Financial Performance - For the six months ended June 30, 2021, the company reported total sales revenue of approximately RMB 7,066.4 million, an increase of approximately RMB 2,020.5 million or 40.0% compared to RMB 5,045.9 million for the same period in 2020[3]. - The adjusted net loss for the group decreased from approximately RMB 136.4 million in the first half of 2020 to approximately RMB 84.6 million in the first half of 2021, a reduction of approximately 37.9%[4]. - The loss attributable to equity holders of the company was approximately RMB 110.2 million for the first half of 2021, compared to a loss of approximately RMB 179.0 million for the same period in 2020[5]. - The EBITDA improved from approximately RMB (44.5) million in the first half of 2020 to approximately RMB 13.9 million in the first half of 2021, marking a significant turnaround[6]. - The company reported a total comprehensive loss of RMB 108,122 thousand for the first half of 2021, compared to a loss of RMB 251,299 thousand in the same period of 2020, reflecting a significant reduction of 57.1%[70]. - The company reported a net loss attributable to equity holders of RMB 93,738 thousand for the first half of 2021, compared to a loss of RMB 266,989 thousand in the same period of 2020, indicating a 64.9% improvement[72]. Revenue Segments - Sales revenue from the technology new retail segment was approximately RMB 505.5 million, a 32.1% increase from RMB 382.8 million in the same period of 2020[8]. - The smart industry segment saw sales revenue rise by 42.4% to approximately RMB 6,438.6 million, up from RMB 4,520.4 million in the previous year[8]. - The platform and enterprise services segment generated sales revenue of approximately RMB 122.3 million, a decrease of approximately 14.3% from RMB 142.7 million in the same period of 2020[8]. - Revenue from financial services for the six months ended June 30, 2021, was RMB 7,001,702 thousand, an increase from RMB 4,977,603 thousand in 2020, representing a growth of approximately 40.6%[70]. - Revenue from B2B product sales amounted to RMB 6,756,950, up from RMB 4,697,627 in the previous year, indicating a growth of about 43.7%[130]. Operational Efficiency - Operating expenses for the continuing operations decreased from approximately RMB 336.7 million in 2020 to approximately RMB 319.9 million in 2021, primarily due to a reduction in amortization of intangible assets and share-based payments[8]. - The core strategy of the platform and enterprise services segment is to provide a service platform for small and medium-sized enterprises, enhancing their operational efficiency and creating value for customers[12]. - The company aims to enhance brand professionalism and customer service systems over the next three years following its relocation to a new office[33]. Investments and Strategic Initiatives - The company aims to become a leading "industrial internet" group in China, focusing on enhancing industry efficiency and empowering supply chains[11]. - The group has received significant investments, including RMB 150 million from the Huizhou Daya Bay Government Investment Fund for its subsidiary, Mianlian, in August 2021[39]. - MiaoXin Technology's strategic transformation aims to position it as a leading player in the industrial internet sector in China[33]. - The company plans to leverage AI algorithms to match buyers and sellers on Huicong Network, enhancing business efficiency for SMEs[39]. Cash Flow and Financial Position - As of June 30, 2021, the group's cash and bank balances were approximately RMB 265.2 million, an increase from RMB 254.3 million as of December 31, 2020[43]. - The group's total borrowings as of June 30, 2021, were approximately RMB 1,002.1 million, down from RMB 1,236.3 million as of December 31, 2020[43]. - The group's net assets decreased from approximately RMB 3,518.8 million as of December 31, 2020, to approximately RMB 3,430.3 million as of June 30, 2021, a reduction of about RMB 88.5 million[43]. - The group maintains a capital debt ratio of 17% as of June 30, 2021, down from 20% as of December 31, 2020[43]. - The company’s cash and cash equivalents increased to RMB 265,221 thousand as of June 30, 2021, compared to RMB 254,301 thousand at the end of 2020[75]. Discontinued Operations - The group has decided to terminate the operations of its integrated marketing and advertising services and O2O business exhibition center, reclassifying related comparative amounts as discontinued operations[96]. - The group has also terminated the leasing service business operated by Tianjin Guokai Ruitou Education Technology Co., Ltd., which is classified as discontinued operations[96]. - The profit from discontinued operations for the six months ended June 30, 2021, was RMB 6,745, compared to a loss of RMB (86,472) in the same period of 2020, indicating a significant turnaround[41]. Financial Risks and Management - The group faces various financial risks including market risk (foreign exchange, interest rate, and price risks), credit risk, and liquidity risk[105]. - The capital risk management policy has not changed since the year ended December 31, 2020, focusing on maintaining optimal capital structure to reduce capital costs[108]. - The group aims to ensure its ability to continue as a going concern while providing returns to shareholders and benefits to other stakeholders[107]. Awards and Recognition - MiaoXin Technology received the "Most Commercially Valuable SaaS Product" award in June 2021, highlighting its market recognition[27]. - The ZOL app won the "Dandelion Annual Best Information Application" award, highlighting its role in creating a private traffic platform[17]. - MiaoXin Technology has received multiple awards for user satisfaction and service quality, reflecting its commitment to customer service excellence[27].

Business Expansion and Strategy - As of December 31, 2020, HC Group had expanded its business to over 100 cities nationwide, with a service team of approximately 1,658 individuals[12]. - The Group initiated its layout towards industrial internet on January 17, 2018, aiming to become a leading industrial internet group in China[13]. - In 2019, HC Group established three business segments: platform and corporate services, technology-driven new retail, and smart industries[13]. - The platform and corporate services segment focuses on enhancing industrial efficiency for SMEs by providing value-added services such as financial services, data marketing, and SaaS[14]. - In July 2020, HC Group launched the "excellent merchants and products" strategy to improve content quality and business opportunity audits[15]. - The technology-driven new retail segment aims to connect retailers through SaaS tools and supply chain services, enhancing customer acquisition and operational efficiency[20]. - The smart industries segment includes key platforms such as PanPass, Union Cotton, and ibuychem.com, focusing on vertical integration and digital transformation[23]. - The company aims to leverage its 28 years of accumulated resources to rapidly incubate vertical runways in the smart industries segment[25]. - The technology-driven new retail segment has evolved from traditional media to encompass smart marketing and retail solutions[24]. Financial Performance - The revenue for 2020 was RMB 14,544,074, a decrease of 1.9% compared to RMB 14,832,832 in 2019[26]. - The net loss attributable to equity holders for 2020 was RMB (745,537), compared to a loss of RMB (376,490) in 2019[26]. - Basic and diluted earnings per share for 2020 were both RMB (0.6018), down from RMB (0.3360) in 2019[26]. - Total assets decreased to RMB 6,636,737 in 2020 from RMB 8,426,473 in 2019, representing a decline of 21.1%[26]. - Total liabilities were RMB 2,610,958 in 2020, down from RMB 3,696,761 in 2019[26]. - The adjusted EBITDA for 2020 was RMB 69,457, a decrease from RMB 122,797 in 2019[40]. - For the year ended 31 December 2020, the Group generated total revenue of approximately RMB14,531,321,000, representing a decrease of approximately 1.5% compared to RMB14,748,415,000 in 2019[43]. - Revenue from the technology-driven new retail segment increased by approximately 21.1% to RMB1,022,760,000 in 2020, up from RMB844,493,000 in 2019[43]. - Revenue from the smart industries segment increased by approximately 0.9% to RMB13,168,532,000 in 2020, compared to RMB13,050,827,000 in 2019[43]. - Revenue from the platform and corporate services segment decreased by approximately 60.1% to RMB340,029,000 in 2020, down from RMB853,095,000 in 2019[43]. - The loss attributable to equity holders of the Company was approximately RMB745.5 million for the year, compared to a loss of approximately RMB376.5 million in 2019[45]. - Impairment for goodwill and intangible assets amounted to approximately RMB578.3 million from continuing operations and RMB47.2 million from discontinued operations[45]. - The Group's operating expenses for continuing operations decreased to approximately RMB805,093,000 in 2020 from RMB967,793,000 in 2019[43]. Segment Performance - Approximately 7.0% of the Group's revenue was generated from the technology-driven new retail segment in 2020[50]. - Approximately 90.5% of the Group's revenue was derived from the smart industries segment in 2020[50]. - In 2020, approximately 7.0% of the group's revenue came from the technology-driven new retail segment, while about 90.5% came from the smart industry segment, and around 2.4% from the platform and corporate services segment[52]. - The platform and corporate services segment aims to empower SMEs by providing value-added services such as financial services, data marketing, and SaaS, enhancing their operational efficiency and facilitating economic development in China[54]. - The smart retail business, including ZOL cloud store, provides comprehensive solutions for supply chain connection and customer acquisition challenges faced by merchants[71]. - The smart enterprise procurement segment, ZOL, has developed six functional platforms, providing efficient one-stop, customized cloud procurement solutions for government and corporate customers[73][76]. Product and Service Innovations - In March 2020, the company launched a new product "Huishengyi," a one-stop multi-contact platform designed to help customers automatically seize business opportunities, reducing manual communication costs for enterprises[56]. - The new homepage of hc360.com was launched in September 2020, improving user experience and attracting over 10,000 enterprises to join the platform, generating more than 3,000 buyer inquiries per month[62]. - In November 2020, hc360.com launched a new B2B information aggregation platform, b2b.so.com, which is expected to become an independent entrance for B2B vertical crowds in the next three years[63]. - The technology-driven new retail segment was restructured in 2020 into four segments: "wise marketing," "smart retail," "smart enterprise procurement," and "self-owned brand segment," to enhance operational efficiency[67]. - The company established a strategic partnership with Tencent Qidian to create "Huicaigou," a procurement platform that leverages big data and information services to improve user connection efficiency[57]. Market Position and Recognition - PanPass, an IoT solutions provider, has served over 40,000 enterprises, including top 500 global companies, with its anti-counterfeiting traceability solutions[82][83]. - In February 2020, PanPass provided 50,000 to 100,000 anti-counterfeit labels free of charge to qualified brand enterprises recognized by China, supporting anti-pandemic efforts[84][85]. - PanPass has deepened strategic cooperation with leading customers such as Langjiu and Luzhoulaojiao, focusing on upgrading digital operations and construction projects[88]. - In 2020, Union Cotton's cumulative trading revenue exceeded 10 billion RMB, establishing it as a leading integrated service provider in the cotton textile industry[97]. - In December 2020, Union Cotton achieved a single-month turnover receivable exceeding 1 billion RMB[97]. - ibuychem.com was ranked 55th in the "2020 Top 100 Companies in China's Industrial Internet," marking its 11th consecutive appearance on the list since 2005[103]. - In 2020, PanPass was recognized with multiple awards, including "Top 100 Small and Medium-sized Private Enterprises in Beijing" and "Top 10 Reputable Brands in the software and information industry" in China[92]. - PanPass successfully obtained "double soft certification," becoming one of the few companies in the industry to achieve this status[92]. Leadership and Governance - The Company has a diverse board with members having extensive experience in finance, law, and technology[138]. - The management team is committed to strategic growth and market expansion through experienced oversight[139]. - The Group has a strong leadership team with diverse backgrounds in finance, management, and legal affairs, enhancing its operational capabilities[26]. - The Group's leadership structure supports its strategic objectives and positions it for future growth and market expansion[26]. Financial Management and Investments - As of December 31, 2020, the Group's cash and cash equivalents decreased by approximately RMB77,592,000 to approximately RMB254,301,000, with about 88.03% denominated in RMB[163]. - Total borrowings as of December 31, 2020, were RMB1,236,267,000, down from RMB2,304,401,000 as of December 31, 2019, with bank borrowings averaging a fixed interest rate of 7.00% per annum[163]. - The Group's gearing ratio was 20%, calculated as net debt, including lease liabilities, divided by total capital[163]. - Capital and reserves attributable to equity holders decreased by approximately RMB504.4 million from RMB4,023.2 million as of December 31, 2019, to approximately RMB3,518.8 million as of December 31, 2020[163]. - The Board does not recommend the payment of any final dividend for the year ended December 31, 2020[163]. - The Group had no significant investments or material acquisitions or disposals for the year ended December 31, 2020[169]. Related Party Transactions - The Group relies on HC Contractual Arrangements for its online services, which have not undergone any material changes during the reporting period[169]. - The financial statements of Huicong Construction have been included in the Group's consolidated financial statements since September 15, 2014[169]. - The Group entered into new agreements with Huicong Construction on February 14, 2019, due to a change in one of the registered shareholders[169]. - The independent non-executive Directors confirmed that all transactions during the financial year ended December 31, 2020, were conducted in accordance with the HC Contractual Arrangements[181].

Financial Performance - Sales revenue for the six months ended June 30, 2020, was approximately RMB 5,062.6 million, a decrease of about RMB 1,901.3 million or 27.3% compared to RMB 6,963.9 million in the same period of 2019[6]. - EBITDA for the first half of 2020 was approximately RMB (91.9) million, a decrease of about RMB 176.7 million from RMB 84.8 million in the first half of 2019[7]. - Loss attributable to equity holders was approximately RMB 248.6 million for the first half of 2020, compared to a loss of RMB 164.0 million in the same period of 2019, representing an increase of 52%[22]. - The company reported a significant decline in transaction revenue due to reduced orders from clients amid the COVID-19 pandemic[24]. - The company reported a total loss before tax of RMB 281,331,000 for the six months ended June 30, 2020[130]. - The net loss for the period was RMB 266,989 thousand, which is a 57.7% increase from RMB 169,195 thousand in the same period of 2019[86]. - Basic loss per share was RMB 0.2132, compared to RMB 0.1463 in the previous year[87]. - Total comprehensive loss for the period amounted to RMB 251,299 thousand, compared to RMB 172,030 thousand in the same period of 2019[87]. Operational Initiatives - The company launched a new product "HuiShengYi," a one-stop multi-touchpoint platform aimed at helping clients automatically manage business opportunities and reduce communication costs[25]. - The company implemented nine initiatives under the "Support Business Action" to assist SMEs in expanding their operations during the pandemic, helping over 10,000 enterprises open online sales channels[25]. - The Smart Retail Division successfully held 14 B2B live streaming events with major brands, involving over 10,000 retailers and generating more than 300,000 orders, with over 1 million products sold during the first half of 2020[28]. - The "618" promotional event achieved a transaction value exceeding 200 million, representing a year-on-year growth of 272%, with participation from 4,500 retailers[28]. - The Smart Industry Group reported a transaction revenue of 2 billion in the first half of 2020, with total platform transaction revenue surpassing 10 billion, maintaining profitability for nine consecutive quarters since April 2018[32]. Financial Position - As of June 30, 2020, the company's cash and bank balances were approximately RMB 385.9 million, an increase from RMB 331.9 million as of December 31, 2019[46]. - The company's total borrowings as of June 30, 2020, were RMB 2,239.48 million, a decrease from RMB 2,304.40 million as of December 31, 2019[46]. - The company's capital debt ratio was 25% as of June 30, 2020, down from 28% as of December 31, 2019[47]. - The company's equity attributable to shareholders decreased from approximately RMB 4,023.2 million as of December 31, 2019, to approximately RMB 4,009.5 million as of June 30, 2020[48]. - Total assets as of June 30, 2020, amounted to RMB 8,649,233,000, an increase from RMB 8,426,473,000 as of December 31, 2019, representing a growth of approximately 2.65%[92]. - Total liabilities reached RMB 3,956,616,000 as of June 30, 2020, up from RMB 3,696,761,000 at the end of 2019, marking an increase of about 7.04%[92]. Shareholder Information - The company issued 288,000 shares under the share option plan during the period[55]. - As of June 30, 2020, the total number of issued shares was 1,320,840,210, with 73,393,500 share options unexercised[56]. - The company raised approximately RMB 218.43 million from the issuance of 200,000,000 new shares at a price of HKD 1.2 per share on May 20, 2020[197]. - The placement price was HKD 1.20 per share, which was approximately 9.09% lower than the closing price of HKD 1.32 on the date of the agreement[67]. - 80% of the net proceeds from the placement is intended for repaying part of the group's existing debts, while 20% is allocated for R&D and general working capital[71]. Strategic Focus - The company’s strategic focus remains on becoming a leading "Industrial Internet" group in China, leveraging the internet and data to empower traditional industries[24]. - The company aims to provide integrated marketing solutions for enterprise clients through data analysis and channel data collected from small businesses[27]. - The company plans to enhance its digital operations in the liquor industry through a digital management platform, focusing on seven key modules[38]. - The company aims to leverage AI algorithms on its platform to match buyers and sellers, addressing the rigid demand for suitable pricing in the B2B market[42]. - The company will focus on a dual-driven model of "Huicong Network + Zhongguancun Online" to meet the needs of small and medium-sized enterprises[43]. Cost Management - Operating expenses decreased from approximately RMB 532.1 million in the first half of 2019 to approximately RMB 371.7 million in the same period of 2020, primarily due to tightened control over marketing and employee costs[22]. - As of June 30, 2020, the total employee cost was approximately RMB 179,438,000, a decrease from RMB 261,487,000 for the six months ended June 30, 2019[54]. - The company incurred an operating loss of RMB 167,426 thousand, compared to an operating loss of RMB 86,023 thousand in the previous year[86]. Investments and Acquisitions - The company has not made any significant investments or acquisitions during the reporting period[50]. - The company did not acquire any subsidiaries during the reporting period, contrasting with a cash outflow of RMB 35,742 thousand for acquisitions in the same period last year[102]. - The company holds a 29.6% stake in Zhejiang Huicong Investment Co., which engages in real estate investment and management[178]. Risk Management - The management has indicated that there are no significant changes in risk management policies since the end of the last fiscal year[114]. - The group does not face significant foreign exchange risk as most of its assets and liabilities are denominated in RMB[59].

Business Expansion and Revenue Model - As of December 31, 2019, HC Group Inc. expanded its business to over 100 cities nationwide, with a service team of approximately 2,043 individuals[13] - The Group's revenue model includes three business groups: platform and corporate services, technology-driven new retail, and smart industries, aiming to create a comprehensive industrial internet ecosystem[15] - The platform and corporate services group focuses on SMEs, enhancing customer engagement through internet tools and AI, thereby closing the business loop[16] - The technology-driven new retail group is transitioning from a tech media company to a technology-based industrial internet company, with strategic upgrades including a content matrix and a comprehensive ecosystem for Baidu Mini Program[19] - The smart industries group integrates several vertical platforms, such as "Union Cotton" and "ibuychem.com," utilizing an "investment + incubation" approach to enhance industry expertise and resources[21] Financial Performance - The company's revenue for 2019 reached RMB 14,832,832, a 40.2% increase from RMB 10,583,111 in 2018[24] - EBITDA for 2019 was RMB 88,783, a significant decrease from RMB 641,212 in 2018[24] - The company reported a loss attributable to equity holders of RMB (376,490) in 2019, compared to a profit of RMB 275,610 in 2018[24] - Basic and diluted earnings per share for 2019 were both RMB (0.3360), down from RMB 0.2462 in 2018[24] - Total assets decreased to RMB 8,426,473 in 2019 from RMB 8,767,955 in 2018[24] - Total liabilities increased to RMB 3,696,761 in 2019 from RMB 3,546,331 in 2018[24] - The net current assets were RMB 716,935 in 2019, down from RMB 1,233,990 in 2018[24] Revenue Breakdown by Segment - The revenue analysis shows a significant contribution from the Technology-Driven New Retail segment, which generated RMB 13,050,827 in 2019[28] - Revenue from the technology-driven new retail segment was approximately RMB844,493,000 in 2019, an increase of approximately 51.4% from RMB557,875,000 in 2018[34] - Revenue from the smart industries segment increased from approximately RMB9,211,537,000 in 2018 to approximately RMB13,050,827,000 in 2019, representing an increase of approximately 41.7%[34] - Revenue from platform and corporate services was approximately RMB916,805,000 in 2019, an increase of approximately 26.0% from RMB727,563,000 in 2018[34] - The O2O business exhibition center revenue decreased by approximately 76.0% to RMB20,707,000 in 2019 from RMB86,136,000 in 2018 due to a decline in property sales[34] Strategic Initiatives and Partnerships - The Group's strategy focuses on developing industrial internet business platforms to empower SMEs with value-added services such as financial services and data marketing[38] - hc360.com launched new products like "Huijingcai" and "Huiqitong" in collaboration with major partners to enhance customer experience and operational efficiency[42] - The strategic cooperation with Baidu led to the introduction of over 1,000 brick-and-mortar retailers into the Baidu Smart Mini Program ecosystem[57] - The smart retail segment aims to empower thousands of SMEs and distributors, utilizing SaaS to enhance operational efficiency in the smartphone and home appliance industries[50] - The annual transaction size of the Union Cotton platform exceeds RMB 5 billion, positioning it as a leading B2B e-business service in the cotton industry[64] Management and Governance - As of December 31, 2019, the board comprised several executive directors, including Liu Jun and Zhang Yonghong, with Liu Jun serving as chairman since March 2018[101] - Liu Xiaodong was appointed as an executive director and president of the company effective June 1, 2018, and has over 20 years of experience in media operation and management in the TMT field[105] - The company completed the full acquisition of zol.com.cn in July 2015, enhancing its digital media presence[105] - The company operates subsidiaries listed on the National Equities Exchange and Quotations System, expanding its market reach[103] - The management team is committed to driving innovation and exploring new market opportunities to sustain growth[106] Financial Position and Debt Management - As of December 31, 2019, the Group's cash and cash equivalents decreased by approximately RMB139.8 million from RMB471.7 million in 2018 to RMB331.9 million[135] - Total borrowings increased to RMB2,304.4 million as of December 31, 2019, up from RMB2,127.3 million in 2018, with bank borrowings rising to RMB1,591.1 million[136] - The average interest rate on bank borrowings rose to 6.69% per annum in 2019 from 6.17% in 2018[136] - The Group's capital and reserves attributable to equity holders decreased by approximately RMB314.5 million from RMB4,337.7 million in 2018 to RMB4,023.2 million in 2019[137] - The Group's gearing ratio is 28%, calculated as net debt divided by total capital[136] Regulatory and Compliance Matters - The Group relies on HC Contractual Arrangements with Huicong Construction for its online services due to PRC regulations restricting foreign investment in internet content services[198] - PRC legal advisers confirmed that there is currently no prohibition against using contractual arrangements or variable interest entities in service businesses[198] - The legality of the HC Contractual Arrangements has not been challenged, but there is no guarantee that future regulations will not affect compliance[199] - Potential risks include the PRC government imposing restrictions on business operations or requiring reorganization if the HC Contractual Arrangements are deemed non-compliant[199]

Financial Performance - Sales revenue increased by approximately RMB 3,185.3 million or 84.3% to approximately RMB 6,963.9 million compared to RMB 3,778.6 million in the same period last year[4]. - EBITDA decreased from approximately RMB 364.2 million in the first half of 2018 to approximately RMB 84.8 million in the first half of 2019, a reduction of approximately RMB 279.4 million[5]. - The loss attributable to equity holders was approximately RMB 164.0 million in the first half of 2019, compared to a profit of approximately RMB 191.0 million in the same period last year[10]. - Gross profit decreased from RMB 669.3 million to RMB 507.0 million, a decline of approximately 24.2%[10]. - Total sales revenue for the six months ended June 30, 2019, was RMB 6,908,267 thousand, an increase from RMB 3,700,334 thousand in the same period of 2018, representing an increase of approximately 86.7%[61]. - Operating loss for the period was RMB (86,023) thousand, compared to an operating profit of RMB 267,217 thousand in the same period of 2018, indicating a significant decline[61]. - Net loss attributable to equity holders for the period was RMB (163,964) thousand, compared to a profit of RMB 190,958 thousand in the same period of 2018, reflecting a negative turnaround[63]. - The company reported a total loss of RMB 169,195 thousand for the period ending June 30, 2019[68]. - The company reported a basic loss per share of RMB (0.1463) for the period, compared to earnings per share of RMB 0.1708 in the same period of 2018[63]. Revenue Segmentation - Approximately 87.8% of the company's revenue in the first half of 2019 came from the Smart Industry segment, while 5.8% was from the Technology New Retail segment[23]. - The technology new retail segment generated sales revenue of RMB 400,882 thousand for the six months ended June 30, 2019, up from RMB 270,175 thousand in the same period of 2018[133]. - The smart industry segment reported sales revenue of RMB 6,110,523 thousand for the six months ended June 30, 2019, compared to RMB 3,052,234 thousand in the previous year[134]. - The platform and enterprise services segment achieved sales revenue of RMB 442,087 thousand for the six months ended June 30, 2019, an increase from RMB 386,083 thousand in 2018[134]. - The O2O business exhibition center segment recorded sales revenue of RMB 10,408 thousand for the six months ended June 30, 2019, compared to RMB 70,130 thousand in the same period of 2018[134]. Goodwill and Impairment - The company recorded goodwill impairment losses of RMB 76.2 million due to underperformance in two operating segments[10]. - The company recognized goodwill impairment of RMB 38,426 thousand and RMB 37,776 thousand for two cash-generating units due to challenges in the garment services internet environment and a declining trend in the automotive industry[76]. - The goodwill impairment loss recognized for the internet services - garment industry was RMB 38,426,000 for the six months ended June 30, 2019, due to a decline in the recoverable amount[159]. - The goodwill impairment loss for the integrated marketing and advertising services was RMB 37,776,000 for the six months ended June 30, 2019, attributed to a decline in the automotive industry[162]. Strategic Initiatives - The company aims to become a leading "industrial internet" group in China, focusing on improving industry efficiency and empowering supply chains[11]. - The company has integrated resources from Zhongguancun Online, Rongshang Tonglian, and Home Appliance Exchange to enhance capabilities in media influence, SaaS, and supply chain[16]. - The company plans to continue investing resources to advance its industrial internet strategy and improve transaction scenarios[10]. - The strategic partnership with Tencent Cloud aims to enhance product development and market promotion, leveraging AI and IoT technologies[21]. - The company has entered into a cooperation agreement with the Daya Bay Development Zone Management Committee and other partners, indicating a strategic move for future expansion[76]. Financial Position - As of June 30, 2019, the group's cash and bank balances were approximately RMB 430.4 million, with net current assets of about RMB 1,374.3 million, indicating sufficient operating capital[28]. - Total borrowings as of June 30, 2019, amounted to RMB 2,395,985,000, an increase from RMB 2,127,338,000 as of December 31, 2018, with an average interest rate of 6.11%[29]. - The group's debt-to-equity ratio stood at 28% as of June 30, 2019, reflecting a net debt position[29]. - The group's equity attributable to shareholders decreased from RMB 4,337.7 million as of December 31, 2018, to RMB 4,210.0 million as of June 30, 2019, a reduction of RMB 127.7 million[30]. - The group employed 2,686 staff as of June 30, 2019, with employee compensation aligned with market trends[34]. Cash Flow and Investments - The net cash used in operating activities for the six months ended June 30, 2019, was RMB (150,256) thousand, compared to RMB (220,359) thousand for the same period in 2018, indicating a 31.7% improvement[74]. - The net cash generated from investing activities was RMB (111,383) thousand for the six months ended June 30, 2019, compared to RMB 110,953 thousand for the same period in 2018, reflecting a significant change in investment strategy[74]. - The net cash generated from financing activities was RMB 220,343 thousand, with a net decrease in cash and cash equivalents of RMB (41,296) thousand, compared to a net cash generated of RMB 108,886 thousand and a decrease of RMB (520) thousand in 2018[74]. - The total cash and cash equivalents at the end of the period was RMB 430,423 thousand, up from RMB 401,757 thousand at the end of the same period in 2018, representing a 7.1% increase[74]. Shareholder Actions - The group issued 450,000 shares under its share option plan during the six months ended June 30, 2019, and repurchased 1,100,000 shares, which have not yet been cancelled[35]. - The company approved an updated stock option plan allowing for the issuance of up to 112,085,221 shares, which is 10% of the total issued share capital as of the special general meeting[48]. - The board granted 10,000,000 stock options to the CEO at an exercise price of HKD 4.6 per share, pending acceptance[52]. - The company updated its employee share incentive plan, allowing for the issuance of up to 56,000,000 reward shares, which is 5% of the total issued share capital as of July 8, 2019[54]. - A total of 28,100,000 reward shares were granted to 26 selected employees, representing approximately 2.51% of the total issued share capital, including 4,000,000 shares to the CEO[54]. Accounting and Reporting Changes - The company has adopted new accounting standards, including HKFRS 16 on leases, which may impact financial reporting and cash flow management[80]. - The adoption of Hong Kong Financial Reporting Standard 16 resulted in a lease liability of RMB 163,310, with current lease liabilities at RMB 70,714 and non-current lease liabilities at RMB 92,596[84]. - The impact of adopting Hong Kong Financial Reporting Standard 16 led to a decrease in earnings per share by RMB 0.34 for the six months ended June 30, 2019[98]. - The company has opted for a simplified transition approach under the new standard, with no restatement of comparative figures for the fiscal year 2018[84]. Risk Management - The company does not face significant foreign exchange risks as most of its assets and liabilities are denominated in RMB[38]. - The company has no significant concentration of credit risk in accounts receivable due to a diverse customer base across China[169]. - The company’s financial risk management policies have remained unchanged since the end of the fiscal year[110].

Financial Performance - The Group achieved revenue of over RMB 10 billion for the year 2018, representing an increase of 185.8% compared to the same period last year[13]. - In 2018, the company achieved a revenue of RMB 10,583,111, representing a 185.8% increase from RMB 3,702,466 in 2017[30]. - For the financial year ended December 31, 2018, the Group generated total revenue of approximately RMB10,583,111,000, representing an increase of approximately 185.8% compared to RMB3,702,466,000 in 2017[35]. - EBITDA for 2018 was RMB 641,212, slightly down from RMB 653,075 in 2017[23]. - Profit attributable to equity holders of the company was RMB 275,610, a marginal increase from RMB 267,777 in 2017[23]. - The Group achieved a profit for the year of approximately RMB276,875,000 in 2018, a decrease from RMB317,310,000 in 2017, mainly due to increased share-based compensation expenses[35]. - The Group's operating expenses increased from approximately RMB1,012,537,000 in 2017 to approximately RMB1,173,887,000 in 2018, primarily due to an increase in share-based compensation expenses[35]. Business Expansion and Structure - As of December 31, 2018, the Group expanded its business to more than 100 cities nationwide, with branches established in over ten cities and a service team of around 2,778 individuals[13]. - The Group's new business structure established three business groups: technology-driven new retail, smart industries, and platform and corporate services[13]. - The Group's transformation towards industrial internet began at the end of 2017, with a new vision to become a leading industrial internet group in China[13]. - The smart industries business group is expected to bring more surprises in 2019 following significant progress in 2018[18]. - The platform and corporate services group aims to empower SMEs through industrial internet tools and value-added services[16]. - The structural adjustment in the organization is believed to lay a foundation for faster and more efficient development in 2019[19]. Revenue Breakdown by Segment - Revenue from the smart industries segment increased from approximately RMB2,154,579,000 in 2017 to approximately RMB9,211,537,000 in 2018, which represented an increase of approximately 327.5%[35]. - The technology-driven new retail segment achieved total revenue of approximately RMB557,875,000 in 2018, an increase of approximately 35.4% from RMB411,909,000 in 2017[35]. - Revenue from the platform and corporate services segment was approximately RMB727,563,000 in 2018, representing an increase of approximately 3.5% from RMB702,881,000 in 2017[35]. - Revenue from the O2O business exhibition centre decreased by approximately 80% to RMB86,136,000 in 2018 from RMB433,097,000 in 2017 due to a decline in property sales[35]. - In 2018, approximately 5.3% of the Group's revenue came from its technology-driven new retail business, while approximately 87.0% was from smart industries, 6.9% from platform and corporate services, and 0.8% from the O2O business exhibition center[85]. Strategic Initiatives and Collaborations - The Group announced a strategic cooperation with Tencent CCM on December 26, 2018, to jointly develop products and engage in marketing efforts utilizing AI and IoT technologies[76]. - The Group signed a strategic cooperation agreement with Tencent Cloud at the end of 2018 to develop industrial internet tools aimed at improving efficiency for SMEs[98]. - The collaboration with Shanghai Unicom and Tsinghua University in June 2018 aims to enhance big data applications and model construction for the Group[84]. - The Group aims to empower traditional industries through advanced technologies such as SaaS, IoT, and big data, enhancing efficiency and competitiveness[88]. Management and Governance - Liu Jun has been appointed as an executive Director since September 12, 2016, and has been the senior vice president of the Group since July 2016[103]. - Liu Xiaodong was appointed as an executive Director on June 1, 2018, and has over 19 years of experience in media operation and management in the TMT field[103]. - Lee Wee Ong, aged 49, has served as the chief financial officer since 2011 and was redesignated as an executive Director in July 2012[105]. - Guo Fansheng, aged 63, founded the Group in October 1992 and is responsible for its overall strategic development[105]. - Mr. Zhang was appointed as the CEO of the Company effective January 4, 2019, after serving as co-president[117]. Financial Position and Liabilities - Total assets increased to RMB 8,767,955 in 2018 from RMB 7,334,553 in 2017[23]. - Total liabilities rose to RMB 3,546,331 in 2018, up from RMB 2,877,424 in 2017[23]. - The Group's cash and cash equivalents increased by approximately RMB 69,754,000 to approximately RMB 471,672,000, with about 85% denominated in RMB[130]. - Total borrowings amounted to approximately RMB 2,254,900,000 as of December 31, 2018, representing a 47% increase from RMB 1,538,517,000 in 2017, primarily for refinancing purposes[130]. - The Group's gearing ratio was 22% as of December 31, 2018, compared to 20% in 2017, calculated as net debt divided by total capital[130]. Risks and Regulatory Compliance - The Group relies on HC Contractual Arrangements for its online services due to PRC laws restricting foreign participation in internet content services[132]. - The Group's ability to conduct online business could be materially affected if the PRC government determines that the HC Contractual Arrangements do not comply with applicable laws[186]. - There is a risk that the HC Contractual Arrangements may not provide control as effective as direct ownership, potentially leading to substantial litigation costs if obligations are not met[193]. - The Group's financial results could be adversely affected if it loses the right to direct the activities of Huicong Construction due to the consequences of regulatory actions[190].