Financial Performance - For the three months ended March 31, 2023, the group recorded a gross profit of approximately RMB 246,230,000, an increase of 11.7% compared to RMB 220,477,000 in the same period last year[3]. - The gross profit margin increased from 60.8% in the same period last year to 69.4% in the current year[4]. - The operating loss for the three months ended March 31, 2023, was approximately RMB 1,667,000, a significant decrease of 99.5% compared to an operating loss of RMB 344,007,000 in the same period last year[4]. - The company reported a net loss of RMB 9,256,000 for the three months ended March 31, 2023, compared to a net loss of RMB 348,280,000 in the same period last year[5]. - The total comprehensive loss for the period was RMB 10,999,000, down from RMB 355,121,000 in the previous year[7]. - The group’s revenue for the period was RMB 354,817,000, compared to RMB 362,802,000 in the same period last year[6]. - The company’s basic earnings per share for the period was RMB 0.0004, compared to a loss per share of RMB 0.0106 in the same period last year[5]. - The group reported a loss of approximately RMB 9,256,000 for the three months ended March 31, 2023, indicating significant uncertainty regarding its ability to continue as a going concern[9]. - Revenue from customer contracts for the three months ended March 31, 2023, was RMB 354,817,000, a decrease of 2.7% compared to RMB 362,802,000 for the same period in 2022[11]. - The total revenue for the group in Q1 2023 was approximately RMB 354.8 million, a decrease of about 2.2% from RMB 362.8 million in the same period last year[31]. Revenue Breakdown - Subscription solutions generated revenue of RMB 205,719,000, while merchant solutions brought in RMB 148,172,000 for the three months ended March 31, 2023[11]. - In Q1 2023, the revenue from subscription solutions was approximately RMB 205.7 million, a decrease of 6.5% compared to RMB 219.9 million in the same period last year[32]. - Revenue from merchant solutions increased by 6.3% year-on-year to approximately RMB 148.2 million, up from RMB 139.4 million[33]. Cost and Expenses - The company reported a decrease in the cost of goods sold to RMB 487,000 for the three months ended March 31, 2023, down from RMB 1,573,000 in the same period of 2022[18]. - The total cost of sales decreased by 23.7% year-on-year to approximately RMB 108.6 million, primarily due to a significant reduction in server and SMS costs[36]. - Sales expenses decreased by 38.6% to approximately RMB 157,128,000 from RMB 255,966,000 year-on-year[41]. - Administrative expenses decreased by 73.0% to approximately RMB 33,338,000 from RMB 123,324,000 year-on-year[41]. - Other operating expenses decreased by 67.5% to approximately RMB 56,026,000 from RMB 172,251,000 year-on-year[41]. - Research and development expenses for the three months ended March 31, 2023, were RMB 55,999,000, significantly lower than RMB 172,195,000 in the same period of 2022, reflecting a reduction in investment in R&D[14]. Financial Position - As of March 31, 2023, cash and cash equivalents amounted to approximately RMB 842,118,000, down from RMB 889,944,000 as of December 31, 2022[42]. - Total borrowings as of March 31, 2023, were approximately RMB 481,377,000, slightly up from RMB 480,986,000 as of December 31, 2022[42]. - The total equity attributable to the owners of the company as of March 31, 2023, was RMB 1,044,995,000, a decrease of RMB 8,337,000 from the previous period[22]. Corporate Governance - The company has adhered to the corporate governance code, except for a deviation regarding the separation of roles between the chairman and CEO, which is deemed appropriate by the board[52]. - The company is committed to maintaining high standards of corporate governance to protect shareholder interests[52]. - The audit committee, consisting of three independent non-executive directors, reviewed the unaudited financial results for the three months ending March 31, 2023, and found them compliant with applicable accounting standards[53]. - The company’s board of directors includes four executive directors and three independent non-executive directors as of the report date[54]. Shareholder Information - As of March 31, 2023, Whitecrow Investment holds 1,440,601,703 shares, representing 7.82% of the company's equity[50]. - Poyang Lake Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited, holds 1,036,766,038 shares, accounting for 5.63% of the company's equity[51]. - The company’s major shareholders have no other interests in the company's shares or related securities as of March 31, 2023[49]. Events and Developments - The company held a spring launch event on April 10, 2023, in Hangzhou, where it upgraded its private domain operation solutions and launched the data integration platform "Youzan iPaaS" and its first AI product "Add Me Smart"[28]. - The company provided a range of SaaS products through its subscription solutions, including Youzan WeMall and Youzan Retail, to help merchants enhance operational efficiency[28]. - The company’s management discussed the importance of personalized services and cloud business solutions to support merchants in expanding their customer base and improving operational efficiency[28]. - In Q1 2023, the total GMV generated through Youzan's solutions reached approximately RMB 23.4 billion, a year-on-year increase of about 2%[29]. - The total GMV from store SaaS business was approximately RMB 11.3 billion, accounting for 48% of the total GMV, with a year-on-year growth of about 26%[29]. - The average sales per merchant in Q1 2023 was approximately RMB 300,000, representing a year-on-year increase of about 16%[29]. - As of March 31, 2023, the number of paying merchants was 78,389, with 64% subscribing to e-commerce SaaS and 36% to store SaaS[29]. Stock Options - The company has granted stock options under a new stock option plan, with an exercise price of HKD 0.385, valid until January 19, 2028[6]. - The stock options granted in 2019 have an exercise price of HKD 1.00 and are valid until June 30, 2024[4].

Financial Performance - For the three months ended March 31, 2023, the group recorded a gross profit of approximately RMB 246,230,000, representing a year-on-year increase of 11.7% from RMB 220,477,000[3]. - The gross profit margin increased from 60.8% in the same period last year to 69.4% this year[4]. - The operating loss for the period was approximately RMB 1,667,000, a significant decrease of 99.5% compared to the operating loss of RMB 344,007,000 in the same period last year[4]. - The company reported a net loss of RMB 9,256,000 for the period, compared to a net loss of RMB 348,280,000 in the previous year[5]. - The total comprehensive loss for the period was RMB 10,999,000, compared to RMB 355,121,000 in the previous year[7]. - The basic and diluted loss per share was RMB 0.0004, compared to a loss of RMB 0.0106 per share in the previous year[5]. - For the three months ended March 31, 2023, the company reported a basic earnings loss of approximately RMB 6,519,000, compared to a loss of RMB 182,687,000 for the same period in 2022[19]. - The company’s accumulated losses as of March 31, 2023, were RMB 4,504,618,000, reflecting an increase in losses of RMB 6,519,000 during the period[23]. Revenue Breakdown - Revenue from customer contracts for the three months ended March 31, 2023, was RMB 354,817,000, a decrease of 2.7% compared to RMB 362,802,000 for the same period in 2022[11]. - Subscription solutions generated revenue of RMB 205,719,000, while merchant solutions brought in RMB 148,172,000 for the first quarter of 2023[11]. - Subscription solutions revenue decreased by 6.5% to approximately RMB 205,719 thousand, primarily due to a reduction in the number of paid merchants[33]. - Merchant solutions revenue increased by 6.3% to approximately RMB 148,172 thousand, driven by growth in private domain operation services[33]. - The total gross merchandise volume (GMV) generated by merchants through the company's solutions reached approximately RMB 23.4 billion, representing a year-on-year growth of about 2%[29]. Cost Management - The financing costs for the period were RMB 6,895,000, compared to RMB 5,459,000 in the previous year[5]. - Research and development expenses amounted to RMB 55,999,000 for the first quarter of 2023, significantly lower than RMB 172,195,000 in the same period of 2022, reflecting a reduction of 67.5%[14]. - The company's sales cost for the reporting period was approximately RMB 108,587 thousand, a year-on-year decrease of 23.7% from RMB 142,325 thousand[36]. - Total sales expenses decreased by 38.6% to approximately RMB 157,128 thousand from RMB 255,966 thousand in the same period last year[41]. - Administrative expenses decreased by 73.0% to approximately RMB 33,338 thousand, primarily due to a reduction in personnel costs[41]. - Other operating expenses decreased by 67.5% to approximately RMB 56,026 thousand, attributed to optimized R&D spending[41]. Shareholder Information - The total equity attributable to the company's owners as of March 31, 2023, was RMB 1,044,995,000, a decrease of RMB 8,337,000 from the previous period[22]. - The total equity held by Mr. Zhu Ning is 1,932,771,804 shares, representing 10.49% of the total equity[47]. - The total equity held by major shareholder Whitecrow Investment is 1,440,601,703 shares, accounting for 7.82% of the total equity[50]. - Tencent Holdings Limited is a major shareholder, holding 1,036,766,038 shares, which is 5.63% of the total equity[51]. Corporate Governance - The company has complied with the corporate governance code, except for a deviation regarding the roles of Chairman and CEO held by Mr. Zhu Ning since February 19, 2021[52]. - The audit committee, consisting of three independent non-executive directors, has reviewed the unaudited financial results for the three months ending March 31, 2023[53]. - The board of directors includes executive directors Zhu Ning, Cui Yusong, Yu Tao, and Ying Hangyan, as well as independent non-executive directors Fang Zhi Hua, Deng Tao, and Li Shaojie[54]. Future Outlook - The company has prepared cash flow forecasts indicating sufficient financial resources to meet its obligations for the foreseeable future[9]. - The company aims to enhance operational efficiency and improve cash flow while focusing on market expansion and customer retention strategies[31]. - The company plans to control operational costs, including employee costs and advertising expenses, as part of its strategy to improve financial performance[9]. New Initiatives - The company launched the data integration platform "Youzan iPaaS" and the first AI product "Jiawo Intelligent" to enhance merchant operations and efficiency[29]. - The number of new paid merchants added in the first quarter of 2023 was 5,015, with store SaaS accounting for 38% of the total[29]. Other Financial Information - The company received government subsidies totaling RMB 4,832,000 during the first quarter of 2023, which was not reported in the same period of the previous year[13]. - The company recognized a deferred tax expense of RMB 4,258,000 for the three months ended March 31, 2023, compared to RMB 1,901,000 for the same period in 2022[16]. - The company’s intangible asset amortization for the three months ended March 31, 2023, was RMB 19,986,000, slightly down from RMB 20,077,000 in the previous year[18]. - The company’s capitalized contract costs amortization decreased to RMB 43,808,000 from RMB 58,572,000 year-over-year[18]. - As of March 31, 2023, the company had cash and cash equivalents of approximately RMB 842,118 thousand[42]. - The company has not purchased, sold, or redeemed any of its listed securities as of March 31, 2023[52]. - The report will be published on the Hong Kong Stock Exchange website and the company's website for at least seven days from the publication date[54].

Financial Performance - Revenue for 2022 decreased by 4.7% to RMB 1,496,977 thousand compared to RMB 1,569,991 thousand in 2021[11] - Gross profit increased by 1.0% to RMB 961,922 thousand in 2022 from RMB 952,263 thousand in 2021[11] - Gross profit margin improved to 64.3% in 2022 from 60.7% in 2021[11] - Loss before tax significantly reduced by 79.8% to RMB (658,407) thousand in 2022 from RMB (3,251,782) thousand in 2021[11] - Loss for the year attributable to owners of the company decreased by 80.4% to RMB (645,760) thousand in 2022 from RMB (3,293,020) thousand in 2021[11] - Adjusted loss before interest, tax, depreciation, and amortization (unaudited) decreased by 87.9% to RMB (303,089) thousand in 2022 from RMB (2,509,498) thousand in 2021[11] - Adjusted non-HKFRS loss for the year (unaudited) decreased by 61.3% to RMB (339,537) thousand in 2022 from RMB (876,549) thousand in 2021[11] - Total assets decreased by 4.6% to RMB6,559,725,000 in 2022 compared to RMB6,872,975,000 in 2021[12] - Non-current liabilities decreased significantly by 40.1% to RMB262,833,000 in 2022 from RMB438,828,000 in 2021[12] - Adjusted EBITDA in Q4 2022 was approximately RMB7.15 million[18] - Adjusted EBITDA in Q4 2022 was approximately RMB7.15 million[33] - Sales expense ratio decreased quarter-on-quarter, and R&D expenses decreased year-on-year in 2022[33] - Cash balances achieved consecutive quarterly growth in Q3 and Q4 2022[33] - Net cash balance showed consecutive growth in Q3 and Q4 2022[18] - The company's revenue in 2022 was approximately RMB1,496,977,000, a 4.7% decrease year-on-year, primarily due to a decline in subscription solutions revenue[54][57] - Revenue from subscription solutions decreased by 8.6% year-on-year to RMB890,223,000, driven by a decline in cloud service fees and SaaS subscription fees[55][58] - Revenue from merchant solutions increased by 2.2% year-on-year to RMB597,780,000, in line with GMV growth[59][61] - Revenue from other businesses decreased by 21.3% year-on-year to RMB8,974,000, mainly due to the cessation of catering services[60][62] - Total cost of sales decreased by 13.4% year-on-year to RMB535,055,000 in 2022, primarily due to a 15.1% reduction in transaction costs, a 9.3% decrease in staff costs, and a 22.0% drop in server and SMS costs[65][66] - Gross profit increased by 1.0% year-on-year to RMB961,922,000 in 2022, with the gross profit margin rising from 60.7% in 2021 to 64.3% in 2022[67][68] - Subscription solutions gross profit decreased by 5.3% year-on-year to RMB660,006,000 in 2022, but the gross profit margin improved from 71.5% to 74.1%[69] - Merchant solutions gross profit increased by 17.0% year-on-year to RMB298,902,000 in 2022, with the gross profit margin rising from 43.7% to 50.0%[70] - Other gross profit surged to RMB3,014,000 in 2022 from RMB59,000 in 2021, with the gross profit margin jumping from 0.5% to 33.6%[70] - Selling expenses decreased by 13.4% year-on-year to RMB830,816,000 in 2022, mainly due to reductions in promotion, advertising, and sales staff costs[70] - Administrative expenses decreased by 12.6% year-on-year to RMB293,043,000 in 2022, partially offset by one-off severance packages of RMB92,211,000[70] - Other operating expenses decreased by 48.7% year-on-year to RMB312,268,000 in 2022, primarily due to reduced research and development expenses[71] - Equity-settled share-based payments increased by 65.8% year-on-year to approximately RMB88,068,000 in 2022[72] - Investment and other income decreased by 22.4% year-on-year to approximately RMB49,517,000 in 2022, mainly due to reduced super deduction of value-added tax and bank interest income[72] - Other net gains of approximately RMB36,100,000 were recorded in 2022, compared to net losses of approximately RMB2,186,924,000 in 2021, primarily due to the absence of impairment losses[72] - Finance costs increased by 13.2% year-on-year to approximately RMB25,631,000 in 2022, driven by higher interest expenses from new bank loans[72] - Adjusted loss before interest, tax, depreciation, and amortization (unaudited) improved to RMB339,537,000 in 2022 from RMB876,549,000 in 2021[74] - Adjusted non-HKFRS loss for the year (unaudited) was RMB394,791,000 in 2022, compared to RMB904,037,000 in 2021[75] Merchant Performance and GMV - The company helped merchants achieve GMV of approximately RMB101.4 billion, with non-Kuaishou channel GMV increasing by 19% year-on-year[15] - Average annual sales per merchant exceeded RMB1.2 million in 2022, representing a 9% year-on-year increase[15] - The proportion of targeted merchants increased to 47%, with a renewal rate exceeding 75%[15] - The gross merchandise volume (GMV) generated by merchants through Youzan's solutions reached approximately RMB101.4 billion in 2022, with non-Kuaishou channels growing by 19% year-on-year[47][48] - The GMV of store SaaS business was approximately RMB42.5 billion, accounting for 42% of total GMV, representing a 53% year-on-year increase[47][48] - The average annual sales of a single merchant exceeded RMB1.2 million in 2022, up 9% year-on-year[47][48] - The company had 83,439 paying merchants as of December 31, 2022, with 63% subscribing to e-commerce SaaS and 37% to store SaaS[49] - In 2022, the company added 40,443 new paying merchants, with store SaaS accounting for 50% of new merchants[49][50] Business Model and Strategy - The company aims to transition from SaaS-based system services to comprehensive solution services, focusing on increasing private domain business proportion in customer portfolios[22] - The company upgraded its business model from "store opening marketing solutions" to "private domain operation solutions" in H1 2022[35] - The company focuses on three core customer categories: content monetization, brand DTC, and store digitization[36] - The company provides e-commerce private domain operation solutions focusing on distribution, community, membership, and live streaming scenarios[36] - The company offers "Youzan customer operation solutions" to help merchants connect consumer information and perform precision marketing[36] - Youzan upgraded its business from "store marketing solutions" to "private domain operation solutions," focusing on consumer-centric strategies to enhance online and offline integration and improve end-to-end consumer experience[37] - The company segmented its core customer base into three categories: content monetization, brand DTC, and store digitization, providing tailored solutions for each group[37] - Youzan's product matrix includes Youzan CRM, Youzan WeCom Assistant, Youzan Salespeople Assistant, Youzan Chain, Marketing Canvas, and New Retail Integration Module, aimed at improving marketing and sales capabilities[38] - In 2022, Youzan conducted in-depth annual cooperation with nearly 100 large enterprises across industries such as liquor, FMCG, vehicles, department stores, and beauty products[39] - Youzan Cloud platform has over 3,000 active developers, more than 800 apps launched, and an average of over 500 million daily API visits, with 34 third-party systems integrated[43] - In June 2022, Youzan launched Youzan Jarvis, an AI engine product with five core capabilities (machine learning, NLP, computer vision, deep learning, and knowledge graph) for private domain scenarios[45] - Youzan collaborated with over 300 agents nationwide to promote and sell its products and services in 2022[43] - The company provided customized system services to nearly 300 merchants, focusing on system integration, transaction and marketing expansion, and personalized page display[43] - In early 2023, Youzan adjusted its mall products, upgrading the flagship version to a solution version and launching a supreme version with in-depth private domain operation services[46] - Youzan's service teams improved merchant delivery rates and activity, contributing to higher merchant renewal rates and commercial success[42] Organizational and Operational Changes - The company restructured its organizational structure in early 2022 to optimize business development and collaboration efficiency[33] - 80% of the company's employees are frontline workers directly facing merchants[19] - The Group's employee count decreased to 1,952 as of 31 December 2022, down from 4,494 in 2021, due to rationalization of R&D investment and organizational optimization[122] Cash Flow and Financial Position - The Group's cash and cash equivalents increased to approximately RMB889,944,000 as of 31 December 2022, up from RMB711,527,000 in 2021[113] - The Group's borrowings stood at approximately RMB480,986,000 as of 31 December 2022, compared to no borrowings in 2021[113] - The company successfully placed 810,792,000 shares at HK$0.385 per share, raising net proceeds of approximately HK$309.01 million, which will be used for system upgrades, product development, marketing, strategic investments, and general working capital[139] - Net proceeds from the Placing of New Shares amounted to approximately HK$309.01 million after deducting related costs, fees, expenses, and commission[177] - Approximately HK$211.46 million of the net proceeds was used for system upgrades, product development, and marketing expenses as of December 31, 2022[180] - Approximately HK$23.23 million of the net proceeds was used for potential strategic investments and acquisitions as of December 31, 2022[180] - Approximately HK$23.50 million of the net proceeds was used for the Group's general working capital as of December 31, 2022[180] - The remaining balance of approximately HK$35.75 million is expected to be used for system upgrades, product development, and marketing expenses[180] - The remaining balance of approximately HK$7.67 million is expected to be used for potential strategic investments and acquisitions by June 30, 2023[180] - The remaining balance of approximately HK$7.40 million is expected to be used for the Group's general working capital[180] Impairment and Goodwill - The recoverable amounts of cash-generating units (CGUs) were determined using discounted cash flow method, with a pre-tax discount rate of 20.35% for CGU A and 19.67% for CGU B[79] - The budgeted revenue CAGR for both CGU A and CGU B in the 5-year forecast is 6.37%, with a terminal growth rate of 2.08%[79] - Goodwill allocated to CGU A remains unchanged at approximately RMB341,326,000 (2021: RMB341,326,000)[81] - The recoverable amount for CGU A exceeded its carrying value by approximately RMB211 million (2021: RMB125 million), with no impairment charge deemed necessary[82] - CGU B recorded operating losses of RMB596 million for the year ended 31 December 2022[83] - The recoverable amount for CGU B exceeded its carrying value by approximately RMB161 million, with no impairment charge deemed necessary[83] - The pre-tax discount rate for CGU A decreased to 20.35% (2021: 20.7%)[82] - The pre-tax discount rate for CGU B is 19.67% as of the end of the reporting period[83] - A 10.47% increase in the pre-tax discount rate for CGU A would reduce the headroom to zero[82] - A 3.83% increase in the pre-tax discount rate for CGU B would reduce the headroom to zero[83] - Impairment losses for CGU B in 2021 included RMB1,622,083,000 for goodwill and RMB459,553,000 for intangible assets[86] - The pre-tax discount rate for CGU B in 2021 was 19.16%[86] Management and Board - Ms. Ying Hangyan, aged 41, joined the Company in April 2018 and was appointed as an executive Director and the chief service officer in May 2018, responsible for management of the help center, talent development, and organization operation[92] - Mr. Yu Tao, aged 35, joined the Company in April 2018 and was appointed as an executive Director and CFO in May 2018, responsible for financial planning, management, and investor relations[93] - Dr. Fong Chi Wah, aged 60, has served as an independent non-executive director since December 2003, with over 26 years of experience in the financial industry, including roles at KPMG, AIG, and ING Group[95] - Dr. Fong has been the CFO of Citychamp Watch & Jewellery Group Limited since September 2004 and served as a Non-independent Non-executive Director of Cordlife Group Limited from January 2019 to November 2021[96] - Dr. Fong holds a Bachelor's degree in Management Sciences (Economics) from Lancaster University, three Master's degrees, and a Doctorate in Business Administration from Hong Kong Polytechnic University[97] - Mr. Deng Tao, aged 68, has served as an independent non-executive director since May 2018, with over 27 years of experience in human resources management, including roles at Hewlett-Packard, Maersk Line, and Google[99] - Mr. Li Shaojie, aged 45, has served as an independent non-executive director since March 2022, with about 21 years of experience in internet brand marketing and is the chairman of Rich Flag Sci & Tech Group Co., Ltd[99] - Mr. Huan Fang, aged 34, joined Youzan Group in September 2018 as the chief operating officer, responsible for business data assessment, product commercialization, and market investment, with prior experience at Hillhouse Capital Group[99] - Executive directors Zhu Ning, Cui Yusong, Yu Tao, and Ying Hangyan renewed their service agreements for three years starting from May 2021[186][190] - Independent non-executive director Dr. Fong Chi Wah renewed his appointment for three years starting from 19 December 2021 and has served on the board for over 10 years[191] - Independent non-executive director Deng Tao renewed his appointment for three years starting from 8 May 2021[192] - Independent non-executive director Li Shaojie entered into a three-year appointment starting from 18 March 2022[192] - Directors Zhu Ning, Cui Yusong, Yu Tao, and Ying Hangyan will retire at the forthcoming AGM and are eligible for re-election[192] - The company maintained directors and officers liability insurance during the year[182] Shareholding and Equity - Mr. Zhu Ning holds a total interest of 1,931,771,804 shares, representing 10.49% of the company's shareholding[197] - Mr. Cui Yusong holds a total interest of 270,785,127 shares, representing 1.47% of the company's shareholding[197] - Mr. Yu Tao holds a total interest of 28,848,000 shares, representing 0.16% of the company's shareholding[197] - Ms. Ying Hangyan holds a total interest of 15,852,000 shares, representing 0.09% of the company's shareholding[197] - Dr. Fong Chi Wah and Mr. Li Shaojie each hold 1,000,000 shares, representing 0.01% of the company's shareholding[197] - Whitecrow Investment Ltd., owned by Mr. Zhu Ning, holds 1,440,601,703 shares[198] - Youzan Teamwork Inc., partially owned by Mr. Zhu Ning and Whitecrow, holds 363,170,101 shares[198] - V5.Cui Investment Ltd., owned by Mr. Cui Yusong, holds 241,885,127 shares[198] - Share options granted under the New Share Option Scheme have an exercise price of HK$1.00 and are valid until 30 June 2024[198] - Share options granted under the New Share Option Scheme have an exercise price of HK$0.90 and are valid until 30 June 2024[198] - The company granted 14,450,000 share options to 36 eligible participants at an exercise price of HK$0.385 per share on 20 January 2023[184] - Share Option Scheme 2019 details: Mr. Zhu Ning holds 100,000,000 options at HK$1.00, exercisable from 1 July 2021 to 30 June 2024[132] - Share Award Scheme adopted on 31 May 2018, valid for 10 years, aimed at retaining and attracting talent[134][136] - Company's share premium account amounted to approximately RMB6,420,355,000 as of 31 December 2022, up from RMB6,098,424,000 in 2021[135][137] - No reserves available for distribution to shareholders as of 31 December 2022[135][137] - No purchase, sale, or redemption of listed securities by the company or its subsidiaries during the year[138] Supplier and Customer Relationships - The Group's five largest suppliers accounted for approximately 52.2% of total purchases in 2022, down from 54.3% in 2021, with the largest supplier accounting for 24.0% of total purchases, up from 18.9%

Financial Performance - Revenue for 2022 was RMB 1,496,977, a decrease of 4.7% compared to RMB 1,569,991 in 2021[11]. - Gross profit increased to RMB 961,922, with a gross profit margin of 64.3%, up from 60.7% in the previous year[11]. - Loss before tax improved significantly to RMB (658,407), a reduction of 79.8% from RMB (3,251,782) in 2021[11]. - Revenue from subscription solutions decreased by 8.6% year-on-year to approximately RMB 890,223,000, primarily due to a decline in cloud service fees[55]. - Revenue from merchant solutions increased by 2.2% year-on-year to approximately RMB 597,780,000[56]. - The group's cost of sales decreased by 13.4% to approximately RMB 535,055,000 in 2022 from RMB 617,728,000 in 2021, driven by a 15.1% reduction in transaction costs[66]. - Gross profit for 2022 was approximately RMB 961,922,000, representing a year-on-year increase of 1.0% from RMB 952,263,000 in 2021, with a gross profit margin rising from 60.7% to 64.3%[67]. - The gross profit from subscription solutions was approximately RMB 660,006,000 in 2022, a decrease of 5.3% from RMB 696,684,000 in 2021, while the gross profit margin increased from 71.5% to 74.1%[69]. - The gross profit from merchant solutions was approximately RMB 298,902,000 in 2022, an increase from RMB 255,520,000 in 2021, with the gross profit margin rising from 43.7% to 50.0%[68]. Business Strategy and Development - The company aims to enhance its service offerings and transition from a SaaS-based system to a more comprehensive solution service in 2023[22]. - Youzan aims to achieve small-scale operating profitability in 2023 while maintaining steady business growth[24]. - The company plans to enhance knowledge accumulation and transmission to improve collaboration efficiency and increase annual per capita output[25]. - Youzan is transitioning from providing primarily SaaS systems to offering comprehensive solution services to merchants[33]. - The company intends to expand its operational services and value-added services to help merchants increase GMV and boost its own revenue[33]. - Youzan Technology plans to spend approximately RMB 620 million on research and development to widen its product range and enhance infrastructure, and RMB 260 million on marketing to increase advertising and distribution agents[146]. - The company aims to enhance its competitive edge in the e-commerce platform industry, which faces challenges from ongoing COVID-19 impacts[147]. Corporate Governance - The board of directors collectively accepts full responsibility for the accuracy and completeness of the report[6]. - The company has a risk committee and an audit committee to oversee financial practices and risk management[9]. - The leadership team has a diverse educational background, with degrees from prestigious universities and professional certifications in finance and accounting[97]. - The company emphasizes innovation in technology and user experience, leveraging the expertise of its executives from leading tech firms[89]. - The management team is committed to driving growth and expanding market presence through strategic initiatives and product development[92]. Shareholder Information - The Group did not recommend the payment of any dividend for 2022, consistent with 2021[112]. - The Company had no convertible bonds or warrants outstanding as of December 31, 2022[129]. - The Company's share premium account was approximately RMB 6,420,355,000 as of December 31, 2022, compared to RMB 6,098,424,000 in 2021, which may be distributed as fully paid bonus shares[135]. - The Group's share option scheme adopted on June 12, 2019, remains in effect, with specific options granted to selected directors[132]. - The Group has a share award scheme in place since May 31, 2018, aimed at recognizing contributions and retaining personnel[134]. Risk Management - The company emphasizes the potential investment risks associated with companies listed on GEM[4]. - The Group monitors foreign currency risks, primarily dealing in Renminbi due to its operations in the PRC[116]. - The Group monitors its foreign exchange risk and considers hedging significant currency risks when necessary[119]. Employee and Operational Metrics - The number of employees decreased to 1,952 as of December 31, 2022, from 4,494 in 2021, primarily due to rationalization of R&D investment and organizational structure optimization[122]. - In 2022, Youzan achieved an annual per capita output of approximately RMB 570,000, representing a 51% year-on-year increase[33]. - The average annual sales per merchant exceeded RMB 1.2 million, representing a year-on-year increase of approximately 9%[15]. Related Party Transactions - The company has complied with GEM Listing Rules regarding related party transactions and continuing connected transactions for the year ended December 31, 2022[141]. - The auditor confirmed that the continuing connected transactions were approved by the Board and were in accordance with the Group's pricing policies[175]. - The independent non-executive Directors confirmed that the continuing connected transactions were entered into in the ordinary course of business and on normal commercial terms[173]. Leadership and Management - Mr. Zhu Ning, the CEO and chairman, has been with the company since April 2018 and is responsible for overall development planning and business strategies[88]. - Mr. Cui Yusong, the CTO, focuses on technology reserve, artificial intelligence, and product strategic planning, having joined the company in April 2018[89]. - Mr. Yu Tao, the CFO, has been with the company since April 2018, overseeing financial planning and management, and investor relations[91]. - Ms. Ying Hangyan, the Chief Service Officer, is responsible for client services and contract compliance, having joined the company in April 2018[92]. - The company has a strong leadership team with extensive experience in technology, finance, and service management, enhancing its operational capabilities[90].

Financial Performance - For the nine months ended September 30, 2022, the group recorded revenue of approximately RMB 1,098,851,000, a decrease of 6.6% compared to the same period last year[3]. - The gross profit for the same period was approximately RMB 690,802,000, down 3.5% year-on-year[3]. - The operating loss for the nine months was approximately RMB 510,487,000, a reduction of 32.8% from the operating loss of RMB 759,120,000 in the previous year[4]. - The total comprehensive loss for the nine months was approximately RMB 505,535,000, compared to RMB 677,617,000 in the previous year[8]. - The company reported a basic loss per share of RMB 0.0152 for the nine months ended September 30, 2022[6]. - The company reported a loss of approximately RMB 518,304,000 for the nine months ended September 30, 2022, raising significant doubts about its ability to continue as a going concern[10]. - Total revenue for the nine months ended September 30, 2022, was RMB 1,098,851,000, down 6.6% from RMB 1,176,489,000 in the previous year[11]. - The company reported a net profit margin of 12% for Q3 2022, reflecting improved operational efficiency[64]. Revenue Breakdown - Revenue from subscription solutions for the nine months ended September 30, 2022, was RMB 660,974,000, a decrease of 10.3% compared to RMB 737,292,000 for the same period in 2021[11]. - Revenue from merchant solutions for the nine months ended September 30, 2022, was RMB 430,513,000, slightly up from RMB 427,420,000 in the same period of 2021[11]. - Subscription solution revenue decreased by 10.4% to approximately RMB 660.9 million, primarily due to a reduction in cloud service fees[40]. - Merchant solution revenue increased by 0.7% to approximately RMB 430.5 million, driven by higher transaction service fees[40]. Cost Management - The company has implemented cost control measures, including managing employee costs and advertising expenses, to ensure sufficient financial resources for the foreseeable future[10]. - Total sales costs for the period were approximately RMB 408.0 million, a year-on-year decrease of 11.4% from RMB 460.4 million[43]. - Sales expenses decreased by 5.5% year-over-year to approximately RMB 649,797 thousand, primarily due to reduced promotional and advertising expenses[47]. - Administrative expenses increased by 5.5% year-over-year to approximately RMB 249,872 thousand, mainly due to a one-time severance payment of approximately RMB 90,772 thousand[47]. - Other operating expenses decreased by 42.0% year-over-year to approximately RMB 273,254 thousand, attributed to optimized R&D spending and reduced personnel costs[47]. - Cost management strategies are being implemented, aiming to reduce operational expenses by 8% in the upcoming quarter[64]. Shareholder Information - The board of directors did not recommend any dividend for the nine months ended September 30, 2022[4]. - The company did not recommend any dividend for the nine months ended September 30, 2022, consistent with the same period in 2021[24]. - Shareholder returns are prioritized, with a proposed dividend increase of 20% based on the positive financial outlook[64]. Operational Highlights - The company has maintained a corporate income tax rate of 25% for the current period, consistent with the previous year[19]. - The company has established an audit committee consisting of three independent non-executive directors to oversee financial reporting and internal controls[63]. - The company has complied with the corporate governance code provisions during the nine months ending September 30, 2022[63]. - The ongoing impact of the COVID-19 pandemic continues to affect the group's business operations[55]. - The company emphasized a new "private domain operation model" focused on consumer-centric strategies to enhance customer experience and value creation[36]. - The company provided a range of SaaS products and PaaS cloud services to merchants, enhancing operational efficiency and customer engagement[35]. Future Outlook - Future outlook includes a projected revenue growth of 15% for Q4 2022, driven by new product launches and market expansion strategies[64]. - The company plans to introduce three new products in Q1 2023, expected to contribute an additional 5% to overall revenue[64]. - Market expansion efforts are underway, targeting new regions to increase market share by 10% in the next fiscal year[64]. - The board discussed potential mergers and acquisitions to strengthen competitive positioning in the market[64]. - The company is investing in new technology development, aiming to enhance its e-commerce platform capabilities[64]. Equity and Ownership - As of September 30, 2022, the total equity attributable to owners of the company was RMB 1,336,823,000, a decrease of RMB 230,315,000 from the previous year[24]. - The total number of issued shares as of September 30, 2022, was 18,421,642,097 shares, unchanged from the report date[24]. - As of September 30, 2022, the total equity held by the directors and senior management in the company amounts to 1,931,771,804 shares, representing 10.49% ownership[57]. - Whitecrow Investment Ltd. holds 1,440,601,703 shares, accounting for 7.82% of the total equity[60]. - Poyang Lake Investment Limited, a wholly-owned subsidiary of Tencent Holdings Limited, holds 1,036,766,038 shares, representing 5.63% of the total equity[61].

Financial Performance - For the six months ended June 30, 2022, the group recorded revenue of approximately RMB 729,275,000, a decrease of 9.2% compared to the same period last year[3]. - The gross profit for the same period was approximately RMB 441,518,000, down 9.4% year-on-year, with a gross margin of 60.5% compared to 60.7% in the previous year[4]. - The group reported an operating loss of approximately RMB 474,112,000 for the six months, an increase in loss of 5.5% compared to RMB 449,519,000 in the previous year[4]. - The net loss for the six months was approximately RMB 481,795,000, compared to RMB 370,053,000 in the previous year[7]. - The total comprehensive loss for the six months was approximately RMB 473,382,000, compared to RMB 373,305,000 in the previous year[9]. - The total loss for the six months ended June 30, 2022, was RMB 460,696,000, compared to a loss of RMB 417,124,000 in the same period of 2021, indicating a worsening of 10.4%[40]. Revenue Breakdown - The subscription solutions revenue was approximately RMB 283,852,000, a decrease of 1.9% year-on-year, while merchant solutions revenue increased by 28.5% to approximately RMB 136,514,000[3]. - Subscription solutions generated revenue of RMB 439,197 thousand for the six months ended June 30, 2022, compared to RMB 507,808 thousand for the same period in 2021, reflecting a decrease of about 13.5%[28]. - The company’s external customer revenue from mainland China (excluding Hong Kong) was RMB 573,882 thousand for the six months ended June 30, 2022, down from RMB 668,191 thousand in the same period of 2021, a decrease of about 14.1%[29]. - The company’s revenue from merchant solutions for the six months ended June 30, 2022, was RMB 287,439 thousand, compared to RMB 316,019 thousand for the same period in 2021, reflecting a decline of approximately 9.0%[32]. - The company’s revenue from third-party payment services was RMB 78,734 thousand for the six months ended June 30, 2022, with no revenue reported for the same period in 2021[32]. - The company’s revenue from other services was RMB 283,852 thousand for the six months ended June 30, 2022, compared to RMB 289,258 thousand for the same period in 2021, a decrease of about 1.5%[28]. Cash Flow and Liquidity - The cash and cash equivalents totaled approximately RMB 831,809,000, with a current ratio of 0.93[4]. - The company's net cash used in operating activities for the six months ended June 30, 2022, was RMB (558,568) thousand, compared to RMB (355,011) thousand for the same period in 2021, indicating a worsening cash flow situation[16]. - The company reported a net cash inflow from financing activities of RMB 701,416 thousand for the six months ended June 30, 2022, a significant increase compared to RMB 2,293 thousand in the same period of 2021[16]. - The company’s cash and cash equivalents at the end of the period were RMB 831,809 thousand, down from RMB 1,125,095 thousand at the end of June 2021, representing a decrease of approximately 26.1%[15]. - The company reported a net cash outflow from investing activities of RMB (30,879) thousand for the six months ended June 30, 2022, compared to RMB (267,086) thousand for the same period in 2021, indicating a significant improvement in investment cash flow[16]. Assets and Liabilities - As of June 30, 2022, total assets amounted to RMB 4,770,452 thousand, a decrease from RMB 4,903,752 thousand as of December 31, 2021, representing a decline of approximately 2.7%[10]. - The company's total liabilities as of June 30, 2022, were RMB 5,128,341 thousand, compared to RMB 5,097,324 thousand at the end of 2021, showing a slight increase of approximately 0.6%[11]. - The total equity attributable to the owners of the company decreased to RMB 1,140,132 thousand as of June 30, 2022, down from RMB 1,336,823 thousand at the end of 2021, reflecting a decline of approximately 14.7%[11]. - Non-current assets totaled RMB 1,887,259 thousand as of June 30, 2022, down from RMB 1,969,223 thousand as of December 31, 2021, indicating a decrease of about 4.2%[10]. Operational Highlights - The company has plans to control operational costs, including employee costs and advertising expenses, to improve financial performance[18]. - The company plans to continue focusing on expanding its SaaS product offerings and enhancing its third-party payment services in the Chinese market[36]. - The company launched its first AI engine product, Youzan Jarvis, in June 2022, designed specifically for private domain operation scenarios[59]. - The company announced a shift from "store marketing solutions" to "private domain operation solutions" in the first half of 2022, focusing on customer-centric business planning[58]. - The company’s employee count reached 2,633 as of June 30, 2022[59]. Governance and Compliance - The audit committee has been established in accordance with GEM listing rules, consisting of three independent non-executive directors[92]. - The board of directors confirmed compliance with the trading code throughout the reporting period[91]. - The company has adhered to the corporate governance code as per GEM Listing Rules during the reporting period[91]. Shareholder Information - Major shareholder Whitecrow Investment Ltd. holds 1,440,601,703 shares, representing 7.82% of the total shares[82]. - Poyang Lake Investment Limited, a subsidiary of Tencent Holdings, owns 1,036,766,038 shares, accounting for 5.63% of the total shares[82]. - UBS Group holds 933,869,572 shares (5.07%) and has a short position of 221,497,159 shares (1.20%) in the company[82].

Financial Performance - For the three months ended March 31, 2022, the group recorded revenue of approximately RMB 362,802,000, a decrease of 13.1% year-on-year[3]. - The group reported a gross profit of approximately RMB 220,477,000, down 10.1% year-on-year, with subscription solutions gross profit decreasing by 20.0%[3][4]. - The operating loss for the three months ended March 31, 2022, was approximately RMB 344,007,000, an increase of 76.6% compared to the operating loss of RMB 194,821,000 in the same period last year[4][5]. - The net loss for the period was RMB 348,280,000, compared to a net loss of RMB 168,176,000 in the previous year[5][7]. - Basic loss per share was RMB 0.0106, compared to RMB 0.0053 in the previous year[5]. - The company reported a net loss of RMB 171,767,000 for the three months ended March 31, 2022, compared to RMB 138,401,000 in the same period of 2021[25]. - The group recorded a foreign exchange loss of RMB 6,841,000 for the period, compared to a gain of RMB 1,582,000 in the previous year[7]. - Total interest income decreased to RMB 6,220,000, down 32.1% from RMB 9,190,000 in the same quarter last year[21]. - The total gross merchandise volume generated by merchants through Youzan's solutions reached approximately RMB 23 billion, with a year-on-year growth of over 25% from non-Kuaishou channels[35]. - The total gross merchandise volume from the store SaaS business was approximately RMB 9 billion, accounting for 39% of the total, with a year-on-year growth of about 70%[35]. Cost and Expenses - Research and development expenses increased to RMB 172,195,000, up 27.8% from RMB 134,742,000 in the previous year[22]. - Sales expenses increased by 21.9% year-on-year to approximately RMB 255,966 thousand, driven by an increase in sales personnel and travel expenses[44]. - Administrative expenses rose by 74.7% year-on-year to approximately RMB 123,324 thousand, primarily due to one-time severance payments of approximately RMB 61,181 thousand[44]. - Other operating expenses increased by 26.1% year-on-year to approximately RMB 172,251 thousand, mainly due to increased research and development expenditures[45]. - Investment and other income decreased by 45.3% year-on-year to approximately RMB 11,360 thousand, attributed to reduced VAT deductions and bank interest income[45]. Equity and Shares - Total equity as of March 31, 2022, was RMB 4,481,704,000, a decrease of RMB 148,395,000 from the previous period[31]. - The company reported a cumulative loss of RMB 4,391,368,000 as of March 31, 2022, reflecting an increase of RMB 180,318,000 during the period[30]. - The total number of shares issued as of March 31, 2022, was 18,421,642,097 shares, unchanged from the report date[29]. - The total number of shares held by Mr. Cui Yusong is 265,085,127, representing 1.44% of the total equity[52]. - Whitecrow Investment holds 1,440,601,703 shares, representing 7.82% of the total equity[55]. - Poyang Lake Investment Limited and Tencent Holdings Limited each hold 1,036,766,038 shares, accounting for 5.63% of the total equity[55]. Governance and Compliance - The audit committee, consisting of three independent non-executive directors, reviewed the financial performance for the three months ending March 31, 2022, ensuring compliance with applicable accounting standards[58]. - The company adopted the corporate governance code as per GEM Listing Rules Appendix 15 during the three months ending March 31, 2022[57]. - The company confirmed full compliance with the trading code for directors during the period ending March 31, 2022[56]. - The company’s board of directors includes both executive and independent non-executive members, ensuring a diverse governance structure[58]. Operational Strategy - The company plans to control operational costs, including employee costs and advertising expenses, to improve financial performance[9]. - The company aims to enhance operational cash flow and improve results by optimizing sales and R&D investments and focusing on customer needs[35]. - Organizational restructuring was implemented to improve operational efficiency and focus on strategic development across five core sectors: social e-commerce, new retail, beauty industry, education, and international markets[34]. - The company emphasized cost control measures to enhance per capita output and improve cash flow and operational results[34]. Dividend and Financial Health - The board of directors did not recommend the payment of an interim dividend for the three months ended March 31, 2022[4]. - No interim dividend was recommended for the three months ended March 31, 2022, consistent with the previous year[29]. - The company has sufficient financial resources to meet its obligations for the foreseeable future, as indicated by cash flow forecasts[9]. - The company has no bank borrowings as of March 31, 2022[45]. Market Conditions - The impact of COVID-19 continues to affect the group's business operations, and the company is monitoring the situation closely[50]. - The company has not made any hedging arrangements to offset foreign exchange risks as of March 31, 2022[48]. - The company has not adopted any new accounting standards or amendments that are expected to be issued in the near future[10]. - The company adopted new and revised Hong Kong Financial Reporting Standards effective from January 1, 2022, with no significant impact on financial statements[10].

Impairment Loss - The company reported a significant impairment loss in its cash-generating unit B due to intense competition in the e-commerce platform industry and the prolonged impact of COVID-19, leading to a decrease in expected future revenues and growth rates[2] Cash Flow Forecasts - The management has conservatively adjusted cash flow forecasts in light of the ongoing challenges, reflecting a more cautious outlook compared to previous estimates[2] Valuation Methods - The valuation methods employed include income, market, and cost approaches, with the discounted cash flow method being used to determine the value of the cash-generating unit[3]

Financial Performance - Financial performance highlights indicate significant growth in revenue, with a year-on-year increase of 25%[12] - Revenue for the year ended December 31, 2021, was RMB 1,569,991, a decrease of 13.8% from RMB 1,820,723 in 2020[13] - The company projects a revenue growth of 20% for the next fiscal year, driven by new product launches and market expansion[12] - Revenue for the fiscal year reached approximately $200 million, reflecting a 15% increase compared to the previous year[91] - Youzan's revenue for 2021 was approximately RMB 1,569,991,000, a decrease of 13.8% compared to 2020, primarily due to a decline in revenue from merchant solutions[48] User Engagement and Market Expansion - User data shows an increase in active merchants by 30%, reaching a total of 150,000[12] - The company reported a significant increase in user engagement, with a year-over-year growth of 25% in active users[90] - The company plans to expand its market presence in Southeast Asia, targeting a 10% market share within the next two years[12] - The company plans to expand its market presence in Southeast Asia, targeting a 30% increase in market share by 2025[92] Product Development and Innovation - Investment in R&D has increased by 15%, focusing on enhancing technology and product offerings[12] - The company has launched a new e-commerce platform, which is projected to contribute an additional $50 million in revenue[12] - New product launches are expected to contribute an additional $50 million in revenue over the next fiscal year[93] - Youzan launched WowShop in 2021, serving a total of 10,000 paying merchants, including retail and catering businesses[36] - The Group launched four new products in 2021, including WowShop and Youzan CRM, as part of its focus on new retail business[71] Financial Health and Cost Management - The gross profit margin improved to 45%, up from 40% in the previous year, reflecting better cost management[12] - Gross profit for 2021 was RMB 952,263, down 12.0% from RMB 1,082,084 in 2020, with a gross profit margin of 60.7%[13] - The Group's cost of sales decreased by 16.4% to approximately RMB 617,728,000 in 2021 from RMB 738,639,000 in 2020, mainly due to a 44.6% reduction in transaction costs[58] - The Group reported other net losses of approximately RMB 2,186,924,000 in 2021, compared to net gains of approximately RMB 1,569,000 in 2020, mainly due to impairments[74] Customer Satisfaction and Retention - Customer retention rates have improved by 12%, indicating stronger user engagement and satisfaction[12] - Customer satisfaction ratings improved to 90%, up from 85% last year, indicating better service delivery[90] Strategic Acquisitions and Partnerships - A strategic acquisition of a local tech firm is expected to enhance service capabilities and customer reach[12] - The company is exploring potential acquisitions to enhance its service offerings, with a focus on companies in the fintech sector[92] - The company has established a new partnership with a leading e-commerce platform, expected to drive additional traffic and sales[93] Operational Efficiency and Management - The company emphasizes the importance of returning to business fundamentals and improving operational efficiency through structured management principles[22] - The Company plans to focus on expanding all-industry value and deeply exploring vertical industries as part of its short-term strategy[16] - Youzan is committed to building a commercialization capability to improve marketing and sales system efficiency[22] Employee and Organizational Development - The number of employees increased to 4,494 as of December 31, 2021, up 24.8% from 3,603 in 2020[120] - The Group recognizes the importance of staff training and regularly provides internal and external training to enhance employee skills and knowledge[120] Financial Agreements and Compliance - The Company has entered into a Loan Agreement 2022 with Youzan Technology, providing an unsecured loan facility of up to HK$480 million, effective from January 1, 2022, to December 31, 2024[144] - The proposed annual caps for the Loan Agreement 2022 are set at HK$480 million for each of the financial years ending December 31, 2022, 2023, and 2024[145] - The Company expects the Loan Agreement 2022 to be beneficial and fair, having been negotiated on normal commercial terms[146] Challenges and Risks - The evolving regulatory requirements in the PRC present challenges to the market in which the Group operates[84] - The management anticipates future growth of CGU B will be subject to uncertainties, including competition and market demand changes[83]