legal Adviser, failure to complete the registration and filing of lease
agreements will not affect the validity of the lease agreements or result in us being required to vacate
the leased properties. However, the relevant PRC authorities may impose a fine ranging from
RMB1,000 to RMB10,000 for each unregistered lease. The aggregate maximum penalty of the
Company for the non-compliance relating to the registration and filing of lease agreements is
RMB70,000 based on agreements currently in force. If we were ordered to make such payment, we
will do so promptly and within the prescribed time period.
Having considered the foregoing, our Directors believe that the non-registrations of leases
described above will not, individually or in the aggregate, materially affect our business and results of
operation, on the grounds that: (i) no penalty had been imposed on us for our failure to register and file
the relevant lease agreements during the Track Record Period and up to the Latest Practicable Date,
(ii) if the lease registration can be completed in accordance with relevant laws and regulations within a
reasonable time from the date of application or the prescribed time limit ordered by the competent
governmental authorities, the risk of governmental authorities imposing a material penalty on us with
respect to these leased properties is remote, (iii) we have designated a dedicated team to work on the
lease registration by proactively communicating with the lessors in order to obtain their cooperation
and collect the application documents for the relevant lease registration, and we have submitted the
application documents for lease registration where those documents are complete, and (iv) we have
enhanced our internal control measures and procedures to prevent re-occurrence of such
non-compliance incidents.
Leased Properties outside the Chinese mainland
As of the Latest Practicable Date, we leased approximately 419 square meters for office space
in Hong Kong and approximately 121 square meters of office space in Hungary. We believe the
premises we leased in Hong Kong and Hungary are sufficient to meet our business needs.
RISK MANAGEMENT AND INTERNAL CONTROL
We have devoted ourselves to establishing and maintaining risk management and internal
control systems consisting of policies and procedures that we consider to be appropriate for our
business operations, and we are dedicated to continuously improving these systems.
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We have adopted and implemented comprehensive risk management policies in various aspects
of our business operations, such as financial reporting, information system, internal control, human
resources and investment management.
Financial Reporting Risk Management
We have in place a set of accounting policies in connection with our financial reporting risk
management, such as financial reporting management policies, budget management policies, treasury
management policies, financial statements preparation policies and finance department and staff
management policies. We have various procedures and information technology systems in place to
implement our accounting policies, and our finance department reviews our management accounts
based on such procedures.
Internal Control Risk Management
We have designed and adopted strict internal procedures to ensure the compliance of our
business operations with the relevant rules and regulations. Our legal, finance and other departments
work closely together to: (a) perform risk assessments and give advice on risk management strategies;
(b) improve business process efficiency and monitor internal control effectiveness; and (c) promote
risk awareness throughout our company.
In accordance with our internal procedures, our in-house legal and finance departments review
due diligence materials and contracts of suppliers and customers, and work with relevant business units
to obtain and maintain requisite governmental approvals or consents, including preparing and
submitting all necessary documents for filing with relevant government authorities within the
prescribed regulatory timelines.
We continually review the implementation of our risk management policies and measures to
ensure our policies and implementation are effective and sufficient.
Audit Committee Experience and Qualification and Board Oversight
We have established an audit committee to monitor the implementation of our risk management
policies across our company on an ongoing basis to ensure that our internal control system is effective
in identifying, managing and mitigating risks involved in our business operations.
The audit committee consists of three members, namely Ms. CAI Lin, Mr. LI Wei and
Mr. HOU Yang. Ms. CAI Lin is the chairperson of the audit committee. For the professional
qualifications and experiences of the members of our audit committee, see “Directors and Senior
Management.”
We also maintain an internal audit department which is responsible for reviewing the
effectiveness of internal controls and reporting to the audit committee and senior management on any
issues identified. Our internal audit department members hold regular meetings with management to
discuss any internal control issues we face and the corresponding measures to implement toward
resolving such issues. The internal audit department reports to the audit committee to ensure that any
major issues identified are channeled to the committee on a timely basis. The audit committee then
discusses the issues and reports to the board of directors, if necessary.
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Ongoing Measures to Monitor the Implementation of Risk Management Policies
Our audit committee, internal audit department and senior management together monitor the
implementation of our risk management policies on an ongoing basis to ensure our policies and
implementation are effective and sufficient.
Personal Information Protection and Data Security
We take protection of personal information and data security very seriously. We follow strictly
the relevant laws and regulations, including the recently promulgated Cyber Data Security Regulations
(
ၣഖᅰኽτΌ၍ଣૢԷ), in collecting the personal information of our users, and we conduct
regular self-inspections and correct any irregularities found to ensure our maximum protection of each
user’s personal information. For details on our compliance with PRC laws on protection of personal
information, see “Risk Factors—Risks Relating to Our Business and Industry—Because we receive,
store, and process data, some of which contain sensitive personal information, we face concerns over
the collection, improper use or disclosure of personal information, which could discourage current and
potential users from using our services and technology platforms, damage our reputation, face
regulatory scrutiny, and in turn materially and adversely affect our business, financial condition and
results of operations.” With respect to data security, we have leveraged our technological capabilities
to establish safe data transmission channels to ensure the security of data transmission between our
platform and the users. To avoid data leakage, we have established stringent internal protocols under
which we grant classified access to confidential client data only to employees with strictly defined and
layered access authority. In the meantime, we encrypt sensitive personal information including but not
limited to the user names, addresses, and phone numbers of our users stored in our database to prevent
data theft or leakage caused by possible security breaches. Additionally, we provide regular trainings
about data security to our relevant employees.
Our PRC legal adviser in respect of PRC data compliance is of the view that, based on the
service agreements reached with our customers, we process consumer personal information entrusted
by customers only within the scope stipulated in these agreements, and our practice complies with
Article 21 of the Personal Information Protection Law. Furthermore, we have implemented
corresponding compliance management measures to ensure the secure protection of personal
information and data. Therefore, our PRC legal adviser in respect of PRC data compliance is of the
view that during the Track Record Period and up to the Latest Practicable Date, we had complied with
the applicable laws and regulations regarding personal information privacy and data security in all
material aspects.
Regulatory Compliance and Legal Risk Management
Compliance risk refers to the risk of being subject to legal and regulatory sanctions, and the risk
of major financial and reputational losses as a result of our failure to comply with relevant laws,
regulations, rules and guidelines. Meanwhile, legal risk refers to the risk of legal liability arising from
violations of laws and regulations, breaches of contracts, infringements on the legal rights of others or
otherwise in connection with any contract or business activity in which we are involved.
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. We maintain internal procedures to ensure that we have obtained all material
requisite licenses, permits and approvals for our business operation, and our legal team conduct regular
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reviews to monitor the status and effectiveness of those licenses and approvals. Our in-house legal
department works with relevant business departments to obtain requisite governmental approvals or
consents, including preparing and submitting all necessary documents for filing with relevant
government authorities within the prescribed regulatory timelines.
INSURANCE
We maintain insurance policies that are required under PRC laws and regulations as well as
based on our assessment of our operational needs and industry practice. We do not maintain business
interruption insurance or key-man insurance. We also do not maintain insurance policies covering
damages to our network infrastructures or information technology systems. We believe the insurance
coverage we maintain is in line with the industry. During the Track Record Period, we did not make
any material insurance claims in relation to our business. For risk factors relating to our insurance
policies, 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.”
LEGAL PROCEEDINGS AND COMPLIANCE
Legal Proceedings
From time to time, we may become involved in legal proceedings in the ordinary course of our
business. During the Track Record Period, a subsidiary of our Company were involved in a contractual
dispute lawsuit with a mobile phone supplier of our Company’s legacy commodity business. The
mobile phone supplier requested our Company to compensate them for payables and interest of
RMB56,667,100 and certain disputed assets were frozen by the court from the subsidiary’s bank
account. In September 2022, the court dismissed the case based on the findings of a court-
commissioned forensic appraisal that the seal used in the evidentiary documents presented in the
lawsuit did not match with our subsidiary’s authentic company seal, and disputed assets were unfrozen
in October 2022. None of our shareholders, directors or senior management or any of their associates
were involved in the seal’s forgery leading up to the lawsuit.
During the Track Record Period, a subsidiary of our Company was involved in a contractual
dispute where criminal investigation was brought by relevant authority against a supplier of the
Company for undelivered goods. In May 2020, Dmall Life Digital entered into a merchandise purchase
and sale agreement (the “ Purchase and Sale Agreement”) with a certain supplier (“ Supplier X”).
Under the Purchase and Sale Agreement, Dmall Life Digital agreed to buy and Supplier X agreed to
sell cellphones pursuant to the procedures set forth in the agreement. In June 2020, Dmall Life Digital
and Supplier X entered into a safekeeping agreement related to the merchandise purchase and sale
agreement (the “ Safekeeping Agreement”). Under the Safekeeping Agreement, Supplier X agreed to
keep within its custody cellphones purchased under the Purchase and Sale Agreement by Dmall Life
Digital. In June 2020, we made a payment amount of RMB43.6 million for a cellphone order to
Supplier X. When making the payment for the cellphone order to Supplier X, we: (i) did not implement
proper procedures for verifying delivery receipt of the cellphone order. We did not arrange for a
designated personnel to receive and verify the status of the cellphones, and relied on the verification
provided by a third party; (ii) did not establish procedures to verify the identity of our suppliers’
authorized contacts and did not require proper authorization from such contacts; and (iii) did not
establish procedures to review and verify the bank account information of our transaction
counterparties. We did not receive the cellphones. As a result, we reported the incident to the Beijing
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Municipal Public Security Bureau in July 2020, and we made a provision in the same year for bad
debts since such loss was determined to be probable. The incident was still under investigation as of
the Latest Practicable Date.
Subsequently, our Company conducted an internal review of the internal control mechanisms
and adopted corresponding internal control measures. For instance, the procurement department shall
obtain and verify copies of suppliers’ business licenses and authorization letters to the contacts before
further arrangements. The purchase demand department and procurement department are responsible
for the inspection and acceptance of goods when purchased goods arrives (or services are provided).
During the inspection process, we collect documents from the supplier that describe the details of the
orders and that certify the quality of the goods delivered. These documents, together with our own
order receipt form, are recorded in our inventory management system by our designated inventory
management personnel for further periodic inspection and verification. The finance department shall
verify the performance of each contract and corresponding bank account information before releasing
payment to suppliers strictly in accordance with the details of our contracts with our suppliers. Having
taken into account specific measures adopted by us to prevent inadequate verification during our
procurement process and resources devoted to implement and monitor the effectiveness of such
measures, our Directors are of the view that the above measures are effective and adequate in
safeguarding our procurement process. Based on (i) the discussion with the management of our
Company about the nature and reasons for the non-compliance incidents, the internal review of the
internal control mechanisms undertaken and the corresponding internal control measures adopted by
our Group; (ii) the discussion with the internal control consultant on the rectification measures
recommended by them; and (iii) our Directors’ view mentioned above, nothing has come to the Joint
Sponsors’ attention which would cause them to disagree with our Directors’ view above in relation to
the sufficiency of the rectifications and new internal control measures. For details, please see “Risk
Factors—Risks Relating to our Business and Industry—If we fail to implement and maintain an
effective system of internal controls, we may be unable to accurately report our results of operations,
meet our reporting obligations or prevent fraud.”
During the Track Record Period and up to the Latest Practicable Date, we had not been
involved in any actual or pending legal, arbitration or administrative proceedings (including any
bankruptcy or receivership proceedings) that we believe would have a material adverse effect on our
business, results of operations, financial condition or reputation and compliance.
Compliance
During the Track Record Period and up to the Latest Practicable Date, having taken into
account the Restructuring, our Directors are of the view that we had not been and were not involved in
any systemic or material non-compliance incidents that have led to fines, enforcement actions or other
penalties that could, individually or in the aggregate, have a material adverse effect on our business,
financial condition and results of operations.
We have developed and implemented a set of internal control measures to prevent the
recurrence of non-compliance with regards to employee benefits, social insurance and housing fund
contributions, dispatched workers and lease registration.
In rectifying and preventing non-compliance issues relating to social security and housing fund
contributions, we have adopted our corporate Compensation and Benefits Policy (the “ C&B Policy”),
which requires our PRC subsidiaries to use the appropriate contracting entity to make the social
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BUSINESS
security and housing fund contributions for the corresponding contracting employees in accordance
with and in the amount provided by the relevant local government authorities. Our human resources
department monitors and reviews the implementation of the C&B Policy within each of our entities on
a quarterly basis. This review covers compliance with social security policy, amounts and ledger of
social security and housing fund contributions, employees for whom such contributions were made,
and record-keeping. The human resources department is also responsible for internally reporting and
monitoring the rectification of any non-compliance issues. A designated social insurance coordinator is
responsible for calculating the amount of social insurance contributions and conducting inspections on
compliance.
Additionally, our Company established the Compliance Management Policy (the “ Compliance
Policy”) and implemented accordingly. The Compliance Policy states that our human resources
department is responsible for creating designated position for conducting inspections on compliance
pursuant to relevant labor laws and regulations as well as employee compensation and benefits laws
and regulations. The human resources department is also tasked with adjusting and improving our
internal control mechanisms on employee benefits and compensation according to any changes in the
relevant laws and regulations.
Under the Compliance Policy, the designated position created by our human resources
department for compliance-related inspections is also responsible for compliance issues related to labor
dispatch according to the relevant laws and regulations. A number of other internal control policies
within our Company governs our labor dispatch compliance, including our Procurement Management
Policy (the “Procurement Policy”), our Contract Management Policy (the “ Contract Policy”) and our
Dispatch Labor Management Policy (the “ Dispatch Labor Policy ”). The Procurement Policy
establishes our internal procedure for the request and quotation of dispatch labor needed for our
operations. The Contract Policy requires that our contracts for dispatch labor be reviewed and
approved by our legal counsel, human resources department and other authorized individuals before
signing. Our Dispatch Labor Policy establishes protocols for the hiring, authorization and departure of
our dispatch labor contract workers.
With regard to lease registration, we have also enhanced our internal control measures and
procedures to prevent the re-occurrence of such non-compliance incidents. For example, when our
corporate affairs department initiates the signing of the lease contract, we require the department to
obtain the lessors’ asset ownership certificate as a supporting document. Our corporate affairs
department is also responsible for the lease registration. We also designate personnel to proactively
communicate with the lessors in order to obtain their cooperation and collect the application documents
for the relevant lease registration, and we have submitted the application documents for lease
registration where those documents are complete. We will also implement site selection policies,
pursuant to which our legal department shall also review the lease agreements.
Having taken into account specific measures adopted our Company to prevent the recurrence of
non-compliances and resources devoted to implement and monitor the effectiveness of such measures,
our Directors are of the view that, and the Joint Sponsors concur, the above measures are effective and
adequate in preventing non-compliance with respect to social insurance and housing provident funds,
dispatched workers and lease registration.
Having taken into account (i) the nature of and all the facts and circumstances leading to the
non-compliance incidents, (ii) the internal control measures adopted and enhanced by our Group to
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minimize the recurrence of the historical non-compliance incidents, (iii) our PRC Legal Adviser’s view
that the possibility of our Company being penalized for its non-compliance of dispatched workers
during the Track Record Period is low; (iv) provisions had been recorded for social insurance and
housing provident fund shortfall; (v) none of the non-compliance incidents was originated from any
repeated failure by our Directors to operate the business in a compliant manner; (vi) the past instances
of non-compliance incidents are not related to the character of our Directors and do not raise any
serious concern on the integrity of them as such incidents did not involve any fraudulent or dishonest
acts by our Directors; (vii) we were not aware of any material complaints filed against us nor involved
in any material labor disputes with respect to social insurance and housing provident funds, dispatched
workers or lease registration during the Track Record Period and up to the Latest Practicable Date, and
(viii) as of the Latest Practicable Date, we had not received any notification from the relevant PRC
authorities requiring us to pay for the shortfalls or any overdue charges with respect to social insurance
and housing provident funds or rectify non-compliance relating to social insurance and housing
provident funds, dispatched workers or lease registration, our Directors are of the view, and the Joint
Sponsors concur, that we had not been and were not involved in any systemic or material non-
compliance incidents pursuant to Chapter 1.2D of the Guide For New Listing Applicants issued by the
Stock Exchange during the Track Record Period.
LICENSES AND PERMITS
As of the Latest Practicable Date, we had obtained all requisite licenses, permits, approvals,
and certificates from and completed filings with the relevant government authorities that are material
for our business operations. We had complied with all relevant applicable PRC Laws relating to the
required permits and licenses in all material respects as of the Latest Practicable Date. All of our
licenses which have expiration dates are valid for a fixed period and subject to renewal upon expiry.
Our Directors do not expect any impediment in the renewal of our licenses.
The following table sets forth a summary of the material licenses and permits that we have
obtained for our business operations during the Track Record Period. As of the date of this document,
we do not possess any of the licenses or permits listed in the following table due to the disposal of
Dmall Fresh (Shenzhen) and the Restructuring. We do not believe our current operation necessitates
any such licenses or permits.
License/Permit Holder
Issuing
Authority Grant Dates
Expiration
Date Description
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Beijing)(1)
Ministry of
Industry and
Information
Technology of
the PRC
November 22,
2022
November 22,
2027
Information services
(limited to Internet
information services)
Online data processing
and transaction
processing services
(limited to transactional
e-commerce)
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Beijing)(1)
Beijing
Communication
Administration
August 14,
2019
March 2,
2021
Information services
(limited to Internet
information services)
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BUSINESS
License/Permit Holder
Issuing
Authority
Grant
Dates
Expiration
Date Description
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Beijing)(1)
Beijing
Communication
Administration
March 5,
2021
March 5,
2026
Information services
(limited to Internet
information services)
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Beijing)(1)
Beijing
Communication
Administration
August 14,
2019
November 27,
2023
Online data processing
and transaction
processing services
(limited to transactional
e-commerce)
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Beijing)(1)
Ministry of
Industry and
Information
Technology of
the PRC
July 19,
2023
November 22,
2027
Online data processing
and transaction
processing services
(limited to transactional
e-commerce) Information
services (limited to
Internet information
services) Information
services (excluding
Internet information
services)
Online Food Third-Party
Platform Provider Filing
Information Chart (
ၣഖ
٫
ڌࢹڦࣩ
)
Dmall Fresh
(Beijing)(1)
Beijing
Municipal
Medical
Products
Administration
August 28,
2019
——
Third Party Platform
Provider for Medical
Equipment Online
Trading Services Filing
Certificate (
ᔼᐕኜ૛ၣ
ਕୋɧ˙̨̻
ኯᗇ
)
Dmall Fresh
(Beijing)(1)
Beijing
Municipal
Medical
Products
Administration
August 4,
2022
——
Third Party Platform
Provider for Medical
Equipment Online
Trading Services Filing
Certificate (
ᔼᐕኜ૛ၣ
ਕୋɧ˙̨̻
ኯᗇ
)
Dmall Fresh
(Beijing)(1)
Beijing
Municipal
Medical
Products
Administration
June 5,
2019
——
Value-added
Telecommunications
Business Operating
License (
ุਕ
຾ᐄ஢̙ᗇ)
Dmall Fresh
(Shenzhen)(2)
Guangdong
Communication
Administration
May 22,
2020
May 22, 2025 Information services
(limited to Internet
information services)
Online data processing
and transaction
processing services
(limited to transactional
e-commerce)
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BUSINESS
License/Permit Holder
Issuing
Authority
Grant
Dates
Expiration
Date Description
Third Party Platform
Provider for Food Online
Trading Filing Certificate
(
ୋɧ˙̨̻
ኯᗇ)
Dmall Fresh
(Shenzhen)(2)
/ June 23,
2020
——
Third Party Platform
Provider for Medical
Equipment Online
Trading Services Filing
Certificate (
ᔼᐕኜ૛ၣഖ
ࣩ
ኯᗇ
)
Dmall Fresh
(Shenzhen)(2)
Guangdong
Municipal
Medical
Products
Administration
August 31,
2020
——
Notes:
(1) Dmall Fresh (Beijing) is no longer a consolidated affiliated entity of our Group after the Restructuring.
(2) Dmall Fresh (Shenzhen) was disposed of on August 30, 2023.
AWARDS AND RECOGNITION
During the Track Record Period, we have received recognition for the quality and popularity of
our products and services. Some of the significant awards and recognition that we or our senior
management have received are set forth below:
No.
Award
Year Award Name Awarding Institutions
1 2024 21st Asia Pacific Retailer’s Convention &
Exhibition - Most Innovative Retail Concept Award
ୋ21֣“ึ”- ௰Գ௴อᆤ
Federation of Asia-Pacific Retailers
Associations
ԭ˄ཧਯਠ՘ึᑌຑ
2 2024 World Unicorn Enterprise Development Report
2024 (229th; Top position for digital operations
category for enterprises)
జѓ2024(ᐼ࿮ఊୋ 229Τ;
Άุᅰοᐄ༶ᒄ༸ୋɓΤ)
Great Wall Strategy Consultants
ഄଫፔ༔
3 2023 CCF Science and Technology Achievement Award
(Third Prize for Scientific and Technological
Progress)
ᆤ -ҦආӉɧഃᆤ
Chinese Computer Society
ၑዚኪึ
4 2023 Top 10 SaaS Service Innovation Cases Chinese
Academy of Sciences “Internet Weekly”
৫ʝ䝀᠒մ̊
CASS Informatization Research
Center
Ӻʕː
5 2023 Beijing Digitalization Service Provider
ਕਠ
Beijing Software and Information
Service Industry Association
ਕุ՘ึ
6 2023 Beijing Digitalization Innovative Solution
ࣩ
Beijing Software and Information
Service Industry Association
7 2022 China Federation of Logistics & Procurement
Science and Technology Progress Award (First
Prize)
ҦආӉᆤɓഃᆤ
China Federation of Logistics &
Procurement
ၾમᒅᑌΥึ
8 2022 2022 Top 100 New Enterprises (95th)
2022ྼ᜗Άุ100੶࿮ఊ95З
China Enterprise Evaluation
Association
ʕ਷Άุ൙ᄆ՘ึ
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BUSINESS
No.
Award
Year Award Name Awarding Institutions
9 2022 2022 Retail Supply Chain Best Case Studies
2022Էණ
China Chain Store & Franchise
Association
ʕ਷ஹᕁ຾ᐄ՘ึ
10 2022 Digital Initiative of the Year - China
ࣩ
Retail Asia Awards Committee
11 2022 Hurun Global Unicorn List (451st)
ᆗΌଢዹԉᖕ࿮ఊ451
Hurun Report
ᆗ
12 2022 2022 Top Ten Outstanding Digital Economy Cases
2022Է
China Internet Week
ʝᑌၣ඄̊
13 2021 Service Industry Technology and Innovation Award
First Prize & Third Prize
Ҧ௴อᆤɓഃᆤ & ɧഃᆤ
China General Chamber Of
Commerce
ʕ਷ਠุᑌΥึ
14 2021 2021 China’s New Technologies Top 100
2021Ҧ100੶
eNet & Ciweek
eNet
ԋਗɢʿʝᑌၣ඄̊
15 2021 2021 Asian Retail Awards - Digital Initiative of the
Year
2021ཧਯɽᆤ -ྌ
Retail Asia
ཧਯ
16 2021 2021 Retail Digital Transformation and Technology
Application Best Practice Case
Է
China Chain Store & Franchise
Association
ʕ਷ஹᕁ຾ᐄ՘ึ
17 2021 2021 New Retail Technology Service Provider
Innovation Ranking
2021ਕਠ௴อરБ࿮
China Internet Week
ʝᑌၣ඄̊
18 2021 China Retail Supply Chain Best Practice Cases
Է
China Chain Store & Franchise
Association
ʕ਷ஹᕁ຾ᐄ՘ึ
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REGULATIONS
REGULATIONS ON FOREIGN INVESTMENT RESTRICTIONS
Investment activities in the PRC by foreign investors are principally governed by the Catalog of
Encouraged Industries for Foreign Investment ( ོᎸ̮ਠҳ༟ପุͦ፽) (the “ Encouraged
Catalog”), and the Special Administrative Measures for Entrance of Foreign Investment (Negative
List)૶ఊthe “Negative List”, which are promulgated
and amended from time to time by the Ministry of Commerce (the “ MOFCOM”) and the NDRC, and
together with the Foreign Investment Law and its respective implementation rules and ancillary
regulations. The Encouraged Catalog and the Negative List lay out the basic framework for foreign
investments in China, classifying businesses into three categories regarding foreign investments:
“encouraged,” “restricted” and “prohibited”. Industries not listed in the Encouraged Catalog or the
Negative List are generally deemed as falling into a fourth category, “permitted” unless specifically
restricted by other PRC laws.
On December 27, 2020, the MOFCOM and the NDRC released the latest Encouraged Catalog,
which was latest amended on October 26, 2022 and would be effected on January 1, 2023. On
September 8, 2024, the MOFCOM and the NDRC promulgated the latest Negative List (the “ 2024
Negative List”), which became effective on November 1, 2024.
On March 15, 2019, the National People’s Congress (the “ NPC”), approved the PRC Foreign
Investment Law (
) (the “Foreign Investment Law ”), which took effect
on January 1, 2020 and replaced three then existing laws on foreign investments in China, namely, the
PRC Sino-Foreign Equity Joint Venture Law (
), the PRC Sino-
Foreign Cooperative Joint Venture Law () and the PRC
Wholly Foreign-owned Enterprise Law (), together with their respective
implementing rules. The Foreign Investment Law embodies an expected PRC regulatory trend to
rationalize its foreign investment regulatory regime in line with prevailing international practice and
the legislative efforts to unify the corporate legal requirements for both foreign and domestic invested
enterprises in China. The Foreign Investment Law establishes the basic framework for foreign
investments in view of fair competition and investment protection.
Pursuant to the Foreign Investment Law, “foreign investments” refer to investments by foreign
investors (including foreign natural persons, foreign enterprises or other foreign organizations) directly
or indirectly in the PRC, which include any of the following circumstances: (i) foreign investors setting
up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors
obtaining shares, equity interests, property portions or other similar rights and interests of enterprises
within the PRC, (iii) foreign investors investing in new projects in the PRC solely or jointly with other
investors, and (iv) investment in other methods as specified by laws, administrative regulations, or as
stipulated by the State Council. Foreign investors and their investments are entitled to pre-entry
national treatment, except for those industries deemed to be either “restricted” or “prohibited” in the
Negative List. While foreign investors shall refrain from investing in any of the foreign “prohibited”
industries, foreign investors may invest in “restricted” industries if they meet stipulated requirements
on the shareholding, senior management personnel, etc.
On December 26, 2019, the State Council promulgated the Implementation Rules for the PRC
Foreign Investment Law (
ૢԷ), which took effect on January 1,
2020. It further clarifies that the State encourages foreign investments, protects the lawful rights and
interests of foreign investors, regulates foreign investment administration, optimizes foreign
investment environment, and advances a higher-level opening.
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REGULATIONS
On December 30, 2019, the MOFCOM and the State Administration for Market Regulation
(the “SAMR”), jointly promulgated the Information Reporting Measures for Foreign Investment ( ̮
), which became effective on January 1, 2020. Pursuant to the PRC Information
Reporting Measures for Foreign Investment, where a foreign investor carries out investment activities
in China directly or indirectly, the foreign investor or the foreign-invested enterprise shall submit the
investment information to the competent commerce department through the Enterprise Registration
System and the National Enterprise Credit Information Publicity System. Pursuant to the Measures for
the Security Review of Foreign Investment (
), which was promulgated by
the NDRC and the MOFCOM on December 19, 2020 and came into effect on January 18, 2021, the
office of the working mechanism for the security review of foreign investments is set up under the
NDRC, to undertake the routine work of the security review of foreign investments under the
leadership of the NDRC and the MOFCOM.
REGULATIONS ON PRODUCT QUALITY
The PRC Product Quality Law (
) (the “Product Quality Law ”)
promulgated by the SCNPC which was latest amended on December 29, 2018 and came into effect on
the same day, applies to all production and sale activities in the PRC. Pursuant to the Product Quality
Law, products offered for sale must satisfy relevant quality and safety standards. Enterprises may not
produce or sell counterfeit products in any fashion, including forging brand labels or giving false
information regarding a product’s manufacturer. Violations of state or industrial standards for health
and safety and any other related violations may result in civil liabilities and administrative penalties,
such as compensation for damages, fines, suspension or shutdown of business, as well as confiscation
of products illegally produced and sold and the proceeds from such sales. Severe violations may
subject the responsible individual or enterprise to criminal liabilities.
REGULATIONS ON CYBERSECURITY, INFORMATION SECURITY, PRIVACY AND DATA
PROTECTION
On 28 May 2020, the NPC promulgated the Civil Code of the PRC (ج
Պ) (the “ Civil Code ”), which came into effect on January 1, 2021. Pursuant to the Civil Code, the
personal information of a natural person shall be protected by the law. Any organization or individual
that needs 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.
In addition to the Civil Code, the PRC government authorities have enacted other laws and
regulations with respect to Internet information security and protection of personal information from
any abuse or unauthorized disclosure, which includes the Decision of the SCNPC on Maintaining
Internet Security
) promulgated by the
SCNPC on December 28, 2000 and amended on August 27, 2009, the Provisions on the Technical
Measures for Internet Security Protection (
) promulgated by the
Ministry of Public Security on December 13, 2005 and becoming effective on March 1, 2006, and the
Decision of the SCNPC on Strengthening Network Information Protection (
ɽึ੬ਕ։
) promulgated by the SCNPC on December 28, 2012.
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REGULATIONS
The Administrative Measures for the Hierarchical Protection of Information Security (τ
) promulgated by the Ministry of Public Security, State Secrecy Administration
and State Cryptography Administration and the State Council Informatized Office (dissolved) on
June 22, 2007 and came into effect on the same day, requires the entities that operate and use
information systems to fulfill the obligation of the hierarchical protection of information security. The
operator or the user of the information systems at Grade II or above shall, within thirty days since the
date when its security protection grade is determined, completes the record filing procedures at the
local public security authority at the level of city divided into districts or above.
According to the National Security Law of the PRC (
)
promulgated by the SCNPC on July 1, 2015 and came into effect on the same day, the state shall
establish systems and mechanisms for national security review and supervision, conduct national
security review on key technology, network information technology products and services related to
state security, so as to prevent and neutralize state security risks in an effective way.
The PRC Cyber Security Law (
) (the “ Cyber Security Law ”),
which was promulgated by the SCNPC on November 7, 2016 and came into effect on June 1, 2017,
requires a network operator, including internet information services providers among others, to adopt
technical measures and other necessary measures in accordance with applicable laws and regulations as
well as compulsory national and industrial standards to safeguard the safety and stability of network
operations, effectively respond to network security incidents, prevent illegal and criminal activities,
and maintain the integrity, confidentiality and availability of network data. The Cyber Security Law
emphasizes that any individuals and organizations that use networks must not endanger network
security or use networks to engage in unlawful activities such as those endangering national security,
economic order and social order or infringing the reputation, privacy, intellectual property rights and
other lawful rights and interests of others. The Cyber Security Law has also reaffirmed certain basic
principles and requirements on personal information protection previously specified in other existing
laws and regulations, including those described above. Any violation of the provisions and
requirements under The Cyber Security Law may subject an Internet service provider to warnings,
fines, confiscation of illegal gains, revocation of licenses, cancelation of filings, closedown of websites
or even criminal liabilities.
The PRC Minors Protection Law (Revised in 2020) (
ج2020ࡌ
ࠈ)) (the “ Minors Protection Law ”), which was promulgated by the SCNPC on October 17, 2020
and came into effect on June 1, 2021, establish the clear rules of information protection of minors. The
Minors Protection Law prohibits the production, reproduction, publish, release or dissemination of
books, newspapers and periodicals, films, radio and television programs, works of stage art, audio-
video products, electronic publications and network information that publicizes obscenity,
pornography, violence, cult, superstition, gambling, luring suicide, terrorism, separatism and
extremism, etc., which may endanger the physical and mental health of minors. The Minors Protection
Law further requires that when information processors are processing the personal information of
minors online, information processors shall follow the principles of legitimacy, rightfulness and
necessity. Where the personal information of minors under the age of 14 is processed, the consent of
parents or other guardians of such minors shall be obtained, unless otherwise provided by laws and
administrative regulations. Where minors, parents or other guardians require information processors to
correct or delete the personal information of minors, the information processors shall promptly take
measures to response the justified requirement. Network service provider who finds that a user
publishes or spreads information containing the content that is harmful to minors’ physical and mental
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REGULATIONS
health, it shall immediately stop the transmission of relevant information, take measures such as
deleting, screening or disconnecting links, keep relevant records and report the case to authorities in
charge of cyberspace administration and public security.
The PRC Data Security Law of the (
) (the “ Data Security
Law”) was promulgated by the SCNPC on June 10, 2021 and came into effect on September 1, 2021.
The Data Security Law requires the data processor to establish and improve a whole-process data
security management system, organize data security education and training, and take corresponding
technical measures and other necessary measures to safeguard data security. In conducting data
processing activities by using the Internet or any other information network, the data processor shall
perform the above data security protection obligations on the basis of the hierarchical cybersecurity
protection system. Any violation of the provisions and requirements under the Data Security Law may
subject a data processor to rectifications, warnings, fines, suspension of the related business, revocation
of licenses or even criminal liabilities.
On December 15, 2019, the CAC promulgated the Provisions on the Management of Network
Information Content Ecology (
), (the “ CAC Order No.5 ”), which
became effective on March 1, 2020, to further strengthen the regulation and management of network
information content. Pursuant to the CAC Order No.5, each network information content service
platform is required, among others, (i) not to disseminate any information prohibited by laws and
regulations, such as information jeopardizing national security; (ii) to strengthen the examination of
advertisements published on such network information content service platform; (iii) to promulgate
management rules and platform convention, improve user agreement, clarify users’ rights and
obligations and perform management responsibilities required by laws, regulations, rules and
convention; (iv) to establish convenient channels for complaints and reports; and (v) to prepare annual
work report regarding its management of network information content ecology. In addition, a network
information content service platform must not, among others, (i) utilize new technologies and
applications such as deep-learning and virtual reality to engage in activities prohibited by laws and
regulations; (ii) engage in online traffic fraud, malicious traffic rerouting and other activities related to
fraudulent account, illegal transaction account or maneuver of users’ account; and (iii) infringe a third
party’s legitimate rights or seek illegal interests by way of interfering with information display.
The PRC Personal Information Protection Law of the People’s Republic of China (
ʕശɛ͏
) (the “Personal Information Protection Law ”) was promulgated by the
SCNPC on August 20, 2021 and came into effect on November 1, 2021. The Personal Information
Protection Law reiterates the circumstances under which a personal information processor could
process personal information and the requirements for such circumstances, such as when (1) the
individual’s consent has been obtained; (2) the processing is necessary for the conclusion or
performance of a contract to which the individual is a party; (3) the processing is necessary to fulfill
statutory duties and statutory obligations; (4) the processing is necessary to respond to public health
emergencies or protect natural persons’ life, health and property safety under emergency
circumstances; (5) the personal information that has been made public is processed within a reasonable
scope in accordance with this Law; (6) personal information is processed within a reasonable scope to
conduct news reporting, public opinion-based supervision, and other activities in the public interest; or
(7) under any other circumstance as provided by any law or regulation. It also stipulates the obligations
of a personal information processor. Any violation of the provisions and requirements under the
Personal Information Protection Law may subject a personal information processor to rectifications,
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warnings, fines, suspension of the related business, revocation of licenses, being entered into the
relevant credit record or even criminal liabilities.
From the perspective of ownership, as advised by our PRC legal advisor in respect of PRC data
compliance, it remains unclear on the ownership of personal information under relevant PRC laws and
regulations. Nonetheless, as a personal data processor under relevant PRC laws, we have obtained
users’ consent to collect and process specific limited personal data under given purpose and patterns
abiding with the privacy policy, we have also implemented convenient measures for users to exert their
personal information rights. To support these measures, we have also set up various internal
compliance systems to response to users’ request and to fulfill our obligation as a personal data
processor. Our PRC legal advisor in respect of PRC data compliance has reviewed the compliance
status of the Group under relevant PRC laws and of the view that the Group is compliant with relevant
PRC laws on all substantial perspectives of personal data processing.
For purposes of ensuring the security of the supply chain for critical information infrastructure
and maintaining national security, the CAC and the NDRC, the MIIT, the Ministry of Public Security,
the Ministry of State Security, the Ministry of Finance (the “ MOF”), the MOFCOM, the PBOC, the
SAMR, the CSRC and the National Administration of State Secrets Protection and State Cipher Code
Administration jointly promulgated the Cybersecurity Review Measures (
)o n
December 28, 2021 and came into effect on February 15, 2022. The Cybersecurity Review Measures
specify that the procurement of network products and services by an operator of critical information
infrastructure (the “ CII Operator ”) and the activities of data process carried out by online platform
operators, that raise or may raise “national security” concerns are subject to strict cyber security review
by the cyber security review office established by the CAC. Before the CII Operator procures internet
products and services, it should assess the potential risk of national security that may be caused by the
use of such products and services. If such use of products and services may give raise to national
security concerns, it should apply for a cyber security review by the cyber security review office and a
report of analysis of the potential effect on national security shall be submitted when the application is
made. In addition, an online platform operator that possesses the personal data of at least one million
users must apply for cybersecurity review by the cyber security review office, if it plans listing of
companies in foreign countries. The Cybersecurity Review Office may voluntarily conduct cyber
security review if any network products and services, activities of data process or listing of companies
overseas affect or may affect national security. Pursuant to the Cybersecurity Review Measures, any
violation shall be punished in accordance with the Cyber Security Law and the Data Security Law, the
sanctions under which include, among others, government enforcement actions and investigations,
fines, penalties, suspension of our non-compliant operations.
The Cybersecurity Review Measures focus on the assessment of risk related to procurement
activities, data processing and listing of companies overseas and the major factors that are taken into
consideration include (i) the risk of critical information infrastructure being illegally controlled,
interfered or destroyed as a result of the use of the products or services; (ii) the continuous harm to the
business of critical information infrastructure by the interruption of provision of products or services;
(iii) the security, openness, transparency, diversity of sources, reliability of supply and potential supply
interruptions of products and services due to political, diplomatic or international trade issues;
(iv) whether the products and services provider comply with PRC laws and regulations; (v) the risk of
core data or a large amount of personal information being stolen, leaked, destroyed, illegally utilized or
exited the country; (vi) the risk that critical information infrastructure, core data or a large amount of
personal information will be affected, controlled, or maliciously utilized by foreign governments after
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listing, and internet information security risk, and (vii) other factors that may endanger the security of
critical information infrastructure, internet security and data security. It may take approximately 70
business days in maximum for the general cybersecurity review upon the delivery of their applications,
which may be subject to extensions for a special review. Pursuant to the Cybersecurity Review
Measures, online platform operators possessing personal information of more than one million users
seeking to be listed on a foreign stock exchange must apply for a cybersecurity review. We, together
with our PRC legal adviser in respect of PRC data compliance conducted a consultation with the Vice
Director of the Beijing CAC (the “ CAC director ”) on January 20, 2022. The CAC director advised
that the term “listing on a foreign stock exchange (
਷̮ɪ̹)” under the Cybersecurity Review
Measures does not include “listing in Hong Kong.” As advised by our PRC Legal Adviser in respect of
PRC data compliance, the CAC director has the authority to represent Beijing CAC. In addition, a CII
Operator shall apply for cybersecurity review if it anticipates that its procurement of network products
and services affect or may affect national security after the network products and services being put
into use. We possess the personal information of over one million users. However, we are of the view
that we are not subject to cybersecurity review, since (i) as of the Latest Practicable Date, the Group
had not received any notice or determination from competent PRC government authorities identifying
us as a CII Operator, (ii) according to majority opinions, “listed overseas” does not include “listed in
Hong Kong”, (iii) according to the interview with Beijing CAC, Beijing CAC confirmed that the
Listing will not be subjected to the obligation of proactively declaring cybersecurity review under the
Cybersecurity Review Measures and (iv) according to the understanding of our PRC legal advisor in
respect of PRC data compliance, the type and nature of personal information and businesses
operational data we collect are mainly related to the main business of our Company, we have not
involved in activities that affect or may affect national security, and we don’t process core data,
important data as defined in the Data Security Law. As of the Latest Practicable Date, our PRC legal
adviser in respect of PRC data compliance confirms, and the our Directors concur, that we have not
been notified by any PRC government authority of being classified as a CII Operator and we are not
required by any PRC government authority to file for a cybersecurity review. According to the
Cybersecurity Law, the CAC is responsible for the overall planning and coordination of cybersecurity
work and its relevant supervision and administration, and the Beijing CAC is the provincial department
of the CAC. Our PRC legal advisor in respect of PRC data compliance confirms, and our Directors
concur, that Beijing CAC and the CAC director are the relevant competent authorities to advise on the
context of the Cybersecurity Review Measures and that we are not required to apply for a
cybersecurity review. Based on above, our PRC legal advisor in respect of PRC data compliance is of
the view that we will comply with the Cybersecurity Review Measures on relevant data security
requirements if they were implemented in current form.
On July 30, 2021, the State Council promulgated the Provisions on Protection of Critical
Information Infrastructure Security (
ᚐૢԷ) (the “ Safe Protection
Regulations”), which came into effect on September 1, 2021 and provides that “critical information
infrastructures”, or CII, refers to important network facilities and information systems involved in
important industries and fields such as public communication and information services, energy,
transportation, water conservancy, finance, public services, e-government, national defense related
science and technology industry, as well as those which may seriously endanger national security,
national economy and citizens’ livelihood and public interests if damaged, malfunctioned, or if any
leakage of data in relation thereto occurs. According to the Safe Protection Regulations, the competent
departments and supervision and administrative departments of important industries and fields are the
departments responsible for the safety and protection of CII (hereinafter referred to as the “protection
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authorities”). The protection authorities shall, in light of the actual conditions of the industries and
fields, develop rules for the identification of critical information infrastructure, and file such rules with
the public security department under the State Council for the record. The protection authorities shall,
in accordance with identification rules, be responsible for organizing the identification of critical
information infrastructure of respective industries and fields, notify the operators concerned of the
identification results in a timely manner, and report the same to the public security department under
the State Council. The Safe Protection Regulations provide specific requirements for the
responsibilities and obligations of the operator: (i) the operator shall establish and improve the cyber
security protection system and responsibility system, and ensure the input of manpower, financial and
material resources; (ii) the operator shall set up a special security management department, and review
the security background of the person in charge of the special security management department and the
personnel in key positions; (iii) the operator shall guarantee the operation funds of the special security
management department, allocate corresponding personnel, and have the personnel of the special
security management department participate in the decision-making relating to cyber security and
informatization; (iv) the operators shall give priority to the purchase of safe and reliable network
products and services; network products and services procured that may affect the national security
shall be subject to the security review in accordance with the national provisions on network security.
The Safe Protection Regulations clarify the measures for dealing with the failure of critical information
infrastructure operators to perform their responsibilities for security protection, such as imposing fines.
On September 24, 2024, the CAC announced the Cyber Data Security Regulations, which will
be effective on January 1, 2025, stipulates that cyber data processors who carry out cyber data
processing activities that affect or may affect national security shall undergo national security review in
accordance with relevant state regulations. In addition, the Cyber Data Security Regulations also
regulate other specific requirements in respect of the data processing activities conducted by data
processors in the view of personal data protection, important data safety, data cross-broader safety
management and obligations of network platform service provider. Cyber data processors shall identify
and declare important data in accordance with relevant state regulations. For data confirmed as
important data, relevant regions and departments shall promptly inform cyber data processors or make
public announcements. Cyber data processors shall fulfill their responsibilities for cyber data security
protection. Processors of important data shall designate persons in charge of cyber data security and
establish cyber data security management institutions. Cyber data security management institutions
shall fulfill their responsibilities for cyber data security protection. Processors of important data shall
conduct risk assessments of their cyber data processing activities on an annual basis and submit risk
assessment reports to relevant competent departments at or above the provincial level. Relevant
competent departments shall promptly notify the cyberspace affairs departments and public security
organs at the same level. Network platform service providers shall clarify the cyber data security
protection obligations of third-party product and service providers accessing their platforms through
platform rules or contracts, and urge third-party product and service providers to strengthen cyber data
security management. When network platform service providers push information to individuals
through automated decision-making methods, they shall set up easy-to-understand, accessible and
operable personalized recommendation closing options, and provide users with functions such as
refusing to receive pushed information and deleting user tags for their personal characteristics.
We have taken several measures to comply with the Cyber Data Security Regulations before it
has not been formally adopted. We have not suffered from any material data leakage during the Track
Record Period and up to the Latest Practicable Date. Subject to the further interpretation of Cyber Data
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Security Regulations by the competent authorities, we may be required to make further adjustments to
our business operations to comply with the effective version of Cyber Data Security Regulations in the
future.
During the Track Record Period and up to the Latest Practicable Date, considering (i) there had
been no material incident of data or personal information leakage, infringement of data protection and
privacy laws and regulations or investigation or other legal proceeding, pending or threatened against
us initiated by competent government authorities or third parties; (ii) we have not been subject to any
material fines, administrative penalties or other sanctions, or received any enquiries, notices or
warnings from any relevant regulatory authorities in relation to the infringement of cybersecurity and
data protection laws and regulations, and have not been involved in any investigations on cybersecurity
review by CAC; (iii) we have maintained a comprehensive and rigorous data protection program and
implemented comprehensive and strict internal policies, procedures and measures to ensure our
compliance practice in data protection; and, (iv) we will continuously pay close attention to the
legislative and regulatory development in cybersecurity and data protection, maintain ongoing
communication with relevant government authorities and implement all necessary measures in a timely
manner to ensure continuous compliance with the relevant laws and regulations, our Directors and
PRC legal adviser in respect of PRC data compliance are of the view, and the Joint Sponsors concur,
that (i) the Group would be able to comply with the Cybersecurity Review Measures and the Cyber
Data Security Regulations in all material aspects and (ii) the Cybersecurity Review Measures and the
Cyber Data Security Regulations, if implemented in the current form, would not have a material
adverse impact on our business operations or the proposed Listing.
On February 4, 2015, the Provisions on the Management of Internet User Account Names (
ʝ
) (the “ User Account Names Provisions ” was promulgated by the
CAC, which came into effect on March 1, 2015. The User Account Names Provisions is applicable to
all registration, usage and management of Internet user account names within the territory of the
People’s Republic of China. Internet information service providers shall follow the principle of “real-
name in the background and voluntariness in the foreground” to require Internet information service
users to register accounts after authenticating their real identity information. When Internet information
service users register accounts, they shall sign an agreement with the Internet information service
provider, pledging to abide by the seven bottom lines, including laws and regulations, the socialist
system, national interests, citizens’ lawful rights and interests, public order, social morality, and
information authenticity. Internet user account names registered and used by any institution or
individual must not have the following circumstances: (1) violating the Constitution or laws and
regulations; (2) endangering national security, leaking national secrets, subverting state power, or
undermining national unity; (3) harming national honor and interests, harming the public interest;
(4) inciting ethnic hatred, ethnic discrimination, or undermining ethnic unity; (5) undermining state
religious policies and propagating cults and feudal superstitions; (6) spreading rumors, disrupting
social order, or undermining social stability; (7) spreading obscenity, pornography, gambling, violence,
murder, terror, or instigating crimes; (8) insulting or slandering others, infringing upon the lawful
rights and interests of others; (9) containing other content prohibited by laws and administrative
regulations.
On July 22, 2020, the MIIT promulgated the Notice of Ministry of Industry and Information
Technology on Carrying out Special Rectification Actions in Depth against the Infringement upon
Users’ Rights and Interests by Apps (
ᐽଉપආAppБ
) (the “ Rectification Actions ”). The Rectification Actions is purported to promote the
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combination of technology and management, strengthen supervision and inspection, urge the relevant
enterprises to strengthen the protection of personal information of Apps, timely rectify and eliminate
prominent problems such as illegal collection and use of personal information of users, harassment of
users, deception and misleading of users and poor implementation of management responsibilities of
the application distribution platforms and purify the application space. The Rectification Actions
includes the following for main tasks: (1) illegally processing personal information of users by the App
and the SDK; (2) setting up obstacles and frequently harassing users; (3) cheating and misleading
users; (4) inadequate implementation of application distribution platforms’ responsibilities.
The Administrative Provisions on Security Vulnerability of Network Products (
τΌ
) (the “Provisions”) was jointly promulgated by the MIIT, the CAC and the Ministry of
Public Security on July 12, 2021 and became effective on September 1, 2021. Network product
providers, network operators as well as organizations or individuals engaging in the discovery,
collection, release and other activities of network product security vulnerability are subject to the
Provisions and shall establish channels to receive information of security vulnerability of their
respective network products and shall examine and fix such security vulnerability in a timely manner.
In response to the Cyber Security Law, network product providers are required to report relevant
information of security vulnerability of network products with the MIIT within two days and to
provide technical support for network product users. Network operators shall take measures to examine
and fix security vulnerability after discovering or acknowledging that their networks, information
systems or equipment have security loopholes. According to the Provisions, the breaching parties may
be subject to monetary fine as regulated in accordance with the Cyber Security Law. Since the
Provisions is relatively new, uncertainties still exist in relation to its interpretation and implementation.
The Administrative Measures for Data Security in the Field of Industry and Information
Technology (for Trial Implementation) (
ج(༊Б)) was
promulgated by the MIIT on December 8, 2022 and became effective on January 1, 2023.
The Ministry of Industry and Information Technology shall organize the formulation of
standards and specifications for data classification and grading, identification and determination of
important data and core data, and graded data protection, among others, in the field of industry and
information technology, guide the management of data classification and grading, and formulate
specific catalogues of important data and core data of the industry and conduct dynamic management.
A local industry regulatory department shall organize the classified and graded management of data in
the field of industry and information technology and the identification of important data and core data
within its region, determine the specific catalogue of important data and core data within its region and
submit it to the Ministry of Industry and Information Technology. Any change in the catalogue shall be
promptly reported and updated.
A data processor in the field of industry and information technology shall review data on a
periodical basis, identify important data and core data in accordance with the relevant standards and
specifications, and form its specific catalogue.
On July 27, 2021, the Supreme People’s Court of China issued the Provisions on Several Issues
concerning the Application of Law in the Trial of Civil Cases Involving the Use of Face Recognition
Technologies to Process Personal Information (
ࣩ
) (the “ Face Recognition Provisions ”), which came into effect on
August 1, 2021. The Face Recognition Provisions applies to civil disputes arising from the use of face
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recognition technology to deal with facial information between equal civil subjects. The Face
Recognition Provisions clarify the nature and responsibilities of the abuse of utilizing face recognition
technologies to process facial information. To process the facial information of a natural person, the
individual consent of such natural person or his/her guardian must be obtained. Any violation of
individual consent, or forcing or de facto forcing of a natural person to consent to the processing of
facial information constitutes an infringement of the personal rights and interests of natural persons.
The Face Recognition Provisions further stipulate that a natural person has the right to confirm the
invalidity of certain boilerplate terms of a contract with the information processor if the information
processor enters into a contract with a natural person using boilerplate terms that would require such
natural person to grant the processer an indefinite right to process his/her human facial information, or
that such terms are irrevocable or would permit the information processor to assign the right to process
such facial information. If the natural person requests confirmation that the boilerplate terms are
invalid, the Face Recognition Provisions provide that the people’s court shall support the claim
pursuant to the law.
On January 23, 2019, the OCCAC, the MIIT, and the Ministry of Public Security, and the
SAMR jointly issued the Notice on Special Governance of Illegal Collection and Use of Personal
Information via Apps (
࢝Appʮѓ), which restates the
requirement of legal collection and use of personal information, encourages APP operators to conduct
security certifications, and encourages search engines and APP stores to clearly mark and recommend
those certified APPs.
On November 28, 2019, the CAC, MIIT, the Ministry of Public Security and SAMR jointly
issued the Measures to Identify Illegal Collection and Usage of Personal Information by APPs
(
App), which came into effect on the same day, lists six
types of illegal collection and usage of personal information, including “not publishing rules on the
collection and usage of personal information” and “not providing privacy rules.”
Pursuant to the Security Assessment Measures for Cross-border Data Transfers (
ᅰኽ̈ྤτ
), 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
critical infrastructure operator or a data processor processing the personal information of more than one
million people 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. The CAC issued
the Measures on the Standard Contract for Cross-border Transfer of Personal Information (
ڦ
) on February 24, 2023, which became effective on June 1, 2023 and applies to
the provision of personal information by personal information processors to overseas recipients by
concluding a standard contract for outbound transfer of personal information (hereinafter referred to as
“Standard Contracts”). Personal information processor shall apply for filing with the cyberspace
administration at the provincial level within 10 working days of the effective date of the standard
contract. The following materials shall be submitted for filing: (1) the standard contract, and (2) the
personal information protection impact assessment report.
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According to the Provisions on Promoting and Regulating Cross-Border Data Flows (ආձ
) (Decree No. 16 of the Cyberspace Administration of China) promulgated by
the CAC and came into effect on March 22, 2024, data processors shall declare security assessment for
the outbound provision of data if any of the following conditions is met unless the circumstance falls
under Article 3, 4, 5, or 6 of the Provisions: (i) where a critical information infrastructure operator
(hereinafter referred to as a “CIIO”) provides personal information or important data abroad; (ii) where
a data processor other than an operator of critical information infrastructure provide important data
abroad, or, since January 1 of the current year, such a non-CIIO data processor has provided personal
information (excluding sensitive personal information) of not less than one million people or sensitive
personal information of not less than 10,000 people to overseas recipients. Where a non-CIIO data
processor provides personal information (excluding sensitive personal information) overseas of not less
than 100,000 but less than 1 million persons, or provide sensitive personal information overseas of less
than 10,000 persons, cumulatively since January 1 of the current year, such a data processor shall
conclude a standard contract with the overseas recipients or obtain a certification on protection of
personal information in accordance with the law. However, where the circumstance falls under Article
3, 4, 5 or 6 of the Provisions, such provisions shall apply. Additionally, if the data being provided
abroad has not been notified or publicly disclosed by relevant departments or regions as important data,
data processors do not need to declare security assessment for the outbound provision of data unless
such data contain personal information and meet the thresholds stipulated in the Provisions. Under
Article 3 of the Provisions, to provide the data collected and generated in activities such as
international trade, cross-border transport, academic cooperation, transnational manufacturing and
marketing to overseas parties, where personal information or important data is not contained in such
data, the data processor would be exempted from declaring security assessment for cross-border data
transfers, concluding a standard contract for the outbound transfer of personal information, or
obtaining a personal information protection certification. According to Articles 4, 5, and 6 of the
Provisions, the following are the main exemptions from the requirement to declare security assessment
for the outbound provision of data, concluding a standard contract for the outbound transfer of personal
information, and obtain a personal information protection certification: (i) providing personal
information collected and generated overseas to overseas recipients after being provided to China for
processing, and no domestic personal information or important data is introduced in the process of such
processing; (ii) providing personal information overseas is necessary for entering into or performing a
contract to which an individual concerned is a party, such as cross-border shopping, cross-border
mailing, cross border remittance, cross-border payment, cross-border account opening, air ticket and
hotel reservation, visa processing, exam services, etc.; (iii) providing employees’ personal information
overseas is necessary for conducting cross-border human resources management in accordance with
legally formulated labor rules and regulations and legally concluded collective contracts; (iv) providing
personal information overseas is necessary to protect the life , health, and property safety of a natural
person in an emergency; (v) a non-CIIO data processor has provided personal information (excluding
sensitive personal information) overseas of less than 100,000 people cumulatively since January 1 of
the current year; (vi) data processors in pilot free trade zones provide overseas recipients with any data
not included in a negative list formulated, approved and filed in accordance with the Provisions.
In case of any inconsistency between the Provisions and the Measures for the Security
Assessment of Outbound Data Transfer (
) (Decree No. 11 of the Cyberspace
Administration of China) issued on July 7, 2022 and the Measures for the Standard Contract for the
Outbound Transfer of Personal Information (
) (Decree No. 13 of the
Cyberspace Administration of China) issued on February 22, 2023, the Provisions shall prevail.
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Although our PRC legal adviser in respect of PRC data compliance is of the view that the
security assessment for cross-border data transfer, the Standard Contract for Cross-border Transfer of
Personal Information and the personal information protection certification is not applicable to us to
date, there might be newly issued explanations or implementation rules, uncertainties with respect to
applications to the CAC under the Security Assessment Measures for Cross-border Data Transfers, the
Measures on the Standard Contract for Cross-border Transfer of Personal Information and the
Regulations on Promoting and Standardizing Cross-Border Data Transfer are still exist, and we will
continually monitor our compliance status in accordance with the latest changes in applicable
regulatory requirements. Our PRC legal adviser in respect of PRC data compliance is of the view that
the Company is in compliance with the relevant law and regulations of cross border data transfer in all
material respects.
Pursuant to the Ninth Amendment to the PRC Criminal Law of the PRC (
ʕശɛ͏΍ձ਷Α
ɘ) issued by the SCNPC on August 29, 2015 and came into effect on November 1,
2015, any network service provider that fails to fulfill the obligations related to Internet information
security administration as required by applicable laws and refuses to rectify upon orders, will be
subject to criminal liability for causing (i) any dissemination of illegal information in large scale;
(ii) any leakage of the users’ information with serious consequences; (iii) any loss of evidence of
criminal activities with serious circumstances; or (iv) any other serious circumstances. In addition, any
individual or entity that (i) sells or provides personal information to others unlawfully, or (ii) steals or
illegally obtains any personal information, will be subject to criminal liability in serious circumstances.
On 8 May 2017, the Supreme People’s Court and the Supreme People’s Procuratorate released
the Interpretations of the Supreme People’s Court and the Supreme People’s Procuratorate on Several
Issues Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement
of Citizens’ Personal Information (
Α
༆ᙑ) (the “ Interpretations”), which came into effect on June 1, 2017.
The Interpretations clarify several concepts regarding the crime of “infringement of citizens’ personal
information” stipulated by Article 253A of the PRC Criminal Law (
),
including “citizens’ personal information”, “violation of relevant national provisions”, “provision of
citizens’ personal information” and “illegally obtaining any citizens’ personal information by other
methods”. In addition, the Interpretations specifies the standards for determining “serious
circumstances” and “particularly serious circumstances” of this crime. On October 21, 2019, the
Supreme People’s Court and the Supreme People’s Procuratorate jointly issued the Interpretations on
Certain Issues Regarding the Applicable of Law in the Handling of Criminal Case Involving Illegal
Use of Information Networks and Assisting Committing Internet Crimes (
৫e௰৷ɛ͏Ꮸ
༆ᙑ), which
came into effect on November 1, 2019, and further clarifies the meaning of Internet service operators
and the serious circumstance of the relevant crimes. Failure to comply with the above laws and
regulations regarding cybersecurity, information security, privacy and data protection may subject the
internet service providers or data processors to administrative penalties including, without limitation,
warnings, fines, suspension of business operation, shut-down of websites or apps, revocation of
licenses and even criminal liabilities.
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REGULATIONS ON INTELLECTUAL PROPERTY
Patent
According to the PRC Patent Law () promulgated by the SCNPC on
March 12, 1984, last amended on October 17, 2020, and came into effect on June 1, 2021, and its
Implementation Rules (
) promulgated by the State Council on
January 9, 2010 and last amended on December 11, 2023 and became effective on January 20, 2024,
the State Intellectual Property Office is responsible for administering patents in the PRC. The patent
administration departments of provincial or autonomous regions or municipal governments are
responsible for administering patents within their respective jurisdictions. The PRC Patent Law and its
Implementation Rules provide three types of patents, “invention,” “utility model” and “design.”
Invention patents are valid for twenty years, while design patents filed no later than May 31, 2021 are
valid for 10 years and design patents filed on or after June 1, 2021 are valid for 15 years, and utility
model patents are valid for ten years, from the date of filling application. In accordance with the
Measures for the Filing of Patent Licensing Agreement (
), which was
issued by the State Intellectual Property Office on June 27, 2011 and came into effect on August 1,
2011, the State Intellectual Property Office is responsible for the filing of patent licensing agreements
nationwide. The parties concerned shall complete filing within three months from the effective date of
such patent licensing agreement. The PRC patent system follows “first come, first file” principle,
which means that where more than one person file patent applications for the same invention, the
patent will be granted to the person who files the application first. To be patentable, invention or utility
models must meet three criteria: novelty, non obviousness and utility. A third party must procure
consent or proper licensing from the patent owner to use the patent. Otherwise, the use constitutes
infringement of the patent. The 2020 amendment to Patent Law focuses on: (i) clarifying the incentives
for inventors or designers relating to service inventions; (ii) extending the duration of design patent;
(iii) adding a new genre of “open licensing” (
஢̙); and (iv) increasing the amount for patent
infringement damages.
Copyright
Pursuant to the PRC Copyright Law () promulgated by the
SCNPC on September 7, 1990, last amended on November 11, 2020 and came into effect on June 1,
2021, and the Implementation Regulations of the PRC Copyright Law (
݄
ૢԷ) promulgated by the State Council on August 2, 2002, last amended on January 30, 2013 and
came into effect on March 1, 2013, Chinese citizens, legal persons, or other organizations shall,
whether published or not, be entitled to copyrights in their works, which include, among others, works
of literature, art, natural science, social science, engineering technology and computer software. In
addition, internet activities, products disseminated over the internet and software products are also
entitled to copyrights. There is a voluntary registration system administered by the PRC Copyrights
Protection Center. In order to further implement the Computer Software Protection Regulations (
ࠇ
ᚐૢԷ) promulgated by the State Council on June 4, 1991, last amended on January 30,
2013 and came into effect on March 1, 2013, the National Copyrights Administration issued Measures
for Registration of Computer Software Copyrights (
) on February 20,
2002 with immediate effect, which apply to software copyrights registration, licensing registration and
transfer registration. The National Copyrights Administration shall be the competent authority for the
nationwide administration of software copyrights registration and the Copyrights Protection Center of
China (the “ CPCC”), is designated as the software registration authority. The CPCC shall grant
registration certificates to computer software copyrights applicants pursuant to relevant regulations.
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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 (
ٙ
), issued by the Supreme People’s Court on December 29, 2020 and came into effect on
January 1, 2021, provide that web users or web service providers who offer works, performances or
audio-video products, in which others have the right of dissemination, via information networks
without authorization shall be deemed to have infringed upon the right of dissemination through
information networks.
Trademark
Trademarks are protected by the PRC Trademark Law (
) (the
“Trademark Law ”), which was promulgated by the SCNPC on August 23, 1982, last amended on
April 23, 2019 and came into effect on November 1, 2019, as well as the PRC Implementation
Regulation of Trademark Law (
ૢԷ), which was adopted by the State
Council on August 3, 2002, last amended on April 29, 2014 and came into effect on May 1, 2014. In
China, registered trademarks include commodity trademarks, service trademarks, collective trademarks
and certification trademarks.
The PRC Trademark Office of National Intellectual Property Administration (the “ Trademark
Office”) is responsible for the registration and administration of trademarks throughout the PRC and
grants a term of ten years to registered trademarks. Trademarks are renewable every ten years where a
registered trademark needs to be used after the expiration of its validity term. A registration renewal
application shall be filed within twelve months prior to the expiration of the term. A trademark
registrant may license its registered trademark to another party by entering into a trademark licensing
agreement. Trademark licensing agreements must be filed with the Trademark Office. The licensor
shall supervise the quality of the commodities on which the trademark is used, and the licensee shall
guarantee the quality of such commodities. The Trademark Law follows a “first come, first file”
principle with respect to trademark registration. Where trademark for which a registration application
has been made is identical or similar to another trademark which has already been registered or been
subject to a 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 first obtained by 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.
Domain Name
Domain names are protected under the Administrative Measures on Internet Domain Names (

) promulgated by the MIIT on August 24, 2017 and came into effect on
November 1, 2017. Domain name registrations are handled through domain name service agencies
established under the relevant regulations, and applicants become domain name holders upon
successful registration. Domain name registration follows a “first come, first file” principle as well.
REGULATIONS ON EMPLOYMENT AND SOCIAL WELFARE
The Labor Contract Law
Pursuant to the PRC Labor Law (
) (the “ Labor Law ”) promulgated
by the SCNPC on July 5, 1994, becoming effective on January 1, 1995 and last amended on
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December 29, 2018, the PRC Labor Contract Law () (the “ Labor
Contract Law”) promulgated by the SCNPC on June 29, 2007, becoming effective on January 1, 2008
and amended on December 28, 2012 and effective from July 1, 2013, and the Regulations on the
Implementation of the Labor Contract Law (
ૢԷ) (the
“Implementation of the Labor Contract Law ”) promulgated by the State Council and came into
effect on September 18, 2008, labor relationships between employers and employees must be executed
in written form. Where a labor relationship has already been established but no formal contract has
been made, a written labor contract shall be entered into within one month from the date when the
employee begins to work. If an employer fails to enter into a written employment contract with an
employee within one year from the date on which the employment relationship is established, the
employer must rectify the situation by entering into a written employment contract with the employee
and pay the employee twice the employee’s salary for the period from the day following the lapse of
one month from the date of establishment of the employment relationship to the day prior to the
execution of the written employment contract. All employers must comply with local minimum wage
standards. The Labor Contract Law and the Implementation of the Labor Contract Law also require
compensation to be paid upon certain terminations. In addition, if an employer intends to enforce a
non-compete provision with an employee in an employment contract or a non-competition agreement,
it has to compensate the employee on a monthly basis during the term of the restriction period after the
termination or ending of the labor contract. Employers must establish a system for labor safety and
sanitation, strictly abide by state standards and provide relevant training to its employees. It is required
that employers provide safe and sanitary working conditions for employees.
Social Insurance and Housing Fund
Enterprises in China are required by PRC laws and regulations to participate in certain
employee benefit plans, including social insurance funds, namely a basic pension plan, a basic medical
insurance plan, an unemployment insurance plan, an employment injury insurance plan and a maternity
insurance plan, and a housing provident fund.
According to the PRC Social Security Law (
), which was
promulgated by the SCNPC on October 28, 2010 and came into effect on July 1, 2011, and was
amended on December 29, 2018, and other relevant PRC laws and regulations, the employer shall
contribute to social insurance plans covering basic pension insurance, basic medical insurance,
maternity insurance, employment injury insurance and unemployment insurance in amounts equal to
certain percentages of salaries, including bonuses and allowances, of the employees as specified by the
local government from time to time at locations where they operate their businesses or where they are
located. Basic pension, medical and unemployment insurance contributions shall be paid by both
employers and employees, while employment injury insurance and maternity insurance contributions
shall be paid only by employers, and employers who fail to promptly contribute social insurance
premiums in full amount shall be ordered by the social insurance premium collection agency to make
or supplement contributions within a stipulated period, and shall be subject to a late payment fine
computed from the due date at the rate of 0.05% per day; and where payment is not made within the
stipulated period, the relevant administrative authorities shall impose a fine ranging from one to three
times the amount of the amount in arrears.
According to the Regulations on the Administration of Housing Fund (
၍ଣૢԷ
), which was promulgated by the State Council and became effective on April 3, 1999, and last
amended on March 24, 2019, enterprises in the PRC must register with the competent managing center
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for housing provident funds and upon the examination by such center, and these enterprises shall
complete procedures for opening an account at the relevant bank for the deposit of employees’ housing
provident funds. Enterprises are also required to pay and deposit housing provident funds on behalf of
their employees in full and in a timely manner. Employers that violate these regulations and fail to
process housing provident fund payments or deposit registrations with the housing provident fund
administration center within a designated period are subject to a fine ranging from RMB10,000 to
RMB50,000.
REGULATIONS ON FOREIGN EXCHANGE AND DIVIDEND DISTRIBUTION
Foreign Currency Exchange
According the Foreign Exchange Administration Regulations of the PRC (
ʕശɛ͏΍ձ਷̮
ි၍ଣૢԷ) (the “ Foreign Exchange Regulations ”) promulgated by the State Council on
January 29, 1996, became effective on April 1, 1996 and last amended on August 5, 2008 with
immediate effectiveness, payments of current account items, such as profit distributions, interest
payments and trade and service-related foreign exchange transactions, can be made in foreign
currencies without prior approval from the State Administration of Foreign Exchange of the PRC (the
“SAFE”), by complying with certain procedural requirements. By contrast, approval from or
registration with appropriate government authorities in advance is required where RMB is to be
converted into foreign currency and remitted out of China to pay capital account items, such as direct
investments, repayment of foreign currency-denominated loans, repatriation of investments and
investments in securities outside of China.
On March 30, 2015, the SAFE promulgated the Circular of the SAFE on Reforming the
Management Approach regarding the Settlement of Foreign Capital of Foreign-invested Enterprise (

) (the “ Circular 19 ”), which
came into effect on June 1, 2015. Circular 19 expands a pilot reform of the administration of the
settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19
allows all foreign-invested enterprises established in the PRC to settle their foreign exchange capital on
a discretionary basis according to the actual needs of their business operation, provides the procedures
for foreign invested companies to use Renminbi converted from foreign currency-denominated capital
for equity investments. However, Circular 19 continues to prohibit foreign-invested enterprises from,
among other things, using RMB funds converted from their foreign exchange capital for expenditure
beyond their business scope and providing entrusted loans or repaying loans between non-financial
enterprises. The SAFE promulgated the Notice of the State Administration of Foreign Exchange on
Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital
Account (
) (the “ Circular 16 ”),
effective on June 9, 2016, and was amended on December 4, 2023, which, among other things, amends
certain provisions of the Circular 19. Pursuant to the Circular 19 and the Circular 16, the flow and use
of the Renminbi capital converted from foreign currency denominated registered capital of a foreign-
invested company is regulated such that Renminbi capital may not be used for business beyond its
business scope or to provide loans to persons other than affiliates unless otherwise permitted under its
business scope.
On January 26, 2017, the SAFE promulgated the Circular on Further Improving Reform of
Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification (
࢕
) (the “ Circular 3”), which came
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into effect on the same day. Circular 3 stipulates several capital control measures with respect to the
outbound remittance of profits from domestic entities to offshore entities, including (i) banks must
check whether the transaction is genuine by reviewing board resolutions regarding profit distribution,
original copies of tax filing records and audited financial statements, and (ii) domestic entities must
retain income to account for previous years’ losses before remitting any profits. Moreover, pursuant to
Circular 3, domestic entities must explain in detail the sources of capital and how the capital will be
used, and provide board resolutions, contracts and other proof as a part of the registration procedure for
outbound investment.
On October 23, 2019, the SAFE issued Circular of the State Administration of Foreign
Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment (
̮ි၍
) (the “ Circular 28 ”), which took effect on the same
day and was partly amended according to Notice of the State Administration of Foreign Exchange on
Further Deepening Reforming to Facilitate Cross-border Trade and Investment (
׵
. Circular 28 expressly allows foreign-invested
enterprises that do not have equity investments in their approved business scope to use their capital
obtained from foreign exchange settlement to make domestic equity investments as long as the
investments are real and in compliance with the foreign investment-related laws and regulations. In
addition, Circular 28 stipulates that qualified enterprises in certain pilot areas may use their capital
income from registered capital, foreign debt and overseas listing, for the purpose of domestic payments
without providing authenticity certifications to the relevant banks in advance for those domestic
payments.
Foreign Exchange Registration of Overseas Investment by PRC Residents
On July 4, 2014, the SAFE promulgated the Circular on Relevant Issues Relating to Domestic
Resident’s Investment and Financing and Round Trip Investment through Special Purpose Vehicles (

) (the
“SAFE Circular 37 ”), for the purpose of simplifying the approval process, and for the promotion of
the cross-border investment. Under the SAFE Circular 37, a “special purpose vehicle” refers to an
offshore entity established or controlled, directly or indirectly, by PRC residents or entities for the
purpose of seeking offshore financing or making offshore investment, using legitimate onshore or
offshore assets or interests, while “round trip investment” refers to direct investment in China by PRC
residents or entities through special purpose vehicles, namely, establishing foreign-invested enterprises
to obtain ownership, control rights and management rights. The SAFE Circular 37 provides that
(i) prior to the PRC residents or entities conducting investment in offshore special purpose vehicles
with their legitimate onshore and offshore assets or equities, they must register with local SAFE
branches with respect to their investments; and (ii) following the initial registration, they must update
their SAFE registrations when the offshore special purpose vehicle undergoes material events relating
to any change of basic information (including change of such PRC citizens or residents, name and
operation term, increases or decreases in investment amount, transfers or exchanges of shares, or
mergers or divisions).
The SAFE further promulgated the Notice of the State Administration of Foreign Exchange on
Further Simplifying and Improving the Policies of Foreign Exchange Administration Applicable to Direct
Investment (
) on February 13,
2015, which came into effect on June 1, 2015 and allows PRC residents or entities to register with qualified
banks in connection with their establishment or control of an offshore entity established for the purpose of
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overseas investment or financing. The SAFE and its branches shall perform indirect regulation over the
foreign exchange registration via qualified banks. In the event that a PRC shareholder holding interests in a
special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special
purpose vehicle may be prohibited from distributing profits to the offshore parent and from carrying out
subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its
ability to contribute additional capital into its PRC subsidiary.
REGULATIONS ON STOCK INCENTIVE PLAN
On February 15, 2012, the SAFE promulgated the Notice on Foreign Exchange Administration
of PRC Residents Participating in Share Incentive Plans of Offshore Listed Companies (
̮ි၍
), (the “ Stock Option
Rules”), which came into effect on the same day, replacing the previous rules issued by the SAFE in
March 2007. Under the Stock Option Rules, employees, directors, supervisors, and other senior
management who participate in any stock incentive plan of an publicly-listed overseas company and
who are PRC citizens or non-PRC citizens residing in China for a continuous period of no less than
one year, subject to a few exceptions, are required to register with the SAFE through a qualified
domestic agent, which may be a PRC subsidiary of such overseas listed company, and complete certain
other procedures.
In addition, the MOF and the State Taxation Administration of the PRC (the “ STA”) has issued
certain circulars concerning employee stock options and restricted shares. Under these circulars,
employees working in the PRC who exercise stock options or are granted restricted shares will be
subject to PRC individual income tax. The PRC subsidiaries of an overseas listed company are
required to file documents related to employee stock options and restricted shares with relevant tax
authorities and to withhold individual income taxes of employees who exercise their stock option or
purchase restricted shares. If the employees fail to pay or the PRC subsidiaries fail to withhold income
tax in accordance with relevant laws and regulations, the PRC subsidiaries may face sanctions imposed
by the tax authorities or other PRC governmental authorities.
REGULATIONS ON TAX
Enterprise Income Tax
According to the PRC Enterprise Income Tax Law (
 )( t h e
“EIT Law ”), which was promulgated by the SCNPC on March 16, 2007 and became effective on
January 1, 2008 and last amended on December 29, 2018, and the Implementation Regulations for
the PRC Enterprise Income Tax Law (
ૢԷ )( t h e“ EITIR”),
which was promulgated by the State Council on December 6, 2007, became effective on January 1,
2008 and was amended on April 23, 2019, the enterprise income tax of both domestic and foreign-
invested enterprises is unified at 25%. According to the EIT Law and the EITIR, enterprises are
classified as “resident enterprises” and “non-resident enterprises”. PRC resident enterprises typically
pay an enterprise income tax at the rate of 25% while non-PRC resident enterprises without any
branches in the PRC should pay an enterprise income tax in connection with their income from the
PRC at the tax rate of 10% and enterprises established under the laws of foreign countries or regions
whose “de facto management bodies” are located in the PRC are considered as PRC resident
enterprises, and will generally be subject to enterprise income tax at the rate of 25% of their global
income. The EITIR defines “de facto management bodies” as “establishments that carry out
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substantial and overall management and cont rol over production and operations, personnel,
accounting, and properties” of the enterprise.
Pursuant to the Notice of the State Taxation Administration of the PRC on Issues about the
Determination of Chinese-Controlled Enterprises Registered Abroad as Resident Enterprises on the Basis of
Their Body of Actual Management (
Άุ Աኽྼყ၍ଣዚ࿴ᅺ๟Ⴉ
)( t h e“STA Circular 82”) issued by the STA on April 22, 2009 and last
amended on December 29, 2017, an overseas registered enterprise controlled by a PRC company or a PRC
company group will be classified as a “resident enterprise” with its “de facto management body” located
within China if the following requirements are satisfied: (i) the senior management and core management
departments in charge of its daily operations are mainly located in the PRC; (ii) its financial and human
resources decisions are subject to determination or approval by persons or bodies located in the PRC;
(iii) its major assets, accounting books, company seals, and minutes and files of its board and shareholders’
meetings are located or kept in the PRC; and (iv) no less than half of the enterprise’s directors or senior
management with voting rights reside in the PRC. The STA issued an amendment to STA Circular 82
delegating the authority to its provincial branches t o determine whether a Chinese-controlled overseas-
incorporated enterprise should be considered a PRC resident enterprise, in January 2014. Although the STA
Circular 82 and its amendment only apply to overseas registered enterprises controlled by PRC enterprises
and not those controlled by PRC individuals or foreigners, the determining criteria set forth in the circular
may reflect STA’s general position on how the “de facto management body” test should be applied in
determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC
enterprises, individuals or foreigners. If offshore entities are deemed PRC resident enterprises, these entities
may be subject to the EIT at the rate of 25% on their global incomes.
Enterprises that are recognized as High and New Technology Enterprises in accordance with
the Administrative Measures for the Determination of High and New Tech Enterprises (
৷อҦஔΆ
) issued by the Ministry of Science and Technology (the “ MST”), the Ministry of
Finance and the STA are entitled to enjoy a preferential corporate income tax rate of 15%. The validity
period of the High and New Technology Enterprise qualification is three years from the date of
issuance of the certificate. An enterprise can re-apply for recognition as a High and New Technology
Enterprise before or after the previous certificate expires.
Pursuant to the Notice on Increasing the Ratio of the Additional Deduction of Research and
Development Expenses (
), which was promulgated
by the MOF, the STA and the MST of the PRC on September 20, 2018 and became effective on the
same day and the Announcement on Extension of the Implementation Period of Certain Preferential
Tax Policies (
ʮѓ), which was promulgated by the MOF
and the STA on March 15, 2021 and became effective on the same day, with respect to the R&D
expenses that are actually incurred in the R&D activities of the enterprise, an extra 75% of the actual
amount of expenses is deductible before tax, in addition to other actual deductions, during the period
from January 1, 2018 till December 31, 2023, provided that the said expenses are not converted into
the intangible asset and balanced into the enterprise’s current gains and losses; however, if the said
expenses have been converted into the intangible asset, such expenses may be amortized at a rate of
175% of the intangible asset’s costs before tax during the above-said period.
According to the Notice of the MOF and the STA on Implementing the Inclusive Tax
Deduction and Exemption Policies for Small Low-profit Enterprises (
೼ϗಯ
) (the “ Notice of Small Low-profit Enterprises ”) which took effect on January 1,
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2019, from January 1, 2019 to December 31, 2021, the annual taxable income of small low-profit
enterprises that is not more than RMB1 million shall be included in its taxable income at the reduced
rate of 25%, with the applicable enterprise income tax rate of 20%, and the annual taxable income that
is not less than RMB1 million nor more than RMB3 million shall be included in its taxable income at
the reduced rate of 50%, with the applicable enterprise income tax rate of 20%. According to the
Announcement on Implementation of Income Tax Incentives for Micro and Small Enterprises and
Individually-owned Businesses (
ʮѓ), which
was promulgated by the MOF and the STA on April 2, 2021, during the period from January 1, 2021 to
December 31, 2022, for the portion of annual taxable income amount of small low-profit enterprises
which does not exceed RMB1 million, corporate income tax shall be reduced by 50%, in addition to
the incentives stipulated in Article 2 of Notice of Small Low-profit Enterprises. According to the
Notice of the MOF and the STA on the Income Tax Incentives to Small and Micro Enterprises and
Privately-owned Businesses (
ʮ
ѓ) and the Notice of the MOF and the STA on the Relevant Tax and Fee Policies for Further
Supporting the Development of Micro and Small Enterprises and Individual Industrial and Commercial
Households (
ʮѓ),
which shall be in force from January 1, 2023 to December 31, 2027, for the annual taxable income of a
small and low-profit enterprise, the portion not exceeding RMB1 million shall be treated as 25% for
the purpose of taxable income calculation and subject to the enterprise income tax rate of 20%.
Value-added Tax and Business Tax
According to the PRC Provisional Regulations on Value-added Tax (
೼
ᅲБૢԷ), which was promulgated by the State Council on December 13, 1993, came into effect on
January 1, 1994, and last amended on November 19, 2017, and the Implementation Rules for the PRC
Interim Regulations on Value-added Tax (
) promulgated
by the MOF on December 25, 1993 and last amended on October 28, 2011, organizations and
individuals engaging in sale of goods or processing, repair and assembly services, sale of services,
intangible assets, immovable and importation of goods in the PRC shall be taxpayers of Value-added
Tax (the “ VAT”), and all enterprises and individuals that engage in the sale of goods, the provision of
processing, repair and replacement services, the sale of services, intangible assets or immovable
properties and the importation of goods within the territory of the PRC must pay value-added tax.
Since January 1, 2012, the MOF and the STA have implemented the Pilot Plan for Imposition
of Value-Added Tax to Replace Business Tax (
), which imposes VAT
in lieu of business tax for certain “modern service industries” in certain regions and eventually
expanded to nationwide application in 2013. In accordance with the Notice on Fully Launch of the
Pilot Scheme for the Conversion of Business Tax to Value-Added Tax (
೼ਕᐼ҅ᗫɲΌ
), which was issued by the MOF and the STA on March 23, 2016
and came into effect on May 1, 2016, the state started to fully implement the pilot change from
business tax to value-added tax on May 1, 2016. All taxpayers of business tax in construction industry,
real estate industry, financial industry and living service industry have been included in the scope of
the pilot and should pay value-added tax instead of business tax. On November 19, 2017, the PRC
Interim Regulations on Business Tax (
ʕശɛ͏΍ձ਷ᐄุ೼ᅲБૢԷ) was abolished.
On March 20, 2019, the MOF, the STA and the General Administration of Customs jointly
issued the Announcement of Strengthening Reform of VAT Policies (௅e೼ਕᐼ҅eऎᗫᐼ໇
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ʮѓ) (the “ Announcement No.39 ”), which provides certain VAT
reduction arrangements.
Enterprise Income Tax on Indirect Transfer of Non-Resident Enterprises
On December 10, 2009, the STA issued the Notice on Strengthening the Administration of
Enterprise Income Tax on Equity Transfers of Non-resident Enterprises (֢ڢ
) (the “ Circular 698 ”). By promulgating and
implementing the Circular 698, the PRC tax authorities have enhanced their scrutiny over the indirect
transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. The STA further
issued the Announcement on Several Issues Concerning Enterprise Income Tax for Indirect Transfer of
Assets by Non-Resident Enterprises (
ʍਪᕚ
ʮѓ) (the “ Circular 7 ”) on February 3, 2015 and came into effect on the same day, which
replaced certain provisions in the Circular 698. The Circular 7 introduces a new tax regime that is
significantly different from that under the Circular 698. The Circular 7 extends its tax jurisdiction to
capture not only indirect transfer as set forth under the Circular 698 but also transactions involving
transfer of immovable property in China and assets held under the establishment and place, in China of
a foreign company through the offshore transfer of a foreign intermediate holding company. The
Circular 7 also provides clearer criteria than the Circular 698 on how to assess reasonable commercial
purposes and introduces safe harbor scenarios applicable to internal group restructurings. Where a
non-resident enterprise indirectly transfers equity interests or other assets of a PRC resident enterprise
by implementing arrangements that are not for reasonable commercial purposes to avoid its obligation
to pay enterprise income tax, such an indirect transfer shall, in accordance with the EIT Law, be
recognized by the competent PRC tax authorities as a direct transfer of equity interests or other assets
of the PRC resident enterprise.
On October 17, 2017, the STA promulgated the Announcement on Matters concerning
Withholding and Payment of Income Tax of Non-resident Enterprises from Source (
೼ਕᐼ҅ᗫ
ʮѓ) (the “ STA Circular 37 ”), which came into force and
replaced the Circular 698 and certain provisions in the Circular 7 on December 1, 2017 and was partly
amended on June 15, 2018. The STA Circular 37, among other things, simplifies the procedures of
withholding and payment of income tax levied on non-resident enterprises. Pursuant to the STA
Circular 37, where the party responsible for withholding such income tax fails to, or is unable to,
withhold the taxes that should have been withheld to the relevant tax authority, the party may be
subject to penalties. Where the non-resident enterprise receiving such income fails to declare and pay
taxes that should have been withheld to the relevant tax authority, the party may be ordered to rectify
within a specific time limit.
REGULATIONS ON M&A AND OVERSEAS LISTINGS
On August 8, 2006, six PRC regulatory agencies issued the Rules on Merger and Acquisition of
Domestic Enterprises by Foreign Investors (
)( t h e“ M&A
Rules”), which was amended on June 22, 2009. Foreign investors shall comply with the M&A Rules
when they purchase equity interests of a domestic company or subscribe the increased capital of a
domestic company, and thus turning the domestic company into a foreign-invested enterprise; or when
the foreign investors establish a foreign-invested enterprise in the PRC, purchase the assets of a domestic
company and operate the assets; or when the foreign investors purchase the asset of a domestic company,
establish a foreign-invested enterprise by injecting such assets and operate the assets.
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On July 6, 2021, the Opinions on Strictly Cracking Down Illegal Securities Activities in
Accordance with the Law (จԈ) was jointly issued by the
General Office of the Communist Party of China Central Committee and the General Office of the
State Council, which steps up scrutiny of overseas listings by companies and calls for strengthening
cooperation in cross-border regulation, amending relevant laws and regulations on cyber security,
cross-border data transmission and confidential information management, including the confidentiality
requirement and file management related to the issuance and listing of securities overseas, enforcing
the primary responsibility of the enterprises for information security of China-based overseas listed
companies and promoting the construction of relevant regulatory systems to deal with the risks and
incidents faced by China-based overseas-listed companies. On February 17, 2023, the CSRC published
the Overseas Listing Filing Rules, which took effective on March 31, 2023 and regulate both direct and
indirect overseas offering and listing of PRC-based companies by adopting a filing-based regulatory
regime. Direct overseas offering and listing refers to overseas offering and listing by a PRC-
incorporated joint-stock company, while indirect overseas offering and listing refers to overseas
offering and listing based on the underlying equity, assets, earnings or other similar rights of PRC
entities by an overseas company with operations primarily in the PRC. In the context of indirect
overseas offering and listing, if the issuer meets both following criteria, its overseas offering and listing
would be captured by the filing requirement: (i) 50% or more of the issuer’s operating revenue, total
profit, total assets or net assets as documented in its audited consolidated financial statements for the
most recent accounting year is accounted for by domestic companies, and (ii) the main parts of the
issuer’s business activities are conducted in China, or its main places of business are located in China,
or the senior managers in charge of its business operation and management are mostly Chinese citizens
or domiciled in China. We have met both criteria and shall therefore comply with the relevant
requirements under the Overseas Listing Filing Rules in connection with our Listing.
The Overseas Listing Filing Rules provide that (i) the filing procedures with the CSRC shall be
completed within three business days after the issuer submits its application documents relating to the initial
public offering and/or listing in overseas; (ii) a timely report to the CSRC and update its CSRC filing within
three business days after the occurrence of any of the following material events, if any of them occurs
before the completion of the overseas offering and/or listing but after obtaining its CSRC filing: (a) any
material change to principal business, licenses or qualifications of the issuer, (b) a change of control of the
issuer or any material change to equity structure of the issuer, and (c) any material change to the offering
and listing plan; (iii) once listed overseas, a report relating to the issuance information of such offering and/
or list shall be submitted to the CSRC and a report to CSRC within three business days upon the occurrence
of any of the following material events after the overseas offering and/or listing: (a) a change of control of
the issuer, (b) the investigation, sanction or other measures undertaken by any foreign securities regulatory
agencies or relevant competent authorities in respect of the issuer, (c) change of the listing status or transfer
of the listing board, and (d) the voluntary or mandatory delisting of the issuer. For such issuer that have
already submitted applications overseas but have not yet obtained the consent from overseas regulators on
or prior to the effective date of the Overseas Listing Filing Rules, according to the Notice on the
Management Arrangements for the Filing of Overseas Securities Offering and Listing by Domestic
Companies (
,t h e“ Notice”), which was also released
on February 17, 2023, such issuer is permitted to conduct its filing with the CSRC under a “reasonable
arrangement” but in any event before the completion of the overseas offering and/or listing. As we have
already submitted applications of this Listing to the Hong Kong Stock Exchange prior to the effective date
of the Overseas Listing Filing Rules, we are required to complete the filing with the CSRC in relation to this
offering before the completion of this Listing pursuant to the Notice.
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REGULATIONS
On February 23, 2023, the CSRC, the Ministry of Finance, the National Administration of State
Secrets Protection and the National Archives Administration of China jointly promulgated the
Confidentiality and Archives Administration Provisions, which took effective on March 31, 2023. The
Confidentiality and Archives Administration Provisions provide that PRC-based companies seeking to
offering and listing securities in overseas markets, either directly or indirectly, shall establish and
improve confidentiality and archives system, take necessary measures to carry out the responsibility of
confidentiality and archival administration, and shall not divulge the state secrets and the work secrets
of PRC government agencies or damage the interests of the state or the public, and shall complete
approval and filing procedures with competent authorities, if such PRC domestic companies or their
overseas listing entities provide or publicly disclose documents or materials involving state secrets and
work secrets of PRC government agencies to relevant securities companies, securities service
institutions, overseas regulatory agencies and other entities and individuals. It further stipulates that
providing or publicly disclosing documents and materials which may adversely affect national security
or public interests, and accounting files or copies of important preservation value to the state and
society shall be subject to corresponding procedures in accordance with relevant laws and regulations.
Where any entity or individual violates relevant laws and regulations in the overseas issuance and
listing activities of domestic companies, the relevant authorities shall investigate the legal liabilities
thereof in accordance with the law; where a crime is suspected, the case shall be transferred to the
judicial authority for investigation of criminal liabilities in accordance with the law.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
CONTROLLING SHAREHOLDERS
Immediately after the completion of the Global Offering, Dr. Zhang, our founder and senior
advisor, will be interested in and control, through Celestial Limited, Odor Nice Limited, D&W Inc.,
Interface Holdings Inc., Retail Enterprise Corporation Limited, Wumei Southern Technology
Company Limited, Wumei Technology, Beijing Zhongsheng Huate Technology Company Limited and
Beijing Jingxi Guigu Technology Company Limited, which are companies wholly-owned or controlled
by Dr. Zhang, an aggregate of 56.67% of our issued Shares. Therefore Dr. Zhang, together with the
aforesaid companies, will constitute a group of Controlling Shareholders of our Company upon
Listing.
The following diagram illustrates our Controlling Shareholders’ interest in our Company
immediately following the completion of the Global Offering (assuming the Over-allotment Option is
not exercised, the Convertible Bond is not converted and no Shares are issued under the Share
Incentive Plans):
100%
D&W Inc. Interface Holding Inc. Retail Enterprise Corporation
Limited
Dr. Zhang
100%
Our Company
1.14%7.77%47.76%
66.4% 33.6%
Celestial Limited
100%
Odor Nice Limited
100%
Wumei Southern Technology
Company Limited
Wumei Technology(1)
99%
100%
Beijing Zhongsheng Huate
Technology Company Limited
100%
Beijing Jingxi Guigu Technology
Company Limited
19.40%
77.61%1%
Note:
(1) Wumei Technology is owned by Dr. Zhang and Beijing Muhong Management Consulting Co., Ltd. as to approximately 97.02% and
2.98%, respectively. Beijing Muhong Management Consulting Co., Ltd. is ultimately beneficially owned by Mr. LIN Dongliang and
Mr. WU Guangze as to 66.66% and 33.34%, respectively. Mr. LIN Dongliang is an independent third party; Mr. WU Guangze is a
former director of the Company and is otherwise independent from the Company, Dr. Zhang and his associates. As Beijing Muhong
Management Consulting Co., Ltd. does not have any controlling interest in Wumei Technology (which in turn, by itself, also does not
have any controlling interest in the Company), it nor its ultimate beneficial owners are in any way connected to Dr. Zhang, and it nor its
ultimate beneficial owners have any acting in concert agreement or consensus building process with Dr. Zhang or his holding companies
in respect of matters relating to the Company, Beijing Muhong Management Consulting Co., Ltd. and its beneficial owners are not part
of the group of Controlling Shareholders of our Company. The Joint Sponsors have obtained a confirmation from the Company that there
is no acting in concert or voting right agreement or arrangement or consensus building process among Dr. Zhang on one hand, and
Beijing Muhong Management Consulting Co., Ltd. and its ultimate beneficial owners, namely, Mr. LIN Dongliang and Mr. WU
Guangze, on the other hand, nor are they acting in concert with each other, in respect of our Company or Wumei Technology.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
INDEPENDENCE FROM CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors are satisfied that we are capable of
carrying on our business independently from our Controlling Shareholders and its close associates after
the Listing.
Management Independence
Our business is managed by our Board and senior management. Upon Listing, our Board will
consist of nine Directors comprising one executive Director, four non-executive Directors and four
independent non-executive Directors. For more information, please see the section headed “Directors
and Senior Management”.
Our Directors consider that our Board and senior management are capable of operating our
business and managing all actual or potential conflicts of interest independently of our Controlling
Shareholders because:
(a) except for Ms. WANG Yi, there will not be any overlap between the Controlling
Shareholders and their close associates and our Company in terms of directors and senior
management. Ms. WANG Yi serves as a non-executive director of MDL Wholesale
Limited, and she is a vice president, board secretary and joint company secretary of our
Company. Ms. Wang’s roles with our Company mainly concern overall strategy,
information disclosure and investors relations and do not involve extensive participation in
the frontline business operations; as such, her extensive work experience in corporate
governance and investors relations only enhances her ability to serve our Company.
(b) each Director is aware of his/her fiduciary duties as a director which require, among other
things, that he/she acts for the benefit and in the interest of our Company and does not
allow any conflict between his/her duties as a Director and his personal interests;
(c) our daily management and operations are carried out by a senior management team, all of
whom have substantial experience in the industry in which our Company is engaged, and
will therefore be able to make business decisions that are in the best interests of our
Group;
(d) we have four independent non-executive Directors and certain matters of our Company
must always be referred to the independent non-executive Directors for review;
(e) according to the Articles, in the event that there is a potential conflict of interest arising
out of any transaction to be entered into between our Group and a Director or his or her
respective associates, the interested Director is required to declare the nature of such
interest before voting at the relevant Board meetings of our Company in respect of such
transactions;
(f) according to the Articles, in respect of any contract or arrangement or any other proposal
whatsoever in which a Director or any of his or her close associates (or, if required by the
Listing Rules, his or her other associates) has any material interest, such Director shall
abstain from voting on the resolutions and shall not be counted towards the quorum for the
voting;
(g) where a Shareholders’ meeting is held to consider a proposed transaction in which any
Controlling Shareholder has a material interest, the Controlling Shareholder shall abstain from
voting on the resolutions and shall not be counted towards the quorum for the voting; and
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
(h) we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and our Controlling Shareholders which would support
our independent management. Please see “—Corporate Governance Measures” in this
section for further information.
Based on the above, our Directors believe that our Board as a whole and together with our
senior management team are able to perform the managerial role our Group independently.
Operational Independence
Our Directors believe that our Group is operationally independent from the Controlling
Shareholders. Our Company (through our subsidiaries) holds all relevant licenses and owns all relevant
intellectual properties and research and development facilities necessary to carry on our business. We
have sufficient capital, facilities, equipment and employees to operate our business independently from
our Controlling Shareholders. We also have independent access to our customers and an independent
management team to operate our business. We have adopted a set of internal control procedures to
maintain effective and independent operation of our business.
Transactions with Related Parties
As part of our ordinary course of business, we have provided, and expect to continue to
provide, retail core service cloud solutions and other technology services (as applicable) to the
following Related Parties of Dr. Zhang, our Controlling Shareholder. For the avoidance of doubt, for
this purposes of the section headed “Relationship with the Controlling Shareholders”, the defined term
“Related Parties” shall not include Dmall Fresh (Beijing), which is not an associate of Dr. Zhang.
During the Track Record Period, we recognized a substantial portion of our revenue from our
cooperation with the Related Parties. However, as explained below, there is no unduly reliance on the
Related Parties to conduct our business.
(a) Wumei Group
Wumei Technology Group, Inc. (
ʮ̡)( “Wumei Technology”, together with
its subsidiaries and for this documents only, excluding the MDL Wholesale Group after the
MDL Reorganization, Yinchuan Xinhua Group and B&T Entities as defined below, “ Wumei
Group”) is a company ultimately owned as to approximately 97.02% of its equity interest by
Dr. Zhang, and hence an associate of Dr. Zhang. Wumei Technology was founded by Dr.
Zhang in 1994, and operates one of the largest multi-brand retailers in China. As of the Latest
Practicable Date, the retailer brands operated by the Wumei Group include Wumart (
ߕي,)
Merry Mart (ߕ,)dht pharmacy (גand Zhejiang Gongxiao (एϪԶቖ൴̹) (each
within the applicable national or regional geographical areas in China); all of the brands and
businesses operated by the Wumei Group are retailers.
Our Group had provided retail core service cloud solutions, e-commence service cloud solution, and
others to Wumei Group during the Track Record Period. For the years ended December 31, 2021,
2022, 2023, and the six months ended June 30, 2024, our revenue from providing the said services
to the Wumei Group amounted to RMB384.1 million, RMB561.6 million, RMB821.0 million and
RMB484.5 million, respectively, representing 45.3%, 42.3%, 51.8% and 51.9% of our revenue for
the same years/period. We expect to continue the provision of services to Wumei Group after the
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
Listing pursuant to the Wumei Retail Core Service Cloud Framework Agreement and conduct
certain other transactions with them pursuant to the Wumei Framework Agreement. For details of
these transactions, please see the section headed “Connected Transactions”.
(b) MDL Wholesale Group
MDL Wholesale Limited (“ MDL Wholesale ”, together with its subsidiaries, “ MDL
Wholesale Group ”) is a subsidiary of Wumei Technology, and hence it (including its
subsidiaries) is an associate of Dr. Zhang. Following the MDL Reorganization, given MDL
Wholesale Group now focuses on the food and fast-moving consumer goods distribution
business and ceased engaging in the retail business which has been disposed to Wumei Group,
we provide retail core service cloud solutions to MDL Wholesale Group following the MDL
Reorganization.
Our Group had provided retail core service cloud solutions, e-commerce service cloud solutions
and other products and services to MDL Wholesale Group (or Maidelong Entities, prior to the
MDL Reorganization) during the Track Record Period. For the years ended December 31,
2021, 2022, 2023, and the six months ended June 30, 2024, our revenue from providing the said
services to MDL Wholesale Group (or Maidelong Entities, prior to the MDL Reorganization)
amounted to RMB86.6 million, RMB258.2 million, RMB259.5 million and RMB183.8 million,
respectively, representing 10.2%, 19.4%, 16.4% and 19.6% of our revenue for the same years/
period. We expect to continue the provision of services to MDL Wholesale Group after the
Listing pursuant to the MDL Wholesale Retail Core Service Cloud Framework Agreement and
conduct certain other transactions with them pursuant to the MDL Wholesale Framework
Agreement. Transactions we provide to MDL Wholesale Group (or Maidelong Entities, prior to
the MDL Reorganization) during the Track Record Period in relation to their retail business
which has been disposed of to Wumei Group will now be covered by the Wumei Retail Core
Service Cloud Framework Agreement. For details of these transactions, please see the section
headed “Connected Transactions”.
(c) Yinchuan Xinhua Group
Yinchuan Xinhua Commercial Group Co., Ltd. (
ʮ̡) (Shanghai
Stock Exchange: 600785) (“Yinchuan Xinhua”, together with its subsidiaries, “Yinchuan Xinhua
Group”) is a subsidiary of Wumei Technology, and hence it (including its subsidiaries) is an
associate of Dr. Zhang. Based on public information disclosed by Yinchuan Xinhua, it is mainly
engaged in the business of department stores, supermarkets and electronics retail and has stores
mainly located in the Ningxia Hui Autonomous Region and surrounding provinces such as Shaanxi,
Gansu, Inner Mongolia and Qinghai.
Our Group has provided retail core service cloud solutions and e-commerce service cloud
solutions and other products and services to Yinchuan Xinhua Group during the Track Record
Period. For the years ended December 31, 2021, 2022, 2023, and the six months ended June 30,
2024, our revenue from providing the said services to Yinchuan Xinhua Group amounted to
RMB38.1 million, RMB30.7 million, RMB54.9 million and RMB32.5 million, respectively,
representing 4.5%, 2.3%, 3.5% and 3.5% of our total revenue for the same years/period. We
expect to continue the provision of services to Yinchuan Xinhua Group after the Listing
pursuant to the Yinchuan Xinhua Framework Agreement. For details of the said transaction,
please see the section headed “Connected Transactions”.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
(d) B&T Entities
Wumei Technology controls the entities that manage and operate stores bearing the brand of
B&T (֢in China (the “ B&T Entities ”), and hence the B&T Entities are associates of
Dr. Zhang. B&T Entities are mainly engaged in the retailing of home décor and building
materials.
We commenced the provision of Retail Core Service Cloud Solutions to B&T Entities in October
2022. No fees were paid by B&T Entities to us for the years ended December 31, 2021 and 2022,
and the total fees paid by B&T Entities to us relating to our continuing operations in the year
ended December 31, 2023 and the six months ended June 30, 2024 were RMB3.7 million and
RMB6.0 millon, respectively, representing 0.2% and 0.6% of our revenue for the same year/
period. We expect to continue the provision of services to B&T Entities after the Listing pursuant
to the B&T Framework Agreement. For details of the said transaction, please see the section
headed “Connected Transactions”.
(e) Chongqing Department Store Group
Chongqing Department Store Co., Ltd. (
ʮ̡) (Shanghai Stock Exchange:
600729) (“ Chongqing Department Store ”, together with its subsidiaries, “ Chongqing
Department Store Group”) is a company which was a former associate of Dr. Zhang during the
Track Record Period but had ceased to be an associate of Dr. Zhang since March 9, 2024. Based
on public information disclosed by Chongqing Department Store, it is mainly engaged in the
business of department stores, supermarkets, electrical appliances and automobile trade and owns
famous brands and trademarks such as Chongqing Department Store (
ᅅϵ஬)a n dN e w
Century Department Store (ϵ஬).
Our Group had provided retail core service cloud solutions, e-commerce service cloud solutions
and other products and services to Chongqing Department Store Group during the Track
Record Period. For the years ended December 31, 2021, 2022, 2023, and the six months ended
June 30, 2024, our revenue from providing the said services to Chongqing Department Store
Group amounted to RMB90.2 million, RMB115.1 million RMB62.8 million and RMB27.7
million, respectively, representing 10.6%, 8.7%, 4.0% and 2.9% of our revenue for the same
years/period. We expect to continue the provision of services to Chongqing Department Store
Group after the Listing, however, Chongqing Department Store (including its subsidiaries) had
ceased to be an associate of Dr. Zhang since March 9, 2024 and is no longer relevant to
assessing our operational independence from our Controlling Shareholders from that date
onwards.
No material adverse change or risk of termination of the business relationship between our
Group and the Related Parties.
In view of the mutually beneficial and long-standing business relationship between the Group
and the Related Parties, the Company currently does not expect any material adverse change in such
relationship and the risk of termination of the relationship is expected to be remote.
(a) Mutually beneficial and dependent business relationship
Given the Company’s and the Related Parties’ leading positions in their respective markets, the
Company considers the business relationship between the Group and the Related Parties to be mutually
beneficial and dependent.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
The Related Parties are among the top retailers in China, with thousands of malls and stores across
China and owning a wide array of well-known brands and trademarks in China. According to Frost &
Sullivan, the supermarket retail market in China is highly localized with leading incumbents taking a large
market share in their local regions, and the Related Parties command strong leadership in their respective
local markets. In terms of sales in 2023, according to Frost & Sullivan, (i) Wumei Group had approximately
33.1% and 56.2% of the market share of the chained supermarkets (store-based, excluding warehouse
supermarkets) market in northern China (which include Beijing, Tianjin, Hebei, Shanxi, and Inner
Mongolia, according to Frost & Sullivan) and Beijing, China, respectively, (ii) the Maidelong Entities had
approximately 44.0% of the market share of the warehouse-style supermarket market in China, (iii) the
Yinchuan Xinhua Group had approximately 43.0% and 47.1% of the market share of the chained
supermarkets (store-based, excluding warehouse supermarkets) market in Ningxia and Yinchuan, China,
respectively; (iv) the B&T Entities had 1.2% market share in the home improvement and gardening
industry in China; and (v) the Chongqing Department Store Group had approximately 21.4% of the market
share of the chained supermarkets (store-based, excluding warehouse supermarkets) market in Chongqing,
China. The Company believes it is beneficial to the Company to maintain strong business relationship with
the top retailers in China such as the Related Parties, not only because they represent a substantial revenue
source for the Company but also cooperation with them enhances the Company’s industry insight and
capabilities as well as business reputation.
While the Related Parties represent an important source of revenue for our Group, we are also
the sole retail digitalization solution provider for the Related Parties. As a leading full-spectrum omni-
channel retail digitalization solution provider in China according to Frost & Sullivan, the Group is a
natural choice for the Related Parties for retail digitalization solutions.
Our technology is well-recognized by retailers for its functionality and retail format coverage,
according to Frost & Sullivan, and such technological advantages have allowed the Group to become and
remain the sole retail digitalization solution provider for the Related Parties. The Company deploys stable
data centers and standardized data collection, storage, and utilization functions, and its Dmall OS system
integrates an array of functionalities that retailers need to streamline operation, facilitate sales and optimize
the decision-making processes. The underlying technology architecture for the Company’s services consists
of hundreds of modules suitable for digitalizing the operational management of retailers of various sizes and
types and at different organizational levels (from individual stores to headquarters). Such modularized
design makes its operating system adaptable for a di verse range of retailers compared to a traditional
monolithic design. As a result, the configurable and scalable software solutions offered by our retail
digitalization solutions fulfill a wide range of business digitalization needs of retailers, especially large
retailers such as the Related Parties, with great flexibility.
The Company believes that the services it provides the Related Parties are difficult to replace
for the following reasons.

Deep understanding of retail operations. With the substantial business cooperation with
the Related Parties so far, the Company has accumulated deep understanding of the
Related Parties’ retail operations, and has provided transformative solutions based on such
understanding to the Related Parties regarding various aspects of their operations through
its proprietary Dmall OS system. These solutions include developing their mobile
applications and mini-programs, designing and enhancing their marketing and promotional
campaigns and efforts, optimizing their merchandise selection and display, and otherwise
improving their digitalized operational capabilities in terms of store operations (including
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
payment), supply chain (including coordination between retailers and their suppliers), and
consumer interaction and traffic, among others. The Company’s retail know-how and
in-depth understanding of the Related Parties’ business operations have allowed it to
provide better services to the Related Parties.

Advanced system catering to complex retail operations. The Company’s Dmall OS system
is modularly configured to support constant upgrade in response to the increasingly
complex organizational and technological infrastructure of retailers. The scale and
complexity of operations of the Related Parties render them reliant on the Company’s
system and services.

High switching cost. The Company believes that it would be difficult and costly for the
Related Parties to replace the Company as their retail digitalization solution provider,
considering that (i) the systems that the Company helped establish and manage are essential to
the day-to-day operations of the Related Parties, and any disruption to these systems and the
related services could result in substantial loss in revenue and reputation for the Related
Parties, and (ii) training all relevant staff to operate a new SaaS system would take additional
costs and time, and any replacement SaaS system would also take time to reach a desirable
level of stability. Furthermore, the data-driven algorithms that the Company helped the Related
Parties develop and maintain are essential to the execution of their business strategies that rely
on data insights. Therefore, the Company believes that the services it provides to the Related
Parties cannot be substituted without them incurring substantial costs.
As such, the Group believes the business relationship between the Group and the Related
Parties is mutually beneficial and dependent and it would not be in the best interest of the Related
Parties to replace the Group with a different retail digitalization solution provider.
(b) Long-term strategic business relationship
The Group has maintained close and stable business relationship with the Related Parties. The
Group first started to provide services to (a) the Wumei Group in 2015, (b) the Maidelong Entities in
2018; (c) the Yinchuan Xinhua Group in 2018; (d) B&T Entities in 2022; and (e) the Chongqing
Department Store Group in 2019. No business contracts with the Related Parties have been terminated
by either party to date and the Company does not expect any material adverse change in such
relationship going forward.
(c) No undue reliance on the Related Parties
Despite the relatively high revenue contribution from the Related Parties to our Group during
the Track Record Period, we do not, and expect that we will not, unduly rely on the Related Parties to
conduct our business for the reasons set out below.
The Group has been expanding its customer base to reduce its reliance on the Related Parties:
 Other than the Related Parties, the Company has entered into cooperation agreements with
other leading retailers in China and overseas markets, such as Zhongbai Holdings Group
Co., Ltd. and Luosen. The recognition by these leading retailers of the Group’s service
capabilities and quality has created a solid foundation for the Group to attract many more
retailer customers outside of the Related Parties.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
 By leveraging the deep retail know-how, market-leading technology, and abundant
experience cooperating with top retailers, the Group has also acquired a sizeable number
of new customers independent from the Related Parties and other Related Party. The
number of such independent customers (for the avoidance of doubt, excluding Dmall
Fresh (Beijing)) of the Group grew from 233 for 2021 to 433 for 2022 and 530 for 2023
and 440 for the six months ended June 30, 2024.
 The Group has achieved rapid growth in revenue from customers independent from the
Related Parties and other Related Party. For the years ended December 31, 2021, 2022, 2023
and the six months ended June 30, 2023 and 2024, the Company achieved revenues from
such independent customers (for the avoidance of doubt, excluding Dmall Fresh (Beijing)),
of RMB221.1 million, RMB267.3 million RMB244.4 million, RMB106.2 million and
RMB124.9 million, respectively, demonstrating a rapid and significant growth trend.
 The overall growth in the Chinese economy and the size and projected growth of China’s
retail digitalization solution market also contribute to the Group’s ability to attract more
customers independent from the Related Parties. China’s retail industry has experienced a
fast growth over the past three decades along with a robust national economic growth, but
the market is still under-digitalized. In addition, to penetrate into unaddressed global markets
is one of our main strategies. We have developed an English version of the Dmall OS
system, and are developing our overseas business development team with local market
know-how and expanding our research and development team focusing on overseas market
development. Therefore, there is a huge market where the Company can expand its
independent customer base as well as to establish strategic cooperation with new customers.
The Company is confident in its ability to acquire customers independent from the Related Parties
and expect the proportion of the Group’s revenue derived from the Related Parties will gradually
decrease in the long term.
Based on the above, our Directors believe that we are able to operate independently of our
Controlling Shareholders.
Financial Independence
We have independent internal control and accounting systems. We also have an independent
finance department responsible for discharging the treasury function. We are capable of obtaining
financing from third parties, if necessary, without reliance on our Controlling Shareholders.
No loans or guarantees provided by, or granted to, our Controlling Shareholders or its
associates will be outstanding as of the Listing Date.
Based on the above, our Directors believe that our business is financially independent of our
Controlling Shareholders.
Dr. Zhang’s managerial roles and directorships in the Group
With deep insights and understanding of retail operations and years of experience in the
industry, Dr. Zhang identified the trends of digital retail in China and founded the Company in 2015.
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
Dr. Zhang served as the Company’s chairman of the board of directors from the Company’s inception
to November 27, 2022. He resigned from the board of directors based on the following considerations:
(i) The Company’s pursuit of further global expansion and the building of our overseas
business development team: The Company’s new stage of development requires a leader with
extensive experience in the global retail market, and Mr. Ferguson, the current Chairman, is a thought-
leader in the consumer space with such experience. Therefore, he is in a better position to guide the
Company through this phase of development;
(ii) Mr. Zhang’s responsibilities as co-founder, executive director, and president and the
Company’s strong management team: Mr. Zhang is responsible for the overall strategic planning,
business operation, and management of the Group, who is in the position to lead the Company in its
day-to-day operations. In addition, we have a strong management team in place that is capable of
running the business effectively without Dr. Zhang’s direct leadership; and
(iii) Dr. Zhang’s lack of involvement in the day-to-day management of the Group during the
Track Record Period and his current senior advisor role: Dr. Zhang has not been involved in the day-
to-day management of the Group during the Track Record Period and his resignation would not have a
significant impact on our business operations. Furthermore, Dr. Zhang currently serves as the senior
advisor of the Company, providing advice to the senior management on important strategies,
technology developments and key business development opportunities. He will remain available and
that his expertise will continue to be utilized in other capacities within the Group.
The Subsequent Acquittal of the Wrongful Charges against Dr. Zhang
In October 2008, Dr. Zhang, was found liable for fraud, organizational bribery (
ఊЗБ༡ໆ)
and embezzlement of funds by the Intermediate People’s Court of Hengshui City, Hebei Province (the
“Charges”), and was sentenced to an 18-year term of imprisonment and a fine of RMB500,000 with
property involved confiscated.
Upon Dr. Zhang’s first acquittal appeal, in March 2009, the High People’s Court of Hebei
Province upheld the judgment made by the first instance court with respect to the confiscation of
property involved, the conviction and sentence of organizational bribery and embezzlement of funds,
and the conviction of fraud, but overturned the sentence of fraud offense and its related penalty. It is
ruled that all three convictions shall be imposed together and Dr. Zhang was sentenced to a 12-year
term of imprisonment with a fine of RMB500,000.
Subsequently, Dr. Zhang brought another appeal against the conviction to the High People’s
Court of Hebei Province and the case was dismissed in December 2015. In October 2016, Dr. Zhang
further appealed to the Supreme People’s Court (the “ Supreme Court ”). On December 27, 2017, the
Supreme Court decided to hold a further trial to hear the case in open court on February 12, 2018 on
the grounds that Dr. Zhang had provided new evidence that was not presented during the original trial.
This evidence included witness testimonies and financial records that were relevant to this case but
were not previously disclosed.
On May 31, 2018, the Supreme Court adjudged its final judgment and overturned the previous
rulings of the High People’s Court of Hebei Province and the Intermediate People’s Court of Hengshui
City, Hebei Province. All convictions previously imposed on Dr. Zhang were quashed, and the fines
and property confiscated according to the original judgments were ordered to be returned.
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Pursuant to the final judgment of the Supreme Court (the “ Final Judgment ”), the convictions
previously imposed on Dr. Zhang were overturned for the following reasons:
Fraud. The original ruling had stated that Wumei Group did not qualify to apply for a national
bond interest subsidy for technological improvements. However, the Supreme Court found that there
was insufficient evidence to support this claim. The Supreme Court concluded that Wumei Group was
a qualified private enterprise when it applied for the national debt interest discount technical
transformation project. Furthermore, Wumei Group completed and submitted the application materials
under the name of “Beijing Wumart Supermarket Co., Ltd.” (later changed to Wumei Group). The
Supreme Court found that Wumei Group used its real identity to declare the project as the appropriate
entity. Dr. Zhang, the founder and chairman of the board of directors of Wumei Group, did not
fabricate facts or conceal the truth during the application process. Neither Wumei Group nor Dr. Zhang
had the intention of misleading the government authority about the identity and nature of the applicant
company. Additionally, the project funds of RMB31.9 million were always recorded as “payable to the
government” in the financial accounts and remained under the control of state authority. Neither
Wumei Group nor Dr. Zhang had the intention of illegally possessing the project funds. As the
evidence was insufficient to sustain a conviction of fraud, the Supreme Court overturned the previous
rulings.
Organizational bribery. The Supreme Court found that there was insufficient evidence to
establish that Wumei Group had received any improper benefits or assistance during the equity
acquisition process. The Supreme Court determined that the acquisition was the result of arm’s length
negotiations between Wumei Group and the shareholders of Taikang Life Insurance Co., Ltd. The
negotiations covered the acquisition price and the agreed-upon considerations for the shares, which
were found to be within the expectations of the shareholders. The evidence revealed that no third party
was involved in the equity acquisitions, and there were no circumstances for Wumei Group to offer
bribes to exclude other buyers or gain a competitive advantage. Based on these findings, the Supreme
Court concluded that Wumei Group did not engage in bribery or receive any inappropriate assistance
during the equity acquisition process. Therefore, the evidence was insufficient to sustain a conviction
of organizational bribery, and the Supreme Court overturned the previous rulings.
Embezzlement of funds. The Supreme Court held that on the evidence as disclosed, Dr. Zhang
neither misappropriated funds for his own benefit, nor had subjective intention of fraudulent
appropriation of property. The Supreme Court also found that fund transfers involved in the alleged
embezzlement remained between corporate entities and were recorded in the corporate entities’
accounts. The evidence is insufficient to sustain a conviction of embezzlement of funds offense,
therefore, the Supreme Court overturned the previous rulings.
We have consulted Dr. Zhang’s PRC Litigation Legal Counsel in respect of Dr. Zhang’s case
and were given to understand that (i) Final Judgment clearly demonstrated that Dr. Zhang was
exonerated of the charges that were levelled against him, (ii) Dr. Zhang’s previous convictions were
the result of the trial court being wrong in its ruling on questions of fact and application of law and
(iii) Final Judgment is final on Dr. Zhang’s case and according to Article 254 of the Criminal
Procedure Law of China, only the Supreme Court has the authority to decide whether to retry a case
that has been effectively adjudicated by the Supreme Court.
The Directors are of the view that the Charges have not impugned Dr. Zhang’s suitability, as if
he was appointed as a Director, under Rules 3.08 and 3.09 of the Listing Rules, as (i) all the relevant
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RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
convictions against Dr. Zhang were quashed by the Supreme Court’s final decision and both Dr. Zhang
and Wumei Group were exonerated of the Charges, (ii) the evidence in respect of each of the charges
of fraud, organizational bribery and embezzlement is insufficient to sustain the previous convictions as
discussed above, and (iii) Dr. Zhang confirmed that (a) in relation to the fraud charge, he, as the
chairman of Wumei Group, did not fabricate facts or conceal the truth during the application process
(and there is no indication in the Final Judgment that he was involved or aware in this connection), (b)
in relation to the embezzlement charge, he did not have any intention to acquire the relevant funds for
personal use or gains, and the relevant fund transfers were for proper commercial transactions, i.e.,
entrusted investment, supported by contracts, and (c) in relation to the organizational bribery charge,
there was no intention to seek improper benefits.
Based on (i) the due diligence conducted with Dr. Zhang, including an interview with Dr.
Zhang and confirmations obtained from him, (ii) the advice of Dr. Zhang’s PRC Litigation Legal
Counsel in respect of Dr. Zhang’s case that the Final Judgment demonstrated Dr. Zhang’s exoneration
from the Charges and Dr. Zhang’s previous convictions were the result of the trial court being wrong in
its ruling on questions of fact and application of law and the Final Judgment is final on Dr. Zhang’s
case, and the opinion of the PRC Legal Adviser to the Company that a judgment made by the Supreme
Court is final, and (iii) the Joint Sponsors noting no other material negative findings from the
background search report compiled by independent search agents and desktop research conducted
against Dr. Zhang, which relates to his integrity, the Joint Sponsors concur with the Directors’ view
that in light of the circumstances set out above, the Charges have not impugned Dr. Zhang’s suitability,
as if he was appointed as a Director, under Rules 3.08 and 3.09 of the Listing Rules.
DISCLOSURE UNDER RULE 8.10 OF THE LISTING RULES
Our Controlling Shareholders confirm that as of the Latest Practicable Date, they did 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 that would require disclosure under Rule 8.10 of the
Listing Rules.
As of the Latest Practicable Date, apart from the business of our Group, the businesses in which
our Controlling Shareholders have interests have been summarized under the sub-section headed “—
Independence from Controlling Shareholders—Operational Independence” above, namely, the
businesses of the Wumei Group, the Maidelong Entities, the Yinchuan Xinhua Group, the B&T
Entities and the Chongqing Department Store Group (such businesses, together, “ Other Businesses”).
Such Other Businesses are all retail business in nature.
As we are a provider of SaaS solutions to retailers in the local retail industry, the business we
operate are by nature different from the Other Businesses. In terms of services provided, we develop
and sell cloud-based SaaS platform solutions and related technical services; whereas the Other
Businesses are retailers that procure and sell goods. In terms of customer profile, we provide the said
services to retailer businesses and, historically, brand owners, while the Other Businesses primarily
serve the wider individual consumers. In the value creation chain, our business and the Other
Businesses are also positioned differently; our business can be considered an upstream supplier of
SaaS platform solutions to retailers like the Other Businesses. As such, the services we provide are
non-substitutable by the services/products provided by the Other Businesses, and the Other Businesses
do not compete nor are they likely to compete, directly or indirectly, with our business.
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CORPORATE GOVERNANCE MEASURES
Our Directors recognize the importance of good corporate governance in protecting our
Shareholders’ interests. We have adopted the following measures to ensure good corporate governance
standards and to avoid potential conflicts of interest between our Group and our Controlling
Shareholders:
(a) under the Articles, where any member is, under the Listing Rules, required to abstain from
voting on any particular resolution proposed at a Shareholders’ meeting, any votes cast by
or on behalf of such member in contravention of such requirement or restriction shall not
be counted;
(b) our Company has established internal control mechanisms to identify connected
transactions. Upon the Listing, if our Company enters into connected transactions with our
Controlling Shareholders or any of its associates, our Company will comply with the
applicable Listing Rules;
(c) the independent non-executive Directors will review, on an annual basis, whether there are
any conflicts of interests between the Group and our Controlling Shareholders and provide
impartial and professional advice to protect the interests of our minority Shareholders;
(d) our Controlling Shareholders will undertake to provide all information necessary,
including all relevant financial, operational and market information and any other
necessary information as required by the independent non-executive Directors for the
purpose of their annual review;
(e) our Company will disclose decisions on matters reviewed by the independent
non-executive Directors either in its annual reports or by way of announcements as
required by the Listing Rules;
(f) where our Directors reasonably request the advice of independent professionals, such as
financial advisors, the appointment of such independent professionals will be made at our
Company’s expense;
(g) we have appointed Somerley Capital Limited as our compliance adviser to provide advice
and guidance to us in respect of compliance with the applicable laws and regulations, as
well as the Listing Rules, including various requirements relating to corporate governance;
and
(h) we have established our audit committee, remuneration committee and nomination
committee with written terms of reference in compliance with the Listing Rules and the
Corporate Governance Code and Corporate Governance Report in Appendix C1 to the
Listing Rules. All of the members of our audit committee are non-executive Directors and
the majority of the members, including the chairman, are independent non-executive
Directors.
Based on the above, our Directors are satisfied that sufficient corporate governance measures
have been put in place to manage conflicts of interest that may arise between our Group and our
Controlling Shareholders, and to protect our minority Shareholders’ interests after the Listing.
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CONNECTED TRANSACTIONS
Pursuant to Chapter 14A of the Listing Rules, the following transactions that we enter into with
our connected persons will constitute connected transactions upon the Listing.
OUR CONNECTED PERSONS
The table below sets forth the parties who will become our connected persons and with whom
we have entered into certain transactions which will constitute our continuing connected transactions
following the Listing:
Name Connected relationship
Wumei Technology Group, Inc. (ʮ̡)( “Wumei
Technology”, together with its subsidiaries and, for this section only,
excluding the MDL Wholesale Group, B&T Entities and Yinchuan
Xinhua Group (all as defined below), the “ Wumei Group”)
a company which is ultimately owned as to approximately 97.02%
of its equity interest by Dr. Zhang, and hence an associate of
Dr. Zhang
MDL Wholesale Limited (“MDL Wholesale”, together with its
subsidiaries, the “MDL Wholesale Group”)
subsidiaries of Wumei Technology, and hence associates of
Dr. Zhang
Shanghai Baianju Commercial Operation Management Co., Ltd. (
ɪऎ
ʮ̡)( “Shanghai B&T”), which is the
holding company of entities that manage and operate stores bearing the
brand of B&T (
֢in the PRC (collectively, “ B&T Entities”)
subsidiaries of Wumei Technology, and hence associates of
Dr. Zhang
Dmall Zhilian a non-wholly owned subsidiary of our Company which is
indirectly held as to more than 10% by Wumei Technology, and
therefore a connected subsidiary of our Company
Yinchuan Xinhua Commercial Group Co., Ltd. (
ვʇอശϵ஬ਠุණྠ
ʮ̡) (Shanghai Stock Exchange: 600785) (“ Yinchuan
Xinhua”, together with its subsidiaries, the “ Yinchuan Xinhua
Group”)
subsidiaries of Wumei Technology, and hence associates of
Dr. Zhang
Dmall Fresh (Beijing) (together with its subsidiaries from time to time,
“Dmall Fresh Group”)
a company that is owned as to 51% by Mr. Zhang Feng after the
Restructuring, and hence an associate of Mr. Zhang Feng
For the avoidance of doubt, Chongqing Department Store, DRGML and Metro Group are not
connected persons for the purpose of Chapter 14A of the Listing Rules. In particular, (i) Chongqing
Department Store ceased to be a connected person as it was held as to 24.89% only by Wumei Group
as of March 9, 2024; (ii) DRGML is a substantial shareholder of Retail Technology Asia, an
insignificant subsidiary of the Company, and is therefore not a connected person for the purpose of for
the purpose of Rule 14A.09 of the Listing Rule; and (iii) Metro Group currently does not, nor through
its subsidiaries, hold any equity interest in WM Holding HK (which was the holding company of
Maidelong Entities, prior to the MDL Reorganization) or MDL Wholesale Group (or Maidelong
Entities, prior to the MDL Reorganization). Transactions entered into with these entities do not
therefore constitute connected transactions for the purpose of Chapter 14A of the Listing Rules.
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CONNECTED TRANSACTIONS
SUMMARY OF OUR CONTINUING CONNECTED TRANSACTIONS
We have entered into the following transactions that will constitute continuing connected
transactions under Rule 14A.31 of the Listing Rules upon Listing:
Type of connected
transaction and
applicable Listing Rule Waiver sought
Proposed annual cap for the year ending
December 31, (RMB million)
Transaction 2024 2025 2026
A1. Wumei Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core
Service Cloud Solutions by
our Group to Wumei
Group
Non-exempt continuing
connected transaction:
Rule 14A.35
Rule 14A.36
Rule 14A.52
Rule 14A.53
Rule 14A.105
Announcement,
independent shareholder
approval, circular
1,235.1 1,327.4 1,435.2
A2. Wumei Framework Agreement
1. Lease of properties owned
by Wumei Group by our
Group
Partially-exempt
continuing connected
transaction:
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 7.2 4.6 7.8
2. Lease of advertising space
from Wumei Group by our
Group
Partially-exempt
continuing connected
transaction:
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 7.0 15.0 15.0
B1. MDL Wholesale Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core
Service Cloud Solutions by
our Group to MDL
Wholesale Group
Non-exempt continuing
connected transaction:
Rule 14A.35
Rule 14A.36
Rule 14A.52
Rule 14A.53
Rule 14A.105
Announcement,
independent shareholder
approval, circular
92.0 106.0 106.0
B2. MDL Wholesale Framework Agreement
1. Lease of properties owned
by MDL Wholesale Group
by our Group
Partially-exempt
continuing connected
transaction:
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 0.1 0.1 0.5
C. B&T Framework Agreement
1. Provision of Retail Core
Service Cloud Solutions by
our Group to B&T Entities
Non-exempt continuing
connected transaction:
Rule 14A.35
Rule 14A.36
Rule 14A.53
Rule 14A.105
Announcement,
Independent shareholder
approval, circular
10.0 11.5 12.8
D. Dmall Zhilian Framework Agreement
1. Provision of Zhilian AIoT
Solutions by Dmall Zhilian
to our Group
Non-exempt continuing
connected transaction:
Rule 14A.35
Rule 14A.36
Rule 14A.53
Rule 14A.105
Announcement,
Independent shareholder
approval, circular
429.3 450.8 473.3
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CONNECTED TRANSACTIONS
Type of connected
transaction and
applicable Listing Rule Waiver sought
Proposed annual cap for the year ending
December 31, (RMB million)
Transaction 2024 2025 2026
E. Yinchuan Xinhua Framework Agreement
1. Provision of Retail Core
Service Cloud Solutions by
our Group to Yinchuan
Xinhua Group
Non-exempt continuing
connected transaction:
Rule 14A.35
Rule 14A.36
Rule 14A.53
Rule 14A.105
Announcement,
independent shareholder
approval, circular
82.0 93.5 104.1
F1. Dmall Fresh Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core
Service Cloud Solutions by
our Group to Dmall Fresh
(Beijing)
Partially-exempt
continuing connected
transaction:
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 20.0 20.0 20.0
F2. Trademark Licensing Agreement
1. Trademark Licensing by
our Group to Dmall Fresh
(Beijing)
Fully-exempt continuing
connected transaction:
Rule 14A.52
Rule 14A.76(1)
N/A N/A N/A
F3. Dmall Fresh Marketing Resource Framework Agreement
1. Provision of marketing
resources by Dmall Fresh
Group to us
Partially-exempt
continuing connected
transaction:
Rule 14A.35
Rule 14A.76(2)
Rule 14A.105
Announcement 3.0 3.0 1.0
PROVISION OF RETAIL CORE SERVICE CLOUD SOLUTIONS BY THE GROUP TO THE
CONNECTED PERSONS
Services provided
As part of our ordinary course of business, we provide retail core service cloud solutions and
related services (“ Retail Core Service Cloud Solutions ”) to our retailer customers to digitalize and
optimize their omni-channel operation including through our proprietary cloud-based operating system
and our AIoT solutions and related services. Our Retail Core Service Cloud Solutions include but are
not limited to: installation of modules of our operating system based on customer preference and needs,
such as modules for supply chain management, product management, store management and
distributed e-commerce system; development of mobile applications on our operating system and other
software development, customization and maintenance services; provision of ongoing system
maintenance and technical support services; provision of AIoT solutions such as our proprietary Scan-
and-Go solutions, intelligent loss prevention solutions, intelligent cleaning solutions, intelligent stock
management solutions, intelligent package sorting solutions, intelligent delivery solutions and
intelligent energy saving solutions, among others.
For further details of our Retail Core Service Cloud Solutions, please see the section headed
“Business—Our Service Offerings”.
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Pricing terms
For our Retail Core Service Cloud Solutions, we charge service fees using one or a combination
of the following methods (“ Retail Core Service Cloud Pricing Terms ”):
(a) Our primary pricing methods for providing Retail Core Service Cloud Solutions are: a take rate
fee structure whereby we charge a percentage of the customer’s GMV (based on POS value or
sales value) facilitated by our operating system, or a fixed subscription fee model. The said
take rate percentage or the fixed fee shall be determined through arm’s length negotiation
between the parties based on various factors, including but not limited to the number and types
of modules subscribed by the customer, the subscription period, the expected customer’s total
GMV transacted through our platform, and the size and operational scope of our customers.
(b) Where we provide software development and maintenance services, we charge a fixed fee
which shall be determined through arm’s length negotiation between the parties based on
various factors, including but not limited to the number and types of the software modules
involved, the subscription period, and the size and operational scope of our customers.
(c) We charge a consultation fee for the customization of our product and service offerings.
The amount of the consultation fees is the product of (a) the aggregated work hours or
work days involved and (b) the applicable fee rate per worker per work hour or work day.
The fee rate varies depending on the type and seniority of the worker and may be
determined through arm’s length negotiation between the parties based on various factors,
including but not limited to operational scope of our customers and contract period.
(d) Where we provide AIoT solutions and related services to the customer, our primary
pricing methods are: a take rate fee structure whereby we charge a fee based on a
percentage of the GMV (based on POS value or sales value) processed through the
relevant AIoT solution, or a fixed subscription fee model. The said take rate percentage or
the fixed fee shall be determined through arm’s length negotiation between the parties
based on various factors, including but not limited to types of the products and/or services
provided by us and the retail format, store size and operational scope of the customer.
(e) Where we sell AIoT hardware to customers, the price is determined on a cost-plus basis
and subject to arm’s length negotiation between the parties taking into account various
factors including the purchase volume and product type of the customers’ orders.
(f) Where a module on our operating system or a type of AIoT solutions, due to the unique
nature of the functionality or service involved, would require pricing methods other than
the take rate fee structure or subscription fee structure, the pricing method and pricing
terms shall be determined through arm’s length negotiations between the parties to reflect
the commercial reality, and shall take into account factors such as (to the extent relevant in
each case): our costs in developing the relevant module or solutions, our labor and other
costs required for providing such services, the scope and estimated volume of services to
be provided, market pricing for similar services made available by or to independent third
parties. In any event, we will only agree to the pricing methods and pricing terms if (i) the
terms and conditions are fair and reasonable and based on normal or no less favorable
commercial terms as compared to our provision of similar modules or solutions to other
customers who are independent third parties; and (ii) they are in the best interests of our
Company and the Shareholders as a whole.
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CONNECTED TRANSACTIONS
Reasons for the transactions
Provision of Retail Core Service Cloud Solutions forms our ordinary business. In particular, as
a leading full-spectrum omni-channel retail digitalization solution provider in China, according to
Frost & Sullivan, we are the natural choice for our above listed connected persons (being among the
top retailers in their respective markets) for acquiring retail digitalization solutions. The connected
persons discussed in this section have found our service offerings beneficial to their own operations
and have been our valued long-term customers. Our strategic partnership with Wumei Group, in
particular, is the bedrock of our early success. We implemented our cloud solutions in Wumei Group’s
nationwide store network and our functionalities through their complex operation. Our experience with
Wumei Group has inspired us to deliver many popular modules that are applicable to other retail
formats in China and overseas markets. We expect to continue to provide Retail Core Service Cloud
Solutions to them following the Listing.
A1. WUMEI RETAIL CORE SERVICE CLOUD FRAMEWORK AGREEMENT
On October 10, 2024, Dmall (Shenzhen) Digital (for itself and on behalf of other members of
our Group) entered into a framework agreement with Wumei Technology (for itself and on behalf of
the other group members of Wumei Group) (the “ Wumei Retail Core Service Cloud Framework
Agreement”) to regulate the provision of Retail Core Service Cloud Solutions by our Group to Wumei
Group.
The initial term of the Wumei Retail Core Service Cloud Framework Agreement will
commence on the Listing Date and end on December 31, 2043 (both days inclusive). Separate
underlying agreements will be entered into which will set out the precise scope of services, service fees
calculation, method of payment and other details of the service arrangement in the manner provided in
the Wumei Retail Core Service Cloud Framework Agreement.
1. Retail Core Service Cloud Solutions
Pursuant to the Wumei Retail Core Service Cloud Framework Agreement, we shall provide
Retail Core Service Cloud Solutions to Wumei Group and, in return, the Wumei Group shall pay us
service fees in accordance with the Retail Core Service Cloud Pricing Terms.
Pricing policy
We will follow the Retail Core Service Cloud Pricing Terms when providing Retail Core
Service Cloud Solutions to Wumei Group. The pricing and other terms in a specific service agreement
under the Wumei Retail Core Service Cloud Framework Agreement will be determined based on arm’s
length negotiation, and we will only enter into such a specific service agreement if (i) the terms and
conditions are fair and reasonable and based on normal or no less favorable commercial terms as
compared to our provision of similar Retail Core Service Cloud Solutions to other customers who are
independent third parties; and (ii) it is in the best interests of our Company and the Shareholders as a
whole. Prior to any specific service agreement is entered into, our legal department will review the
legal terms of the agreement and our finance department will review the pricing terms of the
agreement, in order to ensure the terms of such agreement are consistent with and no less favorable to
the Group than the terms on which we provide similar Retail Core Service Cloud Solutions to
independent customers.
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CONNECTED TRANSACTIONS
Historical amounts, annual caps and basis of annual caps
Prior to the MDL Reorganization, Wumei Group primarily consist of the food and fast-moving
consumer goods distribution business and the retail business. We understood from MDL Wholesale
that following assessment of the overall market positions of the food and fast-moving consumer goods
distribution business and the retail business and to enable Wumei Group and the Maidelong Entities to
focus on their respective businesses, MDL Wholesale decided to conduct the MDL Reorganization to
focus on the food and fast-moving consumer goods distribution business, and to dispose subsidiaries
which engaged in the retail business to Wumei Group. The remaining subsidiaries within the Wumei
Group, including the B&T Entities and the Yinchuan Xinhua Group, were unaffected by the MDL
Reorganization.
We set out below our historical transaction amounts with Wumei Group and Maidelong Entities
prior to the MDL Reorganization for reference. In this context, Wumei Group prior to the MDL
Reorganization refers to Wumei Technology together with its subsidiaries, excluding Maidelong
Entities, B&T Entities and Yinchuan Xinhua Group.
For the years ended December 31, 2021, 2022, 2023 and the six months ended June 30, 2024,
the aggregate amounts of fees relating to Retail Core Service Cloud Solutions paid by Wumei Group to
us relating to our continuing operations were RMB203.0 million, RMB306.4 million RMB604.4
million and RMB475.3 million, respectively.
For the years ended December 31, 2021, 2022, 2023 and the six months ended June 30, 2024,
the aggregate amounts of fees relating to Retail Core Service Cloud Solutions paid by Maidelong
Entities (or MDL Wholesale Group, after the MDL Reorganization) to us relating to our continuing
operations were RMB75.5 million, RMB234.4 million, RMB244.2 million and RMB182.2 million,
respectively.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under
this transaction are expected to be RMB1,235.1 million, RMB1,327.4 million and RMB1,435.2
million, respectively.
The annual caps were determined taking into account the following key factors:
(a) the aforesaid historical transaction amounts and the growth trend observed thereof. It is
noted that the transaction amount relating to Retail Core Service Cloud Solutions paid by
Wumei Group to us relating to our continuing operations grew 50.9% from 2021 to 2022,
97.3% from 2022 to 2023 and 69.6% from the six months ended June 30

 2023 to the six
months ended June 30, 2024. The rapid growth during the Track Record Period was driven
by a number of factors, including (i) the increasing total GMV processed through our
operating system, and (ii) expanding revenue streams from subscriptions of new AIoT
solutions such as the intelligent loss prevention systems since 2022, intelligent cleaning
solutions, intelligent merchandise replenishment solutions, intelligent package sorting
solutions and intelligent cashier solutions since early 2023 as well as additional
customization work demanded by the Wumei Group based on its business needs;
(b) the existing agreements (including the pricing terms therein) between our Group and
Wumei Group. The annual cap for the year 2024 shows an increase of RMB630.7 million
from the historical transaction amount in 2023. The increase in expected revenue is mainly
due to (i) an increase of expected revenue in the amount of approximately
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CONNECTED TRANSACTIONS
RMB303.2 million as a result of the MDL Reorganization, of which we expect an increase
of expected revenue from provision of SaaS solutions in the amount of approximately
RMB159.8 million and from provision of AIoT solutions in the amount of approximately
RMB143.4 million for the year ending December 31, 2024; and (ii) Wumei Group starting
to operate its O2O e-commerce business in-house in January 2024, of which we expect an
increase of expected revenue in the amount of approximately RMB327.5 million.
Following such transition, we started to provide additional technical support and other
services under our Retail Core Service Cloud Solutions to Wumei Group to support its
distributed e-commerce system operations, which we expect will bring in additional Retail
Core Service Cloud Solutions revenue in the following manner: (i) we charge an increased
take rate for our SaaS solutions provided to customers who operate its O2O e-commerce
business in-house, including Wumei Group. We expect this factor would account for
approximately RMB54.7 million out of the RMB327.5 million increase; and (ii) Wumei
Group increased its procurement of our intelligent delivery solutions to support its
distributed e-commerce system operations. We expect this factor would account for
approximately RMB200.9 million out of the RMB327.5 million increase. Further, we
expect the existing AIoT solutions subscribed for by Wumei Group, such as intelligent
package sorting solutions, intelligent cleaning solutions and intelligent loss prevention
solutions, will contribute approximately RMB48.4 million out of the RMB327.5 million
increase, as they become fully online and operational in 2024. The remaining
approximately RMB23.5 million increase reflects our expected new revenue based on the
organic growth of some of the existing solutions as well as potential new projects that are
under negotiation and those we may present to our customers in the future; and
(c) the Company’s expectation of the demand for our Retail Core Service Cloud Solutions
from Wumei Group for the 2024, 2025 and 2026 financial years. The bases for the
expected demand in 2024 are detailed in (b) above. The Company further expects an
approximately 7.4% increase in the annual cap from 2024 to 2025, mainly reflecting the
additional revenue to be generated from a moderate increase in Wumei Group’s total
GMV from 2024 to 2025. The Company further expects an approximately 8.1% increase
in the annual cap from 2025 to 2026, representing a relatively stable continuation of the
growth trend from 2025 to 2026. Hence, the overall CAGR of the annual caps for 2024 to
2026 is approximately 7.8%. The growth trend is less rapid than that during the Track
Record Period because, between 2022 and 2024, the major new AIoT solutions purchased
by the Wumei Group have become or will become progressively fully operational and the
scope of the service modules will largely stabilized from 2024 onwards. Hence the
expected growth trend for the next three years is relatively moderate based on relatively
stable take rates and the customer’s total GMV.
Our Directors consider that the proposed annual caps are fair and reasonable.
A2. WUMEI FRAMEWORK AGREEMENT
On October 10, 2024, Dmall (Shenzhen) Digital (for itself and on behalf of other members of
our Group) entered into a framework agreement with Wumei Technology (for itself and on behalf of
the other group members of Wumei Group) (the “ Wumei Framework Agreement ”) to regulate the
provision by Wumei Group of (i) property lease and (ii) lease of advertising space to our Group.
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The initial term of the Wumei Framework Agreement will commence on the Listing Date and
end on December 31, 2026 (both days inclusive). Separate underlying agreements will be entered into
which will set out the precise scope of services, service fees calculation, method of payment and other
details of the service arrangement in the manner provided in the Wumei Framework Agreement.
1. Lease of properties owned by Wumei Group by our Group
We have been leasing and will continue to lease various office space in buildings located in
Beijing and Shenzhen owned by Wumei Group, as our offices. In return, we pay Wumei Group rent
and property management fees. To avoid disruption to the continued operations of our Group, we
expect to, upon expiry of existing leases, continue to rent the properties from Wumei Group. The lease
terms of the existing leases and future leases to be entered hereunder are, and are expected to remain,
variable terms (in that they have fixed initial terms with options for extension).
Reasons for the transactions
The buildings owned by Wumei Group in Beijing and Shenzhen are located in the prime
business districts where many technology companies set up their headquarters and offices and are close
to public transport. As such buildings have the desired features we required for our offices, we engaged
in arm’s length negotiations with Wumei Group and leased certain office space located in its buildings.
Pricing terms and policy
The annual rent is calculated as a fixed per-day-per-square-meter rate multiplied by the size of
the rental property and the number of days in a year subject to the lease. The monthly management fee
is calculated as a fixed per month per square meter rate multiplied by the size of the rental property.
Both the rates of the rent and the rates of the management fee were determined based on the
parties’ arm’s length negotiations with reference to the actual rents, management fees and other
utilities that apply to other tenants in the same building, and the prevailing market rentals and
management fees of similar grade and sized properties in the same vicinity, charged by landlords that
are independent third parties.
The pricing and other terms in a specific property lease agreement under the Wumei
Framework Agreement will be determined based on arm’s length negotiation, and we will only enter
into such an agreement if (i) the terms and conditions are fair and reasonable and based on normal or
no less favorable commercial terms as compared to those made available from landlords of comparable
property in the vicinity who are independent third parties; and (ii) it is in the best interests of our
Company and the Shareholders as a whole. Our business department will annually survey and review
the prevailing market price and terms of similar property rentals to ensure our foregoing pricing policy
can be effectively implemented.
Historical amounts, annual caps and basis of annual caps
In respect of the lease of property by our Group from Wumei Group relating to our continuing
operations, the historical transaction amounts for the years ended December 31, 2021, 2022, 2023, and
the six months ended June 30, 2024 were RMB14.3 million, RMB6.7 million, RMB2.2 million and
RMB5.1 million, respectively. Such amounts consist of the one-off recognition of right-of-use assets in
relation to the capitalization of the relevant leases under IFRS 16 during the respective periods as well
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as the property management fees incurred in each period. The decrease from RMB14.3 million in 2021
to RMB6.7 million in 2022 was mainly driven by our cost control and efficiency enhancement
measures, including reducing our office space upon the expiry of certain leases. The reason why the
leases of properties owned by Wumei Group under the Wumei Framework Agreement are treated as a
continuing connected transaction rather than one-off connected transactions is that such transactions
are not an individual lease (which would have been recognized as one-off right-of-use assets) but are
the “umbrella” transaction covering the existing and potential future individual leases during the term
of the Wumei Framework Agreement between the relevant parties.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB7.2 million, RMB4.6 million and RMB7.8 million, respectively.
The annual caps were determined taking into account the following key factors:
(a) the existing lease agreements we have with Wumei Group (including the expected expiry
and renewal cycles which will affect when the right-of-use asset is recognized and hence
the annual cap of that year) and the total size of the office space we expect to lease from
Wumei Group;
(b) our expected changes to the rent and management fee rates in the coming three years in
line with inflation and property market conditions; and
(c) due to the one-off recognition of right-of-use assets required under IFRS 16, which we
expect will be applicable to our current and future leases from Wumei Group, the annual
caps are materially higher than the actual lease payments we expect to pay to Wumei
Group on an annual basis.
Our Directors consider that the proposed annual caps are fair and reasonable.
2. Lease of advertising space from Wumei Group by our Group
Pursuant to the Wumei Framework Agreements, we may lease advertising spaces (such as
displays areas on walls, lift areas, shop venues and so on) in the physical stores of Wumei Group that
Wumei Group manages and has the right to lease out. In return, we shall pay Wumei Group rent. The
leased advertising spaces are primarily used by our Group in the provision of marketing and
advertising cloud solutions to our customers. The term of each individual lease may vary substantially
depending on the marketing project(s) the relevant advertising space is intended for.
Reasons for the transactions
The Wumei Group is one of the largest multi-brand retailers in China and operates a large
number of stores with extensive geographical reach in China. The advertising spaces in Wumei
Group’s stores can be viewed by a wide audience and are desirable advertising resources. As such, we
have leased and will continue to lease advertising spaces from Wumei Group from time to time in
order to serve the customers.
Pricing terms and policy
The rent may be calculated based on one or more of the following methods:
(a) a fixed monthly or annual rent, usually applicable to leases that are longer than a month; or
(b) a lump sum, usually applicable to short-term leases that are shorter than a month.
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The rent of each individual lease shall be determined based on the parties’ arm’s length
negotiations with reference to a range of factors including the rents charged by Wumei Group for other
comparable advertising spaces in the same store or in the same vicinity, which are set out in the
standard pricing sheets Wumei Group would issue from time to time that apply to all potential lessees
of the advertising spaces in the same store, and the intended duration of the lease.
The rent and other terms in a specific lease agreement under the Wumei Framework Agreement
will be determined based on arm’s length negotiation, and we will only enter into such an agreement if
(i) the terms and conditions are fair and reasonable and based on normal or no less favorable
commercial terms as compared to those made available from lessors of comparable advertising spaces
in the vicinity who are independent third parties; and (ii) it is in the best interests of our Company and
the Shareholders as a whole. Our business department will annually survey and review the prevailing
market price and terms of similar advertising spaces to ensure our foregoing pricing policy can be
effectively implemented.
Historical amounts, annual caps and basis of annual caps
As we only started to lease advertising spaces from Wumei group in February 2023, the
historical transaction amounts relating to our continuing operations for the years ended December 31,
2021, 2022, 2023, and the six months ended June 30, 2024 were nil, nil, RMB13.8 million and nil,
respectively.
Such amounts consist of the one-off recognition of right-of-use assets in relation to the
capitalization of the long-term leases under IFRS 16 during the respective periods, as well as the rents
paid for the short-term leases (which were not capitalized) in each period.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB7.0 million, RMB15.0 million and RMB15.0 million, respectively.
The annual caps were determined taking into account the following key factors:
(a) the existing lease agreements we have with Wumei Group (including the expected expiry
and renewal cycles of the long-term leases which will affect when the right-of-use asset is
recognized and hence the annual cap of that year);
(b) our expected amount and format of advertising spaces we will require in the provision of
marketing and advertising solutions to our customers in the next three years. For 2024, the
annual cap of RMB7.0 million reflects the existing advertising space lease agreements we
have entered into with Wumei Group which has been recognized as a right-of-use asset
(and hence all amounts are recognized in 2023). For 2025 and 2026, the annual caps of
RMB15.0 million reflect our expected additional needs of short term leases and new long
term leases of Wumei’s advertising space in 2025 and 2026;
(c) our expected changes to the rent in the coming three years in line with inflation and market
conditions; and
(d) due to the one-off recognition of right-of-use assets required under IFRS 16, which we
expect will be applicable to some of our longer term leases of advertising spaces from
Wumei Group, the annual caps are materially higher than the actual lease payments we
expect to pay to Wumei Group on an annual basis.
Our Directors consider that the proposed annual caps are fair and reasonable.
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B1. MDL WHOLESALE RETAIL CORE SERVICE CLOUD FRAMEWORK AGREEMENT
On November 8, 2024, Dmall (Shenzhen) Digital (for itself and on behalf of other members of
our Group) entered into a framework agreement with MDL Wholesale (for itself and on behalf of the
other group members of MDL Wholesale Group) (the “ MDL Wholesale Retail Core Service Cloud
Framework Agreement ”) to regulate the provision of Retail Core Service Cloud Solutions by our
Group to MDL Wholesale Group.
The initial term of the MDL Wholesale Retail Core Service Cloud Framework Agreement will
commence on the Listing Date and end on December 31, 2044 (both days inclusive). Separate
underlying agreements will be entered into which will set out the precise scope of services, service fees
calculation, method of payment and other details of the service arrangement in the manner provided in
the MDL Wholesale Retail Core Service Cloud Framework Agreements.
1. Retail Core Service Cloud Solutions
Pursuant to the MDL Wholesale Retail Core Service Cloud Framework Agreement, we shall
provide Retail Core Service Cloud Solutions to MDL Wholesale Group and, in return, they shall pay us
service fees in accordance with the Retail Core Service Cloud Pricing Terms.
Pricing policy
We will follow the Retail Core Service Cloud Pricing Terms when providing Retail Core
Service Cloud Solutions to MDL Wholesale Group. The pricing and other terms in a specific service
agreement under the MDL Wholesale Retail Core Service Cloud Framework Agreement will be
determined based on arm’s length negotiation, and we will only enter into such a specific service
agreement if (i) the terms and conditions are fair and reasonable and based on normal or no less
favorable commercial terms as compared to our provision of similar Retail Core Service Cloud
Solutions to other customers who are independent third parties; and (ii) it is in the best interests of our
Company and the Shareholders as a whole. Prior to any specific service agreement is entered into, our
legal department will review the legal terms of the agreement and our finance department will review
the pricing terms of the agreement, in order to ensure the terms of such agreement are consistent with
and no less favorable to the Group than the terms on which we provide similar Retail Core Service
Cloud Solutions to independent customers.
Historical amounts, annual caps and basis of annual caps
Please refer to the section “Connected Transactions — A1. Wumei Retail Core Service Cloud
Framework Agreement — Historical amounts, annual caps and basis of annual caps” above. In this
context, Wumei Group prior to the MDL Reorganization refers to Wumei Technology together with its
subsidiaries, excluding Maidelong Entities, B&T Entities and Yinchuan Xinhua Group.
We set out below our historical transaction amounts with Wumei Group and Maidelong Entities
prior to the MDLReorganization for reference. For the years ended December 31, 2021, 2022, 2023,
and the six months ended June 30, 2024, the aggregate amounts of fees relating to Retail Core Service
Cloud Solutions paid by Wumei Group to us relating to our continuing operations were RMB203.0
million, RMB306.4 million RMB604.4 million and RMB475.3 million, respectively.
For the years ended December 31, 2021, 2022, 2023, and the six months ended June 30, 2024,
the aggregate amounts of fees relating to Retail Core Service Cloud Solutions paid by Maidelong
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Entities to us (or MDL Wholesale Group, after the MDL Reorganization) relating to our continuing
operations were RMB75.5 million, RMB234.4 million, RMB244.2 million and RMB182.2 million,
respectively.
Following the MDL Reorganization, given MDL Wholesale Group now only focuses on the
food and fast-moving consumer goods distribution business and has disposed subsidiaries which
engaged in the retail business to Wumei Group, the transactions covered under the MDL Wholesale
Retail Core Service Cloud Framework Agreement represents the Retail Core Service Cloud Solutions
we provide to MDL Wholesale Group only following the MDL Reorganization.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB92.0 million, RMB106.0 million and RMB106.0 million,
respectively.
The annual caps were determined taking into account the following key factors:
(a) the existing agreements (including the existing pricing terms therein) between our Group and
Maidelong Entities (prior to MDL Reorganization). Following the MDL Reorganization, the
annual cap for the year 2024 represents the Retail Core Service Cloud Solutions we provide
to MDL Wholesale Group for their food and fast-moving consumer goods distribution
business as they ceased engaging in the retail business following the MDL Reorganization.
For the year ending December 31, 2024, revenue from take rates to be charged for using our
Dmall OS system under the Retail Core Service Cloud Solutions is expected to be
approximately RMB85.4 million; revenue from intelligent loss prevention solutions is
expected to be approximately RMB4.3 million; revenue from intelligent delivery solutions is
expected to be approximately RMB1.6 million; and revenue from other AIoT solutions are
expected to be approximately RMB0.6 million, reflecting our expected new revenue based
on the organic growth of some of the existing solutions as well as potential new projects that
are under negotiation and those we may present to our customers in the future; and
(b) the Company’s expectation of the demand for our Retail Core Service Cloud Solutions
from MDL Wholesale Group for the 2024, 2025 and 2026 financial years. The bases for
the expected demand in 2024 are detailed in (a) above. The Company further expects an
increase of approximately 15.2% in the annual cap from 2024 to 2025, factoring in a
moderately expanded service scope and a moderate increase in MDL Wholesale Group’s
total GMV from 2024 to 2025. We expect the annual cap in 2026 should maintain at the
same level as that in 2025. Hence, the overall CAGR of the annual caps for 2023 to 2025
is approximately 7.3%.
The growth trend is less rapid than that during the Track Record Period because, in 2022,
the Dmall OS system deployed to the Maidelong Entities fully commenced operations and
between 2022 and 2024, the major new AIoT solutions purchased have become or will
become progressively fully operational, hence the scope and amount of the Retail Core
Service Cloud Solutions subscribed by MDL Wholesale Group will largely stabilized from
2024 onwards especially as MDL Wholesale Group only focuses on the food and fast-
moving consumer goods distribution business following the MDL Reorganization.
Our Directors consider that the proposed annual caps are fair and reasonable.
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B2. MDL WHOLESALE FRAMEWORK AGREEMENT
On October 30, 2024, Dmall (Shenzhen) Digital (for itself and on behalf of other members of
our Group) entered into a framework agreement with MDL Wholesale (for itself and on behalf of the
other group members of MDL Wholesale Group) (the “ MDL Wholesale Framework Agreement ”) to
regulate the provision of property lease by MDL Wholesale Group to our Group.
The initial term of the MDL Wholesale Framework Agreement will commence on the Listing
Date and end on December 31, 2026 (both days inclusive). Separate underlying agreements will be
entered into which will set out the precise scope of services, service fees calculation, method of
payment and other details of the service arrangement in the manner provided in the MDL Wholesale
Framework Agreement.
1. Lease of properties owned by MDL Wholesale Group by our Group
We have been leasing and will continue to lease office space in the building located at
No. 1425, Zhenbei Road, Putuo District, Shanghai, the PRC, which is owned by MDL Commercial
Group Co., Ltd. (
ʮ̡), a subsidiary of MDL Wholesale Group, as our offices. In
return, we pay MDL Wholesale Group rent and property service fees. To avoid disruption to the
continued operations of our Group, we expect to, upon expiry of existing leases, continue to rent the
properties from MDL Wholesale Group. The lease terms of the existing leases and future leases to be
entered hereunder are, and are expected to remain, variable terms (in that they have fixed initial terms
but allow options for extension).
Reasons for the transactions
The building subject to this transaction is located in one of the prime business districts in
Shanghai and close to public transport. As such building has the desired features we required for our
offices, we engaged in arm’s length negotiations with MDL Wholesale Group and leased certain office
space located in such building.
Pricing terms and policy
The rent is calculated as a fixed per-day-per-square-meter rate multiplied by the size of the
rental property and the number of days of the lease. The monthly property service fee is calculated as a
fixed monthly rate for each type of service subscribed for by our Group (such as property management
fees, internet connection fees and so forth).
Both the rates of the rent and the rates of the property service fee were determined based on the
parties’ arm’s length negotiations with reference to the actual rents, property service fees and other
utilities that apply to other tenants in the same building, and the prevailing market rentals and property
service fees of similar grade and sized properties in the same vicinity, charged by landlords that are
independent third parties.
The pricing and other terms in a specific property lease agreement under the MDL Wholesale
Framework Agreement will be determined based on arm’s length negotiation, and we will only enter
into such an agreement if (i) the terms and conditions are fair and reasonable and based on normal or
no less favorable commercial terms as compared to those made available from landlords of comparable
property in the vicinity who are independent third parties; and (ii) it is in the best interests of our
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Company and the Shareholders as a whole. Our business department will annually survey and review
the prevailing market price and terms of similar property rentals to ensure our foregoing pricing policy
can be effectively implemented.
Historical amounts, annual caps and basis of annual caps
In respect of the lease of property by our Group from MDL Wholesale Group relating to our
continuing operations, the historical transaction amounts for the years ended December 31, 2021, 2022,
2023, and the six months ended June 30, 2024, were RMB0.1 million, RMB1.4 million
RMB0.4 million and less than RMB0.1 million, respectively. Such amounts consist of the one-off
recognition of right-of-use assets in relation to the capitalization of the relevant leases under IFRS 16
during the respective periods as well as the property service fees incurred in each period. The reason
why the lease of properties owned by MDL Wholesale Group by our Group under the MDL Wholesale
Framework Agreement are treated as a continuing connected transaction rather than one-off connected
transactions is that such transactions are not an individual lease (which would have been recognized as
one-off right-of-use assets) but are the “umbrella” transaction covering the existing and potential future
leases during the term of the MDL Wholesale Group Framework Agreement between the relevant
parties.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB0.1 million, RMB0.1 million and RMB0.5 million, respectively.
The annual caps were determined taking into account the following key factors:
(a) the existing lease agreements we have with MDL Wholesale Group (prior to the MDL
Reorganization) (including the expiry and renewal cycles which will affect when the right-
of-use asset is recognized and hence the annual cap of that year) and the total size of the
office space we expect to lease from them;
(b) our expected changes to the rent and property service fee rates in the coming three years in
line with inflation and property market conditions; and
(c) due to the one-off recognition of right-of-use assets required under IFRS 16, which we
expect will be applicable to our current and future leases from MDL Wholesale Group, the
annual caps are materially higher than the actual lease payments we expect to pay to MDL
Wholesale Group on an annual basis.
C. B&T FRAMEWORK AGREEMENT
On October 10, 2024, Dmall (Shenzhen) Digital (for itself and on behalf of other members of
our Group) entered into a framework agreement (the “ B&T Framework Agreement ”) with Shanghai
B&T (for itself and on behalf of the other B&T Entities) to regulate the provision of Retail Core
Service Cloud Solutions by our Group to B&T Entities.
The initial term of the B&T Framework Agreement will commence on the Listing Date and end
on December 31, 2026 (both days inclusive). Separate underlying agreements will be entered into
which will set out the precise scope of services, service fees calculation, method of payment and other
details of the service arrangement in the manner provided in the B&T Framework Agreement.
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1. Retail Core Service Cloud Solutions
Pursuant to the B&T Framework Agreement, we shall provide Retail Core Service Cloud
Solutions to B&T Entities and, in return, B&T Entities shall pay us service fees in accordance with the
Retail Core Service Cloud Pricing Terms.
Pricing policy
We will follow the Retail Core Service Cloud Pricing Terms when providing Retail Core
Service Cloud Solutions to B&T Entities. The pricing and other terms in a specific service agreement
under the B&T Framework Agreement will be determined based on arm’s length negotiation, and we
will only enter into such a specific service agreement if (i) the terms and conditions are fair and
reasonable and based on normal or no less favorable commercial terms as compared to our provision of
similar Retail Core Service Cloud Solutions to other customers who are independent third parties; and
(ii) it is in the best interests of our Company and the Shareholders as a whole. Prior to any specific
service agreement is entered into, our legal department will review the legal terms of the agreement
and our finance department will review the pricing terms of the agreement, in order to ensure the terms
of such agreement are consistent with and no less favorable to the Group than the terms on which we
provide similar Retail Core Service Cloud Solutions to independent customers.
Historical amounts, annual caps and basis of annual caps
As we only commenced the provision of Retail Core Service Cloud Solutions to B&T Entities
in October 2022, no fees were paid by B&T Entities to us for the years ended December 31, 2021 and
2022, and the total fees paid by B&T Entities to us in the year ended December 31, 2023 and the six
months ended June 30, 2024 were RMB3.7 million and RMB6.0 million, respectively.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB10.0 million, RMB11.5 million and RMB12.8 million,
respectively.
The annual caps were determined taking into account the following key factors:
(a) the aforesaid historical transaction amounts;
(b) the existing agreements (including the existing pricing terms therein) between our Group
and B&T Entities; and
(c) the Company’s expectation of the demand for our Retail Core Service Cloud Solutions
from B&T Entities for the 2024 financial year, and an expected moderate growth trend of
such demand for the 2025 and 2026 financial years, which are reflected as a CAGR of
approximately 13.1% in the annual caps for the next three years. The expected growth is
mainly driven by the expected increase in the provision of our intelligent cleaning
solutions to B&T Entities.
Our Directors consider that the proposed annual caps are fair and reasonable.
D. DMALL ZHILIAN FRAMEWORK AGREEMENT
As part of its ordinary business, Dmall Zhilian develops and provides smart retail AIoT
hardware, software and AI solutions (including but not limited to store security systems, intelligent loss
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prevention systems, intelligent merchandise replenishment solutions, intelligent package sorting
solutions, intelligent cashier solutions and so forth) as well as related design, installation and
maintenance services (together, “ Zhilian AIoT Solutions ”). On November 8, 2024, Dmall Life
Network (for itself and on behalf of other members of our Group) entered into a framework agreement
(the “ Dmall Zhilian Framework Agreement ”) with Dmall Zhilian (for itself and on behalf of its
subsidiary(ies) from time to time) to regulate the provision of Zhilian AIoT Solutions by Dmall Zhilian
to our Group.
The initial term of the Dmall Zhilian Framework Agreement will commence on the Listing
Date and end on December 31, 2026 (both days inclusive). Separate underlying agreements will be
entered into which will set out the precise scope of services, service fees calculation, method of
payment and other details of the service arrangement in the manner provided in the Dmall Zhilian
Framework Agreement.
Reasons for the transactions
The Company uses Dmall Zhilian, its subsidiary, to carry out procurement and sales activities
in connection with the Group’s AIoT business. As such, it is part of the Group’s ordinary business for
it to procure Zhilian AIoT Solutions as an intra-group transaction.
Pricing terms and policy
For the Zhilian AIoT Solutions, Dmall Zhilian charges us fees using one or a combination of
the following methods:
(a) for purchases of AIoT hardware, the price is determined on a cost-plus basis and subject to
arm’s length negotiation between the parties taking into account various factors including
the purchase volume and hardware type/model in the orders.
(b) for purchases of AIoT softwares and solutions, the primary pricing methods are (a) pricing
based on cost-plus basis, subject to arm’s length negotiation between the parties taking
into account various factors including the purchase volume and software type/model in the
orders and (b) a certain percentage of the revenue of the Group received from providing
such AIoT solutions to the Group’s external customers, which shall be determined based
on arm’s length negotiation between the parties taking into account various factors
including the relative contribution of Dmall Zhilian (and its subsidiaries), on the one hand,
and the other members of the Group, on the other hand, to the development of external
customer base and the provision of such solutions to the customers, in terms of the costs
and resources expended on developing the relevant hardwares and softwares, ongoing
operations and marketing efforts.
(c) for design and installation services for AIoT hardware, the price is typically quoted as a
fixed fee, which is determined based on a cost-plus basis taking into account various
factors including the estimated number of work hours required and the workers’ rates, the
costs of the materials to be used, costs of project management, logistics, quality controls
and other related expenses.
(d) for maintenance and technical support services in relation to AIoT solutions (if such
service is not included in the original warranty), the price is determined through arm’s
length negotiation between the parties taking into account various factors including the
scope, modules and duration of the AloT solutions to which such service relates.
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The pricing terms and other terms for the provisions of Zhilian AIoT Solutions between our Group
and Dmall Zhilian are determined through arm’s length negotiation. We will only enter into a specific
service agreement under the Dmall Zhilian Framework Agreement if (i) the terms and conditions are fair
and reasonable and based on normal or no less favorable commercial terms as compared to the prevailing
market price and terms for comparable products and services (available from vendors who are independent
third parties); and (ii) it is in the best interests of our Company and the Shareholders as a whole. Our
business department will annually survey and review the prevailing market price and terms of similar
products and services to ensure our foregoing pricing policy can be effectively implemented.
Historical amounts, annual caps and basis of annual caps
For the years ended December 31, 2021, 2022, 2023, and the six months ended June 30, 2024,
the aggregate amounts relating to Zhilian AIoT Solutions paid by us to Dmall Zhilian (and its
subsidiary) relating to our continuing operations were RMB4.7 million, RMB3.0 million, RMB266.0
million and RMB159.9 million, respectively.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB429.3 million, RMB450.8 million and RMB473.3 million,
respectively.
The annual caps were determined taking into account the following key factors:
(a) the existing agreements between our Group and Dmall Zhilian (and its subsidiaries). The
reason for the significant increase in 2023 as compared with 2022 was that our Group
increased the scope of the AIoT solutions purchased from Dmall Zhilian in early 2023, to
include solutions such as intelligent merchandise replenishment solutions, intelligent
package sorting solutions and intelligent cashier solutions etc., which the Group provides
to external customers. The service fees payable by the Group to Dmall Zhilian are
calculated as a percentage of the revenue of the Group received from providing such AIoT
solutions to the Group’s external customers.
(b) The annual cap for the year 2024 shows an increase of RMB163.3 million from the
historical transaction amount in 2023. The increase mainly reflects the increased scope of
AIoT solutions our Group purchased from Dmall Zhilian and that the service fees shall be
calculated as a percentage of the Group’s revenue from providing those AIoT solutions to
external customers, as detailed in (a) above. More precisely, based on the Group’s
additional revenue from external customers expected to be generated from existing
business contracts for such new AIoT solutions, the expected additional fees to be paid to
Dmall Zhilian in 2024 shall amount to approximately RMB63.0 million. The remaining
approximately RMB100.3 million out of the RMB163.3 million increase reflects the
expected additional fees to be paid to Dmall Zhilian based on our potential new AIoT
solutions projects with external customers that are under negotiation and those we may
present to our customers in the future.
(c) As Company’s AIoT solutions subscribed for by existing customers progressively
becoming fully online and operational, and as Company will further increase the scope of
its AIoT solutions offerings, the Company expects the Group’s revenue from providing
AIoT solutions to external customers to grow consistently over the next three years, the
service fees to be paid to Dmall Zhilian are expected to increase correspondingly, reflected
as a CAGR of 5.0% over the next three years.
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For the avoidance of doubt, since Dmall Zhilian is a subsidiary of the Group, transaction
between Dmall Zhilian (and its subsidiaries) with the other members of the Group are intra-group
transactions of the Group, and therefore the transaction amounts under the Dmall Zhilian Framework
Agreement are not costs or expenses of the Group in the Group’s consolidated financial statements.
Our Directors consider that the proposed annual caps are fair and reasonable.
E. YINCHUAN XINHUA FRAMEWORK AGREEMENT
On October 30, 2024, Dmall Life Wuhan (for itself and on behalf of other members of our
Group) entered into a framework agreement (the “ Yinchuan Xinhua Framework Agreement ”) with
Yinchuan Xinhua (for itself and on behalf of the other group members of Yinchuan Xinhua Group) to
regulate the provision of Retail Core Service Cloud Solutions by our Group to Yinchuan Xinhua
Group.
The initial term of the Yinchuan Xinhua Framework Agreement will commence on the Listing
Date and end on December 31, 2026 (both days inclusive). Separate underlying agreements will be
entered into which will set out the precise scope of services, service fees calculation, method of
payment and other details of the service arrangement in the manner provided in the Yinchuan Xinhua
Framework Agreement.
1. Retail Core Service Cloud Solutions
Pursuant to the Yinchuan Xinhua Framework Agreement, we shall provide Retail Core Service
Cloud Solutions to Yinchuan Xinhua Group and, in return, the Yinchuan Xinhua Group shall pay us
service fees in accordance with the Retail Core Service Cloud Pricing Terms.
Pricing policy
We will follow the Retail Core Service Cloud Pricing Terms when providing Retail Core
Service Cloud Solutions to Yinchuan Xinhua Group. The pricing and other terms in a specific service
agreement under the Yinchuan Xinhua Framework Agreement will be determined based on arm’s
length negotiation, and we will only enter into such a specific service agreement if (i) the terms and
conditions are fair and reasonable and based on normal or no less favorable commercial terms as
compared to our provision of similar Retail Core Service Cloud Solutions to other customers who are
independent third parties; and (ii) it is in the best interests of our Company and the Shareholders as a
whole. Prior to any specific service agreement is entered into, our legal department will review the
legal terms of the agreement and our finance department will review the pricing terms of the
agreement, in order to ensure the terms of such agreement are consistent with and no less favorable to
the Group than the terms on which we provide similar Retail Core Service Cloud Solutions to
independent customers.
Historical amounts, annual caps and basis of annual caps
For the years ended December 31, 2021, 2022, 2023, and the six months ended June 30, 2024, the
aggregate amounts of fees relating to Retail Core Service Cloud Solutions paid by Yinchuan Xinhua
Group to us relating to our continuing operations were RMB24.8 million, RMB23.9 million,
RMB53.9 million and RMB32.5 million, respectively.
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For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB82.0 million, RMB93.5 million and RMB104.1 million, respectively.
The annual caps were determined taking into account the following key factors:
(a) the aforesaid historical transaction amounts and the trend observed thereof. It is noted that
the transaction amount relating to Retail Core Service Cloud Solutions paid by Yinchuan
Xinhua Group to us decreased 3.6% from 2021 to 2022 and grew 125.5% from 2022 to
2023. The large increase in the transaction amount from 2022 to 2023 was mainly due to
Yinchuan Xinhua Group purchasing additional AIoT solutions from our Group, such as
intelligent loss prevention solutions and intelligent delivery solutions;
(b) the existing agreements (including the existing pricing terms therein) between our Group
and Yinchuan Xinhua Group; and
(c) the Company’s expectation of the demand for our Retail Core Service Cloud Solutions
from Yinchuan Xinhua Group, which is expected to experience moderate growth for the
2024, 2025 and 2026 financial years and reflected as a CAGR of approximately 12.7% in
the annual caps for the next three years, mainly driven by the increasing purchase of our
AIoT solutions by Yinchuan Xinhua Group and such AIoT solutions progressively going
online and operational.
F1. DMALL FRESH RETAIL CORE SERVICE CLOUD FRAMEWORK AGREEMENT
On November 8, 2024, Dmall Life Network (for itself and on behalf of other members of our
Group) entered into a framework agreement (the “ Dmall Fresh Retail Core Service Cloud
Framework Agreement”) with Dmall Fresh (Beijing) (for itself and on behalf of its subsidiaries from
time to time) to regulate the provision of Retail Core Service Cloud Solutions by our Group to Dmall
Fresh Group.
The initial term of the Dmall Fresh Retail Core Service Cloud Framework Agreement will
commence on the Listing Date and end on December 31, 2026 (both days inclusive). Separate
underlying agreements will be entered into which will set out the precise scope of services, service fees
calculation, method of payment and other details of the service arrangement in the manner provided in
the Dmall Fresh Retail Core Service Cloud Framework Agreement. The Retail Core Service Cloud
Solutions required by Dmall Fresh Group are mainly to support the Dmall app it operates.
1. Retail Core Service Cloud Solutions
Pursuant to the Dmall Fresh Retail Core Service Cloud Framework Agreement, we shall
provide Retail Core Service Cloud Solutions to Dmall Fresh Group and, in return, Dmall Fresh Group
shall pay us service fees in accordance with the Retail Core Service Cloud Pricing Terms.
Pricing policy
We will follow the Retail Core Service Cloud Pricing Terms when providing Retail Core
Service Cloud Solutions to Dmall Fresh Group. The pricing and other terms in a specific service
agreement under the Dmall Fresh Retail Core Service Cloud Framework Agreement will be
determined based on arm’s length negotiation, and we will only enter into such a specific service
agreement if (i) the terms and conditions are fair and reasonable and based on normal or no less
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favorable commercial terms as compared to our provision of similar Retail Core Service Cloud
Solutions to other customers who are independent third parties; and (ii) it is in the best interests of our
Company and the Shareholders as a whole. Prior to any specific service agreement is entered into, our
legal department will review the legal terms of the agreement and our finance department will review
the pricing terms of the agreement, in order to ensure the terms of such agreement are consistent with
and no less favorable to the Group than the terms on which we provide similar Retail Core Service
Cloud Solutions to independent customers.
Historical amounts, annual caps and basis of annual caps
We entered into agreement(s) to provide Retail Core Service Cloud Solutions to the Dmall
Fresh Group (mainly to support the Dmall app it operates) in January 2024. Prior to the completion of
the Restructuring on April 24, 2024, Dmall Fresh (Beijing) was a consolidated affiliated entity of the
Company. The historical transaction amount for this transaction relating to our continuing operations
for each of the years ended December 31, 2021, 2022, 2023, and the six months ended June 30, 2024 is
nil.
For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB20.0 million, RMB20.0 million and RMB20.0 million.
The annual caps were determined taking into account the following key factors:
(a) Company’s current expectation that the Retail Core Service Cloud Solutions required by
Dmall Fresh Group for the 2024, 2025 and 2026 financial years are mainly to support the
Dmall app it operates. Prior to the Restructuring, the Group developed, upgraded and
maintained the Dmall app in-house, and therefore had a good understanding of the app,
including the frequency and amount of work typically required to maintain it and the
potential areas requiring upgrading in the next three years. For example, in the year ended
December 31, 2022, the Group expended approximately 8,632 work days, or
approximately RMB30.2 million research & development expenses, on the research and
development, upgrading and maintenance of the Dmall app; in the year ended December
31, 2023, the Group expended approximately 10,045 work days, or approximately
RMB35.2 million research & development expenses, on the same; and during the month
of January, 2024, the Group expended approximately 599 work days, or approximately
RMB2.1 million research & development expenses, on the same.
The Company therefore estimated the service scope, service volume, and the estimated
work days and the applicable fee rates for the types and seniority of the workers involved,
based on its historical experience of maintaining and upgrading the Dmall app prior to
Restructuring, and on such basis determined the annual caps for this transaction. The
Company further expects the demand for our Retail Core Service Cloud Solutions from
Dmall Fresh Group over the next three years to be relatively stable, which is reflected as
the same annual cap amount for each of 2024, 2025 and 2026.
F2. TRADEMARK LICENSING AGREEMENT
On April 1, 2024, Dmall Life Digital entered into a trademark licensing agreement with Dmall
Fresh (Beijing) (the “ Trademark Licensing Agreement ”) pursuant to which Dmall Life Digital
granted a non-transferable license to Dmall Fresh (Beijing) for the use of a number of trademarks
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relating to our Dmall brand for an indefinite term. The permitted uses of each trademark are limited to
those products or services specified for each single trademark in the Trademark Licensing Agreement,
and must be for carrying out Dmall Fresh (Beijing)’s ordinary business of providing O2O e-commerce
platform services within Mainland China; the main products or services for which the trademarks may
be used include: advertising and promotional services, electronic product labels, softwares and
applications, goods delivery and storage, product packaging etc. Since such permitted uses are limited
to carrying out Dmall Fresh (Beijing)’s ordinary business of providing O2O e-commerce platform
services only, and our Group no longer operates any O2O e-commerce business to any material extent,
such permitted uses by Dmall Fresh (Beijing) are clearly delineated from our Group’s uses of the same
trademarks.
In consideration of the grant of the trademark licenses, Dmall Fresh (Beijing) had paid to our
Group a one-off license fee of RMB3,816,000, which had been fully settled prior to the Latest
Practicable Date. Other than the said one-off payment, we have no historical transaction amount for
this transaction as we had not previously entered into any trademark licensing agreement with Dmall
Fresh (Beijing).
The license fee was determined based on the valuation of the trademarks subject to the Trademark
Licensing Agreement provided in the valuation report issued by Shanghai PG Advisory Co., Ltd.
(“PGA”), an independent professional valuer, plus applicable taxes. PGA is a professional firm which
provides due diligence, transaction advisory, financial and tax consulting, valuation and capital market
services and other value-added financial services in the China. In addition, considering Dmall Fresh
(Beijing) operates the Dmall app with millions of active users, the Group would gain further exposure
and promotional benefits by having logos relating to our Dmall brand displayed or used in connection
with the Dmall app.
Accordingly, our Directors consider the Trademark Licensing Agreement is entered into in the
ordinary and usual course of business of our Group and its terms are fair and reasonable and are in the
interest of the Company and the Shareholders as a whole.
F3. DMALL FRESH MARKETING RESOURCE FRAMEWORK AGREEMENT
On November 8, 2024, Dmall Life Digital (for itself and on behalf of other members of our
Group) entered into a framework agreement (the “ Dmall Fresh Marketing Resource Framework
Agreement”) with Dmall Fresh (Beijing) (for itself and on behalf of its subsidiaries from time to time)
to regulate the provision of marketing resource by Dmall Fresh Group to our Group (including
provision of marketing resources and coupons issued by Dmall Fresh Group and other third parties)
(“marketing resources”).
The initial term of the Dmall Fresh Retail Marketing Resource Framework Agreement will
commence on the Listing Date and end on December 31, 2026 (both days inclusive). Separate underlying
agreements will be entered into which will set out the precise scope of services, service fees calculation,
method of payment and other details of the service arrangement in the manner provided in the Dmall
Fresh Marketing Resource Framework Agreement.
Pursuant to the Dmall Fresh Marketing Resource Framework Agreement, Dmall Fresh Group
shall provide marketing resources to us and, in return, we shall pay Dmall Fresh Group service fees in
accordance with the pricing terms set out below.
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Reasons for the transactions
Dmall Fresh Group has business relationship with a large number of high calibre brand
operators, payment channel operators and other businesses and enterprises. In the ordinary course of
Dmall Fresh Group’s business, it conducts marketing by issuing coupons which can be used as cash by
its consumers for direct consumption of products listed on the Dmall app, which are either under Dmall
Fresh Group’s expenses or reimbursed by the brand operators, payment channel operators and other
enterprises eventually. In order to serve our retailer customers who require us to gather marketing
resources for them, we purchase marketing resources and coupons issued by Dmall Fresh Group and
other third parties at a pricing term more particularly set out below based on arm’s length negotiation.
In addition, we sometimes give these coupons issued by Dmall Fresh Group to our customers for
marketing or promotion purpose. If these coupons are ultimately used by our customers in the platform
operated by Dmall Fresh Group, we will pay Dmall Fresh Group the face value of these coupon
actually used.
Pricing terms and policy
Dmall Fresh Group charges us fees using one or a combination of the following methods:
(a) for provision of marketing services required by our customers, the price is determined
typically based on a certain percentage of the marketing resources procured by Dmall
Fresh Group which are used by our customers, which in turn shall be determined based on
arm’s length negotiation between the parties taking into account various factors including
the our ability in providing the required marketing resources required by our customers,
the extent to which we need to procure the marketing resources from Dmall Fresh Group
and the fee rate we are willing to give to procure such marketing resources from Dmall
Fresh Group.
(b) for coupons issued by Dmall Fresh Group under our requirement, the price is determined
subject to arm’s length negotiation between the parties taking into account various factors
including the face value of the relevant coupons and the cost to Dmall Fresh Group issuing
such coupons.
The pricing terms and other terms for the provisions of marketing resources by Dmall Fresh
Group to our Group are determined through arm’s length negotiation. We will only enter into a specific
service agreement under the Dmall Fresh Marketing Resource Framework Agreement if (i) the terms
and conditions are fair and reasonable and based on normal or no less favorable commercial terms as
compared to the prevailing market price and terms for comparable products and services (available
from vendors who are independent third parties); and (ii) it is in the best interests of our Company and
the Shareholders as a whole. Our business department will annually survey and review the prevailing
market price and terms of similar products and services to ensure our foregoing pricing policy can be
effectively implemented.
Historical amounts, annual caps and basis of annual caps
Prior to the completion of the Restructuring on April 24, 2024, Dmall Fresh (Beijing) was a
consolidated affiliated entity of the Company. For the years ended December 31, 2021, 2022, 2023,
and the six months ended June 30, 2024, the amount we paid to Dmall Fresh Group for marketing
services were nil, nil, nil, and RMB0.1 million.
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For the years ending December 31, 2024, 2025 and 2026, the relevant annual caps under this
transaction are expected to be RMB3 million, RMB3 million and RMB1 million.
The annual caps were determined taking into account the following key factors:
(a) Demand from our customers in procuring marketing resources from brand operators,
payment channel operators and other businesses and enterprises for them. We currently
expect to procure marketing resources in the amount of approximately RMB50 million for
each of the two years ending December 31, 2024 and December 31, 2025 and the fee rate
we are willing to give depends on the types of marketing resources provided by Dmall
Fresh Group and the duration for which the marketing resources are provided.
(b) The size of our marketing or promotion activities and the extent to which we use coupons
issued by Dmall Fresh Group in our marketing or promotion activities as projected by our
business department. We started using coupons issued by Dmall Fresh Group in our
marketing and promotion activities in July 2024. We currently expect purchasing coupons
of RMB1 million for the year ending December 31, 2024 and we expect our purchase
should remain stable year-on-year.
Our Directors consider that the proposed annual caps are fair and reasonable.
LISTING RULES IMPLICATIONS
Transaction Listing Rules implications
A1. Wumei Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core Service
Cloud Solutions by our Group to
Wumei Group
As (i) MDL Wholesale Group, Yinchuan Xinhua Group and B&T
Entities are subsidiaries of Wumei Technology and (ii) the Retail
Core Service Cloud Solutions provided by us to Wumei Group
under the Wumei Retail Core Service Cloud Transactions (i.e.
transaction A1.1.) are substantially the same in nature as the Retail
Core Service Cloud Solutions provided by us to MDL Wholesale
Group under the MDL Wholesale Retail Core Service Cloud
Framework Agreement (i.e. transaction B1.1.), to Yinchuan Xinhua
Group under the Yinchuan Xinhua Framework Agreement (i.e.
transaction E.1.) and to B&T Entities under the B&T Framework
Agreement (i.e. transaction C.1.), the said transactions may be
required to be aggregated pursuant to Rule 14A.83 of the Listing
Rules.
Since the highest of the applicable percentage ratios calculated
under Chapter 14A of the Listing Rules, if such aggregation
applies, is expected to exceed 5%, the provision of Retail Core
Service Cloud Solutions by our Group to Wumei Group as
contemplated under the Wumei Retail Core Service Cloud
Transactions, in aggregation with the provision of Retail Core
Service Cloud Solutions by our Group to MDL Wholesale Group
as contemplated under the MDL Wholesale Retail Core Service
Cloud Framework Agreement, to Yinchuan Xinhua Group as
contemplated under the Yinchuan Xinhua Framework Agreement,
and to B&T Entities under the B&T Framework Agreement will,
upon Listing, constitute non-exempt continuing connected
transactions of the Company subject to the annual reporting
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Transaction Listing Rules implications
requirement under Rules 14A.49 and 14A.71 of the Listing Rules,
the announcement requirement under Rule 14A.35 of the Listing
Rules and the independent Shareholders’ approval requirement
under Rule 14A.36 of the Listing Rules.
A2. Wumei Framework Agreement
1. Lease of properties owned by
Wumei Group by our Group
As (i) MDL Wholesale Group are subsidiaries of Wumei
Technology and (ii) the lease of properties by us from Wumei
Group under the Wumei Framework Agreement (i.e. transaction
A2.1.) are the same in nature as the lease of properties by us from
MDL Wholesale Group under the MDL Wholesale Framework
Agreement (i.e. transaction B2.1.), the said transactions may be
required to be aggregated pursuant to Rule 14A.83 of the Listing
Rules.
Since the highest of the applicable percentage ratios calculated
under Chapter 14A of the Listing Rules, if such aggregation
applies, is expected to be 0.1% or more but less than 5%, pursuant
to Rule 14A.76(2) of the Listing Rules, the transactions in
connection with the lease of properties by us contemplated under
the Wumei Framework Agreement in aggregation with the lease of
properties by us contemplated under the MDL Wholesale
Framework Agreement will be exempt from the circular (including
the opinion and recommendation from an independent financial
advisor) and the independent shareholders’ approval requirements
upon Listing, but are subject to the announcement requirements
under Rule 14A.35 of the Listing Rules and the annual reporting
requirements under Rules 14A.49, 14A.71 and 14A.72 of the
Listing Rules.
2. Lease of advertising space from
Wumei Group by our Group
Since the highest of the applicable percentage ratios calculated
under Chapter 14A of the Listing Rules will be 0.1% or more but
less than 5%, pursuant to Rule 14A.76(2) of the Listing Rules, the
lease of advertising space from Wumei Group by our Group as
contemplated under the Wumei Framework Agreement will be
exempt from the circular (including the opinion and
recommendation from an independent financial advisor) and the
independent shareholders’ approval requirements, but are subject to
the announcement requirements under Rule 14A.35 of the Listing
Rules and the annual reporting requirements under Rules 14A.49,
14A.71 and 14A.72 of the Listing Rules.
B1. MDL Wholesale Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core Service
Cloud Solutions by our Group to
MDL Wholesale Group
See analysis in relation to transaction A1.1. above.
B2. MDL Wholesale Framework Agreement
1. Lease of properties owned by MDL
Wholesale Group by our Group
See analysis in relation to transaction A2.1. above.
C. B&T Framework Agreement
1. Provision of Retail Core Service by
our Group to B&T Entities
See analysis in relation to transaction A1.1. above.
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Transaction Listing Rules implications
D. Dmall Zhilian Framework Agreement
1. Provision of Zhilian AIoT Solutions
by Dmall Zhilian to our Group
Since the highest of the applicable percentage ratios calculated
under Chapter 14A of the Listing Rules is expected to exceed 5%,
the transactions contemplated under the Dmall Zhilian Framework
Agreement will, upon Listing, constitute continuing connected
transactions of the Company subject to the annual reporting
requirement under Rules 14A.49 and 14A.71 of the Listing Rules,
the announcement requirement under Rule 14A.35 of the Listing
Rules and the independent Shareholders’ approval requirement
under Rule 14A.36 of the Listing Rules.
E. Yinchuan Xinhua Framework Agreement
1. Provision of Retail Core Service
Cloud Solutions by our Group to
Yinchuan Xinhua Group
See analysis in relation to transaction A1.1. above.
F1. Dmall Fresh Retail Core Service Cloud Framework Agreement
1. Provision of Retail Core Service
Cloud Solutions by our Group to
Dmall Fresh Group
Since the highest of the applicable percentage ratios calculated
under Chapter 14A of the Listing Rules will be 0.1% or more but
less than 5%, pursuant to Rule 14A.76(2) of the Listing Rules, the
provision of Retail Core Service Cloud Solutions by our Group to
Dmall Fresh Group as contemplated under the Dmall Fresh Retail
Core Service Cloud Framework Agreement will be exempt from
the circular (including the opinion and recommendation from an
independent financial advisor) and the independent shareholders’
approval requirements, but are subject to the announcement
requirements under Rule 14A.35 of the Listing Rules and the
annual reporting requirements under Rules 14A.49, 14A.71 and
14A.72 of the Listing Rules.
F2. Trademark Licensing Agreement
1. Trademark Licensing by our Group
to Dmall Fresh (Beijing)
As all applicable percentage ratios under the Listing Rules in
respect of the transactions contemplated under the Trademark
Licensing Agreement are expected to be, on an annual basis, less
than 0.1% and the transactions are on normal commercial terms or
better, these transactions will be fully exempt from all of the
reporting, annual review, announcement, circular and independent
shareholders’ approval requirements under Chapter 14A of the
Listing Rules pursuant to Rule 14A.76(1) of the Listing Rules
F3. Dmall Fresh Marketing Resource Framework Agreement
1. Provision of marketing resources by
Dmall Fresh Group to us
Since the highest of the applicable percentage ratios calculated under
Chapter 14A of the Listing Rules will be 0.1% or more but less than
5%, pursuant to Rule 14A.76(2) of the Listing Rules, the provision of
marketing resources by Dmall Fresh Group to us as contemplated
under the Dmall Fresh Marketing Resource Framework Agreement
will be exempt from the circular (including the opinion and
recommendation from an independent financial advisor) and the
independent shareholders’ approval requirements, but are subject to
the announcement requirements under Rule 14A.35 of the Listing
Rules and the annual reporting requirements under Rules 14A.49,
14A.71 and 14A.72 of the Listing Rules.
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The annual caps set out and discussed in this section headed “Connected Transactions” are
produced for the purposes of managing our connected transactions and compliance with Chapter 14A
of the Listing Rules; they do not in any way represent, indicate or imply any forecast or projection of
our revenue, profitability, financial position or financial performance in the future. Shareholders and
investors shall not place any reliance on the above annual caps in assessing the financial position or
financial performance of our Group, whether historical or future. Instead, to assess the financial
position and financial performance of our Group, Shareholders and investors shall consider carefully
all relevant business and financial information contained in this document, in particular, the
information in “Business”, “Financial Information” and “Risk Factors” sections of this documents and
the accountants’ report and unaudited pro forma financial information in Appendix I and Appendix II
to this document.
WAIVERS
1. Partially-exempt and non-exempt continuing connected transactions
In respect of the partially-exempt continuing connected transactions described above, we have
applied for, and the Stock Exchange has granted us, a waiver from strict compliance with the
announcement requirements under the Listing Rules pursuant to Rule 14A.105 of the Listing Rules.
In respect of the non-exempt continuing connected transactions described above, we have
applied for, and the Stock Exchange has granted us, a waiver from strict compliance with the
announcement, circular and independent shareholders’ approval requirements under the Listing Rules
pursuant to Rule 14A.105 of the Listing Rules.
RULE 14A.52 CONSIDERATIONS
Pursuant to Rule 14A.52 of the Listing Rules, the terms of an agreement for a continuing
connected transaction must not exceed three years, except in special circumstances where the nature of
the transaction requires a longer period. The transactions contemplated under (a) the Wumei Retail
Core Service Cloud Framework Agreement, (b) the MDL Wholesale Retail Core Service Cloud
Framework Agreement, and (c) the Trademark Licensing Agreement are by nature require terms longer
than three years for the reasons set out below.
1. Provision of Retail Core Service Cloud Solutions
(a) The nature of transactions requires long-term cooperation
As our Retail Core Service Cloud Solutions are deeply embedded into our customers’
technology infrastructure and day-to-day operations, it is natural and common for our customers
(including independent third party customers) to enter into a long-term cooperation with us in respect
of Retail Core Service Cloud Solutions to ensure the stability of their business operations; any
disruption to these systems and related services may result in substantial loss in revenue and damage in
reputation for them.
Our Retail Core Service Cloud Solutions are also by nature difficult to replace and therefore
long-term cooperation is desirable and common. It would take substantial costs and time for a customer
to set up a replacement SaaS system which would take further time to be adjusted to a desirable level
of suitability and stability. It would take additional costs and time to train the customers’ staff to
operate a new SaaS system. We are a leading full-spectrum retail digitalization solution provider in
China, according to Frost & Sullivan, which means replacement options are limited.
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In addition, as we continue to provide Retail Core Service Cloud Solutions to our customers,
we accumulate understanding of their operations. The length of cooperation directly contributes to the
effectiveness and stability of the types of services we provide and therefore long-term cooperation is
desirable and common.
As such, our business contracts for provision of Retail Core Service Cloud Solutions, including
with independent third-party customers, typically have terms of five years or more. In particular,
according to Frost & Sullivan, given the design service life of a smart efficiency solution system
usually takes longer, the entering into of the Wumei Retail Core Sercice Cloud Framework Agreement
and the MDL Wholesale Retail Core Service Cloud Frame Agreement for a term of approximately 20
years is in line with industry practice.
(b) Interest of the Company and its Shareholders not prejudiced
As the transactions contemplated under the Wumei Retail Core Service Cloud Framework
Agreement and the MDL Wholesale Retail Core Service Cloud Framework Agreement are part of our
ordinary course of business and bring revenue to our Group, long-term agreements allow the Group to
secure stable revenue streams and customer base. In addition, we will ensure (i) the terms and
conditions for the transactions are fair and reasonable and based on normal or no less favorable
commercial terms as compared to our provision of similar services to other customers who are
independent third parties, and (ii) it is in the best interests of our Company and the Shareholders as a
whole, according to the applicable pricing policy and Listing Rules. As such, the Directors do not
consider having a term of more than three years would unduly prejudice the interests of the Company
and its Shareholders as a whole.
Based on the due diligence conducted and the factors listed below, the Joint Sponsors are of the
view that the transactions contemplated under (a) the Wumei Retail Core Service Cloud Framework
Agreement and (b) the MDL Wholesale Retail Core Service Cloud Framework Agreement require
terms longer than three years: (i) the reasons for entering into the Wumei Retail Core Service Cloud
Framework Agreement and the MDL Wholesale Retail Core Service Cloud Framework Agreement and
the nature and benefits of the long-term commercial and strategic cooperation among the parties as
mentioned above; (ii) the nature of the transactions between the parties which requires long-term
cooperating; (iii) Frost & Sullivan’s view that it is normal business practice in the retail digitalization
solution industry for cloud solutions agreements to have a duration of longer than three years and in
particular, according to Frost & Sullivan, given the design service life of a smart efficiency solution
system usually takes longer, the entering into of the Wumei Retail Core Sercice Cloud Framework
Agreement and the MDL Wholesale Retail Core Service Cloud Frame Agreement for a term of
approximately 20 years is in line with industry practice; and (iv) the Group has entered into cloud
solutions contracts with a term of five years with customers who are not connected persons of the
Company.
As the above discussed agreements are in respect of the Group’s provision of Retail Core
Service Cloud Solutions, the precise scope and volume of solutions to be provided are largely
dependent on the business needs of Wumei Group and MDL Wholesale Group, respectively, as
customers of the Group. In addition, the Group is actively innovating and expanding its service
offerings, further adding to the unpredictability of the precise scope and volume of solutions to be
provided under the Agreements. As such, as of the date of this document, the Company does not have
sufficiently accurate and certain basis to produce annual caps for the said transactions beyond three
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years. The Company will refresh the annual caps for the these transactions and re-comply with the
relevant requirements in Chapter 14A before the end of 2026.
2. Trademark Licensing
Considering that (a) the license fee paid by Dmall Fresh (Beijing) to our Group under the
Trademark Licensing Agreement was based on the valuation of the trademarks provided by an independent
professional valuer, which had taken into account the indefinite term of the license, and (b) the Group
would gain exposure and promotional benefits by having logos relating to our Dmall brand displayed or
used in connection with the Dmall app operated by Dmall Fresh (Beijing), we believe that having the
trademark licensing arrangements in place is beneficial to the business of the Group. In addition, according
to Frost & Sullivan, it is in line with industry practice that the Group grants a license over its trademarks for
an indefinite term. As such, our Directors are of the view that entering into the Trademark Licensing
Agreement with a term of more than three years can ensure the stable continuation of the trademark
licensing arrangements and is in the interests of our Company and our Shareholders as a whole.
Based on the due diligence conducted and the factors listed below, the Joint Sponsors are of the
view that the transactions contemplated under the Trademark Licensing Agreement requires a term
longer than three years: (i) the reasons for entering into the Trademark Licensing Agreement and the
benefits of having logos relating to the Dmall brand displayed or used in connection with the Dmall
app operated by Dmall Fresh (Beijing) as mentioned above; and (ii) Frost & Sullivan’s view that it is in
line with industry practice that the Group grants a license over its trademarks for an indefinite term.
DIRECTORS’ CONFIRMATION
Our Directors (including independent non-executive Directors) are of the view that: (i) the
continuing connected transactions set out above have been and will be entered into in our ordinary and
usual course of business on normal commercial terms or better, on terms that are fair and reasonable,
and in the interests of our Company and our Shareholders as a whole; (ii) the proposed annual caps of
the continuing connected transactions are fair and reasonable and in the interests of our Company and
our Shareholders as a whole; and (iii) it is normal business practice for the Trademark Licensing
Agreement, the Wumei Retail Core Service Cloud Framework Agreement and the MDL Wholesale
Retail Core Service Cloud Framework Agreement to be of a term greater than three years.
JOINT SPONSORS’ CONFIRMATION
Based on the due diligence findings, the Joint Sponsors are of the view that: (i) the continuing
connected transactions set out above have been and will be entered into in the Company’s ordinary and
usual course of business on normal commercial terms or better, on terms that are fair and reasonable,
and in the interest of the Company and its Shareholders as a whole; (ii) the proposed annual caps (if
any) of the continuing connected transactions are fair and reasonable and in the interest of the
Company and the Shareholders as a whole; and (iii) it is normal business practice for the Trademark
Licensing Agreement, the Wumei Retail Core Service Cloud Framework Agreement and the MDL
Wholesale Retail Core Service Cloud Framework Agreement to be of a term greater than three years.
In forming a view on the above matters, the Joint Sponsors have considered, among others, the
historical terms and arrangements, the basis of the historical amounts and their importance to the business and
operations of the Company, the nature and coverage of the services, the rationale and basis for determining
the pricing policies or mechanism, measures to review and adjust the pricing policies, the internal controls and
measures to monitor the continuing connected transactions and Frost & Sullivan’s view that, based on their
experience in the retail digitalization solutions industry in China and Asia, it is not uncommon for companies
engaging in businesses similar to the Group’s retail core cloud solutions to sign a long-term contract.
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DIRECTORS AND SENIOR MANAGEMENT
DIRECTORS
The Board consists of nine Directors, comprising one executive Director, four non-executive
Directors and four independent non-executive Directors. The following table provides certain
information about the Directors:
Name Age Position
Date of
joining our
Group
Date of
appointment as
a Director
Roles and
responsibilities
Executive Director
Mr. ZHANG Feng (ࢤ1) ........ 4 2 Co-founder,
executive Director
and president
February 2015 August 23,
2018
Overall strategic
planning, business
operations and
overall management
of our Group
Non-executive Directors
Mr. Curtis Alan FERGUSON ...... 6 6 Chairman and
non-executive
Director
November 2022 November 28,
2022
Providing
professional advice,
opinion, and
guidance to our
Board
Mr. CHEN Zhiyu (
௓қρ) ........ 4 1 Non-executive
Director
November 2020 November 13,
2020
Providing
professional advice,
opinion, and
guidance to our
Board
Ms. SUN Yuhan (
ρў) ......... 4 7 Non-executive
Director
November 2021 November 17,
2021
Providing
professional advice,
opinion, and
guidance to our
Board
Mr. WANG Zhenghao
(
ˮ͍ख) ..................... 4 0
Non-executive
Director
November 2020 November 13,
2020
Providing
professional advice,
opinion, and
guidance to our
Board
Independent
non-executive Directors
Dr. HOU Yang (
ජ) ............ 4 2 Independent
non-executive
Director
Listing Date Listing Date Supervising and
providing
independent
judgment to the
Board
Ms. CAI Lin
(
ᇹ೙)....................... 5 3
Independent
non-executive
Director
Listing Date Listing Date Supervising and
providing
independent
judgment to the
Board
Dr. MAO Jiye (
ˣਿุ) ........... 6 0 Independent
non-executive
Director
Listing Date Listing Date Supervising and
providing
independent
judgment to the
Board
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Name Age Position
Date of
joining our
Group
Date of
appointment as
a Director
Roles and
responsibilities
Mr. LI Wei ( ҽၪ) ............... 4 6 Independent
non-executive
Director
Listing Date Listing Date Supervising and
providing
independent
judgment to the
Board
Note:
(1) Mr. ZHANG Feng is the nephew of Dr. Zhang.
Executive Director
Mr. ZHANG Feng (ࢤ,)aged 42, is our co-founder, and has served as our Director and
president since August 2018 and December 2018, respectively. Mr. Zhang is responsible for the overall
strategic planning, business operation and overall management of our Group. Mr. Zhang currently
holds 51% equity interests in Dmall Fresh (Beijing). Mr. Zhang is the nephew of Dr. Zhang.
Mr. Zhang co-founded the Company in 2015. Since co-founding the Company, Mr. Zhang has
been committed to helping retailers to thrive in the digital era by leading the implementation of the
integrated digital retail concept that combines online and offline channels for solving long-standing
inefficiencies in the industry. This approach has been instrumental in helping retailers increase
operational efficiency in the digital marketplace. Mr. Zhang has also served as executive director and
general manager of several of our major subsidiaries, including Dmall Life Network since October
2017 and Dmall (Shenzhen) Digital.
Mr. Zhang graduated from Huazhong University of Science and Technology (
Ҧɽኪ)i n
China majored in computer science and technology in June 2004. He received his executive master of
business administration from Marshall Business School of University of Southern California in the
United States in August 2014.
Non-executive Directors
Mr. Curtis Alan FERGUSON , aged 66, has served as our Chairman and Director since
November 28, 2022. Mr. Ferguson provides professional advice, opinion, and guidance to our Board.
Mr. Ferguson is a thought-leader in the consumer space. Mr. Ferguson has served as a
managing partner of Ventech China Ltd., a venture capital firm based in China, since February 2021.
At Ventech China, Mr. Ferguson is responsible for investments in the consumer market, financial
technology and big data sectors, with a focus on China’s rapidly growing consumer market. Prior to
that, Mr. Ferguson served multiple roles at The Coca-Cola Company (NYSE: KO) for more than 37
years, including as the president of The Coca-Cola Greater China and Korea and as the president of
The Coca-Cola Middle East and North Africa. Mr. Ferguson has served as a director of The American
Chamber of Commerce in Shanghai since 2020, and he served as its vice chairman in 2020 and 2022.
Mr. Ferguson has served as a director of the board of the Indiana University Foundation since 2016.
Mr. Ferguson received his bachelor’s degree in science from the Indiana University Kelley
School in the United States in 1980.
Mr. CHEN Zhiyu (
௓қρ), aged 41, has served as our Director since November 2020.
Mr. Chen provides professional advice, opinion, and guidance to our Board.
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Mr. Chen has extensive experience in the retail and merchandise industry and has over 16 years
of management experience both in China and overseas. He has served as a board consultant of Metro
Commerce Group Co., Ltd. since June 2024 and the deputy chief executive officer of Metro Commerce
Group Co., Ltd., a leading wholesaler and retailer in China, from March 2021 to June 2024, where he
has been responsible for overseeing the company’s business operations, including the management of
the product management team, supply chain team, information technology department and marketing
and membership department. Prior to joining our Group, Mr. Chen served as a senior vice president of
Wal-Mart (China) Investment Co., Ltd. from June 2017 to August 2020. Prior to that, Mr. Chen served
as the chief commercial and product officer of AliExpress, an Alibaba Group company, from
November 2015 to June 2017. Prior to that, Mr. Chen served as a senior product specialist for financial
products of Alipay, from May 2014 to November 2015. Prior to that, Mr. Chen worked at Barclays
Bank, a British multinational universal bank, from September 2008 to April 2014 with last position as
vice president.
Mr. Chen received his bachelor’s degree in engineering from Zhejiang University (
एϪɽኪ)i n
China in June 2006. He received his master’s degree in biomedical engineering from the University of
Oxford in the United Kingdom in November 2007.
Ms. SUN Yuhan (
ρў), aged 47, has served as our Director since November 2021. Ms. Sun
provides professional advice, opinion, and guidance to our Board.
Ms. Sun has served as managing director at IDG Capital Partners, a leading private equity
investment institution engaging in venture capital business in China, since November 2011. Ms. Sun is
responsible for investments in the retail, e-commerce, consumer goods and services sectors at IDG
Capital Partners. Her expertise lies in corporate strategic planning, brand positioning, financial
planning and management improvement.
Ms. Sun graduated from Beijing Institute of Technology (
̏ԯଣʈɽኪ) in China majored in
marketing in July 2000. She received her master’s degree in accounting and finance from the
University of Birmingham in the United Kingdom in July 2003.
Mr. WANG Zhenghao (
ˮ͍ख), aged 40, has served as our Director since November 2020.
Mr. Wang provides professional advice, opinion, and guidance to our Board.
Mr. Wang has served as general manager at Xingtou (Beijing) Capital Management Co., Ltd.
(ʮ̡), a professional investment company, since August 2018. Prior to that,
Mr. Wang worked in Industrial Bank ( ጳุვБ) from 2013 to 2018 and in China Metallurgical Group
Corporation (ʈණྠʮ̡) from 2010 to 2012.
Mr. Wang received his bachelor’s degree in management from Beijing Normal University ( ̏ԯ
ᇍɽኪ) in China in July 2006. He received his master’s degree in economics from Peking University
(̏ԯɽኪ) in China in June 2010.
Independent Non-executive Directors
Dr. HOU Yang (ජ), aged 42, will be an independent non-executive Director upon Listing.
Dr. Hou supervises and provides independent judgment to our Board.
Dr. Hou has served as the chairman and chief executive officer of Greater China region of
Microsoft Corporation (NASDAQ: MSFT), an American multinational technology corporation, since
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DIRECTORS AND SENIOR MANAGEMENT
March 2021, responsible for strategic leadership of sales, marketing, services and operations across the
three subsidiaries that make up one of Microsoft’s most dynamic and innovative growth regions. He
has also served as director of Shenzhou Netcom Technology Co., Ltd., a China-based software
development company, since May 2021. Dr. Hou worked at Qualcomm (NASDAQ: QCOM), an
American multinational semiconductor and telecommunications corporation, for more than 8 years
with the last position of global senior vice president. Prior to that, Dr. Hou worked at McKinsey, a
global management consulting firm, for about 5 years.
Dr. Hou obtained his bachelor’s degree in physics from Peking University (
̏ԯɽኪ) in China
in June 2004 and received his Ph.D. in electrical engineering from the University of Michigan in the
United States in April 2008.
Ms. CAI Lin (
ᇹ೙), aged 53, will be an independent non-executive Director upon Listing.
Ms. Cai supervises and provides independent judgment to our Board.
Ms. Cai has served as an independent director at Huatai Insurance Group since June 2022 and
her current positions include the chairperson of the audit committee, risk management committee and
related party transaction control committee of the board of directors. Prior to that, she served as a
partner at China Consumer Capital Partners from July 2014 to June 2018. She served in multiple
capacities at Ernst & Young ‘s Strategy and Transactions department in Hong Kong, Beijing and
Shanghai from August 2003 to May 2014 with her last position as a partner. Prior to that, Ms. Cai
worked in Ernst & Young Huaming CPA LLP’s Shanghai office from July 1994 through August 2001
with her last position as a manager of the Assurance department, during which she was seconded to
Ernst & Young’s Chicago office from September 1998 through March 2000.
Ms. Cai obtained her bachelor’s degree in Economics from Shanghai University of Finance and
Economics (
ɪऎৌ຾ɽኪ in China in July 1994 and received her MBA degree from Ivey Business
School at Western University (formerly known as Richard Ivey School at the University of Western
Ontario) in Canada in April 2003.
Dr. MAO Jiye (
ˣਿุ) (former name as Mao Jiye ( ˣᘱุ)), aged 60, will be an independent
non-executive Director upon Listing. Dr. Mao supervises and provides independent judgment to our
Board.
Dr. Mao is a professor at the School of Entrepreneurship and Management, ShanghaiTech
University (
Ҧɽኪ). Previously, he was a professor in the business school at Renmin University
of China ( ʕ਷ɛ͏ɽኪ) in China from June 2004 to October 2023. His research primarily focuses on
digital transformation of traditional firms, digital innovation and entrepreneurship, management of IT
outsourcing and management of information technology projects. He was the Dean of the business
school at Renmin University of China from October 2015 to September 2021, and previously taught at
University of Waterloo in Canada from January 1995 to August 2022. He also served as the chairman
of China Association for Information Systems (
ӻ୕՘ึʕ਷ʱึ) from October 2013 to October
2021. Dr. Mao has served as a director of Hubei Forbon Technology (ʮ̡)
(SZSE: 300387), a China-based high-tech chemical enterprise, since November 2019. Dr. Mao has also
served as an independent director of Dalian Wanda Commercial Management Group Co., Ltd. (
ɽஹຬ
ʮ̡), a China-based commercial real estate company that was previously
listed on the Stock Exchange, since July 2022 and an independent director of Hengmingda Electronic
Technology Co., Ltd. (
ʮ̡) (SZSE: 002947), a China-based electronic
technology company, since August 2022.
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Dr. Mao received his bachelor’s degree in economic information management from Renmin
University of China ( ʕ਷ɛ͏ɽኪ) in China in July 1985. He received his MBA degree from McGill
University in Canada in June 1989, and Ph.D. in management information systems from University of
British Columbia in Canada in November 1995.
Mr. LI Wei (
ҽၪ), aged 46, will be an independent non-executive Director upon Listing.
Mr. Li supervises and provides independent judgment to our Board.
Mr. Li has more than 23 years of experience in finance, operations and management. He has
served as the chief financial officer of Smartmore Technology (Ҧ), an intelligent manufacturing
and digital innovation company, since August 2024. He has also served as independent non-executive
director of ANE (Cayman) Inc. (HKEX: 9956), a leading express freight network in China’s less-than-
truckload market, since October 2021. From September 2020 to August 2024, Mr. Li served as the
chief financial officer of Spark Education Ltd. (
ၪ), a China-based online education platform.
From September 2018 to June 2020, Mr. Li served as the chief financial officer of OYO Hotels. From
April 2016 to August 2018, Mr. Li served as the chief operating officer and chief financial officer of
CAR Inc. (HKEX: 0699), a car rental service provider in China, and served as the executive vice-
president and the chief financial officer in the same company from May 2014 to April 2016. From July
2010 to April 2014, Mr. Li served as the chief financial officer of UniTrust Finance & Leasing
Corporation. From January 2007 to July 2010, Mr. Li served as the chief financial officer for Global
Supply Chain Asia Group in GE Healthcare of General Electric Company (NYSE: GE), an American
multinational company. From January 2004 to January 2007, Mr. Li served as part of the General
Electric corporate audit staff based in the United States and Asia. From August 2002 to January 2004,
Mr. Li served as the head of risk and credit management at GE Healthcare China. From July 2000 to
July 2002, Mr. Li worked as a management trainee of the Financial Management Program at GE.
Mr. Li obtained his bachelor’s degree in finance from Fudan University (
ూ͇ɽኪ) in China in
July 2000.
Save as disclosed herein, none of the Directors have held directorships in any listed company
over the past three years and none of our Directors and members of senior management are related to
other Directors or members of senior management. During the Track Record Period, certain of our then
directors discontinued their services with us for personal reasons. Among them, Ms. ZHANG
Kangrong, the daughter of Dr. ZHANG Wenzhong, was appointed as non-executive director of our
Company on November 28, 2022 and resigned on April 19, 2024. She did not have any disagreements
or disputes with our Company prior to or at the time of her resignation. She does not hold any position
or directorship within any companies of our Group. She does not provide any consultancy or advisory
services to our Group.
Saved as disclosed above (and their respective interests or short positions (if any) as set out in
the section headed “Statutory and General Information—C. Further Information about our Directors”
in Appendix IV), there are no other matters in respect of each of our Directors that is required to be
disclosed pursuant to Rule 13.51(2)(a) to (v) of the Listing Rules and there is no other material matter
relating to our Directors that needs to be brought to the attention of our Shareholders.
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DIRECTORS AND SENIOR MANAGEMENT
SENIOR MANAGEMENT
The following table provides information about members of the senior management of our
Company:
Name Age Position(s)
Date of
joining our
Group
Date of
appointment
as a senior
management
Roles and
responsibilities
Mr. ZHANG Feng (ࢤ42 Co-founder,
executive Director
and president
February 2015 December
2018
Overall strategic
planning, business
operations and
overall management
of our Group
Mr. YANG Kai (
เ௱) .... 4 0 Chief technology
officer and chief
executive officer
of international
business
June 2015 February
2017 and
March 2022
Overall strategy, the
development of
Dmall OS system
and international
market and
management of
research and
development of our
Group
Mr. REN Zhongwei
(
΂ʕਃ) .............. 4 5 Chief strategy
officer
November
2018
November
2018
Overall strategy, the
development and
marketing of Dmall
OS system of our
Group
Mr. LIU Guihai (
ऎ) . . . 42 Chief marketing
officer
December
2015
February
2017
Overall strategy,
brand building and
marketing activities
of our Group
Mr. Marcus SPURRELL . . . 61 Co-chief
executive officer
of international
business
August 2023 August 2023 Overall strategy and
development of
international market
Mr. TANG Yifan
(
ಷᆇɭ) .............. 4 2 Vice president
and chief financial
officer
June 2021 June 2021
and
September
2021
Overall strategy, the
finance, legal,
internal controls
functions, and the
capital markets
activities of our
Group
Ms. WANG Yi (
 .... 4 2 Vice president
and board
secretary
August 2022 August 2022 Overall strategy,
information
disclosure and
investor relations of
our Group
Mr. ZHANG Feng (ࢤ)aged 42, is the co-founder, executive Director and president of our
Group. See “—Executive Director” in this section for his biography.
Mr. YANG Kai ( เ௱), aged 40, has joined our Group since June 2015. Mr. Yang has served
as our chief technology officer since February 2017 and our chief executive officer of international
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DIRECTORS AND SENIOR MANAGEMENT
business since March 2022. Mr. Yang is responsible for overall strategy, the development of Dmall OS
system and international market and management of research and development of our Group.
Prior to joining our Group, Mr. Yang served as a director of the Chengdu Research Institute at
JD.com, Inc. (HKEX: 9618; NASDAQ: JD), an online direct sales company in China, from March
2010 to June 2015.
Mr. Yang graduated from North China University of Science and Technology (
ശ̏ଣʈɽኪ)
major in in computer science and technology in China in June 2006.
Mr. REN Zhongwei ( ΂ʕਃ), aged 45, has joined our Group since November 2018 and has
served as our chief strategy officer since November 2018. Mr. Ren is responsible for overall strategy,
the development and marketing of Dmall OS system of our Group.
Prior to joining our Group, Mr. Ren served multiple roles at Lenovo Group Limited (
ᑌซණྠ
ʮ̡) (HKEX: 0992), a Chinese multinational technology company, including as a general
manager of China Smart TV department from April 2012 to January 2015, a general manager of China
accessories election department from April 2011 to March 2012, a general manager of Russia from
April 2010 to March 2011, a general manager of Northern China from April 2009 to March 2010 and a
general Manager of Northwest China from April 2007 to March 2009.
Mr. Ren obtained his bachelor’s degree in applied mathematics from Sichuan University (
̬ʇ
ɽኪ) in China in July 2001. He graduated from EMBA program from China Europe International
Business School ( ʕᆄ਷ყʈਠኪ৫) in China in September 2012.
Mr. LIU Guihai (ऎ), aged 42, has joined our Group since December 2015 and has served
as our chief marketing officer since February 2017. Mr. Liu is responsible for overall strategy, brand
building and marketing activities of our Group.
Prior to joining our Group, Mr. Liu served as a vice president and executive director of Three’s
Company Media Group Co Ltd (
ɧɛБෂదණྠ) (SSE: 605168), a Chinese media company listed on
the Shanghai Stock Exchange, from July 2014 to December 2015. Prior to that, Mr. Liu first served as
an account manager and then a senior account manager and subsequently as an account director in
Phoenix New Media Limited (
ჾ਑อద᜗) (NYSE: FENG), a media company in China, from
December 2007 to July 2014.
Mr. Liu obtained his bachelor’s degree in public service management from Beijing University
of Posts and Telecommunication ( ̏ԯඉཥɽኪ) in China in June 2006.
Mr. Marcus SPURRELL , aged 61, has joined our Group since August 2023 and has served as
our co-chief executive officer of international business since then. Mr. Spurrell is responsible for
overall strategy and development of our international market.
Prior to joining our Group, Mr. Spurrell served multiple roles at The Dairy Farm Company,
Limited, including as a board member from October 2018 to June 2023, as a chief technology officer
from August 2021 to June 2023 and as a chief digital officer from October 2018 to July 2021. Prior to
that, Mr. Spurrell served at Ahold Delhaize Group from September 2012 to September 2018, including
as a senior vice president of digital personalization, loyalty and analytics.
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Mr. Spurrell obtained his bachelor’s degree in economics and Japanese from SOAS, London
University in August 1994.
Mr. TANG Yifan ( ಷᆇɭ), aged 42, has joined our Group since June 2021 and has served as
our vice president and chief financial officer since June 2021 and September 2021, respectively.
Mr. Tang is responsible for overall strategy, the finance, legal, internal controls functions, and the
capital markets activities of our Group.
Prior to joining our Group, Mr. Tang served as general manager in the industrial financing
department division of Kaiyuan Securities Co., Ltd. (
ʮ̡), a China-based securities
company, from July 2016 to June 2021. Prior to that, Mr. Tang served as an executive director in the
investment banking department of China Great Wall Securities Co., Ltd (
ʮ̡) (SZSE:
002939), a China-based securities company, from October 2015 to May 2016. Prior to that, Mr. Tang
worked in Western Securities Co., Ltd (
ʮ̡) (SZSE: 002673), a China-based
securities company, from April 2013 to July 2015, with last position responsible for bond issuance in
fixed income department. In addition, Mr. Tang served as a senior auditor in the Wuhan office of Ernst &
Young Hua Ming LLP (
הfrom January 2007 to December 2009.
Mr. Tang obtained his bachelor’s degree in computer science and technology and master’s
degree in computer system architecture from Huazhong University of Science and Technology (߅
Ҧɽኪ) in China in June 2004 and March 2007, respectively.
Ms. WANG Yi (׋)aged 42, has joined our Group since August 2022 and has served as our
vice president and board secretary since August 2022. Ms. Wang is responsible for overall strategy,
information disclosure and investor relations of our Group.
Ms. Wang has over 18 years of experience in corporate governance, finance, merger and
acquisition and investor relations. Ms. Wang has served as a non-executive director of MDL
Wholesale Limited, a food and fast-moving consumer goods distribution solution provider in China,
since June 2024. Prior to that, Ms. Wang served as a board secretary, deputy chief financial officer and
company secretary of WM Tech Corporation Limited (currently known as MDL Wholesale Limited)
from September 2020 to June 2024. Prior to that, Ms. Wang served as board secretary and investment
director of the Wumei Technology from January 2016 to September 2020, and company secretary,
board secretary and deputy director of finance department of Wumart Stores, Inc. (
ٰ
ʮ̡), a Chinese retail company, from June 2013 to January 2016. Ms. Wang also served as our
Director from October 2017 to August 2018.
Ms. Wang obtained her bachelor’s degree and master’s degree in economics from Nankai
University (කɽኪ) in China in June 2004 and June 2006, respectively.
Save as disclosed above, none of our senior management team has been a director of any listed
companies during the three years immediately prior to the date of this document.
JOINT COMPANY SECRETARIES
Ms. WANG Yi (׋)has been appointed as our joint company secretary with effect from
December 5, 2022. See “—Senior Management” in this section for her biography.
Ms. AU Wing Sze ( ਜ൘་), has been appointed as our joint company secretary with effect
from the Listing Date. Ms. Au is a manager of the listing services department of TMF Hong Kong
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DIRECTORS AND SENIOR MANAGEMENT
Limited and has been providing corporate secretarial and compliance services to Hong Kong listed
companies. She has over 10 years of professional experience in the corporate secretarial field. Ms. Au
is an associate of both The Hong Kong Chartered Governance Institute and The Chartered Governance
Institute in the United Kingdom. Ms. Au holds a master degree in corporate governance from Hong
Kong Metropolitan University (formerly “The Open University of Hong Kong”) in Hong Kong in
August 2019.
CORPORATE GOVERNANCE
Board Committees
Audit Committee
We have established an audit committee with written terms of reference in compliance with
Rule 3.21 of the Listing Rules and the Corporate Governance Code set out in Appendix C1 to the
Listing Rules. The primary duties of the audit committee are to review and supervise the financial
reporting process and internal controls system of the Group, review and approve connected
transactions and to advise the Board. The audit committee comprises three members, namely,
Ms. CAI Lin, Mr. HOU Yang and Mr. LI Wei. Ms. CAI Lin is the chairperson of the committee and is
the director appropriately qualified as required under Rules 3.10(2) and 3.21 of the Listing Rules.
Remuneration Committee
We have established a remuneration committee with written terms of reference in compliance
with Rule 3.25 of the Listing Rules and the Corporate Governance Code set out in Appendix C1 to the
Listing Rules. The primary duties of the remuneration committee are to review and make
recommendations to the Board regarding the terms of remuneration packages, bonuses and other
compensation payable to the Directors and senior management. The remuneration committee
comprises three members, namely, Dr. MAO Jiye, Dr. HOU Yang and Mr. ZHANG Feng. Dr. MAO
Jiye is the chairperson of the committee.
Nomination Committee
We have established a nomination committee with written terms of reference in compliance
with the rules set out in the Corporate Governance Code set out in Appendix C1 to the Listing Rules.
The primary duties of the nomination committee are to make recommendations to the Board regarding
the appointment of Directors and Board succession. The nomination committee comprises three
members, namely, Mr. Curtis Alan FERGUSON, Dr. MAO Jiye and Ms. CAI Lin. Mr. Curtis Alan
FERGUSON is the chairperson of the committee.
Corporate Governance Code
We aim to achieve high standards of corporate governance which are crucial to our
development and safeguard the interests of our Shareholders. In order to accomplish this, we expect to
comply with the Corporate Governance Code set out in Appendix C1 to the Listing Rules.
Management Presence
Pursuant to Rule 8.12 of the Listing Rules, an issuer must have a sufficient management
presence in Hong Kong. This will normally mean that at least two of its executive directors must be
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DIRECTORS AND SENIOR MANAGEMENT
ordinarily resident in Hong Kong. We do not have sufficient management presence in Hong Kong for
the purposes of Rule 8.12 of the Listing Rules. Accordingly, we have applied for, and the Stock
Exchange has granted, a waiver from strict compliance with Rule 8.12 of the Listing Rules. See the
section headed “Waivers and Exemptions—Management Presence in Hong Kong” in this document
for further details.
Board Diversity
Our Company has adopted a board diversity policy which sets out the approach to achieve
diversity of the Board. Our Company recognizes and embraces the benefits of having a diverse Board
and sees increasing diversity at the Board level, including gender diversity, as an essential element in
maintaining the Company’s competitive advantage and enhancing its ability to attract, retain and
motivate employees from the widest possible pool of available talent. Pursuant to the board diversity
policy, in reviewing and assessing suitable candidates to serve as a director of the Company, the
nomination committee will consider a number of aspects, including, but not limited to gender, age,
cultural and educational background, professional qualifications, skills, knowledge, and industry and
regional experience.
Our Directors have a balanced mix of knowledge and skills, and we have four independent
non-executive Directors with different industry backgrounds, more than one third of the members of
our Board. Taking into account our existing business model and specific needs as well as the different
background of our directors, the composition of our Board satisfies our board diversity policy. We
have also taken, and will continue to take steps to promote gender diversity at all levels of our
Company, including but not limited to our Board and the senior management levels. Currently, two of
our Directors are female. We will invest more resources in training female staff who have long and
relevant experience in our business, with the aim of promoting them to senior management or
directorship positions within our Group. While we recognize that the gender diversity at our Board
level can be improved given the majority of our Directors are male, we will continue to apply the
principle of appointments based on merits with reference to our diversity policy as a whole. Our Board
would also ensure that appropriate balance of gender diversity is achieved with reference to investors’
expectation, and international and local recommended best practices.
Pursuant to the board diversity policy, the nomination committee will discuss periodically and
when necessary, agree on the measurable objectives for achieving diversity, including gender diversity,
on the Board and recommend them to the Board for adoption.
COMPLIANCE ADVISER
We have appointed Somerley Capital Limited as the compliance adviser (the “ Compliance
Adviser”) pursuant to Rule 3A.19 of the Listing Rules. The Compliance Adviser will provide us with
guidance and advice as to compliance with the Listing Rules and applicable Hong Kong laws. Pursuant
to Rule 3A.23 of the Listing Rules, the Compliance Adviser will advise the Company in certain
circumstances including:
(a) before the publication of any regulatory announcement, circular, or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is contemplated,
including share issues and share repurchases;
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DIRECTORS AND SENIOR MANAGEMENT
(c) where we propose to use the proceeds of the Global Offering in a manner different from
that detailed in this document or where the business activities, development or results of
the Group deviate from any forecast, estimate or other information in this document; and
(d) where the Stock Exchange makes an inquiry to the Company under Rule 13.10 of the
Listing Rules.
The term of appointment of the Compliance Adviser shall commence on the Listing Date and is
expected to end on the date on which we comply with Rule 13.46 of the Listing Rules in respect of our
financial results for the first full financial year commencing after the Listing Date.
DIRECTORS’ AND SENIOR MANAGEMENT’S REMUNERATION
For the details of the service contracts and appointment letters that we have entered into with
the Directors and senior management, see “Statutory and General Information—C. Further Information
about Our Directors—1. Particulars of Directors’ Service Contracts and Appointment Letters” in
Appendix IV to this document.
The aggregate amount of emoluments (including directors’ fees, salaries and other emoluments,
discretionary bonuses, retirement scheme contributions, but excluding share-based compensation
expenses) for our Directors for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024, was RMB3.2 million, RMB3.8 million, RMB4.1 million, and RMB2.2 million
respectively.
The five highest paid individuals for the years ended December 31, 2021, 2022 and 2023 and
the six months ended June 30, 2024, included two, one, one and one Director(s), respectively, whose
remuneration is included in the aggregate amount of remuneration (including wages, salaries and
bonuses, other social insurance costs, housing benefits and other employee benefits, pension costs, but
excluding share-based compensation expenses) we paid to the relevant Directors as set out above. In
2021, 2022 and 2023 and the six months ended June 30, 2024, the aggregate amount of remuneration
(including salaries and other emoluments, discretionary bonuses, retirement scheme contributions, but
excluding share-based compensation expenses) for the remaining three, four, four and four individuals
was RMB6.1 million, RMB9.8 million, RMB11.1 million and RMB9.4 million, respectively.
Save as disclosed above, no other payments have been paid or are payable, during the Track
Record Period by our Company to our Directors. No remuneration was paid to our Directors or the five
highest paid individuals as an inducement to join, or upon joining, our Group. No compensation was
paid to, or receivable by, our Directors or past directors for the Track Record Period for the loss of
office as director of any member of our Group or of any other office in connection with the
management of the affairs of any member of our Group. None of our Directors waived any
emoluments during the same period.
Under the arrangements currently in force, we estimate that the aggregate remuneration payable
to, and benefits in kind receivable by, our Directors by any member of our Group in respect of the year
ending December 31, 2024 is approximately RMB4.9 million.
For additional information on Directors’ remuneration during the Track Record Period as well
as information on our five highest paid individuals, please see Notes 9 and 10 to the Accountants’
Report set out in Appendix I in this document.
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DIRECTORS AND SENIOR MANAGEMENT
SHARE INCENTIVE PLANS
We have adopted the 2016 Share Incentive Plan, the 2020 Share Incentive Plan, the 2024 First
Share Incentive Plan and the 2024 Second Share Incentive Plan. See paragraphs headed “Statutory and
General Information—D. Share Incentive Plans” in Appendix IV for details regarding the incentive
plans for our Directors and the senior management.
CONFIRMATION FROM OUR DIRECTORS
Rule 8.10 of the Listing Rules
Each of the Directors confirms that as of the Latest Practicable Date, he or she did not have any
interest in a business which materially competes or is likely to compete, directly or indirectly, with our
business, and requires disclosure under Rule 8.10 of the Listing Rules.
Following the Restructuring, Mr. Zhang Feng holds 51% equity interest in Dmall Fresh
(Beijing) as at the Latest Practicable Date. Dmall Fresh (Beijing) (and its subsidiary(ies)) is principally
engaged in the provision of online marketing and advertising services and the operation of the Dmall
app. Our Group, however, only provides marketing and advertising services through offline channels
following the Restructuring. The nature of the products and services involved and the location and
format of the marketing and advertising materials displayed are highly differentiated; based on our
experience, customers would not consider online and offline marketing and advertising services a
substitute of each other. The principal business of Dmall Fresh (Beijing) also does not nor is it likely to
compete with our other businesses, such as retail core service cloud solutions, in any way. For
example, we assist retailers in automatically and intelligently processing online orders, optimizing the
fulfillment process by coordinating order handling, and minimizing the exposure of perishable items.
We believe our technology and system present high entry barriers, being highly technical and
developed through years of industry experience and continuous technological refinement. Other
companies, such as Dmall Fresh (Beijing), lack the capability to offer similar services.
From time to time our non-executive Directors may serve on the boards of both private and
public companies within the industry which our Group operates in. However, as these non-executive
Directors are neither our controlling shareholders nor members of our executive management team, we
do not believe that their interests in such companies as directors would render us incapable of carrying
on our business independently from the other companies in which they may hold directorships from
time to time.
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred to under
Rule 3.09D of the Listing Rules on, in the case of Dr. Hou Yang, March 3, 2023, in the case of Ms. Cai
Lin, April 24, 2024, and in the case of other Directors, December 1, 2022; and (ii) understands his or
her obligations as a director of a listed issuer on the Stock Exchange under the Listing Rules.
Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors confirms (i) his or her independence as
regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) that he or she has
no past or present financial or other interest in the business of the Company or its subsidiaries or any
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DIRECTORS AND SENIOR MANAGEMENT
connection with any core connected person of the Company under the Listing Rules as of the Latest
Practicable Date, and (iii) that there are no other factors that may affect his or her independence at the
time of his or her appointment.
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SUBSTANTIAL SHAREHOLDERS
SUBSTANTIAL SHAREHOLDERS
Interest in our Company
So far as our Directors are aware, immediately following completion of the Global Offering
(assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no
Shares are issued under the Share Incentive Plans), the following persons will have an interest or short
position in our Shares or underlying Shares which would fall to be disclosed to us 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 issued Shares of our Company:
Name of Shareholder Capacity / Nature of interest Number of Shares(1)
Approximate %
of shareholding in our
Company after the
Global Offering(1)
Dr. Zhang(2) ................... Interest in controlled corporations 502,452,135 56.67%
Celestial Limited(2) ............. Beneficial owner 423,470,475 47.76%
Odor Nice Limited (2) ............ Beneficial owner 68,880,650 7.77%
Retail Enterprise Corporation
Limited(2) ................... Beneficial owner 10,101,010 1.14%
Vigorous Link Group Limited (3) . . . Beneficial owner 75,000,000 8.46%
IDG USD Fund Shareholders
Olive Spark Limited
(4) ........... Beneficial owner 13,179,525 1.49%
Lovely Tree Holdings Limited (4) . . . Beneficial owner 37,119,350 4.19%
IDG-Accel China Capital II
L.P.(4) ...................... Beneficial owner 3,651,067 0.41%
IDG-Accel China Capital II
Investors L.P. (4) .............. Beneficial owner 162,862 0.02%
Handy Cloud Limited (4) .......... Beneficial owner 1,196,429 0.13%
Notes:
(1) The table assumes (i) the Global Offering becomes unconditional and the Offer Shares are issued pursuant to the Global Offering, (ii) the
Convertible Bond is not converted, (iii) the Over-allotment Option is not exercised and no Shares are issued under the Share Incentive
Plans, and (iv) no Shares are issued or canceled and no other potential change to the number of shares the Company is authorized to issue
materialize as described in “Share Capital—Potential Changes to the Number of Shares the Company is Authorized to Issue After
Listing.”
(2) Celestial Limited is wholly owned by D&W Inc. which is wholly owned by Dr. Zhang. Odor Nice Limited is wholly owned by Interface
Holding Inc. which is owned by D&W Inc. and Retail Enterprise Corporation Limited as to 66.44% and 33.56%, respectively. Retail
Enterprise is wholly-owned by Wumei Southern Technology Company Limited, which is in turn wholly-owned by Wumei Technology.
Wumei Technology is owned by Beijing Zhongsheng Huate Technology Company Limited and Beijing Jingxi Guigu Technology
Company Limited as to approximately 19.40% and 77.61% respectively; Beijing Zhongsheng Huate Technology Company Limited is
owned by Dr. Zhang and Beijing Jingxi Guigu Technology Company Limited as to 99% and 1%, respectively; and Beijing Jingxi Guigu
Technology Company Limited is wholly-owned by Dr. Zhang. Accordingly, Dr. Zhang is deemed to be interested in the Shares held by
Celestial Limited, Odor Nice Limited and Retail Enterprise Corporation Limited.
(3) Vigorous Link Group Limited, a limited liability company incorporated under the laws of the BVI, is wholly-owned by a trust which
holds Shares for the benefit of certain Directors, senior management and employees of our Group. Pursuant to the relevant trust
arrangement, the exercise of the voting rights attached to all the Shares held by Vigorous Link Group Limited is ultimately directed and
controlled by the Board.
(4) As confirmed by IDG Capital, Lovely Tree Holdings Limited and Olive Spark Limited, each a private company incorporated in the BVI,
are investment holding companies of USD funds ultimately controlled by Mr. HO Chi Sing and Mr. ZHOU Quan; IDG-Accel China
Capital II L.P. holds more than 78% equity interests in each of Lovely Tree Holdings Limited and Olive Spark Limited. As confirmed by
IDG Capital, IDG-Accel China Capital II Investors L.P. is the side fund of IDG-Accel China Capital II L.P. as the main fund; IDG-Accel
China Capital II L.P. and IDG-Accel China Capital II Investors L.P., each a limited partnership established in the Cayman Islands, are
ultimately controlled by Mr. HO Chi Sing and Mr. ZHOU Quan; IDG-Accel China Capital II L.P. has over 100 limited partners and none
of which holds more than 10% partnership interest in it. As confirmed by IDG Capital, Handy Cloud Limited, a private company
incorporated in the BVI, is an investment holding company, the voting shares of which are wholly owned by Direct Galore Limited, also
a BVI company, which is in turn ultimately owned and ultimately controlled by Mr. HO Chi Sing. Mr. ZHOU Quan is a partner of IDG
Capital and Mr. HO Chi Sing is the chief financial officer of IDG Capital, as confirmed by IDG Capital.
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SUBSTANTIAL SHAREHOLDERS
Substantial shareholders of members of our Group
Name of Shareholder Capacity / Nature of interest
Name of member of
our Group
Approximate %
of interest held by the
substantial
shareholder
DFI Retail Group
Management Limited(1) . . Beneficial owner Retail Technology Asia 30.5%
Beijing Wumart
Supermarket Co.,
Ltd.
(2) ................ Beneficial owner Dmall Zhilian 20%
Sun Kewei(3) ............. Beneficial owner Shenzhen Enjoy 17.09%
Shanghai Gaussian
Automation Technology
Development Co.,
Ltd.
(4) ................ Beneficial owner Beijing Xianmei
Technology Service
Co., Ltd. 45%
Li Xue
(3) ................ Beneficial owner Shenzhen Firefly
Circulation
Information
Technology Co., Ltd. 40%
Notes:
(1) DFI Retail Group Management Limited (formerly known as Dairy Farm Management Limited) is a subsidiary of DFI Retail Group
Holdings Limited (formerly known as Dairy Farm International Holdings Limited).
(2) Beijing Wumart Supermarket Co., Ltd. is a subsidiary of Wumei Technology, which is controlled by Dr. Zhang.
(3) An independent third party of the Company.
(4) Shanghai Gaussian Automation Technology Development Co., Ltd. is ultimately beneficially owned by Mr. CHENG Haotian, an
independent third party of the Company.
Except as disclosed above and in the section headed “Statutory and General Information” of
this document, our Directors are not aware of any other person who will, immediately following
completion of the Global Offering (assuming the Over-allotment Option is not exercised, the
Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans), have an
interest or short position in our Shares or underlying Shares which would fall to be disclosed to us
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 issued Shares of our Company or any other member of our Group.
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SHARE CAPITAL
AUTHORIZED AND ISSUED SHARES
The following is a description of our authorized shares and the amount in issue and to be issued
as fully paid or credited as fully paid immediately prior to and following completion of the Global
Offering, assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no Shares are issued under the Share Incentive Plans.
As of the date of this document
Authorized shares
Number Description of share
Aggregate
nominal value
Approximate
percentage of total
authorized share
capital
1,992,312,791 Ordinary share with a par value of US$0.0001 US$199,231.28 79.69%
507,687,209 Preferred share with a par value of US$0.0001 US$50,768.72 20.31%
2,500,000,000 Shares in total US$250,000.00 100.00%
Issued shares
Number Description of share
Aggregate
nominal value
Approximate
percentage of total
issued share capital
525,150,000 Ordinary share with a par value of US$0.0001 US$52,515.00 61.00%
335,766,124 Preferred share with a par value of US$0.0001 US$33,576.61 39.00%
860,916,124 Shares in total US$86,091.61 100.00%
Immediately following the completion of the Global Offering
Issued shares
Number Description of share
Aggregate
nominal value
Approximate
percentage of total
issued share capital
860,916,124 Shares in issues US$86,091.61 97.09%
25,774,000 Shares to be issued pursuant to the Global Offering US$2,577.40 2.91%
886,690,124 Shares in total US$88,669.01 100.00%
Ranking
The Offer Shares will rank equally with all Shares currently in issue or to be issued as mentioned
in this document and, in particular, will rank equally for all dividends or other distributions declared,
made or paid on the Shares in respect of a record date which falls after the date of this document.
POTENTIAL CHANGES TO THE NUMBER OF SHARES THE COMPANY IS
AUTHORIZED TO ISSUE AFTER LISTING
Circumstances under which general meeting and class meeting are required
Our Company may, from time to time, whether or not all the shares for the time being
authorized shall have been issued and whether or not all the shares for the time being issued shall have
been fully paid up, by resolution of members, increase the maximum number of shares our Company is
authorized to issue.
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SHARE CAPITAL
Our Company may from time to time by resolution of members cancel any shares which at the
date of the passing of the resolution of members have not been taken or agreed to be taken by any
person, and diminish the maximum number of shares the Company is authorized to issue by the
number of shares so canceled subject to the provisions of the BVI Business Companies Act.
Our Company may also divide its shares (including those shares already in issue) into a larger
number of shares or consolidate them into a smaller number of shares in the same class or series,
provided that the maximum number of shares our Company is authorized to issue is not exceeded
(where relevant). On any such division or combination of shares, the aggregate par value (if any) of the
new shares must be equal to the aggregate par value (if any) of the original shares.
See “Summary of the constitution of our Company and BVI company law—Articles of
Association—Alteration to the number of shares the Company is authorized to issue” in Appendix III
for further details.
If at any time the authorized shares of the Company are divided into different classes of shares,
all or any of the rights attached to any class of shares for the time being issued (unless otherwise
provided for in the terms of issue of the shares of that class) may, subject to the provisions of the BVI
Business Companies Act, be varied or abrogated either with the consent in writing of the holders of at
least three-fourths of the issued shares of that class, or with the approval of a resolution passed by at
least three-fourths of the votes cast by the holders of the shares of that class present and voting in
person or by proxy at a separate meeting of such holders.
See “Summary of the constitution of our Company and BVI company law—Articles of
Association—Variation of rights of existing shares or classes of shares” in Appendix III for further
details.
General mandate to issue Shares
Subject to the Global Offering becoming unconditional, our Directors were granted a general
mandate to allot, issue and deal with any Shares (including the resale or transfer of treasury shares by
our Company) or securities convertible into Shares of not more than the sum of:
 20% of the total number of Shares in issue immediately following completion of the
Global Offering (but excluding any Shares which may be issued pursuant to the exercise
of the Over-allotment Option, the Shares which may be issued upon conversion of the
Convertible Bond, any Shares which may be issued under the Share Schemes, and any
Shares that are issuable upon conversion of the Shares on a one-to-one basis); and
 the total number of Shares repurchased by our Company pursuant to the authority referred
to in “—General mandate to repurchase Shares” below.
This general mandate to issue Shares will remain in effect until the earliest of:
 the conclusion of the next annual general meeting of our Company unless, by ordinary
resolution passed at that meeting, the authority is renewed, either unconditionally or
subject to condition;
 the expiration of the period within which the next annual general meeting of our Company
is required to be held under any applicable laws of the BVI or the memorandum and the
articles of association of our Company; and
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SHARE CAPITAL
 the passing of an ordinary resolution by our Shareholders in a general meeting revoking or
varying the authority.
General mandate to repurchase Shares
Subject to the Global Offering becoming unconditional, our Directors were granted a general
mandate to repurchase our own Shares up to 10% of the total number of Shares in issue immediately
following completion of the Global Offering (but excluding any Shares which may be issued pursuant
to the exercise of the Over-allotment Option, the Shares which may be issued upon conversion of the
Convertible Bond, any Shares which may be issued under the Share Schemes, and any Shares that are
issuable upon conversion of the Shares on a one-to-one basis).
This mandate only relates to repurchases on the Stock Exchange or on any other stock
exchange on which the securities of our Company may be listed and which is recognized by the SFC
and the Stock Exchange for this purpose, and in accordance with all applicable laws and the
requirements under the Listing Rules or equivalent rules or regulations of any other stock exchange.
This general mandate to repurchase Shares will remain in effect until the earliest of:
 the conclusion of the next annual general meeting of our Company unless, by ordinary
resolution passed at that meeting, the authority is renewed, either unconditionally or
subject to condition;
 the expiration of the period within which the next annual general meeting of our Company
is required to be held under any applicable laws of the BVI or the memorandum and the
articles of association of our Company; and
 the passing of an ordinary resolution by our Shareholders in a general meeting revoking or
varying the authority.
See “Statutory and general information—A. Further information about our Group—5.
Explanatory statement on repurchase of our own securities” in Appendix IV for further details of this
general mandate to repurchase Shares.
Share Incentive Plans
We have adopted the Share Incentive Plans. See “Statutory and general information—D. Share
Incentive Plans” in Appendix IV for further details.
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FINANCIAL INFORMATION
You should read the following discussion and analysis in conjunction with our audited
consolidated financial statements as of and for the years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2024, included in the Accountants’ Report set out in
Appendix I to this document, together with the respective accompanying notes. This
consolidated financial information includes the financial information of our discontinued
operations, which we disposed of in April 2024. Our consolidated financial statements have
been prepared in accordance with IFRS Accounting Standards.
The following discussion and analysis contain forward-looking statements that reflect
our current views with respect to future events and financial performance. These statements
are based on our assumptions and analysis in light of our experience and perception of
historical trends, current conditions and expected future developments, as well as other factors
we believe are appropriate under the circumstances. However, whether actual outcomes and
developments will meet our expectations and predictions depends on a number of risks and
uncertainties, many of which we cannot control or foresee. In evaluating our business, you
should carefully consider all of the information provided in this document, including “Risk
Factors” and “Business.”
OVERVIEW
We provide SaaS solutions to retailers in the local retail industry. We have successfully
expanded our businesses to other countries and regions in Asia, comprising Hong Kong SAR,
Cambodia, Singapore, Malaysia, Macau SAR, Indonesia, the Philippines and Brunei. We were the
largest retail digitalization solution provider in China by revenue and a leading retail digitalization
solution provider in Asia, according to Frost & Sullivan.
We distinguish ourselves from our competitors through achieving full-spectrum coverage,
incorporating industry latest practices, facilitating intelligent data-driven business decision making, and
continuous product development, which help retailers drive revenue growth and reduce costs. According to
Frost & Sullivan, we were a leading full-spectrum omni-channel retail digitalization solution provider in
China. Full-spectrum coverage refers to our capability to address retailers’ needs across all critical parts of
their operations. The broadest operational modules coverage enables us to reach the widest and most diverse
customer base in the industry and thus obtain deep retail know-how. We continuously improve our SaaS
modules based on our deep understanding of the retail industry and technological advancements to deliver
tangible and measurable improvements to retailers.
We started our business in retail digitalization in collaboration with Wumei Group. We
implemented our cloud solutions in Wumei Group’s nationwide store network and upgraded our
functionalities through their complex operation. Today, we have developed comprehensive retail
digitalization solutions for customers of various sizes and formats that encompass local retail
operations, from procurement and supply chain management, store and headquarters management, to
marketing and omni-channel sales. Our experience with Wumei Group has inspired us to deliver many
popular modules that are applicable to other retail formats from chained supermarkets, warehouse
supermarkets, department stores to convenience stores, specialty retailers and retailers with new retail
formats, such as membership stores and discount stores. We now cover all major retail formats,
helping our expanding customer base meet ever-evolving market challenges and provide quality
services to consumers. As a testament to our success, we have served 236, 436, 533, 413 and 444
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FINANCIAL INFORMATION
customers in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, respectively. The
dollar-based net retention ratio was 184% in 2021, 158% in 2022, 117% in 2023, and 123% in the
twelve months ended June 30, 2024.
We experienced significant growth during the Track Record Period. Our revenue increased by
56.6% from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further by 19.4% to
RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million in the six
months ended June 30, 2023 to RMB939.2 million in the same period in 2024. We had a gross profit
margin of 20.4%, 38.0%, 35.0%, 36.3% and 38.3% in the years ended December 31, 2021, 2022 and
2023, and the six months ended June 30, 2023 and 2024, respectively. The general increase in gross
profit margin during the Track Record Period was due to our strategic measures to focus more intently
on our core service by growing our relatively high-margin operating system business in our retail core
service cloud segment and gradually phasing out our e-commerce service solutions which had a lower
margin.
BASIS OF PRESENTATION
Our Company was incorporated as an exempted company with limited liability in the BVI on
February 5, 2015. Our Company, as the holding company of our business, indirectly owns all of our
subsidiaries, including our operating subsidiaries, which run all of our operations both domestically
and internationally. See “History, Reorganization and Corporate Structure” in this document for
details.
Our historical financial information has been prepared in accordance with all applicable IFRS
Accounting Standards as issued by the International Accounting Standards Board (the “ IASB”).
Further details of the material accounting policy information adopted are set out in Note 2 of the
Accountants’ Report in Appendix I to this document.
The IASB has issued a number of new and revised IFRS Accounting Standards. For the
purpose of preparing this historical financial information, we have consistently adopted all applicable
new and revised IFRS Accounting Standards, throughout the Track Record Period. We have not
adopted any new standards or interpretations that are not yet effective for the Track Record Period. The
revised and new accounting standards and interpretations issued but not yet effective for the Track
Record Period and not yet adopted by us are set out in Note 35 of the Accountants’ Report in Appendix
I to this document.
The historical financial information also complies with the applicable disclosure provisions of
the Listing Rules.
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FINANCIAL INFORMATION
MAJOR FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations have been, and are expected to continue to be, materially affected by a
number of factors, many of which are outside of our control. These factors include but are not limited
to the following:
General Factors
Our business and results of operations are impacted by general factors affecting the broader
retail digitalization solution industry, including
 global economic growth and development of the retail digitalization solution industry in
China and around the world;
 continuing integration with retail digitalization solutions and rising demand for digital
transformation in the local retail industry in China and around the world;
 improved technology and performance of retail digitalization solutions; and
 governmental policies, initiatives and incentives affecting the retail industry and retail
digitalization solution industry.
Company Specific Factors
Our ability to expand our customer base and retain our existing customers
Our results of operations and future growth depend on our ability to attract and retain
customers. We grew and maintained our customer base in recent years with (i) our strong industry-
wide brand recognition and our customers’ positive perception of our services, (ii) our key accounts
strategy targeting enterprise retailers and brand owners, and (iii) the exemplification of our lighthouse
projects enhancing our customers’ confidence in a prolonged partnership. Continued expansion of our
customer base strengthens our brand and reputation within the retail digitalization solution industry,
creating a virtuous cycle that helps expand our customer base in a cost-effective manner.
The following table sets forth our customers served for the years/periods indicated:
Year Ended
December 31,
Six Months Ended
June 30,
Number of customers(1) 2021 2022 2023 2023 . 2024
- Retail core service cloud ....................................... 2 3 1 4 3 2 5 2 7 4 0 9 4 3 0
- Operating system ............................................ 1 6 4 3 0 0 3 2 4 2 5 1 2 8 3
- AIoT solutions .............................................. 8 4 1 8 8 2 8 1 2 1 4 1 8 4
- E-commerce service cloud ...................................... 4 0 3 5 2 9 2 9 *
- Others ...................................................... 3 4 4 2 1 9
Total number of customers (2) .................................... 236 436 533 413 444
Notes:
* The e-commerce cloud service solutions has been immaterial in 2024. By the end of 2023, all our customers had transitioned to in-house
O2O operation, where they manage their own day-to-day O2O operations. As a result of our customers opting for in-house O2O e-
commerce business, we ceased to provide system and delivery services under the e-commerce service cloud solutions for those
customers accordingly, but we provide distributed e-commerce system and other services to them if they decide to subscribe to such
services. Consequently, the bulk of the services we provided under the e-commerce service clouds during the Track Record Period, such
as the operational support for their online stores and delivery services, had been phased out by the end of 2023. The remaining services
we provided under the e-commerce service cloud solutions did not generate material revenue in 2024. In April 2024, we completed the
Restructuring, which led to the divestment of the Dmall app and the online advertising services. After the Restructuring, we do not
operate any business under the e-commerce service cloud. See “Summary—Recent Development,” “Business—Retail Core Service
Cloud Solutions—Distributed e-commerce system” and “Business—E-commerce service cloud.”
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(1) Number of customers that have contributed revenue to us in a given y ear/period, including number of customers we serve through Shenzhen
Enjoy as a result of our acquisition of Shenzhen Enjoy in November 2021. If we remove the number of customers solely using Shenzhen
Enjoy’s products from the calculation, in 2021, 2022 and 2023 and thesix months ended June 30, 2023 and 2024, we had retail core service
cloud solutions customer of 86, 162

 259
 213 and 183, respectively, including (i) operating system customer of 23, 39, 60, 47 and 60,
respectively, (ii) AIoT solutions customers of 75, 142, 217, 182 and 136, respectively. The number of customers does not include those from
our tax invoice management system services, which was launched in 2023 and generated revenue of RMB10 thousand in 2023 and RMB2.3
million in the six months ended June 30, 2024. We had 14 and 930 tax invoice customers in the second half of 2023 and the six months ended
June 30, 2024, respectively.
(2) Many of our customers use more than one of our cloud service solutions. Therefore eliminations are made to avoid double counting.
We have also begun to set our foundation for overseas expansion by collaborating with a number
of overseas enterprise customers, such as DFI Retail Group, SM Group and Metro Group. Our overseas
expansion introduced an additional stream of revenue for our operations. In 2021, 2022 and 2023, and the
six months ended June 30, 2023 and 2024, our overseas revenue accounted for 2.4%, 6.0%, 7.8%, 7.6%
and 8.0% of our revenue, respectively. Our overseas revenue grew by 296.6% from RMB20.3 million in
2021 to RMB80.3 million in 2022, and further increased by 53.4% to RMB123.3 million in 2023. Our
overseas revenue grew by 28.7% from RMB58.3 million in the six months ended June 30, 2023 to
RMB75.0 million in the same period in 2024.
Our ability to deepen our relationship with and increase spending of our existing customers
Our results of operations depend on our ability to deepen our relationship with existing
customers and increase customer spending over time. Our one-stop retail digitalization solutions allows
us to enhance customer engagement with our products by cross-selling additional modular functions
that cater to our customer’s needs. For instance, we continue to serve our existing Dmall OS customers
by delivering additional modules that would streamline various aspects of a customer’s retail
operations and new AIoT solutions that inject greater efficiency to a customer’s retail locations. As our
revenue is primarily driven by charging a take rate based on our customer’s transactions processed
through our operating system, our revenue also benefits from our customers adopting our products and
services in broad scope. Our revenue sees organic growth as customer’s GMV processed through our
solutions increases, especially that of our operating system customers, and in turn contributes to our
increased income. GMV processed through our operating system in 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024 were RMB95.1 billion, RMB123.3 billion, RMB141.9 billion,
RMB69.1 billion and RMB76.1 billion. As we continue to deliver measurable business results to our
customers and improve their user experience, we will further enhance customer loyalty and spending.
During the Track Record Period, we have achieved high dollar-based net retention ratio, a
metric used to measure growth in revenue generated from existing customers of our services. The
dollar-based net retention ratio for our customers was 184% in 2021, 158% in 2022, 117% in 2023 and
123% in the twelve months ended June 30, 2024, as calculated by revenues generated in the given
period by recurring customers (excluding consumers) with the prior period divided by revenues
generated in the prior period by all customers (excluding consumers). The long-term partnerships with
our existing customers provided a stable source of business for our operations and highlighted our
continued efforts to satisfy evolving client demands over time with our holistic line up of products and
services.
Our ability to leverage industry know-how to enhance technology and product capability
We are a leading full-spectrum omni-channel retail digitalization solution provider in China,
hosting the most comprehensive products portfolio. Full-spectrum coverage refers to our capability to
address retailers’ needs across all critical parts of their operations. We have invested, and will continue
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to invest, significantly in product and technology to strengthen our market leadership. Our investment
in research and development in 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024
was RMB588.6 million, RMB586.3 million, RMB520.9 million, RMB266.1 million and RMB203.5
million, respectively. We believe our capability and dedication to developing and offering a
comprehensive portfolio of solutions that addresses the diverse and evolving needs of our customers is
critical to the success of our business. With the support of practical experience and industry know-how
gained from our extensive operations serving a large customer base, we continue to refine and enrich
our modules and functionalities to help retailers improve operation efficiency in more online and
offline business scenarios across different retail formats.
We expect these efforts in product and technology development will attract more customers,
increase customer loyalty and increase product sales, creating a long-term positive impact on our
results of operations and growth prospects.
Our ability to improve operational efficiency
Our ability to control our expenses is critical to the success of our business. Our expenses
mainly consist of research and development expenses, selling and marketing expenses and general and
administrative expenses. During the Track Record Period, these expenses generally decreased as a
percentage of our revenue. Our research and development expenses in 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024 accounted for 69.4%, 44.1%, 32.9%, 34.8% and 21.7% of our
revenue, respectively. Research and development is the cornerstone of our operations, allowing us to
provide quality services to our customers and solidify our market position. Our selling and marketing
expenses in 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024 accounted for
52.5%, 18.0%, 9.5%, 11.1% and 4.6% of our revenue, respectively. We strategically reduced our sales
and marketing expenses for promotional incentives targeting retail consumers relating to our e-
commerce service cloud solutions and AIoT solutions as our brand becomes established in the market
and we phased out services we provided under the e-commerce service cloud. Our general and
administration expenses in 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024
accounted for 24.6%, 18.9%, 16.4%, 14.5% and 14.2% of our revenue, respectively. We continue to be
disciplined on general and administration expenses and keep the cost structure in check.
Strategic acquisitions and investments
We have made, and intend to continue to make, strategic acquisitions to expand our product
offerings, strengthen our technological and research and development capabilities, scale up our
business, expand our customer reach and solidify our market position. We take a deliberate and staged
approach to our investment and acquisition strategy. In some cases, we may begin with an initial
minority investment followed by business cooperation. We have chosen to make minority investments
in some circumstances instead of full acquisitions for one or more of the following reasons: (i) the
investee has strong management, where it allows them to have operating independence and potential
upside tied to their business in order to retain them; (ii) the investee does not fit within the Group’s
core business operations but can generate strategic synergies through an equity relationship; and/or (iii)
the investee demonstrates clear strategic value to the Group but capital or integration risk in the near
term suggests a deliberate and phased-in approach. When the business results, cooperation and the
overall relationship established with the management of the investee company show increasing value
to the Group’s ongoing business strategy, we may increase our investment or acquire the investee
company completely. For example, our investment in Shenzhen Enjoy adopted part of this investment
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and acquisition strategy, where the period from initial investment to acquisition of 51% equity interest
and a staged delegation of voting rights spanned more than a fiscal year. The business of Shenzhen
Enjoy mainly includes software development, sales of hardware and software products and system
operation and maintenance. The acquisition not only allows us to establish in-house capability for
products and services development but also enables us to reach a new set of retailer customers for
cross-selling opportunities. We believe our investment in Shenzhen Enjoy strengthens our software
development, marketing and distribution capabilities, and enables us to become a holistic full-service
provider for more customers.
We intend to continue to selectively pursue strategic alliances and investments to further
strengthen our competitiveness. We expect to evaluate and execute alliance, investment and acquisition
opportunities that complement and scale up our business, increase our market power, synergize our
core competencies and skills and optimize our profitability.
We have sufficient funds to pursue the strategic alliances and investment, specifically by
utilizing proceeds obtained via the Listing and specifically allocated to pursue strategic cooperation,
investments and acquisitions. We have allocated approximately 10%, or HK$62.4 million, in addition
to internal funds in the event the investment amount exceeds HK$62.4 million, of our proceeds from
the Listing to pursue strategic alliances and investments. According to Frost & Sullivan, the retail
cloud industry in Asia in general has approximately 4,000 providers in 2023, and in China specifically,
approximately 400 providers in 2023. We intend to establish a high standard in selecting potential
targets from this broad pool of existing providers. We expect to seek out potential businesses and
assets that are complementary to and have synergies with our current business and that will help us
attract and retain customers. We intend to focus on players with a solid track record and significant
growth potential. We would generally consider factors including suitability with our strategic planning,
degree of potential synergies, market position, management team experience, valuation, historical
operating metric, and financial performance.
IMPACT OF THE COVID-19 PANDEMIC
The COVID-19 pandemic has materially and adversely affected China and many parts of the
world, leading to widespread lockdowns. The global spread of COVID-19 and the associated
prevention and control measures imposed by countries and regions around the world has resulted in
systematic macro-economic distress, adversely impacting global consumer purchasing sentiment and
capabilities, supply chain and logistics services.
Our retail core service cloud’s online and offline product offerings experienced different
operating conditions. With reduced retail consumer foot traffic in offline retail stores, our revenue
generated from customer take rate suffered as a result of a general reduction of GMV processed
through our system as retailer customers reduced their spending in offline stores. However, this effect
is largely offset by an increase in demand by retailers and brand owners for our digitalized retail
services as they seek to accelerate the digitalization of their operations to better manage the remote
operating conditions imposed by COVID-19. For instance, customers such as 7-Eleven (Guangdong)
further embedded our operating system modules on inventory and logistics management with their
warehouses, which played an important role in the Foshan warehouse expansion, doubling the amount
of stores it supplied from over 500 stores to over 1,000 stores as of June 2022.
Our e-commerce service cloud segment had positive growth during the time of the COVID-19
pandemic, as evidenced by the notable GMV growth in our e-commerce service cloud operations. The
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segment GMV rose 18.8% year-over-year to RMB8.2 billion in 2022, as offline retailers accelerated
their adoption of e-commerce functions to cope with rapidly growing market demand for online retail
channels and for retailers to engage with consumers who were changing their purchase behavior in a
remote retail scenario. Lockdowns and movement restrictions associated with COVID-19 further
allowed us to present our e-commerce platform to consumers who required emergency support to
resolve grocery shopping difficulties, and allowed us to enhance consumers’ digital consumption
experience in moments of need.
Since the outbreak of COVID-19, we had also benefited from pandemic-specific government
relief policies during challenging economic conditions as a result of the COVID-19 pandemic mainly
in the form of social insurance contribution reductions. We were granted holdover of social insurance
payment of approximately RMB37.0 million in 2022 across our offices in China which resulted in
savings for our general cost and expenses in 2022. At the same time, we were in receipt of government
support of human resources maintenance. We also received government-granted rent relief, resulting in
a temporary savings for our cost of operations.
Our Directors are of the view that the overall impact of the COVID-19 pandemic on our
business operation and financial performance had been immaterial, on the basis that (i) we achieved
significant revenue growth from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, during
which the COVID-19 pandemic had the most severe impact on our operations, (ii) our customer
engagement and business development efforts resulted in the number of our customers growing from
236 in 2021 to 436 in 2022, (iii) our business operations had fully resumed since China began to
modify the COVID-19 policy at the end of 2022, and (iv) the negative impact of COVID-19 on our
operations and revenue related to offline retail stores was balanced to a certain extent by the increased
adoption of our solutions for online retail formats. See “Risk Factors—Risks Relating to our Business
and Industry—Our business had been affected by the COVID-19 pandemic.”
RESTRUCTURING
In April 2024, we conducted a series of restructuring transactions to divest all of our equity
interests in Dmall Fresh (Beijing), our former VIE, to minimize the underlying legal and regulatory
risks. The Restructuring led to the divestment of online advertising services and the cessation of the
operation of the Dmall app and mini programs. At the time of the Restructuring, Dmall app was
primarily associated with the provision of online advertising services under the marketing and
advertising service cloud we previously operated and payment processing services under the retail core
service cloud. Revenue from such payment processing services was RMB27.4 million,
RMB56.2 million, RMB36.1 million, RMB19.6 million and RMB14.7 million in 2021, 2022, 2023 and
the six months ended June 30, 2023 and 2024, respectively. Gross profit from such payment processing
services was negative RMB18.2 million, RMB8.4 million, RMB4.7 million, RMB4.5 million and
RMB2.9 million in 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, respectively.
The financial results of our online advertising services were classified as discontinued operations in the
historical financial information. Please also refer to the following table which sets forth the results of
the discontinued operations.
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Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB RMB RMB RMB RMB
(in thousands)
(unaudited)
Revenue 196,400 172,695 164,334 76,721 41,781
Cost of revenue ................................. (11,110) (8,767) (6,552) (1,472) (2,510)
Gross profit .................................... 185,290 163,928 157,782 75,249 39,271
(Loss)/profit for the year/period from discontinued
operations ................................... (17,027) 59,498 93,548 40,032 233,134
See “Summary—Recent Developments” and “Business—Others.”
Results of discontinued operations were accounted for as a separate line item as “(loss)/profit
for the year/period from discontinued operations” in the consolidated statements of profit or loss.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Some of our accounting policies require us to apply estimates and assumptions as well as
complex judgments relating to accounting items. The estimates and assumptions we use and the
judgments we make in applying our accounting policies have a significant impact on our financial
position and results of operations. Our management continually evaluates such estimates, assumptions
and judgments based on past experiences and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. There has not been any material deviation
between our management’s estimates or assumptions and actual results, and we have not made any
material changes to these estimates or assumptions during the Track Record Period. We do not expect
any material changes in these estimates and assumptions in the foreseeable future.
Set forth below are discussions of the accounting policies that we believe are of critical
importance to us or involve the most significant estimates, assumptions and judgments used in the
preparation of our financial statements. Other material accounting policies, estimates, assumptions and
judgments, which are important for understanding our financial condition and results of operations, are
set forth in detail in Note 2 and Note 3 to the Accountants’ Report in Appendix I to this document.
Material Accounting Policy Information
Revenue recognition
We derive our revenues principally from providing retail core service cloud, e-commerce
service cloud and other services and products to customers.
We recognize revenue when control over a product or service is transferred to the customer, at
the amount of promised consideration to which we are expected to be entitled, excluding those
amounts collected on behalf of third parties. Revenue excludes value added tax or other sales taxes and
is after deduction of any trade discounts.
Further details of our revenue and other net income/(loss) recognition policies are as follows:
Retail core service cloud
Retail core service cloud provides digitalized solutions for retailers, including operating system
and AIoT solutions.
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Operating system
The operating system our Group mainly offers is Dmall OS, which is a SaaS solution
proprietarily developed by our Group to digitalize retailers’ operations and support intelligent business
decision making by utilizing omni-channel data. Our Group is responsible for design and
implementation services to the retailer customers, which are not distinct from the utilization of the
SaaS solutions during the subscription period. Therefore, design and implementation services together
with the SaaS solutions are determined to be one performance obligation. Our Group usually charges
retailer customers a fixed implementation fee or customization fee prior to the launch of the SaaS
solutions, and charges retailer customers either by taking a percentage of the volume of sales (i.e., take
rate model), or by a fixed subscription fee upon the launch of the SaaS solutions.
Revenue from services of Dmall OS is recognized over the contract term. For take rate model,
our Company performs the sales reconciliation with the customers on a monthly basis. Our Company
issues invoices and recognizes revenue after volume of sales being agreed by customers. For fixed
implementation fee, customization fee and subscription fee model, revenue is generally recognized
ratably over the contract term.
AIoT solutions
AIoT solutions offer the service to retailers to build digitally integrated retail locations that
consolidate offline data to achieve more efficient store management. AIoT solutions primarily
comprise intelligent delivery solutions, intelligent cleaning solutions, intelligent loss prevention
solutions, intelligent package sorting solutions, intelligent cashier solutions and intelligent merchandise
replenishment solutions.
When an AIoT solutions contract includes multiple performance obligations, we allocate the
transaction price to each performance obligation on a relative stand-alone selling price basis, which is
determined based on the prices charged to or expected to recover from customers. For AIoT solutions
contracts billed based on a fixed amount for a specified service period, we recognize revenue over the
subscribed period. For services provided on a consumption basis, we recognize revenue based on the
customer utilization of the resources when the services are rendered to the customers. For AIoT
product sales, we recognize revenue when the products are delivered and have been accepted by
customers.
E-commerce service cloud
Prior to the Restructuring, we operated an online-to-offline retailer platform, Dmall mobile app,
for offline retailers and merchants, to facilitate their online sales of their merchandise to the consumers.
We were not primarily obligated to the consumers in their purchases of merchandise, did not take
inventory risk, and did not have latitude over pricing of the merchandise. Upon the completion of sales,
we charged the retailers or merchants a fixed rate commission fee, as agreed in the contract, based on the
sales amount. We recognized commission fees on a net basis at the point of completion of delivery of
merchandise.
Meanwhile, we fulfilled the delivery needs of O2O business by utilizing riders from outsourced
delivery agencies. We were primarily responsible for and guarantee identifying and directing riders to
complete the deliveries requested by the consumers, and had the ability to control the related services.
We considered ourselves as a principal in the delivery arrangement. Accordingly, we recognized
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revenues resulting from delivery services on a gross basis at the point of delivery of merchandise, with
the amounts paid to the riders recorded in cost of revenue.
Other revenue
Other revenue comprises offline advertising service, offline marketing products and the
provision of discounts and coupons. We recognize revenue when control over a product or service is
transferred to the customers at the amount of promised consideration to which we are expected to be
entitled, excluding any obligation to compensate customers.
Incentives
We offer various types of incentives to retailers, merchants and consumers. We offer customers
incentives for retail core service cloud and e-commerce service cloud services when the sales volume
meets pre-determined amounts during a certain period. We record such incentives as deduction of
revenue as we do not receive a distinct good or service or the fair value of the good or service received
cannot be reasonably estimated. We, in certain circumstances, pay incentives on behalf of certain
retailers and merchants to consumers, which is not treated as our incentives.
We offer consumers incentives at our discretion that are neither specific to any retailers or
merchants nor contractually required by any retailers or merchants for platform transactions in order to
stimulate the transaction volume on online platforms. Such consumer incentives offered to promote our
platform are recognized as selling and marketing expenses.
Rental income from operating leases
We recognize rental income receivable under operating leases in profit or loss in equal
installments over the periods covered by the lease term, except where an alternative basis is more
representative of the pattern of benefits to be derived from the use of the leased asset. We recognize
lease incentives granted in profit or loss as an integral part of the aggregate net lease payments
receivable. Variable lease payments that do not depend on an index or a rate are recognized as income
in the accounting period in which they are earned.
Interest income
We recognize interest income as it accrues under the effective interest method using the rate
that exactly discounts estimated future cash receipts through the expected life of the financial asset to
the gross carrying amount of the financial asset. For credit-impaired financial assets, the effective
interest rate is applied to the amortized cost (i.e. gross carrying amount net of loss allowance) of the
asset.
Government grants
We recognize government grants in the statement of financial position initially when there is
reasonable assurance that they will be received and that we will comply with the conditions attached to
them. We recognize grants that compensate us for expenses incurred as income in profit or loss on a
systematic basis in the same periods in which the expenses are incurred.
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Convertible bond
We account for convertible bond which do not contain an equity component as follows:
We measure at initial recognition the derivative component of the convertible bond at fair value
and we present it as part of derivative financial instruments. We recognize any excess of proceeds over
the amount initially recognized as the derivative component as the liability component. We allocated
transaction costs that relate to the issue of the convertible bond to the liability and derivative
components in proportion to the allocation of proceeds. We recognize initially the portion of the
transaction costs relating to the liability component as part of the liability. We recognize the portion
relating to the derivative component immediately in profit or loss.
We subsequently remeasure the derivative component in accordance with Note 2(i) of the
Accountants’ Report in Appendix I to this document. We subsequently carry the liability component at
amortized cost. We recognize the interest expense in profit or loss on the liability component as
calculated using the effective interest method. If the bond is converted, we transfer the carrying
amounts of the derivative and liability components as consideration for the shares issued. If the bond is
redeemed, we recognize any difference between the amount paid and the carrying amounts of both
components in profit or loss.
Convertible redeemable preferred shares
Our Company designated the convertible redeemable preferred shares as financial liabilities at
fair value through profit or loss (“ FVPL”). We initially recognize convertible redeemable preferred
shares at fair value. Subsequent to initial recognition, the convertible redeemable preferred shares are
re-measured to fair value at the end of each reporting period with changes in fair value being
recognized in profit or loss.
Discontinued operations
A discontinued operation is a component of our business, the operations and cash flows of
which can be clearly distinguished from the rest of our Group and which represents a separate major
line of business or geographical area of operations, or is part of a single coordinated plan to dispose of
a separate major line of business or geographical area of operations, or is a subsidiary acquired
exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the
criteria to be classified as held for sale, if earlier. It also occurs if the operation is abandoned. Where an
operation is classified as discontinued, a single amount is presented on the face of the statement of
profit or loss, which comprises:
 the post-tax profit or loss of the discontinued operation; and
 the post-tax gain or loss recognized on the measurement of fair value less costs to sell, or
on the disposal, of the assets or disposal group(s) constituting the discontinued operation.
Significant Accounting Judgments and Estimates
Goodwill
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business
combination is allocated to each cash-generating unit (“ CGU”), or groups of cash generating units, that
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is expected to benefit from the synergies of the combination and is tested annually for impairment by
comparing the carrying amount of a CGU or CGUs to its recoverable amount.
The recoverable amount of a CGU is determined based on value-in-use calculations. In
determining the value in use, the calculations use cash flow projections based on financial forecasts
prepared by our management, which requires significant judgment relating to the level of revenue and
amount of operating costs. We use all readily available information in determining an amount that is a
reasonable approximation of the recoverable amount, including estimates based on reasonable and
supportable assumptions and projections of the level of revenue and amount of operating costs for a
five-year period. Other key estimates include an estimated annual growth rate beyond the five-year
period and pre-tax discount rate. Changes in these estimates could have a significant impact on the
recoverable amount of the CGU or CGUs and could result in impairment charge in goodwill in future
periods.
Deferred tax assets
Deferred tax assets are recognized for all temporary differences to the extent that it is probable
that future taxable profit will be available against which the temporary differences can be utilized. In
assessing whether such temporary differences can be utilized in the future, we need to make judgments
and estimates on the ability of each of its subsidiaries to generate taxable income in the future years.
We believe we have recorded adequate deferred taxes based on the prevailing tax rules and regulations
and our current best estimates and assumptions. In the event that future tax rules and regulations or
related circumstances change, adjustments to deferred taxation may be necessary which would impact
our results or financial position.
SUMMARY OF OUR RESULTS OF OPERATIONS
The following table sets forth our consolidated statements of profit or loss with line items in
absolute amounts and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Continuing Operations
Revenue ...................... 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Cost of revenue ................ (675,453) (79.6) (823,068) (62.0) (1,030,656) (65.0) (486,834) (63.7) (579,908) (61.7)
Gross profit ................... 172,739 20.4 505,196 38.0 554,701 35.0 277,169 36.3 359,254 38.3
Revaluation loss on property and
equipment upon transfer ........ (37,618) (4.4) — — — — — — — —
Valuation gains on investment
property .................... 3 8 0 * 16,972 1.3 — — — — — —
Other net income/(loss) .......... 37,237 4.4 170,429 12.8 115,502 7.3 23,876 3.2 (59,134) (6.2)
Research and development
expenses .................... (588,611) (69.4) (586,330) (44.1) (520,887) (32.9) (266,087) (34.8) (203,527) (21.7)
Selling and marketing expenses .... (444,905) (52.5) (238,569) (18.0) (150,923) (9.5) (84,613) (11.1) (42,965) (4.6)
General and administration
expenses .................... (208,571) (24.6) (251,699) (18.9) (259,413) (16.4) (110,517) (14.5) (133.251) (14.2)
Impairment loss on trade and other
receivables .................. (1,032) (0.1) (1,596) (0.1) (1,784) (0.1) (578) (0.1) (1,533) (0.2)
Loss from operations ........... (1,070,381) (126.2) (385,597) (29.0) (262,804) (16.6) (160,750) (21.0) (81,156) (8.6)
Net finance costs ............... (5,222) (0.6) (23,065) (1.7) (13,344) (0.8) (6,775) (0.9) (5,740) (0.6)
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Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Share of profits/(losses) of associates . . . 607 0.1 — — — — — — (200) *
Share of profits of a joint venture ...... — — * * * — — — — — —
Fair value change of convertible
redeemable preferred share ......... (732,280) (86.4) (493,191) (37.2) (476,160) (30.1) (422,261) (55.2) (397,118) (42.3)
Loss before taxation from continuing
operations ...................... (1,807,276) (213.1) (901,853) (67.9) (752,308) (47.5) (589,786) (77.1) (484,214) (51.5)
Income tax (expense)/benefit ......... (745) (0.1) 1,829 0.1 3,321 0.2 1,878 0.2 2,008 0.2
Loss for the year/period from
continuing operations ............ (1,808,021) (213.2) (900,024) (67.8) (748,987) (47.3) (587,908) (76.9) (482,206) (51.3)
Discontinued operations
(Loss)/profit for the year/period from
discontinued operations ............ (17,027) (2.0) 59,498 4.5 93,548 5.9 40,032 5.2 233,134 24.8
Loss for the year/period ............ (1,825,048) (215.2) (840,526) (63.3) (655,439) (41.4) (547,876) (71.7) (249,072) (26.5)
Attributable to:
Equity shareholders of the Company (1,750,680) (206.4) (807,406) (60.8) (592,361) (37.4) (512,618) (67.1) (234,875) (25.0)
- Continuing operations ............ (1,733,653) (204.4) (866,904) (65.3) (685,909) (43.3) (552,650) (72.3) (468,009) (49.8)
- Discontinued operations .......... (17,027) (2.0) 59,498 4.5 93,548 5.9 40,032 5.2 233,134 24.8
Non-controlling interests ............. (74,368) (8.8) (33,120) (2.5) (63,078) (4.0) (35,258) (4.6) (14,197) (1.5)
- Continuing operations ............ (74,368) (8.8) (33,120) (2.5) (63,078) (4.0) (35,258) (4.6) (14,197) (1.5)
Notes:
* Less than 0.1%
** Less than RMB500
NON-IFRS MEASURE
To supplement our consolidated financial statements, which are presented in accordance with
IFRS Accounting Standards, we also use adjusted loss from continuing operations (non-IFRS measure)
and adjusted net margin from continuing operations (non-IFRS measure) as additional financial
measures, which are not required by, or presented in accordance with IFRS Accounting Standards.
We believe adjusted loss from continuing operations (non-IFRS measure) provides 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
loss from continuing operations (non-IFRS measure) may not be comparable to similarly titled
measures presented by other companies. The use of adjusted loss from continuing operations
(non-IFRS measure) has limitations as an analytical tool, and you should not consider it in isolation
from, or as a substitute for an analysis of, our results of operations or financial condition as reported
under IFRS Accounting Standards.
We define adjusted loss from continuing operations (non-IFRS measure) as loss for the year/
period from continuing operations adjusted by adding back equity-settled share-based payment
expenses, fair value change of convertible redeemable preferred shares and listing expenses. We
exclude equity-settled share-based payment expenses because they are non-cash in nature, and do not
result in cash outflow. Fair value change of convertible redeemable preferred shares represents fair
value changes of the convertible redeemable preferred shares issued by our Company and relate to the
changes in the valuation of our Company.
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The following table reconciles adjusted loss from continuing operations (non-IFRS measure)
for the years/periods presented in accordance with IFRS Accounting Standards, which is loss from
continuing operations for the years/periods:
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2023 2024
(RMB in thousands)
(unaudited)
Loss from continuing operations for the year/
period ................................ (1,808,021) (900,024) (748,987) (587,908) (482,206)
Add:
Equity-settled share-based payment expenses (1) . . 134,140 12,530 13,620 7,229 8,330
Fair value change of convertible redeemable
preferred shares(2) ........................ 732,280 493,191 476,160 422,261 397,118
Listing expenses(3) ......................... — 38,391 25,859 14,537 20,372
Adjusted loss from continuing operations (non-
IFRS measure) for the year/period ........ (941,601) (355,912) (233,348) (143,881) (56,386)
Adjusted net margin from continuing
operations (non-IFRS measure) ........... (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equity-settled share-based payment expenses mainly represent share-based compensation expenses incurred in connection with our 2016
Share Incentive Plan and 2020 Share Incentive Plan. Equity-settled share-based payment expenses are not expected to result in future
cash payments. The reconciling item is non-cash and does not result in cash outflow, and the adjustment has been consistently made
during the Track Record Period. The significant increase in share-based payment expenses in 2021 was mainly due to our Company
accelerating the vesting of 75,000,000 RSUs in October 2021. It resulted in unrecognized share-based compensation expenses being
recognized for services that our Group would have received over the remainder of the vesting period.
(2) Fair value change of convertible redeemable preferred shares represents fair value changes of the convertible redeemable preferred
shares issued by our Company and relate to changes in the valuation of our Company. We do not expect to record any further changes in
fair value of the convertible redeemable preferred shares after the Listing as such convertible redeemable preferred shares will be
converted from liabilities to equity as a result of the automatic conversion into ordinary shares upon the Listing. The reconciling item is
non-cash and does not result in cash outflow. The convertible redeemable preferred shares will be redesignated from liabilities to equity
as a result of automatic conversion into ordinary shares upon the Listing such that the net liabilities position would turn into a net asset
position.
(3) Listing expenses represent expenses related to the Global Offering.
DESCRIPTION OF MAJOR COMPONENTS OF OUR RESULTS OF CONTINUING
OPERATIONS
Revenue
During the Track Record Period, we derived our revenue primarily from the provision of our
services of retail core service cloud and e-commerce service cloud. Our revenue increased by 56.6%
from RMB848.2 million in 2021 to RMB1,328.3 million in 2022, and further increased by 19.4% to
RMB1,585.4 million in 2023. Our revenue increased by 22.9% from RMB764.0 million in the six
months ended June 30, 2023 to RMB939.2 million in the same period in 2024.
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Revenue by Operating Segment
The following table sets forth a breakdown of our revenue by operating segment both in absolute
amount and as a percentage of our revenue for the years/periods presented:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service cloud . . . 438,814 51.7 880,502 66.3 1,298,730 81.9 602,255 78.8 933,185 99.4
- Operating system ....... 288,481 34.0 616,529 46.4 680,043 42.9 330,655 43.3 419,838 44.7
- AIoT solutions .......... 150,333 17.7 263,973 19.9 618,687 39.0 271,600 35.5 513,347 54.7
- Take rate .......... 113,894 13.4 105,638 8.0 66,057 4.2 36,624 4.8 28,878 3.1
- Subscription ....... 16,693 2.0 85,885 (1) 6.5 516,473 (1) 32.6 211,403 (1) 27.7 479,418 (1) 51.1
- Product sales ....... 19,746 2.3 72,450 (2) 5.4 36,157 (2) 2.2 23,573 3.0 5,051 0.5
E-commerce service
cloud ................ 409,312 48.3 447,487 33.7 300,006 18.9 160,465 21.0 4,279 0.4
Others ................. 6 6 * 2 7 5 * (13,379) (0.8) 1,283 0.2 1,698 0.2
Revenue ............... 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Note:
* Less than 0.1%
(1) There was a general increase in the subscription fees under our AIoT solutions, mainly attributable to a greater adoption of such solutions
by customers as we expanded our AIoT service during the Track Record Period, including intelligent loss prevention solutions in early
2022, as well as intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions,
intelligent cleaning solutions and intelligent delivery solutions in 2023.
(2) The increase in our product sales under AIoT solutions from RMB19.7 million in 2021 to RMB72.5 million in 2022 was resulted from
the expansion of our product offerings of digitalized smart tags in late 2021. The decrease from RMB72.5 million in 2022 to
RMB36.2 million in 2023 was mainly due to the majority of our retailer customers’ stores having completed their digitalized smart tags
adoption by 2022.
Retail core service cloud
We generate revenue from retail core service cloud solutions primarily by (i) charging take rate
from our retailer customers based on the customers’ GMV processed through operating system or
subscription fees for utilizing operating system, as well as customization, implementation, software
development and maintenance fees, and (ii) charging product and service fees from customers utilizing our
AIoT solutions. The take rate and subscription fees we charge are determined based on various factors,
including, among others, the number of modules subscribed, the subscription period, the customer’s total
GMV transacted through our platform, and the size and operational scope of our customers. The
customization, implementation, software development and maintenance fees we charge are determined
based on the number of modules subscribed through our operating system as well as the scale and
complexity of our customers’ businesses.
In 2021, 2022, 2023 and six months ended June 30, 2023 and 2024, revenues from our retail core
service cloud solutions were RMB438.8 million, RMB880.5 million, RMB1,298.7 million,
RMB602.3 million and RMB933.2 million, respectively, representing 51.7%, 66.3%, 81.9%, 78.8% and
99.4% of our revenue in the same years/periods. The increases in our revenue from retail core service cloud
solutions during the Track Record Period was primarily due to (i) an increase in GMV processed through
the operating system as a result of (a) a greater number of customers adopting our operating system as we
continue to attract, retain and cooperate with enterprise retail customers through expanded business
development channels and (b) the expansion of our product portfolio and modules, (ii) an increase in sales
generated from greater adoption of our AIoT solutions by customers as we expanded our AIoT service and
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product offerings during the Track Record Period, (iii) an increase in revenue associated with our
acquisition of Shenzhen Enjoy in November 2021 which contributed revenue of RMB23.7 million,
RMB72.1 million, RMB82.7 million, RMB37.2 million and RMB36.3 million in 2021, 2022 and 2023 and
the six months ended June 30, 2023 and 2024, respectively, representing mainly software development and
maintenance service fees under our operating system segment, and (iv) new customization revenues from
existing customers who demanded additional custo mized functionalities on our operating system due to
respective business needs.
E-commerce service cloud
During the Track Record Period, we generated revenue from e-commerce service cloud
solutions primarily by (i) charging retailers and brand owners a percentage of the customers’ GMV
processed through our O2O platform, particularly our Dmall mobile app and mini-programs, and
(ii) charging consumers delivery fee upon completion of each delivery order in connection with
transactions through our O2O platform.
In 2021, 2022, 2023 and the six months ended June 30, 2023 and 2024, revenues from our
e-commerce service cloud solutions were RMB409.3 million, RMB447.5 million, RMB300.0 million,
RMB160.5 million and RMB4.3 million, respectively, representing 48.3%, 33.7%, 18.9%, 21.0% and
0.5% of our revenue in the same years/periods. The increase in our revenue from e-commerce service
cloud solutions from 2021 to 2022 was primarily due to (i) the increase in total GMV processed
through our O2O platform together with the expansion of our customer base and (ii) an increase in take
rate we charged for certain retailer customers. The decrease in our revenue from e-commerce service
cloud solutions from 2022 to 2023 was primarily due to (i) the decrease in O2O platform service fees
as a result of certain customers opt to operate O2O e-commerce business in-house, where they manage
their own day-to-day O2O operations, (ii) the decrease in GMV processed and number of delivery
orders placed through our platform for certain major retailer customer and (iii) the cessation of our
O2O e-commerce business that we used to provide to DFI Retail Group along with our disposal of DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April 2022. For details, see
“History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI Digital
(Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.”
By the end of 2023, all our customers had transitioned to in-house O2O operation, where they
manage their own day-to-day O2O operations. Consequently, the bulk of the services we provided
under the e-commerce service clouds during the Track Record Period, such as the operational support
for their online stores and delivery services, had been phased out. As we phased out the bulk of
services provided under the e-commerce service clouds by the end of 2023, the remaining services we
provided under the e-commerce service cloud solutions did not generate material revenue in 2024.
After the Restructuring, we do not operate any business under the e-commerce service cloud. See
“Summary—Recent Developments” and “Business—E-commerce service cloud solutions.”
Others
During the Track Record Period, the services we provided under our other business segment
primarily included offline marketing services, offline marketing products and the provision of discounts and
coupons. We determined the price of our offline marketing services, including both advertisement
placement and related consultation services, on a case-by-case basis based on various factors, including,
among others, the format and duration of the advertisement, targeting scope and display location, among
others. Our offline marketing products are priced based on an arm’s length negotiation with our customers
based on the type of products provided and the relevant amount and specifications. See also “Business—
Marketing Resource Collaboration Agreement with Chongqing Department Store.”
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In 2021, 2022 and 2023, revenue generated from others was RMB0.07 million, RMB0.3 million
and negative RMB13.4 million, respectively. We recorded gross loss from others in 2023, primarily due to
an amount of RMB18.9 million we provided to Chongqing Department Store representing the equivalent
value shortage of marketing resources. We entered into a marketing resource collaboration agreement with
Chongqing Department Store in late 2022, pursuant to which we agreed to assist Chongqing Department
Store Group’s marketing activities by gathering marketing resources from third party market participants
(including but not limited to brand owners, payment solution operators, banks and other businesses or
organizations) of not less than RMB50 million in value per calendar year during the service period from
January 1, 2023 to December 31, 2025. We determined the RMB50 million threshold based on the amount
of merchandise coupon resources we estimated we could gather in 2023, multiplied by the estimated
merchandise coupon usage rate. In 2023, as the marketing resources was less than RMB50 million in value,
we paid the resultant value shortage to Chongqing Department Store. The merchandise coupon usage rate
of consumers in 2023, calculated by dividing the value of merchandise coupons used by consumers by the
value of merchandise coupon resources provided by us, has been unexpectedly lower than in 2021 and
2022, resulting in our failure to meet the target for 2023. The lower merchandise coupon usage rate in 2023
was primarily due to the decrease in consumers’ willingness to spend. In the six months ended June 30,
2023 and 2024, revenue generated from others was RMB1.3 million and RMB1.7 million, respectively.
Revenue by Geographic Location
Apart from the Chinese mainland, we have successfully expanded our businesses into markets
outside the Chinese mainland, namely Hong Kong SAR, Cambodia, Singapore, Malaysia, Poland, Macau
SAR, Indonesia, the Philippines and Brunei. We are also in the initial stage venturing into the European
market through our collaboration with Metro Group, a leading wholesaler headquartered in Germany.
The following table sets forth the breakdown of our revenue by geographic region, expressed as
an absolute amount and as a percentage of our revenue, for the years/periods presented:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
The Chinese
Mainland ...... 827,936 97.6 1,247,930 94.0 1,462,096 92.2 705,676 92.4 864,121 92.0
Overseas
- Hong Kong ...... 18,312 2.2 76,502 5.8 113,428 7.2 54,013 7.1 60,000 6.4
- Cambodia ....... 9 8 9 0 . 1 2,598 0.2 4,842 0.3 2,628 0.3 2,389 0.3
- Singapore ....... 9 5 5 0 . 1 9 7 1 * 2,309 0.1 948 0.1 4,712 0.5
- Malaysia ........ — — — — 1,687 0.1 — — 223 *
- Poland .......... — — 2 3 9 * 6 6 7 * 6 6 7 0 . 1 2 *
- Macau .......... — — 2 4 * 3 2 8 * 7 1 * 5 5 0 0 . 1
- Indonesia ........ — — — — — — — — 1,260 0.1
- the Philippines .... — — — — — — — — 5,627 0.6
- Brunei .......... — — — — — — — — 2 7 8 *
Total ............ 848,192 100.0 1,328,264 100.0 1,585,357 100.0 764,003 100.0 939,162 100.0
Note:
* Less than 0.1%
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The Chinese Mainland
In 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, revenue generated
from the Chinese mainland were RMB827.9 million, RMB1,247.9 million, RMB1,462.1 million,
RMB705.7 million and RMB864.1 million, respectively, representing 97.6%, 94.0%, 92.2%, 92.4%
and 92.0% of our revenue in the same years/periods. Our revenue growth in the Chinese mainland from
2021 to 2022 was primarily due to the expansion of the Chinese mainland’s retail cloud solution
market, a greater subscription and utilization of Dmall OS system, and the continued growth of our
high-quality enterprise customer portfolio. The increase in revenue generated from the Chinese
mainland from 2022 to 2023 and from the six months ended June 30, 2023 to the same period in 2024
was mainly attributable to a greater adoption of such solutions by customers as we expanded our AIoT
solutions including intelligent merchandise replenishment solutions, intelligent package sorting
solutions, intelligent cashier solutions, intelligent cleaning solutions and intelligent delivery solutions
in 2023.
Overseas
In 2021, 2022, 2023 the six months ended June 30, 2023 and 2024, revenue generated from
overseas markets were RMB20.3 million, RMB80.3 million, RMB123.3 million, RMB58.3 million
and RMB75.0 million, respectively, representing 2.4%, 6.0%, 7.8%, 7.6% and 8.0% of our revenue
from continued operations in the same years/periods. Our revenue growth in overseas markets was
primarily due to an increase in the adoption of our retail cloud solutions in Hong Kong SAR,
Cambodia, Singapore, Malaysia, Poland, Macau SAR, Indonesia, the Philippines and Brunei, as we
enter into long-term cooperation agreements with leading overseas enterprise retailers and an increase
in GMV processed through our operating system from overseas retailer customers.
Cost of Revenue
Our cost of revenue primarily consists of (i) logistics costs, representing the cost of logistics
service providers associated with our O2O delivery services (ii) employee benefit expenses,
representing salaries for our implementation, operation and maintenance services staff, (iii) cost of
inventories sold, representing procurement cost and product design cost of our AIoT solutions and
other services, (iv) payment processing costs, representing fees paid to our payment processing
providers, (v) cloud service, bandwidth and server custody fees, representing fees incurred for the
purchase or rental of cloud and bandwidth services and servers, (vi) outsourcing and other labor costs
mainly from our retail core service cloud solutions including intelligent loss prevention, intelligent
merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier
solutions, intelligent cleaning solutions, intelligent delivery solutions, and e-commerce service cloud
solutions, (vii) customer services support fees, representing service fees charged by third-party
customer service vendors who provide call center services for our O2O platform, and (viii) others,
mainly including depreciation and amortization costs, text messaging cost associated with our text
messaging services, travel expenses, taxes and surcharges, and others.
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The following table sets forth a breakdown of our cost of revenue by nature in amounts and as
percentages of our revenue for the years/periods presented:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Logistics costs ................. 383,125 45.2 342,834 25.8 233,454 14.7 126,213 16.5 — —
Employee benefit expenses ....... 104,458 12.3 180,300 13.6 132,288 8.3 76,475 10.0 49,150 5.2
Outsourcing and other labor costs . . 5,073 0.6 49,069 3.7 465,496 29.4 190,698 25.0 439,715 46.8
Payment processing costs ......... 67,179 7.9 67,901 5.1 41,709 2.6 21,853 2.9 11,944 1.3
Cost of inventories sold .......... 27,528 3.2 70,724 5.3 31,725 2.0 20,719 2.7 11,348 1.2
Cloud service, bandwidth and server
custody fees ................. 46,419 5.5 59,514 4.5 40,355 2.5 21,127 2.8 14,804 1.6
Customer service fees ............ 22,535 2.7 19,128 1.4 11,696 0.7 6,060 0.8 — —
Others ........................ 19,136 2.2 33,598 2.6 73,933 4.8 23,689 3.0 52,947 5.6
Total ......................... 675,453 79.6 823,068 62.0 1,030,656 65.0 486,834 63.7 579,908 61.7
During the Track Record Period, the three largest components of our cost of revenue were
logistics costs, employee benefit expenses and outsourcing and other labor costs. Our logistics costs
decreased from RMB383.1 million in 2021 to RMB342.8 million in 2022, in line with the growth of
our e-commerce service cloud solutions, partially offset by (i) certain customers transitioning to an
in-house delivery model in lieu of using our on-demand delivery service and (ii) our efforts to reduce
logistics costs for our O2O business as we introduced the delivery vendor bidding since April 2020.
Our logistics costs decreased from RMB342.8 million in 2022 to RMB233.5 million in 2023, primarily
due to (i) the decrease in delivery order volume for certain major customer and (ii) the cessation of our
O2O e-commerce business we used to provide to DFI Retail Group along with our disposal of DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April 2022. For details, see
“History, Reorganization and Corporate Structure—Acquisitions and Disposals—(4) DFI Digital
(Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited.” Our logistics costs decreased from
RMB126.2 million in the six months ended June 30, 2023 to nil in the same period in 2024, primarily
due to the cessation of the e-commerce service cloud solutions due to product optimization.
Our employee benefit expenses increased from RMB104.5 million in 2021 to
RMB180.3 million in 2022, primarily due to the increase in our number of employees in line with our
overall business growth, especially those associated with the implementation of our operating system
in overseas markets. Our employee benefit expenses decreased from RMB180.3 million in 2022 to
RMB132.3 million in 2023 and from RMB76.5 million in the six months ended June 30, 2023 to
RMB49.2 million in the same period in 2024, primarily due to our concerted efforts to optimize our
labor structure and increase overall operational efficiency.
Outsourcing and other labor costs mainly represent the labor costs we incurred for our collaboration
with outsourcing service providers to support (i) our AIoT solutions which involve in-store personnel
deployment in addition to digital services and (ii) our e-commerce service cloud solutions where we
stimulated traffic for our O2O platform via offline p romotions. See “Business—Retail Core Service
Cloud—Service Components—AIoT Solutions.” Our outsourcing and other labor costs increased from
RMB5.1 million in 2021 to RMB49.1 million in 2022, and RMB465.5 million in 2023, and from
RMB190.7 million in the six months ended June 30, 2023 to RMB439.7 million in the same period in 2024,
primarily due to the launch and expansion of our new AIoT solutions, including our intelligent loss
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prevention solutions in early 2022 and our intelligent merchandise replenishment solutions, intelligent
package sorting solutions, intelligent cashier solutions, intelligent cleaning solutions and intelligent delivery
solutions in 2023. Our new AIoT solutions generally incur higher outsourcing and other labor costs at their
launching stage, during which in-store personnel deployment to facilitate the adoption of our solutions by
our outsourcing service providers are the most common. This is primarily because we need to deploy more
personnel to assist our customers in familiarizing themselves with the new products and workflows during
the product launching stage. After the launching stage, our AIoT solutions generally continue to incur
outsourcing and other labor costs due to continued use of outsourcing service providers to support our AIoT
solutions, and finally the outsourcing and other labor costs gradually decline to a stable level as our AIoT
solutions mature, which based on our estimates will happen generally within three years. Take the
intelligent merchandise solutions for example: outsourced personnel authenticate their identity through a
mobile workstation, and the system records their online status. When replenishment tasks arise, the system
generates task orders which are then claimed by the outsourced personnel. They complete the replenishment
tasks according to designated workflow, and crucial milestones are recorded by the system and verified by
cameras. The efficiency of outsourced personnel in replenishment operations tends to improve over time as
we and retailers streamline workflows and optimize work allocation, and as relevant personnel become
more familiar with the products and workstream. We contract with third-party labor outsourcing companies
that recruit their own skilled employees, ensuring a consistently high level of replenishment efficiency.
Moreover, the intelligent merchandise solutions system strategically plans for the location of commodities
at retail locations, which significantly minimizes the time spent by personnel in locating goods. These
together result in enhanced personnel efficiency and cost reduction as the intelligent merchandise solutions
mature. See “Business—Employees—Dispatched Workers.”
Our payment processing costs remained relatively stable at RMB67.2 million in 2021 and
RMB67.9 million in 2022. Our payment processing costs decreased from RMB67.9 million in 2022 to
RMB41.7 million in 2023, primarily due to the decrease in sales volume processed through our Scan-
and-Go solutions and O2O platforms. Our payment processing costs decreased from RMB21.9 million
in the six months ended June 30, 2023 to RMB11.9 million in the same period in 2024, primarily due
to the disposal of payment processing services as a result of the Restructuring.
Our cost of inventories sold increased from RMB27.5 million in 2021 to RMB70.7 million in
2022, primarily as a result of an increase in purchase and design costs due to increased sales for AIoT
solutions including digitalized smart tags. Our cost of inventories sold decreased from RMB70.7
million in 2022 to RMB31.7 million in 2023, as the majority of our retailer customers’ stores have
completed their digitalized smart tags adoption by 2022. Our cost of inventories decreased from
RMB20.7 million in the six months ended June 30, 2023 to RMB11.3 million in the same period in
2024, primarily due to a decrease in procurement from our customers.
Our others costs increased from RMB19.1 million in 2021 to RMB33.6 million in 2022,
primarily due to (i) network costs relating to operating system business in 2022, (ii) travel expenses,
and (iii) others. Our other costs increased from RMB33.6 million in 2022 to RMB73.9 million in 2023
and from RMB23.7 million in the six months ended June 30, 2023 to RMB52.9 million in the same
period in 2024, primarily due to text messaging costs incurred to meet the business needs of customers
under our retail core service solutions.
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The following table sets forth the breakdown of our cost of revenue by operating segment in
amounts and as percentages of our revenue for the years/periods presented:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service
cloud ............. 178,651 21.1 385,932 29.1 757,009 47.8 336,947 44.1 564,619 60.1
E-commerce service
cloud ............. 496,802 58.5 437,136 32.9 269,148 17.0 147,911 19.4 2,571 0.3
Others .............. — — — — 4,499 0.2 1,976 0.3 12,718 1.4
Total ............... 675,453 79.6 823,068 62.0 1,030,656 65.0 486,834 63.7 579,908 61.7
Our cost of revenue for our retail core service cloud solutions increased from
RMB178.7 million in 2021 to RMB385.9 million in 2022, primarily due to an increase in (i) direct
labor costs associated with implementation, operation and maintenance of operating system solutions
as well as operation of AIoT solutions due to the general business expansion, (ii) purchase and design
costs due to increased sales for AIoT solutions including digitalized smart tags, (iii) third-party labor
costs from the launch of intelligent loss prevention solutions in early 2022 and (iv) cloud server rental
fees consistent with our expanding operating system operations. Our cost of revenue for our retail core
service cloud solutions increased from RMB385.9 million in 2022 to RMB757.0 million in 2023,
primarily due to an increase in third-party labor costs as we launched intelligent merchandise
replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions, intelligent
cleaning solutions and intelligent delivery solutions in 2023, which was partially offset by the decrease
in our cost of inventories sold as the majority of our retailer customers’ stores have completed their
digitalized smart tags adoption in late 2022. Our cost of revenue for our retail core service cloud
solutions increased from RMB336.9 million in the six months ended June 30, 2023 to
RMB564.6 million in the same period in 2024, primarily due to an increase in third-party labor costs as
we expanded our intelligent merchandise replenishment solutions, intelligent package sorting
solutions, intelligent cashier solutions, intelligent cleaning solutions and intelligent delivery solutions.
Our cost of revenue for our e-commerce service cloud solutions decreased from RMB496.8
million in 2021 to RMB437.1 million in 2022, and further decreased to RMB269.1 million in 2023,
primarily due to (i) lower logistics costs due to the establishment of a delivery service bidding process
as well as certain customers’ transitioning to an in-house delivery model in lieu of using our on-
demand delivery service and (ii) lower labor costs, customer service costs and cloud service costs as a
result of our strategic decision to control costs and limit investment in our O2O operations. Our cost of
revenue for our e-commerce service cloud solutions decreased from RMB147.9 million in the six
months ended June 30, 2023 to RMB2.6 million in the same period in 2024, primarily due to the
cessation of the e-commerce service cloud solutions due to product optimization.
Our cost of revenue for others was nil in 2021, nil in 2022 and RMB4.5 million in 2023. Our
cost of revenue for others increased from RMB2.0 million in the six months ended June 30, 2023 to
RMB12.7 million in the same period in 2024, primarily due to the additional cost of products sold to
our certain customer.
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Gross Profit and Gross Margin
Our gross profit represents our revenue less our cost of revenue. Our gross profit margin
represents our gross profit as a percentage of our revenue. We had a gross profit margin of 20.4%,
38.0%, 35.0%, 36.3% and 38.3% in the years ended December 31, 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024, respectively. The increase from 2021 to 2022 was driven by our
strategic shift towards high-gross-margin operating segments and greater revenue contribution of our
retail core service cloud business, which has a notably high gross profit margin. The decrease from
2022 to 2023 was due to the change in our product mix with greater adoption of our AIoT solutions by
our customers, which has a relatively lower gross profit margin compared to our other products. The
increase from the six months ended June 30, 2023 to the same period of 2024 was driven by our efforts
to improve the efficiency of our outsourced labor under our AIoT solutions.
The following table sets forth our gross profit in absolute amounts and as percentages of
relevant segment revenue, or gross margin, for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
Gross
Profit/
(Loss)
Gross
Margin
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Retail core service
cloud ........... 260,163 59.3 494,570 56.2 541,721 41.7 265,308 44.1 368,566 39.5
Operating
system ........ 209,300 72.6 436,128 70.7 478,330 70.3 234,728 71.0 322,233 76.8
AIoT solutions . . . 50,863 33.9 58,442 22.2 63,391 10.2 30,580 11.3 46,332 9.0
E-commerce service
cloud ........... (87,490) (21.4) 10,351 2.3 30,858 10.3 12,554 7.8 1,708 39.9
Others ............ 6 6 100.0 275 100.0 (17,878) — (693) (54.0) (11,020) (649.0)
Total ............. 172,739 20.4 505,196 38.0 554,701 35.0 277,169 36.3 359,254 38.3
The retail core service cloud solutions segment had a gross profit margin of 59.3%, 56.2%,
41.7%, 44.1%, 39.5% in the years ended December 31, 2021, 2022, 2023 and six months ended
June 30, 2023 and 2024, respectively, driven by increased scale of our AloT solutions with relatively
lower gross margins in comparison to other components of our retail core service cloud solutions.
The e-commerce service cloud solutions segment had a gross margin of negative 21.4%, 2.3%
and 10.3% in the years ended December 31, 2021 and 2022 and 2023, respectively. The gross loss
margin in 2021 and the low gross profit margin in 2022 and 2023 were mainly due to high logistics
cost incurred from the delivery service we provided to consumers to fulfill their delivery orders,
accounting for over 70% of revenue from our e-commerce service cloud solutions. Our gross margin
increased from 2.3% in 2022 to 10.3% in 2023 primarily due to the decrease in logistics costs as
certain customers opt to operate O2O e-commerce business in-house, where they manage their own
day-to-day O2O operations. The e-commerce service cloud solutions segment had a gross profit
margin of 7.8% and 39.3% in the six months ended June 30, 2023 and 2024, respectively, due to the
cessation of e-commerce service cloud solutions by the end of 2023. We discontinued providing the
cost-intensive logistics services when customers transitioned their O2O operations in-house, which
also contributed to an increase in the gross margin of our e-commerce service cloud.
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We adopted a competitive bidding process in April 2020 which we believe provides a thorough
way for us to evaluate a logistics service provider’s service proposal and competencies. After the
introduction of our delivery service bidding process, our Company terminated cooperation with
substantially all delivery vendors with minimum order quantity requirements which required us to
account for the gap amount of delivery fees when the required minimum quantity of O2O delivery
orders was not met. By enhancing our fulfilment capabilities in O2O business with collaboration with a
larger delivery vendor base through our delivery bidding process, we have also reduced our subsidy
granted to riders during high demand periods since 2021.
Others had a gross profit margin of 100.0% in 2021 and 2022 and of negative 54.0% and
negative 649.0% in the six months ended June 30, 2023 and 2024, respectively. We recorded negative
revenue for others in 2023.
We completed our acquisition of Shenzhen Enjoy in November 2021. As a result, in 2021, 2022
and 2023 and the six months ended June 30, 2023 and 2024, the gross profit contributed from
Shenzhen Enjoy were RMB16.5 million, RMB55.4 million, RMB58.0 million, RMB27.8 million and
RMB23.4 million, respectively. For details, see “History, Reorganization and Corporate Structure—
Acquisitions and Disposals—Shenzhen Enjoy.”
Other net income/(loss)
Our other net income/(loss) primarily consists of (i) gains from disposal of subsidiaries, (ii)
government grants and tax preference relating to financial assistance from local authorities in China
and additional deductible input value-added tax, (iii) fair value change in financial assets measured at
FVPL, (iv) rental income from investment property, (v) investment income from wealth management
products, and (vi) gain from re-measurement of previously held equity interest upon acquisition of
Shenzhen Enjoy. There were no unfulfilled conditions or contingencies relating to the government
grants income recorded during the Track Record Period.
The following table sets forth a breakdown of the major components of our other net income/(loss)
in both in absolute amount and as a percentage of revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Government grants and tax
preference ................ 15,890 1.5 52,849 3.5 71,653 4.1 22,620 3.0 26,486 2.8
Rental income ............... 2 3 0 * 2,451 0.2 — — — — — —
Investment income from wealth
management products ....... 6,841 0.7 1,195 0.1 167 * 46 * 547 0.1
Fair value change in financial
assets measured at FVPL .... 11,433 1.1 12,460 0.8 43,762 2.5 1,374 0.2 (87,107) (9.2)
Gain from re-measurement of
equity interest upon
acquisition ................ 2,782 0.3 — — — — — — — —
Gain/(loss) on disposal of
subsidiaries ............... — — 100,131 6.7 (1) * — — — —
Others ..................... 6 1 * 1,343 0.1 (79) * (164) * 940 0.1
Total ...................... 37,237 4.4 170,429 12.8 115,502 7.3 23,876 3.2 (59,134) (6.2)
Note:
* Less than 0.1%
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Our other net income/(loss) increased from RMB37.2 million in 2021 to RMB170.4 million in
2022, primarily due to (i) gains from our disposal of DFI Digital (Hong Kong) Limited and DFI Digital
(Singapore) PTE. Limited and (ii) an increase in government grants and tax preference, partially offset
by a decrease in investment income from wealth management products. Government grants and tax
preference mainly represent cash grants we received from provincial and municipal governments in
Guangdong, China, in connection with capital increases in our Shenzhen WOFE from its overseas
shareholder pursuant to government policies encouraging overseas investments in local enterprises.
Such grants are generally calculated as a percentage of the actual capital increase amount received by
such WOFE in the immediate prior year, capped at RMB100.0 million. Our government grants and tax
preference increased from RMB15.9 million in 2021 to RMB52.8 million in 2022, mainly attributable
to the increase in capital injection into our WOFE from overseas shareholders, resulting in additional
grants of RMB32.0 million from the municipal government of Shenzhen, Guangdong.
Our other net income/(loss) decreased from RMB170.4 million in 2022 to RMB115.5 million
in 2023, primarily due to (i) the absence of a one-off gain of RMB100.1 million from disposal of DFI
Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in April 2022, and (ii) the
absence of rental income from investment properties held in Shenzhen, Guangdong, following the
disposal of Dmall (Shenzhen) Development in 2022, partially offset by the increase in (i) fair value
change in financial assets measured at FVPL as a result of the increased valuation of Guoquan and (ii)
government grants and tax preference as a result of the utilization of additional deductible input value-
added tax in 2023.
Our other net income/(loss) decreased from RMB23.9 million in the six months ended June 30,
2023 to negative RMB59.1 million in the same period in 2024, primarily due to a decrease in fair value
change in financial assets measured at FVPL as a result of the decreased valuation of Guoquan.
Disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
Pursuant to the share and business transfer agreement dated April 4, 2022, 100% equity interest in
each of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited (formerly known as
Retail Technology (Hong Kong) Limited and Retail Technology (Singapore) PTE. Ltd.) was acquired
from Retail Technology Asia for a consideration valued at US$6.9 million (the “Transactions”). The
consideration was determined based on arm’s length negotiation between our Company and DFI Retail
Group. Prior to the disposal, DFI Digital (Hong Kong) Limited served as an operating entity of Retail
Technology Asia to provide Dmall OS solutions and services in relation to O2O business to DFI Retail
Group, and DFI Digital (Singapore) PTE. Limited was an operating entity domiciled in Singapore to
provide O2O services to local retailer customers operated by DFI Retail Group. At the time of disposal,
O2O business mainly refers to the included online ordering and delivery services DFI Digital (Hong
Kong) Limited and DFI Digital (Singapore) PTE. Limited provided to DFI Retail Group for which to sell
products to consumers online via software and digital applications, including customer mobile
applications, e-commerce website, e-commerce operations team, e-commerce picking and delivery
operations, digitalized smart tag, customer service call centers, smart trolley and last mile delivery
services. The disposal was based on the Group’s overall strategic considerations to focus on our core
business as a one-stop digitalization solutions provider, enhance Retail Technology Asia’s service
capabilities to facilitate our global expansion and build a more sustainable business model for strong and
visible growth. Upon completion of such transfer, DFI Digital (Hong Kong) Limited and DFI Digital
(Singapore) PTE. Limited became owned as to 100% by DFI Retail Group and Retail Technology Asia
continued to provide Dmall OS solutions to DFI Retail Group.
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FINANCIAL INFORMATION
The financial information of the disposed subsidiaries at the disposal date are set out as below:
RMB’000
Cash and cash equivalents ............................................................ 35,616
Trade receivables ................................................................... 8,521
Prepayments, deposits and other receivables .............................................. 192,394
Property and equipment .............................................................. 4 9 2
Trade payables ..................................................................... (27,678)
Accrued expenses and other payables .................................................... (265,604)
Net liabilities ....................................................................... (56,259)
Net cash outflow arising on disposal:
Consideration received, satisfied in cash ................................................. —
Less: cash and cash equivalents disposed of .............................................. 35,616
Net cash outflow .................................................................... (35,616)
The disposed entities, namely DFI Digital (Hong Kong) Limited and DFI Digital (Singapore)
PTE. Limited, were incorporated in 2020 and 2021, respectively, focusing on providing operating
system and O2O services to our retailer customers primarily by charging a take rate. During their
ordinary course of business, these entities incurred costs and expenses including employee benefit
expenses and cloud service fees for their overall business growth. They also incurred logistics costs,
expenses for promotional and marketing activities and customer service fees specifically for providing
O2O services. As these entities had not achieved economies of scale despite relatively large spending
associated with their O2O operations since their incorporation, they incurred accumulated losses as of
March 31, 2022. These entities were in net liabilities position as of March 31, 2022 primarily due to
their accumulated operating losses. See Note 32 of the Accountants’ Report in Appendix I to this
document.
Selling and Marketing Expenses
Our selling and marketing expenses primarily consist of (i) promotion and marketing expenses,
which primarily represent marketing incentives and advertising expenses we incur when marketing our
cloud solutions, (ii) employee benefit expenses for our selling and marketing personnel, and
(iii) others, which primarily represent travel and entertainment expenses and depreciation and
amortization. Our selling and marketing expenses in 2021, 2022 and 2023 and the six months ended
June 30, 2023 and 2024 were RMB444.9 million, RMB238.6 million, RMB150.9 million, RMB84.6
million and RMB43.0 million, respectively, accounting for 52.5%, 18.0%, 9.5%, 11.1% and 4.6% of
our revenue, respectively.
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The following table sets forth details of our selling and marketing expenses both in absolute
amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Expenses of promotion
and marketing
activities ........... 245,246 28.9 118,358 8.9 48,002 3.0 29,737 3.9 2,075 0.2
Employee benefit
expenses ........... 177,243 20.9 101,806 7.7 80,980 5.1 44,832 5.9 30,108 3.2
Others ............... 22,416 2.7 18,405 1.4 21,941 1.4 10,044 1.3 10,782 1.2
Total ............... 444,905 52.5 238,569 18.0 150,923 9.5 84,613 11.1 42,965 4.6
Our selling and marketing expenses decreased from RMB444.9 million in 2021 to
RMB238.6 million in 2022 further decreased to RMB150.9 million in 2023, and decreased from
RMB84.6 million in the six months ended June 30, 2023 to RMB43.0 million in the same period in the
2024, primarily due to (i) the decrease in promotion and marketing expenses as a result of reduced
promotional incentives to retail consumers and our strategic decision to limit investment in our O2O
operations and (ii) the decrease in employee benefit expenses as a result of our efforts to control costs
and optimize our operational efficiency.
General and Administration Expenses
Our general and administrative expenses primarily consist of (i) employee benefit expenses for
our administrative personnel, (ii) professional service fees, which primarily represent fees paid to third
parties for professional services they provided, (iii) depreciation and amortization, (iv) expenses
relating to short-term leases and leases of low-value assets, incurred primarily for office leases with
lease terms no more than 12 months, property management services fees, and leases for low-value
assets representing leases of printers for general office use and (v) others, which primarily represent
travel and entertainment expenses as well as general office expenses. Our general and administrative
expenses in 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024 were
RMB208.6 million, RMB251.7 million, RMB259.4 million, RMB110.5 million and
RMB133.3 million, respectively, accounting for 24.6%, 18.9%, 16.4%, 14.5% and 14.2% of our
revenue, respectively.
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The following table sets forth a breakdown of our general and administrative expenses both in
absolute amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Employee benefit expenses ........... 126,855 15.0 145,910 11.0 185,373 11.7 73,645 9.6 86,473 9.2
Depreciation and amortization ........ 30,503 3.6 23,489 1.8 15,686 1.0 7,888 1.0 6,112 0.7
Professional fees ................... 34,370 4.1 54,709 4.1 34,572 2.2 18,672 2.4 23,649 2.5
Expenses relating to short-term leases
and leases of low-value
assets
(1) ........................ 5,977 0.7 4,312 0.3 3,852 0.2 1,924 0.3 1,234 0.1
Outsourcing and other labor costs ...... 7 1 5 0 . 1 8,069 0.6 1,856 0.1 411 0.1 8,503 0.9
Others ........................... 10,151 1.1 15,210 1.1 18,074 1.2 7,977 1.1 7,280 0.8
Total ............................ 208,571 24.6 251,699 18.9 259,413 16.4 110,517 14.5 133,251 14.2
Note:
(1) Expenses relating to short-term leases and leases of low-value assets are internally allocated to different functions for their respective
uses and are respectively recorded under cost of revenue, general and administration expenses, research and development expenses, or
selling and marketing expenses, if any.
The increase in our general and administrative expenses from RMB208.6 million in 2021 to
RMB251.7 million in 2022, was primarily due to (i) increases in employee benefit expenses associated
with (a) increases in our number of administrative personnels primarily driven by our growing demand
for business expansion in 2022, (b) new labor structure optimization costs related to our cost control
measures in 2022 and (c) additional employee benefit expenses associated with our acquisition of
Shenzhen Enjoy in November 2021, and (ii) increases in financing-related costs and consulting fees
paid to professional parties including listing expenses incurred. The increase in our general and
administrative expenses from RMB251.7 million in 2022 to RMB259.4 million in 2023 was primarily
due to the increase in employee benefit expenses due to our operational efficiency optimizing efforts
and the addition of management positions for our AIoT solutions, which was partially offset by the (i)
the decrease in depreciation and amortization as a result of certain equipment having been fully
depreciated as well as the expiry of certain long-term office leases, (ii) the decrease in outsourcing and
other labor costs as a result of our full settlement of labor costs paid by DFI Retail Group on our behalf
following our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
to DFI Retail Group, and (iii) the decrease in professional fees after the one-off cost impact of the
disposition of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited in 2022
and lower listing expenses in 2023. The increase in our general and administrative expenses from
RMB110.5 million in the six months ended June 30, 2023 to RMB133.3 million in the same period in
2024 was primarily due to (i) increases in employee benefit expenses associated with the growing
demand for our AIoT solutions, and (ii) increases in outsourcing and other labor costs driven by the
addition of outsourced personnel for intelligent package sorting solutions, intelligent cashier solutions
and intelligent cleaning solutions.
Research and Development Expenses
Our research and development expenses primarily consist of (i) employee benefit expenses for
our research and development personnel, (ii) cloud service, bandwidth and server custody fees, which
are internally allocated cost, incurred when we purchase cloud and bandwidth services and rent service
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from third party service suppliers for the purpose of ramping up and maintaining sufficient
technological capacity for our research and development efforts, (iii) depreciation and amortization,
(iv) expenses relating to short-term leases and leases of low-value assets, incurred primarily for office
leases with lease terms no more than 12 months, property management services fees, and leases for
low-value assets representing leases of printers for general office use by our research and development
function, among which leases for low-value assets account for less than 4% of the total short-term
leases and leases of low-value assets, (v) outsourcing and other labor costs, and (vi) other expenses,
which include travel expenses for research and development activities. Our research and development
expenses in 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024 were
RMB588.6 million, RMB586.3 million, RMB520.9 million, RMB266.1 million and
RMB203.5 million, respectively, accounting for 69.4%, 44.1%, 32.9%, 34.8% and 21.7% of our
revenue, respectively.
The following table sets forth a breakdown of our research and development expenses both in
absolute amount and as a percentage of our revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Employee benefit expenses . . . 531,312 62.6 535,104 40.3 472,980 29.8 240,441 31.5 183,460 19.5
Cloud service, bandwidth and
server custody fees ....... 16,736 2.0 13,967 1.1 17,186 1.1 7,925 1.0 6,300 0.7
Depreciation and
amortization ............. 18,572 2.2 17,492 1.2 11,850 0.7 7,671 1.0 5,952 0.6
Expenses relating to short-term
leases and leases of
low-value assets
(1) ........ 6,746 0.8 7,564 0.6 6,080 0.4 3,441 0.5 2,064 0.2
Outsourcing and other labor
costs ................... 2,553 0.3 1,590 0.1 1,939 0.1 1,356 0.2 128 *
Others ................... 12,692 1.5 10,613 0.8 10,852 0.8 5,253 0.6 5,623 0.7
Total .................... 588,611 69.4 586,330 44.1 520,887 32.9 266,087 34.8 203,527 21.7
Note:
* Less than 0.1%
(1) Expenses relating to short-term leases and leases of low-value assets a re internally allocated to different functions for their respective usesand
are respectively recorded under cost of revenue, general and administ ration expenses, research and development expenses, or selling and
marketing expenses, if any.
The decrease in our research and development expenses from RMB588.6 million 2021 to
RMB586.3 million in 2022 was primarily due to decreases in cloud service rental fees as a result of our
cost control measures. The decrease in our research and development expenses from
RMB586.3 million in 2022 to RMB520.9 million in 2023 was primarily due to (i) the decrease in our
employee benefit expenses in relation to our cost control measures and (ii) the decrease in depreciation
and amortization as a result of office equipment having been fully depreciated, partially offset by the
increase in cloud services, bandwidth and server custody fees to meet the increased need for product
testing. The decrease in our research and development expenses from RMB266.1 million in the six
months ended June 30, 2023 to RMB203.5 million in the same period in 2024 was primarily due to the
decrease in our employee benefit expenses in relation to our cost control measures and the
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accumulation of technological capabilities, which enabled us to replicate and upgrade our product
offerings without significant further investments.
Net Finance Costs
Our finance costs and income primarily consist of (i) interest on bank loans and other
borrowings, (ii) accrued financial charges of convertible bond, (iii) changes in fair value on the
derivative components of convertible bond, (iv) interest on lease liabilities, (v) interest income from
bank deposits, (vi) net foreign currency exchange loss and (vii) gains on partial derecognition of
convertible bond.
The following table sets forth a breakdown of the major components of our finance costs and
income in absolute amounts and as percentages of revenue for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(in thousands, except percentages)
(unaudited)
Interest on bank loans and other
borrowings ......................... 4,061 0.4 3,348 0.2 9,027 0.5 3,471 0.4 6,462 0.7
Accrued financial charges of convertible
bond .............................. — — 7,233 0.5 13,595 0.8 6,803 0.9 6,606 0.7
Interest on lease liabilities ............... 1,197 0.1 1,091 0.1 1,870 0.1 887 0.1 870 0.1
Interest income from bank deposits ....... (2,356) (0.2) (4,965) (0.3) (10,897) (0.6) (4,959) (0.6) (4,748) (0.5)
Gains on partial derecognition of convertible
bond .............................. — — —— — — — — (2,379) (0.3)
Changes in fair value on the derivative
components of convertible bond ........ — — 4,370 0.3 2,570 0.1 3,752 0.5 (172) *
Foreign currency exchange loss/(gain) ..... 2,320 0.2 11,988 0.8 (2,821) (0.1) (3,179) (0.4) (899) (0.1)
Total ............................... 5,222 0.6 23,065 1.7 13,344 0.8 6,775 0.9 5,740 0.6
Note:
* Less than 0.1%
In 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, we incurred finance
costs of RMB5.2 million, RMB23.1 million, RMB13.3 million, RMB6.8 million and RMB5.7 million
respectively. The increase in our finance costs from RMB5.2 million in 2021 to RMB23.1 million in
2022 was primarily due to accrued financial charges of convertible bond which we issued in June
2022, changes in fair value on the derivative components of convertible bond and an increase in
foreign currency exchange loss primarily incurred for repayment of US dollar denominated loans as a
result of rising currency value for US dollar against Renminbi in 2022. The decrease in our finance
costs from RMB23.1 million in 2022 to RMB13.3 million in 2023 was primarily due to the decrease in
foreign currency exchange loss and the increase in interest income from bank deposits, partially offset
by the increases in accrued financial charges of convertible bond and interest on bank loans and other
borrowings. The decrease in our finance costs from RMB6.8 million in the six months ended June 30,
2023 to RMB5.7 million in the same period in 2024 was primarily due to changes in fair value on the
derivative components of convertible bond and gains on partial derecognition of convertible bond due
to the repayment of convertible bond, partially offset by increases in interest on bank loans and other
borrowings and decrease in foreign currency exchange gains.
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Share of profits/losses of associates
During the Track Record Period, our associate primarily engaged in the business of software
development and maintenance services, and we recognized our shares of gains in such associate in our
consolidated statements of profit or loss.
Our share of profits of associates was a gain of RMB0.6 million in 2021, nil in 2022, nil in
2023, nil in the six months ended June 30, 2023, and a loss of RMB0.2 million in the six months ended
June 30, 2024, respectively.
Fair Value Change of Convertible Redeemable Preferred Shares
Historically we have completed multiple rounds of financing by issuing convertible redeemable
preferred shares to investors. Our fair value changes of convertible redeemable preferred shares
represent changes in fair value of the preferred shares issued by us. We designated the preferred shares
as financial liabilities at FVPL. They are initially recognized at fair value. Any directly attributable
transaction costs are recognized as general and administrative expense. Subsequent to initial
recognition, the preferred shares are carried at fair value with changes in fair value recognized through
profit or loss.
We recorded fair value losses of convertible redeemable preferred shares of RMB732.3 million,
RMB493.2 million, RMB476.2 million, RMB422.3 million, and RMB397.1 million in 2021, 2022 and
2023, and the six months ended June 30, 2023 and 2024, respectively. Prior to the Global Offering, the
preferred shares are not traded in an active market and their value at respective reporting dates is
determined using valuation techniques. We applied the discounted cash flow method to determine the
underlying equity value of our Company and adopted the equity allocation model to determine the fair
value of the convertible redeemable preferred shares. Please refer to Note 28 to the Accountants’
Report in Appendix I to this document for details of the key assumptions of the valuations. Upon the
completion of the Global Offering, all of the preferred shares will be automatically converted to our
ordinary shares.
Income tax
Our income tax expense is comprised primarily of deferred tax expense or benefit and current
tax expense attributable to our profitable subsidiaries. We recorded a tax expense of RMB0.7 million
and tax benefits of RMB1.8 million, RMB3.3 million, RMB1.9 million and RMB2.0 million in 2021,
2022, 2023 and the six months ended June 30, 2023 and 2024, respectively. In 2021, our effective tax
rate was less than 0.1%. In 2022, 2023 and the six months ended June 30, 2023 and 2024, our tax
benefits were primarily due to reversal of deferred tax liabilities through amortization of acquired
customer relationship and technological know-how from Shenzhen Enjoy as well as increasing unused
tax losses which were recognized as deferred tax assets. As of the Latest Practicable Date, we did not
have any dispute with any tax authority.
We are subject to various rates of income tax under different jurisdictions. The following
summarizes the income tax rates applicable to our Group during the Track Record Period:
British Virgin Islands
Our Company and Dmall BVI are incorporated in the BVI as BVI business companies and are
not subject to tax on income or capital gain. In addition, the BVI does not impose a withholding tax on
payments of dividends to shareholders.
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Cayman Islands
Dmall Cayman was incorporated in the Cayman Islands as an exempted company with limited
liability under the Cayman Companies Law and has not been subject to any taxation in the Cayman
Islands since its incorporation.
Hong Kong
Dmall Hong Kong Limited, Retail Technology Asia, DFI Digital (Hong Kong) Limited
(formerly known as Retail Technology (Hong Kong) Ltd., which was disposed in 2022) and Digital
Retail Technology (Hong Kong) Limited, our subsidiaries incorporated in Hong Kong are subject to a
Hong Kong profits tax rate of 16.5%. In 2021, 2022 and 2023, our subsidiaries in Hong Kong did not
have any assessable profits.
PRC
Generally, our subsidiaries, consolidated affiliated entities and their subsidiaries in China are
subject to the statutory income tax rate of 25%, except that (i) Dmall Life Network was qualified as a
High and New Technology Enterprise in 2018 and was entitled to a preferential rate of 15% until
December 31, 2020, and it is further entitled to a preferential rate of 15% until December 31, 2024,
subsequent to obtaining renewal of its qualifications in 2022, (ii) Dmall Life Chengdu was qualified as
a High and New Technology Enterprise in 2019 and was entitled to a preferential rate of 15% until
December 31, 2021, and it is further entitled to a preferential rate of 15% until December 31, 2024,
subsequent to obtaining renewal of its qualifications in 2022, (iii) Zhilian Wuhan was qualified as a
High and New Technology Enterprise in 2019 and was entitled to a preferential rate of 15% until
December 31, 2021, and it is further entitled to a preferential rate of 15% until December 31, 2024
subsequent to obtaining renewal of its qualification in 2022, (iv) Shenzhen Enjoy was qualified as a
High and New Technology Enterprise in 2020 and was entitled to a preferential rate of 15% until
December 31, 2022, and it is further entitled to a preferential rate of 15% until December 31, 2025
subsequent to obtaining renewal of its qualification in 2023, (v) Dmall (Shenzhen) Digital was
qualified as a High and New Technology Enterprise in 2021 and was entitled to a preferential rate of
15% until December 31, 2023, (vi) Dmall Fresh (Beijing) was qualified as a High and New
Technology Enterprise in 2023 and is entitled to a preferential rate of 15% until December 31, 2025,
and (vii) certain subsidiaries of our Group were qualified as Small Low-Profit Enterprises and were
entitled to a preferential rate of 20% during the Track Record Period.
Other jurisdictions
Taxation for subsidiaries incorporated in other jurisdictions is charged at the appropriate current
rates of taxation rulings in the relevant jurisdiction.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF CONTINUING OPERATIONS
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Revenue
Our revenue increased by 22.9% from RMB764.0 million in the six months ended June 30,
2023 to RMB939.2 million in the six months ended June 30, 2024. This increase in our revenue was
mainly driven by increases in revenue from retail core service cloud solutions as a result of our
continuous business expansion of our operating system and AIoT solutions described below.
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Retail core service cloud. Our revenue generated from retail core service cloud increased by
54.9% from RMB602.3 million in the six months ended June 30, 2023 to RMB933.2 million in the
six months ended June 30, 2024, primarily due to (i) the increase in AIoT revenue from intelligent
delivery solutions, intelligent merchandise replenishment solutions, intelligent package sorting
solutions, intelligent cashier solutions and intelligent cleaning solutions, partially offset by the decrease
in the sales of hardware products and (ii) the increase in operating system revenue, primarily due to
(a) revenue contribution of the text messaging services, (b) expansion of our overseas operation and
(c) revenue increase from our distributed e-commerce system services.
E-commerce service cloud. Our revenue from e-commerce service cloud decreased by 97.3%
from RMB160.5 million in the six months ended June 30, 2023 to RMB4.3 million in the six months
ended June 30, 2024, as all of our customers shifted to operating their e-commerce business in-house
by the end of 2023. See “Summary—Recent Developments.”
Others. Our revenue from others increased by 32.3% from RMB1.3 million in the six months
ended June 30, 2023 to RMB1.7 million in the six months ended June 30, 2024, primarily due to the
additional sales to a certain retailer, which was partially offset by a decrease in our payment to
Chongqing Department Store pursuant to the Marketing Resource Collaboration Agreement. See
“Business—Marketing Resource Collaboration Agreement with Chongqing Department Store.”
Cost of revenue
Our cost of revenue increased by 19.1% from RMB486.8 million in the six months ended
June 30, 2023 to RMB579.9 million in the six months ended June 30, 2024. This increase in our cost of
revenue was primarily driven by an increase in our outsourcing and other labor costs from
RMB190.7 million in the six months ended June 30, 2023 to RMB439.7 million in the six months
ended June 30, 2024, primarily due to the expansion of our AIoT solutions, including intelligent
merchandise replenishment solutions, intelligent package sorting solutions, intelligent cashier
solutions, intelligent cleaning solutions and intelligent delivery solutions, partially offset by a decrease
in logistics costs from RMB126.2 million in the six months ended June 30, 2023 to nil in the
six months ended June 30, 2024 primarily due to the cessation of the e-commerce service cloud
solutions due to product optimization.
Gross profit and gross margin
As a result of the foregoing, our gross profit from continuing operations increased from
RMB277.2 million in the six months ended June 30, 2023 to RMB359.3 million in the six months
ended June 30, 2024. Our gross profit margin increased from 36.3% in the six months ended June 30,
2023 to 38.3% in the six months ended June 30, 2024.
Other net income/(loss)
We recorded other net income/(loss) of negative RMB59.1 million in the six months ended
June 30, 2024, compared with other net income/(loss) of RMB23.9 million in the six months ended
June 30, 2023. The decrease was primarily due to the decrease in fair value change in financial assets
measured at FVPL from RMB1.4 million in the six months ended June 30, 2023 to negative
RMB87.1 million in the same period in 2024, due to the decreased valuation of Guoquan.
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Selling and marketing expenses
Our selling and marketing expenses decreased by 49.2% from RMB84.6 million in the six
months ended June 30, 2023 to RMB43.0 million in the six months ended June 30, 2024. The decrease
was primarily due to a decrease in expenses of promotion and marketing activities from
RMB29.7 million in the six months ended June 30, 2023 to RMB2.1 million in the same period in
2024, attributable to a decrease in promotional incentives to retail consumers as customers transitioned
to operate their e-commerce business in house, and a decrease in employee benefit expenses from
RMB44.8 million in the six months ended June 30, 2023 to RMB30.1 million in the same period in
2024 a result of our efforts to control costs and optimize our operational efficiency.
General and administration expenses
Our administrative expenses increased by 20.6% from RMB110.5 million in the six months
ended June 30, 2023 to RMB133.3 million in the six months ended June 30, 2024. The increase was
primarily due to (i) increases in employee benefit expenses associated with the growing demand for
our AIoT solutions, and (ii) increases in outsourcing and other labor costs driven by the addition of
outsourced personnel for intelligent package sorting solutions, intelligent cashier solutions and
intelligent cleaning solutions.
Research and development expenses
Our research and development expenses decreased by 23.5% from RMB266.1 million in the six
months ended June 30, 2023 to RMB203.5 million in the six months ended June 30, 2024. The
decrease was primarily due to a decrease in employee benefit expenses from RMB240.4 million in the
six months ended June 30, 2023 to RMB183.5 million in the same period in 2024 in relation to our cost
control measures and the accumulation of technological capabilities, which enabled us to replicate and
upgrade our product offerings without significant further investments.
Net Finance Costs
Net finance costs decreased from RMB6.8 million in the six months ended June 30, 2023 to
RMB5.7 million in the six months ended June 30, 2024, primarily due to (i) the decrease in changes in
fair value on the derivative components of convertible bond of RMB3.9 million, and (ii) the decrease
in gains on partial derecognition of convertible bond of RMB2.4 million, partially offset by (i) the
increase in interest on bank loans and other borrowings of RMB3.0 million, and (ii) the decrease in
foreign currency exchange gains of RMB2.3 million.
Fair value change of Convertible Redeemable Preferred Shares
Our fair value change of convertible redeemable preferred shares was negative
RMB397.1 million in the six months ended June 30, 2024, as compared to negative RMB422.3 million
in the six months ended June 30, 2023, which reflected the continued increase in the equity value of
our Company and the rising currency value of US dollars against Renminbi.
Profit / loss for the period from continuing operations
As a result of the foregoing, we recorded loss for the period from continuing operations in the
six months ended June 30, 2024 of RMB482.2 million, as compared to loss from for the period from
continuing operations of RMB587.9 million in the six months ended June 30, 2023.
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Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Revenue
Our revenue increased by 19.4% from RMB1,328.3 million in 2022 to RMB1,585.4 million in
2023. This increase in our revenue was driven by increases in revenue from retail core service cloud
solutions as a result of our continuous business expansion of our operating system and AIoT solutions
described below, partially offset by decreases in revenues from e-commerce service cloud solutions.
Retail core service cloud. Our revenue generated from retail core service cloud increased by
47.5% from RMB880.5 million in 2022 to RMB1,298.7 million in 2023, primarily due to an increase
in AIoT revenue due to our new AIoT solutions, including intelligent merchandise replenishment
solutions, intelligent package sorting solutions, intelligent cashier solutions, intelligent cleaning
solutions and intelligent delivery solutions, launched in 2023.
E-commerce service cloud. Our revenue from e-commerce service cloud decreased by 33.0%
from RMB447.5 million in 2022 to RMB300.0 million in 2023, primarily due to (i) the decrease in
O2O platform service fees as a result of certain customers opting to operate O2O e-commerce business
in-house, where they manage their own day-to-day O2O operations, (ii) the decrease in GMV
processed and number of delivery orders placed through our platform for certain major retailer
customer, and (iii) the cessation of our O2O e-commerce business we used to provide to DFI Retail
Group along with our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE.
Limited in April 2022. For details, see “History, Reorganization and Corporate Structure—
Acquisitions and Disposals—(4) DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE.
Limited.”
Others. Our revenue from others decreased from RMB0.3 million in 2022 to negative
RMB13.4 million in 2023, primarily due to an amount of RMB18.9 million we provided to Chongqing
Department Store representing the equivalent value shortage of marketing resources we collaborated
with third party marketing participants. We entered into a marketing resource collaboration agreement
with Chongqing Department Store in late 2022, pursuant to which we agreed to assist Chongqing
Department Store Group’s marketing activities by gathering marketing resources from third party
market participants (including but not limited to brand owners, payment solution operators, banks and
other businesses or organizations) of not less than RMB50 million in value per calendar year during
the service period from January 1, 2023 to December 31, 2025. In 2023, as the marketing resources
was less than RMB50 million in value, we paid the resultant value shortage to Chongqing Department
Store.
Cost of revenue
Our cost of revenue increased by 25.2% from RMB823.1 million in 2022 to RMB1,030.7
million in 2023. This increase in our cost of revenue was primarily driven by an increase in our
outsourcing and other labor costs that increased from RMB49.1 million in 2022 to RMB465.5 million
in 2023, primarily due to the launch of our AIoT solutions, including intelligent merchandise
replenishment solutions, intelligent package sorting solutions, intelligent cashier solutions, intelligent
cleaning solutions and intelligent delivery solutions in 2023. Our new AIoT solutions generally incur
higher outsourcing and other labor costs at their launching stage, during which in-store personnel
deployment to facilitate the adoption of our solutions by our outsourcing service providers are the most
frequent. After the launching stage, our AIoT solutions generally continues to incur outsourcing and
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other labor costs due to continued use of outsourcing service providers to support our AIoT solutions,
and outsourcing and other labor costs gradually decline to a stable level as our AIoT solutions matures.
The increase is partially offset by (i) a decrease in logistics costs from RMB342.8 million in 2022 to
RMB233.5 million in 2023, primarily due to (a) a decrease in delivery order volume for major
customer and (b) the cessation of our O2O e-commerce business we used to provide to DFI Retail
Group along with our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE.
Limited in April 2022, (ii) a decrease in employee benefit expenses from RMB180.3 million in 2022 to
RMB132.3 million in 2023, primarily due to our concerted efforts to optimize our labor structure and
increase overall operational efficiency and (iii) a decrease in cost of inventories sold from RMB70.7
million in 2022 to RMB31.7 million in 2023, as the majority of our retailer customers’ stores have
completed their digitalized smart tags adoption by 2022.
Gross profit and gross margin
As a result of the foregoing, our gross profit increased from RMB505.2 million in 2022 to
RMB554.7 million in 2023. Our gross profit margin decreased from 38.0% in 2022 to 35.0% in 2023
during the same year.
Other net income/(loss)
We recorded other net income/(loss) of RMB115.5 million in 2023, compared with other net
income/(loss) of RMB170.4 million in 2022. The decrease was primarily due to (i) the decrease in
gain/(loss) on disposal of subsidiaries from positive RMB100.1 million to negative RMB1 thousand,
due to the absence of a one-off gain of RMB100.1 million from disposal of DFI Digital (Hong Kong)
Limited and DFI Digital (Singapore) PTE Limited in April 2022 and (ii) the decrease in rental income
from RMB2.5 million in 2022 to nil in 2023, due to the absence of rental income from investment
properties held in Shenzhen, Guangdong, following the disposal of Dmall (Shenzhen) Development in
2022, partially offset by (i) the increase in fair value change in financial assets measured at FVPL from
RMB12.5 million in 2022 to RMB43.8 million in 2023, due to the increased valuation of Guoquan and
(ii) the increase in government grants and tax preference from RMB52.8 million in 2022 to RMB71.7
million in 2023, due to the increase in utilization of additional deductible input value-added tax in
2023.
Selling and marketing expenses
Our selling and marketing expenses decreased by 36.7% from RMB238.6 million in 2022 to
RMB150.9 million in 2023. The decrease was primarily due to (i) a decrease in expenses of
promotional and marketing activities from RMB118.4 million in 2022 to RMB48.0 million in 2023 as
a result of reduced promotional incentives to retail consumers and our strategic decision to limit
investment in our O2O operations, and (ii) a decrease in employee benefit expenses from
RMB101.8 million in 2022 to RMB81.0 million in 2023 as a result of our strategic decision to control
cost and optimize our operational efficiency.
General and administration expenses
Our general and administrative expenses increased by 3.1% from RMB251.7 million in 2022 to
RMB259.4 million in 2023. The increase was primarily due to the increase in employee benefit
expenses from RMB145.9 million in 2022 to RMB185.4 million in 2023, mainly due to our operational
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efficiency optimizing efforts and the addition of management positions for our AIoT solutions, which
was partially offset by the (i) the decrease in professional fees from RMB54.7 million in 2022 to
RMB34.6 million in 2023 after the one-off cost impact of the disposition of DFI Digital (Hong Kong)
Limited and DFI Digital (Singapore) PTE. Limited in 2022 and lower listing expenses in 2023, (ii) the
decrease in outsourcing and other labor costs from RMB8.1 million in 2022 to RMB1.9 million in
2023, mainly due to our full settlement of labor costs paid by DFI Retail Group on our behalf
following our disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
to DFI Retail Group in 2022, and (iii) the decrease in depreciation and amortization from RMB23.5
million in 2022 to RMB15.7 million in 2023, mainly due to certain equipment having been fully
depreciated in 2022.
Research and development expenses
Our research and development expenses decreased by 11.2% from RMB586.3 million in 2022
to RMB520.9 million in 2023. The decrease was primarily due to (i) the decrease in our employee
benefit expenses from RMB535.1 million in 2022 to RMB473.0 million in 2023, in relation to our cost
control measures, (ii) the decrease in depreciation and amortization from RMB17.5 million in 2022 to
RMB11.9 million in 2023, as a result of office equipment having been fully depreciated, partially
offset by the increase in cloud services, bandwidth and server custody fees from RMB14.0 million in
2022 to RMB17.2 million in 2023 to meet the increased need for product testing.
Net Finance Costs
Net finance costs decreased from RMB23.1 million in 2022 to RMB13.3 million in 2023,
primarily due to (i) the improvement in foreign currency exchange loss, from a loss of RMB12.0
million in 2022 to a gain of RMB2.8 million in 2023, and (ii) the increase in interest income from bank
deposits of RMB5.9 million due to our proactive cash management policy, partially offset by (i) the
increase in accrued financial charges of convertible bond of RMB6.4 million and (ii) the increase in
interest on bank loans and other borrowings of RMB5.7 million.
Fair value change of Convertible Redeemable Preferred Shares
Our fair value change of convertible redeemable preferred shares were RMB476.2 million in
2023, as compared to RMB493.2 million in 2022, which reflected the continued increase in the equity
value of our Company and the rising currency value of US dollars against Renminbi.
Loss for the year from continuing operations
As a result of the foregoing, our loss for the year from continuing operations decreased by
16.8% from RMB900.0 million in 2022 to RMB749.0 million in 2023.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021
Revenue
Our revenue increased by 56.6% from RMB848.2 million in 2021 to RMB1,328.3 million in
2022. This increase in our revenue was driven by increases in revenue from retail core service cloud,
e-commerce service cloud as the result of our continuous business expansion described below.
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Retail core service cloud. Our revenue generated from retail core service cloud increased by
100.7% from RMB438.8 million in 2021 to RMB880.5 million in 2022, primarily due to (i) an increase
in our GMV processed through our operating system from RMB95.1 billion in 2021 to
RMB123.3 billion in 2022 due to the expansion in customer base as well as additional purchases of our
operating system modules both in the Chinese mainland and overseas markets, (ii) an increase in our
AIoT solutions sales, including new revenue generated from intelligent loss prevention solutions and
digitalized smart tags, (iii) an increase in revenue generated from software development and
maintenance services associated with our acquisition of Shenzhen Enjoy in November 2021, and (iv)
new customization revenue from existing customers who demanded additional customized
functionalities on our operating system due to respective business needs. For details of our acquisition
of Shenzhen Enjoy, see “History, Reorganization and Corporate Structure—Acquisitions and
Disposals—Shenzhen Enjoy.”
E-commerce service cloud. Our revenue from e-commerce service cloud increased by 9.3% from
RMB409.3 million in 2021 to RMB447.5 million in 2022, primarily due to growth in GMV processed
through our e-commerce service cloud solutions with the increased adoption of our O2O services from
approximately RMB6.9 billion in 2021 to approximately RMB8.2 billion in 2022 as well as an increase
in take rate we charged for certain retailer customers.
Others. Our revenue from others increased by 316.7% from RMB0.1 million in 2021 to
RMB0.3 million in 2022.
Cost of revenue
Our cost of revenue increased by 21.9% from RMB675.5 million in 2021 to RMB823.1 million
in 2022. This increase in our cost of revenue was primarily driven by (i) an increase in employee
benefit expenses from RMB104.5 million in 2021 to RMB180.3 million in 2022, primarily due to the
increased number of implementation, operation and maintenance employees associated with our
business expansion, (ii) an increase in cost of inventories sold from RMB27.5 million in 2021 to
RMB70.7 million in 2022, primarily due to an increase in procurement cost and product design cost of
our AIoT solutions associated with the increase in product sales volume, and (iii) an increase in
outsourcing and other labor costs from RMB5.1 million in 2021 to RMB49.1 million in 2022,
primarily due to third-party outsourced services fees for the launch of our intelligent loss prevention
business under our AIoT solutions in early 2022.
Gross profit and gross margin
As a result of the foregoing, our gross profit increased from RMB172.7 million in 2021 to
RMB505.2 million in 2022. Our gross profit margin increased from 20.4% to 38.0% during the same
year.
Other net income/(loss)
We recorded other net income/(loss) of RMB37.2 million in 2021, compared with other net
income/(loss) of RMB170.4 million in 2022. The increase was primarily due to (i) a gain of
RMB100.1 million from our disposal of DFI Digital (Hong Kong) Limited and DFI Digital
(Singapore) PTE. Limited in April 2022, and (ii) an increase in government grants and tax preference
from RMB15.9 million to RMB52.8 million during the same year, partially offset by a decrease in
investment income from wealth management products from RMB6.8 million to RMB1.2 million
during the same year.
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Selling and marketing expenses
Our selling and marketing expenses decreased by 46.4% from RMB444.9 million in 2021 to
RMB238.6 million in 2022. The decrease was primarily due to (i) a decrease in expenses of
promotional incentives to retail consumers from RMB245.2 million in 2021 to RMB118.4 million in
2022, and (ii) a decrease in employee benefit expenses from RMB177.2 million in 2021 to
RMB101.8 million in 2022 as a result of our strategic decision to control cost and limit investment in
our O2O operations.
General and administration expenses
Our administrative expenses increased by 20.7% from RMB208.6 million in 2021 to
RMB251.7 million in 2022. The increase was primarily due to (i) an increase in employee benefit
expenses from RMB126.9 million in 2021 to RMB145.9 million in 2022 as a result of (a) additional
employee benefit expenses associated with our acquisition of Shenzhen Enjoy in November 2021, (b)
new labor structure optimization cost related to our cost control measures in 2022, (ii) an increase in
professional fees from RMB34.4 million to RMB54.7 million as a result of financing-related costs and
consulting fees paid to professional parties including listing expenses incurred, and (iii) a decrease in
depreciation and amortization from RMB30.5 million to RMB23.5 million as our office properties in
Shenzhen, Guangdong that we purchased in 2020 were reclassified to investment property in late 2021.
Research and development expenses
Our research and development expenses decreased by 0.4% from RMB588.6 million in 2021 to
RMB586.3 million in 2022. The decrease was primarily due to decreases in cloud service rental fees as
a result of our cost control measures.
Net Finance Costs
Net finance costs increased from RMB5.2 million in 2021 to RMB23.1 million in 2022,
primarily due to (i) an increase of RMB4.3 million in fair value on the derivative components of
convertible bond as we issued convertible bond in June 2022, (ii) an increase of RMB7.2 million in
accrued financial charges of convertible bond, and (iii) an increase in foreign currency exchange loss
incurred for repayment of US dollar denominated loans as a result of rising currency value for US
dollar against Renminbi in 2022. These were partially offset by an increase of RMB2.6 million in
interest income from bank deposits as well as an increase of RMB9.7 million in foreign currency
exchange gains.
Fair value change of Convertible Redeemable Preferred Shares
Our fair value change of convertible redeemable preferred shares were RMB732.3 million in
2021, as compared to RMB493.2 million in 2022, which reflected the continued increase in the equity
value of our Company for the respective years and is also attributable to the rising currency value of
US dollars against Renminbi.
Loss for the year from continuing operations
As a result of the foregoing, our loss for the year from continuing operations decreased by
50.2% from RMB1,808.0 million in 2021 to RMB900.0 million in 2022.
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DISCUSSION OF CERTAIN KEY 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 the Accountants’ Report
set out in Appendix I to this document:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Total non-current assets ........................... 632,979 496,240 533,589 516,093
Total current assets ............................... 648,123 810,924 844,183 839,292
Total assets .................................... 1,281,102 1,307,164 1,377,772 1,355,385
Total non-current liabilities ........................ 104,676 272,689 349,295 137,296
Total current liabilities ............................ 5,915,674 7,111,842 7,793,601 8,271,650
Total liabilities .................................. 6,020,350 7,384,531 8,142,896 8,408,946
Net current liabilities ............................ (5,267,551) (6,300,918) (6,949,418) (7,432,358)
Total assets less current liabilities .................. (4,634,572) (5,804,678) (6,415,829) (6,916,265)
Share capital .................................... 3 2 3 3 2 3 3 2 3 3 2 3
Reserves ....................................... (4,822,726) (6,160,824) (6,865,150) (7,138,067)
Total deficit attributable to equity shareholders of the
Company ..................................... (4,822,403) (6,160,501) (6,864,827) (7,137,744)
Non-controlling interests .......................... 83,155 83,134 99,703 84,183
Total deficit .................................... (4,739,248) (6,077,367) (6,765,124) (7,053,561)
The following table sets forth our current assets and current liabilities as of the dates indicated:
As of December 31, As of June 30,
As of
September 30,
2021 2022 2023 2024 2024
(RMB in thousands)
(unaudited)
Current assets:
Cash and cash equivalents ............... 368,716 533,054 533,171 469,536 365,353
Trade receivables ...................... 93,239 140,609 165,142 256,453 272,383
Prepayments, deposits and other
receivables ......................... 106,834 64,655 75,496 87,384 83,706
Restricted bank deposits ................ 55,667 56,086 20,933 498 643
Inventories and other contract costs ....... 7,150 5,994 11,269 11,137 13,095
Contract assets ........................ 1,464 1,497 3,237 3,073 3,233
Other financial assets ................... 15,053 9,029 34,935 11,211 103,318
Total current assets ................... 648,123 810,924 844,183 839,292 841,731
Current liabilities:
Trade payables ........................ 49,361 63,778 86,563 98,367 93,488
Accrued expenses and other payables ...... 590,868 533,737 422,749 227,537 215,850
Bank loans and other borrowings ......... 76,163 70,090 202,076 281,264 276,285
Contract liabilities ..................... 44,506 49,473 91,288 78,597 88,524
Lease liabilities ....................... 17,570 16,029 25,428 27,422 25,407
Convertible redeemable preferred shares . . . 5,137,156 6,378,735 6,965,493 7,407,194 8,028,123
Convertible bond ...................... — — — 151,039 151,883
Current taxation ....................... 5 0 — 4 2 3 0 1 3 2
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As of December 31, As of June 30,
As of
September 30,
2021 2022 2023 2024 2024
(RMB in thousands)
(unaudited)
Total current liabilities ................ 5,915,674 7,111,842 7,793,601 8,271,650 8,879,692
Net current liabilities .................. (5,267,551) (6,300,918) (6,949,418) (7,432,358) (8,037,961)
We recorded net current liabilities of RMB5,267.6 million as of December 31, 2021, compared
to net current liabilities of RMB6,300.9 million as of December 31, 2022, primarily due to (i) an
increase of RMB1,241.6 million in convertible redeemable preferred shares, (ii) a decrease of
RMB42.2 million in prepayments, deposits and other receivables and (iii) an increase of
RMB14.4 million in our trade payables, partially offset by (i) an increase of RMB164.3 million in our
cash and cash equivalents, (ii) a decrease of RMB57.1 million in our accrued expenses and other
payables and (iii) an increase of RMB47.4 million in our trade receivables. We recorded net current
liabilities of RMB6,300.9 million as of December 31, 2022, compared to net current liabilities of
RMB6,949.4 million as of December 31, 2023, primarily due to (i) an increase of RMB586.8 million
in convertible redeemable preferred shares, (ii) an increase of RMB132.0 million in bank loans and
other borrowings, (iii) an increase of RMB41.8 million in contract liabilities, (iv) a decrease of
RMB35.2 million in restricted bank deposits and (v) an increase of RMB22.8 million in trade payables,
partially offset by (i) a decrease of RMB111.0 million in accrued expenses and other payables, (ii) an
increase of RMB25.9 million in other financial assets and (iii) an increase of RMB24.5 million in trade
receivables. We recorded net current liabilities of RMB6,949.4 million as of December 31, 2023,
compared to net current liabilities of RMB7,432.4 million as of June 30, 2024, primarily due to (i) an
increase of RMB441.7 million in convertible redeemable preferred shares, (ii) an increase of
RMB151.0 million in convertible bond, reclassified from non-current liabilities, (iii) an increase of
RMB79.2 million in bank loans and other borrowings, and (iv) a decrease of RMB63.6 million in cash
and cash equivalents, partially offset by (i) a decrease of RMB195.2 million in accrued expenses and
other payables, and (ii) an increase of RMB91.3 million in trade receivables.
Our net liabilities increased from RMB4,739.2 million as of December 31, 2021 to
RMB6,077.4 million as of December 31, 2022, primarily due to (i) loss for the year of RMB840.5
million, (ii) other comprehensive loss of RMB500.0 million representing exchange difference on
translation of financial statements, (iii) purchase of non-controlling interests of RMB96.0 million,
representing share buy-back and cancellation of Retail Technology Asia shares and our purchase of
additional 9.93% shares of interests in Shenzhen Enjoy, and (iv) dividends declared by a subsidiary
attributable to non-controlling interests of RMB4.3 million, representing the dividends paid to the non-
controlling shareholders of Shenzhen Enjoy in May 2022, partially offset by (i) contribution from non-
controlling shareholders of subsidiaries of RMB90.2 million, representing the capital injection into
Retail Technology Asia from the non-controlling shareholder and capital injection into Dmall Zhilian
from Beijing Wumart Supermarket Co., Ltd., and (ii) reserve from equity settled share-based
transactions of RMB12.5 million. Our net liabilities increased from RMB6,077.4 million as of
December 31, 2022 to RMB6,765.1 million as of December 31, 2023, primarily due to (i) loss for the
year of RMB655.4 million, and (ii) other comprehensive income of negative RMB107.7 million
representing exchange difference on translation of financial statements, partially offset by (i)
contribution from a non-controlling shareholder of a subsidiary of RMB59.5 million, representing the
capital injection into Retail Technology Asia from the non-controlling shareholder, and (ii) reserve
from equity settled share-based transactions of RMB13.6 million. Our net liabilities increased from
RMB6,765.1 million as of December 31, 2023 to RMB7,053.6 million as of June 30, 2024, primarily
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due to (i) loss for the period of RMB249.1 million, and (ii) other comprehensive income of negative
RMB45.2 million, representing exchange difference on translation of financial statements.
Property and Equipment
Our property and equipment primarily consist of (i) buildings, (ii) electronic equipment,
(iii) right-of-use assets associated with properties leased for own use, (iv) office equipment and
furniture and (v) leasehold improvement.
The following table sets forth our property and equipment as of the dates indicated:
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Buildings ................................................... 5,430 5,113 4,796 18,864
Electronic equipment .......................................... 28,896 14,287 6,822 8,837
Right-of-use assets ............................................ 26,369 20,620 38,474 31,895
Office equipment and furniture .................................. 9,463 7,125 3,892 3,838
Leasehold improvement ........................................ 4,943 26,836 22,815 19,950
Motor vehicles ............................................... 7 2 7 4 7 1 — —
Total ....................................................... 75,828 74,452 76,799 83,384
Our property and equipment decreased slightly from RMB75.8 million as of December 31,
2021 to RMB74.5 million as of December 31, 2022, primarily due to depreciation in overall property
and equipment as substantially offset by an increase in leasehold improvement mainly from capital
injection into Dmall Zhilian from Beijing Wumart Supermarket Co., Ltd. Our property and equipment
increased from RMB74.5 million as of December 31, 2022 to RMB76.8 million as of December 31,
2023, primarily due to (i) the increase in right-of-use assets resulting from additional leases for offline
advertising business use, (ii) the increase in equipment rental obtained through the acquisition and
operation of Beijing Xianmei Technology Service Co., Ltd. and (iii) the increase in renewed and
additional rental leases for office space, partially offset by depreciation in overall property and
equipment. Our property and equipment increased from RMB76.8 million as of December 31, 2023 to
RMB83.4 million as of June 30, 2024, primarily due to (i) the increase in building resulting from asset
capitalization of the property held by Shandong Orange Bay and (ii) the increase in photovoltaic
equipment, partially offset by depreciation in overall property and equipment.
For further information regarding our property and equipment, see Note 13 to the Accountants’
Report in Appendix I.
Intangible Assets
Our intangible assets primarily consist of (i) customer relationship, (ii) technological
know-how, and (iii) software. Customer relationship and technological know-how were acquired
through the acquisition of Shenzhen Enjoy in November 2021 and recognized at fair value at the date
of acquisition and is subsequently amortized on a straight-line basis. Fair value of the customer
relationship and technological know-how at the date of acquisition was determined by the directors of
the Company with reference to the valuation performed by an independent qualified professional
valuer. The amortization of intangible assets is included in the consolidated statements of profit or loss
during the Relevant Period. For details, see “History, Reorganization and Corporate Structure—
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Acquisitions and Disposals—Shenzhen Enjoy” and Note 14 to the Accountants’ Report in Appendix I
to this document. We recorded intangible assets of RMB105.3 million, RMB93.2 million, RMB83.7
million and RMB158.0 million as of December 31, 2021, 2022 and 2023 and June 30, 2024. Our
intangible assets increased from 83.7 million as of December 31, 2023 to RMB158.0 million as of June
30, 2024, primarily due to the software acquired from Dmall Fresh (Beijing) upon its disposal, which
was based on an arm’s length transaction and recognized at fair value. In December 2023 and January
2024, Dmall Fresh (Beijing) entered into copyright transfer agreements with Dmall (Shenzhen) Digital.
Pursuant to these agreements, Dmall Fresh (Beijing) agreed to transfer a total of 22 software copyrights
to Dmall (Shenzhen) Digital for a consideration of RMB94.7 million, including value-added tax. These
assets were internally developed by Dmall Fresh (Beijing) and were not capitalized as intangible assets
in Dmall Fresh (Beijing)’s standalone financial statements. Dmall (Shenzhen) Digital recognized
intangible assets of RMB89.3 million on its standalone financial statements after the purchase. Prior to
the disposal of Dmall Fresh (Beijing), such intangible assets were eliminated upon consolidation when
the Group prepared its consolidated financial statements. Upon the disposal of Dmall Fresh (Beijing),
the intangible assets were recognized in the consolidated financial statements. In the meantime, the
unrealized profit from intergroup transactions was realized as disposal gain, which was included in the
results of discontinued operations.
The following table sets forth our intangible assets as of the dates indicated:
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Customer relationship ......................................... 75,367 67,767 60,167 56,367
Technological know-how ...................................... 29,026 24,928 20,830 19,096
Software ................................................... 9 2 5 5 0 8 2,684 82,532
Total ...................................................... 105,318 93,203 83,681 157,995
Goodwill
Goodwill arising from acquisitions represents the excess of the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair
value of the acquirer’s previous held equity interest in the acquiree, if any, over the net amount of the
identifiable assets acquired and the liabilities assumed as of the acquisition date. Goodwill impairment
reviews are undertaken annually or more frequently if events or changes in circumstances indicate a
potential impairment. Determining whether goodwill is impaired requires us to estimate the
recoverable amounts of the cash generating unit to which we have allocated goodwill, which is the
higher of fair value less costs of disposal and value in use. This recoverable amounts calculation
requires us to estimate the future cash flows expected to arise from the cash generating unit and a
suitable discount rate to calculate the present value. Where the book value of the cash generating unit
exceeds its recoverable amounts, an impairment loss may arise. See Note 15 to the Accountants’
Report in Appendix I to this document.
Goodwill is attributed to significant synergies expected to arise after the Group’s acquisition of
Shenzhen Enjoy in 2021 and Beijing Xianmei Technology Service Co., Ltd. in 2023.
Goodwill acquired in business combination in 2021 is allocated to the cash generating unit
(“CGU”) of Shenzhen Enjoy. The Directors of our Company forecasted an average annual revenue
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growth rate of 17.0%, 18.8% and 17.8% in 2021, 2022 and 2023, respectively, for the next five-year
period, and the cash flows beyond the five-year period were extrapolated using an estimated annual
growth rate of 3.0%, 3.0% and 2.5%. Pre-tax discount rate of 14% was used to reflect market
assessment of time value and the specific risks relating to the CGU.
We perform annual impairment tests on goodwill at the end of reporting year. Based on the
result of the goodwill impairment tests, the estimated recoverable amount of Shenzhen Enjoy was
RMB219.2 million, RMB213.3 million and RMB207.1 million as of December 31, 2021, 2022 and
2023, exceeding carrying amount by RMB20.9 million, RMB19.2 million and RMB18.7 million,
respectively. No impairment was recognized in respect of the goodwill as of December 31, 2021, 2022
and 2023. As of June 30, 2024, we consider there are no significant changes to Shenzhen Enjoy’s
operations, and as a result, no impairment assessment as of June 30, 2024 was considered necessary.
We performed a sensitivity analysis on key assumptions used in management’s annual
impairment test of goodwill. Had the discount rate during the forecast period been 1% higher, the
remaining headroom would have decreased to RMB4.0 million, RMB6.4 million and RMB0.2 million
as of December 31, 2021, 2022 and 2023, respectively. Had the estimated profit during the forecast
period been decreased by 5%, the remaining headroom would have decreased to RMB14.0 million,
RMB3.7 million and RMB8.3 million as of December 31, 2021, 2022 and 2023.
Reasonably possible changes in key assumptions would not lead to impairment as of
December 31, 2021, 2022 and 2023.
The parameters of average revenue growth rate, annual growth rate and pre-tax discount rate
used for impairment test of goodwill remained largely the same throughout the Track Record Period
because our management considered that there were no material changes in business and operation of
Shenzhen Enjoy or external market conditions when determining the key assumptions.
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we had goodwill of
RMB151.9 million, RMB151.9 million, RMB152.0 million and RMB152.0 million, respectively. Our
goodwill remained stable at RMB151.9 million as of December 31, 2021 and 2022, and increased
slightly to RMB152.0 million as of December 31, 2023, due to our acquisition of Beijing Xianmei
Technology Service Co., Ltd. in February 2023. Our goodwill remained stable at RMB152.0 million as
of June 30, 2024. For details, see “History, Reorganization and Corporate Structure—Acquisitions and
Disposals—Shenzhen Enjoy” and “—Beijing Xianmei Technology Service Co., Ltd.”
Impairment of Other Non-current Assets
Internal and external sources of information are reviewed at the end of each reporting period to
identify indications that the following assets may be impaired or, except in the case of goodwill, an
impairment loss previously recognized no longer exists or may have decreased:
 property and equipment, including right-of-use assets;
 intangible assets;
 goodwill; and
 investments in subsidiaries in the Company’s statements of financial position.
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If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
goodwill, intangible assets that are not yet available for use and intangible assets that have indefinite
useful lives, the recoverable amount is estimated annually whether or not there is any indication of
impairment.
 Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal and
value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of
time value of money and the risks specific to the asset. Where an asset does not generate
cash inflows largely independent of those from other assets, the recoverable amount is
determined for the smallest group of assets that generates cash inflows independently (i.e.
a cash-generating unit).
 Recognition of impairment losses
An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment
losses recognized in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the cash-generating unit (or group of units)
an then, to reduce the carrying amount of the other assets in the unit (or group of units) on
a pro rata basis, except that the carrying value of an asset will not be reduced below its
individual fair value less costs of disposal (if measurable) or value in use (if determinable).
 Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a
favorable change in the estimates used to determine the recoverable amount. An
impairment loss in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have
been determined had no impairment loss been recognized in prior periods. Reversals of
impairment losses are credited to profit or loss in the period in which the reversals are
recognized.
As of December 31, 2021 2022 and 2023 and June 30, 2024, we did not recognize any
impairments of non-financial assets.
Other Financial Assets
Our financial assets at FVPL consist of (i) wealth management products purchased from banks
in the PRC and (ii) equity investment in Guoquan. As of December 31, 2021, 2022 and 2023 and
June 30, 2024, we had current financial assets at FVPL of RMB15.1 million, RMB9.0 million,
RMB34.9 million and RMB11.2 million, respectively. As of December 31, 2021, 2022 and 2023 and
June 30, 2024, we had non-current financial assets at FVPL of RMB140.7 million, RMB153.2 million,
RMB196.6 million and RMB109.7 million, respectively. For details, see Note 17 to the Accountants’
Report in Appendix I to this document.
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The following table sets forth our other financial assets as of the dates indicated:
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Current
Financial assets measured at FVPL
- Wealth management products ................................ 15,053 9,029 34,935 11,211
Non-current
Financial assets measured at FVPL
- Equity investment
- Guoquan .............................................. 140,734 153,218 196,574 109,692
To monitor and control the investment risks associated with our wealth management product
portfolio, we have adopted a set of internal policies and guidelines to manage our investment in wealth
management products. Our internal policies and guidelines set forth the procedures for requests to
purchase and to redeem wealth management products. Our finance department is responsible for
managing our investments in wealth management products. Any request to purchase or redeem is
subject to the supervision of our chief financial officers, both of whom are well equipped to manage
and supervise our wealth management product portfolio, with over 15 years of experiences in
investment and financial having worked at securities companies, investment banks and top accounting
firms. Our chief financial officers supervise the procedures for the purchase of new wealth
management products in accordance with appropriate authorizations granted by our Company’s
Memorandum and Articles or by our Board of Directors. Prior to making any material investments in
wealth management products or modifying our existing investment portfolio, the proposal shall be
approved by our chief financial officers and their designated member of our management. Our
investment strategy related to wealth management products aims to minimize the financial risks by
reasonably and conservatively matching the maturities of the portfolio to anticipated operating cash
needs, and to generate investment returns for the benefits of our shareholders. We primarily invest in
wealth management products with relatively low risks and the proposed investment must not interfere
with our daily operation and business prospects. We make investment decisions related to wealth
management products on a case-by-case basis after thoroughly considering a number of factors,
including but not limited to macro-economic environment, general market conditions and the expected
profit or potential loss of the investment. After the Listing, the investments in wealth management
products will be subject to our Company’s compliance with the requirements under Chapter 14 of the
Listing Rules, and we also intend to continue our investments in these products strictly in accordance
with our internal policies and guidelines.
The fair value of equity investment we made in Guoquan with principal amount of RMB129.4
million was RMB140.7 million, RMB153.2 million, RMB196.6 million and RMB109.7 million as of
December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Guoquan Shihui is a home meal
products brand in China owned by Guoquan, offering a variety of ready-to-eat, ready-to-heat, ready-to-
cook and prepared ingredients, with a focus on at-home hotpot and barbecue products. We entered into
cooperation with Guoquan Shihui in 2021. Guoquan Enterprise Consulting (Shanghai) Co., Ltd. is a
wholly owned subsidiary of Guoquan, and holds approximately 7.1 million convertible redeemable
preferred shares of our Company. For our investment in Guoquan, we have no significant influence,
joint control or control over the relevant entity based on the fact that we do not participate in any
operating and financial policies of the relevant entity nor exercise our influence on the operating and
financial policies or have representation on the board of directors of the relevant entity.
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Inventories and Other Contract Costs
Our inventories and other contract costs primarily consist of finished goods, raw materials,
goods in transit and other contract costs. Other contract costs relate to costs and expenses incurred to
fulfill a contract if the costs and expenses relate directly to an existing contract or to a specifically
identifiable anticipated contract and are expected to be recovered. Other contract costs are recognized
as cost of revenue or research and development expenses in the period in which revenue from the
related sales is recognized. The amount of capitalized costs recognized in profit or loss in 2021, 2022,
2023 and the six months ended June 30, 2024 were RMB6.4 million, RMB7.8 million, RMB17.3
million and RMB12.7 million, respectively.
To minimize the risk of inventory build-up, we review our inventory levels regularly. We
believe that maintaining appropriate levels of inventories can help us better plan raw material
procurement and deliver our products to meet customer demand timely without straining our liquidity.
Inventories are carried at the lower of cost and net realizable value. Net realizable value is the
estimated selling price in the ordinary course of business less the estimated costs of completion and the
estimated costs necessary to make the sale. We recognize the amount of any write-down of inventories
to net realizable value and all losses of inventories as an expense in the year the write-down or loss
occurs. We further recognize the amount of any reversal of any write-down of inventories as a
reduction in the amount of inventories recognized as an expense in the year in which the reversal
occurs. We have made full provision of the inventories aged over one year measured in 2022. Further,
(i) the balance of our inventories remains low as we continue to procure inventories on a per-order
basis, and (ii) other contract costs associated with Shenzhen Enjoy generally have an inventory age of
less than one year and are recognized as cost of revenue as Shenzhen Enjoy completes the provision of
services to customers. As such, our Directors believe that there is no recoverability issue for
inventories and sufficient provision has been made.
The following table sets forth details of our inventories and other contract costs as of the dates
indicated:
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Finished goods .................................................. 1,934 706 1,393 2,098
Raw materials ................................................... 3 3 7 — — —
Goods in transit .................................................. 9 3 4 — — —
Other contract costs .............................................. 3,945 5,288 9,876 9,039
Total .......................................................... 7,150 5,994 11,269 11,137
Our inventories and other contract costs decreased from RMB7.2 million as of December 31,
2021 to RMB6.0 million as of December 31, 2022, mainly due to a decrease in finished goods, raw
materials and goods in transit that were subsequently recognized in profit or loss, partially offset by an
increase in other contract costs, representing labor costs associated with Shenzhen Enjoy’s additional
customer projects not yet recognized as cost of revenue.
Our inventories and other contract costs increased from RMB6.0 million as of December 31,
2022 to RMB11.3 million as of December 31, 2023, mainly due to the addition of labor costs
associated with our research and development efforts for Dmall OS in connection with our overseas
business not yet recognized in research and development expenses.
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Our inventories and other contract costs slightly decreased from RMB11.3 million as of
December 31, 2023 to RMB11.1 million as of June 30, 2024.
The following table sets for the turnover days of our average inventory turnover days for the
years/period indicated:
Year Ended December 31,
Six Months Ended
June 30,
2021 2022 2023 2024
Average inventories and other contract costs turnover days (1) ....... 3 . 2 2 . 9 3 . 1 3 . 5
Note:
(1) Average inventories and other contract costs turnover days are equal to the average balances of inventories and other contract costs at the
beginning and at the end of the year divided by cost of revenue during the year and multiplied by the respective number of days in that
year.
Our inventories and other contract costs turnover days generally remained stable from 2021 to
the six months ended June 30, 2024.
As of September 30, 2024, RMB3.1 million or 28.0% of our inventories and other contract
costs as of June 30, 2024 had been subsequently recognized as cost of revenue.
Trade Receivables
Our trade receivables primarily represent outstanding service fees associated with our operating
system business, product and service fees associated with our AIoT solutions, and marketing and
advertising fees due from our customers. We recognize a loss allowance for expected credit losses on
trade receivables measured at amortized cost.
The following table sets forth our trade receivables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Trade receivables ........................................ 95,888 144,120 168,395 261,007
Less: loss allowance ...................................... (2,649) (3,511) (3,253) (4,554)
Total .................................................. 93,239 140,609 165,142 256,453
Our trade receivables increased from RMB93.2 million as of December 31, 2021 to
RMB140.6 million as of December 31, 2022, primarily due to (i) new revenue stream from overall
expansion of our operating system business both in China and overseas, (ii) new consultation revenue
from certain customer in demand of customized digitalized solutions, and (iii) additional revenue from
AIoT solutions including digitalized smart tags business and newly launched intelligent loss prevention
business, which were partially offset by a decrease in receivables for our marketing and advertising
service. Our trade receivables increased from RMB140.6 million as of December 31, 2022 to
RMB165.1 million as of December 31, 2023, primarily due to additional revenue from AIoT solutions,
especially intelligent merchandise replenishment solutions, intelligent package sorting solutions,
intelligent cashier solutions, intelligent cleaning solutions and intelligent delivery solutions. Our trade
receivables increased from RMB165.1 million as of December 31, 2023 to RMB256.5 million as of
June 30, 2024, primarily due to (i) additional revenue generated from system development for Dmall
Fresh (Beijing) in demand of customized digitalized solutions, and (ii) additional revenue generated
from intelligent delivery services and intelligent cleaning services due to business expansion.
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We generally allow a credit period of 30 to 90 days to our customers. The following table sets
forth an aging analysis of our trade receivables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Within 3 months ......................................... 72,619 126,556 148,234 169,437
3 to 6 months ............................................ 15,625 2,213 4,491 74,647
7 to 12 months ........................................... 1,150 7,004 5,621 4,955
More than 1 year but less than 3 years ........................ 4,116 6,138 9,072 11,124
Over 3 years ............................................ 2,378 2,209 977 844
Less: loss allowance ...................................... (2,649) (3,511) (3,253) (4,554)
Total .................................................. 93,239 140,609 165,142 256,453
Our trade receivables aged between 3 to 6 months increased from RMB2.2 million as of
December 31, 2022 to RMB4.5 million as of December 31, 2023 and further to RMB74.7 million
as of June 30, 2024, primarily due to expansion of software development and implementation
business under customer contracts for our retail core service cloud solutions, which generally have
a credit period of under one year.
Our trade receivables aged between 7 to 12 months increased from RMB1.2 million as of
December 31, 2021 to RMB7.0 million as of December 31, 2022, primarily due to outstanding
receivables relating to digitalized smart tags business and software development and implementation
business under customer contracts for our retail core service cloud solutions, which generally have a
credit period of under one year. Our trade receivables aged between 7 to 12 months decreased from
RMB7.0 million as of December 31, 2022 to RMB5.6 million as of December 31, 2023 and further to
RMB5.0 million as of June 30, 2024. This change is considered a normal fluctuation within the
ordinary course of our operations.
Our trade receivables aged over one year increased from RMB6.5 million as of December 31,
2021 to RMB8.3 million as of December 31, 2022, and further to RMB10.0 million as of
December 31, 2023, and further to RMB12.0 million as of June 30, 2024 primarily due to outstanding
software implementation fees associated with our acquisition of Shenzhen Enjoy which may grant
relatively longer credit periods to its creditworthy customers.
The following table sets for the turnover days of our trade receivables for the years/period
indicated:
Year Ended
December 31,
Six Months Ended
June 30,
2021 2022 2023 2024
Trade receivables turnover days (1) .............................. 24.9 32.1 35.2 41.0
Note:
(1) Trade receivables turnover days for a year equals the average of the opening and closing trade receivables balance divided by revenue for
that year and multiplied by the respective number of days in that year.
Our trade receivables turnover days stabilized at around 30 days, at 24.9 days in 2021, 32.1
days in 2022, 35.2 days in 2023. Our trade receivables increased in the six months ended June 30,
2024, primarily due to unsettled payments from certain related parties.
As of September 30, 2024, RMB166.6 million or 65.0% of our trade receivables as of June 30,
2024 had been subsequently settled.
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We do not foresee any material recoverability issue with our trade receivables based on our
evaluation of the historical credit standing and the credit records of our customers, which are generally
leading local retail enterprises with strong economic performance and credit history, and with whom
we have maintained long-term commercial cooperation. We will continue to strengthen our
management in trade receivables and improve the collection rate in the future, and our Directors are of
the view that sufficient provision has been made to trade receivables during the Track Record Period.
See “—Financial Risk Disclosure—Credit Risk.”
Prepayments, Deposits and Other Receivables
Our prepayments, deposits and other receivables primarily consist of receivable from a
supplier, receivable for transferring software copyright, deductible input value-added tax, receivable
from third party payment platform, receivables from retailers and advertisers, lease and security
deposits, and others. Our prepayments, deposits and other receivables are partially offset by a loss
allowance. Current balances of prepayments, deposits and other receivables are expected to be
recovered or recognized within one year.
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,
2021 2022 2023 2024
(RMB in thousands)
Current:
Prepayments for purchase of services/goods ................... 2,113 1,993 8,142 5,833
Receivable from a supplier ................................ 43,558 43,558 43,558 43,558
Deposits ............................................... 1,156 1,648 2,335 2,231
Receivable from third party payment platform ................. 22,885 13,819 19,482 —
Deductible input Value-added tax ........................... 47,884 16,457 19,803 10,035
Receivables from retailers and advertisers ..................... 23,271 18,649 17,906 8,099
Receivable for transferring software copyright ................. — — — 31,717
Other receivables ........................................ 10,216 12,974 8,103 29,832
Less: loss allowance ..................................... (44,249) (44,443) (43,833) (43,921)
Non-current:
Prepayments for purchase of property and equipment ............ 1,541 15,810 15,615 3,229
Lease and security deposits ................................ 8,915 5,539 4,467 3,984
Others ................................................. 7 6 3 9 — —
117,366 86,043 95,578 94,597
Historically in 2019 and 2020, our prepayments, deposits and other receivables were affected
by receivables from retailers and advertisers due to our strategic exit of almost all of the legacy
commodity business in 2020. Our legacy commodity business was an early business involving the
purchase and sale of household consumer goods such as foods as well as consumer electronics. We
conducted our legacy commodity business as a way to expand our services to our retailer and merchant
customers offline, in addition to the e-commerce service cloud solutions that helps them sell products
online. We mainly arranged for the purchase of merchandise from consumer goods wholesalers and
mobile phone suppliers, and sold such merchandise to merchants, supermarkets, mobile phone dealers
and retail consumers. Consequently, revenue from the legacy commodity business are recorded on a
net basis as we were not primarily obligated to our customers in their purchases of merchandise, nor
did we have latitude over merchandise pricing. The legacy commodity business accounted for RMB0.1
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million, RMB0.5 million, nil and nil of our revenues in 2021, 2022, 2023 and the six months ended
June 30, 2024, respectively. The wholesale of mobile phones, which accounted for the majority of our
legacy commodity business, ended in 2020. However, the remainder of our legacy commodity business
comprise the purchases and sales of household consumer goods and foods and limited retail services
for consumer electronics, which positively contributed to our Company’s revenue. As a result, we
continued to generate revenue from and record gross transaction amounts for the remainder of our
legacy commodity business in 2021 and 2022. The gross transaction amounts for our legacy
commodity business were RMB422.0 million, RMB17.8 million, nil and nil in 2021, 2022, 2023 and
the six months ended June 30, 2024, respectively. Receivables from customers for our legacy
commodity business decreased from RMB2.4 million as of December 31, 2021 to nil as of
December 31, 2022 and 2023 and June 30, 2024. We have fully exited the legacy commodity business
due to its insignificant contribution to and impact on the growth and profitability of our Company as
well as its strategic incompatibility with our Company’s focus of providing retail cloud products and
services to customers who are undergoing digitalization. Historically, part of the legacy commodity
business was conducted through our O2O platform to consumers, while the remaining part was
conducted offline to merchants and retailers. In particular, we sold some household consumer goods
through our O2O platform in 2019 but has ceased the online distribution in 2020 and afterwards.
Since 2020, we had prepayments for purchase of goods of RMB43.6 million in connection with
a dispute where we sued a supplier of our Company for undelivered goods. In May 2020, Dmall Life
Digital entered into a merchandise purchase and sale agreement (the “ Purchase and Sale
Agreement”) with a certain supplier (“ Supplier X”). Under the Purchase and Sale Agreement, Dmall
Life Digital agreed to buy and Supplier X agreed to sell cellphones pursuant to the procedures set forth
in the agreement. In June 2020, Dmall Life Digital and Supplier X entered into a safekeeping
agreement related to the merchandise purchase and sale agreement (the “ Safekeeping Agreement ”).
Under the Safekeeping Agreement, Supplier X agreed to keep within its custody cellphones purchased
under the Purchase and Sale Agreement by Dmall Life Digital. In June 2020, we made a payment
amount of RMB43.6 million for a cellphone order to Supplier X without verifying delivery receipt of
the cellphone order. However, we did not receive the cellphones. As a result, we reported the incident
to the Beijing Municipal Public Security Bureau in July 2020, and we made a provision in the same
year for bad debts since such loss was determined to be probable. The incident is under investigation
by the relevant authority since 2020; therefore, there were no movements of the “receivable from a
supplier” item from 2020 and throughout the Track Record Period.
Subsequently, our Company conducted an internal review of the internal control mechanisms
and adopted corresponding internal control measures. For instance, the procurement department shall
obtain and verify copies of suppliers’ business licenses and authorization letters to the contacts before
further arrangements. The purchase demand department and procurement department are responsible
for the inspection and acceptance of goods when purchased goods arrives (or services are provided).
During the inspection process, we collect documents from the supplier that describe the details of the
orders and that certify the quality of the goods delivered. These documents, together with our own
order receipt form, are recorded in our inventory management system by our designated inventory
management personnel for further periodic inspection and verification. The finance department shall
verify the performance of each contract and corresponding bank account information before releasing
payment to suppliers strictly in accordance with the details of our contracts with our suppliers. For
details, please see “Risk Factors—Risks Relating to our Business and Industry—If we fail to
implement and maintain an effective system of internal controls, we may be unable to accurately report
our results of operations, meet our reporting obligations or prevent fraud.”
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Our prepayments, deposits and other receivables decreased from RMB117.4 million as of
December 31, 2021 to RMB86.0 million as of December 31, 2022, which was primarily due to (i) a
decrease in deductible input value added tax from its utilization claimed against output VAT incurred
from increasing sales and VAT credit refund, (ii) a decrease in receivables from third party payment
platform mainly due to cash received from consumers pending settlement to us through certain online
payment service provider transitioned to be reserved in a bank supervised account directly for our
subsequent settlement with retailers and merchants since early December 2022, and (iii) a decrease in
prepayment of promotional incentives on behalf of our retailer and advertising customers through
expedited payment collection and continued settlement with them, partially offset by Shenzhen Enjoy’s
prepayment to purchase the property and equipment. We made prepayments of promotional incentives
to certain of our advertising customers as part of our collaboration with advertising customers for
promotional activities. Prior to a promotional event, our Company agrees with the advertising customer
regarding the format and amount of promotional incentives to be deployed on our platform for
consumers; we subsequently grant such incentives to the consumers’ accounts and keep a record of
utilization amount of such incentives associated with the promotional event; upon completion of the
promotional event, we agree to split of utilization of such incentives with our advertising customer who
would then pay us for their corresponding portion of incentives actually applied during the promotional
event. These effectively constitute a prepayment by us of promotional incentives to consumers on
behalf of our advertising customers.
Our prepayments, deposits and other receivables increased from RMB86.0 million as of
December 31, 2022 to RMB95.6 million as of December 31, 2023, which was primarily due to (i) an
increase in prepayments for listing expenses that have been capitalized and new software purchases
and, (ii) an increase in receivables from third party payment platform due to extra settlement period as
a result of holiday impact at the end of 2023.
Our prepayments, deposits and other receivables decreased from RMB95.6 million as of
December 31, 2023 to RMB94.6 million as of June 30, 2024, which was primarily due to (i) the
derecognition of receivable from third-party payment platform as a result of the Restructuring and (ii) a
decrease in advance payment for the purchase of certain assets of Shandong Orange Bay upon such
assets were reclassified to property and equipment, partially offset by (i) an increase in receivable from
Dmall Fresh (Beijing) relating to its purchase of software copyright from us and (ii) an increase in
other current prepayments, deposits and other receivables relating to hardware equipment transaction
where we purchase on behalf of customers.
As of September 30, 2024, RMB30.8 million or 32.6% of our prepayments, deposits and other
receivables as of June 30, 2024 had been subsequently settled.
Trade Payables
Our trade payables consist of logistics cost, AIoT product and service fees, third-party customer
service fees and other procurement cost.
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The following table sets forth our trade payables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Logistics cost payable ....................................... 31,033 29,284 28,016 —
AIoT product and service fee payable .......................... 13,049 23,404 50,140 89,602
Customer service fee and other procurement cost payable ........... 5,279 11,090 8,407 8,765
Total .................................................... 49,361 63,778 86,563 98,367
Our trade payables increased from RMB49.4 million as of December 31, 2021, to
RMB63.8 million as of December 31, 2022, primarily due to (i) the increase in product procurement
cost associated with the growth of our digitalized smart tags business launched in December 2021 and
(ii) new procurement cost under our points program collaboration with Maidelong Entities, partially
offset the elimination of certain logistics costs as a result of the disposal of our overseas O2O business.
Our trade payables increased from RMB63.8 million as of December 31, 2022 to RM86.6 million as of
December 31, 2023, which was primarily due to the increase in AIoT product and service fee payable
associated with additional outsourcing for the launch and expansion of our AIoT solutions, including
intelligent merchandise replenishment solutions, intelligent package sorting solutions, intelligent
cashier solutions and intelligent cleaning solutions. Our trade payables increased from RM86.6 million
as of December 31, 2023 to RMB98.4 million as of June 30, 2024, which was primarily due to the
increase in AIoT product and service fee payable associated with additional outsourcing for the
expansion of the intelligent cleaning solutions.
The following table sets forth an aging analysis of our trade payables as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Within 3 months ........................................... 47,884 56,737 77,959 89,623
3 to 6 months .............................................. 1,069 5,420 1,775 746
7 to 12 months ............................................. 9 7 1,284 2,989 1,780
Over 1 year ............................................... 3 1 1 3 3 7 3,840 6,218
Total .................................................... 49,361 63,778 86,563 98,367
Our trade payables aged over 1 year increased from RMB0.3 million as of December 31, 2022
to RMB3.8 million as of December 31, 2023, and further to RMB6.2 million as of June 30, 2024,
primarily due to unsettled payables relating to digitalized smart tags business, which were within the
credit period that our vendors provided to us.
The following table sets for the turnover days of our trade payables turnover days for the years/
periods indicated:
Year Ended
December 31,
Six Months
Ended June 30,
2021 2022 2023 2024
Trade payables turnover days (1) ................................... 21.7 25.1 26.6 29.1
Note:
(1) Trade payables turnover days are equal to the average balances of trade payables at the beginning and at the end of the year divided by
cost of revenue during the year and multiplied by the respective number of days in that year.
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Our trade payables turnover days increased slightly from 21.7 days in 2021 to 25.1 days in
2022 and further increased to 26.6 days in 2023, and 29.1 days in the six months ended June 30, 2024.
Our trade payables turnover days stabilized at around 30 days over time, which is on par with industry
average.
As of September 30, 2024, RMB89.4 million or 90.9% of our trade payables as of June 30, 2024
had been subsequently settled.
Accrued Expenses and Other Payables
Our accrued expenses and other payables mainly consist of (i) payables to retailers and
merchants, representing cash collected on behalf of retailers and merchants from consumers,
(ii) accrued payroll and welfare, (iii) advances from consumers, representing advances from consumers
we received on behalf of retailers and merchants before merchandise is delivered when consumers pay
for merchandise online through our platform until (x) such consumers pick up their merchandise
offline from our customer or (y) the merchandise is arranged for delivery on a next-day basis, at which
time the merchandise payment is reclassified to payables to retailers and merchants and will be settled
with the corresponding customer of ours in due settlement period, (iv) refundable government subsidy,
representing the cash received from the government but the conditions attaching to the grant have not
been fulfilled, (v) Sales incentive payables, representing fees payable to retailer customers related to
using and promoting our e-commerce service cloud solutions and scan-and-go solutions in order to
encourage consumers to transact through the Dmall mobile app and mini-programs, (vi) advance from
an investor, (vii) cloud services fee payables and (viii) others.
The following table sets forth details of our accrued expenses and other payables as of the dates
indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Current
Payables to retailers and merchants ......................... 216,661 237,748 153,677 19,113
Advance from an investor ................................. 127,384 — — —
Accrued payroll and welfare ............................... 116,345 159,573 137,375 78,280
Advances from consumers ................................ 16,878 16,105 2,568 —
Deposits from merchants ................................. 17,717 9,908 4,175 5,170
Refundable government subsidy ............................ 23,000 23,000 23,000 23,000
Cloud services fee payables ............................... 18,434 11,591 4,343 2,348
Taxes payable .......................................... 6,351 7,516 16,768 6,321
Professional fee payables ................................. 3,281 23,202 20,784 17,635
Sales incentive payables .................................. 5,579 2,486 — —
Others ................................................ 39,238 42,608 60,059 75,670
Non-current
Rental deposits ......................................... 1,001 — — —
Others ................................................ 6 3 5 6 2 2 9 5 9 1,006
Total ................................................. 592,504 534,359 423,708 228,543
Our accrued expenses and other payables decreased from RMB592.5 million as of
December 31, 2021, to RMB534.4 million as of December 31, 2022, primarily due to that advance
from an investor in 2021 was recognized in convertible redeemable preferred shares in February 2022,
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as partially offset by (i) an increase in accrued payroll and welfare including holdover of social
insurance payment under pandemic-specific government relief policies across our offices in 2022, (ii)
an increase in professional fee payables in relation to the Listing and (iii) an increase in payables to
retailers and merchants.
Our accrued expenses and other payables decreased from RMB534.4 million as of
December 31, 2022 to RMB423.7 million as of December 31, 2023, which was primarily due to (i) a
decrease in payables to retailers and merchants due to our timely settlement with them at the end of
2023, (ii) a decrease in accrued payroll and welfare, including social insurance payment under
pandemic-specific government relief policies, and (iii) a decrease in advances from consumers upon
completion of consumer orders placed through our O2O platform.
Our accrued expenses and other payables decreased from RMB423.7 million as of
December 31, 2023 to RMB228.5 million as of June 30, 2024, which was primarily due to (i) a
decrease in payables to retailers and merchants as a result of the Restructuring, and (ii) a decrease in
accrued payroll and welfare.
As of September 30, 2024, RMB164.5 million or 72.2% of the current portion of our accrued
expenses and other payables as of June 30, 2024 had been subsequently settled.
Contract Liabilities
Our contract liabilities mainly consist of customer advances for our retail core service cloud
solution business, customer advances for our marketing and advertising services and advances from
consumers for our membership programs. Our contract liabilities increased from RMB44.5 million as
of December 31, 2021 to RMB49.5 million as of December 31, 2022. The increase was primarily due
to an increase in customer advances under our marketing and advertising service. Customer advances
for our marketing and advertising services mainly represent the advance payments we receive from our
advertising customers prior to us rendering services to them as advertising customers transition into a
prepayment fee model. We instated the prepayment fee model in early 2022 for brand owners using
our marketing and advertising services to prepay fees associated with advertising and marketing
campaigns, with limited exception for our long-term brand owner customers. This fee model is
consistent with market practice for marketing and advertising services, and improves operating cash
flow for our marketing and advertising services. The increase in contract liabilities from RMB49.5
million as of December 31, 2022 to RMB91.3 million as of December 31, 2023 was primarily
attributable to the increase in customer advances for our operating system implementation under our
retail core service cloud solutions, together with the scaling up of our business in both domestic and
overseas markets. The decrease in contract liabilities from RMB91.3 million as of December 31, 2023
to RMB78.6 million as of June 30, 2024 was primarily attributable to the derecognition of customer
advances for our marketing and advertising services and advances from consumers for our membership
programs as a result of the Restructuring, partially offset by the increase in contract liabilities as a
result of advance payments relating to Dmall OS business during the period.
As of September 30, 2024, RMB23.2 million or 29.6% of our contract liabilities as of June 30,
2024 had been subsequently recognized as revenue.
Convertible Redeemable Preferred Shares
The convertible redeemable preferred shares were designated as financial liabilities at fair value
through profit or loss. The carrying amount of the convertible redeemable preferred shares was
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RMB5,137.2 million, RMB6,378.7 million, RMB6,965.5 million and RMB7,407.2 million as of
December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Such amounts include the initial
proceeds received on the issuance of the convertible redeemable preferred shares and their subsequent
fair value.
For further information regarding our convertible redeemable preferred shares, see “History,
Reorganization and Corporate Structure—Pre-IPO Investments” of this document and Note 28 to the
Accountants’ Report in Appendix I to this document.
Convertible Bond
The outstanding convertible bond of RMB151.0 million was classified as our current liability as
at June 30, 2024. See “History, Reorganization and Corporate Structure—Pre-IPO Investments—
Issuance of Convertible Bond” of this document and Note 29 to the Accountants’ Report in Appendix I
to this document for details of the convertible bond.
KEY FINANCIAL RATIOS
The table below sets forth our key financial ratios for the years/periods or as of the dates
indicated:
For the Year Ended December 31,
For the Six Months Ended
June 30
2021 2022 2023 2023 2024
(unaudited)
Growth of revenue .......................... — 56.6% 19.4% — 22.9%
Gross margin (1) ............................ 20.4% 38.0% 35.0% 36.3% 38.3%
Net margin (2) .............................. (213.2%) (67.8%) (47.3%) (76.9%) (51.3%)
Adjusted net margin from continuing operations
(non-IFRS measure)(3) ..................... (111.0%) (26.8%) (14.7%) (18.8%) (6.0%)
Notes:
(1) Equals gross profit for the year/period divided by revenue for the year/period and multiplied by 100%.
(2) Equals loss for the year from continuing operations divided by revenue for the year/period and multiplied by 100%.
(3) Equals adjusted loss from continuing operations (non-IFRS measures) for the year/period divided by revenue for the year/period and
multiplied by 100%.
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period and up to the Latest Practicable Date, we funded our cash
requirements principally from cash generated from our business operations and funds raised through
private placements and bank loans. After the Global Offering, we intend to finance our future capital
requirements through cash generated from our business operations, the net proceeds received from the
Global Offering, and other future equity or debt financings. We currently do not anticipate any changes
to the availability of financing to fund our operations in the near future.
We had cash and cash equivalents of RMB368.7 million, RMB533.1 million, RMB553.2
million and RMB469.5 million as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively.
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The following table sets forth details of our cash and cash equivalents and restricted bank
deposits as of the dates indicated:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Cash at bank and on hand ................................. 424,383 589,140 554,104 470,034
Less: Restricted bank deposits ............................. ( 55,667) (56,086) (20,933) (498)
Cash and cash equivalents ................................. 368,716 533,054 533,171 469,536
As of December 31, 2021, we recorded restricted bank deposits of RMB55.7 million, due to the
freezing of certain disputed assets. During the Track Record Period, a subsidiary of our Company was
involved in a contractual dispute lawsuit with a supplier of our Company, and certain disputed assets
were frozen by the court from the subsidiary’s bank account. In September 2022, the court dismissed
the case and disputed assets were unfrozen in October 2022. See “Risk Factors—Risks Relating to our
Business and Industry—We have been and may again, from time to time, be subject to legal
proceedings during the course of our business operations. Our directors, management, shareholders and
employees may also again from time to time be subject to legal proceedings, which could adversely
affect our reputation and results of operations.”
We recorded restricted bank deposits of RMB56.1 million as of December 31, 2022 and
RMB20.9 million as of December 31, 2023 mainly representing cash received from consumers and
reserved in a bank supervised account for payments to retailers and merchants.
During the Track Record Period, Zhilian Wuhan, a subsidiary of our Company was
involved in a contractual dispute with a product manufacturer for our AIoT solutions. On April 15,
2019, Dmall Zhilian and a certain product manufacturer (the “ Manufacturer ”) entered into a
manufacturing contract (the “ Manufacturing Contract ”), pursuant to which the Manufacturer
agreed to manufacture AIoT equipment. On May 25, 2019, Dmall Zhilian, the Manufacturer, and
Zhilian Wuhan entered into an agreement to change the Manufacturing Contract signing party to
Zhilian Wuhan and have Zhilian Wuhan to assume the rights and obligations under the
Manufacturing Contract. According to the Manufacturing Contract, if the AIoT equipment has
quality problems, the quality assurance deposit will be paid after the quality problems are solved.
Zhilian Wuhan believes that the product manufacturer delivered equipment of substandard quality
and have not subsequently resolved such quality problems. Furthermore, Zhilian Wuhan has
incurred additional equipment repairment costs of RMB0.03 million and it is expected to incur
further equipment repairment costs in subsequent equipment use with a third-party service
provider. Correspondingly, Zhilian Wuhan withheld the quality assurance deposit.
In July 2022, the product manufacturer brought a contractual dispute claim against Zhilian
Wuhan and an amount equal to the quality assurance deposit and its interest expense was frozen by the
court from the subsidiary’s bank account. As a result of the contractual dispute, we incurred
RMB20,000 in legal fees. On November 16, 2023, the court made a final judgment that dismissed the
product manufacturer’s claim. Consequently, the amount frozen by the court from the subsidiary’s
bank account had been released in January 2024. See “Risk Factors—Risks Relating to our Business
and Industry—We have been and may again, from time to time, be subject to legal proceedings during
the course of our business operations. Our directors, management, shareholders and employees may
also again from time to time be subject to legal proceedings, which could adversely affect our
reputation and results of operations.”
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The following table sets forth a summary of our cash flows for the years/periods indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands)
(unaudited)
Operating cash flows before changes in working
capital ...................................... (870,007) (383,173) (125,538) (76,532) 27,832
Changes in working capital ....................... (404,660) 177,917 (53,805) (116,261) (84,553)
Cash used in operations .......................... (1,274,667) (205,256) (179,343) (192,793) (56,721)
Income tax (paid)/refunded ........................ (10) (245) 95 127 (22)
Net cash used in operating activities ................ (1,274,677) (205,501) (179,248) (192,666) (56,743)
Net cash (used in)/generated from investing activities...... (321,400) 68,847 (31,031) (12,150) (6,049)
Net cash generated from financing activities .......... 833,719 282,425 207,061 132,409 144
Net (decrease)/increase in cash and cash
equivalents .................................. (762,358) 145,771 (3,218) (72,407) (62,648)
Cash and cash equivalents at the beginning of the
y e a r / p e r i o d ................................... 1,134,873 368,716 533,054 533,054 533,171
E f f e c to ff o r e i g nc u r r e n c ye x c h a n g er a t ec h a n g e s ..........(3,799) 18,567 3,335 3,337 (987)
Cash and cash equivalents at the end of the
year/period .................................. 368,716 533,054 533,171 463,984 469,536
Net Cash Used in Operating Activities
Net cash used in operating activities in the six months ended June 30, 2024 was
RMB56.7 million. Our net cash used in operating activities is calculated by adjusting our loss before
tax of RMB251.1 million for non-cash and non-operating items of RMB278.9 million, changes in
working capital of negative RMB84.6 million, and income tax paid of less than RMB0.1 million.
Adjustments mainly include (i) fair value change of convertible redeemable preferred shares of
RMB397.1 million, and (ii) fair value change on financial assets at FVPL of RMB87.1 million and
(iii) depreciation on property and equipment of RMB19.4 million partially offset by gain on disposal of
subsidiaries of RMB253.9 million. Changes in working capital mainly include (i) an increase in trade
receivables and contract asset of RMB92.6 million, primarily due to additional revenue from system
development services, intelligent delivery services and intelligent cleaning services, and (ii) an
increase in other receivables and prepayments of RMB41.4 million, primarily due to an increase in
receivable from Dmall Fresh (Beijing) relating to its purchase of software copyright from our Group,
partially offset by (i) a decrease in other payables and accruals of RMB37.9 million, primarily due to a
decrease in payables to retailers and a decrease in accrued payroll and welfare, and (ii) an increase in
trade payables of RMB11.8 million, primarily due to an increase in AloT product and service fee
payable.
Net cash used in operating activities in 2023 was RMB179.3 million. Our net cash used in
operating activities is calculated by adjusting our loss before tax of RMB658.8 million for non-cash
and non-operating items of RMB533.2 million, changes in working capital of negative RMB53.8
million, and income tax refunded of less than RMB0.1 million. Adjustments mainly include (i) fair
value change of convertible redeemable preferred shares of RMB476.2 million and (ii) depreciation on
property and equipment of RMB45.8 million, partially offset by fair value change on financial assets at
FVPL of RMB43.8 million. Changes in working capital mainly include (i) a decrease in other payables
and accruals of RMB109.7 million, primarily due to a decrease in payables to retailers and merchants,
a decrease in accrued payroll and welfare and a decrease in advances from consumers and (ii) an
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increase in trade receivables and contract assets of RMB25.2 million, primarily due to additional
revenue from AIoT solutions, partially offset by (i) an increase in contract liabilities of RMB41.8
million, primarily due to an increase in customer advances for our operating system implementation
(ii) a decrease in restricted bank deposits of RMB35.2 million, primarily due to settlement of payments
to retailers and merchants from the restricted bank supervised account, and (iii) an increase in trade
payables of RMB20.8 million, primarily due to an increase in AIoT product and service fee payable.
Net cash used in operating activities in 2022 was RMB205.5 million. Our net cash used in
operating activities is calculated by adjusting our loss before tax of RMB842.4 million for non-cash
and non-operating items of RMB459.2 million, changes in working capital of RMB177.9 million, and
income tax paid of RMB0.2 million. Adjustments mainly include (i) fair value change of convertible
redeemable preferred shares of RMB493.2 million, and (ii) depreciation on property and equipment of
RMB51.9 million, partially offset by gain on disposal of subsidiaries of RMB100.1 million. Changes
in working capital mainly include (i) an increase in other payables and accruals of RMB158.6 million,
primarily due to an increase in accrued payroll and welfare, an increase in professional fee payables
and an increase in payables to retailers and merchants, (ii) a decrease in other receivables and
prepayments of RMB50.9 million, primarily due to a decrease in deductible input VAT and VAT
credit refund, a decrease in receivables from third-party payment platform and a decrease in
prepayment of promotional incentives on behalf of our retailer customers and advertising customers,
and (iii) an increase in trade payables of RMB14.4 million, partially offset by an increase in trade
receivables of RMB47.8 million, primarily due to new revenue stream from overall expansion of our
operating system business, new consultation revenue from certain customer, and additional revenue
from AIoT solutions.
Net cash used in operating activities in 2021 was RMB1,274.7 million. Our net cash used in
operating activities is calculated by adjusting our loss before tax of RMB1,824.3 million for non-cash
and non-operating items of RMB954.3 million, changes in working capital accounts of negative
RMB404.7 million, and income tax paid of less than RMB0.1 million. Adjustments mainly include
(i) fair value change of convertible redeemable preferred shares of RMB732.3 million, (ii) equity
settled share-based payment expenses of RMB134.1 million, and (iii) depreciation on property and
equipment of RMB63.5 million. Changes in working capital mainly include (i) a decrease in other
payables and accruals of RMB340.7 million, primarily due to a decrease in outstanding sales
incentives payables, a decrease in payables to retailers and merchants, and a decrease in advances from
consumers, and (ii) an increase in trade receivables and contract asset of RMB57.8 million, primarily
due to operating system deployment for new retailer customers, new software development and
maintenance revenue, new revenue stream from digitalized smart tags under our AIoT solutions, and
additional advertising and marketing fees derived from new advertising customers, and (iii) an increase
in restricted bank deposit of RMB55.7 million primarily due to the freezing of certain disputed assets,
partially offset by (i) an increase in contract liabilities of RMB15.7 million, and (ii) an increase in trade
payables of RMB14.6 million.
Despite experiencing a net operating cash outflow in the Track Record Period, we anticipate an
improvement in our operating cash flow as we expect to improve our loss making position gradually.
Firstly, our business scale is continuously expanding as we deploy our operating system which has a
notably higher gross margin to a broader range of customers. We expect to grow our customer base by
bringing in new customers and generating additional revenue from existing customers who continue to
deepen the digitalization of their operations through the adoption of our additional offerings. For
instance, we have entered into cooperation agreements with major regional retailers operating
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supermarkets and convenience stores, which will start contributing to our revenue in 2023.
Additionally, we are diversifying our revenue stream through our AIoT solutions. We anticipate an
increase in the number of AIoT customers as we cross-sell AIoT solutions to our Dmall OS and other
customers, which will also lead to higher revenue per customer. In particular, we expect to generate
more revenue from our new AIoT initiatives, such as intelligent loss prevention solutions, intelligent
cleaning solutions, intelligent merchandise replenishment solutions, intelligent package sorting
solutions, and intelligent cashier solutions. These solutions provide customers with a comprehensive
AIoT hardware and services package which we expect will generate positive returns for us. We will
also generate additional fees from advertising customers as we integrate and enhance our online and
offline marketing channels. For example, we are expanding our marketing collaboration with broader
customer base for offline marketing and promotional services, such as partner stores and banks.
Furthermore, our concerted efforts to control costs and optimize our operational efficiency, including
but not limited to, labor structure optimization and reducing promotional incentives to retail consumers
for our e-commerce service cloud solutions, will also contribute to improvement in our operating cash
flow.
Net Cash (Used in)/Generated from Investing Activities
In the six months ended June 30, 2024, our net cash used in investing activities was RMB6.0
million, primarily attributable to (i) net cash outflow from disposal of Dmall Fresh (Beijing) of
RMB26.1 million and (ii) purchase of financial assets at FVPL of RMB14.0 million, partially offset by
proceeds from disposal of financial assets at FVPL of RMB38.0 million.
In 2023, our net cash used in investing activities was RMB31.0 million, primarily attributable
to purchase of financial assets at FVPL of RMB164.5 million partially offset by proceeds from
disposal of financial assets at FVPL of RMB139.2 million.
In 2022, our net cash generated from investing activities was RMB68.8 million, primarily
attributable to (i) proceeds from disposal of financial assets at FVPL of RMB256.7 million, and (ii) net
proceeds from disposal of a subsidiary of RMB78.2 million partially offset by purchase of financial
assets at FVPL of RMB249.5 million.
In 2021, our net cash used in investing activities was RMB321.4 million, primarily attributable
to purchase of financial assets at FVPL of RMB3,833.4 million, payment for acquisition of subsidiaries
of RMB103.4 million, and payment for acquisition of equity investments of RMB102.6 million,
partially offset by proceeds from disposal of financial assets at FVPL of RMB3,733.8 million.
Net Cash Generated from Financing Activities
In the six months ended June 30, 2024, our net cash generated from financing activities was
RMB0.1 million, primarily attributable to proceeds from bank loans of RMB182.0 million, partially
offset by repayment of bank loans of RMB99.6 million, repayment of convertible bond of RMB50.0
million, payment of interests of convertible bond of RMB11.2 million and capital element of lease
rentals paid of RMB10.7 million.
In 2023, our net cash generated from financing activities was RMB207.1 million, primarily
attributable to proceeds from bank loans of RMB260.7 million and capital contribution from non-
controlling interests of RMB59.5 million, partially offset by repayment of bank loans of RMB70.0
million as well as capital element of lease rentals paid of RMB25.8 million.
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In 2022, our net cash generated from financing activities was RMB282.4 million, primarily
attributable to proceeds from convertible bond of RMB190.0 million, proceeds from bank loans of
RMB120.4 million and proceeds from issuance of convertible redeemable preferred shares
RMB111.0 million, partially offset by repayment of borrowings from related parties of RMB85.3 million
as well as cash paid for acquisition of non-controlling interests of RMB48.5 million.
In 2021, net cash generated from financing activities was RMB833.7 million, primarily
attributable to proceeds from issuance of convertible redeemable preferred shares of
RMB742.1 million, partially offset by interests paid of RMB68.0 million and payments for capital
element of lease rentals of RMB22.9 million and payments for interest element of lease rentals of
RMB1.2 million.
INDEBTEDNESS
The table below sets forth a breakdown of our lease liabilities, contingent liabilities or
guarantees, bank loans and other borrowings, convertible redeemable preferred shares and convertible
bond as of the dates indicated:
As of December 31, As of June 30, As of September 30,
2021 2022 2023 2024 2024
(RMB in thousands)
(unaudited)
Lease liabilities .................... 25,612 20,313 40,584 36,650 31,441
Bank loans and other borrowings ...... 155,261 120,490 314,176 396,664 391,685
Convertible redeemable preferred
shares .......................... 5,137,156 6,378,735 6,965,493 7,407,194 8,028,123
Convertible bond ................... — 203,193 208,577 151,039 151,883
Total ............................ 5,318,029 6,722,731 7,528,830 7,991,547 8,603,132
Bank Loans and Other Borrowings
The table below sets forth our bank loans, borrowings from related parties and borrowings from
other company as of the dates indicated:
As of December 31, As of June 30, As of September 30,
2021 2022 2023 2024 2024
(RMB in thousands)
(unaudited)
Current
Bank loans—secured ..................... 11,364 41,655 60,994 68,284 68,278
Bank loans—unsecured ................... — 28,435 138,337 210,186 205,188
Borrowings from related parties—unsecured . . 64,799 — — — —
Borrowings from other
company—unsecured .................. — — 2,745 2,794 2,819
Non-current
Bank loans—secured ..................... 79,098 50,400 112,100 115,400 115,400
Total ................................. 155,261 120,490 314,176 433,314 391,685
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Our balances with related parties as at the end of each reporting period are as follows:
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Trade in nature:
Amounts due from related parties ........................... 76,434 109,593 143,112 248,284
Amounts due to related parties ............................. 197,474 244,698 169,081 40,962
Non-trade in nature:
Borrowings and interests due to related parties ................ 64,799 — — —
Amounts due from and to related parties of the Group are unsecured, interest-free, repayable on
demand/on contract terms.
Amounts due to related parties include mainly logistics cost payable, promotion and other
service fee payable, sales incentive payables and cash collected on behalf of retailer customers from
consumers, among which sales incentive payables and cash collected on behalf of retailer customers
from consumers did not correspond to our purchase transactions with related parties.
In July 2017 and May 2018, we and Dmall Life Network entered into a series of loan agreements
with Retail Enterprise Corporation Limited, a subsidiary of Wumei Technology, and Wumei Technology,
respectively. Under these agreements, (i) we provided interest-free borrowings of US$101.0 million,
using our overseas financing proceeds, to Retail Enterprise Corporation Limited, obtained by Retail
Enterprise Corporation for the purpose of funding several potential acquisitions of retailers; and (ii)
Dmall Life Network obtained interest-free borrowings in RMB equivalent to US$101.0 million from
Wumei Technology for the purpose of meeting funding needs for its operations. These borrowings were
fully repaid by Retail Enterprise Corporation Limited and Dmall Life Network in 2020, respectively.
Our PRC Legal Adviser is of the view that, with respect to the U.S. dollar loans between the
Group and the subsidiary of Wumei Technology (namely, Retail Enterprise Corporation Limited) (the
“U.S. Dollar Loans ”), in accordance with the provisions of the Circular of the National Development
and Reform Commission on Promoting the Administrative Reform of the Filing and Registration
System for the Issuance of Foreign Debts by Enterprises (
પආΆุ೯Б̮ව௪
, the “ Circular 2044 ”) promulgated by the NDRC on September 14, 2015,
effective on the same day, and relevant Q&As published on the NDRC’s official website, the Group, as
the lender, were not subject to any filing or reporting requirements under the Circular 2044. Based on
the above, our PRC legal adviser has advised that, the Group is in compliance with the relevant PRC
laws and regulations in all material respects in the U.S. Dollar Loans transactions.
With respect to the RMB loans between the Group’s subsidiary (namely, Dmall Life Network)
and Wumei Technology (the “ RMB Loans ”), in accordance with the provisions of the General
Lending Provisions (
) issued by the PBOC, any financing arrangements or lending
transactions between non-financial institutions is prohibited, and PBOC may impose on the non-
compliant lender a fine of one to five times the income received by the lender from such loans.
However, according to the Provisions of the Supreme People’s Court on Several Issues concerning the
Application of Law in the Trial of Private Lending Cases (
ج
, the “ Private Lending Provisions ”), borrowing agreements between enterprises
which are not financial institutions shall be classified as private lending and should be valid if such
lending is for business operation purposes and do not fall into certain situations stipulated in the Civil
Code of the PRC and Private Lending Provisions. PRC courts will support an enterprise’s claim for
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interest in respect of such lending as long as the annual interest rate does not exceed four times of the
applicable one-year loan prime rate. The RMB Loans did not fall into the scope of the certain situations
stipulated in the Civil Code of the PRC and Private Lending Provisions and were interest-free. Based
on the above, our PRC legal adviser is of the view that, the possibility of the Group being penalized in
respect of the RMB Loans pursuant to the General Lending Provisions is remote, the Group is in
compliance with the relevant PRC laws and regulations in all material respects in the RMB Loans
transactions.
We have entered into revolving loan facilities with Bank of Beijing. In September 2022, we
entered into a revolving loan facility of RMB300.0 million with Bank of Beijing, with an expiration
date in September 2026. In November 2023, we entered into another loan facility to extend the
expiration date to November 2027. The loan facilities are committed, secured and unrestricted. The
interest rate and repayment schedule of any drawdown will be determined by separate agreement with
Bank of Beijing per each drawdown. As of September 30, 2024, we have drawn down borrowings with
the principal amount of RMB227.0 million under these loan facilities, out of which we have repaid
RMB43.5 million and the unutilized loan facility was RMB116.5 million.
In June 2023, we entered into another revolving loan facility of RMB10.0 million with Bank of
Beijing, with an expiration date in June 2025. In June 2024, we entered into another revolving loan
facility with Bank of Beijing to extend the expiration date to June 2025 and raise the loan facility of
RMB10.0 million to RMB20.0 million. The loan facility is committed, unsecured and unrestricted. As
of September 30, 2024, we have drawn down borrowings with the principal amount of RMB30.0
million under this loan facility, out of which we have repaid RMB10.0 million in June 2024 and the
unutilized loan facility was nil.
In March 2023, we entered into a revolving loan facility of RMB100.0 million with Bank of
China, with an expiration date in March 2024. In April 2024, we entered into another loan facility to
extend the expiration date to March 2025. The loan facility is committed, unsecured and unrestricted.
The interest rate and repayment schedule of any drawdown will be determined by separate agreement
with Bank of China per each drawdown. As of September 30, 2024, we have drawn down borrowings
with the principal amount of RMB85.0 million under these loan facilities, out of which we have repaid
RMB50.0 million and the unutilized loan facility was 65.0 million.
In March 2023, we entered into a revolving loan facility of RMB100.0 million with Shanghai
Pudong Development Bank Co., Ltd., with an expiration date in March 2024. In June 2024, we entered
into another loan facility to extend the expiration date to April 2025 and raise the loan facility of
RMB100.0 million to RMB110.0 million. The loan facility is unsecured and unrestricted. The interest
rate and repayment schedule of any drawdown will be determined by separate agreement with
Shanghai Pudong Development Bank Co., Ltd., per each drawdown. As of September 30, 2024, we
have drawn down borrowings with the principal amount of RMB124.6 million under these facilities,
out of which we have repaid RMB14.6 million and the unutilized loan facility was nil.
In November 2023 we entered into a non-revolving loan facility of RMB30.0 million with
Industrial and Commercial Bank of China, with an expiration date in October 2024. The loan facility is
unsecured and unrestricted. The interest rate and repayment schedule of any drawdown will be
determined by separate agreement with Industrial and Commercial Bank of China per each drawdown.
As of September 30, 2024, we have drawn down borrowings with the principal amount of RMB30.0
million under this facility and the unutilized loan facility was nil.
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In September 2023 we entered into a revolving loan facility of RMB100.0 million with China
Zheshang Bank, with an expiration date in August 2024. In August 2024, we entered into another loan
facility to extend the expiration date to July 2025. The loan facility is unsecured and unrestricted. The
interest rate and repayment schedule of any drawdown will be determined by separate agreement with
China Zheshang Bank per each drawdown. As of September 30, 2024, we have drawn down
borrowings with the principal amount of nil under this facility and the unutilized loan facility was
RMB100.0 million.
In August 2024, we entered into a revolving loan facility of RMB50.0 million with Bank of
Nanjing, with an expiration date in August 2025. The loan facility is secured and unrestricted. The
interest rate and repayment schedule of any drawdown will be determined by separate agreement with
Bank of Nanjing per each drawdown. As of September 30, 2024, we have drawn down borrowings
with the principal amount of nil under this facility and the unutilized loan facility was
RMB50.0 million.
In September 2024, we entered into a revolving loan facility of RMB200.0 million with
Industrial Bank Co., Ltd., with an expiration date in September 2025. The loan facility is unsecured
and unrestricted. The interest rate and repayment schedule of any drawdown will be determined by
separate agreement with Industrial Bank Co., Ltd., per each drawdown. As of September 30, 2024, we
have drawn down borrowings with the principal amount of RMB10.0 million under this facility and the
unutilized loan facility was RMB190.0 million.
In September 2024, we entered into a revolving loan facility of RMB50.0 million with Bank of
Shanghai, with an expiration date in August 2025. The loan facility is secured and unrestricted. The
interest rate and repayment schedule of any drawdown will be determined by separate agreement with
Bank of Shanghai per each drawdown. As of September 30, 2024, we have drawn down borrowings
with the principal amount of nil under this facility and the unutilized loan facility was
RMB50.0 million.
As of September 30, 2024, we recorded RMB388.5 million in bank loans and other borrowings
and had RMB571.5 million in unutilized banking facilities.
Some of our bank loan agreements contain standard terms, conditions and covenants that are
customary for commercial bank loans in the PRC. Such covenants primarily include requirements for
us to obtain the relevant lenders’ prior consent for certain transactions, such as disposal of material
assets and merger or consolidation. Save as disclosed above, so far as our Directors are aware, we do
not have any material covenants relating to the outstanding debts which limited our ability to undertake
additional debt or equity financing. Our Directors also confirm that (i) there was no delay or defaults in
the repayment of borrowings during the Track Record Period, (ii) they are not aware of any breach of
any of the covenants contained in our bank loan arrangements and other borrowing arrangements or
any event of default during the Track Record Period and up to the Latest Practicable Date, (iii) they are
not aware of any restrictions that will limit our ability to drawdown on our unutilized facilities. Our
Directors further confirm that our Group did not experience any difficulty in obtaining bank loans and
other borrowings, default in payment of bank loans and other borrowings or breach of covenants
during the Track Record Period and up to the Latest Practicable Date.
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Lease Liabilities
Our lease liabilities amounted to RMB25.6 million, RMB20.3 million, RMB40.6 million and
RMB36.7 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. As of
September 30, 2024, we recorded RMB31.4 million in lease liabilities. For further information
regarding our lease liabilities, see Note 25 to the Accountants’ Report in Appendix I to this document.
Contingent Liabilities or Guarantees
We did not have any material contingent liabilities or guarantees as of December 31, 2021 and
2022, 2023 and June 30, 2024.
Except as disclosed above and under the paragraphs headed “—Discussion of Certain Key
Items of Consolidated Statements of Financial Position—Convertible Redeemable Preferred Shares”
and “—Discussion of Certain Key Items of Consolidated Statements of Financial Position—
Convertible Bond” in this section, we did not have any material mortgages, charges, debentures, loan
capital, debt securities, loans, bank overdrafts or other similar indebtedness, finance lease or hire
purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits,
which are either guaranteed, unguaranteed, secured or unsecured, or guarantees as of June 30, 2024.
Our Directors have confirmed that there is no material change in our indebtedness since September 30,
2024 and up to the date of this prospectus.
CAPITAL EXPENDITURES
Our capital expenditures are primarily incurred for purchase of property and equipment and
intangible assets.
The table below sets forth our capital expenditures as of the dates indicated:
Year Ended December 31, Six Months Ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands)
(unaudited)
Payment for the purchase of property and equipment ........ 16,261 16,641 3,578 1,475 4,421
Payment for the purchase of intangible assets ............. 3 1 4 3 6 3 2,963 1,441 —
Total ............................................. 16,575 17,004 6,541 2,916 4,421
We intend to fund our future capital expenditures with our existing cash balance, cash
generated from our operating operations and proceeds from the Global Offering. We may reallocate the
fund to be utilized on capital expenditure and long-term investments based on our ongoing business
needs.
CONTRACTUAL OBLIGATIONS
Capital Commitments
We did not have any material capital commitments as of December 31, 2021, 2022, 2023 and
June 30, 2024.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet commitments
or arrangements.
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MATERIAL RELATED PARTY TRANSACTIONS AND BALANCES
We enter into transactions with our related parties from time to time. During the Track Record
Period, we entered into a number of related party transactions, see Note 34 to the Accountants’ Report
in Appendix I to this document.
Our Directors are of the view that each of our transactions with related parties during the Track
Record Period were conducted in the ordinary course of business on an arm’s length basis and with
normal commercial terms between the relevant parties. Our Directors are also of the view that our
related party transactions during the Track Record Period would not distort our results of operations or
cause our historical results to become non-reflective of our future performance.
FINANCIAL RISK DISCLOSURE
We are exposed to a variety of financial risks, including currency risk, interest risk, credit risk
and liquidity risk. We manage and monitor these exposures to ensure appropriate measures are
implemented in a timely and effective manner, minimizing any potential adverse effects on our
financial performance. See Note 33 to the Accountants’ Report in Appendix I to this document for a
detailed description of our financial risk management.
Currency Risk
We are exposed to currency risk primarily through sales and purchases which give rise to
receivables, payables and cash balances that are denominated in a foreign currency, i.e. a currency
other than the functional currency of the operations to which the transactions relate. The currencies
giving rise to this risk are primarily United States dollars.
Interest Rate Risk
Interest rate risk arises from fair value or future cash flows of a financial instrument fluctuating
because of changes in market interest rates. We are exposed to fair value interest rate risk primarily
due to lease liabilities and cash flow risk in relation to variable-rate bank balances. We currently do not
have an interest rate hedging policy to mitigate interest rate risk; nevertheless, our management
monitors our interest rate risk exposure and will consider hedging significant interest rate risk should
the need arise. Our Directors are of the view that our exposure to interest rate risk arising from
variable-rate bank balances and cash is insignificant because current market interest rates are relatively
low and stable.
Credit Risk
Credit risk arises from a counterparty defaulting on its contractual obligations, resulting in a
financial loss to us. We are exposed to credit risk primarily in relation to trade receivables and contract
assets. We measure loss allowances for trade receivables at an amount equal to lifetime expected credit
losses, which is calculated using a provision matrix. As our historical credit loss experience does not
indicate significantly different loss patterns for different customer segments, the loss allowance based
on past due status is not further distinguished between our different customer bases. See Note 33 to the
Accountants’ Report in Appendix I. Our exposure to credit risk arising from cash and cash equivalents
is limited because our counterparties are banks and financial institutions having high-credit-quality.
We do not provide any guarantees which would expose us to credit risk.
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Liquidity Risk
Our policy is to regularly monitor our liquidity requirements and compliance with lending
covenants, to ensure that we maintain a sufficient reserve of cash and cash equivalents as well as
committed lines of funding from major financial institutions to meet our liquidity requirements in the
short and longer term.
Our Directors have considered our future liquidity and performance and our available sources
of finance, including our cash balance of RMB469.5 million as of June 30, 2024, unutilized bank loan
facilities in an amount of RMB266.5 million as of June 30, 2024 and the net proceeds from the Global
Offering, in assessing we will have sufficient financial resources to continue as a going concern.
FAIR VALUE MEASUREMENT
The fair value of the Company’s financial instruments measured at the end of each reporting
period on a recurring basis are categorized into the three-level fair value hierarchy as defined in IFRS
13, Fair value measurement . The level into which a fair value measurement is classified is determined
with reference to the observability and significance of the inputs used in the valuation technique as
follows:
 Level 1—Fair value measured using only Level 1 inputs, i.e., unadjusted quoted prices in
active markets for identical assets or liabilities at the measurement date.
 Level 2—Fair value measured using Level 2 inputs, i.e., observable inputs which fail to
meet Level 1, and not using significant unobservable inputs. Unobservable inputs are
inputs for which market data are not available.
 Level 3—Fair value measured using significant unobservable inputs.
Level 3 fair value measurement
Wealth management products held by us are categorized within Level 3, of which we estimate
the fair value by reviewing contractual terms of the respective wealth management products to
understand their nature, considering all information with particular emphasis on non-market related
informational inputs, analyzing the basis of interest return rates and reviewing the retrospective
analysis results of comparable settled wealth management products. Our investment in unlisted equity
securities of Guoquan was categorized within Level 3 in 2021 and 2022, of which we estimated the fair
value by engaging independent external valuers to perform valuation procedures with financial and
non-financial information we provided as well as with discussions on relevant assumptions,
considering all information with particular emphasis on non-market related informational inputs and
relying on the management team’s assessments and estimates of such inputs. Due to Guoquan’s initial
public offering in November 2023, fair value measurement of Guoquan’s securities was transferred
from Level 3 to Level 1.
Convertible redeemable preferred shares and derivative components of the convertible bond are
categorized within Level 3, of which we estimate the fair value, with reference to the guidance under
the “Guidance Note on Directors’ Duties in the Context of Valuations in Corporate Transactions”
issued by the SFC in May 2017 applicable to directors of companies listed on the Stock Exchange, and
with reliance on professional advice, by reviewing the relevant contractual terms of the investment
agreements with investors, understanding the nature of the financial instruments issued, engaging an
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independent qualified professional valuer with financial and non-financial information we provided
such as historical financial performance, financial forecast and industry conditions as well as with
discussions on relevant assumptions, considering all information comprehensively including but not
limited non-market related information such as fair value of our ordinary shares, possibilities under
different scenarios, time to liquidation and discounts for lack of marketability, reviewing comparison
results of the equity fair value of our Company prepared by the valuer with recent implied financial
value of our Company.
Based on the above, and having considered the relevant facts, we are satisfied that the estimated
fair values resulting from the valuation technique recorded in the consolidated statement of financial
position and the relevant changes in fair values recorded in profit or loss, are reasonable, and that they
were the most appropriate values at the end of the Track Record Period.
The Reporting Accountants have conducted their work in accordance with HKSIR 200 issued
by HKICPA to express an opinion on the Group’s historical financial information included in the
Historical Financial Information. This standard requires that the Reporting Accountants plan and
perform their work to obtain reasonable assurance about whether the Historical Financial Information
as a whole is free from material misstatement.
Details of the valuation measurement of financial assets at FVPL and financial liabilities at
FVPL, particularly the valuation techniques and key inputs are disclosed in Note 17, Note 18 and Note
29 to the Accountants’ Report in Appendix I to this prospectus. The Reporting Accountants’ opinion
on our historical financial information for the Track Record Period as whole is set out in the Appendix
I to this prospectus.
The Joint Sponsors have conducted relevant independent due diligence work in relation to the
level 3 fair value measurement, including but not limited to: (i) reviewed the relevant notes included in
the Accountants’ Report as contained in Appendix I to this prospectus; (ii) discussed and conducted
due diligence with our Company on the primary factors taken into account by us, key assumptions,
parameters and methodologies adopted for the valuation of the level 3 financial assets, and the internal
control measures undertaken by us for reviewing and approving the relevant valuation; (iii) obtained
and reviewed the underlying contracts for the financial assets and liabilities; and (iv) discussed with the
Reporting Accountants in respect of the work performed in relation to the valuation of the level 3
financial assets for the purpose of reporting on the historical financial information of our Group for the
Track Record Period as a whole. Based on the due diligence work conducted by the Joint Sponsors as
stated above, and having considered the work performed by our management and audit procedures
carried out by the Reporting Accountants, nothing has come to the Joint Sponsors’ attention that would
cause the Joint Sponsors to question the valuation analysis in relation to the level 3 financial assets and
liabilities performed by us and the audit procedures carried out by the Reporting Accountants for the
purpose of expressing an opinion on the historical financial information of our Group as a whole.
DIVIDEND
We are a holding company incorporated under the laws of the BVI. As a result, the payment
and amount of any future dividends will also depend on the availability of dividends received from our
subsidiaries. PRC laws require that dividends be paid only out of the profit for the year determined
according to the Accounting Standards for Business Enterprises issued by the Ministry of Finance of
the People’s Republic of China. PRC laws also require foreign-invested enterprises to set aside at least
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10% of its after-tax profits, if any, to fund its statutory reserves until the aggregate amount of such fund
reaches 50% of its registered capital, which are not available for distribution as cash dividends.
Dividend distribution to our shareholders is recognized as a liability in the period in which the
dividends are approved by our shareholders or Directors, where appropriate. During the Track Record
Period, no dividends have been paid or declared by our Company.
Any future determination to pay dividends will be made at the discretion of our Directors and
may be based on a number of factors, including our future operations and earnings, capital requirements
and surplus, general financial condition, contractual r estrictions and other factors that our Directors may
deem relevant. Our BVI legal adviser has advised that, so long as we satisfy the solvency test, namely, (i)
the value of the our assets exceeds our liabilities, and (ii) we are able to pay our debts as they become due
immediately after the distribution, our Directors may authorize a distribution by way of dividend at a time
and of such an amount as they see fit, subject to our Memorandum and Articles. The declaration,
payment and amount of dividends will be subject to our Directors’ discretion, if they are satisfied, on
reasonable grounds, that immediately after the payment of the dividend, the value of our Company’s
assets will exceed its liabilities and our Company is able to pay its debts as they fall due. Investors should
not purchase our shares with the expectation of receiving cash dividends. We did not declare or pay any
dividends on our shares during the Track Record Period. Currently, we do not have a formal dividend
policy or a fixed dividend distribution ratio.
WORKING CAPITAL CONFIRMATION
Taking into account the financial resources available to us, including the estimated net proceeds
from the Global Offering, cash flow generated from operations, bank facilities available to us, cash and
cash equivalents on hand, financial assets at fair value through profit or loss, and after due and careful
enquiry, our Directors are of the view that we and our subsidiaries have sufficient working capital to
meet our present needs and for the next 12 months from the date of this document. Taking into account
the above, as well as based on the written confirmation from our Company in respect of working
capital sufficiency, the financial due diligence conducted on the financial information of our Group
during the Track Record Period and the discussion with our Directors, the Joint Sponsors concur with
our Directors’ view that we and our subsidiaries have sufficient working capital to meet our present
needs and for the next 12 months from the date of this document.
DISTRIBUTABLE RESERVES
We did not have any distributable reserves.
LISTING EXPENSES
Based on the Offer Price of HK$30.21 per share, the total estimated listing expenses in relation
to the Global Offering is approximately RMB143.1 million, assuming the Over-allotment Option is not
exercised. The total estimated listing expenses will represent approximately 19.9% of the total gross
proceeds from the Global Offering of approximately HK$778.6 million. Out of the total listing
expenses, we estimate RMB116.3 million will be charged to our consolidated statement of profit or
loss. The remaining balance of approximately RMB26.8 million, which mainly includes underwriting
commission, is expected to be accounted for as a deduction from equity upon the completion of the
Global Offering. These listing expenses mainly comprise professional fees paid and payable to the
professional parties for their services rendered in relation to the Listing and the Global Offering which
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FINANCIAL INFORMATION
are non-underwriting related expenses, including fees for legal advisers, Reporting Accountants and
internal control consultant of RMB77.4 million, and other non-underwriting-related fees of
RMB42.3 million, as well as the underwriting commission (including SFC transaction levy, AFRC
transaction levy, and Stock Exchange trading fee) of RMB23.4 million, payable to the Underwriters in
connection with the offering of Offer Shares under the Global Offering.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS
ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF OUR COMPANY
The following unaudited pro forma statement of adjusted net tangible assets of our Group is
prepared in accordance with Rule 4.29 of the Listing Rules and set out below to illustrate the effect of
the Global Offering on the consolidated net tangible liabilities attributable to equity shareholders of the
Company as at June 30, 2024 as if the Global Offering had taken place on June 30, 2024.
The unaudited pro forma statement of adjusted 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 at June 30, 2024 or at any
future date.
Consolidated net
tangible liabilities
attributable to equity
shareholders of the
Company as at
June 30, 2024 (1)
Estimated net
proceeds from
the Global Offering(2)
Estimated
impact to net
tangible
assets upon
reclassification
of convertible
redeemable
preferred
shares(3)
Unaudited
pro forma
adjusted net
tangible
assets
attributable
to equity
shareholders
of the
Company
Unaudited
pro forma
adjusted net
tangible
assets per
Share(4)
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$ (5)
Based on an Offer Price of
HK$30.21 per Share ......... (7,409,957) 660,935 7,407,194 658,172 0.74 0.80
Notes:
(1) The consolidated net tangible liabilities of the Group attributable to equity shareholders of the Company as of June 30, 2024 are calculated
based on the consolidated total deficit attributable to equi ty shareholders of the Company as of June 30, 2024 of RMB7,137,744,000
extracted from the Accountants’ Report set out in Appendix I to th is prospectus, after deduction of goodwill of RMB151,993,000 and
intangible assets of RMB157,995,000 and adjusting the share of int angible assets attributable to non-controlling interests of
RMB37,775,000.
(2) The estimated net proceeds from the Global Offering are based on 25,774,000 Shares to be issued pursuant to the Global Offering and
the Offer Price of HK$30.21 per Share, after deduction of the estimated underwriting fees and other related listing expenses paid or
payable by the Group (excluding the listing expenses that have been charged to profit or loss during the Track Record Period), assuming
the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive
Plans. The estimated net proceeds from the Global Offering are converted to Renminbi at the exchange rate of HK$1 to RMB0.9237. No
representation is made that the Hong Kong dollar amounts have been, could have been or may be converted into Renminbi, or vice versa,
at that rate.
(3) As at June 30, 2024, the carrying amount of the convertible redeemable preferred shares was RMB7,407,194,000 (as set out in Note 28
of Appendix I to this prospectus). Upon the Listing, the redeemable preferred shares will be automatically converted into ordinary shares
and will be reclassified from liabilities to equity.
(4) The unaudited pro forma adjusted net tangible assets per Share is arrived at after the adjustments referred to in the preceding paragraphs
and on the basis that 886,690,124 Shares were in issue (being the outstanding 525,150,000 ordinary shares as at June 30, 2024 ,
335,766,124 ordinary shares being converted from the outstanding redeemable preferred shares as at June 30, 2024 and 25,774,000
Shares to be issued pursuant to the Global Offering) assuming that the Global Offering and the conversion of redeemable preferred
shares into ordinary shares had been completed on June 30, 2024, and assuming the Over-allotment Option is not exercised, the
Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans.
(5) The unaudited pro forma adjusted net tangible assets per Share amounts in RMB are converted into Hong Kong dollar at a rate of
RMB1.00 to HK$1.0826. No representation is made that Renminbi amounts have been, could have been or may be converted to Hong
Kong dollar, or vice versa, at that rate.
(6) No adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to June 30, 2024.
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FINANCIAL INFORMATION
NO MATERIAL ADVERSE CHANGE
After performing sufficient due diligence work considered appropriate by our Directors and
after due and careful consideration, our Directors confirm that, up to the date of this document, there
has been no material adverse change in our financial or trading position or prospects since June 30,
2024, and there is no event since June 30, 2024 that would materially affect the information as set out
in the Accountants’ Report included in Appendix I to this document.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors confirm that, as of the Latest Practicable Date, there was no circumstance that
would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing Rules.
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CORNERSTONE INVESTOR
THE CORNERSTONE PLACING
We have entered into a cornerstone investment agreement (the “ Cornerstone Investment
Agreement”) with the cornerstone investor set out below (the “ Cornerstone Investor ”), pursuant to
which the Cornerstone Investor has agreed to, subject to certain conditions, subscribe, or cause its
designated entities to subscribe, at the Offer Price for such number of Offer Shares (rounded down to
the nearest whole board lot of 100 Shares) that may be purchased for an aggregate amount of
approximately US$39.06 million (or approximately HK$304.07 million, calculated based on an
exchange rate of US$1.00 to HK$7.7846) (exclusive of brokerage, the SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy) (the “ Cornerstone Investment ”o r
“Cornerstone Placing”).
We believe that the Cornerstone Placing demonstrates our Cornerstone Investor’s confidence in
our Company and its business prospect, and that the Cornerstone Placing will help to raise the profile
of our Company. DFI Development Holdings Limited is an indirect wholly-owned subsidiary of DFI
Retail Group, our customer and a minority shareholder of Retail Technology Asia (an insignificant
subsidiary of our Company whose total assets, profits and revenue accounted for less than 10% of our
Group for each of the latest three financial years) holding 30.5% equity interest thereof. Accordingly,
DFI Development Holding Limited will, upon the Listing, constitute a core connected person of the
Company under Rule 1.01 of the Listing Rules.
The Cornerstone Placing will form part of the International Offering, and the Cornerstone
Investor and its respective close associates will not subscribe for any Offer Shares under the Global
Offering (other than pursuant to the Cornerstone Investment Agreement). The Offer Shares to be
subscribed by the Cornerstone Investor will rank pari passu in all respects with the fully paid Shares in
issue following the Global Offering of the Company and will not be counted towards the public float of
our Company under Rule 8.08 of the Listing Rules. Immediately following the completion of the
Global Offering, the Cornerstone Investor or its close associates will not, by virtue of its cornerstone
investment, have any Board representation in our Company; and the Cornerstone Investor and its close
associates will not become a substantial Shareholder of our Company. Other than a guaranteed
allocation of the relevant Offer Shares at the final Offer Price, the Cornerstone Investor does not have
any preferential rights under its Cornerstone Investment Agreement, as compared with other public
Shareholders. There are no side arrangements or agreements between our Company and the
Cornerstone Investor or any benefit, direct or indirect, conferred on the Cornerstone Investor by virtue
of or in relation to the Listing, other than a guaranteed allocation of the relevant Offer Shares at the
final Offer Price, following the principles as set out in Chapter 4.15 of the Guide for New Listing
Applicants.
Save as otherwise disclosed, to the best knowledge of our Company, the Cornerstone Investor
is (i) not accustomed to take instructions from our Company or any of our Directors, chief executive of
our Company, our Controlling Shareholders, substantial Shareholders or existing Shareholders or any
of its subsidiaries or their respective close associates in relation to the acquisition, disposal, voting or
other disposition of the Shares registered in its name or otherwise held by it; (ii) not financed by our
Company or any of our Directors, chief executive of our Company, our Controlling Shareholders,
substantial Shareholders, existing Shareholders or any of its subsidiaries or their respective close
associates; and (iii) independent of our Group, our connected persons and their respective associates,
and not an existing Shareholder or a close associate of our Group.
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CORNERSTONE INVESTOR
As confirmed by the Cornerstone Investor, its subscription under the Cornerstone Placing
would be financed by its own internal financial resources and/or intra-group borrowing and it has
sufficient funds to settle its respective investment under the Cornerstone Placing. The Cornerstone
Investor 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) is required for its
Cornerstone Investment.
The Cornerstone Investor has agreed to pay for the relevant Offer Shares that it has subscribed
before dealings in the Company’s Shares commence on the Stock Exchange. There will be no delayed
delivery of the Offer Shares and no deferred settlement of payment of the investment amounts for the
Cornerstone Investor under the Cornerstone Investment Agreement.
The total number of Offer Shares to be subscribed by the Cornerstone Investor 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. If the total demand
for Shares in the Hong Kong Public Offering falls within the circumstance as set out in the section
headed “Structure of the Global Offering—The Hong Kong Public Offering—Reallocation” in this
prospectus, the Overall Coordinators have the absolute discretion, but not obliged, to deduct the
number of Offer Shares to be subscribed by the Cornerstone Investor on a pro rata basis under the
Hong Kong Public Offering pursuant to Practice Note 18 of the Listing Rules. Details of the actual
number of Offer Shares to be allocated to the Cornerstone Investor will be disclosed in the allotment
results announcement of our Company to be published on or around Thursday, December 5, 2024.
THE CORNERSTONE INVESTOR
The information about our Cornerstone Investor set forth below has been provided by the
Cornerstone Investor in connection with the Cornerstone Placing.
DFI DEVELOPMENT HOLDINGS LIMITED
DFI Development Holdings Limited is an indirect wholly-owned subsidiary of DFI Retail
Group. DFI Retail Group Holdings Limited has a primary listing in the equity shares (transition)
category of the London Stock Exchange, with secondary listings in Bermuda and Singapore. DFI
Retail Group is a leading pan-Asian retailer operating a number of well-known brands across food,
convenience, health and beauty, home furnishings, restaurants and other retailing in 13 Asian markets
and territories. DFI Retail Group is also a member of the Jardine Matheson group.
We have applied to the Stock Exchange for, and the Stock Exchange has granted us a waiver
from strict compliance with Rule 9.09(b) of the Listing Rules in relation to the subscription of the
Shares as a cornerstone investor by DFI Development Holdings Limited. Please refer to the section
headed “Waivers and Exemptions—Cornerstone Subscription by a Close Associate of a Substantial
Shareholder of our Subsidiary” in this prospectus for further details.
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CORNERSTONE INVESTOR
The table below sets forth details of the Cornerstone Placing:
Based on the Offer Price of HK$30.21 per Offer Share
Cornerstone Investor
Subscription
amount
(US$ in millions)
Number of
Offer Shares (1)
Assuming the Over-allotment
Option is not exercised
Assuming the Over-allotment
Option is exercised in full
Approximate %
of the Offer
Shares
Approximate %
of the issued
share capital (2)
Approximate %
of the Offer
Shares
Approximate %
of the issued
share capital (2)
DFI Development
Holdings Limited . . . 39.06 10,065,000 39.05 1.14% 33.96% 1.13%
Total ............... 39.06 10,065,000 39.05 1.14% 33.96% 1.13%
Notes:
(1) Subject to rounding down to the nearest whole board lot of 100 Offer Shares. Calculated based on the exchange rate set out in the section
headed “Information about this document and the Global Offering—Exchange Rate Conversion”. The actual investment amount in Hong
Kong dollars, the number of Shares agreed to be subscribed for, percentage to the initial number of Offer Shares, and percentage to the
enlarged number of Shares in issue immediately upon completion of the Global Offering may change due to the actual exchange rate to
be used as prescribed in the Cornerstone Investment Agreement.
(2) Immediately upon completion of the Global Offering, assuming the Convertible Bond is not converted and no Shares are issued under
the Share Incentive Plans.
CLOSING CONDITIONS
The obligation of the Cornerstone Investor to subscribe for the Offer Shares under its
Cornerstone Investment Agreement is subject to, among other things, the following closing conditions:
(a) the Underwriting Agreements 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 Underwriting Agreements, and neither of the aforesaid Underwriting
Agreements having been terminated;
(b) the Offer Price having been agreed upon between our Company and the Overall
Coordinators (on behalf of themselves and the underwriters of the Global Offering);
(c) the Listing Committee of the Stock Exchange having granted the approval for the listing
of, and permission to deal in, the Shares (including the Shares subscribed for by the
Cornerstone Investor) 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 Shares on the Stock Exchange;
(d) no laws, rules or rulings shall have been enacted or promulgated by any governmental
authority (including, without limitation, the Stock Exchange, the SFC, and the CSRC) of
all relevant jurisdictions which prohibits the consummation of the transactions
contemplated in the Global Offering or in the respective Cornerstone Investment
Agreement 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 acknowledgements, representations, warranties, undertakings and confirmations of
such Cornerstone Investor under the Cornerstone Investment Agreement are accurate and
true in all respects and not misleading and that there is no material breach of the
Cornerstone Investment Agreement on the part of such Cornerstone Investor.
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CORNERSTONE INVESTOR
RESTRICTIONS ON THE CORNERSTONE INVESTOR
The Cornerstone Investor has agreed that it will not, and will cause its affiliates not to, whether
directly or indirectly, at any time during the period of six months from (and inclusive of) the Listing
Date (the “ Lock-up Period ”), dispose of, in any way, any of the Offer Shares or any interest in any
company or entity holding such Offer Shares that it has purchased pursuant to the Cornerstone
Investment Agreement, 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 Investor, including
the Lock-up Period restriction.
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FUTURE PLANS AND USE OF PROCEEDS
FUTURE PLANS
See the section headed “Business—Our Strategies” in this document for a detailed discussion
of our future plans.
USE OF PROCEEDS
With an Offer Price of HK$30.21 per Offer Share, we estimate that we will receive net
proceeds of approximately HK$623.7 million from the Global Offering after deducting the
underwriting commissions and fees, and other estimated expense in connection with the Global
Offering and assuming that the Over-allotment Option is not exercised. In line with our strategies, we
intend to use our proceeds from the Global Offering for the purposes and in the amounts set out below:
 Approximately 42.1%, or HK$262.6 million, will be allocated to develop new applications
and new service modules. More specifically, we intend to use:
 Approximately 22.0%, or HK$137.2 million, to develop functionalities that propel our
overseas expansion and enhance our solutions’ capabilities through improving our
existing offerings, and creating market-particular applications or modules that suits the
unique needs of our overseas customers. For example, we have entered the markets of
Brunei and Indonesia in 2024. We intend to deepen our local know-hows and launch
innovative solutions specifically designed for our target overseas customers.
 Approximately 16.8%, or HK$104.8 million, to hire approximately 160 research
and development personnel with overseas industry experience to develop
modules in support of our overseas development in Macau SAR, Hong Kong
SAR, Southeast Asia, including Cambodia, Singapore, Malaysia, Indonesia, the
Philippines and Brunei and the EMEA area, including Poland and the United
Arab Emirates. In particular, we plan to enlarge our overseas project team with a
focus on overseas products localization and customization by hiring
approximately 55 product and projects managers with an average salary of
HK$0.7 million per employee per year, including: (i) 13 for ERP management
service; (ii) 27 for IT support service; and (iii) 15 for data middleware service by
the end of 2027. In order to achieve better product localization, including local
language version Dmall OS system, and consistently upgrade the system to
incorporate latest industry best practices, we also plan to hire approximately
4 research and development personnel, including: (i) 2 for EMEA local
implementation with an average salary of HK$0.8 million per employee per
year; and (ii) 2 for Southeast Asia local implementation with an average salary
of HK$0.6 million per employee per year with local expertise for continuous
business development and customer base expansion. We also plan to hire
approximately 101 employee for technological support and system maintenance
for overseas operations with an average salary of HK$0.7 million per employee
per year by the end of 2027. Part of the proceeds will be used on investments in
building relevant workspace and necessary equipment for the overseas team,
including renting office spaces, purchasing devices, hardware equipment, testing
machines and software licenses.
 Approximately 1.0%, or HK$6.2 million, to repair and upgrade our information
technology infrastructure.
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FUTURE PLANS AND USE OF PROCEEDS
 Approximately 4.2%, or HK$26.2 million, to enhance technological capabilities
and strengthen our data privacy agreements and information security
management to strengthen our ability to adapt to market conditions, including
but not limited to engage third-party data compliance advisor for system testing,
enhance firewall construction to upgrade anti-attack capability as well as avoid
system downtime, and consistently refine security system to ensure IT security,
information security, system security and IAM security.
 Approximately 13.1%, or HK$81.7 million, to develop new modules or upgrade
existing modules to drive smart operation and automation that meet the evolving
demand of our customers and increase our customers’ operating efficiency. We also
intend to develop solutions especially catered to various retail platforms and adaptive
to different retail scenarios, including local retail industry participants such as
specialized chain stores, community convenient stores, etc.
 Approximately 8.4%, or HK$52.4 million, to upgrade and enhance our operating
system modules and functionalities to cover more retail scenarios, cater different
customers’ needs, increase product compatibility and fulfill ESG
responsibilities. As a result, we expect to hire approximately 80 additional
domestic research and development engineers, with an average salary of
HK$0.7 million per employee per year, including (i) 56 for system development;
(ii) 15 for general purposes; and (iii) 9 for system upgrading. The additional
personnel will be responsible for upgrading the scalability and on upgrading
Dmall OS system for new retail format clients and enhance intelligent supply
chain as well as omni-channel marketing product offerings in our existing
service matrix. The expansion of headcounts in this team is expected to help us
maintain and enhance competitiveness in product offerings. Part of the proceeds
will be used on investments in building relevant workspace and necessary
equipment for the domestic team, including renting office spaces, purchasing
devices, hardware equipment, cloud resources and software licenses.
 Approximately 0.6%, or HK$3.7 million, to repair and upgrade our information
technology infrastructure.
 Approximately 4.1%, or HK$25.6 million, to purchase more storage services
and to develop more efficient algorithm to support our research and
development efforts, and to further enhance our research and development
efficiency. Additionally, we plan on investing in our internal system to improve
our internal information management, strengthen our data privacy agreements
and information security management.
 Approximately 7.0%, or HK$43.7 million, to enhance research and development
efforts in technologies such as AIoT and data analytics to accelerate
commercialization of our products and solutions across different retail formats and
increase the profitability potential of our solutions.
 Approximately 7.0%, or HK$43.7 million, to hire approximately 110 research
and development staffs with an average salary of HK$0.4 million per employee
per year, including (i) 38 for system maintenance, (ii) 14 for system
development, (iii) 14 for general purposes, (iv) 21 for technical service, and
(v) 23 for system upgrading. They will focus on the development and
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FUTURE PLANS AND USE OF PROCEEDS
enhancement of security related AIoT solutions, including the current intelligent
loss prevention solutions and other security and protection solutions and manage
the research and design of various new product offering lines, including
intelligent cleaning solutions, intelligent merchandise replenishment solutions,
intelligent package sorting solutions and intelligent cashier solutions. This will
help our retailer customers to establish fully digitalized retail locations to
improve their operational efficiency.
 Approximately 30.0%, or HK$187.1 million, will be allocated to talent acquisition
associated with the expansion of our operations. The additional headcounts are mostly
related to the growth of our retail core service cloud which has higher margin than our e-
commerce service cloud solutions. As a result, our overall margin would likely improve
given the deployment of additional headcount to grow our higher margin retail core
service cloud segment. In addition, the growth in business will lead to greater economy of
scale and higher efficiency from operating expense as a percentage of revenue.
Historically, we have a track record of improving our cost structure and we will continue
to focus on productivity and efficiency on a per headcount basis, ensuring overall
profitability is not impaired even with additional hiring.
 Approximately 16.8%, or HK$104.8 million, to hire approximately 162 execution
experts with overseas implementation and execution experience as well as Project
Management Professional Certificate with an average salary of approximately
HK$0.7 million per employee per year by the end of 2027. The execution experts will
be responsible for managing the full-spectrum execution work for the projects,
including technical proposal design and market analysis at the beginning, on-site
deployment and testing for the system, quality assurance for consistency with original
design roadmap, and technical training and support services after deployment.
Approximately 128 of them will be responsible for the different projects and products
to ensure seamless customer experience and coordinate resources both internally and
externally, including (i) 8 for ERP management service; (ii) 53 for POS system
service; (iii) 34 for store management service; and (iv) 33 for warehouse management
system service. Additionally, approximately 34 execution experts will be responsible
for local implementation, including 15 for EMEA area and 19 for Southeast Asia.
 Approximately 3.5%, or HK$21.8 million, to establish a customer success team with
approximately 55 customer success specialists to provide corresponding customer
service with an average salary of HK$0.5 million per employee per year by the end of
2027, including front-tier sales professionals and back-office sales management
professionals with relevant sales experience. Of the 55 customer success specialists,
(i) 8 of them would be responsible for ERP management service; (ii) 20 of them
would be responsible for POS system service; (iii) 7 of them would be responsible for
store management service; (iv) 15 of them would be responsible for warehouse
management service; and (v) 5 of them would be responsible for data middleware
service. Part of the proceeds will also be used to provide professional trainings for
our service team to improve their capabilities in providing high-quality customer
service, which further enables us to enhance customer loyalty and stickiness.
We expect the demand for overseas implementation and execution team to increase
alongside the rapid expansion of our overseas business operations. Increasing
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FUTURE PLANS AND USE OF PROCEEDS
headcount for overseas local implementation and execution teams to service more
geographic locations and customers would also allow us to improve our service
efficiency and results.
 Approximately 2.4%, or HK$15.0 million, to provide travel expenses and allowances
for our overseas implementation and execution personnel.
 Approximately 7.3%, or HK$45.5 million, to hire approximately 114 AIoT
operations personnel in Beijing and Wuhan by the end of 2027 with an average salary
of US$0.5 million per employee per year. We expect these personnel to support and
execute our AIoT solutions. Approximately 16 of the operation personnel will be
responsible for the deployment of security related AIoT solutions, including the
current intelligent loss prevention solutions and other security and protection
solutions. The remaining personnel will manage the operation of various new product
lines, including (i) 42 for intelligent cashier solutions and intelligent package sorting
solutions; (ii) 16 for intelligent cleaning solutions; and (iii) 40 for intelligent delivery
solutions. By implementing such plans, we expect to incur additional expenses
related to employees’ salary and compensation as well as other administrative
expenses. We believe such investment is indispensable to the rapid expansion of our
product offerings. Moreover, as our operational team grows, we may incur additional
office rental, equipment procurement and utility expenses accordingly. However,
such impact will be gradually mitigated through increased sales efficiency, which
brings enlarged customer base through improved customer experience, and ultimately
drives our revenue and profit margin in the long run.
 Approximately 10.0%, or HK$62.4 million, will be allocated to selectively pursue
strategic cooperation, investments and acquisitions that are complementary to our organic
growth strategies, particularly those that can complement our product offerings, strengthen
our technology capabilities, and solidify our market position. We intend to focus on
players with a solid track record and significant growth potential to achieve synergies. In
selecting investment targets or partners, we generally consider factors including suitability
with our strategic planning, degree of potential synergies, market position, management
team experience, valuation, historical operating metrics, and financial performance.
Through strategic acquisition and cooperation, we aim to further enhance our products and
services and strengthen our market leadership. Our strategy is to actively and prudently
expand our business by focusing on our retail core service cloud solutions, while taking
into account our actual development and national policy guidance. When selecting
potential targets, we will concentrate on companies that (i) possess all necessary business
qualifications and comply with relevant laws and regulations in their respective operating
jurisdictions. They should also have sound financial controls and management; (ii)
specialize in providing digital solutions and related services for local retailers in the retail
industry; (iii) host products based on advanced technologies such as artificial intelligence,
big data analysis, the Internet of Things, and cloud computing, which can be integrated
with our products to further deepen our engagement with customers and increase our share
of wallet; (iv) have business coverage areas that match our market expansion plans, and
can help promote our business development in China and overseas; (v) have a
management team with rich industry experience, stable financial performance, and growth
potential; and (vi) have a good brand image and reputation with no major negative
publicity. Currently, we have not identified any potential investment or acquisition targets.
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FUTURE PLANS AND USE OF PROCEEDS
 Approximately 10.0%, or HK$62.4 million, to seek overseas strategic alliances,
investments and/or acquisitions with entities that complement our operations and
align with our strategies. We plan on focusing on opportunities that could help
enhance our one-stop, omni-channel retail core service cloud solutions and realize
opportunities that provide long-term sustainable development. When selecting targets
for strategic alliance, investments and/or acquisitions, we consider a number of
factors, including but not limited to: (i) the target has the ability to achieve synergy
with our current business operations, including but not limited to service solution
providers serving small and medium sized enterprises with digital tools. We intend to
invest in targets with strong research and development ability and mature products
well recognized by the market, (ii) the target’s geographic coverage. We will
prioritize in assessing potential acquisition or investment targets located within
economically developed regions with a wide coverage of diverse retail formats where
we believe there exist significant growth potential. Through cooperating with targets
having deep connections with retailers and in-depth market insights, we can cover
more retail formats and increase profitability, (iii) the target’s financial performance.
We will consider target companies’ operating performance, including profitability
and compliance record. We will prioritize companies with high quality customer
base, strong retention rate and effective risk management ability. We believe that
acquiring or establishing strategic alliances with these market players will generate
synergistic effect and expand our customer network and increase potential for
monetization, and (iv) the target has a stable, mature and efficient management team
that could complement our current management team and engage in sophisticated
collaboration. We expect the management team of the target companies to possess
strong execution capabilities and experience in managing complex retailers.
According to Frost & Sullivan, such investment opportunities exist, and it is expected
that there are more than one hundred potential targets that meet our expectations. By
2025, we expect to complete one to three strategic alliances, investments and/or
acquisitions. For potential acquisitions, we plan on acquiring targets valued between
HK$200.0 million to HK$500.0 million, and will determine whether to acquire a
controlling shareholding or a minority shareholding depending on the target’s
particular circumstances.
 Approximately 7.9%, or HK$49.3 million, will be allocated to expand our sales network
and further strengthen our brand reputation. More specifically, we intend to use:
 Approximately 5.7%, or HK$35.6 million, to expand our overseas business
development team by approximately 24 offline sales personnel with local market
know-how to expand our businesses into unaddressed global markets. Our overseas
team will help build up our brand image as a superior omni-channel retail
digitalization solution provider that services our local retail service industry
customers with a global outlook.
 Approximately 3.0%, or HK$18.7 million, to expand our sales team and to
improve our sale training system to reinforce our sales network and to expand
our overseas services as well as expand our growing customer base. In
particular, we plan on hiring approximately 24 offline sales personnel who are
familiar with the local market and our target customers with an average salary of
HK$0.9 million per employee per year. The 24 sales personnel include business
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FUTURE PLANS AND USE OF PROCEEDS
development managers focusing on exploring new business opportunities and
market expansion, sales consultants focusing on providing solution packages
and achieving sales, as well as sales support engineers responsible for providing
technical support and service for customers during the sales process. Among the
24 sales personnel, (i) 8 of them would be responsible for Southeast Asia
customers, (ii) 11 of them would be responsible for EMEA customers, and (iii) 5
of them would be responsible for customers in China.
 Approximately 2.7%, or HK$16.8 million, to elevate our international brand
awareness and industry influence through marketing and promotions, in order to
enhance customer interest and increase customer engagement.
 Approximately 2.2%, or HK$13.7 million, to enhance our overall brand image and
promote greater brand awareness among potential customers in the local retail
industry, by intensifying our marketing efforts via diversified channels.
 Approximately 2.2%, or HK$13.7 million, to increase our investment in online
advertising and promotions. We plan on using diversified channels, such as
industry conference, developers events and trade expos to showcase our brand
and our products to our target customers and merchants and to further increase
public awareness of our brand and services in domestic markets. We will
continue to use social media platforms to promote our products. We will also use
websites and third-party platforms to deploy banner advertisements and other
formats of advertisements to increase our exposure.
 Approximately 10.0%, or HK$62.4 million, will be used for working capital and general
corporate purposes.
In the event that the Over-allotment Option is exercised in full, we will receive additional net
proceeds of approximately HK$113.0 million.
Additional net proceeds received due to the exercise of any Over-allotment Option will be used
for the above purposes accordingly on a pro rata basis in the event that the Over-allotment Option is
exercised. In the event that net proceeds from the Global Offering is insufficient to fund use of
proceeds for the purposes described above, we will fund the remaining amount using our working
capital.
To the extent that the net proceeds of the Global Offering are not immediately used for the
purposes described above and to the extent permitted by the relevant laws and regulations, we will only
deposit the net proceeds in short-term interest bearing accounts at licensed commercial banks and/or
other authorized financial institutions (as defined under the Securities and Futures Ordinance/the
applicable laws and regulations in other jurisdictions). In such event, we will comply with the
appropriate disclosure requirements under the Listing Rules.
We will issue an appropriate announcement if there is any material change to the above
proposed use of proceeds.
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UNDERWRITING
HONG KONG UNDERWRITERS
UBS AG Hong Kong Branch
CMB International Capital Limited
China Merchants Securities (HK) Co., Limited
CLSA Limited
China International Capital Corporation Hong Kong Securities Limited
CCB International Capital Limited
CMBC Securities Company Limited
Haitong International Securities Company Limited
ABCI Securities Company Limited
BOCI Asia Limited
BOCOM International Securities Limited
Central China International Securities Co., Limited
China Galaxy International Securities (Hong Kong) Co., Limited
Futu Securities International (Hong Kong) Limited
GF Securities (Hong Kong) Brokerage Limited
ICBC International Securities Limited
Orient Securities (Hong Kong) Limited
Patrons Securities Limited
Ruibang Securities Limited
Shenwan Hongyuan Securities (H.K.) Limited
SPDB International Capital Limited
Tiger Brokers (HK) Global Limited
UOB Kay Hian (Hong Kong) 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.
The Global Offering comprises the Hong Kong Public Offering of initially 2,577,400 Hong
Kong Offer Shares and the International Offering of initially 23,196,600 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 as well as to the Over-allotment Option in the case of the
International Offering.
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
The Hong Kong Underwriting Agreement was entered into on Tuesday, November 26, 2024.
Pursuant to the Hong Kong Underwriting Agreement, we are offering the Hong Kong Offer Shares for
subscription by the public in Hong Kong on the terms and conditions set out in this prospectus and the
Hong Kong Underwriting Agreement at the Offer Price.
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UNDERWRITING
Subject to (i) the Listing Committee granting approval for the listing of, and permission to deal
in, (a) the Shares in issue and to be issued pursuant to Global Offering (including any additional Shares
that may be issued pursuant to the exercise of the Over-allotment Option), (b) the Shares which may be
issued upon conversion of the Convertible Bond and (c) the Shares to be issued pursuant to the Share
Incentive Plans on the Main Board of the Stock Exchange and such approval not having been
withdrawn and (ii) certain other conditions set out in the Hong Kong Underwriting Agreement, the
Hong Kong Underwriters have agreed severally, but not jointly, to subscribe or procure subscribers for
their respective applicable proportions of the Hong Kong Offer Shares being offered which are not
taken up under the Hong Kong Public Offering on the terms and conditions set out in this prospectus
and the Hong Kong Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional on, amongst other things, the
International Underwriting Agreement having been signed and becoming unconditional and not having
been terminated in accordance with its terms.
Grounds for Termination
If any of the events set out below shall occur at any time prior to 8:00 a.m. on the Listing Date,
the Overall Coordinators (for themselves and on behalf of the other Hong Kong Underwriters) in their
sole and absolute discretion may, by giving a written notice to our Company, terminate the Hong Kong
Underwriting Agreement with immediate effect:
a. there develops, occurs, exists or comes into force:
i. any event or series of events or circumstances in the nature of force majeure
(including, without limitation, any acts of government, paralysis in government
operations, declaration of a regional, national or international emergency or war,
calamity, crisis, epidemic, pandemic, outbreaks of diseases or its escalation,
mutation or aggravation (including, without limitation, COVID-19, Severe Acute
Respiratory Syndrome (SARS), swine or avian flu, H5N1, H1N1, H1N7, H7N9,
Ebola virus, Middle East respiratory syndrome (MERS) and such related/mutated
forms), accidents or prolonged interruption or delay in transportation, economic
sanctions, strikes, labor disputes, lock-outs, fire, explosion, flooding, earthquake,
volcanic eruption, civil commotion, riots, 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 directly or
indirectly Hong Kong, the PRC, the United States, the United Kingdom, the
European Union (or any member thereof), Singapore, Japan, BVI or any other
jurisdiction relevant to any member of our Group (collectively, the “ Relevant
Jurisdictions”);
ii. any change or development involving a prospective change, or any event or
circumstance or series of events or circumstances resulting or likely to result in or
representing any change or development involving a prospective change, in or
affecting any local, national, regional or international financial, economic, political,
military, industrial, legal, fiscal, regulatory, currency, credit or market matters or
conditions, equity securities or taxation or currency rates or foreign exchange
regulations or exchange control or any monetary or trading settlement system or
other financial markets (including, without limitation, a change in the stock and bond
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UNDERWRITING
markets, money and foreign exchange markets, the interbank markets and credit
markets), in or affecting any of the Relevant Jurisdictions;
iii. 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 York
Stock Exchange, the NASDAQ Global Market, the London Stock Exchange, the
Shanghai Stock Exchange or the Shenzhen Stock Exchange;
iv. any general moratorium on commercial banking activities in or affecting any
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 those places or jurisdictions;
v. any new law or regulation or any change or development involving a prospective
change in existing laws or regulations or any change or development involving a
prospective change in (or in the interpretation or application thereof by any court or
governmental authority of) existing law or regulations, in each case, in or affecting
any of the Relevant Jurisdictions;
vi. the imposition of economic sanctions, or the withdrawal of trading privileges, in
whatever form, directly or indirectly, by, or for, any of the Relevant Jurisdictions;
vii. 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
HK dollar, U.S. dollar or Renminbi against any foreign currencies), or the
implementation of any exchange control, in or affecting any of the Relevant
Jurisdictions;
viii. the issue or requirement to issue by our Company of a supplement or amendment to
this prospectus or other documents in connection with the offer and sale of the
Shares pursuant to the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance or the Listing Rules or upon any requirement
or request of the Stock Exchange and/or the SFC;
ix. an order or petition 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 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;
x. any 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;
xi. any contravention by our Company, any member of our Group, or any Director of
any law or the Listing Rules;
xii. non-compliance of the this prospectus (or any other documents used in connection
with the contemplated subscription and sale of the Offer Shares), the CSRC Filings
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UNDERWRITING
(as defined in the Hong Kong Underwriting Agreement) (“ CSRC Filings ”) or any
aspect of the Global Offering with the Listing Rules, the Companies Ordinance, the
Companies (Winding Up and Miscellaneous Provisions) Ordinance, the CSRC Rules
(as defined in the Hong Kong Underwriting Agreement) (“ CSRC Rules ”) or any
other applicable laws; or
xiii. any litigation, dispute, legal action or claim being threatened or instigated by any
third party against any member of our Group,
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), (1) has or
will have or may have a material adverse effect on the assets, liabilities, business, general
affairs, management, shareholder’s equity, profits, losses, prospects, results of operations,
financial, operational or trading position or condition or performance, of our Group as a
whole, or (2) 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 (3) 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 offering documents in
connection with the Global Offering, or (4) has or will have or may have the effect of
making any part of the Hong Kong Underwriting Agreement (including underwriting), the
Hong Kong Public Offering or the International Offering incapable of performance in
accordance with its terms or preventing or delaying the processing of applications and/or
payments pursuant to the Global Offering or pursuant to the underwriting thereof; or
b. there has come to the notice of the Overall Coordinators:
i. that any statement contained in this prospectus, the formal notice of our Company
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 (including any
supplement or amendment thereto, but excluding the information relating to the
Underwriters for use in such documents, namely legal name, logo and address of such
underwriters) was, when it was issued, or has become, untrue, incorrect, inaccurate or
incomplete in any material respect or misleading, or that any estimate, forecast,
expression of opinion, intention or expectation contained in such documents is not
fair and honest and based on reasonable grounds or reasonable assumptions;
ii. that any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this prospectus, constitute a material
omission from, or misstatement in, this prospectus, the formal notice of our Company
and/or in any notices, announcements, advertisements, communications or other
documents issued or used by or on behalf of our Company in connection with the
Hong Kong Public Offering (including any supplement or amendment thereto);
iii. any breach of any of the obligations imposed upon any party to the Hong Kong
Underwriting Agreement or the International Underwriting Agreement (other than
upon any of the Overall Coordinators or the Underwriters);
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UNDERWRITING
iv. any event, act or omission which gives or is likely to give rise to any liability of any
of our Company and our Controlling Shareholders (as applicable) pursuant to the
indemnities given by any of them under the Hong Kong Underwriting Agreement or
the International Underwriting Agreement, as applicable;
v. that there is any material adverse change, or any development involving a prospective
material adverse change, in or affecting the assets, liabilities, business, general
affairs, management, prospects, shareholders’ equity, profits, losses, results of
operations, position or condition, financial or otherwise, or performance of the
Company and the other members of the Group, taken as a whole (“ Material Adverse
Change”) or development involving a prospective Material Adverse Change;
vi. any breach of, or any event or circumstance rendering untrue, inaccurate or incorrect
or misleading in any respect, any of the representations, warranties, agreements and
undertakings given by any of our Company or our Controlling Shareholders (as
applicable) in the Hong Kong Underwriting Agreement or the International
Underwriting Agreement, as applicable;
vii. the chairman, the president, the chief financial officer, any other Directors, other
members of senior management of our Company or Dr. Zhang vacating his or her
office or role within the Company;
viii. any Director or member of senior management of our Company or Dr. Zhang being
charged with an indictable offense or prohibited by operation of law or otherwise
disqualified from taking part in the management of a company or the commencement
by any governmental, political, regulatory body of any action against Dr. Zhang or
any Director or member of senior management in his or her capacity as such or any
member of our Group or an announcement by any governmental, political,
regulatory body that it intends to take any such action;
ix. a prohibition on our Company for whatever reason from offering, allotting, issuing or
selling any of the Offer Shares (including the additional Shares which may be issued
pursuant to the exercise of the Over-allotment Option) pursuant to the terms of the
Global Offering;
x. that the approval by or agreement to approve by the Listing Committee of the listing of,
and permission to deal in, (i) the Shares in issue and to be issued pursuant to the Global
Offering (including the additional Shares which may be issued pursuant to the exercise
of the Over-allotment Option), (ii) the Shares to be issued upon any conversion of the
Convertible Bond and (iii) the Shares to be issued pursuant to the Share Incentive Plans
is refused or not granted, other than subject to customary conditions, on or before the
Listing Date, or if granted, the approval is subsequently withdrawn, canceled, qualified
(other than by customary conditions), revoked or withheld;
xi. that any of the Reporting Accountants, the Industry Consultant or any of the counsels
or experts has withdrawn its respective consent to the issue of this 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;
xii. that our Company withdraws this prospectus (and/or any other documents issued or
used in connection with the Global Offering) or the Global Offering;
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UNDERWRITING
xiii. any order or petition for the winding-up or liquidation of any material member of our
Group or any composition or arrangement made by any material member of our
Group with its creditors or a scheme of arrangement entered into by any material
member of our Group or any resolution for the winding-up of any material 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 material member of our Group or anything
analogous thereto occurring in respect of any material member of our Group; or
xiv. (A) the notice of acceptance of the CSRC Filings issued by the CSRC and/or the
results of the CSRC Filings published on the website of the CSRC is rejected,
withdrawn, revoked or invalidated; or (B) other than with the prior written consent of
the Overall Coordinators, the issue or requirement to issue by our Company of a
supplement or amendment to the CSRC Filings pursuant to the CSRC Rules or upon
any requirement or request of the CSRC; or (C) any non-compliance of the CSRC
Filings with the CSRC Rules or any other applicable laws.
Undertakings to the Stock Exchange pursuant to the Listing Rules
(A) Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange that we
will not, at any time within six months from the Listing Date, issue any Shares or other securities
convertible into equity securities of us (whether or not of a class already listed) or enter into any
agreement or arrangement to issue any Shares or such other securities (whether or not such issue of the
Shares or such other securities will be completed within six months from the Listing Date), except
pursuant to the Global Offering (including the exercise of the Over-allotment Option) or under any of
the circumstances provided under Rule 10.08 of the Listing Rules.
(B) Undertakings by our Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, each of our Controlling Shareholders has
undertaken to the Stock Exchange and to us that, except pursuant to the Global Offering or for any
lending of Shares pursuant to the Stock Borrowing Agreement, he/it will not (and will procure that the
relevant registered holder(s) will not):
(i) in the period commencing on the date by reference to which disclosure of his or its
shareholding in our Company is made in this prospectus and ending on the date which is
six months from the Listing Date, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of the
Shares in respect of which he/it is shown by this prospectus to be the beneficial owner (as
defined in Rule 10.07(2) of the Listing Rules); and
(ii) during the period of six months commencing on the date on which the period referred to in
paragraph (i) above expires, dispose of, nor enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of, any of the
Shares or securities referred to in the immediately preceding paragraph (i) above if,
immediately following such disposal or upon the exercise or enforcement of such options,
rights, interests or encumbrances, he/it would cease to be a Controlling Shareholder of our
Company,
in each case, save as permitted under the Listing Rules.
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UNDERWRITING
Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, each of our Controlling Shareholders
has undertaken to the Stock Exchange and to us that, within the period commencing on the date by
reference to which disclosure of his/its shareholding in us is made in this prospectus and ending on the
date which is 12 months from the date on which dealings in the Shares commence on the Stock
Exchange, he/it will:
(a) when he/it pledges or charges any Shares or other securities beneficially owned by him/it
in favor of an authorized institution (as defined in the Banking Ordinance (Chapter 155 of
the Laws of Hong Kong)) pursuant to Note 2 to Rule 10.07(2) of the Listing Rules for a
bona fide commercial loan, immediately inform us of such pledge or charge together with
the number of the Shares or securities so pledged or charged; and
(b) when he/it receives indications, either verbal or written, from the pledgee or chargee of
any Shares that any of the pledged or charged Shares or securities will be disposed of,
immediately inform us of such indications.
Undertakings Pursuant to the Hong Kong Underwriting Agreement
Undertakings by our Company
Lock-up on our Company
Our Company has undertaken to the Overall Coordinators, the Joint Global Coordinators, the
Joint Sponsors, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters, the
Capital Market Intermediaries and each of them not to (save for (a) the issue, offer, or sale of the Offer
Shares pursuant to the Global Offering, including pursuant to the exercise of the Over-allotment
Option, (b) any Shares issued upon the conversion of the Convertible Bond, and (c) any Shares which
may be issued pursuant to the Share Incentive Plans) and will procure the subsidiaries of our Company
not to, without the prior written consent of the Overall Coordinators (for themselves and on behalf of
the Hong Kong Underwriters) and unless in compliance with the Listing Rules, at any time during the
period commencing on the date of the Hong Kong Underwriting Agreement and ending on, and
including, the date falling six months after the Listing Date (the “ First Six-Month Period”):
(i) offer, allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, mortgage, charge, pledge, hypothecate, hedge, lend, grant or
sell any option, warrant, right or contract to subscribe for or purchase, grant or purchase
any option, warrant, right or contract to allot, issue or sell, 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 legal
or beneficial interest in any Shares or other securities of our Company, or any interest 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 other securities of our Company), or deposit any
Shares or other securities of our Company with a depositary in connection with the issue
of depositary receipts; or
(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 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
other securities of our Company); or
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UNDERWRITING
(iii) enter into any transaction with the same economic effect as any transaction specified in
paragraphs (i) or (ii) above; or
(iv) offer to or agree to or contract to or announce, or publicly disclose any intention to enter
into or effect any such transaction specified in paragraphs (i), (ii) or (iii) above,
in each case, whether any such transaction specified in paragraphs (i), (ii) or (iii) above is
to be settled by delivery of the Shares or other securities of our Company in cash or otherwise
(whether or not the issue of such Shares or securities will be completed within the First
Six-Month Period).
In the event that, during the six-month period immediately following the First Six-Month
Period (the “ Second Six-Month Period ”), our Company enters into any transactions specified in
paragraphs (i), (ii) or (iii) above or offers or agrees or contracts to, or announces, or publicly discloses,
any intention to, enter into any such transactions, our Company will take all reasonable steps to ensure
that it will not create a disorderly or false market in the securities of our Company.
Maintenance of public float
Each of our Company and our Controlling Shareholders has undertaken to the Overall
Coordinators, the Joint Global Coordinators, the Joint Sponsors, the Joint Bookrunners, the Joint Lead
Managers, the Hong Kong Underwriters, the Capital Market Intermediaries and each of them that he/it
will not effect any purchase of Shares, or agree to do so, which may reduce the holdings of the Shares
held by the public (as defined in Rule 8.24 of the Listing Rules) below the minimum public float
requirements specified in the Listing Rules (subject to modification by any waiver granted and not
revoked by the Stock Exchange) on or before the date falling six months after the Listing Date without
first having obtained the prior written consent of the Overall Coordinators (for themselves and on
behalf of the Hong Kong Underwriters).
Undertakings by our Controlling Shareholders
Each of our Controlling Shareholders agrees and has undertaken to our Company, the Overall
Coordinators, the Joint Global Coordinators, the Joint Sponsors, the Joint Bookrunners, the Joint Lead
Managers, the Hong Kong Underwriters and the Capital Market Intermediaries that, without the prior
written consent of the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) and unless in compliance with the Listing Rules:
(a) save for any lending of the Shares by Celestial Limited pursuant to the Stock Borrowing
Agreement and any pledge of the Shares to an authorized institution for a bona fide
commercial loan, during the First Six-Month Period, he/it will not, and will procure that
the relevant registered holder(s) of the Shares, any nominee or trustee holding the Shares
on trust for it, its affiliates and companies controlled by him/it will not:
(i) sell, offer to sell, contract or agree to sell, mortgage, charge, pledge, hypothecate,
hedge, lend, grant or agree to grant or sell any option, warrant, contract or right to
purchase or subscribe for, grant or purchase any option, warrant, contract or right to
sell, 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 of the share capital or other securities of our
Company, or any interest therein (including, but not limited to, any securities that are
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UNDERWRITING
convertible into or exchangeable or exercisable for, or that represent the right to
receive, or any warrants or other rights to purchase, any such capital or securities or
any interest therein), or deposit any Shares or other securities of our Company with a
depositary in connection with the issue of depositary receipts; or
(ii) 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 Shares or other securities of
our Company or any interest therein (including, without limitation, any securities
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);
(iii) enter into any transaction with the same economic effect as any transaction specified
in paragraphs (i) or (ii) above; or
(iv) offer to or agree to or contract to or announce, or publicly disclose any intention to
enter into or effect any transaction specified in paragraphs (i) or (ii) or (iii) above,
in each case, whether any such transaction described in paragraphs (i) or (ii) or (iii) above
is to be settled by delivery of such Shares or such 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);
(b) during the Second Six-Month Period, he/it will not, and will procure that the relevant
registered holder(s) of the Shares, any nominee or trustee holding the Shares on trust for it,
its affiliates and companies controlled by it will not, enter into any transaction specified in
paragraphs (a)(i), (ii) or (iii) above or offer to or agree to or contract to or announce or
publicly disclose any intention to enter into or effect any such transaction if, immediately
following such transaction or upon the exercise or enforcement of any option, right,
interest or encumbrance pursuant to such transaction, he/ it would cease to be a
“controlling shareholder” (as defined in the Listing Rules) of our Company;
(c) until the expiry of the Second Six-Month Period, in the event that he/it enters into any
such transactions specified in paragraphs (a)(i), (ii) or (iii) above or offers to or agrees to
or contracts to or announces or publicly announces any intention to enter into or effect any
such transactions, he/it will take all reasonable steps to ensure that he/it will not create a
disorderly or false market in the securities of our Company; and
(d) at any time after the date of the Hong Kong Underwriting Agreement up to and including
the date falling 12 months after the Listing Date, he/it shall, among other things:
(i) if and when he/it pledges or charges any securities of our Company or interests in the
securities of our Company beneficially owned by him/it, immediately inform our
Company in writing of such pledge or charge together with the number of securities
so pledged or charged; and
(ii) if and when he/it receives indications, either verbal or written, from any pledgee or
chargee that any of the pledged or charged securities or interests in the securities of
our Company will be disposed of, immediately inform our Company in writing of
such indications.
Our Company agrees and has undertaken that upon receiving such information in
writing as described in paragraph (d)(i) or (d) (ii) above from our Controlling
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UNDERWRITING
Shareholders, it shall, as soon as practicable and if required pursuant to the Listing Rules,
notify the Stock Exchange and make a public disclosure in relation to such information by
way of an announcement.
Each of our Controlling Shareholders has undertaken to each of the Overall Coordinators, the
Joint Global Coordinators, the Joint Sponsors, the Joint Bookrunners, the Joint Lead Managers, the
Hong Kong Underwriters and the Capital Market Intermediaries to procure our Company to comply
with its obligations above.
Our Company agrees to use reasonable endeavors to procure that none of our Directors nor
their respective associates will apply for any of the Offer Shares pursuant to the Global Offering, either
directly or indirectly, whether in their own name or through nominees, unless permitted to do so under
the Listing Rules.
Joint Sponsors’ and Hong Kong Underwriters’ Interests in our Company
Big Cosmos Global Limited, one of the Pre-IPO Investors whose management shares are 100%
held by CMB International Capital Corporation Limited, the controlling shareholder of CMB
International Capital Limited, one of the Joint Sponsors, held 15,600,000 Preferred Shares,
representing approximately 1.81% of the total number of Shares as of the Latest Practicable Date, and
approximately 1.76% of the total number of Shares immediately following the completion of the
Global Offering, after one-to-one conversion of Preferred Shares into Ordinary Shares, without taking
into account the Shares which may be allotted and issued to existing Shareholders under the Global
Offering, the Shares which may be issued upon the conversion of the Convertible Bond and the Shares
to be allotted and issued under the Share Incentive Plans and the Over-allotment Option.
BLISS MOMENT LIMITED, one of the Pre-IPO Investors which is 100% indirectly owned by
China Merchants Securities International Company Limited, the holding company of China Merchants
Securities (HK) Co., Limited, one of the Joint Sponsors, held 3,571,429 Preferred Shares, representing
approximately 0.41% of the total number of Shares as of the Latest Practicable Date, and
approximately 0.40% of the total number of Shares immediately following the completion of the
Global Offering, after one-to-one conversion of Preferred Shares into Ordinary Shares, without taking
into account the Shares which may be allotted and issued to existing Shareholders under the Global
Offering, the Shares which may be issued upon the conversion of the Convertible Bond and the Shares
to be allotted and issued under the Share Incentive Plans and the Over-allotment Option.
Save as disclosed above and save for their respective obligations under the Hong Kong
Underwriting Agreement and/or the International Underwriting Agreement and, if applicable, the
Stock Borrowing Agreement, and the sponsor fee payable to each of the Joint Sponsors in connection
with the Listing, as of the Latest Practicable Date, none of the Joint Sponsors and the Hong Kong
Underwriters was interested legally or beneficially, directly or indirectly, in any Shares or other
securities of our Company or any other member of our Group or had any right or option (whether
legally enforceable or not) to subscribe for or purchase, or to nominate persons to subscribe for or
purchase, any Shares or other securities of our Company or any other 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 respective
obligations under the Hong Kong Underwriting Agreement and/or the International Underwriting
Agreement.
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UNDERWRITING
Joint Sponsors’ Independence
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors as set out
in Rule 3A.07 of the Listing Rules. The Joint Sponsors will receive a fee of USD1,100,000 in total for
acting as the sponsors for the Listing. As of the Latest Practicable Date, US$860,000 was still payable
by the Company to the Joint Sponsors.
International Offering
International Underwriting Agreement
In connection with the International Offering, we and our Controlling Shareholders expect to enter
into the International Underwriting Agreement with, among others, the International Underwriters on or
around Wednesday, December 4, 2024. Under the International Underwriting Agreement and subject to the
Over-allotment Option, the International Underwriters would, subject to certain conditions set out therein,
agree severally and not jointly to procure purchasers for, or themselves purchase, their respective
proportions of the International Offer Shares being offered pursuant to the International Offering. It is
expected that the International Underwriting Agreement may be terminated on similar grounds as the Hong
Kong Underwriting Agreement. Potential investors should note that in the event that the International
Underwriting Agreement is not entered into or is terminated, the Global Offering will not proceed. Please
refer to the section headed “Structure of the Global Offering—The International Offering.”
Over-allotment Option
We are expected to grant to the International Underwriters the Over-allotment Option,
exercisable by the Overall Coordinators (for themselves and on behalf of the International
Underwriters) at any time from the date of the International Underwriting Agreement until 30 days
after the last date for the lodging of applications under the Hong Kong Public Offering, pursuant to
which we may be required to allot and issue up to an aggregate of 3,866,100 additional Shares
representing no more than 15% of the number of the initial Offer Shares, at the same price per Offer
Share under the International Offering to cover, among other things, over-allocations (if any) in the
International Offering.
Commissions and Expenses
Our Company will pay an underwriting commission of up to 3.25% of the aggregate Offer
Price of all the Offer Shares, including additional Shares to be issued pursuant to the exercise of
the Over-allotment Option (11% of such underwriting commission are subject to our sole and
absolute discretion). 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 International Underwriters and not the Hong
Kong Underwriters. Assuming the discretionary portion of the underwriting commission is paid in
full, the ratio of fixed fee and discretionary fee payable by our Company to all Capital Market
Intermediaries is expected to be 89:11. The commissions payable to the Underwriters will be borne
by our Company with respect to the new Offer Shares to be issued by our Company under the
Global Offering (including any additional Shares to be issued pursuant to the exercise of the Over-
allotment Option). The Joint Sponsors will receive an aggregate fee of US$1,100,000 for acting as
the Joint Sponsors for the Listing.
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UNDERWRITING
The aggregate underwriting commissions and fees payable to the Underwriters, together with
the Stock Exchange listing fees, the SFC transaction levy, the Stock Exchange trading fee and the
AFRC transaction levy, legal and other professional fees and printing and all other expenses in relation
to the Global Offering are estimated to be approximately HK$154.9 million (assuming the Over-
allotment Option is not exercised at all) and will be paid by us.
Indemnity
We and our Controlling Shareholders have agreed to indemnify, among others, the Overall
Coordinators, the Joint Sponsors, 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 or incur, including, among others, losses arising from their performance of their
obligations under the Hong Kong Underwriting Agreement.
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 or stabilizing process.
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, investing and other activities for
their own account and for the account of others. In the ordinary course of their various business
activities, the Syndicate Members and their respective affiliates may purchase, sell or hold a broad
array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit
default swaps and other financial instruments for their own account and for the accounts of their
customers. Such investment and trading activities may involve or relate to assets, securities and/or
instruments of us and/or persons and entities with relationships with our Company and may also
include swaps and other financial instruments entered into for hedging purposes in connection with our
loans and other debts.
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STRUCTURE OF THE GLOBAL OFFERING
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of the
Global Offering. UBS AG Hong Kong Branch, CMB International Capital Limited, China Merchants
Securities (HK) Co., Limited, CLSA Limited and China International Capital Corporation Hong Kong
Securities Limited are the Overall Coordinators of the Global Offering.
The listing of the Shares on the Stock Exchange is sponsored by the Joint Sponsors. The Joint
Sponsors have made an application on behalf of our Company to the Listing Committee of the Stock
Exchange for the listing of, and permission to deal in, the Shares in issue and to be issued pursuant to
the Global Offering (including the additional Shares which may be issued pursuant to the exercise of
the Over-allotment Option).
The Global Offering comprises:
(i) the Hong Kong Public Offering of initially 2,577,400 Offer Shares (subject to reallocation)
in Hong Kong as described in the subsection headed “—The Hong Kong Public Offering”
below; and
(ii) the International Offering of initially 23,196,600 Offer Shares (subject to reallocation and
the Over-allotment Option) outside the United States (including to professional and
institutional investors within Hong Kong) in offshore transactions in accordance with
Regulation S, as described in the subsection headed “—The International Offering” below.
Investors may either:
(i) apply for Hong Kong Offer Shares under the Hong Kong Public Offering; or
(ii) apply for or indicate an interest for International Offer Shares under the International
Offering,
but may not do both.
The Offer Shares will represent approximately 2.91% of the total Shares in issue immediately
following the completion of the Global Offering, assuming that the Over-allotment Option is not
exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive
Plans. If the Over-allotment Option is exercised in full, the Offer Shares will represent approximately
3.33% of the total Shares in issue immediately following the completion of the Global Offering and the
exercise of the Over-allotment Option.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering may be subject to reallocation as described in the subsection headed “—the
Hong Kong Public Offering—Reallocation” below.
References in this prospectus to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
We are initially offering 2,577,400 Shares for subscription by the public in Hong Kong at the
Offer Price, representing 10% of the total number of Offer Shares initially available under the Global
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STRUCTURE OF THE GLOBAL OFFERING
Offering. The Hong Kong Offer Shares initially 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 0.29% of the total Shares in issue immediately following the
completion of the Global Offering (assuming that the Over-allotment Option is not exercised, the
Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans).
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 that regularly invest in shares and other securities.
Completion of the Hong Kong Public Offering is subject to the conditions set out in the
subsection headed “—Conditions of the Global Offering” below.
Allocation
Allocation of 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 could 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 Hong Kong Offer Shares available under the
Hong Kong Public Offering (after taking into account any reallocation referred to below) will be
divided equally (to the nearest board lot) into two pools: pool A and pool B. The Hong Kong Offer
Shares in pool A will be allocated on an equitable basis to applicants who have applied for Hong Kong
Offer Shares with an aggregate subscription price of HK$5 million (excluding the brokerage, the SFC
transaction levy, the Stock Exchange trading fee and the AFRC transaction levy payable) or less. The
Hong Kong Offer Shares in pool B will be allocated on an equitable basis to applicants who have
applied for Hong Kong Offer Shares with an aggregate subscription price of more than HK$5 million
(excluding the brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC
transaction levy payable) and up to the total value in pool B.
Investors should be aware that applications in pool A and applications in pool B may receive
different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the pools are
undersubscribed, such undersubscribed Hong Kong Offer Shares will be transferred to the other pool to
satisfy demand in that other pool and be allocated accordingly. For the purpose of the immediately
preceding paragraph only, the “price” for Hong Kong Offer Shares means the price payable on
application therefor. Applicants can only receive an allocation of Hong Kong Offer Shares from either
pool A or pool B and not from both pools. Multiple or suspected multiple applications under the Hong
Kong Public Offering and any application for more than 1,288,700 Hong Kong Offer Shares (being
50% of the 2,577,400 Hong Kong Offer Shares initially available under the Hong Kong Public
Offering) are liable to be rejected.
Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation under the Listing Rules. If the International Offer
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STRUCTURE OF THE GLOBAL OFFERING
Shares are fully subscribed or oversubscribed and the number of Offer Shares validly applied for under
the Hong Kong Public Offering represents (i) 15 times or more but less than 50 times, (ii) 50 times or
more but less than 100 times and (iii) 100 times or more of the total number of Offer Shares initially
available under the Hong Kong Public Offering, and provided that the International Offering is not
undersubscribed, then Offer Shares will be reallocated to the Hong Kong Public Offering from the
International Offering. As a result of such reallocation, the total number of Offer Shares available
under the Hong Kong Public Offering will be increased to 7,732,200 Offer Shares (in the case of
(i)), 10,309,600 Offer Shares (in the case of (ii)) and 12,887,000 Offer Shares (in the case of (iii)),
representing 30%, 40% and 50% of the total number of Offer Shares initially available under the
Global Offering, respectively (before any exercise of the Over-allotment Option).
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 deem
appropriate.
In addition, the Overall Coordinators may allocate Offer Shares from the International Offering
to the Hong Kong Public Offering to satisfy valid applications under the Hong Kong Public Offering.
In accordance with chapter 4.14 of the Guide for New Listing Applicants issued by the Stock
Exchange, if such reallocation is done other than pursuant to Practice Note 18 of the Listing Rules, up
to 2,577,400 Offer Shares may be reallocated to the Hong Kong Public Offering from the International
Offering, so that the total number of Offer Shares available under the Hong Kong Public Offering will
be increased to 5,154,800 Offer Shares, representing double of the initial allocation to the Hong Kong
Public Offering.
If the Hong Kong Public Offering is not fully subscribed for, the Overall Coordinators 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. The Offer Shares to be offered in the
Hong Kong Public Offering and the International Offering may be reallocated as between these
offerings at the discretion of the Overall Coordinators.
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and the
International Offering will be disclosed in the allotment results announcement of the Global Offering,
which is expected to be published on Thursday, December 5, 2024.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an undertaking
and confirmation in the application submitted by him/her/it that he/she/it and any person(s) for whose
benefit he/she/it is making the application has 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 breached and/or untrue (as the case may be) or if he/she/it has been or will be placed or
allocated International Offer Shares under the International Offering.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channel), the offer price of HK$30.21 per Offer Share in addition to the
brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy
payable on each Offer Share, amounting to a total of HK$3,051.46 for one board lot of 100 Shares. For
further details, see “How to Apply for Hong Kong Offer Shares.”
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STRUCTURE OF THE GLOBAL OFFERING
THE INTERNATIONAL OFFERING
Number of Offer Shares initially offered
Subject to reallocation as described above and the Over-allotment Option, the International
Offering will consist of an offering of initially 23,196,600 Offer Shares, representing 90% of the total
number of Offer Shares initially available under the Global Offering. The number of Offer Shares
initially offered under the International Offering, subject to any reallocation of Offer Shares between
the International Offering and the Hong Kong Public Offering, will represent approximately 2.62% of
the total Shares in issue immediately after completion of the Global Offering (assuming that the Over-
allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued
under the Share Incentive Plans).
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 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 that regularly
invest in shares and other securities. Allocation of Offer Shares pursuant to the International Offering
will be effected in accordance with the “book-building” process described in the subsection headed
“—Pricing and Allocation” 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 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 applications under the Hong Kong Public
Offering and to ensure that they are excluded from any allocation of Offer Shares under the Hong
Kong Public Offering.
Reallocation
The total number of Offer Shares to be issued pursuant to the International Offering may
change as a result of the clawback arrangement described in the subsection headed “—The Hong Kong
Public Offering—Reallocation” above, the exercise of the Over-allotment Option in whole or in part
and/or any reallocation of unsubscribed Offer Shares originally included in the Hong Kong Public
Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, we are expected to grant the Over-allotment Option to
the International Underwriters, exercisable by the Overall Coordinators (for themselves and on behalf
of the International Underwriters).
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STRUCTURE OF THE GLOBAL OFFERING
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Overall Coordinators (for themselves and on behalf of the International
Underwriters) at any time from the date of the International Underwriting Agreement until 30 days
after the last day for lodging applications under the Hong Kong Public Offering, to require us to issue
up to an aggregate of 3,866,100 additional Offer Shares, representing not more than 15% of the total
number of Offer Shares initially available under the Global Offering, at the Offer Price under the
International Offering to cover over-allocations in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued
pursuant thereto will represent approximately 0.43% of the total Shares in issue immediately following
the completion of the Global Offering and the exercise of the Over-allotment Option. If the Over-
allotment Option is exercised, an announcement will be made.
STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the distribution of
securities. To stabilize, the underwriters may bid for, or purchase, the securities in the secondary
market, during a specified period of time, to retard and, if possible, prevent a decline in the initial
public market price of the securities below the offer price. Such transactions may be effected in all
jurisdictions where it is permissible to do so, in each case in compliance with all applicable laws and
regulatory requirements, including those of Hong Kong. In Hong Kong, the price at which stabilization
is effected is not permitted to exceed the offer price.
In connection with the Global Offering, the Stabilizing Manager, its affiliates or any person
acting for it, on behalf of the Underwriters, may effect transactions with a view to stabilizing or
supporting the market price of the Shares at a level higher than that which might otherwise prevail for a
limited period on and after the Listing Date. However, there is no obligation on the Stabilizing
Manager, its affiliates or any person acting for it, to conduct any such stabilizing action. Such
stabilizing action, if taken, (i) will be conducted at the sole and absolute discretion of the Stabilizing
Manager, its affiliates or any person acting for it and in what the Stabilizing Manager reasonably
regards as the best interest of us, (ii) may be discontinued at any time and (iii) is required to be brought
to an end within 30 days of the last day for lodging applications under the Hong Kong Public Offering.
Stabilization action permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (i) over-allocating for the purpose of preventing or minimizing
any reduction in the market price of the Shares, (ii) selling or agreeing to sell the Shares so as to
establish a short position in them for the purpose of preventing or minimizing any reduction in the
market price of the Shares, (iii) purchasing, or agreeing to purchase, the Shares pursuant to the Over-
allotment Option in order to close out any position established under (i) or (ii) above, (iv) purchasing,
or agreeing to purchase, any of the Shares for the sole purpose of preventing or minimizing any
reduction in the market price of the Shares, (v) selling or agreeing to sell any Shares in order to
liquidate any position established as a result of those purchases and (vi) offering or attempting to do
anything as described in (ii), (iii), (iv) or (v) above.
Specifically, prospective applicants for and investors in the Offer Shares should note that:
 the Stabilizing Manager (or any person acting for it) may, in connection with the
stabilizing action, maintain a long position in the Shares;
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STRUCTURE OF THE GLOBAL OFFERING
 there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
 liquidation of any such long position by the Stabilizing Manager (or any person acting for
it) and selling in the open market, may have an adverse impact on the market price of the
Shares;
 no stabilizing action can be taken to support the price of the Shares for longer than the
stabilization period, which will begin on the Listing Date, and is expected to expire on the
30th day after the last day for lodging applications under the Hong Kong Public Offering.
After this date, when no further stabilizing action may be taken, demand for the Shares,
and therefore the price of the Shares, could fall;
 the price of the Shares cannot be assured to stay at or above the Offer Price by the taking
of any stabilizing action; and
 stabilizing bids the price or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price and can, therefore, be done at a price
below the price paid by applicants for, or investors in, the Offer Shares.
We will ensure or procure that an announcement in compliance with the Securities and Futures
(Price Stabilizing) Rules of the SFO will be made within seven days of the expiration of the
stabilization period.
Over-allocation
Following any over-allocation of the Shares in connection with the Global Offering, the
Stabilizing Manager (or any person acting for it) may cover such over-allocations by, amongst others,
exercising the Over-allotment Option in full or in part, by using Shares purchased by the Stabilizing
Manager (or any person acting for it) in the secondary market at prices that do not exceed the Offer
Price or through the stock borrowing arrangement as detailed below or a combination of these means.
STOCK BORROWING ARRANGEMENT
In order to facilitate the settlement of over-allocations, if any, in connection with the Global
Offering, the Stabilizing Manager (on its own or through its affiliates) may choose to borrow up to
3,866,100 Shares (being the maximum number of Shares which may be issued pursuant to the exercise of
the Over-allotment Option) from Celestial Limited, pursuant to the Stock Borrowing Agreement, which is
expected to be entered into between the Stabilizing Manager and/or its affiliates and Celestial Limited, on or
around Wednesday, December 4, 2024, or acquire Shares from other sources, including exercising the
Over-allotment Option or by making purchases in the secondary market at prices that do not exceed the
Offer Price.
If the Stock Borrowing Agreement with Celestial Limited is entered into, the borrowing of
Shares will only be effected by the Stabilizing Manager (on its own or through its affiliates) for the
settlement of over-allocations in the International Offering and such arrangement is not subject to the
restrictions of Rule 10.07(1)(a) of the Listing Rules provided that the requirements set out in
Rule 10.07(3) of the Listing Rules are complied with, in particular, such stock borrowing arrangement
as fully described in this prospectus will be for the sole purpose of covering any short position prior to
the exercise of the Over-allotment Option.
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STRUCTURE OF THE GLOBAL OFFERING
The same number of the Shares so borrowed must be returned to Celestial Limited or its
nominees, as the case may be, on or before the third Business Day following the earlier of (i) the last
day for exercising the Over-allotment Option and (ii) the day on which the Over-allotment Option is
exercised in full, or such earlier time as may be agreed in writing between the Stabilizing Manager and
Celestial Limited.
The stock borrowing arrangement described above will be effected in compliance with all
applicable laws, rules and regulatory requirements. No payment will be made to Celestial Limited by
the Stabilizing Manager (on its own or through its affiliates) in relation to such stock borrowing
arrangement.
PRICING AND ALLOCATION
The Offer Price will be HK$30.21 per Offer Share unless otherwise announced, as further
explained below. Applicants under the Hong Kong Public Offering may be required to pay, on
application (subject to application channels), the offer price of HK$30.21 per Offer Share plus brokerage
of 1%, SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015%, amounting to a total of HK$3,051.46 for one board lot of 100 Shares.
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. 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.
Announcement of Offer Price Reduction
The Overall Coordinators (for themselves and on behalf of the Underwriters), may, where they
deem appropriate, based on the level of interest expressed by prospective institutional, professional and
other investors during the book-building process in respect of the International Offering, and with the
consent of us, reduce the number of Offer Shares offered and/or the Offer Price 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, we will, 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, cause to be published on the websites of our
Company and the Stock Exchange at www.dmall.com and www.hkexnews.hk, respectively, notices
of the reduction of the Offer Shares and/or the Offer Price, and the cancellation of the Global Offering
and relaunch of the offer at the revised number of Offer Shares and/or the revised Offer Price.
We will also, as soon as practicable following the decision to make any such reduction, issue a
supplemental prospectus or a new prospectus updating investors of the change in the number of Offer
Shares being offered under the Global Offering and/or the Offer Price, and giving investors at least
three business days to consider the new information. The supplemental or new prospectus should
include at least the following: updated (i) Offer Price and market capitalization; (ii) listing timetable
and underwriting obligations; (iii) price/earning multiple, unaudited pro forma and adjusted net
tangible assets; and (iv) use of proceeds and working capital adequacy confirmation based on revised
proceeds. The Global Offering must first be canceled and subsequently relaunched on FINI pursuant to
the supplemental prospectus.
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STRUCTURE OF THE GLOBAL OFFERING
In the absence of any such notice and supplemental prospectus so published, the number of
Offer Shares and the Offer Price will not be reduced.
Before submitting applications for the Hong Kong Offer Shares, applicants should have regard
to the possibility that any announcement of a reduction in the number of Offer Shares and/or the Offer
Price may not be made until the last day for lodging applications under the Hong Kong Public
Offering.
If there is any change to the offer size due to change in the number of Offer Shares offered in
the Global Offering (other than pursuant to the exercise of the Over-allotment Option and/or the
reallocation mechanism as disclosed in this prospectus), or change to the Offer Price, or if the
Company becomes aware that there has been a significant change affecting any matter contained in this
prospectus or a significant new matter has arisen, the inclusion of information in respect of which
would have been required to be in this prospectus if it had arisen before this prospectus was issued,
after the issue of this prospectus and before the commencement of dealings in our Shares as prescribed
under Rule 11.13 of the Listing Rules, we are required to cancel the Global Offering and relaunch the
offer on FINI and issue a supplemental prospectus or a new prospectus.
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 the initial Hong Kong Offer Shares shall not be less than 10% of the total number of Offer Shares in
the Global Offering. The International 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.
An indication of the level of interest in the International Offering, the level of applications in
the Hong Kong Public Offering, the basis of allocation of the Hong Kong Offer Shares and the results
of allocations in the Hong Kong Public Offering are expected to be made available through a variety of
channels in the manner described in the section headed “How to Apply for Hong Kong Offer Shares—
B. Publication of Results.”
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters under
the terms and conditions of the Hong Kong Underwriting Agreement and is conditional upon the
International Underwriting Agreement being signed and becoming unconditional.
We expect to enter into the International Underwriting Agreement relating to the International
Offering on or around Wednesday, December 4, 2024.
These underwriting arrangements, including the Underwriting Agreements, are summarized in
the section headed “Underwriting.”
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(i) the Listing Committee granting approval for the listing of, and permission to deal in, the
Shares in issue and to be issued pursuant to the Global Offering (including the additional
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STRUCTURE OF THE GLOBAL OFFERING
Shares which may be issued pursuant to the exercise of the Over-allotment Option) on the
Main Board of the Stock Exchange, and such listing and permission not subsequently
having been withdrawn or revoked prior to the commencement of dealings in the Shares
on the Stock Exchange;
(ii) the execution and delivery of the International Underwriting Agreement on or around
December 4, 2024; and
(iii) the obligations of the Underwriters under each of the Hong Kong Underwriting Agreement
and the International Underwriting Agreement 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).
The consummation of each of the Hong Kong Public Offering and the International Offering is
conditional upon, amongst 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 dates and times 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 us on the websites of the Stock Exchange at
www.hkexnews.hk and us at www.dmall.com on the next day following such lapse. In such a
situation, all application monies will be returned, without interest, on the terms set out in the section
headed “How to Apply for Hong Kong Offer Shares—D. Dispatch/Collection of Share Certificates and
Refund of Application Monies.” In the meantime, all application monies will be held in separate bank
account(s) with the receiving bank or other bank(s) in Hong Kong licensed under the Banking
Ordinance (Chapter 155 of the Laws of Hong Kong).
Share certificates for the Offer Shares will only become valid at 8:00 a.m. on Friday,
December 6, 2024 provided that the Global Offering has become unconditional in all respects and the
right of termination described in the section headed “Underwriting” has not been exercised.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00 a.m. in
Hong Kong on Friday, December 6, 2024, it is expected that dealings in the Shares on the Stock
Exchange will commence at 9:00 a.m. on Friday, December 6, 2024.
The Shares will be traded in board lots of 100 Shares each and the stock code of the Shares will
be 2586.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public
Offering and below are the procedures for application. We will not provide any printed
copies of this prospectus 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
https://www.dmall.com/. If you require a printed copy of this prospectus, you may download and
print from the website addresses above.
The contents of this prospectus are identical to the 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.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you are
applying for:
 are 18 years of age or older; and
 have a Hong Kong address (for the HK eIPO White Form service only).
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the Stock
Exchange, you cannot apply for any Hong Kong Offer Shares if you or the person(s) for whose benefit
you are applying for:
 are an existing shareholder of our Company and/or any of our subsidiaries; or
 are a Director or chief executive of our Company and/or any of our subsidiaries; or
 are a close associate (as defined in the Listing Rules) of any of the above.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Thursday,
November 28, 2024 and end at 12:00 noon on Tuesday, December 3, 2024 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application channels:
Application
Channel Platform Target Investors Application Time
HK eIPO White
Form service
www.hkeipo.hk Investors who would like
to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own name.
From 9:00 a.m. on
Thursday, November 28,
2024 to 11:30 a.m. on
Tuesday, December 3,
2024, Hong Kong time.
The latest time for
completing full payment of
application monies will be
12:00 noon on Tuesday,
December 3, 2024,
Hong Kong time.
HKSCC EIPO
channel
Your brokeror custodian
who is a HKSCC
Participant will submit an
EIPO application on your
behalf through HKSCC’s
FINI system in
accordance with your
instruction
Investors who would not
like to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and issued
in the name of HKSCC
Nominees, deposited
directly into CCASS and
credited to your designated
HKSCC Participant’s stock
account.
Contact your broker or
custodian for the earliest
and latest time for giving
such instructions, as this
m a yv a r yb yb r o k e ro r
custodian.
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the last day
of the application period to apply for Hong Kong Offer Shares.
For those applying through the HK eIPO White Form service, once you complete payment in
respect of any application instructions 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. If you are a person for whose benefit the electronic application
instructions are given, you shall be deemed to have declared that only one set of electronic
application instructions has been given for your benefit. If you are an agent for another person, you
shall be deemed to have declared that you have only given one set of electronic application
instructions for the benefit of the person for whom you are an agent and that you are duly authorized
to give those instructions as an agent.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
For the avoidance of doubt, giving an 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 apply through the HK eIPO White Form service, you are deemed to have authorized
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.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of you jointly
and severally) are deemed to have instructed and authorized HKSCC to cause HKSCC Nominees
(acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong Offer Shares on your
behalf and to do on your behalf all the things stated in this prospectus and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed to
have been made for any application instructions given by you or for your benefit to HKSCC (in which
case an application will be made by HKSCC Nominees on your behalf) provided such application
instruction has not been withdrawn or otherwise invalidated before the closing time of the Hong Kong
Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor HKSCC
Nominees shall be liable to you or any other person in respect of any actions taken by HKSCC or
HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any breach of the terms
and conditions of this prospectus.
3. Information Required to Apply
You must provide the following information with your application:
For Individual/Joint Applicants For Corporate Applicants
 Full name(s) 2 as shown on your identity document
 Identity document’s issuing country or jurisdiction
 Identity document type, with order of priority:
i. HKID card; or
ii. National identification document; or
iii. Passport; and
 Identity document number
 Full name(s) 2 as shown on your identity document
 Identity document’s issuing country or jurisdiction
 Identity document type, with order of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration certificate; or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid e-mail address, a contact telephone
number and a Hong Kong address. You are also required to declare that the identity information provided by you follows the
requirements as described in Note 2 below. In particular, where you cannot provide a HKID number, you must confirm that you do not
hold a HKID card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in the individual
members’ names.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity document contains both an English
and Chinese name, both English and Chinese names must be used. Otherwise, either English or Chinese names will be accepted. The
order of priority of the applicant’s identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for Shares in a public offer. Similarly for corporate
applicants, a LEI number must be used if an entity has a LEI certificate.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will be required. If the applicant is an
investment fund (i.e. a collective investment scheme, or CIS), the CID of the asset management company or the individual fund, as
appropriate, which has opened a trading account with the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4 in accordance with market practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity document), the identity document’s
issuing country or jurisdiction, the identity document type; and (ii), the identity document number, for each of the beneficial owners or,
in the case(s) of joint beneficial owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in securities; and (ii) you exercise
statutory control over that company, then the application will be treated as being for your benefit and you should provide the required
information in your application as stated above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any other 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).
For those applying through HKSCC EIPO channel, and making an application under a power
of attorney, we and the Overall Coordinators, as our agent, have discretion to consider whether to
accept it on any conditions we think fit, including evidence of the attorney’s authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 100 Shares
Permitted number of
Hong Kong Offer
Shares for
application and
amount payable on
application/
successful allotment
:
Hong Kong Offer Shares are available for application in specified board lot
sizes only. Please refer to the amount payable associated with each specified
board lot size in the table below.
The Offer Price is HK$30.21 per Share.
If you are applying through the HKSCC EIPO channel, you are required to
pre-fund your application based on the amount specified by your broker or
custodian, as determined based on the applicable laws and regulations in
Hong Kong.
By instructing your broker or custodian to apply for the Hong Kong Offer
Shares on your behalf through the HKSCC EIPO channel, you (and, if you
are joint applicants, each of you jointly and severally) are deemed to have
instructed and authorized HKSCC to cause HKSCC Nominees (acting as
nominee for the relevant HKSCC Participants) to arrange payment of the
Offer Price, brokerage, SFC transaction levy, the Stock Exchange trading fee
and the AFRC transaction levy by debiting the relevant nominee bank
account at the Designated Bank for your broker or custodian.
If you are applying through the HK eIPO White Form service, you may refer
to the table below for the amount payable for the number of Shares you have
selected. You must pay the respective amount payable on application in full
upon application for Hong Kong Offer Shares.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
No. of Hong
Kong
Offer Shares
applied for
Amount
payable(2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
100 3,051.46 2,000 61,029.33 10,000 305,146.68 300,000 9,154,400.35
200 6,102.93 2,500 76,286.67 20,000 610,293.36 400,000 12,205,867.15
300 9,154.39 3,000 91,544.01 30,000 915,440.04 500,000 15,257,333.93
400 12,205.87 3,500 106,801.33 40,000 1,220,586.71 600,000 18,308,800.71
500 15,257.33 4,000 122,058.67 50,000 1,525,733.39 700,000 21,360,267.50
600 18,308.80 4,500 137,316.00 60,000 1,830,880.07 800,000 24,411,734.28
700 21,360.26 5,000 152,573.34 70,000 2,136,026.75 900,000 27,463,201.06
800 24,411.74 6,000 183,088.00 80,000 2,441,173.43 1,000,000 30,514,667.86
900 27,463.20 7,000 213,602.68 90,000 2,746,320.11 1,100,000 33,566,134.64
1,000 30,514.68 8,000 244,117.34 100,000 3,051,466.79 1,288,700
(1) 39,324,252.46
1,500 45,772.00 9,000 274,632.01 200,000 6,102,933.56
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC transaction levy. If your
application is successful, brokerage will be paid to the Exchange Participants (as defined in the Listing Rules) or to the HK eIPO White
Form Service Provider (for applications made through the application channel of the HK eIPO White Form Service Provider) while the
SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
5. Multiple Applications Prohibited
You or your joint applicant(s) shall not make more than one application for your own benefit,
except where you are a nominee and provide the information of the underlying investor in your
application as required under the paragraph headed “— A. Applications for Hong Kong Offer Shares—3.
Information Required to Apply” in this section. If you are suspected of submitting or cause to submit
more than one application, all of your applications will be rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you have made
an application through the HK eIPO White Form service or HKSCC EIPO channel, you or the
person(s) for whose benefit you have made the application shall not apply for any Offer Shares in the
International Offering.
The Hong Kong Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names and identification document 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.
Since applications are subject to personal information collection statements, identification
document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following things
on your behalf):
(i) undertake to execute all relevant documents and instruct and authorize us and/or the
Overall Coordinators, as our agent, to execute any documents for you and to do on your
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HOW TO APPLY FOR HONG KONG OFFER SHARES
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, and (if you are applying through the HKSCC EIPO channel) to deposit
the allotted Hong Kong Offer Shares directly into CCASS for the credit of your
designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the HK eIPO White
Form service (or as the case may be, the agreement you entered into with your broker
or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out in this
prospectus and they do not apply to you, or the person(s) for whose benefit you have
made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Joint Sponsors, the authorized representatives, the Overall Coordinators,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of their or the Company’s respective directors, officers, employees,
partners, agents, advisers and any other parties involved in the Global Offering (the
“Relevant Persons”), the Hong Kong Share Registrar and HKSCC will not be liable for
any information and representations not in this prospectus and any supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit you
have made the application to us, the Relevant Persons, the Hong Kong Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraph headed “—G. Personal Data – 3.
Purposes and 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your application
(or as the case may be, HKSCC Nominees’ application) has been accepted) that you
will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, any application made by you or HKSCC Nominees on your
behalf cannot be revoked once it is accepted, which will be evidenced by the
notification of the result of the ballot by the Hong Kong Share Registrar by way of
publication of the results at the time and in the manner as specified in the paragraph
headed “—B. Publication of Results” in this section;
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HOW TO APPLY FOR HONG KONG OFFER SHARES
(x) confirm that you are aware of the situations specified in the paragraph headed “—C.
Circumstances In Which You Will Not Be Allocated Hong Kong Offer Shares” in this
section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it and
the resulting contract will be governed by and construed in accordance with the laws of
Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any place
outside Hong Kong that apply to your application and that neither we nor the Relevant
Persons will breach any law inside and/ or 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;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf is
not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or any
of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any of
the directors, chief executives, substantial shareholder(s) or existing shareholder(s) of
the Company or any of its subsidiaries or any of their respective close associates in
relation to the acquisition, disposal, voting or other disposition of the Shares registered
in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to allocate any Hong Kong
Offer Shares to you and that you may be prosecuted for making a false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated to
you under the application;
(xvii) 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;
(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 directly or indirectly or through the HK eIPO White Form Service Provider
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 (1) 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 the HK eIPO
White Form Service Provider and (2) you have due authority to give electronic
application instructions on behalf of that other person as its agent.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
B. PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully allocated any Hong Kong Offer Shares through:
Platform Date/ Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
Website From the “Allotment Results” page at
www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a “search
by ID” function.
The full list of (i) wholly or partially successful
applicants using the HK eIPO White Form
service andHKSCC EIPOchannel, and (ii) the
number of Hong Kong Offer Shares
conditionally allotted to them, among other
things, will be displayed at www.hkeipo.hk/
IPOResultor www.tricor.com.hk/ipo/result.
24 hours, from 11:00 p.m. on Thursday,
December 5, 2024 to 12:00 midnight on
Wednesday, December 11, 2024 (Hong
Kong time)
The Stock Exchange’s website at
www.hkexnews.hk and our website at
https://www.dmall.com/ which will
provide links to the above mentioned
websites of the Hong Kong Share Registrar.
No later than 11:00 p.m. on Thursday,
December 5, 2024 (Hong Kong time).
Telephone +852 3691 8488 - the allocation results
telephone enquiry line provided by the Hong
Kong Share Registrar
between 9:00 a.m. and 6:00 p.m. from
Friday, December 6, 2024 to Wednesday,
December 11, 2024 (Hong Kong time) on
a business day
For those applying through HKSCC EIPO channel, you may also check with your broker or
custodian from 6:00 p.m. on Wednesday, December 4, 2024 (Hong Kong time).
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Wednesday, December 4, 2024 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce an indication of the level of interest in the Global Offering, the level of
applications in the Hong Kong Public Offering and the basis of allocations of Hong Kong Offer Shares
on the Stock Exchange’s website at www.hkexnews.hk and our website at https://www.dmall.com/
by no later than 11:00 p.m. on Thursday, December 5, 2024 (Hong Kong time).
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HOW TO APPLY FOR HONG KONG OFFER SHARES
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
You should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Your application or the application made by HKSCC Nominees on your behalf may be revoked
pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the Hong Kong Share Registrar 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.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not grant
permission to list the 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 us of that longer
period within three weeks of the closing date of the application lists.
4. If:

you make multiple applications or suspected multiple applications. You may refer to the
paragraph headed “—A. Applications for Hong Kong Offer Shares—5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;

we or the Overall Coordinators believe that by accepting your application, it or we would
violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC Participants
will be required to hold sufficient application funds on deposit with their designated bank
before balloting. After balloting of Hong Kong Offer Shares, the receiving bank will collect the
portion of these funds required to settle each HKSCC Participant’s actual Hong Kong Offer
Share allotment from their designated bank.
There is a risk of money settlement failure. In the extreme event of money settlement failure
by a HKSCC Participant (or its designated bank), who is acting on your behalf in settling
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HOW TO APPLY FOR HONG KONG OFFER SHARES
payment for your allotted shares, HKSCC will contact the defaulting HKSCC Participant and
its designated bank to determine the cause of failure and request such defaulting HKSCC
Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected Hong
Kong Offer Shares will be reallocated to the International Offering. Hong Kong Offer Shares
applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the Hong Kong Share Registrar and HKSCC is or will be liable if Hong Kong Offer
Shares are not allocated to you due to the money settlement failure.
D. DISPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one Share certificate for all Hong Kong Offer Shares allotted to you under the
Hong Kong Public Offering (except pursuant to applications made through the HKSCC EIPO channel
where the Share certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be issued
for sums paid on application.
Share certificates will only become valid at 8:00 a.m. on Friday, December 6, 2024 (Hong
Kong time), provided that the Global Offering has become unconditional and the right of termination
described in the section headed “Underwriting” has not been exercised. Investors who trade Shares
prior to the receipt of Share certificates or the Share certificates becoming valid do so entirely at their
own risk.
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus application
monies pending clearance of application monies.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Dispatch/ collection of Share certificate 1
For application of 1,000,000
Hong Kong Offer Shares or
more
Collection in person at the Hong
Kong Share Registrar, Tricor
Investor Services Limited, at
17/F, Far East Finance Centre,
16 Harcourt Road Hong Kong
Time: from 9:00 a.m. to 1:00
p.m. on Friday, December 6,
2024 (Hong Kong time)
If you are an individual, you
must not authorize any other
Share certificate(s) will be
issued in the name of HKSCC
Nominees, deposited into
CCASS and credited to your
designated HKSCC Participant’s
stock account
No action by you is required
1 Except in the event of any Bad Weather Signals (as defined below) in force in Hong Kong in the morning on Thursday, December 5,
2024 rendering it impossible for the relevant Share certificates to be dispatched to HKSCC in a timely manner, the Company shall
procure the Hong Kong Share Registrar to arrange for delivery of the supporting documents and share certificates in accordance with the
contingency arrangements as agreed between them. You may refer to “—E. Bad Weather Arrangements” in this section.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
HK eIPO White Form service HKSCC EIPO channel
person to collect for you. If you
are a corporate applicant, your
authorized 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
Hong Kong Share Registrar.
Note: If you do not collect your
Share certificate(s) personally
within the time above, it/they
will be sent to the address
specified in your application
instructions by ordinary post at
your own risk
For application of less than
1,000,000 Hong Kong Offer
Shares
Your Share certificate(s) will be
sent to the address specified in
your application instructions by
ordinary post at your own risk
Date: Thursday, December 5,
2024
Refund mechanism for surplus application monies paid by you
Date Friday, December 6, 2024 Subject to the arrangement
between you and your broker or
custodian
Responsible party Hong Kong Share Registrar Your broker or custodian
Application monies paid
through single bank account
HK eIPO White Form e-Auto
Refund payment instructions to
your designated bank account
Your broker or custodian will
arrange refund to your
designated bank account subject
to the arrangement between you
and it
Application monies paid
through multiple bank
accounts
Refund check(s) will be
dispatched to the address as
specified in your application
instructions by ordinary post at
your own risk
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HOW TO APPLY FOR HONG KONG OFFER SHARES
E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Tuesday, December 3, 2024, if, there is/are:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions,
(collectively, “Bad Weather Signals”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, December 3,
2024.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on the
next business day which does not have Bad Weather Signals in force at any time between 9:00 a.m.
and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the dates
mentioned in the section headed “Expected Timetable” in this prospectus, an announcement will be
made and published on the Stock Exchange’s website at www.hkexnews.hk and our website at
https://www.dmall.com of the revised timetable.
If a Bad Weather Signal is hoisted on Thursday, December 5, 2024, the Share Registrar will
make appropriate arrangements for the delivery of the Share certificates to the CCASS Depository’s
service counter so that they would be available for trading on Friday, December 6, 2024.
If a Bad Weather Signal is hoisted on Thursday, December 5, 2024, for application of less than
1,000,000 Hong Kong Offer Shares, the despatch of physical Share certificate(s) will be made by
ordinary post when the post office re-opens after the Bad Weather Signal is lowered or canceled (e.g.
in the afternoon of Thursday, December 5, 2024 or on Friday, December 6, 2024).
If a Bad Weather Signal is hoisted on Friday, December 6, 2024, for application of 1,000,000
Hong Kong Offer Shares or more, physical Share certificate(s) will be available for collection in
person at the Hong Kong Share Registrar’s office after the Bad Weather Signal is lowered or canceled
(e.g. in the afternoon of Friday, December 6, 2024 or on Monday, December 9, 2024).
Prospective investors should be aware that if they choose to receive physical Share
certificates issued in their own name, there may be a delay in receiving the Share certificates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares on the Stock
Exchange and we comply with the stock admission requirements of HKSCC, the 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 Shares or any other date HKSCC chooses.
Settlement of transactions between Exchange Participants is required to take place in CCASS on the
second settlement day after any trading day.
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HOW TO APPLY FOR HONG KONG OFFER SHARES
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data collected
and held by the Company, the Hong Kong Share Registrar, the receiving bank and the Relevant
Persons about you in the same way as it applies to personal data about applicants other than HKSCC
Nominees. This personal data may include client identifier(s) and your identification information. By
giving application instructions to HKSCC, you acknowledge that you have read, understood and agree
to all of the terms of the Personal Information Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the Hong Kong Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure that
personal data supplied to the Company or its agents and the Hong Kong Share Registrar is accurate and
up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer Shares into or
out of their names or in procuring the services of the Hong Kong Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your application
for Hong Kong Offer Shares being rejected, or in the delay or the inability of the Company or the Hong
Kong Share Registrar to effect transfers or otherwise render their services. It may also prevent or delay
registration or transfers of Hong Kong Offer Shares which you have successfully applied for and/or the
dispatch of Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the Company
and the Hong Kong Share Registrar immediately of any inaccuracies in the personal data supplied.
3. Purposes
Your personal data may be used, held, processed, and/or stored (by whatever means) for the
following purposes:
 processing your application and refund check and HK eIPO White Form e-Auto Refund
payment instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this prospectus and announcing results of allocation of
Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
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HOW TO APPLY FOR HONG KONG OFFER SHARES
 registering new issues or transfers into or out of the names of the holders of the Shares
including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends, rights issues,
bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the Hong Kong Share Registrar to discharge their obligations to applicants
and holders of the Shares and/or regulators and/or any other purposes to which applicants
and holders of the Shares may from time to time agree.
4. Transfer of personal data
Personal data held by the Company and the Hong Kong Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but the Company and
the Hong Kong 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:
 the Company’s appointed agents such as financial advisers, receiving bank and overseas
principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the Hong Kong Share Registrar, in each case for the purposes of providing
its services or facilities or performing its functions in accordance with its rules or
procedures and operating FINI and CCASS (including where applicants for the Hong
Kong Offer Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the Hong
Kong 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, including for the purpose of the Stock
Exchange’s administration of the Listing Rules and the SFC’s performance of its statutory
functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have or
propose to have dealings, such as their bankers, solicitors, accountants or brokers etc.
5. Retention of personal data
The Company and the Hong Kong Share Registrar will keep the personal data of the applicants
and holders of Hong Kong Offer Shares for as long as necessary to fulfill the purposes for which the
462


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HOW TO APPLY FOR HONG KONG OFFER SHARES
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 (Chapter 486 of the Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether the
Company or the Hong Kong 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 Hong Kong 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 the Company and the Hong Kong Share Registrar, at their
registered address disclosed in the section headed “Corporate information” in this prospectus or as
notified from time to time, for the attention of the company secretary, or the Hong Kong Share
Registrar for the attention of the privacy compliance officer.
463


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APPENDIX I ACCOUNTANTS’ REPORT
The following is the text of a report set out on pages I-1 to I-103, received from the
Company’s reporting accountants, KPMG, Certified Public Accountants, Hong Kong, for the
purpose of incorporation in this Prospectus.
ACCOUNTANTS’ REPORT ON THE HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF DMALL INC. AND UBS SECURITIES HONG KONG LIMITED, CMB
INTERNATIONAL CAPITAL LIMITED AND CHINA MERCHANTS SECURITIES (HK)
CO., LIMITED
Introduction
We report on the historical financial information of Dmall Inc. (the “Company”) and its
subsidiaries (together, the “Group”) set out on pages I-4 to I-103, which comprises the consolidated
statements of financial position of the Group and the statements of financial position of the Company
as at December 31, 2021, 2022 and 2023 and June 30, 2024, and the consolidated statements of profit
or loss, the consolidated statements of profit or loss and other comprehensive income, the consolidated
statements of changes in equity and the consolidated cash flow statements, for each of the years ended
December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024 (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-103
forms an integral part of this report, which has been prepared for inclusion in the prospectus of the
Company dated November 28, 2024 (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 the Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation and presentation
set out in Note 1 to the Historical Financial Information, and for such internal control as the directors
of the Company determine is necessary to enable the preparation of the Historical Financial
Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ 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 (the
“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
I-1


--- page 473 ---
APPENDIX I ACCOUNTANTS’ REPORT
accountants’ 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
accountants consider internal control relevant to the entity’s preparation of the Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation and presentation
set out in Note 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 purpose of the accountants’
report, a true and fair view of the Company’s and the Group’s financial position as at December 31,
2021, 2022 and 2023 and June 30, 2024, and of the Group’s financial performance and cash flows for
the Track Record Period in accordance with the basis of preparation and presentation set out in Note 1
to the Historical Financial Information.
Review of stub period corresponding financial information
We have reviewed the stub period corresponding financial information of the Group which
comprises the consolidated statement of profit or loss, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity and the consolidated
cash flow statement for the six months ended June 30, 2023 and other explanatory information (the
“Stub Period Corresponding Financial Information”). The directors of the Company are responsible for
the preparation and presentation of the Stub Period Corresponding Financial Information in accordance
with the basis of preparation and presentation set out in Note 1 to the Historical Financial Information.
Our responsibility is to express a conclusion on the Stub Period Corresponding 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 enquiries, 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 Corresponding Financial Information, for the purpose of the accountants’ report, is not
prepared, in all material respects, in accordance with the basis of preparation and presentation set out
in Note 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 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.
I-2


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APPENDIX I ACCOUNTANTS’ REPORT
Dividends
We refer to Note 30(c) to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Track Record Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its incorporation.
KPMG
Certified Public Accountants
8th Floor, Prince’s Building
10 Chater Road
Central, Hong Kong
November 28, 2024
I-3


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APPENDIX I ACCOUNTANTS’ REPORT
HISTORICAL FINANCIAL INFORMATION
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which the
Historical Financial Information is based, were audited by KPMG Huazhen LLP in accordance with
Hong Kong Standards on Auditing issued by the HKICPA (the “Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values are
rounded to the nearest thousand yuan (RMB’000) except when otherwise indicated.
I-4


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APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of profit or loss
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Continuing operations
Revenue ........................... 5 848,192 1,328,264 1,585,357 764,003 939,162
Cost of revenue ...................... ( 675,453) (823,068) (1,030,656) (486,834) (579,908)
Gross profit ........................ 172,739 505,196 554,701 277,169 359,254
Revaluation loss on property and
equipment upon transfer ............. 1 2 (37,618) — — — —
Valuation gains on investment property . . . 12 380 16,972 — — —
Other net income/(loss) ................ 6 37,237 170,429 115,502 23,876 (59,134)
Research and development expenses ..... ( 588,611) (586,330) (520,887) (266,087) (203,527)
Selling and marketing expenses ......... ( 444,905) (238,569) (150,923) (84,613) (42,965)
General and administration expenses ..... ( 208,571) (251,699) (259,413) (110,517) (133,251)
Impairment loss on trade and other
receivables ....................... 7(c) (1,032) (1,596) (1,784) (578) (1,533)
Loss from operations ................ ( 1 , 070,381) (385,597) (262,804) (160,750) (81,156)
Net finance costs ..................... 7(a) (5,222) (23,065) (13,344) (6,775) (5,740)
Share of profits/(losses) of associates ..... 6 0 7 — — — (200)
Share of profits of a joint venture ........ — — * — — —
Fair value change of convertible
redeemable preferred shares .......... 2 8 (732,280) (493,191) (476,160) (422,261) (397,118)
Loss before taxation from continuing
operations ....................... 7 ( 1 , 807,276) (901,853) (752,308) (589,786) (484,214)
Income tax (expense)/benefit ........... 8(a) (745) 1,829 3,321 1,878 2,008
Loss for the year/period from continuing
operations ....................... (1,808,021) (900,024) (748,987) (587,908) (482,206)
Discontinued operations
(Loss)/profit for the year/period from
discontinued operations ............. 4 (17,027) 59,498 93,548 40,032 233,134
Loss for the year/period .............. (1,825,048) (840,526) (655,439) (547,876) (249,072)
Attributable to:
Equity shareholders of the Company ..... (1,750,680) (807,406) (592,361) (512,618) (234,875)
- Continuing operations ............... (1,733,653) (866,904) (685,909) (552,650) (468,009)
- Discontinued operations .............. (17,027) 59,498 93,548 40,032 233,134
Non-controlling interests .............. (74,368) (33,120) (63,078) (35,258) (14,197)
- Continuing operations ............... (74,368) (33,120) (63,078) (35,258) (14,197)
Loss for the year/period .............. (1,825,048) (840,526) (655,439) (547,876) (249,072)
Loss per share
Basic and diluted (RMB) .............. (3.68) (1.54) (1.13) (0.97) (0.45)
Loss per share – Continuing operations
Basic and diluted (RMB) .............. ( 3 . 6 4 ) ( 1 . 6 5 ) ( 1.31) (1.05) (0.89)
* The balance represents amount less than RMB500.
The accompanying notes form part of the Historical Financial Information.
I-5


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APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of profit or loss and other comprehensive income
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss for the year/period ................. (1,825,048) (840,526) (655,439) (547,876) (249,072)
Other comprehensive income for the year/
period (after tax and reclassification
adjustments):
Item that will not be reclassified to profit or
loss:
Exchange difference on translation of financial
statements of the Company ............. 103,384 (509,986) (111,135) (258,881) (44,297)
Item that may be reclassified subsequently to
profit or loss:
Exchange difference on translation of financial
statements of subsidiaries with functional
currencies other than RMB ............. (2,754) 10,030 3,482 3,900 (884)
Other comprehensive income for the year/
period .............................. 100,630 (499,956) (107,653) (254,981) (45,181)
Total comprehensive income for the year/
period .............................. (1,724,418) (1,340,482) (763,092) (802,857) (294,253)
Attributable to:
Equity shareholders of the Company ........ (1,649,235) (1,310,219) (699,327) (766,763) (280,131)
- Continuing operations .................. (1,632,208) (1,369,717) (792,875) (806,795) (513,265)
- Discontinued operations ................ (17,027) 59,498 93,548 40,032 233,134
Non-controlling interests ................. (75,183) (30,263) (63,765) (36,094) (14,122)
- Continuing operations .................. (75,183) (30,263) (63,765) (36,094) (14,122)
Total comprehensive income for the year/
period .............................. (1,724,418) (1,340,482) (763,092) (802,857) (294,253)
The accompanying notes form part of the Historical Financial Information.
I-6


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APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of financial position
As at December 31, As at June 30
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets
Property and equipment ............... 1 3 75,828 74,452 76,799 83,384
Intangible assets ..................... 1 4 105,318 93,203 83,681 157,995
Interest in an associate ................ — — 2 0 0 —
Interest in a joint venture .............. 5,163———
Investment property .................. 1 2 141,860———
Goodwill .......................... 1 5 151,887 151,887 151,993 151,993
Prepayments, deposits and other
receivables ....................... 1 9 10,532 21,388 20,082 7,213
Other financial assets ................. 1 7 140,734 153,218 196,574 109,692
Deferred tax assets ................... 27(b) 1,657 2,092 4,260 5,816
632,979 496,240 533,589 516,093
Current assets
Other financial assets ................. 1 7 15,053 9,029 34,935 11,211
Inventories and other contract costs ..... 7,150 5,994 11,269 11,137
Contract assets ...................... 1,464 1,497 3,237 3,073
Trade receivables .................... 1 8 93,239 140,609 165,142 256,453
Prepayments, deposits and other
receivables ....................... 1 9 106,834 64,655 75,496 87,384
Restricted bank deposits .............. 2 0 55,667 56,086 20,933 498
Cash and cash equivalents ............. 2 0 368,716 533,054 533,171 469,536
648,123 810,924 844,183 839,292
Current liabilities
Trade payables ...................... 2 1 49,361 63,778 86,563 98,367
Accrued expenses and other payables .... 2 2 590,868 533,737 422,749 227,537
Bank loans and other borrowings ....... 2 3 76,163 70,090 202,076 281,264
Contract liabilities ................... 2 4 44,506 49,473 91,288 78,597
Lease liabilities ..................... 2 5 17,570 16,029 25,428 27,422
Convertible redeemable preferred
shares ........................... 2 8 5,137,156 6,378,735 6,965,493 7,407,194
Convertible bond .................... 2 9 — — — 151,039
Current taxation ..................... 27(a) 50 — 4 230
5,915,674 7,111,842 7,793,601 8,271,650
Net current liabilities ................ ( 5,267,551) (6,300,918) (6,949,418) (7,432,358)
Total assets less current liabilities ..... (4,634,572) (5,804,678) (6,415,829) (6,916,265)
The accompanying notes form part of the Historical Financial Information.
I-7


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APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of financial position (continued)
As at December 31, As at June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current liabilities
Bank loans and other borrowings ......... 2 3 79,098 50,400 112,100 115,400
Lease liabilities ....................... 2 5 8,042 4,284 15,156 9,228
Deferred tax liabilities .................. 27(b) 15,900 14,190 12,503 11,662
Convertible bond ...................... 2 9 — 203,193 208,577 —
Other non-current liabilities .............. 1,636 622 959 1,006
104,676 272,689 349,295 137,296
NET LIABILITIES ................... (4,739,248) (6,077,367) (6,765,124) (7,053,561)
CAPITAL AND RESERVES
Share capital ......................... 30(a) 323 323 323 323
Reserves ............................. (4,822,726) (6,160,824) (6,865,150) (7,138,067)
Total deficit attributable to equity
shareholders of the Company ......... (4,822,403) (6,160,501) (6,864,827) (7,137,744)
Non-controlling interests ............... 83,155 83,134 99,703 84,183
TOTAL DEFICIT .................... (4,739,248) (6,077,367) (6,765,124) (7,053,561)
The accompanying notes form part of the Historical Financial Information.
I-8


--- page 480 ---
APPENDIX I ACCOUNTANTS’ REPORT
Statements of financial position of the Company
As at December 31, As at June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current asset
Investments in a subsidiary ................. 16(b) 1 1 1 1
Amounts due from subsidiaries .............. 34(b) 4,592,949 4,606,466 4,618,234 4,600,767
4,592,950 4,606,467 4,618,235 4,600,768
Current assets
Prepayments, deposits and other receivables . . . 19 — — 5,070 3,021
Cash and cash equivalents .................. 7,389 39,473 1,064 407
7,389 39,473 6,134 3,428
Current liabilities
Accrued expenses and other payables ......... 2 2 135,171 21,376 18,140 15,778
Bank loans and other borrowings ............ 2 3 64,799 — — —
Convertible redeemable preferred shares ...... 2 8 5,137,156 6,378,735 6,965,493 7,407,194
Convertible bond ......................... 2 9 — — — 22,421
5,337,126 6,400,111 6,983,633 7,445,393
Net current liabilities (5,329,737) (6,360,638) (6,977,499) (7,441,965)
Total assets less current liabilities .......... (736,787) (1,754,171) (2,359,264) (2,841,197)
Non-current liabilities
Amounts due to subsidiaries ................ 34(b) — 5,569 5,569 5,569
Convertible bond ......................... 2 9 — 21,246 27,737 —
— 26,815 33,306 5,569
NET LIABILITIES ...................... (736,787) (1,780,986) (2,392,570) (2,846,766)
Capital and reserves
Share capital ............................ 30(a) 323 323 323 323
Reserves ............................... (737,110) (1,781,309) (2,392,893) (2,847,089)
TOTAL DEFICIT ....................... (736,787) (1,780,986) (2,392,570) (2,846,766)
The accompanying notes form part of the Historical Financial Information.
I-9


--- page 481 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of changes in equity
Attributable to equity shareholders of the Company
Note
Share
capital
Capital
reserve
Statutory
reserve
Share-
based
payments
reserve
Exchange
reserve
Accumulated
losses Total
Non-controlling
interests
Total
deficit
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note
30(a)
Note
30(b)(i)
Note
30(b)(ii)
Note
30(b)(iii)
Note
30(b)(iv)
Balance at January 1,
2021 ............ 306 (10,875) — 65,636 84,498 (3,446,873) (3,307,308) 84,165 (3,223,143)
Changes in equity for
2021:
Loss for the year ..... — — — — — (1,750,680) (1,750,680) (74,368) (1,825,048)
Other comprehensive
income .......... — — — — 101,445 — 101,445 (815) 100,630
Total comprehensive
income .......... — — — — 101,445 (1,750,680) (1,649,235) (75,183) (1,724,418)
Equity settled share-
based
transactions ....... 2 6 — — — 134,140 — — 134,140 — 134,140
Acquisition of a
subsidiary ........ 3 1 — — — — — — — 74,472 74,472
Disposal of a
subsidiary ........ — — — — — — — ( 299) (299)
Surrender of ordinary
shares ........... ( 3 0 ) 3 0 — — — — — — —
Vesting of restricted
share units ........ 4 7 — — (47) — — — — —
Appropriation to
statutory reserves . .
—— 1,876 — — (1,876) —— —
Balance at
December 31, 2021
and January 1,
2022 ............ 3 2 3 (10,845) 1,876 199,729 185,943 (5,199,429) (4,822,403) 83,155 (4,739,248)
I-10


--- page 482 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of changes in equity (continued)
Attributable to equity shareholders of the Company
Note
Share
capital
Capital
reserve
Statutory
reserve
Share-
based
payments
reserve
Exchange
reserve
Accumulated
losses Total
Non-controlling
interests
Total
deficit
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note
30(a)
Note
30(b)(i)
Note
30(b)(ii)
Note
30(b)(iii)
Note
30(b)(iv)
Balance at
December 31,
2021 and
January 1,
2022 ........... 3 2 3 (10,845) 1,876 199,729 185,943 (5,199,429) (4,822,403) 83,155 (4,739,248)
Changes in equity
for 2022:
Loss for the year .... — — — — — (807,406) (807,406) (33,120) (840,526)
Other comprehensive
income ......... — — — — (502,813) — (502,813) 2,857 (499,956)
Total comprehensive
income ......... — — — — (502,813) (807,406) (1,310,219) (30,263) (1,340,482)
Equity settled share-
based
transactions ...... 2 6 — — — 12,390 — — 12,390 140 12,530
Purchase of
non-controlling
interests ........ 3 0 ,3 1 — (61,509) — — — — (61,509) (34,506) (96,015)
Contribution from
non-controlling
shareholders of
subsidiaries ...... — 21,240 — — — — 21,240 68,922 90,162
Dividends declared
by a subsidiary
attributable to
non-controlling
interests ........ — — — — — — — (4,314) (4,314)
Appropriation to
statutory
reserves ......... — — 1,376 — — (1,376) — — —
Balance at
December 31,
2022 and
January 1,
2023 ........... 3 2 3 (51,114) 3,252 212,119 (316,870) (6,008,211) (6,160,501) 83,134 (6,077,367)
I-11


--- page 483 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of changes in equity (continued)
Attributable to equity shareholders of the Company
Note
Share
capital
Capital
reserve
Statutory
reserve
Share-
based
payments
reserve
Exchange
reserve
Accumulated
losses Total
Non-controlling
interests
Total
deficit
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note
30(a)
Note
30(b)(i)
Note
30(b)(ii)
Note
30(b)(iii)
Note
30(b)(iv)
Balance at
December 31, 2022
and January 1,
2023 ............. 3 2 3 (51,114) 3,252 212,119 (316,870) (6,008,211) (6,160,501) 83,134 (6,077,367)
Changes in equity for
2023:
Loss for the year ..... — — — — — (592,361) (592,361) (63,078) (655,439)
Other comprehensive
income ........... — — — — (106,966) — (106,966) (687) (107,653)
Total comprehensive
income ........... — — — — (106,966) (592,361) (699,327) (63,765) (763,092)
Equity settled share-
based transactions . . 26 — — — 12,209 — — 12,209 1,411 13,620
Issuance of restricted
ordinary shares by a
subsidiary ........ 2 6 — (1,520) — — — — (1,520) 1,520 —
Contribution from a
non-controlling
shareholder of a
subsidiary ........ — — — — — — — 59,535 59,535
Capital injected to a
subsidiary ........ 3 0 — (15,688) — — — — (15,688) 15,688 —
Appropriation to
statutory reserves . . . — — 949 — — (949) — — —
Acquisition of a
subsidiary ........ 3 1 — — — — — — — 2,180 2,180
Balance at
December 31, 2023
and January 1,
2024 ............. 3 2 3 (68,322) 4,201 224,328 (423,836) (6,601,521) (6,864,827) 99,703 (6,765,124)
Changes in equity for
the six months
ended June 30,
2024:
Loss for the period . . . — — — — — (234,875) (234,875) (14,197) (249,072)
Other comprehensive
income ........... — — — — (45,256) (45,256) 75 (45,181)
Total comprehensive
income ........... — — — — (45,256) (234,875) (280,131) (14,122) (294,253)
Equity settled share-
based transactions . . 26 — — — 7,214 — — 7,214 1,116 8,330
Dividends declared by
a subsidiary
attributable to non-
controlling
interests .......... — — — — — — — (2,514) (2,514)
Balance at June 30,
2024 ............. 3 2 3 (68,322) 4,201 231,542 (469,092) (6,836,396) (7,137,744) 84,183 (7,053,561)
I-12


--- page 484 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated statements of changes in equity (continued)
Attributable to equity shareholders of the Company
Note
Share
capital
Capital
reserve
Statutory
reserve
Share-
based
payments
reserve
Exchange
reserve
Accumulated
losses Total
Non-controlling
interests
Total
deficit
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note
30(a)
Note
30(b)(i)
Note
30(b)(ii)
Note
30(b)(iii)
Note
30(b)(iv)
(unaudited)
Balance at January 1,
2023 ............ 3 2 3 (51,114) 3,252 212,119 (316,870) (6,008,211) (6,160,501) 83,134 (6,077,367)
Changes in equity for
the six months
ended June 30,
2023:
Loss for the period . . . —— — — — (512,618) (512,618) (35,258) (547,876)
Other comprehensive
income .......... —— — — (254,145) — (254,145) (836) (254,981)
Total comprehensive
income .......... —— — — (254,145) (512,618) (766,763) (36,094) (802,857)
Equity settled share-
based
transactions ....... 2 6 —— — 6,932 —— 6,932 297 7,229
Issuance of restricted
ordinary shares by a
subsidiary ........ 2 6 — (1,520) —— — — (1,520) 1,520 —
Capital injected to a
subsidiary ........ 3 0 — (15,688) —— — — (15,688) 15,688 —
Acquisition of a
subsidiary ........ 3 1 —— — — — — 2,180 2,180
Balance at June 30,
2023 ............ 3 2 3 (68,322) 3,252 219,051 (571,015) (6,520,829) (6,937,540) 66,725 (6,870,815)
The accompanying notes form part of the Historical Financial Information.
I-13


--- page 485 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated cash flow statements
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from operating
activities
Cash used in operations ......... 20(b) (1,274,667) (205,256) (179,343) (192,793) (56,721)
Income tax (paid)/refunded ...... 27(a) (10) (245) 95 127 (22)
Net cash used in operating
activities .................. (1,274,677) (205,501) (179,248) (192,666) (56,743)
Investing activities
Payment for the purchase of
property and equipment ....... (16,261) (16,641) (3,578) (1,475) (4,421)
Payment for the purchase of
intangible assets ............. (314) (363) (2,963) (1,441) —
Proceeds from disposal of property
and equipment and intangible
assets ..................... 7 5 6 1,298 861 736 525
Payment for acquisition of
subsidiaries, net of cash
acquired ................... 3 1 (103,428) — (16) (16) —
Payment for acquisition of equity
investments ................ (102,640) (815) — — (100)
Purchase of financial assets at fair
value through profit or loss
“(FVPL)” .................. 1 7 (3,833,360) (249,500) (164,500) (76,000) (14,000)
Proceeds from disposal of
financial assets at FVPL ...... 1 7 3,733,847 256,695 139,166 66,046 38,048
Net cash inflow/(outflow) from
disposal of subsidiaries ....... 3 2 — 78,173 (1) — (26,101)
Net cash (used in)/generated
from investing activities ..... (321,400) 68,847 (31,031) (12,150) (6,049)
Financing activities
Proceeds from bank loans ....... 20(c) — 120,420 260,700 165,700 182,000
Repayment of bank loans ....... 20(c) (8,245) (9,959) (70,020) (10,000) (99,600)
Proceeds from borrowings from
related parties ............... 20(c) 64,799 13,573 — — —
Repayment of borrowings from
related parties ............... 20(c) — (85,314) — — —
Proceeds of borrowings from a
non-controlling shareholder of a
subsidiary .................. 20(c) — — 2,700 1,215 —
Payment of interests of bank loans
and other borrowings ......... 20(c) (67,952) (3,277) (8,721) (3,311) (6,374)
Repayment of convertible bond . . . 20(c) — — — — (50,000)
Payment of interests of convertible
bond ...................... 20(c) — — (11,173) (11,173) (11,204)
Interest element of lease rentals
paid ...................... 20(c) (1,197) (1,091) (1,870) (887) (870)
Capital element of lease rentals
paid ...................... 20(c) (22,880) (21,028) (25,845) (12,021) (10,691)
I-14


--- page 486 ---
APPENDIX I ACCOUNTANTS’ REPORT
Consolidated cash flow statements (continued)
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Proceeds from issuance of
Convertible Redeemable
Preferred Shares ............. 20(c) 742,109 111,017 — — —
Advances received from issuance
of Series C+ Convertible
Redeemable Preferred Shares . . 127,384 — — — —
Proceeds from Convertible
bond ...................... 20(c) — 190,000 — — —
Dividends paid by a subsidiary . . . — (4,314) — — (2,514)
Proceeds from issuance of
restricted ordinary shares by a
subsidiary .................. — — 5,211 5,211 —
Repurchase shares from non-
controlling interest ........... (299) (35,616) — — —
Capital contribution from
non-controlling interests ...... — 56,494 59,535 — —
Cash paid for acquisition of
non-controlling interests ...... 3 1 — (48,480) — — —
Payment of listing expenses ..... — — (3,456) (2,325) (603)
Net cash generated from
financing activities .......... 833,719 282,425 207,061 132,409 144
Net (decrease)/increase in cash
and cash equivalents ........ (762,358) 145,771 (3,218) (72,407) (62,648)
Cash and cash equivalents at the
beginning of the
year/period ................ 20(a) 1,134,873 368,716 533,054 533,054 533,171
Effect of foreign currency
exchange rate changes ........ (3,799) 18,567 3,335 3,337 (987)
Cash and cash equivalents at the
end of the year/period ....... 20(a) 368,716 533,054 533,171 463,984 469,536
The accompanying notes form part of the Historical Financial Information.
I-15


--- page 487 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 Basis of preparation and presentation of the Historical Financial Information
Dmall Inc. (the “Company”) was incorporated in the British Virgin Islands (“BVI”) as an
exempted company with limited liability on February 5, 2015 under the BVI Company Law.
The Company is an investment holding company. The Company and its subsidiaries
(collectively, the “Group”) are principally engaged in providing one-stop retail cloud solutions,
which consist of retail core service cloud and others. The Group also provided e-commerce
service cloud solutions and online marketing services during Track Record Period. The Group’s
principal operations and geographic markets are in the People’s Republic of China (“PRC”).
The functional currency of the Company is United States Dollar (“USD”). The consolidated
financial statements are presented in Renminbi (“RMB”) as the majority of the Group’s
operations are conducted by the Company’s subsidiaries established in the PRC and the
functional currency of which is RMB.
Historically, to comply with PRC laws and regulations, the Group conducted internet-related
business in China through Dmall Fresh (Beijing) E-Commerce Co., Ltd. (“Dmall Fresh
(Beijing)”) and its subsidiary, Dmall Fresh (Shenzhen) E-commerce Co., Ltd. (“Dmall Fresh
(Shenzhen)”), collectively, the “former VIEs”). Dmall Fresh (Beijing) and Dmall Fresh
(Shenzhen), the financial statements of which have been consolidated and accounted for as if
they were subsidiaries of the Group by virtue of the contractual arrangements (the “Contractual
Agreements”), as detailed in the section headed “History, Reorganization and Corporate
Structure” in the Prospectus.
The directors of the Company consider that the Contractual Arrangements were in compliance
with the relevant PRC laws and regulations currently in effect and were legally binding and
enforceable. Pursuant to the Contractual Agreements, and together with the 50% equity
interests in former VIEs held by the Group, the Group had rights to exercise power over the
former VIEs, receive variable returns from involvement in the former VIEs, has the ability to
affect those returns through its power over the former VIEs and was considered to control the
former VIEs. Consequently, the Group regarded the former VIEs as controlled structured
entities through the date of termination of the Contractual Arrangements on April 24, 2024.
Further details of the disposal of the former VIEs are set out in Note 4.
I-16


--- page 488 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
1 Basis of preparation and presentation of the Historical Financial Information (continued)
As of the date of this report, the Company has direct or indirect interests in the following
principal subsidiaries, all of which are private companies.
Company Names
Place and date of
incorporation
/establishment
Issued and paid-up
capital/registered
capital
Proportion of ownership
interest
Name of
statutory auditor
Principal
activities
Held by the
Company
Held by the
Subsidiary
Directly held -
Dmall China Inc.(ii) .... Cayman Islands/
March 26, 2015
USD100 100.0% — NA Holding
company of
DMALL ASIA
INC.
Indirectly held -
Dmall Asia Inc. (ii) .... British Virgin
Islands/April 7,
2015
USD1 — 100.0% NA Holding
company of
Dmall Hong
Kong Limited
Dmall Hong Kong
Limited (iv) ........
Hong Kong/
April 28, 2015
HKD1 — 100.0% 2021&2022: S.C.TO&CO
Certified Public Accountants
2023: NA
Holding
company of
Dmall Life
(China) Digital
Technology
Co., Ltd., Dmall
Life (China)
Network
Technology
Co., Ltd., and
Retail
Technology
Asia Limited
Dmall Life (China)
Digital Technology
Co., Ltd.
(
ʕ਷ ᅰ
ʮ̡) (i)
(iii) ...............
The PRC/
February 13,
2019
USD500,000,000 — 100.0% 2021: Shenzhen
Huazhongjie Certified Public
Accountants
ה(౷
ஷΥྫ) 2022&2023: NA
Development of
e-commerce
service cloud
Dmall (Shenzhen)
Digital Technology
Co., Ltd.
(
߅
ʮ̡) (i) (iii) . .
The PRC/
April 2, 2019
RMB2,600,000,000 — 100.0% 2021: Shenzhen
Huazhongjie Certified Public
Accountantsࠇ
౷ஷΥྫ 2022:
Beijing Zhongcai Guoxin
Certified Public Accountants
Co.,Ltd.ࢪࠇ
ʮ̡ 2023:
Shenzhen Zhongchuang
Certified Public Accountants
ה(౷ஷ
Υྫ)
Development of
retail core
service cloud, e-
commerce
service cloud
and others
Dmall Zhilian (Beijing)
Technology Co., Ltd.
(
߅
ʮ̡)(i) .......
The PRC/
September 19,
2017
RMB168,340,000 — 80.0% 2021&2022&2023: Beijing
Yongqing Certified Public
Accountantsࢪࠇ
ה( ౷ஷΥྫ)
Provision of
AIoT solutions
Dmall Zhilian (Wuhan)
Technology Co., Ltd.
(
εᓃ౽ᑌ (ဏ)Ҧ
ʮ̡) (formerly
known as Weisheng
(Wuhan) Technology
Co., Ltd. (
ฆ᳅ (ဏ)
ʮ̡)) (i)
(ii) ................
The PRC/
September 28,
2017
RMB5,000,000 — 80.0% NA Provision of
AIoT solutions
Shenzhen Xintonglu
Supply Chain
Technology Co., Ltd.
(
ଉέ̹อஷ༩
ʮ
̡
)(i) (ii) ...........
The PRC/
May 28, 2019
RMB5,000,000 — 100.00%
NA
Holding
company of
Shenzhen Enjoy
Information
Technology
Co., Ltd.
I-17


--- page 489 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
1 Basis of preparation and presentation of the Historical Financial Information (continued)
Company Names
Place and date of
incorporation
/establishment
Issued and paid-up
capital/registered
capital
Proportion of ownership
interest
Name of
statutory auditor
Principal
activities
Held by the
Company
Held by the
Subsidiary
Shenzhen Enjoy
Information
Technology Co., Ltd.
(
Ҧஔ
ʮ̡)
(i) (iii) (v) (See
Note 31) ...........
The PRC/
August 5, 2002
RMB25,013,000 — 49.75% 2021&2022&2023: BDO
China Shu Lun Pan Certified
Public Accountants LLP
ה(౷ஷ
Υྫ)
Software
development
and
maintenance
services
2021: Shenzhen
Huazhongjie Certified Public
Accountants
ה(౷
ஷΥྫ)
Dmall Life (China)
Network Technology
Co., Ltd.
(
ʕ਷ၣ
ʮ̡) (i)
(iii) ...............
The PRC/
September 7,
2015
USD188,000,000 — 100.00% 2022&2023: Beijing
Zhongcai Guoxin Certified
Public Accountants Co.,Ltd.
Ϟ
ʮ̡
Research and
development
Dmall Life (Chengdu)
Technology Co., Ltd.
(
߅
ʮ̡) (i) (ii) . . .
The PRC/
April 2, 2015
RMB5,000,000 — 100.0% NA The
development of
Dmall OS
system and
management of
research and
development
Retail Technology Asia
Limited (iv) ........
Hong Kong/
January 14,
2020
USD63,100,000 — 58.5% 2021:PricewaterhouseCoopers
2022&2023: KPMG
Provision of
Dmall OS in
overseas market
(i) The official names of these entities are in Chinese. The English translation of the names is for reference only.
(ii) No audited statutory financial statements were prepared for these entities for the Track Record Period.
(iii) These entities prepared the financial statements in accordance with the Accounting Standards for Business
Enterprise applicable to the enterprise in the PRC (the ‘‘PRC GAAP’’) issued by Ministry of Finance of the PRC.
(iv) The financial statements have been prepared in accordance with Hong Kong Financial Reporting
Standards (the “HKFRSs”) issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”) and the requirements of the Hong Kong Companies Ordinance.
(v) In addition to 49.75% equity interests in Shenzhen Enjoy Information Technology Co., Ltd. (“Shenzhen
Enjoy”), with the delegation of 3.90% of voting right from another shareholder of Shenzhen Enjoy, the
Group holds 53.65% voting rights in Shenzhen Enjoy. Therefore the Group controls Shenzhen Enjoy and
consolidates it in the Group’s Historical Financial Information as a subsidiary.
All companies comprising the Group have adopted December 31, as their financial year end date.
The Historical Financial Information has been prepared in accordance with all applicable IFRS
Accounting Standards as issued by the International Accounting Standards Board (the “IASB”).
Further details of the material accounting policy information are set out in Note 2.
The IASB has issued a number of new and revised IFRS Accounting Standards. For the purpose of
preparing this Historical Financial Information, the Group has consistently adopted all applicable
new and revised IFRS Accounting Standards throughout the Track Record Period. The Group has
not adopted any new standards or interpretations that are not yet effective for the Track Record
Period. The revised and new accounting standards and interpretations issued but not yet effective for
the Track Record Period and not yet adopted by the Group are set out in Note 35.
I-18


--- page 490 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
1 Basis of preparation and presentation of the Historical Financial Information (continued)
The Historical Financial Information also complies with the applicable disclosure provisions of
the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited
(the “Stock Exchange”).
The accounting policies set out below have been applied consistently to all periods presented in
the Historical Financial Information.
The Stub Period Corresponding Financial Information has been prepared in accordance with the
same basis of preparation and presentation adopted in respect of the Historical Financial
Information.
2 Material accounting policy information
(a) Going concern
Notwithstanding that the Group recorded net current liabilities of RMB7,432,358,000 and net
liabilities of RMB7,053,561,000 respectively as at June 30, 2024, which is primarily due to
several rounds of financing by issuing convertible redeemable preferred shares (Note 28) which is
recognized as financial liabilities totaling RMB7,407,194,000 as at June 30, 2024, the Historical
Financial Information has been prepared on a going concern basis based on the following:
(1) the redemption rights of above-mentioned preferred shares would be terminated upon listing
and the financial liabilities would be converted into equity.
(2) the directors of the Company believe that the Group has the ability to obtain new banking and
other financing facilities and has the ability to renew or refinance the banking facilities upon
maturity and obtain other borrowings. As at June 30, 2024, the Group had available unutilized
banking facilities of RMB266,500,000, which can be utilized by the Group to fulfil its liquidity
requirements when necessary.
(3) the directors of the Company have reviewed the Group’s cash flow projections, which cover a
period of twelve months from the date of this report and are of the opinion that the Group will
have sufficient working capital to meet its liabilities and obligations as and when they fall due
and to sustain its operations for the next twelve months from the date of this report. The
directors of the Company also believe that the Group can adjust the pace of its business
expansion and control operating expenses when necessary.
(b) Basis of measurement
The measurement basis used in the preparation of the Historical Financial Information is the
historical cost basis except that the following assets and liabilities are stated at their fair values
as explained in the accounting policies set out below:
 Investment property (see Note 2(j));
 Other financial assets (see Note 2(h));
 Derivative financial instruments (see Note 2(i)); and
 Convertible redeemable preferred shares (see Note 2(u)).
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
(c) Use of estimates and judgments
The preparation of the Historical Financial Information in conformity with IFRS Accounting
Standards require management to make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results of which form the
basis of making the judgments about carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the revision
affects only that period, or in the period of the revision and future periods if the revision affects
both current and future periods.
Judgments made by management in the application of IFRS Accounting Standards that have
significant effect on the Historical Financial Information and major sources of estimation
uncertainty are discussed in Note 3.
(d) Subsidiaries and non-controlling interests
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is
exposed, or has rights, to variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity. When assessing whether the
Group has power, only substantive rights (held by the Group and other parties) are considered.
An investment in a subsidiary is consolidated into the Historical Financial Information from the
date that control commences until the date that control ceases. Intra-group balances,
transactions and cash flows and any unrealized profits arising from intra-group transactions are
eliminated in full in preparing the Historical Financial Information. Unrealized loss resulting
from intra-group transactions are eliminated in the same way as unrealized gains but only to the
extent that there is no evidence of impairment.
Non-controlling interests represent the equity in a subsidiary not attributable directly or
indirectly to the Company, and in respect of which the Group has not agreed any additional
terms with the holders of those interests which would result in the Group as a whole having a
contractual obligation in respect of those interests that meets the definition of a financial
liability. For each business combination, the Group can elect to measure any non-controlling
interests either at fair value or at the non-controlling interests’ proportionate share of the
subsidiary’s net identifiable assets.
Non-controlling interests are presented in the consolidated statement of financial position
within equity, separately from equity attributable to the equity shareholders of the Company.
Non-controlling interests in the results of the Group are presented on the face of the
consolidated statement of profit or loss and the consolidated statement of profit or loss and
other comprehensive income as an allocation of the total profit or loss and total comprehensive
income for the year between non-controlling interests and the equity shareholders of the
Company. Loans from holders of non-controlling interests and other contractual obligations
towards these holders are presented as financial liabilities in the consolidated statement of
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
financial position in accordance with Notes 2(s) or (v) depending on the nature of the liability.
Changes in the Group’s interests in a subsidiary that do not result in a loss of control are
accounted for as equity transactions, whereby adjustments are made to the amounts of
controlling and non-controlling interests within consolidated equity to reflect the change in
relative interests, but no adjustments are made to goodwill and no gain or loss is recognized.
When the Group loses control of a subsidiary, it is accounted for as a disposal of the entire
interest in that subsidiary, with a resulting gain or loss being recognized in profit or loss. Any
interest retained in that former subsidiary at the date when control is lost is recognized at fair
value and this amount is regarded as the fair value on initial recognition of a financial asset or,
when appropriate, the cost on initial recognition of an interest in an associate or joint venture.
In the Company’s statement of financial position, an investment in a subsidiary is stated at cost
less impairment losses (see Note 2(n)), unless the investment is classified as held for sale (or
included in a disposal group that is classified as held for sale)).
(e) Associates and joint ventures
An associate is an entity in which the Group or Company has significant influence, but not
control or joint control, over its management, including participation in the financial and
operating policy decisions.
A joint venture is an arrangement whereby the Group or Company and other parties
contractually agree to share control of the arrangement, and have rights to the net assets of the
arrangement.
An investment in an associate or a joint venture is accounted for in the consolidated financial
statements under the equity method, unless it is classified as held for sale (or included in a
disposal group that is classified as held for sale). Under the equity method, the investment is
initially recorded at cost, adjusted for any excess of the Group’s share of the acquisition-date
fair values of the investee’s identifiable net assets over the cost of the investment (if any).
The cost of the investment includes purchase price, other costs directly attributable to the
acquisition of the investment, and any direct investment into the associate or joint venture that
forms part of the Group’s equity investment. Thereafter, the investment is adjusted for the post
acquisition change in the Group’s share of the investee’s net assets and any impairment loss
relating to the investment (see Notes 2(h) and (n)(ii)). At each reporting date, the Group
assesses whether there is any objective evidence that the investment is impaired. Any
acquisition-date excess over cost, the Group’s share of the post-acquisition, post-tax results of
the investees and any impairment losses for the year are recognized in the consolidated
statement of profit or loss, whereas the Group’s share of the post-acquisition post-tax items of
the investees’ other comprehensive income is recognized in the consolidated statement of profit
or loss and other comprehensive income.
When the Group’s share of losses exceeds its interest in the associate or the joint venture, the
Group’s interest is reduced to nil and recognition of further losses is discontinued except to the
extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the investee. For this purpose, the Group’s interest is the carrying amount of the investment
under the equity method, together with any other long-term interests that in substance form part
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
of the Group’s net investment in the associate or the joint venture, after applying the expected
credit loss (ECLs) model to such other long-term interests where applicable (see Note 2(n)(i)).
Unrealized profits and losses resulting from transactions between the Group and its associates
and joint venture are eliminated to the extent of the Group’s interest in the investee, except
where unrealized losses provide evidence of an impairment of the asset transferred, in which
case they are recognized immediately in profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice versa, the
retained interest is not remeasured. Instead, the investment continues to be accounted for under
the equity method.
In all other cases, when the Group ceases to have significant influence over an associate or joint
control over a joint venture, it is accounted for as a disposal of the entire interest in that
investee, with a resulting gain or loss being recognized in profit or loss. Any interest retained in
that former investee at the date when significant influence or joint control is lost is recognized
at fair value and this amount is regarded as the fair value on initial recognition of a financial
asset (see Note 2(h)).
In the Company’s statement of financial position, investments in associates and joint venture
are stated at cost less impairment losses (see Note 2(n)), unless classified as held for sale (or
included in a disposal group that is classified as held for sale).
(f) Business combination
The Group accounts for business combination using the acquisition method except for business
combination under common control. For business combination using the acquisition method,
the consideration transferred in the acquisition is generally measured at fair value, which is
calculated as the sum of the acquisition-date fair values of the assets transferred by the Group,
liabilities incurred by the Group to the former owners of the acquiree and the equity interests
issued by the Group in exchange for control of the acquiree.
Transaction costs are expensed as incurred, except if related to the issue of debt or equity
securities. Any contingent consideration is measured at fair value at the date of acquisition. If
an obligation to pay contingent consideration that meets the definition of a financial instrument
is classified as equity, then it is not remeasured and settlement is accounted for within equity.
Otherwise, other contingent consideration is remeasured at fair value at each reporting date and
subsequent changes in the fair value of the contingent consideration are recognized in the profit
and loss.
Business combination arising from transfer of interests in entities that are under the control of
the controlling shareholder that controls the Group is accounted for as if the acquisition had
occurred at the beginning of the Track Record Period or, if later, at the date that common
control was established. The assets acquired and liabilities assumed are recognized at the
carrying amounts recognized previously in the Group’s controlling shareholder’s perspective.
There is no recognition of any additional goodwill or excess of the acquirer’s interest in the net
fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities over cost at
the time of the common control combination to the extent of the continuation of the Group’s
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
controlling shareholder’s interests, and any difference between the net assets acquired and the
consideration paid is recognized directly in equity.
(g) Goodwill
Goodwill represents the excess of
(i) the aggregate of the fair value of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the fair value of the Group’s previously held
equity interest in the acquiree; over
(ii) the net fair value of the acquiree’s identifiable assets and liabilities measured as at the
acquisition date.
When (ii) is greater than (i), then this excess is recognized immediately in profit or loss as a
gain on a bargain purchase.
Goodwill is stated at cost less accumulated impairment losses. Goodwill arising on a business
combination is allocated to each cash-generating unit, or groups of cash generating units, that is
expected to benefit from the synergies of the combination and is tested annually for impairment
(See Note 2(n)(ii)).
On disposal of a cash generating unit during the periods, any attributable amount of purchased
goodwill is included in the calculation of the profit or loss on disposal.
(h) Other investments
The Group’s policies for investments, other than investments in subsidiaries, associates and
joint ventures, are set out below.
Investments are recognized/derecognized on the date the Group commits to purchase/sell the
investment. The investments are initially stated at fair value plus directly attributable
transaction costs, except for those investments measured at FVPL for which transaction costs
are recognized directly in profit or loss. For an explanation of how the Group determines fair
value of financial instruments, see Note 33(e). These investments are subsequently accounted
for as follows, depending on their classification.
(i) Investments other than equity investments
Non-equity investments held by the Group are classified into one of the following measurement
categories:
 amortized cost, if the investment is held for the collection of contractual cash flows which
represent solely payments of principal and interest. Interest income from the investment is
calculated using the effective interest method (see Note 2(z)(vii)).
 fair value through other comprehensive income (FVOCI)—recycling, if the contractual
cash flows of the investment comprise solely payments of principal and interest and the
investment is held within a business model whose objective is achieved by both the
collection of contractual cash flows and sale. Changes in fair value are recognized in other
comprehensive income, except for the recognition in profit or loss of expected credit
I-23


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
losses, interest income (calculated using the effective interest method) and foreign
exchange gains and losses. When the investment is derecognized, the amount accumulated
in other comprehensive income is recycled from equity to profit or loss.
 FVPL if the investment does not meet the criteria for being measured at amortized cost or
FVOCI (recycling). Changes in the fair value of the investment (including interest) are
recognized in profit or loss.
(ii) Equity investments
An investment in equity securities is classified as FVPL unless the equity investment is not held
for trading purposes and on initial recognition of the investment the Group makes an
irrevocable election to designate the investment at FVOCI (non-recycling) such that subsequent
changes in fair value are recognized in other comprehensive income. Such elections are made
on an instrument-by-instrument basis but may only be made if the investment meets the
definition of equity from the issuer’s perspective. Where such an election is made, the amount
accumulated in other comprehensive income remains in the fair value reserve (non-recycling)
until the investment is disposed of. At the time of disposal, the amount accumulated in the fair
value reserve (non-recycling) is transferred to retained earnings. It is not recycled through profit
or loss. Dividends from an investment in equity securities, irrespective of whether classified as
at FVPL or FVOCI, are recognized in profit or loss as other net income/(loss).
(i) Derivative financial instruments
Derivative financial instruments are recognized initially at fair value. At the end of each
reporting period the fair value is remeasured. The gain or loss on remeasurement to fair value is
recognized immediately in profit or loss.
(j) Investment property
Investment properties are land and/or buildings which are owned or held under a leasehold
interest (see Note 2(m)) to earn rental income and/or for capital appreciation. These include
land held for a currently undetermined future use and property that is being constructed or
developed for future use as investment property.
Investment properties are stated at fair value, unless they are still in the course of construction
or development at the end of the reporting period and their fair value cannot be reliably
measured at that time. Any gain or loss arising from a change in fair value or from the
retirement or disposal of an investment property is recognized in profit or loss. Rental income
from investment property is accounted for as described in Note 2(z)(v).
When the use of a property changes from owner-occupied to investment property, the property
is remeasured to fair value and reclassified accordingly. Any gain arising on this
remeasurement is recognized in profit or loss to the extent that it reverses a previous
impairment loss on the specific property, with any remaining gain recognized in OCI and
presented in the revaluation reserve. Any loss is recognized in profit or loss. However, to the
extent that an amount is included in the revaluation surplus for that property, the loss is
recognized in OCI and reduces the revaluation surplus within equity.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
(k) Property and equipment
The following items of property and equipment are stated at cost less accumulated depreciation
and impairment losses (see Note 2(n)(ii)):
 items of property and equipment, including right-of-use assets arising from leases of
underlying property and equipment (see Note 2(m)).
Gains or losses arising from the retirement or disposal of an item of property and equipment are
determined as the difference between the net disposal proceeds and the carrying amount of the
item and are recognized in profit or loss on the date of retirement or disposal.
Depreciation is calculated to write off the cost of items of property and equipment, less their
estimated residual values, if any, using the straight-line method over their estimated useful lives as
follows:
Estimated useful lives
 Building 20 - 40 years
 Office equipment and furniture 3 - 5 years
 Motor vehicles 5 years
 Electronic equipment 3 - 12 years
 Right-of-use assets Over the lease term
 Leasehold improvement The shorter of the unexpired term of lease and the
estimated useful lives
Where parts of an item of property and equipment have different useful lives, the cost of the item is
allocated on a reasonable basis between the parts and each part is depreciated separately. Both the
estimated useful life of an asset and its residual value, if any, are reviewed annually.
(l) Intangible assets (other than goodwill)
Expenditure on research activities is recognized as an expense in the period in which it is
incurred. Expenditure on development activities is capitalized if the product or process is
technically and commercially feasible and the Group has sufficient resources and the intention
to complete development. The expenditure capitalized includes the direct labor, and an
appropriate proportion of overheads, where applicable. Capitalized development costs are
stated at cost less accumulated amortization and impairment losses (see Note 2(n)(ii)). Other
development expenditure is recognized as an expense in the period in which it is incurred.
There were no development costs meeting the recognition criteria and capitalized as intangible
assets during the Track Record Period.
Intangible assets that are acquired by the Group are stated at cost less accumulated amortization
(where the estimated useful life is finite) and impairment losses (see Note 2(n)(ii)). Expenditure
on internally generated goodwill and brands is recognized as an expense in the period in which
it is incurred.
Amortization of intangible assets with finite useful lives is charged to profit or loss on a
straight-line basis over the assets’ estimated useful lives. Evaluation of the estimated useful
lives of the intangible assets is with reference to the factors, including but not limited to the
historical usage pattern, product life cycle, the useful life of the dependent assets, annual
attrition rate, technological obsolescence, and expiry of related legal rights. The following
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
intangible assets with finite useful lives are amortized from the date they are available for use
and their estimated useful lives are as follows:
Technological know-how ........................... 8 years
Software ......................................... 2- 5 years
Customer relationship .............................. 1 0 years
The estimated useful lives of technology know-how are determined based on the respective
periods over which such assets can bring economic benefits to the Group and the useful lives
adopted by comparable companies in the market.
The estimated useful lives of customer relationship are determined with reference to the
acquired business’s existing contract based on contract expiring dates, historical trend of
termination or renewal rate and to the useful lives of customer relationships used by the
industry peers.
Both the period and method of amortization are reviewed annually.
(m) Leased assets
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration. Control is conveyed where
the customer has both the right to direct the use of the identified asset and to obtain
substantially all of the economic benefits from that use.
(i) As a lessee
At the lease commencement date, the Group recognizes a right-of-use asset and a lease liability,
except for short-term leases that have a lease term of 12 months or less and leases of low-value
assets. When the Group enters into a lease in respect of a low-value asset, the Group decides
whether to capitalize the lease on a lease-by-lease basis. The lease payments associated with
those leases which are not capitalized are recognized as an expense on a systematic basis over
the lease term.
Where the lease is capitalized, the lease liability is initially recognized at the present value of
the lease payments payable over the lease term, discounted using the interest rate implicit in the
lease or, if that rate cannot be readily determined, using a relevant incremental borrowing rate.
After initial recognition, the lease liability is measured at amortized cost and interest expense is
calculated using the effective interest method. Variable lease payments that do not depend on
an index or rate are not included in the measurement of the lease liability and hence are charged
to profit or loss in the accounting period in which they are incurred.
The right-of-use asset recognized when a lease is capitalized is initially measured at cost, which
comprises the initial amount of the lease liability plus any lease payments made at or before the
commencement date, and any initial direct costs incurred. Where applicable, the cost of the
right-of-use assets also includes an estimate of costs to dismantle and remove the underlying
asset or to restore the underlying asset or the site on which it is located, discounted to their
present value, less any lease incentives received. The right-of-use asset is subsequently stated at
cost less accumulated depreciation and impairment losses (see Notes 2(k) and 2(n)(ii)).
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
The lease liability is remeasured when there is a change in future lease payments arising from a
change in an index or rate, or there is a change in the Group’s estimate of the amount expected
to be payable under a residual value guarantee, or there is a change arising from the
reassessment of whether the Group will be reasonably certain to exercise a purchase, extension
or termination option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or
loss if the carrying amount of the right-of-use asset has been reduced to zero.
The lease liability is also remeasured when there is a change in the scope of a lease or the
consideration for a lease that is not originally provided for in the lease contract (“lease
modification”) that is not accounted for as a separate lease. In this case the lease liability is
remeasured based on the revised lease payments and lease term using a revised discount rate at
the effective date of the modification. The only exceptions are rent concessions that occurred as
a direct consequence of the COVID-19 pandemic and met the conditions set out in paragraph
46B of IFRS 16 Leases. In such cases, the Group has taken advantage of the practical expedient
not to assess whether the rent concessions are lease modifications, and recognized the change in
consideration as negative variable lease payments in profit or loss in the period in which the
event or condition that triggers the rent concessions occurred.
In the consolidated statement of financial position, the current portion of long-term lease
liabilities is determined as the present value of contractual payments that are due to be settled
within twelve months after the reporting period.
(ii) As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance
lease or an operating lease. A lease is classified as a finance lease if it transfers substantially all
the risks and rewards incidental to the ownership of an underlying assets to the lessee. If this is
not the case, the lease is classified as an operating lease.
When a contract contains lease and non-lease components, the Group allocates the
consideration in the contract to each component on a relative stand-alone selling price basis.
The rental income from operating leases is recognized in accordance with Note 2(z)(v).
When the Group is an intermediate lessor, the sub-leases are classified as a finance lease or as
an operating lease with reference to the right-of-use asset arising from the head lease. If the
head lease is a short-term lease to which the Group applies the exemption described in Note
2(m)(i), then the Group classifies the sub-lease as an operating lease.
(n) Credit losses and impairment of assets
(i) Credit losses from financial instruments and contract assets
The Group recognizes a loss allowance for ECLs on financial assets measured at amortized cost
(including cash and cash equivalents, trade receivables and other receivables) and contract
assets as defined in IFRS 15 (see Note 2(p)).
Other financial assets measured at fair value are not subject to the ECL assessment.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Measurement of ECLs
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the
present value of all expected cash shortfalls (i.e. the difference between the cash flows due to the
Group in accordance with the contract and the cash flows that the Group expects to receive).
The expected cash shortfalls are discounted using the following discount rates where the effect
of discounting is material:
 fixed-rate financial assets, trade and other receivables and contract assets: effective
interest rate determined at initial recognition or an approximation thereof;
 variable-rate financial assets: current effective interest rate.
The maximum period considered when estimating ECLs is the maximum contractual period
over which the Group is exposed to credit risk.
In measuring ECLs, the Group takes into account reasonable and supportable information that
is available without undue cost or effort. This includes information about past events, current
conditions and forecasts of future economic conditions.
ECLs are measured on either of the following bases:
 12-month ECLs: these are losses that are expected to result from possible default events
within the 12 months after the reporting date; and
 lifetime ECLs: these are losses that are expected to result from all possible default events
over the expected lives of the items to which the ECL model applies.
Loss allowances for trade receivables and contract assets, lease receivables, contract assets and
amounts due from related parties are always measured at an amount equal to lifetime ECLs.
ECLs on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for factors that are specific to the debtors and an
assessment of both the current and forecast general economic conditions at the reporting date.
For all other financial instruments, the Group recognizes a loss allowance equal to 12-month
ECLs unless there has been a significant increase in credit risk of the financial instrument since
initial recognition, in which case the loss allowance is measured at an amount equal to lifetime
ECLs.
Significant increases in credit risk
In assessing whether the credit risk of a financial instrument has increased significantly since
initial recognition, the Group compares the risk of default occurring on the financial instrument
assessed at the reporting date with that assessed at the date of initial recognition. In making this
reassessment, the Group considers that a default event occurs when the borrower is unlikely to
pay its credit obligations to the Group in full, without recourse by the Group to actions such as
realizing security (if any is held). The Group considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward-
looking information that is available without undue cost or effort.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
In particular, the following information is taken into account when assessing whether credit risk
has increased significantly since initial recognition:
 failure to make payments on their contractually due dates;
 an actual or expected significant deterioration in a financial instrument’s external or
internal credit rating (if available);
 an actual or expected significant deterioration in the operating results of the debtor; and
 existing or forecast changes in the technological, market, economic or legal environment
that have a significant adverse effect on the debtor’s ability to meet its obligation to the
Group.
Depending on the nature of the financial instruments, the assessment of a significant increase in
credit risk is performed on either an individual basis or a collective basis. When the assessment
is performed on a collective basis, the financial instruments are grouped based on shared credit
risk characteristics, such as past due status and credit risk ratings.
ECLs are remeasured at each reporting date to reflect changes in the financial instrument’s
credit risk since initial recognition. Any change in the ECL amount is recognized as an
impairment gain or loss in profit or loss. The Group recognizes an impairment gain or loss for
all financial instruments with a corresponding adjustment to their carrying amount through a
loss allowance account.
Basis of calculation of interest income
Interest income recognized in accordance with Note 2(z)(vii) is calculated based on the gross
carrying amount of the financial asset unless the financial asset is credit-impaired, in which
case interest income is calculated based on the amortized cost (i.e. the gross carrying amount
less loss allowance) of the financial asset.
At each reporting date, the Group assesses whether a financial asset is credit-impaired. A
financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable events:
 significant financial difficulties of the debtor;
 a breach of contract, such as a default or delinquency in payments;
 it becoming probable that the borrower will enter into bankruptcy or other financial
reorganization; or
 significant changes in the technological, market, economic or legal environment that have
an adverse effect on the debtor.
 the disappearance of an active market for a security because of financial difficulties of the
issuer.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Write-off policy
The gross carrying amount of a financial asset or contract asset is written off (either
partially or in full) to the extent that there is no realistic prospect of recovery. This is
generally the case when the Group determines that the debtor does not have assets or
sources of income that could generate sufficient cash flows to repay the amounts subject to
the write-off.
Subsequent recoveries of an asset that was previously written off are recognized as a reversal of
impairment in profit or loss in the period in which the recovery occurs.
(ii) Impairment of other non-current assets
Internal and external sources of information are reviewed at the end of each reporting
period to identify indications that the following assets may be impaired or, except in the
case of goodwill, an impairment loss previously recognized no longer exists or may have
decreased:
 property and equipment, including right-of-use assets;
 intangible assets;
 goodwill; and
 investments in subsidiaries in the Company’s statements of financial position. (see Note 2(e)).
If any such indication exists, the asset’s recoverable amount is estimated. In addition, for
goodwill, intangible assets that are not yet available for use and intangible assets that have
indefinite useful lives, the recoverable amount is estimated annually whether or not there is any
indication of impairment.
 Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value less costs of disposal and
value in use. In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market assessments of
time value of money and the risks specific to the asset. Where an asset does not generate
cash inflows largely independent of those from other assets, the recoverable amount is
determined for the smallest group of assets that generates cash inflows independently (i.e.
a cash-generating unit).
 Recognition of impairment losses
An impairment loss is recognized in profit or loss if the carrying amount of an asset, or the
cash-generating unit to which it belongs, exceeds its recoverable amount. Impairment
losses recognized in respect of cash-generating units are allocated first to reduce the
carrying amount of any goodwill allocated to the cash-generating unit (or group of units)
and then, to reduce the carrying amount of the other assets in the unit (or group of units)
on a pro rata basis, except that the carrying value of an asset will not be reduced below its
individual fair value less costs of disposal (if measurable) or value in use (if determinable).
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NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
 Reversals of impairment losses
In respect of assets other than goodwill, an impairment loss is reversed if there has been a
favorable change in the estimates used to determine the recoverable amount. An
impairment loss in respect of goodwill is not reversed.
A reversal of an impairment loss is limited to the asset’s carrying amount that would have
been determined had no impairment loss been recognized in prior periods. Reversals of
impairment losses are credited to profit or loss in the period in which the reversals are
recognized.
(o) Inventories and other contract costs
(i) Inventories
Inventories are assets which are held for sale in the ordinary course of business, in the process
of production for such sale or in the form of materials or supplies to be consumed in the
production process or in the rendering of services.
Inventories are carried at the lower of cost and net realizable value.
Cost is calculated using the first-in-first-out method.
Net realizable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
When inventories are sold, the carrying amount of those inventories is recognized as an
expense in the period in which the related revenue is recognized.
The amount of any write-down of inventories to net realizable value and all losses of
inventories are recognized as an expense in the period the write-down or loss occurs. The
amount of any reversal of any write-down of inventories is recognized as a reduction in the
amount of inventories recognized as an expense in the period in which the reversal occurs.
(ii) Other contract costs
Other contract costs are either the incremental costs of obtaining a contract with a customer or
the costs to fulfill a contract with a customer which are not capitalized as inventory (see Note
2(o)(i)) or property and equipment (see Note 2(k)).
The incremental costs of obtaining a contract are those costs that the Group incurs to obtain a
contract with a customer that it would not have incurred if the contract had not been obtained
e.g. an incremental sales commission. The incremental costs of obtaining a contract are
capitalized when incurred if the costs relate to revenue which will be recognized in a future
reporting period and the costs are expected to be recovered. Other costs of obtaining a contract
are expensed when incurred.
Costs to fulfill a contract are capitalized if the costs relate directly to an existing contract or
to a specifically identifiable anticipated contract; generate or enhance resources that will be
used to provide goods or services in the future; and are expected to be recovered. Costs that
relate directly to an existing contract or to a specifically identifiable anticipated contract may
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
include direct labor, direct materials, allocations of costs, costs that are explicitly chargeable
to the customer and other costs that are incurred only because the Group entered into the
contract (e.g. payments to sub-contractors). Other costs of fulfilling a contract, which are not
capitalized as inventory, property and equipment or intangible assets, are expensed as
incurred.
Capitalized contract costs are stated at cost less accumulated amortization and impairment
losses. Impairment losses are recognized to the extent that the carrying amount of the contract
cost asset exceeds the net of (i) the remaining amount of consideration that the Group expects
to receive in exchange for the goods or services to which the asset relates, less (ii) any costs
that relate directly to providing those goods or services that have not yet been recognized as
expenses.
Amortization of capitalized contract costs is charged to profit or loss when the revenue to
which the asset relates is recognized. The accounting policy for revenue recognition is set out
in Note 2(z).
(p) Contract assets and contract liabilities
A contract asset is recognized when the Group recognizes revenue (see Note 2(z)) before being
unconditionally entitled to the consideration under the payment terms set out in the contract.
Contract assets are reclassified to receivables when the right to the consideration has become
unconditional (see Note 2(q)).
A contract liability is recognized when the customer pays non-refundable consideration before
the Group recognizes the related revenue (see Note 2(z)). A contract liability would also be
recognized if the Group has an unconditional right to receive non-refundable consideration
before the Group recognizes the related revenue. In such cases, a corresponding receivable
would also be recognized (see Note 2(q)).
For a single contract with the customer, either a net contract asset or a net contract liability is
presented. For multiple contracts, contract assets and contract liabilities of unrelated contracts
are not presented on a net basis.
When the contract includes a significant financing component, the contract balance includes
interest accrued under the effective interest method (see Note 2(z)).
(q) Trade and other receivables
A receivable is recognized when the Group has unconditional right to receive consideration. A right
to receive consideration is unconditional if only the passage of time is required before payment of
the consideration is due. If revenue has been recognized before the Group has an unconditional right
to receive consideration, that amount is presented as contract assets (see Note 2(p)).
Trade receivables that do not contain a significant financing component are initially measured
at their transaction price. Trade receivables that contain a significant financing component and
other receivables are initially measured at fair value plus transaction costs. All receivables are
subsequently stated at amortized cost, using the effective interest method and including an
allowance for credit losses (see Note 2(n)(i)).
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NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
(r) Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and
other financial institutions, and short-term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant risk of
changes in value, having been within three months of maturity at acquisition. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are
also included as a component of cash and cash equivalents for the purpose of the consolidated
cash flow statement. Cash and cash equivalents are assessed for ECLs in accordance with the
policy set out in Note 2(n)(i).
(s) Trade and other payables
Trade and other payables are initially recognized at fair value. Subsequent to initial recognition,
trade and other payables are stated at amortized cost unless the effect of discounting would be
immaterial, in which case they are stated at invoice amounts.
(t) Convertible bond
Convertible bond which does not contain an equity component are accounted for as follows:
At initial recognition the derivative component of the convertible bond is measured at fair value
and presented as part of derivative financial instruments (see Note 2(i)). Any excess of proceeds
over the amount initially recognized as the derivative component is recognized as the liability
component. Transaction costs that relate to the issue of the convertible bond are allocated to the
liability and derivative components in proportion to the allocation of proceeds. The portion of the
transaction costs relating to the liability component is recognized initially as part of the liability.
The portion relating to the derivative component is recognized immediately in profit or loss.
The derivative component is subsequently remeasured in accordance with Note 2(i). The
liability component is subsequently carried at amortized cost. The interest expense recognized
in profit or loss on the liability component is calculated using the effective interest method. If
the bond is converted, the carrying amounts of the derivative and liability components are
transferred to share capital and share premium as consideration for the shares issued. If the
bond is redeemed, any difference between the amount paid and the carrying amounts of both
components is recognized in profit or loss.
(u) Convertible redeemable preferred shares
The Company designated the convertible redeemable preferred shares as financial liabilities at
FVPL. The Company initially recognizes convertible redeemable preferred shares at fair value.
Subsequent to initial recognition, the convertible redeemable preferred shares are re-measured
to fair value at the end of each reporting period with changes in fair value being recognized in
profit or loss.
(v) Interest-bearing borrowings
Interest-bearing borrowings are measured initially at fair value less transaction costs.
Subsequent to initial recognition, interest-bearing borrowings are stated at amortized cost using
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
the effective interest method. Interest expense is recognized in accordance with the Group’s
accounting policy for borrowing costs (see Note 2(ab)).
(w) Employee benefits
(i) Short-term employee benefits and contributions to defined contribution retirement plans
Salaries, annual bonuses, paid annual leave, contributions to defined contribution retirement
plans and the cost of non-monetary benefits are accrued in the period in which the associated
services are rendered by employees. Where payment or settlement is deferred and the effect
would be material, these amounts are stated at their present values.
(ii) Share-based payments
The Group operates share incentive plans, under which it receives services from eligible
employees, directors and non-employees as consideration for equity instruments (including
share options, restricted share units (“RSUs”) and restricted ordinary shares) of the Group. The
fair value of the services received in exchange for the grant of the equity instruments (share
options, RSUs and restricted ordinary shares) is recognized as an expense in the consolidated
statements of profit or loss with a corresponding increase in share-based payments reserve in
equity.
Share options
For grant of share options, the total amount to be expensed is determined by reference to the
fair value of the options granted using option-pricing models.
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 Group 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. The equity amount is recognized in
the share-based payment reserve until either the option is exercised (when it is included in the
amount recognized in share capital for the shares issued) or the option expires (when it is
released directly to retained profits).
RSUs
For grant of RSUs, the total amount to be expensed is determined by reference to the fair value
of the Company’s ordinary shares at the grant date.
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 Group revises
its estimates of the number of RSUs 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.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Restricted ordinary shares issued by the Company’s subsidiary
For restricted ordinary shares issued by the Company’s subsidiary, the total amount to be
expensed is determined by reference to the fair value of equity instruments granted. In addition,
the Company’s subsidiary will re-purchase the restricted ordinary shares forfeited due to
unsatisfaction of service condition or performance condition fulfilled by the grantees.
Service and non-marketing performance conditions are included in calculation of the number of
restricted ordinary shares that are expected to vest. The total amount expensed 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 reporting period, the Group revises its estimates of the
number of restricted ordinary shares that are expected to vest based on the non-marketing
performance and service conditions. It recognises the impact of the revision to original
estimates, if any, in the consolidated statements of profit or loss, with a corresponding
adjustment to equity.
Modifications and Cancelations
The Group may modify the terms and conditions on which share incentive awards were
granted. If a modification increases the fair value of the equity instruments granted, the
incremental fair value granted is included in the measurement of the amount recognized for the
services received over the remainder of the vesting year.
A grant of share incentive awards, that is canceled or settled during the vesting year, is treated
as an acceleration of vesting. The Group immediately recognizes the amount that otherwise
would have been recognized for services received over the remainder of the vesting year.
(iii) Termination benefits
Termination benefits are recognized as an expense when the Group is demonstrably committed,
without realistic possibility of withdrawal, to a formal detailed plan to either terminate
employment before the normal retirement date, or to provide termination benefits as a result of
an offer made encourage voluntary redundancy.
(x) Income tax
Income tax expense comprises current tax and deferred tax. It is recognized in profit or loss
except to the extent that it relates to a business combination, or items recognized directly in
equity or in other comprehensive income.
Current tax comprises the estimated tax payable or receivable on the taxable income or loss for
the year and any adjustments to the tax payable or receivable in respect of previous years. The
amount of current tax payable or receivable is the best estimate of the tax amount expected to
be paid or received that reflects any uncertainty related to income taxes. It is measured using
tax rates enacted or substantively enacted at the reporting date. Current tax also includes any
tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation
purposes.
Deferred tax is not recognized for:
 temporary differences on the initial recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable profit or loss
and does not give rise to equal taxable and deductible temporary differences;
 temporary differences related to investment in subsidiaries, associates and joint venture to
the extent that the Group is able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the foreseeable future;
 taxable temporary differences arising on the initial recognition of goodwill; and
 those related to the income taxes arising from tax laws enacted or substantively enacted to
implement the Pillar Two model rules published by the Organisation for Economic
Cooperation and Development.
The Group recognized deferred tax assets and deferred tax liabilities separately in relation to its
lease liabilities and right-of-use assets.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible
temporary differences to the extent that it is probable that future taxable profits will be
available against which they can be used. Future taxable profits are determined based on the
reversal of relevant taxable temporary differences. If the amount of taxable temporary
differences is insufficient to recognise a deferred tax asset in full, then future taxable profits,
adjusted for reversals of existing temporary differences, are considered, based on the business
plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised; such reductions are reversed when the probability of future taxable
profits improves.
Where investment properties are carried at their fair value in accordance with Note 2(j), the
amount of deferred tax recognized is measured using the tax rates that would apply on sale of
those assets at their carrying value at the reporting date, unless the property is depreciable and
is held within a business model whose objective is to consume substantially all of the economic
benefits embodied in the property over time, rather than through sale. In all other cases, the
measurement of deferred tax reflects the tax consequences that would follow from the manner
in which the Group expects, at the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
(y) Provisions and contingent liabilities
(i) Provisions
When determining the amounts to be recognized in respect of liabilities arising from the
provisions, management makes the estimates based on prior experience and default history. It is
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
possible that the prior experience and default history is not indicative of all the future loss. Any
increase or decrease in the provisions would affect the profit or loss in future years.
Provisions are recognized when the Group has a legal or constructive obligation arising as a result
of a past event, it is probable that an outflow of economic benefits will be required to settle the
obligation and a reliable estimate can be made. Where the time value of money is material,
provisions are stated at the present value of the expenditure expected to settle the obligation.
(ii) Contingent liabilities
Where it is not probable that an outflow of economic benefits will be required, or the amount cannot
be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of
outflow of economic benefits is remote. Possible obligations, whose existence will only be
confirmed by the occurrence or non-occurrence of one or more future events are also disclosed as
contingent liabilities unless the probability of outflow of economic benefits is remote.
(z) Revenue and other net income/(loss)
The Group derives its revenues from providing retail core service cloud, e-commerce service
cloud and other revenue to customers.
Revenue is recognized when control over a product or service is transferred to the customer, at
the amount of promised consideration to which the Group is expected to be entitled, excluding
those amounts collected on behalf of third parties. Revenue excludes value added tax or other
sales taxes and is after deduction of any trade discounts.
Further details of the Group’s revenue and other net income/(loss) recognition policies are as
follows:
(i) Retail core service cloud
Retail core service cloud provides full-spectrum digitalized solutions for retailers, including
operating system and AIoT solutions.
Operating system
The operating system the Group mainly offers is Dmall OS, which is a SaaS solution
proprietarily developed by the Group to digitalize retailers’ operations and support intelligent
business decision. The Group is responsible for design and implementation services to the
retailer customers, which are not distinct from the utilization of the SaaS solutions during the
subscription period. Therefore, design and implementation services together with the SaaS
solutions are determined to be one performance obligation. The Group usually charges the
retailer customers a fixed implementation fee or customisation fee prior the launch of SaaS
solutions, and charges the retailer customers either by taking a percentage of the volume of
sales (i.e. take rate model), or by a fixed subscription fee upon the launch of SaaS solutions.
Revenue from services of Dmall OS is recognized over the contract term. For take rate model,
the Company performs the sales reconciliation with the customers on a monthly basis. The
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Company issues invoices and recognizes revenue after volume of sales being agreed by
customers. For fixed implementation fee, customisation fee and subscription fee model,
revenue is generally recognized ratably over the contract term.
AIoT solutions
AIoT solutions offer the service to retailers to build digitally integrated retail locations that
consolidate offline data to achieve more efficient store management. AIoT solutions primary
comprise intelligent delivery solutions, intelligent cleaning solutions, intelligent loss prevention
solutions, intelligent package sorting solutions, intelligent cashier solutions and intelligent
merchandise replenishment solutions.
When an AIoT solutions contract includes multiple performance obligations, the Group
allocates the transaction price to each performance obligation on a relative stand-alone selling
price basis, which is determined based on the prices charged to or expected to recover from
customers. For AIoT solutions contracts billed based on a fixed amount for a specified service
period, revenue is recognized over the subscribed period. For services provided on a
consumption basis, revenue is recognized based on the customer utilisation of the resources
when the services are rendered to the customers. For AIoT product sales, revenue is recognized
when the products are delivered and have been accepted by customers.
(ii) E-commerce service cloud
The Group historically operated an online-to-offline (“O2O”) retailer platform, Dmall app, for
offline retailers and merchants, to facilitate their online sales of their merchandise to the
consumer during Track Record Period. The Group is not primarily obligated to the consumers
in their purchases of merchandise, does not take inventory risk, and does not have latitude over
pricing of the merchandise. Upon the completion of sales, the Group charges the retailers or
merchants a fixed rate commission fee, as agreed in the contract, based on the sales amount.
Commission fees are recognized on a net basis at the point of completion of delivery of
merchandise.
Meanwhile, the Group fulfils the delivery needs of O2O business by utilizing riders from
outsourced delivery agencies. The Group is primarily responsible for and guarantee identifying
and directing riders to complete the deliveries requested by the consumers, and has the ability
to control the related services. The Group considers itself as a principal in the delivery
arrangement. Accordingly, revenues resulting from delivery services are recognized on a gross
basis at the point of completion of delivery of merchandise, with the amounts paid to the riders
recorded in cost of revenue.
(iii) Other revenue
Other revenue comprises offline advertising service, marketing resource collaboration service
and product sales. Revenue is recognized when control over a product or service is transferred
to the customers at the amount of promised consideration to which the Group is expected to be
entitled, excluding any obligation to compensate customers.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
(iv) Incentives
The Group offers three types of incentives:
(a) The Group offers customers incentives for retail core service cloud and e-commerce service
cloud services when the sales volume meets pre-determined amounts on a monthly basis. The
Group records such incentives as deduction of revenue as it does not receive a distinct good or
service or the fair value of the good or service received cannot be reasonably estimated.
(b) The Group, in certain circumstance, pays the incentives on behalf of certain retailers and
merchants to consumers, which is not treated as the Group’s incentives. Such incentive has no
financial impact to the Group’s profit or loss.
(c) The Group offers consumers incentives at the Group’s discretion that are neither specific to
any retailers or merchants nor contractually required by any retailers or merchants for platform
transactions in order to stimulate the transaction volume on the Group’s online platform. Such
consumer incentives offered to promote the Group’s platform are recognized as selling and
marketing expenses.
(v) Rental income from operating leases
Rental income receivable under operating leases is recognized in profit or loss in equal
installments over the periods covered by the lease term, except where an alternative basis is
more representative of the pattern of benefits to be derived from the use of the leased asset.
Lease incentives granted are recognized in profit or loss as an integral part of the aggregate net
lease payments receivable. Variable lease payments that do not depend on an index or a rate are
recognized as income in the accounting period in which they are earned.
(vi) Dividends
Dividends income from unlisted investments is recognized when the shareholder’s right to
receive payment is established.
Dividends income from listed investments is recognized when the share price of the investment
goes ex-dividend.
(vii) Interest income
Interest income is recognized as it accrues under the effective interest method using the rate
that exactly discounts estimated future cash receipts through the expected life of the financial
asset to the gross carrying amount of the financial asset. For credit-impaired financial assets,
the effective interest rate is applied to the amortized cost (i.e. gross carrying amount net of loss
allowance) of the asset (see Note 2(n)(i)).
(viii) Government grants
Government grants are recognized in the statement of financial position initially when there is
reasonable assurance that they will be received and that the Group will comply with the
conditions attaching to them. Grants that compensate the Group for expenses incurred are
recognized as income in profit or loss on a systematic basis in the same periods in which the
expenses are incurred.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
(aa) Translation of foreign currencies
Foreign currency transactions are translated into the functional currency of the entity to which
they relate at the foreign exchange rates ruling at the transaction dates. Monetary assets and
liabilities denominated in foreign currencies are translated into the functional currency of the
entity to which they relate at the foreign exchange rates ruling at the end of the reporting
period. Exchange gains and losses are recognized in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign
currency are translated into the functional currency of the entity to which they relate using the
foreign exchange rates ruling at the transaction dates. The transaction date is the date on which
the Group initially recognizes such non-monetary assets or liabilities.
The results of foreign operations which have a functional currency other than RMB, the
Group’s presentation currency, are translated into RMB at the exchange rates approximating
the foreign exchange rates ruling at the dates of the transactions. Statement of financial position
items are translated into RMB at the closing foreign exchange rates at the end of the reporting
period. The resulting exchange differences are recognized in other comprehensive income and
accumulated separately in equity.
On disposal of a foreign operation, the cumulative amount of the exchange differences relating
to that foreign operation is reclassified from equity to profit or loss when the profit or loss on
disposal is recognized.
(ab) Borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of an
asset which necessarily takes a substantial period of time to get ready for its intended use or
sale are capitalized as part of the cost of that asset. Other borrowing costs are expensed in the
period in which they are incurred.
The capitalization of borrowing costs as part of the cost of a qualifying asset commences when
expenditure for the asset is being incurred, borrowing costs are being incurred and activities
that are necessary to prepare the asset for its intended use. Capitalization of borrowing costs is
suspended or ceases when substantially all the activities necessary to prepare the qualifying
asset for its intended use are interrupted or complete.
(ac) Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and cash
flows of which can be clearly distinguished from the rest of the Group and which represents a
separate major line of business or geographical area of operations, or is part of a single
coordinated plan to dispose of a separate major line of business or geographical area of
operations, or is a subsidiary acquired exclusively with a view to resale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the
criteria to be classified as held for sale, if earlier. It also occurs if the operation is abandoned.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
Where an operation is classified as discontinued, a single amount is presented on the face of the
statement of profit or loss, which comprises:
 the post-tax profit or loss of the discontinued operation; and
 the post-tax gain or loss recognized on the measurement to fair value less costs to sell, or
on the disposal, of the assets or disposal group(s) constituting the discontinued operation.
(ad) Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Group’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) The entity and the Group are members of the same group.
(ii) One entity is an associate or joint venture of the other entity (or an associate or joint
venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of
the third entity.
(v) The entity is a post-employment benefit plan for the benefit of employees of either
the Group or an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a).
(vii) A person identified in (a)(i) has significant influence over the entity or is a member
of the key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of a group of which it is a part, provides key
management personnel services to the Group or to the Group’s parent.
Close members of the family of a person are those family members who may be expected to
influence, or be influenced by, that person in their dealings with the entity.
(ae) Segment reporting
Operating segments, and the amounts of each segment item reported in the financial statements,
are identified from the financial information provided regularly to the chief operating decision-
maker (“CODM”) of the Group for the purposes of allocating resources to, and assessing the
performance of, the Group’s various lines of business and geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes
unless the segments have similar economic characteristics and are similar in respect of the
nature of products and services, the nature of production processes, the type or class of
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
2 Material accounting policy information (continued)
customers, the methods used to distribute the products or provide the services, and the nature of
the regulatory environment. Operating segments which are not individually material may be
aggregated if they share a majority of these criteria.
3 Accounting judgments and estimates
Notes 12, 15, 26 and 33 contains information about the assumptions and their risk factors
relating to fair value of investment property, goodwill impairment, fair value of equity-settled
share-based transactions and fair value of financial instruments. Other key sources of
estimation uncertainty are as follows:
(a) Impairment of non-current assets other than financial assets
If circumstances indicate that the carrying amount of a non-current asset other than financial
assets may not be recoverable, the asset may be considered “impaired”, and an impairment loss
may be recognized in accordance with accounting policy for impairment of non-current assets
as described in Note 2(n)(ii). These assets are tested for impairment periodically or whenever
the events or changes in circumstances indicate that their recorded carrying amounts may not
be recoverable. When such a decline has occurred, the carrying amount is reduced to
recoverable amount. The recoverable amount is the greater of the fair value less costs of
disposal and value in use. In determining the value in use, expected future cash flows generated
by the asset are discounted to their present value, which requires significant judgment relating
to the level of revenue and amount of operating costs. The Group uses all readily available
information in determining an amount that is a reasonable approximation of the recoverable
amount, including estimates based on reasonable and supportable assumptions and projections
of the level of revenue and amount of operating costs. Changes in these estimates could have a
significant impact on the recoverable amount of the assets and could result in additional
impairment charge or reversal of impairment in future periods.
(b) Deferred tax assets
Deferred tax assets are recognized for all temporary differences to the extent that it is probable
that future taxable profit will be available against which the temporary differences can be
utilized. In assessing whether such temporary differences can be utilized in the future, the
Group needs to make judgments and estimates on the ability of each of its subsidiaries to
generate taxable income in the future years. The Group believes it has recorded adequate
deferred taxes based on the prevailing tax rules and regulations and its current best estimates
and assumptions. In the event that future tax rules and regulations or related circumstances
change, adjustments to deferred taxation may be necessary which would impact the Group’s
results or financial position.
4 Discontinued operations
On April 24, 2024, the Group entered into termination agreement of Contractual Arrangements
and a share transfer agreement, pursuant to which the Contractual Arrangements were
terminated and the Group transferred 50% equity interests in Dmall Fresh (Beijing) to
I-42


--- page 514 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
4 Discontinued operations (continued)
Mr. Zhang Feng and Ms. Lu Yuxin at a consideration of RMB1, respectively. Immediately
following the transactions, the Group no longer holds, directly or indirectly, any interest in
Dmall Fresh (Beijing). As a result of the divestment, the financial results of the Group’s online
advertising services were classified as discontinued operations in the Historical Financial
Information.
(a) Results of discontinued operations
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue 196,400 172,695 164,334 76,721 41,781
Cost of revenue ............................... (11,110) (8,767) (6,552) (1,472) (2,510)
Gross profit .................................. 185,290 163,928 157,782 75,249 39,271
Research and development expenses ............... (25,852) (21,140) (29,931) (12,084) (13,925)
Selling and marketing expenses ................... (162,709) (68,634) (29,249) (20,097) (45,225)
General and administration expenses .............. (13,756) (14,656) (5,054) (3,036) (858)
Gain on disposal of a subsidiary .................. — — — — 253,871
(Loss)/profit before taxation .................... (17,027) 59,498 93,548 40,032 233,134
Income tax expense ............................ — — — — —
(Loss)/profit for the year/period from discontinued
operations ................................. (17,027) 59,498 93,548 40,032 233,134
(Loss)/earnings per share – Discontinued
operations .................................
Basic and diluted (RMB) ........................ (0.04) 0.11 0.18 0.08 0.44
(b) Cash (used in)/generated from discontinued operations
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Net cash (used in)/generated from operating
activities ................................... (66,009) 94,988 66,214 4,323 (19,278)
Net cash used in investing activities ................ — — — — —
Net cash used in financing activities ................ — — — — —
Net cash (used in)/generated for the year/period ...... (66,009) 94,988 66,214 4,323 (19,278)
I-43


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
4 Discontinued operations (continued)
(c) Effect of disposal on the financial position of the Group
The disposals had the following consolidated effect on the Group’s assets and liabilities on the
disposal date:
RMB’000
Cash and cash equivalents ............................................................ 26,101
Restricted bank deposits .............................................................. 10,513
Other current assets .................................................................. 1,292
Trade receivables ................................................................... 5 3
Prepayments, deposits and other receivables .............................................. 28,007
Other non-current assets .............................................................. 1 0
Contract liabilities ................................................................... (4,888)
Accrued expenses and other payables .................................................... (231,729)
Net liabilities ...................................................................... (170,641)
Total consideration satisfied by cash .................................................... - *
Intangible assets recognized from pre-disposal intergroup transactions upon loss of control ......... 83,230
Gain on disposal of subsidiaries charged to the results of discontinued operations in the consolidated
statements of profit or loss .......................................................... 253,871
Net cash outflow arising on disposal: ....................................................
Consideration received, satisfied in cash ................................................. - *
Less: cash and cash equivalents disposed of .............................................. 26,101
Net cash outflow ................................................................... (26,101)
* The balance represents amount less than RMB500.
5 Revenue and segment reporting
(a) Revenue
The principal activities of the Group are providing retail core service cloud, e-commerce
service cloud and other revenue to customers.
(i) Disaggregation of revenue
Revenue of the Group are all from contracts with customers within the scope of IFRS 15. The
amount of each significant category of revenue is as follows:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue from contracts with customers within
the scope of IFRS 15
 Retail core service cloud ..................... 438,814 880,502 1,298,730 602,255 933,185
 E-commerce service cloud ................... 409,312 447,487 300,006 160,465 4,279
 Other revenue ............................. 6 6 2 7 5 (13,379) 1,283 1,698
848,192 1,328,264 1,585,357 764,003 939,162
I-44


--- page 516 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
5 Revenue and segment reporting (continued)
Disaggregation of revenue from contracts with customers by the timing of revenue recognition
is as follows:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Disaggregated by timing of revenue recognition
 Point in time .............................. 569,469 682,065 469,203 248,560 108,270
 Over time ................................. 278,723 646,199 1,116,154 515,443 830,892
848,192 1,328,264 1,585,357 764,003 939,162
The Group’s revenue from customers individually contributing over 10% of the total revenue of
the Group during the Track Record Period is as below, details of concentrations of credit risk
arising from this customer are set out in Note 33(a).
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Customer A* ................................ 508,725 850,501 1,139,183 550,318 706,770
* Customer A is considered as a group of entities known to be under common control.
(ii) Revenue expected to be recognized in the future arising from contracts with customers in
existence at the reporting date
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the aggregated amount of the
transaction price allocated to the remaining performance obligations under the Group’s existing
contracts is RMB148,254,000, RMB115,008,000, RMB247,238,000 and RMB568,067,000,
respectively. These amounts represent revenue expected to be recognized in the future from
contracts with customers in existence at the reporting date. The Group will recognize the
expected revenue in future when or as the work is completed, which is expected to occur over
the next 1 year to 5 years.
I-45


--- page 517 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
5 Revenue and segment reporting (continued)
(b) Geographic information
The following table sets out information about the geographical location of (i) the Group’s revenue
from external customers and (ii) the Group’s investment property, property and equipment,
intangible assets, goodwill, investments in associates and joint ventures, non-current prepayments,
deposits and other receivables (“Specified non-current assets”). The geographical location of
customers is based on the location at which the services were provided or the goods delivered. The
geographical location of the specified non-current assets is based on the physical location of the
asset, in the case of property and equipment, the location of the operation to which they are
allocated, in the case of intangible assets and goodwill, and the location of operations, in the case of
investments in associates and joint ventures.
Revenues from external customers
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
The Chinese Mainland ........................ 827,936 1,247,930 1,462,096 705,676 864,121
Overseas ................................... 20,256 80,334 123,261 58,327 75,041
848,192 1,328,264 1,585,357 764,003 939,162
Specified non-current assets
As at December 31, As at June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
The Chinese Mainland ............................ 490,047 340,930 328,128 343,774 396,787
Overseas ....................................... 5 4 1 — 4,627 3,860 3,798
490,588 340,930 332,755 347,634 400,585
(c) Segment reporting
The Group has presented the following two reportable segments. No operating segments have
been aggregated to form the following reportable segments.
 Retail core service cloud
 E-commerce service cloud
Other operations include offline advertising service, marketing resource collaboration service
and product sales.
(i) Segment results
For the purposes of assessing segment performance and allocating resources between
segments, the Group’s senior executive management monitors the revenue and gross profit
attributable to each reportable segment. Other items in profit or loss are not allocated to
reportable segments.
Revenue and costs are allocated to the reportable segments with reference to sales generated by
those segments and the costs incurred by those segments.
I-46


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
5 Revenue and segment reporting (continued)
The measure used for reporting segment profit is gross profit. No inter-segment sales have
occurred during the Track Record Period. The Group’s other net income/(loss) and expense
items, such as other net income/(loss), selling and marketing expenses, general and
administration expenses, research and development expenses, and assets and liabilities are not
measured under individual segments. Accordingly, neither information on segment assets and
liabilities nor information concerning capital expenditure, operating expenses, interest income
and interest expenses is presented.
Information regarding the Group’s reportable segments as provided to the Group’s senior
executive management for the purposes of resource allocation and assessment of segment
performance for the Track Record Period is set out below.
Year ended December 31, 2021
Reportable segments
Retail core service
cloud
E-commerce
service cloud Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue .................................. 438,814 409,312 66 848,192
Segment gross profit/(loss) .......................... 260,163 (87,490) 66 172,739
Year ended December 31, 2022
Reportable segments
Retail core service
cloud
E-commerce
service cloud Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue ................................. 880,502 447,487 275 1,328,264
Segment gross profit .............................. 494,570 10,351 275 505,196
Year ended December 31, 2023
Reportable segments
Retail core service
cloud
E-commerce
service cloud Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue ................................. 1,298,730 300,006 (13,379) 1,585,357
Segment gross profit/(loss) ......................... 541,721 30,858 (17,878) 554,701
Six months ended June 30, 2024
Reportable segments
Retail core service
cloud
E-commerce
service cloud Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue .................................. 933,185 4,279 1,698 939,162
Segment gross profit/(loss) .......................... 368,566 1,708 (11,020) 359,254
Six months ended June 30, 2023 (unaudited)
Reportable segments
Retail core service
cloud
E-commerce
service cloud Others Total
RMB’000 RMB’000 RMB’000 RMB’000
Segment revenue .................................. 602,255 160,465 1,283 764,003
Segment gross profit/(loss) .......................... 265,308 12,554 (693) 277,169
I-47


--- page 519 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
6 Other net income/(loss)
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Government grants and tax preference (i) ........... 15,890 52,849 71,653 22,620 26,486
Rental income ................................. 2 3 0 2,451 — — —
Investment income from wealth management
products .................................... 6,841 1,195 167 46 547
Fair value change in financial assets measured at FVPL
(Note 17) ................................... 11,433 12,460 43,762 1,374 (87,107)
Gain from re-measurement of equity interest upon
acquisition (Note 31) ......................... 2,782 — — — —
Gain/(loss) on disposal of subsidiaries, net (Note 32) . . — 100,131 (1) — —
Others ....................................... 6 1 1,343 (79) (164) 940
37,237 170,429 115,502 23,876 (59,134)
(i) Government grants mainly represented unconditional cash awards granted by local authorities in the PRC during the Track Record
Period. During the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, government
grants mainly represented subsidies received from government for encouraging foreign investment and technology research activities.
7 Loss before taxation
Loss before taxation is arrived at after charging/(crediting):
(a) Net finance costs
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Interest on bank loans and other borrowings ......... 4,061 3,348 9,027 3,471 6,462
Accrued financial charges of convertible bond ....... — 7,233 13,595 6,803 6,606
Interest on lease liabilities ........................ 1,197 1,091 1,870 887 870
Interest income from bank deposits ................ (2,356) (4,965) (10,897) (4,959) (4,748)
Gains on partial derecognition of convertible bond
(Note 29) ................................... — — — — (2,379)
Changes in fair value on the derivative components of
convertible bond (Note 29) ..................... — 4,370 2,570 3,752 (172)
Foreign currency exchange loss/(gain) .............. 2,320 11,988 (2,821) (3,179) (899)
5,222 23,065 13,344 6,775 5,740
(b) Staff costs
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, wages, bonuses and other benefits .......... 729,520 866,904 780,810 388,474 309,617
Contributions to defined contribution retirement
schemes .................................... 76,209 83,685 77,201 39,689 31,243
Share-based payment expenses (Note 26) ........... 134,140 12,530 13,620 7,229 8,330
939,869 963,119 871,631 435,392 349,190
I-48


--- page 520 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
7 Loss before taxation (continued)
Employees of the Group’s subsidiaries in the PRC are required to participate in a defined
contribution retirement scheme administered and operated by the local municipal government.
The Group’s subsidiaries in the PRC contribute funds which are calculated on certain
percentages of the average employee salary as agreed by the local municipal government to the
scheme to fund the retirement benefits of the employees.
The Group also operates a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong
Kong Mandatory Provident Fund Scheme Ordinance for employees under the jurisdiction of the
Hong Kong Employment Ordinance. The MPF Scheme is a defined contribution retirement plan
administered by an independent trustee. Under the MPF Scheme, the employer and its employees are
each required to make contributions to the plan at 5% of the employees’ relevant salaries, subject to a
cap of monthly relevant salaries of HKD30,000. Contributions to the MPF Scheme vest immediately.
The Group has no further material obligation for payment of other retirement benefits beyond
the above contributions.
(c) Other items
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Expenses of promotion and marketing activities ...... 245,772 118,359 48,002 29,737 2,076
Logistics costs ................................. 383,125 342,992 233,454 129,831 —
Servers and cloud infrastructure costs .............. 63,218 58,542 58,046 29,308 21,430
Depreciation charge (Note 13) .................... 63,481 51,937 45,793 23,387 19,421
Cost of inventories sold ......................... 27,528 70,724 31,725 20,719 11,348
Amortization of intangible assets (Note 14) .......... 2,478 12,478 12,485 6,162 8,916
Impairment loss on trade and other receivables ....... 1,032 1,596 1,784 578 1,533
Listing expenses ............................... — 38,391 25,859 14,537 20,372
8 Income tax in the consolidated statements of profit or loss
(a) Taxation in the consolidated statements of profit or loss represent:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Current taxation (unaudited)
Provision for the year/period (Note 27(a)) ........... 6 0 3 1 6 5 3 4 2 5 3 3 8 9
Deferred taxation
Origination and reversal of temporary differences (Note
27(b)) ...................................... 6 8 5 (2,145) (3,855) (2,131) (2,397)
745 (1,829) (3,321) (1,878) (2,008)
I-49


--- page 521 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
8 Income tax in the consolidated statements of profit or loss (continued)
(b) Reconciliation between tax expenses/(benefit) and accounting loss at applicable tax rates:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss before taxation ........................... 1,824,303 842,355 658,760 549,754 251,080
Notional tax on loss before taxation, calculated at the
applicable rates in the jurisdictions concerned (i) . . 223,904 56,768 23,856 20,346 (45,301)
Effect of preferential tax rate (i) (iii) .............. (76,538) (21,455) 5,719 2,803 48,128
Effect of additional deduction on research and
development expenses (ii) .................... 47,447 58,615 60,094 23,867 23,630
Tax effect of non-deductible expenses ............. (442) (328) (70,166) (131) (1,441)
Tax losses and temporary differences for which no
deferred tax assets were recognized ............. ( 193,626) (95,429) (22,824) (48,763) (27,024)
Actual tax expenses/(benefit) .................... 7 4 5 (1,829) (3,321) (1,878) (2,008)
(i) Income tax rate applies to the Group:
Pursuant to the rules and regulations of the BVI, the Group is not subject to any income
tax in the BVI.
Pursuant to the rules and regulations of the Cayman Islands, the Group is not subject to
any income tax in the Cayman Islands.
Dmall Hong Kong Limited (“Dmall HK”), Retail Technology Asia Limited (“Retail
Technology Asia”), DFI Digital (Hong Kong) Limited (formerly known as Retail
Technology (Hong Kong) Ltd., which was disposed in 2022) and Digital Retail
Technology (Hong Kong) Limited, the Group’s subsidiaries incorporated in
Hong Kong, are subject to Hong Kong profits tax rate of 16.5%. For the years ended
December 31, 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, subsidiaries in Hong Kong did not have any assessable profits.
The Group’s PRC subsidiaries, including VIEs and the VIEs’ subsidiaries are subject to
the PRC Corporate Income Tax Law (“CIT Law”) at the statutory income tax rate of 25%,
unless otherwise specified. According to the CIT Law, entities that qualify as
“high-and-new technology enterprises” (“HNTE”) are entitled to a preferential income tax
rate of 15%, and entities that qualify as Small Low-profit Enterprises (“SLE”) are entitled
to a preferential income tax rate of 20%.
Taxation for subsidiaries incorporated in other jurisdictions is charged at the appropriate
current rates of taxation ruling in the relevant countries.
(ii) An additional 75% of qualified research and development expenses incurred is allowed to be
deducted from taxable income under the PRC Income Tax Law and its relevant regulations
before October 1, 2022 during the Track Record Period. And an additional 100% of qualified
research and development expenses incurred is allowed to be deducted from taxable income
under the PRC Income Tax Law and its relevant regulations after October 1, 2022.
I-50


--- page 522 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
8 Income tax in the consolidated statements of profit or loss (continued)
(iii) Dmall Life (China) Network Technology Co., Ltd (“Dmall Life Network”) was qualified as a
HNTE in 2018 and the qualification was valid for three years from 2018 to 2020. The
qualification was renewed in 2022 and the valid period is extended to 2024. Dmall Life
(Chengdu) Technology Co., Ltd (“Dmall Chengdu”) and Dmall Zhilian (Wuhan) Technology
Co., Ltd. (“Zhilian Wuhan”) were qualified as a HNTE in 2019 and the qualification was valid
for three years from 2019 to 2021. Dmall Chengdu and Zhilian Wuhan’s qualifications were
renewed in 2022 and the valid period is extended to 2024. Shenzhen Enjoy was qualified as a
HNTE in 2020 and the qualification was valid for three years from 2020 to 2022, and its
qualification was renewed in 2023 and the valid period is extended to 2025. Dmall (Shenzhen)
Digital Technology Co., Ltd. (“Dmall (Shenzhen) Digital”) was qualified as a HNTE in 2021
and the qualification was valid for three years from 2021 to 2023. Dmall Fresh (Beijing) was
qualified as a HNTE in 2023 and the qualification was valid for three years from 2023 to 2025.
Certain subsidiaries of the Group have been approved as SLE. The entitled
subsidiaries are subject to a preferential income tax rate of 20% during the Track
Record Period.
9 Directors’ emoluments
Details of emoluments of the directors of the Company during the Track Record Period are as
follows:
Year ended December 31, 2021
Note
Directors’
fees
Salaries,
allowances
and benefits
in kind
Discretionary
bonuses
Retirement
scheme
contributions Sub-total
Share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note (i)
Dr. Zhang
Wenzhong ...... ( a ) — — — — — — —
Mr. Zhang Feng .... ( b ) — 1,528 695 49 2,272 23,717 25,989
Mr. Chen Zhiyu .... ( f ) — 8 7 5 — 3 9 9 1 4 35,189 36,103
Mr. Zhang Bin ..... ( c ) — — — — — — —
Mr. Zhou Quan .... ( d ) — — — — — — —
Mr. Wu Guangze . . . (e) — — — — — — —
Mr. Liu Jiangfeng . . (d) — — — — — — —
Mr. Wang
Zhenghao ....... ( e ) — — — — — — —
Ms. Sun Yuhan .... ( e ) — — — — — — —
— 2,403 695 88 3,186 58,906 62,092
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--- page 523 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
9 Directors’ emoluments (continued)
Year ended December 31, 2022
Note
Directors’
fees
Salaries,
allowances and
benefits
in kind
Discretionary
bonuses
Retirement
scheme
contributions Sub-total
Share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Note (i)
Dr. Zhang
Wenzhong ....... ( a ) — — — — — — —
Mr. Curtis Alan
Ferguson ........ ( g ) — — — — — — —
Mr. Zhang Feng .... ( b ) — 2,603 — 58 2,661 46 2,707
Mr. Chen Zhiyu .... ( f ) — 1,091 — — 1,091 — 1,091
Mr. Zhang Bin ..... ( c ) — — — — — — —
Ms. Zhang
Kangrong ....... ( h ) — — — — — — —
Mr. Wu Guangze . . . (e) — — — — — — —
Mr. Liu Jiangfeng . . . (d) — — — — — — —
Mr. Wang
Zhenghao ....... ( e ) — — — — — — —
Ms. Sun Yuhan ..... ( e ) — — — — — — —
— 3,694 — 58 3,752 46 3,798
Year ended December 31, 2023
Note
Directors’
fees
Salaries,
allowances and
benefits
in kind
Discretionary
bonuses
Retirement
scheme
contributions Sub-total
Share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note i)
Mr. Curtis Alan
Ferguson ........ ( g ) 3 5 1 — — — 3 5 1 — 3 5 1
Mr. Zhang Feng .... ( b ) — 2,602 — 52 2,654 4 2,658
Mr. Chen Zhiyu .... ( f ) — 1,091 — — 1,091 — 1,091
Ms. Zhang
Kangrong ....... ( h ) — — — — — — —
Mr. Wang
Zhenghao ....... ( e ) — — — — — — —
Ms. Sun Yuhan ..... ( e ) — — — — — — —
351 3,693 — 52 4,096 4 4,100
I-52


--- page 524 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
9 Directors’ emoluments (continued)
Six months ended June 30, 2024
Note
Directors’
fees
Salaries,
allowances and
benefits
in kind
Discretionary
bonuses
Retirement
scheme
contributions Sub-total
Share-based
payments Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note i)
Mr. Curtis Alan
Ferguson ........ ( g ) 3 5 4 — — — 3 5 4 — 3 5 4
Mr. Zhang Feng .... ( b ) — 1,302 — 39 1,341 — 1,341
Mr. Chen Zhiyu .... ( f ) — 5 4 6 — — 5 4 6 — 5 4 6
Ms. Zhang
Kangrong ....... ( h ) — — — — — — —
Mr. Wang
Zhenghao ....... ( e ) — — — — — — —
Ms. Sun Yuhan ..... ( e ) — — — — — — —
354 1,848 — 39 2,241 — 2,241
Six months ended June 30, 2023
Note
Directors’
fees
Salaries,
allowances and
benefits
in kind
Discretionary
bonuses
Retirement
scheme
contributions Sub-total
Share-based
payments Total
(unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note i)
Mr. Curtis Alan
Ferguson ........ ( g ) — — — — — — —
Mr. Zhang Feng .... ( b ) — 1,302 — 24 1,341 — 1,330
Mr. Chen Zhiyu .... ( f ) — 5 4 5 — — 5 4 6 4 5 4 5
Ms. Zhang
Kangrong ....... ( h ) — — — — — — —
Mr. Wang
Zhenghao ....... ( e ) — — — — — — —
Ms. Sun Yuhan ..... ( e ) — — — — — — —
— 1,847 — 24 1,871 4 1,875
Note:
(a) Dr. Zhang Wenzhong was appointed as Chairman of the Company on February 6, 2015 and resigned on November 27, 2022.
(b) Mr. Zhang Feng was appointed as director of the Company on August 23, 2018. He is key management personnel of the Group
during the Track Record Period and his remuneration disclosed above include those for services rendered by him as key
management personnel.
(c) Mr. Zhang Bin was appointed as director of the Company on October 16, 2017 and resigned on March 2, 2022.
(d) Mr. Zhou Quan, Mr. Liu Jiangfeng were appointed as directors of the Company on February 5, 2015, October 16, 2017 and
resigned on November 17, 2021, March 2, 2022, respectively.
(e) Mr. Wu Guangze, Mr. Wang Zhenghao, Ms. Sun Yuhan were appointed as directors of the Company on October 16, 2017,
November 13, 2020 and November 17, 2021, respectively. Mr. Wu Guangze resigned on November 27, 2022.
(f) Mr. Chen Zhiyu was appointed as director of the Company on November 13, 2020.
(g) Mr. Curtis Alan Ferguson was appointed as chairman and director of the Company on November 28, 2022.
(h) Ms. Zhang Kangrong was appointed as non-executive director of the Company on November 28, 2022 and resigned on
April 19, 2024.
I-53


--- page 525 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
9 Directors’ emoluments (continued)
(i) These represent the estimated value of share options or RSUs granted to the directors under the Company’s share incentive
plans. The value of these share options or RSUs is measured according to the Group’s accounting policies for share-based
payment transactions as set out in Note 2(w)(ii) and, in accordance with that policy, includes adjustments to reverse amounts
accrued in previous years where grants of equity instruments are forfeited prior to vesting.
The details of these benefits in kind, including the principal terms and number of options or RSUs granted, are disclosed under
Note 26.
During the Track Record Period, there were no amounts paid or payable by the Group to the
directors or any of the highest paid individuals set out in Note 10 below as an inducement to
join or upon joining the Group or as a compensation for loss of office.
10 Individuals with highest emoluments
During the Track Record Period, of the five individuals with the highest emoluments, 2, 1, 1, 1
(unaudited) and 1 are the directors of the Company for each of the years ended December 31,
2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024, respectively, whose
emoluments are disclosed in Note 9. The aggregate of the emoluments in the respect of the
remaining 3, 4, 4, 4 (unaudited) and 4 individuals during the Track Record Period are as
followings:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries and other emoluments .................. 4,791 8,739 10,659 4,873 7,089
Discretionary bonuses ......................... 1,208 877 284 592 2,156
Retirement scheme contributions ................ 1 1 9 2 3 1 1 7 7 1 0 9 1 0 5
Share-based payment expenses .................. 45,836 2,394 1,823 2,536 242
51,954 12,241 12,943 8,110 9,592
The emoluments of the above individuals with the highest emoluments are within the following bands:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
Number of
individuals
Number of
individuals
Number of
individuals
Number of
individuals
Number of
individuals
(unaudited)
HKD1,500,001 - HKD2,000,000................. — — — 2 1
HKD2,000,001 - HKD2,500,000................. — 1 — 1 1
HKD2,500,001 - HKD3,000,000 ................ — — 1 — —
HKD3,000,001 - HKD3,500,000 ................ — 2 1 — 1
HKD3,500,001 - HKD4,000,000 ................ — — 1 1 1
HKD4,500,001 - HKD5,000,000 ................ — 1 1 — —
HKD7,500,001 - HKD8,000,000 ................ 1 — — — —
HKD16,000,001 - HKD16,500,000 .............. 1 — — — —
HKD38,000,001 - HKD38,500,000 .............. 1 — — — —
344 4 4
I-54


--- page 526 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
11 (Loss)/earnings per share
(a) Basic (loss)/earnings per share
The following table sets forth the basic (loss)/earnings per share computation and the numerator
and denominator for the years/periods presented:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(unaudited)
Net (loss)/profit attributable to equity
shareholders of the Company
(RMB’000) ...................
- Continuing operations ............ (1,733,653) (866,904) (685,909) (552,650) (468,009)
- Discontinued operations .......... (17,027) 59,498 93,548 40,032 233,134
(1,750,680) (807,406) (592,361) (512,618) (234,875)
Weighted average number of ordinary
shares ........................ 476,616,164 525,150,000 525,150,000 525,150,000 525,150,000
Basic (loss)/earnings per share
( R M B ) .......................
- Continuing operations ............ (3.64) (1.65) (1.31) (1.05) (0.89)
- Discontinued operations .......... (0.04) 0.11 0.18 0.08 0.44
(3.68) (1.54) (1.13) (0.97) (0.45)
Basic (loss)/earnings per share is calculated by dividing the net (loss)/earnings attributable to
equity shareholders of the Company by the weighted average number of ordinary shares in
issue during the Track Record Period.
(b) Weighted average number of shares
Weighted average number of ordinary shares outstanding
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(unaudited)
Ordinary shares at January 1 ....... 500,000,000 525,150,000 525,150,000 525,150,000 525,150,000
Surrender of ordinary shares ....... (36,329,041) ————
Effect of exercise of RSUs
(Note 26) ..................... 12,945,205 ————
Weighted average number of ordinary
shares outstanding .............. 476,616,164 525,150,000 525,150,000 525,150,000 525,150,000
(c) Diluted loss per share
The Company has four categories of potential ordinary shares: preferred shares, RSUs, share
options and convertible bond. For the years ended December 31, 2021, 2022 and 2023 and the
six months ended June 30, 2023 and 2024, the potential ordinary shares were not included in
the calculation of diluted loss per share as their inclusion would result in anti-dilution.
Accordingly, diluted loss per share for the years ended December 31, 2021, 2022 and 2023 and
the six months ended June 30, 2023 and 2024 were the same as basic loss per share of the
respective years and periods.
I-55


--- page 527 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
12 Investment property
(a) Reconciliations of carrying amount
Years ended December 31,
Six months ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Fair value
At January 1 ........................................ — 141,860 — —
Transfer from property and equipment ................... 179,098 — — —
Revaluation loss on property and equipment upon transfer .... (37,618) — — —
Valuation gains on investment property .................. 3 8 0 16,972 — —
Disposal of a subsidiary (Note 32) ....................... – (158,832) — —
At December 31/June 30 .............................. 141,860 — — —
The investment property was owned by Dmall (Shenzhen) Development Co., Ltd. (“Dmall
(Shenzhen) Development”), a subsidiary of the Company. In November 2022, the Group sold
100% of equity interests in Dmall (Shenzhen) Development to Wumei South Commercial Co.,
Ltd, a subsidiary of Wumei Technology Group Co., Ltd for the cash consideration of
RMB79,840,000.
(b) Fair value measurement of properties
All of the Group’s investment property were revalued as at December 31, 2021. The valuations
were carried out by an independent firm, with recent experience in the location and category of
property being valued.
The Group entered into a lease agreement with a lessee from December 2021 to June 2022. The
valuation technique was income approach during the period.
The following table gives information about how the fair values of the investment property is
determined (in particular, the valuation techniques and inputs used).
Valuation techniques
and key inputs
Significant
unobservable inputs
Relationship of
unobservable inputs to fair
value
Investment property ...... Income approach The
key inputs are:
Capitalization rate:
December 31, 2021:
2.7%-2.9%
The higher the
capitalization rate, the
lower the market value
– Capitalization rate
– Unit rent of individual
unit
Unit rent of individual
unit per sq.m. per month:
December 31, 2021:
RMB128.89-192.18
The higher the unit
rent, the higher the
market value
Under the income approach, the fair value of investment property is estimated based on
capitalization rate and unit rent. The unit rent is mainly made reference to the rents in existing
lease.
As of December 31, 2021, it is estimated that with all other variables held constant, an increase/
decrease in market rental by 1% would have increase/decrease the fair value of investment
property by RMB1,330,000.
I-56


--- page 528 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
13 Property and equipment
(a) Reconciliations of carrying amounts
Building
Electronic
equipment
Motor
vehicles
Office
equipment
and furniture
Leasehold
improvement
Right-of-use
assets Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At January 1, 2021 .................... 190,003 92,221 — 10,877 9,657 53,984 356,742
Acquisitions through business combinations
(Note 31(a)) ....................... 5,457 371 751 200 133 2,056 8,968
Additions ........................... — 6,061 — 6,610 2,064 13,841 28,576
Disposals ............................ — (3,837) — (353) (5) (12,539) (16,734)
Reclassification to investment property .... (190,003) — — — — — (190,003)
At December 31, 2021 and January 1,
2022 ............................. 5,457 94,816 751 17,334 11,849 57,342 187,549
Additions ........................... — 3,431 — 4,293 30,462 16,417 54,603
Disposals ............................ — (10,501) (265) (1,191) (425) (38,605) (50,987)
Disposal of subsidiaries (Note 32) ........ — (639) — — (3,048) — (3,687)
At December 31, 2022 and January 1,
2023 ............................. 5,457 87,107 486 20,436 38,838 35,154 187,478
Acquisitions through business combinations
(Note 31(b)) ....................... — — — 1 5 5 — 5,210 5,365
Additions ........................... — 7 2 9 — 6 0 9 1,722 41,384 44,444
Disposals ............................ — ( 12,675) (641) (8,075) (726) (16,880) (38,997)
At December 31, 2023 ................. 5,457 75,161 (155) 13,125 39,834 64,868 198,290
Additions ........................... 14,226 3,776 — 1,084 — 15,493 34,579
Disposals ............................ — (2,812) — (63) — (23,206) (26,081)
Disposal of subsidiaries (Note 32) ........ — (2,107) — — (204) — (2,311)
At June 30, 2024 ...................... 19,683 74,018 (155) 14,146 39,630 57,155 204,477
Accumulated depreciation:
At January 1, 2021 .................... (2,256) (46,278) — (2,358) (3,717) (20,837) (75,446)
Charge for the year .................... (9,052) (22,932) (24) (5,604) (3,194) (22,675) (63,481)
Written back on disposals ............... — 3,290 — 91 5 12,539 15,925
Reclassification to investment property .... 11,281 — — — — — 11,281
At December 31, 2021 and January 1,
2022 ............................. (27) (65,920) (24) (7,871) (6,906) (30,973) (111,721)
Charge for the year .................... (317) (16,650) (242) (5,993) (7,259) (21,476) (51,937)
Written back on disposals ............... — 9,609 251 553 319 37,915 48,647
Disposal of subsidiaries (Note 32) ........ — 1 4 1 — — 1,844 — 1,985
At December 31, 2022 and January 1,
2023 ............................. (344) (72,820) (15) (13,311) (12,002) (14,534) (113,026)
Charge for the year .................... (317) (7,479) (297) (3,610) (5,743) (28,347) (45,793)
Written back on disposals ............... — 11,960 467 7,688 726 16,487 37,328
At December 31, 2023 and January 1,
2024 ............................. ( 661) (68,339) 155 (9,233) (17,019) (26,394) (121,491)
Charge for the period .................. (158) (1,492) — (1,129) (2,865) (13,777) (19,421)
Written back on disposals ............... — 2,543 — 54 — 14,911 17,508
Disposal of subsidiaries (Note 32) ........ — 2,107 — — 204 — 2,311
At June 30, 2024 ...................... (819) (65,181) 155 (10,308) (19,680) (25,260) (121,093)
Net book value:
At December 31, 2021 ................. 5,430 28,896 727 9,463 4,943 26,369 75,828
At December 31, 2022 ................. 5,113 14,287 471 7,125 26,836 20,620 74,452
At December 31, 2023 ................. 4,796 6,822 — 3,892 22,815 38,474 76,799
At June 30, 2024 ..................... 18,864 8,837 — 3,838 19,950 31,895 83,384
I-57


--- page 529 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
13 Property and equipment (continued)
During the Track Record Period, there was no impairment provided for the Group’s property
and equipment.
(b) Right-of-use assets
The analysis of the net book value of right-of-use assets by class of underlying asset is as
follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Properties leased for own use, carried at depreciated cost
- Office buildings ....................................... 26,369 20,620 16,012 19,165
- Equipment and others ................................... — — 22,462 12,730
26,369 20,620 38,474 31,895
The analysis of expenses items in relation to leases recognized in the Group’s profit or loss are
as follows:
As at December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation on right-of-use assets has been charged to
the consolidated statements of profit or loss as
follows:
Cost of revenue ............................ 3,224 2,960 13,788 5,447 8,826
General and administration expenses ........... 15,879 15,029 11,976 5,960 1,914
Selling and marketing expenses ............... 1,405 1,490 1,372 687 588
Research and development expenses ........... 2,167 1,997 1,211 473 2,449
Depreciation charge of right-of-use assets ...........
(Note 13(a)) ................................... 22,675 21,476 28,347 12,567 13,777
Interest on lease liabilities (Note 7(a)) .............. 1,197 1,091 1,870 887 870
Expense relating to short-term leases and leases of
low-value assets ............................. 13,213 12,904 10,892 6,191 4,579
14,410 13,995 12,762 7,078 5,449
The Group leases office buildings, equipment and others under leases expiring from 1 to 3
years. Some leases include an option to renew the lease when all terms are renegotiated.
None of the leases includes variable lease payments.
The total cash outflow for leases and the maturity analysis of lease liabilities are set out in
Note 20(d) and Note 25, respectively.
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--- page 530 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
14 Intangible assets
Technological
know-how Software
Customer
relationship Total
RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At January 1, 2021 ............................ — 3,255 — 3,255
Additions .................................... — 3 1 4 — 3 1 4
Disposals .................................... — (143) — (143)
Acquisitions through business combinations ........ 29,315 51 76,000 105,366
At December 31, 2021 and January 1, 2022 ......... 29,315 3,477 76,000 108,792
Additions .................................... — 3 6 3 — 3 6 3
Disposals .................................... — (1,060) — (1,060)
At December 31, 2022 and January 1, 2023 ......... 29,315 2,780 76,000 108,095
Additions .................................... — 2,963 — 2,963
Disposals .................................... — (33) — (33)
At December 31, 2023 ......................... 29,315 5,710 76,000 111,025
Recognized from pre-disposal intergroup transactions
upon loss of control .......................... — 83,230 — 83,230
Disposals .................................... — (12) — (12)
At June 30, 2024 .............................. 29,315 88,928 76,000 194,243
Accumulated depreciation:
At January 1, 2021 ............................ — (1,139) — (1,139)
Charge for the year ............................ (289) (1,556) (633) (2,478)
Written back on disposals ....................... — 1 4 3 — 1 4 3
At December 31, 2021 and January 1, 2022 ......... (289) (2,552) (633) (3,474)
Charge for the year ............................ (4,098) (780) (7,600) (12,478)
Written back on disposals ....................... — 1,060 — 1,060
At December 31, 2022 and January 1, 2023 ......... (4,387) (2,272) (8,233) (14,892)
Charge for the year ............................ (4,098) (787) (7,600) (12,485)
Written back on disposals ....................... — 3 3 — 3 3
At December 31, 2023 and January 1, 2024 ......... (8,485) (3,026) (15,833) (27,344)
Charge for the period ........................... (1,734) (3,382) (3,800) (8,916)
Written back on disposals ....................... — 1 2 — 1 2
At June 30, 2024 .............................. (10,219) (6,396) (19,633) (36,248)
Net book value:
At December 31, 2021 ......................... 29,026 925 75,367 105,318
At December 31, 2022 ......................... 24,928 508 67,767 93,203
At December 31, 2023 ......................... 20,830 2,684 60,167 83,681
At June 30, 2024 .............................. 19,096 82,532 56,367 157,995
During the Track Record Period, there was no impairment provided for the Group’s intangible
assets.
I-59


--- page 531 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
15 Goodwill
RMB’000
Cost:
At January 1, 2021 .................................................................... —
Acquisition of Shenzhen Enjoy .......................................................... 151,887
At December 31, 2021 and December 31, 2022 ............................................. 151,887
Acquisition of Beijing Xianmei Technology Services Co., Ltd. (“Beijing Xianmei”) ................ 1 0 6
At December 31, 2023 and June 30, 2024 .................................................. 151,993
Accumulated impairment losses:
At January 1, 2021, December 31, 2021, December 31, 2022 and December 31, 2023 and June 30,
2024 ............................................................................. —
Net book value:
At December 31, 2021 ................................................................. 151,887
At December 31, 2022 ................................................................. 151,887
At December 31, 2023 ................................................................. 151,993
At June 30, 2024 ..................................................................... 151,993
Goodwill is attributed to significant synergies expected to arise after the Group’s acquisition of
Shenzhen Enjoy in 2021 and Beijing Xianmei in 2023.
Impairment tests for cash-generating units containing goodwill of Shenzhen Enjoy
Goodwill acquired in business combination in 2021 is allocated to the cash generating unit
(“CGU”) of Shenzhen Enjoy (Note 31(a)).
The recoverable amount of Shenzhen Enjoy has been determined based on a value in use
calculation. The directors of the Company forecasted an average annual revenue growth rate of
17.0%, 18.8% and 17.8% in 2021, 2022 and 2023 respectively, for the next five-year period,
and the cash flows beyond the five-year period were extrapolated using an estimated annual
growth rate of 3.0%, 3.0% and 2.5%. Pre-tax discount rate of 14% were used to reflect market
assessment of time value and the specific risks relating to the CGU.
The Group performs annual impairment tests on goodwill at the end of reporting year. Based on
the result of the goodwill impairment tests, the estimated recoverable amount of Shenzhen
Enjoy was approximately RMB219,174,000, RMB213,309,000 and RMB207,108,000 as of
December 31, 2021, 2022 and 2023, exceeding carrying amount by RMB20,892,000,
RMB19,202,000 and RMB18,705,000 respectively. No impairment was recognized in respect
of the goodwill as of December 31, 2021, 2022 and 2023. As of June 30, 2024, the directors of
the Company consider there are no significant changes to Shenzhen Enjoy’s operations, and as
a result no impairment assessment as of June 30, 2024 was considered necessary.
The Group performed a sensitivity analysis on key assumptions used in management’s annual
impairment test of goodwill. Had the discount rate during the forecast period been 1% higher,
the remaining headroom would have decreased to RMB3,989,000, RMB6,417,000 and
RMB193,000 as of December 31, 2021, 2022 and 2023, respectively. Had the estimated profit
I-60


--- page 532 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
15 Goodwill (continued)
Impairment tests for cash-generating units containing goodwill of Shenzhen Enjoy—(Continued)
during the forecast period been decreased by 5%, the remaining headroom would have
decreased to RMB13,960,000, RMB3,652,000 and RMB8,328,000 as of December 31, 2021,
2022 and 2023. Reasonably possible changes in key assumptions would not lead to impairment
as of December 31, 2021, 2022 and 2023. The parameters of average revenue growth rate,
annual growth rate and pre-tax discount rate used for impairment test of goodwill remained
largely the same throughout the Track Record Period, because the management considered that
there were no material changes in business and operation of Shenzhen Enjoy or external market
conditions when determining the key assumptions.
16 Subsidiaries
(a) Subsidiaries of the Group
The list in Note 1 contains only the particulars of subsidiaries which principally affected the results,
assets or liabilities of the Group. The class of shares held is ordinary unless otherwise stated.
The following table lists out the information relating to Retail Technology Asia, Shenzhen Enjoy, as
disclosed in Note 31 and Dmall Zhilian (Beijing) Technology Co., Ltd., (“Dmall Zhilian”) the
subsidiaries of the Group which has a material non-controlling interest (“NCI”). The summarized
financial information presented below represents the amounts before any inter-company elimination.
For the year ended December 31, 2021
Retail Technology
Asia Shenzhen Enjoy
RMB’000 RMB’000
NCI percentage* ................................................. 50.00% 58.93%
Current assets ................................................... 71,155 80,639
Non-current assets ............................................... 5,275 119,917
Current liabilities ................................................ ( 67,804) (49,204)
Non-current liabilities ............................................. — (17,563)
Net assets ...................................................... 8,626 133,789
Carrying amount of NCI ........................................... 4,313 78,842
Revenue ....................................................... 20,256 23,699
(Loss)/profit for the year ........................................... ( 157,474) 7,414
Total comprehensive income ....................................... ( 159,104) 7,414
(Loss)/profit allocated to NCI ....................................... ( 78,737) 4,369
Cash flows from operating activities ................................. ( 129,294) 12,493
Cash flows from investing activities ................................. (6,020) 23,280
Cash flows from financing activities ................................. — 1,117
I-61


--- page 533 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
16 Subsidiaries (continued)
(a) Subsidiaries of the Group—continued
For the year ended December 31, 2022
Retail Technology
Asia Shenzhen Enjoy Dmall Zhilian
RMB’000 RMB’000 RMB’000
NCI percentage* ...................................... 41.50% 49.00% 45.00%
Current assets ........................................ 76,383 61,341 21,957
Non-current assets ..................................... 2,618 119,984 26,089
Current liabilities ...................................... (49,366) (41,353) (26,241)
Non-current liabilities .................................. — (15,044) (423)
Net assets ............................................ 29,635 124,297 21,382
Carrying amount of NCI ................................ 12,298 61,214 9,622
Revenue ............................................. 74,417 72,706 86,354
Loss for the year ...................................... (74,166) (1,541) (6,437)
Total comprehensive income ............................ (67,707) (1,541) (6,437)
Loss allocated to NCI .................................. (28,242) (1,981) (2,897)
Dividend paid to NCI .................................. — (4,314) —
Cash flows from operating activities ....................... (98,160) (5,140) 6,541
Cash flows from investing activities ....................... (36,022) (6,216) (276)
Cash flows from financing activities ....................... 136,130 (10,356) 8,000
For the year ended December 31, 2023
Retail
Technology
Asia
Shenzhen
Enjoy
Dmall
Zhilian
RMB’000 RMB’000 RMB’000
NCI percentage* ............................................. 41.50% 50.25% 20.00%
Current assets ................................................ 82,849 81,277 127,193
Non-current assets ............................................ 6 5 1 107,286 34,571
Current liabilities ............................................. ( 38,762) (51,153) (73,108)
Non-current liabilities ......................................... — ( 13,462) (2,713)
Net assets ................................................... 44,738 123,948 85,943
Carrying amount of NCI ....................................... 18,566 62,284 18,853
Revenue .................................................... 113,829 83,697 477,060
Loss for the year ............................................. ( 127,337) (3,285) (31,025)
Total comprehensive income .................................... ( 128,993) (3,285) (31,025)
Loss allocated to NCI ......................................... ( 52,845) (1,608) (8,625)
Dividend paid to NCI .......................................... — — —
Cash flows from operating activities .............................. (134,149) 12,621 (38,664)
Cash flows from investing activities .............................. (144) (25,715) (297)
Cash flows from financing activities .............................. 143,458 4,038 38,411
I-62


--- page 534 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
16 Subsidiaries (continued)
(a) Subsidiaries of the Group—continued
Six months ended June 30, 2024
Retail
Technology
Asia
Shenzhen
Enjoy
Dmall
Zhilian
RMB’000 RMB’000 RMB’000
NCI percentage* ............................................. 41.50% 50.25% 20.00%
Current assets ............................................... 59,890 64,772 235,351
Non-current assets ............................................ 4 0 105,084 33,141
Current liabilities ............................................. (45,546) (42,179) (168,352)
Non-current liabilities ......................................... — (14,416) (2,980)
Net assets ................................................... 14,384 113,261 97,160
Carrying amount of NCI ....................................... 5,969 56,810 21,404
Revenue .................................................... 65,251 36,312 330,283
(Loss)/profit for the period ..................................... (30,840) (7,225) 10,666
Total comprehensive income ................................... (30,662) (7,225) 10,666
(Loss)/profit allocated to NCI ................................... (12,799) (3,839) 2,441
Dividend paid to NCI ......................................... — (2,514) —
Cash flows from operating activities .............................. (25,553) (11,316) (2,912)
Cash flows from investing activities .............................. — 23,858 (179)
Cash flows from financing activities .............................. — (5,503) 23,820
* As disclosed in Note 30, following the share repurchase in 2022, the Group’s share of interests in Retail Technology Asia increased from
50.00% to 58.50%.
As disclosed in Note 31, on November 11, 2022, the Group acquired additional 9.93% share of interests in Shenzhen Enjoy, and then
Group’s share of interests in Shenzhen Enjoy increased from 41.07% to 51.00%. As disclosed in Note 26, on May 25, 2023, Shenzhen
Enjoy approved a share incentive plan of granting up to 613,000 restricted ordinary shares to eight core employees. The Group’s shares
of interests in Shenzhen Enjoy decreased accordingly.
As disclosed in Note 30, following the capital injected to Dmall Zhilian in March 2023, the Group’s share of interests in Dmall Zhilian
increased from 55.00% to 80.00%.
(b) Investments in a subsidiary by the Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Unlisted investment, at cost ............................... 1 1 1 1
I-63


--- page 535 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
17 Other financial assets
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current ..............................................
Financial assets measured at FVPL .......................
- Wealth management products ............................ 15,053 9,029 34,935 11,211
Non-current ..........................................
Financial assets measured at FVPL .......................
- Equity investment .....................................
- ᒢਸ਼ԶᏐᗡ (ɪऎ)ʮ̡ (Guoquan Supply Chain (Shanghai)
Co., Ltd.) (“Guoquan”) ................................ 140,734 153,218 196,574 109,692
The fair value of wealth management products is calculated by discounting the expected future
cash flows. The key input used by the Group for wealth management products is the expected
rate of return. For the years ended December 31, 2021, 2022 and 2023, and the six months
ended June 30, 2024 it is estimated that with all other variables held constant, an increase/
decrease in fair value of investment management products by 1% would have decreased/
increased the Group’s loss by approximately RMB151,000, RMB90,000 and RMB349,000, and
RMB112,000, respectively.
As of December 31, 2021 and 2022, the Group determines the fair value of the investment in
Guoquan by reference to its recent transaction prices or using a backsolve method based on
assumptions that are not supported by observable market prices or rates. As of December 31,
2021 and 2022, it is estimated that with all other variables held constant, an increase/decrease
in the expected probability of event by 10% would have increased/decreased the Group’s loss
by RMB9,748,000 and RMB9,937,000, respectively. As of December 31, 2023 and June 30,
2024, the fair value of the investment in Guoquan is determined based on the closing market
price of its shares.
18 Trade receivables
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables ....................................... 95,888 144,120 168,395 261,007
Less: loss allowance ..................................... (2,649) (3,511) (3,253) (4,554)
93,239 140,609 165,142 256,453
All of the trade receivables are expected to be recovered within one year.
I-64


--- page 536 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
18 Trade receivables (continued)
(a) Aging analysis
At the end of each reporting period, the aging analysis of trade receivables, based on the
invoice date, are as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months ........................................ 72,619 126,556 148,234 169,437
3 to 6 months .......................................... 15,625 2,213 4,491 74,647
7 to 12 months ......................................... 1,150 7,004 5,621 4,955
More than 1 year but less than 3 years ....................... 4,116 6,138 9,072 11,124
Over 3 years ........................................... 2,378 2,209 977 844
Less: loss allowance ..................................... (2,649) (3,511) (3,253) (4,554)
93,239 140,609 165,142 256,453
19 Prepayments, deposits and other receivables
The Group
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Prepayments for purchase of services/goods .................. 2,113 1,993 8,142 5,833
Receivable from a supplier (i) ............................. 43,558 43,558 43,558 43,558
Deposits .............................................. 1,156 1,648 2,335 2,231
Receivable from third party payment platform ................ 22,885 13,819 19,482 —
Deductible input value-added tax .......................... 47,884 16,457 19,803 10,035
Receivables from retailers and advertisers ................... 23,271 18,649 17,906 8,099
Receivable for transferring software copyright ................ — — — 31,717
Other receivables ....................................... 10,216 12,974 8,103 29,832
Less: loss allowance (i) .................................. (44,249) (44,443) (43,833) (43,921)
106,834 64,655 75,496 87,384
Non-current
Prepayments for purchase of property and equipment .......... 1,541 15,810 15,615 3,229
Lease and security deposits ............................... 8,915 5,539 4,467 3,984
Others ................................................ 7 6 3 9 — —
10,532 21,388 20,082 7,213
The Company
As at December 31, As at June 30
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Others ................................................ — — 5,070 3,021
Less: loss allowance ..................................... — — — —
— — 5,070 3,021
I-65


--- page 537 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
19 Prepayments, deposits and other receivables (continued)
(i): The receivable from a supplier was in connection with a dispute for purchase of goods of
RMB43,558,000. The Group sued such supplier for undelivered goods. Full provision was
provided for the receivable from the third-party supplier, since the loss was determined to be
probable.
Current portion of prepayments, deposits and other receivables are expected to be recovered or
recognized as expenses within one year.
20 Cash at bank and on hand and other cash flow information
(a) Cash at bank and on hand comprise:
As at December 31, As at June 30
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash at bank and on hand ................................. 424,383 589,140 554,104 470,034
Less: Restricted bank deposits (i) ........................... (55,667) (56,086) (20,933) (498)
Cash and cash equivalents ................................ 368,716 533,054 533,171 469,536
(i): As of December 31, 2021, the Group’s restricted bank deposit mainly pertained to funds that
were frozen by the court due to a lawsuit involving a subsidiary of the Company and a supplier,
which occurred in May 2021. The lawsuit was dismissed in September 2022, and the restricted
bank deposits were unfrozen in October 2022.
As of December 31, 2022 and 2023, the Group had restricted cash of RMB56,086,000 and
RMB20,933,000, respectively, mainly representing cash received from consumers and reserved
in a bank supervised account for payments to retailers and merchants.
(b) Reconciliation of loss before taxation to cash used in operations:
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss before taxation .................. (1,824,303) (842,355) (658,760) (549,754) (251,080)
Adjustments for:
Fair value change of convertible redeemable
preferred shares ..................... 2 8 732,280 493,191 476,160 422,261 397,118
Fair value changes of derivative components
of convertible bond .................. 2 9 — 4,370 2,570 3,752 (172)
Fair value changes of investment property . . 12 37,238 (16,972) — — —
Share of (profits)/losses of an associate .... (607) — — — 200
Share of profits of a joint venture ......... — — * — — —
Gain from re-measurement of equity interest
upon acquisition ..................... 3 1 (2,782) — — — —
Depreciation on property and equipment . . . 13(a) 63,481 51,937 45,793 23,387 19,421
Amortization of intangible assets ......... 1 4 2,478 12,478 12,485 6,162 8,916
Loss/(gain) on disposal of property and
equipment ......................... 5 2 3 6 2 2 4 6 1 1 2 (682)
Investment income from wealth management
products ........................... 6 (6,841) (1,195) (167) (46) (547)
I-66


--- page 538 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
20 Cash at bank and on hand and other cash flow information (continued)
Years ended December 31, Six months ended June 30,
Note 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fair value change on financial assets at
FVPL ............................. 6 (11,433) (12,460) (43,762) (1,374) 87,107
Net impairment losses on trade and other
receivables ......................... 7(c) 1,032 1,596 1,784 578 1,533
Interest on bank loans and other
borrowings ......................... 7(a) 4,061 3,348 9,027 3,471 6,462
Accrued financial charges of convertible
bond .............................. 7(a) — 7,233 13,595 6,803 6,606
Gains on partial derecognition of convertible
bond .............................. 7(a) — — — — (2,379)
Interest on lease liabilities ............... 7(a) 1,197 1,091 1,870 887 870
(Gain)/loss on disposal of subsidiaries ..... 3 2 — (100,131) 1 — (253,871)
Equity settled share-based payment
expenses ........................... 7(b) 134,140 12,530 13,620 7,229 8,330
Impairment loss on inventory ............ — 1,804 — — —
Changes in working capital: ............
(Increase)/decrease in restricted bank
deposits ........................... (55,667) (419) 35,153 46,068 9,922
Decrease/(increase) in inventories and other
contract costs ....................... 7,347 (648) (5,275) (6,446) 132
Increase in trade receivables and contract
asset .............................. (57,811) (47,773) (25,218) (47,186) (92,643)
Decrease/(increase) in other receivables and
prepayments ........................ 11,278 50,928 (7,557) (10,973) (41,423)
Deferred tax assets ..................... 8 7 2 (434) (2,168) (1,312) (1,556)
Deferred tax liabilities .................. (187) (1,710) (1,687) (819) (841)
Increase in trade payables ............... 14,551 14,417 20,788 36,450 11,804
(Decrease)/increase in other payables and
accruals ........................... (340,700) 158,589 (109,657) (145,969) 37,855
Increase/(decrease) in contract liabilities . . . 15,657 4,967 41,815 13,926 (7,803)
Cash used in operations ............... (1,274,667) (205,256) (179,343) (192,793) (56,721)
* The balance represents amount less than RMB500.
(c) Reconciliation of liabilities arising from financing activities:
The table below details changes in the Group’s liabilities from financing activities, including
both cash and non-cash changes. Liabilities arising from financing activities are liabilities for
which cash flows were, or future cash flows will be, classified in the consolidated cash flow
statements as cash flows from financing activities.
I-67


--- page 539 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
20 Cash at bank and on hand and other cash flow information (continued)
Note
Bank loans
and other
borrowings
Convertible
redeemable
preferred
shares
Convertible
bond
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 23) (Note 28) (Note 29) (Note 25)
At January 1, 2021 ........................... 159,297 3,767,451 — 32,724 3,959,472
Changes from financing cash flows:
Proceeds from issuance of Convertible Redeemable
preferred shares ........................... — 742,109 — — 742,109
Interest element of lease rentals paid ............. — — — (1,197) (1,197)
Capital element of lease rentals paid ............. — — — (22,880) (22,880)
Proceeds from borrowings from related parties ..... 64,799 — — — 64,799
Repayment of bank loans ...................... (8,245) — — — (8,245)
Interest paid ................................ (67,952) — — — (67,952)
Total changes from financing cash flows ......... (11,398) 742,109 — (24,077) 706,634
Other changes:
Increase in lease liabilities from entering into new
lease during the year ....................... — — — 13,846 13,846
Interest expenses ............................ 7(a) 4,061 — — 1,197 5,258
Acquisition of subsidiary ...................... 3,301 — — 1,922 5,223
Changes in fair value through profit or loss ........ — 732,280 — — 732,280
Foreign currency translation adjustment .......... — (104,684) — — (104,684)
Total other changes .......................... 7,362 627,596 — 16,965 651,923
At December 31, 2021 and January 1, 2022 ....... 155,261 5,137,156 — 25,612 5,318,029
Changes from financing cash flows:
Proceeds from issuance of Convertible Redeemable
preferred shares ........................... — 111,017 — — 111,017
Proceeds from Convertible bond ................ 2 9 — — 190,000 — 190,000
Interest element of lease rentals paid ............. — — — (1,091) (1,091)
Capital element of lease rentals paid ............. — — — (21,028) (21,028)
Proceeds from bank loans ..................... 120,420 — — — 120,420
Repayment for bank loans ..................... (9,959) — — — (9,959)
Proceeds from borrowings from related parties ..... 13,573 — — — 13,573
Repayment of borrowings from related parties ..... (85,314) — — — (85,314)
Interest paid ................................ (3,277) — — — (3,277)
Total changes from financing cash flows ......... 35,443 111,017 190,000 (22,119) 314,341
Other changes:
Increase in lease liabilities from entering into new
lease during the year ....................... — — — 16,408 16,408
Disposal of a subsidiary ....................... 3 2 (80,503) — — — (80,503)
Early termination of leases ..................... — — — (679) (679)
Accrued financial charges of convertible bond ..... 29 — — 7,233 — 7,233
Interest expenses ............................ 7(a) 3,348 — — 1,091 4,439
Issuance of Convertible Redeemable preferred
shares ................................... 28,29 — 127,384 — — 127,384
Changes in fair value through profit or loss ........ 2 9 — 493,191 4,370 — 497,561
Foreign currency translation adjustment .......... 6,941 509,987 1,590 — 518,518
Total other changes .......................... (70,214) 1,130,562 13,193 16,820 1,090,361
At December 31, 2022 120,490 6,378,735 203,193 20,313 6,722,731
I-68


--- page 540 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
20 Cash at bank and on hand and other cash flow information (continued)
Note
Bank loans
and other
borrowings
Convertible
redeemable
preferred
shares
Convertible
bond
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 23) (Note 28) (Note 29) (Note 25)
At January 1, 2023 ............ 120,490 6,378,735 203,193 20,313 6,722,731
Changes from financing cash
flows:
Interest element of lease rentals
paid ...................... — — — (1,870) (1,870)
Capital element of lease rentals
paid ...................... — — — (25,845) (25,845)
Proceeds from bank loans ....... 260,700 — — — 260,700
Proceeds of borrowings from a
non-controlling shareholder of a
subsidiary ................. 2,700 — — — 2,700
Repayment of bank loans ....... (70,020) — — — (70,020)
Interest paid ................. (8,721) — (11,173) — (19,894)
Total changes from financing cash
flows ..................... 184,659 — (11,173) (27,715) 145,771
Other changes:
Increase in lease liabilities from
business combination ........ 31(b) — — — 5,371 5,371
Increase in lease liabilities from
entering into new lease during
the year ................... — — — 40,745 40,745
Accrued financial charges of
convertible bond ............ 2 9 — — 13,595 — 13,595
Interest expenses .............. 7(a) 9,027 — — 1,870 10,897
Changes in fair value through
profit or loss ............... 28,29 — 476,160 2,570 — 478,730
Foreign currency translation
adjustment ................. — 110,598 392 — 110,990
Total other changes ............ 9,027 586,758 16,557 47,986 660,328
At December 31, 2023 and
January 1, 2024 ............. 314,176 6,965,493 208,577 40,584 7,528,830
Changes from financing cash
flows:
Interest element of lease rentals
paid ...................... — — — (870) (870)
Capital element of lease rentals
paid ...................... — — — (10,691) (10,691)
Proceeds from bank loans ....... 182,000 — — — 182,000
Repayment of bank loans ....... (99,600) — — — (99,600)
Repayment of convertible bond . . — — (50,000) — (50,000)
Interest paid ................. (6,374) — (11,204) — (17,578)
Total changes from financing cash
flows ..................... 76,026 — (61,204) (11,561) 3,261
I-69


--- page 541 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
20 Cash at bank and on hand and other cash flow information (continued)
Note
Bank loans
and other
borrowings
Convertible
redeemable
preferred
shares
Convertible
bond
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 23) (Note 28) (Note 29) (Note 25)
Other changes:
Increase in lease liabilities from
entering into new lease during
the period ................. — — — 6,757 6,757
Accrued financial charges of
convertible bond ............ 2 9 — — 6,606 — 6,606
Interest expenses .............. 7(a) 6,462 — — 870 7,332
Changes in fair value through
profit or loss ............... 28,29 — 397,118 (172) — 396,946
Gains on partial derecognition of
convertible bond ............ 2 9 — — (2,379) — (2,379)
Foreign currency translation
adjustment ................. — 44,583 (389) — 44,194
Total other changes ............ 6,462 441,701 3,666 7,627 459,456
At June 30, 2024 .............. 396,664 7,407,194 151,039 36,650 7,991,547
Note
Bank loans
and other
borrowings
Convertible
redeemable
preferred
shares
Convertible
bond
Lease
liabilities Total
(unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 23) (Note 28) (Note 29) (Note 25)
At January 1, 2023 ............ 120,490 6,378,735 203,193 20,313 6,722,731
Changes from financing cash
flows:
Interest element of lease rentals
paid ...................... — — — (887) (887)
Capital element of lease rentals
paid ...................... — — — (12,021) (12,021)
Proceeds from bank loans ...... 165,700 — — — 165,700
Proceeds from borrowings from a
non-controlling shareholder of
a subsidiary ............... 1,215 — — — 1,215
Repayment of bank loans ....... (10,000) — — — (10,000)
Interest paid ................. (3,311) — (11,173) — (14,484)
Total changes from financing
cash flows ................. 153,604 — (11,173) (12,908) 129,523
Other changes:
Increase in lease liabilities from
acquisition of subsidiary ..... 3 1 — — — 5,371 5,371
Increase in lease liabilities from
entering into new lease during
the period ................. — — — 29,045 29,045
Accrued financial charges of
convertible bond ............ 2 9 — — 6,803 — 6,803
Interest expenses ............. 7(a) 3,471 — — 887 4,358
I-70


--- page 542 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
20 Cash at bank and on hand and other cash flow information (continued)
Note
Bank loans
and other
borrowings
Convertible
redeemable
preferred
shares
Convertible
bond
Lease
liabilities Total
(unaudited) RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 23) (Note 28) (Note 29) (Note 25)
Changes in fair value through
profit or loss ............... 2 8 ,2 9 — 422,261 3,752 — 426,013
Foreign currency translation
adjustment ................ — 257,309 1,012 — 258,321
Total other changes ........... 3,471 679,570 11,567 35,303 729,911
At June 30, 2023 ............. 277,565 7,058,305 203,587 42,708 7,582,165
(d) Total cash outflow for leases:
Amounts included in the cash flow statements for leases comprise the following:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Within operating cash flows ...................... 13,389 15,391 10,752 5,906 4,190
Within financing cash flows ...................... 24,077 22,119 27,715 12,908 11,561
37,466 37,510 38,467 18,814 15,751
21 Trade payables
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Logistics cost payable ................................... 31,033 29,284 28,016 —
AIoT product and service fee payable ....................... 13,049 23,404 50,140 89,602
Customer service fee and other procurement cost payable ....... 5,279 11,090 8,407 8,765
Total ................................................. 49,361 63,778 86,563 98,367
The aging analysis of the trade payables, based on the invoice date, are as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 3 months ........................................ 47,884 56,737 77,959 89,623
3 to 6 months .......................................... 1,069 5,420 1,775 746
7 to 12 months ......................................... 9 7 1,284 2,989 1,780
Over 1 year ............................................ 3 1 1 3 3 7 3,840 6,218
49,361 63,778 86,563 98,367
All trade payables are expected to be settled within one year or are repayable on demand.
I-71


--- page 543 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
22 Accrued expenses and other payables
The Group
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Payables to retailers and merchants (i) ...................... 216,661 237,748 153,677 19,113
Advance from an investor (ii) ............................. 127,384 — — —
Accrued payroll and welfare .............................. 116,345 159,573 137,375 78,280
Advances from consumers (iii) ............................ 16,878 16,105 2,568 —
Deposits from merchants ................................. 17,717 9,908 4,175 5,170
Refundable government subsidy (iv) ........................ 23,000 23,000 23,000 23,000
Cloud services fee payables ............................... 18,434 11,591 4,343 2,348
Taxes payable .......................................... 6,351 7,516 16,768 6,321
Professional fee payables ................................. 3,281 23,202 20,784 17,635
Sales incentive payables .................................. 5,579 2,486 — —
Other payables ......................................... 39,238 42,608 60,059 75,670
590,868 533,737 422,749 227,537
Non-current
Rental deposits ......................................... 1,001 — — —
Others ................................................ 6 3 5 6 2 2 9 5 9 1,006
1,636 622 959 1,006
The Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Professional fee payables ................................. 6,485 21,375 18,139 15,777
Advance from an investor (ii) ............................. 127,384 — — —
Others ................................................ 1,302 1 1 1
135,171 21,376 18,140 15,778
(i) Payables to retailers and merchants mainly represent cash collected on behalf of retailers and
merchants from consumers.
(ii) Advance from an investor represents advance from a potential investor, which the Company
subsequently issued preferred shares to.
(iii) Advances from consumers represent advances from consumers the Group has received on behalf
of retailers and merchants before the merchandise is delivered.
(iv) Refundable government subsidy represents the cash received from the government, but the
conditions attaching to the grant have not been fulfilled.
Current portion of accrued expenses and other payables are expected to be settled within one year or
are repayable on demand.
I-72


--- page 544 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
23 Bank loans and other borrowings
The Group
As at December 31, As at June 30,
Note 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Bank loans .................................... 11,364 70,090 199,331 278,470
Borrowings from related parties ................... 64,799 — — —
Borrowings from other companies ................. — — 2,745 2,794
76,163 70,090 202,076 281,264
Non-current
Bank loans .................................... 2 0 79,098 50,400 112,100 115,400
79,098 50,400 112,100 115,400
155,261 120,490 314,176 396,664
(a) As at the end of each reporting period, borrowings were repayable as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year or on demand ............................... 76,163 70,090 202,076 281,264
After 1 year but within 2 years ............................. 8,709 21,600 64,500 82,600
After 2 years but within 5 years ............................ 28,541 28,800 47,600 32,800
After 5 years ........................................... 41,848 — — —
155,261 120,490 314,176 396,664
(b) As at the end of each reporting period, borrowings were secured as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Bank Loans
-Secured .............................................. 90,462 92,055 173,094 183,684
-Unsecured ............................................ — 28,435 138,337 210,186
Other borrowings
-Unsecured ............................................ 64,799 — 2,745 2,794
155,261 120,490 314,176 396,664
In September 2020, the Group entered into a 10-year mortgage loan of RMB96,700,000 with
Bank of Communications Co., Ltd. The gross carrying amount of the mortgaged property was
approximately RMB190,003,000. The loan was disposed together with the Group’s disposal of
100% equity interests in Dmall (Shenzhen) Development to Wumei South Commercial Co.,
Ltd. in November 2022.
As at June 30, 2024, the Group had total bank facilities amounting to RMB660,000,000. As at
June 30, 2024, the Group had unused bank facilities of RMB266,500,000.
As at June 30, 2024, the loan in amount of RMB183,500,000 borrowed by Dmall Life Network
was guaranteed by Dmall Life (China) Digital Technology Co., Ltd.
I-73


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
23 Bank loans and other borrowings (continued)
The Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current
Borrowings from related parties-unsecured ................... 64,799 — — —
The borrowings of the Company were from Retail Enterprise Corporation Limited, a related
party of the Company. The borrowings have been fully settled in October 2022.
24 Contract liabilities
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
- Retail core service cloud ................................ 38,804 36,312 73,887 78,597
- E-commerce service cloud ............................... 2,188 4,323 4,007 —
- Other revenue ......................................... 3,514 8,838 13,394 —
44,506 49,473 91,288 78,597
Movements in contract liabilities
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Balance at January 1 .................................... 1,144 44,506 49,473 91,288
Decrease in contract liabilities as a result of recognizing revenue
during the year that was included in the contract liabilities at the
beginning of the year/period ............................ (1,133) (34,716) (33,917) (43,369)
Increase in contract liabilities as a result of receiving advance
payments during the year/period ......................... 22,387 39,683 75,732 30,678
Increase in contract liabilities as a result of acquisitions through
business combinations ................................. 22,108 — — —
Balance at December 31/June 30 ........................... 44,506 49,473 91,288 78,597
As at December 31, 2021, 2022 and 2023 and June 30, 2024, the amount of contract liabilities
expected to be recognized as income after more than one year is RMB10,852,000,
RMB19,974,000, RMB41,866,000 and RMB46,542,000, respectively.
I-74


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
25 Lease liabilities
The following tables show the remaining contractual maturities of the Group’s lease liabilities
as at the end of each of the reporting period:
As at December 31, As at June 30,
2021 2022 2023 2024
Present value
of the
minimum
lease
payments
Total
minimum
lease
payments
Present value
of the
minimum
lease
payments
Total
minimum
lease
payments
Present value
of the
minimum
lease
payments
Total
minimum
lease
payments
Present value
of the
minimum
lease
payments
Total
minimum
lease
payments
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Within 1
year ...... 17,570 18,369 16,029 16,657 25,428 26,757 27,422 28,251
After 1 year
but within 2
years ...... 7,963 8,177 4,260 4,439 13,915 14,292 8,437 8,598
After 2 years
but within 5
years ...... 79 167 24 25 1,241 1,254 791 801
8,042 8,344 4,284 4,464 15,156 15,546 9,228 9,399
Subtotal ..... 25,612 26,713 20,313 21,121 40,584 42,303 36,650 37,650
25,612 20,313 40,584 36,650
Less: total
future
interest
expenses . . . 1,101 808 1,719 1,000
Present value
of lease
liabilities . . 25,612 20,313 40,584 36,650
26 Equity settled share-based transactions
The table below sets forth share-based payments expenses for share options and RSUs during
the Track Record Period:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Share Option Plan .............................. 8,340 9,021 9,182 4,542 6,766
RSUs ........................................ 125,800 3,509 2,158 2,361 (173)
Restricted ordinary shares ........................ — — 2,280 326 1,737
134,140 12,530 13,620 7,229 8,330
On January 8, 2016, the shareholders of the Company approved and adopted the 2016 Stock
Incentive Plan (the “2016 Plan”), under which the Company approved 100,000,000 ordinary
shares to motivate eligible employees of the Group and eligible non-employees, under which
restricted share units (RSUs) and share options accounts for 50%, respectively. On
December 12, 2018, the shareholders of the Company approved to revise the total shares under
2016 Plan to 99,850,000 shares, including 49,850,000 shares of RSUs and 50,000,000 shares of
I-75


--- page 547 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
26 Equity settled share-based transactions (continued)
share options. Restricted share units and share options granted to employees or non-employees
under the 2016 Plan are generally subject to a five-year service schedule, under which 25% of
restricted share units or share options shall vest on each anniversary date since the second
anniversary of the grant date. Restricted share units and share options become exercisable only
when an Initial Public Offering (“IPO”) occurs. If the employee leaves the Company with good
faith before the IPO, the employee will retain the vested restricted share units or share options.
On April 2, 2021, the shareholders of the Company approved and adopted the 2020 Stock
Incentive Plan (the “2020 Plan”), under which a total of 60,000,000 restricted share units and
share options were newly authorized. In addition, for the number of restricted share units and
share options (1) unissued; (2) issued but forfeited shares and (3) issued and that is forfeited in
the future under the 2016 Plan are authorized under the 2020 Plan. Upon the effective of the
2020 Plan, no new shares would be issued under the 2016 Plan. Restricted share units and share
options under the 2020 Plan are generally subject to a five-year service schedule, under which
25% of restricted share units or share options shall vest on each anniversary date since the
second anniversary of the grant date. If the employee leaves the Company with good faith
before the IPO, the employee will retain the vested restricted share units or share options.
On May 25, 2023, the shareholders of Shenzhen Enjoy approved a share incentive plan (the
“Shenzhen Enjoy incentive plan”). The participants were granted 613,000 restricted ordinary
shares with a grant price of RMB8.5 per share on May 25, 2023. The vesting of the restricted
ordinary shares is subject to certain performance targets and will take place in two equal
instalments over 24 months.
(a) Share Option Plan
A summary of activities of the share options is presented as follows:
Number of share
options
Weighted average
exercise price
USD
Outstanding - January 1, 2021 ..................................... 52,724,500 1.20
Granted during the year ............................................ 15,759,900 1.98
Forfeited ........................................................ (8,547,200) 1.62
Outstanding - December 31, 2021 .................................. 59,937,200 1.35
Outstanding - January 1, 2022 ..................................... 59,937,200 1.35
Granted during the year ............................................ 13,623,400 2.72
Forfeited ........................................................ (10,386,600) 1.63
Outstanding - December 31, 2022 .................................. 63,174,000 1.60
Outstanding - January 1, 2023 ..................................... 63,174,000 1.60
Granted during the year ............................................ 9,128,000 2.72
Forfeited ........................................................ ( 9,509,200) 2.22
Outstanding - December 31, 2023 .................................. 62,792,800 1.67
Outstanding-January 1, 2024 ...................................... 62,792,800 1.67
Granted during the period .......................................... 2,649,500 2.72
Forfeited ........................................................ (3,649,900) 2.44
Outstanding-June 30, 2024 ........................................ 61,792,400 1.67
I-76


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
26 Equity settled share-based transactions (continued)
All the share options are only exercisable after the IPO of the Company. The contractual lives
of these share options are (i) either five years from the later of the Listing Date and the vesting
date or (ii) ten years from the vesting date.
Fair value of share options
The fair value of share options was estimated using the Binomial option-pricing model. The
determination of estimated fair value of share options on the grant date is affected by the fair
value of the Company’s ordinary shares as well as assumptions regarding a number of complex
and subjective variables.
Key assumptions are set as below:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2024
Risk-free interest rates .......... 0.74% - 1.34% 2.46% - 4.05% 3.57% - 3.85% 3.85%
Expected volatility ............. 46.6% -47.8% 48.0% -51.9% 52.8% -53.1% 53.1%
Exercise multiple .............. 2 . 2 2 . 2 2 . 2 2 . 2
Dividend yield ................. 0 % 0 % 0 % 0 %
The expected volatility was referenced to the average of daily historical share price volatility of
comparable companies operating in similar industry of the Company.
(b) RSUs
Movements in the number of RSUs granted and the respective weighted average grant date fair
value are as follows:
Number of
RSUs
Weighted
average grant
date fair value
per RSU
USD
Outstanding - January 1, 2021 ......................................... 76,981,859 0.27
Granted during the year ................................................ 13,637,000 0.55
Forfeited ........................................................... (1,260,000) 0.50
Exercised ........................................................... (75,000,000) 0.34
Outstanding - December 31, 2021 ...................................... 14,358,859 0.19
Outstanding - January 1, 2022 ......................................... 14,358,859 0.19
Granted during the year ................................................ 1,500,000 0.88
Forfeited ........................................................... (150,000) 0.35
Outstanding - December 31, 2022 ...................................... 15,708,859 0.25
Outstanding - January 1, 2023 ......................................... 15,708,859 0.25
Granted during the year ................................................ 2,000,000 1.26
Forfeited ........................................................... ( 2,337,500) 0.82
Outstanding - December 31, 2023 ...................................... 15,371,359 0.30
Outstanding-January 1, 2024 .......................................... 15,371,359 0.30
Granted during the period .............................................. — —
Forfeited ........................................................... (1,000,000) 1.06
Outstanding-June 30, 2024 ............................................ 14,371,359 0.24
I-77


--- page 549 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
26 Equity settled share-based transactions (continued)
Share-based payment expense relating to awards granted to employees is based on the grant
date fair value of the RSUs is recognized, on a straight-line basis over the entire vesting period.
The fair value of each RSU at the grant dates is determined by reference to the fair value of the
underlying ordinary shares of the Company on the date of grant. The grant date fair value of the
underlying ordinary shares was determined with the assistance of an independent third-party
valuation firm.
The contractual lives of these RSUs are (i) either five years from the later of the Listing Date
and the vesting date or (ii) ten years from the vesting date.
In October 2021, the Company accelerated the vesting of 75,000,000 RSUs. It resulted in the
unrecognized share-based compensation expense of RMB94,684,000 recognized in profit or
loss at the time of vesting.
(c) Restricted ordinary shares granted by Shenzhen Enjoy
As at June 30, 2024, 613,000 restricted ordinary shares granted by Shenzhen Enjoy were
outstanding. All these shares of Shenzhen Enjoy are restricted for sale until certain service and
performance conditions are met. The fair value of these restricted ordinary shares at the grant
date was RMB17 per Shenzhen Enjoy ordinary share with reference to its market price. The
total expenses recognized in the consolidated statement of profit or loss in respect of these
restricted ordinary shares granted by Shenzhen Enjoy for the year ended December 31, 2023
and for the six months ended June 30, 2024 were RMB2,280,000 and RMB1,737,000
respectively.
27 Income tax in the consolidated statements of financial position
(a) Movements of current taxation in the consolidated statements of financial position are as
follows:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Income tax payable at January 1 ................... — 5 0 (78) (78) 4
Provision for the year/period ..................... 6 0 — 3 3 — 6 5
Effect of withholding tax ........................ — 3 1 6 5 0 1 2 5 3 3 2 4
Tax (paid)/refunded:
-Income Tax .................................. (10) (245) 95 127 (22)
-Withholding tax ............................... — (199) (547) (327) (141)
Income tax payable/(receivable) at
December 31/June 30 ......................... 5 0 (78) 4 (25) 230
I-78


--- page 550 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
27 Income tax in the consolidated statements of financial position (continued)
(b) Deferred tax assets and liabilities recognized
(i) Movements of each component of deferred tax assets and liabilities
The deferred tax assets/(liabilities) recognized in the consolidated statements of financial
position and the movements during the Track Record Period are as follows:
Cumulative
tax losses
Credit loss
allowance
Restricted
ordinary shares
Revaluation of
intangible assets Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax arising
from:
At January 1, 2021 ....... — — — — — —
Effect of business
combinations ......... 2,115 317 — (16,087) 97 (13,558)
(Charged)/credited to the
consolidated statements
of profit or loss ........ (918) 48 — 187 (2) (685)
At December 31, 2021 and
January 1, 2022 ....... 1,197 365 — (15,900) 95 (14,243)
Credited/(charged) to the
consolidated statements
of profit or loss ........ 3 9 8 3 9 — 1,714 (6) 2,145
At December 31, 2022 and
January 1, 2023 ....... 1,595 404 — (14,186) 89 (12,098)
Credited/(charged) to the
consolidated statements
of profit or loss ........ 1,982 (143) 342 1,683 (9) 3,855
At December 31, 2023 .... 3,577 261 342 (12,503) 80 (8,243)
Credited/(charged) to the
consolidated statements
of profit or loss ........ 1,546 62 (81) 841 29 2,397
At June 30, 2024 ........ 5,123 323 261 (11,662) 109 (5,846)
(ii) Reconciliations to the consolidated statements of financial position
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Deferred tax assets recognized in the consolidated statements of
financial position ..................................... 1,657 2,092 4,260 5,816
Deferred tax liabilities recognized in the consolidated statements
of financial position ................................... (15,900) (14,190) (12,503) (11,662)
(14,243) (12,098) (8,243) (5,846)
I-79


--- page 551 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
27 Income tax in the consolidated statements of financial position (continued)
(c) Deferred tax assets not recognized
In accordance with the accounting policy set out in Note 2(x), the Group has not recognized
deferred tax assets in respect of cumulative tax losses of RMB4,695,183,000,
RMB5,408,858,000, RMB5,420,825,000 and RMB5,013,443,000 at December 31, 2021, 2022,
2023 and June 30, 2024, respectively, as it is not probable that future taxable profits against
which the losses can be utilized will be available in the relevant tax jurisdiction and entities.
28 Financial liabilities measured at fair value through profit or loss
Convertible redeemable preferred shares
Issued and fully paid
Series of
Convertible
Redeemable
Preferred
Shares Share Issued
Issue Price
per Share
USD
Proceeds
from issuance
USD
A 106,000,000 1.00 106,000,000
B 40,404,040 1.98 80,000,000
B+ 25,505,051 1.98 50,500,000
B++ 18,399,621 2.50 46,000,000
C 132,103,065 2.80 369,888,571
C+ 13,354,347 3.88 51,814,866
The rights, preferences and privileges of the Series A Preferred Shares, Series B Preferred
Shares, Series B+ Preferred Shares, Series B++ Preferred Shares, Series C Preferred Shares and
Series C+ Preferred Shares (collectively “Convertible Redeemable Preferred Shares”) are as
follows:
Redemption Rights
The preferred shares are redeemable at the option of the holders after the occurrence of any of the
following events: (a) at any time after the fifth anniversary of the issuance date of Series C+
Preferred Shares, if a Qualified IPO has not been consummated by then; (b) Dr. Zhang Wenzhong,
together with his affiliate companies, ceasing to be the single largest shareholder of the Company
and have the right to appoint or designate at least the majority of the directors of the Company;
(c) termination of cooperation between the Group and the supermarkets in which Wumei
Technology Group Co., Ltd, holds more than 50% of equity interests in; or (d) termination of VIEs
Agreements, which would result in that the Company’s failure to consolidate the VIEs and VIEs’
subsidiary. For above-mentioned (c) and (d), the Company is obliged to rectify within three months
after receipt of a written notice from any holder of Preferred Shares demanding the rectification.
The redemption rights granted upon the occurrence of any of events (b), (c) and (d) to the investors
have been suspended immediately prior to the first submission of the listing application form to the
Stock Exchange, and will only be exercisable if the listing does not take place, otherwise such
redemption rights will terminate upon the listing.
The redemption preference from high priority to low priority is as follows in sequence: Series
C+ Preferred Shares, Series C Preferred Shares, Series B++ Preferred Shares, Series B+
Preferred Shares/Series B Preferred Shares and Series A Preferred Shares.
I-80


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
28 Financial liabilities measured at fair value through profit or loss (continued)
The redemption price equals to the amount at the issuance price of preferred shares (as adjusted
by any share split, combination, recapitalization and other similar transactions) plus an interest
rate of 8% per annum (simple interest), accruing daily from the first issuance date of such
preferred shares to the date the applicable redemption price is paid in full by the Company.
Conversion Feature
Each preferred share is convertible, at the option of the holder, at any time after the issuance
date according to a conversion ratio, subject to adjustments for dilution, including but not
limited to share splits and combinations, share dividends and distributions, issuance of new
securities for a consideration less than the applicable conversion price (i.e. a “down-round”
protection feature) and certain other events. The number of ordinary shares to which a holder
shall be entitled upon conversion of each preferred share shall be the quotient of the applicable
original issue price divided by the then effective conversion price for the preferred shares (the
“Conversion Price”), which shall initially be the Issue Price, resulting in an initial conversion
ratio for the preferred shares of 1:1. The conversion price of preferred shares is the same as its
original issuance price and no adjustments to conversion price have occurred. As of
December 31, 2021, 2022 and 2023 and June 30, 2024, each preferred share is convertible into
one ordinary share.
Each preferred share shall automatically be converted, based on the then-effective Conversion
Price, without the payment of any additional consideration, into fully-paid and non-assessable
ordinary shares upon the closing of a Qualified IPO.
Voting Rights
Each preferred shareholder shall be entitled to that number of votes corresponding to the
number of ordinary shares on an as-converted basis.
Dividend Rights
No dividend shall be paid on or declared and set aside for any ordinary share during any fiscal
year unless and until a dividend in like amount as is declared or paid on ordinary shares has
been paid on or declared and set aside for each outstanding preferred share, on an as if
converted basis, in such fiscal year.
Liquidation Preferences
In the event of any dissolution, liquidation or winding up of the Company or any other deemed
liquidation event (as defined below), the holders of the preferred shares shall be entitled to
receive the amount equal to one hundred percent (100%) of the issue price for each preferred
share then held by them and, in addition, an amount equal to all declared but unpaid dividends
on such preferred shares (the “Liquidation Preference Amount”), in the sequence of Series C+
Preferred Shares, Series C Preferred Shares, Series B++ Preferred Shares, Series B+ Preferred
Shares/Series B Preferred Shares and Series A Preferred Shares. If there are any net assets
remaining after the Liquidation Preference Amount has been distributed or paid in full to all
I-81


--- page 553 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
28 Financial liabilities measured at fair value through profit or loss (continued)
holders of the preferred shares, the remaining net assets of the Company available for
distribution to the shareholders shall be distributed ratably among all shareholders according to
the number of ordinary shares held by such shareholder on an as if converted basis.
“Deemed liquidation event” refer an event involving (i) the sale, lease, transfer or other
disposition, in a single transaction or series of related transactions, by the Company of all or
substantially all the assets or properties of the Company, except where such sale, lease, transfer
or other disposition is to a wholly owned subsidiary of the Company; (ii) any merger,
consolidation, amalgamation or acquisition of the Company, whereby the holders of the
Company’s Capital Stock immediately prior to the transaction own or control less than a
majority of the as-converted voting power of the surviving entity immediately after such
transaction; or (iii) any other transaction or series of related transactions involving the
Company as a result of which the holders of the Company’s Capital Stock immediately prior to
the transaction, own or control less than a majority of the as-converted voting power of the
surviving entity immediately after such transaction.
Upon the occurrence of the Deemed liquidation event, the Company is required to be liquidated
unless otherwise waived by the holders holding at least 50% of the votes of the outstanding
Preferred Shares.
Presentation and classification
The Company classified the convertible redeemable preferred shares as financial liabilities,
because it is obliged to redeem the convertible redeemable preferred shares or liquidate itself at
the option of the holders of the outstanding preferred shares upon occurrence of contingent
events that are beyond its control and the preferred shares are not in the most subordinated class
of instruments issued by the Company upon the liquidation.
Upon occurrence of certain redemption events which are beyond the control of the Company,
the Company is obliged to purchase the convertible redeemable preferred shares if requested by
the holders. Such redemption obligation also gives rise to financial liabilities. The conversion
feature meets the definition of a derivative and the fixed-for-fixed criterion is not met due to the
“down-round” protection feature, thus the conversion feature is classified as a derivative
financial liability. As at December 31, 2021, 2022 and 2023 and June 30, 2024, all the preferred
shares were classified as current liabilities as the preferred shares may be converted into
ordinary shares at the option of the holders at any time and the conversion feature does not
meet the definition of an equity instrument.
The convertible redeemable preferred shares are hybrid instruments with parts that have
different economic characteristics and risks (debt vs equity nature).
The financial liability is designated and measured at fair value through profit or loss in its
entirety, as the Company cannot reliably measure its embedded derivatives separately.
I-82


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
28 Financial liabilities measured at fair value through profit or loss (continued)
The movements of the convertible redeemable preferred shares are set out as below:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Balance at January 1 .................... 3,767,451 5,137,156 6,378,735 6,378,735 6,965,493
Issuance of convertible redeemable preferred
shares .............................. 742,109 238,401 — — —
Changes in fair value through profit or loss . . 732,280 493,191 476,160 422,261 397,118
Foreign currency translation adjustment ..... (104,684) 509,987 110,598 257,309 44,583
Balance at December 31/June 30............ 5,137,156 6,378,735 6,965,493 7,058,305 7,407,194
The Company has engaged an independent qualified professional valuer to determine the
underlying equity value of the Company using the discounted cash flow valuation approach and
the fair value of convertible redeemable preferred shares using Black-Scholes model and equity
allocation model. Key assumptions are set as below:
As at December 31, As at June 30,
2021 2022 2023 2024
Discount rate ........................................... 16.00% 16.00% 16.00% 15.00%
Risk-free interest rate .................................... 1.24% 4.13% 4.04% 4.68%
Volatility .............................................. 53.42% 55.46% 55.71% 46.42%
It is estimated that with all other variables held constant, 1% increase/decrease in
discount rate would decrease/increase the fair value of convertible redeemable preferred
shares by RMB492,116,000/RMB575,554, 000, RMB542,786,000/RMB634,190,000,
RMB597,026,000/RMB704,530,000 and RMB645,301,000/RMB753,483,000 as at December 31, 2021,
2022 and 2023 and June 30, 2024, respectively.
29 Convertible bond
Liability
component
Derivative
components Total
RMB’000 RMB’000 RMB’000
At January 1, 2021, December 31, 2021 and January 1, 2022 ............. — — —
Issuance of convertible bond ....................................... 175,580 14,420 190,000
Accrued finance charges for the year (Note 7(a)) ....................... 7,233 — 7,233
Fair value changes on the derivative components (Note 7(a)) ............. — 4,370 4,370
Foreign currency translation adjustment .............................. — 1,590 1,590
At December 31, 2022 and January 1, 2023 ........................... 182,813 20,380 203,193
Issuance of convertible bond ....................................... — — —
Accrued finance charges for the year (Note 7(a)) ....................... 13,595 — 13,595
Payment of accrued finance charges ................................. (11,173) — (11,173)
Fair value changes on the derivative components (Note 7(a)) ............. — 2,570 2,570
Foreign currency translation adjustment .............................. — 3 9 2 3 9 2
At December 31, 2023 ............................................ 185,235 23,342 208,577
Partial derecognition of convertible bond ............................. 3,242 (5,621) (2,379)
Repayment of convertible bond ..................................... (50,000) — (50,000)
Accrued finance charges for the period (Note 7(a)) ..................... 6,606 — 6,606
I-83


--- page 555 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
29 Convertible bond (continued)
Liability
component
Derivative
components Total
RMB’000 RMB’000 RMB’000
Payment of accrued finance charges ................................. (11,204) — (11,204)
Fair value changes on the derivative components (Note 7(a)) ............. — (172) (172)
Foreign currency translation adjustment .............................. — (389) (389)
At June 30, 2024 ................................................ 133,879 17,160 151,039
On May 27, 2022, the Company, Dmall Life Network and Beijing Heyin Investment Fund (Limited
Partner) (“Beijing Heyin”) entered into a series of agreements (the “Convertible Bond Investment
Agreements”). Pursuant to the agreements, the Company agreed to issue, and Beijing Heyin agreed
to subscribe for a convertible bond in the principal amount of RMB190,000,000 (the “Convertible
Bond”), which bears interest of 5.8% per annum and matures on June 14, 2027. Beijing Heyin paid
the consideration in cash to Dmall Life Network on June 15, 2022.
Beijing Heyin is entitled to early redeem the convertible bond by a notice of redemption at its
face value plus accrued but not paid interest on June 14, 2025 or June 14, 2026 (i.e. the put
option).
The Company could early repay the convertible bond by a notice of repayment at its face value
plus accrued but not paid interest at any time after June 14, 2025 (i.e. the call option).
On or after the 180th calendar days upon the completion of a Qualified IPO, Beijing Heyin
could, at any time till maturity date, convert the bond into ordinary shares of the Company at
conversion price of US$3.93 per share (i.e. the conversion option).
If at any time on or after the 180th calendar days upon the completion of a Qualified IPO till
maturity date, if the closing price per share of the Company on last trading day and the average
closing price per share of last 20 consecutive trading days equal to or exceed US$5.1, the
Company shall have the right to require Beijing Heyin to convert the bond into the Company’s
ordinary shares (i.e. the forced conversion option).
The convertible bond was initially bifurcated into liability and derivative components upon
issuance. The call option, put option, conversion option and forced conversion option are all
classified as derivative financial instruments and have been included in the balance of the
convertible bond in the consolidated statements of financial position. The effective interest rate
of the liability component of the convertible bond is 7.6850% per annum.
The estimate of the fair value of the derivative components of the convertible bond is measured
based on a Binomial pricing model. Details of the assumptions used are as follows:
Derivative components of the convertible bond
Dates of valuation Date of issue
December 31,
2022
December 31,
2023
June 30,
2024
Expected volatility ................................... 4 8 % 5 2 % 5 2 % 4 5 %
Dividend yield ...................................... 0 % 0 % 0 % 0 %
Maturity period ..................................... 5.00 4.46 3.46 2.96
Risk free rate ....................................... 3.37% 4.06% 3.97% 4.55%
It is estimated that with all other variables held constant, 1% increase/decrease in risk-free
interest rate, would increase/decrease the fair value of derivative components of the convertible
I-84


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
29 Convertible bond (continued)
bond by RMB3,210,000/RMB3,411,000, RMB3,413,000/RMB3,581,000 and RMB2,542,000/
RMB2,647,000 as at December 31, 2022, 2023 and June 30, 2024, respectively.
On March 22, 2024, the Group entered into an amendment to the convertible bond Investment
Agreement with Beijing Heyin. Pursuant to the amended agreement, the Group repaid
RMB50,000,000 of the principal amount and accrued but not paid interests by June 15, 2024.
Therefore, it met the derecognition criteria for the convertible bond repaid and the difference
between the carrying amount and the consideration paid is recognized in the consolidated
statements of profit or loss on the amendment date.
30 Capital and reserves
(a) Share capital
The Company was incorporated in British Virgin Islands in 2015 with authorized share capital
of USD250,000 divided into 2,500,000,000 ordinary shares with par value of USD$0.0001
each.
The outstanding ordinary shares issued to the equity shareholders of the Company were
525,150,000, 525,150,000, 525,150,000 and 525,150,000 as at December 31, 2021, 2022, 2023
and June 30, 2024 respectively.
(b) Reserves
(i) Capital reserve
Capital injected to a subsidiary by the Group and a non-controlling shareholder
On January 6, 2022, Dmall (Shenzhen) Digital and Beijing Wumart Supermarket Co., Ltd.
injected capital into Dmall Zhilian by RMB60,928,000 in total, of which RMB27,260,000 was
contributed by the Group in cash, and RMB33,668,000 by Beijing Wumart Supermarket Co.,
Ltd. in equipment. After the capital injection, Dmall Zhilian’s paid-in capital was increased to
RMB74,818,000. The equity interest of the Group in Dmall Zhilian decreased from 100% to
55%, whereas that of Beijing Wumart Supermarket Co., Ltd increased to 45%.
Capital injected to a subsidiary by the Group
On February 28, 2023, equity holders of Dmall Zhilian approved Dmall (Shenzhen) Digital to
increase its investment in Dmall Zhilian in amount of RMB93,522,000. In connection with such
additional investment, the Group’s equity interests in Dmall Zhilian increased from 55% to
80%. As of December 31, 2023, RMB36,000,000 was injected to Dmall Zhilian.
Such transaction was accounted for as a transaction with a non-controlling equity holder of
Dmall Zhilian. No gain or losses on such changes was recognized in profit or loss. The
difference between capital injected by the Group and its interests increased in the carrying
amount of Dmall Zhilian’s net assets was recognized as deduction in capital reserve with
amount of RMB15,688,000.
I-85


--- page 557 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
30 Capital and reserves (continued)
Repurchase of non-controlling interests
Retail Technology Asia was established in Hong Kong on January 14, 2020. On the
incorporation date, each of Dmall HK and DFI Retail Group Management Limited subscribed
for and were issued 1 ordinary share in cash at US$1,500,000 per share (equivalent to
RMB10,333,700), representing 50% equity interests of Retail Technology Asia. Dmall HK has
the right to and appointed four out of seven directors to the Board of Retail Technology Asia.
Dmall HK has a controlling equity interest in Retail Technology Asia and has control over the
operation of Retail Technology Asia, subject to any reserved matters under the JV Agreement.
In April 2022, Retail Technology Asia repurchased 4,358,974 of its shares by disposing 100%
equity interest in DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
(formerly known as Retail Technology (Hong Kong) Ltd. and Retail Technology (Singapore)
PTE. Ltd.) to DFI Retail Group. The repurchased shares were subsequently canceled. Upon
completion of the repurchase, Dmall HK held 58.5% of the equity interest in Retail Technology
Asia.
The difference between the fair value of the equity interests of DFI Digital (Hong Kong)
Limited and DFI Digital (Singapore) PTE. Limited and the carrying amount of the net liabilities
of these two subsidiaries upon the disposal was amounted to RMB101,845,000 and recognized
in other net income/(loss).
(ii) Statutory reserve
Statutory reserve is established in accordance with the relevant PRC rules and regulations and
the articles of association of the companies which are incorporated in the PRC until the reserve
balance reaches 50% of their registered capital. The transfer to this reserve must be made
before distribution of a dividend to equity holders.
(iii) Share-based payments reserve
The share-based payments reserve represents the portion of the grant date fair value of share
options, RSUs and restricted ordinary shares granted to eligible employees, directors and non-
employees of the Group that has been recognized in accordance with the accounting policy
adopted for share-based payments in Note 2(w)(ii).
(iv) Exchange reserve
The exchange reserve comprises all foreign exchange differences arising from the translation of
the financial statements for operations outside of Chinese mainland. The reserve is dealt with in
accordance with the accounting policies set out in Note 2(aa).
(c) Dividends
No dividends have been paid or declared by the Company during the Track Record Period.
I-86


--- page 558 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
30 Capital and reserves (continued)
(d) Capital management
The Group’s primary objectives when managing capital are to safeguard the Group’s ability to
continue as a going concern, so that it can continue to provide returns for shareholders and
benefits for other stakeholders, by pricing products and services commensurately with the level
of risk and by securing access to finance at a reasonable cost.
The Group actively and regularly reviews and manages its capital structure to maintain a
balance between the higher shareholder returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position and makes
adjustments to the capital structure in light of changes in economic conditions.
The Group monitors its capital structure on the basis of adjusted liability-to-asset ratio. For this
purpose, adjusted liabilities is defined as total liabilities less convertible redeemable preferred
shares and convertible bond.
31 Business combination not under common control
(a) Acquisition of Shenzhen Enjoy
On May 18, 2021, Shenzhen Xintonglu, a subsidiary of the Company, entered into a series of
share purchase agreements (collectively, the “SPA”) with certain shareholders of Shenzhen
Enjoy to acquire the shares of Shenzhen Enjoy.
By August 5, 2021, Shenzhen Xintonglu had acquired 21.03% share of interests in Shenzhen Enjoy
for a consideration of RMB102,640,000. The Group accounted such investment using equity
method (i.e. Step 1). By November 26, 2021, the Group had acquired additional 20.04% share of
interests in Shenzhen Enjoy for a consideration of RMB97,760,000. On November 26, 2021,
according to the SPA, the former controlling shareholder of Shenzhen Enjoy delegated his voting
right of 2,424,000 shares, which represented 9.93% of total outstanding shares of Shenzhen Enjoy
to Shenzhen Xintonglu. As a result, Shenzhen Xintonglu was entitled to 51% of voting rights at the
shareholders’ meetings and obtained control over Shenzhen Enjoy. (i.e. Step 2)
For the two steps mentioned above, the occurrence of each step is independent and each of the
step on their own is considered economically justified. As such, the directors considered that
these transactions during the Track Record Period should be treated as separate transactions of
a step acquisition to obtain control over Shenzhen Enjoy.
As at acquisition date (i.e. November 26, 2021), the fair value of the 21.03% share of interests as
an associate of the Group acquired at the Step 1 formed part of the total consideration of the step
acquisition and was included in the calculation of goodwill on the step acquisition. The Group
recognized a gain of RMB2,782,000 in such re-measurement of the 21.03% share of interests
previously held as an associate at fair value. The gain was recognized in other net income/(loss).
November 26,
2021
RMB’000
Initial investment ................................................................. 102,640
Share of profits before combination ................................................... 6 0 7
Book value at acquisition date ....................................................... 103,247
Less: Fair value of previously held interests in Shenzhen Enjoy ............................. 106,029
Gain from re-measurement of equity interest upon acquisition .............................. 2,782
I-87


--- page 559 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
31 Business combination not under common control (continued)
For the year ended December 31, 2021, Shenzhen Enjoy contributed revenue of RMB23,699,000
and profit of RMB8,209,000 to the Group’s results. If the acquisition had occurred on January 1,
2021, management estimates that consolidated revenue would have increased by
RMB55,648,000, and consolidated profit for the year would have increased by RMB7,393,000
(after deduction of share of profits as associate of the Group from May 18, 2021 to November 26,
2021 and gain from re-measurement of equity interest upon acquisition).
On November 11, 2022, the Group acquired additional 9.93% share of interests in Shenzhen
Enjoy for a consideration of RMB48,480,000.
(i) Acquisition-related costs
The Group incurred acquisition-related costs of RMB1,106,000 on legal fees and due diligence
costs. These costs have been included in general and administration expenses in the
consolidated statement of profit or loss.
(ii) Identifiable assets acquired and liabilities assumed
The following table summarizes the recognized amounts of assets acquired and liabilities
assumed at the date of acquisition.
Recognized
values on
date of
acquisition
RMB’000
Property and equipment .............................................................. 8,968
Interest in associates ................................................................ 5,163
Intangible assets .................................................................... 105,366
Deferred tax assets .................................................................. 2,529
Inventories and other contract costs .................................................... 9,781
Trade receivables ................................................................... 12,060
Contract assets ..................................................................... 1,506
Prepayments, deposits and other receivables ............................................. 2,877
Other financial assets ................................................................ 38,000
Cash and cash equivalents ............................................................ 7,222
Trade payables ..................................................................... (3,704)
Contract liabilities .................................................................. (26,987)
Bank loans and other borrowings ...................................................... (3,300)
Accrued expenses and other payables ................................................... (14,368)
Other non-current liabilities .......................................................... (646)
Deferred tax liabilities ............................................................... (16,088)
Lease liability ..................................................................... (2,005)
Total identifiable net assets acquired ................................................... 126,374
I-88


--- page 560 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
31 Business combination not under common control (continued)
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as
follows.
Assets acquired Valuation technique
Property and equipment ................ Market comparison technique and cost technique: The valuation
model considers market prices for similar items when they are
available, and depreciated replacement cost when appropriate.
Depreciated replacement cost reflects adjustments for physical
deterioration as well as functional and economic obsolescence.
Intangible assets ...................... Relief-from-royalty method and multi-period excess earnings
method: The relief-from-royalty method considers the discounted
estimated royalty payments that are expected to be avoided as a
result of the patents being owned. The multi-period excess
earnings method considers the present value of net cash flows
expected to be generated by the customer relationships, by
excluding any cash flows related to contributory assets. Market
comparison technique: The fair value is determined based on the
estimated selling price in the ordinary course of business less the
estimated costs of completion and sale, and a reasonable profit
margin based on the effort required to complete and sell the
inventories.
(iii) Goodwill
Goodwill arising from the acquisition has been recognized as follows.
November 26,
2021
RMB’000
Fair value of pre-existing interest in Shenzhen Enjoy ..................................... 106,029
NCI, based on their proportionate interest in the recognized amounts of the assets and liabilities of
Shenzhen Enjoy ................................................................ 74,472
Cash consideration transferred ....................................................... 97,760
Total identifiable net assets acquired .................................................. (126,374)
Goodwill ........................................................................ 151,887
(b) Acquisition of Beijing Xianmei
Pursuant to the equity transfer agreement dated February 21, 2023, Dmall Zhilian, a subsidiary
of the Group, acquired 55% equity interest in Beijing Xianmei from selling shareholders, i.e.
30% from Wumei Group and 25% from a third-party shareholder, at a total consideration of
RMB2,770,000.
For the year ended December 31, 2023, Beijing Xianmei contributed revenue of
RMB64,938,000 and loss of RMB219,000 to the Group’s results. If the acquisition had
occurred on January 1, 2023, management estimates that consolidated revenue would have
increased by RMB7,037,000, and consolidated loss for the year would have decreased by
RMB569,000.
I-89


--- page 561 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
31 Business combination not under common control (continued)
(i) Identifiable assets acquired and liabilities assumed
The following table summarizes the recognized amounts of assets acquired and liabilities
assumed at the date of acquisition.
Recognized
values on
date of
acquisition
RMB’000
Property and equipment .............................................................. 5,365
Trade receivables ................................................................... 3,403
Prepayments, deposits and other receivables ............................................. 9 0 0
Cash and cash equivalents ............................................................ 2,754
Trade payables ..................................................................... (1,997)
Accrued expenses and other payables ................................................... (210)
Lease liabilities .................................................................... ( 5,371)
Total identifiable net assets acquired ................................................... 4,844
(ii) Goodwill
Goodwill arising from the acquisition has been recognized as follows.
February 28,
2023
RMB’000
Non-controlling interests ............................................................ 2,180
Cash consideration transferred ....................................................... 2,770
Total identifiable net assets acquired .................................................. (4,844)
Goodwill ........................................................................ 1 0 6
32 Disposal of subsidiaries
(a) Disposal of DFI Digital (Hong Kong) Limited and DFI Digital (Singapore) PTE. Limited
As disclosed in Note 30, Retail Technology Asia repurchased 4,358,974 of its shares by
disposing 100% equity interest in DFI Digital (Hong Kong) Limited and DFI Digital
(Singapore) PTE. Limited to DFI Retail Group. The net loss of DFI Digital (Hong Kong)
Limited and DFI Digital (Singapore) PTE. Limited for the year ended December 31, 2021 was
RMB181,175,000 and the net loss for the period in 2022 before disposal was RMB61,760,000,
which were included in the Historical Financial Information of the Group. The differences
between the fair value of the equity interests of USD6,900,000 (equivalent to RMB45,586,000)
and the carrying amount of the net liabilities upon the disposal was amounted to
RMB101,845,000 and recognized in other net income.
I-90


--- page 562 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
32 Disposal of subsidiaries (continued)
The financial information of the disposed subsidiaries at the disposal date are set out as below:
RMB’000
Cash and cash equivalents ............................................................ 35,616
Trade receivables ................................................................... 8,521
Prepayments, deposits and other receivables .............................................. 192,394
Property and equipment .............................................................. 4 9 2
Trade payables ..................................................................... (27,678)
Accrued expenses and other payables .................................................... (265,604)
Net liabilities ....................................................................... (56,259)
Net cash outflow arising on disposal:
Consideration received, satisfied in cash ................................................. —
Less: cash and cash equivalents disposed of .............................................. ( 35,616)
Net cash outflow .................................................................... (35,616)
(b) Disposal of Dmall (Shenzhen) Development Co., Ltd.
In November 2022, the Group sold 100% of equity interests in Dmall (Shenzhen) Development Co., Ltd.
to Wumei South Commercial Co., Ltd, a subsidiary of Wumei Technology Group Co., Ltd for cash
consideration of RMB79,840,000. The differences between the cash consideration and the carrying
amount of the net assets was amounted to RMB1,714,000 and recognized in other net loss.
The financial information of the disposed subsidiaries at the disposal date are set out as below:
RMB’000
Cash and cash equivalents ............................................................. 1,667
Other current assets .................................................................. 1 0
Investment property .................................................................. 158,832
Property and equipment ............................................................... 1,210
Other non-current assets .............................................................. 3 4 6
Loans and borrowings ................................................................ (80,503)
Accrued expenses and other payables .................................................... ( 8 )
Net assets .......................................................................... 81,554
Net cash outflow arising on disposal:
Consideration received, satisfied in cash .................................................. 79,840
Less: cash and cash equivalents disposed of ............................................... (1,667)
Net cash inflow ..................................................................... 78,173
(c) Disposal of Dmall Fresh (Shenzhen)
In August 2023, the Group disposed 100% interests in Dmall Fresh (Shenzhen) to a third party with a
total consideration of RMB1.
I-91


--- page 563 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
32 Disposal of subsidiaries (continued)
The financial information of the disposed subsidiary at the disposal date are set out as below:
RMB’000
Cash and cash equivalents ............................................................. 1
Net assets .......................................................................... 1
Net cash outflow arising on disposal:
Consideration received, satisfied in cash .................................................. — *
Less: cash and cash equivalents disposed of ............................................... ( 1 )
Net cash outflow .................................................................... ( 1 )
* The balance represents amount less than RMB500.
33 Financial risk management and fair values of financial instruments
Exposure to credit, liquidity, interest rate and currency risks arises in the normal course of the
Group’s business.
The Group’s exposure to these risks and the financial risk management policies and practices
used by the Group to manage these risks are described below.
(a) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in a financial loss to the Group. The Group’s credit risk is primarily attributable to
trade receivables and contract assets. The Group’s exposure to credit risk arising from cash and
cash equivalents is limited because the counterparties are banks and financial institutions with
high credit ratings assigned by the management of the Group, for which the Group considers to
have low credit risk.
The Group does not provide any guarantees which would expose the Group to credit risk.
As at December 31, 2021, 2022 and 2023 and June 30, 2024, 44.02%, 53.12% and 66.75% and
47.88% of the total trade receivables and contract assets was due from the Group’s largest
customer, respectively.
The Group measures loss allowances for trade receivables at an amount equal to lifetime ECLs,
which is calculated using a provision matrix. As the Group’s historical credit loss experience does
not indicate significantly different loss patterns for different customer segments, the loss allowance
based on past due status is not further distinguished between the Group’s different customer bases.
I-92


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
The following table provides information about the Group’s exposure to credit risk and ECLs
for trade receivables as at December 31, 2021, 2022 and 2023 and June 30, 2024:
December 31, 2021
Expected
loss rate
%
Gross carrying
amount
Loss
allowance
RMB’000 RMB’000
Within 1 year .................................................. 0.68 89,393 606
1 - 2 years ..................................................... 12.56 2,579 324
2 - 3 years ..................................................... 18.02 1,537 277
3 - 4 years ..................................................... 30.22 1,264 382
4 - 5 years ..................................................... 45.00 100 45
More than 5 years ............................................... 100.00 1,015 1,015
95,888 2,649
December 31, 2022
Expected
loss rate
%
Gross carrying
amount
Loss
allowance
RMB’000 RMB’000
Within 1 year .................................................. 0.90 135,773 1,224
1 - 2 years ..................................................... 13.92 4,510 628
2 - 3 years ..................................................... 25.43 1,628 414
3 - 4 years ..................................................... 29.97 744 223
4 - 5 years ..................................................... 50.00 886 443
More than 5 years ............................................... 100.00 579 579
144,120 3,511
December 31, 2023
Expected
loss rate
%
Gross carrying
amount
Loss
allowance
RMB’000 RMB’000
Within 1 year .................................................. 0.62 158,346 985
1 - 2 years ..................................................... 21.34 8,290 1,769
2 - 3 years ..................................................... 22.38 782 175
3 - 4 years ..................................................... 29.98 884 265
4 - 5 years ..................................................... 50.00 68 34
More than 5 years ............................................... 100.00 25 25
168,395 3,253
June 30, 2024
Expected
loss rate
%
Gross
carrying
amount
Loss
allowance
RMB’000 RMB’000
Within 1 year ...................................................... 0.36 249,039 900
1 - 2 years ......................................................... 16.98 6,079 1,032
2 - 3 years ......................................................... 44.16 5,045 2,228
3 - 4 years ......................................................... 30.00 200 60
4 - 5 years ......................................................... 50.00 620 310
More than 5 years .................................................. 100.00 24 24
261,007 4,554
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
Movement in the loss allowance account in respect of trade receivables during the year/period
is as follows:
2021 2022 2023 June 30, 2024
RMB’000 RMB’000 RMB’000 RMB’000
Balance at January 1 ..................................... 1 1 2,649 3,511 3,253
Impairment loss recognized during the year/period ............. 2 1 6 8 6 2 2,250 1,404
Amounts written off during the year/period ................... — — (2,508) (103)
Impact of acquisition of subsidiaries ........................ 2,422 — — —
At December 31/June 30 ................................. 2,649 3,511 3,253 4,554
(b) Liquidity risk
The Group’s policy is to regularly monitor its liquidity requirements and its compliance with
lending covenants, to ensure that it maintains sufficient reserves of cash and adequate
committed lines of funding from major financial institutions to meet its liquidity requirements
in the short and longer term.
The following tables show the remaining contractual maturities at December 31, 2021, 2022
and 2023 and June 30, 2024, of the Group’s non-derivative financial liabilities, which are based
on contractual undiscounted cash flows (including interest payments computed using
contractual rates or, if floating, based on rates current at December 31, 2021, 2022 and 2023
and June 30, 2024) and the earliest dates the Group can be required to pay:
As at December 31, 2021
Contractual undiscounted cash outflow
Within
1 year
or on
demand
More
than
1 year
but
less than
2 years
More
than
2 years
but
less than
5 years
More
than
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ........................... 49,361 — — — 49,361 49,361
Accrued expenses and other payables ......... 590,868 — — — 590,868 590,868
Bank loans and other borrowings ............ 76,786 11,880 35,640 44,796 169,102 155,261
Lease liabilities .......................... 18,369 8,177 167 — 26,713 25,612
735,384 20,057 35,807 44,796 836,044 821,102
As at December 31, 2022
Contractual undiscounted cash outflow
Within
1 year
or on
demand
More
than
1 year
but
less than
2 years
More
than
2 years
but
less than
5 years
More
than
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ........................... 63,778 — — — 63,778 63,778
Accrued expenses and other payables ......... 533,737 — — — 533,737 533,737
Bank loans and other borrowings ............ 74,560 23,616 29,912 — 128,088 120,490
Convertible bond-liability component ........ 11,020 11,020 223,060 — 245,100 182,813
Lease liabilities .......................... 16,657 4,439 25 — 21,121 20,313
699,752 39,075 252,997 — 991,824 921,131
I-94


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
As at December 31, 2023
Contractual undiscounted cash outflow
Within
1 year
or on
demand
More
than
1 year
but
less than
2 years
More
than
2 years
but
less than
5 years
More
than
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ........................ 86,563 — — — 86,563 86,563
Accrued expenses and other payables ...... 422,749 — — — 422,749 422,749
Bank loans and other borrowings ......... 210,354 68,285 48,670 — 327,309 314,176
Convertible bond-liability component ...... 11,020 11,020 212,040 234,080 185,235
Lease liabilities ....................... 26,757 14,292 1,254 — 42,303 40,584
757,443 93,597 261,964 — 1,113,004 1,049,307
As at June 30, 2024
Contractual undiscounted cash outflow
Within
1 year
or on
demand
More
than
1 year
but
less than
2 years
More
than
2 years
but
less than
5 years
More
than
5 years Total
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade payables ........................ 98,367 — — — 98,367 98,367
Accrued expenses and other payables ...... 227,537 — — — 227,537 227,537
Bank loans and other borrowings ......... 291,965 86,102 33,667 — 411,734 396,664
Convertible bond-liability component ...... 172,480 — — — 172,480 133,879
Lease liabilities ....................... 28,251 8,598 801 — 37,650 36,650
818,600 94,700 34,468 — 947,768 893,097
(c) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates.
The Group is primarily exposed to fair value interest rate risk in relation to lease liabilities and
cash flow risk in relation to variable-rate bank balances. The Group currently does not have an
interest rate hedging policy to mitigate interest rate risk; nevertheless, the management
monitors interest rate exposure and will consider hedging significant interest rate risk should
the need arise. The directors of the Company consider that the exposure of cash flow interest
rate risk arising from variable-rate bank balances is insignificant because the current market
interest rates are relatively low and stable.
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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
(d) Currency risk
The Group is exposed to currency risk primarily through sales and purchases which give rise to
receivables, payables and cash balances that are denominated in a foreign currency, i.e. a
currency other than the functional currency of the operations to which the transactions relate.
Currency risk is mainly due to exchange rate fluctuations between the USD and RMB. The
Group manages this risk as follows:
(i) Exposure to currency risk
The following table details the Group’s exposure at the end of the reporting period to currency
risk arising from recognized assets or liabilities denominated in a currency other than the
functional currency of the entity to which they relate. For presentation purposes, the amounts of
the exposure are shown in RMB, translated using the spot rate at the year-end date. Differences
resulting from the translation of the Historical Financial Information of foreign operations into
the Group’s presentation currency are excluded.
Exposure to foreign currencies (expressed in RMB)
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade and other receivables
-i nU S D............................................... 1,317 — 228 229
-i nH K D .............................................. — 7,204 6,335 7,898
-i nS G D............................................... — — 7 1 7 6 6 9
-i nR M B .............................................. — 6 3 — —
-i nM Y R .............................................. — — — 9
Cash and cash equivalents
-i nU S D............................................... 149,413 42,158 4,132 5,588
-i nH K D .............................................. 1 4 8 4,082 664 2,719
-i nS G D............................................... — — 7 8 4 1,776
-i nR M B .............................................. 5 0 0 5 — 4 4 8
-i nE U R............................................... — 1 9 1 — -
-i nH U F............................................... — — 1,037 519
-i nP H P ............................................... — — — 2 9 3
Trade and other payables
-i nU S D............................................... ( 182) (20,522) (831) (363)
-i nH K D .............................................. ( 268) (134) (94) (4,134)
-i nS G D............................................... — — — (53)
-i nR M B .............................................. ( 29,988) (35,240) (21,273) (21,392)
-i nP H P ............................................... — — — (12)
Net exposure arising from recognized assets and liabilities ....... 120,940 (2,193) (8,301) (6,969)
(ii) Sensitivity analysis
The following table indicates the instantaneous change in the Group’s loss after tax (and accumulated
losses) and other components of consolidated equity that would arise if foreign exchange rates to
which the Group has significant exposure at the end of each reporting period had changed at that date,
assuming all other risk variables remained constant.
I-96


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
2021 2022 2023 June 30, 2024
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and
retained
profits
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and
retained
profits
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and
retained
profits
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and
retained
profits
RMB’000 RMB’000 RMB’000 RMB’000
U S D ............... 5 % 7,528 5% 1,082 5% 163 5% 261
(5%) (7,528) (5%) (1,082) (5%) (163) (5%) (261)
H K D ............... 5 % ( 5 ) 5 % 3 8 0 5 % 3 2 6 5 % 3 0 8
(5%) 5 (5%) (380) (5%) (326) (5%) (308)
S G D ............... 5 % — 5 % — 5 % 7 1 5 % 1 1 4
(5%) — (5%) — (5%) (71) (5%) (114)
R M B............... 5 % (1,474) 5% (1,759) 5% (1,008) 5% (987)
(5%) 1,474 (5%) 1,759 (5%) 1,008 (5%) 987
H U F ............... 5 % — 5 % — 5 % 1 7 4 5 % 2 5
(5%) — (5%) — (5%) (174) (5%) (25)
E U R ............... 5 % — 5 % 1 0 5 % — 5 % —
(5%) — (5%) (10) (5%) — (5%) —
P H P ............... 5 % — 5 % 1 0 5 % — 5 % 1 3
(5%) — (5%) (10) (5%) — (5%) (13)
Results of the analysis as presented in the above table represent an aggregation of the
instantaneous effects on each of the Group entities’ profit after tax and equity measured in the
respective functional currencies, translated into RMB at the exchange rate ruling at the end of
the reporting period for presentation purposes.
The sensitivity analysis assumes that the change in foreign exchange rates had been applied to
re-measure those financial instruments held by the Group which expose the Group to foreign
currency risk at the end of the reporting period, including inter-company payables and
receivables within the Group which are denominated in a currency other than the functional
currencies of the lender or the borrower.
(e) Fair value measurement
(i) Fair value hierarchy
The following table presents the fair value of the Group’s financial instruments measured at the
end of each reporting period on a recurring basis, categorized into the three-level fair value
hierarchy as defined in IFRS 13, Fair value measurement . The level into which a fair value
measurement is classified is determined with reference to the observability and significance of
the inputs used in the valuation technique as follows:
 Level 1 valuations: Fair value measured using only Level 1 inputs i.e. unadjusted
quoted prices in active markets for identical assets or liabilities at
the measurement date.
 Level 2 valuations: Fair value measured using Level 2 inputs i.e. observable inputs
which fail to meet Level 1, and not using significant unobservable
inputs. Unobservable inputs are inputs for which market data are
not available.
 Level 3 valuations: Fair value measured using significant unobservable inputs.
I-97


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
The following table presents the Group’s investment property, financial assets and financial
liabilities that are measured at fair value at the end of each reporting dates:
Fair value at
December 31,
2021
Fair value Measurement as
at December 31, 2021 categorized into
Recurring fair value measurements Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Assets:
- Investment property .................................. 141,860 — — 141,860
- Equity investment .................................... 140,734 — — 140,734
- Investment in wealth management products ............... 15,053 — — 15,053
Liability:
- Convertible redeemable preferred shares .................. (5,137,156) — — (5,137,156)
(4,839,509) — — (4,839,509)
Fair value at
December 31,
2022
Fair value Measurement as
at December 31, 2022 categorized into
Recurring fair value measurements Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Assets:
- Equity investment .................................... 153,218 — — 153,218
- Investment in wealth management products ............... 9,029 — — 9,029
Liability:
- Convertible redeemable preferred shares .................. (6,378,375) — — (6,378,735)
- Derivative components of the convertible bond (Note 29) .... (20,380) — — (20,380)
(6,236,868) — — (6,236,868)
Fair value at
December 31,
2023
Fair value Measurement as
at December 31, 2023 categorized into
Recurring fair value measurements Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Assets:
- Equity investment ................................... 196,574 196,574 — —
- Investment in wealth management products ............... 34,935 — — 34,935
Liability:
- Convertible redeemable preferred shares ................. (6,965,493) — — (6,965,493)
- Derivative components of the convertible bond (Note 29) .... (23,342) — — (23,342)
(6,757,326) 196,574 — (6,953,900)
Fair value at
June 30,
2024
Fair value Measurement as
at June 30, 2024 categorized into
Recurring fair value measurements Level 1 Level 2 Level 3
RMB’000 RMB’000 RMB’000 RMB’000
Assets:
- Equity investment .................................... 109,692 109,692 — —
- Investment in wealth management products ................ 11,211 — — 11,211
Liability:
- Convertible redeemable preferred shares ................... (7,407,194) — — (7,407,194)
- Derivative components of the convertible bond (Note 29) ..... (17,160) — — (17,160)
(7,303,451) 109,692 — (7,413,143)
I-98


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APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
33 Financial risk management and fair values of financial instruments (continued)
For assets and liabilities that are measured at fair value on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by reassessing
categorization (based on the lowest level input that is significant to the fair value measurement
as a whole) at the end of each reporting period. During the year ended December 31, 2021 and
2022, there were no transfers among different levels of fair values measurement. During the
year ended December 31, 2023, transfer from Level 3 to Level 1 was due to the IPO of
Guoquan in November 2023. During the and six months ended June 30, 2024, there were no
transfers among different levels of fair values measurement.
34 Material related party transactions and balances
(a) The Group
The material related party transactions entered into by the Group during the Track Record
Period and the balances with related parties at the end of each reporting period are set out
below.
(i) Key management personnel remuneration
Key management personnel are those persons holding positions with authority and
responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly, including the Company’s directors.
Remuneration for key management personnel of the Group, including amounts paid to the
Company’s directors as disclosed in Note 9 and certain of the highest paid employees as
disclosed in Note 10, is as follows:
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries and other benefits ....................... 7,190 11,444 15,134 6,690 9,325
Discretionary bonuses ........................... 2,100 284 284 284 2,156
Retirement scheme contributions .................. 2 1 6 2 8 9 2 9 2 1 3 5 1 7 6
Equity-settled share-based payment ................ 74,176 46 2,075 610 318
83,682 12,063 17,785 7,719 11,975
Total remuneration was included in staff costs (see Note 7(b)).
I-99


--- page 571 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
34 Material related party transactions and balances (continued)
(ii) Names and relationships of the related parties that had material transactions with the Group
during the Track Record Period
Name of related party Relationship
Wumei Technology Group, Inc. and its subsidiaries,
excluding MDL Wholesale Group, Yinchuan Xinhua
Group and B&T Entities (“Wumei Group”) (
Ҧ
ʮ̡ʿՉɿʮ̡,ʮ
̡ʿՉɿʮ̡,ʮ̡ʿ
ྼ᜗) * .......................
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
MDL Wholesale Limited and its subsidiaries (“MDL
Wholesale Group”)** (
ʮ̡ʿՉɿ
ʮ̡) * ......................................
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Chongqing Department Store Co., Ltd. and its
subsidiaries (“Chongqing Department Store Group”)
(
ʮ̡ʿՉɿʮ̡) * ..........
Entities significantly influenced by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Yinchuan Xinhua Commercial (Group) Co., Ltd and its
subsidiaries (“Yinchuan Xinhua Group”) (
ვʇอശϵ
ʮ̡ʿՉɿʮ̡) *.............
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Entities that manage and operate stores bearing the
brand of B&T in the PRC
(“B&T Entities”) (
ྼ᜗) * .................
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Beijing CAST Technology Investment Co., Ltd.
(
ʮ̡) * .................
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Retail Enterprise Corporation Limited ...............
Entities ultimately controlled by the Company’s
Founder and Controlling Shareholder, Dr. Zhang
Wenzhong
Dmall Fresh (Beijing) E-commerce Co., Ltd. (“Dmall
Fresh (Beijing)”) (
εᓃอᒻ (̏ԯ)
ʮ̡) * ...........................
Entity under Company’s key management control
after disposal
* The official names of these entities are in Chinese. The English translation of the names are for
identification purpose only.
** Prior to MDL Wholesale Group’s reorganization in June 2024, MDL Wholesale Group represents
Maidelong Entities that manage and operate stores bearing the brand of Maidelong in the PRC.
I-100


--- page 572 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
34 Material related party transactions and balances (continued)
(iii) Transactions with related parties
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Continuing operations
Services rendered and products sold to
Wumei Group ................................. 384,055 561,579 821,047 396,454 484,459
MDL Wholesale Group .......................... 86,618 258,246 259,471 125,347 183,819
Chongqing Department Store Group ............... 90,153 115,094 62,781 39,627 27,684
Yinchuan Xinhua Group ......................... 38,052 30,676 54,944 27,416 32,521
B&T Entities .................................. — — 3,721 1,101 5,971
Dmall Fresh (Beijing) ........................... — — — — 1 2 6
Purchase of delivery service from
Wumei Group ................................. 32,676 9,266 13,067 4,914 —
MDL Wholesale Group .......................... 2 3 0 — — — —
Chongqing Department Store Group ............... 1,579 — — — —
Yinchuan Xinhua Group ......................... 1,180 500 — — —
Other transactions with related parties
Purchase of rental services received from Wumei
Group ..................................... 14,976 13,961 14,445 7,280 3,527
Purchase of rental services received from MDL
Wholesale Group ............................ 6 0 6 6 5 3 6 0 0 3 2 8 9 0
Purchase of promotion and other services received from
Wumei Group ............................... 8 0 3 1,302 852 224 4,051
Purchase of promotion and other services received from
MDL Wholesale Group ........................ 2 7 5 1 1 4 3 8 9 3 0 3 2 4 4
Purchase of promotion and other services received from
other related parties ........................... 3 1 — 3 2 — 1 1
Receipt on behalf of Dmall Fresh (Beijing) .......... — — — — 11,934
Payment paid on behalf of Wumei Group ........... 129,097 178,899 180,352 125,867 27,878
Payment paid on behalf of MDL Wholesale Group .... 5 5 8 9 5 0 — — —
Payment paid on behalf of other related parties ....... 58,038 60,343 68,062 37,384 37,721
Discontinued operations
Services rendered to
Wumei Group ................................. 88,967 99,883 106,343 46,084 32,528
MDL Wholesale Group .......................... 13,143 923 1,114 644 174
Chongqing Department Store Group ............... 8,456 2,785 1,090 124 93I-101


--- page 573 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
34 Material related party transactions and balances (continued)
(iv) Related party balances
The Group’s balances with related parties as at the end of each reporting period are as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Trade in nature:
Amounts due from related parties .......................... 76,434 109,593 143,112 246,744
Amounts due to related parties ............................ 197,474 244,698 169,081 40,962
Non-trade in nature:
Borrowings and interests due to related parties ................ 64,799 — — —
Amounts due from and to related parties of the Group are unsecured, interest-free, repayable on
demand/on contract terms.
(v) Investing and financing arrangements with related parties
Years ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Borrowings provided by other related parties ......... 64,799 13,573 — — —
Repayment of borrowings provided by other related
parties ..................................... — 85,458 — — —
Interest expenses for borrowings provided by other
related parties ............................... — 1 4 2 — — —
(b) The Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-trade in nature:
Amounts due from subsidiaries ........................ 4,592,949 4,606,466 4,618,234 4,600,767
Amounts due to subsidiaries .......................... — 5,569 5,569 5,569
Amounts due from and to subsidiaries of the Company are with non-trade nature, unsecured,
interest-free, repayable on demand.
35 Possible impact of amendments, new standards and interpretations issued but not yet
effective for the Track Record Period
Up to the date of this report, the IASB has issued a number of new or amended standards which are
not yet effective for the Track Record Period and which have not been adopted in the Historical
Financial Information. These include the following which may be relevant to the Group.
I-102


--- page 574 ---
APPENDIX I ACCOUNTANTS’ REPORT
NOTES TO THE HISTORICAL FINANCIAL INFORMATION (continued)
35 Possible impact of amendments, new standards and interpretations issued but not yet
effective for the Track Record Period (continued)
Effective for
accounting year
beginning on or
after
Amendments to IAS 21, The effects of changes in foreign exchange rates: Lack of
exchangeability ..................................................... January 1, 2025
Amendments to IFRS 9 and IFRS 7: Amendments to the Classification and
Measurement of Financial Instruments .................................. January 1, 2026
Annual Improvements to IFRS Accounting Standards — Volume 11 ............. January 1, 2026
IFRS 18, Presentation and Disclosure in Financial Statements .................. January 1, 2027
IFRS 19, Subsidiaries without Public Accountability: Disclosures ............... January 1, 2027
Amendments to IFRS 10 and IAS 28, Sale or contribution of assets between an
investor and its associate or joint venture ................................ T ob e determined
The Group is in the process of making an assessment of what the impact of these developments
is expected to be in the period of initial application. So far it has concluded that the adoption of
them is unlikely to have a significant impact on the consolidated financial statements.
36 Immediate and ultimate controlling party
At December 31, 2021, the directors consider the immediate parent to be D&W Inc., which is
incorporated in BVI, and ultimate controlling party of the Group to be Dr. Zhang Wenzhong.
At December 31, 2022 and 2023 and June 30, 2024, the directors consider the immediate parent
to be Celestial Limited, which is incorporated in BVI, and ultimate controlling party of the
Group to be Dr. Zhang Wenzhong.
37 Subsequent events
There were no material subsequent events after June 30, 2024 up to the date of this report.
SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company and its subsidiaries in respect of
any period subsequent to June 30, 2024.
I-103


--- page 575 ---
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following information does not form part of the Accountants’ Report received from KPMG,
Certified Public Accountants, Hong Kong, the Company’s reporting accountants, as set out in
Appendix I to this prospectus, and is included herein for information purposes only. The unaudited pro
forma financial information should be read in conjunction with “Financial Information” in this
prospectus and the Accountants’ Report set out in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted net tangible assets of our Group is
prepared in accordance with Rule 4.29 of the Listing Rules and set out below to illustrate the effect of
the Global Offering on the consolidated net tangible liabilities attributable to equity shareholders of the
Company as at June 30, 2024 as if the Global Offering had taken place on June 30, 2024.
The unaudited pro forma statement of adjusted 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 at June 30, 2024 or at any
future date.
Consolidated net
tangible liabilities
attributable to equity
shareholders of the
Company as at
June 30, 2024 (1)
Estimated net
proceeds from
the Global Offering(2)
Estimated
impact to net
tangible
assets upon
reclassification
of convertible
redeemable
preferred
shares(3)
Unaudited
pro forma
adjusted net
tangible
assets
attributable
to equity
shareholders
of the
Company
Unaudited
pro forma
adjusted net
tangible
assets per
Share(4)
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$ (5)
Based on an Offer Price of
HK$30.21 per Share ......... (7,409,957) 660,935 7,407,194 658,172 0.74 0.80
Notes:
(1) The consolidated net tangible liabilities of the Group attributable to equity shareholders of the Company as of June 30, 2024 are
calculated based on the consolidated total deficit attributable to equity shareholders of the Company as of June 30, 2024 of
RMB7,137,744,000 extracted from the Accountants’ Report set out in Appendix I to this prospectus, after deduction of goodwill of
RMB151,993,000 and intangible assets of RMB157,995,000 and adjusting the share of intangible assets attributable to non-controlling
interests of RMB37,775,000.
(2) The estimated net proceeds from the Global Offering are based on 25,774,000 Shares to be issued pursuant to the Global Offering and
the Offer Price of HK$30.21 per Share, after deduction of the estimated underwriting fees and other related listing expenses paid or
payable by the Group (excluding the listing expenses that have been charged to profit or loss during the Track Record Period), assuming
the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive
Plans. The estimated net proceeds from the Global Offering are converted to Renminbi at the exchange rate of HK$1 to RMB0.9237. No
representation is made that the Hong Kong dollar amounts have been, could have been or may be converted into Renminbi, or vice versa,
at that rate.
(3) As at June 30, 2024, the carrying amount of the convertible redeemable preferred shares was RMB7,407,194,000 (as set out in Note 28
of Appendix I to this prospectus). Upon the Listing, the redeemable preferred shares will be automatically converted into ordinary shares
and will be reclassified from liabilities to equity.
(4) The unaudited pro forma adjusted net tangible assets per Share is arrived at after the adjustments referred to in the preceding paragraphs
and on the basis that 886,690,124 Shares were in issue (being the outstanding 525,150,000 ordinary shares as at June 30, 2024 ,
335,766,124 ordinary shares being converted from the outstanding redeemable preferred shares as at June 30, 2024 and 25,774,000
Shares to be issued pursuant to the Global Offering) assuming that the Global Offering and the conversion of redeemable preferred
shares into ordinary shares had been completed on June 30, 2024, and assuming the Over-allotment Option is not exercised, the
Convertible Bond is not converted and no Shares are issued under the Share Incentive Plans.
(5) The unaudited pro forma adjusted net tangible assets per Share amounts in RMB are converted into Hong Kong dollar at a rate of
RMB1.00 to HK$1.0826. No representation is made that Renminbi amounts have been, could have been or may be converted to Hong
Kong dollar, or vice versa, at that rate.
(6) No adjustment has been made to reflect any trading result or other transactions of the Group entered into subsequent to June 30, 2024.
II-1


--- page 576 ---
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
B. REPORT FROM THE REPORTING ACCOUNTANTS
The following is the text of a report received from the reporting accountants, KPMG, Certified
Public Accountants, Hong Kong, in respect of the Group’s pro forma financial information for the
purpose in this prospectus.
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
TO THE DIRECTORS OF DMALL INC.
We have completed our assurance engagement to report on the compilation of pro forma
financial information of Dmall Inc. (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 net tangible assets as at
June 30, 2024 and related notes as set out in Part A of Appendix II to the prospectus dated
November 28, 2024 (the “Prospectus”) issued by the Company. The applicable criteria on the basis of
which the Directors have compiled the pro forma financial information are described in Part A of
Appendix II to the Prospectus.
The pro forma financial information has been compiled by the Directors to illustrate the impact
of the proposed offering of the ordinary shares of the Company (the “Global Offering”) on the Group’s
financial position as at June 30, 2024 as if the Global Offering had taken place at June 30, 2024. As
part of this process, information about the Group’s financial position as at June 30, 2024 has been
extracted by the Directors from the Group’s historical financial information included in the
Accountants’ Report as set out in Appendix I to the Prospectus.
Directors’ Responsibilities for the Pro Forma Financial Information
The Directors are responsible for compiling the 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”).
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 behavior.
Our firm applies Hong Kong Standard on Quality Management 1 “Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related Services
Engagements”, 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.
II-2


--- page 577 ---
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing
Rules, on the 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 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 (“HKSAE”) 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 accountants plan and perform procedures to obtain reasonable assurance about whether the
Directors have compiled the 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 purpose of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the 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 pro forma financial information.
The purpose of pro forma financial information included in an investment circular is solely to
illustrate the impact of a significant event or transaction on unadjusted financial information of the
Group 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
events or transactions as at June 30, 2024 would have been as presented.
A reasonable assurance engagement to report on whether the 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 in the compilation of the 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 pro forma financial information reflects the proper application of those adjustments to
the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgement, having regard to the
reporting accountants’ understanding of the nature of the Group, the event or transaction in respect of
which the pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the pro forma financial
information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Our procedures on the pro forma financial information have not been carried out in accordance
with attestation standards or other standards and practices generally accepted in the United States of
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APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
America, auditing standards of the Public Company Accounting Oversight Board (United States) or
any overseas standards and accordingly should not be relied upon as if they had been carried out in
accordance with those standards and practices.
We make no comments regarding the reasonableness of the amount of net proceeds from the
issuance of the Company’s shares, the application of those net proceeds, or whether such use will
actually take place as described in ‘‘Future plans and use of proceeds’’ in the prospectus.
Opinion
In our opinion:
(a) the pro forma financial information has been properly compiled 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 pro forma financial information as
disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
KPMG
Certified Public Accountants
Hong Kong
November 28, 2024
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
SUMMARY OF THE CONSTITUTION OF THE COMPANY AND THE BRITISH VIRGIN
ISLANDS COMPANY LAW
Set out below is a summary of certain provisions of the Memorandum of Association and
Articles of Association of the Company and of certain aspects of the British Virgin Islands company
law.
The Company was incorporated in the BVI as a BVI business company with limited liability
under the BVI Business Companies Act on February 5, 2015. The Company’s constitutional
documents consist of its Memorandum of Association and its Articles of Association.
1 MEMORANDUM OF ASSOCIATION
The Memorandum was approved for adoption on November 27, 2024 which will take effect
upon registration with the Registrar of Corporate Affairs in the BVI.
1.1 Classes of shares
The Company is authorized to issue a maximum of 2,500,000,000 shares of a single class with
a par value of US$0.0001.
1.2 Capacity and power
The objects for which the Company is established are unrestricted. The Company shall have
full capacity and power to carry out any object not prohibited by the BVI Business Companies Act or
any other law of the British Virgin Islands.
1.3 Liability of members
Pursuant to the Memorandum of Association, the liability of each member is limited to:
(a) the amount from time to time unpaid on such member’s shares;
(b) any liability expressly provided for in the Memorandum of Association or the Articles of
Association; and
(c) any liability to repay a distribution pursuant to section 58(1) of the BVI Business
Companies Act.
There is no provision in the Memorandum of Association or the Articles of Association which
provides for the increase of a member’s liability to the Company.
1.4 Rights of shares
Under the Memorandum of Association, each share confers on the holder:
(a) the right to one (1) vote on any resolution of members or special resolution of members;
(b) the right to an equal share in any dividend paid by the Company; and
(c) the right to an equal share in the distribution of the surplus assets of the Company.
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1.5 Alteration of Memorandum of Association
The Company may by a special resolution of members alter its Memorandum of Association
with respect to any objects, powers or other matters specified therein.
The Memorandum of Association is on display at the address specified in Appendix V in the
section headed “Documents delivered to the Registrar of Companies and on display.”
2 ARTICLES OF ASSOCIATION
The Articles of Association were approved for adoption on November 27, 2024 which will take
effect upon registration with the Registrar of Corporate Affairs in the BVI. A summary of certain
provisions of the Articles of Association is set out below.
2.1 Shares
(a) Variation of rights of existing shares or classes of shares
If at any time the authorized shares of the Company are divided into different classes of
shares, all or any of the rights attached to any class of shares for the time being issued
(unless otherwise provided for in the terms of issue of the shares of that class) may,
subject to the provisions of the BVI Business Companies Act, be varied or abrogated
either with the consent in writing of the holders of at least three-fourths (3/4) of the issued
shares of that class, or with the approval of a resolution passed by at least three-fourths
(3/4) of the votes cast by the holders of the shares of that class present and voting in
person or by proxy at a separate meeting of such holders. In each such separate meeting all
the provisions of the Articles of Association relating to general meetings shall apply
mutatis mutandis, provided that the quorum for the purposes of any such separate meeting
and of any adjournment thereof shall be two persons together holding (or representing by
proxy or duly authorized representative) at the date of the relevant meeting at least
one-third (1/3) of the issued shares of that class.
The special rights conferred upon the holders of shares of any class shall not, unless
otherwise expressly provided in the rights attaching to or the terms of issue of such shares,
be deemed to be varied by the creation or issue of further shares ranking pari passu
therewith.
(b) Alteration to the number of shares the Company is authorized to issue
The Company may, from time to time, whether or not all the shares for the time being
authorized shall have been issued and whether or not all the shares for the time being
issued shall have been fully paid up, by resolution of members, increase the maximum
number of shares the Company is authorized to issue.
The Company may from time to time by resolution of members cancel any shares which at
the date of the passing of the resolution of members have not been taken or agreed to be
taken by any person, and diminish the maximum number of shares the Company is
authorized to issue by the number of shares so canceled subject to the provisions of the
BVI Business Companies Act.
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
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(c) Transfer of shares
Transfers of shares may be effected by an instrument of transfer in the usual common form
or in such other form as the Directors may approve which is consistent with the standard
form of transfer as prescribed by the Stock Exchange.
The instrument of transfer shall be executed by or on behalf of the transferor and, unless
the Directors otherwise determine, the transferee, and the transferor shall be deemed to
remain the holder of the share until the name of the transferee is entered in the register of
members of the Company in respect thereof. All instruments of transfer must be left at the
registered office of the Company or at such other place as the Directors may appoint and
all such instruments of transfer shall be retained by the Company.
The Directors may refuse to register any transfer of any share which is not fully paid up or
on which the Company has a lien. The Directors may also decline to register any transfer
of any shares unless:
(a) a fee of such maximum as the Stock Exchange may from time to time determine to be
payable (or such lesser sum as the Directors may from time to time require) has been
paid to the Company;
(b) the instrument of transfer is lodged with the Company accompanied by the certificate
of the shares to which it relates (which shall upon registration of the transfer be
canceled), and such other evidence as the Directors may reasonably require to show
the right of the transferor to make the transfer (and, if the instrument of transfer is
executed by some other person on his behalf, the authority of that person so to do);
(c) the instrument of transfer is in respect of only one (1) class of shares;
(d) in the case of a transfer to joint holders, the number of joint holders to which the
share is to be transferred does not exceed four (4);
(e) the shares concerned are free from any lien in favor of the Company; and
(f) if applicable, the instrument of transfer is properly stamped.
If the Directors refuse to register a transfer of any share, they shall, within two (2) months
after the date on which the transfer was lodged with the Company, send to each of the
transferor and the transferee notice of such refusal.
The registration of transfers may, on no less than ten (10) Business Days’ notice (or on six
(6) Business Days’ notice in the case of a rights issue) being given by announcement
published on the Stock Exchange’s website, or, subject to the Listing Rules, by electronic
communication in the manner in which notices may be served by the Company by
electronic means as provided in the Articles of Association or by advertisement published
in the newspapers, be suspended and the register of members of the Company closed at
such times for such periods as the Directors may from time to time determine, provided
that the registration of transfers shall not be suspended or the register closed for more than
30 days in any year (or such longer period as the members of the Company may by
resolution of members determine provided that such period shall not be extended beyond
60 days in any year).
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
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(d) Power of the Company to purchase its own shares
The Company is empowered by the BVI Business Companies Act and the Articles of
Association to purchase its own shares subject to certain restrictions and the Directors may
only exercise this power on behalf of the Company subject to the authority of its members
by resolution of members as to the manner in which they do so and to any applicable
requirements imposed from time to time by the Stock Exchange and the Securities and
Futures Commission of Hong Kong. Shares which have been repurchased will be treated
as canceled upon the repurchase.
(e) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles of Association relating to the ownership of shares
in the Company by a subsidiary.
(f) Calls on shares and forfeiture of shares
The Directors may, from time to time, make such calls as they think fit upon the members
of the Company in respect of any monies unpaid on their shares (whether on account of
the nominal amount of the shares or by way of premium or otherwise) and not by the
conditions of allotment thereof made payable at fixed times and each member of the
Company shall (subject to the Company serving upon him at least 14 days’ notice
specifying the time and place of payment and to whom such payment shall be made) pay
to the person at the time and place so specified the amount called on his shares. A call may
be revoked or postponed as the Directors may determine. A person upon whom a call is
made shall remain liable on such call notwithstanding the subsequent transfer of the shares
in respect of which the call was made.
A call may be made payable either in one sum or by installments and shall be deemed to
have been made at the time when the resolution of the Directors authorizing the call was
passed. The joint holders of a share shall be jointly and severally liable to pay all calls and
installments due in respect of such share or other monies due in respect thereof.
If a sum or any installment called in respect of a share is unpaid on or before the day
appointed for payment thereof, the person or persons from whom the sum is due shall pay
interest on the same from the day appointed for payment thereof to the time of actual
payment at such rate, not exceeding 20% per annum, as the Directors may determine, but
the Directors may waive payment of such interest in whole or in part.
If any call or installment of a call remains unpaid on any share after the day appointed for
payment thereof, the Directors may at any time during such time as any part thereof
remains unpaid serve a notice on the holder of such shares requiring payment of so much
of the call or installment as is unpaid, together with any interest which may be accrued and
which may still accrue up to the date of actual payment.
The notice shall name a further day (not earlier than the expiration of 14 days from the
date of service of the notice) on or before which, and the place where, the payment
required by the notice is to be made, and shall state that in the event of non-payment at or
before the time and at the place appointed, the shares in respect of which such call was
made or installment is unpaid will be liable to be forfeited.
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
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If the requirements of such notice are not complied with, any share in respect of which
such notice has been given may at any time thereafter, before payment of all calls or
installments and interest due in respect thereof has been made, be forfeited by a resolution
of the Directors to that effect. Such forfeiture shall include all dividends and bonuses
declared in respect of the forfeited shares and not actually paid before the forfeiture. A
forfeited share shall be deemed to be the property of the Company and may be re-allotted,
sold or otherwise disposed of.
A person whose shares have been forfeited shall cease to be a member of the Company in
respect of the forfeited shares but shall, notwithstanding the forfeiture, remain liable to pay
to the Company all monies which, as at the date of forfeiture were payable by him to the
Company in respect of the forfeited shares, together with (if the Directors shall in their
discretion so require) interest thereon at such rate not exceeding 20% per annum as the
Directors may prescribe from the date of forfeiture until payment, and the Directors may
enforce payment thereof as it thinks fit, and without being under any obligation to make
any deduction or allowance for the value of the shares forfeited, as at the date of forfeiture.
2.2 Directors
(a) Appointment, retirement and removal
At any time or from time to time, the Directors shall have power to appoint any person as
a Director either to fill a casual vacancy or as an addition to the existing Directors. Any
Director so appointed shall hold office only until the first annual general meeting of the
Company after his appointment, and such Director shall then be eligible for re-election at
the relevant meeting.
The Shareholders may by resolution of members remove any Director (including a
managing director or other executive director) before the expiration of his period of office
notwithstanding anything to the contrary in the Articles of Association or in any
agreement between the Company and such Director (but without prejudice to any claim
for compensation or damages payable to him in respect of the termination of his
appointment as Director or of any other appointment of office as a result of the termination
of this appointment as Director). The Company may by resolution of members appoint
another person in his stead. Any Director so appointed shall hold office during such time
only as the Director in whose place he is appointed would have held the same if he had not
been removed. No person shall, unless recommended by the Directors, be eligible for
election to the office of Director at any general meeting unless, during the period, which
shall be at least seven (7) days, commencing no earlier than the day after the despatch of
the notice of the meeting appointed for such election and ending no later than ten
(10) business days prior to the date of such meeting, there has been given to the Secretary
of the Company notice in writing by a member of the Company (not being the person to be
proposed) entitled to attend and vote at the meeting for which such notice is given of his
intention to propose such person for election and also notice in writing signed by the
person to be proposed of his willingness to be elected.
A Director is not required to hold any shares in the Company by way of qualification nor
is there any specified age limit for Directors.
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
The office of a Director shall be vacated if:
(i) he resigns his office by notice in writing to the Company at its registered office or its
principal place of business in Hong Kong;
(ii) an order is made by any competent court or official on the grounds that he is or may
be suffering from mental disorder or is otherwise incapable of managing his affairs
and the Directors resolve that his office be vacated;
(iii) without leave, he is absent from meetings of the Directors (unless an alternate
Director appointed by him attends) for 12 consecutive months, and the Directors
resolve that his office be vacated;
(iv) he becomes bankrupt or has a receiving order made against him or suspends payment
or compounds with his creditors generally;
(v) he ceases to be or is prohibited from being a Director by law or by virtue of any
provision in the Articles of Association;
(vi) he is removed from office by notice in writing served upon him signed by not less
than three-fourths (3/4) in number (or, if that is not a round number, the nearest lower
round number) of the Directors (including himself) for the time being then in office;
or
(vii) he shall be removed from office by a resolution of members under the Articles of
Association.
Every Director, including those appointed for a specific term, should be subject to
retirement by rotation at least once every three years. A retiring Director shall retain office
until the close of the meeting at which he retires and shall be eligible for re-election
thereat. The Company at any annual general meeting at which any Directors retire may fill
the vacated office by electing a like number of persons to be Directors.
(b) Power to allot and issue shares and warrants
Subject to the provisions of the BVI Business Companies Act and the Memorandum of
Association and the Articles of Association, the unissued shares in the Company (whether
forming part of its original or any increased authorized shares) shall be at the disposal of
the Directors, who may offer, allot, grant options over or otherwise dispose of them to
such persons, at such times and for such consideration, and upon such terms, as the
Directors shall determine.
Subject to the provisions of the Articles of Association and to any direction that may be
given by resolution of members and without prejudice to any special rights conferred on
the holders of any existing shares or attaching to any class of shares, any share may be
issued with or have attached thereto such preferred, deferred, qualified or other special
rights or restrictions, whether in relation to dividend, voting, return applicable to shares or
otherwise, and to such persons at such times and for such consideration as the Directors
may determine. Subject to the BVI Business Companies Act and to any special rights
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
conferred on any shareholders or attaching to any class of shares, any share may, with the
sanction of a resolution of members, be issued on terms that it is, or at the option of the
Company or the holder thereof, liable to be redeemed.
(c) Power to dispose of the assets of the Company or any subsidiary
The management of the business of the Company shall be vested in the Directors who, in
addition to the powers and authorities expressly conferred upon them by the Articles of
Association, may exercise all such powers and do all such acts and things as may be
exercised or done or approved by the Company and are not by the Articles of Association
or the BVI Business Companies Act expressly directed or required to be exercised or done
by resolution of members, subject nevertheless to the provisions of the BVI Business
Companies Act and of the Articles of Association and to any regulation from time to time
made by resolution of members not being inconsistent with such provisions or the Articles
of Association, provided that no regulation so made shall invalidate any prior act of the
Directors which would have been valid if such regulation had not been made.
(d) Borrowing powers
The Directors may from time to time at their discretion exercise all the powers of the
Company to raise or borrow or to secure the payment of any sum or sums of money for the
purposes of the Company and to mortgage or charge its undertaking, property and assets
(present and future) and uncalled amounts owing on the shares in the Company or any part
thereof.
(e) Remuneration
The Directors shall be entitled to receive, by way of remuneration for their services, such
sum as shall from time to time be determined by resolution of members or by the
Directors, as the case may be, such sum (unless otherwise directed by the resolution by
which it is determined) to be divided among the Directors in such proportions and in such
manner as they may agree, or failing agreement, equally, except that in such event any
Director holding office for less than the whole of the relevant period in respect of which
the remuneration is paid shall only rank in such division in proportion to the time during
such period for which he has held office. Such remuneration shall be in addition to any
other remuneration to which a Director who holds any salaried employment or office in
the Company may be entitled by reason of such employment or office.
The Directors shall also be entitled to be paid all expenses reasonably incurred by them in
or in connection with the performance of their duties as Directors including their expenses
of traveling to and from board meetings, committee meetings or general meetings or
otherwise incurred while engaged on the business of the Company or in the discharge of
their duties as Directors.
The Directors may grant special remuneration to any Director who shall perform any
special or extra services at the request of the Company. Such special remuneration may be
made payable to such Director in addition to or in substitution for his ordinary
remuneration as a Director, and may be made payable by way of salary, commission or
participation in profits or otherwise as may be agreed.
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
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The remuneration of an executive Director or a Director appointed to any other office in
the management of the Company shall from time to time be fixed by the Directors and
may be by way of salary, commission, participation in profits or otherwise or by all or any
of those modes and with such other benefits (including share option and/or pension and/or
gratuity and/or other benefits on retirement) and allowances as the Directors may from
time to time decide. Such remuneration shall be in addition to such remuneration as the
recipient may be entitled to receive as a Director.
(f) Compensation or payment for loss of office
Payment to any Director or past Director of any sum by way of compensation for loss of
office or as consideration for or in connection with his retirement from office (not being a
payment to which the Director or past Director is contractually or statutorily entitled) must
first be approved by resolution of members.
(g) Loans and provision of security for loans to Directors
The Company shall not directly or indirectly make a loan to a Director or a director of any
holding company of the Company or any of their respective close associates, enter into
any guarantee or provide any security in connection with a loan made by any person to a
Director or a director of any holding company of the Company or any of their respective
close associates, or, if any one or more Directors hold(s) (jointly or severally or directly or
indirectly) a controlling interest in another company, make a loan to that other company or
enter into any guarantee or provide any security in connection with a loan made by any
person to that other company.
(h) Financial assistance to purchase shares
Subject to all applicable laws, the Company may give, directly or indirectly, by means of a
loan, a guarantee, a gift, an indemnity, the provision of security or otherwise, financial
assistance for the purpose of or in connection with a purchase or other acquisition made or
to be made by any person of any shares or warrants in the Company or any company
which is its holding company.
(i) Disclosure of interest in contracts with the Company or any of its subsidiaries
No Director or proposed Director shall be disqualified by his office from contracting with
the Company either as vendor, purchaser or otherwise nor shall any such contract or any
contract or arrangement entered into by or on behalf of the Company with any person,
company or partnership of or in which any Director shall be a member or otherwise
interested be capable on that account of being avoided, nor shall any Director so
contracting or being any member or so interested be liable to account to the Company for
any profit so realized by any such contract or arrangement by reason only of such Director
holding that office or the fiduciary relationship thereby established, provided that such
Director shall, if his interest in such contract or arrangement is material, declare the nature
of his interest at the earliest meeting of the board of Directors at which it is practicable for
him to do so, either specifically or by way of a general notice stating that, by reason of the
facts specified in the notice, he is to be regarded as interested in any contracts of a
specified description which may be made by the Company.
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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
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A Director shall not be entitled to vote on (nor shall be counted in the quorum in relation
to) any resolution of the Directors in respect of any contract or arrangement or any other
proposal in which the Director or any of his close associate(s) (or, if required by the
Listing Rules, his other associates) has/have any material interest, and if he shall do so his
vote shall not be counted (nor is he to be counted in the quorum for the resolution), but
this prohibition shall not apply to any of the following matters, namely:
(i) the giving of any security or indemnity either: (i) to such Director or any of his close
associates in respect of money lent or obligations incurred or undertaken by him or
any of them at the request of or for the benefit of the Company or any of its
subsidiaries; or (ii) to a third party in respect of a debt or obligation of the Company
or any of its subsidiaries for which the Director or any of his close associates has
himself/themselves assumed responsibility in whole or in part and whether alone or
jointly under a guarantee or indemnity or by the giving of security;
(ii) any proposal concerning an offer of shares, debentures or other securities of or by the
Company or any other company which the Company may promote or be interested in
for subscription or purchase where the Director or any of his close associates is/are or
is/are to be interested as a participant in the underwriting or sub-underwriting of the
offer;
(iii) any proposal concerning any other company in which the Director or his close
associate(s) is/are interested only, whether directly or indirectly, as an officer or
executive or shareholder or in which the Director or his close associate(s) is/are
beneficially interested in shares of that company, provided that the Director and any
of his close associates are not in aggregate beneficially interested in 5% or more of
the issued shares of any class of such company (or of any third company through
which his interest or that of his close associates is derived) or of the voting rights;
(iv) any proposal or arrangement concerning the benefit of employees of the Company or
any of its subsidiaries including the adoption, modification or operation of either:
(i) any employees’ share scheme or any share incentive scheme or share option
scheme under which the Director or any of his close associates may benefit; or
(ii) any of a pension or provident fund or retirement, death or disability benefits
scheme which relates both to Directors, their close associates and employees of the
Company or any of its subsidiaries and does not provide in respect of any Director or
any of his close associates, as such any privilege or advantage not generally accorded
to the class of persons to which such scheme or fund relates; and
(v) any contract or arrangement in which the Director or any of his close associates is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or debentures
or other securities of the Company.
2.3 Proceedings of the Board
The Directors may meet together for the despatch of business, adjourn and otherwise regulate
their meetings and proceedings as they think fit in any part of the world and may determine the quorum
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necessary for the transaction of business. Questions arising at any meeting of the Directors shall be
determined by a majority of votes, and in case of an equality of votes, the chairman of such meeting
shall have a second or casting vote.
2.4 Alterations to the constitutional documents and the Company’s name
No alteration or amendment to the Memorandum of Association or the Articles of Association
may be made except by special resolution of members, except the members may from time to time
amend the Memorandum of Association or the Articles of Association to increase the maximum
number of shares the Company is authorized to issue by resolution of members.
A change of name of the Company shall constitute an amendment of the Memorandum of
Association and the Articles of Association, and may only be changed with the sanction of a special
resolution of members.
2.5 Meetings of members
(a) Special resolution and resolution of members
A “special resolution of members” is defined in the Articles of Association as a resolution
passed by a majority of not less than three-fourths (3/4) of the voting rights held by such
members of the Company as, being entitled to do so, vote in person or, in the case of any
member being a corporation, by its duly authorized representative(s) or, where proxies are
allowed, by proxy(ies) at a general meeting of which notice specifying the intention to
propose the resolution as a special resolution of members has been duly given and
includes a special resolution of members approved in writing signed by all of the members
of the Company entitled to vote at a general meeting of the Company in one or more
instruments each signed by one or more of such members, and the effective date of the
special resolution of members so adopted shall be the date on which the instrument or the
last of such instruments (if more than one) is executed.
A “resolution of members” is defined in the Articles of Association to mean a resolution
passed by a simple majority of the votes of the members of the Company as, being entitled
to do so, vote in person or, in the case of any member being a corporation, by its duly
authorized representative(s) or, where proxies are allowed, by proxy(ies) at a general
meeting held in accordance with the Articles of Association and includes a resolution of
members approved in writing signed by all the members of the Company aforesaid.
(b) Voting rights
Subject to any special rights, privileges or restrictions as to voting for the time being
attached to any class or classes of shares, at any general meeting where a show of hands is
allowed, every member present in person (or, in the case of a member being a corporation,
by its duly authorized representative) shall have one (1) vote, and on a poll every member
present in person (or, in the case of a member being a corporation, by its duly authorized
representative) or by proxy shall have one (1) vote for each share registered in his name in
the register of members of the Company.
All Shareholders of the Company (including a Shareholder which is a recognized clearing
house (or its nominee(s))) shall have the right to (a) speak at a general meeting and
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(b) vote at a general meeting except where a Shareholder is required by the Listing Rules
to abstain from voting to approve the matter under consideration. Where any member is,
under the Listing Rules, required to abstain from voting on any particular resolution or
restricted to voting only for or only against any particular resolution, any votes cast by or
on behalf of such member in contravention of such requirement or restriction shall not be
counted.
In the case of joint registered holders of any share, any one (1) of such persons may vote at
any meeting, either personally or by proxy, in respect of such share as if he were solely
entitled thereto, but if more than one (1) of such joint holders be present at any meeting
personally or by proxy, the person so present being the more or most senior shall alone be
entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall
be determined by reference to the order in which the names of the joint holders stand on
the register in respect of the relevant joint holding.
A member of the Company in respect of whom an order has been made by any competent
court or official on the grounds that he is or may be suffering from mental disorder or is
otherwise incapable of managing his affairs may vote by any person authorized in such
circumstances to do so and such person may vote by proxy.
Save as expressly provided in the Articles of Association or as otherwise determined by
the Directors, no person other than a member of the Company duly registered and who
shall have paid all sums for the time being due from him payable to the Company in
respect of his shares shall be entitled to be present or to vote (save as proxy for another
member of the Company), or to be counted in a quorum, either personally or by proxy at
any general meeting.
At any general meeting a resolution put to the vote of the meeting shall be decided on a
poll, provided that the chairman of the general meeting may, in good faith, allow a
resolution which relates purely to a procedural or administrative matter as prescribed
under the Listing Rules to be voted on by a show of hands.
If a recognized clearing house (or its nominee(s)) is a member of the Company it may
appoint proxies or authorize such person or persons as it thinks fit to act as its
representative(s), who enjoy rights equivalent to the rights of other Shareholders, at any
meeting of the Company (including but not limited to general meetings and creditors
meetings) or at any general meeting of any class of members of the Company provided
that, if more than one (1) person is so authorized, the authorization shall specify the
number and class of shares in respect of which each such person is so authorized. A person
authorized pursuant to the Articles of Association shall be entitled to exercise the same
rights and powers on behalf of the recognized clearing house (or its nominee(s)) which he
represents as that recognized clearing house (or its nominee(s)) could exercise as if it were
an individual member of the Company holding the number and class of shares specified in
such authorization, including the right to speak and vote individually on a show of hands
or on a poll.
(c) Annual general meetings
The Company shall hold a general meeting as its annual general meeting for each financial
year, and such annual general meeting shall be held within six months after the end of the
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Company’s financial year (or such longer period as the Stock Exchange may authorize).
The annual general meeting shall be specified as such in the notices calling it.
(d) Notice of meetings and business to be conducted
The board of Directors may, whenever it thinks fit, convene an extraordinary general
meeting. General meetings shall also be convened and resolutions shall be added to the
agenda of a meeting on the written requisition of any member(s) deposited at the principal
place of business of the Company in Hong Kong or, in the event the Company ceases to
have such a principal place of business, the registered office specifying the objects of the
meeting and signed by the requisitionists, provided that one or more such requisitionists
held as at the date of deposit of the requisition in aggregate not less than one-tenth (1/10)
of the voting rights (on a one vote per share basis) attached to the shares of the Company
which carry the right of voting at general meetings of the Company. General meetings
may also be convened on the written requisition of any one (1) member which is a
recognized clearing house (or its nominee(s)) deposited at the principal place of business
of the Company in Hong Kong or, in the event the Company ceases to have such a
principal place of business, the registered office specifying the objects of the meeting and
signed by the requisitionist, provided that such requisitionist held as at the date of deposit
of the requisition not less than one-tenth (1/10) of voting rights (on a one vote per share
basis) attached to the shares of the Company which carry the right of voting at general
meetings of the Company.
An annual general meeting shall be called by not less than 21 days’ notice in writing and
any extraordinary general meeting shall be called by not less than 14 days’ notice in
writing. Subject to the requirements under the Listing Rules, the notice shall be exclusive
of the day on which it is served or deemed to be served and of the day for which it is
given, and shall specify the time, place, agenda of the meeting, particulars of the
resolutions and the general nature of the business to be considered at the meeting. The
notice convening an annual general meeting shall specify the meeting as such, and the
notice convening a meeting to pass a special resolution of members shall specify the
intention to propose the resolution as a special resolution of members. Notice of every
general meeting shall be given to the auditors and all members of the Company (other than
those who, under the provisions of the Articles of Association or the terms of issue of the
shares they hold, are not entitled to receive such notice from the Company).
Notwithstanding that a meeting of the Company is called by shorter notice than that
mentioned above, if permitted by the Listing Rules, it shall be deemed to have been duly
called if it is so agreed:
(i) in the case of a meeting called as an annual general meeting, by all members of the
Company entitled to attend and vote thereat or by their proxies; and
(ii) in the case of any other meeting, by a majority in number of the members entitled to
attend and vote thereat or by their proxies, being a majority together holding not less
than 95% in nominal value of the shares having that right.
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(e) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present when
the meeting proceeds to business, but the absence of a quorum shall not preclude the
appointment, choice or election of a chairman which shall not be treated as part of the
business of the meeting.
Two (2) members of the Company present in person or by proxy shall be a quorum
provided always that if the Company has only one member of record the quorum shall be
that one member present in person or by proxy.
A corporation being a member of the Company shall be deemed for the purpose of the
Articles of Association to be present in person if represented by its duly authorized
representative being the person appointed by resolution of the directors or other governing
body of such corporation or by power of attorney to act as its representative at the relevant
general meeting of the Company or at any relevant general meeting of any class of
members of the Company.
The quorum for a separate general meeting of the holders of a separate class of shares of
the Company is described in paragraph 2.1(a) above.
(f) Proxies
Any member of the Company entitled to attend and vote at a meeting of the Company
shall be entitled to appoint another person (who must be an individual) as his proxy to
attend and vote on his behalf and a proxy so appointed shall have the same right as the
member to speak at the meeting. A proxy need not be a member of the Company.
Instruments of proxy shall be in common form or such other form that complies with the
Listing Rules as the Directors may from time to time approve, provided that it shall enable
a member to instruct his proxy to vote in favor of or against (or in default of instructions or
in the event of conflicting instructions, to exercise his discretion in respect of) each
resolution to be proposed at the meeting to which the form of proxy relates. The
instrument of proxy shall be deemed to confer authority on the proxy to vote on any
amendment of a resolution put to the meeting for which it is given as the proxy thinks fit.
The instrument of proxy shall, unless the contrary is stated therein, be valid as well for any
adjournment of the meeting as for the meeting to which it relates provided that the meeting
was originally held within 12 months from such date.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of
his attorney authorized in writing, or if the appointor is a corporation, either under its seal
or under the hand of an officer, attorney or other person authorized to sign the same.
The instrument appointing a proxy and (if required by the Directors) the power of attorney
or other authority, (if any) under which it is signed, or a notarially certified copy of such
power or authority, shall be delivered at the registered office of the Company (or at such
other place as may be specified in the notice convening the meeting or in any notice of any
adjournment or, in either case, in any document sent therewith) not less than 48 hours
before the time appointed for holding the meeting or adjourned meeting at which the
person named in the instrument proposes to vote or, in the case of a poll taken
subsequently to the date of a meeting or adjourned meeting, not less than 48 hours before
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the time appointed for the taking of the poll and in default the instrument of proxy shall
not be treated as valid. No instrument appointing a proxy shall be valid after the expiration
of 12 months from the date named in it as the date of its execution. Delivery of any
instrument appointing a proxy shall not preclude a member of the Company from
attending and voting in person at the meeting or poll concerned and, in such event, the
instrument appointing a proxy shall be deemed to be revoked.
2.6 Accounts and audit
The Directors shall cause to be kept such books of account as are necessary to give a true and
fair view of the state of the Company’s affairs and to show and explain its transactions and otherwise
in accordance with the BVI Business Companies Act.
The Directors shall from time to time determine whether, to what extent, at what times and
places and under what conditions or regulations, the accounts and books of the Company, or any of
them, shall be open to the inspection of members of the Company (other than officers of the Company)
and no such member shall have any right of inspecting any accounts or books or documents of the
Company except as conferred by the BVI Business Companies Act or any other relevant law or
regulation or as authorized by the Directors or by the resolution of members.
The Directors shall cause to be prepared at every annual general meeting a profit and loss
account for the period, in the case of the first account, since the incorporation of the Company and, in
any other case, since the preceding account, together with a balance sheet as at the date to which the
profit and loss account is made up and a Director’s report with respect to the profit and loss of the
Company for the period covered by the profit and loss account and the state of the Company’s affairs
as at the end of such period, an auditor’s report on such accounts and such other reports and accounts
as may be required by law. Copies of those documents referred above shall not less than 21 days before
the date of an annual general meeting, be sent in the manner in which notices may be served by the
Company as provided in the Articles of Association to every member of the Company and every holder
of debentures of the Company provided that the Company shall not be required to send copies of those
documents to any person of whose address the Company is not aware or to more than one of the joint
holders of any shares or debentures.
The Shareholders shall at every annual general meeting by resolution of members appoint an
auditor or auditors of the Company who shall hold office until the next annual general meeting. The
removal of an auditor before the expiration of his period of office shall require the approval of a
resolution of members. The remuneration of the auditors shall be fixed by the Shareholders by
resolution of members at the annual general meeting at which they are appointed provided that in
respect of any particular year the Company may by resolution of members delegate the fixing of such
remuneration to the Directors.
2.7 Dividends and other methods of distribution
Subject to the BVI Business Companies Act and Articles of Association, the Directors may
resolve to declare and pay dividends on the issued shares in the Company in any currency, if they are
satisfied, on reasonable grounds, that immediately after the payment of the dividend, the value of the
Company’s assets will exceed its liabilities and the Company is able to pay its debts as they fall due.
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Unless and to the extent that the rights attached to any shares or the terms of issue thereof
otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in
respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid up
on the shares during any portion or portions of the period in respect of which the dividend is paid. For
these purposes, no amount paid up on a share in advance of calls shall be treated as paid up on the share.
The Directors may from time to time pay to the members of the Company interim dividends.
The Directors may also pay half-yearly or at other intervals to be selected by them at a fixed rate.
The Directors may retain any dividends or other monies payable on or in respect of a share
upon which the Company has a lien, and may apply the same in or towards satisfaction of the debts,
liabilities or engagements in respect of which the lien exists. The Directors may also deduct from any
dividend or other monies payable to any member of the Company all sums of money (if any) presently
payable by him to the Company on account of calls, installments or otherwise.
No dividend shall carry interest against the Company and no dividend shall be paid on treasury
shares.
Whenever the Directors or the Company by resolution of members have resolved that a
dividend be paid or declared on the shares in the Company, the Directors may further resolve: (a) that
such dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid
up on the basis that the shares so allotted are to be of the same class as the class already held by the
allottee, provided that the members of the Company entitled thereto will be entitled to elect to receive
such dividend (or part thereof) in cash in lieu of such allotment; or (b) that the members entitled to
such dividend shall be entitled to elect to receive an allotment of shares credited as fully paid up in lieu
of the whole or such part of the dividend as the Directors may think fit on the basis that the shares so
allotted are to be of the same class as the class already held by the allottee. The Company may upon
the recommendation of the Directors by resolution of members resolve in respect of any one particular
dividend of the Company that notwithstanding the foregoing a dividend may be satisfied wholly in the
form of an allotment of shares credited as fully paid without offering any right to members of the
Company to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, interest or other sum payable in cash to a holder of shares may be paid by check or
warrant sent through the post addressed to the registered address of the member of the Company entitled,
or in the case of joint holders, to the registered address of the person whose name stands first in the
register of members of the Company in respect of the joint holding or to such person and to such address
as the holder or joint holders may in writing direct. Every check or warrant so sent shall be made payable
to the order of the holder or, in the case of joint holders, to the order of the holder whose name stands first
on the register of members of the Company in respect of such shares, and shall be sent at his or their risk.
The payment of any such check or warrant by the bank on which it is drawn shall operate as a good
discharge to the Company in respect of the dividend and/or bonus represented thereby, notwithstanding
that it may subsequently appear that the same has been stolen or that any endorsement thereon has been
forged. The Company may cease sending such checks for dividend entitlements or dividend warrants by
post if such checks or warrants have been left uncashed on two (2) consecutive occasions. However, the
Company may exercise its power to cease sending checks for dividend entitlements or dividend warrants
after the first occasion on which such a check or warrant is returned undelivered. Any one of two or more
joint holders may give effectual receipts for any dividends or other monies payable or property
distributable in respect of the shares held by such joint holders.
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All dividends or bonuses unclaimed for six (6) years from the date of declaration of such
dividend may be forfeited by the Directors and shall revert to the Company.
The Directors, with the sanction of a resolution of members, may direct that any dividend be
satisfied wholly or in part by the distribution of specific assets of any kind, and in particular of paid up
shares, debentures or warrants to subscribe securities of any other company, or in one or more of such
ways, and where any difficulty arises in relation to such distribution the Directors may settle it as they
think expedient, and in particular may disregard fractional entitlements, round the same up or down or
provide that the same shall accrue to the benefit of the Company, and may fix the value for distribution
of such specific assets and may determine that cash payments shall be made to any members of the
Company upon the footing of the value so fixed in order to adjust the rights of all parties, and may vest
any such specific assets in trustees as may seem expedient to the Directors.
2.8 Inspection of register of members
The register of members of the Company shall be kept in such manner as to show at all times
the members of the Company for the time being and the shares respectively held by them. The register
may, on no less than ten (10) Business Days’ notice (or on six (6) Business Days’ notice in the case of
a rights issue) being given by advertisement published on the Stock Exchange’s website, or, subject to
the Listing Rules, by electronic communication in the manner in which notices may be served by the
Company by electronic means as provided in the Articles of Association or by advertisement published
in the newspapers, be closed in accordance with the terms equivalent to the relevant section of the
Companies Ordinance at such times and for such periods as the Directors may from time to time
determine either generally or in respect of any class of shares, provided that the register shall not be
closed for more than 30 days in any year (or such longer period as the members of the Company may
by resolution of members determine provided that such period shall not be extended beyond 60 days in
any year).
Any register of members of the Company held in Hong Kong shall during normal business
hours (except when such register is closed in accordance with the terms equivalent to the relevant
section of the Companies Ordinance and subject to such reasonable restrictions as the Directors may
impose) be open to inspection by any member of the Company without charge and by any other person
on payment of a fee of such amount not exceeding the maximum amount as may from time to time be
permitted under the Listing Rules as the Directors may determine for each inspection.
2.9 Rights of the minorities in relation to fraud or oppression
There is no provision in the Articles of Association concerning the rights of minority
shareholders in relation to fraud or oppression.
2.10 Procedure on liquidation
The Company may, by special resolution of members, approve a liquidation plan and appoint a
voluntary liquidator for the voluntary winding up of the Company in accordance with the BVI
Business Companies Act.
If the Company shall be wound up, and the assets available for distribution among the members
of the Company as such shall be insufficient to repay the whole of the amounts paid up on the issued
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shares in the Company, such assets shall be distributed so that, as nearly as may be, the losses shall be
borne by the members of the Company in proportion to the amounts paid up on the issued shares in the
Company, or which ought to have been paid up, at the commencement of the winding up on the shares
held by them respectively. If in a winding up the assets available for distribution among the members
of the Company shall be more than sufficient to repay the whole of the amounts paid up on the issued
shares in the Company at the commencement of the winding up, the excess shall be distributed among
the members of the Company in proportion to the amounts paid up on the issued shares in the
Company at the commencement of the winding up on the shares held by them respectively. The
foregoing applies without prejudice to the rights of the holders of shares issued upon special terms and
conditions.
If the Company shall be wound up, the liquidator may with the sanction of a special resolution
of members and any other sanction required by the BVI Business Companies Act, divide among the
members of the Company in specie or kind the whole or any part of the assets of the Company
(whether they shall consist of property of the same kind or not) and may, for such purpose, set such
value as he deems fair upon any property to be divided as aforesaid and may determine how such
division shall be carried out as between the members or different classes of members of the Company.
The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon
such trusts for the benefit of the members of the Company as the liquidator, with the like sanction and
subject to the BVI Business Companies Act, shall think fit, provided that no member of the Company
shall be compelled to accept any assets, shares or other securities in respect of which there is a liability.
2.11 Untraceable members
The Company shall be entitled to sell any shares of a member of the Company or the shares to
which a person is entitled by virtue of transmission on death or bankruptcy or operation of law if and
provided that: (a) all checks or warrants, not being less than three (3) in number, for any sums payable
in cash to the holder of such shares have remained uncashed for a period of 12 years; (b) the Company
has not during that time or before the expiry of the three (3) month period referred to in paragraph
(d) below received any indication of the whereabouts or existence of the member of the Company;
(c) during the 12-year period, at least three (3) dividends in respect of the shares in question have
become payable and no dividend during that period has been claimed by the member of the Company;
and (d) upon expiry of the 12-year period, the Company has caused an advertisement to be published in
the newspapers or subject to the Listing Rules, by electronic communication in the manner in which
notices may be served by the Company by electronic means as provided in the Articles of Association,
giving notice of its intention to sell such shares, and a period of three (3) months has elapsed since
such advertisement and the Stock Exchange has been notified of such intention. The net proceeds of
any such sale shall belong to the Company, and upon receipt by the Company of such net proceeds it
shall become indebted to the former member of the Company for an amount equal to such net
proceeds.
3 BRITISH VIRGIN ISLANDS COMPANY LAW AND TAXATION
The Company operates subject to the laws of the BVI. Set out below is a summary of certain
provisions of BVI company law and taxation, although this does not purport to contain all applicable
qualifications and exceptions or to be a complete review of all matters of BVI company law and
taxation, which may differ from equivalent provisions in jurisdictions with which interested parties
may be more familiar.
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3.1 Incorporation
The Company was incorporated in the BVI as a BVI business company under the BVI Business
Companies Act on February 5, 2015. The Company is required to pay an annual fee to the Registrar of
Corporate Affairs in the BVI which is based on the number of shares the Company is authorized to
issue.
3.2 Shares
The concept of share capital does not apply to a BVI Business Company. A company limited
by, or otherwise authorized to issue shares, shall state in its memorandum of association the maximum
number (or that the company is authorized to issue an unlimited number of shares) and classes of
shares that the company is authorized to issue. Companies may also divide their shares (including
those shares already in issue) into a larger number of shares or consolidate them into a smaller number
of shares in the same class or series, provided that the maximum number of shares the company is
authorized to issue is not exceeded (where relevant). On any such division or combination of shares,
the aggregate par value (if any) of the new shares must be equal to the aggregate par value (if any) of
the original shares.
The directors of a company may, at their discretion, issue shares in registered or bearer form
(although in order to issue bearer shares there must be an express authorization in the memorandum of
association of the company and such bearer shares must be held by an approved custodian) for such
consideration and on such terms as they may determine.
Shares can be issued for consideration in any form, provided that such consideration is not less
than par value where the share is a par value share. Under the BVI Business Companies Act, the
liability of a shareholder to the company, as shareholder, is limited to (i) any amount unpaid on a share
held by the shareholder; (ii) any liability expressly provided for in the memorandum of association or
articles of association of the company; and (iii) any liability to repay a distribution under section 58(1)
of the BVI Business Companies Act (which relates to the recovery of a distribution made when a
company did not satisfy the statutory solvency test).
If so authorized by its memorandum of association, a company can issue more than one class of
shares and, if so, the memorandum of association must also specify the rights, privileges, restrictions
and conditions which attach to each class of shares.
The BVI Business Companies Act provides that companies may issue redeemable shares,
shares with no rights, limited rights or preferential rights to share in distributions, or shares with no or
special or limited or conditional voting rights. They may also, subject to their memorandum of
association and articles of association, issue bonus shares, partly or nil paid shares, and fractional
shares.
The BVI Business Companies Act provides that a company may purchase, redeem or otherwise
acquire its own shares, either in accordance with the procedure set out in the BVI Business Companies
Act, or any other procedure as provided for in the memorandum of association and articles of
association of the company.
Shares that the Company purchases, redeems or otherwise acquires may be cancelled or held as
treasury shares provided that the number of shares purchased, redeemed or otherwise acquired and held
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as treasury shares, when aggregated with shares of the same class already held by the Company as
treasury shares, may not exceed 50% of the shares of that class previously issued by the Company
excluding shares that have been cancelled. Shares which have been cancelled shall be available for
reissue.
Under the provisions in the BVI Business Companies Act, the directors may make an offer for
the company to purchase, redeem or otherwise acquire shares in the company, provided that the offer is
either (a) to all shareholders and would, if successful, leave the relative voting and distribution rights
unaffected, or (b) to one or more shareholders and consented to in writing by all shareholders, or is
otherwise permitted by the memorandum of association or articles of association. Where the offer is to
one or more shareholders, the directors must pass a resolution to the effect that, in their opinion, the
purchase, redemption or other acquisition would benefit the remaining shareholders, and the proposed
offer is fair and reasonable to the company and the remaining shareholders.
Where an acquisition by a company of its own shares would be treated as a distribution, the
conditions imposed on distributions (as set out in paragraph 3.4 below) must be met. The purchase,
redemption or other acquisition by a company of its own shares is not deemed to be a distribution
where it is effected pursuant to, inter alia , a right of a shareholder to have his shares redeemed or
exchanged for money or other property of the company or where the share is redeemable at the option
of the company.
3.3 Financial assistance
There is no statutory restriction in the BVI on the provision of financial assistance by a
company for the purchase of, or subscription for, its own or its holding company’s shares.
Accordingly, a company may provide financial assistance if the directors of the company consider, in
discharging their duties of due care, skill and diligence that they are acting in good faith, for a proper
purpose and in the interests of the company, that such assistance can be given.
3.4 Dividends and distributions
The directors of a company may only declare a distribution by the company if they are
satisfied, on reasonable grounds, that the company will, immediately after the distribution, satisfy the
solvency test set out in section 56 of the BVI Business Companies Act. A company satisfies the
solvency test if the value of its assets exceeds its liabilities and it is able to pay its debts as they fall
due.
3.5 Shareholders’ remedies
The BVI Business Companies Act has introduced a series of remedies available to
shareholders. Where a company engages in activity which breaches the BVI Business Companies Act
or the company’s memorandum of association and articles of association, the court can issue a
restraining or compliance order. Shareholders can also bring derivative, personal and representative
actions under certain circumstances. The traditional English basis for shareholders’ remedies has also
been incorporated into the BVI Business Companies Act, namely where a shareholder of a company
considers that the affairs of the company have been, are being or are likely to be conducted in a manner
likely to be oppressive, unfairly discriminating or unfairly prejudicial to him, he may apply to the court
for an order on such conduct.
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3.6 Mergers and consolidations
Under the BVI Business Companies Act, two or more companies, each a “constituent
company”, may merge or consolidate.
A merger involves merging two or more companies into one of the constituent companies that
will remain as the surviving company and a consolidation involves two or more companies
consolidating into a new company. Subject to the memorandum of association and articles of
association of the company a merger or consolidation must be authorized by a resolution of
shareholders of every class of shares entitled to vote on the merger or consolidation.
There are different procedures depending on the type of merger that is taking place. Under the
BVI Business Companies Act, a merger may occur between any of the following:
(a) two or more companies incorporated under the BVI Business Companies Act;
(b) one or more companies incorporated under the BVI Business Companies Act and one or
more companies incorporated under the laws of a jurisdiction outside the BVI, with the
BVI company as the surviving entity;
(c) one or more companies incorporated under the BVI Business Companies act and one or
more companies incorporated under the laws of a jurisdiction outside the BVI, with the
foreign company as the surviving entity;
(d) a parent company and one or more of its subsidiaries where the companies are
incorporated under the BVI Business Companies Act;
(e) a parent company and one or more of its subsidiaries where one or more of the companies
are incorporated under the BVI Business Companies Act, and one or more companies are
incorporated under the laws of a jurisdiction outside the BVI, with the BVI company as
the surviving entity; or
(f) a parent company and one or more of its subsidiaries where one or more of the companies
are incorporated under the BVI Business Companies Act, and one or more companies are
incorporated under the laws of a jurisdiction outside the BVI, with the foreign company as
the surviving entity.
Under the BVI Business Companies Act, a shareholder of a company is entitled to payment of
the fair value of his shares upon dissenting from:
(a) a merger, if the company is a constituent company, unless the company is the surviving
company and the shareholder continues to hold the same or similar shares; or
(b) a consolidation, if the company is a constituent company.
The BVI Business Companies Act sets out the procedures that must be followed in effecting
dissenters’ rights. Ultimately, if the company and the dissenting shareholder fail to agree on the price
to be paid for the shares owned by the dissenting shareholder, then the fair value of the shares owned
by the dissenting shareholder shall be fixed by the appraisers in accordance with the BVI Business
Companies Act.
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3.7 Redemption of minority shares
Under the BVI Business Companies Act and subject to the memorandum of association or
articles of association of a company, shareholders of a company holding 90% of the votes of the
outstanding shares entitled to vote; and shareholders of a company holding 90% of the votes of the
outstanding shares of each class of shares entitled to vote as a class, may give a written instruction to
the company directing it to redeem the shares held by the remaining shareholders. Upon receiving this
direction, the company must redeem the shares it has been directed to redeem and must give written
notice to each shareholder stating the redemption price and the manner by which the redemption will
be effected.
The shareholders having their shares compulsorily redeemed are entitled to receive fair value
for their shares and may dissent from the compulsory redemption. The BVI Business Companies Act
sets out the procedures that must be followed in effecting dissenters’ rights. Ultimately, if the company
and the dissenting shareholder fail to agree on the price to be paid for the shares owned by the
dissenting shareholder, then the fair value of the shares owned by the dissenting shareholder shall be
fixed by the appraisers in accordance with the BVI Business Companies Act.
3.8 Disposition of assets
Under the BVI Business Companies Act and subject to the memorandum of association or
articles of association of a company, any sale, transfer, lease, exchange or other disposition, other than
a mortgage, charge or other encumbrance or the enforcement thereof, of more than 50% in value of the
assets of the company, if not made in the usual or regular course of the business carried on by the
company, requires the approval of the shareholders.
The BVI Business Companies Act sets out the procedures that must be followed in relation to
effecting such a disposal.
3.9 Accounting and auditing requirements
The BVI Business Companies Act requires that a company shall cause to be kept proper books
of account that (a) are sufficient to show and explain the company’s transactions; and (b) will, at any
time, enable the financial position of the company to be determined with reasonable accuracy. Each
company shall file a financial return containing certain financial information about the company to its
registered agent on an annual basis.
3.10 Register of members
Under the BVI Business Companies Act, a company may, subject to the provisions of its
articles of association, maintain its principal register of members and any branch registers at such
locations, whether within or outside of the BVI, as its directors may, from time to time, think fit.
However, either the register of members or a copy of the register of members of the company has to be
kept at the office of its registered agent in the BVI.
There is no mandatory requirement under the BVI Business Companies Act for a company to
make any filings of shareholders’ information to the Registrar of Corporate Affairs in the BVI. The
names and addresses of the shareholders are, accordingly, not a matter of public record and are not
available for public inspection.
III-21


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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
3.11 Register of directors
Under the BVI Business Companies Act, a company is required to file a copy of its register of
directors with the Registrar of Corporate Affairs. The list of the names of the current directors of a
company shall be made on display by any person upon payment of a fee by such person to the British
Virgin Islands Financial Services Commission.
3.12 Inspection of books and records
Subject to the BVI Business Companies Act, a shareholder of a company will have general
right under the BVI Business Companies Act to inspect or obtain copies of the register of members, the
register of directors and minutes of meetings and resolutions of members and of those classes of
members of which he is a member. However, subject to the company’s memorandum of association
and articles of association, the directors may, if they are satisfied that it would be contrary to the
company’s interests to allow a shareholder to inspect any document (or part of a document) refuse to
permit the shareholder to inspect the document or limit the inspection of the document, including
limiting the making of copies or the taking of extracts from the records.
3.13 Special resolutions
The BVI Business Companies Act does not define “special resolution”. However, a company’s
memorandum of association and articles of association may make provisions for varying threshold
levels of votes required to pass a resolution and require that certain matters may only be approved if
passed by a certain percentage of votes.
3.14 Subsidiary owning shares in parent
The BVI Business Companies Act does not prohibit a BVI company acquiring and holding
shares in its parent company. The directors of any subsidiary making such acquisition must discharge
their duties of care and to act honestly and in good faith and in what the director believes to be in the
best interests of the company.
Under the BVI Business Companies Act:
(a) a director of a company that is a wholly-owned subsidiary may, when exercising powers
or performing duties as a director, if expressly permitted to do so by the memorandum of
association and articles of association of the company, act in a manner which he believes
is in the best interests of that company’s holding company even though it may not be in
the best interests of the company;
(b) a director of a company that is a subsidiary, but not a wholly-owned subsidiary, may,
when exercising powers or performing duties as a director, if expressly permitted to do so
by the memorandum of association or articles of association of the company and with the
prior agreement of the shareholders, other than its holding company, act in a manner
which he believes is in the best interests of that company’s holding company even though
it may not be in the best interests of the company; and
(c) a director of a company that is carrying out a joint venture between the shareholders may,
when exercising powers or performing duties as a director in connection with the carrying
out of the joint venture, if expressly permitted to do so by the memorandum of association
III-22


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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
or articles of association of the company, act in a manner which he believes is in the best
interests of a shareholder or shareholders, even though it may not be in the best interests of
the company.
3.15 Indemnification
BVI law in general does not limit the extent to which a company’s articles of association may
provide for indemnification of officers and directors, subject to the conditions set out in the BVI
Business Companies Act (for example, the officer or director has acted honestly and in good faith and
in what he believed to be in the best interests of the company and, in the case of criminal proceedings,
that officer or director had no reasonable cause to believe that his conduct was unlawful).
3.16 Economic substance
The BVI enacted the Economic Substance (Companies and Limited Partnerships) Act 2018 (the
“ES Act”), which became effective on January 1, 2019, and the International Tax Authority’s (the
“ITA”) Rules on Economic Substance in the Virgin Islands (the “ITA’s Rules”), containing rules and
guidance relating to the interpretation of the ES Act and how the ITA will carry out its obligations. The
ITA’s Rules were first issued on October 9, 2019, were further updated on February 10, 2020 and
again updated on February 23, 2023. A BVI company that is considered a “legal entity” that is
conducting one or more of the nine “relevant activities” is required to comply with the economic
substance requirements in relation to that relevant activity. A BVI company is required to report to the
ITA, via its registered agent, on an annual basis under the Beneficial Ownership Secure Search Act
2017 to enable the ITA to monitor compliance with the economic substance requirements (as
applicable).
3.17 Liquidation
A company is placed in liquidation either by an order of the court or by a resolution of directors
or shareholders. A liquidator is appointed whose duties are to collect the assets of the company
(including the amount (if any) due from the contributories (shareholders)), to settle the list of creditors
and to discharge the company’s liability to them, rateably if insufficient assets exist to discharge the
liabilities in full, and to settle the list of contributories and divide the surplus assets (if any) amongst
them in accordance with the rights attaching to the shares.
3.18 Stamp duty on transfers
No stamp duty is payable in the BVI on transfers of shares of BVI companies incorporated or
registered under the BVI Business Companies Act.
3.19 Taxation
Companies incorporated or registered under the BVI Business Companies Act are currently
exempt from income and corporate tax. In addition, the BVI currently does not levy capital gains tax
on companies incorporated or registered under the BVI Business Companies Act.
No estate, inheritance, succession or gift tax, rate, duty, levy or other charge is payable by
persons who are not resident in the BVI with respect to any shares, debt obligation or other securities
of the Company.
III-23


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APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND BVI COMPANY LAW
3.20 Exchange controls
There are no foreign exchange controls or foreign exchange regulations under the currently
applicable laws of the BVI.
4 GENERAL
Harney Westwood & Riegels, the Company’s legal advisers on BVI law, have sent to the
Company a letter of advice summarizing certain aspects of the BVI Business Companies Act. This
letter, together with a copy of the BVI Business Companies Act, is on display as referred to in the
paragraph headed “Documents on Display” in Appendix V. Any person wishing to have a detailed
summary of BVI company law or advice on the differences between it and the laws of any jurisdiction
with which he/she is more familiar is recommended to seek independent legal advice.
III-24


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation
Our Company was incorporated under the laws of the BVI on February 5, 2015 as a BVI
business company with limited liability. Upon our incorporation, the maximum number of shares we
were authorized to issue was 2,500,000,000 shares with par value of US$0.0001 each.
Our registered office address is at Craigmuir Chambers, P.O. Box 71, Road Town, Tortola, VG
1110, British Virgin Islands. Accordingly, our Company’s corporate structure and Memorandum and
Articles are subject to the relevant laws of the BVI. A summary of our Memorandum and Articles is
set out in Appendix III.
Our registered place of business in Hong Kong is at 31/F, Tower Two, Times Square,
1 Matheson Street, Causeway Bay, Hong Kong. We were registered as a non-Hong Kong company
under Part 16 of the Companies Ordinance on February 2, 2023 with the Registrar of Companies in
Hong Kong. Ms. AU Wing Sze has been appointed as the authorized representative of our Company
for the acceptance of service of process in Hong Kong. The address for service of process is 31/F,
Tower Two, Times Square, 1 Matheson Street, Causeway Bay, Hong Kong.
2. Changes in the number of issued shares of our Company
There has been no alteration in the number of issued shares of our Company within the two
years immediately preceding the date of this document.
3. Changes in the share capital of members of our Group
A summary of the corporate information and the particulars of our subsidiaries are set out in
Note 1 to the Accountants’ Report as set out in Appendix I.
The following sets out the changes in the share or registered capital of our subsidiaries and
operating entities our Group within the two years immediately preceding the date of this document:
Dmall Digital Europe Kft.
Dmall Digital Europe Kft. was established in Hungary on December 21, 2022 with a registered
capital stock of HUF600.0 million.
Dmall Digital Philippines Inc.
Dmall Digital Philippines Inc. was established in the Philippines on December 11, 2023 with a
authorised capital stock of PHP12.0 million.
Dmall Life Beijing
On December 13, 2023, the registered capital of Dmall Life Beijing was increased from
RMB10.0 million to RMB1,666.0 million.
Dmall Life Network
On March 22, 2023, the registered share capital of Dmall Life Network was decreased from
US$213.0 million to US$198.0 million.
IV-1


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
On January 26, 2024, the registered share capital of Dmall Life Network was decreased from
US$198.0 million to US$188.0 million.
On October 21, 2024, the registered share capital of Dmall Life Network was decreased from
US$188.0 million to US$178.0 million.
Dmall Life Tianjin
Dmall Life Tianjin was established in the PRC on August 11, 2023 with a registered capital of
RMB2.0 million.
Dmall (Ningbo) New Energy Technology Co., Ltd.
Dmall (Ningbo) New Energy Technology Co., Ltd. was established in the PRC on January 15,
2024 with a registered capital of RMB1.0 million.
Dmall Zhilian
On March 21, 2023, the registered capital of Dmall Zhilian was increased from
RMB74.8 million to RMB168.3 million.
Retail Technology Asia
On September 22, 2023, the registered capital of Retail Technology Asia was increased from
US$43.1 million to US$63.1 million.
Shenzhen Enjoy
On July 27, 2023, the registered capital of Shenzhen Enjoy was increased from
RMB24.4 million to RMB25.0 million.
Shenzhen Firefly Circulation Information Technology Co., Ltd.
Shenzhen Firefly Circulation Information Technology Co., Ltd. was established in the PRC on
January 22, 2024 with a registered capital of RMB3.0 million.
Save as disclosed above, there has been no alteration in the share capital of our subsidiaries and
operating entities of our Group within the two years immediately preceding the date of this document.
4. Resolutions of our Shareholders dated November 27, 2024
Resolutions of our Shareholders were passed on November 27, 2024, pursuant to which, among
others, conditional upon the conditions of the Global Offering (as set out in this document) being
fulfilled:
(a) the Memorandum and the Articles were approved and adopted effective conditional on and
immediately prior to the Listing on the Listing Date;
(b) the Global Offering, Listing and Over-allotment Option were approved, and our Directors
were authorized to negotiate and agree the Offer Price and to allot and issue the Offer
Shares (including pursuant to the Over-allotment Option);
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
(c) a general mandate (the “ Sale Mandate ”) was granted to our Directors to allot, issue and
deal with any Shares or securities convertible into Shares (including the resale or transfer
of treasury shares by our Company) and to make or grant offers, agreements or options
which would or might require Shares to be allotted, issued or dealt with, provided that the
number of Shares so allotted, issued or dealt with or agreed to be allotted, issued or dealt
with by our Directors, shall not exceed 20% of the total number of Shares in issue
immediately following the completion of Global Offering;
(d) a general mandate (the “ Repurchase Mandate ”) was granted to our Directors to
repurchase our own Shares on the Stock Exchange or on any other stock exchange on
which the securities of our Company may be listed and which is recognized by the SFC
and the Stock Exchange for this purpose, such number of Shares as will represent up to
10% of the total number of Shares in issue immediately following completion of the
Global Offering;
(e) the Sale Mandate was extended by the addition to the total number of Shares which may
be allotted and issued or agreed to be allotted and issued by our Directors pursuant to such
general mandate of an amount representing the total number of the Shares purchased by
our Company pursuant to the Repurchase Mandate, provided that such extended amount
shall not exceed 10% of the total number of the Shares in issue immediately following
completion of the Global Offering; and
(f) each authorized and issued (if any) Preferred Shares be converted into one ordinary share
of par value US$0.0001 by re-designation and re-classification immediately before the
Listing;
Each of the general mandates referred to above will remain in effect until the earliest of:
 the conclusion of the next annual general meeting of our Company unless, by ordinary
resolution passed at that meeting, the authority is renewed, either unconditionally or
subject to condition;
 the expiration of the period within which the next annual general meeting of our Company
is required to be held under any applicable laws of the BVI or the memorandum and the
articles of association of our Company; and
 the passing of an ordinary resolution by our Shareholders in a general meeting revoking or
varying the authority.
5. Explanatory statement on repurchase of our own securities
The following summarizes restrictions imposed by the Listing Rules on share repurchases by a
company listed on the Stock Exchange and provides further information about the repurchase of our
own securities.
Shareholders’ approval
A listed company whose primary listing is on the Stock Exchange may only purchase its shares
on the Stock Exchange, either directly or indirectly, if: (i) the shares proposed to be purchased are
fully-paid up, and (ii) its shareholders have given a specific approval or general mandate by way of an
ordinary resolution of shareholders.
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Size of mandate
The exercise in full of the Repurchase Mandate, on the basis of 886,690,124 Shares in issue
immediately following completion of the Global Offering (assuming the Over-allotment Option is not
exercised, the Convertible Bond is not converted and no Shares are issued under the Share Incentive
Plans), could accordingly result in up to approximately 88,669,012 Shares being repurchased by our
Company.
The total number of shares which a listed company may repurchase on the Stock Exchange may
not exceed 10% of the number of issued shares (excluding any treasury shares) as of the date of the
shareholder approval.
Reasons for repurchases
Our Directors believe that it is in the best interests of our Company and Shareholders for our
Directors to have general authority from the Shareholders to enable our Company to repurchase Shares
in the market. Such repurchases may, depending on market conditions and funding arrangements at the
time, lead to an enhancement of the net asset value per Share and/or earnings per Share and will only
be made where our Directors believe that such repurchases will benefit our Company and
Shareholders.
Source of funds
Purchases must be funded out of funds legally available for the purpose in accordance with the
Memorandum and Articles and the applicable Laws of the BVI.
Our Company shall not purchase its own Shares on the Stock Exchange for a consideration
other than cash or for settlement otherwise than in accordance with the trading rules of the Stock
Exchange from time to time.
The Articles and the Laws of the BVI provide that our Company may not repurchase its own
shares unless (i) the value of our Company’s assets exceeds its liabilities, and (ii) our Company is able
to pay its debts as they fall due.
Suspension of repurchase
A listed company shall not repurchase its shares on the Stock Exchange at any time after inside
information has come to its knowledge until the information is made publicly available. In particular,
during the period of one month immediately preceding the earlier of: (i) the date of the board meeting
(as such date is first notified to the Stock Exchange in accordance with the Listing Rules) for the
approval of the company’s results for any year, half-year, quarterly or any other interim period (whether
or not required under the Listing Rules); and (ii) the deadline for the issuer to announce its results for
any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not
required under the Listing Rules), until the date of the results announcement, the company may not
repurchase its shares on the Stock Exchange unless there are exceptional circumstances.
Trading restrictions
The number of shares which a listed company may repurchase on the Stock Exchange is the
number of shares representing up to a maximum of 10% of the number of shares in issue (excluding
treasury shares) as at the date of the shareholder approval. Our Company may not issue Shares, sell or
IV-4


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
transfer treasury shares, or announce a proposed issue of Shares, or a sale or transfer of any treasury
shares for a period of 30 days immediately following a repurchase of Shares without the prior approval of
the Stock Exchange. Such restriction does not apply to (i) a new issue of Shares, or a sale or transfer of
treasury shares under capitalization issue; (ii) a grant of share awards or options under a share scheme
that complies with Chapter 17 of the Listing Rules or a new issue of Shares or a transfer of treasury
shares upon vesting or exercise of shares awards or options under the share scheme that complies with
Chapter 17 of the Listing Rules; and (iii) a new issue of Shares or a transfer of treasury shares pursuant to
the exercise of warrants, share options or similar instruments requiring our Company to issue Shares or
transfer treasury shares, which were outstanding prior to the purchase of its own Shares.
A listed company is prohibited from repurchasing its shares on the Stock Exchange if the
purchase price is 5% or more than the average closing market price for the five preceding trading days
on which its shares were traded on the Stock Exchange.
A listed company may not repurchase its shares if that repurchase would result in the number of
listed securities which are in the hands of the public falling below the relevant prescribed minimum
percentage as required by the Stock Exchange.
Status of repurchased shares
Our Company may cancel any repurchased Shares (upon which the certificates for such shares
must be cancelled and destroyed) and/or hold them as treasury shares subject to, among others, market
conditions and its capital management needs at the relevant time of the repurchases, which may change
due to evolving circumstances. Shareholders and potential investors should pay attention to any
announcement to be published by us in the future, including but without limitation, any next day
disclosure return (which shall identify, amongst others, the number of repurchased Shares that are to be
held as treasury shares or cancelled upon settlement of such repurchases).
The listing status of all Shares which are held as treasury shares will be retained. Our Company
will ensure that treasury shares are appropriately identified and segregated. For any treasury shares
deposited with CCASS pending resale on the Stock Exchange, our Company will ensure that it would
not exercise any shareholders’ rights or receive any entitlements which would otherwise be suspended
under the relevant laws if those shares were registered in our Company’s own name as treasury shares
by, including but not limited to, obtaining an approval by the board of our Company that (i) our
Company should procure its broker not to give any instructions to HKSCC to vote at general meetings
for the treasury shares deposited with CCASS; and (ii) in the case of dividends or distributions, our
Company should withdraw the treasury shares from CCASS, and either re-register them in its own name
as treasury shares or cancel them, in each case before the record date for the dividends or distributions.
The listing status of all Shares which are purchased by our Company (whether on the Stock
Exchange or otherwise) but not held as treasury shares shall be automatically cancelled upon
repurchase. Our Company shall ensure that the documents of title of these repurchased Shares are
cancelled and destroyed as soon as reasonably practicable following settlement of any such repurchase.
Close associates and core connected persons
None of our Directors or, to the best of their knowledge having made all reasonable enquiries,
any of their close associates have a present intention, in the event the Repurchase Mandate is approved,
to sell any Shares to our Company.
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
No core connected person of our Company has notified our Company that they have a present
intention to sell Shares to our Company, or have undertaken to do so, if the Repurchase Mandate is
approved.
A listed company shall not knowingly purchase its shares on the Stock Exchange from a core
connected person (namely a director, chief executive or substantial shareholder of the company or any
of its subsidiaries, or a close associate of any of them), and a core connected person shall not
knowingly sell their interest in shares of the company to it.
Takeover implications
If, as a result of any repurchase of Shares, a Shareholder’s proportionate interest in the voting
rights of our Company increases, such increase will be treated as an acquisition for the purposes of the
Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting in concert could obtain
or consolidate control of our Company and become obliged to make a mandatory offer in accordance
with Rule 26 of the Takeovers Code. Save as aforesaid, our Directors are not aware of any
consequences which would arise under the Takeovers Code as a consequence of any repurchases
pursuant to the Repurchase Mandate.
General
If the Repurchase Mandate were to be carried out in full at any time, there may be a material
adverse impact on our working capital or gearing position (as compared with the position disclosed in
our most recent published audited accounts). However, our Directors do not propose to exercise the
Repurchase Mandate to such an extent as would have a material adverse effect on our working capital
or gearing position.
Our Directors have undertaken to the Stock Exchange to will exercise the Repurchase Mandate
in accordance with the Listing Rules and the applicable laws in the BVI.
We have not made any repurchases of our Shares in the previous six months.
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of material contracts
The following are contracts (not being contracts entered into in the ordinary course of business)
entered into by any member of our Group within the two years immediately preceding the date of this
document that are or may be material:
(a) a termination agreement dated April 24, 2024 entered into among Shenzhen Xintonglu,
Dmall Fresh (Beijing), Mr. Zhang and Ms. LU Yuxin, pursuant to which the parties agreed
to terminate the contractual arrangements which permitted us to have effective control
over Dmall Fresh (Beijing);
(b) a cornerstone investment agreement dated November 22, 2024 entered into among our
Company, DFI Development Holdings Limited, UBS Securities Hong Kong Limited,
UBS AG Hong Kong Branch, CMB International Capital Limited, China Merchants
Securities (HK) Co., Limited, CLSA Limited and China International Capital Corporation
Hong Kong Securities Limited, pursuant to which DFI Development Holdings Limited
agreed to subscribe for Shares at the Offer Price in the aggregate amount of the Hong
Kong dollar equivalent of US$39.06 million; and
(c) the Hong Kong Underwriting Agreement.
IV-6


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
2. Intellectual property rights
Save as disclosed below, as of the Latest Practicable Date, there were no other trademarks,
service marks, patents, intellectual property rights, or industrial property rights which are or may be
material in relation to our business.
Trademarks
As of the Latest Practicable Date, we had registered the following trademarks which we
consider to be or may be material to our business:
No. Trademark Registered Owner
Place of
registration Class
Registered
Number
Expiry
Date
1.
 Dmall Life Digital PRC 35 56379465 12/20/2031
2.
 Dmall Life Digital PRC 9 54623926 10/27/2031
3.
 Dmall Life Digital PRC 9 54620762 10/27/2031
4.
 Dmall Life Digital PRC 42 54616716 10/27/2031
5.
 Dmall Life Digital PRC 42 54601038 10/20/2031
6.
 Dmall Life Digital PRC 39* 53016254 8/27/2031
7.
 Dmall Life Digital PRC 9 50070228 6/13/2031
8.
 Dmall Life Digital PRC 39* 50068170 10/27/2031
9.
 Dmall Life Digital PRC 39* 50062596 10/6/2031
10.
 Dmall Life Digital PRC 39* 50058553 10/20/2031
11.
 Dmall Life Digital PRC 41 50054814 9/13/2031
12.
 Dmall Life Digital PRC 42 50054285 5/27/2031
13.
 Dmall Life Digital PRC 35* 44106559 7/13/2031
14.
 Dmall Life Digital PRC 9* 44094300 6/13/2031
15.
 Dmall Life Digital PRC 39* 44104202 12/6/2030
16.
 Dmall Life Digital PRC
37/29/45/
38/9*/41/30/
40/42/39*
17106722 3/6/2028
17.
 Dmall Life Digital PRC 39*/36 17102542 3/6/2028
18.
 Dmall Life Digital PRC
41/31/29/
9*/37/39*/
45/30/42/40
17099516 10/27/2027
19.
 Dmall Life Digital PRC 7 57102418 1/13/2032
20.
 Dmall Life Digital PRC 42 60690924 5/27/2032
21.
 Dmall Life Network PRC 7 20549170 12/20/2027
22.
 Dmall Life Network PRC 7 20549174 12/6/2027
23.
 Dmall Life Network PRC 7 20549178 9/27/2027
24.
 Dmall Life Digital Hong Kong 35 305577968 3/28/2031
25.
 Dmall Life Digital Hong Kong 42 305577959 3/28/2031
26.
 Dmall Life Digital Cambodia 42 KH/T/2021/97571 4/2/2031
27.
 Dmall Life Digital Singapore 42 40202107248R 3/26/2031
IV-7


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
No. Trademark Registered Owner
Place of
registration Class
Registered
Number
Expiry
Date
28.
 Dmall Life Digital European
Union
42 18432328 3/19/2031
29.
 Dmall Life Digital European
Union
42 18720553 6/23/2032
30.
 Dmall Life Digital European
Union
9 018806200 12/8/2032
31.
 Dmall Life Digital European
Union
42 018806200 12/8/2032
32.
 Dmall Life Digital PRC 38 72394167 12/20/2033
Note:
(1) We have granted Dmall Fresh (Beijing) a perpetual license to use these trademarks, along with other trademarks. Please refer to
“Connected Transactions—Trademark Licensing Agreement.”
Copyrights
As of the Latest Practicable Date, we had registered the following copyrights which we
consider to be or may be material to our business:
Software
No. Copyright Version Registered owners Registration number Registration date
1 εᓃTMS-༶፩ӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0912236 8/12/2020
2 εᓃ͛ᒻІਗ໾஬̨̻ V1.0 Dmall (Shenzhen) Digital 2020SR0916645 8/12/2020
3༶ᐄʕːӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0917338 8/12/2020
4ඎʕ̨ӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0912957 8/12/2020
5 εᓃᆼफ़ӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0917233 8/12/2020
6͏ӻ୕ V2.1 Dmall (Shenzhen) Digital 2020SR0916708 8/12/2020
7ਕ̨ӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0917632 8/12/2020
8 εᓃኯᗇӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0917359 8/12/2020
9̔ӻ୕ V1.0.10 Dmall (Shenzhen) Digital 2020SR0917809 8/12/2020
10೯၍ଣ̨̻ V1.0 Dmall (Shenzhen) Digital 2020SR0916652 8/12/2020
11 εᓃ௓ΐӻ୕ V2.0 Dmall (Shenzhen) Digital 2020SR0916312 8/12/2020
12 εᓃᆵᓃӻ୕ V3.0 Dmall (Shenzhen) Digital 2020SR0917247 8/12/2020
13 εᓃપᑥӻ୕ V3.0 Dmall (Shenzhen) Digital 2020SR0916701 8/12/2020
14 εᓃᑊॶӻ୕ V1.0 Dmall (Shenzhen) Digital 2020SR0916305 8/12/2020
15 εᓃମุΥЪӻ୕ V1.5.0 Dmall (Shenzhen) Digital 2020SR0916024 8/12/2020
16ழ΁ V1.9.0 Dmall (Shenzhen) Digital 2022SR0092675 1/13/2022
17 εᓃ̋ຑɝታӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0105509 1/17/2022
18 εᓃቖ໾ΥΝӻ୕V1.0 V1.0 Dmall (Shenzhen) Digital 2022SR0190087 1/29/2022
19 εᓃ̹ሜ၍ଣ೻ҏV2.2 V2.2 Dmall (Shenzhen) Digital 2022SR0180005 1/27/2022
20஝ྌ೻ҏ V1.0 Dmall (Shenzhen) Digital 2022SR0363204 3/18/2022
21 εᓃৗಛ၍ଣӻ୕ V2.0 Dmall (Shenzhen) Digital 2022SR0284039 2/28/2022
22၍ଣӻ୕ V2.0 Dmall (Shenzhen) Digital 2022SR0284040 2/28/2022
23 εᓃમᒅ၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0283952 2/28/2022
24 εᓃ̋ຑਠഐၑ၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0272221 2/24/2022
25္છӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0265020 2/23/2022
26 εᓃ(DMALL)ӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0252359 2/21/2022
27ਗӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0252360 2/21/2022
28ӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0252358 2/21/2022
29 εᓃ(DMALL)˾ɨఊӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0252357 2/21/2022
30ቖӻ୕ V3.0 Dmall (Shenzhen) Digital 2022SR0240541 2/17/2022
31 εᓃ(DMALL)౽ঐϽාӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0240542 2/17/2022
32Τఊӻ୕ V2.0 Dmall (Shenzhen) Digital 2022SR0240528 2/17/2022
33 εᓃ(DMALL)౽ঐરफӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0241674 2/17/2022
34̨̻ V1.0 Dmall (Shenzhen) Digital 2022SR0241675 2/17/2022
35ӻ୕ V3.0.2 Dmall (Shenzhen) Digital 2022SR0240543 2/17/2022
36ӻ୕ V2.0.2 Dmall (Shenzhen) Digital 2022SR0192999 1/30/2022
37 εᓃԶᏐਠഐၑӻ୕ V1.5 Dmall (Shenzhen) Digital 2022SR0190095 1/29/2022
38π၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0381483 3/23/2022
39 εᓃ͛ᒻజᄆ೻ҏ V2.2 Dmall (Shenzhen) Digital 2022SR0375352 3/22/2022
40છ၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR0369231 3/21/2022
41 εᓃDmallථ̨̻ӻ୕ V3.0 Dmall (Shenzhen) Digital 2022SR0029303 1/6/2022
42ਠ೻ҏ V1.0 Dmall (Shenzhen) Digital 2022SR0375380 3/22/2022
43Τఊӻ୕ V2.0 Dmall (Shenzhen) Digital 2022SR0240528 2/17/2022
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
No. Copyright Version Registered owners Registration number Registration date
44 εᓃDMALL OSழ΁ V1.4.9 Dmall (Shenzhen) Digital 2021SR0516948 4/9/2021
45 εᓃDMALL OS iOSழ΁ V1.5.0 Dmall (Shenzhen) Digital 2021SR1001882 7/7/2021
46̨̻ V1.0.2 Dmall (Shenzhen) Digital 2022SR1522303 11/17/2022
47 εᓃDMALLฤ॰ሯඎ္છ̨̻ V1.0 Dmall (Shenzhen) Digital 2022SR1522304 11/17/2022
48̨̻ V1.0 Dmall (Shenzhen) Digital 2022SR1628084 12/30/2022
49 εᓃ˕˹၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2022SR1628085 12/30/2022
50༶ၪ၍ଣ̨̻ V1.0 Dmall (Shenzhen) Digital 2022SR1628083 12/30/2022
51 εᓃDMALL OS̨̻ V1.0.1 Dmall (Shenzhen) Digital 2023SR0300325 3/3/2023
52၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0397995 3/27/2023
53 εᓃUniData༟๕၍ଣછՓ၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0432990 4/3/2023
54 εᓃUniData၌၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0493996 4/23/2023
55 εᓃɽ೐ᒅӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0518190 5/5/2023
56ਠ̨̻ V1.0 Dmall (Shenzhen) Digital 2023SR0518191 5/5/2023
57 εᓃDMALLԶᏐਠΥΝӻ୕ V1.0.0 Dmall (Shenzhen) Digital 2023SR0592905 6/7/2023
58 εᓃPOS˕˹ӻ୕ V1.0.0 Dmall (Shenzhen) Digital 2023SR0592906 6/7/2023
59 εᓃᎴ౉Վ၍ଣӻ୕ V2.0 Dmall (Shenzhen) Digital 2023SR0600391 6/8/2023
60ӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0656653 6/14/2023
61 εᓃ௓ΐ΂ਕੂБӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0992057 8/30/2023
62 εᓃΆฆӷਹ༶ᐄ၍ଣӻ୕ V1.0 Dmall (Shenzhen) Digital 2023SR0986214 8/30/2023
63 εᓃᏀɢ಻༊̨̻ӻ୕ V1.0.0 Dmall (Shenzhen) Digital 2023SR0986174 8/30/2023
64 εᓃІਗ໾஬ӻ୕ V3.0 Dmall (Shenzhen) Digital 2023SR0986410 8/30/2023
65ቖӻ୕ V1.0 Dmall Life Network 2018SR242180 4/10/2018
66̨ӻ୕ V1.1 Dmall Life Network 2016SR166541 7/4/2016
67 εᓃɽᅰኽණϓ̨̻ V1.0 Dmall Life Network 2022SR0703654 6/6/2022
68છˏᏗӻ୕ V1.0.0 Dmall Life Network 2022SR0703621 6/6/2022
69೐ᐄቖɓ᜗ʷӻ୕ V1.0 Dmall Life Network 2022SR0703651 6/6/2022
70 εᓃІਗʷ͛ପ༶ɢӻ୕ V1.0 Dmall Life Network 2022SR0703620 6/6/2022
71ʕːӻ୕ V1.0 Dmall Life Network 2022SR0703622 6/6/2022
72 εᓃཥɿᄆᜀӻ୕ V1.0 Dmall Life Network 2022SR0703653 6/6/2022
73ᑌၣ̨̻ V3.0 Dmall Life Network 2022SR1354140 9/14/2022
74 εᓃঐ๕၍ଣӻ୕ V1.0 Dmall Life Network 2022SR1354139 9/14/2022
75ਕ̨̻ V2.0 Dmall Life Network 2022SR1396578 10/11/2022
76 εᓃΌᗡ༩္છӻ୕ V1.0 Dmall Life Network 2022SR1454985 11/3/2022
77 εᓃᅰኽʹ౬ʕːӻ୕ V1.0 Dmall Life Network 2022SR1454984 11/3/2022
78၍ଣӻ୕ V1.0 Dmall Life Network 2023SR0437774 4/4/2023
79 εᓃண௪༶ၪ၍ଣӻ୕ V1.0 Dmall Life Network 2023SR0432989 4/4/2023
80 εᓃDmall POSϗვӻ୕ V2.3.7.0 Dmall Life Network 2023SR0784125 7/3/2023
81 εᓃၣഖ಻༊Іਗʷஈଣழ΁ V1.0 Dmall Life Network 2023SR0779275 7/3/2023
82ഐၑʕːӻ୕ V1.0 Dmall Life Network 2023SR0882192 8/2/2023
83ৌਕഐၑӻ୕ V1.0 Dmall Life Network 2023SR1029409 9/7/2023
84ӻ୕ V1.0 Dmall Life Chengdu 2021SR1631350 11/4/2021
85ӻ୕ V1.0 Dmall Life Chengdu 2021SR1631349 11/4/2021
86ӻ୕ V1.0 Dmall Life Chengdu 2021SR1631392 11/4/2021
87 εᓃήપRNழ΁ V4.0.0 Dmall Life Chengdu 2019SR1053744 10/17/2019
88 εᓃৣ৔APPழ΁ V3.1.8 Dmall Life Chengdu 2019SR1053083 10/17/2019
89 εᓃᆵ̚ౝ஬Appழ΁ V5.1.3 Dmall Life Chengdu 2019SR1053078 10/17/2019
90ࣨAppழ΁ V1.3.5 Dmall Life Chengdu 2019SR1053072 10/17/2019
91πʕ̨ӻ୕ V1.0 Dmall Life Chengdu 2018SR1064267 12/25/2018
92ၑ̨̻ V1.0 Dmall Life Chengdu 2018SR1064247 12/25/2018
93 εᓃᒯ໮ӻ୕ V1.0 Dmall Life Chengdu 2018SR1067635 12/25/2018
94ႊԭӻ୕ V1.0 Dmall Life Chengdu 2018SR1065264 12/25/2018
95 εᓃІਗ໾஬̨̻ V1.0 Dmall Life Chengdu 2018SR1065280 12/25/2018
96ӻ୕ V1.0 Dmall Life Chengdu 2018SR1064206 12/25/2018
97 εᓃટɝၣᗫ̨̻ V1.0 Dmall Life Chengdu 2018SR1063917 12/25/2018
98൬၍ଣ̨̻ V1.0 Dmall Life Chengdu 2018SR1063712 12/25/2018
99 εᓃ౽ঐπ̍ᓞAPP V1.0.6 Dmall Life Chengdu 2021SR0643751 5/7/2021
100Ꮇ၍ଣӻ୕ V1.0 Dmall Life Chengdu 2021SR0441003 3/24/2021
101༶፩၍ଣӻ୕ V1.0 Dmall Life Chengdu 2021SR0441041 3/24/2021
102 εᓃІпᒅAPP V1.9.8 Dmall Life Chengdu 2021SR0643750 5/7/2021
103 εᓃ՘Ν೯б̨̻ V1.0 Dmall Life Chengdu 2021SR1624343 11/3/2021
104 εᓃርఙ໾஬ӻ୕ V1.0 Dmall Life Chengdu 2021SR1624296 11/3/2021
105 εᓃԚᏨӻ୕ V1.0 Dmall Life Chengdu 2021SR1624342 11/3/2021
106ఊӻ୕ V1.0 Dmall Life Chengdu 2021SR1624297 11/3/2021
107ක೯ӻ୕ V1.0 Dmall Life Chengdu 2022SR1433322 10/31/2022
108 εᓃɪෂʕːӻ୕ V1.0 Dmall Life Chengdu 2022SR1433323 10/31/2022
109 εᓃDMALLӻ୕ V1.0 Dmall Life Chengdu 2023SR0467389 4/12/2023
110ਕ̨̻ӻ୕ V2.0 Dmall Life Chengdu 2023SR0656860 6/14/2023
111 εᓃ͜Է၍ଣӻ୕ V1.0 Dmall Life Chengdu 2023SR0656861 6/14/2023
112ࠠAPPழ΁ V1.0 Zhilian Wuhan 2021SR1434359 9/26/2021
113లɝόழ΁ V1.0 Zhilian Wuhan 2021SR1441776 9/27/2021
114 ฆ᳅౽ঐτԣ୅ਗ၌၍ଣ̨̻ V1.0 Zhilian Wuhan 2021SR0512086 4/8/2021
115୿෤၍ଣӻ୕ V1.0 Zhilian Wuhan 2021SR1441359 9/27/2021
116 ІпϗვዚAPPழ΁ V1.0 Zhilian Wuhan 2021SR1434473 9/26/2021
117ཕழ΁iOS Appழ΁ V1.0 Zhilian Wuhan 2021SR0482416 4/1/2021
118 ௔шτԣӻ୕̨̻ V1.0 Zhilian Wuhan 2021SR1441358 9/27/2021
119ఊ္છӻ୕ V1.0 Zhilian Wuhan 2021SR1441532 9/27/2021
120ཕழ΁Android App ழ΁ V1.0 Zhilian Wuhan 2021SR0211836 2/7/2021
121ਕWindowsழ΁ V1.0 Zhilian Wuhan 2021SR1434472 9/26/2021
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No. Copyright Version Registered owners Registration number Registration date
122 ฆ᳅ண௪၍ଣ̨̻ V1.0 Zhilian Wuhan 2021SR0211837 2/7/2021
123 ฆ᳅ᄿѓ၍ଣ̨̻ V2.0 Zhilian Wuhan 2021SR0211872 2/7/2021
124 ฆ᳅ೌᇞஷৃਿ१లɝόழ΁ V1.0 Zhilian Wuhan 2019SR0805064 8/2/2019
125 ฆ᳅౽ঐ˓፶లɝόழ΁ V1.0 Zhilian Wuhan 2019SR0805047 8/2/2019
126లɝόழ΁ V1.0 Zhilian Wuhan 2019SR0787951 7/30/2019
127 ฆ᳅ਿᓾԣฦ̨̻ழ΁ V1.0 Zhilian Wuhan 2019SR0784363 7/29/2019
128 ฆ᳅౽ঐვᓣዱలɝόழ΁ V1.0 Zhilian Wuhan 2019SR0784354 7/29/2019
129 ฆ᳅౽ঐτԣၣᗫቇৣኜలɝόழ΁ V1.0 Zhilian Wuhan 2018SR766622 9/20/2018
130 ฆ᳅Іпϗვዚၪᚐ၍ଣӻ୕ V1.0 Zhilian Wuhan 2018SR658364 8/17/2018
131 ฆ᳅Іпϗვԣฦӻ୕(iosوV1.0 Zhilian Wuhan 2018SR653489 8/16/2018
132 ฆ᳅Іпϗვԣฦӻ୕(Android V1.0 Zhilian Wuhan 2018SR653500 8/16/2018
133 ฆ᳅౽ঐτԣ၍ଣӻ୕ V1.0 Zhilian Wuhan 2018SR576687 7/23/2018
134 ฆ᳅Іпϗვԣฦӻ୕H5ழ΁ V1.1 Zhilian Wuhan 2018SR541519 7/11/2018
135 ฆ᳅ІпᒅOSӻ୕ V1.1 Zhilian Wuhan 2018SR347107 5/16/2018
136 ฆ᳅౽ঐථધᇁଷ၍ଣ̨̻ V1.0 Zhilian Wuhan 2021SR0512088 4/8/2021
137 εᓃમᒅ˴ᅰኽ၍ଣӻ୕ V1.0 Dmall Life Chengdu 2022SR0310247 3/4/2022
138 εᓃ(DMALL)ᓀӻ୕ V1.0 Dmall Life Chengdu 2022SR0310246 3/4/2022
139ઠਠ˒ஷ዁Ъ၍ଣӻ୕ V1.0 Shenzhen Enjoy 2021SR0875609 6/10/2021
140ઠఙ౻ʷᐄቖӻ୕ V1.0 Shenzhen Enjoy 2021SR1115671 7/28/2021
141ઠථ̨̻ཧਯ୞၌ӻ୕ழ΁ V1.0 Shenzhen Enjoy 2020SR1723274 12/3/2020
142ਜྠᒅʃ೻ҏ V1.0 Shenzhen Enjoy 2020SR1723273 12/3/2020
143ઠၳΥ˕˹̨̻ழ΁ V2.0 Shenzhen Enjoy 2019SR1221439 11/27/2019
144ਕᝂAPPழ΁ V1.0 Shenzhen Enjoy 2019SR1224383 11/27/2019
145ʃ೻ҏழ΁ V1.0 Shenzhen Enjoy 2019SR1210144 11/25/2019
146ઠધᇁᒅʃ೻ҏழ΁ V1.0 Shenzhen Enjoy 2019SR1210146 11/25/2019
147ઠमᘒБุB2B၍ଣӻ୕ழ΁ V1.0 Shenzhen Enjoy 2019SR0939154 9/10/2019
148ӻ୕ V1.0 Shenzhen Enjoy 2018SR1038420 12/19/2018
149̨̻၍ଣӻ୕ழ΁ V1.0 Shenzhen Enjoy 2017SR737790 12/27/2017
150ӻ୕ழ΁ V1.0 Shenzhen Enjoy 2017SR737635 12/27/2017
151ӻ୕ழ΁ V1.0 Shenzhen Enjoy 2017SR634616 11/20/2017
152ઠ༨̨̻ཧਯ୞၌ӻ୕ழ΁ V3.0 Shenzhen Enjoy 2016SR358024 12/7/2016
153ӻ୕ழ΁ V1.0 Shenzhen Enjoy 2016SR357994 12/7/2016
154ਕᝂӻ୕ழ΁ V2.0 Shenzhen Enjoy 2016SR357990 12/7/2016
155ӻ୕ழ΁ V2.0 Shenzhen Enjoy 2016SR342932 11/28/2016
156ஷ൴̹୅ਗ၍ଣӻ୕ழ΁ V1.0 Shenzhen Enjoy 2016SR074870 4/12/2016
157 ઠ༐ϵᒅ၍ଣӻ୕ழ΁ V2.0 Shenzhen Enjoy 2016SR069211 4/6/2016
158ӻ୕ழ΁ V2.0 Shenzhen Enjoy 2016SR067053 4/1/2016
159Ꮇ၍ଣӻ୕ழ΁ V2.0 Shenzhen Enjoy 2013SR148667 12/18/2013
160ӻ୕ழ΁ V2.0 Shenzhen Enjoy 2013SR131569 11/25/2013
161ӻ୕ழ΁ V3.0 Shenzhen Enjoy 2012SR069525 8/1/2012
162ઠ༟ҿ၍ଣӻ୕ழ΁ V2.0 Shenzhen Enjoy 2012SR069578 8/1/2012
163ઠ፬ʮІਗʷӻ୕ழ΁ V2.0 Shenzhen Enjoy 2012SR069576 8/1/2012
164ӻ୕ழ΁ V3.0 Shenzhen Enjoy 2012SR069574 8/1/2012
165ӻ୕ழ΁ V5.0 Shenzhen Enjoy 2008SR13212 7/11/2008
166ӻ୕ V2.0 Shenzhen Enjoy 2004SR10369 10/25/2004
167
ઠˢᄆᘒழ΁ V1.0
Shenzhen Enjoy Data
Technology Co., Ltd 2019SR0391296 4/25/2019
168ӻ୕ V1.0 Shenzhen Enjoy 2022SR0068178 1/11/2022
169ઠ౽ঐPOSཧਯϗვӻ୕(EnjoyPOS4.0) V1.0 Shenzhen Enjoy 2022SR0661609 5/27/2022
170ԶᏐᗡӻ୕ V1.0 Shenzhen Enjoy 2022SR1561701 11/23/2022
171ӻ୕ V1.0 Shenzhen Enjoy 2022SR1561491 11/23/2022
172ᅰοʷ༶ᐄӻ୕ V1.0 Shenzhen Enjoy 2022SR1564403 11/23/2022
173ઠᅰeஷ̨̻ V1.0 Shenzhen Enjoy 2022SR1627462 12/29/2022
174ઠϵᒅᅰοʷ၍ଣӻ୕ V1.0 Shenzhen Enjoy 2022SR1627345 12/29/2022
175۬H5༢୕ழࡱV2.0 Shenzhen Enjoy 2023SR1686894 12/19/2023
176ઠԶᏐᗡ၍ଣӻ୕ V5.0 Shenzhen Enjoy 2023SR1720080 12/21/2023
177 Όಬ༸ཧਯᅰοʷ຾ᐄ၍ଣӻ୕ V1.0 Shenzhen Enjoy 2023SR1703837 12/20/2023
178
̨၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1332416 12/10/2019
179
౛อPDĄ၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1314402 12/9/2019
180
ϗ஬ʱᅧफ़၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1298519 12/6/2019
181
Όಬ༸ุਕʕ̨Վ၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1278113 12/4/2019
182
ӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1277734 12/4/2019
183
৛๑ӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1175646 11/20/2019
184
ਠ൴ϗვPOSழ΁Android V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR1175377 11/20/2019
185
၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR0907793 9/2/2019
186
̔၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR0908349 9/2/2019
187
ਜ၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR0897446 8/29/2019
IV-10


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
No. Copyright Version Registered owners Registration number Registration date
188
ІпϗვPOSӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR0897979 8/29/2019
189
Όಬ༸ุਕʕ̨၍ଣӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2019SR0082839 1/23/2019
190
౽ঐථPOSӻ୕ V2.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2018SR895335 11/8/2018
191
ཥɿϗვफ़POSӻ୕ V2.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2018SR895039 11/8/2018
192
ܵPDAЪุӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2018SR890204 11/7/2018
193
ථྡ୅ਗ˕˹࿁ሪ̨̻ V3.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR232934 6/5/2017
194
၍ଣӻ୕ V3.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR226450 6/2/2017
195
ᐄቖӻ୕ V2.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR226292 6/2/2017
196
ථྡ୅ਗPOSϗვӻ୕ V2.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR221113 6/1/2017
197
၍ଣӻ୕ V3.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR221084 6/1/2017
198
ӻ୕ V1.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR221072 6/1/2017
199
ථྡΆุ໮၍ଣӻ୕ V2.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR220809 6/1/2017
200
၍ଣӻ୕ V3.0
Wuhan Tianjiyuntu
Technology Co., Ltd. 2017SR220458 6/1/2017
201 εᓃ௔шցϗп˓ʃ೻ҏழ΁ V2.4 Dmall Zhilian 2023SR0397994 3/27/2023
202 εᓃ௔шτԣAPPழ΁ V2.0 Dmall Zhilian 2023SR0451764 4/7/2023
203ʃ೻ҏழ΁ V1.0 Dmall Zhilian 2023SR0451765 4/7/2023
204ᑌၣ̨̻ V1.0 Dmall Zhilian 2023SR0566450 5/25/2023
205 εᓃ౽ঐफ़APP V1.0 Dmall Zhilian 2023SR0566451 5/25/2023
206 εᓃฆ᳅΂ਕ̨̻ V1.0 Dmall Zhilian 2023SR0660289 6/14/2023
207၌ழ΁ V1.0 Dmall Zhilian 2023SR0861333 7/20/2023
208ֳWeb၌ழ΁ V2.0 Dmall Zhilian 2023SR0861334 7/20/2023
209ԓ౽ঐᕁӻ୕ V1.0 Dmall Zhilian 2023SR0766676 6/30/2023
210 εᓃ຅ੰ౽ঐफ़Web၌ӻ୕ V2.0 Dmall Zhilian 2023SR1122014 9/20/2023
211 εᓃΌ೻༧ᔳၾ္છӻ୕ V2.0.0 Dmall Zhilian 2023SR1088887 9/18/2023
212၍ଣӻ୕ V1.0 Dmall Zhilian 2023SR1097963 9/19/2023
213೯ӻ୕ V1.2.0 Dmall Zhilian 2023SR1090087 9/18/2023
214Ꮠ͜ӻ୕ V2.8 Dmall Zhilian 2023SR1278376 10/23/2023
215 εᓃ᜻଻໾஬΂ਕӻ୕ V1.1.0 Dmall Zhilian 2023SR1367146 11/2/2023
216ς୞၌છՓᏐ͜ӻ୕ V1.4 Dmall Zhilian 2024SR0123662 1/18/2024
217 εᓃDMALLॹ௘၍ଣ̨̻ V1.0.0 Dmall Life Wuhan 2023SR0848023 7/18/2023
218 εᓃᒯӷᅰኽ၍ଣӻ୕ V1.0 Dmall Life Wuhan 2023SR0848022 7/18/2023
219 εᓃ໾஬ਞᅰৣໄழ΁ V1.0 Dmall Life Wuhan 2023SR1254640 10/18/2023
220 εᓃԶਠ՘Ν̨̻ V1.0 Dmall Life Wuhan 2023SR1245846 10/17/2023
221 εᓃDSDਪᕚʈఊ၍ଣӻ୕ V1.0 Dingmo Shanghai 2023SR1138709 9/22/2023
222 εᓃDMALLɧ˙࿁ሪ̻ၽӻ୕ V2.0 Dmall (Shenzhen) Digital 2024SR0677930 5/20/2024
223 εᓃNPSӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731169 5/29/2024
224 εᓃOSၣᗫӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731170 5/29/2024
225 εᓃ௓ΐྡ၍ଣӻ୕ V3.0 Dmall (Shenzhen) Digital 2024SR0677932 5/20/2024
226ᅵዚӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731163 5/29/2024
227 εᓃ˚қ̻ၽ V1.1.0 Dmall (Shenzhen) Digital 2024SR0731146 5/29/2024
228Іп(DBSS)̻ၽ V1.0 Dmall (Shenzhen) Digital 2024SR0731158 5/29/2024
229 εᓃਪᕚൢᓙʕːӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731140 5/29/2024
230 εᓃ㝬ɪཧਯӻ୕ V1.0.0 Dmall (Shenzhen) Digital 2024SR0731148 5/29/2024
231 εᓃ୅ਗϗვழ΁RN V1.0 Dmall (Shenzhen) Digital 2024SR0731150 5/29/2024
232 εᓃ୅ਗϗვழ΁ V1.0.74 Dmall (Shenzhen) Digital 2024SR0731156 5/29/2024
233 εᓃཫ˹̔ӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731166 5/29/2024
234 εᓃථ၍ଣ̻ၽmulti-cloud V3.0 Dmall (Shenzhen) Digital 2024SR0731161 5/29/2024
235೯̻ၽ V1.0 Dmall (Shenzhen) Digital 2024SR0731172 5/29/2024
236 εᓃ౛ʕᘒ˕˹ӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731167 5/29/2024
237 εᓃॆዚථ಻༊̻ၽ V1.0 Dmall (Shenzhen) Digital 2024SR0731162 5/29/2024
238 εᓃ˕˹ӻ୕ V1.0 Dmall (Shenzhen) Digital 2024SR0731164 5/29/2024
239 εᓃ౽ᅆϗვӻ୕ V1.1.1.0 Dmall (Shenzhen) Digital 2024SR0731160 5/29/2024
240 ౛ʕᘒAPP V1.0.14 Dmall (Shenzhen) Digital 2024SR0731174 5/29/2024
IV-11


--- page 614 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
Design
No. Copyright Registered owners Registration number
Registration
date
1. εᓃᅰοཧਯ዁Ъӻ୕DMALLOS೐ᅺᗆ Dmall Life Network ਷Ъ೮ο-2021-F-00096985 4/30/2021
2. εᓃʃDઋ̍ Dmall Life Network ਷Ъ೮ο-2021-F-00036294 2/10/2021
3.ي—ʃD Dmall Life Network ਷Ъ೮ο-2020-F-01068938 7/28/2020
4. εᓃlogoၾɹ໮ഐΥᅺ๟ο Dmall Life Network ਷Ъ೮ο-2020-F-00926009 3/24/2020
5. εᓃᄿѓႧj௃൴̹͜εᓃᅺ๟ο Dmall Life Network ਷Ъ೮ο-2020-F-00926008 3/24/2020
6. εᓃlogoᅺ๟ଡ଼ΥҖό Dmall Life Network ਷Ъ೮ο-2020-F-00926007 3/24/2020
7. εᓃlogoᅺ๟ྡҖ Dmall Life Network ਷Ъ೮ο-2020-F-00926004 3/24/2020
8. εᓃᅺ๟ο Dmall Life Network ਷Ъ೮ο-2020-F-00926005 3/24/2020
9. dmall ᅺ๟ο Dmall Life Network ਷Ъ೮ο-2020-F-00926006 3/24/2020
10.ૄҖ൥ Dmall Life Network ਷Ъ೮ο-2019-F-00841017 11/14/2019
11.يDmall Life Network ਷Ъ೮ο-2017-F-00481300 7/13/2017
12.ʮ̡ᅺႦ Dmall Life Network ਷Ъ೮ο-2017-F-00479357 7/5/2017
Patents
As of the Latest Practicable Date, we had registered the following invention related patents
which we consider to be or may be material to our business:
No. Patent Patentee
Place of
registration
Publication
number
Registration
date
1.جDmall (Shenzhen) Digital PRC CN111260829B 12/28/2021
2.ၑዚண௪ձ̙ᛘπᎷʧሯ Dmall (Shenzhen) Digital PRC CN112734962B 12/2/2022
3.ၑዚʧሯ Dmall (Shenzhen) Digital PRC CN113216790B 12/2/2022
4.ࠦޢDmall (Shenzhen) Digital PRC CN306907552S 10/29/2021
5.ࠦޢDmall (Shenzhen) Digital PRC CN306907524S 10/29/2021
6.ࠦޢDmall (Shenzhen) Digital PRC CN306893525S 10/22/2021
7.ࠦޢDmall (Shenzhen) Digital PRC CN307019191S 12/21/2021
8.ᅵዚ Dmall (Shenzhen) Digital PRC CN214540901U 10/29/2021
9.˓ዚ Dmall (Shenzhen) Digital PRC CN306722043S 7/30/2021
10.˓ዚ Dmall (Shenzhen) Digital PRC CN306550752S 5/18/2021
11.˓ዚ Dmall (Shenzhen) Digital PRC CN306579565S 6/1/2021
12.ؐࠦDmall (Shenzhen) Digital PRC CN306550882S 5/18/2021
13.ϗვዚ (MiNi ᒅ) Dmall (Shenzhen) Digital PRC CN306512389S 5/4/2021
14.ࠦޢDmall (Shenzhen) Digital PRC CN306551769S 5/18/2021
15.˓ዚ Dmall (Shenzhen) Digital PRC CN306550731S 5/18/2021
16.ԓ౽ঐᕁӻ୕ Dmall (Shenzhen) Digital PRC CN111223213B 7/9/2021
17.ӻ୕ Dmall (Shenzhen) Digital PRC CN113126979B 3/25/2022
18.ԓ౽ঐᕁછՓཥ༩ഐ࿴ Dmall (Shenzhen) Digital PRC CN211454678U 9/8/2020
19. ౽ঐᕁ Dmall (Shenzhen) Digital PRC CN305731921S 4/24/2020
20. ͂ˆѰՈ Dmall (Shenzhen) Digital PRC CN305857639S 6/19/2020
21. ɓ၇˓પԓ͂ˆѰՈ Dmall (Shenzhen) Digital PRC CN211758717U 10/27/2020
22. ɓ၇౽ঐᕁ͜༆ᕁዚ࿴ Dmall (Shenzhen) Digital PRC CN211691890U 10/16/2020
23. ϗვӻ୕ձೌɛ൴̹ Dmall (Shenzhen) Digital PRC CN210804651U 6/19/2020
24. ɓ၇౽ঐᕁ Dmall (Shenzhen) Digital PRC CN211448146U 9/8/2020
25.ٙAI ཥɿफ़ Dmall (Shenzhen) Digital PRC CN216524320U 5/13/2022
26.ཥɿफ़ Dmall (Shenzhen) Digital PRC CN216524335U 5/13/2022
27.ԣѰண௪ Dmall (Shenzhen) Digital PRC CN215416806U 1/4/2022
28.ٙAIཥɿफ़ Dmall (Shenzhen) Digital PRC CN215573304U 1/8/2022
29.ۨAIཥɿफ़ Dmall (Shenzhen) Digital PRC CN215811203U 2/11/2022
30.ݖTPS700P) Dmall (Shenzhen) Digital PRC CN307338409S 5/13/2022
31.ؐࠦDmall (Shenzhen) Digital PRC CN307448499S 7/12/2022
32.ϗვІпɓ᜗ዚ Dmall (Shenzhen) Digital PRC CN307544484S 9/13/2022
33. ϗვ̨ஷ༸ό Dmall (Shenzhen) Digital PRC CN307952814S 4/7/2023
34.˓ዚ Dmall (Shenzhen) Digital PRC CN307978864S 4/14/2023
35. ɓ၇HTML5جDmall (Shenzhen) Digital PRC CN113076234B 7/12/2022
36.eༀໄe୞၌ண௪ Dmall (Shenzhen) Digital PRC CN113282471B 9/27/2022
37.eༀໄeᎷπʧሯʿཥɿண௪ Dmall (Shenzhen) Digital PRC CN113177410B 4/25/2023
38.ၑዚ̙ᛘʧሯ Dmall (Shenzhen) Digital PRC CN112949326B 5/5/2023
39.جDmall (Shenzhen) Digital PRC CN113205642B 4/14/2023
40.Іпഐၑዚ Dmall (Shenzhen) Digital PRC CN217586029U 10/14/2022
41.ધ౜ᄃ Dmall (Shenzhen) Digital PRC CN219046508U 5/19/2023
42.Іпϗვዚ Dmall (Shenzhen) Digital PRC CN218866571U 4/14/2023
43.ஷ༸όϗვༀໄ Dmall (Shenzhen) Digital PRC CN218866565U 4/14/2023
44. ɓ၇͛ϓԨɪෂSVGجDmall (Shenzhen) Digital PRC CN112989242B 6/13/2023
45.جDmall (Shenzhen) Digital PRC CN111988750B 6/13/2023
46.ၑዚ̙ᛘʧሯ Dmall (Shenzhen) Digital PRC CN113254813B 7/18/2023
47.جDmall (Shenzhen) Digital PRC CN112070225B 10/10/2023
48.˓ዚ Dmall (Shenzhen) Digital PRC CN308250583S 9/29/2023
49.˓ዚ Dmall (Shenzhen) Digital PRC CN308256377S 10/3/2023
50.e୞၌ண௪ Dmall (Shenzhen) Digital PRC CN111950863B 9/12/2023
51.ၑዚண௪ʿπᎷʧሯ Dmall (Shenzhen) Digital PRC CN111401959B 9/29/2023
IV-12


--- page 615 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
No. Patent Patentee
Place of
registration
Publication
number
Registration
date
52.Іпഐၑዚ Dmall (Shenzhen) Digital PRC CN220252662U 12/26/2023
53.جDmall (Shenzhen) Digital PRC CN115471935B 12/26/2023
54.ࠦޢDmall (Shenzhen) Digital PRC CN308369720S 12/12/2023
55.ձༀໄ Dmall (Shenzhen) Digital PRC CN111860462B 2/20/2024
56.ਕኜձʧሯ Dmall (Shenzhen) Digital PRC CN112000667B 4/12/2024
57.ၑዚ̙ᛘʧሯ Dmall (Shenzhen) Digital PRC CN113743807B 3/5/2024
58.̨Іпഐၑዚ Dmall (Shenzhen) Digital PRC CN308516056S 3/19/2024
59.eༀໄeண௪ձʧሯ Dmall Zhilian PRC CN113792565B 2/18/2022
60.جZhilian Wuhan PRC CN113250931B 10/15/2021
61.eༀໄeཥɿண௪ʿʧሯ Zhilian Wuhan PRC CN112633262B 5/11/2021
62. ԣฦዱ૖L5 Zhilian Wuhan PRC CN306361008S 3/2/2021
63. ІпϗვዚW6ɽͣᕪ Zhilian Wuhan PRC CN306156183S 11/6/2020
64. Іпϗვዚ Zhilian Wuhan PRC CN305655795S 3/24/2020
65. ɓ၇ε̌ঐІ˴ϗვԣฦༀໄ Zhilian Wuhan PRC CN210961290U 7/10/2020
66. ɓ၇౽ঐІ˴ᒅɓ᜗ዚ Zhilian Wuhan PRC CN210600905U 5/22/2020
67. ౽ঐᙆజዱ Zhilian Wuhan PRC CN304929500S 12/4/2018
68. Іпϗვዚ Zhilian Wuhan PRC CN305119972S 4/19/2019
69.ʿண௪ Zhilian Wuhan PRC CN116226944B 8/4/2023
70.׵O2Oӻ୕ Dmall Life Network PRC CN105260873B 2/26/2021
71.ݖDmall Life Network PRC CN308232692S 9/19/2023
72.ݖDmall Life Network PRC CN308233195S 9/19/2023
73.ݖDmall Life Network PRC CN308220726S 9/12/2023
74. ዱ૖ Dmall Life Network PRC CN308384067S 12/19/2023
75.ࠦޢDmall Life Chengdu PRC CN308464883S 2/9/2024
76.eༀໄʿӻ୕ Dmall Life Chengdu PRC CN109379371B 11/23/2021
77.ਕኜ Dmall Life Chengdu PRC CN109324914B 6/22/2021
78.ձʕග໮၍છༀໄ Dmall Life Chengdu PRC CN109005301B 10/13/2020
79.ਕኜණ໊ Dmall Life Chengdu PRC CN109766210B 4/22/2022
80.ʿༀໄ Dmall Life Chengdu PRC CN109688134B 4/1/2022
81.eༀໄeཥɿண௪ձ̙ᛘπᎷʧሯ Dmall Life Chengdu PRC CN113435669B 10/28/2022
82.eༀໄeཥɿண௪ձ̙ᛘᎷπʧሯ Dmall Life Chengdu PRC CN113282326B 5/16/2023
83.ձༀໄ Dmall Life Chengdu PRC CN113438280B 2/17/2023
84. ᔝ˫ၣᗫ Dmall Life Chengdu PRC CN307082959S 1/25/2022
85.˓ዚ Dmall Life Chengdu PRC CN307192133S 3/22/2022
86.ࠦޢDmall Life Chengdu PRC CN307191789S 3/22/2022
87.˓ዚ Dmall Life Chengdu PRC CN307543778S 9/13/2022
88.ࠦޢDmall Life Chengdu PRC CN307978967S 4/14/2023
89. ᔝ˫ၣᗫண௪ʿӻ୕ Dmall Life Chengdu PRC CN218734344U 3/24/2023
90. ɓ၇ɽᅰኽ̨̻SQLجDmall Life Chengdu PRC CN113641487B 6/13/2023
91.׵SQLجDmall Life Chengdu PRC CN113641572B 6/13/2023
92.جDmall Life Chengdu PRC CN113837739B 6/13/2023
93.ၑዚ̙ᛘʧሯ Dmall Life Chengdu PRC CN114928574B 6/13/2023
94.eༀໄe୞၌ண௪ Dmall Life Chengdu PRC CN113568936B 6/13/2023
95.ਕኜ Dmall Life Chengdu PRC CN113836916B 6/20/2023
96.ਕ၌ண௪ʿπᎷʧሯ Dmall Life Chengdu PRC CN113342785B 6/27/2023
97.eༀໄeཥɿண௪ձ̙ᛘʧሯ Dmall Life Chengdu PRC CN113837694B 6/30/2023
98.جDmall Life Chengdu PRC CN113641392B 8/15/2023
99.جDmall Life Chengdu PRC CN114760127B 10/3/2023
100.جDmall Life Chengdu PRC CN114745328B 12/26/2023
101.ၑዚʧሯ Dmall Life Chengdu PRC CN113657968B 2/27/2024
102.eༀໄeཥɿண௪ʿπᎷʧሯ Dmall Life Chengdu PRC CN113836579B 4/9/2024
103. ፽Ⴁሜ͜ਗ࿒Mockձༀໄ Dmall Life Chengdu PRC CN114553929B 4/12/2024
104.࿇ᙢ̍ Dmall Life Chengdu PRC CN308546863S 3/29/2024
105.ؐࠦDmall Life Wuhan PRC CN307569971S 9/27/2022
106.ࠦޢDmall Life Wuhan PRC CN307819746S 1/31/2023
107.eༀໄeཥɿண௪ձ̙ᛘπᎷʧሯ Dmall Life Wuhan PRC CN114116067B 2/27/2024
108.eༀໄeཥɿண௪ʿπᎷʧሯ Shenzhen Enjoy PRC CN115311005B 4/7/2023
109.eༀໄʿཥɿண௪ Shenzhen Enjoy PRC CN115271602B 6/20/2023
Domain names
As of the Latest Practicable Date, we owned the following domain names which we consider to
be or may be material to our business:
No. Domain Name Registered Owner Expiry Date
1 xmdmall.com Beijing Xianmei Technology Service Co., Ltd. 3/24/2025 *
2 easydcloud.cn Dmall (Shenzhen) Digital 8/16/2025
3 easydcloud.com Dmall (Shenzhen) Digital 8/16/2025
4 dmall.com Dmall (Shenzhen) Digital 4/15/2030
5 dmall.com.hk DMALL HONG KONG LIMITED 8/14/2025
6 wesine.com.cn Zhilian Wuhan 5/7/2025
*
7 enjoydmp.com Shenzhen Enjoy Data 2/22/2025 *
8 pos99.com Shenzhen Enjoy 8/9/2025
9 enjoyit.com.cn Shenzhen Enjoy 9/10/2025
10 enjoyitcloud.com Shenzhen Enjoy 9/11/2025
Note:
* The Company intends to renew such domain name in due time when it expires.
IV-13


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Save as aforesaid, as of the Latest Practicable Date, there were no other trade or service marks,
patents, intellectual or industrial property rights which were material in relation to our business.
C. FURTHER INFORMATION ABOUT OUR DIRECTORS
1. Particulars of Directors’ service contracts and appointment letters
Executive Director
Our executive Director entered into a service contract with our Company on November 26,
2024. The term of appointment shall be for an initial term of three years from the Listing Date or until
the third annual general meeting of our Company after the Listing Date, whichever is sooner (subject
to retirement as and when required under the Articles of Association). Either party may terminate the
agreement by giving not less than three months’ written notice.
Non-executive Directors
Each of our non-executive Directors entered into an appointment letter with our Company
either on October 24, 2023 or November 26, 2024. The term of appointment shall be for an initial term
of three years from the Listing Date or until the third annual general meeting of our Company after the
Listing Date, whichever is sooner (subject to retirement as and when required under the Articles of
Association). Either party may terminate the agreement by giving not less than three months’ written
notice.
Independent non-executive Directors
Each of our independent non-executive Directors entered into an appointment letter with our
Company on November 26, 2024. The term of appointment shall be for an initial term of three years
from the Listing Date or until the third annual general meeting of our Company after the Listing Date,
whichever is sooner (subject to retirement as and when required under the Articles of Association).
Either party may terminate the agreement by giving not less than three months’ written notice.
2. Remuneration of Directors
(a) Save as disclosed above, none of our Directors has or is proposed to have a service
contract with any member of our Group other than contracts expiring or determinable by
the employer within one year without the payment of compensation (other than statutory
compensation).
(b) The aggregate amount of emoluments granted to our Directors by our Group in 2023 was
RMB4.1 million.
(c) Under the arrangements currently in force, we estimate that the aggregate remuneration
payable to, and benefits in kind receivable by, our Directors by any member of our Group
in respect of the year ending December 31, 2024 is approximately RMB4.9 million.
3. Disclosure of interests
Interests and short positions of our Directors in the shares of our Company or our associated
corporations following completion of the Global Offering
Immediately following completion of the Global Offering (assuming the Over-allotment Option
is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share
IV-14


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Incentive Schemes), the interests or short positions of our Directors and chief executives in the Shares,
underlying shares and debentures of our Company and its associated corporations, within the meaning
of Part XV of the SFO, which will have to be notified to our Company and the Stock Exchange
pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which he/
she is taken or deemed to have under such provisions of the SFO), or which will be required, pursuant
to section 352 of the SFO, to be recorded in the register referred to therein, or which will be required to
be notified to our Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Companies contained in the Listing Rules, will be as follows:
(i) Interest in Shares
Name of director Nature of interest Number of Shares
Approximate percentage of
interest in our Company
immediately after the
Global Offering(1)
Mr. ZHANG Feng ................... Beneficial owner 6,900,000 (L) (2) 0.78%
Beneficiary of a trust 5,000,000 (L) (3) 0.56%
Mr. CHEN Zhiyu ................... Beneficiary of a trust 3,698,734 (L) (3) 0.42%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no Shares are issued under the Share
Incentive Plans.
(2) Represents Mr. Zhang’s entitlement to receive up to 5,900,000 Shares pursuant to the exercise of options granted to him under the 2016
Share Incentive Plan and up to 1,000,000 Shares pursuant to the vesting of the RSUs granted to him under the 2016 Share Incentive Plan,
subject to the conditions (including vesting conditions) of those options and RSUs.
(3) Represents the Shares held by Vigorous Link Group Limited for Mr. Zhang and Mr. Chen, respectively. Vigorous Link Group Limited is
a limited liability company incorporated under the laws of the BVI and is wholly-owned by a trust which holds Shares for the benefit of
certain Directors, senior management and employees of our Group. Pursuant to the relevant trust arrangement, the exercise of the voting
rights attached to all the Shares held by Vigorous Link Group Limited is ultimately directed and controlled by the Board.
Interests and short positions disclosable under Divisions 2 and 3 of Part XV of the SFO
For information, so far as is known to our Directors or chief executive, of each person, other
than our Director or chief executive, who immediately following completion of the Global Offering
(assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no
Shares are issued under the Share Incentive Plans) will have an interest or short position in the Shares
or underlying shares of our Company which would fall to be disclosed to our Company 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 issued voting shares of any class of shares of any other member of our Group, see
“Substantial Shareholders.”
Save as set out above, as of the Latest Practicable Date, our Directors were not aware of any
persons who would, immediately following the completion of the Global Offering and taking no
account of any Shares which may be issued pursuant to the exercise of the options granted under the
Share Incentive Plans, be interested, directly or indirectly, in 10% or more of the nominal of any class
of share capital or shares carrying rights to vote in all circumstances at general meetings of any
member of our Group or had option in respect of such capital.
D. SHARE INCENTIVE PLANS
1. 2016 Share Incentive Plan
The following is a summary of the principal terms of the 2016 Share Incentive Plan. After the
Listing, the 2016 Share Incentive Plan will not involve the grant of any Awards (defined below) after
Listing and will not be subject to Chapter 17 of the Listing Rules.
IV-15


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Purpose
The purpose of the 2016 Share Incentive Plan is to promote the success and enhance the value
of our Company by linking the personal interests of the directors, senior management and employees to
those of the Company’s shareholders and by providing these individuals with incentives for
outstanding performance.
Eligible participants
Those eligible to participate in the 2016 Share Incentive Plan include technology personnel,
business personnel, members of middle-level management or senior management and any persons
agreed on by the Board (the “ Participants”).
Types of awards
The 2016 Share Incentive Plan permits the awards of options (“ Options”) and restricted share
units (“RSUs”) (the “Award”).
Scheme Limit
The overall limit on the number of Shares which may be issued pursuant to all Awards under
the 2016 Plan (the “ Equity Incentive Pool ”) is a maximum of 99,850,000 Shares, of which Options
shall consist of 50,000,000 Shares and RSUs shall consist of 49,850,000 Shares.
Administration
The 2016 Share Incentive Plan shall be administered by Shareholders’ meetings, or upon
authorization by Shareholders’ resolution, by the Board or other units of the Company so authorized.
(the “Administrator”). Subject to the provisions thereunder, the Administrator shall have the authority
in its sole discretion to, among others:
(i) determine the list of Participants to whom Awards may be granted;
(ii) determine the type of Award;
(iii) determine the number of Shares to be covered by each Award;
(iv) determine the vesting period, exercise period, and exercise price of each Award;
(v) determine to cancel or rescind Awards which have been granted but not vested;
(vi) determine the modification, suspension or termination of the 2016 Share Incentive Plan;
and
(vii) any other matters related to the implementation of the 2016 Share Incentive Plan.
Grant of awards
Awards granted will be evidenced by an agreement (the “ Award Agreement ”) between the
Company and the Participant. The Award Agreement shall set forth the terms, conditions and
limitations for each Award.
IV-16


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Terms and conditions of RSUs
(i) Grant of RSUs
The Administrator may, at any time and from time to time, grant RSUs to Participants as the
Administrator, in its or his sole discretion, shall determine. The Administrator, in its or his sole
discretion, shall determine the number of RSUs to be granted to each Participant.
(ii) Vesting period
The vesting period shall commence a year after the grant date. Provided that the grantee shall
continue to be a full-time employee of the Company, 25% of the RSUs granted in the Award shall vest
in the grantee upon the second anniversary of the grant date and every anniversary of the same
thereafter.
(iii) Acceleration
If there occurs an event of (i) change of control of the company (including any merger or
acquisition of the Company, or other transactions with other entities (including but not limited to
reorganization, mergers and acquisitions, equity transfers) resulting in the total voting rights of the
original shareholders of the Company being lower than 50% of the voting rights of the Company after
the transaction); (ii) the Company sells substantially all or most of its core assets; or (iii) the Company
is legally dissolved, (each an “ Exit Event ”) the Administrator, in its or his sole discretion, shall
determine whether the vesting date of any RSUs will be accelerated within five business days of the
event.
Where an Exit Event occurs, a grantee shall, in respect of RSUs which have not been exercised,
issue a notice to the Company for the exercise of the said RSUs (“ Exercise Notice ”) within 10
business days of the Exit Event. If a grantee fails to give such a notice, any such RSUs shall
automatically lapse, and the grantee shall cease to have any rights in such RSUs.
So far as applicable laws are complied with, where an Exit Event occurs, a grantee who has
exercised RSUs has the right to: (i) acquire the corresponding Shares, or (ii) deal with or dispose of
RSUs which have vested in the grantee for benefit in accordance with the Company’s Articles of
Association or any such stipulations as resolved in Shareholders’ meetings.
(iv) Exercise of RSUs
An RSU may be exercised in accordance with the terms of the 2016 Share Incentive Plan at any
time during a period to be determined by each grantee, which period may commence on the vesting
date or the Listing Date, whichever is later but shall end in any event not later than 10 years from the
vesting date. The exercise of RSUs is subject to the completion of the Listing of the Company.
A grantee does not enjoy any rights as a Shareholder in respect of RSUs which have not been
exercised.
Unless provisions for acceleration apply, the Board shall, within 20 business days from the date
when a grantee issues a valid Exercise Notice to the Company in accordance with the provisions of the
2016 Share Incentive Plan, the Award Agreement and any applicable laws, enter the name of the
grantee into the Company’s register of members, upon which the grantee becomes a Shareholder
holding the corresponding number of Shares and enjoys relevant rights as a Shareholder.
IV-17


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Terms and conditions of Options
(i) Grant of option
The Administrator may, at any time and from time to time, grant Options to Participants as the
Administrator, in its or his sole discretion, shall determine. The Administrator, in its or his sole
discretion, shall determine the number of Options to be granted to each Participant.
(ii) Vesting period
The vesting period shall commence a year after the grant date. Provided that the grantee shall
continue to be a full-time employee of the Company, 25% of the Option Shares granted in the Award
shall vest in the grantee upon the second anniversary of the grant date and every anniversary of the
same thereafter.
(iii) Exercise of option
An Option may be exercised in accordance with the terms of the 2016 Share Incentive Plan at
any time during a period to be determined by each grantee, which period may commence on the
vesting date but shall end in any event not later than 10 years from the vesting date. The exercise of
Options is subject to the completion of the Listing of the Company. Any Option which is not exercised
within the exercise period shall lapse and re-enter the Company’s Equity Incentive Pool. The grantee
shall cease to have any right in Options which have lapsed.
The Administrator, in its sole discretion, shall determine the exercise price of the Options.
(iv) Acceleration
If there occurs an event of (i) change of control of the company (including any merger or
acquisition of the Company, or other transactions with other entities (including but not limited to
reorganization, mergers and acquisitions, equity transfers) resulting in the total voting rights of the
original shareholders of the Company being lower than 50% of the voting rights of the Company after
the transaction); (ii) the Company sells substantially all or most of its core assets; or (iii) the Company
is legally dissolved, (each an “ Exit Event ”) the Administrator shall in its sole discretion, shall
determine whether the vesting date of any Options will be accelerated within five business days of the
event.
Where an Exit Event occurs, a grantee shall, in respect of Options which have not been
exercised, issue a notice to the Company for the exercise of the said Options (“ Exercise Notice ”)
within 10 business days of the Exit Event. If a grantee fails to give such a notice, any such Options
shall automatically lapse, and the grantee shall cease to have any rights in such Options.
Cancelation and termination of Awards
If a grantee commits (i) a serious violation of the Company’s rules and regulations; (ii) a
serious dereliction of duty, malpractice or corruption; (iii) any act of dishonesty, including but not
limited to falsification of information during job onboarding, or deceiving internal and external
customers, etc.; (iv) breach of confidence; (v) being investigated for criminal liabilities; (vi) violating
non-competition, full-time employment and non-solicitation obligations, (vii) fabricating facts so as to
damage the Company’s reputation; and (viii) any other act that causes substantial losses to the
IV-18


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Company, (each an “ Act of Wrongdoing ”), regardless of whether the Company terminates its
employment relationship with the grantee, and unless the Administrator determines otherwise:
(1) the Company has the right to acquire without consideration or cancel any unvested
Options or RSUs or any Options or RSUs which have vested but not yet been exercised;
(2) the grantee ceases to have any rights in the acquired or canceled Options or RSUs from the
date on which the Board resolves to acquire or cancel the Award.
For termination of employment for any reason other than any Act of Wrongdoing, unless the
Administrator determines otherwise:
(1) the Company has the right to acquire without consideration or cancel any unvested
Options or RSUs held by the grantee. The grantee shall cease to have any right in the said
Options or RSUs;
(2) the grantee reserves the right to exercise Options/RSUs which have vested but unexercised
and to dispose of Options or RSUs which have been exercised.
Any Options or RSUs which the Company acquires without consideration or cancels shall re-enter the
Company’s Equity Incentive Pool.
Restrictions on transfer of Awards
Prior to the Listing of the Company and without the Board’s consent, a grantee shall not, by
assignment, pledge, trust, or any other means, dispose of part or all of the Options or RSUs held by
him/her (whether vested or not) or otherwise attach third-party rights thereto.
After the Listing of the Company, all or part of the unvested Options or RSUs held by a grantee
shall still be subject to the limitation above. However, a grantee shall be free to dispose of any Options
or RSUs which have vested in him / her.
Duration
The 2016 Share Incentive Plan shall continue in effect for a term of five years from the relevant
effective date, and hence has expired in 2021.
Amendment, modification or termination
The Shareholders’ meeting may at any time amend, alter, suspend, or terminate the 2016 Share
Incentive Plan.
2. 2020 Share Incentive Plan
The following is a summary of the principal terms of the 2020 Share Incentive Plan of the
Company as approved and adopted by our Board and our shareholders in March 2021 and April 2021,
respectively. The 2020 Share Incentive Plan does not involve the grant of any Awards (defined below)
after Listing and is not subject to the provisions of Chapter 17 of the Listing Rules.
IV-19


--- page 622 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
Purpose
The purposes of the 2020 Share Incentive Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional incentives to employees, and
directors of the Group and to promote the success of the Company’s business.
Eligible participants
Those eligible to participate in the 2020 Share Incentive Plan include employees of our Group
as well as any persons agreed on by the Board or by any director or representative authorized by the
Board (the “Participants”).
Types of awards
The Administrator (as defined below) may, from time to time, select from among all
Participants to whom awards in the form of share options (“ Options”) or a right to purchase restricted
share units (“ RSUs”) (collectively, “ Awards”) will be granted, and will determine the nature and
amount of each Awards.
Scheme Limit
The overall limit on the number of Shares which may be issued pursuant to all Awards under
the 2020 Plan (the “ Equity Incentive Pool ”) is the sum of (i) a maximum of 60,000,000 Shares which
may be issued in the form of Options or RSUs, and (ii) other Shares as approved by the Board,
including such number of Shares equivalent to the unused portion of the scheme limit of the 2016
Share Incentive Plan as at the expiry of such plan.
Administration
The 2020 Share Incentive Plan shall be administered by the Board (the “ Administrator”).
In relation to the 2020 Share Incentive Plan, subject to the provisions thereunder, the
Administrator shall have the authority in its sole discretion to, among others:
(i) determine the list of Participants to whom Awards may be granted;
(ii) determine the type of Award;
(iii) determine the number of Shares to be covered by each Award;
(iv) determine the vesting and removal of restrictions of RSUs (including acceleration), the
vesting and exercise of Options (including acceleration), the exercise price of RSUs and
Options, and the proportion of RSUs and Options in the Equity Incentive Pool;
(v) determine to cancel or rescind the granted RSUs and Options that have not vested or due
to serious faults;
(vi) determine the modification, suspension or termination of the 2020 Share Incentive Plan;
and
(vii) any other matters related to the implementation of the 2020 Share Incentive Plan.
IV-20


--- page 623 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
Grant of Awards
The Administrator is authorized to grant Awards in the form of Options or RSUs to Participants
in accordance with the terms of the 2020 Share Incentive Plan. Awards granted will be evidenced by an
option agreement or restricted share unit purchase agreement (“ Award Agreement ”) between the
Company and the grantee.
Terms and conditions of RSUs
(i) Grant of RSUs
The Administrator, at any time and from time to time, may grant RSUs to Participants as the
Administrator, in its or his sole discretion, shall determine.
(ii) Vesting period
The vesting period shall commence a year after the grant date. Provided that the grantee shall
continue to be a full-time employee of the Company, 25% of the RSUs granted in the Award shall vest
in the grantee upon the second anniversary of the grant date and every anniversary of the same
thereafter.
(iii) Acceleration
If there occurs an event of (i) change of control of the company (including any merger or
acquisition of the Company, or other transactions with other entities (including but not limited to
reorganization, mergers and acquisitions, equity transfers) resulting in the total voting rights of the
original shareholders of the Company being lower than 50% of the voting rights of the Company after
the transaction); (ii) the Company sells substantially all or most of its core assets; or (iii) the Company
is legally dissolved (each an “ Exit Event ”), the Company shall give written notice (including via
e-mail) to each grantee and the Board shall determine whether the vesting of RSUs shall be accelerated
within reasonable time.
So far as applicable laws are complied with, where an Exit Event occurs, a grantee has the right
to, in respect of RSUs of which restrictions have been removed: (i) acquire the equity interest in the
corresponding Shares, or (ii) deal with or dispose of RSUs which have vested in the grantee for benefit
in accordance with the Company’s Articles of Association or any such stipulations as resolved in
Board meetings.
(iv) Removal of Restrictions on RSUs
The restrictions on RSUs may only be removed after the listing of the Company’s shares on any
domestic or international stock exchange (the “ Condition Precedent”), unless otherwise authorized by
the Board.
Unless provisions for acceleration apply, upon the satisfaction of the Condition Precedent,
grantees shall have the right to have their name entered into the Company’s register of members or the
employee stock ownership platform in accordance with stipulations in the 2020 Stock Incentive Plan
and the corresponding Award Agreement.
IV-21


--- page 624 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
Terms and conditions of Options
(i) Grant of option
The Administrator, at any time and from time to time, may grant Options to Participants as the
Administrator, in its or his sole discretion, shall determine. The Administrator, in its or his sole
discretion, shall determine matters including but not limited to the list of grantees, the number of
Options to be granted to each grantee, and exercise price.
(ii) Vesting period
The vesting period shall commence a year after the grant date. Provided that the grantee shall
continue to be a full-time employee of the Company, 25% of the Option Shares shall vest in the
grantee upon the second anniversary of the grant date and every anniversary of the same thereafter.
(iii) Acceleration
If there occurs an event of (i) change of control of the company (including any merger or acquisition
of the Company, or other transactions with other entities (including but not limited to reorganization,
mergers and acquisitions, equity transfers) resulting in the total voting rights of the original shareholders of
the Company being lower than 50% of the voting rights of the Company after the transaction); (ii) the
Company sells substantially all or most of its core assets; or (iii) the Company is legally dissolved (each an
“Exit Event”), the Company shall give written notice (including via e-mail) to each grantee and the Board
shall determine whether the vesting of Options shall be accelerated within reasonable time.
Where an Exit Event occurs, a grantee shall, in respect of Options which have not been
exercised, issue a notice to the Company for the exercise of the said Options (“ Exercise Notice ”)
within 10 business days of the Exit Event. If a grantee fails to give such a notice, any such Options
shall automatically lapse, and the grantee shall cease to have any rights in such Options.
(iv) Exercise of option
An Option may be exercised in accordance with the terms of the 2020 Share Incentive Plan at
any time during a period to be determined by each grantee, which period may commence on the
vesting date but shall end in any event not later than five years from the vesting date, unless otherwise
approved by the Board. To exercise an Option, a grantee shall pay an exercise price according to this
2020 Share Incentive Plan as well as any relevant Award Agreement. A grantee shall cease to have any
right in an Option which has lapsed, either because the Option is not exercised by the grantee or for
which the grantee has not paid the exercise price. Such Option shall re-enter the Company’s Equity
Incentive Pool. The exercise of Options is subject to the satisfaction of the Condition Precedent.
Restrictions on transfer of Awards
Prior to the Listing of the Company and without the Board’s consent, a grantee shall not, by
assignment, pledge, trust, or any other means, dispose of part or all of the Options or RSUs held by
him/her (whether vested or not) or otherwise attach third-party rights thereto.
After the Listing of the Company, all or part of the unvested Options or RSUs held by a grantee
shall still be subject to the limitation above.
Cancelation and termination of Awards
If a grantee commits (i) a serious violation of the Company’s rules and regulations; (ii) a
serious dereliction of duty, malpractice or corruption; (iii) any act of dishonesty, including but not
IV-22


--- page 625 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
limited to falsification of information during job onboarding, or deceiving internal and external
customers, etc.; (iv) breach of confidence; (v) being investigated for criminal liabilities; (vi) violating
non-competition, full-time employment and non-solicitation obligations, (vii) fabricating facts so as to
damage the Company’s reputation; and (viii) any other act that causes substantial losses to the
Company, (each an “ Act of Wrongdoing ”), regardless of whether the Group terminates its
employment relationship with the grantee, the grantee shall agree that all Options or RSUs held by him
/ her be automatically rescinded by the Company.
A grantee shall be deemed to irrevocably agree to relinquish all Options or RSUs held by him /
her (whether vested or not) as soon as the grantee is in breach of his / her non-competition or non-
solicitation obligations.
If a grantee’s employment is terminated without the grantee having committed any Act of
Wrongdoing, the grantee shall be considered to have irrevocably agreed to automatically relinquish all
unvested Options or RSUs held by him / her and may only exercise vested Options or RSUs upon
satisfaction of the Conditions Precedent and after the lock-up period, unless otherwise stipulated by the
resolution of the Board.
Death, Illnesses, and Incapacitation
If a grantee is unable to work or terminates his / her employment due to work-related death or
injuries, the Board shall decide whether to accelerate the vesting of the unvested Options or RSUs held
by the grantee. The vested Options or RSUs shall be inherited by the person with the right to inherit.
If a grantee is unable to work or terminates his / her employment due to death, illnesses, or
incapacitation because of other causes unrelated to his / her employment, unless otherwise approved by
the Board, all vested Options or RSUs which have not been exercised or in the case of RSUs the
restrictions on which have not been removed shall automatically lapse and deemed as acquired or
canceled by the Company. The grantee shall cease to have any rights in such Options or RSUs.
3. Outstanding Awards granted under the 2016 Share Incentive Plan and the 2020 Share
Incentive Plan
Overview for the 2016 Share Incentive Plan
As of the Latest Practicable Date, the aggregate number of Shares underlying the outstanding
Options granted under the 2016 Share Incentive Plan amounted to 29,755,750 Shares, representing
approximately 3.36% of the issued Shares immediately following the completion of the Global Offering
(assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no
further Shares are issued under the Share Incentive Plans). The outstanding Options are held by 478
grantees, including a Director, senior management and current and former employees and a consultant of
the Group. The exercise price of the outstanding Option ranges between US$0.50 and US$1.50 per
Share. No consideration was payable by the grantees for the grant of Options under the 2016 Share
Incentive Plan. As of the Latest Practicable Date, none of the outstanding Option has been exercised.
Assuming full issuance of Shares pursuant to all the outstanding Options granted under the 2016 Share
Incentive Plan, the shareholding of our Shareholders immediately following completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no further Shares are issued under the Share Incentive Plans) will be diluted by approximately 3.25%
and the dilutive effect on our earnings per Share would be approximately 3.25%.
IV-23


--- page 626 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
As of the Latest Practicable Date, the aggregate number of Shares underlying the outstanding
RSUs granted under the 2016 Share Incentive Plan amounted to 11,605,109 Shares, representing
approximately 1.31% of the issued Shares immediately following the completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no further Shares are issued under the Share Incentive Plans). The outstanding RSUs are held by
115 grantees, including a Director, senior management and current employees of the Group. As of the
Latest Practicable Date, 11,605,109 of the outstanding RSUs have vested. Assuming full issuance of
Shares pursuant to all the outstanding RSUs granted under the 2016 Share Incentive Plan, the
shareholding of our Shareholders immediately following completion of the Global Offering (assuming
the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further
Shares are issued under the Share Incentive Plans) will be diluted by approximately 1.29% and the
dilutive effect on our earnings per Share would be approximately 1.29%.
The Company will not grant further Options or RSUs under the 2016 Share Incentive Plan after
the Listing.
Overview for the 2020 Share Incentive Plan
As of the Latest Practicable Date, the aggregate number of Shares underlying the outstanding
Options granted under the 2020 Share Incentive Plan amounted to 31,186,250 Shares, representing
approximately 3.52% of the issued Shares immediately following the completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no further Shares are issued under the Share Incentive Plans). The outstanding Options are held by
868 grantees, including a member of the senior management of the Company and employees or former
employees of the Group (and not Directors or other connected persons of the Company). The exercise
price of the outstanding Option ranges between US$1.50 and US$2.716 per Share. No consideration
was payable by the grantees for the grant of Options under the 2020 Share Incentive Plan. As of the
Latest Practicable Date, none of the outstanding Option has been exercised. Assuming full issuance of
Shares pursuant to all the outstanding Options granted under the 2020 Share Incentive Plan, the
shareholding of our Shareholders immediately following completion of the Global Offering (assuming
the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further
Shares are issued under the Share Incentive Plans) will be diluted by approximately 3.40% and the
dilutive effect on our earnings per Share would be approximately 3.40%.
As of the Latest Practicable Date, the aggregate number of Shares underlying the outstanding
RSUs granted under the 2020 Share Incentive Plan amounted to 6,460,200 Shares, representing
approximately 0.73% of the issued Shares immediately following the completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no further Shares are issued under the Share Incentive Plans). The outstanding RSUs are held by
100 grantees including a member of the senior management of the Company and employees or former
employees of the Group (and not Directors or other connected persons of the Company). As of the
Latest Practicable Date, 1,587,500 of the outstanding RSUs have vested and the rest remain unvested.
Assuming full issuance of Shares pursuant to all the outstanding RSUs granted under the 2020 Share
Incentive Plan, the shareholding of our Shareholders immediately following completion of the Global
Offering (assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted
and no further Shares are issued under the Share Incentive Plans) will be diluted by approximately
0.72% and the dilutive effect on our earnings per Share would be approximately 0.72%.
IV-24


--- page 627 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
The Company will not grant further Options or RSUs under the 2020 Share Incentive Plan after
the Listing.
Details of the outstanding Awards
The table below shows the details of the outstanding Awards granted to the Director(s) and
member(s) of the senior management of the Company under the 2016 Share Incentive Plan and the
2020 Share Incentive Plan:
Name Position Address Plan
Number of
Shares
underlying
Awards
outstanding
Exercise
Price (per
Share)(US$)
Date of
Grant
Expiry
Date
Vesting
Period(2)(3)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
Zhang
Feng . . .
Executive
Director,
President
No. 101, Gate 2,
Building 5, Yard
65, Jingyang East
Street,
Shijingshan District,
Beijing, China
2016 Share
Incentive
Plan
5,900,000
(Options)
1.00 Jan 31, 2018 Jan 31,
2033
4 years 0.67%
2016 Share
Incentive
Plan
1,000,000
(RSUs)
N/A Jul 1, 2015 Jul 1, 2030 4 years 0.11%
Marcus
Spurrell .
Co-chief
executive
officer of
international
business
8/F Haidian Wen
Hua Yi Shu
Building, Haidian
District, Beijing,
China
2020 Share
Incentive
Plan
2,000,000
(Options)
2.716 Aug 14, 2023 5 years after
the later of
the Listing
Date and
the vesting
date
4 years 0.23%
Wang Yi . . Vice
president,
board
secretary,
joint
company
secretary
7-7-703, Wan Quan
Zhuang Bei
Community,
Haidian District,
Beijing, China
2020 Share
Incentive
Plan
300,000
(RSUs)
N/A Oct 7, 2023 5 years after
the later of
the Listing
Date and
the vesting
date
4 years 0.03%
Total: ..... 3 grantees 9,200,000 1.04%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The exercise period of the Options shall commence from the date on which the relevant Options become vested or upon the completion
of the Global Offering, whichever is later, and end on the expiry date, subject to the terms of the 2016 Share Incentive Plan and the share
option award agreement signed by the grantee.
(3) The vesting period begins one year after the date of grant.
IV-25


--- page 628 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
The table below shows the details of the outstanding Awards granted to the employees or
former employees of the Group (who are not Director(s), member(s) of the senior management or
connected persons of the Company) holding one million or more outstanding Awards under the 2016
Share Incentive Plan and/or the 2020 Share Incentive Plan:
Name Position Address Plan
Number of
Shares
underlying
Awards
outstanding
Exercise
Price (per
Share)(US$) Date of Grant Expiry Date
Vesting
Period(2)(3)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
Xie
Dong . . .
Vice
President
Room 201,
Gate 5, No.
12 Wan
Shou Lu Xi
Street,
Haidian
District,
Beijing,
China
2016 Share
Incentive
Plan
1,500,000
(Options)
1.50 Mar 30, 2020 Mar 30, 2035 4 years 0.17%
2016 Share
Incentive
Plan
500,000
(Options)
1.00 Jan 1, 2018 Jan 1, 2033 4 years 0.06%
2020 Share
Incentive
Plan
1,500,000
(RSUs)
N/A Mar 30, 2020 5 years after
the later of
the Listing
Date and the
vesting date
4 years 0.17%
2020 Share
Incentive
Plan
3,000
(Options)
2.716 Feb 1, 2023 5 years after
the later of
the Listing
Date and the
vesting date
4 years 0.00%
Liu
Jiangfeng
Former
director
Unit A,
30/F,
Building
19, Double
Cove
Starview, 8
Wu Kai Sha
Road, Ma
On Shan,
New
Territories,
Hong Kong
2016 Share
Incentive
Plan
2,000,000
(RSUs)
N/A Jan 1, 2018 Jan 1, 2028 Immediate
vesting
0.23%
Peng Yi
Jung . . .
Director of
insignificant
subsidiary
1301 Gate 2
Building 2
Hong Shan
Guo Ji
Apartments,
No. 89
Shuangqing
Road,
Haidian
District,
Beijing,
China
2016 Share
Incentive
Plan
1,325,000
(RSUs)
N/A Jun 17, 2015
to Apr 1,
2018
Jun 17, 2030
to Apr 1,
2033
4 years 0.15%
2020 Share
Incentive
Plan
75,000
(RSUs)
N/A Feb 1, 2020 5 years after
the later of
the Listing
Date and the
vesting date
4 years 0.01%
Xu Ying . . Director of
insignificant
subsidiary
#57-10, 2
Marina
Blvd,
Singapore
018987
2016 Share
Incentive
Plan
1,100,000
(Options)
1.00 Jan 1, 2018 Jan 1, 2028 Immediate
vesting
0.12%
Total: ....4 grantees 8,003,000 0.90%
IV-26


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The exercise period of the Options shall commence from the date on which the relevant Options become vested or upon the completion
of the Global Offering, whichever is later, and end on the expiry date, subject to the terms of the 2016 Share Incentive Plan and the share
option award agreement signed by the grantee.
(3) The vesting period begins one year after the date of grant.
The table below shows the details of the outstanding Awards granted to consultant(s) of the
Group under the 2016 Share Incentive Plan and the 2020 Share Incentive Plan:
Name Position Address Plan
Number of
Shares
underlying
Awards
outstanding
Exercise
Price (per
Share)(US$)
Date of
Grant
Expiry
Date
Vesting
Period(2)(3)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
H o uJ i n........... External
Consultant
No. 32,
Building 7,
Cement
Plant
Building,
Shijingshan
District,
Beijing
2016 Share
Incentive
Plan
10,000
(Options)
1.00 Jan 19,
2018
Jan 19,
2034
4 years 0.00%
Total: ............1 grantee 10,000 0.00%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The exercise period of the Options shall commence from the date on which the relevant Options become vested or upon the completion
of the Global Offering, whichever is later, and end on the expiry date, subject to the terms of the 2016 Share Incentive Plan and the share
option award agreement signed by the grantee.
(3) The vesting period begins two years after the date of grant.
The table below shows the details of the outstanding Options granted to the remaining grantees
under the 2016 Share Incentive Plan, who are employees or former employees of the Group (and not
Directors, members of the senior management or other connected persons of the Company or
consultants of the Group) holding less than one million outstanding Awards under the 2016 Share
Incentive Plan and/or the 2020 Share Incentive Plan:
Category by number of
underlying Shares
Number of
grantees
Number of
Shares
underlying
Options
outstanding
Exercise
Price (per
Share)(US$) Date of Grant Expiry Date
Vesting
Period(2)(3)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
More than 400,000 ...... 0 — — — — — —
200,001 to 400,000 ..... 1 0 2,640,000 0.60 to
1.50
Jul 28, 2015 to
Mar 9, 2020
Jul 28, 2030 to
Mar 9, 2035
4 years 0.30%
1 to 200,000 ........... 4 6 4 18,105,750 0.50 to
1.50
May 1, 2015 to
Dec 9, 2019
May 1, 2030
to Dec 9, 2034
4 years 2.04%
Total: ................ 4 7 4 grantees 20,745,750 2.34%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
IV-27


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
(2) The exercise period of the Options shall commence from the date on which the relevant Options become vested or upon the completion
of the Global Offering, whichever is later, and end on the expiry date, subject to the terms of the 2016 Share Incentive Plan and the share
option award agreement signed by the grantee.
(3) The vesting period begins one year after the date of grant.
The table below shows the details of the outstanding RSUs granted to the grantees under the 2016
Share Incentive Plan, who are employees or former employees of the Group (and not Directors, members of
the senior management or other connected persons of the Company or consultants of the Group) holding
less than one million outstanding Awards under the 2016 Share Incentive Plan and/or the 2020 Share
Incentive Plan:
Category by number of
underlying Shares
Number of
grantees
Number of
Shares
underlying
RSUs
outstanding Date of Grant Expiry Date
Vesting
Period(2)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
More than 400,000 ................. 1 525,000 Apr 23, 2015 Apr 23, 2030 4 years 0.06%
200,001 to 400,000 ................. 5 1,407,500 Jul 28, 2015 to
Sep 1, 2018
Sep 1, 2028 to
Jul 12, 2032
Immediate
vesting to
4 years
0.16%
1 to 200,000 ...................... 1 0 6 5,347,609 Mar 18, 2015 to
Mar 9, 2020
Mar 18, 2030 to
Mar 9, 2035
4 years 0.60%
Total: ............................ 1 1 2 grantees 7,280,109 0.82%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The vesting period begins one year after the date of grant.
The table below shows the details of the outstanding Options granted to the remaining grantees
under the 2020 Share Incentive Plan, who are employees or former employees of the Group (and not
Directors, members of the senior management or other connected persons of the Company or
consultants of the Group) holding less than one million outstanding Awards under the 2016 Share
Incentive Plan and/or the 2020 Share Incentive Plan:
Category by number of
underlying Shares
Number of
grantees
Number of
Shares
underlying
Options
outstanding
Exercise
Price (per
Share)(US$) Date of Grant Expiry Date
Vesting
Period(2)(3)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
More than 400,000 ..... 5 2,813,375 1.50 to 2.716 Feb 1, 2020 to
Sep 11, 2023
5 years after the
later of the
Listing Date
and the vesting
date
4 years 0.32%
200,001 to 400,000 ..... 1 2 3,217,500 1.50 to 2.716 Dec 2, 2019
to Feb 1, 2024
5 years after the
later of the
Listing Date
and the vesting
date
3t o4
years
0.36%
1 to 200,000 .......... 8 4 9 23,152,375 1.50 to 2.716 Nov 1, 2019
to Apr 1,
2024
5 years after the
later of the
Listing Date
and the vesting
date
3t o
4 years
2.61%
Total: ............... 8 6 6 grantees 29,183,250 3.29%
IV-28


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The exercise period of the Options shall commence from the date on which the relevant Options become vested or upon the completion
of the Global Offering, whichever is later, and end on the expiry date, subject to the terms of the 2020 Share Incentive Plan and the share
option award agreement signed by the grantee.
(3) The vesting period begins one year after the date of grant.
The table below shows the details of the outstanding RSUs granted to the remaining grantee(s)
under the 2020 Share Incentive Plan, who are employee(s) of the Group (and not Directors, members
of the senior management or other connected persons of the Company or consultants of the Group)
holding less than one million outstanding Awards under the 2016 Share Incentive Plan and/or the 2020
Share Incentive Plan:
Category by number of
underlying Shares
Number of
grantees
Number of
Shares
underlying
RSUs
outstanding Date of Grant Expiry Date
Vesting
Period(2)
Approximate
percentage of
issued Shares
immediately
after
completion of
Global
Offering
(1)
More than 400,000 .............. 0 — — — — —
200,001 to 400,000 ............. 6 2,002,700 Sep 13, 2021 to
Nov 1, 2024
5 years after the later
of the Listing Date
and the vesting date
3t o4
years
0.23%
1 to 200,000 ................... 9 1 2,582,500 Jun 29, 2020 to
Nov 1, 2024
5 years after the later
of the Listing Date
and the vesting date
3t o4
years
0.29%
Total: ........................ 9 7 grantees 4,585,200 0.52%
Notes:
(1) Assuming the Over-allotment Option is not exercised, the Convertible Bond is not converted and no further Shares are issued under the
Share Incentive Plans.
(2) The vesting period begins one year after the date of grant.
4. The 2024 First Share Incentive Plan
The following is a summary of the principal terms of the 2024 First Share Incentive Plan
conditionally adopted by our Shareholders by way of a written resolution passed on November 27,
2024 and which shall take effect from the Listing Date. The terms of the 2024 First Share Incentive
Plan will be governed by Chapter 17 of the Listing Rules. For the purpose of the 2024 First Share
Incentive Plan, references to Shares include treasury shares, and references to the issue of or
subscription for Shares include the transfer of treasury shares.
(a) Purpose of the 2024 First Share Incentive Plan
The purpose of the 2024 First Share Incentive Plan is to provide the Company with a flexible
means of remunerating, incentivizing, retaining, rewarding, compensating and/or providing benefits to
eligible participants; to align the interests of eligible participants with those of the Company and
Shareholders by providing such eligible participants with the opportunity to acquire shareholding
interests in the Company; and to encourage eligible participants to contribute to the long-term growth
and profitability of the Company and to enhance the value of the Company and its Shares for the
benefit of the Company and Shareholders as a whole.
IV-29


--- page 632 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
(b) Eligible participants
Eligible participants include (A) any person who is an employee (whether full-time or part-
time), director or officer of any member of the Group (“ Employee Participant”), (B) any person who
is an employee (whether full-time or part-time), director or officer of (i) a holding company of the
Company, (ii) subsidiaries of the holding company other than members of the Group, or (iii) any
company which is an associate of the Company, including those directly or indirectly controlling or
controlled by the Company or directly or indirectly under common control with the Company
(“Related Entity Participant ”), and (C) persons providing services to the Group on a continuing or
recurring basis in its ordinary and usual course of business which are in the interests of the long term
growth of the Group as determined by the Scheme Administrator pursuant to the criteria set out in the
Scheme (“Service Provider Participant”).
Service Provider Participants shall include the following categories: (a) supplier of services,
including suppliers, advisors, consultants, agents or other professional firms with expertise in (i) research
and development, production or marketing of technologies, technical services, hardware and other related
services, including in connection with the retail industry, (ii) business expansion and development strategy,
advisory or execution, including in connection with the local retail industry, and (iii) corporate governance
strategy, advisory or execution; and (b) business partners that collaborate with the Group in connection
with, among others, research and development, marketing or sales of the systems, solutions, products or
services provided by our Group, whose work or expertise has contributed or will contribute significantly to
the growth of the Group’s financial or business performance. However, placing agents or financial advisors
providing advisory services for fundraising, mergers or acquisitions, or professional service providers such
as auditors or valuers who provide assurance or are required to perform their services with impartiality and
objectivity may not be Service Provider Participants for the purposes of the Scheme.
The Board, including the independent non-executive Directors, is of the view that the above
types of eligible participants are in line with the Company’s business needs and have the potential to
contribute to the long-term growth and profitability of the Company and hence are in line with the
purpose of the plan.
(c) Administration
The Board shall be responsible and have full authority for administering the plan in accordance
with the rules of the plan. The authority to administer the Scheme may be delegated by the Board to a
committee of the Board or to any other persons deemed appropriate at the sole discretion of the Board,
including its powers to offer or grant Awards and to determine the terms and conditions of such
Awards. The Company may establish trust(s) and appoint trustee(s) to hold Shares and other trust
property under the trust(s) for the purposes of implementing and administering the plan. Unless
otherwise agreed between the Company and any trustee(s), the scheme administrator shall act on
behalf of the Company to give instructions to and direct the trustee(s).
(d) Grant of Awards
The Board or scheme administrator may, from time to time, in their absolute discretion select
any eligible participant to be a grantee and, subject to the rules of the plan, grant an award under the
plan (“Award”) to such grantee during the scheme period. The nature, amount, terms and conditions of
any such Award so granted shall be determined by the Board or scheme administrator in their sole and
absolute discretion.
IV-30


--- page 633 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
An Award may be take the form of: (i) an award which vests in the form of the right to
subscribe for and/or be issued such number of Shares as the scheme administrator may determine at the
issue price in accordance with the terms of the plan (“ Share Award”); or (ii) an award which vests in
the form of the right to subscribe for such number of Shares as the scheme administrator may
determine during the exercise period at the exercise price in accordance with the terms of the plan
(“Share Option”).
No Award shall be granted to any eligible participant in certain specified circumstances,
including but not limited to:
(i) in circumstances prohibited by the Listing Rules or at a time when the relevant eligible
participant would be prohibited from dealing in the Shares by the Listing Rules or by any
applicable rules, regulations or law;
(ii) where the Company is in possession of any unpublished inside information in relation to
the Company, until (and including) the trading day after such inside information has been
announced;
(iii) during the periods commencing one month immediately before the earlier of the date of
the board meeting for approving the Company’s results for any year, half-year, quarterly
or any other interim period and the deadline for the Company to announce such results,
and ending on the date of the results announcement, provided that such period will also
cover any period of delay in the publication of any results announcement;
(iv) in circumstances which would result in a breach of the Scheme Limit, provided that to
the extent permissible in accordance with applicable laws, rules and regulations an
Award may be made conditional upon the Scheme Limit being refreshed or approval of
Shareholders being otherwise obtained;
(v) where such Award requires the specific approval of Shareholders, until such approval of
Shareholders is obtained, provided that to the extent permissible in accordance with
applicable laws, rules and regulations an Award may be made conditional upon such
specific shareholder approval being obtained,
and any such grant so made shall be null and void to the extent that it falls within the circumstances
described above.
(e) Maximum number of Shares
The total number of Award Shares which may be issued pursuant to all Awards to be granted
under the 2024 First Share Incentive Plan together with the number of Shares which may be issued
pursuant to any awards to be granted under any other share schemes of the Company is
44,334,506 Shares, being approximately 5% of the Shares (excluding any treasury shares) in issue on
the Listing Date (the “ Scheme Mandate Limit ”). For the avoidance of doubt, Shares issued or to be
issued pursuant to awards made under the 2016 Share Incentive Plan and the 2020 Share Incentive Plan
shall not be subject to the Scheme Mandate Limit. Shares which would have been issued pursuant to
Awards which have lapsed in accordance with the terms of the plan (or the terms of any other share
schemes of the Company) shall not be counted for the purpose of calculating the Scheme Mandate
Limit.
IV-31


--- page 634 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
The total number of Award Shares which may be issued pursuant to Awards granted to Service
Provider Participants under the 2024 First Share Incentive Plan is 8,866,901 Shares, being
approximately 1% of the Shares in issue (excluding any treasury shares) on the date the Shares
commence trading on the Stock Exchange (the “ Service Provider Sublimit”).
The Company may refresh either of the Scheme Mandate Limit and/or the Service Provider
Sublimit: (i) from the later of three years after the adoption date of the plan or three years after the date
of the previous shareholder approval for refreshment of the Scheme Mandate Limit or Service Provider
Sublimit (as the case may be) pursuant to the rules of the plan, with the prior approval of Shareholders
in general meeting by way of ordinary resolution; or (ii) at any time, with the prior approval of the
Shareholders in general meeting and subject to compliance with any additional requirements set out in
the Listing Rules. The total number of Award Shares which may be issued in respect of all Awards to
granted under the 2024 First Share Incentive Plan and all other schemes of the Company under the
Scheme Mandate Limit as refreshed shall not exceed 10% of the Shares in issue (excluding any
treasury shares) as at the date of the approval to refresh the Scheme Mandate Limit by the Shareholders
in general meeting. Awards already granted under the 2024 First Share Incentive Plan and any other
share schemes of the Company (including those exercised, outstanding, cancelled or lapsed in
accordance with its terms) shall not be counted for the purpose of calculating the number of Award
Shares that may be issued under the Scheme Mandate Limit as refreshed.
The Company may seek separate approval of the Shareholders in general meeting to grant
Awards beyond the Scheme Mandate Limit to eligible participants specifically identified by the
Company, subject to compliance with the requirements set out in the Listing Rules.
(f) Maximum entitlement of a grantee
Unless approved by the Shareholders in the manner set out in the plan, the total number of
Shares issued and to be issued upon exercise of Awards granted and to be granted under the 2024 First
Share Incentive Plan and any other share schemes of the Company to each eligible participant
(including both exercised and outstanding Share Options) in any 12 month period shall not exceed 1%
of the total number of Shares in issue (excluding any treasury shares). Any further grant of Awards to
an eligible participant which would exceed this limit shall be subject to separate approval of the
Shareholders in general meeting with the relevant eligible participant and their associates abstaining
from voting.
Any grant of Awards to any Director, chief executive or substantial shareholder of the
Company, or any of their respective associates, shall be subject to the prior approval of the
remuneration committee of the Board (excluding any proposed recipient of the grant) and the
independent non-executive Directors (excluding any proposed recipient of the grant). Where any grant
of Share Awards (but not any grant of Share Options) to any Director (other than an independent non-
executive Director) or chief executive of the Company or any of their associates would result in the
Shares issued and to be issued in respect of all Awards granted under the 2024 First Share Incentive
Plan together with awards granted under any other share schemes of the Company (excluding any
awards lapsed in accordance with the terms of the relevant scheme) to such person in the 12-month
period up to and including the date of such grant representing in aggregate over 0.1% of the Shares in
issue (excluding any treasury share) at the date of such grant, or where any grant of Awards to an
independent non-executive director or substantial shareholder of the Company (or any of their
respective associates) would result in the number of Shares issued and to be issued upon exercise of all
IV-32


--- page 635 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
Awards already granted under the 2024 First Share Incentive Plan together with awards granted under
any other share schemes of the Company (excluding any awards lapsed in accordance with the terms of
the relevant scheme) to such person in the 12 month period up to and including the date of such grant
representing in aggregate over 0.1% of Shares in issue (excluding any treasury shares) at the date of
such grant, such further grant of Awards must be approved by shareholders of the Company in general
meeting in the manner required, and subject to the requirements set out, in the Listing Rules.
(g) Award Letter and terms of an Award
The Company shall, in respect of each Award, issue a letter to each grantee setting out the
terms and conditions of the Award (an “ Award Letter ”), which may include the number of Shares in
respect of which the Award relates, the issue price or exercise price (as applicable), the vesting criteria
and conditions, the vesting date, any minimum performance targets that must be achieved and any such
other details as the scheme administrator may consider necessary, and requiring the grantee to
undertake to hold the Award on the terms of the Award Letter and be bound by the provisions of the
rules of the plan. To the extent that Awards shall be satisfied by way of issue and allotment of new
Shares, the grant of such Awards shall be conditional upon the Listing Committee of the Stock
Exchange having granted approval for the listing of, and permission to deal in, such Shares and the
satisfaction of any other conditions as may be considered necessary or appropriate by the scheme
administrator.
Amount payable on application or acceptance of an Award: The scheme administrator may
determine the amount (if any) payable on application or acceptance of an Award and the period within
which any such payments must be made, which amounts (if any) and periods shall be set out in the
Award Letter.
Exercise price and exercise period of Share Options: The exercise price for Share Options shall
be no less than the higher of: (i) the closing price of the Shares on the Stock Exchange on the grant
date; and (ii) the average closing price of the Shares on the Stock Exchange for the five business days
immediately preceding the grant date. The exercise period for Share Options shall be not longer than
10 years from the grant date. A Share Option shall lapse automatically and shall not be exercisable (to
the extent not already exercised) on the expiry of the tenth anniversary from the grant date. The
foregoing provisions relating to exercise price are in line with the requirements of the Stock Exchange
and the purpose of the plan.
Issue price of Share Awards : The issue price for Share Awards shall be such price determined
by the scheme administrator and notified to the grantee in the Award Letter. For the avoidance of
doubt, the scheme administrator may determine the issue price to be nil. The foregoing provisions
relating to exercise price are in line with the requirements of the Stock Exchange and the purpose of
the plan.
Vesting period: The vesting date in respect of any Award shall be not less than 12 months from
the grant date, provided that for Employee Participants the vesting date may be less than 12 months
from the grant date (including on the grant date) in the following circumstances: (a) grants of “make
whole” awards to new Employee Participants to replace share awards they forfeited when leaving their
previous employers; (b) grants to an Employee Participant whose employment is terminated due to
death or disability or occurrence of any out of control event; (c) grants of Awards which are subject to
the fulfilment of performance targets; (d) grants of Awards that are made in batches during a year for
IV-33


--- page 636 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
administrative and/or compliance requirements, in which case the vesting date may be adjusted to take
account of the time from which the Award would have been granted if not for such administrative or
compliance requirements; (e) grants of Awards with a mixed or accelerated vesting schedule such that
the Awards vest evenly over a period of 12 months; or (f) grants of Awards with a total vesting and
holding period of more than 12 months.
Performance target: The scheme administrator may in respect of each Award and subject to all
applicable laws, rules and regulations determine such performance targets or other criteria or
conditions for vesting of Awards in its sole and absolute discretion. Where performance targets, criteria
or conditions are to be specified in the relevant Award Letter, the scheme administrator may determine
such targets, criteria or conditions based on, among other considerations: (i) for directors and members
of senior management, business or financial milestones, milestones based on the Company’s market
capitalization, transaction milestones, or the Grantee’s anticipated future contribution to the Group
(including with respect to their experience, expertise, insight, participation in specific projects, or
achievement of specific work targets etc.), (ii) for Employee Participants (other than directors and
members of senior management), business or financial milestones, transaction milestones, performance
appraisal within a specified period reaching a desirable level, or the Grantee’s anticipated future
contribution to the Group (including with respect to their experience, expertise, insight, participation in
specific projects, or achievement of specific work targets etc.), (iii) for Related Entity Participants, the
grantee’s anticipated future contribution to the long-term development of the Group (including with
respect to their experience, expertise, insight, participation in specific projects, or achievement of
specific work targets or business collaboration targets etc.), and (iv) for Service Provider Participants,
the grantee’s anticipated future contribution to the long-term development of the Group (including with
respect to their experience, expertise, insight, participation in specific projects, or achievement of
specific work targets or business collaboration targets etc.). The scheme administrator shall specify in
the Award Letter the person(s) of the Company that will assess how and whether such targets, criteria
or conditions are satisfied.
The Board and the remuneration committee of the Board believe that it is in the best interests of
the Company to retain the flexibility to impose appropriate conditions in light of the particular
circumstances of each grant, which would then be a more meaningful reward for each eligible
participant’s contribution or potential contribution. It is considered that by having the flexibility of
having a shorter vesting period than 12 months in appropriate circumstances, the Group will be in a
better position to attract and retain suitable eligible participants to continue serving the Group whilst at
the same time providing them with incentive in achieving the goals of the Group, and thereby to
achieve the purpose of the 2024 First Share Incentive Plan. Further, by allowing the Company to
require the eligible participant to achieve such performance targets as may be stipulated in the Award
Letter on a case by case basis, the Company may be in a better position to incentivize suitable eligible
participants to deliver high quality work or to complete specified projects or goals important to the
Group, which is in line with the purpose of the 2024 First Share Incentive Plan. Where Awards are
granted to directors or senior management of the Company with a vesting period shorter than 12
months, the views of the remuneration committee on why a shorter vesting period is appropriate, and
where such Awards are without performance targets, the views of the remuneration committee on why
performance targets are not necessary and how the grants align with the purpose of the plan, will be
included in the announcement to be issued after any grant of Awards as required by the Listing Rules.
IV-34


--- page 637 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
(h) Exercise or Vesting of Awards
Exercise/vesting of an Award
After the applicable vesting date for any Award:
(i) Share Option may be exercised in whole or in part by the grantee giving notice in writing
to the Company together with a remittance for the required exercise price. Within 10
business days after receipt of the notice and related remittance in full, the Company shall
allot and issue to the grantee the relevant Award Shares; and
(ii) for a Share Award, within 10 business days following the vesting date, subject to receipt in
full of the aggregate issue price payable (if any), the Company shall allot and issue to the
Grantee the relevant number of Award Shares.
Award Shares
The Award Shares to be allotted and issued under the plan shall be identical to all existing
issued Shares and shall be allotted and issued subject to all the provisions of the articles of association
of the Company for the time being in force and will rank pari passu with the other fully paid Shares in
issue on the date the name of the grantee is registered on the register of members of the Company.
At the discretion of the scheme administrator, any obligation to allot and issue Award Shares to
a grantee may be satisfied by transferring the equivalent number of treasury shares to the grantee.
The scheme administrator shall determine the methods by which the exercise price or the
purchase price may be paid. For the purposes of satisfying the issuance of Shares following the
exercise/vesting of an Award, to the extent that, at the determination of the scheme administrator, it is
not practicable for the grantee to receive Award Shares due to applicable legal or regulatory
restrictions, the scheme administrator may sell on-market at prevailing market prices the number of
Shares to be so issued and pay to the grantee the actual selling price of such Shares.
(i) Cancellation and lapse of Awards
Any Awards granted but not exercised may be cancelled by the scheme administrator at any
time with the prior consent of the grantee. Issuance of new Awards to the same grantee whose Awards
have been cancelled may only be made if there are unissued Awards available under the Scheme
Mandate (excluding the Awards of the relevant grantee so cancelled) and in compliance with the terms
of the plan.
Without prejudice to the authority of the scheme administrator to provide additional situations
when an Award shall lapse in the Award Letter, an Award shall lapse automatically (to the extent not
already vested and, where relevant, exercised) on the earliest: (a) the expiry of any applicable exercise
period; (b) the date on which the Board makes a determination under the clawback clause of the plan;
and (c) the expiry of any of the periods for exercising a Share Option due to ceasing to be an eligible
participant; (d) the date on which the grantee commits a breach of transferability. The scheme
administrator shall have the power to decide whether an Award shall lapse and its decision shall be
binding and conclusive.
(j) Rights are personal to grantee
Awards shall be personal to the grantee to whom they are made and shall not be assignable or
transferable, except in circumstances where the written consent of the Company has been obtained and
IV-35


--- page 638 ---
APPENDIX IV STATUTORY AND GENERAL INFORMATION
a waiver has been granted by the Stock Exchange for such transfer in compliance with the
requirements of the Listing Rules and provided that any such transferee agrees to be bound by rules of
the plan as if the transferee were the grantee.
(k) Voting and dividend rights
Awards do not carry any right to vote at general meetings of the Company, nor any right to
dividends, transfer or other rights. No grantee shall enjoy any of the rights of a Shareholder by virtue of
the grant of an Award unless and until the Award Shares are issued or transferred to the grantee
pursuant to the vesting/exercise of such Awards. Where Award Shares are held on trust for the Grantee
by the plan’s trustee(s), a grantee may give instructions to the trustee(s) to exercise the voting rights in
respect of those Award Shares pursuant to, and to the extent permitted by, the trust deed(s).
(l) Effects of alterations in the capital structure of the Company
In the event of any alteration in the capital structure of the Company by way of capitalization of
profits or reserves, rights issue, open offer, subdivision or consolidation of Shares or reduction of the
share capital of the Company (other than any alteration in the capital structure of the Company as a
result of an issue of Shares as consideration in a transaction to which the Company is a party) after the
adoption date, the scheme administrator shall make such corresponding adjustments, if any, as it in its
discretion may deem appropriate to reflect such change with respect to: (i) the number of Shares
constituting the Scheme Mandate Limit or Service Provider Sublimit, (ii) the number of Shares in each
Award to the extent any Award has not been exercised, (iii) the exercise price of any Share Option or
Issue Price of any Share Award, or any combination thereof, as the auditors or financial advisor have
certified satisfy the relevant requirements of the Listing Rules and are, in their opinion, fair and
reasonable either generally or as regards any particular grantee, provided always that (i) any such
adjustments should give each grantee the same proportion of the equity capital of the Company,
rounded to the nearest whole Share, as that to which that grantee was previously entitled prior to such
adjustments, and (ii) no such adjustments shall be made which would result in a Share being issued at
less than its nominal value.
(m) Ceasing to be an eligible participant
Clawback: In the event that (a) a grantee ceases to be an eligible participant by reason of the
termination of his/her employment or contractual engagement with the Group or related entity for
cause or without notice or with payment in lieu of notice; (b) a grantee has been convicted of a
criminal offence involving his/her integrity or honesty; or (c) in the reasonable opinion of the Board, a
grantee has engaged in serious misconduct or breaches the terms of the plan in any material respect,
then the Board may make a determination at its absolute discretion that: (A) any Awards issued to that
Grantee but not yet exercised shall immediately lapse, regardless of whether such Awards have vested
or not, (B) with respect to any Award Shares issued or transferred to that grantee, the grantee shall be
required to transfer back to the Company or its nominee the equivalent number of Shares, or an amount
in cash equal to the market value of such Shares, or a combination thereof, and/or (C) with respect to
any Award Shares held by the trustee(s) of the plan for the benefit of the grantee, those Award Shares
shall no longer be held on trust for nor inure to the benefit of the grantee.
Retirement: If a grantee ceases to be an eligible participant by reason of his/her retirement: (i)
any outstanding Awards not yet vested shall continue to vest in accordance with the vesting dates set
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
out in the Award Letter, or such other period as the scheme administrator may determine at their sole
discretion, and (ii) any vested Share Option may be exercised within the exercise period, failing which
the Share Option shall lapse.
Death or permanent incapacity : If a grantee ceases to be an eligible participant by reason of
death of the grantee, or the termination of his/her employment or contractual engagement with any
member of the Group or related entity by reason of his/her permanent physical or mental disablement:
(a) in the case of Share Options: any vested Share Option may be exercised within the exercise period
by the personal representatives of the grantee. In the case where a grantee no longer has any legal
capacity to exercise the Share Option, the vested Share Option may be exercised within that period by
the persons charged with the duty of representing the Grantee under applicable laws. If the vested
Share Option is not exercised within the time mentioned above, the Share Option shall lapse; and (b) in
the case of Share Awards: any outstanding Share Awards not yet vested shall immediately vest, and the
Company shall issue such number of Award Shares or pay the actual selling price pursuant to the
vested Share Award to the legal personal representatives of the grantee or the persons charged with the
duty of representing the grantee under applicable laws as soon as practicable following the death or
incapacity of the grantee or, if the said issuance or payment would otherwise become bona vacantia, it
shall be forfeited and shall lapse.
Bankruptcy: If a grantee is declared bankrupt or becomes insolvent or makes any arrangements
or composition with his/her creditors generally, they shall cease to be an eligible participant under the
plan and any Awards not yet vested and any outstanding Share Options not yet exercised shall
immediately be forfeited and shall lapse, unless the scheme administrator determines otherwise at their
absolute discretion.
Other reasons : If a grantee ceases to be an eligible participant for reasons other than those set
out in the preceding provisions, (a) subject to the provisions of the clawback clause, a grantee may
exercise any vested Share Options within 20 business days of such cessation or within the exercise
period, whichever is the shorter, or such other period as the scheme administrator may decide in their
sole discretion. If a Share Option is not exercised within the stipulated time, the Share Option shall be
forfeited and shall lapse; and (b) any outstanding Awards not yet vested shall immediately be forfeited
and shall lapse, unless the scheme administrator determines otherwise at their absolute discretion.
(n) Alteration of the rules of the plan or any Award
Subject to the below, the Board may amend any of the provisions of the plan or any Awards
granted under the plan at any time and in any respect, provided that the terms of the plan or Awards so
altered must comply with the relevant requirements of Chapter 17 of the Listing Rules.
The approval of the Shareholders in general meeting is required for any amendment or
alteration to the terms of the plan which are of a material nature or to those provisions which relate to
the matters set out in Rule 17.03 of the Listing Rules to the extent that such alteration or amendment
operates to the advantage of eligible participants. Any change to the authority of the Board or the
scheme administrator to alter the terms of the plan shall be subject to the approval of the Shareholders
in general meeting.
Any amendment or alteration to the terms of any Award the grant of which was subject to the
approval of a particular body shall be subject to approval by that same body, provided that this
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
requirement does not apply where the relevant alteration takes effect automatically under existing
terms of the plan. Without limiting the generality of the foregoing, any change in the terms of Awards
granted to any grantee who is a director, chief executive or substantial shareholder of the Company, or
any of their respective associates, must be approved by the Shareholders in general meeting in the
manner required in the Listing Rules if the initial grant of the Awards requires such approval (except
where the changes take effect automatically under the rules of the plan).
(o) Termination
The 2024 First Share Incentive Plan shall terminate on the earlier of: (a) the expiry of the
scheme period, being the period of 10 years commencing on the adoption date and ending on the 10
th
anniversary of the adoption date of the plan ; and (b) such date of early termination as determined by
the Board, following which no further Awards will be offered or granted under the plan, provided that
notwithstanding such termination, the plan and the rules thereof shall continue to be valid and effective
to the extent necessary to give effect to the vesting and exercise of any Awards granted prior to the
termination and such termination shall not affect any subsisting rights already granted to any grantee.
5. The 2024 Second Share Incentive Plan
The following is a summary of the principal terms of the 2024 Second Share Incentive Plan
conditionally adopted by the Board by way of a written resolution passed on November 26, 2024 and
which shall take effect from the Listing Date. The 2024 Second Share Incentive Plan is a share scheme
funded by existing Shares that is subject to, and complies with, the applicable requirements in Chapter
17 of the Listing Rules.
(a) Purpose of the 2024 Second Share Incentive Plan
The purpose of the 2024 Second Share Incentive Plan is to provide the Company with a flexible
means of remunerating, incentivizing, retaining, rewarding, compensating and/or providing benefits to
eligible participants; to align the interests of eligible participants with those of the Company and
Shareholders by providing such eligible participants with the opportunity to acquire shareholding
interests in the Company; and to encourage eligible participants to contribute to the long-term growth
and profitability of the Company and to enhance the value of the Company and its Shares for the
benefit of the Company and Shareholders as a whole.
(b) Eligible participants
Eligible participants include (A) any person who is an employee (whether full-time or
parttime), director or officer of any member of the Group; (B) any person who is an employee (whether
full-time or part-time), director or officer of (i) a holding company of the Company, (ii) subsidiaries of
the holding company other than members of the Group, or (iii) any company which is an associate of
the Company, including those directly or indirectly controlling or controlled by the Company or
directly or indirectly under common control with the Company, and (C) any consultant, advisor,
distributor, contractor, customer, supplier, agent, business partner, joint venture business partner or
service provider of the Group or any related entity of the Company, who as determined by the scheme
administrator in its sole discretion has contributed or will contribute to the growth of the Group.
(c) Administration
The Board shall be responsible and have full authority for administering the plan in accordance
with the rules of the plan. The authority to administer the Scheme may be delegated by the Board to a
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
committee of the Board or to any other persons deemed appropriate at the sole discretion of the Board,
including its powers to offer or grant Awards and to determine the terms and conditions of such
Awards. The Company may establish trust(s) and appoint trustee(s) to hold Shares and other trust
property under the trust(s) for the purposes of implementing and administering the plan. Unless
otherwise agreed between the Company and any trustee(s), the scheme administrator shall act on
behalf of the Company to give instructions to and direct the trustee(s).
(d) Grant of Awards
The Board or scheme administrator may, from time to time, in their absolute discretion select
any eligible participant to be a grantee and, subject to the rules of the plan, grant an award under the
plan (“Award”) to such grantee during the scheme period. The nature, amount, terms and conditions of
any such Award so granted shall be determined by the Board or scheme administrator in their sole and
absolute discretion.
An Award may be take the form of: (i) an award which vests in the form of the right to
purchase such number of Shares as the scheme administrator may determine at the purchase price in
accordance with the terms of the plan (“ Share Award”); or (ii) an award which vests in the form of the
right to purchase such number of Shares as the scheme administrator may determine during the
exercise period at the exercise price in accordance with the terms of the plan (“ Share Option”).
No Award shall be granted to any eligible participant in certain specified circumstances,
including but not limited to:
(i) in circumstances prohibited by the Listing Rules or at a time when the relevant eligible
participant would be prohibited from dealing in the Shares by the Listing Rules or by any
applicable rules, regulations or law;
(ii) where the Company is in possession of any unpublished inside information in relation to
the Company, until (and including) the trading day after such inside information has been
announced;
(iii) during the periods commencing one month immediately before the earlier of the date of
the board meeting for approving the Company’s results for any year, half-year, quarterly
or any other interim period and the deadline for the Company to announce such results,
and ending on the date of the results announcement, provided that such period will also
cover any period of delay in the publication of any results announcement;
(iv) in circumstances which would result in a breach of the Scheme Limit, provided that to the
extent permissible in accordance with applicable laws, rules and regulations an Award
may be made conditional upon the Scheme Limit being refreshed,
and any such grant so made shall be null and void to the extent that it falls within the
circumstances described above.
(e) Maximum number of Shares
The total number of Award Shares which may be granted under the 2024 Second Share
Incentive Plan is 46,789,006 Shares, which shall consist of existing Shares only. For the avoidance of
doubt, no new Shares shall be issued by the Company (including transfer of treasury shares) pursuant
to the 2024 Second Share Incentive Plan.
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
The Company may refresh the Scheme Mandate Limit at any time, with the prior approval of
the Board and subject to compliance with any additional requirements set out in the Listing Rules.
(f) Award Letter and terms of an Award
The Company shall, in respect of each Award, issue a letter to each grantee setting out the
terms and conditions of the Award (an “ Award Letter ”), which may include the number of Shares in
respect of which the Award relates, the purchase price or exercise price (as applicable), the vesting
criteria and conditions, the vesting date, any minimum performance targets that must be achieved and
any such other details as the scheme administrator may consider necessary, and requiring the grantee to
undertake to hold the Award on the terms of the Award Letter and be bound by the provisions of the
rules of the plan.
The scheme administrator may determine the amount (if any) payable on application or
acceptance of an Award and the period within which any such payments must be made, which amounts
(if any) and periods shall be set out in the Award Letter.
(g) Exercise or Vesting of Awards
Exercise/vesting of an Award
After the applicable vesting date for any Award:
(i) Share Option may be exercised in whole or in part by the grantee giving notice in writing
to the scheme administrator together with a remittance for the required exercise price.
Within 10 business days after receipt of the notice and related remittance in full, the
scheme administrator shall transfer to the grantee the relevant Award Shares; and
(ii) for a Share Award, within 10 business days following the vesting date, subject to receipt in
full of the aggregate purchase price payable (if any), the scheme administrator shall
transfer to the Grantee the relevant number of Award Shares.
The scheme administrator shall determine the methods by which the exercise price or the
purchase price may be paid.
For the purposes of transferring Shares following the exercise/vesting of an Award, to the
extent that, at the determination of the scheme administrator, it is not practicable for the grantee to
receive Award Shares due to applicable legal or regulatory restrictions, the scheme administrator may
sell on-market at prevailing market prices the number of Shares the grantee is entitled to and pay to the
grantee the actual selling price of such Shares.
(h) Cancellation and lapse of Awards
Any Awards granted but not exercised may be cancelled by the scheme administrator at any
time with the prior consent of the grantee.
Without prejudice to the authority of the scheme administrator to provide additional situations
when an Award shall lapse in the Award Letter, an Award shall lapse automatically (to the extent not
already vested and, where relevant, exercised) on the earliest: (a) the expiry of any applicable exercise
period; (b) the date on which the Board makes a determination under the clawback clause of the plan;
and (c) the expiry of any of the periods for exercising a Share Option due to ceasing to be an eligible
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
participant; (d) the date on which the grantee commits a breach of transferability. The scheme
administrator shall have the power to decide whether an Award shall lapse and its decision shall be
binding and conclusive.
(i) Rights are personal to grantee
Awards shall be personal to the grantee to whom they are made and shall not be assignable or
transferable, except in circumstances where the written consent of the Company has been obtained and
a waiver has been granted by the Stock Exchange for such transfer in compliance with the
requirements of the Listing Rules and provided that any such transferee agrees to be bound by rules of
the plan as if the transferee were the grantee.
(j) Voting and dividend rights
Awards do not carry any right to vote at general meetings of the Company, nor any right to
dividends, transfer or other rights. No grantee shall enjoy any of the rights of a Shareholder by virtue of
the grant of an Award unless and until the Award Shares are transferred to the grantee pursuant to the
vesting/exercise of such Awards. Where Award Shares are held on trust for the Grantee by the plan’s
trustee(s), a grantee may give instructions to the trustee(s) to exercise the voting rights in respect of
those Award Shares pursuant to, and to the extent permitted by, the trust deed(s).
(k) Effects of alterations in the capital structure of the company
In the event of any alteration in the capital structure of the Company by way of capitalization of
profits or reserves, rights issue, subdivision or consolidation of Shares or reduction of the share capital
of the Company (other than any alteration in the capital structure of the Company as a result of an issue
of Shares as consideration in a transaction to which the Company is a party) after the adoption date, the
scheme administrator shall make such corresponding adjustments, if any, as it in its discretion may
deem appropriate to reflect such change with respect to: (i) the number of Shares constituting the
Scheme Mandate Limit, (ii) the number of Shares in each Award to the extent any Award has not been
exercised, (iii) the exercise price of any Share Option or purchase price of any Share Award, or any
combination thereof, as the auditors or financial advisor have certified satisfy the relevant requirements
of the Listing Rules and are, in their opinion, fair and reasonable either generally or as regards any
particular grantee, provided always that (i) any such adjustments should give each grantee the same
proportion of the equity capital of the Company, rounded to the nearest whole Share, as that to which
that grantee was previously entitled prior to such adjustments, and (ii) no such adjustments shall be
made which would result in a Share being purchased or transferred at less than its nominal value.
(l) Ceasing to be an eligible participant
Clawback: In the event that (a) a grantee ceases to be an eligible participant by reason of the
termination of his/her employment or contractual engagement with the Group or related entity for
cause or without notice or with payment in lieu of notice; (b) a grantee has been convicted of a
criminal offence involving his/her integrity or honesty; or (c) in the reasonable opinion of the Board, a
grantee has engaged in serious misconduct or breaches the terms of the plan in any material respect,
then the Board may make a determination at its absolute discretion that: (A) any Awards issued to that
Grantee but not yet exercised shall immediately lapse, regardless of whether such Awards have vested
or not, (B) with respect to any Award Shares transferred to that grantee, the grantee shall be required to
transfer back to the Company or its nominee the equivalent number of Shares, or an amount in cash
IV-41


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
equal to the market value of such Shares, or a combination thereof, and/or (C) with respect to any
Award Shares held by the trustee(s) of the plan for the benefit of the grantee, those Award Shares shall
no longer be held on trust for nor inure to the benefit of the grantee.
Retirement: If a grantee ceases to be an eligible participant by reason of his/her retirement: (i)
any outstanding Awards not yet vested shall continue to vest in accordance with the vesting dates set
out in the Award Letter, or such other period as the scheme administrator may determine at their sole
discretion, and (ii) any vested Share Option may be exercised within the exercise period, failing which
the Share Option shall lapse.
Death or permanent incapacity: If a grantee ceases to be an eligible participant by reason of
death of the grantee, or the termination of his/her employment or contractual engagement with any
member of the Group or related entity by reason of his/her permanent physical or mental disablement:
(a) in the case of Share Options: any vested Share Option may be exercised within the exercise period
by the personal representatives of the grantee. In the case where a grantee no longer has any legal
capacity to exercise the Share Option, the vested Share Option may be exercised within that period by
the persons charged with the duty of representing the Grantee under applicable laws. If the vested
Share Option is not exercised within the time mentioned above, the Share Option shall lapse; and (b) in
the case of Share Awards: any outstanding Share Awards not yet vested shall immediately vest, and the
Company shall issue such number of Award Shares or pay the actual selling price pursuant to the
vested Share Award to the legal personal representatives of the grantee or the persons charged with the
duty of representing the grantee under applicable laws as soon as practicable following the death or
incapacity of the grantee or, if the said issuance or payment would otherwise become bona vacantia, it
shall be forfeited and shall lapse.
Bankruptcy: If a grantee is declared bankrupt or becomes insolvent or makes any arrangements
or composition with his/her creditors generally, they shall cease to be an eligible participant under the
plan and any Awards not yet vested and any outstanding Share Options not yet exercised shall
immediately be forfeited and shall lapse, unless the scheme administrator determines otherwise at their
absolute discretion.
Other reasons: If a grantee ceases to be an eligible participant for reasons other than those set
out in the preceding provisions, (a) subject to the provisions of the clawback clause, a grantee may
exercise any vested Share Options within 20 business days of such cessation or within the exercise
period, whichever is the shorter, or such other period as the scheme administrator may decide in their
sole discretion. If a Share Option is not exercised within the stipulated time, the Share Option shall be
forfeited and shall lapse; and (b) any outstanding Awards not yet vested shall immediately be forfeited
and shall lapse, unless the scheme administrator determines otherwise at their absolute discretion.
(m) Alteration of the rules of the plan or any Award
Subject to the below, the Board may amend any of the provisions of the plan or any Awards
granted under the plan at any time and in any respect. Any amendment or alteration to the terms of any
Award the grant of which was subject to the approval of a particular body shall be subject to approval
by that same body, provided that this requirement does not apply where the relevant alteration takes
effect automatically under existing terms of the plan.
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APPENDIX IV STATUTORY AND GENERAL INFORMATION
(n) Termination
The 2024 Second Share Incentive Plan shall terminate on the earlier of: (a) the expiry of the
scheme period, being the period of 10 years commencing on the adoption date and ending on the 10 th
anniversary of the adoption date of the plan ; and (b) such date of early termination as determined by
the Board, following which no further Awards will be offered or granted under the plan, provided that
notwithstanding such termination, the plan and the rules thereof shall continue to be valid and effective
to the extent necessary to give effect to the vesting and exercise of any Awards granted prior to the
termination and such termination shall not affect any subsisting rights already granted to any grantee.
E. Other Information
1. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to fall upon
any member of our Group.
2. Litigation
As of the Latest Practicable Date, we are not aware of any other litigation or arbitration
proceedings of material importance pending or threatened against us or any of our Directors that could
have a material adverse effect on our financial condition or results of operations.
3. Joint Sponsors
Each of the Joint Sponsors satisfies the independence criteria applicable to sponsors set out in
Rule 3A.07 of the Listing Rules.
The Joint Sponsors will receive an aggregate of US$1.1 million for acting as the Company’s
sponsor for the Listing.
4. Consent of Experts
This document contains statements made by the following experts:
Name Qualification
UBS Securities Hong Kong limited A licensed corporation to conduct Type 1 (dealing in
securities), Type 2 (dealing in futures contracts),
Type 6 (advising on corporate finance) and Type 7
(providing automated trading services) of the
regulated activities as defined under the SFO
CMB International Capital Limited A licensed corporation to conduct type 1 (dealing in
securities) and type 6 (advising on corporate finance)
of the regulated activities as defined under the SFO
China Merchants Securities (HK) Co., Limited A licensed corporation to carry out type 1 (dealing in
securities), type 2 (dealing in futures contracts), type
4 (advising on securities), type 6 (advising on
corporate finance) and type 9 (asset management)
regulated activities under the SFO
Haiwen & Partners Qualified PRC lawyers
Harney Westwood & Riegels British Virgin Islands attorneys-at-law
KPMG Certified Public Accountants, and Public Interest
Entity Auditor registered in accordance with the
Accounting and Financial Reporting Council
Ordinance
IV-43


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
Name Qualification
Frost & Sullivan International Limited Independent industry consultant
Grandall Law Firm (Beijing) Qualified PRC lawyers
Dr. Zhang’s PRC Litigation Legal Counsel Qualified PRC lawyer
As of the Latest Practicable Date, save as disclosed in “Underwriting” in this document, none
of the experts named above 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.
Each of the experts named above have given and have not withdrawn their respective written
consent to the issue of this document with copies of their reports, letters, opinions or summaries of
opinions (as the case may be) and the references to their names included herein in the form and context
in which they are respectively included.
5. Binding Effect
This document shall have the effect, if an application is made in pursuance hereof, of rendering
all persons concerned bound by all the provisions (other than the penal provisions) of sections 44A and
44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so far as applicable.
6. Bilingual Document
The English language and Chinese language versions of this document 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).
7. Preliminary Expenses
We have not incurred any material preliminary expenses in relation to the incorporation of our
Company.
8. Disclaimers
Save as disclosed in this document, within the two years immediately preceding the date of this
document:
(i) there are no commissions (but not including commission to sub-underwriters) for
subscribing or agreeing to subscribe, or procuring or agreeing to procure subscriptions,
for any shares in or debentures of our Company; and
(ii) there are no commissions, discounts, brokerages or other special terms granted in
connection with the issue or sale of any capital of any member of our Group, and no
Directors, promoters or experts named in the part headed “—Other Information—
Consent of Experts” received any such payment or benefit.
Save as disclosed in this document:
(i) there are no founder, management or deferred shares in our Company or any member of
our Group;
IV-44


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APPENDIX IV STATUTORY AND GENERAL INFORMATION
(ii) we do not have any promoter and no cash, securities or other benefit has been paid,
allotted or given within the two years immediately preceding the date of this document,
or are proposed to be paid, allotted or given to any promoters;
(iii) none of the Directors or the experts named in the part headed “—Other Information—
Consent of Experts” above has any interest, direct or indirect, in the promotion of, or in
any assets which have been, within the two years immediately preceding the date of this
document, 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; and
(iv) there are no bank overdrafts or other similar indebtedness by our Company or any
member of our Group;
(v) there are no hire purchase commitments, guarantees or other material contingent
liabilities of our Company or any member of our Group;
(vi) there are no outstanding debentures of our Company or any member of our Group;
(vii) there are no other stock exchange on which any part of the equity or debt securities of our
Company is listed or dealt in or on which listing or permission to deal is being or is
proposed to be sought;
(viii) no capital of any member of our Group is under option, or is agreed conditionally or
unconditionally to be put under option; and
(ix) there are no contracts or arrangements subsisting at the date of this document in which a
Director is materially interested or which is significant in relation to the business of our
Group.
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APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND ON DISPLAY
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this document delivered to the Registrar of Companies
in Hong Kong for registration were, among other documents:
(a) the written consents referred to in “Statutory and general information—E. Other
information—4. Consent of experts” in Appendix IV; and
(b) copies 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.
DOCUMENTS ON DISPLAY
Copies of the following documents will be available for viewing on the website of the Stock
Exchange at www.hkexnews.hk and our Company’s website at https://www.dmall.com/ up to and
including the date which is 14 days from the date of this document:
(a) the Memorandum and the Articles;
(b) the material contracts referred to in “Statutory and general information—B. Further
information about our business—1. Summary of material contracts” in Appendix IV;
(c) the service contracts and the letters of appointment with our Directors referred to in
“Statutory and general information—C. Further information about our Directors—1.
Particulars of Directors’ service contracts and appointment letters” in Appendix IV;
(d) the report issued by Frost & Sullivan, a summary of which is set forth in “Industry
Overview”;
(e) the PRC legal opinion issued by Haiwen & Partners, our PRC Legal Adviser on PRC law, in
respect of certain general corporate matters and property interests in the PRC of our Group;
(f) the PRC legal opinion issued by Grandall Law Firm (Beijing), our PRC Legal Adviser in
respect of PRC data compliance law;
(g) the letter of advice issued by Dr. Zhang’s PRC Legal Counsel in respect of Dr. Zhang’s
case;
(h) the Accountants’ Report and the report on the unaudited pro forma financial information of our
Group prepared by KPMG, the texts of which are set out in Appendices I and II, respectively;
(i) the audited consolidated financial statements of our Group for the three financial years
ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024;
(j) the letter of advice prepared by Harney Westwood & Riegels, our legal adviser on BVI
law, summarizing certain aspects of BVI company law referred to in Appendix III;
(k) the BVI Business Companies Act;
(l) the written consents referred to in “Statutory and general information—E. Other
information—4. Consent of experts” in Appendix IV; and
(m) the terms of the Share Incentive Plans.
DOCUMENT AVAILABLE FOR INSPECTION
A list of grantees under the 2016 Share Incentive Plan and the 2020 Share Incentive Plan will
be available for inspection at the office of Skadden, Arps, Slate, Meagher & Flom at 42/F, Edinburgh
Tower, The Landmark, 15 Queen’s Road Central, Hong Kong during normal business hours from
9:00 a.m. to 5:00 p.m. up to and including the date which is 14 days from the date of this prospectus.
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Cover Size: 210 x 280 mm / Open Size: 448.5 x 280 mm /       width: 28.5mm
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ʮ̡
Stock Code: 2586
(Incorporated in the British Virgin Islands with limited liability)
GLOBAL
OFFERING
GLOBAL
OFFERING
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers
Joint Global Coordinators, Joint Bookrunners, and Joint Lead Managers (in alphabetical order)
Joint Bookrunners, and Joint Lead Managers (in alphabetical order)
