香港交易及結算所有限公司以及香港聯合交易所有限公司對本公佈之內容概 不負責，對其準確性或完整性亦不發表任何聲明，並明確表示概不就因本公佈 全部或任何部分內容而產生或因倚賴該等內容而引致之任何損失承擔任何責 任。 佳 華 百 貨 控 股 有 限 公 司 Jiahua Stores Holdings Limited （於開曼群島註冊成立的有限公司） （股份代號：00602） 截 至 二 零 二 二 年 十 二 月 三 十 一 日 止 年 度 全 年 業 績 公 佈 財務摘要 收入下跌22.8%至約人民幣335.3百萬元。 商品銷售毛利率上升4.0%至約人民幣14.8百萬元。 本公司擁有人應佔年內虧損約人民幣107.9百萬元。 每股基本虧損約為人民幣10.40分。 不建議擬派發末期股息。 ...

Economic Environment - The global economy is facing significant inflationary pressures, with inflation in the United States reaching its highest level in four years[11]. - China's economy has experienced a slowdown due to the pandemic, with consumption remaining sluggish while fixed asset investment increased in the first half of the year[20]. - Despite internal and external pressures, China's supply chain remains safe and stable, with strong overseas demand contributing to high growth[20]. - Since June, various economic data in China have shown signs of stabilization and rebound, particularly in the Yangtze River Delta region[20]. Retail Industry Trends - The traditional retail model is undergoing innovation and transformation, driven by new internet technologies, leading to the development of a new retail business model[21]. - In 2022, the retail industry is adapting to market changes, shifting focus from product pipelines to consumer needs, with an emphasis on community-based retail development[25]. - The integration of technology, fashion, and lifestyle is enhancing the shopping experience through smart applications like digital signage and virtual reality displays[25]. - The consumer goods market in China still has growth potential, as the country transitions from a world factory to a world market[25]. - The pandemic has led to a greater emphasis on "instant delivery," highlighting both opportunities and challenges for retailers[29]. - The integration of online and offline retail is becoming a trend, with a focus on improving product quality and user loyalty[26]. - The retail industry is experiencing a shift towards personalized and diversified services, which are becoming dominant consumption trends[37]. - Retail operators are enhancing online capabilities through live broadcasts and multi-channel marketing to increase sales[41]. - The integration of online and offline retail channels is being emphasized to stimulate business growth[37]. Market Performance - The performance of the Group has been affected by various factors, but confidence in the retail industry's development remains strong[30]. - The overall scale of the retail market is expected to continue expanding in 2022, driven by changing consumer behaviors and preferences[31]. - The 618 promotional event saw major e-commerce companies enhancing consumer shopping experiences, injecting new momentum into the market[34]. - The performance of department stores has generally declined due to ongoing pandemic effects and rising costs[39]. - The number of shopping mall openings has shown a decreasing trend over the past five years, indicating a more cautious market development[44]. - The decrease in revenue was primarily due to the ongoing impact of the pandemic on consumer sentiment and the closure of three stores last year[84]. Financial Performance - For the six months ended June 30, 2022, the Group's total revenue was approximately RMB169.0 million, a decrease of approximately 31.7% compared to RMB247.0 million in the first half of 2021[67]. - The total loss attributable to shareholders was approximately RMB26.4 million, compared to a loss of approximately RMB30.4 million for the same period in 2021[67]. - Gross profit was approximately RMB5.8 million, reflecting a year-on-year decrease of approximately 58.4%[83]. - The operating loss was approximately RMB25.1 million, a year-on-year decrease of approximately 14.4%[83]. - The Group's liquidity is dependent upon the cash received from its customers, and the directors are satisfied that the Group will be able to meet its financial obligations in the foreseeable future[117]. - The company incurred a loss of RMB 26,335,000 for the six months ended June 30, 2022, compared to a loss of RMB 100,114,000 for the previous year[174]. Strategic Initiatives - The Group is expanding investment horizons to obtain diverse income sources while enhancing core competitiveness in the retail sector[30]. - The Group aims to consolidate existing stores through reform and innovation to improve sales mix and enhance shopping experience[69]. - The Group plans to enhance its competitive advantage through mergers and acquisitions to explore new business opportunities[77]. - The Group is preparing for the expansion of its branch network and shopping malls in the coming year[86]. - The Group signed a licensing exhibition cooperation agreement to increase store attractiveness and customer flow, resulting in increased sales and new member registrations[92]. - The Group actively organized marketing activities and implemented cross-industry cooperation to provide a diversified shopping atmosphere, including live broadcast sales to enhance customer engagement[98]. Community Engagement - The Group organized community activities to support medical staff and essential workers during the pandemic, enhancing community relations[96]. Operational Challenges - The pandemic has caused delays in the opening of shopping malls originally planned for the first half of 2022, pushing many projects to the second half of the year[49]. - Retailers are focusing on optimizing supply chains and enhancing product management capabilities to mitigate pandemic impacts[41]. Future Outlook - The Group aims to become one of the major operators in the retail industry, leveraging core competencies to navigate challenges and opportunities in 2022[104]. - The Group has prepared to cope with macro-economic conditions that significantly impact the retail industry, driven by rapid growth in information technology[105].

Economic Environment - In 2021, the global economic recovery faced significant headwinds due to new COVID-19 infections, labor market challenges, supply-chain disruptions, and rising inflationary pressures[16]. - The government has multiple policy tools available to stimulate economic activity, providing room for monetary easing amid low inflation[17]. - The transition towards consumption-driven and higher-end manufacturing development in China is expected to lead to more sustainable but slower growth[17]. - The retail industry in China is expected to face a slowdown in growth, high operating costs, and narrowing profit margins, leading to increased mergers and acquisitions in 2022[34]. - The government is committed to expanding rural consumption and e-commerce development, creating new opportunities for businesses[90]. Retail Industry Trends - China's retail industry experienced a difficult business environment, with performance declines becoming common among both small and medium-sized retail enterprises and listed companies[19]. - The diversity of customers in China has led to accelerated differentiation of demand, with high-end and mass market segments growing faster than the mid-end market[20]. - The pandemic has intensified the trend of "double-speed growth" in consumer behavior, with the youth generation becoming the mainstream consumer in a digital environment[20]. - Online sales channels are increasingly fragmented, leading to fierce competition among new retailers and challenges in customer loyalty establishment[20]. - The overall retail environment remains challenging, with overseas retailers closing stores and traditional companies seeking survival through various strategies[19]. - The retail market in China is anticipated to consolidate into larger operators to strengthen competitive power and market presence[34]. - The importance of online sales channels has grown, with the proportion of online sales expected to continue rising, driven by evolving consumer habits[72]. - Community commerce is identified as a new growth area, with online and offline integrated marketing showing significant potential for development[80]. - The trend of community commerce is gaining attention, with online and offline integration expected to accelerate[81]. Company Performance - For the year ended December 31, 2021, the Group recorded revenue from continuing operations of approximately RMB 434.2 million, representing a year-over-year increase of approximately 1.4%[29]. - Gross profit from direct sales was approximately RMB 14.2 million, reflecting a year-over-year decrease of approximately 66.7%[29]. - The consolidated loss attributable to owners of the Company was approximately RMB 100.1 million, representing a year-over-year decrease of approximately 48.5%[29]. - The Group closed two retail stores during the year due to unfavorable business conditions and lease expirations[30]. - The Group implemented an operational responsibility system and streamlined business processes to improve efficiency[30]. - The Group aims to consolidate resources and develop its retail chain business, focusing on management enhancement and brand image improvement[36]. - The Group's revenue for the year ended December 31, 2021, was approximately RMB 434.2 million, representing a 1.4% increase from RMB 428.1 million in 2020[121]. - Loss attributable to Shareholders amounted to approximately RMB 100.1 million for the year ended 31 December 2021, an improvement from a loss of approximately RMB 194.5 million in the previous year[150][151]. Digital Transformation and Innovation - The company is actively developing online business and undergoing digital transformation to adapt to changing consumer behaviors[19]. - Online to Offline (O2O) has become a key battlefield for obtaining retail customer flow, with growth rates far exceeding that of e-commerce[23]. - Fresh food is becoming increasingly critical in the O2O battlefield, serving as a primary means of offline customer acquisition and retention[23]. - The development of "smart retail/business" has accelerated, with increased focus on technologies such as 5G, artificial intelligence, and the Internet of Things, enhancing supply-demand matching[68]. - The Group optimized the online-to-offline shopping model, utilizing online short videos and live broadcasts to attract young customers and increase shopping interactivity[103]. Management and Team Experience - The Group's senior management team has extensive experience, with members serving over 14 years on average[51][55][61]. - Mr. Chen Li Chong has over 19 years of experience in engineering facilities management, responsible for establishing the engineering and facilities management system[52][56]. - Mr. Li Dong has over 20 years of experience in the retail industry, overseeing security and safety management[53][57]. - The Group's commercial management center is led by Mr. Du Jun Yin, who has experience in commercial business operation and management since joining in February 2021[59][60]. - The Group's commitment to safety and engineering excellence is reflected in the extensive experience of its management team[52][53]. Customer Engagement and Marketing - The Group acknowledges both opportunities and challenges in the evolving retail landscape, aiming for development in a better market environment[35]. - The flagship Longhua store underwent operational enhancements to create a lifestyle-oriented shopping experience[98]. - The Group introduced various popular food and beverage brands in its shopping malls, including Starbucks and Luckin Coffee, to enhance customer experience[106]. - The registration rate of the Mini program continued to increase, with strategies to cultivate users' repeated shopping habits through daily check-ins and interactive strategies[109]. - The Group optimized promotional activities and improved the Mini program and customer account management system to stimulate sales[109]. Financial Overview - As of December 31, 2021, the group had cash and cash equivalents of approximately RMB 26.1 million, down from approximately RMB 76.6 million as of December 31, 2020[155]. - Total borrowings increased to approximately RMB 93.4 million as of December 31, 2021, compared to RMB 66.9 million as of December 31, 2020[155]. - The group reported net current liabilities of approximately RMB 102 million as of December 31, 2021, up from approximately RMB 71.7 million in the previous year[156]. - The gearing ratio rose to approximately 2.25 as of December 31, 2021, compared to 1.55 as of December 31, 2020[156]. - Interest income from financing services decreased by 3.3% to RMB 5.8 million for the year ended 31 December 2021, maintaining a percentage of 1.4% of total revenue[130][133].

Economic Recovery and Market Trends - The global economy is expected to recover gradually, with external demand improving and China's foreign trade anticipated to continue growing[9]. - The pandemic has caused unprecedented shifts in global supply and demand for retail goods, leading to inventory shortages and changes in bulk buying habits[21]. - The recovery of the consumer market post-pandemic and the growth of e-commerce are driving best sales performance in the retail industry[29]. - The pandemic has accelerated the shift of consumer focus from high-tier cities to middle- and low-tier cities, indicating a change in shopping behavior[35]. - The importance of lower-tier cities and rural areas is increasing, creating new opportunities for consumption growth in the retail sector[29]. Digital Transformation and E-commerce - China has implemented policies to stimulate cross-border e-commerce, addressing logistics delays and enhancing after-sales service systems[12]. - Social consumption and retail operations are steadily recovering, with physical retailers accelerating digital transformation and full-channel marketing upgrades[14]. - The penetration rate of home delivery services, live-streaming sales, and mini-program transactions has significantly increased among physical retail companies[14]. - The pandemic has cultivated online consumption habits, leading to a significant increase in online penetration rates compared to pre-pandemic levels[14]. - Online sales channels have become increasingly important, with a significant rise in e-commerce sales during the pandemic[33]. - E-commerce sales have rapidly grown, with live broadcast e-commerce doubling, particularly in apparel, skincare products, and packaged foods[30]. Retail Operations and Strategies - Retailers are migrating to cloud platforms to better understand customer needs and enhance the customer experience[16]. - Full-channel marketing has become a focus for retailers, requiring investment in technology to support customer interactions across various channels[17]. - Retailers need to evaluate all customer contact points throughout the purchase process to ensure effective data management across digital and physical platforms[17]. - Community group buying has emerged as a new sales model, utilizing internet platforms for bulk shopping through community leaders[30]. - The competitive landscape in the offline retail market is fragmented, with new competitors rapidly gaining market share[33]. Financial Performance and Business Development - In the first half of 2021, the total revenue of the Group reached approximately RMB247.0 million, an increase of approximately 10.0% compared to RMB224.6 million in the first half of 2020[50]. - The total loss attributable to shareholders was approximately RMB30.4 million, compared to a loss of approximately RMB51.4 million for the six months ended June 30, 2020[50]. - The Group plans to enhance its competitive advantage through mergers and acquisitions to explore new business opportunities[59]. - The Group aims to consolidate existing stores through reform and innovation to improve sales mix and enhance shopping experience[55]. - The Group is confident in its future prospects, aiming to become a major operator in the retail industry amidst rapid technological advancements and macroeconomic changes in China[92]. Operational Challenges and Adjustments - The outdated Enterprise Resource Planning systems in most shopping malls hinder data integration and limit service support, making digital transformation challenging[25]. - Safety management measures were introduced, including regular inspections and employee training to ensure operational safety[77]. - The Group has adopted a proactive business strategy to provide value-added services to physical retail stores[68]. - The Group's flagship Longhua Store has undergone adjustments to improve customer shopping experience[71]. - Employee appraisal assessments were conducted to improve problem-solving abilities and adjust salaries based on performance[81]. Investment and Future Plans - The Group plans to expand its branch network and shopping mall in the coming year[68]. - The company plans to allocate approximately HK$40,000,000 for refurbishments of existing retail stores[154]. - Approximately HK$ 29 million was used for the acquisition of a retail chain business in Shenzhen, PRC[151]. - The company plans to invest approximately HK$15,000,000 in office equipment purchases[154]. - The Group aims to cultivate repeated shopping habits by enhancing user interaction through daily check-ins and increasing product variety, including new categories like movie tickets and education[89].

Economic Performance - In 2020, China's economy grew by 2.3% despite the pandemic, with final consumption expenditure accounting for 54.3% of GDP[18]. - The global economy faced severe challenges in 2020, with advanced economies and emerging markets experiencing contractions, while China's economy was the only major economy to achieve positive growth[14]. - In 2020, China's GDP reached approximately RMB 102 trillion, representing a year-over-year increase of 2.3%[89]. - Economic growth in China is expected to slow, leading to increased consolidation in the retail industry and a higher market concentration[40]. Retail Sales Trends - Total social retail sales in China recorded RMB39.2 trillion, a year-on-year (YOY) decrease of 3.9%[18]. - In 2020, China's total retail sales of consumer goods decreased by 3.9% year-over-year (YOY), amounting to RMB39,198 billion[79]. - Online retail sales of physical goods in China increased by 14.8% YOY, accounting for 24.9% of total social retail sales, up 4.2 percentage points from the previous year[18]. - Online retail sales reached RMB 11.8 trillion, a YOY increase of 10.9%, with physical goods online retail sales at RMB 9.8 trillion, increasing by 14.8%[90]. - The retail sales of communications equipment, cosmetics, and goldsmith and jewellery products increased by 26.0%, 21.2%, and 17.3% respectively YOY[90]. Impact of the Pandemic - The pandemic has led to a significant change in consumer shopping habits, with a trend towards online shopping observed globally[17]. - The pandemic has tested the anti-risk ability and comprehensive capability of companies, with leading companies still increasing market supply despite the challenges[26]. - The retail industry faced unprecedented pressure due to the pandemic, but there are signs of gradual recovery as store closures stabilize[36]. - The pandemic has accelerated the shift towards digitalization in retail, enhancing operational efficiency and customer engagement[85]. Company Financial Performance - For the year ended December 31, 2020, the Group recorded revenue from continuing operations of approximately RMB 428.1 million, representing a year-over-year decrease of approximately 33.7%[34]. - Gross profit from direct sales was approximately RMB 42.7 million, reflecting a year-over-year decrease of approximately 45.7%[34]. - The consolidated loss attributable to owners of the Company was approximately RMB 194.5 million, representing a year-over-year increase of approximately 271.5%[34]. - The revenue decrease was primarily due to a drop in sales of goods, commissions from concessionaire sales, rental income from investment properties, and interest income from financing services[34]. Operational Adjustments - The Group closed three retail stores during the year, with closures attributed to lease expiration and increased competition in the surrounding areas[35]. - The Group implemented an operational responsibility system and streamlined business processes to enhance efficiency[35]. - The Group's operational adjustments and restructuring efforts have led to fair operating results despite a difficult business environment[34]. - The Group has implemented internal restructuring in four major stores to streamline operations and reduce costs, including adjustments to the headquarters staff structure[37]. Future Strategies - The Group plans to focus on resource consolidation and retail chain development, with an emphasis on expanding in Guangdong and Guangxi through acquisitions, mergers, and joint ventures[42]. - The Group aims to strengthen management and brand image while expanding steadily in the market[42]. - The Group plans to enhance sales turnover and reduce unnecessary costs through operational management and innovation[130]. - The Group aims to explore new commercial retail models, including shopping malls and internet plus initiatives, to provide a one-stop shopping experience[131]. Management and Leadership - The Group has a diverse senior management team with extensive experience across various sectors, enhancing operational efficiency[58]. - The management team has a strong educational background, with degrees in business administration, law, and engineering[58]. - The Group emphasizes the importance of experienced leadership in driving growth and innovation in its operations[58]. Market Outlook - The consumer market is expected to recover steadily, supported by policies to expand domestic demand and promote consumption[91]. - The retail market in China is expected to consolidate into large operators to enhance marketing power and competitive strength[40]. - The Group expresses confidence in the future, aiming to become one of the major operators in the retail industry in China[132].

Impact of the Pandemic on Retail - In early 2020, the pandemic caused a significant decline in retail sales of consumer goods in Mainland China, with Hubei province experiencing a year-on-year drop of approximately 50%[8]. - Supermarkets focused on low-margin necessities saw a decline in operating income, leading to operating losses due to increased staff costs and expenditures on prevention measures[11]. - The pandemic severely impacted durable goods sellers, with upstream suppliers and downstream customers affected by delayed resumption of work and logistics hindrances, resulting in a year-on-year decline in sales revenue and net profit[11]. - Sales turnover for household appliances and department stores was affected by temporary suspensions or closures due to local pandemic control regulations[12]. - The company anticipates that the overall performance of department stores and shopping malls will be significantly affected throughout the year due to the pandemic[11]. - The pandemic has led to a significant increase in the popularity of high-end projects, particularly luxury goods, as domestic consumption rebounds[18]. - Sales of supermarkets and concessionaire have fallen, impacting gross profit due to cautious consumer spending amid the pandemic[64]. Recovery Trends in Retail - Domestic shopping malls showed signs of recovery in the first half of the year, with sales steadily picking up after promotions through online channels[16]. - By the end of June, the average daily customer flow of shopping malls across China had returned to 90% of the normal level, indicating a recovery in consumer activity[20]. - Economic stimulus policies and spending vouchers have been introduced in various cities to boost consumption, yielding positive effects[12]. - The consumer market is expected to continue its upward trend due to the implementation of "six stability" and "six support" policies[39]. Online Retail Growth - Online merchandise retail sales continued to grow, with significant acceleration during the "618" shopping festival, reflecting a shift in consumer behavior[27]. - Shopping malls are actively opening online channels and launching initiatives like "Live Shopping Days" to stimulate online consumption frequency[20]. - Baijiahua's online sales have been increasing since February, with connections established to major O2O platforms Meituan, JD Daojia, and Ele.me[77][78]. Financial Performance Overview - The Group's total revenue for the first half of 2020 was approximately RMB 224.6 million, a decrease of approximately 40.4% compared to RMB 376.7 million in the same period of 2019[41]. - The total loss attributable to shareholders was approximately RMB 51.4 million, compared to a profit of approximately RMB 8.0 million for the six months ended June 30, 2019[41]. - For the six months ended June 30, 2020, the Group recorded total revenue of approximately RMB 224.6 million, representing a year-on-year decrease of approximately 40.4% compared to RMB 374.7 million in the same period of 2019[43][58]. - Gross profit for the period amounted to approximately RMB 21.9 million, reflecting a year-on-year decrease of approximately 61.8%[58]. - The operating loss was approximately RMB 50.2 million, representing a year-on-year increase of approximately 431.6%[58]. Operational Adjustments and Strategies - The Group aims to enhance sales turnover and reduce unnecessary costs through operational management and innovation, focusing on improving the sales mix and customer shopping experience[46][49]. - The Group is exploring new commercial retail models, including shopping malls and online integration, to provide a one-stop shopping experience[47][61]. - The Group plans to expand its store and shopping mall network while continuously seeking potential profit opportunities[61][62]. - The Group has implemented measures to improve operational efficiency, including standardizing operations and enhancing cash flow management[66]. - Closure of underperforming stores, such as Xixiang Store, was decided to mitigate operational risks due to a deteriorating business environment[69]. Investment and Future Prospects - The Group is confident in its future prospects, aiming to become one of the major operators in the retail industry amidst the challenges posed by the COVID-19 pandemic and competitive environment[49][54]. - The Group aims to maintain its market share by focusing on Shenzhen and expanding into surrounding areas while seeking suitable investment opportunities to diversify its business[40]. - The Group is focused on improving its operating performance through mergers and acquisitions to enhance competitive advantage[84][86]. Financial Health and Liabilities - The Group's liquidity is dependent on cash received from customers, and it maintains sufficient cash and bank balances to meet working capital requirements[94]. - The Group has no significant concentrations of credit risk, as most sales transactions are settled in cash or through online payment platforms[90][92]. - The Group's exposure to interest rate risk mainly arises from cash and bank balances, with no derivative contracts used for hedging[93]. - The Group had no significant contingent liabilities as of June 30, 2020[101]. Segment Performance - The Group operates two main segments: retail store management and financing services, with no significant changes in segment performance reported[165]. - Segment revenue for the six months ended June 30, 2020, was RMB 224,632,000, a decrease from RMB 376,651,000 in the same period of 2019, representing a decline of approximately 40.3%[171].

Economic Growth and Consumer Spending - In 2019, China's GDP growth rate was 6.1%, significantly higher than the global growth rate of 3%[20] - Retail sales of social consumable goods in China increased by 8.0% year-on-year, indicating strong consumer spending[20] - The overall consumer spending structure is enhancing through digital, travel, and telecommunication expenditures at a higher speed[20] - In 2019, the total retail sales of social consumer goods in China reached RMB 41,200 billion, representing a year-over-year (YOY) growth of 8.0%[78] - Retail sales of urban consumer goods rose by 7.9% to RMB 35,100 billion, while rural consumer goods increased by 9.0% to RMB 6,000 billion[78] - The annual per capita disposable income for urban residents was RMB 42,000, an increase of 7.9% compared to the previous year, while rural residents' disposable income was RMB 16,000, up by 9.6%[78] Retail Industry Trends - Approximately 980 shopping malls opened in China in 2019, with a total commercial area of 86.0 million square meters, marking a historic high[21] - Traditional stores faced significant challenges, prompting them to innovate and adjust their operating models to capture more market share[21] - The integration of technology into shopping experiences, such as virtual reality and electronic sports, has become a key strategy for retailers[21] - The retail industry is expected to face continued pressure from high operating costs and a slowdown in economic growth, leading to increased consolidation in 2020[31] - The retail market in China is anticipated to consolidate into various large operators to enhance corporate marketing power and competitive strength[31] - Retail entities in China are adapting to changes in the retail industry, including the entry or exit of foreign investors and the use of digital information exchange[67] - The retail industry is undergoing significant changes, including the expansion or contraction in fresh markets and the selection of new retail methods[67] Company Financial Performance - For the year ended December 31, 2019, the Group recorded revenue from continuing operations of approximately RMB 645.3 million, representing a year-on-year decrease of approximately 9.2%[26] - Gross profit from direct sales, excluding online sales, was approximately RMB 78.6 million, reflecting a year-on-year decrease of approximately 6.2%[26] - The consolidated loss attributable to owners of the Company was approximately RMB 52.3 million, representing a year-on-year increase of approximately 307.7%[26] - The Group's revenue from continuing operations for the year ended December 31, 2019, was RMB 645.3 million, a decrease of 9.2% compared to RMB 710.3 million in 2018[107] - Sales of goods decreased by 12.4% to RMB 432.8 million for the year ended December 31, 2019, from RMB 494.2 million in 2018, primarily due to external competitive market conditions[108] - Commission from concessionaire sales fell by 22.8% to RMB 78.5 million for the year ended December 31, 2019, from RMB 101.8 million in 2018, mainly due to temporary business suspensions for enhancement works[109] Operational Adjustments and Strategies - The Group has implemented measures to maintain operational efficiency and minimize costs, including restructuring the staff organizational structure[28] - The Group aims to enhance its competitive strength and brand image while expanding its market share in a stable manner[33] - The Group has implemented various operational adjustments, including the introduction of elite supermarkets, experience stores, discount flagship stores, and intelligent stores to adapt to market demands[90] - The Group's strategy focuses on enhancing customer flow through improved product placement, introducing potential products, and optimizing the shopping environment[90] - The Group aims to maintain its market share by adapting its supermarket operations to local factors and business circles[90] - The Group plans to explore new commercial retail models, including shopping malls and internet integration, to provide a one-stop shopping experience[101] Management and Governance - Mr. Zhuang Pei Zhong has over 25 years of experience in the retail industry and has served the Group for over 22 years[40] - Mr. Zhuang Lu Kun, the founder and chairman, has over 25 years of experience in the retail industry and has held various leadership roles in business associations[39] - The Group's management team includes experienced professionals with extensive backgrounds in finance, law, and engineering, ensuring a well-rounded leadership[48][49][50] - The Board consists of six Directors, including three executive Directors and three Independent Non-executive Directors, with a focus on enhancing management quality and corporate governance standards[196] - The Company is committed to providing timely information to Board members regarding business operations[198] - The Company ensures equal treatment of all shareholders and protects the interests of all investors[198] Market Conditions and Economic Outlook - The global economic condition was slowing down, with major developed economies experiencing a decline in economic growth, except for Japan[62] - The inflation rate in developed nations has been decreasing, with the United States targeting a personal spending rate of 1.5%[63] - The Chinese government has implemented various fiscal and monetary measures to stimulate domestic demand and boost employment[67] - The overall GDP growth rate in newly emerging markets decreased in 2019 compared to 2018[62] - The inflation rate in Japan was only 0.5%, indicating a high risk of deflation[63] Community Engagement and Recognition - The Group has been recognized for its commitment to employee welfare and has received various accolades in the retail sector[39] - The Group is actively involved in community and business associations, enhancing its reputation and networking opportunities[39]

Economic Growth and Consumer Behavior - The overall retail sales growth rate in China reached 6.7% in the first half of 2019, with the second quarter showing improvement over the first quarter and the fourth quarter of the previous year [7]. - Domestic consumption contributed over 60% to the overall economic growth, surpassing capital investment and net exports [9]. - There is a notable shift towards rational consumption, with consumers increasingly focusing on product packaging and marketing messages as key factors influencing purchasing decisions [10]. - Consumers became more price-sensitive during the rational consumption era, with social media promotions gaining importance [27]. - The growth rate of consumption spending in rural areas outpaced that of urban areas, indicating a shift in consumer behavior [19]. Retail Market Trends - The fast-moving consumer goods (FMCG) market in China is driven by product innovation, service enhancement, new store openings, and e-commerce development [8]. - The retail market is experiencing five major trends: demand for high-quality service, the rise of e-spending, expansion of consumer demographics, and redefined spending scopes due to urbanization [12]. - The number of supermarkets is increasing, particularly those focusing on fresh products and elite offerings, while traditional retail is adapting by enhancing product categories and business hours [13]. - Digital transformation and platform integration are being employed to improve shopping environments and customer engagement [13]. - New retail models are redistributing online and offline sales flows, maximizing customer traffic to physical stores [15]. Financial Performance - The Group's total revenue increased by 2.2% to approximately RMB 376.7 million for the first half of 2019, compared to RMB 368.7 million in the same period of 2018 [38]. - Gross profit for the Group was approximately RMB 57.2 million, reflecting a YOY increase of 16.8% [51]. - Operating profit decreased by approximately 34.7% to RMB 15.1 million, influenced by the adoption of new financial reporting standards [38]. - Net profit attributable to shareholders fell by 55.5% to approximately RMB 8.0 million for the six months ended June 30, 2019 [38]. - Total retail sales of social consumer goods in China reached RMB 19,500 billion, with a year-over-year (YOY) growth of 8.4% [32]. Operational Strategies - The company maintained stable performance through continuous renovation and improvement of stores, aiming to enhance competitive strength in a changing retail environment [18]. - The Group aims to enhance customer experience by optimizing sales mix and upgrading brand presence through innovative retail formats [44]. - Future strategies include expanding into neighborhood areas and exploring new investment opportunities to diversify sales [37]. - The Group is focused on integrating online and offline operations to improve market demand and customer shopping experience [44]. Risk Management and Financial Health - The Group is focused on risk management, addressing financial risks including foreign currency, credit, interest rate, and liquidity risks [74]. - The Group's liquidity is reliant on cash received from customers, ensuring it can meet financial obligations in the foreseeable future [84]. - The Group has no significant contingent liabilities as of June 30, 2019 [88]. - The Group has established a defined credit policy to minimize credit risk, with most sales transactions settled in cash or through online payment platforms [79]. Accounting Standards and Financial Reporting - The interim financial statements were prepared in accordance with Hong Kong Accounting Standard 34, ensuring compliance with applicable disclosure requirements [144]. - The Group recognized RMB 841,393,000 of right-of-use assets and RMB 858,247,000 of lease liabilities as of June 30, 2019, due to the initial application of HKFRS 16 [158]. - The application of new accounting standards did not have a significant impact on the Group's financial performance and position for the current and prior periods [156]. - The Group applies the short-term lease recognition exemption to leases with a term of 12 months or less, recognizing lease payments as an expense on a straight-line basis over the lease term [184]. Segment Performance - Segment revenue for the retail stores and related businesses was RMB 374,846,000, while financing services generated RMB 1,805,000, leading to a consolidated revenue of RMB 376,651,000 for the six months ended June 30, 2019 [196]. - The segment results for retail stores and related businesses were RMB 17,676,000, and financing services contributed RMB 879,000, resulting in total segment results of RMB 18,555,000 [196]. - Total segment assets reached RMB 1,776,652,000, with retail stores accounting for RMB 1,719,097,000 and financing services for RMB 57,555,000 as of June 30, 2019 [198].

Economic Overview - In 2018, the global economic growth rate was approximately 3.7%, with a downward revision in growth forecasts due to trade policies, including a USD 200 billion tariff on imports from China [16]. - The global economy remained weak in 2018, with trade protectionism increasing pressure on economic growth [68]. - The USA's trade disputes and tight monetary policy contributed to a slowdown in global economic expansion, affecting emerging markets significantly [69]. - Emerging economies faced currency depreciation, capital outflows, and increased debt repayment pressures, raising concerns globally [69]. - The overall economic growth in developed countries was stable, but emerging markets experienced significant volatility and risks [69]. - In 2018, China's GDP reached RMB 90,000 billion, marking a 6.6% increase year-on-year [74]. Retail Industry Trends - The retail business in China adapted to consumer spending trends by focusing on quality goods, cross-industry shopping experiences, smart retailing, and green retailing [21]. - The retail industry underwent major reforms, including store closures and the integration of online and offline operations [73]. - Online retail turnover in China saw significant breakthroughs, indicating a shift towards e-commerce and digital spending advancements [73]. - The portion of resident service spending increased steadily, particularly in cosmetics, electric appliances, and telecommunication products [72]. - The retail sector experienced a transition with the withdrawal of overseas brands and the acquisition of international brands [73]. - The integration of supply chains and advancements in e-commerce were key drivers of change in the retail landscape [72]. Company Performance - For the year ended December 31, 2018, the Group recorded revenue from continuing operations of approximately RMB 710.3 million, representing a year-on-year increase of approximately 2.9% [28]. - Consolidated profit attributable to owners of the Company was approximately RMB 25.2 million, a year-on-year decrease of approximately 24.1% [28]. - Total revenue for 2018 was RMB 718,238,000, up from RMB 700,183,000 in 2017, representing a growth of approximately 2.9% [152]. - Sales of goods decreased to RMB 494,219,000 in 2018 from RMB 509,167,000 in 2017, a decline of about 2.9% [152]. - Commission from concessionaire sales decreased by 7.1% to RMB 101.8 million for the year ended December 31, 2018, representing 14.3% of total revenue [112]. - Rental income from sub-leasing a shopping mall significantly increased to RMB 39,738,000 in 2018 from RMB 6,897,000 in 2017, marking a growth of approximately 476.5% [152]. Operational Strategies - The Group has implemented various measures to maintain operational efficiency and minimize operating costs, including recruitment through multiple channels [30]. - The Group plans to focus on diversifying its business and exploring viable investment opportunities to enhance shareholder returns [31]. - Future business development will emphasize resource consolidation and retail chain expansion, particularly in Guangdong and Guangxi regions [37]. - The Group aims to enhance its competitive strength and brand image through various expansion models, including acquisitions and joint ventures [37]. - The Group plans to continue exploring new business models and partnerships to enhance customer engagement and loyalty [89]. Organizational Structure and Governance - The Board consists of six Directors, with three being executive Directors and three Independent Non-executive Directors, ensuring a balanced governance structure [191]. - The Company adopted the principles in the Corporate Governance Code to enhance the quality of corporate governance, reflected in its Articles of Association and internal regulations [185]. - The Board is responsible for formulating overall strategies, monitoring operating and financial performance, and managing risk exposures to achieve the Group's strategic goals [192]. - Independent non-executive directors perform their duties in compliance with relevant laws and regulations, safeguarding the interests of the Company and its shareholders [198]. - The Company has arranged appropriate insurance coverage for directors and officers against losses or liabilities incurred from executing their duties, reviewed annually [195]. Challenges and Future Outlook - Traditional department stores faced unprecedented pressure, with retail giants gradually closing stores in non-core city areas, yet the Group achieved reasonable operating results amidst these challenges [23]. - The retail industry is expected to face challenges in 2019, including a slowdown in economic growth and high operating costs, leading to increased industry consolidation [35]. - The directors express confidence in the future, aiming to become one of the major operators in the retail industry in China [107].