Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

China Parenting Network Holdings Limited

中 國 育 兒 網 絡 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 1736)

ANNOUNCEMENT OF THE INTERIM RESULTS

FOR SIX MONTHS ENDED 30 JUNE 2020

The board (the "Board") of directors (the "Directors") of China Parenting Network Holdings Limited (the "Company", together with its subsidiaries, collectively the "Group" or "we") is pleased to announce the unaudited condensed consolidated results of the Group for six months ended 30 June 2020 (the "Period"). This announcement, containing the full text of the 2020 interim report of the Company, complies with the relevant requirements of the Rules (the "Listing Rules") Governing the Listing of Securities of the Stock Exchange of Hong Kong Limited (the "Hong Kong Stock Exchange") in relation to information to accompany preliminary announcement of interim results. This results announcement is published on the websites of the Hong Kong Stock Exchange (http://www.hkexnews.hk) and the Company (http://www.ci123.com). The 2020 interim report of the Company will be despatched to the shareholders of the Company and published on both of the above websites on or before 30 September 2020.

By order of the Board

China Parenting Network Holdings Limited

Cheng Li

Executive Director and Chief Executive Officer

Nanjing, the People's Republic of China, 31 August 2020

As at the date of this announcement, the executive directors are Mr. Cheng Li, Mr. Hu Qingyang and Mr. Zhang Lake Mozi; the non-executive directors are Mr. Wu Haiming, Ms. Li Juan and Mr. Zhang Haihua; and the independent non-executive directors are Mr. Wu Chak Man, Mr. Zhao Zhen and Mr. Ge Ning.

CONTENTS

Pages

Corporate Information

02

Highlights

04

Management Discussion and Analysis

05

Corporate Governance and Other Information

23

Interim Condensed Consolidated Statement of Profit or Loss

31

Interim Condensed Consolidated Statement of Comprehensive Income

32

Interim Condensed Consolidated Statement of Financial Position

33

Interim Condensed Consolidated Statement of Changes in Equity

34

Interim Condensed Consolidated Statement of Cash Flows

35

Notes to the Interim Condensed Consolidated Financial Statements

37

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Cheng Li

Mr. Hu Qingyang

Mr. Zhang Lake Mozi (Chairperson of the Board)

Non-Executive Directors

Ms. Li Juan

Mr. Wu Haiming

Mr. Zhang Haihua

Independent Non-Executive Directors

Mr. Wu Chak Man

Mr. Zhao Zhen

Mr. Ge Ning

BOARD COMMITTEES

Audit Committee

Mr. Wu Chak Man (Chairperson)

Ms. Li Juan

Mr. Ge Ning

Nomination Committee

Mr. Zhang Lake Mozi (Chairperson)

(appointed on 31 July 2020)

Mr. Zhao Zhen

Mr. Ge Ning

Ms. Li Juan

(resigned as the chairperson of the nomination committee with effect from 31 July 2020)

Remuneration Committee

Mr. Ge Ning (Chairperson)

Mr. Zhao Zhen

Mr. Cheng Li

COMPANY SECRETARY

Mr. Zhang Lake Mozi

AUTHORISED REPRESENTATIVES

Mr. Cheng Li

Mr. Zhang Lake Mozi

AUDITOR

Baker Tilly Hong Kong Limited

LEGAL ADVISERS TO OUR COMPANY

As to Hong Kong Law

Jingtian & Gongcheng LLP

Suites 3203-3207, 32/F

Edinburgh Tower

The Landmark

15 Queen's Road Central

Hong Kong

As to PRC law

King & Wood Mallesons

17th Floor, One ICC

Shanghai International Commerce Centre

999 Middle Huai Hai Road

Xuhui District, Shanghai 200031

The PRC

Notes:

Ms. Li Juan has resigned as chairperson of the Board with effect from 31 July 2020.

Mr. Zhang Lake Mozi has been appointed as chairperson of the Board with effect from 31 July 2020.

Mr. Hsieh Kun Tse has resigned as

a non-executive Director with effect from 31 July 2020. Mr. Zhang Haihua has been appointed as

a non-executive Director with effect from 31 July 2020.

02 China Parenting Network Holdings Limited • Interim Report 2020

REGISTERED OFFICE IN THE CAYMAN ISLANDS

Cricket Square, Hutchins Drive

P.O. Box 2681

Grand Cayman KY1-1111

Cayman Islands

CORPORATE INFORMATION

HEAD OFFICE AND PRINCIPAL PLACE OF

BUSINESS IN THE PRC

13F, Building J, Cloud Security City

No. 19. Ningshuang Road

Nanjing, Jiangsu Province

The PRC

PRINCIPAL PLACE OF BUSINESS IN

HONG KONG

Room 1905, China Resources Building

26 Harbour Road

Wanchai

Hong Kong

HONG KONG BRANCH SHARE

REGISTRAR AND TRANSFER OFFICE

Tricor Investor Services Limited

Level 54, Hopewell Centre

183 Queen's Road East

Hong Kong

PRINCIPAL BANK

Bank of Communications (Xuanwu Branch)

No. 519, Zhujiang Road, Xuanwu District

Nanjing, Jiangsu Province, The PRC

STOCK CODE

1736

COMPANY WEBSITE

www.ci123.com

China Parenting Network Holdings Limited • Interim Report 2020 03

HIGHLIGHTS

The board (the "Board") of directors (the "Directors") of China Parenting Networking Holdings Limited (the "Company", together with its subsidiaries, collectively the "Group" or "we") is submit herewith to announce the unaudited condensed consolidated interim results of the Group for six months ended 30 June 2020 (the "Period").

For the six months ended

30 June 2020

30 June 2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

Revenue

32,206

50,857

Gross profit

6,279

30,906

(Loss)/profit for the Period

(20,776)

12,483

Total (loss)/profit for the Period attributable to:

Owners of the parent

(16,407)

12,530

Non-controlling interests

(4,369)

(47)

  • During the Period, in terms of the sum volume of data of "Pregnancy Reminder"（孕育提醒）APP and the "Mother Zone（媽媽社區）"APP, two major mobile APPs of CI Web of the Company, the MAU and DAU increased by 38%and 37%, respectively, as compared to those of last year.
  • During the Period, as a pioneer in the digitalization of the maternal and infant industry, with its six major capabilities following the pandemic such as brand targeted marketing, brand digitization, MCN support, information platform, full- scenario-based SaaS, full-scenario customer acquisition, the Group has focused on consolidating and optimizing its comprehensive ecological platform, externally empower maternal and child brands and enterprises to carry out digital transformation solutions.

04 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS REVIEW

The Group is a leading vertical online platform for the Children-Babies-Maternity ("CBM") market in China, aiming at providing users with value-added services like new media, contents, community, smart hardware, e-commerce and cross- border services with such platforms as the CI Web（育兒網）, mobile CI Web, mobile APPs and the IPTV APP, creating a one- stop mother-child experience platform. In terms of the total volume of data of mobile APPs of the Company (representing the sum volume of data of "Pregnancy Reminder"（孕育提醒）APP and the "Mother Zone（媽媽社區）" APP, two major mobile APPs of CI Web), the MAU and DAU aggregated 15.24 million and 3.30 million respectively as of 30 June 2020, representing an increase of 38%and 37%, respectively, as compared to those of last year.

In the post-pandemic era, the prevention and control on the epidemic became a normalized trend. As a double-edged sword, the pandemic not only accelerated the change of the rules in the mother-child industry, and also facilitated the transformation, upgrading and integration of the industry at a faster pace. CI Web has shifted to a comprehensive ecological platform boasting six major capabilities such as brand targeted marketing, brand digitization, MCN support, information platform, full-scenario-based SaaS, full-scenario customer acquisition from a single mother-child portal. We will further drive our brand to go through transformation to achieve targeted marketing, full-scenario customer acquisition following the pandemic.

During the period, the Group prioritized and promoted the progress of transformation for digitization of the mother-child industry, connecting the various ecosystems in the platform capitalizing on its contents, technological strengths and database. It provided diversified and multiple-scenario services under the household-consumption orientation, aiming to the facilitation of digital transformation among mother-child brands, entities and enterprises. It also gave access to solutions for digital efficiency enhancement. Empowered by the content matrix, data and technology platforms, CI Web strategically joined force with various brands by proceeding with CRM management, users marketing and big data analysis and other improvement by means of digitization. Furthermore, the comprehensive ecosystem platform of CI Web also empowered bricks and mortar clinics through medical SaaS system, supported small- and medium-early education institutions nationwide with comprehensive education system and further pushed forward transformation into digitization of early education institutions.

Relying on BABYFACE data analysis platform, the Group precisely identified mother-child population through smart big-data management. It brought its digitization experiences into full play to design smart marketing strategy, widely promoting its own platform. The "Mother Zone"（媽媽社區）APP of the CI Web, by pooling the advantages of the whole platform, built the IP "Pursuit of Babies among Pregnant Girls"（膨脹女孩奪寶孕動）as its annual campaign. Meanwhile, in cooperation with TikTok（抖音）APP under ByteDance, Toutiao（今日頭條）and other platforms, the Group launched out a wide variety of video programs, thematic interesting activities for sourcing new users from various channels. In addition, with its online and offline efforts, the Group helped mitigate stress in parenting families with quality materials during the pandemic and gave support to our brand in providing mental education in the course of knowledge promotion. By means of the foregoing efforts, both our user size and awareness of the platform have witnessed remarkable enhancement.

China Parenting Network Holdings Limited • Interim Report 2020 05

MANAGEMENT DISCUSSION AND ANALYSIS

CI Web continued to strengthen cooperation with third parties to achieve complementary advantages and mutual benefit. During the Period, CI Web cooperated with W+ Club（育悅薈）, a mother-child health management platform. CI Web provides mother-child health management services for the membership covering more than 50 mother-child ecological alliance brands. By leveraging our advantages as to mother-child themed "contents, operation and technology", we provided personalized services and health solutions for mother-child family, and empowered related mother-child industries for promoting marketing and conversion among members. As a long-term partner of Pinduoduo（拼多多）in respect of mother-child products and services, CI Web provides multi-form and all-dimensional content support for its "Parent- Child Festival". Alternatively, we chose by way of livestreaming platforms to answer question in relation to mother-child population and interpret the parenting knowledge. Moreover, CI Web reached a friendly strategic cooperation with Haier. By utilizing the Haier APP as a platform for launching our quality parenting Q&A, we assisted families in dealing with parenting challenges in the interactive and interesting scenarios. In this manner, we collectively designed smart solutions for families and explored more opportunities for cooperation under offline situation.

In terms of public welfare and social responsibilities, CI Web united numerous enterprises in the mother-child industry to donate supplies for baby and children to designated hospitals for treating children infected by novel coronavirus, such as Wuhan Children's Hospital. Peer-to-peer communication between the Company and these hospitals made the whole donation process transparent and standardised to help children patients to be comforted and accompanied during quarantine. During the Period, Mr. Zhang Lake Mozi, the representative of the Group, was invited to attend the charity activities with the attendance of children afflicted with certain particular diseases. The Group were always providing charity- caring donation, company and guidance for the child patients recovering from various diseases in their personal visit at times.

OUTLOOK

The Group will keep helping mother-child brands and enterprises in the pursuit of targeted marketing, full-scenario customer acquisition and digitalized transformation in the areas of online operation, family travel, new retail, health, education and entertainment of mother-child topics. With its platform-wide and multiple-dimension empowering, the Group will facilitate the mother-child businesses and brand owners to embrace new opportunities in the post-pandemic era.

06 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Comparison of the business target and the actual business progress

The following table shows the comparison between the actual business progress during the six months ended 30 June 2020 and the plans set out in the prospectus dated 30 June 2015:

Actual business progress during the period

Business Target

Particulars

from 1 January 2020 to 30 June 2020

Strengthening research and development capabilities in terms of contents and service-related products

Increasing original contents in

•

The Group incessantly consolidated its

the Platform and improve user

capabilities for production and output of

interface;

original contents with vital investment

and support to short video and interesting

Developing new web-based and

graphics to display sense of professionalism

Mobile APPs CBM products to

and enrichment, so as to enhance

maintain market position;

attractiveness and improve loyalty of users.

During the period, the flagship cartoon

Developing interactive family

program named All About Parenting（育兒你

entertainment system products,

造麼）under CI Web was formally upgraded,

early learning products and early

to which a new short video series of family-

learning centre management

themed drama was added. As a brand

system.

new streaming media characterized by

organization, verticality, personalization, the

program accommodates to the preference of

users, demonstrates a sense of organization,

verticality, personalization, thereby user

loyalty was further enhanced.

  • As the core product of the Group, "Mother Zone" APP continually built mother-child ecosystem circle with dynamic presence. During the period, the contents in the "Mother Zone" experienced a further upgrading in all respects. In addition to module as to regular community life, it was further expanded into audio, video, early education, two-dimensional game modules, enhancing its functions in terms of parenting and social activities. During the period, two major IPs were added to the "Mother Zone", giving support to our brand in providing mental education in the course of knowledge promotion; besides, external cooperation with audio platform, interactive games and so forth was continually expanded to produce in-depth contents and implant education simulation games, which played a key role in the significant increase of the users' retention rate.

China Parenting Network Holdings Limited • Interim Report 2020 07

MANAGEMENT DISCUSSION AND ANALYSIS

Actual business progress during the period

Business Target

Particulars

from 1 January 2020 to 30 June 2020

•

By analyzing behavior trajectory of users in

various stages, the "Pregnancy Reminder"

APP rolled out multi-functional tools matrix

that adapt to diversified demands of users.

For more engagement in daily usage of users' mobiles devices, the "Pregnancy Reminder" of the Group cooperated with Huawei to implant the "Pregnancy Reminder" APP into Huawei Smart Screen（華為智慧 屏）, which filled its vacancy in mother-child service module and brought diversification to the same. Moreover, "Pregnancy Reminder", in cooperation with vivo, had its presence in Quick App platform（快應用平台）, aiding mother group to more conveniently access health information in pregnancy; "Pregnancy Reminder" also officially established connectivity to smart XiaoAI speaker（小 愛音箱）of Xiaomi, which addresses issues out of mother-child families in a smart life scenario by producing related topics to build smart home ecosystem. Looking forward, "Pregnancy Reminder" APP will seek in- depth cooperation with smart scenario in the mother-child theme.

The Group innovated its advertising and marketing services to provide more scenic experience, identify targeted groups in different ways and enhance its advertising effect.

08 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Actual business progress during the period

Business Target

Particulars

from 1 January 2020 to 30 June 2020

Enhancing user loyalty and

Increase number of visits of CI Web

Internet traffic

through securing entrance slots

in search engines and navigation

sites;

Increase the number of downloads

and mobile APPs usage through

obtaining entrances slots in

online APP stores;

Marketing of interactive family

entertainment system product

and early education.

  • The Group has various platforms to maintain a certain number of existing users, and occupied a leading position in the industry. As at 30 June 2020, In terms of the total volume of data of mobile APPs of the Company (representing the sum volume of data of "Pregnancy Reminder" APP and the "Mother Zone" APP, two major mobile APPs of CI Web), the MAU and DAU aggregated 15.24 million and 3.30 million respectively, representing an increase of 38% and 37%, respectively, as compared to those of last year.
  • The plan of marketing of interactive family entertainment system product and early education is under continuous development.

Developing e-commerce business and related O2O business

Expand e-commerce platform;

Increase the O2O elements in mobile APPs;

Develop and marketing fetal heart monitoring device（胎心儀）and other smart-hardware devices that can connect with Mobile APP.

  • The Group sold CBM related services and products through self-developed mobile APP as well as the third party platform and continuously developed e-commerce business through multiple channels.
  • During the Period, the Group proceeded with industry chain upgrading and developed new offline retail markets by providing business intelligence solutions regarding new retail model to businesses. During the Pandemic, by provision of new retail SaaS system, the platform aided certain maternal and child stores in realization of fast-paced transformation toward digitization operation.

China Parenting Network Holdings Limited • Interim Report 2020 09

MANAGEMENT DISCUSSION AND ANALYSIS

Actual business progress during the period

Business Target

Particulars

from 1 January 2020 to 30 June 2020

Acquisition of or investment in other companies engaging in O2O and CBM related businesses

Expand business through

•

For details of the Group's investment in

acquisition of or investment in

certain entities and loans, please see the

other companies engaging in

paragraphs of "financial assets at fair value

CBM related business.

through other comprehensive income" and

"Loan to other entities" under the section of

Management Discussion and Analysis. The

Group believes that this will help to expand

the existing business boundaries of the

Group and enhance its ability of resource

integration, and is in line with the long-

term goals of diversified development of the

Group.

Enhancing marketing and

Organize more social activities

•

CI Web launched the IP "Pursuit of Babies

promotional services

and expand marketing and

among Pregnant Girls"（膨脹女孩奪寶孕動）

promotion team.

as its annual campaign. In cooperation with

TikTok（抖音）APP under ByteDance, Toutiao

（今日頭條）and other platforms, the Group

unveiled a wide variety of video programs,

thematic interesting activities for sourcing

new users from various channels.

Working capital and other

Utilize the working capital

general corporate purposes

according to our needs and for

other general corporate purpose.

  • The Group increased its cooperation with complex media, stars and celebrities and web celebrities to increase its exposure and influence.
  • The Group has spent its working capital in its daily operations and other general corporate purposes.

10 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL REVIEW

Revenue

The Group's revenue for the six months ended 30 June 2020 was approximately RMB32.2 million, representing a decrease of approximately 37% over approximately RMB50.9 million for the six months ended 30 June 2019, primarily due to the falling of China's macro-economy and the decrease of investment budget by certain customers, resulting in a decrease in revenue.

Cost of sales

The Group's cost of sales for the six months ended 30 June 2020 was approximately RMB25.9 million, representing an increase of approximately 29.5% over approximately RMB20.0 million for the six months ended 30 June 2019, primarily due to the increased efforts put into the promotion and technological support on CI Web and its related APPs.

Gross profit and gross profit margin

The Group's gross profit for the six months ended 30 June 2020 was approximately RMB6.3 million, representing a decrease of approximately 79.6% over approximately RMB30.9 million for the six months ended 30 June 2019. At the same period, the Group's gross profit margin decreased from approximately 60.8% to approximately 19.5%, primarily due to higher promotion cost.

Other income and gains

The Group's other income and gains for the six months ended 30 June 2020 was approximately RMB6.7 million, representing an increase of approximately 16% compared to approximately RMB5.8 million for the six months ended 30 June 2019, primarily due to government grants provided by the local government as development support funds.

Selling and distribution expenses

The Group's selling and distribution expenses for the six months ended 30 June 2020 was approximately RMB20.1 million, representing an increase of approximately 133.7% over approximately RMB8.6 million for the six months ended 30 June 2019, which was mainly due to the increase in marketing expenses.

Administrative expenses

The Group's administrative expenses for the six months ended 30 June 2020 was approximately RMB8.0 million, representing a decrease of approximately 8% over approximately RMB8.7 million for the six months ended 30 June 2019, which remained relatively stable.

Research and development costs

The Group's research and development ("R&D") cost for the six months ended 30 June 2020 was approximately RMB5.5 million, representing an increase of approximately 10% over approximately RMB5.0 million for the six months ended 30 June 2019, primarily attributable to the increase in the number of R&D personnel.

China Parenting Network Holdings Limited • Interim Report 2020 11

MANAGEMENT DISCUSSION AND ANALYSIS

Income tax expense

The Group's income tax expense for the six months ended 30 June 2020 was approximately RMB0.1 million, representing a decrease of approximately 63% over approximately RMB0.27 million for the six months ended 30 June 2019, primarily due to the increase in the Group's cost, the decrease in total profit.

Profit for the Period

As a result of the factors described above, the Group's loss for six months ended 30 June 2020 was approximately RMB20.8 million (net profit for six months ended 30 June 2019: approximately RMB12.5 million).

Gearing ratio

As at 30 June 2020, the gearing ratio of the Group, calculated as total liabilities, divided by total assets, was 10% (30 June 2019: 14%).

Liquidity and capital resources

As at 30 June 2020, the net current assets of the Group was approximately RMB76 million (30 June 2019: approximately

RMB141.7 million) and the cash and cash equivalents were approximately RMB38.9 million (30 June 2019: approximately RMB53.6 million).

As at 30 June 2020, the bank borrowing of the Group was approximately RMB19 million (30 June 2019: approximately RMB43 million). The bank borrowings of the Group were denominated in RMB, and the cash and cash equivalents were mainly held in RMB and Hong Kong dollars. As at 30 June 2020, the Group's outstanding loans are unsecured and bear interest at a fixed interest rate. The Group plans to retain an appropriate capital and debt portfolio to ensure that an effective capital structure is maintained during the Period. For the details of the cash flow of the Group during the Period, please refer to the consolidated statement of cash flows in this report.

Capital commitment

As at 30 June 2020, the Group had capital commitment of approximately RMB56.5 million (including the construction cost of the Target Land and various government administrative fees and taxes) (30 June 2019: Nil).

Foreign exchange exposure

The Group's transactions are mainly denominated in RMB. Part of the cash and bank deposits of the Group are denominated in Hong Kong dollars. During the Period, the Group did not experience any material impact or liquidity problems in its operation resulting from the changes in exchange rate nor enter into hedging transaction or forward contract arrangement. However, the management closely monitors foreign exchange exposure to ensure appropriate measures are implemented in a timely and effective manner. In this regard, the Group is not exposed to any significant foreign currency exchange risk in its operation.

12 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Employees, training and remuneration policy

The remuneration committee of the Company will review and determine the remuneration and compensation packages of Directors with reference to their responsibilities, workload, and the time devoted to the Group and the performance of the Group. In general, the Group determines employees' salaries based on their performance and length of services. The Board believes the salaries and benefits provided to the employees are competitive with local market standards. The Group also contributes to the social insurance in the PRC.

The Group has implemented training for new employees during their course of employment in order to ensure that employees are able to meet the job requirements. In addition, the Group will occasionally arrange internal and external trainings for the Group's employees. For external trainings, external speakers who have extensive experience in information technology may be invited to attend the Group's office to perform the training, and for internal trainings, the topics may include finance, accounting, risk management or information technology and such trainings will be conducted by the relevant department. The Group considers these on job trainings are necessary for the employees to handle issues which may arise in their day to day operations and can enhance their ethic and morale.

As at 30 June 2020, the Group had a total of 172 (30 June 2019: 181) employees including executive Directors. Total staff

costs were approximately RMB13.3 million for the Period (30 June 2019: approximately RMB15.3 million).

Material acquisitions and disposals of subsidiaries

During the Period, there was no material acquisition or disposal of subsidiaries by the Group (30 June 2019: Nil).

Charges of assets

As at 30 June 2020, the Group did not make any pledged bank deposit (30 June 2019: Nil).

Contingent liabilities

As at 30 June 2020, the Group did not have any significant contingent liabilities (30 June 2019: Nil).

DIVIDEND

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: nil).

China Parenting Network Holdings Limited • Interim Report 2020 13

MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME

As at 30 June 2020, details of financial assets at fair value through other comprehensive income are as follows:

Proportion of

investment to

Proportion of

Fair value of

the total

Change of fair

shares

Investment

investment

asset of the

value of investment

Name of the

held as at

amount as at

as at

Company as at

comparing with

relevant company

30 June 2020

30 June 2020

30 June 2020(1)

30 June 2020

Principal Business

31 December 2019

1

Nanjing Hongdou Information

12.30%

RMB15,000,000.00

RMB16,728,000.00

3.65%

As at 31 December 2017, the Group made investment of

RMB1,107,000.00

Technology Company

RMB15.0 million on the equity of Nanjing Hongdou Information

Limited* ( 南京紅豆信息

Technology Company Limited* ( 南京紅豆信息技術有限

技術有限公司)

公司) ("Hongdou Information"), a private company. As at

30 June 2018, the Group accounted for 12.3% of Hongdou

Information's registered capital. H5 games "Her Majesty"( 女皇

陛下) and "National Palace"( 全民宮斗) developed by Hongdou

Information successfully launched on Tencent QQ Games and

Qzone Gaming Platform.

2

Shanghai Baiyi Animation

10.00%

RMB10,000,000.00

RMB652,648.86

0.14%

Baiyi has its own professional animation team and can develop,

RMB-100,507.05

Cultural Broadcasting

produce, and distribute 2D/3D cartoon and peripheral toy

Company Limited*

products. Sales channels have expanded to all first and second-

( 上海百逸動漫文化傳播

tier cities in PRC with more than 100 distributors, covering

有限公司)

thousands of primary schools and terminal sales outlet.

3

DEEPFOLIO PTY LTD

18.00%

RMB506,067.50

RMB390,893.76

0.09%

Provision of a professional investment solution for artificial

RMB-8,299.78

intelligence empowerment. Investors can use the most

advanced artificial intelligence technologies to develop

quantitative investment strategies and manage their own

investment.

4

DYNAMIC PIXEL WORKS

18.00%

RMB506,214.00

RMB390,893.76

0.09%

Provide assistance in the animation production process with

RMB-8,299.78

PTY LTD

artificial intelligence technologies in order to make the process

easier and faster and significantly reduce the cost of animation

production.

5

DAILY ROBOTICS PTY LTD

18.00%

RMB505,997.74

RMB390,893.76

0.09%

Use artificial intelligence technology to identify scenarios and

RMB-8,299.78

objects with accuracy rate as high as 98% and achieves

continuous improvement of accuracy by using machine

learning technology under manual intervention, and the

provision of API and output technical services for various

businesses and industries.

6

Nanjing Depth Element

10.00%

RMB5,000,000.00

RMB5,718,408.28

1.25%

Provision of artificial intelligence-based technology: item

RMB-44,972.12

Artificial Intelligence

identification, human body identification, path recognition,

Technology Development

behavior recognition; and the provision of analysis services

Company Limited*

based on the above identification technologies: crowd

(南京深度元素人工智能

analysis, business analysis, personalized recommendation and

技術研發有限公司)

marketing, intelligent shopping guide.

14 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Proportion of

investment to

Proportion of

Fair value of

the total

Change of fair

shares

Investment

investment

asset of the

value of investment

Name of the

held as at

amount as at

as at

Company as at

comparing with

relevant company

30 June 2020

30 June 2020

30 June 2020(1)

30 June 2020

Principal Business

31 December 2019

7

Nanjing Shenkong Vision

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Provision of auto-cruise, path planning and other functions for

RMB0

Artificial Intelligence

robots with the use of self-developed vSLAM system combined

Technology Development

with artificial intelligence technology; and human tracking and

Company Limited*

educational interaction with natural language understanding

(南京深空視線人工智能

with the use of monocular camera.

技術研發有限公司)

8

Nanjing Zhiren Cloud

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Principal activities are the provision of container cloud

RMB0

Information Technology

management platform, artificial intelligence cloud platform,

Company Limited*

public cloud and private cloud services based on microservices.

(南京智人雲信息技術

有限公司)

9

Nanjing Free Chain Information

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Establishment of interconnections between internet devices in

RMB0

Technology Company

different regions with its unique solutions, construction of

Limited* ( 南京自由鏈信息

decentralized transmission network to achieve independent

技術有限公司)

collaboration and the expansion of business scale. Such kind

of internet is not subject to the limitation of computing power

and storage, thus empowers the internet with strong expansion

capabilities to achieve true decentralization, openness, self-

motivation, privacy and security.

10

Beijing Chengjiyuan Clinic*

19.50%

RMB5,000,000.00

RMB973,924.11

0.21%

Provision of family and general medical services with an aim to

RMB-4,776,694.83

(北京誠濟源診所)

serving patients in the new suburban residential areas.

11

Nanjing Luobo Information

15.00%

RMB12,000,000.00

RMB13,766,418.71

3.01%

Provision of educational, marketing and social services to its

RMB-122,932.48

Technology Company

customers across the network for baby-children businesses

Limited* ( 南京蘿播信息

through the distribution of audio and video contents and

技術有限公司)

the management capabilities of the communities, effectively

expanding and making up for the service capabilities of major

customers of CI Web under the pan-network conditions.

12

Nanjing Suichuang Xiupu

10.00%

RMB10,000,000.00

RMB11,431,811.02

2.50%

Provision of micro-service cloud application platform, which is

RMB-74,500.48

Information Technology

a one-stop PaaS platform service designed for mother-child

Company Limited*

enterprises, providing application cloud hosting solutions to

(南京速創秀普信息科技

assist enterprises simplify application lifecycle management

有限公司)

such as deployment, control, operation and maintenance;

and the provision of micro-service framework, compatible

mainstream open source ecosystem, specific development

framework and platform without binding. Suichuang Xiupu

is able to assist the small and medium-sizedmother-child

enterprises that are connected to CI Web to quickly establish

distributed applications based on micro-service structure.

13

Nanjing Xinmenghui Education

10.00%

RMB5,000,000.00

RMB5,715,899.44

1.25%

Leading service provider for online baby and children education. It

RMB-33,492.20

Technology Company

provides interactive learning systems and contents to families

Limited* ( 南京芯萌匯教育

with babies and children through a combination of unique

科技有限公司)

contents, technology and system, effectively extending the

online educational service capabilities of CI Web to those

families.

China Parenting Network Holdings Limited • Interim Report 2020 15

MANAGEMENT DISCUSSION AND ANALYSIS

Proportion of

investment to

Proportion of

Fair value of

the total

Change of fair

shares

Investment

investment

asset of the

value of investment

Name of the

held as at

amount as at

as at

Company as at

comparing with

relevant company

30 June 2020

30 June 2020

30 June 2020(1)

30 June 2020

Principal Business

31 December 2019

14

Guangzhou Muyun Electronic

16.00%

RMB4,000,000.00

RMB4,672,080.60

1.02%

Provision of services relating to quickly set up a foreign trade

RMB21,722.92

Commerce Co., Ltd.*

independent website of global sales for vendors and offer

(廣州沐雲電子商務有限公司)

technical support for corporate and individual online shop and

operators and integrated solutions from website building to

management and operation. The business is also divided into

B2C cross-bordere-commerce independent station and B2B

export trade independent station.

15

Guangzhou Baxianguohai

18.00%

RMB5,000,000.00

RMB5,955,093.94

1.30%

Establishment of an omnichannel marketing and ordering

RMB-12,357.52

Information Technology

platform for enterprises. This platform helps enterprises to

Co., Ltd.* ( 廣州八仙過海

develop collaboration between upstream and downstream

信息科技有限公司)

business and make real-time data decision in six aspects of

order management, inventory management, fund settlement,

customer operations, business reporting and procurement

management.

16

Hangzhou Xianju Information

15.00%

RMB10,000,000.00

RMB11,463,861.86

2.50%

Provision of hospital management system platform in four

RMB38,184.90

Technology Co., Ltd.*

aspects: hospital information and management open platform,

(杭州先巨信息技術有限公司)

mobile clinic, intelligent monitoring module and chronic disease

management module. This platform provides all-round medical

care from patient admission to discharge; from hospital

diagnosis to home monitoring; from computer to mobile

terminal; and from infant health monitoring to smart retirement.

17

Suzhou Youchao Information

19.00%

RMB7,000,000.00

RMB8,076,136.22

1.76%

Provision of enterprise online education platform which focuses

RMB-112,122.46

Technology Co., Ltd.*

on the training of product managers. The business is divided

(蘇州優潮信息技術有限公司)

into three aspects: enterprise orientation training, internal

enterprise staff training and vocational skill training. A number

of well-known internet enterprise product directors acted as

lecturers. Using platform technology, users can take online

open classes and participate one-on-one tutoring after school

so as to achieve offline practical training, internet project

practice and innovative teaching processes with internships in

famous enterprises.

18

Zhengzhou Lishi Information

17.00%

RMB6,000,000.00

RMB6,924,474.08

1.51%

Provision of integrated platform system for digital currency

RMB-18,484.79

Technology Co., Ltd.*

exchanges based on block chain technology. This system

(鄭州立時信息技術有限公司)

provides services of issuance, management and trading of

digital currencies. On the basis of fully supporting the Bitcoin

trading system, this system further improves its digital currency trading mechanism with block chain query and management functions and continuously optimizes its core functions and increases the comprehensive functional advantages of the product by enhancing of security protection level, leveraged financial transaction system and platform promotion and operation mechanism.

16 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

Proportion of

investment to

Proportion of

Fair value of

the total

Change of fair

shares

Investment

investment

asset of the

value of investment

Name of the

held as at

amount as at

as at

Company as at

comparing with

relevant company

30 June 2020

30 June 2020

30 June 2020(1)

30 June 2020

Principal Business

31 December 2019

19

Nanjing Qianguang Information

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Provision of user-centered system for enterprise intelligence

RMB0

Technology Co., Ltd.*

marketing. Based on seven business modules of social

(南京千光信息技術有限公司)

business strategy, social experience management, social

branding and traffic management, social sales promotion,

loyalty operations management, social product innovation and

social advertising services, a one-stop platform for enterprise

mobile marketing is established to create a rich, open and

intelligent mobile marketing ecosystem.

20

Nanjing Yuanhui Information

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Provision of software development tool system based on artificial

RMB0

Technology Co., Ltd.*

intelligence technology. For those who are not capable of

(南京遠匯信息技術有限公司)

programming, this system can help them to develop internet

products easily through PC client, development tool website

and mobile APP mode.

21

Nanjing Youke Workshop

17.20%

RMB10,000,000.00

RMB11,944,444.44

2.61%

Provision of knowledge sharing platform. This platform provides

RMB0

Information Technology

computer-related professional and technical knowledge for

Co., Ltd.* ( 南京優客工坊

corporate employees and individual members and provides

信息技術有限公司)

users with mutual learning modules, so that everyone can

be a teacher. Members who obtained platform instructor

certification can also organize courses to earn commissions.

22

Nanjing Mengmiao Education

18.00%

RMB8,000,000.00

RMB13,680,000.00

2.99%

Provision of IM system with complete solution customized for

RMB1,080,000.00

Technology Co., Ltd.*

internet education industry. Products are in line with the

(南京萌苗教育科技有限公司)

education industry, suitable for practical educational scenarios,

and truly meet the needs of the teachers. In the form of

PAAS+SAAS service, the product itself serves as a platform to

provide SDK for third parties. At the same time, it also provides

services for different users to develop different functions based

on its own platform.

23

Nanjing Suyun Xiupu

10.00%

RMB3,000,000.00

RMB46,000,000.00

1.00%

Development of a CRM system for training institutions. This system

RMB1,184,535.26

Information Technology

also applies its self-developed face recognition technology to

Co., Ltd.* ( 南京速雲秀普

specific CRM scenarios, achieving an innovative combination of

信息科技有限公司)

"Face Recognition + Education CRM System".

24

Nanjing Duomai Information

18.08%

RMB16,000,000.00

RMB18,344,068.96

4.01%

A service company for mother-child businesses. It provides

RMB-73,306.61

Technology Company

assistance for privatized customer assets during the Internet

Limited* ( 南京多麥信息

era, expanding the Internet customer base and improving

科技有限公司)

operational efficiency through its products and services. In

particular, through the provision of integrated solutions such

as micromalls, new retailing and mini programs, it provides

assistance for the transformation and upgrade towards smart business for small and medium-sizedmother-child enterprises, thus helping those enterprises achieve smart business with technology-driven business innovation. Duomai Information is able to expand CI Web's online and offline retailing channels for large business (大B) customers effectively, therefore playing an important role in securing the CI Web's existing business customer base.

China Parenting Network Holdings Limited • Interim Report 2020 17

MANAGEMENT DISCUSSION AND ANALYSIS

Proportion of

investment to

Proportion of

Fair value of

the total

Change of fair

shares

Investment

investment

asset of the

value of investment

Name of the

held as at

amount as at

as at

Company as at

comparing with

relevant company

30 June 2020

30 June 2020

30 June 2020(1)

30 June 2020

Principal Business

31 December 2019

25

Nanjing Yunqulu Network

17.20%

RMB10,000,000.00

RMB10,320,000.00

2.25%

A leading mother-child business incubator company with

RMB-1,287,625.73

Technology Company

branches in Australia and the United States. Its core role is to

Limited* ( 南京雲曲率網絡

provide effective incubator services for startup mother-child

科技有限公司)

enterprises on the CI Web. Similar to the innovative factory

in the mother-child industry, Yunqulu provides angel funding,

technical support and staff training for the startup mother-child

enterprises.

26

Nanjing Baicheng Medical

17.20%

RMB16,000,000.00

RMB16,168,000.00

3.53%

Provision of one-stop integrated information system construction

Technology Company

for hospitals, and the construction of end-to-end medical

Limited* ( 南京柏橙醫療

service platform covering pre-diagnosis,in-diagnosis and

科技有限公司)

post-diagnosis stages. Having leading system capabilities and

product advantages in cloud-based family medical and smart

medical areas, Baicheng Medical is able to assist CI Web to

better connect and serve the mother-child families through the

internet.

RMB-2,437,833.36

27

Beijing Changsheng Clinic

19.50%

RMB5,000,000.00

RMB1,057,504.77

0.23%

Company Limited*

( 北京昌盛門診部有限公司)

28

Nanjing Shen Jufeng Engine

18.10%

RMB13,000,000.00

RMB13,212,402.12

2.89%

Information Technology

Company Limited*

( 南京颶風引擎信息技術

有限公司)

29

Nanjing Duozan Health

17.20%

RMB13,000,000.00

RMB15,075,363.77

3.29%

Technology Company Limited* ( 南京多贊健康 科技有限公司)

Provision of family and general medical services with an aim to serving patients in the city center.

Operation of emerging distributed applications with the support of new blockchain, and the provision of high-performance computing with low cost and high yield by establishing a distributed cloud infrastructure.

Committed to establish the best healthy pregnancy management and knowledge service platform in China. It provides the best paid knowledge and online medical services to Chinese families, enabling the provision of paid knowledge and medical services to more families by the national obstetricians and pediatricians with the removal of institutional constraints.

RMB-4,693,114.71

RMB-361,983.63

RMB-420,087.59

30

Shanghai Shijiu Information

0.82%

RMB650,000.00

RMB393,600.00

0.09%

Technology Co., Ltd.*

(上海視九信息科技有限公司)

31

CCLOUD TECH

18.00%

HKD50,000,000.00

RMB50,005,119.09

10.92%

Provision of system integration, application development and operation services for devices such as smart TV set-top boxes based on its leading browser technologies such as HTML5.

Technology development and operation combining block chain technology with the entity economy and the provision of cross-border consumer service platform, cross-border global education platform, cross-border new retail business platform, block chain information service and technology trading platform, high-speed and cross-chain trading system based on intelligence contracts, system testing for block chain security system and block chain service platform.

RMB123,000.00

RMB191,157.11

32

Shanghai Beijia Network

5.00%

RMB2,500,000.00

RMB2,500,000.00

0.55%

The company cooperated with a number of maternal and child

Technology Co., Ltd.*

service platforms including ci123.com to launch a maternal and

(上海蓓嘉網絡科技有限公司)

child alliance (W+ Club). aiming to provide one-stop knowledge,

services, protection and welfare required for childcare.

N/A

Note:

  1. Further details of the fair value measurement of the Group are set out in note 23 of the interim condensed consolidated financial statements of this report. As at the date of this report, the Company has not sold its financial assets. The Company has not received any interest distribution for the period ended 30 June 2020.

18 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The Company continued to track and monitor its investments and conduct evaluation. As most of the Company's investments are emerging market growth companies, some of the entities which the Company invested are in the stage of research and development. The Company considers its investment management in the following aspects:

  • effective output from the application of the industrial chain, including technological output;
  • operating condition, including the achievement of business objectives, standardization of the corporate governance structure, and the stability of core talents; and
  • judgment on the future growth prospects of the industry it located and technology market.

With technological advancement and the changes in needs and behaviors of the new generation consumers in recent years, our investment helps to achieve the upstream and downstream digitalization of the industrial chain. It is also beneficial for us to consolidate new technology and service application scenarios to help brands upgrade their traditional business models. Since most of our investments are made in digital industries, they are currently affected by the epidemic to a lesser extent. Furthermore, influenced by the epidemic, more enterprises will require digital transformation solutions. Upon evaluation by our Company, the overall value of the investment during first half year in 2020 is in a state of steadiness comparing with 31 December 2019, which is in line with our strategic planning direction.

LOANS TO OTHER ENTITIES

The balance represents loans extended to independent third parties, bearing interest rates of 6.0% to 8.0% per annum for periods of 24 to 36 months. The aim of entering into these loan facility agreements with these third parties are for the long term interest of the Group. In future, by evaluating the performance of these third parties over a period, the Group has the option to invest in shares of these companies in priority.

Details of loans to other entities as at 30 June 2020 are set out below:

Proportion of

Borrowing

investment

made to

Exercise of

to the total

Interest

the relevant

Annual

Investment

the priority

Fair value of

asset of

income for

company

interest rate

guarantee

right of the

investment

the Company

the six months

Name of the relevant

as at

as at

as at

investment

as at

as at

ended

company

30 June 2020

30 June 2020

Term of loan

30 June 2020

shares

30 June 2020

30 June 2020

Principal business

30 June 2020

1

Nanjing Qianyu Information

RMB

6 %

36 months

Guaranteed by

No

RMB13,887,027.25

3.03%

A major platform for parentchild

RMB1,800,000.00

Technology Company

12,000,000.00

an A share

consumption.

Limited*(南京千魚信息

listed

技術有限公司)

company

2

Beijing Hongwei Technology

RMB

8 %

24 months(1)

N/A

No

RMB4,912,876.71

1.07%

Providing equipment support to

RMB880,000.00

Company Limited*

4,000,000.00

medical institution and

(北京宏偉科技有限公司)

developing online platform

for health consultation.

3

Shenzhen Feishikang

RMB

6 %

36 months

N/A

No

RMB1,148,331.44

0.20%

Feishikang provides video stream

RMB150,000.00

Technology Company

1,000,000.00

media technology and service

Limited*

to other security organizations.

(深圳飛視康科技有公司)

Note:

  1. As disclosed in the interim report issued by the Company on 20 September 2019, the contract was expired in March 2019. Pursuant to a loan facility agreement renewed by the parties in March 2019, it is interest bearing at a rate of 8% per annum for a period of 24 months and other terms remain unchanged. The loan made to the Borrower under the loan facility agreement amounted to RMB4.0 million.

China Parenting Network Holdings Limited • Interim Report 2020 19

MANAGEMENT DISCUSSION AND ANALYSIS

INVESTMENT OBJECTIVES AND POLICIES

The Group is a vertical online platform for the CBM market. In relation to its business development, family-related business of the Group refers to business that uses Internet technology to address the needs of new generation home consumers as target customers, such as early education, entertainment, health and services. On the basis of its existing core business, the family-related business of the Group still adheres to the original family-based user groups of its CBM platform, and forms a new maternal and child ecological layout with diversified maternal and child family services. It also extends the traditional and single maternal and child services to several cross-sector segments including health, education, finance and entertainment by way of investment and strategic cooperation, further expanding the types of family services and customer reach, prolonging user life-cycle, and meeting the increasing long-tail demands from the mother-child groups.

There have been rapid changes in the Internet industry and the competition in online advertising and e-commerce market and related O2O business is intense. The Group intends to expand into new core sectors such as new socialized retail, family medical, family education and internet technology with external empowerment. Leveraging the investments in the companies engaged in relevant new sectors, the Company will be able to reduce its costs to a certain extent and enter such new sectors in a quicker manner, as well as gain technology reserves and Internet traffic from new resources.

As for its investment strategy, in line with its principal business and for its future business development, the Company targets on investments in entities which are principally engaged in CBM and family related business chain and related technology research and development. The Company has adopted investment policies which it will take into account when making its investment decisions. In general, the Company prefers long-term investments as opposed to short-term ones and usually invests in targeted entities for more than one year. For the Company's mode of investment, the Company may adopt equity investments through acquisition of shareholdings in the targeted entities or loan financings by providing facilities to the targeted entities depending on, among others, potential rate of return which generally shall be not less than 6% per annum or the prevailing one-year fixed deposit interest rate published by the People's Bank of China (whichever is higher), strategic cooperation with the invested entities of the company, negotiation with the counterparties as well as compliance with legal and regulatory requirements. In order to reduce its participation in the operation and management of its investments so as to focus on its existing business, the Company generally does not invest in more than 20% shareholding in the targeted entities.

In addition to financial returns, the Directors expect that the investments will create synergies to the Group's business in terms of upgrade in technologies, enrichment of contents as well as expansion of coverage of value-added services which in turn result in enhancement of operational efficiency, user experience and user base. Depending on the business natures of the invested companies, the Group usually requires the invested companies to share their relevant technologies to offer selected contents such as games, animations and audio and video contents of them for the Platform, to share user data and network for promotion of the Group's APPs, and to support the Group's provision of value-added services to its users. The Group has a certain scale of investment activities. Failure to promptly and effectively manage investment risks may affect realization of investment strategies. The risk resulting from adverse movements in industry market could also impact the Group's investment.

The Group has formed an investment team (the "team"). The team's member consisted of the Group's chief executive officer, chief financial officer, marketing director, technical director and operation director who are experienced in the Internet industry. The team has been continuously paying attention to the market influence and technological development of the investment areas related to the CBM business chain. The Group continuously monitors the status of business development and financial exposure of investees and conducts regular assessments. The Group also strictly requires the invested entities to use the proceeds of the Group's investments for the sole purpose of the planned business development projects as agreed by the Group.

20 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

USE OF PROCEEDS

The Company's net proceeds from the Placing amounted to approximately HK$276.4 million (the "net proceeds") after taking into account the partial exercise of the over-allotment option in connection with the Listing (the "Over-allotment Option"). As at 30 June 2020, the Group had utilised approximately HK$234.5 million of the net proceeds. The unutilised net proceeds in the amount of approximately HK$41.9 million has been deposited in banks.

Details of the original allocation of net proceeds set out in the prospectus and the revised allocation of net proceeds of the Company as at the date of this report as follows:

Expected

Revised

Revised

Revised

Revised

timetable for

Allocation

Allocation

Allocation

Allocation

Utilized

Unutilized

the utilization

as at

as at

as at

as at

Amount as at

Amount as at

of the

Original

26 February

15 December

2 May

3 July

30 June

30 June

remaining

Use of Net Proceeds

Allocation

2016

2017

2018

2018

2020

2020

net proceeds

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

HK$ million

Strengthening research and development

capabilities

55.3

52.8

52.8

44.8

-

-

-

-

Enhancing the user base and Internet traffic of

our Platform

55.3

49.6

49.6

49.6

-

-

-

-

Developing our e-commerce business and

related O2O business

55.3

44.9

44.9

-

-

-

-

-

Acquisition of or investment in other companies

engaging in O2O and CBM related businesses

55.3

19.3

19.3

-

-

-

-

-

Enhancing marketing and promotional services

27.6

24.9

24.9

24.9

24.9

24.9

-

-

Working capital and other general corporate

purposes

27.6

24.9

24.9

24.9

24.9

24.9

-

-

Providing loan facilities

-

60.0

-

-

-

-

-

-

Acquisition of property or land for the construction

of the Company headquarters

-

-

60.0

60.0

60.0

18.1

41.9

expected in 2023

Acquisition of or investment in companies engaging

in CBM and family related business chains and

companies engaging in related technology

research and development

-

-

-

72.2

166.6

166.6

-

-

Total

276.4

276.4

276.4

276.4

276.4

234.5

41.9

-

As disclosed in the announcements of the Company dated 15 December 2017 and 28 September 2018, the Group has been in discussions with Management Committee of the Software Valley of Nanjing, the PRC regarding the acquisition of land for its headquarters. As disclosed in the announcements of the Company dated 27 December 2019, Nanjing Wanhui, an indirect wholly-owned subsidiary of the Company, has entered into the Development Entrustment Agreement with Nanjing Ningnan Real Estate Development pursuant to which Nanjing Ningnan Real Estate Development shall mainly (i) assist Nanjing Wanhui in acquisition of land use right of the Target Land from Nanjing Planning and Natural Resources Bureau; and (ii) construct and develop the Target Land as the Group's new headquarters in the PRC. The Consideration of approximately RMB54.3 million (equivalent to approximately HK$60.3 million) includes the costs of the acquisition, construction and development of the Target Land.

China Parenting Network Holdings Limited • Interim Report 2020 21

MANAGEMENT DISCUSSION AND ANALYSIS

The amount of the Consideration to be paid by Nanjing Wanhui will be satisfied mainly by the net proceeds from the Placing allocated for acquiring property or land for the construction of the headquarters of the Company, with any remaining amount by the Group's internal resources. In 2019, Nanjing Wanhui has paid a land premium of RMB5.34 million (equivalent to approximately HKD6.0 million) to Nanjing Bureau of Finance. In the first half of 2020, a total of construction fees were paid and the various government administrative fees and taxes were RMB10.3 million (approximately HK$12.1 million). The Company expects to obtain the land certificate in the third quarter of 2020. The remaining portion of the allocated fund has not been utilised.

According to the Development Entrustment Agreement, the planned construction area in the Nanyuan Area, the Software Valley of Nangjing, the PRC has been approved by the government authority, spanning to existing Mading Road ( 馬定路) to the north, existing Meiyuan South Road ( 梅苑南路) to the west, existing Second Passage of Lukou Airport ( 祿口機場二 通道) to the east and Dazhou Road ( 大周路) to the south. The Target Land is located at Nanyuan Area, the Software Valley of Nangjing, the PRC, with a site area of approximately 3,210 sq.m. and a total floor area of approximately 8,358 sq.m. It is expected that the construction work will be completed in 2022, subject to the actual progress of such construction work. The Group is currently leasing properties for its own use as offices. The Directors consider that the development of the Target Land as the Group's new headquarters will benefit the Group in saving rental expenses. The Company may consider renting out the remaining premises for rental returns.

22 China Parenting Network Holdings Limited • Interim Report 2020

CORPORATE GOVERNANCE AND OTHER INFORMATION

DIRECTORS' AND CHIEF EXECUTIVE'S INTERESTS AND/OR SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY OF ITS ASSOCIATED CORPORATION

As at 30 June 2020, interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")) held by the Directors and chief executive of the Company which have been notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of the SFO) or have been entered in the register maintained by the Company pursuant to Section 352 of the SFO, or otherwise have been notified to the Company and the Hong Kong Stock Exchange pursuant to Model Code for Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in Appendix

10 of the Listing Rules are as follows:

LONG POSITIONS IN THE SHARES OF THE COMPANY

Number of

Shares or

Approximate

Underlying

Percentage of

Name of Director

Nature of Interest

Shares

Shareholding

Ms. Li Juan(1)

Interest in a controlled corporation

409,200,000

Interest of concert party

120,000,000

Total:

529,200,000

51.60%

Mr. Wu Haiming(1)

Interest of spouse

529,200,000

51.60%

Mr. Cheng Li(2)

Interest in a controlled corporation

120,000,000

Interest of concert party

409,200,000

Total:

529,200,000

51.60%

Notes:

  1. Each of Loyal Alliance Management Limited ("Loyal Alliance") and Prime Wish Holdings Limited ("Prime Wish") is directly and wholly owned by Ms. Li Juan, who is therefore deemed to be interested in all the shares held by each of Loyal Alliance and Prime Wish. Ms. Li Juan and Mr. Cheng Li entered into an acting in concert party agreement dated 19 June 2015, and are therefore deemed to be interested in the interests of each other. Mr. Wu Haiming, a non-executive Director, is the spouse of Ms. Li Juan, and therefore is deemed to be interested in the interests of Ms. Li Juan.
  2. Victory Glory Holdings Limited ("Victory Glory") is directly and wholly owned by Mr. Cheng Li, who is therefore deemed to be interested in all the shares held by Victory Glory. Ms. Li Juan and Mr. Cheng Li entered into an acting in concert party agreement dated 19 June 2015, and are therefore deemed to be interested in the interests of each other.

China Parenting Network Holdings Limited • Interim Report 2020 23

CORPORATE GOVERNANCE AND OTHER INFORMATION

INTERESTS IN OTHER MEMBERS OF THE GROUP (LONG POSITIONS)

Approximate

Nature of

Percentage of

Name of Director

Name of Subsidiary

Interest

Shareholding

Ms. Li Juan(1)

Nanjing Xihui Information Technology Company Limited*

Beneficial owner

85%

（南京矽滙信息技術有限公司）("Nanjing Xihui")(2)

Nanjing Xinchuang Micro Machinery and Electronic

Beneficial owner

85%

Technology Company Limited*（南京芯創微機電

技術有限公司）("Nanjing Xinchuang")(2)

Mr. Wu Haiming(1)

Nanjing Xihui(2)

Interest of spouse

85%

Nanjing Xinchuang(2)

Interest of spouse

85%

Mr. Cheng Li

Nanjing Xihui(2)

Beneficial owner

15%

Nanjing Xinchuang(2)

Beneficial owner

15%

Notes:

  1. Mr. Wu Haiming, a non-executive Director, is the spouse of Ms. Li Juan, and therefore deemed to be interested in the interests of Ms. Li Juan.
  2. Pursuant to the contractual arrangement, each of Nanjing Xinchuang and Nanjing Xihui is deemed to be a wholly owned subsidiary of the Company.

Save as disclosed above, as at 30 June 2020, none of the Directors nor chief executive of the Company held an interest or short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) that was required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of the SFO) or were recorded pursuant to Section 352 of the SFO, or as otherwise notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.

24 China Parenting Network Holdings Limited • Interim Report 2020

CORPORATE GOVERNANCE AND OTHER INFORMATION

SUBSTANTIAL SHAREHOLDERS' AND OTHER PERSONS' INTERESTS AND/OR SHORT POSITIONS IN THE SHARES AND UNDERLYING SHARES OF THE COMPANY

So far as the Directors are aware, as at 30 June 2020, the following persons (not being Directors or chief executive of the Company) have or be deemed or taken to have interests and/or short positions in the shares or the underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which would be recorded in the register required to be kept under Section 336 of the SFO:

LONG POSITIONS IN THE SHARES OF THE COMPANY

Number of

Shares or

Approximate

Underlying

Percentage of

Name

Nature of Interest

Shares

Shareholding

Loyal Alliance(1)

Beneficial owner

193,200,000

18.84%

Prime Wish(1)

Beneficial owner

216,000,000

21.06%

Victory Glory(2)

Beneficial owner

120,000,000

11.70%

Properous Commitment(3)

Beneficial owner

51,600,000

5.03%

TMF Trust (HK) Limited(3)

Trustee

51,600,000

5.03%

Notes:

  1. Each of Loyal Alliance and Prime Wish is directly and wholly owned by Ms. Li Juan.
  2. Victory Glory is directly and wholly owned by Mr. Cheng Li.
  3. Properous Commitment is directly held by TMF Trust (HK) Limited, a professional trustee engaged by the Company for the operation of the Share Award Plan.

Save as disclosed above, as at 30 June 2020, no person, other than the Directors and chief executive of the Company whose interests and short positions are set out in the section headed "Directors' and Chief Executive's Interests and/or Short Positions in Shares, Underlying Shares and Debentures" above, had registered an interest or a short position in the shares or underlying shares of the Company as recorded in the register of interests required to be kept pursuant to Section 336 of the SFO.

China Parenting Network Holdings Limited • Interim Report 2020 25

CORPORATE GOVERNANCE AND OTHER INFORMATION

SHARE OPTION SCHEME

The Company adopted a share option scheme on 19 June 2015 (the "Share Option Scheme") for the purpose of providing incentive or rewarding eligible persons (including the Directors or employees (whether full time or part time), consultants or advisors of our Group) for their contribution to, and continuing efforts to promote the interests of our Group and for such other purposes as the Board may approve from time to time. No share option has been granted under the Share Option Scheme since its adoption by the Company.

The Share Option Scheme became effective on the date of the Company's listing (8 July 2015) and, unless otherwise cancelled or amended, will remain in force for 10 years from that date.

The maximum number of shares which may be issued upon exercise of all options granted and to be granted under the Share Option Scheme is 100,000,000 shares, representing 10% of the shares of the Company in issue as at the date of listing of the Company's shares on GEM (i.e. 8 July 2015) and 9.75% of the shares of the Company in issue as at the date of this report. The maximum number of shares issuable under share options granted to each eligible participant in the Share Option Scheme (including both exercised and outstanding options) within any 12-month period is limited to 1% of the shares of the Company in issue. Any grant or further grant of share options in excess of this limit is subject to Shareholders' approval in a general meeting. A grant of share options under the Share Option Scheme to a Director, chief executive or substantial Shareholder of the Company, or to any of their associates, is subject to approval in advance by the independent non-executive Directors (excluding any independent non-executive Director who is the grantee of the Option). In addition, any share options granted to a substantial Shareholder or an independent non-executive Director of the Company, or to any of their associates, which would result in the shares issued and to be issued, upon exercise of all options already granted and to be granted (including options exercised, cancelled and outstanding), to such person in the 12-month period up to and including the date of the grant in excess of 0.1% of the shares of the Company in issue and with an aggregate value (based on the closing price of the Company's shares at the date of grant) in excess of HK$5 million, are subject to Shareholders' approval in advance at a general meeting.

The offer of a grant of share options may be accepted within 30 days from the date of offer upon payment of a nominal consideration of RMB1 in total by the grantee. The exercise period of the share options granted is determined by the Directors, save that such a period shall not be more than 10 years from the date of offer of the share options and subject to the provisions for early termination as set out in the Share Option Scheme. There is no requirement of a minimum period for which an option must be held before it can be exercised.

The exercise price of the share options shall be not less than the highest of (i) the Hong Kong Stock Exchange closing price of the Company's shares on the date of offer of the share options, which must be a date on which the Hong Kong Stock Exchange is open for business of dealing in securities; (ii) the average Hong Kong Stock Exchange closing price of the Company's shares for the five trading days immediately before the date of offer; and (iii) the nominal value of the Company's shares as at the date of offer.

No share options were granted from the date of adoption up to 30 June 2020. Therefore, no share options were outstanding under the Scheme.

26 China Parenting Network Holdings Limited • Interim Report 2020

CORPORATE GOVERNANCE AND OTHER INFORMATION

DIRECTORS' RIGHT TO ACQUIRE SHARES OR DEBENTURE

Save as disclosed above, as at 30 June 2020, no rights to acquire benefits by means of the acquisition of shares in or debentures of the Company were granted to any Directors or their respective spouse or children under 18 years of age, or were any such rights exercised by them, or was the Company, its holding company, or any of its subsidiaries and fellow subsidiaries a party to any arrangement to enable the Directors to acquire such rights in any other body corporate.

PURCHASE, SALE OR REDEMPTION OF LISTED SECURITIES OF THE COMPANY

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the Period.

COMPLIANCE WITH THE MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS

The Company has adopted the Model Code as set out in Appendix 10 of the Listing Rules as its code regarding Directors' dealings in the Company's securities. Having made specific enquiry of all Directors, all Directors confirmed that they have complied with the Model Code during the Period.

NON-COMPETITION UNDERTAKINGS

The controlling shareholders of the Company, namely Ms. Li Juan, Mr. Cheng Li, Mr. Wu Haiming, Loyal Alliance Management Limited, Prime Wish Holdings Limited and Victory Glory Holdings Limited (the "Controlling Shareholders") have entered into a deed of non-competition (the "Deed of Non-competition") on 19 June 2015. Details of the Deed of Non-competition are set out in the section headed "Relationship with Controlling Shareholders" of the Prospectus and the non-competition undertaking has become effective from the Listing Date. So far as the Directors are aware, as at the date of this report, the Controlling Shareholders have not breached any terms under the Deed of Non-competition.

SHARE AWARD PLAN

The Board has adopted a share award plan (the "Plan") on 6 July 2016 so as to recognize and appreciate the contribution of any qualified employees towards the growth and development of the Group. On 8 September 2016, Mr. Hsieh Kun Tse, the non-executive Director, had transferred the entire issued share capital of Properous Commitment Holdings Limited ("Properous Commitment") which in turn holds 51,600,000 of the Shares of the Company, to TMF Trust (HK) Limited at nil consideration. The trustee holds on trust the award Shares for the benefit of the selected employees in accordance to the terms of the trust deed, until such award Shares are vested in the relevant selected employees in accordance with this Plan. For details of the Plan, please refer to the announcements of the Company dated 7 July 2016 and 14 July 2016. To the best knowledge of the Directors, as at the date of this report, both Properous Commitment and TMF Trust (HK) Limited have complied with the terms of the trust deed.

As at the date of this report, no Shares have been granted to qualified employees under the Plan.

China Parenting Network Holdings Limited • Interim Report 2020 27

CORPORATE GOVERNANCE AND OTHER INFORMATION

COMPLIANCE WITH QUALIFICATION REQUIREMENTS AND LAWS AND REGULATIONS

The Group's primary business is considered to be value-added telecommunications service, a sector where foreign investment is subject to significant restrictions under the current PRC laws and regulations. Accordingly, with the restriction of the current PRC laws and regulations and the implementation of local competent authorities, the Company cannot acquire Nanjing Xihui and Nanjing Xinchuang, which hold certain licenses and permits required for our primary business. As a result, the Group entered into a series of contractual arrangement with Nanjing Xihui and Nanjing Xinchuang and their respective registered shareholders (the "Structural Contract") in order to conduct the said business, and to assert management control over the operations of and enjoy the economic benefits derived from Nanjing Xihui and Nanjing Xinchuang. For details of the Contractual Arrangement, please refer to the section headed "Contractual Arrangement" of the 2019 Annual Report.

In addition, under the current PRC laws and regulations, a foreign investor intending to acquire any equity interest in a value-added telecommunications business in the PRC must also demonstrate a good track record and possess operating experience in providing value-added telecommunications services overseas ("Qualification Requirements").

So far as the Directors are aware, as at the date of this report, the Company has taken all reasonable steps to ensure that such Qualification Requirements are met if and when the PRC laws and competent authorities substantially allow foreign investors to invest in value-added telecommunications services in the PRC. The Company will continue to communicate with the relevant governmental authorities and provide updates where necessary.

Due to the nature of our business, the Company is significantly affected by PRC laws and regulations, including laws and regulations of telecommunications services, those relevant to advertising service, information security and privacy protection as well as intellectual property rights. As far as the Directors are aware, the Company had no material breach of any relevant laws and regulations as at 30 June 2020. The Company reduced its potential legal risk through different management and monitoring systems, such as regular review of the effectiveness of internal control system, defined duty division and provided training to employees and management related to such laws and regulations and recruit legal adviser as professional consultant.

COMPETING INTERESTS

So far as the Directors are aware, as at the date of this report, none of the Directors or the Controlling Shareholders and their respective close associates has any interests in a business which competes or may compete with the business of the Group or have any other conflict of interests with the Group.

AUDIT COMMITTEE AND REVIEW OF FINANCIAL STATEMENTS

The Company has established an audit committee (the "Audit Committee") with written terms of reference in compliance with Rules 3.21 and 3.22 of the Listing Rules. The primary duties of the Audit Committee are to review the Company's annual reports and accounts and interim reports, the financial reporting, risk management and internal control systems of the Group and to provide advice to the Board. The Audit Committee consists of two independent non-executive Directors, namely Mr. Wu Chak Man (chairman of the Audit Committee) and Mr. Ge Ning, and one non-executive Director, namely Ms. Li Juan. The Audit Committee has reviewed the unaudited interim results of the Group for the Period and interim report. The interim condensed consolidated financial statements for the Period have not been audited.

28 China Parenting Network Holdings Limited • Interim Report 2020

CORPORATE GOVERNANCE AND OTHER INFORMATION

RISKS AND UNCERTAINTIES

Our Group believes that there are certain risks and uncertainties in our operations, some of which are beyond the Group's control, including:

  1. The Group is unable to guarantee that the Contractual Arrangement with the PRC Contractual Entities will be deemed by the relevant governmental and judicial authorities to be in compliance with existing PRC laws and regulations or that it will comply with future PRC laws and regulations, including but not limited to the new draft of the Foreign Investment Law of PRC（中華人民共和國外國投資法）.
    Our Directors have already formulated monitoring measures and examine the risk evaluation and report regularly, the details of which are set out in the Contractual Arrangement.
  2. The revenue of the Group relies significantly on the marketing and promotional services provided and new businesses may not be successfully developed and introduced going forward.
    Since the operational environment in the Internet industry has never-ending changes and improvements, we believe we should timely keep track of the industry, market and customer demands development to review our business strategies. We jointly make investigation and assessment with industry experts and partners in addition to monitoring the market and industry by ourselves.
    We optimize our sales and promotion models constantly through innovation to satisfy the demand of existing customers and explore new customers at the same time.
    The Group will develop diversified business actively to anticipate comprehensive income. We will continue to propel industry chain cooperation and upgrade strategies, exploit more demands from mother-child households and formulate project management system to explore high-quality and suitable cooperation projects.
    Research and development of technology is our significant support in business development. We have management system in place for technological research and development, so as to facilitate effective business development through technology.
  3. The Company's investment scale is expanding which results in the failure to carry out timely and effective management may affect realization of investment expectations.
    The Company pays close attention to investment risks and has established an investment team to make recommendations on investment matters. Our financial department, legal advisers and technical team are responsible for the follow-up of post-investment management so as to continuously monitor the status of business development and financial risks of investees. The Company has established an investment management system to implement relevant risk management and internal control measures. The Company also obtains relevant professional experience and knowledge by consulting external experts.
  4. At the date of this report, the Group expects the outbreak of COVID-19 will continue to affect part our clients. Due to the uncertainties of the epidemic, it is difficult to estimate its influence in the future. The Group will continue to monitor the development of the epidemic, evaluate its impact, respond in an active manner and make timely disclosures.

China Parenting Network Holdings Limited • Interim Report 2020 29

CORPORATE GOVERNANCE AND OTHER INFORMATION

CORPORATE GOVERNANCE CODE

The Company has adopted the principles and the code provisions set out in the Corporate Governance Code (the "CG Code") contained in Appendix 14 to the Listing Rules. To the best knowledge of the Directors, the Company had complied with all the code provisions as set out in the CG Code during the Period.

By order of the Board

China Parenting Network Holdings Limited

CHENG Li

Executive Director and Chief Executive Officer

Nanjing, the PRC, 31 August 2020

As at the date of this report, the executive Directors are Mr. CHENG Li, Mr. HU Qingyang, and Mr. ZHANG Lake Mozi; the non-executive Directors are Mr. WU Haiming, Ms. LI Juan and Mr. ZHANG Haihua; and the independent non-executive Directors are Mr. WU Chak Man, Mr. ZHAO Zhen and Mr. GE Ning.

30 China Parenting Network Holdings Limited • Interim Report 2020

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS

for the six months ended 30 June 2020 (Expressed in thousands of Renminbi)

The board of directors (the "Board") of China Parenting Network Holdings Limited (the "Company") submit herewith the unaudited interim report of the Company and its subsidiaries (collectively referred to as the "Group") for the six months ended 30 June 2020 prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting".

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

Note

RMB'000

RMB'000

Revenue

5

32,206

50,857

Cost of sales

(25,927)

(19,951)

Gross profit

6,279

30,906

Other income and gains

5

6,740

5,752

Selling and distribution expenses

(20,113)

(8,648)

Administrative expenses

(7,998)

(8,679)

Research and development costs

(5,455)

(5,019)

(Reversal of)/provision for impairment on trade

receivables and contract asset, net

356

-

Other expenses

(81)

(91)

Finance costs

7

(402)

(1,468)

(Loss)/profit before tax

6

(20,674)

12,753

Income tax expense

8

(102)

(270)

(Loss)/profit for the period

(20,776)

12,483

(Loss)/profit attributable to:

Owners of the parent

(16,407)

12,530

Non-controlling interests

(4,369)

(47)

(20,776)

12,483

RMB cents

RMB cents

(Loss)/earnings per share attributable to ordinary equity holders

of the parent

Basic and diluted

9

(1.60)

1.22

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

China Parenting Network Holdings Limited • Interim Report 2020 31

INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2020 (Expressed in thousands of Renminbi)

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

(Loss)/profit for the period

(20,776)

12,483

Other comprehensive (loss)/income, net of tax:

Items that will not be reclassified to profit or loss in subsequent periods:

Equity investments designated at fair value through other comprehensive income

(11,933)

(507)

Items that may be reclassified to profit or loss in subsequent periods:

Exchange differences on translation of foreign operations

34

(498)

Other comprehensive loss for the period, net of tax

(11,899)

(1,005)

Total comprehensive (loss)/income for the period

(32,675)

11,478

Total comprehensive (loss)/income for the period attributable to:

Owners of the parent

(28,306)

11,525

Non-controlling interests

(4,369)

(47)

(32,675)

11,478

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

32 China Parenting Network Holdings Limited • Interim Report 2020

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2020

(Expressed in thousands of Renminbi)

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Note

RMB'000

RMB'000

Non-current assets

726

Property, plant and equipment

10

707

Right-of-use assets

1,616

3,330

Long-term receivables

11

26,603

28,081

Deposit for property, plant and equipment

5,361

5,348

Other financial assets

12

310,274

318,623

Deferred tax assets

30

84

344,610

356,173

Current assets

9,545

Inventories

9,545

Trade and bills receivables

13

20,918

24,636

Contract assets

14

24,088

23,527

Prepayments, deposits and other receivables

15

19,750

21,406

Debt investment

16

-

30,000

Cash and cash equivalents

17

38,896

57,684

113,197

166,798

Current liabilities

8,700

Other payables and accruals

18

10,229

Interest-bearing bank borrowings

19

19,000

49,000

Lease liabilities

1,540

1,904

Contract liabilities

689

35

Tax payable

6,930

6,936

36,859

68,104

Net current assets

76,338

98,694

Total assets less current liabilities

420,948

454,867

Non-current liabilities

132

Lease liabilities

1,066

Deferred tax liabilities

8,786

9,096

8,918

10,162

NET ASSETS

412,030

444,705

Equity

Equity attributable to owners of the parent

8,090

Share capital

8,090

Reserves

404,520

432,826

412,610

440,916

Non-controlling interests

(580)

3,789

TOTAL EQUITY

412,030

444,705

Cheng Li

Zhang Lake Mozi

Director

Director

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

China Parenting Network Holdings Limited • Interim Report 2020 33

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2020 (Expressed in thousands of Renminbi)

Attributable to owners of the Company

Exchange

Non-

Share

Share

Reserves

Other

fluctuation

Fair value

Retained

controlling

capital

premium*

funds*

reserve*

reserve*

reserve*

profits*

Total

interests

Total

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

RMB'000

At 1 January 2020 (audited)

8,090

224,688

21,347

16,842

21,096

26,073

122,780

440,916

3,789

444,705

Loss for the period

-

-

-

-

-

-

(16,407)

(16,407)

(4,369)

(20,776)

Other comprehensive profit/

(loss) for the period:

Exchange differences on

translation of foreign

operations

-

-

-

-

34

-

-

34

-

34

Change in fair value of equity

investments at fair value

through other comprehensive

income

-

-

-

-

-

(11,933)

-

(11,933)

-

(11,933)

Total comprehensive (loss)/income

for the period

-

-

-

-

34

(11,933)

(16,407)

(28,306)

(4,369)

(32,675)

Appropriation of statutory reserves

-

-

10

-

-

-

(10)

-

-

-

At 30 June 2020 (unaudited)

8,090

224,688

21,357

16,842

21,130

14,140

106,363

412,610

(580)

412,030

At 1 January 2019 (audited)

8,090

224,688

19,190

16,842

19,492

7,366

126,326

421,994

(12)

421,982

Profit for the period

-

-

-

-

-

-

12,530

12,530

(47)

12,483

Other comprehensive

(loss)/income for the period:

Exchange differences on

translation of foreign

operations

-

-

-

-

(498)

-

-

(498)

-

(498)

Change in fair value of

equity investments

at fair value through other

comprehensive income

-

-

-

-

-

(507)

-

(507)

-

(507)

Total comprehensive (loss)/profit

for the period

-

-

-

-

(498)

(507)

12,530

11,525

(47)

11,478

Appropriation of statutory reserves

-

-

979

-

-

-

(979)

-

-

-

At 30 June 2019 (unaudited)

8,090

224,688

20,169

16,842

18,994

6,859

137,877

433,519

(59)

433,460

  • These reserve accounts comprise the consolidated reserves of RMB404,520,000 (30 June 2019: RMB425,429,000) in the interim condensed consolidated statement of financial position.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

34 China Parenting Network Holdings Limited • Interim Report 2020

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 30 June 2020 (Expressed in thousands of Renminbi)

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

Note

RMB'000

RMB'000

Operating activities

(Loss)/profit before tax

(20,674)

12,753

Adjustments for:

Depreciation of property, plant and equipment

6

287

153

Depreciation of right-of-use assets

6

1,036

1,199

Finance costs

7

402

1,468

(Reversal of)/provision for impairment on trade receivables

6

(201)

28

Reversal of impairment on contract assets

6

(155)

(28)

Foreign exchange differences, net

6

(19)

(345)

Bank interest income

5

(35)

(39)

Other interest income

5

(745)

(634)

Investment income from financial assets at fair value through profit or loss

5

(1,548)

(589)

Staff costs arising from interest-free loans to employees

193

160

Written off of inventories

6

-

9

Loss on early termination of leases

6

164

-

(21,296)

14,135

Operating cash flows before working capital changes

Increase/(decrease) in prepayments, deposits and other receivables

2,414

(7,324)

Increase/(decrease) in trade and bills receivables

3,918

(20,226)

Increase/(decrease) in contract assets

(405)

19,903

Increase/(decrease) in long-term receivables

(18)

29

Increase/(decrease) in contract liabilities

654

(8)

Increase/(decrease) in trade payables

-

(2,280)

Decrease in other payables and accruals

(1,971)

(2,447)

Cash (used in)/generated from operations

(16,704)

1,782

Interest paid

-

-

Income tax paid

(35)

-

Income tax refund

-

858

Net cash flows (used in)/generated from operating activities

(16,739)

2,640

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

China Parenting Network Holdings Limited • Interim Report 2020 35

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 30 June 2020 (Expressed in thousands of Renminbi)

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

Note

RMB'000

RMB'000

Investing activities

Interest received

35

39

Refund of deposit paid for property, plant and equipment

(13)

-

Purchases of items of property, plant and equipment

(304)

(308)

Loan to employees

-

(2,100)

Repayment of loan to employees

340

120

Loan to others

-

-

Repayment of loan to others

-

-

Purchases of unlisted equity investments

(2,500)

-

Purchases of bank product investments

(65,500)

(111,400)

Proceeds from redemption of bank product investments

97,048

49,839

Increase in time deposits with original maturity over three months

-

-

Net cash generated from/(used in) investing activities

29,106

(63,810)

Financing activities

New bank borrowings

14,000

40,000

Repayment of bank loans

(44,000)

(8,000)

Principal portion of lease payments

(840)

(1,445)

Interest paid

(349)

(1,340)

Net cash (used in)/generated from financing activities

(31,189)

29,215

Net decrease in cash and cash equivalents

(18,822)

(31,955)

Cash and cash equivalents at beginning of the period

57,684

86,251

Effect of foreign exchange rate changes, net

34

(665)

Cash and cash equivalents at end of the period

38,896

53,631

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

36 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

1 CORPORATE INFORMATION

The Company was incorporated in the Cayman Islands on 13 October 2014 as an exempted company with limited liability under the Companies Law (2013 Revision) of the Cayman Islands. The address of the registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands. The shares of the Company were listed on the Growth Enterprise Market (the "GEM") of the Stock Exchange of Hong Kong Limited (the "Stock Exchange") on 8 July 2015 (the "Listing Date"). Upon approval by the Stock Exchange on 27 September 2018, the shares of the Company were listed on the Main Board on 8 October 2018 and delisted from the GEM since the last day of trading on 5 October 2018.

The principal activity of the Company is investment holding. The Group are principally engaged in (i) the provision of marketing and promotional services through the Group's platform, including CI Web, mobile CI Web, Mobile Application Software ("APPs") and IPTV APPs; and (ii) e-commerce business in China. There has been no significant change in the Group's principal activities during the period.

In the opinion of the directors of the Company, as of the date of approval of these financial statements, Ms. Li Juan, Mr. Cheng Li, Mr. Wu Haiming, Loyal Alliance Management Limited, Prime Wish Holdings Limited and Victory Glory Holdings Limited are the Company's controlling shareholders.

2 BASIS OF PREPARATION

The interim condensed consolidated financial statements for the six months ended 30 June 2020 have been prepared in accordance with the International Accounting Standards ("IAS") 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with those of the annual report for the year ended 31 December 2019.

The interim condensed consolidated financial statements have been prepared in accordance with the same accounting policies adopted in the annual report for the year ended 31 December 2019, except for the accounting policy changes that are expected to be reflected in the annual report for the year ended 31 December 2020. Details of any changes in accounting policies are set out in note 3.

The unaudited consolidated results for the six months ended 30 June 2020 have not been audited by the Company's auditors, but have been reviewed by the Company's audit committee.

3 CHANGES IN ACCOUNTING POLICIES

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those applied in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2019, except for the adoption of the revised International Financial Reporting Standards ("IFRSs") below for the first time in these financial statements.

Amendments to IFRS 3

Definition of a Business

Amendments to IFRS 9, IFRS 39 and IFRS 7

Interest Rate Benchmark Reform

Amendments to IFRS 16

Rental concessions related to COVID-19 (prospectively apply)

Amendments to IAS 1 and IAS 8

Definition of Material

The directors of the Company expect that the application of all new IFRSs and their amendments will not have a significant impact on the consolidated financial statements in the foreseeable future.

China Parenting Network Holdings Limited • Interim Report 2020 37

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

4 OPERATING SEGMENT INFORMATION

The Group is principally engaged in the provision of marketing and promotional services through the Group's platform and e-commerce business.

IFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reporting about components of the Group that are regularly reviewed by the chief operating decision-maker in order to allocate resources to segments and to assess their performance. The information reported to the directors of the Company, who are the chief operating decision-makers, for the purpose of resource allocation and assessment of performance does not contain discrete operating segment financial information and the directors reviewed the financial results of the Group as a whole. Therefore, no further information about the operating segment is presented.

Geographical information

During the period, the Group operated within one geographical segment because nearly all of its revenue was generated in the Mainland China and all of its long-term assets/capital expenditure were located/incurred in the Mainland China. Accordingly, no geographical segment information is presented.

Information about major customers

For the six months ended 30 June 2020, revenue of approximately RMB13,503,000 (six months ended 30 June 2019: RMB17,828,000) was derived from sales of marketing and promotional service to top three customers. Details are disclosed as follows:

For the six months ended

30 June

20202019

(Unaudited) (Unaudited)

RMB'000 RMB'000

Customer A

6,021

6,819

Customer B

3,850

6,251

Customer C

3,632

4,758

13,503

17,828

38 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

5 REVENUE, OTHER INCOME AND GAINS

An analysis of revenue, other income and gains is as follows:

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

Revenue

Marketing and promotional services

32,206

50,840

E-commerce

-

17

32,206

50,857

Other income and gains

Bank interest income

35

39

Other interest income

745

634

Foreign exchange gain/(loss), net

19

345

Government grants - related to expense (note)

4,240

4,062

Investment income from financial assets at fair value through profit or loss

1,548

589

Other income

153

83

6,740

5,752

Note:

Government grants were received from the government of the Mainland China mainly to encourage the Group's efforts on development and innovation or as listing incentives. There are no unfulfilled or contingencies relating to the grants.

China Parenting Network Holdings Limited • Interim Report 2020 39

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

6

(LOSS)/PROFIT BEFORE TAX

The Group's profit before tax is arrived at after charging/(crediting):

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

Note

RMB'000

RMB'000

Cost of services provided

19,144

10,822

Depreciation of property, plant and equipment

287

153

Depreciation of right-of-use assets

1,036

1,199

Loss on early termination of leases

164

-

Minimum lease payments under operating leases

215

-

Research and development costs:

Current period expenditure

5,455

5,019

Employee benefit expense (excluding directors' and

chief executive's remuneration):

Wages and salaries

11,540

12,295

Pension scheme contributions (defined contribution scheme)

75

912

Written off of inventories

-

9

Foreign exchange differences, net

(19)

(345)

(Reversal of)/provision for impairment on trade receivables

13

(201)

28

Reversal of impairment on contract assets

14

(155)

(28)

Bank interest income

5

(35)

(39)

Other interest income

5

(745)

(634)

Government grants

5

(4,240)

(4,062)

Investment income from financial asset

at fair value through profit or loss

5

(1,548)

(589)

40 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

7

FINANCE COSTS

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

Interest on bank borrowings

349

390

Interest on discounted bill

-

950

Interest expense on lease liabilities

53

128

402

1,468

8

INCOME TAX EXPENSES

The Group is subject to income tax on an entity basis on profit arising in or derived from the jurisdictions in which members of the Group are domiciled and operate.

The Company was incorporated in the Cayman Islands as an exempted company with limited liability under the Companies Law of the Cayman Islands and accordingly is not subject to income tax.

Under the relevant income tax law, the Mainland China subsidiaries are subject to income tax at a statutory rate of 25% on their respective taxable income, except for Nanjing Xibai, Nanjing Xile, Khorgos Xizhi and Nanjing Xihui.

Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation on Enterprise Income Tax Policies for Further Encouraging the Development of Software and Integrated Circuit Industries (《財政部、國家稅務 總局關於進一步鼓勵軟件產業和集成電路產業發展企業所得稅政策的通知》) promulgated by the State Council on 20 April 2012, if a corporate enterprise is recognised as a software enterprise, from tax filing at its first profitable year, the corporate enterprise can enjoy a preferential treatment (i.e., 2-year exemption and 3-year half payment). Nanjing Xibai and Nanjing Xile have been recognised as software enterprises since 27 May 2016 and filed in local tax bureau. Pursuant to the Notice of the Ministry of Science and Technology, the Ministry of Finance, and the State Administration of Taxation on Revising and Issuing the Measures for the Administration of the Certification of High-Tech Enterprises (《科技部、財政部、國家稅務總局關於修訂印發《高新技術企業認定管理辦法》的通知》) promulgated by the State Council on 19 June 2017, if a corporate enterprise is recognised as a high-tech enterprise, the corporate enterprise can enjoy a preferential income tax rate of 15%. Nanjing Xibai has been recognised as a high-tech enterprise since 6 December 2019 and filed in local tax bureau. Nanjing Xile would be exempted from income tax for their first two profitable years (i.e., 2017 and 2018) followed by a preferential income tax rate of 12.5% from 2019 to 2021.

Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation on Enterprise Income Tax Policies for Xinjiang Uygur Autonomous Region and Xinjiang Kashgar Autonomous Region (《財政部、國家稅務總局 關於新疆喀什霍爾果斯兩個特殊經濟開發區企業所得稅優惠政策的通知》) promulgated by the State Council on 29 November 2011, if a corporate enterprise is newly established within calendar years 2010 to 2020 in two specific regions with business fallen in the scope of the Catalogue of Preferred Enterprise Income Tax for Key Encouraged Industries in Poor Areas of Xinjiang (《新疆困難地區重點鼓勵發展產業企業所得稅優惠目錄》), the corporate enterprise can enjoy a preferential treatment (i.e., 5-year exemption) from the first year when the entity begins to generate revenue. Khorgos Xizhi is exempted from income tax from calendar years 2017 to 2020 upon an approval by the State Taxation Bureau of the Xinjiang Uygur Autonomous Region in October 2017.

China Parenting Network Holdings Limited • Interim Report 2020 41

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

8 INCOME TAX EXPENSES (CONTINUED)

Pursuant to the Notice of the Ministry of Science and Technology, the Ministry of Finance, and the State Administration of Taxation on Revising and Issuing the Measures for the Administration of the Certification of High-techEnterprises (《科技部、財政部、國家稅務總局關於修訂印發《高新技術企業認定管理辦法》的通知》) promulgated by the State Council on 19 June 2017, if a corporate enterprise is recognised as a high-techenterprise, the corporate enterprise can enjoy a preferential income tax rate of 15%. Nanjing Xihui has been recognised as a high-techenterprise since 30 November 2018 and filed in local tax bureau. Therefore, Nanjing Xihui would enjoy a preferential income tax rate of 15% from 2018 to 2020.

The income tax expenses of the Group are analysed as follows:

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

Current tax - Mainland China

Provision for the period

108

1,596

Over-provision/underprovision in respect of prior periods

(75)

(1,349)

33

247

Deferred tax

Origination of temporary differences

69

23

Total tax charge for the period

102

270

9 (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT

The calculation of the basic earnings per share amount is based on the (loss)/profit attributable to ordinary equity holders of the parent, and the weighted average numbers of ordinary shares of 1,025,662,000 (2019: 1,025,662,000) in issue during the six months ended 30 June 2020 and 2019. The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2020 (six months ended 30 June 2019: RMBNil).

There were no potentially dilutive ordinary shares in issue during the six months ended 30 June 2020 and 2019, and therefore the diluted earnings per share amount is equivalent to the basic earnings per share.

42 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

9 (LOSS)/EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT (CONTINUED)

The calculations of basic and diluted (loss)/earnings per share are based on:

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB'000

RMB'000

(Loss)/earnings

(Loss)/profit attributable to ordinary equity holders of the parent

(16,407)

12,530

Number of shares

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

Shares

Weighted average number of ordinary shares in issue

1,025,662,000

1,025,662,000

For the six months ended

30 June

2020

2019

(Unaudited)

(Unaudited)

RMB cents

RMB cents

(Loss)/earnings per share attributable to ordinary equity holders of the parent

- Basic and diluted

(1.60)

1.22

10 PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2020, the Group acquired assets with a cost of approximately RMB304,000 (six months ended 30 June 2019: RMB308,000).

Assets with a net book value of RMBNil were disposed of by the Group during the six months ended 30 June 2020 (six months ended 30 June 2019: RMBNil), resulting in a net loss on disposal of RMBNil (six months ended 30 June 2019: RMBNil).

China Parenting Network Holdings Limited • Interim Report 2020 43

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

11 LONG-TERM RECEIVABLES

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Note

RMB'000

RMB'000

Rental deposit

951

934

Loans to employees

(i)

5,704

6,342

Loan to others

19,948

20,805

- At FVOCI

(ii)

18,800

19,688

- At amortised cost

(iii)

1,148

1,117

26,603

28,081

Notes:

  1. Since September 2016, the Group had begun to offer certain employees interest-free loans which amounted to no more than RMB15,000,000 in aggregate. The employees, including key management personnel, who have served the Group for more than three years can apply for such interest-free loans to purchase home properties. The balance, including interest-free loans to key management personnel of RMB1,798,000 (31 December 2019: RMB1,775,000), represents the interest-free loans to employees which will be repaid within two to five years.
  2. As at 30 June 2020, included in the balances was a loan measured at fair value of RMB13,887,000 (31 December 2019: RMB14,935,000), made to a private company, Nanjing Qianyu Information Technology Company Limited (「南京千魚信息技術有限公司」) ("Nanjing Qianyu"), at interest rate of 6.0% per annum for a period of 36 months. The directors of the Company are of the opinion that this loan facility agreement is for the long-term interest of the Group. In future, by evaluating the performance of Nanjing Qianyu over a period, the Group has the option to invest in shares of Nanjing Qianyu in priority. The loan was guaranteed by a subsidiary, Jiangsu Wansheng Weiye Network Technology Company Limited (「江蘇萬聖偉業網絡科技有限公司」) of an A-share company.
    The balance as at 30 June 2020 also included a loan measured at fair value of RMB4,913,000 (31 December 2019: RMB4,753,000) extended to a third party, Beijing Hongwei Technology Company Limited（北京宏偉科技有限公司）("Beijing Hongwei"), bearing interest rate of 8.0% per annum for a period of 24 months. By evaluating the performance of Beijing Hongwei over a period, the Group has the option to invest in shares of Beijing Hongwei in priority. The directors of the Company are of the opinion that this loan facility agreement is for the long-term interest of the Group and therefore designated at FVOCI.
  3. As at 6 June 2020, the balance included a loan with interest of RMB1,148,000 (2019 RMB1,117,000) extended to a third party, Shenzhen Feishikang Technology Company Limited（深圳飛視康科技有限公司）, bearing interest rates of 6.0% per annum for periods of 36 months.

44 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

12 OTHER FINANCIAL ASSETS

30 June

31 December

2020

2019

(Unaudited)

(Audited)

Note

RMB'000

RMB'000

Equity investments designated at fair value through

other comprehensive income (FVOCI)

Unlisted equity securities

(i),(ii)

310,274

318,623

310,274

318,623

Notes:

  1. The unlisted equity securities and the relevant prepayment were irrevocably designated at FVOCI as the Group considers these investments to be strategic in nature. No dividends were received on these equity securities during the period (six months ended 30 June 2019: RMBNil). During the period ended 30 June 2020, the fair value loss recognised in the statement of other comprehensive income amounted to RMB10,849,000 (the gain for six months ended 30 June 2019: RMB249,000). Details on the Group's fair value measurement are set out in note 24.
  2. The balances include put options with an amount of RMB157,149,000 (31 December 2019: RMB202,940,000) with derivative embedded which represents the Company's options to request for investees to repurchase the equity shares in certain situations including the investees' failure in meeting specific profits guarantee or developing specific techniques, fundamental change in investees' principal activities and/or investees and original shareholders violated integrity and damaged the investees' interest.

China Parenting Network Holdings Limited • Interim Report 2020 45

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

13 TRADE AND BILLS RECEIVABLES

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Trade receivables

20,988

22,607

Impairment

(70)

(271)

20,918

22,336

Bills receivables

-

2,300

20,918

24,636

The Group's trading terms with its customers are mainly on credit. The credit period is generally 90 to 180 days after date of invoices, depending on contracts with individual customers. Each customer has a maximum credit limit. The Group seeks to maintain strict control over its outstanding receivables and has a credit control department to minimise credit risk. Overdue balances are reviewed regularly by senior management. In view of the aforementioned and the fact that the Group's trade receivables relate to customers with a good track record, there is no significant concentration of credit risk. The Group does not hold any collateral or other credit enhancements over its trade receivable balances. Trade receivables are non-interest-bearing.

Bills receivables are those bills not yet due at the end of the reporting period and the management considers the default rate is low as the Group did not encounter any default on bills receivables based on past experience. All bills received by the Group are with a maturity period of less than one year.

An ageing analysis of the trade receivables as at the end of the reporting period, based on the date of invoices and net of loss allowance, is as follows:

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Within 3 months

5,269

12,822

3 to 6 months

6,197

5,869

6 months to 1 year

6,809

3,302

1 to 2 years

-

-

2 to 3 years

2,643

2,643

20,918

24,636

46 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

14 CONTRACT ASSETS

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Contract assets arising from marketing and promotional services

24,221

23,815

Impairment

(133)

(288)

24,088

23,527

Contract assets are initially recognised for revenue earned from the marketing and promotional services as the receipt of consideration is conditional on successful completion of services. Included in contract assets for marketing and promotional services are retention receivables. Upon completion of services and acceptance by the customer, the amounts recognised as contract assets are reclassified to trade receivables.

As at 30 June 2020, RMB155,000 (31 December 2019: provision for impairment of RMB221,000) was recognised for reversal of impairment on contract assets.

The expected timing of recovery or settlement for contract assets as at the end of the reporting period is as follows:

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Within 1 year

24,088

23,527

The movements in the loss allowance for impairment of contract assets are as follows:

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

At beginning of the year

288

67

Impairment losses (note 6)

(155)

221

At end of the year

133

288

An impairment analysis is performed at each reporting date using a provision matrix to measure ECLs. The provision rates for the measurement of the ECLs of the contract assets are based on those of the trade receivables as the contract assets and the trade receivables are from the same customer bases. The provision rates of contract assets are based on days past due of trade receivables for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type, customer type and rating, and coverage by letters of credit or other forms of credit insurance). The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.

China Parenting Network Holdings Limited • Interim Report 2020 47

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

15 PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Advance payments to suppliers

6,864

17,233

Prepaid expenses

8,702

844

Employee advances

188

176

Deposits

402

41

Other receivables

518

334

Current portion of loans to employees (note 11(i))

3,076

2,778

19,750

21,406

None of the above assets is either past due or impaired. The financial assets included in the above balances relate to receivables for which there was no recent history of default.

16 DEBT INVESTMENT

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Debt investment

-

30,000

The debt investment was wealth management product, principal guaranteed with floating return ranging from 2% to 3.75% per annum, issued by a bank in the Mainland China, which was redeemed on 30 January 2020.

48 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

17 CASH AND CASH EQUIVALENTS

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Cash and bank balances

38,896

57,684

Notes:

  1. At the end of the reporting period, the cash and bank balances of the Group dominated in RMB amount to approximately RMB34,870,000 (31 December 2019: RMB31,732,000). The RMB is not freely convertible into other currencies, however, under Mainland China's Foreign Exchange Control Regulations and Administration of Settlement, Sale and Payment of Foreign Exchange Regulations, the Group is permitted to exchange RMB for other currencies through banks authorised to conduct foreign exchange business.
  2. Cash at banks earns interest at floating rates based on daily bank deposit rates. Short term time deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, and earn interest at the respective short term time deposit rates. The bank balances are deposited with creditworthy banks with no recent history of default.

18 OTHER PAYABLES AND ACCRUALS

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Other payables

1,305

1,193

Accruals

119

116

Other tax payables

5,261

4,160

Employee related payables

2,015

4,760

8,700

10,229

Other payables are non-interest-bearing and repayable on demand.

China Parenting Network Holdings Limited • Interim Report 2020 49

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

19 INTEREST-BEARING BANK BORROWINGS

30 June 2020 (Unaudited)

31 December 2019 (Audited)

Effective

Effective

interest

interest

rate (%)

Maturity

RMB'000

rate (%)

Maturity

RMB'000

Current

Bank loans, secured

-

-

-

4.35

2020

10,000

Bank loans, unsecured

4.35-5.22

2020

19,000

3.45-5.22

2020

39,000

19,000

49,000

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Analysed into:

Bank loans:

Within one year or on demand

19,000

49,000

  1. The loans of RMB5,000,000 are secured by personal guarantees given by an executive director, Cheng Li, and a non-executive director, Li Juan of the Company. The loans RMB5,000,000 are secured by personal guarantees given by an executive director, Cheng Li, and non-executive directors, Li Juan and Wu Haiming of the Company. The relevant directors did not receive any fees for such guarantees from the Group and the Group did not provide any collateral for the aforesaid guarantees to the relevant directors.
  2. The Group's bank facilities amounted to RMB19,000,000 (31 December 2019: RMB49,000,000), all of which had been utilised as at the end of the reporting period and will be settled within one year.
  3. Such loans were denominated in RMB.

20 CONTINGENT LIABILITIES

As at the end of the reporting period, neither the Group nor the Company had any significant contingent liabilities.

21 COMMITMENTS

The Group had the following capital commitment at the end of the reporting period:

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

Contracted, but not provided for:

Land and buildings

56,542

-

50 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

22 RELATED PARTY TRANSACTIONS

  1. Material transactions with key management personnel:

30 June

31 December

2020

2019

(Unaudited)

(Audited)

RMB'000

RMB'000

For the period/year

Maximum aggregate amount of loans

1,798

1,847

At the period/year-end

Loans to key management personnel

1,798

1,755

The loans granted to key management personnel who are not directors of the Company are interest-free housing loans and have fixed terms of repayment of five years, which are included in loans to employees in note 11(i).

  1. Compensation of key management personnel of the Group:

For the six months ended

30 June

20202019

(Unaudited) (Unaudited)

RMB'000 RMB'000

Short term employee benefits

1,671

1,969

Pension scheme contributions

10

131

1,681

2,100

China Parenting Network Holdings Limited • Interim Report 2020 51

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

23 FINANCIAL INSTRUMENTS BY CATEGORY

The carrying amounts of each of the categories of financial instruments as at the end of the reporting period are as follows:

As at 30 June 2020

Financial assets

Financial

assets at

Financial

amortised

Financial

assets at

cost

assets at FVPL

FVOCI

Total

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

RMB'000

RMB'000

RMB'000

RMB'000

Long-term receivables

6,852

-

18,800

25,652

Other financial assets

-

-

310,274

310,274

Trade and bills receivables

20,918

-

-

20,918

Contract assets

24,088

-

-

24,088

Financial assets included in prepayments,

deposits and other receivables

9,128

-

-

9,128

Cash and cash equivalents

38,896

-

-

38,896

99,882

-

329,074

428,956

Financial liabilities

Financial

liabilities at

amortised

cost

(Unaudited)

RMB'000

Financial liabilities included in other payables and accruals

8,700

Interest-bearing bank borrowings

19,000

Lease liabilities

1,672

29,372

52 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

23 FINANCIAL INSTRUMENTS BY CATEGORY (CONTINUED)

As at 31 December 2019

Financial assets

Financial

Financial

assets at

assets at

amortised cost

FVOCI

Total

RMB'000

RMB'000

RMB'000

Long-term receivables

7,459

19,688

27,147

Other financial assets

-

318,623

318,623

Trade and bills receivables

24,636

-

24,636

Contract assets

23,527

-

23,527

Financial assets included in prepayments, deposits

and other receivables

3,288

-

3,288

Debt investment

30,000

-

30,000

Cash and cash equivalents

57,684

-

57,684

146,594

338,311

484,905

Financial liabilities

Financial

liabilities at

amortised

cost

RMB'000

Financial liabilities included in other payables and accruals

1,309

Interest-bearing bank borrowings

49,000

Lease liabilities

2,970

53,279

China Parenting Network Holdings Limited • Interim Report 2020 53

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

24 FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Group's financial instruments, other than those with carrying amounts that reasonably approximate to fair values, are as follows:

Carrying amounts

Fair values

30 June

31 December

30 June

31 December

2020

2019

2020

2019

(Unaudited)

(Audited)

(Unaudited)

(Audited)

RMB'000

RMB'000

RMB'000

RMB'000

Financial assets

Long-term receivables

18,800

19,688

18,800

19,688

Other financial assets

310,274

318,623

310,274

318,623

329,074

338,311

329,074

338,311

Financial liabilities

Interest-bearing bank borrowings

19,000

49,000

19,000

49,000

Management has assessed that the fair values of cash and cash equivalents, time deposit with original maturity over three months, financial assets included in prepayments, deposits and other receivables, contract assets, trade payables and financial liabilities included in other payables and accruals, based on their notional amounts, reasonably approximate to their carrying amounts largely due to the short-term maturities of these instruments.

The Group's finance department headed by the finance manager is responsible for determining the policies and procedures for the fair value measurement of financial instruments. The finance manager reports directly to the chief financial officer and the audit committee. At each reporting date, the finance department analyses the movements in the values of financial instruments and determines the major inputs applied in the valuation. The valuation is reviewed and approved by the chief financial officer. The valuation process and results are discussed with the audit committee twice a year for interim and annual financial reporting.

The fair values of the financial assets are included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:

The fair value of financial assets and liabilities at amortised costs included in long term receivables and interest-bearing bank borrowings have been calculated by discounting the expected future cash flows using rates currently available for instruments with similar terms, credits risk and remaining maturities.

The fair value of financial assets at FVPL under Level 2 included bank product investments which represent wealth management products issued by banks in Mainland China. The Group has estimated the fair value of these unlisted investments by discounting the expected future cash flow based on the market interest rates of instruments with similar terms and risk.

54 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

24 FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)

Below is a summary of significant unobservable inputs to the valuation of financial instruments as at the end of the reporting period:

Financial assets

Valuation techniques

Significant unobservable input

Financial assets at FVOCI

Income approach and

Expected volatility of 45% (31 December 2019: 45%), taking

included in long-term

Black Scholes Model

into account volatility in listed entities in similar industry

receivables

extracted from the financial database of Wind Information

Co., Ltd.（萬得信息技 術股份有限公司）("Wind") (note (i))

Unlisted equity securities

Market comparable

Discount for lack of marketability, determined by reference

and prepayment for

companies

to the price/sales ratios of listed entities in similar industries

unlisted equity

extracted from database of Wind, 5.6 (2019: ranging from 3.7

securities

to 6.8) (note (ii))

Discount for lack of marketability, determined by reference

to the price/sales ratios of listed entities in similar industries

extracted from database of Wind, ranging from 3.6 to 7.7

(2019: 3.6 to 7.7) (Note (iii))

Black Scholes Model

Expected volatility ranging from 25% to 45% (2019: 25% to

45%), taking into account the volatility in listed and unlisted

entities in similar industry extracted from database of Wind

(note (i))

Notes:

  1. An increase in the expected volatility used in isolation would result in an increase in the fair value measurement of the financial assets at FVOCI included in long-term receivables and unlisted equity securities respectively, and vice versa. 5% increase/decrease in the volatility holding all other variables constant would increase/decrease the carrying amount of the financial assets at FVOCI included in long-term receivables and unlisted equity securities by RMB161,000 and RMB1,016,000 respectively (31 December 2019: RMB106,000 and RMB1,336,000 respectively).
  2. An increase in the price/sale ratios used in isolation would result in an increase in the fair value measurement of the unlisted equity investments, and vice versa. 5% increase/decrease in the price/sale ratio holding all other variables constant would increase/decrease the carrying amount of the unlisted equity investments by RMB1,729,000 (31 December 2019: RMB1,771,000).
  3. An increase in the long-term revenue growth rates used in isolation would result in an increase in the fair value measurement of the unlisted equity securities, and vice versa. 2% increase/decrease in the long-term revenue growth rates holding all other variables constant would increase/decrease the carrying amount of the unlisted equity securities by RMB2,650,000 (31 December 2019: RMB2,611,000).

China Parenting Network Holdings Limited • Interim Report 2020 55

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

24 FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)

Fair value hierarchy

The following tables illustrate the fair value measurement hierarchy of the Group's financial instruments for which fair values are disclosed:

As at 30 June 2020

Fair value measurement using

Quoted prices

Significant

Significant

in active

observable

unobservable

markets

inputs

inputs

(Level 1)

(Level 2)

(Level 3)

Total

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

RMB'000

RMB'000

RMB'000

RMB'000

Financial assets

Long-term receivables

-

-

18,800

18,800

Other financial assets

-

-

310,274

310,274

-

-

329,074

329,074

As at 31 December 2019

Fair value measurement using

Quoted prices

Significant

Significant

in active

observable

unobservable

markets

inputs

inputs

(Level 1)

(Level 2)

(Level 3)

Total

(Audited)

(Audited)

(Audited)

(Audited)

RMB'000

RMB'000

RMB'000

RMB'000

Financial assets

Long-term receivables

-

-

19,688

19,688

Other financial assets

-

-

318,623

318,623

-

-

338,311

338,311

56 China Parenting Network Holdings Limited • Interim Report 2020

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

24 FAIR VALUE AND FAIR VALUE HIERARCHY OF FINANCIAL INSTRUMENTS (CONTINUED)

Fair value hierarchy (continued)

The movements in fair value measurements within Level 3 during the period are as follows:

Financial

Financial

assets at

assets at

FVOCI

FVOCI

included in

included in

long-term

other financial

receivables

assets

Total

RMB'000

RMB'000

RMB'000

At 1 January 2020 (audited)

19,688

318,623

338,311

Payment for purchases

-

2,500

2,500

Loan interest receivable

520

-

520

Exchange realignment

-

818

818

Changes in fair value recognised in other

comprehensive income

(1,408)

(11,667)

(13,075)

At 30 June 2020 (unaudited)

18,800

310,274

329,074

At 1 January 2019 (restated)

14,113

262,192

276,305

Loan interest receivable

360

-

360

Exchange realignment

-

176

176

Changes in fair value recognised in other

comprehensive income

(598)

249

(349)

At 30 June 2019 (unaudited)

13,875

262,617

276,492

The Group did not have any financial liabilities measured at fair value as at 30 June 2020 and 31 December 2019.

During the period, there were no transfers of fair value measurements between Level 1 and Level 2 and no transfers into or out of Level 3 for both financial assets and financial liabilities (six months ended 30 June 2019: RMBNil).

China Parenting Network Holdings Limited • Interim Report 2020 57

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of Renminbi)

25 EVENT AFTER THE REPORTING PERIOD

There was no material subsequent event during the period from 30 June 2020 to the approval date of these interim condensed consolidated financial statements.

26 APPROVAL OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

These interim condensed consolidated financial statements were approved and authorised for issue by the board of directors on 31 August 2020.

By order of the Board

China Parenting Network Holdings Limited

CHENG Li

Executive Director and Chief Executive Officer

Nanjing, the PRC, 31 August 2020

As at the date of this report, the executive Directors are Mr. CHENG Li, Mr. HU Qingyang, and Mr. ZHANG Lake Mozi; the non- executive Directors are Ms. LI Juan, Mr. WU Haiming and Mr. ZHANG Haihua; and the independent non-executive Directors are Mr. WU Chak Man, Mr. ZHAO Zhen and Mr. GE Ning.

58 China Parenting Network Holdings Limited • Interim Report 2020

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China Parenting Network Holdings Ltd. published this content on 31 August 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 August 2020 12:44:11 UTC