# OVERALL RESULTS

In 2018, the Company maintained a healthy growth in revenue from continuing operations and the revenue from the software business maintained a stable growth, which amounted to approximately RMB5,192.0 million, representing an increase of 7.6% as compared with last year, which was the greatest increase in the last three years. In particular, the data-driven operation services achieved a rapid growth, almost doubling that of last year.

The adjusted net profit for 2018 amounted to approximately RMB602.2 million, representing a significant increase of 29.9% as compared with last year, and the adjusted net profit margin was 11.6%, achieving a good profitability level. The use of adjusted net profit from continuing operations is to easily compare the operating performance of the Company between periods. In view of this, we have eliminated the impacts of certain non-recurring, non-cash or non-operating items. Such impacts include share-based compensation, amortization of intangible assets arising from acquisition, interest expenses from the Privatization Syndicated Loan1, exchange gain and loss, and the listing expenses. The adjusted net profit and adjusted net profit margin referred to in this annual report were adjusted pursuant to the principles as set out above.

Net cash generated from operating activities amounted to approximately RMB583.3 million, representing an increase of 14.3% as compared with last year, and the cash generating ability continued to strengthen.

# BUSINESS REVIEW

# Further reinforcing our leading position in the telecom operators market to maintain positive growth

We served as the provider of China’s first-generation telecom software and services, and accumulated experience of more than 20 years in the telecom operators market. With leading research and development (“R&D”) capabilities, products and services within the industry, we have collaborated extensively with the three major telecom operators in the PRC, supporting over one billion subscribers nationwide. We maintained an absolute leading position in the industry.

In 2018, the Company continued to expand its input on business support, 5G intelligent network, data-driven operating services, big data and artificial intelligence (“AI”), developing over 500 types of software products for telecom operators. We actively participated in the centralized reform of telecom operators, supporting the R&D of various large-scale information technology (“IT”) projects. We took the initiative to grasp development opportunities provided by newly established specialized companies and participated in early business model design phase to provide a variety of software products and services. We actively explored the development opportunities of telecom operators in new business sectors such as IoT, data-driven operation, intelligent customer services and 5G intelligent network, and continuously develop the telecom operators market. As of December 31, 2018, the Company provided services to 214 telecom operator customers, representing an increase of 10.9% as compared with last year, and achieved a customer retention rate of over 99%.

REVENUE FROM THE SOFTWARE BUSINESS

ADJUSTED NET PROFIT

NET CASH GENERATED FROM OPERATING ACTIVITIES

Note 1: Refers to the loan borrowed in connection with the delisting of AsiaInfo Holdings, LLC (“AsiaInfo Holdings”) from National Association of Securities Dealers Automated Quotations (“NASDAQ”) Global Market of the United States, which was transferred to our Group in December 2015 and refinanced in 2018.

# Actively deploying large enterprise customer market in non-telecom industries, and achieving breakthroughs in expansion of customers

With in-depth knowledge and understanding on the telecom operators market, precious skills and techniques in project management, and rich telecom grade software products, we are actively enhancing market shares in the non-telecom large enterprise customers market, providing support services to large enterprises on business transformation and data-driven operating services.

During the Reporting Period, the Company had put its focus on related industries such as postal, cable TV, banking, insurance, power grid and automobile and collaborated with large enterprises in the industry and made phenomenal progress, such as, the success in launching the CRM system for China Post online, obtaining the order of CRM system for China Life Property and Casualty Insurance Company Limited and PICC Life Insurance Company Limited, as well as entering the power grid industry to become the strategic partner of State Grid Limited (“State Grid”) and its subsidiaries. As of December 31, 2018, the Company provided services to 38 non-telecom large enterprise customers, representing an increase of 35.7% as compared with last year, and achieved a customer retention rate of over 99%.

# Rapid growth in data-driven operation business convening power for future growth

In light of the current wave of development in digitalization and informationization, customers from different sectors have pressing needs for digital transformation. The Company leveraged its strong data analyzing capability, professional modeling and IT capabilities, as well as in-depth understanding on operating environment and pain points of customers’ business, to help corporations analyze market development and customer trends by providing them with software as a service (“SaaS”) data-driven operation service tools through external data sources from multiple channels, achieving a win-win situation.

During the Reporting Period, the Company strived to cultivate the new business area of data-driven operating services. We provided major customers including operators, banking, insurance, automobile and public utility related industries with innovative data-driven operating services. And we actively expanded customer base and income sources with measures such as jointly establishing innovative laboratories on data-driven business with headquarters and subsidiaries of various telecom operators, establishing strategic partnership with China Merchants Bank, providing public utility operators with data-driven operating platform for population statistic management and safety control of dense crowd, etc. In 2018, data-driven operating services achieved a revenue of approximately RMB82.5 million with a nearly 100% increase, demonstrating our rapid business development and promising prospect.

# Actively deploying IoT applications in vertical industries

Facing industry changes and development opportunities in the smart connection generation, the Company has reinforced its efforts in exploring and developing IoT sector and has established an innovative “IoT platform + IoT business application + IoT operation” business model.

In terms of smart communities and the Internet of Vehicles, we have developed mature applications for industries, providing IoT services. We also started our in-depth collaboration with well-known enterprises in real estates, properties and automobile industries, such as Beijing North Star Group, Kang Qiao Service, Desay SV, BYD Company Limited and Changan Automobile. As of December 31, 2018, the smart community platform products covered over 3 million users, activating over 200 communities. The Internet of Vehicles served over 6 million members of Changan Automobile and over 0.3 million high-end users of BYD Company Limited.