HC Group Inc. provided earnings guidance for the year ended December 31, 2023. For the year, the group expects to record a loss attributable to equity holders of the Company in a range from approximately RMB 1,700 million to RMB 2,000 million, compared to a loss attributable to equity holders of the Company of approximately RMB 224 million for the year ended 31 December 2022. Such loss for the year ended 31 December 2023 was mainly attributable to, among other things, the following principal factors: The expected impairment loss associated with the proposed disposal of 100% equity interests in Beijing Huicong Hulian Information Technology Co.

Ltd. It is estimated that the Proposed Disposal will be completed in or around the first half of 2024. The Target Group therefore is classified as non-current assets held for sale as at 31 December 2023. Pursuant to HKFRS 5 Non-current Assets Held for Sale and Discontinued Operations, a full impairment review is required when the Target Group and the 40% equity interests of Chongqing Digital China Huicong Micro-credit Co., Ltd, are classified as held for sale, and an impairment loss is recognized if the fair value less costs to sell is lower than the carrying value of the Target Group and Chongqing Micro-credit.

Under this circumstance, the Group is expected to record a total one-off impairment loss of approximately RMB 590 million. Impairment for goodwill and intangible assets relating to the technology-driven new retail segment cash generating unit. As stated in the Company's 2023 interim report, the Company recognized an impairment for goodwill of approximately RMB 719 million for this segment for the six months ended 30 June 2023.

The Company proposes to recognize a further impairment for the goodwill and intangible assets relating to this segment for the year ended 31 December 2023, currently expected to be up to RMB 260 million. Such recognition of impairment was proposed in light of the corresponding business which could not achieve the financial results as expected at the time when the Company's 2023 interim report was finalized. The increment in advertising engagements however fell short of expectations in the second half of 2023, and the volume of advertising spending recorded a significant decline compared to that in the first half of 2023.

A critical reassessment of the financial projections of ZOL was therefore performed in light of such decline, resulting in a revised future cashflow forecast projection, and thereby a further reassessment on ZOL's business valuation. In light of the revised cashflow forecast, it is proposed that a further impairment provision for the goodwill and intangible assets be made for such segment; and Impairment loss of approximately RMB 240 million on loan and interest receivables is expected to be made for the year ended 31 December 2023 before the Proposed Disposal completes, arising from certain significant overdue loans during the year from the Group's ordinary and usual course of its micro-credit business under its platform and corporate services segment.