China Parenting Network : 2020 INTERIM REPORT

CONTENTS

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”).

• 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

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

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:

14 China Parenting Network Holdings Limited • Interim Report 2020

MANAGEMENT DISCUSSION AND ANALYSIS

China Parenting Network Holdings Limited • Interim Report 2020 15

MANAGEMENT DISCUSSION AND ANALYSIS

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

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

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:

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:

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

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)

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

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