Table of Contents Page Corporate Information 2 Management Discussion and Analysis 6 Other Information 16 Report on Review of Condensed Consolidated Fi

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2 Table of Contents Page Corporate Information 2 Management Discussion and Analysis 6 Other Information 16 Report on Review of Condensed Consolidated Financial Statements 24 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 26 Condensed Consolidated Statement of Financial Position 27 Condensed Consolidated Statement of Changes in Equity 29 Condensed Consolidated Statement of Cash Flows 30 Notes to The Condensed Consolidated Financial Statements

3 Corporate Information BOARD OF DIRECTOR Executive Directors Mr. HUANG Junmou (Chairman) Mr. YANG Hua (Chief Executive Officer) Non-executive Directors Mr. LI Xiangcheng Mr. XU Xinhua Mr. YU Zida Independent Non-executive Directors Mr. LIN Zhangxi Mr. QIAN Haomin Ms. ZHAO Jinlin JOINT COMPANY SECRETARIES Mr. WONG Wai Tung (appointed on 13 September 2017) Ms. OUYANG Jiejiao (resigned on 13 September 2017) Ms. WONG Wai Ling AUTHORISED REPRESENTATIVES Mr. HUANG Junmou Ms. WONG Wai Ling AUDIT COMMITTEE Ms. ZHAO Jinlin (Chairlady) Mr. QIAN Haomin Mr. LIN Zhangxi REMUNERATION COMMITTEE Mr. LIN Zhangxi (Chairman) Mr. HUANG Junmou Ms. ZHAO Jinlin NOMINATION COMMITTEE Mr. HUANG Junmou (Chairman) Ms. ZHAO Jinlin Mr. QIAN Haomin 2 NNK Group Limited Interim Report 2017

4 Corporate Information REGISTERED OFFICE IN THE CAYMAN ISLANDS PO Box 309, Ugland House Grand Cayman, KY Cayman Islands PO Box 309, Ugland House Grand Cayman, KY Cayman Islands HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS IN THE PRC 6/F, 3 Building A Area Internet Industry Base Xixiang, Baoyuan Road Baoan District, Shenzhen, PRC A 3 6 PRINCIPAL PLACE OF BUSINESS IN HONG KONG 18/F Tesbury Centre 28 Queen s Road East Wanchai, Hong Kong PRINCIPAL SHARE REGISTRAR Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall Cricket Square Grand Cayman, KY Cayman Islands Maples Fund Services (Cayman) Limited PO Box 1093, Boundary Hall Cricket Square Grand Cayman, KY Cayman Islands HONG KONG SHARE REGISTRAR Computershare Hong Kong Investor Services Limited Shops th Floor Hopewell Centre 183 Queen s Road East Wanchai Hong Kong

5 Corporate Information LEGAL ADVISORS As to Hong Kong law: Sidley Austin Level 39, Two International Finance Centre 8 Finance Street Central Hong Kong As to Cayman Islands law: Maples and Calder 53rd Floor, The Center 99 Queen s Road Central Hong Kong COMPLIANCE ADVISOR Lego Corporate Finance Limited Room 1601, 16/F, China Building 29 Queen s Road Central Hong Kong AUDITOR Deloitte Touche Tohmatsu Certified Public Accountants 35/F, One Pacific Place 88 Queensway Hong Kong NNK Group Limited Interim Report 2017

6 Corporate Information PRINCIPAL BANKERS Shenzhen Tairan Sub-branch, China Construction Bank Co., Limited 1st Floor, No. 304 Building, Third Area Che Gongmiao Tairan Industrial Area Futian District, Shenzhen, PRC Shenzhen Dongmen Sub-branch, Industrial and Commercial Bank of China Co., Limited 1-2 Floor, Jinxiu Building No Wenjin Middle Road Luohu District, Shenzhen, PRC Shenzhen Gaoxinyuan Sub-branch, China Everbright Bank Co., Limited No Shennan Avenue Nanshan District, Shenzhen, PRC STOCK CODE COMPANY S WEBSITE

7 Management Discussion and Analysis The board (the Board ) of directors (the Directors ) of NNK Group Limited (the Company ) hereby announce the unaudited consolidated interim results of the Company and its subsidiaries (collectively, the Group ) for the six months ended 30 June 2017, together with the comparative figures for the corresponding period in BUSINESS REVIEW The Group is principally engaged in providing mobile top-up services to mobile users through electronic banking systems of PRC banks, offline channels including convenience stores, mobile phone stores and other third party retailer chains, and other channels including third-party online platforms, its own websites and Wechat public account. The mobile top-up service industry remained competitive in the first half of The Group experienced both declines in mobile top-up requests through its channel partners and average discount rate received from the PRC telecommunication operators and their distributors. Total revenue of the Group decreased by approximately 41.0% to approximately RMB50.8 million for the six months ended 30 June 2017 from approximately RMB86.1 million for the six months ended 30 June 2016, mainly due to declines in the number of mobile top-up requests processed by 007ka top-up platform and the average discount rate received from the PRC telecommunication operators and their distributors. The number of mobile top-up requests processed by 007ka topup platform was approximately 71.4 million for the six months ended 30 June 2017, representing a decrease of approximately 15.9% as compared with approximately 85.0 million for the six months ended 30 June The gross transaction value with mobile users decreased by approximately 29.5% to approximately RMB5,888.5 million for the six months ended 30 June 2017 from approximately RMB8,346.1 million for the six months ended 30 June % ka 007ka % 8, % 5, NNK Group Limited Interim Report 2017

8 Management Discussion and Analysis Despite the intensified competition, the Group endeavours to expand its user base by expanding its bank network and offline channel partners. As at 30 June 2017, the Group had cooperative relationships with 63 PRC banks, including five largest state-owned commercial banks and 10 of 12 nation-wide joint stock commercial banks, as compared with 50 PRC banks as at 30 June The Group collaborated with approximately 49,900 offline channel partners as at 30 June 2017, as compared with approximately 49,000 offline channel partners as at 30 June In addition, the Group will continue to expand its data usage top-up service offering on the back of growing demand of data usage top-up service in the PRC. In the first half of 2017, the gross transaction value of data usage top-up services through the Group s channel partners increased by approximately 41.2% to approximately RMB9.5 million for the six months ended 30 June 2017 from approximately RMB6.7 million for the corresponding period in The management made great effort to optimise the Group s operation structure through various cost-cutting measures. Costs incurred on administrative expenses and finance costs decreased by approximately 12.2% and 31.7%, respectively, for the six months ended 30 June 2017 when compared with the corresponding period in 2016, however, due to the decline of Group s total revenue, profit and total comprehensive income of the Group decreased by approximately 84.6% to approximately RMB3.0 million for the six months ended 30 June 2017 from approximately RMB19.3 million for the six months ended 30 June ,900 49, % % 31.7% %

9 Management Discussion and Analysis OUTLOOK The emerging of e-commerce platforms providing mobile top-up service is impacting the Group s mobile top-up service on electronic banking systems and offline channels. The management of the Group believes that it brings both challenges and opportunities to the Company s business. Facing with the challenges, the Group will base on its extensive experiences and competitive advantages in the mobile top-up service industry to enhance cooperation with PRC banks and expand the Company s service offerings in existing channels, in order to maintain the leading position in the industry. Moreover, the Group will actively seek for opportunities to cooperate with the leading internet companies and e-commerce companies and strive for the market share in those e-commerce channels. The Group will also continue to strengthen its research and development capabilities, reinforce the core competitiveness and optimise the Group s cost structure to provide greater returns to shareholders of the Company (the Shareholders ). FINANCIAL REVIEW Revenue For the six months ended 30 June 2017, the Group recorded a revenue of approximately RMB50.8 million, representing a decrease of approximately 41.0% as compared with approximately RMB86.1 million for the corresponding period in The decrease was primarily due to the decrease in mobile top-up requests through Group s channel partners, and the decline of average discount rate received from the PRC telecommunication operators and their distributors % 8 NNK Group Limited Interim Report 2017

10 Management Discussion and Analysis Gross Transaction Value with Mobile Users The gross transaction value with mobile users decreased by approximately 29.5% to approximately RMB5,888.5 million for the six months ended 30 June 2017 from approximately RMB8,346.1 million for the six months ended 30 June The decrease was mainly due to the decline in mobile top-up requests through the Group s channel partners. As at 30 June 2017, the gross transaction value via electronic banking systems decreased by approximately 34.7% to approximately RMB3,282.1 million for the six months ended 30 June 2017 from approximately RMB5,029.3 million for the six months ended 30 June The gross transaction value through offline channels down by approximately 64.5% to approximately RMB354.5 million for the six months ended 30 June 2017 from approximately RMB999.6 million for the six months ended 30 June The gross transaction value through other channels including third-party online platforms, the Company s own websites and Wechat public account decreased by approximately 2.8% to approximately RMB2,251.9 million for the six months ended 30 June 2017 from approximately RMB2,317.2 million for the six months ended 30 June , % 5, , % 3, % , % 2,251.9 Gross Transaction Value with PRC Telecommunication Operators, their Distributors and other Channels The average discount rate that the Company received from the PRC telecommunication operators, their distributors and other channels decreased from approximately 1.1% for the six months ended 30 June 2016 to approximately 0.8% for the six months ended 30 June The gross transaction value with the PRC telecommunication operators, their distributors and other channels decreased by approximately 29.3% for the six months ended 30 June 2017 as compared to the six months ended 30 June 2016, which was in line with the decrease in the gross transaction value with mobile users. 1.1% 0.8% 29.3%

11 Management Discussion and Analysis Cost of Revenue Cost of revenue decreased by approximately 37.5% to approximately RMB24.4 million for the six months ended 30 June 2017 from approximately RMB39.0 million for the six months ended 30 June 2016, primarily due to the decrease of gross transaction value with mobile users and the decline of commission fees charged by the Group s channel partners % 24.4 Gross Profit and Gross Profit Margin As a result of foregoing, gross profit decreased by approximately 44.5% to approximately RMB25.4 million for the six months ended 30 June 2017 from approximately RMB45.7 million for the six months ended 30 June The Group s overall gross profit margin decreased to approximately 50.0% for the six months ended 30 June 2017 from approximately 53.1% for the six months ended 30 June 2016, primarily attributable to the decline in average discount rate received from the PRC telecommunication operators and their distributors % % 50.0% Other Income and Expenses Other income and expenses decreased by approximately 38.6% to approximately RMB1.8 million for the six months ended 30 June 2017 from approximately RMB2.9 million for the six months ended 30 June The decrease in other income and expenses was primarily due to approximately RMB1.4 million unrealised net exchange losses from bank balances denominated in Hong Kong dollars as a result of the appreciation of Renminbi against Hong Kong dollars for the six months ended 30 June % NNK Group Limited Interim Report 2017

12 Management Discussion and Analysis Distribution and Selling Expenses Distribution and selling expenses decreased by approximately 19.2% to approximately RMB2.8 million for the six months ended 30 June 2017 from approximately RMB3.5 million for the six months ended 30 June 2016, primarily attributable to effective control of salaries and allowances of customer services employees % 2.8 Administration Expenses Administration expenses decreased by approximately 12.2% to approximately RMB11.3 million for the six months ended 30 June 2017 from approximately RMB12.9 million for the six months ended 30 June 2016, primarily attributable to the cost cutting measures to reduce the general administrative expenses % 11.3 Research and Development Expenses Research and development expenses decreased by approximately 12.9% to approximately RMB5.8 million for the six months ended 30 June 2017 from approximately RMB6.7 million for the six months ended 30 June 2016, primarily due to the decrease in depreciation of servers % 5.8 Finance Costs Finance costs decreased by approximately 31.7% to approximately RMB4.1 million for the six months ended 30 June 2017 from approximately RMB5.9 million for the six months ended 30 June 2016, primarily due to the decrease in average bank borrowings as compared with the corresponding period in % 4.1 Income Tax Expense Income tax expense decreased by approximately 41.9% to approximately RMB0.3 million for the six months ended 30 June 2017 from approximately RMB0.4 million for the six months ended 30 June 2016, primarily due to the decrease in taxable income %

13 Management Discussion and Analysis Profit for the Period attributable to Owners of the Company As a result of the cumulative effects of foregoing, profit for the period attributable to owners of the Company decreased by approximately 84.6% to approximately RMB3.0 million for the six months ended 30 June 2017 from approximately RMB19.3 million for the six months ended 30 June % 3.0 Liquidity, Financial Resources and Capital Structure The Group s working capital was funded by cash from operating activities, bank loans and proceeds from global offering. As at 30 June 2017, cash and cash equivalents of the Group was approximately RMB175.0 million, as compared with approximately RMB124.7 million as at 31 December The Group reported net current assets of approximately RMB224.8 million as at 30 June 2017, as compared with approximately RMB230.1 million as at 31 December The Group s current ratio was approximately 2.12 as at 30 June 2017, as compared with approximately 2.35 as at 31 December The bank borrowings of the Group increased by 55% to RMB124.0 million as at 30 June 2017 from RMB80.0 million as at 31 December As at 30 June 2017, the total bank borrowings, being interest-bearing bank borrowings which are dominated in Renminbi, carried interest rates ranging from 4.35% to 5.66% (31 December 2016: 4.35% to 4.79%) per annum and are repayable in one year. The Group currently does not adopt any financial instruments for hedging purposes, however, the management will consider the usage of financial instrument for hedging purpose when the need arises % % 5.66% 4.35% 4.79% 12 NNK Group Limited Interim Report 2017

14 Management Discussion and Analysis Gearing Ratio As at 30 June 2017, the gearing ratio (calculated by dividing bank borrowings by total equity as at the end of the period) of the Group increased to approximately 0.55 from approximately 0.34 as at 31 December 2016, primarily attributable to the increase in bank borrowings and decrease in total equity of the Group due to the declaration of final dividend for the year ended 31 December 2016 during the six months ended 30 June Capital Expenditure For the six months ended 30 June 2017, the Group had capital expenditure of approximately RMB0.1 million, as compared with approximately RMB0.6 million for the six months ended 30 June The expenditure was mainly related to the acquisition of property, plant and equipment for replacement in daily operations Significant Investment As at 30 June 2017, the Group did not have any significant investment. Capital Commitments and Operating Lease Commitments As at 30 June 2017, the Group did not have any material capital commitments. As at 30 June 2017, the Group s operating lease commitments amounted to approximately RMB0.3 million, as compared with approximately RMB0.6 million as at 31 December

15 Management Discussion and Analysis Foreign Exchange Risk The Group s reporting currency is in Renminbi to which the Group s material transactions are denominated. The net proceed from global offering are denominated in Hong Kong Dollars, which exposed the Group to market risk arising from changes in foreign exchange rate. The Group currently does not have a foreign currency hedging policy, however, the management of the Group will monitor foreign exchange exposure closely and consider the usage of hedging instruments when the need arises. Charges on Assets As at 30 June 2017, the Group did not have any asset charges. Contingent Liabilities and Guarantees As at 30 June 2017, the Group did not have any significant contingent liabilities and guarantees. FUTURE PLANS FOR MATERIAL INVESTMENTS OR CAPITAL ASSETS There was no specific plan for material investments or capital assets as at 30 June MATERIAL ACQUISITIONS OR DISPOSALS During the six months ended 30 June 2017, there was no material acquisition or disposal of subsidiaries and associated companies by the Group. INTERIM DIVIDENDS The Board did not recommend the payment of interim dividend for the six months ended 30 June 2017 (for the six months ended 30 June 2016: nil). 14 NNK Group Limited Interim Report 2017

16 Management Discussion and Analysis EMPLOYMENT AND REMUNERATION POLICY As at 30 June 2017, the Group had 146 full-time employees. Total staff cost (including Director s remuneration) was approximately RMB10.9 million for the six months ended 30 June 2017, as compared with approximately RMB12.5 million for the six months ended 30 June All employees have joined the state-managed retirement benefits schemes which are classified as defined contribution plans. The Group believes that employees are one of its most important assets and the Group strives to offer a competitive remuneration to its employees. The Group has recruited and promoted individuals based on merit and their development potentials. Remuneration package offered to all employees including Directors is determined with reference to their performance, qualifications, experience and the prevailing salary levels in the market. The Group has provided training opportunities for its employees in order to enhance their qualifications and equip them with necessary skills EVENTS AFTER THE REPORTING PERIOD Save as disclosed herein, there was no other significant events that might affect the Group since the end of the six months ended 30 June

17 Other Information PURCHASE, SALE OR REDEMPTION OF THE COMPANY S LISTED SECURITIES During the six months ended 30 June 2017, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company s listed securities. MODEL CODE FOR SECURITIES TRANSACTIONS BY DIRECTORS The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers (the Model Code ) as set out in Appendix 10 to the Rules Governing the Listing of Securities (the Listing Rules ) on The Stock Exchange of Hong Kong Limited (the Stock Exchange ) as its code of conduct regarding Director s securities transactions. Specific enquiries have been made to all Directors and the Directors have confirmed that they have complied with the required standard of dealing as set out in the Model Code during the six months ended 30 June CORPORATE GOVERNANCE CODE It is the belief of the Board that good corporate governance plays a vital part in maintaining the success of the Company. The Group is committed to maintaining high standards of corporate governance to safeguard the interests of the Shareholders and to enhance corporate value accountability. The Company has complied with all the applicable code provisions of the Corporate Governance Code (the CG Code ) as set out in Appendix 14 to the Listing Rules during the six months ended 30 June The Company will continue to review the current corporate governance structure from time to time and shall make necessary changes when appropriate and report to Shareholders accordingly. 16 NNK Group Limited Interim Report 2017

18 Other Information DIRECTORS AND CHIEF EXECUTIVE S INTERESTS AND SHORT POSITIONS IN THE SHARES, UNDERLYING SHARES OR DEBENTURES As at 30 June 2017, the interests or short positions of the Directors or chief executives of the Company in the shares of the Company (the Shares ), underlying Shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ( SFO )) as recorded in the register required to be kept under section 352 of SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code were as follows: XV 352 Long Position in the ordinary shares of the Company Approximate Percentage of Issued Number of Share Capital (5) Name of Director Capacity/Nature of Interests Shares held (5) Mr. Huang Junmou (1) Interest in controlled corporation 94,500, % (1) Mr. Yang Hua (2) Interest in controlled corporation 63,000, % (2) Mr. Li Xiangcheng (3) Interest in controlled corporation 56,100, % (3) Mr. Xu Xinhua (4) Interest in controlled corporation 26,400, % (4) Notes: (1) Mr. Huang Junmou beneficially owns 100% of the share capital of Fun Charge Technology Limited ( Fun Charge Technology ). By virtue of the SFO, Mr. Huang Junmou is deemed to be interested in 94,500,000 Shares held by Fun Charge Technology. (2) Mr. Yang Hua beneficially owns 100% of the share capital of Happy Charge Technology Limited ( Happy Charge Technology ). By virtue of the SFO, Mr. Yang Hua is deemed to be interested in 63,000,000 Shares held by Happy Charge Technology. (1) Fun Charge Technology LimitedFun Charge Technology Fun Charge Technology 94,500,000 (2) Happy Charge Technology LimitedHappy Charge Technology Happy Charge Technology 63,000,

19 Other Information (3) Mr. Li Xiangcheng beneficially owns 100% of the share capital of Cool Charge Technology Limited ( Cool Charge Technology ). By virtue of the SFO, Mr. Li Xiangcheng is deemed to be interested in 56,100,000 Shares held by Cool Charge Technology. (4) Mr. Xu Xinhua beneficially owns 100% of the share capital of Enjoy Charge Technology Limited ( Enjoy Charge Technology ). By virtue of the SFO, Mr. Xu Xinhua is deemed to be interested in 26,400,000 Shares held by Enjoy Charge Technology. (5) The percentage of shareholding was calculated based on the Company s total issued share capital of 415,000,000 Shares as at 30 June (3) Cool Charge Technology LimitedCool Charge Technology Cool Charge Technology 56,100,000 (4) Enjoy Charge Technology LimitedEnjoy Charge Technology Enjoy Charge Technology 26,400,000 (5) 415,000,000 Save as disclosed above, as at 30 June 2017, none of the Directors and chief executives of the Company had or was deemed to have any interests or short positions in the Shares, underlying Shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept under section 352 of the SFO, or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code. XV NNK Group Limited Interim Report 2017

20 Other Information SUBSTANTIAL SHAREHOLDERS INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES As at 30 June 2017, to the best knowledge of the Directors, the interests or short positions of the persons, other than the Directors or chief executives of the Company, in the Shares or underlying Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO were as follows: 336 Long positions in the ordinary shares of the Company Approximate Number of Shares Percentage of Issued or Securities held Share Capital (6) Substantial Shareholders Capacity/Nature of Interests (6) Fun Charge Technology (1) Beneficial owner 94,500, % Happy Charge Technology (2) Beneficial owner 63,000, % Cool Charge Technology (3) Beneficial owner 56,100, % Mr. Huang Shaowu (4) Interest in controlled corporation 60,000, % (4) China Charge Technology Limited (4) Beneficial owner 60,000, % Enjoy Charge Technology (5) Beneficial owner 26,400, % Notes: (1) Mr. Huang Junmou is the director and beneficially owns 100% of the share capital of Fun Charge Technology. By virtue of the SFO, Mr. Huang Junmou is deemed to be interested in 94,500,000 Shares held by Fun Charge Technology. (2) Mr. Yang Hua is the director and beneficially owns 100% of the share capital of Happy Charge Technology. By virtue of the SFO, Mr. Yang Hua is deemed to be interested in 63,000,000 Shares held by Happy Charge Technology. (1) Fun Charge Technology Fun Charge Technology 94,500,000 (2) Happy Charge Technology Happy Charge Technology 63,000,

21 Other Information (3) Mr. Li Xiangcheng is the director and beneficially owns 100% of the share capital of Cool Charge Technology. By virtue of the SFO, Mr. Li Xiangcheng is deemed to be interested in 56,100,000 Shares held by Cool Charge Technology. (4) Mr. Huang Shaowu is the director and beneficially owns 100% of the share capital of China Charge Technology Limited ( China Charge Technology ). By virtue of the SFO, Mr. Huang Shaowu is deemed to be interested in 60,000,000 Shares held by China Charge Technology. (5) Mr. Xu Xinhua is the director and beneficially owns 100% of the share capital of Enjoy Charge Technology. By virtue of the SFO, Mr. Xu Xinhua is deemed to be interested in 26,400,000 Shares held by Enjoy Charge Technology. (6) The percentage of shareholding was calculated based on the Company s total issued share capital of 415,000,000 Shares as at 30 June (3) Cool Charge Technology Cool Charge Technology 56,100,000 (4) China Charge Technology LimitedChina Charge Technology China Charge Technology 60,000,000 (5) Enjoy Charge Technology Enjoy Charge Technology 26,400,000 (6) 415,000,000 Save as disclosed herein, as at 30 June 2017, the Directors were not aware of any person (other than the Directors and chief executive of the Company) who had an interest and short position in Shares or underlying Shares as recorded in the register required to be kept by the Company under Section 336 of the SFO NNK Group Limited Interim Report 2017

22 Other Information DIRECTOR S INTEREST IN A COMPETING BUSINESS During the six months ended 30 June 2017 and up to the date of this interim report, none of the Directors or their respective associates (as defined in the Listing Rules) had any interest in any business which were in competition or were likely to compete, either directly or indirectly with the Group s business which needs to be disclosed pursuant to Rule 8.10 of the Listing Rules SHARE OPTION SCHEME The Company adopted the share option scheme (the Scheme ) prepared in accordance with Chapter 17 of the Listing Rules on 14 December 2015 for the primary purpose of providing incentives or rewards to eligible participants (the Eligible Participants ) as defined in the Scheme to recognise and acknowledge their contribution to the Group and motivate them to higher levels of performance. Certain provisions of the Scheme were amended and approved in the extraordinary general meeting of the Company held on 4 November 2016, the definition of Eligible Participants in the Scheme was amended to include the advisors, consultants, suppliers, customers, distributors, business partners and such other persons who, in the opinion of the Board, will contribute or have contributed to the Company and/or any of its subsidiaries as participants eligible to participate in the Scheme. Under the Scheme, the Board may, at its discretion, offer to Eligible Participants options (the Options ) to subscribe for Shares subject to the terms and conditions stipulated in the Scheme. Subject to the terms and conditions of the Scheme, the maximum number of Shares in respect of which Options may be granted under the Scheme and under any other share option schemes of the Company must not in aggregate exceed 10% of the total number of Shares issued on 7 January 2016, being 40,000,000 Shares, representing approximately 9.64% of the Company s issued share capital as at the date of this interim report, excluding for this purpose Shares which would have been issuable pursuant to Options which have lapsed in accordance with the terms of the Scheme (or any other share option schemes of the Company). 10% 40,000, %

23 Other Information Subject to earlier termination by the Company in general meeting or by the Board, the Scheme shall be valid and effective for a period of 10 years from the date of its adoption. Since the adoption of the Scheme and up to the date of this interim report, no option had been granted, exercised, lapsed nor cancelled under the Scheme. For details of the Scheme, please refer to the section headed Statutory and General Information F. Share Option Scheme in Appendix IV to the Company s prospectus dated 24 December 2015 (the Prospectus ). As at 30 June 2017, no Option has been granted under the Scheme. 10 F. AUDIT COMMITTEE The Company established the audit committee (the Audit Committee ) with written terms of reference in compliance with Rule 3.21 of the Listing Rules and paragraph C.3 of the CG Code. The primary duties of the Audit Committee are, among other things, to review and supervise the financial reporting process, risk management and internal control system of the Group, oversee the audit process and select external auditors and assess their independence and qualifications. The Audit Committee comprises three independent non-executive Directors, namely Ms. Zhao Jinlin, Mr. Qian Haomin and Mr. Lin Zhangxi. Ms. Zhao Jinlin is the chairlady of the Audit Committee and she is the independent nonexecutive Director with the appropriate professional qualifications. The Audit Committee, together with the external auditors of the Company, Deloitte Touche Tohmatsu, have reviewed the unaudited consolidated interim results and the interim report of the Company for the six months ended 30 June 2017 and agreed to the accounting principles and practices adopted by the Company C.3 22 NNK Group Limited Interim Report 2017

24 Other Information USE OF PROCEEDS FROM GLOBAL OFFERING The Company s shares were listed on the Main Board of the Stock Exchange on 7 January 2016 and the Company raised net proceeds (after the exercise of the over-allotment option and after deducting the underwriting fees, commissions and other expenses payable by the Company in connection with the global offering) of approximately HK$52.0 million. As at 30 June 2017, the Group had utilised approximately HK$5.8 million of the net proceeds from the global offering, out of which approximately HK$0.6 million was utilised for software and research and development activities and approximately HK$5.2 million was utilised for general working capital. Such utilisation of the net proceeds was in accordance with the proposed allocations as set out in the section headed Future Plans and Use of Proceeds in the Prospectus. The unutilised portion of the net proceeds is deposited in reputable banks in Hong Kong

25 Report on Review of Condensed Consolidated Financial Statements TO THE BOARD OF DIRECTORS OF NNK GROUP LIMITED (incorporated in the Cayman Islands with limited liability) INTRODUCTION We have reviewed the condensed consolidated financial statements of NNK Group Limited (the Company ) and its subsidiaries (collectively referred to as the Group ) set out on pages 26 to 48, which comprise the condensed consolidated statement of financial position as of 30 June 2017, and the related condensed consolidated statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the six-month period then ended, and certain explanatory notes. The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited require the preparation of a report on interim financial information to be in compliance with the relevant provisions thereof and Hong Kong Accounting Standard 34 Interim Financial Reporting ( HKAS 34 ) issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ). The directors of the Company are responsible for the preparation and presentation of these condensed consolidated financial statements in accordance with HKAS 34. Our responsibility is to express a conclusion on these condensed consolidated financial statements based on our review, and to report our conclusion solely to you, as a body, in accordance with our agreed terms of engagement, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report SCOPE OF REVIEW We conducted our review in accordance with Hong Kong Standard on Review Engagements 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the HKICPA. A review of these condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion NNK Group Limited Interim Report 2017

26 Report on Review of Condensed Consolidated Financial Statements CONCLUSION Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated financial statements are not prepared, in all material respects, in accordance with HKAS Deloitte Touche Tohmatsu Certified Public Accountants Hong Kong 24 August

27 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the six months ended 30 June 2017 Six months ended 30 June (Unaudited) (Unaudited) NOTES RMB'000 RMB'000 Revenue 4 50,781 86,106 Less: Tax surcharge (985) (1,323) Cost of revenue (24,401) (39,044) Gross profit 25,395 45,739 Other income and expenses 1,806 2,941 Distribution and selling expenses (2,794) (3,456) Administrative expenses (11,293) (12,860) Research and development expenses (5,824) (6,689) Finance costs 5 (4,050) (5,927) Profit before tax 6 3,240 19,748 Income tax expense 7 (258) (444) Profit and total comprehensive income for the period 2,982 19,304 Total comprehensive income attributable to owners of the Company 2,982 19,304 Earnings per share 9 Basic (RMB) Diluted (RMB) NNK Group Limited Interim Report 2017

28 Condensed Consolidated Statement of Financial Position As at 30 June June 31 December NOTES (Unaudited) (Audited) RMB 000 RMB 000 Non-current assets Property, plant and equipment 10 5,102 7,309 Rental deposits Deferred tax assets 11 5,568 5,568 11,141 13,375 Current assets Inventories 129, ,172 Trade receivables 12 63,717 69,875 Prepayments, deposits and other receivables 55,167 47,498 Tax recoverable 2, Cash and cash equivalents 175, , , ,083 Current liabilities Trade payables 13 41,159 36,911 Other payables 35,428 53,123 Bank borrowings ,000 80, , ,

29 Condensed Consolidated Statement of Financial Position As at 30 June June 31 December NOTES (Unaudited) (Audited) RMB 000 RMB 000 Net current assets 224, ,049 Total assets less current liabilities 235, ,424 Non-current liabilities Government grants Deferred tax liabilities 11 9,280 9,280 9,713 10,175 Net assets 226, ,249 Capital and reserves Share capital 15 27,221 27,221 Reserves 199, ,028 Total equity 226, , NNK Group Limited Interim Report 2017

30 Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2017 Attributable to owners of the Company Share Share Capital Statutory Retained capital premium reserve reserves earnings Total RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 RMB 000 At 1 January ,510 10,340 67, ,794 Profit and total comprehensive income for the period (unaudited) 19,304 19,304 Issue of new shares by the Company upon Capitalisation Issue (note 15) 15 19,365 (19,365) Issue of new shares by the Company upon global offering 6,565 77,462 84,027 Issue of new shares by the Company upon exercise of over-allotment option ,451 13,434 Share issue expenses (22,551) (22,551) At 30 June 2016 (unaudited) 27,221 47,997 46,510 10,340 86, ,008 At 1 January ,221 47,997 46,510 10, , ,249 Profit and total comprehensive income for the period (unaudited) 2,982 2,982 Dividend declared (note 8) (unaudited) 8 (9,960) (9,960) At 30 June 2017 (unaudited) 27,221 38,037 46,510 10, , ,

31 Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2017 Six months ended 30 June (Unaudited) (Unaudited) RMB 000 RMB 000 OPERATING ACTIVITIES Profit before tax 3,240 19,748 Adjustments for: Depreciation of property, plant and equipment 2,197 3,732 Finance costs 4,050 5,927 Government grants related to assets (462) (774) Interest income (2,812) (1,477) Unrealised net exchange losses (gains) 1,378 (543) Loss on disposal of property, plant and equipment 53 Operating cash flows before movements in working capital 7,644 26,613 Decrease in rental deposits Decrease in inventories 27,837 97,306 Decrease (increase) in trade receivables 6,158 (18,686) (Increase) decrease in prepayments, deposits and other receivables (7,669) 78,979 Increase (decrease) in trade payables 4,248 (11,377) Decrease in other payables (27,655) (30,967) Cash generated from operations 10, ,899 Income tax paid (1,629) (1,894) NET CASH FROM OPERATING ACTIVITIES 8, , NNK Group Limited Interim Report 2017

32 Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2017 Six months ended 30 June (Unaudited) (Unaudited) RMB 000 RMB 000 INVESTING ACTIVITIES Purchase of property, plant and equipment (82) (576) Interest received 2,812 1,477 Proceeds from disposal of property, plant and equipment Repayments from related companies 33,448 Placement of structured products (2,618,340) (1,335,300) Withdrawal of structured products 2,618,340 1,335,300 Withdrawal of restricted bank deposit 27,000 NET CASH FROM INVESTING ACTIVITIES 2,769 61,850 FINANCING ACTIVITIES Interest paid (4,050) (5,927) Repayments of bank borrowings (315,310) (578,261) Proceeds from bank borrowings 359, ,196 Proceeds from shares issued by the Company 97,461 Share issue expenses (22,551) NET CASH FROM (USED IN) FINANCING ACTIVITIES 39,950 (127,082) Net increase in cash and cash equivalents 51,680 74,773 Cash and cash equivalents at the beginning of the period 124,719 49,968 Effect of foreign exchange rate changes (1,378) 543 Cash and cash equivalents at the end of the period 175, ,

33 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June GENERAL The Company was incorporated as an exempted company with limited liability in the Cayman Islands on 18 June 2014 and its shares have been listed on the Main Board of The Stock Exchange of Hong Kong Limited (the Stock Exchange ) on 7 January Its ultimate controlling shareholders are Huang Junmou, Yang Hua, Li Xiangcheng, Xu Xinhua and Huang Shaowu (collectively referred to as the Shareholders ). The Company s registered office is located at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands. The address of its principal place of business is 6/F, 3 Building A Area, Internet Industry Base, Xixiang, Baoyuan Road, Bao an District, Shenzhen, the Peoples Republic of China (the PRC ). The Company is an investment holding company. The principal activity of the Group is engaged in providing mobile top-up service to mobile subscribers in the PRC. The condensed consolidated financial statements are presented in Renminbi ( RMB ), which is the same as the functional currency of the Company and its subsidiaries. 1. PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands A BASIS OF PREPARATION OF CONDENSED PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS The condensed consolidated financial statements have been prepared in accordance with Hong Kong Accounting Standard ( HKAS ) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the HKICPA ) as well as with the applicable disclosure requirements of Appendix 16 to the Rules Governing the Listing of Securities on the Stock Exchange NNK Group Limited Interim Report 2017

34 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June BASIS OF PREPARATION OF CONDENSED PRESENTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued) The mobile top-up service provided by the Group is prohibited and restricted to foreign investment in the PRC pursuant to the applicable PRC laws and regulations. In preparation for the listing, the Group has adopted a series of contracts with the Shareholders (the Structured Contracts ) and Shenzhen Niannianka Network Technology Co., Ltd. ( Shenzhen NNK ) to maintain and exercise the control over the operation of Shenzhen NNK, and to obtain its entire economic benefits. The Structured Contracts are irrevocable and enable the Group to: 2. exercise effective financial and operational control over Shenzhen NNK; exercise equity holders voting rights of Shenzhen NNK; receive substantially all economic returns generated by Shenzhen NNK in consideration for the business support, technical and consulting services provided by the Group; obtain an irrevocable and exclusive right to purchase the entire equity interest in Shenzhen NNK from the Shareholders; and obtain a pledge over the entire equity interest of Shenzhen NNK from the Shareholders as collateral security for all of Shenzhen NNK due to the Group and to secure performance of Shareholders obligations under the Structured Contracts

35 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June PRINCIPAL ACCOUNTING POLICIES The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments, which are measured at fair values. Except as described below, the accounting policies and the methods of computation used in the condensed consolidated financial statements for the six months ended 30 June 2017 are the same as those followed in the preparation of the Group s annual financial statements for the year ended 31 December In the current interim period, the Group has applied, for the first time, the following amendments to Hong Kong Financial Reporting Standards ( HKFRSs ) issued by the HKICPA that are relevant for the preparation of the Group s condensed consolidated financial statements: 3. Amendments to HKAS 7 7 Amendments to HKAS Amendments to HKFRS Disclosure Initiative Recognition of Deferred Tax Assets for Unrealised Losses Included in Annual Improvements Cycle Disclosure of Interests in Other Entities The application of the above amendments to HKFRS in the current interim period has had no material effect on the amounts reported in these condensed consolidated financial statements and/or disclosures set out in these condensed consolidated financial statements. 34 NNK Group Limited Interim Report 2017

36 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June PRINCIPAL ACCOUNTING POLICIES (continued) New and amendments to HKFRSs in issue but not yet effective The Group has not early applied the following new and amendments to HKFRSs that have been issued but are not yet effective: 3. HKFRS 9 Financial Instruments HKFRS 15 Revenue from Contracts with Customers and the related Amendments HKFRS 16 Leases Amendments to HKFRS 2 Classification and Measurement of Share-based Payment Transactions Amendments to HKFRS 4 Applying HKFRS 9 Financial Instruments with HKFRS 4 Insurance Contracts Amendments to HKFRS 10 Sale or Contribution of Assets between and HKAS 28 an Investor and its Associate or Joint Venture Amendments to HKFRSs Annual Improvements to HKFRSs Cycle Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after 1 January Effective for annual periods beginning on or after a date to be determined

37 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June REVENUE AND SEGMENT INFORMATION HKFRS 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the executive directors, the chief operating decision maker (the CODM ), in order to allocate resources to the segments and to assess their performance. The CODMs review the Group s profit as a whole, which is generated from the provision of mobile top-up service by the Group to customers and determined in accordance with the Group s accounting policies, for performance assessment. Therefore, no separate segment information is prepared by the Group. Geographical information All of the Group s revenue and assets are principally derived from customers in the PRC and located in the PRC, no geographical segment information is presented Information about major customers There was no revenue from individual customers of the Group s operations contributing over 10% of the total revenue of the Group during both periods. 10% 5. FINANCE COSTS 5. Six months ended 30 June (Unaudited) (Unaudited) RMB 000 RMB 000 Interest on bank borrowings 4,050 5, NNK Group Limited Interim Report 2017

38 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June PROFIT BEFORE TAX 6. Six months ended 30 June (Unaudited) RMB 000 (Unaudited) RMB 000 Profit before tax has been arrived at after charging (crediting): Directors emoluments 1,434 1,462 Salaries and other benefits, excluding those of directors 8,189 9,623 Retirement benefits schemes contributions, excluding those of directors 1,310 1,393 Total staff costs 10,933 12,478 Depreciation of property, plant and equipment 2,197 3,732 Operating lease rentals Interest income (2,812) (1,477) 7. INCOME TAX EXPENSE 7. Six months ended 30 June (Unaudited) RMB 000 (Unaudited) RMB 000 Current tax: PRC Enterprise Income Tax ( EIT ) (Over) under-provision in prior years (91) 61 Taxation

39 Notes to the Condensed Consolidated Financial Statements For the six months ended 30 June INCOME TAX EXPENSE (continued) The Company was incorporated in the Cayman Islands and is exempted from income tax. 7. Hong Kong The applicable tax rate of the subsidiaries of the Company in Hong Kong is 16.5%. No provision for Hong Kong Profits Tax was made in the condensed consolidated financial statements, as no assessable profit was generated in Hong Kong. 16.5% PRC Pursuant to the Enterprise Income Tax Law and Implementation Regulations of the Law of the PRC (the PRC EIT Law ) which became effective on 1 January 2008, the statutory tax rate of PRC subsidiaries is 25% during the two periods. In September 2014, Shenzhen NNK, a PRC subsidiary of the Company, was qualified as a High and New Technology Enterprise by Shenzhen Technological Innovation Committee, Shenzhen Finance Bureau, Administrator of Local Taxation of Shenzhen Municipality and Shenzhen Municipal office of the State Administration of Taxation, and therefore was entitled to 15% preferential tax rate for three years starting from the year ended 31 December 2015, in accordance with the PRC EIT Law. Accordingly, the tax rate of Shenzhen NNK is 15% for both periods. In January 2016, Daily Charge Technology (Shenzhen) Limited ( Daily Charge SZ ), a wholly foreign-owned enterprise of the Company, was accredited as a software enterprise by the Shenzhen Software Industry Association, and therefore could enjoy an income tax exemption for two years starting from its first profit-making year and a 50% tax reduction to an income tax rate of 12.5% for the subsequent three years. Accordingly, Daily Charge SZ is tax exempted in The statuary tax rate of Daily Charge SZ was 25% in % 15% 15% 12.5% 25% 8. DIVIDENDS A dividend of RMB0.024 per share was declared and approved in respect of the year ended 31 December 2016 (2016: no final dividend was declared or paid for the year ended 31 December 2015) to shareholders during the current period NNK Group Limited Interim Report 2017