--- page 1 ---
(Incorporated in the Cayman Islands with limited liability)
Sole Sponsor
Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers (in alphabetical order)
Stock code: 2473


--- page 2 ---
IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
XXF Group Holdings Limited
喜相逢集團控股有限公司
(Incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the Global Offering : 103,125,000 Shares (subject to the Over-allotment Option)
Number of Hong Kong Offer Shares : 10,312,500 Shares (subject to adjustment)
Number of International Placing Shares : 92,812,500 Shares (subject to adjustment and the
Over-allotment Option)
Offer Price : Not more than HK$1.36 per Offer Share, plus brokerage of
1%, SFC transaction levy of 0.0027%, Stock Exchange
trading fee of 0.00565% and AFRC transaction levy of
0.00015% (payable in full on application in Hong Kong
Dollars and subject to refund) and expected to be not less
than HK$1.05 per Offer Share
Nominal value : HK$0.01 per Share
Stock code : 2473
Sole Sponsor
Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and
Joint Lead Manager
Joint Bookrunners and Joint Lead Managers (in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the contents of this
prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arisin g from or in reliance upon the whole or any part of the
contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in ‘‘Documents Delivered to the Registrar of Companies and Available on Di splay’’ in Appendix V to this prospectus, has
been registered by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordi nance (Chapter 32 of the Laws of Hong
Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Kong take no responsibility for the contents of this pr ospectus or any other documents referred
to above.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States, and may not be of fered or sold, pledged or transferred, except
pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with any a pplicable state securities laws in the United States.
The Offer Shares are being offered only outside of the United States in offshore transactions in reliance on Regulations S.
The final Offer Price is expected to be fixed by agreement between our Company and the Sole Overall Coordinator (for itself and on behalf of the Underwri ters) currently on the Price Determination
Date, which is expected to be on or about Thursday, 2 November 2023, or such later date as may be agreed between our Company and the Sole Overall Coordinat or (for itself and on behalf of the
Underwriters). The Offer Price will be not more than HK$1.36 per Offer Share and is currently expected to be not less than HK$1.05 per Offer Share, unles s otherwise announced. Applicants for Hong
Kong Offer Shares are required to pay, on application, the Offer Price will be not more than HK$1.36 for each Hong Kong Offer Share together with a broker age fee of 1%, a SFC transaction levy of
0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy of 0.00015% subject to refund if the Offer Price as finally determined shoul d be lower than HK$1.36 per Offer Share.
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may, with our consent, extend or reduce the indicative Offer Price range an d/or the number of Offer Shares being offered under the
Global Offering that is stated in this prospectus (which is HK$1.05 to HK$1.36 per Offer Share) at any time on or before the morning of the last day of lodg ing applications under the Hong Kong Public
Offering. In such case, notices of the extension or reduction of the indicative Offer Price range will be published on the websites of the Stock Exchang ea t www.hkexnews.hk and our Company at
www.xxfqc.com no later than the morning of the day which is the last day for lodging applications under the Hong Kong Public Offering. If, for any reason , the Offer Price if not agreed between the Sole
Overall Coordinator (for itself and on behalf of the Underwriters) and our Company on or before Thursday, 2 November 2023, the Global Offering (includ ing the Hong Kong Public Offering) will not proceed
and will lapse. See ‘‘Structure and Conditions of the Global Offering’’ and ‘‘How to Apply for Hong Kong Offer Shares’’ for further details.
Prior to making an investment decision, prospective investors should consider carefully all of the information contained in this prospectus, inclu ding the risk factors set out in ‘‘Risk Factors’’.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Sole Overall Coordinator ( for itself and on behalf of the Hong Kong
Underwriters) if certain grounds arise prior to 8 : 00 a.m. on the Listing Date. For further details, please see ‘‘Underwriting — Underwriting Arrange ments and Expenses — Hong Kong Public Offering
— Grounds for termination’’.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus or prin ted copies of any application forms to the
public in relation to the Hong Kong Public Offering.
This prospectus is available at the websites of the Stock Exchange ( www.hkexnews.hk ) and our Company ( www.xxfqc.com ). If you require a printed copy of this prospectus, you may download and
print from the website addresses above.
30 October 2023
IMPORTANT


--- page 3 ---
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public Offering.
We will not provide printed copies of this prospectus or printed copies of any application
forms to the public in relation to the Hong Kong Public Offering.
This prospectus is available at the website of the Hong Kong Stock Exchange at
www.hkexnews.hk under the ‘‘HKEXnews > New Listings > New Listing Information’’
section, and our website at www.xxfqc.com. If you require a printed copy of this prospectus,
you may download and print from the website addresses above.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the White Form eIPO service at
www.eipo.com.hk ;o r
(2) apply through CCASS EIPO service to electronically cause HKSCC Nominees to
apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing Participant or a
CCASS Custodian Participant to give electronic application instructions via
CCASS terminals to apply for the Hong Kong Offer Shares on your behalf; or
(ii) (if you are an existing CCASS Investor Participant) giving electronic application
instructions through the CCASS Internet System ( https://ip.ccass.com )o r
through the CCASS Phone System by calling +852 2979 7888 (using the
procedures in HKSCC’s ‘‘An Operating Guide for Investor Participants’’ in
effect from time to time). HKSCC can also input electronic application
instructions for CCASS Investor Participan ts through HKSCC’s Customer
Service Centre at 1/F, One & Two Exchange Square, 8 Connaught Place,
Central, Hong Kong by completing an input request.
We will not provide any physical channels to accept any application for the Hong Kong
Offer Shares by the public. The contents of the electronic version of this prospectus are
identical to the printed document as registered with the Registrar of Companies in Hong
Kong pursuant to Section 342C of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses
above.
Please refer to ‘‘How to Apply for Hong Kong Offer Shares’’ for further details on the
procedures through which you can apply for Hong Kong Offer Shares electronically.
IMPORTANT
–i–


--- page 4 ---
Your application through the White Form eIPO service or by giving electronic application
instructions to HKSCC must be for a minimum of 2,500 Hong Kong Offer Shares and in one
of the numbers set out in the table. You are required to pay the amount next to the number
you select.
XXF Group Holdings Limited (Stock Code 2473)
(HK$1.36 per Hong Kong Offer Share)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
2,500 3,434.29 35,000 48,080.05 250,000 343,428.90 1,500,000 2,060,573.40
5,000 6,868.57 40,000 54,948.62 300,000 412,114.68 2,000,000 2,747,431.20
7,500 10,302.88 45,000 61,817.20 350,000 480,800.45 2,500,000 3,434,289.00
10,000 13,737.16 50,000 68,685.78 400,000 549,486.25 3,000,000 4,121,146.80
12,500 17,171.45 60,000 82,422.93 450,000 618,172.02 3,500,000 4,808,004.60
15,000 20,605.73 70,000 96,160.09 500,000 686,857.80 4,000,000 5,494,862.40
17,500 24,040.02 80,000 109,897.25 600,000 824,229.35 4,500,000 6,181,720.20
20,000 27,474.31 90,000 123,634.40 700,000 961,600.92 5,155,000
(Note) 7,081,503.92
22,500 30,908.61 100,000 137,371.55 800,000 1,098,972.48
25,000 34,342.89 150,000 206,057.35 900,000 1,236,344.05
30,000 41,211.47 200,000 274,743.12 1,000,000 1,373,715.60
Note: Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of the Hong Kong Offer Shares will be considered and
any such application is liable to be rejected.
IMPORTANT
–i i–


--- page 5 ---
We will issue an announcement if there is any change in the following expected
timetable of the Hong Kong Public Offering.
2023
(Note 1)
H o n gK o n gP u b l i cO f f e r i n gc o m m e n c e s .......................... 9 : 0 0a . m .o n
Monday, 30 October
Latest time to complete elect ronic applications under
the White Form eIPO service through the designated
website at www.eipo.com.hk ................................ 1 1 : 3 0a . m .o n
Thursday, 2 November
Application lists of the Hong Kong Public Offering
open (Note 3) ........................................... 1 1 : 4 5a . m .o n
Thursday, 2 November
Latest time to (a) giving electronic application
instructions to HKSCC and (b) completing payment
of White Form eIPO applications by effecting
internet banking transfer(s) or PPS payment
transfer(s)
(Note 4) .......................................1 2 : 0 0n o o no n
Thursday, 2 November
If you are instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions via CCASS
terminals to apply for the Hong Kong Offer Shares on your behalf, you are advised to
contact your broker or custodian for the latest time for giving such instructions which may
be different from the latest time as stated above.
Application lists of the Hong Kong Public Offering
c l o s e ...............................................1 2 : 0 0n o o no n
Thursday, 2 November
Expected Price Determination Date
(Note 5) ................ T h u r s d a y ,2N o v e m b e r
Announcement of the final Offer Price, the level of
applications in the Hong Kong Public Offering, the
indication of the levels of interest in the
International Placing, the b a s i so fa l l o t m e n ta n dt h e
results of applications in the Hong Kong Public
Offering to be published on websites of the Stock
Exchange at
www.hkexnews.hk and our Company at
www.xxfqc.com on or before (Notes 6 & 8) ................W e d n e s d a y ,8N o v e m b e r
EXPECTED TIMETABLE
– iii –


--- page 6 ---
2023
(Note 1)
Results of allocations in the Hong Kong Public
Offering (with successful ap plicants’ identification
document numbers, where appropriate) to be
available through a variety of channels, including:
. in the announcement to be posted on our
website at
www.xxfqc.com (Note 6) and the
website of the Stock Exchange at
www.hkexnews.hk f r o m ........................ W e d n e s d a y ,8N o v e m b e r
. from the designated results of allocations
website at www.iporesults.com.hk
(alternatively: English
https://www.eipo.com.hk/en/Allotment ; Chinese
https://www.eipo.com.hk/zh-hk/Allotment )
w i t ha‘ ‘ s e a r c hb yI D ’ ’f u n c t i o nf r o m(Note 8) .................. 8 : 0 0a . m .o n
Wednesday, 8 November to
12 : 00 midnight
on Tuesday, 14 November
. from the allocation results telephone enquiry by
calling +852 2862 8555 between 9 : 00 a.m. and
6 : 0 0p . m .f r o m ............................. W e d n e s d a y ,8N o v e m b e r
to Monday, 13 November
(excluding Saturday, Sunday and
public holiday in Hong Kong)
Despatch/collection of refund cheques or White Form
e-Refund payment instructions in respect of wholly
or partially unsuccessful applications under the
Hong Kong Public Offering on or before
(Notes 7 & 8) .......W e d n e s d a y ,8N o v e m b e r
Despatch/collection of Share certificates/Deposit of
Share certificates into CCASS in respect of wholly or
partially successful application under the Hong
Kong Public Offering on or before
(Notes 7 & 8) ...........W e d n e s d a y ,8N o v e m b e r
Dealings in the Shares on the Stock Exchange expected
to commence at (Note 8) ..................................... 9 : 0 0a . m .o n
Thursday, 9 November
EXPECTED TIMETABLE
–i v–


--- page 7 ---
Notes:
1. All times and dates refer to Hong Kong local time, ex cept as otherwise stated. D etails of the structure of
the Global Offering, including its conditions, are set out in the section headed ‘‘Structure and Conditions
of the Global Offering’’ in this prospectus.
2. You will not be permitted to submit your application under the White Form eIPO service through the
designated website at www.eipo.com.hk after 11 : 30 a.m. on the last day fo r submitting applications. If you
have already submitted your application and obt ained an application reference number from the
designated website prior to 11 : 30 a.m., you will be permitted to continue the application process (by
completing payment of application monies) until 12 : 0 0 noon on the last day for submitting applications,
when the application lists close.
3. If there is a ‘‘black’’ rainstorm warning, Extrem e Conditions and/or a tropical cyclone warning signal
number 8 or above in force in Hong Kong at any time between 9 : 00 a.m. and 12 : 00 noon on Thursday, 2
November 2023, the application lists will not open and will close on that day. Further information is set
out in the section headed ‘‘How to Apply for Hong Kong Offer Shares — 10. Effect of Bad Weather
and/or Extreme Conditions on the Opening of th e Application Lists’’ in this prospectus.
4. Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
should refer to ‘‘How to apply for Hong Kong Offer Shares — 6. Applying through CCASS EIPO Service’’
in this prospectus.
5. The Price Determination Date is expected to be on or around Thursday, 2 November 2023. If, for any
reason, the Offer Price is not agreed between the Sole O verall Coordinator (for itself and on behalf of the
Underwriters) and our Company, the Global Offering will not proceed and will lapse accordingly.
6. None of the websites or any of the information cont ained on the websites forms part of this prospectus.
7. Share certificates for the Hong Kong Offer Shares are expected to be issued on Wednesday, 8 November
2023, but will only become valid evidence of title p rovided that the Global Offering has become
unconditional in all respects prior to 8 : 00 a.m. on Thursday, 9 November 2023. Investors who trade
Shares on the basis of publicly available allocation deta ils prior to the receipt of Share certificates or prior
to the Share certificates becoming valid eviden ce of title do so entirely at their own risk.
e-Refund payment instructions/refund cheques wil l be issued in respect of unsuccessful applications
pursuant to the Hong Kong Public Offering.
8. In case a typhoon warning signal no.8 or above, a b lack rainstorm warning signal and/or Extreme
Conditions is/are in force in any days between Mond ay, 30 October 2023 to Thursday, 9 November 2023,
then the day of (i) announcement of results of allocati ons in the Hong Kong Public Offering; (ii) despatch
of Share certificates and refund cheques/White Form e -Refund payment instructions; and (iii) dealings in
the Shares on the Stock Exchange may be postponed and an announcement may be made in such event.
The above expected timetable is a summary only. For details of the structure of the
Global Offering, including its conditions, and the procedures for applications for Hong Kong
Offer Shares, applicants should refer to the sections headed ‘‘Structure and Conditions of the
Global Offering’’ and ‘‘How to Apply for Hong Kong Offer Shares’’ in this prospectus,
respectively.
EXPECTED TIMETABLE
–v–


--- page 8 ---
IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by our Company solely in connection with the Hong Kong
Public Offering and the Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Hong Kong Offer Shares offered
by this prospectus pursuant to the Hong Kong Public Offering. This prospectus may not be
used for the purpose of, and does not constitute, an offer or invitation in any other
jurisdiction or in any other circumstances. No action has been taken to permit a public
offering of the Offer Shares in any jurisdiction other than Hong Kong and no action has been
taken to permit the distribution of this prospectus in any jurisdiction other than Hong Kong.
The distribution of this prospectus and the offering and sale of the Offer Shares in other
jurisdictions are subject to restrictions an d may not be made except as permitted under the
applicable securities laws of such jurisdictions pursuant to registration with or authorisation
by the relevant securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this prospectus to make your
investment decision. We have not authorised anyone to provide you with information that is
different from what is contained in this prospectus. Any information or representation not
made in this prospectus must not be relied on by you as having been authorised by us, the
Sole Sponsor, the Sole Overall Coordinator, the Sole Global Coordinator, the Capital
Market Intermediaries, the Joint Bookrunners, the Joint Lead Managers and the
Underwriters, any of our or their respective directors or advisers, or any other person or
party involved in the Global Offering. Information contained in our website, located at
www.xxfqc.com , does not form part of this prospectus.
Page
Expected Timetable ............................................................. i i i
Contents ........................................................................ v i
Summary ....................................................................... 1
Definitions ..................................................................... 2 8
Glossary of Technical Terms .................................................... 4 3
Forward-looking Statements .................................................... 4 5
Risk Factors .................................................................... 4 7
Information about this Prospectus and the Global Offering ...................... 6 5
Waivers from Strict Compliance with the Listing Rules .......................... 6 9
CONTENTS
–v i–


--- page 9 ---
Page
Directors and Parties Involved in the Global Offering ........................... 7 5
Corporate Information .......................................................... 8 1
Regulatory Overview ............................................................ 8 3
Industry Overview .............................................................. 1 1 7
History, Reorganisation and Corporate Structure ................................ 1 3 9
Business ........................................................................ 1 7 2
Risk Management and Operations .............................................. 2 8 3
Relationship with Our Single Largest Shareholder ............................... 3 0 4
Connected Transactions ......................................................... 3 1 0
Directors and Senior Management .............................................. 3 1 2
Substantial Shareholders ........................................................ 3 2 6
Share Capital ................................................................... 3 2 9
Financial Information ........................................................... 3 3 3
Future Plans and Use of Proceeds ............................................... 4 3 2
Underwriting ................................................................... 4 3 8
Structure and Conditions of the Global Offering ................................ 4 5 0
How to Apply for Hong Kong Offer Shares ..................................... 4 6 2
Appendix I — Accountant’s Report ........................................... I - 1
Appendix II — Unaudited Pro Forma Financial Information ................... I I - 1
Appendix III — Summary of the Constitution of Our Company
and Cayman Islands Company Law .......................... III-1
Appendix IV — Statutory and General Information ............................ I V - 1
Appendix V — Documents Delivered to the Registrar of
Companies and Available on Display ......................... V - 1
CONTENTS
–v i i–


--- page 10 ---
This summary aims to give you an overview of the information contained in this
prospectus. As this is a summary, it does not contain all the information that may be
important to you and is qualified in its entirety by, and should be read in conjunction with,
the full text of this prospectus. You should read the whole document including the appendices
hereto, which constitute an integral part of this prospectus, before you decide to invest in our
Offer Shares. There are risks associated with any investment. Some of the particular risks in
investing in our Offer Shares are set out in ‘‘Risk Factors’’. You should read that section
carefully before you decide to invest in our Offer Shares.
OVERVIEW
We are an established automobile retailer providing automobile finance lease service
primarily through our self-operated sales outlets in the PRC. Our Group’s principal
businesses comprise: (i) automobile retail and finance, where we sell non-luxury
automobiles mostly on direct finance lease; and (ii) automobile-related businesses, where
we primarily offer automobile operating lease se rvice and other automobile-related services.
We are one of the offline third party RAFLCs among all the RAFLCs (i.e. bank-affiliated,
automaker or automobile dealer-affiliated, off line third party RAFLCs and internet-backed
third party RAFLCs). According to the CIC R eport, in terms of transaction volume of
direct finance lease, we ranked 4th and had market share of approximately 4.1% in the PRC
in 2022. In terms of transaction volume of retail automobile finance lease among all
RAFLCs, including both direct finance lease and sale-leaseback, we ranked 19th and had a
market share of approximately 0.7% in the PRC in 2022.
Prior to 2012, we primarily engaged in the provision of automobile rental services by
way of operating lease. Since 2012, we have sold automobiles by way of direct finance lease.
In late 2018, we started to provide our automobile lease service to individual e-hailing
drivers. Automobile retail and finance busi ness is our principal revenue generator. Our
revenue from sales of automobile under direct finance lease accounted for almost all of the
revenue from our automobile retail and finance business during the Track Record Period.
Our customers of automobile retail and finance business are mainly individuals in the
PRC’s tier two, and tier three and below cities looking for non-luxury automobile models.
We offered non-luxury automobiles of over 50 brands during the Track Record Period. Our
customers of operating lease business are primarily individual customers looking for
automobile rental service and e-hailing drive rs looking to rent e-hailing vehicles. We have
established an extensive sales network with sa les outlets mainly loca t e di nt i e rt w oc i t i e s ,
and tier three and below cities throughout the PRC. As at the Latest Practicable Date, we
operated 77 sales outlets across 25 provinces and municipalities in the PRC.
SUMMARY
–1–


--- page 11 ---
OUR BUSINESS MODEL
Our businesses involve (i) automobile retail and finance; and (ii) automobile-related
businesses in the PRC. The following table sets out the breakdown of our revenue for the
years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Automobile retail and finance
Sales of automobile under
finance lease (Note 1) 362,934 48.4 777,856 66.4 734,600 64.4 331,012 61.5 384,710 64.0
Finance lease income (Note 2) 234,705 31.3 234,561 20.0 262,498 23.0 131,093 24.4 148,191 24.7
Sub-total 597,639 79.7 1,012,417 86.4 997,098 87.4 462,105 85.9 532,901 88.7
Automobile-related businesses
Automobile operating lease 132,606 17.7 144,163 12.3 126,018 11.0 69,247 12.9 61,433 10.2
Other automobile-related
income 19,516 2.6 14,682 1.3 18,410 1.6 6,786 1.2 6,667 1.1
Sub-total 152,122 20.3 158,845 13.6 144,428 12.6 76,033 14.1 68,100 11.3
Total 749,761 100.0 1,171,262 100.0 1,141,526 100.0 538,138 100.0 601,001 100.0
Notes:
(1) Revenue generated from the sales of new automobile.
(2) Revenue generated from the provision of finance lease for automobiles to customers.
Automobile Retail and Finance
As shown above, automobile retail and finance business was our major revenue
contributor, which accounted for 79.7%, 86. 4%, 87.4% and 88.7% of our total revenue for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. We sell our automobiles to customers primarily under direct finance lease. We
principally sell automobiles throu gh our self-operated sales outlets.
The following table sets out the breakdown of revenue generated from automobile
retail and finance business by geographical location for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Eastern PRC 241,828 40.5 395,627 39.1 409,689 41.1 188,505 40.8 200,687 37.7
Southern PRC 100,895 16.9 193,048 19.1 194,667 19.5 87,935 19.0 95,726 18.0
Southwestern PRC 105,305 17.6 156,951 15.5 137,979 13.8 66,792 14.5 74,039 13.9
Central PRC 62,601 10.5 121,023 12.0 108,738 10.9 52,975 11.5 62,378 11.7
Northern PRC 47,728 8.0 86,661 8.6 77,476 7.8 35,006 7.6 48,891 9.2
Northwestern PRC 28,027 4.6 49,272 4.7 52,867 5.3 23,599 5.1 38,030 7.1
Northeastern PRC 11,255 1.9 9,835 1.0 15,682 1.6 7,293 1.5 13,150 2.4
Total 597,639 100.0 1,012,417 100.0 997,098 100.0 462,105 100.0 532,901 100.0
SUMMARY
–2–


--- page 12 ---
The following table sets out the breakdown of revenue generated from automobile
retail and finance business by city tier for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Tier one city 2,278 0.4 669 0.1 5,470 0.5 707 0.2 5,877 1.1
Tier two cities 506,884 84.8 879,744 86.9 844,925 84.7 403,155 87.2 450,720 84.6
Tier three and below cities 88,477 14.8 132,004 13.0 146,703 14.8 58,243 12.6 76,304 14.3
Total 597,639 100.0 1,012,417 100.0 997,098 100.0 462,105 100.0 532,901 100.0
Automobile-related Businesses
Under our automobile-related businesse s, we primarily generated revenue from
automobile operating lease and other auto mobile-related services during the Track
Record Period.
Our automobile operating lease business pr incipally involves: (i) e-hailing operating
lease; (ii) new energy car-sharing; and (iii) other operating lease. Automobile operating
lease business accounted for 87.2%, 90.8%, 87.3% and 90.2% of our revenue from the
automobile-related businesses segment for the years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, respectively.
For our other automobile-related services, we mainly promote our business-end
customers’ insurance service and automobile a fter-market service to o ur car-user customers,
in return, we receive service fees from our bus iness-end customers f o rs u c hs e r v i c e sw e
provided.
CUSTOMERS, SALES AND MARKETING
For our automobile retail and finance business, our customers are mainly individuals
in the PRC’s tier two, and tier three and below cities within the age group of 20 to 40 years
looking for non-luxury automo biles. For our automobile operating lease business, our
customers are principally e-hailing drivers. F or other automobile-related businesses, our
customers are business-end customers, includi ng third party insurance providers and third
party automobile aftermarket service providers, where we promote our business-end
customers’ insurance service and automobile a fter-market service to o ur car-user customers.
We do not have any major customers in terms of revenue contribution. Our five largest
customers in each year during the Track Record Period accounted for approximately 3.2%,
1.6%, 2.1% and 1.4% of our total revenue f or the years ended 31 December 2020, 2021,
2022 and the six months ended 30 June 2023, respectively.
SUMMARY
–3–


--- page 13 ---
PRICING POLICY
Generally, we formulate our pricing polic y according to (i) the type of products and
services; (ii) the market competition and industrial information; (iii) market trend; and (iv)
the market acceptance of our product pricing.
We set the price of our automobile retail and finance offerings, including the finance
lease service for both passenger vehicles an d e-hailing vehicles, as a packaged automobile
finance lease product in terms of the number of instalments and the amount of each
instalment. The pricing of our packaged automobile finance lease product is determined by
taking into account factors including but not limited to the cost of automobiles, length of
finance lease terms, the cost of automobile insurance, handling fee, vehicle registration fee,
initial down payment, the cost of GPS tracking de vices, the creditworthiness of customers.
All of our automobile finance leases adopt a fixed interest rate throughout the respective
lease term.
PROCUREMENT AND SUPPLIERS
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our cost of inventories amounted to RMB305.9 million, RMB633.4 million,
RMB595.6 million and RMB312.3 million, repr esenting 68.6%, 78.2%, 77.6% and 77.4%
of our total cost of revenue for the corresponding year/period, respectively.
We also procure automobiles for our operating lease business. Such automobiles are
included in property and equipment.
Our suppliers mainly consist of (i) auto deal ers which supply us with automobiles for
our finance lease business and operating lease business; and (ii) insurance and other service
providers. Other suppliers include GPS component manufacturers which supply us GPS
components.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, transactions with our five largest suppliers in each year/period during the Track
Record Period were RMB236.4 million, RMB364.5 million, RMB394.9 million and
RMB267.6 million, representing 62.9%, 54.5%, 49.1% and 65.2% of our total
transaction amount with automobile suppliers respectively, and transactions with our
largest supplier amounted to RMB80.2 m illion, RMB108.0 million, RMB162.5 million and
RMB105.9 million, representing 21.4%, 16.2 %, 20.2% and 25.8% of our total transaction
amount with automobile suppliers, respectively.
O U RR I S KM A N A G E M E N TS Y S T E M
We have developed a risk management and internal control systems to address the
risks we are subject to. In particular, we have developed an automobile monitoring platform
based on our understanding of the management characteristics of automobile finance lease
business. The automobile monitoring platform, through the GPS tracking technology,
provides various functions including the positioning of leased automobiles, risk analysis
through detecting vehicle trajectory abnormality, vanishing GPS signal and usage pattern
SUMMARY
–4–


--- page 14 ---
of automobiles, and alarm system sending tim ely warning messages to our system upon the
detection of automobile malfunctioning. We continue to develop proprietary algorithms
and data analytics capabilities to enhance our risk management system. As a result of our
risk management system, we have managed to maintain relatively low credit losses during
the Track Record Period. Please see the section headed ‘‘Risk Management and
Operations’’ for further details.
MARKET
Along with the rollout of favourable policies and regulations by the Chinese
government, and the steady increase in the disposable income of consumers, the total
sales volume of non-luxury automobiles is e stimated to reach 25.8 million units in 2027,
representing a CAGR of 4.6% in 2022 to 2027.
In 2022, the retail automobile finance lease services penetration rates of both new and
used automobiles of the United States, Germany and France were approximately 38.0%,
25.5% and 23.5%, respectively. The penetration rate of retail automobile finance lease
services of both new and used automobiles in China, when compared with the
aforementioned countries, was still at a relatively low level in 2022, indicating a strong
growth potential and is expected to reach approximately 5.4% in 2027. In 2022, the top 20
companies in China’s retail automobile fi nance lease market had a market share of
approximately 81.1%, and the top 10 companies in China’s third-party retail automobile
finance lease market in terms of total numb er of loan volume disbursed by third party
RAFLCs had a market share o f approximately 69.5%.
The PRC’s direct finance lease market expe rienced rapid growth from 2018 to 2022 in
terms of loan volume. Such volume grew from 0.2 million units in 2018 to 0.3 million units
in 2022, representing a CAGR of 11.1%. Driven by the benefit of lower down payment and
the expansion of e-hailing vehicle platform, the loan volume of direct finance lease market is
expected to reach 0.6 million units in 2027, representing a CAGR of 15.6% from 2022 to
2027.
The automobile operating lease market size has increased from RMB50.9 billion in
2018 to RMB63.4 billion in 2022, with a CAGR o f 5.7%. With the development of e-hailing
vehicle platforms, the increasing spending o n self-drive trips and the favourable policy
reforms, the market size of automobile operating lease market in China is projected to
increase to RMB82.6 billion in 2027, repres enting a CAGR of 5.4% from 2022 to 2027.
The information above is based on the CIC Report. For details of CIC Report, please
see the section headed ‘‘Industry Overview’’.
OUR COMPETITIVE STRENGTHS
We believe we possess the following competitive strengths:
(i) we specialise in matching the supply of non-luxury automobiles with the demand
of our customers mainly in tier two, and tier three and below cities in the PRC;
SUMMARY
–5–


--- page 15 ---
(ii) our extensive automobile service offering s provide tailored service for customers’
different needs;
(iii) we have an established and extensive sales network;
(iv) we have developed a risk management system;
(v) our centralised automobile procurement leads to cost advantage; and
(vi) we are led by a visionary and experienced management team.
OUR BUSINESS STRATEGIES
Our key business strategies include:
(i) capturing the potential growth in th e direct finance lease market and the
automobile operating lease market;
(ii) expanding our sales network to increase our market penetration;
(iii) continuing to incorporate new techno logies and upgrade our automobile-related
software and mobile applications; and
(iv) continuing to enhance our risk management capabilities.
F U T U R EP L A N SA N DU S EO FP R O C E E D S
The estimated net proceeds of the Global Offering, after deducting underwriting fees
and estimated total expenses paid and payable by us in connection with the Listing, are
estimated to be HK$40.0 million (equivalent to RMB37.7 million) before any exercise of the
Over-allotment Option, assuming the Offer Price of HK$1.205 per Offer Share, being the
mid-point of the indicative Offer Price range from HK$1.05 to HK$1.36 per Offer Share.
We intend to use the net proceeds of the Global Offering for the following purposes:
. HK$28.7 million (equivalent to RMB27.0 million or approximately 71.6% of our
estimated net proceeds) for purchasing more vehicles, so as to increase our
revenue; and
. HK$11.3 million (equivalent to RMB10.7 million or approximately 28.4% of our
estimated net proceeds) for expanding our sales network to increase market
penetration.
Please see the section headed ‘‘Future Plans and Use of Proceeds’’ for further details.
SUMMARY
–6–


--- page 16 ---
SUMMARY FINANCIAL INFORMATION AND OPERATING DATA
Summary of Results of Operations
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue 749,761 1,171,262 1,141,526 538,138 601,001
Gross profit 303,598 361,756 374,447 185,314 197,291
Operating profit 130,141 160,831 234,791 121,153 147,192
Profit before income tax 20,969 43,010 91,773 47,970 65,159
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Profit/(loss) attributable to:
— Owners of our Company 12,341 34,112 78,913 45,627 62,402
— Non-controlling interests (2,088 ) (3,425) (1,831) (1,285) (148)
10,253 30,687 77,082 44,342 62,254
Non-IFRS Measures
To supplement our historical financial information set out in Appendix I to this
prospectus, we also present adjusted net profit (non-IFRS measures) and adjusted net profit
margin (non-IFRS measures) as additional fi nancial measures, which are not required by,
nor presented in accordance with IFRS. We pre sent these financial measures because our
management use them to evaluate our financial performance by eliminating the impact of
certain items. We believe that these non-IFRS measures provide additional information to
investors and others in understanding and evaluating our business performance.
Adjusted net profit (non-IFRS measures) an d adjusted net profit margin (non-IFRS
measures) eliminate the effect of certain item s, mainly listing expenses and fair value
loss/(gain) on ordinary shares with redemption right.
The following table reconciles our adjusted net profit (non-IFRS measures) and
adjusted net profit margin (non-IFRS measures) presented to the most directly comparable
financial measures calculated and presented in accordance with IFRS. Listing expenses
represent expenses relate to the Listing, net of the PRC enterprise income tax. Fair value
loss/(gain) on ordinary shares with redemption right represents the changes arising from
change in fair value to ordinary shares with r edemption right. Such changes are non-cash in
nature. Upon the Listing, all ordinary shares with redemption right will be automatically
converted into ordinary shares which will no lo nger be recognised as financial liabilities at
fair value through profit or loss.
SUMMARY
–7–


--- page 17 ---
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Add:
Listing expenses, net of tax 4,148 14,636 12,533 8,016 6,226
Fair value loss/(gain) on
ordinary shares with
redemption right 6,932 4,153 (47,251) (34,555) (46,335)
Adjusted net profit (non-IFRS
measures) 21,333 49,476 42,364 17,803 22,145
Adjusted net profit margin
(non-IFRS measures)
(Note) 2.8% 4.2% 3.7% 3.3% 3.7%
Note: Adjusted net profit margin (non-IFRS measures) i s calculated based on the adjusted net profit
(non-IFRS measures) for the year/period divi ded by revenue for the respective year/period.
O u rf i n a n c i a lr e s u l t sf o rt h ey e a re n d e d3 1December 2020 were adversely affected by
the impacts caused by the outbreak of COVID-19 in the PRC in 2020. Our financial results
for the year ended 31 December 2021 demon strated a strong recovery. Our revenue
increased by approximately 56.2% to appr oximately RMB1,171.3 million for the year
ended 31 December 2021, as compared to the y ear ended 31 December 2020, mainly driven
by our growth in revenue from sales of automobile under finance lease from RMB362.9
million for the year ended 31 December 2020 t o RMB777.9 million for the year ended 31
December 2021, as our business recovered fr om the adverse impact of COVID-19 in 2020.
Our revenue for the year ended 31 December 2022 decreased by approximately 2.5%, as
compared to the year ended 31 December 2021, primarily due to the regional outbreaks of
COVID-19 variants in the PRC in 2022, our revenue from sales of automobile under finance
lease and e-hailing operating lease busines s declined in certain regions in 2022. Our revenue
for the six months ended 30 June 2023 increased by approximately 11.7% as compared to
the six months ended 30 June 2022, primarily due to the increase in revenue of 15.3% from
our automobile retail and finance business, ma inly driven by the recovery from the adverse
impact of COVID-19 in the PRC in 2022, our increased sales and marketing efforts and the
opening of new self-operated sales outlets to grow our business.
SUMMARY
–8–


--- page 18 ---
Our profit for the year increased by 199.3 % from RMB10.3 million for the year ended
31 December 2020 to RMB30.7 million for the y ear ended 31 December 2021, mainly driven
by our revenue growth due to the recovery from the adverse impact of COVID-19 in 2020.
Our profit for the year increased by 151.2 % from RMB30.7 million for the year ended 31
December 2021 to RMB77.1 million for the yea r ended 31 December 2022, mainly due to
the fair value gain on ordinary shares with redemption right of RMB47.3 million for the
year ended 31 December 2022 whereas we recorded fair value loss on ordinary shares with
redemption right of RMB4.2 million for the year ended 31 December 2021. Our profit
increased by 40.4% from RMB44.3 million f rom the six months ended 30 June 2022 to
RMB62.3 million for the six months ended 30 J une 2023, mainly driven by (i) our revenue
growth from RMB538.1 million to RMB601. 0 million for the corresponding periods,
principally due to the recovery from the adverse impact of COVID-19 in 2022, our increased
sales and marketing efforts and the opening of new self-operated sales outlets to grow our
business; and (ii) the increase in the fair value gain on ordinary shares with redemption right
by RMB11.8 million for the corresponding period.
We received government grants during the Track Record Period. Government grants
primarily consist of the fiscal support that local governments offer to the Group entities
engaged in the finance leasing business in the PRC. There are no unfulfilled conditions or
other contingencies attaching to these grants. The government grants decreased from
RMB24.4 million for the year ended 31 December 2020 to RMB16.7 million for the year
ended 31 December 2021, as the decrease in VAT refund for the year ended 31 December
2021, then increased to RMB22.6 million for the year ended 31 December 2022, primarily
due to the increase in VAT refund. The govern ment grants increased from RMB9.3 million
for the six months ended 30 June 2022 to RMB11.5 million for the six months ended 30 June
2023, primarily due to the increase in VAT refund. For details of VAT refund, please refer
to ‘‘Financial Information — Description of Selected Items in Consolidated Statements of
Comprehensive Income — Other income, net — (a) VAT related tax benefits’’.
SUMMARY
–9–


--- page 19 ---
Key Operating Data
The following table sets out selective key operating data for the years/period indicated.
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Newly entered finance lease
agreements:
Number of newly entered finance
lease agreements 7,859 11,308 12,754 6,728
Average principal amount of newly
entered finance lease agreements
(RMB’000) 83.1 94.2 90.6 90.2
A v e r a g ee f f e c t i v ei n t e r e s tr a t e
charged for newly entered finance
lease agreements
(Note 1) 20.5% 19.4% 18.5% 18.7%
Net interest spread and net interest
margin:
Average yield of finance lease
receivables (Note 2) 22.3% 20.4% 19.0% 19.8%
Average cost of borrowings (Note 3) 8.0% 8.6% 8.5% 8.5%
Weighted average effective interest
rate of borrowings (Note 4) 8.5% 8.5% 8.6% 8.5%
Net interest spread (Note 5) 14.3% 11.8% 10.5% 11.3%
Net interest margin (Note 6) 12.9% 10.9% 9.5% 9.6%
Occupancy rate of e-hailing vehicles:
Occupancy rate of e-hailing vehicles
under operating lease (Note 7) 78.8% 90.7% 85.0% 69.8%
Notes:
(1) Calculated by dividing sum of effective interest r ate of newly entered finance lease agreements by the
total number of newly entered finance lease agreements entered for the relevant year/period.
(2) Calculated by dividing finance lease income for the relevant year/period (annualised for the six
months ended 30 June 2023) by the average balance of finance lease receivables.
(3) Calculated by dividing cost of funding for the re levant year/period (annualised for the six months
ended 30 June 2023) by the average balance of borrowings.
(4) Calculated by multiplying the effective interes t rate of each borrowings by the corresponding ending
balance and dividing by the total ending balanc e of the borrowings as at each year/period end.
SUMMARY
–1 0–


--- page 20 ---
(5) Calculated as the difference between average yi eld of finance lease receivables and average cost of
borrowings (including bank borrowings and other borrowings).
(6) Calculated by dividing net interest income for t he relevant year/period ( annualised for the six
months ended 30 June 2023) by the average balance of finance lease receivables.
(7) Calculated by the aggregate number of e-hailing vehicles under operating lease at each month end in
the year/period divided by the aggregate number o f e-hailing vehicles at each month end in the
year/period.
Our average effective interest rate charged for newly entered finance lease agreements
remained relatively stable for the years ended 31 December 2020 and 2021 and decreased to
18.5% for the year ended 31 December 2022, wh ich was primarily attr ibutable to the lower
contribution of newly entered finance lea se agreements for new automobiles, which
generally had higher average effective interes t rate during the Track Record Period, to the
total newly entered finance lease agreements for the year ended 31 December 2022 as
compared to the year ended 31 December 2021. Our average effective interest rate charged
for newly entered finance lease agreements remained relatively stable at 18.7% for the six
months ended 30 June 2023 as compared to 18.5% for the year ended 31 December 2022.
During the years ended 31 December 2020, 2021 and 2022, the decrease in the average
yield of finance lease receivables was primar ily due to the completion of relatively higher
average yield finance lease agreements entered into prior to 2019 which generally had a term
ranging from two to four years. Accordin g to CIC, the industry average yield of
interest-earning assets before 2019 was relatively higher than that during the Track Record
Period due to higher average effective interest rate per annum charged by RAFLCs prior to
2019. We enjoyed first-mover advantage by ope rating finance lease business since 2012
ahead of other major third-party RAFLCs . The competition in the RAFLC market in
China intensified during 2018 and 2019 with some internet-backed RAFLCs adopted
competitive pricing in order to win more cu stomers, and it was followed by more RAFLCs
in order to sustain market share, leading to a downward adjustment of the industry range of
the average effective interest rate per annum f or finance lease agreements in 2018 and 2019.
Our new automobiles have been sold on financ e lease generally within a term of two to four
years. As such, our sales of automobile under finance lease entered into prior to 2019 with
higher average effective interest rate will last through the subsequent two to four years.
While we also entered into new sales of autom obile under finance le ase with lower average
effective interest rate subsequent to 2019, hence our average yield of interest-earning assets
during the Track Record Period was lower th an that prior to 2019. According to CIC, we
were able to charge higher average interest rat es for the finance lease agreements than other
RAFLCs, because of our flexible product offeri ngs, strong offline capability and developed
risk management system to expand customer reach and control asset quality. According to
CIC, there was no major issue which may exert s ignificant downward pressure on effective
interest rates charged by industry players as at the Latest Practicable Date. Lower effective
interest rates of automobile finance lease serv ices may be charged by industry players from
time to time if the RAFLCs offer occasional promotions and more competitive pricing
options to car buyers, and fluctuations in market interest rates could also affect the level of
effective interest rates charged by RAFLCs. However, the greater market acceptance of
SUMMARY
–1 1–


--- page 21 ---
automobile finance lease services in China can potentially offset the aforesaid impacts, if
any. The average yield of our finance lease receivables increased slightly from 19.0% for the
year ended 31 December 2022 to 19.8% for the six months ended 30 June 2023.
During the Track Record Period, our average cost of borrowings was 8.0%, 8.6%,
8.5% and 8.5%, respectively. The average cost of borrowings is calculated by dividing the
cost of funding for the relevant year/period by the average balance of borrowings. The
average balance of borrowings is the average of the beginning balance and the ending
balance of borrowings for the relevant year/period.
The lower average cost of borrowings for the year ended 31 December 2020 was mainly
attributable to that we had 46% of new borrowings in 2020 drawn down in November and
December 2020, hence the cost of which had less impact on total cost of funding for the
whole year of 2020. In comparison, for the ye ars ended 31 December 2021 and 2022, we had
26% and 32% of new borrowings drawn down in November and December 2021 and 2022.
The average cost of borrowings for the six months ended 30 June 2023 remained relatively
stable at 8.5%.
During the Track Record Period, our weig hted average effective interest rate of
borrowings remained relatively stable.
The net interest spread decreased from 14.3% for the year ended 31 December 2020 to
11.8% for the year ended 31 December 2021, an d remained relatively stable at 10.5% for
the year ended 31 December 2022, which was pr imarily due to the average yield of finance
lease receivables decreased from 22.3% for the year ended 31 December 2020 to 20.4% for
the year ended 31 December 2021, and further decreased to 19.0% for the year ended 31
December 2022, while the average cost of borrowings increased from 8.0% for the year
ended 31 December 2020 to 8.6% for the yea r ended 31 December 2021, and remained
relatively stable at 8.5% for the year ended 31 December 2022. Our net interest spread
increased to 11.3% for the six months ended 30 June 2023, primarily due to the increase in
the average yield of finance lease receivables.
The net interest margin decreased from 12.9% for the year ended 31 December 2020 to
10.9% for the year ended 31 December 2021, an d further decreased to 9.5% for the year
ended 31 December 2022, which was primarily du e to the increase in our finance cost during
the Track Record Period, driven by our increased borrowings to support our business
growth. Our net interest margin remained relatively stable at 9.6% for the six months ended
30 June 2023.
SUMMARY
–1 2–


--- page 22 ---
Summary of Consolidated Statements of Financial Position
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current assets 793,854 947,498 1,241,300 1,198,014
Current liabilities (851,549) (1,094,723) (1,199,532) (1,111,911)
Net current assets/(liabilities) (57,695) (147,225) 41,768 86,103
Non-current assets 1,103,875 1,255,480 1,357,457 1,506,051
Non-current liabilities (638,008) (6 64,743) (892,611) (1,026,780)
Net assets 408,172 443,512 506,614 565,374
Non-controlling interests 11,633 8,208 6,377 6,229
Our non-current assets are primarily finance lease receivables and automobiles for
operating lease.
Our current assets are mainly finance leas e receivables, automobiles for automobile
retail and finance, and prepayment, deposit and other receivables.
Our net assets increased from RMB408.2 m illion as at 31 December 2020 to RMB443.5
million as at 31 December 2021, mainly due to our profit for the year ended 31 December
2021 of approximately RMB30.7 million. Our net assets further increased to RMB506.6
million as at 31 December 2022, due to (i) our p rofit for the year ended 31 December 2022
of approximately RMB77.1 million; (ii) chan ges in fair value of ordinary share with
redemption right due to its own credit risk of approximately RMB2.4 million; and offset by
(iii) exchange difference arising from translation of functional currency to presentation
currency of approximately RMB16.4 million. Ou r net assets increased to RMB565.4 million
as at 30 June 2023, due to (i) our profit for the six months ended 30 June 2023 of
approximately RMB62.3 million; (ii) changes in fair value of ordinary shares with
redemption right of approximately RMB0.2 m illion; and offset by (iii) exchange difference
arising from translation of functional currenc y to presentation currency of approximately
RMB3.3 million. Please refer to ‘‘Accountan t’s Report — Consolidated Statements of
Changes in Equity’’ for details.
Both of our current liabilities and non-cu rrent liabilities are mainly borrowings and
ordinary shares with redemption right.
SUMMARY
–1 3–


--- page 23 ---
Our net current liabilities increased fr om RMB57.7 million as at 31 December 2020 to
RMB147.2 million as at 31 December 2021, mainl y due to the inclusion of ordinary shares
with redemption right in the current liabilit ies of approximately RMB196.6 million for the
year ended 31 December 2021 whereas the or dinary shares with redemption right was
included in the non-current liabilities for the year ended 31 December 2020. The Company
has issued ordinary shares with redemption right to certain pre-IPO investors, which were
classified as financial liabilities due to the redemption feature given to the holders and
would be converted to equity upon the Listing. Such redemption right was no longer
exercisable upon the filing of the Listing app lication and will be terminated upon Listing.
We recorded net current assets of RMB41.8 m illion as at 31 December 2022, as compared to
net current liabilities of RMB147.2 million a s at 31 December 2021, primarily due to the
increase in our cash and cash equivalents of a pproximately RMB121.7 million, the increase
in finance lease receivables of approxim ately RMB95.7 million and the increase in
inventories of approximately RMB51.8 million, and partially offset by the increase in our
borrowings of approximately RMB102.0 million as at 31 De cember 2022, as compared to
those as at 31 December 2021. We recorded net c urrent assets of RMB86.1 million as at 30
June 2023, as compared to net current asse ts of RMB41.8 million as at 31 December 2022,
primarily due to the increase in finance lea se receivables of approximately RMB34.3
million, the decrease in trade payables of app roximately RMB57.5 million, and partially
offset by the decrease in inventories by RMB 66.1 million and the increase in our borrowings
of approximately RMB81.3 million as at 3 0 June 2023, as compared to those as at 31
December 2022. Under current liabilities, ordin ary shares with redemption right amounted
to RMB196.6 million, RMB163.1 millio n and RMB49.7 million as at 31 December 2021,
2022 and 30 June 2023, respectively.
INVENTORY MANAGEMENT
Our inventories consist of new and repossessed automobiles for our automobile retail
and finance business and vehicle telematics equipment. We monitor our inventories from
time to time and strive to maintain an optimal inventory level of automobiles. The average
inventory turnover days for our automobile finance lease business were 96 days, 54 days, 58
days and 53 days for the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, respectively. Please see t he sections headed ‘‘Business — Inventory
Management’’ and ‘‘Financial Information — Description of Certain Items of Consolidated
Statements of Financial Position — Inventories’’ for more details.
SUMMARY
–1 4–


--- page 24 ---
Summary of Consolidated Statements of Cash Flows
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Net cash (used in)/generated
from operating activities 229,881 (77,409) (74,000) 7,244
N e tc a s hu s e di ni n v e s t i n g
activities (171,219) (58,172) (119,133) (130,093)
Net cash generated from/
(used in) financing activities (163,009) 203,073 314,827 135,240
Net (decrease)/increase in cash
and cash equivalents (104,347) 67,493 121,694 12,391
Cash and cash equivalents at
beginning of year/period 119,160 11,880 79,373 201,078
Effect on foreign exchange rate
difference (2,933) — 11 562
Cash and cash equivalents at end
of year/period 11,880 79,373 201,078 214,031
For our automobile retail and finance busin ess, we generally purchase automobiles
first, and then sell the automobiles to custome rs through finance lease. Payments related to
automobile purchases are cash outflow from op erating activities and finance lease income
from customers are cash inflow from operating activities. The automobile purchase and
related expenses need to be paid in full within a relatively short period of time. For
automobile finance lease receivables, custom ers pay us in monthly installments according to
the lease term, which is generally two to fo ur years. Our new auto mobile purchases are
usually funded by debt financing arrangements, which is under the cash flow from our
financing activities.
We recorded net cash generated from operating activities for the year ended 31
December 2020, mainly due to the decrease in the sales of new automobiles caused by the
o u t b r e a k so fC O V I D - 1 9i n2 0 2 0 ,w h i c hc o r r e s p o n d e dt oar e d u c t i o ni nt h ep a y m e n tf o r
automobile purchases, while the existing finan ce lease agreements continue to generate cash
inflow resulting in net cash generated from operating activities for the year ended 31
December 2020.
For the years ended 31 December 2021 and 2022, we recorded net cash used in
operating activities, mainly due to the increase in the number of new automobiles sold and
the increase in the number of new finance lease agreements entered where the corresponding
purchase of new automobiles and related purchase taxes, insurance and other expenses
increased, which were fully paid in a relativel y short period of time, usually within three
SUMMARY
–1 5–


--- page 25 ---
months, exceeded the amount of the monthly repayment of finance lease agreements and the
operating lease rentals, resulting in net cash used in operating activities for the years ended
31 December 2021 and 2022. For the six months ended 30 June 2023, our net cash generated
from operating activities was mainly due to the increase in sales of automobiles and
partially offset by the interest paid for borrowings related to our automobile retail and
finance business. See the sub-section headed ‘‘Financial Information — Liquidity and
Capital Resources — Cash Flow’’ for further details of cash flow movements.
We experienced the net cash used in operating activities for business growth during the
Track Record Period. This was mainly due to the fact that our new automobile purchases
are mainly financed by debt financings, and such debt financings are included in another
cash flow category, namely cash generated fr om financing activities. Due to the nature of
our business operation, our automobiles are sold under finance lease generally with a term
of two to four years, the operating cash inflow from our finance lease receivables from the
automobile sales is realised within a term of t wo to four years, while the full payments for
our new automobile purchases are generally made within 90 days after the purchases, which
resulted in net cash used in operating activities for the years ended 31 December 2021 and
2022. According to CIC, cash flow mismatch with negative net liquidity gap and negative
maturity gap is an industry norm in the automobile finance leasing industry. For further
details of our cashflow mismatch, please re f e rt o‘ ‘ B u s i n e s s—O u rD e b tM a n a g e m e n t—
Liquidity Risk Management’’.
KEY FINANCIAL RATIOS
The following table sets out our key financial ratios for the years/period or as at each
of the dates indicated:
For the year ended 31 December
For the
six months
ended
30 June
2020 2021 2022 2023
Gross profit margin (%) 40.5 30.9 32.8 32.8
Net profit margin (%) 1.4 2.6 6.8 10.4
Return on equity (%) 2.5 6.9 15.2 11.0
Return on total assets (%) 0.5 1.4 3.0 2.3
SUMMARY
–1 6–


--- page 26 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
Current ratio (times) 0.9 0.9 1.0 1.1
Quick ratio (times) 0.8 0.7 0.9 1.0
Gearing ratio (%)
(Note 1) 74.0 74.8 75.1 74.6
Risk assets to equity ratio
(times) (Note 2) 4 . 64 . 84 . 74 . 4
Non-performing asset ratio (%) 0.7 0.7 0.7 0.8
Allowance coverage ratio for
non-performing assets (%) 134.3 126.5 127.5 108.0
Ratio of allowance for impairment
losses to net finance lease
receivables (%) 0.9 0.8 0.9 0.8
Notes:
(1) Gearing ratio is calculated as net debt divide d by total capital. Net debt is calculated as total
borrowings (including ‘‘borrowings and lease liab ilities’’ as shown in the c onsolidated statement of
financial position) less cash and cash equival ents. Our Group does not consider the amount of
ordinary shares with redemption right when calculating net debt. Total capital is calculated as
‘equity’ as shown in the consolidated statem ent of financial position plus net debt.
(2) On 26 May 2020, the CBIRC promulgated the Interim Measures for the Supervision and
Administration of Finance Lease Companies ( 《融資租賃公司監督管理暫行辦法》)( t h e‘ ‘Interim
Measures ’’) with the immediate effect, which made supp lement and further requirements for finance
lease enterprises on the basis of Measures for F inance Lease Enterprises. Under the Interim
Measures, the total amount of risk assets of finance lease companies shall not exceed eight times of
their net assets (total equity). Risk assets to equity ratio represents risk assets divided by total equity
as at the respective dates. Risk assets are th e total amount of residual assets determined by
deducting cash, bank deposit, PRC treasury securi ties and entrusted leased assets from the total
assets.
The following table sets out our gross profit and gross profit margin by segment for the
years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Automobile retail and finance 257,905 43.2 328,527 32.4 340,910 34.2 170,746 36.9 184,637 34.6
Automobile-related businesses 45,693 30.0 33,229 20.9 33,537 19.9 14,568 19.2 12,654 18.6
Total 303,598 40.5 361,756 30.9 374,447 32.8 185,314 34.4 197,291 32.8
SUMMARY
–1 7–


--- page 27 ---
As each of the existing or new services and products often carries a different cost
structure and gross profit margin, our product and service mix will impact our overall cost
structure and gross profit margin. Thus, our results of operation may vary from period to
period as a result of the change in the composition of our revenue from different product
and service mix. During the Track Record Period, sales of automobile under finance lease
was the largest component of our total revenue, which contributed 48.4%, 66.4%, 64.4%
and 64.0% of our total revenue for the years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023, respectively.
Other than the year ended 31 December 2020, our gross profit margin of our
automobile retail and finance segment remaine d relatively stable during the Track Record
Period. The higher gross profit margin for the year ended 31 December 2020 as compared to
the years ended 31 December 2021 and 2022, wa s primarily due to the decreased sales of
automobile as a result of the impact of the outbreak of COVID-19 in the PRC in 2020,
hence the proportional contribution from our sales of automobile for the year ended 31
December 2020 was lower than the years ende d 31 December 2021 and 2022. Our cost of
revenue are principally cost of inventories, which is the value of our new automobiles sold
on finance lease. For the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, our cost of inventories represented 84.3%, 81.4%, 81.1% and 81.2% of
our revenue generated from sales of automobile under finance lease. As our gross profit
margin of sales of automobile under finance lease was lower than that of finance lease
income, the change in revenue mix led to the fluctuation of our gross margin for automobile
retail and finance segment d uring the Track Record Period.
Our gross profit margin for the automobile-related businesses decreased from 30.0%
for the year ended 31 December 2020 to 20.9 % for the year ended 31 December 2021,
primarily due to the change in revenue mix of t he automobile-related businesses, mainly
resulted from the increase in revenue from the automobile operating lease, which has a
lower gross profit margin than our other auto mobile-related income. Our gross profit
margin for the automobile-related business es increased from 20.9% for the year ended 31
December 2021 to 23.2% for the year ended 31 December 2022, mainly due to the decrease
in revenue contribution from the automobile operating lease business. Our gross profit
margin for the automobile-related businesse s slightly decreased from 19.2% for the six
months ended 30 June 2022 to 18.6% for the six months ended 30 June 2023, mainly due to
the decrease in revenue contribution fro m other automobile-related services.
For details of our gross profit and gross profit margin analysis, please see the
sub-section headed ‘‘Financial Informatio n — Gross profit and gross profit margin’’.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our non-performing asset ratios
were 0.7%, 0.7%, 0.7% and 0.8%, respectively. According to the CIC Report, the industry
average non-performing asset ratios as at 31 December 2021 and 2022 were 1.5% and 2.0%,
respectively. As such, our non-performing asset ratios as at 31 December 2021 and 2022
were lower than the industry average.
SUMMARY
–1 8–


--- page 28 ---
LISTING EXPENSES
Our listing expenses mainly comprise pr ofessional fees paid and payable to the
professional parties for their services rendered in relation to the Listing and the Global
Offering. We estimate that total expenses in re lation to the Listing (assuming an Offer Price
of HK$1.205 per Offer Share, being the mid-point of the indicative Offer Price range of
HK$1.05 to HK$1.36 per Offer Share, and no exercise of the Over-allotment Option) will be
RMB79.6 million, comprising (a) underwriti ng commissions of approximately RMB4.7
million; (b) sponsor fees of ap proximately RMB10.7 million; and (c) non-underwriting
related expenses of approximately RMB64.2 mi llion, including (1) fees and expenses of legal
advisers and the Reporting A ccountant of approximately R MB49.0 million; and (2) other
fees and expenses of approximately RMB15.2 m illion, representing approximately 67.8% of
the gross proceeds of the Global Offering (assuming an Offer Price of HK$1.205 per Offer
Share, being the mid-point of the indicative Offer Price range of HK$1.05 to HK$1.36 per
Offer Share, and no exercise of the Over-allotment Option). Up to 30 June 2023, we
incurred Listing expenses of RMB66.9 millio n, of which (a) RMB42.5 million was charged
to our administrative expenses during the Track Record Period; (b) RMB17.4 million was
charged to our administrative expenses prior to the Track Record Period; and (c) RMB7.0
million will be deducted from equity upon Listin g. We expect to incur additional Listing
expenses of RMB12.7 million, of which RMB6.4 million is expected to be recognised as
administrative expenses and RMB6.3 million (to gether with the previously incurred Listing
expenses recorded as prepayment) is expected to be recognised as a deduction in equity for
the year ending 31 December 2023. The listing expe nses directly attributable to the issue of
our shares will be deducted from equity upon listing. The above total Listing expenses are
the latest practicable estimates for referenc e only, and the final amount to be recognised
may differ from these estimates.
IMPACT OF COVID-19 OUTBREAK ON OUR BUSINESS
In response to the outbreak of COVID-19 in the PRC in 2020, the PRC government
has imposed quarantine measures across China, and local governments have also imposed
temporary mobility restrictions or travel b ans to control the spread of COVID-19. As a
result, normal economic activities throughout China have been significantly curtailed due
to the outbreak of COVID-19 in the PRC in 2020.
We have taken a series of measures in response to the COVID-19 outbreak in the PRC
in 2020, including, among others, remote working arrangements for some of our employees,
temporary closure of some of our sales outle ts, reduction in advertising spending,
headcount freeze, and reduction of purchase of new automobiles.
There was a significant decrease in the n umber of confirmed COVID-19 cases in PRC
in the second quarter of 2020. The PRC government has gradually lifted domestic travel
restrictions and other quarantine measures, and economic activities have begun to recover
and return to normal since the second half of 2020. Our business started to recover in the
fourth quarter of 2020.
SUMMARY
–1 9–


--- page 29 ---
In 2021, our businesses were fully recovered as illustrated below. The number of newly
signed finance lease increased by 43.9% from 7,859 agreements for the year ended 31
December 2020 to 11,308 agreements for the year ended 31 December 2021. The average
occupancy rate for e-hailing vehicles for oper ating lease increased from 78.8% for the year
ended 31 December 2020 to 90.7% for the year ended 31 December 2021.
Following the resurgence of COVID-19 in a number of provinces in the PRC,
lockdown of several cities and regions in the PRC and pandemic control measures were
implemented during the period from October 2022 to early December 2022 as a means to
contain the spread of COVID-19. The pandemic control measures impacted our operations
as certain of our self-operated sales outle ts had to temporarily suspend operations.
On 11 November 2022, the PRC government released a circular on further optimising
the COVID-19 responses, the ‘‘Notice on Further Optimizing and Implementing Measures
for Prevention and Control of the COVID-19 Pandemic’’, announcing 20 prevention and
control measures, followed b y ten new COVID-19 easing measures on 7 December 2022.
The ten new measures were introduced based on the then epidemic situation and mutation
of the virus to contain the epidemic in a more science-based and targeted manner, according
to the circular issued by the Joint Prevention and Control Mechanism of the State Council.
On 27 December 2022, the PRC government a nnounced China will manage COVID-19 with
measures against Class B infectious diseases, instead of Class A infectious diseases, in a
major shift of its epidemic response policies and local authorities will drop quarantine
measures against people infected with novel cor onavirus and stop identifying close contacts
or designating high-risk and low-risk areas . It was stated that following the adjustment,
China’s COVID-19 prevention and control efforts will focus on protecting health and
preventing severe cases. Such measures will be rolled out to protect people’s lives and health
to the utmost and minimize the impact of the epidemic on economic and social
development.
RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE
Recent Development
According to CIC, the sales volume of new automobiles in the PRC increased by 6.7%
for the nine months ended 30 September 2023 as compared to the same period of 2022,
mainly due to the recovery from the regional outbreaks of COVID-19 variants in the PRC
in 2022. For the nine months ended 30 September 2023, the total number of e-hailing rides
in the PRC increased by 22.3% as compared to the same period of 2022.
For the third quarter of 2023 as compared to the same period of 2022, the number of
our new automobiles sold increased by 88.1%, mainly due to the recovery from the adverse
impact of the outbreaks of COVID-19 in 2022, our increased sales and marketing efforts
and the opening of new self-operated sales outlets to grow our business. The aggregate
number of e-hailing vehicles under operating le ase at each month end in the third quarter of
2023 increased by 23.2% compared with the thi rd quarter of 2022. Our e-hailing occupancy
rate decreased from 88.0% for the third quarter of 2022 to 78.1% for the same period of
2023, which was mainly attributable to the exp ansion of our e-hailing automobile fleet and
the fact that our newly purchased e-hailing veh icles were not fully leased during the third
SUMMARY
–2 0–


--- page 30 ---
quarter of 2023 as some of such vehicles had not completed the automobile registration
during the period, which typically takes one to two months to complete, primarily
depending on the internal process of the local automobile registration offices that manage
the application for automobile registration . As confirmed by our Directors, during the
Track Record Period and up to the Latest Practicable Date, we had not experienced any
difficulties in completing the e-ha iling automobile registration process.
No Material Adverse Change
Our Directors confirm that after perfor ming all the due diligence work which our
Directors consider appropriate, there had been no material adverse change in our financial
or trading position or prospects since 30 June 2023 and up to the date of this prospectus,
and that there has been no event since 30 June 2023 which would materially affect the
information shown in the Accountant’s Report, the text of which as set out in Appendix I to
this prospectus. Our Directors also confirm that there has not been any material change in
our indebtedness and contingent liabilities since 30 June 2023.
CERTAIN PRC LAWS AND REGULATIONS
Laws and Regulations on Cybersecurity Review
China Cybersecurity Review Technology and Certification Center (CCRC, formerly
known as China Information Security Certification Center) undertakes network security
review technical support and certification work, according to Cybersecurity Review
Measures, which was promulgated by the CAC. The CAC is the rule-making authority and
the CCRC is responsible for undertaking the rules promulgated by the CAC.
On 16 November 2021, the Cyberspace Administration of China (the ‘‘ CAC’’), with
other governmental authorities, jointly issued the Cybersecurity Review Measures ( 《網絡安
全審查辦法》)( t h e‘ ‘Cybersecurity Review Measures ’’), the revised Cybersecurity Review
Measures which came into effect on 15 February 2022. The Cybersecurity Review Measures
provide that the procurement of network products and services by critical information
infrastructure operators ( 關鍵信息基礎設施運營者) and the data processing activities
carried out by network platform operators ( 網絡平台運營者) that affect or may affect
national security shall be sub ject to the cybersecurity revi ew by the CAC. Network platform
operators holding personal information of more than one million users seeking public
listing abroad must apply for a cybersecuri ty review as well. Critical information
infrastructure refers to any network facilities and information systems in important
industries and fields that may seriously endan ger national security, national economy and
people’s livelihood, and public interests in the event that they are damaged or lose their
functions or their data are leaked. Our Directors confirm, we do not hold or operate any of
the abovementioned properties, and the type of data we collect is mainly personal
information, including our customers’ names, dates of birth, ID numbers, addresses, phone
numbers, account numbers, passwords, etc., hence as advised by our PRC Legal Advisers,
we will not be considered as a critical information infrastructure operator. However, there
are no relevant laws and regulations to defin e ‘‘online platform operators’’, hence it is
uncertain whether we will be considered as an online platform operator. Our Directors
confirmed as at the Latest Practicable Date w e had approximately 0.27 million registered
SUMMARY
–2 1–


--- page 31 ---
users in total on our 52 Car APP, Kuai Ya Car Rental, a WeChat mini programme ( 快呀租
⾞微信小程序), Taoqi APP and Go Ziyou APP, which is far less than one million, our PRC
Legal Advisers advised that the Cybersecurity Review Measures do not apply to the
Group’s business. In addition, the CAC may also voluntarily conduct the cybersecurity
review if any network products and services and data processing activities affect or may
affect national security.
On 14 November 2021, the CAC released the Administration of Cyber Data Security
(Draft for Comments) ( 《網絡數據安全管理條例（徵求意見稿）》) (the ‘‘Draft Data Security
Regulations ’’, together with the Cybersecurity Review Measures, the ‘‘ Cybersecurity
Regulations ’’). The Draft Data Security Regulati ons cover a wide range of cyber data
security issues and govern the use of networks to carry out data processing activities, as well
as the supervision and management of cyber data security in the PRC. The Draft Data
Security Regulations are applicable to the use of networks to carry out data processing
activities, and the supervision and management of network data security in the PRC, as well
as several situations of overseas data proces sing activities that process personal and
organisational data of PRC. We conducted a verbal consultation with the CCRC on 15
December 2022 for clarification. The interviewee opined that the cybersecurity review will
not apply to enterprises seeking public listings in Hong Kong.
As confirmed by our Directors, as at the Lat est Practicable Date, we were not involved
in any investigations on the cybersecurity review made by the CAC, and we had not received
any inquiry, notice or warning, or been subject to any penalties or sanctions in such respect.
Our Directors confirmed that our Group’s relevant internet data protection mechanism has
been established. Our Directors confirmed that as at the Latest Practicable Date we had
approximately 0.27 million registered u sers in total on our 52 Car APP, Kuai Ya Car
Rental, a WeChat mini programme ( 快呀租⾞微信小程序), Taoqi APP and Go Ziyou APP,
which is far less than one million users. In the e vent such number exceeds one million in the
future, according to the Cybersecurity Review Measures and the Draft Data Security
Regulations, which would be effective in the future, there is a possibility that we may be
considered as ‘‘online platform operator’’ by the CAC, and thus need to apply for
cybersecurity review. According to the Cybersecurity Regulations, to file an application for
cybersecurity review, the operator shall submit a list of documents, including a written
declaration and an analysis report concerning the impact or possible impact on national
security, the procurement documents, and business agreements and/or IPO related
application documents, etc. As confirmed by our Directors, we will be able to provide
these documents timely and accurately. In addition, the Cybersecurity Regulations do not
require the applicant to suspend the business until the completion of the cybersecurity
review. Therefore, as advised by our PRC Legal A dvisers, if the Cybersecurity Regulations
takes effect in the current form in the future, the Group does not have any obstacles in
meeting the requirements and completing the application timely.
SUMMARY
–2 2–


--- page 32 ---
Accordingly, our PRC Legal Advisers advised, and our Directors concur, that (i) our
Group would be able to comply with the Cyberse curity Regulations in all material aspects;
(ii) the Cybersecurity Regulations would not have any material adverse impact on our
business operations; and (iii) our Listing in Hong Kong will not g ive rise to national
security risks based on the factors set out in Article 10 of the Cybersecurity Review
Measures, assuming the Draft Da ta Security Regulations are implemented in their current
form. The PRC legal advisers to the Sole S ponsor and the Sole Sponsor concur with the
aforesaid view of our PRC Legal Advisers.
Laws and Regulations on E-hailing Services
Our Directors confirmed that our PRC subsidiary only serves as an e-hailing vehicles
provider, which neither owns the online ser vice platforms nor operates any e-hailing
business. As advised by our PRC Legal Advisers and our Directors confirmed that our PRC
subsidiary was only responsible for obtaining Transport Certificate for E-hailing vehicles
during the Track Record Period. As advised b y our PRC Legal Advisers after due diligence
and as confirmed by our Directors, all of our e-hailing vehicles under operating lease and
finance lease during the Track Record Period and up to the Latest Practicable Date have
obtained Transport Certifica tes for E-hailing. In addition, if the vehicle that provides the
aforesaid services operates without the Trans port Certificate for E-hailing vehicles, the
e-hailing platform company or the drivers, rath er than the e-hailing vehicle providers, may
be ordered to make rectification or fined by the competent administrative departments of
transportation and prices. Therefore, as a dvised by our PRC Legal Advisers, the below
regulations on e-hailing industry publishe d recently mainly regulate online e-hailing
platform enterprises and are not applicable to our Group’s businesses, and do not have any
bearing on our Group’s business and operation. As advised by CIC, the four recently
published regulations in relation to the e-h ailing service industry as mentioned are not
expected to have material impa ct on the e-hailing platform ope rators or the e-hailing service
industry at large as they only provide for fur ther details of the requirements on e-hailing
platform operators by existing legislations and do not impose new onerous requirements.
The Directors concur with CIC’s view and do not expect that such regulations to have
material direct or indirect impact on the Gro up’s e-hailing operating lease business. For
details of the Provisional Measures for Administration of E-Hailing Services ( 《網絡預約出
租汽車經營服務管理暫行辦法》) (the ‘‘ E-Hailing Measures ’’), the Notice on Maintaining
Market Order for the Fair Competition and A ccelerating the Compliance of E-hailing
Vehicles ( 《關於維護公平競爭市場秩序加快推進網約車合規化的通知》), the Opinions on
Strengthening the Protection of the Rights and Interests of Employees in the New
Transportation Industry ( 《關於加強交
通運輸新業態從業人員權益保障工作的通知》), the
Notice on Strengthening the Work Related to the Joint Supervision of the Whole
Industry Chain of the E-hailing ( 《關於加強網絡預約出租汽車行業事前事中事後全鏈條聯合
監管有關工作的通知》), and the Measures for the Administration of the Operation of
Regulatory Information Interactive Platforms for E-hailing (the ‘‘ Regulatory Information
Interactive Platforms Measures ’’) (《網絡預約出租汽車監管信息交互平台運行管理辦法》),
please refer to ‘‘Regulatory Overview — Laws and Regulations on e-hailing Services’’.
SUMMARY
–2 3–


--- page 33 ---
Confirmation of Filing by the CSRC
On 17 February 2023, CSRC issued the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies ( 《境內企業境外發行證券和上市管
理試行辦法》) (the ‘‘Trial Administrative Measures ’’) and five items of supporting guidelines,
which mainly standardise activities relating to direct or indirect overseas issuance and
listings of securities by domestic enterprises and became effective on 31 March 2023.
According to the Trial Administrative Measu res, a domestic company that seeks to offer
and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per
requirement of the Measures, s ubmit relevant materials that contain a filing report and a
legal opinion, and provide truthful, accurate and complete information on the shareholders
and disclose other required information. Any overseas offering and listing made by an
issuer that meets both the following cond itions will be determined as indirect:
(1) 50% or more of the issuer’s operating re venue, total profit, total assets or net
assets as documented in its audited conso lidated financial statements for the most
recent accounting year is accounte d for by domestic companies; and
(2) the main parts of the issuer’s business activities are conducted in the Mainland
China, or its main places of business are located in the Mainland China, or the
senior managers in charge of its business operation and management are mostly
Chinese citizens or domiciled in the Mainland China.
In the meanwhile, it is stipulated that under any of the following circumstances, an
overseas listing shall not be allowed: (1) the re are circumstances in which national laws,
regulations and relevant provisions explicitly prohibit listing and financing; (2) the overseas
issuance or listing threatens or endangers national security as reviewed and determined by
the relevant competent departments of the State Council in accordance with the law; (3) the
domestic enterprise and its co ntrolling shareholder or actual controller have committed
corruption, bribery, embezzlement of property, misappropriation of property or disruption
of the socialist market economic order in the r ecent three years; (4) the domestic enterprise
is being investigated by judiciary for suspect ed crimes or are being investigated for major
violations of laws and regulations and no definite conclusions have been reached; and (5)
there are major ownership disputes over equity rights held by the controlling shareholder or
the shareholder governed by the contro lling shareholder or the actual controller.
The Notice on Administrative Arrangemen ts for Filing of Domestic Enterprises’
Overseas Issuance and Listing ( 《關於境內企業境外發行上市備案管理安排的通知》)w a s
promulgated by CSRC on 17 February 2023 and became effective on 31 March 2023.
SUMMARY
–2 4–


--- page 34 ---
Since all of our operating revenue and total assets are accounted for by domestic
companies and all of our business are conducted in the Mainland China, we are subject to
the Trial Administrative Measures, as adv ised by our PRC Legal Advisers. On 17 August
2023, CSRC issued the Filing Notice for Ov erseas Issuance and Listing of XXF Group
Holdings Limited ( 國合規[2023]1142 號), which confirmed the f iling information of the
Company’s overseas securities offering submitted to them. As advised by our PRC Legal
Advisers, we have completed the relevant filin gs for the application of the Listing and
overseas offering, and no other approval from the CSRC is required to be obtained before
the Listing.
For details regarding the regulations o n the overseas listings, please refer to
‘‘Regulatory Overview — M&A Rules and Overseas Listings’’.
STATISTICS OF THE GLOBAL OFFERING
(1)
Based on
Offer Price of
HK$1.05
Based on
Offer Price of
HK$1.36
Market capitalisation of our Shares (2) HK$541.4 million HK$701.3 million
Unaudited pro forma adjusted net tangible asset
per Share (3) HK$1.52 HK$1.58
Notes:
(1) All statistics in this table are based on the assumpti on that the Over-allotment Option is not exercised and
takes no account of any Shares which may be issue d upon the exercise of options granted under the
Pre-IPO Share Option Scheme and any Shares which ma y be issued upon the exercise of the options which
may be granted under the Share Option Scheme.
(2) The calculation of market capitalisation is based on 515,625,000 Shares in issue immediately following the
completion of the Capitalisat ion Issue and Global Offering.
(3) The unaudited pro forma adjusted net tangible asset v alue per Share has been arrived at after adjustments
referred to in the section headed ‘‘Appendix II — Una udited Pro Forma Financial Information’’ and on
the basis that 515,625,000 Shares were in issue assumi ng that the Global Offering and the Capitalisation
Issue have been completed on 30 June 2023 but takes no account of any Shares which may be issued upon
the exercise of options granted under the Pre-IPO Share Option Scheme, any Shares which may be issued
upon the exercise of the options which may be grante d under the Share Option Scheme, any Shares which
may be issued upon the exercise of the Over-allotment Option or any Shares which may be allotted and
issued or repurchased by the Company pursuant to the general mandate to issue Shares and general
mandate to repurchase Shares as described in the sect ion headed ‘‘Share Capital’’ in this prospectus.
SUMMARY
–2 5–


--- page 35 ---
SHAREHOLDERS’ INFORMATION
Our Single Largest Shareholder
As at the Latest Practicable Date, Glorypearl Capital, Precious Luck, Happy Gain and
Southern Fortune, all of which were controlled by Mr. Huang, held in aggregate
approximately 31.18% of our issued share c apital. Immediately upon completion of the
Global Offering and the Capitalisation I ssue, Mr. Huang will be interested in
approximately 24.94% of the issued share capital of our Company, taking no account of
Shares which may be issued pursuant to the exer cise of the Over-allotment Option or Shares
which may be issued upon the exercise of options granted under the Pre-IPO Share Option
Scheme and options which may be granted under the Share Option Scheme. See
‘‘Relationship with Our Single Largest Shareholder’’ for further details.
Pre-IPO Investments
We have concluded pre-IPO in vestments with certain investors, including Beijing
Chesheng, Zhuhai Wanhe, Ms. Yang Yufen ( 楊豫芬), Ms. Mao Lin ( 毛琳), Fuzhou
Shenghui, Fuzhou Bojia, Mr. Guo Hongzhi ( 郭洪志) and Ms. Choo Beng Hiang ( 朱孟香).
Pre-IPO Share Option Scheme
We have conditionally adopted the Pre-IPO Share Option Scheme to incentivise and
reward eligible participants for their contri bution or potential contribution to our Group.
As at the Latest Practicable Date, options to subscribe for an aggregate of 38,199,000
Shares had been granted under the Pre-IPO Sh are Option Scheme. See ‘‘Statutory and
General Information — D. Other Information — 2. Pre-IPO Share Option Scheme’’ in
Appendix IV to this prospectus for further details.
NEEQ LISTING OF XXF GROUP
The shares of XXF Group became quoted on NEEQ (stock code: 834499) on 11
December 2015, and were subsequently delis ted from NEEQ on 15 December 2016, in light
of the fact that a listing on a reputable and liquid equity market such as the Stock Exchange
can raise the brand awareness, enhance the co rporate image and strengthen the corporate
governance as well as the minimal trading v olume of its shares on NEEQ. For further
details, please see ‘‘History, Reorganisation and Corporate Structure’’ in this prospectus.
DIVIDENDS AND DIVIDEND POLICY
Our Company did not declare any dividend during the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023.
SUMMARY
–2 6–


--- page 36 ---
Our Directors may recommend a payment of dividends in the future after taking into
account, among others, our operation and earnings, capital requirements and surplus,
general financial condition, contractual restrictions, capital expenditure and future
development requirements, shareholders’ interests and other factors which they may
deem relevant at such time. Any declaration and payment as well as the amount of
dividends will be subject to our constitutional documents and the Cayman Companies Act.
HIGHLIGHTS OF RISK FACTORS
The major risks relating to the business of our Group include: (i) we are subject to the
credit risks of our customers and our credi t risk management system may not be able to
mitigate all our risk exposure; (ii) we may not be able to repossess the automobiles under
our finance lease services in cases of delinqu ency or default by our customers; (iii) the
residual value of the repossessed automobiles or the amount recovered from legal
proceedings may not be adequate to cover the remaining amount of financing extended
to our customers; (iv) our allowance for impair ment on receivables (including finance lease
receivables, trade receivables and other receivables) may not be adequate to cover potential
credit losses; (v) any material mismatch in the m aturity profile of our a ssets and liabilities
may have material adverse impact on our liqui dity and our ability to settle our outstanding
liabilities; and (vi) if we have net cash used in operating activities and we are unable to
obtain additional financing in the future or there is any adverse movement in market
interest rates, our business may be materially and adversely affected.
NON-COMPLIANT INCIDENTS
Our non-compliance with PRC laws and regulations during the Track Record Period
was failure to register lease agreements with r elevant PRC authorities primarily due to the
lessors did not provide the necessary suppor ting documents for filing. See ‘‘Business —
Legal Compliance’’ for further details of our non-compliance incidents.
SUMMARY
–2 7–


--- page 37 ---
Unless the context otherwise requires, the following expressions have the following
meanings in this prospectus. Certain other terms are explained in the section headed
‘‘Glossary of Technical Terms’’.
‘‘52 Car APP’’ ‘‘52 Car (52 車)’’ mobile application, which provides automobile
aftermarket service platform for car users
‘‘52 Car (Business
Version) APP’’
‘‘52 Car — Business Version (52 車 — 商家版)’’ mobile
application, which provides automobile aftermarket service
platform for business-end users
‘‘AFRC’’ Accounting and Financial Reporting Council
‘‘Application Form’’ the application form for use by White Form eIPO Service
Provider, Computershare Hong Kong Investor Services Limited
‘‘Articles’’ or ‘‘Articles
of Association’’
the articles of association of our Company conditionally adopted
on 9 October 2023, which will become effective upon the Listing
Date, a summary of which is set out in Appendix III to this
prospectus, as amended from time to time
‘‘associate(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Beijing Chesheng’’ Beijing Cheshe ng Technology Company Limited* ( 北京車勝科技
有限公司), a company established under the laws of the PRC on
23 November 2017, one of our Pre- IPO Investors and an affiliate
of Didi Group
‘‘Board of Directors’’ or
‘‘Board’’
the board of Directors
‘‘Business Day’’ a day (other than a Saturday, Sunday or public holiday) on
which licensed banks in Hong Kong are generally open for
normal banking business
‘‘Buyback Mandate’’ the general unconditional mandate given to the Directors by our
Shareholders relating to the repurchase of Shares, as further
described in ‘‘Statutory and Gen eral Information — A. Further
Information about our Group — 3. Resolutions in writing of the
Shareholders of our company passed on 9 October 2023’’ in
Appendix IV to this prospectus
‘‘BVI’’ British Virgin Islands
‘‘CAC’’ Cyberspace Administration of China ( 中華人民共和國國家互聯
網信息辦公室)
DEFINITIONS
–2 8–


--- page 38 ---
‘‘Capital Market
Intermediaries’’
Quam Securities Limited, CCB International Capital Limited,
China Galaxy International Securities (Hong Kong) Co.,
Limited, CMB International Capital Limited, Eddid Securities
and Futures Limited, Fortune (HK) Securities Limited, Innovax
Securities Limited, Livermore Holdings Limited, Luk Fook
Securities (HK) Limited, Shenwan Hongyuan Securities (H.K.)
Limited, SPDB International Capital Limited and ZMF Asset
Management Limited
‘‘Capitalisation Issue’’ the issue of 23,564,727 Shares to be made upon capitalisation of
certain sums standing to the credit of the share premium account
of our Company as referred to in the sub-section headed
‘‘Statutory and General Information — A. Further information
about our Group — 3. Resolutions in writing of the Shareholders
of our Company passed on 9 October 2023’’ in Appendix IV to
this prospectus
‘‘Cayman Companies
Act’’
the Companies Act (As Revised) of the Cayman Islands
‘‘CBIRC’’ China Banking and Insurance Regulatory Commission ( 中國銀行
保險監督管理委員會)
‘‘CBRC’’ China Banking Regulato ry Committee (now known as CBIRC)
(中國銀行業監督管理委員會)
‘‘CCASS’’ the Central Clearing and Settlement System established and
operated by HKSCC
‘‘CCASS Clearing
Participant’’
a person admitted to participate in CCASS as a direct clearing
participant or general clearing participant
‘‘CCASS Custodian
Participant’’
ap e r s o na d m i t t e dt op a r t i c i p a t ei nC C A S Sa sac u s t o d i a n
participant
DEFINITIONS
–2 9–


--- page 39 ---
‘‘CCASS EIPO ’’ the application for the Hong Kong Offer Shares to be issued in
the name of HKSCC Nominees and deposited directly into
C C A S St ob ec r e d i t e dt oy o u ro rad e s i g n a t e dC C A S S
Participant’s stock account through causing HKSCC Nominees
to apply on your behalf, including by (i) instructing your broker
or custodian who is a CCASS Clearing Participant or a CCASS
Custodian Participant to give electronic application instructions
via CCASS terminals to apply for the Hong Kong Offer Shares
on your behalf, or (ii) if you are an existing CCASS Investor
Participant, giving electronic application instructions through the
CCASS Internet System (
https://ip.ccass.com )o rt h r o u g ht h e
CCASS Phone System (using the procedures in HKSCC’s ‘‘An
Operating Guide for Investor Participants’’ in effect from time to
time). HKSCC can also input electronic application instructions
for CCASS Investor Participan ts through HKSCC’s Customer
Service Centre by completing an input request
‘‘CCASS Investor
Participant’’
a person admitted to participate in CCASS as an investor
participant, who may be an individual or joint individuals or a
corporation
‘‘CCASS Participant’’ a CCASS Clearing Participant, a CCASS Custodian Participant
or a CCASS Investor Participant
‘‘Celestial Bonanza’’ Celestial Bonanza Group Limited ( 成天集團有限公司), a
company incorporated in the BVI on 8 March 2019 and our
direct wholly-owned subsidiary
‘‘Cheyijia Automobile’’ Fujian Che yijia Automobile Sale Co., Ltd.* ( 福建車億家汽車銷
售有限公司), a company established under the laws of the PRC
on 12 July 2023 and our indire ct wholly-owned subsidiary
‘‘Chinese government’’
or ‘‘PRC
government’’
the central government of PRC, including all government
subdivisions (including provincial, municipal or other regional
or local government entities) and instrumentalities
‘‘CIC’’ China Insights Industry Consultancy Limited, a market research
and consulting company, an Independent Third Party
‘‘CIC Report’’ a market research report commissioned by us and prepared by
CIC, the content of which is quoted in this prospectus
‘‘close associate(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘Companies
Ordinance’’
the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified from
time to time
DEFINITIONS
–3 0–


--- page 40 ---
‘‘Companies (Winding
Up and
Miscellaneous
Provisions)
Ordinance’’
the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong), as amended,
supplemented or otherwise modified from time to time
‘‘Company’’ or ‘‘our
Company’’
XXF Group Holdings Limited ( 喜相逢集團控股有限公司), an
exempted company with limited liability incorporated in the
Cayman Islands on 29 March 2019
‘‘connected person(s)’’ has the meaning ascribed to it under the Listing Rules
‘‘connected
transaction(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘core connected
person(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘COVID-19’’ Coronavirus Disease 2019 (COVID-19), also known as novel
coronavirus pneumonia, an infectious respiratory disease that
was first reported in December 2019
‘‘CSRC’’ China Securities Regulatory Commission ( 中國證券監督管理委
員會)
‘‘Deed of Indemnity’’ the deed of indemnity dated 25 October 2023 entered into by Mr.
Huang in favour of our Company (for itself and as trustee for its
subsidiaries), particulars of which are set out in the paragraph
headed ‘‘Statutory and General Information — D. Other
information — 3. Tax and other indemnities’’ in Appendix IV
to this prospectus
‘‘Didi Group’’ Beijing Xiaoju Science and Technology Co., Ltd.* ( 北京小桔科技
有限公司) and its subsidiaries, which operate leading mobile
transportation platforms in the PRC
‘‘Director(s)’’ the director(s) of our Company
‘‘Driver License of
E-hailing’’
the license issued by local competent administrative department
in charge of taxis in the PRC to the e-hailing drivers according to
the E-Hailing Measures (as defined in the section headed
‘‘Regulatory Overview’’)
‘‘EDI Licence’’ Electronic data interchange licence, a licence issued by the
Ministry of Industry and Information Technology of the PRC
(中華人民共和國工業和信息化部) for the provision of online
data processing and transaction processing services
DEFINITIONS
–3 1–


--- page 41 ---
‘‘ERP’’ Enterprise resource planning
‘‘ESG’’ environmental, social and corporate governance
‘‘Extreme Conditions’’ extreme conditions including but not limited to serious
disruption of public transport services, extensive flooding,
major landslides or large-scale power outage after super
typhoons as announced by the government of Hong Kong
‘‘Fujian Anxin’’ Fujian Anxin Second-hand Car Market Co., Ltd.* ( 福建安信二
手車交易市場有限公司), a company established under the laws of
the PRC on 21 October 2016 which was our indirect
wholly-owned subsidiary and was deregistered on 9 July 2020
‘‘Fujian Cheyixing’’ Fujian Cheyixing Technology Co., Ltd.* ( 福建車逸行科技有限公
司), a company established under the laws of the PRC on 12 July
2023 and our indirect wholly-owned subsidiary
‘‘Fujian Heqi’’ Fujian Heqi Technology Co., Ltd.* ( 福建禾汽科技有限公司)
(formerly known as Fujian Heqi Automobile Insurance Agency
Co., Ltd.* ( 福建禾汽汽車保險代理有限公司)), a company
established under the laws of the PRC on 22 June 2016 and
our indirect wholly-owned subsidiary
‘‘Fujian Lvyi’’ Fujian Lvyi Infor mation Technology Co., Ltd.* ( 福建綠蟻信息科
技有限公司), a company established under the laws of the PRC
on 14 November 2017 and our indirect wholly-owned subsidiary
‘‘Fujian Qoocar’’ Fujian Qoocar Information Technology Co., Ltd.* ( 福建汽致信
息科技有限公司), a company established under the laws of the
PRC on 14 July 2017 and our indirect wholly-owned subsidiary
‘‘Fujian Shenqi’’ Fujian Shenqi Financial Lease Co., Ltd.* ( 福建神汽融資
租賃有
限公司), a company established under the laws of the PRC on 24
May 2016 and our indirect w holly-owned subsidiary
‘‘Fujian Xidi’’ Fujian Xidi Automobile Service Co., Ltd.* ( 福建喜滴汽車服務有
限公司), a company established under the laws of the PRC on 14
September 2018 and our indirect wholly-owned subsidiary
‘‘Fujian Xidun’’ Fujian Xidun Automobile Service Co., Ltd.* ( 福建喜盾汽車服務
有限公司), a company established under the laws of the PRC on
23 May 2018 and our indirect wholly-owned subsidiary
‘‘Fujian Xiqi’’ Fujian Xiqi Automobile Sale Co., Ltd.* ( 福建喜汽汽車銷售有限
公司), a company established under the laws of the PRC on 22
June 2016 and our indirect wholly-owned subsidiary
DEFINITIONS
–3 2–


--- page 42 ---
‘‘Fujian Xitu’’ Fujian Xitu Technology Co., Ltd.* ( 福建喜途科技有限公司), a
company established under the laws of the PRC on 29 October
2021 and our indirect wholly-owned subsidiary
‘‘Fujian Xiyun’’ Fujian Xiyun Ne w Energy Technology Co., Ltd.* ( 福建喜雲新能
源科技有限公司), a company established under the laws of the
PRC on 9 March 2021 which was our indirect subsidiary owned
as to 60% by XXF Group and 40% by Fujian Nebula Electronics
Co., Ltd.* ( 福建星雲電子股份有限公司), an Independent Third
Party (by virtue of Fujian Xiyun being an insignificant subsidiary
of our Company as defined under the Listing Rules) and was
deregistered on 31 March 2022
‘‘Fujian ZyooCar’’ Fujian ZyooCar Technology Co., Ltd.* ( 福建自在出行科技有限公
司), a company established under the laws of the PRC on 30
November 2017 and our indirect subsidiary owned as to 51% by
XXF Group and 49% by Ningde Transport Investment Group Co.,
Ltd.* ( 寧德市交通投資集團有限公司), an Independent Third Party
(by virtue of Fujian ZyooCar being an insignificant subsidiary of our
Company as defined under the Listing Rules)
‘‘Fuxing Property’’ Building No. 3, C1 Land Lot, Fuxing Economic Development
Area, Fuzhou, PRC ( 福州福興經濟開發區C1地塊上的3號樓)
‘‘Fuzhou Bojia’’ Fuzhou Bojia Investment Co., Ltd.* ( 福州博嘉投資有
限公司), a
company established under the laws of the PRC on 30 March
2018 and an Independent Third Party, which was deregistered on
7F e b r u a r y2 0 2 1
‘‘Fuzhou Shenghui’’ Fuzhou Shenghui Investment Co., Ltd.* ( 福州盛輝投資有限公
司), a company established under the laws of the PRC on 14
August 2013 and owned as to approximately 4.48% by Mr. Liu
Wei, our non-executive Director, and approximately 95.52% by
Mr. Liu Yonghui, father of Mr. Liu Wei
‘‘Global Offering’’ the Hong Kong Public Offering and the International Placing
‘‘Glorypearl Capital’’ Glorypearl Capital Resources Company Limited ( 明珠資本資源
有限公司), a company incorporated in the BVI with limited
liability on 26 March 2019, one of our substantial Shareholders,
and wholly owned by Mr. Huang
‘‘Go Ziyou APP’’ ‘‘Go Ziyou (GO 自游)’’ mobile application, which allows the
customers to rent our new energy vehicles for a short term.
DEFINITIONS
–3 3–


--- page 43 ---
‘‘Group’’, ‘‘our Group’’,
‘‘we’’, ‘‘our’’ and ‘‘us’’
our Company, our subsidiaries from time to time, or where the
context so requires, in respect of the period from our Company
became the holding company of its present subsidiaries, such
subsidiaries as if they were subsidiaries of our Company at the
relevant time
‘‘Guangdong Minyue’’ Guangdong Minyue Automobile Service Co., Ltd.* ( 廣東閩越汽
車服務有限公司), a company established under the laws of the
PRC on 18 May 2022 and our indirect wholly-owned subsidiary
‘‘Guoxin Zhonglian’’ Guoxin Zhonglian (Fuzhou) Automobile Service Co., Ltd.* ( 國
信中聯（福州）汽車服務有限公司), a company established under
the laws of the PRC on 6 March 2012 and our indirect
wholly-owned subsidiary
‘‘Happy Gain’’ Happy Gain Business Developments Limited, a company
incorporated in the BVI with limited liability on 4 September
2019 and indirectly wholly owned by Mr. Huang
‘‘HKSCC’’ the Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
‘‘HKSCC Nominees’’ the HKSCC Nominees Limited, a wholly-owned subsidiary of
HKSCC
‘‘HK$’’ or ‘‘Hong Kong
dollar(s)’’
Hong Kong dollar(s) and cent(s) re spectively, the lawful currency
of Hong Kong
‘‘Hong Kong’’ the Hong Kong Special Administrative Region of the PRC
‘‘Hong Kong Offer
Shares’’
the 10,312,500 new Shares initially being offered by our
Company for subscription pursuant to the Hong Kong Public
Offering at the Offer Price, subject to any adjustment or
re-allocation as described in the section ‘‘Structure and
Conditions of the Global Offering’’
‘‘Hong Kong Public
Offering’’
the offer of Hong Kong Offer Shares for subscription by the
public in Hong Kong at the Offer Price (plus a brokerage fee of
1%, SFC transaction levy of 0.0027%, Stock Exchange trading
fee of 0.00565% and AFRC transaction levy of 0.00015%) on the
terms and subject to the conditions described in this prospectus
and the Application Forms relating thereto, as further described
in ‘‘Structure and Conditions of the Global Offering — Hong
Kong Public Offering’’
‘‘Hong Kong Share
Registrar’’
Computershare Hong Kong Investor Services Limited
DEFINITIONS
–3 4–


--- page 44 ---
‘‘Hong Kong
Underwriters’’
the underwriters for the Hong Kong Public Offering as listed in
‘‘Underwriting — Hong Kong Underwriters’’
‘‘Hong Kong
Underwriting
Agreement’’
the underwriting agreement dated 27 October 2023 relating to the
Hong Kong Public Offering entered into between our Company,
our single largest Shareholder, our executive Directors, the Sole
Sponsor, the Sole Overall Coordinator and the Hong Kong
Underwriters, as further described in ‘‘Underwriting —
Underwriting Arrangements and Expenses — Hong Kong
Public Offering — Hong Kong Underwriting Agreement’’
‘‘IASB’’ International Accounting Standards Board
‘‘Ideal Stand’’ Ideal Stand Ventures Management Limited, a company
incorporated in the BVI with limited liability on 4 September
2019 and one of our substantial Shareholders
‘‘IFRS’’ International Financial Reporting Standards issued by IASB
‘‘Independent Third
Party(ies)’’
individual(s) or company(ies) who/which, to the best knowledge
of our Directors having made due and careful enquiries, is (are)
not a connected person(s) of our Company within the meaning
ascribed under the Listing Rules
‘‘International Placing’’ the conditional offering of the International Placing Shares for
and on behalf of our Company outside the United States
(including professional, institutional and corporate investors
and excluding retail investors in Hong Kong) in reliance on
Regulation S
‘‘International Placing
Shares’’
92,812,500 new Shares being initially offered by our Company
for subscription under the International Placing subject to
reallocation and together, where relevant, with any additional
Shares which may fall to be issued pursuant to the exercise of the
Over-allotment Option as further described in the section
‘‘Structure and Conditions of the Global Offering’’
‘‘International
Underwriters’’
the underwriters of the International Placing
‘‘International
Underwriting
Agreement’’
the international underwriting agreement relating to the
International Placing and expected to be entered into by our
Company, our single largest Shareholder, our executive
Directors, the Sole Sponsor, the Sole Overall Coordinator and
the International Underwriters on or about the last day for
lodging application under the Hong Kong Public Offering
DEFINITIONS
–3 5–


--- page 45 ---
‘‘Joint Bookrunners’’ Quam Securities Limited, CCB International Capital Limited,
China Galaxy International Securities (Hong Kong) Co.,
Limited, CMB International Capital Limited, Eddid Securities
and Futures Limited, Fortune (HK) Securities Limited, Innovax
Securities Limited, Livermore Holdings Limited, Luk Fook
Securities (HK) Limited, Shenwan Hongyuan Securities (H.K.)
Limited, SPDB International Capital Limited and ZMF Asset
Management Limited
‘‘Joint Lead Managers’’ Quam Securities Limited, CCB International Capital Limited,
China Galaxy International Securities (Hong Kong) Co.,
Limited, CMB International Capital Limited, Eddid Securities
and Futures Limited, Fortune (HK) Securities Limited, Innovax
Securities Limited, Livermore Holdings Limited, Luk Fook
Securities (HK) Limited, Shenwan Hongyuan Securities (H.K.)
Limited, SPDB International Capital Limited and ZMF Asset
Management Limited
‘‘Latest Practicable
Date’’
20 October 2023, being the latest practicable date prior to the
printing of this prospectus for the purpose of ascertaining certain
information contained in this prospectus
‘‘Listing’’ listing of the Shares on the Main Board
‘‘Listing Date’’ the date on which the Shares are listed and from which dealings
in Shares on the Stock Exchange commences, which is expected
to be on or about 9 November 2023
‘‘Listing Rules’’ The Rules Governing t he Listing of Securities on The Stock
Exchange of Hong Kong Limited (as amended, supplemented or
otherwise modified from time to time)
‘‘Main Board’’ the stock exchange (excluding the option market) operated by the
Stock Exchange which is independent from and operates in
parallel with GEM of the Stock Exchange
‘‘Memorandum’’ or
‘‘Memorandum of
Association’’
the memorandum of association of our Company adopted on 9
October 2023, a summary of which is set out in Appendix III to
this prospectus, as amended from time to time
‘‘MOF’’ Ministry of Finance of the PRC ( 中華人民共和國財政部)
‘‘MOFCOM’’ Ministry of Commerce of the PRC ( 中華人民共和國商務部)
‘‘Mr. Huang’’ Mr. Huang Wei ( 黃偉), our founder, chairman, chief executive
officer, executive Director and one of our substantial
shareholders
DEFINITIONS
–3 6–


--- page 46 ---
‘‘M&A Rules’’ the laws and rules regulating mergers and acquisition in the PRC
collectively
‘‘Nanning Xidi’’ Nanning Xidi Automob ile Hailing Operation Service Co., Ltd.*
(南寧喜滴網約車運營服務有限公司), a company established
under the laws of the PRC on 31 October 2022 and our
indirect wholly-owned subsidiary
‘‘NDRC’’ National Development and Reform Commission of the PRC ( 中
華人民共和國國家發展和改革委員會)
‘‘NEEQ’’ the National Equitie s Exchange and Quotations ( 全國中小企業股
份轉讓系統), a PRC over-the-counter system for trading shares
of public companies
‘‘Offer Price’’ the final offer price per Offer Share (exclusive of brokerage of
1%, SFC transaction levy of 0.0027%, AFRC transaction levy of
0.00015% and Stock Exchange trading fee of 0.00565%) of not
more than HK$1.36 per Offer Sha r ea n di se x p e c t e dt ob en o tl e s s
than HK$1.05 per Offer Share, such price to be determined by
agreement between our Company and the Sole Overall
Coordinator (for itself and on behalf of the Underwriters) on
or before the Price Determination Date
‘‘Offer Shares’’ the Hong Kong Offer Shares and the International Placing
Shares together, where relevant, with any additional Shares to be
issued by our Company pursuant to the exercise of the
Over-allotment Option
‘‘Over-allotment
Option’’
the option to be granted by our Company to the International
Underwriter(s) exercisable by the Sole Overall Coordinator (for
itself and on behalf of the International Underwriter(s)), at its
sole and absolute discretion under the International
Underwriting Agreement to require our Company to allot and
issue up to an additional 15,468,750 Shares, representing 15% of
the initial number of the Offer Shares, to, among other things,
cover over-allocations in the International Placing, if any, details
of which are set out in the section headed ‘‘Structure and
Conditions of the Global Offering — Over-allotment Option’’ of
this prospectus
‘‘PBOC’’ People’s Bank of China ( 中國人民銀行)
‘‘PRC’’ or ‘‘China’’ the People’s Republic of China, which for the purpose of this
prospectus and for geographical reference only, excludes Hong
Kong, the Macau Special Administrative Region of the People’s
Republic of China and Taiwan
DEFINITIONS
–3 7–


--- page 47 ---
‘‘PRC Legal Advisers’’ Beijing Dacheng Law Offices, LLP (Shanghai), our Group’s legal
advisers as to PRC laws
‘‘Precious Luck’’ Precious Luck Developments Management Limited, a company
incorporated in the BVI with limited liability on 8 August 2019
and indirectly controlled by Mr. Huang
‘‘Pre-IPO Investors’’ as defined in ‘‘History, Reorganisation and Corporate Structure
— Pre-IPO Investments — Summary of Pre-IPO Investments’’
‘‘Pre-IPO Share Option
Scheme’’
the pre-IPO share option scheme conditionally adopted by our
Company on 9 October 2023, the principal terms of which are
summarised under the paragraph headed ‘‘Statutory and General
Information — D. Other Information — 2. Pre-IPO Share
Option Scheme’’ in Appendix IV to this prospectus
‘‘Price Determination
Date’’
the date expected to be on or around Thursday, 2 November
2023, on which our Company and the Sole Overall Coordinator
(for itself and on behalf of the Underwriters) determine the final
Offer Price for the purpose of the Global Offering
‘‘Principal Share
Registrar’’
Conyers Trust Company (Cayman) Limited
‘‘prospectus’’ this prospectus being issued in connection with the Hong Kong
Public Offering
‘‘Prosperous Splendor’’ Prosperous Splendor Investment Holding Limited ( 盛輝投資控股
有限公司), a company incorporated in the BVI on 25 June 2019
and owned as to 4.48% by Mr. Liu Wei, our non-executive
Director, and 95.52% by Mr. Liu Yonghui, father of Mr. Liu
Wei
‘‘Regulation S’’ Regulation S under the U.S. Securities Act
‘‘Remuneration
Committee’’
the remuneration committee of the Board
‘‘Reorganisation’’ the reorganisation arrangements undertaken by our Group in
preparation for the Listing, which are described in more detail in
the section headed ‘‘History, R eorganisation and Corporate
Structure’’ and Appendix IV to this prospectus
‘‘RMB’’ Renminbi, the lawful currency of the PRC
‘‘SAFE’’ State Administration of Foreign Exchange of the PRC ( 中華人民
共和國國家外匯管理局)
DEFINITIONS
–3 8–


--- page 48 ---
‘‘SAT’’ State Taxation Administration of the PRC ( 中華人民共和國國家
稅務總局)
‘‘SFC’’ the Securities and Futures Commission of Hong Kong
‘‘SFO’’ or ‘‘Securities
and Futures
Ordinance’’
the Securities and Futures Ord inance (Chapter 571 of the Laws
of Hong Kong), as amended, supplemented or otherwise
modified from time to time
‘‘Shanghai Bo Yu’’ Shanghai Bo Yu Enterprise Management Partnership (Limited
Partnership)* ( 上海渤毓企業管理合夥企業（有限合夥）), a limited
liability partnership established in the PRC on 15 July 2019 and
indirectly controlled by Mr. Huang
‘‘Shanghai Boyu’’ Shanghai Boyu Enterprise Management Partnership (Limited
Partnership)* ( 上海渤鈺企業管理合夥企業（有限合夥）), a limited
liability partnership established in the PRC on 5 June 2019 and
indirectly controlled by Mr. Huang
‘‘Shanghai Boyun’’ Shanghai Boyun Enterprise Management Partnership (Limited
Partnership)* ( 上海渤鋆企業管理合夥企業（有限合夥）), a limited
liability partnership established in the PRC on 6 June 2019 and
indirectly controlled by Mr. Huang
‘‘Shanghai Xuante’’ Shanghai Xuante Enterprise Management Co. Ltd.* ( 上海煊特企
業管理有限公司), a company established under the laws of the
PRC on 5 July 2019 and owned as to approximately 47.18% by
Ms. Qiu Hui, 32.27% by Mr. Lin Dachun, 10.96% by Mr. Huang
Jianqing and 9.59% by Mr. Wang Yueren as at the Latest
Practicable Date, all being Independent Third Parties
‘‘Shanxi Zhonghong’’ Shanxi Zhonghong Automobile Service Co., Ltd.* (
山西眾弘汽車
服務有限公司), a company established under the laws of the PRC
on 17 May 2022 and our indirect wholly-owned subsidiary
‘‘Shaoxing Xidi’’ Shaoxing Xidi Automobile Service Co., Ltd.* ( 紹興喜滴汽車服務
有限公司), a company established under the laws of the PRC on
24 November 2022 and our indirect wholly-owned subsidiary
‘‘Share(s)’’ ordinary share(s) having a par value of HK$0.01 each in the
capital of our Company
‘‘Share Option Scheme’’ the share option scheme conditionally adopted by our Company
on 9 October 2023 and effective upon the Listing, the principal
terms of which are summarised under the paragraph headed
‘‘Statutory and General Information — D. Other Information —
1. Share Option Scheme’’ in Appendix IV to this prospectus
DEFINITIONS
–3 9–


--- page 49 ---
‘‘Shareholder(s)’’ holder(s) of Shares
‘‘Sole Overall
Coordinator’’ or
‘‘Sole Global
Coordinator’’ or
‘‘Stabilising
Manager’’
Quam Securities Limited, a licensed corporation to carry out
Type 1 (dealing in securities), Type 2 (dealing in futures
contracts), Type 4 (advising on securities), Type 6 (advising on
corporate finance) and Type 9 (asset management) regulated
activities under the SFO
‘‘Sole Sponsor’’ Quam Capital Limited, a corporation licensed by the SFC to
conduct Type 1 (dealing in securities) and Type 6 (advising on
corporate finance) regulated activities under the SFO
‘‘Southern Fortune’’ Southern Fortune En terprises Management Limited, a company
incorporated in the BVI with limited liability on 4 September
2019 and indirectly controlled by Mr. Huang
‘‘sq.m.’’ square metre
‘‘Stock Borrowing
Agreement’’
the Stock borrowing agreement expected to be entered into
between the Stabilising Manage r Glorypearl Capital and
Precious Luck
‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited
‘‘subsidiary(ies)’’ has the meaning ascribed to it under the Listing Rules
‘‘substantial
shareholder(s)’’
has the meaning ascribed to it under the Listing Rules
‘‘Taizhou Xidi’’ Taizhou Xidi Automobile Service Co., Ltd.* ( 台州喜滴汽車服務
有限公司), a company established under the laws of the PRC on
21 November 2022 and our indirect wholly-owned subsidiary
‘‘Takeovers Code’’ The Code on Takeovers and Mergers issued by the SFC, as
amended, supplemented or otherwise modified from time to time
‘‘Taoqi APP’’ ‘‘Taoqi ( 淘汽)’’ mobile application, which is an online channel
for our automobile retail and finance business
‘‘Taoqi Internet’’ Fujian Taoqi Internet Technology Co., Ltd.* ( 福建淘汽互聯科技
有限公司), a company established under the laws of the PRC on
29 June 2015 and our indirect wholly-owned subsidiary
‘‘Taoqi Yuncar’’ Fujian Taoqi Yuncar Information Consultancy Co., Ltd.* ( 福建
淘汽雲車信息諮詢有限公司), a company established under the
laws of the PRC on 1 February 2019 and our indirect
wholly-owned subsidiary
DEFINITIONS
–4 0–


--- page 50 ---
‘‘Tengxin Investment’’ Tengxin Investment Company Limited* ( 騰新投資有限公司), a
company established under the laws of the PRC on 2 March 2015
which indirectly holds 100% interest in Ideal Stand
‘‘Tianjin Xidi’’ Tianjin Xidi Automobile Service Co., Ltd.* ( 天津喜滴汽車服務
有限公司), a company established under the laws of the PRC on
15 July 2022 and our indirec t wholly-owned subsidiary
‘‘Track Record Period’’ the financial years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023
‘‘Transport Certificate
for E-hailing vehicle’’
the certificate issued by loca l competent administrative
department in charge of taxis in the PRC to the vehicle owner
or the e-hailing platform compa ny according to the E-Hailing
Measures (as defined in the section headed ‘‘Regulatory
Overview’’)
‘‘Underwriter(s)’’ the Hong Kong Underwriters and the International Underwriters
‘‘Underwriting
Agreements’’
the Hong Kong Underwriting Agreement and the International
Underwriting Agreement
‘‘United States’’ or
‘‘U.S.’’
the United States of America, its territories, its possessions and
all areas subject to its jurisdiction
‘‘US$’’ or ‘‘US dollars’’ United States dolla rs, the lawful currency of the United States
‘‘U.S. Securities Act’’ U.S. Securities Act of 1933, as amended, supplemented or
otherwise modified from time to time
‘‘VAT’’ value-added tax
‘‘Weichuang Hongjing’’ Fuzhou Weichuang Ho ngjing Enterprise Management Co., Ltd.*
(福州偉創宏景企業管理有限公司), a company established under
the laws of the PRC on 12 April 2019 and indirectly controlled
by Mr. Huang
‘‘Weichuang
Xingsheng’’
Fuzhou Weichuang Xingsheng Enterprise Management Co.,
Ltd.* ( 福州偉創興晟企業管理有限公司), a company established
under the laws of the PRC on 12 April 2019 and wholly owned by
Mr. Huang
‘‘White Form eIPO ’’ the application for Hong Kong Offer Shares to be issued in the
applicant’s own name by submitting applications online through
the designated website of White Form eIPO Service Provider at
www.eipo.com.hk
DEFINITIONS
–4 1–


--- page 51 ---
‘‘White Form eIPO
Service Provider’’
Computershare Hong Kong Investor Services Limited
‘‘Xiamen Xixiangfeng’’ Xixiangfeng (X iamen) Automobile Service Co., Ltd.* ( 喜相逢（廈
門）汽車服務有限公司), a company established under the laws of
the PRC on 3 November 2014 and our indirect wholly-owned
subsidiary
‘‘XXF Group’’ Xixiangfeng Finance Lease Group Co., Ltd.* ( 喜相逢融資租賃集
團有限公司) (formerly known as Fujian Xixiangfeng Automobile
Service Co., Ltd.* ( 福建喜相逢汽車服務股份有限公司)a n d
Xixiangfeng Group Co., Ltd* ( 喜相逢集團有限公司)), a
company established under the laws of the PRC on 7
September 2007 and our indirect wholly-owned subsidiary
‘‘XXF HK’’ XXF Group (Hong Kong) Limited ( 喜相逢集團（香港）有限公司),
a company incorporated in Hong Kong on 2 May 2019 and our
indirect wholly-owned subsidiary
‘‘Zhongshan Xidi’’ Zhongshan Xidi Automobile Service Co., Ltd.* ( 中山喜滴汽車服
務有限公司), a company established under the laws of the PRC
on 28 September 2022 and our indirect wholly-owned subsidiary
‘‘Zhuhai Wanhe’’ Zhuhai Wanhe Xingsheng Investment Management Center
(Limited Partnership)* ( 珠
海萬和興盛投資管理中心（有限合夥）),
a limited liability partnership established in the PRC on 3
January 2017 and an Independent Third Party
‘‘%’’ per cent.
In this prospectus:
1. Unless expressly stated or otherwise required by the context, all data are as at the Latest Practicable
Date.
2. Unless otherwise specified, all references to any shareholdings in our Company assume no exercise of
the Over-allotment Option, any options granted under the Pre-IPO Share Option Scheme and any
options which may be granted under the Share Option Scheme.
3. The English names of the PRC entities, the PRC laws or regulations or the PRC government
authorities mentioned in this prospectus and marked with ‘‘*’’ are translation or transliteration from
their Chinese names and are for identification purposes only. If there is any inconsistency, the Chinese
names shall prevail.
DEFINITIONS
–4 2–


--- page 52 ---
This glossary contains explanations of certain terms used in this prospectus that relate
to our business and the industry in which we operate. These terms and their meanings may
not always correspond to standard industry definitions or usage of these terms.
‘‘4S store’’ a store that is designed to provide a suite of services regarding
sales, service, spare parts and surveys to receive customer
feedbacks, and its operation is generally based on the
authorization by automotive manufacturer
‘‘automobile’’ a passenger vehicle, other than a motor cycle, which is intended
for the carriage of passengers and designed to transport no more
than nine persons (including the driver)
‘‘automobile
transaction’’
a transaction where the title of an automobile will be transferred
or may be transferred upon exercise of an option to purchase
through payment using cash or auto finance options including
loans, financing leases or personal contract purchases
‘‘CAGR’’ compound annual growth rate
‘‘car parc’’ all registered vehicles within a defined geographic region
‘‘Central PRC’’ includes Henan, Hubei and Hunan Provinces of the PRC
‘‘CO
2e’’ carbon dioxide equivalent
‘‘direct finance lease’’ a type of retail automobile finance lease where the lessor
purchases an automobile and then leases the automobile to the
lessee for use, and the lessee will have the title to the automobile
after the finance lease is repaid in full
‘‘Eastern PRC’’ includes Anhui, Fujian, Jiangsu, Jiangxi, Shandong and Zhejiang
Provinces of the PRC
‘‘GDP’’ gross domestic product
‘‘GMV’’ gross merchandise volume
‘‘GPS’’ a global positioning system to provide (i) precise data on position
and velocity and (ii) synchronise the global time for land, air and
sea travel
‘‘IT’’ information technology
‘‘kWh’’ kilowatt-hour
‘‘loan volume’’ the number of newly issu ed loans in a particular period of time
GLOSSARY OF TECHNICAL TERMS
–4 3–


--- page 53 ---
‘‘luxury automobiles’’ includes most of the models of automobiles which are generally
sold at the manufacturer’s suggested retail price of over
RMB300,000 per vehicle in the PRC
‘‘non-luxury
automobiles’’
includes most of the models of automobiles which are generally
sold at the manufacturer’s suggested retail price of up to
RMB300,000 per vehicle in the PRC
‘‘non-performing asset’’ finance lease receivables overdue for three months or more
‘‘Northeastern PRC’’ includes Heilongji ang, Jilin and Liaoning Provinces of the PRC
‘‘Northern PRC’’ includes Hebei, Inner Mongolia and Shanxi Provinces of the
PRC
‘‘Northwestern PRC’’ includes Gansu and Shaanxi Provinces of the PRC
‘‘RAFLC’’ retail automobile finance lease company
‘‘sale-leaseback’’ a type of retail automobile finance lease where the lessee
purchases an automobile using the lessor’s financing, transfers
its title to the lessor, the lessor t hen leases the automobile back to
the lessee for use, and the lessee will have the tile to the
automobile after the finance lease is repaid in full
‘‘Southern PRC’’ includes Guangdong Provinces and Guangxi Zhuang
Autonomous Region of the PRC
‘‘Southwestern PRC’’ includes Guizhou, Sichuan, Yunnan Provinces and Chongqing
City of the PRC
‘‘tier one cities’’ refers to Beijing, Sh anghai, Guangzhou and Shenzhen of the
PRC
‘‘tier two cities’’ refers to Hefei, Fuzhou, Quanzhou, Xiamen, Lanzhou,
Dongguan, Foshan, Nannin g, Guiyang, Shijiazhuang,
Tangshan, Zhengzhou, Harbin, Wuhan, Changsha, Changchun,
Changzhou, Nanjing, Nantong, Suzhou, Wuxi, Xuzhou,
Nanchang, Dalian, Shenyang, Hohhot, Jinan, Qingdao, Yantai,
Taiyuan, Xi’an, Chengdu, Tianjin, Urumqi, Kunming,
Hangzhou, Ningbo, Wenzhou, Shaoxing and Chongqing of the
PRC
‘‘tier three and below
cities’’
refers to rest of the prefecture-le vel cities other than tier one and
tier two cities in the PRC
GLOSSARY OF TECHNICAL TERMS
–4 4–


--- page 54 ---
This prospectus contains forward-looking statements that are, by their nature, subject
to significant risks and uncertainties. The forward-looking statements are contained
principally in the sections hea ded ‘‘Summary’’, ‘‘Risk Factors’’, ‘‘Industry Overview’’,
‘‘Business’’, ‘‘Financial Information’’ and ‘‘Future Plans and Use of Proceeds’’ in this
prospectus. These statements relate to events that involve known and unknown risks,
uncertainties and other factors, including t hose listed under the section headed ‘‘Risk
Factors’’ in this prospectus, which may ca use our actual results, performance or
achievements to be materially different fro m performance or achievements expressed or
implied by the forward-looking statements. These forward-looking statements include,
without limitation, statements relating to:
. our business strategies, operating plans and our ability to implement such
strategies;
. our capital expenditure, business opportunities and expansion plans;
. future events, developments, trends, conditions and the competitive environment
in the industry and the markets in which we operate or into which we intend to
expand;
. our ability to identify and successfu lly take advantage of new business
development opportunities;
. our ability to control our credit risks and other risks inherent in our business;
. other statements in this prospectus that are not historical facts;
. our dividend policy; and
. prospective financial information.
The words ‘‘aim’’, ‘‘continue’’, ‘‘target’’, ‘‘potential’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’,
‘‘estimate’’, ‘‘expect’’, ‘‘intend’’, ‘‘may’’, ‘‘plan’’, ‘‘seek’’, ‘‘will’’, ‘‘would’’ and the negative of
these terms and other similar expressions, as they relate to us, are intended to identify a
number of these forward-looking statements. These forward-looking statements reflect our
current views with respect to future events an d are not a guarantee of future performance.
Actual results may differ materially from in formation contained in the forward-looking
statements as a result of a number of uncertainties and factors, including but not limited to:
. any changes in the laws, rules and regulations of the government relating to any
aspect of our business or operations;
. general global economic, market and business conditions;
. inflationary pressures or changes or volat ility in interest rates, foreign exchange
r a t e so ro t h e rr a t e so rp r i c e s ;
. various business opportunities that we may pursue; and
FORWARD-LOOKING STATEMENTS
–4 5–


--- page 55 ---
. the risk factors discussed in this prosp ectus as well as other factors beyond our
control.
Subject to the requirements of applicable laws, rules and regulations, we do not have
any obligation to update or otherwise revise the forward-looking statements in this
prospectus, whether as a result of new information, future events or otherwise. As a result
of these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this prospectus might not occur in the way we expect, or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements contained in this prospectus are qualified by reference to the
cautionary statements set out in this section a s well as the risks and uncertainties discussed
i nt h es e c t i o nh e a d e d‘ ‘ R i s kF a c t o r s ’ ’i nt h i sp r o s p e c t u s .
FORWARD-LOOKING STATEMENTS
–4 6–


--- page 56 ---
An investment in our Shares involves various risks. You should carefully consider all
the information in this prospectus and, in particular, the risks and uncertainties described
below before making an investment in our Shares. The occurrence of any of the following
events could materially and adversely affect our business, financial condition, results of
operations or prospects. If any of these events occur, the trading price of our Shares could
decline and you may lose all or part of your investment. You should seek professional advice
from your relevant advisers regarding your pro spective investment in the context of your
particular circumstances.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We are subject to the credit risks of our customers and our credit risk management system may
not be able to mitigate all our risk exposure.
We provide automobile finance lease services to customers on the condition that they
will repay such financing amount together with interest regularly on a timely manner.
Therefore, we are subject to risks of default repayment by customers. If our customers delay
or default in their repayment, we may have to make additional impairments and write off
the relevant receivables. This may have a mater ial adverse effect on our business, financial
condition and results of operations.
According to CIC, target cus tomers of bank-affiliated and automaker- or automobile
dealer-affiliated RAFLCs are thos e with super prime credit profiles, generally located in tier
one and tier two cities. Target customers of third party RAFLCs are young population with
prime credit profiles, generally located in tie r two, tier three and below cities. Our target
customers are primarily aged between 20 and 4 0 years old. If there is any material adverse
change in economic and market conditions in the PRC, in particular, any adverse change in
youth employment situation may lead to a decrease in demand for our products and
services, an increase in delinquency risk and, thus, may have an adverse impact on our
business and financial performance. For details of our credit risk management, please refer
to ‘‘Risk Management and Operations — Ou r Risk Management Measures — Credit Risk
Management’’.
Our preliminary credit risk assessment inv olves the evaluation of our customers’
personal and financial information. Since the information is mainly provided by our
customers, we cannot assure that the information we rely on are provided in good faith and
is accurate and complete. Further, our credit risk assessment may involve perusing credit
reports on our customers produced by third party credit risk assessment agents. We have no
control over how these credit risk assessment agents conduct the assessments on our
customers. As such, our credit assessment may not be always accurate and provide
sufficient information for us to manage all of the credit risks that we are exposed to, which
may have a material adverse effect on our business, results of operations and financial
condition.
RISK FACTORS
–4 7–


--- page 57 ---
We may not be able to repossess the automobiles under our finance lease services in cases of
delinquency or default by our customers.
In the event of any material delinquency or default on repayment by our customers, we
may enforce our right to repossess the relevant automobiles leased to them. However, due
to the mobility nature of automobiles, we may face difficulties in repossessing all the
automobiles of which the customers default in repayment. Practically we are also faced with
the risk of traffic accidents or mismanagement of the automobiles resulting in total loss of
the automobiles. In the case where we are n ot able to successfully repossess these
automobiles, our business, financial conditi on and results of operations may be materially
and adversely affected.
We are subject to the uncertainty in amounts of actual late penalties and early termination fee
for the automobiles under finance lease services in cases of delinquency or default by customers
in the future.
During the Track Record Period, we recorded other fee-related income such as late
penalties and early termination fee amo unted to RMB19.6 million, RMB21.1 million,
RMB25.8 million and RMB11.0 million, accoun ted for 2.6%, 1.8%, 2.3% and 1.8% of our
total revenue for the corresponding years/peri od, respectively. According to the Measures
for the Administrative Supervisio n and Administration of Contracts ( 《合同行政監督管理辦
法》) which was promulgated on 18 May 2023 and became effective on 1 June 2023, when
concluding a contract with a consumer, a business operator shall not, by means of the
standard terms or otherwise, require consumer to bear the liquidated damages or penalties
for damages or breaching the contract at th e amount exceeding the statutory amount or a
reasonable amount. Therefore, if our customers conceive that the liquidated damages or
penalties that we require to collect for damag es or breaching the contract caused by our
customers exceed a reasonable amount and pr oceed to take legal actions against us, the
court’s judgement may lower the amount of penalties that we otherwise would be able to
collect from the customers, which may lower our revenue generated from collecting such
penalties from the defaulting customers accordingly.
The residual value of the repossessed automobiles or the amount recovered from legal
proceedings may not be adequate to cover the remaining amount of financing extended to our
customers.
Our receivables under our automobile finance leases are secured by the leased
automobiles throughout the lease term. In case of any default in repayment by customers,
we may enforce our right to repossess the leased automobiles of which we can dispose or put
into other commercial uses, or initiate legal proceedings to recover the remaining amount of
financing extended to our customers. In the event that the residual value of the repossessed
automobile or the amount recovered from lega l proceedings is not sufficient to cover the
receivables, we may not be able to recover the ou tstanding principal amount of financing we
granted to our customers, and thus our financial condition, results of operations and
growth prospects may be materially and adversely affected.
RISK FACTORS
–4 8–


--- page 58 ---
Our allowance for impairment on receivables (i ncluding finance lease receivables, trade
receivables and other receivables) may not be adequate to cover potential credit losses, and
may adversely affect the Group ’s financial performance.
The carrying amount of our gross receivables (including finance lease receivables, trade
receivables, and prepayment and other recei vables) was RMB1,079.2 million, RMB1,384.8
million, RMB1,575.4 million and RMB1,630 .1 million as at 31 December 2020, 2021, 2022
and 30 June 2023, respectively. We make allowance for impairment on receivables in
accordance with IFRS. Our allowance for impairment amounted to RMB10.3 million,
RMB11.5 million, RMB14.2 million and RMB14. 0 million, representing 1.0%, 0.8%, 0.9%
and 0.9% of gross receivables (including finance lease receivables, trade receivables, and
prepayment and other receivables) as at 31 December 2020, 2021, 202 2 and 30 June 2023,
respectively. The corresponding impairment loss recognised in profit or loss was RMB2.1
million, RMB3.9 million, RMB4.9 million and RMB2.8 million, respectively, during the
Track Record Period. As our impairment provision under IFRS requires significant
judgement and estimation, our allowance for impairment provision may not be adequate to
cover all potential credit losses in our business operations. Our allowance for impairment
may prove to be inadequate if unexpected adverse changes occur to the PRC economy or if
other events adversely affect our customers, industries or markets. In such cases, we may
need to make additional impairment allowance for our receivables, which could
significantly reduce our profit and may advers ely affect our financial condition, results of
operations and growth prospects.
Net current liabilities may expose us to certain liquidity risks.
We recorded net current liabilities of RMB57.7 million and RMB147.2 million as at 31
December 2020 and 2021, respectively, and net current assets of RMB41.8 million and
RMB86.1 million as at 31 December 2022 and 30 Jun e 2023. The net current liabilities as at
31 December 2021 were mainly due to the incl usion of ordinary sha res with redemption
right of RMB196.6 million in the current liabilit ies. Such redemption right was no longer
exercisable upon the filing of the Listing applic ation and will be terminated upon Listing.
Net current liabilities may expose us to certain liquidity risks and could constrain our
operational flexibility. There can be no assu rance that we will not experience liquidity
problems in the future. If we fail to generate sufficient revenue from our operations, or if we
fail to maintain sufficient cash or raise sufficient funding, we may not have sufficient cash
to fund our business, operations and capital expenditure, and our business and financial
position will be adversely affected. For detailed analysis of our net current liabilities, please
refer to ‘‘Financial Information — Liqu idity and Capital Resources — Net Current
Assets/(Liabilities)’’.
RISK FACTORS
–4 9–


--- page 59 ---
Any material mismatch in the maturity profile of our assets and liabilities may have material
adverse impact on our liquidity and our abilit y to settle our outstanding liabilities.
If there is any material mismatch in the matur ity profile of our assets and liabilities, we
may not be able to settle the liabilities when t hey fall due. For our financial assets and
liabilities with the category of ‘‘on demand /less than one year’’, we had a negative net
liquidity gap of approximately RMB268.1 million, RMB132.5 million, RMB74.7 million
and RMB32.8 million, as at 31 December 2020, 2 021, 2022 and 30 June 2023, respectively.
For our finance lease receivables and the relevant borrowings under the automobile retail
and finance segment with the category of ‘‘on demand/less than one year’’, we had a
maturity gap of approximately RMB87. 3 million, RMB86.0 million, RMB89.4 million and
RMB59.2 million, as at 31 December 2020, 2021, 2022 and 30 June 2023, respectively. For
further details of our net liquidity gap and maturity gap, please refer to the section headed
‘‘Financial Information — Capital Manage ment — Liquidity’’. If we breach any of our
obligations in the finance lease agreements or fi nancing agreements that could result in any
event of default, the creditors may exercise the right to demand immediate repayment of our
borrowings in the future. In these events, we cannot assure you that we can meet our
financial liabilities as they fall due. Our abil ity to maintain healthy liquidity position and
obtain adequate additional financing may also be impaired, which may have a material
adverse effect on our business, financial condition and results of operations.
We recorded net cash used in operating activi ties during the years ended 31 December 2021
and 2022. If we are unable to obtain additional financing in the future or there is any adverse
movement in market interest rates, our business may be materially and adversely affected.
For the years ended 31 December 2021 and 2022, we recorded net cash used in
operating activities of RMB77.4 million and RMB74.0 million, mainly due to the fact that
our new automobile purchases are mainly financed by debt financings, such debt financings
are included in another cash flow category , namely net cash generated from financing
activities. In addition, due to the nature of our business operation, our automobiles are sold
under finance lease generally within a term of two to four years, the operating cash inflow
from our finance lease receivables from the a utomobile sales is realised within a term of two
to four years, while the full payments for our new automobile purchases are generally made
within 90 days after purchases, which resulted in net cash used in operating activities for the
years ended 31 December 2021 and 2022. Our business operations, in particular, our
automobile retail and finance lease business a nd automobile operating lease business, are
capital intensive. We primarily finance our finance lease business through bank and other
borrowings. For the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2023, our cost of funding amounte d to RMB98.7 million, RMB108.8 million,
RMB131.4 million and RMB76.0 million, representing 42.0%, 46.4%, 50.1% and 51.3% of
our finance lease income for the corresponding year/period, respectively. As such, our
business is affected by adverse movements in market interest rates. For instance, an increase
in market interest rates may not only have a negative impact on our ability to obtain
additional funding at favourable interest rates, which we may not be able to pass on the
increase of interest costs to our customers at a timely manner or at all, but also reduce the
RISK FACTORS
–5 0–


--- page 60 ---
demand for our automobile finance lease se rvices. As a result, any adverse movement in
market interest rates may have a material adverse impact on our business, financial
condition and results of operation.
We cannot assure you, especially in preva iling adverse market conditions, that we will
be able to obtain sufficient additional financing on commercially reasonable terms, or at all,
to support our business operation, in particular, our automobile finance lease business. In
such case, there would be an adverse impact on our liquidity and our financial condition,
results of operations and growth prospects may be materially and adversely affected.
We may be unable to maintain our historical gross profit margins.
We attained a gross profit margin of approximately 40.5%, 30.9%, 32.8% and 32.8%,
respectively, for the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2023. However, the gross profit margin we attained during the Track Record Period
may not be taken as a reference to estimate our gross profit margin in the future. Our ability
to maintain our historical profit margin i s contingent on a variety of factors such as
macroeconomic condition, fluctuations in costs of automobile, pricing of competition,
funding costs, labour costs, and other conditions which are beyond our control.
There is no assurance that we will be successful in meeting all challenges and
addressing all the risks and uncertainties as we may face in developing our business and our
gross profit margin can be maintained at the l evel similar to those during the Track Record
Period. Should we fail to maintain such gross profit margin, our financial results may be
adversely affected.
We are subject to the risk of recoverability of other tax recoverable.
As at 31 December 2020, 2021, 2022 and 30 June 2023, we had other tax recoverable of
RMB94.6 million, RMB56.0 million, RMB70.8 m illion and RMB83.3 million, respectively.
The amount of input VATs and output VATs are determined with reference to the
applicable VAT rate in effect during the period when the purchase from suppliers and the
periodic lease payments are made. Our other tax recoverable may pose risk to us as its
recoverability is dependent on the recoverab ility of lease payments and the applicable VAT
rate in effect.
There is no assurance that the other tax recoverable can be recovered. In the case of
lack of lease payments or adjustment of the applicable VAT rate in effect, the output VAT
may continue to be in a shortfall in the future, and we may have to write-down the other tax
recoverable, which may significan tly affect our financial condition.
RISK FACTORS
–5 1–


--- page 61 ---
The fair value measurements of ordinary shares with redemption right require the use of
estimates that are based on unobservable inputs, which inherently involve a certain degree of
uncertainty, and the fair value change of ordinary shares with redemption right could
materially affect our financial performance.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our financial liabilities at fair
value through profit and loss which was categorised as level three fair value measurement
consisted of ordinary shares with redemption r ight. Our financial liabilities amounted to
RMB177.9 million, RMB196.6 million, RMB 163.1 million and RMB120.6 million as at 31
December 2020, 2021, 2022 and 30 June 2023, respectively.
Our Group has engaged an independent valuer to determine the underlying share value
of our Group by discounted cash flow method and adopted equity allocation model to
determine the fair value of the ordinary shares with redemption right as of the date of
issuance and at the end of each reporting period. See note 3 to the Accountant’s Report in
Appendix I to this prospectus for more information about the fair value measurement of
our financial liabilities at fair value through p rofit and loss which was categorised as level
three fair value measurement. Changes in the unobservable inputs will affect the estimated
fair value of our financial liabilities at f air value through profit and loss which was
categorised as level three fair value measurem ent, which leads to uncertainty in accounting
estimation.
We recognised fair value loss on ordinar y shares with redemption right of RMB6.9
million and RMB4.2 million and fair value gain on ordinary shares with redemption right of
RMB47.3 million and RMB46.3 million for the y ears ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, respectiv ely. A substantial increase in the fair value
of our financial liabilities at fair value through profit or loss may have an adverse effect on
our financial position and as well as our results of operations.
Such redemption right was no longer exercisable upon the filing of the Listing
application and will be terminated upon Listing.
We are exposed to the risk of inventories obsolescence.
As at 31 December 2020, 2021, 2022 and 30 June 2023, we had inventories of
approximately RMB142.0 million, RMB141 .9 million, RMB193.6 million and RMB127.5
million, respectively. Our average inventory tu rnover days for our automobile finance lease
business were 96 days, 54 days, 58 days and 5 3 days for the years ended 31 December 2020,
2021, 2022 and the six months ended 30 Ju ne 2023, respectively. The demand for
automobiles is dependent on our customers’ preferences and the economic condition, which
are beyond our control. We assess our provision for inventories at the end of each financial
year or period. Our automobile inventory provision amounted to RMB5.8 million, RMB7.8
million, RMB6.1 million and RMB5.6 million as at 31 December 2020, 2021, 2022 and 30
June 2023, respectively. Any substantial increase in inventories may adversely affect our
working capital. If we cannot manage our inventory level efficiently in the future, our
liquidity and cash flow may be adversely affected.
RISK FACTORS
–5 2–


--- page 62 ---
Our business and results of operations may be severely affected due to the outbreak of diseases
or epidemics.
Any occurrence of diseases or epidemics may cause material disruptions to our
business operations. The COVID-19 pandemic has affected the global economy. The
COVID-19 outbreak resulted in nationwide restr ictions on travel and public transport, and
the implementation of social distancing measures in China in 2020. As a result, our
automobile retail and finance business, and our automobile operating lease business were
adversely affected in the first half of 2020. In 2022, COVID-19 variants, such as Omicron
strains, triggered new infection waves in Chi na. Some regions in China took restrictive
control measures. For the latest measures for the prevention and control of the COVID-19,
please refer to ‘‘Business — Impact of COVID-19 Outbreak on Our Business’’.
We cannot accurately predict what effects the pandemic or any new variants will have
on our business operations or financial performance, due to the fact that the impact
depends on many factors which are out of our control, such as the duration of the
pandemic, and the corresponding travel restrictions and other restrictive measures imposed
by government authorities, which can pote ntially create uncertainty about the overall
demand for automobiles and automobile services, as well as constraints on automobile
supplies.
There is no assurance that there will be no recurrence of any outbreak of diseases such
as COVID-19 and its variants, Severe Acute Respiratory Syndrome (SARS), Middle East
Respiratory Syndrome Coronavirus (MERS) or any other contagious disease or epidemic
outbreaks in cities or provinces in China in which we do business. We may not be able to
sustain our historical revenue and profit in the future.
We may be exposed to impairment losses on prepayments, deposits and other receivables.
Our prepayments, deposits and other receivables primarily consisted of (i) other tax
recoverable; (ii) prepayment for inventori es; and (iii) prepayment for auto-insurance
premium. As at 31 December 2020, 2021, 2022 and 30 June 2023, our prepayment, deposits
and other receivables were RMB238.4 millio n, RMB244.5 million, RM B266.0 million and
RMB249.3 million, respectively. The impairment loss on prepayment, deposits and
receivables recognised in profit or loss wa s RMB0.3 million, RMB0.4 million, RMB0.02
million and RMB0.05 million, respectively, duri ng the Track Record Period. For details, see
‘‘Financial information — Description of Ce rtain Items of Consolidated Statements of
Financial Position — Prepayment, deposit s and other receivables’’. Any material
impairment loss on prepayments, deposit and o ther receivables could adversely affect our
financial performance.
RISK FACTORS
–5 3–


--- page 63 ---
If our intangible assets are impaired, our results of operations and financial position may be
adversely affected.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our intangible assets were
RMB26.7 million, RMB24.1 million, RMB21.8 m illion and RMB20.4 million, respectively.
Our intangible assets comprise (i) computer software; (ii) self-developed applications; and
(iii) intangible assets under development. O ur Group has developed the software which is
internally used for finance lease operation. For the purpose of impairment test on software
under development as at 31 December 2020, 2021, 2022 and 30 June 2023, the recoverable
amounts of the finance lease business units were determined based on value-in-use
calculations. However, we cannot assure you that impairments or write-offs will not occur
in the future, in which case our financial position and results of operations may be
materially and adversely affected.
The fair value change of financial assets at fair value through profit or loss would have impact
on our financial performance.
During the Track Record Period, our financ ial assets at fair value through profit or
loss consisted of asset-backed securities and our minority investment in a partnership. As at
31 December 2020, 2021, 2022 and 30 June 2023, such financial assets at fair value through
profit or loss amounted to nil, RMB26.0 million, RMB21.6 million and RMB22.5 million,
respectively. Any changes in the unobservable in puts will affect the estimated fair value of
our financial assets at fair value through profit or loss, which lead to uncertainty in
accounting estimation. A substa ntial decrease in the fair value of our financial assets at fair
value through profit or loss may have an adverse effect on our financial position as well as
our results of operations if we hold any financial assets at fair value through profit or loss in
the future.
The markets we operate in are competitive.
We face intense competition in the automobile finance lease business and
automobile-related businesses from both tra ditional and internet-based RAFLCs and we
cannot guarantee that we will be able to sustain our competitive advantage or to effectively
implement our business strategies. The top 20 companies in terms of transaction volume in
2022 in China’s retail automobile finance l ease market represent a market share of
approximately 81.1%. Our Group ranked 4th in terms of transaction volume of direct
finance lease with a market share of approximately 4.1% and 19th in terms of transaction
volume of retail automobile finance lease among RAFLCs in the PRC in 2022 according to
the CIC Report. Our current and potential competitors may have greater financial,
technical, marketing and other resources devoted to the development of their businesses. As
such, they may be able to develop new and better services and respond more quickly to new
technologies, which may be more appealing to consumers. This may have a material adverse
impact on our financial condition, results of operations and growth prospects.
RISK FACTORS
–5 4–


--- page 64 ---
We may fail to maintain or enlarge our consumer base.
Our Directors believe that our success dep ends in part on our ability to maintain and
enlarge our consumer base by providing our consumers with distinct and satisfactory
experience in using our automobile services. I f we fail to deliver satisfactory experience to
our automobile finance lease customers as well as automobile operating lease customers,
they may look for substitutes and turn to our competitors not only for automobile finance
lease and automobile operating lease services , but also other automobile-related businesses.
As such, our business partners, including but not limited to auto dealers and third party
automobile aftermarket service providers, may find us less attractive for business
cooperation and thus reduce or suspend their cooperation with us. Our business and
results of operations may therefore be adversely affected.
If we are unable to maintain stable relationships with automobile suppliers, our results of
operation may be adversely affected.
We primarily procure new automobiles from auto dealers, some of which we have
entered into framework supply agreements with. We believe that maintaining stable
relationships with automobile suppliers is cr itical to a steady supply of and favourable
discount in purchasing automobiles. If we are unable to maintain stable relationships with
our automobile suppliers, we may not enjoy a steady supply, or at all, of automobiles. Our
cost of procurement of automobiles may also increase as we may not be able to purchase
automobiles on favourable terms. As such, our bu siness, results of operations and financial
condition will suffer.
We have very limited control over the services of third party automobile aftermarket service
providers.
We operate an automobile aftermarket service platform with our 52 Car APP where
car-user customers were able to access over 500 automobile service locations operated by
third party automobile aftermarket service pr oviders in the PRC as at the Latest Practicable
Date. However, we have very limited control over the operation of these automobile
aftermarket service providers as our staff do not manage or operate their services. If these
automobile aftermarket service providers fail t o deliver reliable, effective and satisfactory
services to our customers, our customers may associate these with our Group. As we expand
to work with more automobile aftermarket servi ce providers, it may be more difficult for us
to monitor and ensure their service quality. Any poor or unsatisfactory services from these
service providers to our car-user customers may harm our corporate image and, thus,
materially and adversely affect our business and results of operations.
RISK FACTORS
–5 5–


--- page 65 ---
Failure to protect the confidentiality of our customers’ personal data could cost us penalties
and bring a negative impact on our corporate image.
In the provision of our services, we collect , store and transmit personal information
about our customers, for example, names, addresses, contact information, financial and
credit information. To the extent allowed und er the PRC laws and regulations, we may also
provide personal data of our customers to third party automobile aftermarket service
providers for the provision of our other automobile-related services. We are prohibited to
collect, use or disclose such information w ithout prior consent from our customers in
accordance with the ‘‘Automotive Data Security Management Provisions’’ ( 《汽車數據安全
管理若干規定（試行）》) issued on 16 August 2021, and became effective on 1 October 2021,
and the ‘‘Personal Information Protection Law’’ (《中華人民共和國個人信息保護法》)i s s u e d
on 20 August 2021, and became effective on 1 November 2021. We store the personal data
of our customers on our IT systems which may be vulnerable to the attack of computer
virus, worms, trojan horse, hackers or other s imilar computer system disruptive problems.
We also rely on these automobile aftermarket service providers to enforce adequate controls
over the personal data of our customers passed to them. In the event that we,
unintentionally or mistakenly, or any of these automobile aftermarket service providers
disclose or misappropriate any personal data of our consumers without necessary consent,
we may face claims for identity theft or simila r fraud claims or claims for other misuses of
personal information, which in turn will cause damage to our corporate image. This may
have a material adverse effect on our business, financial condition and results of operations.
Increasing focus with respect to environmen tal, social and governance matters may impose
additional costs on us or expose us to additional risks. Failure to adapt to or comply with the
evolving expectations and standards on environmental, social and governance matters from
investors may adversely affect our business, financial condition and results of operation.
The public advocacy groups have been increasingly focused on environment, social and
governance, or ESG, issues in recent years, ma king our business more sensitive to ESG
issues and changes in governmental policie s and laws and regulations associated with
environment protection and other ESG-related matters. Investor advocacy groups, certain
institutional investors, investment funds, and other influential investors are also
increasingly focused on ESG practices an d in recent years have placed increasing
importance on the implications and social cos t of their investments. Regardless of the
industry, increased focus from investors on ESG and similar matters may hinder access to
capital, as investors may decide to reallocate capital or to not commit capital as a result of
their assessment of a company’s ESG practices. Any ESG concern or issue, such as
greenhouse gases emissions and labour practice, could increase our regulatory compliance
costs. If we do not adapt to or comply with the evolving expectations and standards on ESG
matters from investors are perceived to have not responded appropriately to the growing
concern for ESG issues, regardless of whether there is a legal requirement to do so, we may
suffer from reputational damage and the business, financial condition, and the price of our
Shares could be adversely effected. Further, if there is a shift in market sentiment towards
environmentally friendly products in the for eseeable future and our Group is unable to
RISK FACTORS
–5 6–


--- page 66 ---
adapt to the changing market preference or innovate, we may not be able to maintain our
competitiveness, or even lose out on market sh are, causing adverse impacts on our business
operations and financial performance.
Our business is subject to seasonal fluctuations.
We have experienced, and expect to continue to experience various level of seasonal
fluctuations in our revenues and results of ope rations, which are a reflection of consumers’
automobile purchase patterns. More consum ers tend to purchase automobiles in December
each year until before the Chinese New Year in the next calendar year. As a result, our
revenue may vary from quarter to quarter, cau sing volatility in our results of operations.
This may lead to fluctuations in the price of our Shares.
We may face potential liabilities arising from the use of our leased automobiles by our
customers.
According to PRC Tort Law, when a person d rives a leased automobile and is held
liable for a traffic accident, liability will first be covered by the compulsory traffic accident
liability insurance. Any portion beyond the co verage of the insurance will be borne by the
driver of the leased automobile, unless the registered owner of the automobile has
committed negligence in the accident. Due to the nature of our business, it is inevitable and
beyond our control that we may be joined as one of the defendants for car accident cases
involving our customers as we are the legal owner of the automobiles. During the Track
Record Period and up to the Latest Practicable Date, we had been involved in a number of
claims, litigations and pending or threatened claims in our ordinary and usual course of
business. See ‘‘Business — Legal P roceedings’’ for further details. However, since judicial
proceedings determining the cause of the traffic accident can be costly and time consuming,
and the results of such proceedings can be uncertain, we cannot assure you that we will
succeed in defending ourselves every time i n such proceedings. In case we fail, our
reputation and financial performance of our Group could be harmed.
We may encounter potential failure to comply with the final form of the Draft Data Security
Regulations.
On 14 November 2021, the CAC released the Administration of Cyber Data Security
(Draft for Comments) ( 《網絡數據安全管理條例（徵求意見稿）》) (the ‘‘Draft Data Security
Regulations ’’, together with the Cybersecurity Review Measures, the ‘‘ Cybersecurity
Regulations ’’). The Draft Data Security Regulati ons cover a wide range of cyber data
security issues and govern the use of networks to carry out data processing activities, as well
as the supervision and management of cyber data security in the PRC. The Draft Data
Security Regulations are applicable to the use of networks to carry out data processing
activities, and the supervision and management of network data security in the PRC, as well
as several situations of overseas data proces sing activities that process personal and
organisational data of PRC. If the Draft Data Security Regulations takes effect in the
current form in the future, we do not have any o bstacles in meeting the requirements and
completing the application timely, given our Group’s relevant internet data protection
mechanism has been established. However, if the future Draft Data Security Regulations
were to take effect in the form that is different from the current form, our current internet
RISK FACTORS
–5 7–


--- page 67 ---
data protection mechanism established may not be competent to meet the future
requirements, and we may encounter potenti al failure to comply with the final form of
the Draft Data Security Regulations with potential fines of RMB50,000 to RMB500,000 or
being imposed to suspend relevant operations or suspend business for rectification in case
of any serious consequence caused.
We cannot assure you that our automobile monitoring platform and our provision of services
on our mobile applications can continue to run without any significant disruption.
Our business operation is dependent on the accuracy and stability of our automobile
monitoring platform to keep track of our le ased automobile and the capability of our IT
systems to process a huge amount of information and transactions. The proper functioning
and satisfactory performance of our automobile monitoring platform, our mobile
applications and our underlying IT network infrastructure are crucial to our business
operations, reputation and our ability to compe te in the market. However, we cannot assure
you that access to our mobile applications and t he operation of our automobile monitoring
platform and the host of our IT system will be error-free and not materially disrupted due
to, among other things, fire, natural disasters, power suspension, faulty software, computer
viruses, unauthorised access or security breaches. In case of significant disruption to our
automobile monitoring platform, our mobile applications or IT system, our business
operation would be materially and adversely affected.
There is no guarantee that we can effectively implement our business strategies, maintain our
current average effective interest rate charged for newly entered finance lease agreements, and
our business, results of operations and financial condition may be materially and adversely
affected accordingly.
Our business and growth prospects dep end in part on our ability to effectively
implement our business strategies and maintain our current average effective interest rate
charged for newly entered finance lease agreements. According to CIC, lower effective
interest rates of finance lease services may be charged by industry players from time to time
if the RAFLCs offer occasiona l promotions and more competitive pricing options to car
buyers, and fluctuations in market interest ra tes could also affect the level of effective
interest rates charged by RAFLCs. Our business, results of operations and financial
condition may be materially and adversely af fected if we fail to allocate resources
adequately to support our growth or implement our business strategies, or our average
effective interest rate charged for newly ente red finance lease agreement is significantly
reduced.
Our ability to implement our business strategies also depends on, among other things,
the general economic conditions in the PRC, the PRC laws and regulations relating to our
business segments and the ava ilability of management, financi al and technical resources.
RISK FACTORS
–5 8–


--- page 68 ---
We have historically benefited from government grants and there can be no assurance that we
will continue to receive such benefits.
We recorded government grants of appr oximately RMB24.4 million, RMB16.7
million, RMB22.6 million and RMB11.5 millio n, respectively, for the years ended 31
December 2020, 2021, 2022 and the six month s ended 30 June 2023, as part of our other
income. Government grants primarily consist of the fiscal support that local governments
offer to our Group companies engaged in the finance lease business in the PRC. The fiscal
support mainly represented VAT refund from the government as we are one of the 13th
batch of pilot enterprises of domestic-funded finance leasing business jointly approved by
the MOFCOM and the SAT. However, we cannot assure you that we will continue to
receive the same or similar refund of VAT or government grants. Any loss or reduction in
benefits could have an adverse effect on our financial conditions, results of operations and
prospects.
Inability to keep up with technological developm ents may cause material adverse impact on our
business and results of operations.
We believe the ability to keep up with technolo gical developments is essential to our
business. There is an increasing trend of accessing the Internet through smartphones, tablets
and other mobile devices. There are also continuing launches of new electronic devices, new
technologies, new mobile platforms and updates to mobile platforms. As such, it is crucial
for us to keep developing and updating our mobile application to incorporate new
technologies and accommodate these new devices and new mobile platforms, all of which
require significant technological and financial resources. Any failure on our part to act
effectively in any of these areas may materially and adversely affect our business and results
of operations.
We may fail to protect our intellectual property rights, and we may also be subject to
intellectual property infringement claims or other allegations by third parties.
Our trademarks, software copyrights an d other intellectual property rights and
proprietary information are crucial to our business. We rely on the applicable laws to
protect our intellectual property rights. Howe v e r ,e n f o r c i n gac l a i ma g a i n s tat h i r dp a r t yf o r
infringement on our intellectual property rights can be expensive, time consuming and
unpredictable. We cannot assure you that we will be able to enforce our intellectual
property rights effectively, or at all. Any unauthorised use of our intellectual property
rights and proprietary information could adv ersely affect our business, reputation and
competitive advantages.
On the other hand, we may be subject to intellectual property infringement claims or
allegations by third parties. There may be a risk that third parties, including our
competitors, will allege and claim that our tec hnologies and online platforms violate their
trademarks, patents, copyrights or other intellectual property rights they own. Defending
such claims can be costly and time consumin g. We cannot be certain that we will obtain
favourable judgments in all cases. In the eve nt that we are held liable for infringement of
RISK FACTORS
–5 9–


--- page 69 ---
third parties’ intellectual property rights, an y resulting liability, expenses or injunctions on
any of our mobile applications may cause a material adverse impact on our business and
results of operations.
We may be exposed to product liability cla ims for faulty automobiles leased by us.
We cannot be certain that all the automobiles leased by us are free of any inherent
defects. In cases where any personal injury or property damage arises out of our leased
faulty automobiles, we may be subject to produc t liability claims by third parties subject to
such injury or damage since we leased such defective automobiles. If we are subject to
product liability claims, such le gal proceedings can be expensive and time consuming. There
is also no guarantee that we can obtain favourable results in such proceedings. As a result,
any material product liability claim can put our business, reputation, financial condition
and results of operations at risk.
We may not be able to retain our senior management team and key personnel.
Our business operation depends highly on the continuing efforts of our senior
management and other key personnel. The industry experience, expertise and contributions
of our executive Directors and other members of our senior management as set out in
‘‘Directors and Senior Management’’ in this prospectus remain essential to our continuing
success. Each of them takes an important role in formulation and implementation of our
business strategies. We require a sufficient number of experienced and competent personnel
to implement our growth plans. However, we may not be able to retain our senior
management or other key personnel, which could have a negative impact on our ability to
maintain our competitive position and expand our business. As a result, our business and
results of operations could be materially and adversely affected.
We may face penalties for the non-registration of our lease agreements.
As at the Latest Practicable Date, 135 of our lease agreements had not been registered
with the relevant regulatory authorities primarily due to the lessors did not provide the
necessary support or documents for filin g. Pursuant to the requirements of the
Administrative Measures for Commodity Hous e Leasing and relevant local rules, we may
be subject to a fine between RMB1,000 and RMB10,000 per lease for any delay in making
these registrations imposed by local authorities. As at the Latest Practicable Date, we did
not receive any rectification order, nor have we been subject to any fine or penalty in respect
of the failure to register lease agreements. However, we cannot assure you that we would
not be subject to any penalties and/or requests from local authorities to fulfil the
registration requirements, which may increase our cost, in the future.
Acts of God, acts of war, epidemics and other disasters could affect our business.
Our business is subject to the general and social conditions in China. Acts of God such
as natural disasters, epidemics, and other di sasters which may materially and adversely
affect the economy, infrastructure and livelihood of the people in China are beyond our
control. Our business, results of operation an d financial condition may be materially and
adversely affected if these natural disasters occur.
RISK FACTORS
–6 0–


--- page 70 ---
Apart from natural disasters, epidemics may materially and adversely affect people’s
livelihood and even threaten people’s lives . Any outbreak of an epidemic is beyond our
control and there is no assurance that epidemi cs like severe acute respiratory syndrome,
avian flu or the human swine flu will not ha ppen again. For example, the outbreak of
COVID-19 has caused temporary suspension of productions and shortage of labour and
raw materials in affected regions, and disrupt ed local and international travel and economy.
The COVID-19 outbreak has caused an adverse impact on the economy and social
conditions in China and other countries. In the event of an outbreak of any pandemic or
epidemic in China, our business, results of operation and financial conditions may be
materially and adversely affected.
Acts of war and terrorist attacks may cause d amage or disruption to us, our employees,
facilities, markets, suppliers and custome rs, any of which may materially and adversely
affect our revenue, cost of sales, results of operation, financial condition or Share price.
Potential war or terrorist attacks may also cause uncertainty and cause our business to
suffer in ways that we cannot currently predict.
Our Company is a holding company and relies on dividend payments from our subsidiaries.
Our Company is a holding company and rely principally on dividends paid by our
subsidiaries to make dividend payments and other distributions in cash, pay expenses,
service any debts incurred, and finance the n eeds of other subsidiaries. The ability of our
subsidiaries to pay dividends or other distr ibutions to us may be subject to its earnings,
financial position, cash requirements an d availability, applicable laws, rules and
regulations, and restrictions on making payments to our Company contained in financing
or other agreements. If our subsidiaries incur debt in their own name in the future, the
instruments or agreements governing the debt may restrict it from declaring dividends or
making other distributions to us, which could in turn restrict our ability to fund our
business operations and to pay dividends to our Shareholders. Our Company’s future
declaration of dividends may not reflect our historical declarations of dividends and will be
at the absolute discretion of our Board.
RISKS RELATING TO THE GLOBAL OFFERING
There is no existing public market for our Shares. The liquidity and market price of our Shares
may fluctuate after the Global Offering.
Prior to the Global Offering, there has not been a public market for our Shares. Whilst
we have applied for the listing of and dealing in our Shares on the Stock Exchange, even if
the application is successful, we cannot assure you that an active and liquid public trading
market for our Shares will develop or sustain fo llowing the Global Offering. Volatility in
the price of our Shares may be unrelated or disproportionate to our operating results and
caused by factors outside our control, such as business interruptions resulting from natural
disasters or accidents or regulatory developments or market changes in the PRC affecting
us or the industries in which we participate. The financial market in Hong Kong and other
countries have in the past experienced significant price and volume fluctuations.
Accordingly, we cannot assure you that the liquidity and market price of our Shares will
not fluctuate.
RISK FACTORS
–6 1–


--- page 71 ---
T h eO f f e rP r i c ew i l lb et h er e s u l to f ,n e g o t i a t i o n sa m o n gu sa n dt h eS o l eO v e r a l l
Coordinator on behalf of the Underwriters and may not be indicative of prices that will
prevail in the trading market after the Global Offering. Therefore, our Shareholders may
not be able to sell their Shares at prices equal to or greater than the price paid for their
Shares purchased in the Global Offering.
Our Shareholders may experience further dilution if we issue additional Shares in the future.
We may need to raise additional funds in the future to finance our business expansion,
for existing operations or new acquisitions. If additional funds are raised through the
issuance of new equity or equity-linked securities of our Company, other than on a pro rata
basis to existing Shareholders, then (i) the percentage ownership of the existing
Shareholders may be reduced, and they may experience subsequent dilution and
reduction in their earnings per Share, and/o r (ii) such newly issued securities may have
rights, preferences or privileges superior to those of the Shares of the existing Shareholders.
Future sales or perceived sales of our Shares could have a material adverse effect on the
prevailing market price of our Shares and our ability to raise additional capital.
The market price of our Shares could decline as a result of future sales or issuances of a
substantial number of our Shares or other securities in the public market, or the perception
that such sales or issuances may occur. Such a d ecline could also occur with the issuance of
new Shares or other securities relating to our Shares, or the perception that such sales or
issuances may occur. Future sales, or perceived sales, of substantial amounts of our Shares
could materially adversely affect the prevailin g market price of our Shares and our ability to
r a i s ef u t u r ec a p i t a la taf a v o u r a b l et i m ea n dp r i c e .
We cannot give any assurance that the current Shareholders will not dispose of any
Shares they own now or may own in the future, and such future sales or issuances or
perceived sales or issuances may adversely a ffect the prevailing market price of our Shares
and our ability to raise capital in the future at a favourable time and price.
There can be no assurance if and when we will pay dividends in the future.
There can be no assurance whether, when a nd in what form we will pay dividends in
the future. Distribution of dividends is formulated by our Board and will be subject to
shareholders’ approval. A decision to declare or to pay any dividends and the amount of
any dividends will depend on various factors, including but not limited to our results of
operations, cash flows and financial cond ition, operating and capital expenditure
requirements, distributable profits a s determined under IFRS, our Articles of
Association, market conditions, our st rategic plans and prospects for business
development, contractual limits and obligations, payment of dividends to us by our
operating subsidiaries, taxation, relevant laws and regulations and any other factors
determined by our Board from time to time to be relevant to the declaration or suspension
of dividend payments. See ‘‘Financial Information — Dividends and Dividend Policy’’ for
further details.
RISK FACTORS
–6 2–


--- page 72 ---
You may face difficulties in protecting your interests because we are incorporated under
Cayman Islands law and, under Cayman Islands law, protection to minority shareholders may
differ from those established under the laws of Hong Kong and other jurisdictions.
Our corporate affairs are governed by our Memorandum of Association and the
Articles and by the Cayman Companies Act and common law of the Cayman Islands. The
laws of the Cayman Islands relating to the protection of the interests of minority
shareholders differ in some respects from tho se established under statutes and judicial
precedents in existence in Hong Kong and other jurisdictions. Such differences may mean
that the remedies available to our minority shareholders may be different from those which
they would have under the laws of Hong Kong or other jurisdictions. See ‘‘Appendix III —
Summary of the Constitution of Our Compa ny and Cayman Islands Company Law’’ for
further details.
Investors should exercise independent judg ement when assessing the accuracy of facts,
forecasts, estimates and statistics which are derived from government and third party sources.
We have derived certain statistics in this pros pectus, particularly those relating to the
PRC, the PRC economy, the PRC automobile industry, the PRC automobile finance lease
industry, the PRC automobile operating lease market, from information provided by the
PRC and other government agencies, industry associations, independent research institutes
and other third party sources. We have taken reasonable care in the reproduction or
extraction of the official government publications or reports for the purpose of disclosure in
this prospectus, however, which have not been prepared or independently verified by us, the
Sole Sponsor or any of the respective affiliates or advisers and, therefore, we make no
representation as to the accuracy of such stati stics from these official government sources,
which may not be consistent with other information compiled within or outside the PRC. In
all cases, investors should give considerat ion as to how much weight or importance they
should attach to or place on such facts.
Investors should read the entire prospectus a nd we strongly suggest you not to place undue
reliance on any information contained in the press articles, other media and/or research
analyst reports regarding us, our business, our industry and the Global Offering.
There has been, prior to the publicatio n of this prospectus, and there may be
subsequent to the date of this prospectus but prior to the completion of the Global
Offering, press, media, and/or research analyst coverage regarding us, our business, our
industry and the Global Offering. You should rely solely upon the information contained in
this prospectus in making your investment decisions regarding our Shares and we do not
accept any responsibility for the accuracy or co mpleteness of the information contained in
such press articles, other media and/or research analyst reports nor the fairness or the
appropriateness of any forecasts, views or opinions expressed by the press, other media
and/or research analyst regarding the Shares, the Global Offering, our business, our
industry or us. We make no representation as to the appropriateness, accuracy,
completeness or reliability of any such in formation, forecasts, views or opinions
expressed or any such publications. To the extent that such statements, forecasts, views
or opinions are inconsistent or conflict with the information contained in this prospectus,
RISK FACTORS
–6 3–


--- page 73 ---
we disclaim them. Therefore, prospective inve stors are cautioned to make their investment
decisions on the basis of information contained in this prospectus only and should not rely
on any other information.
Forward-looking statements contained in this prospectus are subject to risks and uncertainties.
This prospectus contains certain statements that are ‘‘forward-looking’’ and uses
forward looking terminology such as ‘‘anticipate’’, ‘‘estimate’’, ‘‘believe’’, ‘‘expect’’, ‘‘may’’,
‘‘plan’’, ‘‘consider’’, ‘‘ought to’’, ‘‘should’’,‘‘would’’, and ‘‘will’’. Those statements include,
among other things, the discussion of our growth strategy and the expectations of our
future operations, liquidity and capital resources.
Investors of our Offer Shares are cautioned that reliance on any forward-looking
statement involves risks and uncertainties (include those identified in the risk factors
discussed above) and that, any or all of those assumptions could prove to be inaccurate. As
a result, the forward-looking statements based on those assumptions could also be
incorrect. In light of these and other uncertainties, the inclusion of forward-looking
statements in this prospectus should not be regarded as representations and warranties by
us that our Company’s plans and objectives will be achieved and these forward-looking
statements should be considered in light of vari ous important factors, including those set
out in this section. We do not intend to update these forward-looking statements in addition
to our on-going disclosure obligations pursuant to the Listing Rules or other requirements
of the Stock Exchange. Investors should not place undue reliance on such forward-looking
information.
RISK FACTORS
–6 4–


--- page 74 ---
DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus includes particulars given in compliance with the Companies (Winding
Up and Miscellaneous Provisions) Ordinance , the Securities and Futures (Stock Market
Listing) Rules (Chapter 571V of the Laws of Hong Kong) and the Listing Rules for the
purpose of giving information to the public with regard to our Group. Our Directors
(including any proposed Director who is named as such in this prospectus) collectively and
individually accept full responsibility for the a ccuracy of the informati on contained in this
prospectus and confirm, having made all reasonable enquiries, that to the best of their
knowledge and belief, the information contained in this prospectus is accurate and complete
in all material respects and not misleading or deceptive, and there are no other matters the
omission of which would make this prospectus or any statement herein misleading.
THIS HONG KONG PUBLIC OFFERING AND THE PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering,
which forms part of the Global Offering. For applicants under the Hong Kong Public
Offering, this prospectus and the Application Form set out the terms and conditions of the
Hong Kong Public Offering. Please see ‘‘How to Apply for Hong Kong Offer Shares’’ for
further details of the procedures for applying for the Hong Kong Offer Shares.
The Hong Kong Offer Shares are offered solely on the basis of the information
contained and representations made in this prospectus and the Application Forms and on
the terms and conditions set out herein and therein. No person has been authorised to give
any information or make any representations other than those contained in this prospectus
and the Application Form and, if given or made, such information or representations must
not be relied on as having been authorised by us, the Sole Sponsor, the Sole Overall
Coordinator, the Capital Market Intermediaries, Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Un derwriters, any of our or their affiliates or
any of their respective directors, officers, employees or agents or any other person or party
involved in the Global Offering. Neither the d elivery of this prospectus nor any offering,
sale or delivery made in connection with our Shares shall, under any circumstances,
constitute a representation that there has been no change or development reasonably likely
to involve a change in our affairs since the date of this prospectus or imply that the
information in this prospectus is correct as of any subsequent time.
STRUCTURE OF THE GLOBAL OFFERING AND UNDERWRITING
Please see ‘‘Structure and Conditions of the G lobal Offering’’ for further details of the
structure of the Global Offering, including its conditions and the arrangements relating to
the Over-allotment Option and stabilisation.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–6 5–


--- page 75 ---
The Listing is sponsored by the Sole Sponsor. The Hong Kong Public Offering is fully
underwritten by the Hong Kong Underwriters pursuant to the Hong Kong Underwriting
Agreement. The International Underwriting Agreement relating to the International
Placing is expected to be entered into on or a round the last day for lodging application
under the Hong Kong Public Offering. The Global Offering is managed by the Sole Overall
Coordinator. Please see ‘‘Underwriting’’ for further details of the Underwriters and the
underwriting arrangements.
RESTRICTIONS ON OFFER OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public
Offering will be required to confirm, and is deemed by his acquisition of Hong Kong Offer
Shares to have confirmed, that he is aware of t he restrictions on offers of the Offer Shares
described in this prospectus and that he is not acquiring, and has not been offered, any
Offer Shares in circumstances that contravene any such restrictions.
No action has been taken to permit a public offering of the Offer Shares or the
distribution of this prospectus in any jurisdiction other than Hong Kong. Accordingly,
without limitation to the following, this prospectus may not be used for the purpose of, and
does not constitute, an offer or invitation in any jurisdiction or in any circumstances in
which such an offer or invitation is not authorised or to any person to whom it is unlawful
to make such an offer or invitation. The distribution of this prospectus and the offering of
the Offer Shares in other jurisdictions are subject to restrictions and may not be made
except as permitted under the securities laws of such jurisdiction pursuant to registration
with or an authorisation by the relevant securi ties regulatory authorities or an exemption
therefrom. In particular, the Offer Shares have not been publicly offered and sold, and will
not be offered or sold, directly or indi rectly in the PRC or the United States.
APPLICATION FOR LISTIN G ON THE STOCK EXCHANGE
Our Company has applied to the Stock Exchange for the granting of the listing of and
permission to deal in the Shares in issue and to be issued pursuant to the Global Offering
(including any additional Shares which may be issued pursuant to the exercise of the
Over-allotment Option) and Shares which may be issued pursuant to the exercise of the
options that may be granted under the Share Option Scheme. Dealings in the Shares on the
Stock Exchange are expected to comm ence on Thursday, 9 November 2023.
No part of our share capital or loan capital is listed on or dealt in on any other stock
exchange and no such listing or permission to list is being or proposed to be sought in the
near future.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the Stock Exchange granting the listing of, and permission to deal in, our
Shares on the Stock Exchange and we complying with the stock admission requirements of
HKSCC, our Shares will be accepted as eligible securities by HKSCC for deposit, clearance
and settlement in CCASS with effect from the L isting Date or any other date as determined
by HKSCC.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–6 6–


--- page 76 ---
Settlement of transactions between participants of the Stock Exchange is required to
take place in CCASS on the second settlemen t day after any trading day. All necessary
arrangements have been made for the Shares to be admitted into CCASS. All activities
under CCASS are subject to the general rules of CCASS and CCASS operational
procedures in effect from time to time. You should seek the advice of your stockbroker or
other professional adviser for details o f those settlement arrangements as such
arrangements will affect your rights and interests.
HONG KONG SHARE REGISTER AND STAMP DUTY
All Shares issued by us pursuant to applications made in the Hong Kong Public
Offering will be registered on our register of members to be maintained by our Hong Kong
Share Registrar, Computershare Hong Kong Investor Services Limited, in Hong Kong. Our
principal register of members will be maintained by our Principal Share Registrar, Conyers
Trust Company (Cayman) Limited, in the Cayman Islands.
No stamp duty is payable by applicants in the Global Offering.
Dealings in the Shares reg i s t e r e do no u rr e g i s t e ro fm e m b e r si nH o n gK o n gw i l lb e
subject to Hong Kong stamp duty.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their
professional advisers if they are in any doubt as to the taxation implications of
subscribing for, purchasing, holding, dispo sing of, dealing in or exercising any rights in
relation to, the Shares. None of us, the Sole Sponsor, the Sole Overall Coordinator, the Sole
Global Coordinator, the Capital Market Intermediaries, the Joint Bookrunners, the Joint
Lead Managers, the Underwrite rs, any of our or their affiliates or any of their respective
directors, officers, employees or agents or any other person or party involved in the Global
Offering accepts responsibility for any tax eff ects on, or liabilities of, any person resulting
from the subscription for, purchase, holding, disposition of, dealing in, or exercising any
rights in relation to, the Shares.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain RMB
amounts into Hong Kong dollars at a specified rate. Unless we indicate otherwise, the
translations of RMB into Hong Kong dollars and vice versa have been made at the rate of
R M B 1 . 0 0t oH K $ 1 . 0 5 8 5i nt h i sp r o s p e c t u s .
No representation is made that any amount in RMB or Hong Kong dollars can be or
could be, or have been, converted at the above rate or any other rate or at all.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–6 7–


--- page 77 ---
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this
prospectus shall prevail. For ease of referen ce, the names of Chinese laws and regulations,
governmental authorities, institutions, natural persons or other entities (including certain of
our subsidiaries) have been included in this prospectus in both the Chinese and English
languages and in the event of any inconsistency, the Chinese versions shall prevail.
ROUNDING
Certain amounts and percentage figures included in this prospectus have been subject
to rounding adjustments. Accordingly, figure s shown as totals in certain tables may not be
an arithmetic aggregation of the figures preceding them.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
–6 8–


--- page 78 ---
In preparation for the Listing, we have sought the following waivers and exemption
from strict compliance with the relevant provisions of the Listing Rules and the Companies
(Winding Up and Miscellaneous Provisions) Ordinance:
MANAGEMENT PRESENCE
According to Rule 8.12 of the Listing Rules, an issuer must have a sufficient
management presence in Hong Kong and in n ormal circumstances, at least two of the
issuer’s executive directors must b e ordinarily resident in Hong Kong.
Our executive Directors are based in the PRC and are expected to continue to be based
in the PRC. In addition, substantially al l our assets are based in the PRC and our
headquarters, core business and operations are primarily located, managed and conducted
in the PRC. Appointment of additional executi ve Directors who are ordinarily resident in
Hong Kong or the relocation of any existing executive Directors who are currently based in
the PRC to Hong Kong may not be beneficial to or appropriate for our Group. Our
Company currently does not, and in the foreseeable future will not, have executive
Directors who are ordinarily residents in Hong Kong. Therefore, we have applied to the
Stock Exchange for, and the Stock Exchange has granted, a waiver from compliance with
Rule 8.12 of the Listing Rules on the following conditions:
(1) We have appointed two authorised representatives pursuant to Rule 3.05 of the
Listing Rules, who will act as our principal channel of communication with the
Stock Exchange and ensure that we will comply with the Listing Rules at all times.
The two authorised representatives appointed are Mr. Huang Wei, our executive
Director, and Mr. Wong Yuk, our company secretary. Each of the authorised
representatives will be available to m eet with the Stock Exchange in Hong Kong
w i t h i nar e a s o n a b l et i m ef r a m eu p o nt h er e q u e s to ft h eS t o c kE x c h a n g ea n dw i l l
be readily contactable by telephone, facsimile and e-mail. Each of the authorised
representatives is authorised to communicate on our behalf with the Stock
Exchange. We will keep the Stock Exchange up to date in respect of any change to
such details.
(2) Each of the authorised representative s has means to contact all of our Directors
(including our independent non-executive Directors) promptly at all times as and
when the Stock Exchange wishes to contact our Directors for any matters. To
enhance communication between th e Stock Exchange, the authorised
representatives and our Directors, (a) each Director has provided his or her
office phone number, mobile phone number, facsimile number and e-mail address
to our authorised representatives; (b) in the event that a Director expects to travel
or is out of office, he or she will provide the phone number of the place of his or
her accommodation to the authorised representatives or maintain an open line of
communication via his or her mobile phone; and (c) each of our Directors and
authorised representatives has provided his or her respective mobile phone
numbers, office telephone numbers, facsimile numbers and e-mail addresses to the
Stock Exchange. In addition, each of our Directors (including our independent
non-executive Directors) not ordinarily resident in Hong Kong has confirmed that
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–6 9–


--- page 79 ---
he or she possesses or can apply for valid travel documents to visit Hong Kong for
business purpose and will be able to come to Hong Kong and meet with the
relevant officers of the Stock Exchange within a reasonable period of time, when
required.
(3) In compliance with Rule 3A.19 of the Listing Rules, we have appointed Quam
Capital Limited as our compliance adviser to act as an additional channel of
communication with the Stock Exchange for the period commencing on the
Listing Date and ending on the date on which our Company complies with Rule
13.46 of the Listing Rules in respect of its financial results for the first full
financial year commencing after the Listing Date. The contact person of our
compliance adviser will be fully available to answer enquiries from the Stock
Exchange. There will be adequate and efficient means of communication between
our Company, our authorised representatives, our Directors and other officers
and our compliance adviser, and to the ext ent reasonably practicable and legally
permissible, we will keep the compliance adviser informed of all communications
and dealings between our Company and the Stock Exchange.
(4) Meetings between the Stock Exchan ge and our Directors could be arranged
through our authorised representatives o r our compliance adviser, or directly with
our Directors within a reasonable time frame. We will inform the Stock Exchange
as soon as practicable in respect of any change of our authorised representatives
and/or our compliance adviser.
WAIVER AND EXEMPTION IN RELATION TO THE PRE-IPO SHARE OPTION
SCHEME
Rule 17.02(1)(b) of the Listing Rules requires an issuer to, inter alia , disclose in the
prospectus full details of all outstanding options and their potential dilution effect on the
shareholdings upon listing as well as the impact on the earnings per share arising from the
exercise of such outstanding options.
P a r a g r a p h2 7o fA p p e n d i x1 At ot h eL i s t i n gR u l e sr e q u i r e sa ni s s u e rt os e to u ti nt h e
prospectus, inter alia , particulars of any capital of any member of the group that is under
option, or agreed conditionally or unconditionally to be put under option, including the
consideration for which the option was or will be granted and the price and duration of the
option, and the name and address of the grantee.
Under section 342(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, an issuer must state in its prospectuses to be issued, circulated or distributed in
Hong Kong to include, among other information, the matters specified in Part I of the
Third Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Under paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, details of the number, description and amount of any
shares in or debentures of the company which any person has, or is entitled to be given, an
option to subscribe for, together with the certain particulars of the option, namely (a) the
period during which it is exercisable, (b) the price to be paid for shares and debentures
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 0–


--- page 80 ---
subscribed for under it, (c) the consideration (if any) given or to be given for it or for the
right to it, and (d) the names and addresses o f the persons to whom it was given, must be
specified in the prospectus.
As at the Latest Practicable Date, our Company had granted options under the
Pre-IPO Share Option Scheme to a total of 213 grantees, including (i) three Directors and
senior management of our Company, namely H uang Wei, Ye Fuwei and Zhang Jinghua; (ii)
five connected persons of our Company, namely Ye Ying, Qiu Guohu, Ye Song, He Xiaowu
and Yang Jiabin; (iii) other 53 grantees who have been granted options to subscribe for not
less than 150,000 Shares; and (iv) other 152 grantees, to acquire an aggregate of 38,199,000
Shares, representing 7.41% of the issued share capital of our Company immediately
following the completion of the Global Offering, taking no account of Shares which may be
issued pursuant to the exercise of the Over-a llotment Option or Shares which may be issued
upon the exercise of options granted under the Pre-IPO Share Option Scheme and options
which may be granted under the Share Option Scheme, on the terms set out in ‘‘Statutory
and General Information — D. Other Informa tion — 2. Pre-IPO Share Option Scheme’’ in
Appendix IV to this prospectus.
Our Company has applied to (i) the Stock Exchange for a waiver from strict
compliance with the disclosure requirements under Rule 17.02(1)(b) of, and paragraph 27 of
Appendix 1A to, the Listing Rules; and (ii) the SFC for a certificate of exemption under
section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
exempting our Company from strict compliance with paragraph 10(d) of Part I of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, on the
grounds that the grant of the waiver and exemption sought under the application would not
prejudice the interest of the investing public and strict compliance with the above
requirements would be unduly burdensome for our Company for the following reasons:
(1) given that 213 grantees are involved, s trict compliance with such disclosure
requirements in setting out full details of all the grantees under the Pre-IPO Share
Option Scheme in this prospectus would be costly and unduly burdensome for our
Company in light of a significant increa se in cost and timing for information
compilation and prospectus preparation;
(2) the grant and exercise in full of the options under the Pre-IPO Share Option
Scheme will not cause any material adverse impact to the financial position of our
Company;
(3) non-compliance with the above disclosure requirements would not prevent our
Company from providing its potential investors with an informed assessment of
the activities, assets, liabilities, financ ial position, management and prospects of
our Company; and
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 1–


--- page 81 ---
(4) material information relating to the options under the Pre-IPO Share Option
Scheme will be disclosed in this prospectus, including the total number of Shares
subject to the Pre-IPO Share Option Scheme, the exercise price per Share, the
potential dilution effect on the shareholding and impact on earnings per Share
upon full exercise of the share options granted under the Pre-IPO Share Option
Scheme. Our Directors consider that the information that is reasonably necessary
for potential investors to make an informed assessment in their investment
decision making process has been included in this prospectus.
In light of the above, our Directors are of the view that the grant of the waiver and
exemption sought under this application will not prejudice the interest of the investing
public.
The Stock Exchange has granted to us a waiver under the Listing Rules on the
conditions that:
(1) on an individual basis, full details of the options granted under the Pre-IPO Share
Option Scheme to each of (i) the Directors and senior management (including Mr.
Huang, Ye Fuwei and Zhang Jinghua); (ii) connected persons of our Company
(including Ye Ying, Qiu Guohu, Ye Song, He Xiaowu and Yang Jiabin); and (iii)
other grantees who have been granted options to subscribe for not less than
150,000 Shares have been disclosed in ‘‘S tatutory and General Information — D.
Other Information — 2. Pre-IPO Share Option Scheme’’ in Appendix IV to this
prospectus, such details to include all the particulars required under Rule
17.02(1)(b) of, and paragraph 27 of Appendix 1A to, the Listing Rules, and
paragraph 10 of Part 1 of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance;
(2) in respect of the options granted und er the Pre-IPO Share Option Scheme to
remaining grantees (other than those set out in (1) above), disclosure has been
made, on an aggregate basis, of (a) the aggregate number of grantees and number
of Shares underlying the options under the Pre-IPO Share Option Scheme, (b) the
exercise period of the options granted under the Pre-IPO Share Option Scheme,
(c) the consideration paid for the grant of the options under the Pre-IPO Share
Option Scheme and (d) the exercise price of the options granted under the Pre-IPO
Share Option Scheme in ‘‘Statutory and General Information — D. Other
Information — 2. Pre-IPO Share Option Scheme’’ in Appendix IV to this
prospectus;
(3) the aggregate number of Shares underlying the options granted under the Pre-IPO
Share Option Scheme and the percentage to our Company’s total issued share
capital represented by such number of Shares as at the Latest Practicable Date
have been disclosed in ‘‘Statutory and General Information — D. Other
Information — 2. Pre-IPO Share Option Scheme’’ in Appendix IV to this
prospectus;
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 2–


--- page 82 ---
(4) the potential dilution effect and impact on earnings per Share upon the full
exercise of the options under the Pre-IPO Share Option Scheme has been disclosed
in ‘‘Statutory and General Information — D. Other Information — 2. Pre-IPO
Share Option Scheme’’ in Appendix IV to this prospectus;
(5) a summary of the major terms of the Pre-IPO Share Option Scheme has been
disclosed in ‘‘Statutory and General In formation — D. Other Information — 2.
Pre-IPO Share Option Scheme’’ in Appendix IV to this prospectus;
(6) the particulars of the waiver are disclosed in this prospectus;
(7) a list of all the grantees (including the grantees referred to in sub-paragraph (1)
above) containing all the particulars as required under Rule 17.02(1)(b) and
paragraph 27 of Appendix 1A of the Listing Rules and paragraph 10 of Part I of
the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance will be made available for pub lic inspection as set out in ‘‘Documents
Delivered to the Registrar of Companies and Available on Display’’ in Appendix
V to this prospectus; and
(8) the grant of a certificate of exemption under the Companies (Winding Up and
Miscellaneous Provisions) Ordinance from the SFC exempting our Company from
the disclosure requirements provided in paragraph 10(d) of Part I of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance.
The SFC has agreed to grant to our Company a certificate of exemption under section
342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance exempting
our Company from strict compliance with paragraph 10(d) of Part I of the Third Schedule
to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, subject to the
conditions that:
(1) on an individual basis, full details of the options granted under the Pre-IPO Share
Option Scheme to each of (i) the Directors and senior management; (ii) connected
persons of our Company; and (iii) other grantees who have been granted options
to subscribe for not less than 150,000 Shares have been disclosed in this
prospectus, such details to include all the particulars required under paragraph 10
of Part 1 of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance;
(2) in respect of the options granted und er the Pre-IPO Share Option Scheme to
remaining grantees (other than those set out in (1) above), disclosure has been
made, on an aggregate basis, categorised into lots based on the number of Shares
underlying each individual grantee, being (1) 1–80,000 Shares; (2) 80,001–100,000
Shares; and (3) 100,001–149,999 Shares, of (a) the aggregate number of grantees
and number of Shares underlying the options under the Pre-IPO Share Option
Scheme, (b) the exercise period of the options granted under the Pre-IPO Share
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 3–


--- page 83 ---
Option Scheme, (c) the consideration paid for the grant of the options under the
Pre-IPO Share Option Scheme and (d) the exercise price of the options granted
under the Pre-IPO Share Option Scheme in this prospectus;
(3) a list of all the grantees (including the grantees referred to in sub-paragraph (1)
above) containing all the particulars as required under paragraph 10 of Part I of
the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance will be made available for pub lic inspection as set out in ‘‘Documents
Delivered to the Registrar of Companies and Available on Display’’ in Appendix
V to this prospectus; and
(4) the particulars of the waiver are disclosed in this prospectus, and this prospectus
will be issued on or before 30 October 2023.
Further details of the Pre-IPO Share Optio n Scheme are set out in the section headed
‘‘Statutory and General Information — D. Other Information — 2. Pre-IPO Share Option
Scheme’’ in Appendix IV to this prospectus.
WAIVERS FROM STRICT COMPLIANCE WITH THE LISTING RULES
–7 4–


--- page 84 ---
DIRECTORS
Name Address Nationality
Executive Directors
Mr. Huang Wei
(黃偉)
Room 3106, Building 10
Taihejinzun Garden 1
165 Yangtouwei Road
Yuefeng Zhen
Jin’an District
Fuzhou, Fujian Province
PRC
Chinese
Mr. Ye Fuwei
(葉富偉)
Room 4602
Shiouwangzhuang B
2 Jinlian Road
Jin’an District
Fuzhou, Fujian Province
PRC
Chinese
Ms. Zhang Jinghua
(張景花)
Baima Garden 10–406
17 Baimazhong Road
Shanghai Jiedao, Taijiang District
Fuzhou, Fujian Province
PRC
Chinese
Non-executive Directors
Mr. Liu Wei
(劉偉)
Room 106, Block 6
Wanke Jinyu Rongjun
Fufei Road
Fuzhou, Fujian Province
PRC
Chinese
Ms. Xu Rui
(徐睿)
Room 432, 3rd Floor, Building 11
N o .1 ,X i f uH e y u a n
Tongzhou District
Beijing
PRC
Chinese
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 5–


--- page 85 ---
Name Address Nationality
Independent non-executive
Directors
Mr. Wu Fei
(吳飛)
Room 202, Block 15
181 Liuzhou Road
Xuhui District
Shanghai
PRC
Chinese
Mr. Fung Che Wai, Anthony
(馮志偉)
Flat G, 11th Floor
Hong Yan Court
Healthy Street C
North Point
Hong Kong
Chinese
Mr. Chen Shuo
(陳碩)
Room 8–1001, Meifeng Liju
Lvjingjiayuan
Gulou District
Fuzhou, Fujian Province
PRC
Chinese
Please refer to the section headed ‘‘Directors and Senior Management’’ in this
prospectus for further details of our Directors and senior management members.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 6–


--- page 86 ---
PARTIES INVOLVED IN T HE GLOBAL OFFERING
Sole Sponsor Quam Capital Limited
5/F and 24/F (Rooms 2401 and 2412)
Wing On Centre
111 Connaught Road Central
Hong Kong
Sole Overall Coordinator and
Sole Global Coordinator
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412)
Wing On Centre
111 Connaught Road Central
Hong Kong
Joint Bookrunners, Joint Lead
Managers and Capital Market
Intermediaries
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412)
Wing On Centre
111 Connaught Road Central
Hong Kong
CCB International Capital Limited
9/F CCB Tower
3 Connaught Road Central
Central
Hong Kong
China Galaxy International Securities (Hong Kong)
Co., Limited
20/F Wing On Centre
111 Connaught Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Eddid Securities and Futures Limited
21/F, Citic Tower
1T i mM e iA v e n u e
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 7–


--- page 87 ---
Fortune (HK) Securities Limited
4102–6, 41st Floor
Cosco Tower
Nos 183 Queen’s Road Central
Hong Kong
Innovax Securities Limited
Unit A–C, 20/F Neich Tower
128 Gloucester Road
Wan Chai
Hong Kong
Livermore Holdings Limited
Unit 1214A 12/F Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
L u kF o o kS e c u r i t i e s( H K )L i m i t e d
Units 2201–2207 & 2213–2214, 22/F
Cosco Tower
183 Queen’s Road Central
Hong Kong
Shenwan Hongyuan Securities (H.K.) Limited
L e v e l6 ,T h r e eP a c i f i cP l a c e
1 Queen’s Road East
Hong Kong
SPDB International Capital Limited
33/F SPD Bank Tower
One Hennessy
1 Hennessy Road
Hong Kong
ZMF Asset Management Limited
Unit 2502 25/F World Wide House
19 Des Voeux Road Central
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 8–


--- page 88 ---
Legal advisers to our Company As to Hong Kong law
Dentons Hong Kong LLP
Suite 3201, Jardine House
1 Connaught Place
Central
Hong Kong
As to PRC law
Beijing Dacheng Law Offices, LLP (Shanghai)
9th/24th/25th Floor
Shanghai World Financial Center
100 Century Avenue
Pudong New Area
Shanghai
PRC
As to Cayman Islands law
Conyers Dill & Pearman
29th Floor
One Exchange Square
8 Connaught Place
Central
Hong Kong
Legal advisers to the Sole Sponsor
and the Underwriters
As to Hong Kong law
Howse Williams
27/F Alexandra House
18 Chater Road
Central
Hong Kong
As to PRC law
Grandall Law Firm (Nanjing)
5/7/8/F, Building B
No.309 Hanzhongmen Street
Nanjing, China
Auditor and reporting accountant PricewaterhouseCoopers
Certified Public Accountants
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–7 9–


--- page 89 ---
Industry consultant China Insights Industry Consultancy Limited
10/F, Block B,
Jing’an International Center
88 Puji Road
Jing’an District
Shanghai
PRC
Receiving bank CMB Wing Lung Bank Limited
45 Des Voeux Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–8 0–


--- page 90 ---
Registered office Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman
KY1-1111
Cayman Islands
Principal place of business and
headquarters in the PRC
Building 3, Fuxing Economic Development Zone
( F u z h o uS o f t w a r eP a r kJ i n ’ a nB r a n c h )
No. 318 Fuguang Road
Jin’an District
Fuzhou, Fujian Province
PRC
Principal place of business in
Hong Kong
Room 1901, 19th Floor
Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Company’s website address
www.xxfqc.com
(The information contained on this website do not
form part of this prospectus)
Company secretary Mr. Wong Yuk
(HKICPA, ACCA)
Flat K, 30/F, Block 9
Beverly Garden
Tseung Kwan O
New Territories
Hong Kong
Authorised representatives Mr. Huang Wei
Room 3106, Building 10
Taihejinzun Garden 1
165 Yangtouwei Road
Yuefeng Zhen
Jin’an District
Fuzhou, Fujian Province
PRC
Mr. Wong Yuk
Flat K, 30/F, Block 9
Beverly Garden
Tseung Kwan O
New Territories
Hong Kong
CORPORATE INFORMATION
–8 1–


--- page 91 ---
Audit committee Mr. Fung Che Wai, Anthony (Chairman)
Mr. Wu Fei
Mr. Chen Shuo
Remuneration committee Mr. Wu Fei (Chairman)
Mr. Huang Wei
Mr. Fung Che Wai, Anthony
Nomination committee Mr. Huang Wei (Chairman)
Mr. Wu Fei
Mr. Chen Shuo
Principal share registrar and transfer
office in the Cayman Islands
Conyers Trust Company (Cayman) Limited
Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman
KY1-1111
Cayman Islands
Hong Kong share registrar Computershare Hong Kong Investor Services Limited
Shops 1712–1716, 17th Floor
Hopewell Centre
183 Queen’s Road East
Wan Chai
Hong Kong
Principal banks Fujian Haixia Bank, Fuzhou Mindu Branch
Ancillary Building, Labour Building
128 Gutian Road
Gulou District
Fuzhou, Fujian Province
PRC
China Construction Bank, Fuzhou Chengdong Branch
Mingliu Building
56 Gutian Road
Gulou District
Fuzhou, Fujian Province
PRC
Compliance adviser Quam Capital Limited
5/F and 24/F (Rooms 2401 and 2412)
Wing On Centre
111 Connaught Road Central
Hong Kong
CORPORATE INFORMATION
–8 2–


--- page 92 ---
A summary of the main PRC laws and regulations applicable to our current business
and operations is set out below.
LAWS AND REGULATIONS ON FOREIGN INVESTMENT
Negative List
The investment activities conducted by foreign investors in the PRC shall be regulated under
the Special Administrative Measures (Negative List) for Foreign Investment Access (2021
Edition) (《外商投資准入特別管理措施（負面清單）（2021年版）》) (the ‘‘Negative List 2021 ’’) with
effect from 1 January 2022, which were jointly issued by NDRC and MOFCOM. The Negative
List 2021 contains a list of fields that foreign investment is restricted or forbidden. Our current
businesses do not fall within the Negative List 2021.
Company Establishment
The Company Law of the PRC ( 《中華人民共和國公司法》) (the ‘‘ Company Law ’’)
promulgated on 29 December 1993 and last amended on 26 October 2018 with immediate
effect regulates the establishment, operation and management of corporate entities in the
PRC. Pursuant to the Company Law, foreign-inv ested limited liability companies shall be
subject to the Company Law and any stipulations by other PRC laws governing foreign
investment shall prevail over the Company Law.
Foreign Investment
According to the Foreign Investment Law of the PRC ( 《中華人民共和國外商投資法》)
(the ‘‘Foreign Investment Law ’’) adopted by the National People’s Congress of the PRC
(‘‘NPC’’) on 15 March 2019 with effect from 1 January 2020, repealing simultaneously the
L a wo ft h eP R Co nS i n o - f o r eign Equity Joint Ventures ( 《中華人民共和國中外合資經營企業
法》) (the ‘‘Law of Joint Ventures ’’) and the Law of the PRC on Wholly Foreign-owned
Enterprise ( 《中華人民共和國外資企業法》) (the ‘‘ Law of Foreign-owned Enterprise ’’), the
government of PRC shall implement the management systems of pre-establishment national
treatment and negative list for foreign investment and the foreign investors shall not invest
in any field prohibited by the negative lis t for foreign investment access. The Foreign
Investment Law shall further regulate the orga nisation form, institutional framework and
standard of conduct of a foreign-invested enterprise, which shall be subject to the
provisions of the Company Law, the Partnership Enterprise Law of the PRC ( 《中華人民共
和國合夥企業法》) and other applicable laws.
On 30 December 2019, the MOFCOM and State Administration for Market
Regulation ( 國家市場監督管理總局) jointly promulgated the Measures for the Reporting
of Foreign Investment Information ( 《外商投資信息報告辦法》) (the ‘‘ Foreign Investment
Reporting Measures ’’), which came into effect on 1 January 2020 and repealed the
Provisional Measures on Administratio n of Filing for Establishment and Change of
Foreign Investment Enterprises ( 《外商投資企業設立及變更備案管理暫行辦法》). According
to the Foreign Investment Reporting Measure s, the requirement of record-filing with or
REGULATORY OVERVIEW
–8 3–


--- page 93 ---
approval from the MOFCOM is replaced with a reporting requirement, regardless of
whether such foreign investment is subject to the PRC government’s special entry
administration measures.
LAWS AND REGULATIONS ON FINANCE LEASE INDUSTRY
Laws and regulations under the supervision of the MOFCOM
On 22 October 2004, the MOFCOM and the STA jointly promulgated the Notice of
the Ministry of Commerce and the State Admi nistration of Taxation on Relevant Issues
Concerning the Engagement of Financial Leasing Business ( 《商務部、國家稅務總局關於從
事融資租賃業務有關問題的通知》)( t h e‘ ‘2004 Notice ’’), the domestic-funded finance lease
pilot enterprises shall meet certain conditions . For instance, the minimum registered capital
of domestic-funded finance lease enterprises established on or before 31 August 2001 and
between 1 September 2001 and 31 December 2003 shall reach RMB40 million and RMB170
million, respectively.
Nonetheless, the 2004 Notice does not provide for the minimum registered capital of
domestic-funded finance lease pilot enterpr ises established after 31 December 2003 and
there are no official requirements on the mini mum registered capital of such enterprises
issued by the MOFCOM, the STA and other co mpetent authority. According to the 2004
Notice, the risk assets of any domestic-funde d finance lease pilot enterprise shall not exceed
10 times of its total registered capital.
The Measures for Finance Lease Enterprises ( 《融資租賃企業監督管理辦法》) (the
‘‘Measures for Finance Lease Enterprises ’’) promulgated by MOFCOM on 18 September
2013 and became effective on 1 October 2013 strengthen the regulation over both domestic
and foreign-invested finance lease enterprises.
According to the Measures for Finance Lease Enterprises, foreign investors applying
to establish a finance leasing enterprise shall comply with the relevant provisions on foreign
investment and the Measures for Finance Lease Enterprises do not further distinguish
between domestic-funded financ e lease enterprises and foreign-invested enterprises. Before
the issuance of the Decisions of MOFCOM on repe aling and modifying partial regulations
(《商務部關於廢止和修改部分規章的決定》) (the ‘‘ Repealing Decisions ’’) on 22 February
2018, the main regulations on foreign investment in the PRC finance lease industry included
the Administrative Measures on Foreign-Invested Lease Industry ( 《外商投資租賃業管理辦
法》) with last amendment on 28 October 2015, which mainly require that foreign investors
investing directly in the PRC finance lease i ndustry must each have total assets of no less
than US$5 million and the risk assets of a foreig n-invested finance lea se enterprise which
are the total amount of residual assets determined by deducting cash, bank deposit, PRC
treasury securities and entrusted leased assets from the total assets of the enterprise, shall
not exceed 10 times of its total net assets. How ever, according to the Repealing Decisions,
the Administrative Measures on Foreign-Invested Lease Industry have been repealed since
22 February 2018 and there are no official and specialised regulations on foreign-invested
finance lease enterprises issued by the MOF COM or CBIRC afterwards. Nonetheless, as
REGULATORY OVERVIEW
–8 4–


--- page 94 ---
advised by our PRC Legal Advi sers, our Directors believe th at the definition of ‘‘risk
assets’’ as stated therein is still applicable for us to use for the purpose of calculating risk
assets as at the Latest Practicable Date.
According to the Measures for Finance Lease Enterprises, MOFCOM and the
provincial-level commerce authorities are in ch arge of the supervision and administration of
finance lease companies. A finance lease com pany shall, according to the requirements of
MOFCOM, report the relevant data in a timely and truthful manner through the National
Finance Lease Enterprise Management Information System ( 全國融資租賃企業管理信息系
統). Specifically, a finance lease company shall , within 15 working days after the end of each
quarter, submit the statistics on and summary of its operations in the preceding quarter,
and prior to 30 April of each year, submit the s tatistics on and summary of its operations in
the preceding year as well as its financial and accounting report (including the notes
appended thereto) audited by an audit body for the preceding year. In the event of a change
of name, relocation to another region, increase or decrease of registered capital, change of
organisational form, adjustment of ownership structure or other changes, a finance lease
company shall report to the competent provincial-level commerce authority in advance. A
foreign-invested finance lease company tha t undergoes the said changes shall go through
the approval and other procedures in complia nce with the relevant provisions. A finance
lease company shall, within five working days a fter completing the change registration with
the State Administration for Market Regulat ion or its local counte rparts, log into the
National Finance lease Enterprise Manageme nt Information System to modify the relevant
information.
The Measures for Finance Lease Enterprises explicitly stipulate the business scope of a
finance lease company. A finance lease company may conduct its finance lease activities by
way of a direct lease, sublease, leaseback, leveraged lease, entrusted lease and joint lease
within the limits of applicable laws, regulat ions and rules. A finance lease company shall
operate finance lease and other leasing businesses as its main business, and may engage in
the purchase of leased properties, disposal of residual value of leased properties,
maintenance of leased properties, lease transaction consultancy and guarantee services,
assignment of accounts receivable to a third party institution, receiving lease deposits and
other businesses approved by the competent authority. A finance lease company shall not
engage in deposit-taking ( 吸收存款), lending ( 發放貸款), or entrusted lending ( 受託發放貸
款), and shall not engage in inter-bank borrowing without the approval of the competent
authority. A finance lease company is prohib ited from carrying out illegal fund-raising
activities under the disguise of finance lease under any circumstances.
REGULATORY OVERVIEW
–8 5–


--- page 95 ---
The Measures for Finance Lease Enterprise s require the finance lease companies to
strengthen their internal risk controls, estab lish good systems for classifying at-risk assets,
and form lessee credit assessment system, pos t-transaction recourse an d disposal system and
risk alert mechanism. A financ e lease company shall also esta blish an affiliated transaction
management system, and exclude related parties from the voting or decision making process
of affiliated transactions. In the event of a purchase of equipment from an affiliated
production enterprise, the settlement price for such equipment shall not be evidently lower
than the price offered by such enterprise to any third party for such equipment or for
equipment of the same batch. A finance lease company shall manage its assets under trust
lease and assets under sublease separately and keep separate accounts therefor. A finance
lease company shall strengthen the management of its major lessees, limit the proportion of
business with a single lessee and with lessees that are affiliated, and pay attention to the
prevention and diversification of operational risks.
The Measures for Finance Lease Enterprises also contain regulatory provisions
specifically on sale-leaseback transacti ons. The subject matter of a sale-leaseback
transaction shall be properties that can exert their economic functions and produce
continuous economic benefits. A finance lease company shall not accept any property to
which a lessee has no disposal rights, or on which any mortgage has been created, or which
has been sealed or seized by any judicial organs, or whose ownership has any other defects
as the subject matter of a sale-leaseback tran saction. A finance lease company shall give
adequate consideration to and objectively e valuate assets leased back, set reasonable
purchase prices for them in compliance with accounting principles, and shall not purchase
any asset at a price in excess of its value.
Pursuant to the Notice of the General Offi ce of the Ministry of Commerce on Matters
Concerning Adjustments to the Responsib ility to Regulate Finance Lease Companies,
Commercial Factoring Companies and Pawn Shops ( 《商務部辦公廳關於融資租賃公司、商
業保理公司和典當行管理職責調整有關事宜的通知》) (the ‘‘ Notice 165 ’’) which was
promulgated by MOFCOM on 8 May 2018 and became effective on 8 May 2018, the
authority for developing the rules for business operation of finance lease companies,
commercial factoring companies, pawnshops and regulatory rules shall be delegated to
CBIRC since 20 April 2018. Although the competent authority in charge of regulating
finance lease companies in the PRC has changed, the relevant existing governing laws and
regulations of the finance lease industry are s till in force in the PRC, which play positive
role in deterring illegal acts and creating a healthy business environment for the
development of compliant and high-quality enterprises in the retail automobile finance
market.
REGULATORY OVERVIEW
–8 6–


--- page 96 ---
According to the interview with Fuzhou Local Financial Supervision and
Administration Supervision B ureau of Fujian Province* ( 福建省福州市地方金融監督管理
局) conducted by the PRC Legal Advisers on 24 July 2019, Fuzhou Local Financial
Supervision and Administration is and will be the supervising authority of finance lease
companies within Fuzhou, and as confirmed by Fuzhou Local Financial Supervision and
Administration, a foreign-invested finance l ease enterprise shall conduct its finance lease
business within the limits of the Measures fo r Finance Lease Enterprises which is also
applicable to the conduct of the finance lease business of a domestic-funded enterprise. The
limits of the Measures for Finance Lease Enter prises mainly include the followings: (1) a
finance lease company shall operate finance lease and other leasing businesses as its main
business; (2) the risk assets of a finance lease company shall not exceed 10 times of its total
net assets; (3) a finance lease company sha ll not engage in deposit-taking, lending, or
entrusted lending; and (4) a finance lease co mpany is prohibited from carrying out illegal
fund-raising activities under the disguise of finance lease in any circumstances.
Laws and regulations under the supervision of the CBIRC
On 16 October 2017, the People’s Bank of China and the CBRC (now known as
‘‘CBIRC ’’) promulgated the Notice on Adjusting Relevant Automotive Loan Policies ( 《關
於調整汽車貸款有關政策的通知》)( t h e‘ ‘Adjusting Notice ’’), which became effective on 1
January 2018. According to the Adjusting Notice, the maximum loan ratio is 80% for
purchasing self-use fossil fuel-powered vehicles, 70% for purchasing fossil fuel vehicles for
commercial use, 85% for purchasing self-use new energy vehicles (‘‘ NEVs ’’), 75% for
purchasing the NEVs for commercial use, and 70% for purchasing used vehicles.
On 26 May 2020, the CBIRC promulgated the Interim Measures for the Supervision
and Administration of Finance Lease Companies ( 《融資租賃公司監督管理暫行辦法》) (the
‘‘Interim Measures ’’) with the immediate effect, which made supplement and further
requirements for finance leas e enterprises on the basis of Measures for Finance Lease
Enterprises. According to the Interim Measures, the CBIRC shall be responsible for the
formulation of business operation and super vision and administration rules for finance
leasing companies and local financial regulatory authorities at the provincial level shall be
specifically responsible for the supervision an d administration of finance leasing companies
within their respective jurisdictions.
Pursuant to the Interim Measures, a finance lease company shall not engage in calling
loans with other finance leasing companies o r doing so in a disguised form, and shall not
engage in raising funds or transferring assets through P2P lending information
intermediaries or private investment fund s besides those activities not allowed by
Measures for Finance Lease Enterprises. Furthermore, the Interim Measures stipulated
different regulatory indicators on the assets of a finance lease company. Under the Interim
Measures, the proportion of finance leasing and other leasing assets of finance lease
companies shall not be lower than 60% of the t otal assets, and the total amount of risk
assets of finance lease companies shall not exc eed eight times of their net assets. The total
amount of risk assets shall be determined by deduction of cash, bank deposits and treasury
bonds from the enterprise’s total assets.
REGULATORY OVERVIEW
–8 7–


--- page 97 ---
Particularly, the Interim Measures regul ate a transition period which shall not exceed
three years in principle for the finance le ase companies established prior to the
implementation of Interim Measures to meet the requirements hereof. Local financial
regulatory authorities at the provincial level may appropriately extend the transitional
arrangements according to the actual situation of specific industries.
On 25 January 2022, Fujian Provincia l Local Financial Supervision and
Administration Bureau promulgated the Implementation Rules for the Supervision and
Administration of Financial Leasing Companies in Fujian Province (for Trial
Implementation) ( 《福建省融資租賃公司監督管理實施細則（試行）》)( t h e‘ ‘ Implementation
Rules in Fujian Province ’’) with immediate effect, which provided detailed guidance for
provincial authorities in the implementation process on the basis of Interim Measures.
According to Implementation Rules in Fujian P rovince, the Provincial Local Financial
Supervision and Administration Bureau is the supervision and management authority of all
financial leasing companies in the province and shall be responsible for formulating
provincial supervision policies and systems, organising the implementation of working
deployment, and carrying out counting, monitoring and analysing of the operation of the
financial leasing industry in the province. In the meanwhile, within the scope of their
respective responsibilities, the local financia l supervision and administration bureaus of
each district and city are particularly responsi ble for the daily supervision and management,
risk prevention and disposal of financial leasing companies within their respective
jurisdictions.
The Administrative Measure for Auto Fin ance Companies was first promulgated and
became effective on 3 October 2003 (the ‘‘ 2003 Version ’’), which provided that auto finance
companies are defined as non-bank financial legal entities charted by the China Banking
Regulatory Commission (the ‘‘ CBRC ’’, which is now being incorporated in the China
Banking and Insurance Regulatory Commission, the ‘‘ CBIRC ’’) in compliance with relevant
laws, regulations and the measures to provide loans for auto buyers and dealers in China. It
also provided that the establishment of an auto finance company shall be subject to the
approval of the CBRC. Without t he approval of the CBRC, no individual or entity shall be
allowed to establish an auto finance company. In the meanwhile, the 2003 Version forbids
any auto finance company to e stablish any branch office.
On 24 January 2008, the CBRC published a new version of the Administrative Measure
for Auto Finance Companies (the ‘‘ 2008 Version ’’) to substitute the 2003 Version. The 2008
Version first expanded the business scope of the auto finance company to provide
automobile finance lease service except for sa le and leaseback business. It also provided
that no auto finance company may establish any branch office unless being given special
approval by the CBRC. The Administrative Measure for Auto Finance Companies (Draft)
(the ‘‘Draft Version ’’) was promulgated by the CBIRC on 29 December 2022 for comments.
The Draft Version further expands the business scope of the auto finance company to
provide automobile finance lease service, including the sale and leaseback business, and to
provide finance and lease serv ice of automobile accessories.
REGULATORY OVERVIEW
–8 8–


--- page 98 ---
However, a finance lease company, suc h as our Group (a completely different
classification from the abovementioned auto f inance company), was originally supervised
by the Ministry of Commerce, according to the Notice of the Ministry of Commerce and the
State Administration of Taxation on Ma tters Related to Finance Lease Business ( 《商務部、
國家稅務總局關於從事融資租賃業務有關問題的通知》), which was issued on 22 October
2004 and provided that the Ministry of Commerce would carry out the finance lease work
for pilot domestic leasing enterprises. On 8 M ay 2018, the Ministry of Commerce published
the Notice of the General Office of the Min istry of Commerce on Matters Concerning
Adjustments to the Responsibility to Regulate F inancial Leasing Companies, Commercial
Factoring Companies and Pawn Shops ( 《商務部辦公廳關於融資租賃公司、商業保理公司和
典當行管理職責調整有關事宜的通知》), which delegated the responsibility for developing
rules for business operation and regulation s of finance lease companies, commercial
factoring companies, pawnshops to the CBIRC. Therefore, before 8 May 2018, a finance
lease company was not subject to the CBIRC.
Our Group was first approved to engage in finance lease business according to the
No. 75 Notice issued by the Ministry of Commerce and the State Administration of
Taxation on 2 March 2015, which confirmed XXF Group as one of the 13th Group of pilot
domestic finance lease company, which is not subject to approval is required from the
CBRC or the CBIRC, hence our Group is not a n auto finance company and thus is not
subject to the Draft Version.
Laws and regulations on Finance Lease Contract
The Contract Law of the PRC ( 《中華
人民共和國合同法》) (the ‘‘Contract Law ’’) was
promulgated by NPC on 15 March 1999 and became effective on 1 October 1999. The
Contract Law especially stipulates mandatory provisions on the financial lease contract in
Chapter 14.
On 28 May 2020, the NPC promulgated the PRC Civil Code ( 《中華人民共和國民法
典》) (the ‘‘Civil Code ’’), which came into effect on 1 January 2021 and repealed the Contract
Law.
According to the Civil Code, a finance lease contract is a contract under which a lessor
purchases leased goods from a seller on the ba sis of a lessee’s choice of the seller and leased
goods, and the lessor provides the goods for use by the lessee, for which the lessee pays rent.
The finance lease contracts shall be in written format.
Under the finance lease contracts, the lessor shall conclude a purchase contract based
on the lessee’s selections in respect of the seller and the leased property, and the seller shall
deliver the leased property to the lessee as agreed. The lessee has the rights of a buyer when
taking delivery of the leased property. Without the consent of the lessee, the lessor may not
modify relevant particulars related to the lessee of the purchase contract which has been
concluded based on the lessee’s selections in respect of the seller and the leased property.
REGULATORY OVERVIEW
–8 9–


--- page 99 ---
LAWS AND REGULATIONS ON THE AUTOMOBILE RETAIL INDUSTRY
On 21 May 2004, the NDRC promulgated the Policies for the Development of the
Automotive Industry ( 《汽車產業發展政策》) (the ‘‘Development Policies ’’) with immediate
effect, which was partially revised on 1 September 2009. According to the Development
Policies, it is imperative to foster an auto motive market with the focus on private
consumption, improve the automobile use environment, and safeguard the rights and
interests of automobile consumers. Automobile consumers shall be guided to purchase and
use low-energy, low-pollution, small-displacement, new-energy and new-power
automobiles, so as to strength en environmental protection.
The Plan on Adjusting and Revitalizing the Auto Industry ( 《汽車產業調整和振興規
劃》)( t h e‘ ‘Adjusting and Revitalizing Plan ’’) was promulgated by General Office of the State
Council on 20 March 2009 with immediate effect. According to the Adjusting and
Revitalizing Plan, the research and development of autos, productive logistics, auto retail
and after-sale services, auto lease, second -hand vehicle dealing, auto insurance,
consumption credit loans, parking service, retirement and recycling and other service
industries shall be accelerated, and the relevant administrative regulations, rules and
systems shall be improved.
On 30 March 2009, the MOFCOM, the Min istry of Industry and Information
Technology and the Ministry of Public Security jointly promulgated the Opinions on
Promoting the Auto Consumption ( 《關於促進汽車消費的意見》)( t h e‘ ‘ Promoting
Opinions ’’). According to the Promoting Opinions, the development of auto credit
consumption is supported. Particularly, the authorities shall boost the making of the
administrative regulation on the auto consu mption credit, improve the personal credit
management, encourage financial institutions to operate the consumption credit business
for new autos and second-hand autos, innovate in the credit products, simplify the credit
procedures, determine the interest rate of an auto loan for an individual based on the
borrower’s repayment ability, credit status an d other risk factors, and constantly expand
the credit auto consumption.
The Measures for the Adminis tration of Automobile Sales ( 《汽車銷售管理辦法》) (the
‘‘Sales Measures ’’) was promulgated by the MOFCOM of the PRC on 5 April 2017 and
became effective on 1 July 2017. According t o the Sales Measures, the dealers, who sell
automobiles without the authorisation of the suppliers, or who sell imported automobiles
without authorisation for sales by the overseas manufacturers, shall give a reminder and
explanation to the consumers in writing and inform the consumers of the subjects who
assume relevant responsibility in writing. T he suppliers shall follow the principles of
fairness, impartiality and transparency in developing or implementing business policies such
as marketing incentives. Unless otherwise agreed upon by both parties, the suppliers shall
not sell directly to consumers in the dealers’ authorised sales territory.
REGULATORY OVERVIEW
–9 0–


--- page 100 ---
On 25 August 2023, the Ministry of Industry and Information Technology, in
conjunction with seven other departments of the PRC, issued the ‘‘Work Plan for Stable
Growth of the Automotive Industry (2023–2024)’’. The primary objective of this plan is to
maintain a stable and positive development tra jectory for China’s automotive industry. The
plan outlines the government’s support for expanding the consumption of new energy
vehicles, stabilising the consumption of fue l vehicles, promoting automobile exports,
encouraging the obsolescence, renewal, and consumption of used cars, improving the
quality level of product supply, ensuring the stability of the industrial chain and supply
chain, and enhancing infrastructure construction and operation efficiency.
LAWS AND REGULATIONS ON THE AUTOMOBILE OPERATING LEASE
INDUSTRY
The Notice on Promoting the Healthy Development of the Automobile Lease Industry
(《關於促進汽車租賃業健康發展的通知》)( t h e‘ ‘Promoting Notice ’’) was promulgated by
Ministry of Transport of the PRC (‘‘ MOT’’) on 2 April 2011 with immediate effect.
According to the Promoting Notice, the automobile operating lease enterprises shall sign an
automobile operating lease contract with the lessee to provide vehicles that meet the
technical standards with complete and valid documents, and shall not engage in road
passenger or cargo transportation operations without permission. The Promoting Notice
sets out guidelines for the automobile lease industry and requires local governmental
authorities to promulgate local rules and regulations to improve and develop the regulatory
environment of the automobile operating lease industry. However, the automobile
operating lease industry is currently primar ily regulated by government authorities at
local levels, where regulatory requirements vary from one province or city to another.
According to the Regulations of Fujian Province on Road Transport ( 《福建省道路運
輸條例》) promulgated by the Standing Committee of Fujian Provincial People’s Congress
on 29 November 2013 and with effect from 1 January 2014, an automobile operating lease
enterprise shall acquire automobile lease busin ess license issued by the local road transport
management institution at or above the county level of Fujian Province before undertaking
automobile operating lease business.
LAWS AND REGULATIONS ON E-HAILING SERVICES
The Provisional Measures for Administration of E-Hailing Services ( 《網絡預約出租汽
車經營服務管理暫行辦法》) (the ‘‘ E-Hailing Measures ’’) were jointly approved and
promulgated by the Ministry of Industry and Information Technology, Ministry of
Public Security, MOFCOM, State Administration for Industry and Commerce, General
Administration of Quality Supervision, Inspection and Quarantine and the State Internet
Information Office on 27 July 2016 and became effective on 1 November 2016 and last
amended on 28 December 2019. On 30 November 2 022, the Ministry of Transport and other
five departments jointly revised the Provisio nal Measures for Administration of E-Hailing
Services ( 《網絡預約出租汽車經營服務管理暫行辦
法》). The revision further clarified that
the subjects of legal responsibility for fail ure to obtain relevant e-hailing permits in
REGULATORY OVERVIEW
–9 1–


--- page 101 ---
different circumstances. For failure to obta in the E-hailing Business Permit, an online
e-hailing platform company shall be fined. For f ailure to obtain the Transport Certificate
for E-hailing or the Driver License of E-hail ing, respective parties shall be fined.
Pursuant to the E-Hailing Measures, an e-hailing platform company refers to an
enterprise with legal person status that bu ilds an online service platform to provide
e-hailing services and such enterprise shall o btain the E-hailing Business Permit issued by
the local competent administrative departm ent of transport. The vehicle owner or the
e-hailing platform company shall apply for th e Transport Certificate for the E-hailing
vehicles and the competent administrative d epartment in charge of taxis at the place of
services shall issue the Transport Certific ate for E-hailing for the vehicles that meet the
conditions (including (i) passenger vehicles with seven seats or less; (ii) equipped with the
GPS tracking devices and emergency alarm devices with the driving recording function; and
(iii) the technical performance of the vehicle s shall meet the requirements of the relevant
standards for operational safety determined by the corresponding administrative
department in charge of taxis depending on the local actual conditions) and have been
registered as vehicles for e-hailing passenger transport. After reviewing the application
made by the vehicle owner or the e-hailing pla tform company in accordance with the above
vehicle requirements, the competent administrative department in charge of taxies in the
service location shall issue the Transport Certi ficate for E-hailing for the vehicles that meet
the conditions and have been registered as vehicles for booked passenger transport. Where
it is otherwise prescribed by the people’s governments of the cities for the issuance of the
Transport Certificate for E-hailin g, such provisions shall prevail.
According to the Notice on Maintaining Market Order for the Fair Competition and
Accelerating the Compliance of E-hailing Vehicles ( 《關於維護公平競爭市場秩序加快推進網
約車合規化的通知》), promulgated by General Office of Ministry of Transport and came
into effect on 7 September 2021, e-hailing vehi cles platform enterprises are prohibited to
any new access to non-compliant vehicles and drivers and shall accelerate their removal
process of existing non-compliant vehicles and drivers. Also, e-hailing vehicle platform
enterprises shall strengthen the safety education for e-hailing drivers.
Pursuant to Opinions on Strengthening the Protection of the Rights and Interests of
Employees in the New Transportation Industry ( 《關於加強交通運輸新業態從業人員權益保
障工作的通知》), jointly issued by Ministry of Trans port and other seven governmental
departments, which became effective on 17 Nov ember 2021, the e-hailing vehicles platform
enterprises shall (i) publish pricing rules and income distribution rules to drivers, passengers
and other relevant parties to protect the drivers’ right to know and supervise; (ii) participate
in social insurance for e-hailing drivers accord ing to the relevant labour relations; (iii) pay
salaries no less than the local minimum w age to qualified e-hailing drivers; and (
ⅳ)
scientifically determine the working hours and labour intensity of drivers to ensure that
they have enough rest time.
REGULATORY OVERVIEW
–9 2–


--- page 102 ---
According to the Notice on Strengthening the Work Related to the Joint Supervision
of the Whole Industry Chain of the E-hailing ( 《關於加強網絡預約出租汽車行業事中事後全
鏈條聯合監管有關工作的通知》), jointly issued by Ministry of Transport and other six
governmental departments, which became e ffective on 7 February 2022, all levels of
transportation departments, cyberspace depar tments, communications departments, public
security departments, the People’s Bank of China, taxation departments, industry
departments and commerce departments, ma rket supervision departments and other
departments should establish and improve the joint supervision mechanism, give full play
to their respective functions, closely coordinate and cooperate, strengthen information and
data sharing, and strengthen the supervisio n of relevant business behaviours of online
e-hailing platform enterprises.
According to the E-hailing Measures, (i) t he online e-hailing platform companies are
responsible to apply for and obtain the E-hailing B usiness Permit; (ii) the e-hailing vehicles
providers, such as our Group, are responsible to apply for and obtain the Transport
Certificate for E-hailing vehicles; (iii) the e-h ailing drivers are responsible to apply for and
obtain the Driver License for E-hailing vehic les. The E-hailing Measures also provide that
an online e-hailing platform company failing t o obtain the E-hailing Business Permit and
the party failing to obtain the Transport Cert ificate for E-hailing or the Driver License of
E-hailing shall be fined. According to the E-ha iling Measures, an online e-hailing platform
company failing to obtain E-ha iling Business Permit shall be fined not less than RMB10,000
nor more than RMB30,000; a party failing to obt ain Transport Certificate for E-hailing
vehicles shall be fined not less than RMB3,000 nor more than RMB10,000 in total; and a
party failing to obtain the Driver License for E-hailing shall be fined not less than RMB200
nor more than RMB2,000. Our Directors confirmed that our PRC subsidiary only serves as
an e-hailing vehicles provider, which neither ow ns the online service platforms nor operates
any e-hailing business. As advised by our PRC L egal Advisers and our Directors confirmed
that our PRC subsidiary was only responsible for obtaining Transport Certificates for
E-hailing vehicles during the Track Record Period. As advised by our PRC Legal Advisers
after due diligence and as confirmed by our Di rectors, all of our e-hailing vehicles under
operating lease and finance lease during t he Track Record Period and up to the Latest
Practicable Date have obtained Transport Cer tificates for E-hailing. In addition, if the
e-hailing drivers use a vehicle without the Transp ort Certificate for E-hailing to provide the
aforesaid services, the e-hailing platform comp any or the drivers in practice, other than the
e-hailing vehicle providers, may be ordered to make rectification or fined by the competent
administrative departments of transportatio n and prices. Therefore, as advised by the PRC
Legal Advisers, these four laws and regulat ions on e-hailing industry published recently
mainly regulate online e-hailing platform ente rprises and are not applicable to our Group’s
businesses, and do not have any bearing on our Group’s business and operation.
REGULATORY OVERVIEW
–9 3–


--- page 103 ---
On 24 May 2022, the Ministry of Transport issued the Measures for the
Administration of the Operation of Regulato ry Information Interactive Platforms for
E-hailing (the ‘‘Regulatory Information Interactive Platforms Measures ’’) (《網絡預約出租汽
車監管信息交互平台運行管理辦法》), which became effective on 1 July 2022. The
Regulatory Information Interactive Platform s Measures mainly stipulate that multi-level
regulatory information interactive platforms for e-hailing shall be established to
standardise data transmission and improve t he regulation efficiency of the e-hailing
industry. The Ministry of Transport shall guide the operation of regulatory information
interactive platforms at all levels. The competent transport departments shall be responsible
for the use, operation, and maintenance of the platforms at their respective levels. All online
e-hailing platform companies shall be responsi ble for standardising the operation and data
transmission of their respective platforms . As no obligations on the automobile lease
companies are provided, the Regulatory Info rmation Interactive Platforms Measures do
not have any material adverse impact on our business.
LAWS AND REGULATIONS ON THE CAR-SHARING INDUSTRY
T h eG u i d a n c eo nP r o m o t i n gt h eH e a l thy Development of Minibus Leasing ( 《關於促進
小微型客車租賃健康發展的指導意見》)( t h e‘ ‘Minibus Leasing Guidance ’’) was promulgated
by MOT and Ministry of Housing and Urban-Rural Development of the PRC on 4 August
2017 with immediate effect.
According to the Minibus Leasing Guidance, time-based lease service, commonly
known as car-sharing, is encouraged to be developed in the minibus leasing industry.
Car-sharing service shall be charged by minu tes or hours and shall take advantage of mobile
internet, GPS and other information technol ogy to build a network service platform, which
aims to provide users with self-service vehicle booking service, borrowing and returning
service, and paying service.
Pursuant to the Minibus Leasing Guidance, car-sharing lease operators, which require
minutely or hourly rental charges, shall not include chauffeured service along with
car-sharing and shall carry out identificatio n of lessee before delivering the rental cars to
the lessee. These operators shall have online service capability to carry out the identification
of lessees and achieve the balance between veh icle supply and demand at different times and
regions, and shall have the ability of offline operation service to ensure the good safety
condition of the vehicle, and shall adopt safe and compliant payment and settlement
services to ensure the security of the lessees’ deposits and funds and the safety of lessees’
personal information.
REGULATORY OVERVIEW
–9 4–


--- page 104 ---
LAWS AND REGULATIONS ON FINANCE GUARANTEE
The Administrative Regulations on Superv ision of Finance Guarantee Companies ( 《融
資擔保公司監督管理條例》) (the ‘‘Finance Guarantee Regulations ’’) were promulgated by the
State Council on 2 August 2017 and became effective on 1 October 2017.
According to the Finance Guarantee Regulations, a finance guarantee refers to the
activities where a guarantor provides a guarantee for debt finance such as borrowings or
debentures of a debtor. No organisation or individual shall operate a finance guarantee
business and no organisation shall use the word s ‘‘finance guarantee’’ in its company name
without approval by regulatory authorities, unless otherwise stipulated by the State
Council. In the event of a violation of the provisions of the Finance Guarantee Regulations
by establishing a finance guarantee company or operating finance guarantee businesses
without obtaining approval, violators shall be banned or ordered by the regulatory
authorities to cease operation, imposed a fine ranging from RMB0.5 million to RMB1.0
million, and confiscated illegal income; wher e the case constitutes a criminal offence,
criminal liability shall be pursued in accordance with the law.
On 9 October 2019, the Supplementary Regulations on Supervision of Finance
Guarantee Companies ( 《融資擔保公司監督管理補充規定》)( t h e‘ ‘ Supplementary
Regulations ’’) were jointly promulgated by CBIRC, NDRC, Ministry of Industry and
Information Technology, MOF, Ministry o f Housing and Urban-Rural Development,
Ministry of Agricultural and Rural Affair s, MOFCOM, PBOC and State Administration
for Market Regulation with immediate effect. According to the Supplementary Regulations,
a finance guarantee company shall be established in accordance with the Finance Guarantee
Regulations to operate guarantee businesse s. Without the approval of the regulatory
authorities, automobile dealers and automobile retail service providers are prohibited from
engaging in automobile consumption loan guarantee business and their existing relevant
business shall be properly settled.
On 27 May 2022, the Standing Committee of the Fujian Provincial People’s Congress
published the Regulations of Fujian Province on Local Financial Supervision and
Administration ( 《福建省地方金融監督管理條例》) (the ‘‘ Fujian Financial Supervision
Regulations ’’). According to the Fujian Financial Supervision Regulations, when
providing financial products or services, local financial organisations shall timely, truly,
accurately, and comprehensively disclose the information on operations, products and
services, adequately prompt risks, and sh all not make false or misleading publicity.
REGULATORY OVERVIEW
–9 5–


--- page 105 ---
LAWS AND REGULATIONS ON VALUE-ADDED TELECOMMUNICATION
SERVICES
Pursuant to the Telecommunications Regulations of the PRC( 《中華人民共和國電信條
例》)(the ‘‘Telecom Regulations ’’) promulgated by the State Council on 25 September 2000
with last amended on 6 February 2016 and the Catalogue of Telecommunications
Business(《電信業務分類目錄》) attached to the Telecom Regulations, and promulgated by
the Ministry of Industry and Information Technology of the PRC last amended on 6 June
2019 with immediate effect, telecommunications services are categorised as (i) basic or (ii)
value-added, and ‘‘online data processing and transaction processing services’’ business and
‘‘information service’’ business are regarded a s value-added telecommunication services
business. Online data processing and transaction processing services which the provision of
such would require to obtain the EDI Licence mainly refer to the usage of the data and
transaction application platforms connec ted to public communication networks or the
Internet for the provision of online data processing and transaction processing. Information
service business refers to the business of providing information services to users through the
Internet, including but not limited to informat ion collection, inform ation development,
information protection and processing, inf ormation release and delivery, information
exchange, information search and query, and the construction of information platforms.
According to the Administrative Measur es on Internet Information Services ( 《互聯網信息
服務管理辦法》) promulgated by the State Council (whi ch came into effect on 25 September
2000 and was last amended on 8 January 2011), which further regulated activities of
Internet information services, Internet infor mation services are divided into two types,
namely, (i) profitable Internet informatio n services; and (ii) non-profitable Internet
information services. Further, profitable Internet information services refer to the
provision of Internet information services with charge of payment. Service providers of
profitable Internet information services sha ll apply for a value-added telecommunication
services operating permit for Inte rnet information services (the ‘‘ ICP Licence ’’).
Further, pursuant to the Administrative Measures on Telecommunications Business
Permits ( 《電信業務經營許可管理辦法》), which became effective on 1 September 2017,
enterprises that undertake telecommunications business involved in EDI Licence and ICP
Licence without authorisation or beyond the approved scope shall be punished pursuant to
the provisions of the Telecom Regulations; whe re the case is serious and the enterprise is
ordered to suspend operation and make correction, the enterprise shall be included directly
in the list of dishonest telecommunications business operators.
Pursuant to the Circular of Ministry of Industry and Information Technology
concerning Lifting Restrictions on the Proportion of Foreign Equity in On-line Data
Processing and Transaction Processi ng Business (for-profit E-commerce) ( 《工業和信息化部
關 於放
開 在 線 數 據 處 理 與 交 易 處 理 業 務（ 經 營 類 電 子 商 務 ）外 資 股 比 限 制 的 通 告 》)( t h e
‘‘Circular 196 ’’), which were promulgated on 19 June 2015 with immediate effect, the
limitation on the proportion of foreign equity in on-line data processing and transaction
processing business (for-profit E-commerce) throughout the country were released and
c o u l db eu pt o1 0 0 % .
REGULATORY OVERVIEW
–9 6–


--- page 106 ---
The Regulations for the Administration of Mobile Internet Application Information
Services 2022 ( 《移動互聯網應用程序信息服務管理規定(2022) 》), which were promulgated
on 14 June 2022 and became effective on 1 August 2022, sets out the responsibilities of
information security management of an internet application programme provider, including
verification of real identities with the reg istered users through mobile phone numbers,
establishment and improvement of the mechanism for user information security protection,
and the verification and management mechanism for the information content, protection
and safeguard of users’ information rights and options during installation or use, respect
a n ds oo n .
LAWS AND REGULATIONS ON AUTO INSURANCE
A c c o r d i n gt ot h eL a wo ft h eP R Co nR o a dT r a f f i cS a f e t y(《道路交通安全法》) (the
‘‘Traffic Law ’’) promulgated on 28 October 2003 and last amended on 29 April 2021, traffic
accident insurance must be purchased for each v ehicle. Pursuant to relevant provisions of
the Regulation on Compulsory Auto Liability Insurance ( 《機動車交通事故責任強制保險條
例》) promulgated by the State Council on 21 March 2006 and last amended on 2 March
2019, the owner or manager of a motor vehicle operating on the roads within the PRC must
apply for the compulsory traffic accident liability insurance for motor vehicles in
accordance with the provisions of the Tra ffic Law, and the insurance company must
make indemnity payments within liability lim it to all victims, other than persons in the
insured vehicle, for their death, personal injur y or property losses suffered in a road traffic
accident involving the insured motor vehicle.
LAWS AND REGULATIONS ON TORT LIABILITY
Laws and Regulations on Tort Liability of Traffic Accident
P u r s u a n tt ot h eC i v i lC o d eo ft h eP R C(《中華人民共和國民法典》) (the ‘‘Civil Code ’’)
promulgated on 28 May 2020 and became effective on 1 January 2021, when the owner or
m a n a g e ri sn o tt h eu s e ro fam o t o rv e h i c l eu n der leasing or lending circumstances and the
motor vehicle party is liable for the occurrence of a traffic accident, the user of the motor
vehicle shall bear compensation liability; if the owner or manager of the motor vehicle is at
fault for the occurrence of damages, the owner or manager shall bear the corresponding
compensation liability.
The Tort Law of the PRC ( 《中華人民共
和國侵權責任法》) (the ‘‘ Tort Law ’’) was
promulgated on 26 December 2009 and became effective on 1 July 2010. Before being
repealed by the Civil Code on 1 January 2021, the Tort Law regulated the bearing of tort
liability in traffic accidents.
REGULATORY OVERVIEW
–9 7–


--- page 107 ---
According to the Traffic Law, where motor v ehicles are involved in traffic accidents
which cause personal injury or death or any property losses, the insurance company shall
make compensation within the limit of the compulsory third party liability insurance for
motor vehicles; the part not covered by such insurance shall be compensated according to
the following provisions: (1) where a traffic accident occurs between two motor vehicles, the
party in fault shall bear the liability; and wher e both parties are in fault, the liability shall be
shared on the basis of the proportion of each party’s fault; and (2) where a traffic accident
occurs between the driver of a motor vehicle and the driver of a non-motor vehicle or a
pedestrian, the driver of the motor vehicle sha ll bear the liability for compensation if the
driver of the non-motor vehicle or the pedestrian is not in fault; if there is evidence which
proves that the driver of the non-motor vehicle or the pedestrian is in fault, the liability for
compensation to be borne by the motor vehicle driver shall be appropriately lightened on
the basis of the degree of the fault; if the driver of the motor vehicle is not in fault, the
liability for compensation to be borne by him shall not exceed 10%. Where the losses in a
traffic accident are caused by the driver of a non-motor vehicle or a pedestrian who
deliberately runs into a motor vehicle, the driver of the motor vehicle shall not bear any
liability for compensation.
According to the Interpretation of the S upreme People’s Court on Several Issues
Concerning the Application of Law in the Hearing of Cases Involving Compensation for
Damages in Road Traffic Accidents ( 《最高人民法院關於審理道路交通事故損害賠償案件適
用法律若干問題的解釋》), which became effective on 21 December 2012 and last amended
on 1 January 2021, the vehicle owner will be determined as having fault if (i) the owner
knows or should know that the vehicle has a defect which constitutes one of the causes for
the traffic accident, (ii) knows or should know that the driver of the vehicle does not meet
the driving requirements or has not acquired corresponding driving qualifications; (iii)
knows or should know that the driver cannot drive the vehicle due to drinking, taking
psychoactive or narcotic drug, or having any disease that obstructs safe driving of the
vehicle; or (iv) has any other fault for the traffic accident.
Laws on Tort Liability of Personal Information
PRC governmental authorities have enacted laws and regulations on internet use to
protect personal information from any unauthorised disclosure. On 28 December 2012, the
SCNPC promulgated the Decision on Strengthening Network Information Protection ( 《關
於加強網絡信息保護的決定》) to enhance the legal protection of information security and
privacy on the internet. On 16 July 2013, th e Ministry of Industry and Information
Technology of the PRC promulgated the Provisions on Protection of Personal Information
of Telecommunication and Internet Users ( 《電信和互聯網用戶個人信息保護規定》)t o
regulate the collection and use of users’ personal information in the provision of
telecommunication services and internet information services in the PRC.
Telecommunication business o perators and internet service providers are required to
establish its own rules for collecting and use of users’ information and cannot collect or use
users’ information without users’ consent. Telecommunication bus iness operators and
internet service providers are prohibited from d isclosing, tampering with, damaging, selling
or illegally providing others with, collected personal information.
REGULATORY OVERVIEW
–9 8–


--- page 108 ---
On 7 November 2016, the Standing Committee of the National People’s Congress
(‘‘SCNPC ’’) published Cyber Security Law of the PRC ( 《中華人民共和國網絡安全法》),
which took effect on 1 June 2017 and requires network operators to perform certain
functions related to cyber security protection and the strengthening of network information
management. For instance, under the Cyber Security Law, network operators of key
information infrastructure shall store wit hin the territory of the PRC all the personal
information and important data collected an d produced within the territory of PRC and
their purchase of network products and services that may affect national securities shall be
subject to national cybersecurity review . Further, according to the Administrative
Provisions on Security Vulnerabilities of Cyber Products ( 《網絡產品安全漏洞管理規定》)
promulgated on 12 July 2021 and became effective on 1 September 2021, which were
enacted in accordance with Cyber Security Law of the PRC, Cyber product providers,
network operators and platforms for collectio n of cyber product security vulnerabilities
shall establish a sound unimpeded channel for receiving information on security
vulnerabilities of cyber products and ensure th at security vulnerabilities of their products
are timely repaired.
On 10 June 2021, the Standing Committee of the NPC published the Data Security
L a wo ft h eP R C(《中華人民共和國數據安全法》) (the ‘‘Data Security Law ’’) which became
effective on 1 September 2021. According to the Data Security Law, any organisation or
individual shall collect data by lawful and proper means and shall not acquire data by theft
or other illegal means.
The Personal Information Protection Law of the People’s Republic of China ( 《中華人
民共和國個人信息保護法》)( t h e‘ ‘Personal Information Protection Law ’’) was promulgated
by the Standing Committee of the National People’s Congress on 20 August 2021 and
became effective on 1 November 2021. Pursuant to the Personal Information Protection
Law, the processing of personal information requires the consent of the individual
concerned. In particular, ‘‘whereabouts and tracks’’ is a typical type of sensitive personal
information, which is subject to the individual’s separate consent to be processed. The
Personal Information Protection Law also clari fies that the personal information processor
shall formulate internal management syst ems and operating procedures, implement
category-based management of personal information, take corresponding technical
security measures such as encryption and de-identification, reasonably determine the
authority to process personal information and c onduct security education and training for
relevant employees on a regular basis, and for mulate and organise the implementation of
emergency plans for personal information security incidents to ensure the compliance of
personal information processing activities with relevant laws and prevent unauthorised
access and divulgence, falsification and loss of personal information.
REGULATORY OVERVIEW
–9 9–


--- page 109 ---
On 16 August 2021, CAC, NDRC, Ministry of Industry and Information Technology,
Ministry of Public Security and MOT jointly promulgated Several Provisions on
Automotive Data Security Manageme nt (for Trial Implementation) ( 《汽車數據安全管理
若干規定（試行）》) which were effective on 1 October 2021. The Automotive Data Security
Management Provisions expressly define ‘‘automotive data’’, ‘‘the processing of automotive
data’’, ‘‘automotive data processors’’, ‘‘personal information’’, ‘‘sensitive personal
information’’ and ‘‘important data’’. A ccording to the Automo tive Data Security
Management Provisions, the automotive data processor shall obtain the consent of the
individuals to process personal information.
On 30 July 2021, the State Council promulgat ed Security Protection Regulations for
Critical Information Infrastructure (the ‘‘ Security Protection Regulations ’’) (《關鍵信息基礎
設施安全保護條例》) which took effect on 1 September 2021. Pursuant to Security
Protection Regulations, crit ical information infrastructure refers to the important
network facilities and information systems in important industries and fields such as
public telecommunications, information services, energy, transportation, water
conservancy, finance, public services, e-government and national defense science,
technology and industry, as well as other imp ortant network facilities and information
systems which, in case of destruction, loss of function or leak of data, may result in serious
damage to national security, the national economy and the people’s livelihood and public
interests. No individual or organisation may ill egally invade, interfere with or destroy the
critical information infrastructure, or endanger the security of the critical information
infrastructure.
Laws and Regulations on Cybersecurity Review
China Cybersecurity Review Technology and Certification Center (CCRC, formerly
known as China Information Security Certification Center) undertakes network security
review technical support and certification work, according to Cybersecurity Review
Measures, which was promulgated by the CAC. The CAC is the rule-making authority and
the CCRC is responsible for undertaking the rules promulgated by the CAC.
On 16 November 2021, the Cyberspace Administration of China (the ‘‘ CAC’’), with
other governmental authorities, jointly issued the Cybersecurity Review Measures ( 《網絡安
全審查辦法》) (the ‘‘ Cybersecurity Review Measures ’ ’ ) ,w h i c hc a m ei n t oe f f e c to n1 5
February 2022. The Cybersecurity Review Measures provide that the procurement of
network products and services by critical information infrastructure operators ( 關鍵信息基
礎設施運營者) and the data processing activities carried out by network platform operators
(網絡平台運營者) that affect or may affect national security shall be subject to the
cybersecurity review by the CAC. Network platform operators holding personal
information of more than one million users seeking abroad public listing must apply for
a cybersecurity review as well. Critical inform ation infrastructure refers to any network
facilities and information systems in importa nt industries and fields that may seriously
endanger national security, national economy and people’s livelihood, and public interests
in the event that they are damaged or lose their functions or their data are leaked. As
advised by our PRC Legal Advisers, we do not hold or operate any of the abovementioned
properties, and the type of data we collect is mainly personal information, including our
REGULATORY OVERVIEW
–1 0 0–


--- page 110 ---
customers’ names, dates of birth, ID numbers, addresses, phone numbers, account numbers,
passwords, etc., hence we will not be considere d as a critical information infrastructure
operator. However, there are no relevant laws and regulations to define ‘‘online platform
operators’’, hence it is uncertain whethe r we will be considered as an online platform
operator. Our Directors confirmed as at the Latest Practicable Date, we had approximately
0.27 million registered users in total on o ur 52 Car APP, Kuai Ya Car Rental, a WeChat
mini programme ( 快呀租⾞微信小程序), Taoqi APP and Go Ziyou APP, which is far less
than one million. Our PRC Legal Advisers advis ed that the Cybersecurity Review Measures
do not apply to the Group’s business. In addition, the CAC may also voluntarily conduct
the cybersecurity review if any network produc ts and services and data processing activities
affect or may affect national security.
On 14 November 2021, the CAC released the Administration of Cyber Data Security
(Draft for Comments) ( 《網絡數據安全管理條例（徵求意見稿）》) (the ‘‘Draft Data Security
Regulations ’’). The Draft Data Security Regulati ons cover a wide range of cyber data
security issues and govern the use of networks to carry out data processing activities, as well
as the supervision and management of cyber data security in the PRC. The Draft Data
Security Regulations are applicable to the use of networks to carry out data processing
activities, and the supervision and management of network data security in the PRC, as well
as several situations of overseas data proces sing activities that process personal and
organisational data of PRC. We conducted a verbal consultation with the CCRC on 15
December 2022 for clarification. The interviewee opined that the cybersecurity review will
not apply to enterprises seeking public listin gs in Hong Kong. As advised by our PRC Legal
Advisers, the Draft Data Securi ty Regulations mainly stipula te that the data processor shall
establish relevant security mechanisms to protect data and apply for a cybersecurity review
when applying for a public listing. The Draft Data Security Regulations do not impose
restrictions on a company’s daily operation and therefore, will not have any material
adverse impact on our Group’s business operations.
As confirmed by our Directors, as at the Lat est Practicable Date, we were not involved
in any investigations on the cybersecurity review made by the CAC, and we had not received
any inquiry, notice or warning, or been subject to any penalties or sanctions in such respect.
As advised by our PRC Legal Advisers, our Group’s relevant internet data protection
mechanism has been established. Our Directors confirmed as at the Latest Practicable Date
we had approximately 0.27 million registe red users in total on our 52 Car APP, Kuai Ya
Car Rental, a WeChat mini programme ( 快呀租⾞微信小程序) ,T a o q iA P Pa n dG oZ i y o u
APP, which is far less than one million users. In the event such number exceeds one million
in the future, according to the Cybersecurity Review Measures and the Draft Data Security
Regulations, which would be effective in the future, there is a possibility that we may be
considered as ‘‘online platform operator’’ by the CAC, and thus need to apply for
cybersecurity review. According to the Cybersecurity Regulations, to file an application for
cybersecurity review, the operator shall submit a list of documents, including a written
declaration and an analysis report concerning the impact or possible impact on national
security, the procurement documents, and business agreements and/or IPO related
application documents, etc. As confirmed by our Directors, we will be able to provide
these documents timely and accurately. In addition, the Cybersecurity Regulations do not
require the applicant to suspend the business until the completion of the cybersecurity
REGULATORY OVERVIEW
–1 0 1–


--- page 111 ---
review. Therefore, as advised by our PRC Legal A dvisers, if the Cybersecurity Regulations
takes effect in the current form in the future, the Group does not have any obstacles in
meeting the requirements and completing the application timely.
Accordingly, our PRC Legal Advisers advised, and our Directors concur, that (i) our
Group would be able to comply with the Cyberse curity Regulations in all material aspects;
(ii) the Cybersecurity Regulations would not have any material adverse impact on our
business operations; and (iii) our Listing in Hong Kong will not g ive rise to national
security risks based on the factors set out in Article 10 of the Cybersecurity Review
Measures, assuming the Draft Da ta Security Regulations are implemented in their current
form. The PRC legal advisers to the Sole S ponsor and the Sole Sponsor concur with the
aforesaid view of our PRC Legal Advisers.
LAWS AND REGULATIONS ON FOREIGN EXCHANGE
The Foreign Exchange Control Regulations of the PRC ( 《中華人民共和國外匯管理條
例》) (the ‘‘Foreign Exchange Regulations ’’), promulgated by the State Council on 1 April
1996 and last amended on 5 August 2008, are applicable to all activities related to the
foreign exchange receipts and disbursements and transactions of domestic corporations and
individuals and to the said activities of overse as corporations and individuals within the
territory of the PRC. The Foreign Exchange Regulations stipulate that all international
disbursement and transfer of funds are classified under current account and capital account.
Approval from SAFE is not required for most current account transactions, but is required
for capital account-transactions.
SAFE Circular 59
According to the Circular of SAFE on Further Improving and Adjusting Foreign
Exchange Administration Policies on Foreign Direct Investment ( 《國家外匯管理局關於進
一步改進和調整直接投資外匯管理政策的通知》) (the ‘‘SAFE Circular 59 ’’), promulgated on
19 November 2012 and last amended and b ecame effective on 30 December 2019, the
opening of various special purpose foreign exch ange accounts (e.g. pre-investment expenses
account, foreign exchange capital account, asset realisation account, guarantee account) no
longer requires the approval of SAFE. Furthermore, multiple capital accounts for the same
entity may be opened in different provinces, which was not possible before the issuance of
SAFE Circular 59. Reinvestment of lawful inco mes derived by foreign investors in the PRC
(e.g. profit, proceeds of equity transfer, capit al reduction, liquidation and early repatriation
of investment) no longer requires SAFE’s approval or verification, and purchase and
remittance of foreign exchange as a result of capital reduction, liquidation, early
repatriation or share transfer in a foreign-in vested enterprise no longer requires SAFE’s
approval.
REGULATORY OVERVIEW
–1 0 2–


--- page 112 ---
SAFE Circular 13
According to the Circular of SAFE on Further Simplifying and Improving the Direct
Investment-related Foreign Administration Policies ( 《國家外匯管理局關於進一步簡化和改
進直接投資外匯管理政策的通知》)( t h e‘ ‘SAFE Circular 13 ’ ’ ) ,w h i c hb e c a m ee f f e c t i v eo n1
June 2015 and was last amended on 30 Decembe r 2019, the foreign exchange registration
under domestic direct investment and the foreign exchange registration under overseas
direct investment shall be directly reviewed and handled by banks in accordance with the
SAFE Circular 13, and the SAFE and its branches shall perform indirect regulation over the
foreign exchange registration via banks.
SAFE Circular 19
According to the Circular of SAFE on Reforming the Administrative Approach
Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises
(《國家外匯管理局關於改革外商投資企業外匯資本金結匯管理方式的通知》) (the ‘‘ SAFE
Circular 19 ’’), which became effective on 1 Ju ne 2015 and was last amended on 30
December 2019, the system of willingness-based f oreign exchange settlement is adopted for
the foreign exchange capital of foreign-invested enterprises which refers to that the foreign
exchange capital, for which the monetary contribution has been confirmed by the foreign
exchange authorities (or for which the monetary contribution has been registered for
account entry) in the capital account of a foreign-invested enterprise may be settled at a
bank as required by the enterprise’s actual management needs. The proportion of
willingness-based foreign exchange settlement o f capital for a foreign-invested enterprise
is temporarily set at 100%. The RMB funds obtained by a foreign-invested enterprise from
its willingness-based exchange settlement of cap ital shall be included in a foreign exchange
settlement account for pending payment and shall be used within the approved business
scope of the foreign-invested enterprise. The foreign-invested enterprise still needs to
provide the supporting documents and go through the review process with the banks when
further payment is made from such account. In particular, under the SAFE Circular 19,
domestic equity investments from the ex change settlement funds are allowed after
performing relevant procedures.
SAFE Circular 16
The Notice of SAFE on Policies for Refo rming and Regulating the Control over
Foreign Exchange Settlemen t under the Capital Account ( 《國家外
匯管理局關於改革和規範
資本項目結匯管理政策的通知》) (the ‘‘SAFE Circular 16 ’’), which became effective since 9
June 2016, implements nationwide the reform of the control mode for foreign exchange
settlement of foreign debts of enterprise s. According to SAFE Circular 16, domestic
enterprises (including Chinese-funded ente rprises and foreign-invested enterprises,
excluding financial institutio ns) may complete foreign exchange settlement formalities for
their foreign debts at their discretion and the foreign exchange receipts under the capital
account of a domestic institution shall be used within the business scope of the domestic
institution and under the principl es of authenticity and for itself.
REGULATORY OVERVIEW
–1 0 3–


--- page 113 ---
Regulations on Stock Incentive Plans
In February 2012, SAFE promulgated the Notice on Foreign Exchange Administration
of PRC Residents Participating in Share Ince ntive Plans of Offshore Listed Companies ( 《國
家外匯管理局關於境內個人參與境外上市公司股權激勵計劃外匯管理有關問題的通知》) (the
‘‘Stock Option Rules ’’), replacing the previous rules issued by SAFE in March 2007. Under
the Stock Option Rules and other relevant rules and regulations, PRC residents who
participate in a stock incentive plan in an overseas publicly-listed company are required to
register with SAFE or its local branches and complete certain other procedures.
Participants of a stock incentive plan who ar e PRC residents must retain a qualified PRC
agent, which could be a PRC subsidiary of the overseas publicly-listed company or another
qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and
other procedures with respect to the stock incentive plan on behalf of its participants. The
participants must also retain an overseas entrusted instituti on to handle matters in
connection with their exercise of stock options, the purchase and sale of corresponding
stocks or interests and fund transfers. In addition, the PRC agent is required to amend the
SAFE registration with respect to the stock in centive plan if there is any material change to
the stock incentive plan, the PRC agent or th e overseas entrusted institution or other
material changes. The PRC agents must, on behalf of the PRC residents who have the right
to exercise the employee share options, apply to SAFE or its local branches for an annual
quota for the payment of foreign currencies in connection with the PRC residents’ exercise
of the employee share options. The foreign exchange proceeds received by the PRC
residents from the sale of shares under the stock incentive plans granted and dividends
distributed by the overseas listed companies must be remitted into the bank accounts in the
PRC opened by the PRC agents before distribution to such PRC residents. In addition,
SAFE Circular 37 provides that PRC residents who participate in a share incentive plan of
an overseas unlisted special purpose company may register with SAFE or its local branches
before exercising rights.
LAWS AND REGULATIONS ON OVERSEAS INVESTMENT
The Circular of the SAFE on Issues Concerning Foreign Exchange Administration
Over the Overseas Investment and Financing and Round-Trip Investment by Domestic
Residents via Special Purpose Vehicles ( 《國家外匯管理局關於境內居民通過特殊目的公司境
外投融資及返程投資外匯管理有關問題的
通知》) (the ‘‘SAFE Circular 37 ’’) promulgated by
SAFE on 4 July 2014 with immediate effect requires PRC residents or entities to register
with SAFE or its local branch in connection with their establishment or control of an
offshore entity established for the purpose of ov erseas investment or financing. In addition,
such PRC residents or entities must update their SAFE registrations when the offshore
special purpose vehicle undergoes material events relating to any change of basic
information (including change of such PRC citizens or residents, name and operation
term), increases or decreases in investment amount, transfers or exchanges of shares, or
mergers or divisions.
REGULATORY OVERVIEW
–1 0 4–


--- page 114 ---
The SAFE Circular 37 was issued to replac e the Notice on Relevant Issues Concerning
Foreign Exchange Administration for PR C Residents Engaging in Financing and
Roundtrip Investments via Overseas Special Purpose Vehicles ( 《國家外匯管理局關於境內
居民通過境外特殊目的公司融資及返程投資外匯管理有關問題的通知》)i s s u e db yS A F Eo n
21 October 2005. SAFE further enacted the C ircular 13, which allows PRC residents or
entities to register with qualified banks with respect to their establishment or control of an
offshore entity established for the purpose of overseas investment or financing. However,
remedial registration applications made by PR C residents that previously failed to comply
with the SAFE Circular 37 continue to fall under the jurisdiction of the relevant local
branch of SAFE. In the event that a PRC shareholder holding interests in a special purpose
vehicle fails to fulfil the required SAFE regis tration, the PRC subsidiaries of that special
purpose vehicle may be prohibited from distrib uting profits to the offshore parent and from
carrying out subsequent cross-border foreign exchange activities, and the special purpose
vehicle may be restricted in its ability to contribute additional capital into its PRC
subsidiary. Moreover, failure to comply with the various SAFE registration requirements
described above could result in liability unde r PRC laws for evasion of foreign exchange
controls.
Pursuant to the Administrative Measures for the Outbound Investment of Enterprises
(《企業境外投資管理辦法》), which were promulgated by NDRC on 26 December 2017 and
became effective on 1 March 2018, the State adopts approval administration and filing
administration for overseas investment projects respectively according to different
circumstances. An overseas investment proje ct that involves any sensitive country or
region or any sensitive industry is to be approved by NDRC. Under the circumstances, with
regard to an overseas investment project with C hinese party’s investment amount of not less
than USD300 million, NDRC is in charge of the record-filing.
Pursuant to the Measures on the Administration of Overseas Investment ( 《境外投資管
理辦法》), promulgated by MOFCOM on 6 September 2014 and became effective on 6
October 2014, overseas investments refer to possessing of non-financial enterprises abroad
or acquisition of the ownership of, control over, business management right of, or other
rights and interests of existing overseas non-financial enterprises by enterprises established
in the PRC through newly establishment or m ergers and acquisitions or other methods.
Other than the overseas investments involving sensitive countries, regions or sensitive
industries which are subject to approval, all o ther overseas investments are subject to filing
administration.
REGULATORY OVERVIEW
–1 0 5–


--- page 115 ---
LAWS AND REGULATIONS ON ESG-RELATED MATTERS
Laws and Regulations on Labour Protection
According to the Labour Law of the PRC ( 《中華人民共和國勞動法》)p r o m u l g a t e do n
5 July 1994 with effect from 1 January 1995 and revised on 27 August 2009 and 29
December 2018, and the Labour Contract Law of the PRC ( 《中華人民共和國勞動合同法》)
(the ‘‘Labour Contract Law ’’) promulgated on 29 June 2007 and amended on 28 December
2012 with effect from 1 July 2013, if an employm ent relationship is established between an
enterprise and its employees, written labour contracts shall be executed between them. The
relevant laws stipulate the maximum number of working hours per day and per week,
respectively. The relevant laws also set out the minimum wage. The enterprises shall
establish and develop systems for occupational safety and sanitation, implement the rules
and standards of the PRC government on occu pational safety and sanitation, educate
employees on occupational safety and sanitation, prevent accidents at work and reduce
occupational hazards.
Pursuant to the Social Insurance Law of the PRC ( 《中華人民共和國社會保險法》) (the
‘‘Social Insurance Law ’’), which became effective on 1 July 2011 and amended on 29
December 2018, all employees ar e required to participate in basic pension insurance, basic
medical insurance schemes and unemployment insurance, which must be contributed by
both the employers and the employees. All employees are required to participate in
work-related injury insurance and maternity i nsurance schemes, which must be contributed
by the employers. Employers are required to c omplete registrations with local social
insurance authorities. Moreover, the emplo yers must timely make all social insurance
contributions. Except for mandatory exceptions such as force majeure, social insurance
premiums may not be paid late, reduced or be exempted. Where an employer fails to make
social insurance contributions in full and o n time, the social insurance contribution
collection agencies shall order it to make all or outstanding contributions within a specified
period and impose a late payment fee at the rate of 0.05% per day from the date on which
the contribution becomes due. If such employer fails to make the overdue contributions
within such time limit, the relevant administrative department may impose a fine equivalent
to one to three times of the overdue amount.
According to the Regulations on the Administration of Housing Provident Fund ( 《住
房公積金管理條例》), which were promulgated and became effective on 3 April 1999, and
were last amended on 24 March 2019, housing provident fund contributions by an
individual employee and housing provident fund contributions by his or her employer shall
belong to the individual employee. The employer shall timely pay up and deposit housing
provident fund contributions in full amount and late or insufficient payments shall be
prohibited. The employer shall process housing provident fund payment and deposit
registrations with the housing provident fund administration centre. With respect to
companies who violate the above regulations and fail to process housing provident fund
payment and deposit registrations or open housing provident fund accounts for their
employees, such companies shall be ordered by the housing provident fund administration
centre to complete such procedures within a d esignated period. Those who fail to process
their registrations within the designated p eriod shall be subject to a fine ranging from
REGULATORY OVERVIEW
–1 0 6–


--- page 116 ---
RMB10,000 to RMB50,000. When companies breach the regulations and fail to pay up
housing provident fund contributions in full amount as due, the housing provident fund
administration centre shall order such compan ies to pay up within a designated period, and
may further apply to the People’s Court for mandatory enforcement against those who still
fail to comply after the expiry of such period.
Laws and Regulations on Environmental Protection
Pursuant to the Environmental Protection Law of the People’s Republic of China ( 《中
華人民共和國環境保護法》), which was promulgated by Standing Committee of the
National People’s Congress on 24 April 2014 and became effective on 1 January 2015,
enterprises, institutions and other manufacturing operators shall prevent and reduce
environmental pollution and ecological damage, and shall be liable for damages caused by
them pursuant to the law.
Laws and Regulations on Market Order Protection
Pursuant to the Law of the People’s Repub lic of China on the Protection of Rights and
Interests of Consumers ( 《中華人民共和國消費者權益保護法》), which was promulgated by
Standing Committee of the National People’s Congress on 25 October 2013 and became
effective on 15 March 2014, Business operators engaging in provision of goods or services
to consumers shall not set unfair and unreasonable trading conditions and shall not compel
transactions. If business operators need collect and use personal information of consumers,
they shall adhere to the principles of legitimacy, bona fide and necessity, state expressly the
purpose, method and scope of collection and use of information, and shall obtain the
consent of consumers.
According to Law of the People’s Republic of China Against Unfair Competition ( 《中
華人民共和國反不正當競爭法》), which was promulgated by Standing Committee of the
National People’s Congress on 23 April 2019 and became effective simultaneously, business
operators shall not commit certain acts to mislead others to misidentify their goods as
others’ goods or to associate their goods with others. If business operators make use of
cyber network for their production and business activities, they shall not make use of
technical means to commit acts to hinder and disrupt normal operation of the cyber
products or services provided legitimately by other business operators.
LAWS AND REGULATIONS ON HO USE LEASING REGISTRATION
Pursuant to the Administrative Measures for Commodity House Leasing ( 《商品房屋租
賃管理辦法》), which were promulgated by Ministry of Housing and Urban-Rural
Development of the PRC on 1 December 2010 and became effective on 1 February 2011,
a lease shall be filed with the local construction (real estate) administrative department, and
fines ranging from RMB1,000 to RMB10,000 for each unregistered leasing property may be
imposed by the local construction (real estate) administrative department for such
violation.
REGULATORY OVERVIEW
–1 0 7–


--- page 117 ---
According to the Civil Code, if the parties to a lease contract fail to go through the
formalities of registration of such contract i n accordance with the provisions of laws and
administrative regulations, the effectiveness of the contract shall not be affected.
LAWS AND REGULATIONS ON INTELLECTUAL PROPERTY PROTECTION
Trademarks
According to the Trademark Law of PRC ( 《中華人民共和國商標法》)l a s ta m e n d e d
and newly effective on 1 November 2019 a nd its Implementation Regulations ( 《中華人民共
和國商標法實施條例》) promulgated on 29 April 2014 and with effect from 1 May 2014,
registered trademarks are those that have been approved and registered by the Trademark
Office, including commodity trademarks, se rvice trademarks, collective marks and
certification marks. Trademark registrants shall be entitled to the right to exclusive use
of their trademarks and shall be protected by law. The period of validity of a registered
trademark shall be 10 years from the day the registration is approved. If a registrant needs
to continue to use the registered trademark after the period of validity expires, an
application for renewal of registration s hall be made within 12 months before the
expiration. If the registrant fails to make such an application within that period, an
extension period of six months may be granted. The period of validity for each renewal of
registration shall be 10 years after expiry of the previous valid term.
Patents
According to the Patent Law of the PRC ( 《中華人民共和國專利法》)p r o m u l g a t e do n
12 March 1984 and last amended on 17 October 2020 and with effect from 1 June 2021 and
its Implementation Rules ( 《中華人民共和國專利法實施細則》) promulgated 19 January
1985 and last amended on 9 January 2010 and with effect from 1 February 2010, the State
provides patent protection to three categor ies of patents, namely invention, utility model
and design. An invention or utility model for wh ich a patent is to be granted shall be novel,
inventive and practically applicable. Any desi gn for which a patent is to be granted shall not
be attributed to the existing design, and no entity or individual has, before the date of
application, filed an application with the pa tent administrative department of the State
Council on the identical design and recorded it in the patent documents published after the
date of application. The duration of patent rights shall be twenty years for an invention, ten
years for a utility model and fifteen years for a design, all from the date of application.
Copyrights
In order to further protect the computer software, the Computer Software Protection
Regulations ( 《計算機軟件保護條例
》) promulgated by the State Council on 20 December
2001 and last amended on 30 January 2013 provides that the software copyright holder is
entitled to the right of publication, acknowledgement, alteration, reproduction,
distribution, leasing, dissemination through information networks, translation, etc. In
addition, the State Copyright Bureau issued th e Computer Software Copyright Registration
Procedures (《計算機軟件著作權登記辦法》) on 20 February 2002, which applies to software
copyright registration, license contract regi stration and transfer contract registration.
REGULATORY OVERVIEW
–1 0 8–


--- page 118 ---
Domain Names
Internet domain name registration and rela ted matters are primarily regulated by the
Measures on Administration of Internet Domain Names ( 《互聯網域名管理辦法》)
promulgated by the Ministry of Industry and Information Technology on 24 August
2017 and with effect from 1 November 2017, and the Announcement on Promulgation and
Implementation of a Series of Provisions of the Implementing Rules for the Registration of
National Top-level Domain Names ( 《關於發佈並實施〈國家頂級域名註冊實施細則〉系列
規定的公告》) promulgated by the China Internet Network Information Center on 18 June
2019 with immediate effect. Domain name registrations are handled through domain name
service agencies established under the releva nt regulations, and the applicants become
domain name holders upon successful registration.
LAWS AND REGULATIONS ON TAXATION
Enterprise Income Tax
Pursuant to the Enterprise Income Tax Law of the PRC ( 《中華人民共和國企業所得稅
法》)( t h e‘ ‘EIT Law ’’) which became effective on 1 Ja nuary 2008, last amended and with
effect on 29 December 2018 and the Implementation Rules of the Law of the PRC ( 《中華人
民共和國企業所得稅法實施條例》), which became effective on 1 January 2008 and last
amended and with effect on 23 April 2019, non-resident enterprises which have
establishments or premises of business in the PRC are subject to Enterprise Income Tax
on their income sourced from China by such establishments or premises of business in
China and on their income sourced from outside the PRC which is effectively connected
with such establishments or premises of business. Non-resident enterprises, which do not
have establishments or premises of business in the PRC, or which have establishments or
premises of business in the PRC but relevant income is not effectively connected with such
establishments or premises of business, are sub ject to enterprise income tax on their income
sourced from the PRC. The tax rate for enterprise income tax is 25% under the EIT Law.
For a non-resident enterprise having no office or establishment inside the PRC, or for a
non-resident enterprise whose incomes have no actual connection to its institution or
establishment inside the PRC, it shall pay en terprise income tax on the incomes derived
from the PRC at a reduced tax rate of 10%. Pursuant to the Notice of MOF and STA on the
Preferential Corporate Income Tax Policy and Catalogues for Hengqin New Area of
Guangdong Province, Pingtan Comprehensive Experimental Area of Fujian Province and
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone ( 《財政
部、國家
稅務總局關於廣東橫琴新區福建平潭綜合實驗區深圳前海深港現代服務業合作區企業所得稅
優惠政策及優惠目錄的通知》) promulgated on 25 March 2014 and with effect on 1 January
2014, the enterprises that engage in encouraged industries in Hengqin New Area of
Guangdong Province, Pingtan Comprehensive Experimental Area of Fujian Province and
Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone are eligible for
corporate income tax at a reduced rate of 15%, which were valid until 31 December 2020.
The aforesaid enterprises that engage in encouraged industries refer to the enterprises whose
primary businesses are any of the industrial projects listed in the Preferential Corporate
Income Tax Catalogue ( 《企業所得稅優惠目錄》), and whose revenue from the primary
businesses accounts for more than 70% of th eir total revenue. On 27 May 2021, MOF and
REGULATORY OVERVIEW
–1 0 9–


--- page 119 ---
STA jointly promulgated the Notice on the Continued Preferential Corporate Income Tax
Policy for Pingtan Comprehensive Experimental Area of Fujian Province ( 《關於延續福建平
潭綜合實驗區企業所得稅優惠政策的通知》) which became effective on 1 January 2021 and
until 31 December 2025. The enterprises whose primary businesses are any of the industrial
projects listed in the Preferential Corporate Income Tax Catalogue for Pingtan
Comprehensive Experimental Area (2021) ( 《平潭綜合實驗區企業所得稅優惠目錄（2021
版）》), and whose revenue from the primary businesses accounts for more than 60% of
their total revenue are eligible for cor porate income tax at a reduced rate of 15%.
Pursuant to the Arrangement Between the Mainland of China and the Hong Kong
Special Administrative Region for the Avoidance of Double Taxation and the Prevention of
F i s c a lE v a s i o nw i t hR e s p e c tt oT a xo nI n c o m e(《內地和香港特別行政區關於對所得避免雙
重徵稅和防止偷漏稅的安排》) (the ‘‘Double Tax Avoidance Arrangement ’’) promulgated on
21 August 2006 with immediate effect, and other applicable PRC laws, if a Hong Kong
resident enterprise is determined by the competent tax authority in the PRC to have
satisfied the relevant conditions and requirements under such Double Tax Avoidance
Arrangement and other applicable laws, the 10% withholding tax on the dividends the
Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to
5% upon receiving approval from in-charge tax authority. However, based on the Notice on
Certain Issues with Respect to the Enforcement of Dividend Provisions in Tax Treaties ( 《關
於執
行稅收協定股息條款有關問題的通知》) (the ‘‘Notice 81 ’’) issued on 20 February 2009 by
State Taxation Administration ( 國家稅務總局,‘ ‘STA’’), if the relevant PRC tax authorities
determine, in their discretion, that a company benefits from such reduced income tax rate
due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities
may adjust the preferential tax treatment.
Pursuant to the Public Announcement o f the STA on Several Issues Relating to
Enterprise Income Tax on Transfer of Asse ts between Non-resident Enterprises ( 《關於非居
民企業間接轉讓財產企業所得稅若干問題的公告》)( t h e‘ ‘Circular 7 ’’) promulgated by STA
on 3 February 2015 and last amended on 29 D ecember 2017 with immediate effect, and the
Public Announcement of the STA on Issues Rela ting to Withholding at Source of Income
Tax of Non-resident Enterprises ( 《關於非居民企業所得稅源泉扣繳有關問題的公告》) (the
‘‘STA Circular 37 ’’) promulgated by STA on 17 October 2017 and amended on 15 June 2018
with immediate effect, if the non-resident enterprises indirectly transfer the assets such as
the equity interest of PRC resident enterprise s through the implementation of arrangements
without reasonable commercial purposes eva ding EIT liability, such transfer shall be
deemed as the direct transfer of assets such as the equity interest of PRC resident enterprises
according to the Article 47 of the EIT Law (the ‘‘ PRC Taxable Assets ’’).
REGULATORY OVERVIEW
–1 1 0–


--- page 120 ---
Circular 7 provides two exemptions: (i) wher e a non-resident enterp rise derives income
from the indirect transfer of PRC Taxable assets by acquiring and selling equity interests of
the same listed overseas company on a public market; and (ii) where the non-resident
enterprise had directly held and transferred s uch PRC Taxable assets, the income from the
transfer of such PRC Taxable assets would hav e been exempted from enterprise income tax
in the PRC under an applicable tax treaty or arrangement. Therefore, a Shareholder buying
and selling our Shares on a public market after t he Listing is unlikely to be considered to
indirectly transfer equity interest or other assets in any of our PRC subsidiaries held by our
Company.
It is also stated in Circular 7 that an indir ect transfer of PRC Taxable Assets shall be
deemed to have reasonable commercial purpose if it meets all of the following conditions:
(i) parties to the indirect transfer have one of t he following equity-holding relationships: (a)
the transferor, directly or indirectly, holds over 80% of the equity interest in the transferee;
(b) the transferee, directly or indirectly, holds over 80% of the equity interest in the
transferor; or (c) over 80% of the equity interest in each of the transferee and the transferor
is held, directly or indirectly, by the same pa rty. To the extent that the offshore company
derives directly or indirectly more than 50% of its value from real estate in the PRC, the
equity-holding threshold shall be 100%; for the aforesaid indirect shareholding, the equity
interest shall be calculated by multiplying th e equity-holding percen tage at each level; (ii)
the indirect transfer does not result in a red uction in the PRC income tax payable on the
proceeds from a potential subsequent indirect transfer of the same PRC Taxable Properties;
and (iii) the transferee pays the consideration for the indirect transfer solely in the form of
its shares or the shares of entities of which the transferee is a controlling shareholder
(excluding shares of publicly listed companies).
Value-added Tax
Pursuant to the Provisional Regulations on Value-added Tax of the PRC ( 《中華人民共
和國增值稅暫行條例》) which became effective on 1 January 2009 and last amended on 19
November 2017 and the Detailed Rules for the Implementation of the Provisional
Regulations of the PRC on Value-added Tax ( 《中華人民共和國增值稅暫行條例實施細則》)
which was promulgated by MOF on 25 December 1993 and last amended on 28 October
2011, all enterprises and individuals engaging in sale of goods, the provision of labour
services of processing, repair and maintenance, sale of services, intangible assets and real
estate and importation of goods within the territory of the PRC shall be the taxpayers of
value-added tax (the ‘‘ VAT’’), and shall pay the VAT pursuant to these Regulations.
Generally the tax rate for taxpayers engaging in sale of goods, labour services, lease of
tangible movables or importation of goods shall be 17%, and the tax rate engaging in sale
of services and intangible assets may be 6% pursuant to these Regulations.
According to the Notice of MOF and STA on Adjusting Value-added Tax Rates ( 《財
政部、國家稅務總局關於調整增值稅稅率的通知》)( t h e‘ ‘Notice on VAT
’’), which became
effective on 1 May 2018, for taxpayers who have the VAT taxable sales activities or
imported goods, the previous applicable value-added tax rates of 17% are adjusted to be
16%.
REGULATORY OVERVIEW
–1 1 1–


--- page 121 ---
According to the Announcement on Relevant P olicies for Deepening Value-Added Tax
Reform ( 《關於深化增值稅改革有關政策的公告》)( t h e‘ ‘ Announcement on VAT ’’),
promulgated by MOFCOM, STA and General Administration of Customs on 20 March
2019 and became effective on 1 April 2019, with respect to the VAT taxable sales or
imported goods of a VAT general taxpayer, wh ere the VAT rate of 16% applies before, it
shall be adjusted to 13% and where the VAT rate of 10% applies before, it shall be adjusted
to 9%.
Pursuant to the Circular on Comprehensively Promoting the Pilot Programme of the
Collection of Valued-added Tax in lieu of Business Tax ( 《關於全面推開營業稅改徵增值稅
試點的通知》) (the ‘‘Circular 36 ’’), which was implemented on 1 May 2016 and last amended
and became effective on 1 April 2019, the pilo t programme of the collection of VAT in lieu
of business tax shall be promoted nationwide in a comprehensive manner starting from 1
May 2016. According to the Circular 36, for pilot scheme taxpayers approved by PBOC,
China Banking Regulatory Commission (‘‘ CBRC ’’, now known as ‘‘CBIRC ’’) or MOFCOM
to engage in finance lease business and provide finance lease services, the sales amount shall
be the balance after loan interest paid (including interest of foreign currency loans and
Renminbi loans), interest on bonds issued and vehicle purchase tax from the total money
and other charges received.
The Group’s automobile-related businesses p rincipally contain automobile operating
lease and other automobile-related services. For automobile operating lease, the VAT rate
was the same as the automobile direct leases provided by the Group during the Track
Record Period. For other automobile-related services, the VAT rate was 13% according to
the Announcement on VAT duri ng the Track Record Period.
According to the Notice of STA on Levying Turnover Tax on Finance Lease Business
(《國家稅務總局關於融資租賃業務徵收流轉稅問題的通知》), with effect from 7 July 2000,
for financial lease business operated by entit ies approved by PBOC, re gardless of whether
the ownership of the leased goods is transferred to the lessee, the business tax shall be levied
according to the relevant provisions of the Provisional Regulations on Business Tax of the
PRC, and no VAT shall be levied. the VAT shall be levied on other financial leasing only
when the ownership of the leased goods is transferred to the lessee. Otherwise, the business
tax shall be levied. The Supplemental Notice of the State Administration of Taxation on the
Collection of Turnover Tax on Finance Lease Business ( 《國家稅務總局關於融資租賃業務徵
收流轉稅問題的補充通知》), which was promulgated and became effective on 15 November
2000, provides that the Notice of STA on Levying Turnover Tax on Finance Lease Business
shall be applicable to foreign-invested enterprises and foreign enterprises operating the
finance lease business approved by the Ministry of Foreign Trade and Economic
Cooperation.
REGULATORY OVERVIEW
–1 1 2–


--- page 122 ---
According to the Notice Concerning on the Taxation Issues of Selling Assets in
Sale-Leaseback Financial Business of t he State Administration of Taxation ( 《國家稅務總局關
於融資性售後回租業務中承租方出售資產行為有關稅收問題的公告》), which was promulgated
on 8 September 2010 and became effective on 1 October 2010, the sale of assets by a lessee
in sale-leaseback financing does not fall within the levying scope of VAT and business tax
and shall not be subject to VAT or business tax .B e s i d e s ,t h ei n c o m ef r o mt h es a l eo fa s s e t s
by the lessee in sale-leaseback financing shall not be recognised as sales income, and the
depreciation of assets in financial leasing shall still be computed according to the original
book value of the assets before sale as the tax base. The amount paid by the lessee as
interest on financing during the lease term shall be deducted before tax as the enterprise’s
financial expenses.
For the Group’s automobile direct finance lease business, the VAT rate was 13%
according to the Announcement on VAT during the Track Record Period. For the Group’s
automobile sale-leaseback business, the VAT rate was 6% according to the Circular 36
during the Track Record Period.
Dividend Tax
The EIT Law provides that since 1 January 2008, an income tax rate of 10% will
normally be applicable to dividends declared to foreign resident investors who do not have
an establishment or place of business in mainland China, or who have such establishment or
place of business but the relevant income is not effectively connected with the establishment
or place of business, to the extent such d ividends are sourced in mainland China.
Pursuant to the Double Tax Avoidance Arrangement, and other relevant applicable
PRC laws, the PRC government may impose tax on dividends payable by a PRC company
to a Hong Kong resident, but such tax amount shall not exceed 10% of the gross amount of
dividends payable, and in the case where a Hong Kong resident holds at least 25% equity
interest in a PRC company, such tax amount shall not exceed 5% of the gross amount of
dividends payable by the PRC company after an application is made to and approved by the
PRC taxation authority. However, based on the Notice on Certain Issues with Respect to
the Enforcement of Dividend Provisions in Tax Treaties ( 《關於執行稅收協定股息條款有關
問題的通知》) issued on 20 February 2009 by STA, if the relevant PRC tax authorities
determine, in their discretion, that a company benefits from such reduced income tax rate
due to a structure or arrangement that is primarily tax-driven, such PRC tax authorities
may adjust the preferential tax treatment. The Announcement of STA on Issues ‘‘Beneficial
Owner’’ in Tax Treaties ( 《國家稅務總局關於稅收協定中「受益所
有人」有關問題的公告》)
was issued by STA on 3 February 2018, effective on 1 April 2018, abolished the Notice of
STA on Interpretation and Determination of ‘ ‘Beneficial Owners’’ in Tax Agreements ( 《國
家稅務總局關於如何理解和認定稅收協定中「受益所有人」的通知》), which was issued on
27 October 2009 by STA, and the Announcement on the Recognition of Beneficial Owners
in Tax Treaties ( 《關於認定稅收協定中「受益所有人」的公告》), which was issued on 29
June 2012 by STA, describes factors in favor of and factors not conducive to the
determination of an applicant’s status as a ‘‘ beneficial owner’’. Applicants that are not
recognised as beneficial owners will not be entitled to the above-mentioned reduced income
tax rate of 5% under the Double Tax Avoidance Arrangement.
REGULATORY OVERVIEW
–1 1 3–


--- page 123 ---
Pursuant to the Announcement of State Taxation Administration on Promulgation of
the Administrative Measures on Non-resident Taxpayers Enjoying Treaty Benefits ( 《國家稅
務總局關於發佈《非居民納稅人享受協定待遇管理辦法》的公告》), which was promulgated
on 14 October 2019 and came into effect on 1 January 2020, non-resident taxpayers which
satisfy the criteria for entitlement to tax tre aty benefits may, at the time of tax declaration
or withholding declaration through a withholding agent, enjoy the tax treaty benefits, and
are subject to follow-up administration by the tax authorities.
Vehicle Purchase Tax
Vehicle Purchase Tax and related matters are primarily regulated by the Vehicle
Purchase Tax Law of the PRC ( 《中華人民共和國車輛購置稅法》)( t h e‘ ‘Vehicle Purchase
Tax Law ’’) promulgated on 29 December 2018, with effect from 1 July 2019. According to
the Vehicle Purchase Tax Law, the vehicle purchase tax shall be collected as a one-off tax,
and the tax rate for vehicle purchase tax is 10%.
Before the Vehicle Purchase Tax Law ca me into effect, MOF and State Taxation
Administration jointly promulgated the Notice on the Reduction of Vehicle Purchase Tax
for Passenger Vehicles up to 1.6 litres ( 《關於減徵1.6升及以下排量乘用車車輛購置稅的通
知》)( t h e‘ ‘Notice on the Reduction of Vehicle Purchase Tax ’ ’ )o n1 3D e c e m b e r2 0 1 6a n dw i t h
effect from 1 January 2017, which was repealed on 23 January 2020 eventually with the
implementation of the Vehicle Purchase Tax L aw. Pursuant to the Notice on the Reduction
of Vehicle Purchase Tax, the vehicle purchase tax was levied at a 10 percent rate from 1
January 2018 and onwards.
On 28 June 2019, MOF and STA jointly issued the Announcement on the Continued
Implementation of Preferential Policies for Vehicle Purchase Tax ( 《關於繼續執行的車
輛購
置稅優惠政策的公告》)( t h e‘ ‘Announcement ’’) which came into effect on 1 July 2019.
According to the Announcement, the vehicle purchase tax shall be exempted on the
purchase of new energy vehicles from 1 January 2018 to 31 December 2020.
On 16 April 2020, MOF, STA and Ministry of Industry and Information Technology
jointly issued the Announcement on Relevant Policies for the Exemption of Vehicle
Acquisition Tax on New-energy Automobiles ( 《關於新能源汽車免徵車輛購置稅有關政策的
公告》)( t h e‘ ‘New-energy Automobiles Announcement ’’) which came into effect on 1 January
2021. According to the New-energy Automobile s Announcement, new-energy automobiles
purchased shall be exempt from vehicle acquisition tax between 1 January 2021 and 31
December 2022.
On 31 December 2021, MOF, Ministry of Industry and Information Technology,
Ministry of Science and Technology and NDRC jointly issued the Notice on the Fiscal
Subsidy Policy for the Promotion and Application of New Energy Vehicles in 2022 ( 《關於
2022 年新能源汽車推廣應用財政補貼政策的通知》)( t h e‘ ‘ Notice 446 ’’), which came into
effect on 1 January 2022. According to the Notice 446, the policy of new energy vehicle
purchase subsidies for 2022 will be terminated on 31 December 2022, and no subsidies will
be granted to vehicles licensed after 31 December 2022.
REGULATORY OVERVIEW
–1 1 4–


--- page 124 ---
On 31 March 2022, MOF and STA jointly issued the Announcement on Reduction of
Vehicle Purchase Tax for Certain Passenger Vehicles ( 《關於減徵部分乘用車車輛購置稅的公
告》) (the ‘‘Reduction Announcement ’’), which came into effect on 1 June 2022. According to
the Reduction Announcement, the vehicle purc hase tax will be halved for passenger vehicles
with a displacement up to 2.0 liters with pric e lower than RMB300,000 per unit, that are
purchased between 1 June 2022 and 31 December 2022.
M&A RULES AND OVERSEAS LISTINGS
A c c o r d i n gt ot h eR u l e so nt h eM e r g e ra n dAcquisition of Domestic Enterprises by
Foreign Investors ( 《關於外國投資者併購境內企業的規定》)( t h e‘ ‘Circular 10 ’’) in the PRC,
which were issued jointly by six PRC governmental and regulatory agencies including
MOFCOM, State Administration of Foreign Exchange (‘‘ SAFE ’’) and the CSRC on 8
August 2006, effective on 8 September 2006 and further amended on 22 June 2009 by
MOFCOM, a foreign investor is required to obtain necessary approvals when it (i) acquires
the equity of a domestic enterprise so as to convert the domestic enterprise into a
foreign-invested enterprise; (ii) subscribes to the increased capital of a domestic enterprise
so as to convert the domestic enterprise into a fo reign-invested enterprise; (iii) establishes a
foreign-invested enterprise through purchasing the assets of a domestic enterprise and
operating these assets; or (iv) purchases the assets of a domestic enterprise, and then invest
such assets to establish a fore ign-invested enterprise.
On 17 February 2023, CSRC issued the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies ( 《境內企業境外發行證券和上市管
理試行辦法》) (the ‘‘Trial Administrative Measures ’’) and five items of supporting guidelines,
which mainly standardise activities relating to direct or indirect overseas issuance and
listings of securities by domestic enterprises and will become effective on 31 March 2023.
According to the Trial Administrative Measu res, a domestic company that seeks to offer
and list securities in overseas markets shall fulfill the filing procedure with the CSRC as per
requirement of the Measures, s ubmit relevant materials that contain a filing report and a
legal opinion, and provide truthful, accurate and complete information on the shareholders
and disclose other required information. Any overseas offering and listing made by an
issuer that meets both the following cond itions will be determined as indirect:
(1) 50% or more of the issuer’s operating re venue, total profit, total assets or net
assets as documented in its audited conso lidated financial statements for the most
recent accounting year is accounte d for by domestic companies; and
(2) the main parts of the issuer’s business activities are conducted in the Mainland
China, or its main places of business are located in the Mainland China, or the
senior managers in charge of its business operation and management are mostly
Chinese citizens or domiciled in the Mainland China.
REGULATORY OVERVIEW
–1 1 5–


--- page 125 ---
In the meanwhile, it is stipulated that under any of the following circumstances, an
overseas listing shall not be allowed: (1) the re are circumstances in which national laws,
regulations and relevant provisions explicitly prohibit listing and financing; (2) the overseas
issuance or listing threatens or endangers national security as reviewed and determined by
the relevant competent departments of the State Council in accordance with the law; (3) the
domestic enterprise and its co ntrolling shareholder or actual controller have committed
corruption, bribery, embezzlement of property, misappropriation of property or disruption
of the socialist market economic order in the r ecent three years; (4) the domestic enterprise
is being investigated by judiciary for suspect ed crimes or are being investigated for major
violations of laws and regulations and no definite conclusions have been reached; (5) there
are major ownership disputes over equity righ ts held by the controlling shareholder or the
shareholder governed by the controlling shareholder or the actual controller. Under the
Trial Administrative Measure s, a filing-based regulatory system would be implemented
covering both direct and indirect overseas offeri ng and listing. For an initial public offering
and listing in an overseas market, the issuer shall submit to CSRC filing documents within
three working days after the offering documents is submitted overseas. CSRC would, within
20 working days if filing documents are complete and in compliance with the stipulated
requirements, issue a filing notice thereof an d publish the filing results on the website of
CSRC. If not, CSRC should inform the issuer of supplementary documents within 5
working days after receiving filing documen ts and the issuer should provide relevant
supplementary documents within 30 working days.
According to the Notice on Administrative Arrangements for Filing of Domestic
Enterprises’ Overseas Issuance and Listing ( 《關於境內企業境外發行上市備案管理安排的通
知》), which was promulgated by CSRC on 17 February 2023 and became effective on 31
March 2023.
Since all of our operating revenue and total assets are accounted for by domestic
companies and all of our business are conducted in the Mainland China, we are subject to
the Trial Administrative Measures, as adv ised by our PRC Legal Advisers. On 17 August
2023, CSRC issued the Filing Notice for Ov erseas Issuance and Listing of XXF Group
Holdings Limited ( 國合規[2023]1142 號), which confirmed the f iling information of the
Company’s overseas securities offering submitted to them. As advised by our PRC Legal
Advisers, we have completed the relevant filin gs for the application of the Listing and
overseas offering, and no other approval from the CSRC is required to be obtained before
the Listing.
REGULATORY OVERVIEW
–1 1 6–


--- page 126 ---
Certain information and statistics set out in this section and elsewhere in this
prospectus are derived from various official government and other publicly available sources,
and from the market research report prepared by CIC, an independent industry consultant
which was commissioned by us (the ‘‘ CIC Report ’’). No independent verification has been
carried out on the information from official government sources by us, the Sole Sponsor, the
Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunners, Joint Lead
Managers, the Underwriters or any other parties (other than CIC) involved in the Global
Offering or their respective directors, officers, employees, advisers, or agents, and no
representation is given as to the accuracy. Unless and except for otherwise specified, the
market and industry information and data presented in this ‘‘Industry Overview’’ section is
derived from the CIC Report.
SOURCE OF INFORMATION
We commissioned CIC, an independent industry consultant founded in Hong Kong
and engaged in the provision of professional consulting services across multiple industries,
to conduct an analysis of and to report on the automobile finance market in China. The
CIC Report was prepared by CIC independent of our influence. The total fee paid for the
preparation of the CIC Report in relation to the Listing since the first Listing application is
expected to be RMB1,660,000, which we co nsider to be in line with market rates.
The information and data collected by CIC have been analysed, assessed, and validated
using CIC’s in-house analysis models and t echniques. Primary research was conducted
through interviews with key industry experts and leading industry participants. Secondary
research involved the analysis of market data obtained from several publicly available data
sources, such as the China Association of Aut omobile Manufacturers and National Bureau
of Statistics of China. The methodology used by CIC is based on the analysis of information
gathered from multiple sources and ensuring such information is cross-referenced and
corroborated for both reliability and accu racy. The CIC Report contains a variety of
market projections which were produced based on the following key assumptions: (i) the
overall social, economic and political environment in China is expected to remain stable
during the forecast period; (ii) related key industry drivers are likely to propel continued
growth in China’s retail automobile finance lease market throughout the forecast period,
including increases in the popularity of retail automobile finance lease products, an
improved legal and regulatory environment, s implified lease application processes, and
enhanced risk control systems; (iii) the negat ive impact caused by the COVID-19 outbreak
in 2020 on the industry is expected to be limited, taking into account the impact of the
COVID-19 outbreak and market growth from 2021 to 2022 in a conservative manner based
on the industry and economic recovery in China; and (iv) there are no extreme force
majeure or unforeseen industry regulations which the market may be affected in a dramatic
or fundamental way.
Our Directors after taking reasonable care, confirm that to the best of their knowledge,
there is no material adverse change in the market information since the date of the relevant
data contained in the CIC Report and up to the Latest Practicable Date which may qualify,
contradict or have an impact on the information in this section.
INDUSTRY OVERVIEW
–1 1 7–


--- page 127 ---
OVERVIEW OF THE AUTOMOB ILE INDUSTRY IN CHINA
Total Car Parc in China
The total car parc in China has expanded steadily, with the number of automobiles
increased from 240.3 million units in 2018 to 319.0 million units in 2022, representing a
CAGR of 7.3% between 2018 and 2022. With the continued increase in per capita
disposable income, total car parc in China is expected to reach 407.1 million units by 2027,
representing a CAGR of 5.0% between 2022 and 2027. In line with the increase in total car
parc, the car parc per thousand people is expected to continue to increase from 225.9 units
in 2022 to 289.9 units by 2027, representing a CAGR of 5.1% between 2022 and 2027.
Along with China’s anticipated economy growth and evolving consumption behaviour,
automobile market in China has gradually en tered a new stage of steady growth momentum
rather than rapid growth in the past two decade s. It is expected that, among others, retail
automobile finance starts to become a major dri ving force for China’s automobile industry.
China is the largest automobile market in the world, with approximately 23.6 million
units of new automobile sold in 2022. However, car parc per thousand people was
approximately 225.9 units in 2022, which is still lower than that in the US, which was
approximately 890.0 units in 2022, indicating room for further growth. The sales volume of
new automobile in China decreased from 23.7 million units in 2018 to 20.2 million units in
2020. The decrease from 2018 to 2020 was mainly due to the abolition of preferential
purchase tax, weakening consumption needs, and market sentiment resulting from trade
friction between China and the United States. Further, as COVID-19 spread in 2020, many
workers in automobile industry remain quarantined at home, causing automobile supply
lines to be significantly affected, with many factories struggling to reopen or regain full
capacity. As a result, the sales volume of new automobiles decreased by 5.9% in 2020
compared to 2019. However, along with the rollo ut of favourable policies and regulations
by Chinese government, and the steady increase in the disposable income of consumers, the
sales volume of new automobiles increased to 23.6 million units in 2022 and is expected to
reach 29.9 million units by 2027, represe nting a CAGR of 4.9% between 2022 and 2027.
The sales volume of new automobiles in tier one cities fluctuated from 2.3 million units
in 2018 to approximately 2.6 million units in 2022, representing a CAGR of 3.0% between
2018 and 2022, while it is expected to increase to 2.7 million units by 2027. The sales volume
of new automobiles in tier two cities increased from 10.9 million units in 2018 to 11.3
million units in 2022, representing a CAGR o f 1.0% between 2018 and 2022, and is expected
to increase to 14.6 million by 2027, represen ting a CAGR of 5.3% from 2022 to 2027. The
sales volume of new automobiles in tier three and below cities decreased from 10.5 million
units in 2018 to 9.6 million units in 2022, representing a negative CAGR of 2.1% from 2018
to 2022. Driven by the expected increase in co nsumer disposable income and automobile
consumption of tier three and below cities compared to tier one and tier two cities, tier three
and below cities are expected to demonstrate stronger automobile sales growth momentum
than tier one and tier two cities. The total sale sv o l u m eo fn e wa u t o m o b i l e si nt i e rt h r e ea n d
below cities is estimated to reach 12.6 millio n units in 2027, representing a CAGR of 5.5%
from 2022 to 2027.
INDUSTRY OVERVIEW
–1 1 8–


--- page 128 ---
Total sales volume of new automobiles, by city tier, China, 2018–2027E
0
10
5
15
20
25
30
12.6
14.6
2.7
29.9
10.5
9.2 8.8 9.2 9.6 10.3 10.9 11.5 12.1
10.9
9.9 9.3 9.9 11.3 12.0 12.7 13.4 14.0
2.3
2.3 2.1 2.3
2.6 2.7
2.72.7
2.7
23.7
21.4 20.2 21.5
23.6 25.0 26.3 27.6 28.8
CAGR
(2018–2022) (2022–2027E)
Total -0.2% 4.9%
Tier one cities
Tier two cities
Tier three and below cities
3.0%
1.0%
-2.1%
0.7%
5.3%
5.5%
Million units
CAGR
2027E2026E2018 2019 2020 2021 2022 2023E 2024E 2025E
Source: China Association of Automobile Manufacturers, CIC Report
Note: The figures of the chart have been rounded up to one decimal place.
Non-luxury automobiles account for a substantial proportion of the automobile
market in China. Luxury automobiles inclu de most of the models which are generally sold
at the manufacturer’s suggested retail price (MSRP) over RMB300,000 per vehicle in China,
while non-luxury automobile s include most models which are generally sold at the MSRP
up to RMB300,000 per vehicle.
Total sales volume of non-luxury automobiles, by city tier, China, 2018–2027E
0
10
12
14
16
4
6
8
2
18
20
22
24
26
10.7
12.9
2.2
25.8
8.9 7.1 7.2 7.7 8.3 8.8 9.4 9.9 10.3
9.4 9.6 8.4 9.1 10.2 10.8 11.4 11.9 12.4
1.8
1.9 1.7 1.9
2.1 2.1
2.22.2
2.2
20.2 18.7 17.4 18.6
20.6 21.8
22.9 23.9 24.9
CAGR
(2018–2022) (2022–2027E)
Total 0.5% 4.6%
Tier one cities
Tier two cities
Tier three and below cities
3.3%
2.1%
-1.8%
0.6%
4.8%
5.3%
Million units
CAGR
2027E2026E2018 2019 2020 2021 2022 2023E 2024E 2025E
Source: China Association of Automobile Manufacturers, CIC Report
Note: The figures of this chart have been rounded up to one decimal place.
INDUSTRY OVERVIEW
–1 1 9–


--- page 129 ---
Market Drivers of the Auto mobile Industry in China
. Increasing per capita disposable income of urban households
Given the steady economic growth in China, annual per capita disposable income
continues to increase, especially in tier thre e and below cities. Therefore, an increasing
number of urban households are able to purchase automobiles due to consumption
upgrade. In addition, with growing urbanisation, consumption demand for automobiles as
necessity goods for daily transportati on is expected to increase in China.
. Increasing popularity of retail automobile finance and retail automobile finance lease
services
The development of retail automobile finance and retail automobile finance lease
services enabled an increasing number of consumers to purchase automobiles in China.
Retail automobile financing services encoura ge people to purchase au tomobiles by offering
various financing products which lower the initial payment and credit record requirement
for purchasing automobiles. It is therefore expected that the trend will ultimately support
future growth of the automobile market in China.
. The emergence of automobile e-commerce platforms
The emergence of automobile e-commerce platforms not only simplify the purchase
process for consumers, but also provides more diversified automobile-related services to
consumers from pre-sale stage to after-sale stage, such as retail automobile financing
services, automobile insurance and maintenanc e and other related services. Therefore, the
development of automobile e-commerce platforms provides new vitality for the automobile
market in China.
ANALYSIS OF THE RETAIL AUTOMOBILE FINANCE AND RETAIL AUTOMOBILE
FINANCE LEASE MARKET IN CHINA
Overview of the Retail Automobile Finance Market in China
Retail automobile finance refers to fin ancial products and services that allow
consumers to acquire an automobile by making appropriate financial arrangements
rather than settling the acquisition cost in full immediately. Broadly speaking, the form
of retail automobile finance services are categorised into (i) automobile loan and (ii)
automobile lease (i.e. retail automobile financ e lease). Retail automobile finance lease refers
to a contractual arrangement where the lesse ep a y st h el e s s o ro nar e g u l a rb a s i sf o rt h eu s e
of vehicle. By the end of the lease term, the lessee has the option to buy the vehicle by
paying the contracted residual value. Retail automobile finance lease services providers in
China consist of banks-affiliated RAFLCs, automaker or automobile dealer-affiliated
RAFLCs and third party RAFLCs. It is also a common industry practice for an automobile
finance lease service provider to provide ma tching service to automobile user consumers.
INDUSTRY OVERVIEW
–1 2 0–


--- page 130 ---
The table below sets out comparisons of chara cteristics of retail automobile finance
services:
Comparison of automobile lease and automobile loan
Retail
auto
mobile
finance Auto
mobile
loan
Auto
mobile
lease
Down payment
Typically 10%–30%
of the vehicle price
Typically 20%–40%
of the vehicle price
Option to return
or buy
The consumers have
the right to decide
whether to buy or
return the vehicle at the
end of the lease term
Purchase only Relatively low
Relatively high
Monthly
payment
•
•
Difference of service offering
The financial institutions offer consumers the capital to pay
for the purchase of the automobiles. Consumers pay
monthly mortgages and interests back to financial
institutions.
An automobile lease is a contract to rent an automobile for a
fixed period of time and for a fixed payment term.
Consumers are able to choose to whether purchase at residual
value or return the vehicle when the contract expires.
Market Size of the Retail Automobile Finance Market in China
The retail automobile finance market has undergone a period of moderate growth over
the past five years. In terms of loan volume for new and used automobile, the market size
increased from 11.0 million units in 2018 to 13.6 million units in 2022, representing a
CAGR of 5.6%. It is expected that the loan volume of the retail automobile finance market
will continue expanding throug hout the next five years to reach 29.3 million units by 2027,
driven by accommodating government policies and a growing demand for automobiles and
diversified automobile financing products.
Market size of the retail automobile finance market
in terms of loan volume
1, China, 2018–2027E
0
25
30
20
15
10
5
Loan volume for new automobile
Total
Loan volume for used automobile
CAGR CAGR
(2018–2022)
16.0%
3.6%
5.6%
(2022–2027E)
29.0%
12.5%
16.6%
Million units
9.5
1.5
11.0
8.8
2.1
10.9
8.4
2.1
10.5
9.5
2.7
12.2
10.9
2.7
13.6
13.1
3.7
16.7
14.6
4.8
19.4
16.2
6.2
22.4
17.9
7.8
25.7
19.7
9.6
29.3
2026E2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Notes:
1 : Loan volume refers to the total number of loans for both new and used automobiles disbursed by
retail automobile finance service providers.
2 : The figures of the chart have been rounded up to one decimal place.
INDUSTRY OVERVIEW
–1 2 1–


--- page 131 ---
Market size of the retail automobile finance in terms of loan volume,
by type of finance, China, 2018–2027E
0
5
10
30
25
20
15
2027E
2.71.4 1.5 1.4 1.5 1.5 1.7 2.0 2.2 2.4
0.60.2 0.2 0.2 0.3 0.3 0.4 0.4 0.5 0.6
26.0
9.4 9.1 8.9 10.5 11.8
14.6
17.0 19.7
22.7
29.3
11.0 10.9 10.5
12.2 13.6
16.7
19.4
22.4
25.7
CAGR
(2018–2022) (2022–2027E)
Total 5.6% 16.6%
Loan
Direct lease
Sale-leaseback
5.8%
11.1%
3.2%
17.2%
15.6%
11.5%
Million units
CAGR
2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Penetration Rate of Retail Automobile Finance Lease Services
The penetration rate refers to the ratio of the loan volume of the retail automobile
finance lease serving of both new and used automobiles to the overall automobile sales
volume. In 2022, compared with developed countries where the retail automobile finance
lease services penetration rates of both new and used automobile were approximately
38.0%, 25.5% and 23.5% in the United States, G ermany and France, respectively, China’s
penetration rate of retail automobile finance lease services of both new and used
automobiles is still at a relatively low level, indicating a strong growth potential and is
expected to reach approximately 5.4% in 2027. The relatively low penetration rate in China
is mainly due to (i) consumers’ risk averse attitude towards car ownership in finance lease
arrangement; and (ii) people’s unawareness of automobile finance services.
Market Size of the Retail Automobile Finance Lease Market in China
In 2022, the loan volume of retail automo bile finance lease of both new and used
automobiles in China had reached approx imately 1.9 million units, increased from
approximately 1.6 million units in 2018 , representing a CAGR of 4.3%. Driven by
increasing market penetration of the retail automobile finance lease products offering, the
market size of retail automobile finance lea se in terms of the loan volume is expected to
reach approximately 3.3 million units in 2027 , representing a CAGR of 12.2% from 2022 to
2027.
INDUSTRY OVERVIEW
–1 2 2–


--- page 132 ---
The retail automobile finance loan volume of both new and used automobiles in tier
two cities increased from approximately 0.8 million units in 2018 to approximately 0.9
million units in 2022, representing a CAGR of 4.3% between 2018 and 2 022. Driven by the
continuous increasing market demand and loose restrictions on car purchase than that of
tier one cities, the retail automobile finance l ease volume in tier two cities is projected to
reach approximately 1.5 million units in 2027 , representing a CAGR of 10.8% from 2022 to
2027.
For tier three and below cities, the loan volume of the retail automobile finance lease
services of both new and used automobiles inc reased from 0.7 million units in 2018 to 0.8
million units in 2022, representing a CAGR o f 4.0% from 2018 to 2022. Driven by the
development of urbanisation and the increase in personal disposable income, the market
share of retail automobile finance lease services in tier three and below cities is expected to
have a strong growth potential. Consumers in tier three and below cities are more inclined
to choose retail automobile finance lease serv ices in the car purchase process, which reduces
their financial pressure and offers them with more flexible payment schedule of vehicles
rather than a rigid one-off purchase. The loan volume of the retail automobile finance lease
market in tier three and below cities is expected to reach approximately 1.5 million units in
2027, representing a CAGR of 14.1% from 2022 to 2027.
Market size of the retail automobile finance lease market in terms of loan volume,
by city tier, China, 2018–2027E
0.0
500
1,000
1,500
3,500
1,515.6
1,525.9
253.3
3,294.9
668.2 672.9 662.1 746.6 782.5 909.4 1,047.2 1,195.0 1,351.6
773.7 939.8 822.7 886.8 914.8
1,031.7
1,152.9
1,276.9
1,401.8
119.6 140.0 135.0 150.1 153.4
172.6
192.5
212.7
233.1
1,561.5
1,752.6 1,619.8 1,783.5 1,850.7
2,113.6
2,392.6
2,684.6
2,986.5
Tier two cities
Tier one cities
Tier three and below cities
Total
CAGR
(2018–2022)
6.4%
4.3%
4.0%
4.3%
(2022–2027E)
10.5%
10.8%
14.1%
12.2%
Thousand units
2,000
2,500
3,000
CAGR
2027E2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Note: The figures of the chart have been rounded up to one decimal place.
INDUSTRY OVERVIEW
–1 2 3–


--- page 133 ---
Market size of the retail automobile finance in terms of loan volume,
by type of finance lease, China, 2018–2027E
0
2.5
3.5
3.0
2.0
1.5
1.0
0.5
Sale-leaseback
Total
Direct lease
CAGR CAGR
(2018–2022)
11.1%
3.2%
4.3%
(2022–2027E)
15.6%
11.5%
12.2%
Million units
1.4
0.2
1.6
1.5
0.2
1.8
1.4
0.2
1.6
1.5
0.3
1.8
1.5
0.3
1.9
1.7
0.4
2.1
2.0
0.4
2.4
2.2
0.5
2.7
2.4
0.6
3.0
2.7
0.6
3.3
2027E2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Note: The figures of the chart have been rounded up to one decimal place.
By the ownership of the automobile, the retail automobile finance lease market can be
further divided into two segments including direct finance lease, and sale-leaseback.
Specifically, direct finance lease is a type of retail automobile finance lease where the lessor
purchases an automobile and then leases the automobile to the lessee for use, while in the
sale-leaseback mode, the lessee purchases a n automobile using lessor’s financing, and
transfers its title to the lessor, and then the lessor leases the automobile back to lessee for
use.
In 2022, the loan volume of the direct finance lease market reached 0.3 million units
increasing from 0.2 million units in 2018, representing a CAGR of 11.1% from 2018 to
2022. Meanwhile, in 2022, the loan volume of sale-leaseback market increased from 1.4
million units in 2018 to 1.5 million units in 20 22, representing a CAGR of 3.2% from 2018
to 2022. Driven by benefit of lower down payment and the expansion of e-hailing vehicle
platform, the loan volume of direct finance l ease market is expected to reach 0.6 million
units in 2027, representing a CAGR of 15.6% from 2018 to 2022.
INDUSTRY OVERVIEW
–1 2 4–


--- page 134 ---
Market size of the retail automobile finance lease market
in terms of disbursed loan value 1, China, 2018–2027E
337.3
134.4120.8 129.1
152.3 170.2
196.1
232.0
267.4
302.6
0
100
50
150
350
300
250
200
RMB billion 9.0%
CAGR (2018–2022)
14.7%
CAGR (2022–2027E)
2027E2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Notes:
1 : Loan value refers to the principal amount of loans disbursed by RAFLCs.
2 : The figures of this chart have been rounded up to one decimal place.
The market size in terms of the disbursed loan value of retail automobile finance lease
in China has increased from approximately RMB120.8 billion in 2018 to approximately
RMB170.2 billion in 2022, at a CAGR of 9.0%. A s the market size of the retail automobile
finance lease market for new automobile cont ributed to approximately 80.9% of the total
market size of the retail automobile finance l ease market in terms of disbursed loan value in
China in 2022 and is expected to remain at the largest proportion of approximately 71.6%
in 2027. Furthermore, in 2027, the disbursed loan value is expected to reach approximately
RMB337.3 billion, representing a CAGR of 14.7% from 2022 to 2027.
Analysis of Third Party Retail Automo bile Finance Lease Market in China
In 2022, the loan volume of third party retail automobile finance lease market in China
reached approximately 0.8 million units, decreasing from 0.9 million units in 2018,
representing a negative CAGR of –2.7%. Driven by the increasing market penetration of
the third party retail automobile finance lease products offering, the market size of third
party retail automobile finance lease market is anticipated to reach approximately 1.2
million units in 2027, represent ing a CAGR of 8.3% from 2022 to 2027.
INDUSTRY OVERVIEW
–1 2 5–


--- page 135 ---
Market size of the third party retail automobile finance lease market
in terms of loan volume (Note) , China, 2018–2027E
2027E2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
0
0.9
0.3
0.6
1.2
1.5
1.2
0.9
1.0
0.8 0.8 0.8
0.9
1.0
1.1
1.2
CAGR CAGR
(2018–2022) (2022–2027E)Million units
–2.7% 8.3%
Source: China Association of Automobile Manufactu rers, China Automobile Dealers Association, CIC
Report
Note: The loan volume of the third party retail automobi le finance lease market represents the volume
of automobile sold through third party RAFLCs.
Market Drivers of the Retail Automobile Finance Lease Market in China
. Rising consumer awareness of retail automobile finance lease services
Retail automobile finance lease, as an emerging segment in the retail automobile
finance market, has become increasingly acceptable to consumers in China. Benefited from
the emergence of Internet-backed RAFLCs, auto mobile finance lease services had gradually
been accepted as an alternative option for purchasing automobiles apart from acquiring
auto loans directly from financial institu tions. Along with the increase in consumer
disposable income, consumers can afford a nd are more willing to purchase automobiles,
and due to the low down payment and flexible payment arrangements, consumers will
prefer automobile finance lease services, especially for those consumers who are
underserved by financial institutions. Wit h the increase in consumer disposable income
and the introduction of flexible automobile finance lease products, the market penetration
rate of retail automobile finance lease over the past few years has been increasing and the
penetration rate is expected to increase further in the foreseeable future.
. Enhanced risk control systems
Both third party platforms’ credit data and c ommercial banks’ credit rating system are
now accessible to RAFLCs, which provide an efficient and accurate client qualification
verification system for the purposes of impr oved risk control management. Along with the
access to big data, statistics and individual’s behavioural analytics, the RAFLCs are able to
assess the qualifications of leas ing applicants more effectively.
INDUSTRY OVERVIEW
–1 2 6–


--- page 136 ---
. Favourable policies and regulations
The penetration rate of retail automob ile finance lease industry will continue to
enhance amid favourable regulations. For example, in July 2022, 17 departments including
Ministry of Commerce jointly issued Notice on Several Measures for Vitalizing Automobile
Circulation and Expansion on Automobile Consumption 《關於搞活汽車流通擴大汽車消費
若干措施的通知》. In the policy of Notice on Several Measures for Vitalizing Automobile
Circulation and Expansion on Automobile Consumption, the government has encouraged
the financial institutions to increase fund ing supply in automobile consumer loans and
optimise the down payment, interest rate and repayment period, which will directly increase
the penetration rate of automobile finance and automobile finance lease. Furthermore, the
policy also encouraged the automobile manufacturers, and automobile distributors to
collaborate with automobile finance and automobile finance lease companies to increase
supply in automobiles, which will stimulate the sales volume of automobiles with
automobile finance and automobile finance l ease. To stimulate the consumption of new
energy vehicles, the policy encouraged to extend the tax exemption policy for new energy
vehicle purchases. In order to revitalize the used automobile market, the policy eliminated
unnecessary restrictions in the used automobile transaction process, stated that companies
can operate dealerships business of used automobiles across different regions, and further
standardize the administration process for used automobiles nationwide, such as
cross-region registration. The new policy aimed to improve the efficiency of used
automobile transactions and stimula te the demand for used automobiles.
. Online platforms and mobile applicatio ns stimulating consumption demand
With the increasing popularity of internet and mobile applications, offline retail stores
are no longer the only approach for consumers to apply for retail automobile finance lease
services. Online platforms have enabled con sumers to access different retail automobile
finance lease product and complete their retail automobile finance lease arrangements more
efficiently and conveniently. Thus, online platforms have stimulated the automobile finance
lease market by offering efficient online a pproval and payment process to facilitate the
retail automobile finance lease transactions.
Market Players of Retail Automobile Finance Lease Business in China
Three types of players constitute the majority of the retail automobile finance lease
market in China, including bank-affiliated, a utomaker or automobile dealer affiliated and
third party RAFLCs. In 2022, third party RAFLCs accounted for approximately 45.1% of
the total transaction volume of the retail automobile finance lease market, among which,
offline third party RAFLCs, who are generally offline business-initiated companies and
have stronger offline presenc e, and internet-backed third party RAFLCs, who primarily
focus on developing online automobile retail transaction platform and network, accounted
for 16.8% and 28.3%, respectively.
INDUSTRY OVERVIEW
–1 2 7–


--- page 137 ---
The table below outlines comparisons betw een the different players in China’s retail
automobile finance lease market:
Third party RAFLCs
Bank-affiliated
Automaker or
automobile
dealer-affiliated
Offline
RAFLCs
Internet-backed
RAFLCs
Number of players
(as at 31
December 2022)
.* 35 .* 50 .* 45 .* 40
Primary regulatory
body
. CBIRC . CBIRC . CBIRC . Financial
regulatory
department
Time required for
approval process
. Generally more
than two days
. Generally less than
half a day
. Generally less than
half a day
. Generally one to
two hours
Risk control . B a s e do nc o n s u m e r
credit rating
database from
PBOC
. High credit
requirement of
collateral or other
tangible assets
certificate from
vehicle purchasers
from PBOC
. B a s e do nc o n s u m e r
credit rating
database from
PBOC
. Based on
comprehensive
consumer credit
rating database
from PBOC, third
party and
self-owned
platforms
. On-site inspections
. Based on
comprehensive
consumer credit
rating database
from PBOC, third
party and
self-owned
platforms
. On-site inspections
Sales channel . Lacking offline
channels and sales
networks to reach
retail automobile
finance lease
customers
. Reach end
customers through
automobile stores
. Reach diverse end
customers through
self-operated shops
. Reach diverse end
customers through
self-operated shops
with promotions
on the online
channels
Consumer experience . Lacking
professional
experience in
automobile-related
services
. Professional
services and deep
understanding in
consumer demands
. Deep
understanding in
consumer demands
. Limited
understanding in
consumer demands
Target customer . Customers with
super prime credit
profiles, generally
l o c a t e di nt i e ro n e
and tier two cities
. Customers with
super prime credit
profiles, generally
l o c a t e di nt i e ro n e
and tier two cities
. Customers with
prime credit
profiles, generally
located in tier two,
tier three and
below cities, young
populations
. Customers with
prime credit
profiles, generally
l o c a t e di nt i e rt w o ,
tier three and
below cities, young
populations
Range of effective
interest rate of
newly entered
finance lease
agreements
. 5%–15% . 6%–16% . 8%–24% . 9%–24%
Source: Ministry of Commerce, CBIRC, CIC Report
INDUSTRY OVERVIEW
–1 2 8–


--- page 138 ---
Compared to other peers, particularly internet-backed RAFLCs, offline RAFLCs have
advantages in its offline capability and risk management system. With offline outlets,
offline RAFLCs can foster trust with custome rs through face-to-face consultations and
services, and therefore enhance offline RAFLCs’ abilities in customer acquisition, customer
relationship management and customer retention. Furthermore, through offline
interactions including in-person communic ation and document verification, offline
RAFLCs can enhance the effectiveness of risk management process.
Entry Barriers of Retail Automobile Finance Lease Business in China
. Risk management
Retail automobile finance lease lowers th e entry barrier for consumers on automobile
loan by setting lower requirement for the official credit records and requiring less down
payment, which brings higher default risk for automobile finance lease market players on
loan repayment and damage and loss of leased automobiles. Thus, risk management is vital
to those who wish to enter the retail automob ile finance lease industries. A comprehensive
risk management system should be able to assess and manage credit risks during
pre-financing and post-financing stage.
. Sales channel and client acquisition
The ability of developing comprehensive sa les channel and customer acquisition is
fundamental in entering the retail automobile finance lease industry. For sales channel
development of offline players, building up one ’s own sales channel requires high financial
investment, time and operatio nal capability. In addition, customer acquisition has proven
to be time costly and it is difficult for new ma rket entrants to build brand recognition.
. Financing capacity
Retail automobile finance lease is a capital in tensive industry. Besides the sales channel
developing and marketing cost, a retail auto mobile fiance lease company needs immerse
liquidity to deal with cash flow mismatch in business operation. Except those companies
which are state-owned or bank-affiliated or w ell established RAFLCs, fund raising for most
entrants is difficult, especially in coping with stricter regulations and anticipated slowing
economy growth. Commercial banks find it diffi cult to provide a large line of credit to new
market entrants with a small scale of business and without endorsement. On the other hand,
fundings from non-bank financial institutions usually have higher interest rates, which
limits the profitability of new market entrants
(Note) .
Note: As defined by Implementing Measures of the China Banking and Insurance Regulatory
Commission for Administrative Licensing Matters relating to Non-banking Financial
Institutions ( 《中國銀保監會非銀行金融機構行政許可事項實施辦法》), non-bank financial
institution includes trust company ( 金融資產管理公司), enterprise group financial companies ( 企
業集團財務公司), finance leasing companies ( 金融租賃公司), automobile finance companies ( 汽車
金融公司), currency brokerage companies ( 貨幣經紀公司), consumer financial company ( 消費金融
公司) and representative offices of foreign non-ba nk financial institutions based in China ( 境外非
銀行金融機構駐華代表處等機構) set up under the approval of CBIRC.
INDUSTRY OVERVIEW
–1 2 9–


--- page 139 ---
COMPETITIVE LANDSCAPE OF RETA IL AUTOMOBILE FINANCE LEASE
INDUSTRY
China’s retail automobile finance lease industry is relatively concentrated, and the
current market concentration of China’s licensed third party automobile finance lease
market in terms of transaction volume is relatively high. As of 31 December 2022, the top 20
companies in China’s retail automobile fi nance lease market had a market share of
approximately 81.1%, and the top 10 companies in China’s third-party retail automobile
finance lease market in terms of total numb er of loan volume disbursed by third party
RAFLCs had a market share of approximately 69.5%. In 2022, our Group ranked 19th and
5th, respectively, in terms of transacti on volume among all RAFLCs and third party
RAFLCs, and ranked 4th among all RAFLCs in terms of transaction volume of direct
finance lease. The RAFLCs generally take into account several key factors to price the
finance lease agreements, including costs of financing and operating activities, and profit
margin. As in 2022, the industry range of effective interest rates per annum charged by
RAFLCs in China fell between 5% and 24%, and the average effective interest rate charged
by the Group in 2022 was in line with the industry norm. The industry range of the average
effective interest rate per annum charged by RAFLCs in China remained relatively stable
during the Track Record Period. The Group was a ble to charge higher average interest rates
for the finance lease transactions than other RAFLCs, because of its flexible product
offerings, strong offline capability and de veloped risk management system to expand
customer reach and control asset quality.
The key success factors of third party RAFLCs in China include (i) customer
acquisition and distribution channels; (ii) dive rsification and stability of funding channels;
(iii) risk management and personal credit rat ing system; and (iv) operation efficiency.
Compared with automobile dealer-affiliate d RAFLCs, the Company has advantages in
wider selection of automotive brands, flexible offerings of finance lease services, and
focused geographical coverage. Automotive dealers generally contract with automotive
manufacturers and provide limited selection of brands to customers. Besides, automotive
dealers generally rely on other financial services providers to provide financing services to
their customers, and provide relatively limited or rigid financing method to their customers.
Furthermore, the Company focuses on tier two and tier three and below cities in China with
strong offline capabilit y to serve target customers in these regions, while automotive dealers
generally focus on tier one and tier two citi es in China, with less presence of 4S stores
networks in lower tier cities or counties, leading to lower penetration rate of automobile
finance lease services for customers in tier three and below cities in the PRC.
INDUSTRY OVERVIEW
–1 3 0–


--- page 140 ---
The table below sets out the rankings of the RAFLCs in terms of transaction volume of
retail automobile finance lease through both direct finance lease and sale-leaseback in
China in 2022 :
Rank 1 Rank 2 Company 3
Transaction
volume
Market
share 4 Category Listing status
(thousand
units,
approximate)
(%)
1 1 Group A 430 23.2 Third party RAFLCs Listed
2 / Group B 297 16.0 Bank-affiliated RAFLCs Non-listed
3 / Group C 120 6.5 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
4 / Group D 83 4.5 Bank-affiliated RAFLCs Listed
5 / Group E 71 3.8 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
6 / Group F 70 3.8 Bank-affiliated RAFLCs Non-listed
7 / Group G 59 3.2 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
8 / Group H 54 2.9 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
9 / Group I 52 2.8 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
10 2 Group J 35 1.9 Third party RAFLCs Non-listed
11 / Group K 31 1.7 Bank-affiliated RAFLCs Non-listed
12 / Group L 31 1.7 Bank-affiliated RAFLCs Listed
13 / Group M 30 1.6 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
14 3 Group N 28 1.5 Third party RAFLCs Non-listed
15 / Group O 26 1.4 Bank-affiliated RAFLCs Non-listed
16 / Group P 24 1.3 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
17 / Group Q 19 1.0 Bank-affiliated RAFLCs Non-listed
18 4 Group R 17 0.9 Third party RAFLCs Non-listed
19 5 Our Group 13 0.7 Third party RAFLCs Non-listed
20 / Group S 13 0.7 Automaker or automobile dealer-affiliated
RAFLCs
Non-listed
Total 81.1
Source: CIC Report
Notes:
1 : Refers to the ranking among all RAFLCs.
2 : Refers to the ranking among all third party RAFLCs.
INDUSTRY OVERVIEW
–1 3 1–


--- page 141 ---
3 : Company A, founded in 2014, is principally engaged i n provision of automobile finance solutions
through retail automobile finance lease and opera ting lease, and its total registered capital is
approximately RMB9.6 billion.
Company B, founded in 2013, is engaged in finance lease of automobiles and construction
machinery, automobile operating lease, structured fi nancing, etc., and its total registered capital is
approximately RMB14.5 billion.
Company C, founded in 1993, is a company principally involved in automobile finance lease
business, and its total registered capital is approximately RMB2.7 billion.
Company D, founded in 1984, is involved in finance lease business, and its total registered capital is
approximately RMB12.6 billion.
Company E, founded in 2012, is a finance lease company with total registered capital of
approximately RMB0.8 billion.
Company F, founded in 2008, is a finance lease company of automobile, aircrafts, ships and other
equipment, and its total registered capital is approximately RMB5.1 billion.
Company G, founded in 2004, is involved in fina nce lease of automobiles and other general
machinery, and its total registered capital is approximately RMB1.0 billion.
Company H, founded in 2011, is involved in the sales and finance lease of automobiles, auto parts
and other equipment, and its total registere d capital is approximately RMB3.6 billion.
Company I, founded in 2013, is affiliated to automotive dealership company and is principally
engaged in retail automotive finance lease business, with total registered capital of approximately
RMB0.5 billion.
Company J, founded in 2016, is principally engaged in retail automobile finance lease through direct
leasing, and its total registered capital is approximately RMB0.01 billion.
Company K, founded in 2007, is involved in finance lease business, and its total registered capital is
approximately RMB18.0 billion.
Company L, founded in 1985, is involved in finance lease business for green energy, auto finance,
high-end equipment, and its total registere d capital is approximately RMB2.9 billion.
Company M, founded in 2009, is primarily engaged in automobile finance lease and automobile
operating leasing business, and its total regis tered capital is approximately RMB1.3 billion.
Company N, founded in 2015, is involved in autom obile finance lease and automobile operating
leasing business, and its total registered capital is approximately RMB3.2 billion.
INDUSTRY OVERVIEW
–1 3 2–


--- page 142 ---
Company O, founded in 2007, is involved in the finance lease of automobiles, public utilities, energy
and power, machinery and equipment etc., and its to tal registered capital is approximately RMB14.0
billion.
Company P, founded in 2012, is involved in automobile finance lease and automobile operating
leasing business, and its total registered capital is approximately RMB5.1 billion.
Company Q, founded in 2010, is involved in finance lease and commercial factoring businesses, and
its total registered capital i s approximately RMB5.9 billion.
Company R, founded in 2010, is principally engaged in r etail automobile finance lease business, and
its total registered capital i s approximately RMB0.6 billion.
Company S, founded in 2015, is principally involved in automobile finance lease business, and its
total registered capital is RMB0.2 billion.
4 : Refers to the market share among all RAFLCs.
The table below sets out the rankings of the RAFLCs in terms of transaction volume of
retail automobile finance lease throug h direct finance lease in China in 2022 :
Rank Companies
Transaction
volume
Market
share 1
Offline
capacity 2
Number of
self-operated
offline stores
(thousand
units,
approximate)
(%) (unit,
approximate)
(unit,
approximate)
1 Group A 50 16.1 36,000 None
2 Group J 35 11.3 70 None
3 Group N 28 9.0 150 75
4 Our Group 13 4.1 68 68
5 Group T
3 11 3.7 20–100 2
Total 44.2
Source: CIC Report
Notes:
1 : Refers to the market share among all RAFLCs i n terms of transaction volume through direct
finance lease.
2 : Refers to the number of physical stores across China, including both self-operated sales outlets and
dealership stores in their cooperative sales network.
3 : Company T, founded in 2011, is principally engag ed in second-hand automobile trading and finance
leasing, and its total registered capital is RMB1.9 billion.
INDUSTRY OVERVIEW
–1 3 3–


--- page 143 ---
Market Trends of the Retail Automobile Finance Lease Market in China
. Direct finance lease is expected to gain more recognition by consumers
Driven by the increasingly stringent credit qualification requirements for car buyers,
direct finance lease is projected to gain more recognition by consumers. Compared with
sale-leaseback, direct finance lease is able to p rovide consumers with diversified products,
eliminate residual value risks and simplifies p rocedures such as insurance and purchase tax.
In addition, as the initial vehicle ownership belongs to the leasing companies, direct finance
lease will also become an alternative as a result of the government’s car purchase
restrictions in certain tier one and tier two cities, for the reason that ready-to-use
automobiles with valid license plates are leased to consumers under direct finance lease,
which saves time and avoids uncertainty in appl ying for license plates for the automobiles
by themselves.
. Tier two, tier three and below cities are expected to become the major business focus
Compared with the markets in tier one, tier two and tier three and below cities, where
there are a large number of consumers who ar e willing to choose retail automobile finance
lease to purchase their first car, are expected to become the main growth drivers. Leading
market players in the China’s retail automobile finance lease market do not only expand
their reach to end customers by establishing ex tensive offline sales network, but also offer
flexible and customised financing pr oducts with competitive pricing.
. The omni-channel is expected to become more acceptable
Due to the development of the mobile intern et, the car purchasing process has evolved
towards omni-channel including the integrating of online platforms and offline stores.
Therefore, it has been gradually common for R AFLCs to build their online sales channels
and mobile applications in order to attract consumers to offline stores.
. Pricing of automobile finance lease services in all tier of cities is expected to remain
competitive
As some bank-affiliated RAFLCs and auto maker or automobile dealer-affiliated
RAFLCs may take advantage of broadened funding channels to reduce their financing
costs, they may be able to offer more competitive pricing options which is expected to be
followed by third-party RAFLCs in order to pr eserve and increase their market share.
Besides, as a majority of third-party RAFLCs operate in tier two, tier three and below tier
cities in China with similar products offering an d branding, the pricing in tier two, tier three
and below tier cities is expected to be more competitive than that in tier one cities in China
in subsequent years. Although these developments could lead to potential downward
adjustments in the pricing of automobile financ e lease services in the near term, such pricing
competition pressure could be relieved thank s to greater market acceptance of automobile
finance lease services in China.
INDUSTRY OVERVIEW
–1 3 4–


--- page 144 ---
OVERVIEW OF AUTOMOBILE OPERATING LEASE MARKET IN CHINA
Analysis of Automobile Operating Lease Market in China
The automobile operating lease market in China has expanded at a fast pace over the
past years, and the market size in terms of gross merchandise volume has increased from
RMB50.9 billion in 2018 to RMB63.4 billion in 2022, with a CAGR of 5.7%. With the
development of e-hailing vehic le platforms, the increasing spending on self-drive trips and
the favourable policy reforms, the market si ze of automobile operating lease market in
China is projected to increase to RMB82.6 b illion in 2027, representing a CAGR of 5.4%
from 2022 to 2027.
Market size of automobile operating lease market, China, 2018-2027E
0
40
20
60
80
100
82.6
50.9 56.9 58.8
65.7 63.4 67.2 71.1 74.9 78.8
2027E2026E2018 2019 2020 2021 2022 2023E 2024E 2025E
RMB billion 5.7%
CAGR (2018–2022)
5.4%
CAGR (2022–2027E)
Source: China Association of Automobile Manufacturers, CIC Report
Note: The figures of the chart have been rounded up to one decimal place.
Market Drivers of the Automobile Operating Lease Market in China
The growth of automobile operating lease market in China is expected to be driven
primarily by the following factors:
. Development of e-hailin g vehicle platforms
Rapid growth of e-hailing vehicle platfo rms industry will bring vast demand to the
automobile operating lease market in China. In 2022, the number of rides with the required
Transport Certificate for E-hailing vehicle* ( 網絡預約出租汽車運輸證) and the required
Driver License of E-hailing* ( 網絡預約出租汽車駕駛員證) respectively accounted for less
than 70% of the total number of rides served by all e-hailing vehicle platforms in the PRC.
Along with increasingly strict regulation enfo rcement, leading e-hailing vehicle platforms
are more inclined to adopt the method of em ploying drivers separately from driver
companies and offer them vehicles that are regi stered legally with operating lease services
providers, and till the end of 2022, local traffic management bureaus have approved a total
of 2.1 million Transport Certifi cates for E-hailing vehicles.
INDUSTRY OVERVIEW
–1 3 5–


--- page 145 ---
. Government car ownership reforms
The Chinese government has recently imple mented a series of policy reforms to limit
the number and models of cars that may be purchased by government agencies and
encourage government agencies to meet their needs for car use by renting vehicles. These
reforms encourage both government bodi es and state-owned enterprises to adopt
automobile operating lease service.
. Increasing spending on self-drive trips for leisure purposes
With increasing per capita disposable income, Chinese consumers have been and are
expected to engage in an increasing amount of s elf-drive trips for leisure purposes and
provide strong demand for automobile operating lease services in China.
OVERVIEW OF E-HAILING VEHICLE PLATFORM MARKET IN CHINA
The e-hailing vehicle platform market measured by GMV has increased from
RMB235.2 billion in 2018 to RMB263.2 b illion in 2022, with a CAGR of 2.9%. This
growth is mainly due to the significant m arket demands for daily travelling and the
substantial subsidy from the leading market players. The stringent regulatory environment
of the industry has slowed down its development to an extent, but the improving service
quality as well as the increasing number of certificated drivers with sufficient vehicles will
help to drive up the market growth in the foreseeable future. The e-hailing vehicle platform
market measured by GMV is projected to reac h RMB419.0 billion by 2027, representing a
CAGR of 9.7% from 2022 to 2027. Furthermore, as a dominated e-hailing vehicle platform
in China took up majority of total market of e-hailing vehicle platforms in terms of GMV in
2022, while none of the other e-hailing vehic le platforms took up more than 10% of the
total market.
Market size and forecast of the e-hailing v ehicle platform market, in terms of GMV,
2018–2027E
0
200
400
600
419.0
235.2 246.7 232.7
298.4
263.2
295.1 326.9 358.3 389.1
RMB billion
2027E2018 2019 2020 2021 2022 2023E 2024E 2025E 2026E
2.9%
CAGR (2018–2022)
9.7%
CAGR (2022–2027E)
Source: Ministry of Transport of the People’s Republic of China, CIC Report
Note: The figures of this chart have been rounded up to one decimal place.
INDUSTRY OVERVIEW
–1 3 6–


--- page 146 ---
In accordance with the Provisional Measures for Administration of E-Hailing Services
(《網絡預約出租汽車經營服務管理暫行辦法》), the Transport Certificate for E-hailing
vehicle* ( 網絡預約出租汽車運輸證) shall be obtained for the re levant vehicles such that
they will be registered as vehicles for e-hailing passenger transport. In order to obtain such
transport certificate, e-hailing vehicle driv ers may either re-register private vehicles as
commercial vehicles or rent vehicles already w ith the transport certi ficate from companies
such as our Group. As (i) only private vehicles with low mileage and operating time are
allowed to be re-registered as commercial vehicles; and (ii) such re-registration involves
much higher insurance cost, renting new ve hicles with the Transport Certificate for
E-hailing vehicle is becoming a more preferable option than re-registration of private
vehicles as commercial vehicles.
Market trends and opportunities of e-hailing m arket include: (i) stringent legitimacy
requirement in terms of vehicles and drivers; (ii) constantly increasing market demand; (iii)
specialised e-hailing services offered dir ectly by platforms through platform-owned
vehicles; (iv) growing security and service quality concern; and (v) increasing regulation
on data collection and use of personal information due to growing data security concern.
Impact of the outbreak of COVID-19 on GDP, the retail automobile finance lease and
automobile operating lease markets in China
Due to the outbreak of COVID-19, the year-on-year growth rate of real GDP reached
negative 6.8% for the first quarter of 2020. However, with the effective control measures
and the full resumption of work, China’s real GDP year-on-year growth rebounded to 2.2%
in 2020 and further increased to 8.1% in 2021.
Meanwhile, in 2020, the loan volume of retail automobile finance lease market also
decreased to 1,619.8 thousand units with a negative year-on-year growth rate of
approximately 7.6%, mainly due to the restri ctions of offline outdoor activities and
travels, concern for credit crunch by bank s and temporarily postponed demand from
customers. Furthermore, in 2020, the loan volume of third party retail automobile finance
lease market in China reached approximately 760.0 thousand units with a negative
year-on-year growth rate of approximately 26.8%. However, in 2020, the automobile
operating lease market in China grew to RMB 58.8 billion with a year-on-year growth rate
of approximately 3.3%.
In 2021, along with the recovery of the automobile sales market, increasing penetration
rate of automobile finance, effective impleme ntation of more online marketing strategies,
the retail automobile finance lease market in terms of loan volume increased to 1,783.5
thousand units with a year-on-year growth rate of approximately 10.1% and the loan
volume of third party retail automobile finance lease market reached approximately 781.3
thousand units. In addition, in 2021, the automobile operating lease market in China grew
to RMB65.7 billion with a year-on-year growth rate of approximately 11.8%.
INDUSTRY OVERVIEW
–1 3 7–


--- page 147 ---
As the pandemic has been gradually brought under control in China, its retail
automobile finance lease and automobile op erating lease markets are expected to gain
growth momentum in the long term along with growing intention of non-car owners to
acquire automobiles, increasing awareness of health and safety-r elated benefits of travelling
by private automobiles, and growing penetration rates of retail automobile financial lease
and automobile operating lease. In 2022, the loan volume of retail automobile finance lease
market has increased to 1.9 million units with a y ear-on-year growth rate of approximately
3.8% and the loan volume of third party retail automobile finance lease market reached
approximately 0.8 million units.
INDUSTRY OVERVIEW
–1 3 8–


--- page 148 ---
OVERVIEW
Our Company was incorporated as an exempt ed company with limited liability in the
Cayman Islands on 29 March 2019. XXF Group was established as a limited liability
company in the PRC in 2007. Prior to 2012, our business was primarily the provision of
automobile rental services by way of operating lease. Due to the increasing demand and
business opportunity in the PRC’s automobile finance industry, we have gradually
broadened our scope of services and adjusted the focus of our business to automobile
retail and finance business when we started to sell automobiles by way of direct finance
lease since 2012. We are an automobile finance lease service provider for our self-operated
automobile retail business principally engag ing in (i) automobile retail and finance, where
we sell non-luxury automobiles mostly by way of direct finance lease primarily through our
sales outlets; and (ii) automobile-related businesses, where we principally offer automobile
operating lease service and other automobile-related services.
Mr. Huang is a founder of our Group. He is our executive Director, the chairman and
the chief executive officer of our Group, and has over 15 years of experience in the
automobile industry. Further details of his biography are set out in the section headed
‘‘Directors and Senior Management’’ in this prospectus. Our initial operations were funded
by Mr. Huang by way of capital contribution using his personal fund.
Through years of development, as at the Latest Practicable Date, we had established
an extensive sales network with 77 sales outlets across 25 provinces and municipalities in the
PRC.
BUSINESS MILESTONES
The following is a summary of business milestones of our Group:
Milestone
September 2007 XXF Group was established as a limited liability company
in the PRC primarily providing a utomobile rental services.
December 2012 We began to sell automobile by way of finance lease.
March 2015 We were approved as one of the 13th batch of pilot
enterprises of domestic-fund ed finance lease business* ( 第
十三批內資融資租賃業務試點企業)b yt h eM O F C O Ma n d
the SAT.
December 2015 The shares of XXF Group became quoted on NEEQ.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 3 9–


--- page 149 ---
Milestone
February 2018 We commenced our business on online automobile
aftermarket service platform through our 52 Car APP,
assisting car users to look for automobile usage solutions.
June 2018 We launched 52 Car (Business Version) APP mobile
application targeting at third party automobile
aftermarket service providers.
November 2018 We secured Beijing Che sheng, an affiliate of a leading
mobile transportation platform in the PRC, as one of our
pre-IPO investors, and we started providing our automobile
lease service to individual e-hailing drivers of the relevant
mobile transportation platform.
November 2019 Fujian Qoocar qualified as a new and high technology
enterprise.
OUR CORPORATE DEVELOPMENT
The major corporate developments including the major shareholding changes of
members of our Group which were material to the performance of our Group during the
Track Record Period are set out below:
XXF Group
XXF Group is principally engaged in providing automobile finance and
automobile-related services and the holding company of our subsidiaries in the PRC. It
was established in the PRC as a limited liab ility company on 7 September 2007 with an
initial registered capital of RMB500,000. A s at the date of its establishment, XXF Group
was owned as to 50% by Mr. Huang, the founder of our Group, and 50% by Ms. Hong
Xiaoyan ( 洪小燕), an Independent Third Party.
Subsequent to a series of capital contributi ons and equity transfers, the registered
capital of XXF Group was increased to RMB170.0 million as at 20 April 2015 and XXF
Group became owned as to 92.16% by Mr. Huang and 7.84% by Ms. Xie Xiaohui ( 謝曉惠),
the spouse of Mr. Huang.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 0–


--- page 150 ---
In May 2015, in preparation of listing on NEEQ and to retain talents to achieve our
strategic and operational goals, certain investors including some then employees of our
Group invested in XXF Group through equity interests transfers by Mr. Huang. At the
same time, Ms. Xie Xiaohui transferred 7 .84% equity interest to Mr. Huang at the
consideration of RMB13.335 million, which was determined with reference to the then
paid-up registered capital of XXF Group. Upon the completion of the equity transfers,
XXF Group was owned by the following parties and their respective interests in XXF
Group are set out as below:
Name of shareholder
Capital
contribution
Approximate
equity interest
Consideration
paid by the
investors (1)
(RMB’000) (%) (RMB’000)
Mr. Huang 35,100 20.65
Tengxin Investment (2) 34,000 20.00 35,700
Fuzhou Shenghui (2) 25,000 14.71 26,250
Fuzhou Zhitong Investment Partnership Enterprise
(Limited Partnership)* ( 福州智通投資合夥企業
（有限合夥）)( ‘ ‘Fuzhou Zhitong ’’)(3) 17,000 10.00 17,850
Fuzhou Huitong Investment Partnership Enterprise
(Limited Partnership)* ( 福州惠通投資合夥企業
（有限合夥）)( ‘ ‘Fuzhou Huitong ’’)(4) 12,000 7.06 12,000
Qiu Hui ( 邱暉) (an Independent Third Party) 10,800 6.35 11,340
Lin Dachun ( 林大春) (an Independent Third Party) 10,350 6.09 10,867
Chen Jia ( 陳嘉) (an Independent Third Party) 7,500 4.41 7,875
Pan Qiu ( 潘秋) (then employee) 5,600 3.29 5,600
Liu Donghu ( 劉東扈) (an Independent Third Party) 4,000 2.35 4,200
Huang Jianqing ( 黃劍清) (an Independent Third Party) 3,000 1.76 3,150
Li Huan ( 李歡) (an Independent Third Party) 2,000 1.18 2,100
Mao Lin ( 毛琳) (an Independent Third Party) 1,750 1.03 1,837
Lin Yanfeng ( 林炎峰) (our employee) 1,300 0.76 1,300
Ye Fuwei ( 葉富偉) (our executive Director) 600 0.36 600
Total 170,000 100
Notes:
1. In respect of the investment made by each of the employees and Fuzhou Huitong, the consideration
was determined on arm’s length basis with referen ce to the paid-up registered capital of XXF Group
at the time of such transfers. In respect of the investment made by each of Fuzhou Zhitong, Tengxin
Investment, Fuzhou Shenghui and other Independent Third Parties, the consideration was
determined on arm’s length basis with reference t ot h ep a i d - u pr e g i s t e r e dc a p i t a la tt h et i m eo f
such transfers and the financial performanc e of XXF Group. All the considerations have been
settled.
2. Each of Tengxin Investment and Fuzhou Shenghui was an Independent Third Party at the time of
the relevant equity transfers.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 1–


--- page 151 ---
3. Fuzhou Zhitong was established on 22 May 2015 by Mr. Huang, the founder of our Group. The
general partner of Fuzhou Zhitong was Mr. Huang and the limited partners were Independent Third
Parties at the time when Fuzhou Zhitong was established. On 25 May 2015, Mr. Huang transferred
10% equity interest in XXF Group to Fuzhou Zhitong.
4. Fuzhou Huitong was established as limited partnership to hold equity interests in XXF Group
pursuant to a share incentive plan initiated by M r. Huang. The general partner of Fuzhou Huitong
was Mr. Huang and the limited partners were 45 then employees of XXF Group at the time when
Fuzhou Huitong was established. On 25 May 2015, Mr . Huang transferred 7.06% equity interest in
XXF Group to Fuzhou Huitong.
On 2 July 2015, XXF Group was converted from a limited liability company into a
joint stock company with limited liability on p ro rata basis with reference to its net asset
value as at 31 May 2015. Upon completion of such conversion, the share capital of XXF
Group was RMB170.0 million divided into 1 70,000,000 shares with a nominal value of
RMB1.0 each.
NEEQ listing and delisting
On 11 December 2015, the shares of XXF Group became quoted on NEEQ (stock
code: 834499). In light of the fact that a listing on a reputable and liquid equity market such
as the Stock Exchange can raise the brand awareness, enhance the corporate image and
strengthen the corporate governance as well as the minimal trading volume of its shares on
NEEQ, on 15 December 2016, the shares of X XF Group were delisted from NEEQ with a
market capitalisation of RMB1,339,600,000. Such market capitalisation was calculated
based on the last subscription price of RMB7. 88 per share and 170,000,000 shares in issue
prior to delisting of the shares of XXF Group. As advised by our PRC Legal Advisers, our
Directors are of the view and confirm that (i) the delisting of XXF Group from NEEQ was
duly completed and the necessary approvals have been obtained; and (ii) during the period
of quotation on NEEQ, none of XXF Group or its directors was subject to any
investigations, disciplinary actions or admi nistrative penalties for non-compliance by any
regulatory authority nor any material breach of the relevant rules governing NEEQ. Our
Directors confirm, and the Sole Sponsor concurs, that there are no further matters that
need to be brought to the attention of the regulators and investors in relation to XXF
Group’s listing on and delisting from NEEQ mentioned above.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 2–


--- page 152 ---
Upon delisting from the NEEQ, XXF Group was owned by the following parties and
their respective interests in XXF Group are set out as below:
Name of shareholder Shares
Approximate
equity
interest (1)
(%)
Mr. Huang 37,100,000 21.82
Tengxin Investment (2) 34,000,000 20.00
Fuzhou Shenghui (2) 25,000,000 14.71
Fuzhou Zhitong (2) 17,000,000 10.00
Fuzhou Huitong (2) 12,000,000 7.06
Qiu Hui ( 邱暉) (an Independent Third Party) 10,800,000 6.35
Lin Dachun ( 林大春) (an Independent Third Party) 10,350,000 6.09
Chen Jia ( 陳嘉) (an Independent Third Party) 5,500,000 3.24
Pan Qiu ( 潘秋) (then employee) 5,600,000 3.29
L i uD o n g h u(劉東扈) (an Independent Third Party) 3,999,000 2.35
Huang Jianqing ( 黃劍清) (an Independent
Third Party) 3,000,000 1.76
Li Huan ( 李歡) (an Independent Third Party) 1,334,000 0.78
Mao Lin ( 毛琳) (an Independent Third Party) 1,750,000 1.03
Lin Yanfeng ( 林炎峰) (our employee) 1,300,000 0.76
Ye Fuwei ( 葉富偉) (our executive Director) 600,000 0.35
Liu Hao ( 柳昊)(3) 400,000 0.24
Yunnan A Gu Jia Ni Equity Investment Fund
Management Company Limited — A Gu Jia Ni
Fund I* ( 雲南阿古甲尼股權投資基金管理有限公司
— 阿古甲尼一號基金)
(3) 194,000 0.11
Zhu Shaojian ( 朱少健)(3) 73,000 0.04
Total 170,000,000 100
Notes:
1. Certain percentage figures included in the abov e table have been subject to rounding adjustments.
Accordingly, figures shown as totals may not be an arithmetic aggregation of the figures preceding
them.
2. See respective note 2, note 3 and note 4 under ‘ ‘Reorganisation’’ below in this section.
3. Each of Mr. Liu Hao, Mr. Zhu Shaojian and Yunnan A Gu Jia Ni Equity Investment Fund
Management Company Limited — A Gu Jia Ni Fund I* ( 雲南阿古甲尼股權投資基金管理有限
公司 — 阿古甲尼一號基金) became a shareholder of XXF Group when its shares were quoted on
NEEQ and is an Independent Third Party.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 3–


--- page 153 ---
On 3 January 2017, Fujian Free Trade Z one Pingtan Area Xinyuan Investment
Partnership Enterprise (Limited Partnership)* ( 福建自貿試驗區平潭片區鑫元投資合夥企業
（有限合夥）)( ‘ ‘Fujian Xinyuan ’’) and Fujian Free Trade Zone Pingtan Area Fuyuan
Investment Partnership Enterprise (Limited Partnership)* ( 福建自貿試驗區平潭片區富元投
資合夥企業（有限合夥）)( ‘ ‘Fujian Fuyuan ’’) subscribed for 5,100,000 shares and 6,800,000
shares of XXF Group at a consideration of RMB10.2 million and RMB13.6 million,
respectively. Such consideration was determined with reference to the net asset value of
XXF Group as at 30 June 2016 and fully settled in January 2017. Each of Fujian Xinyuan
and Fujian Fuyuan was a limited partnership controlled by Mr. Huang as the executive
partner and general partner while the limited partners were then employees of XXF Group
at the time when Fujian Xinyuan and Fujian Fuyuan were established. Upon completion of
such subscription, the share capital of XX F Group was further increased to RMB181.9
million divided into 181,900,000 shares.
On 11 January 2017, Hangzhou Chain React ion Investment Partnership Enterprise
(Limited Partnership)* ( 杭州鏈反應投資合夥企業（有限合夥）)( ‘ ‘ Hangzhou Chain
Reaction ’’), Hangzhou Good Hope Chehang Investment Partnership Enterprise (Limited
Partnership)* ( 杭州好望角車航投資
合夥企業（有限合夥）)( ‘ ‘Good Hope Chehang ’’) and
Hangzhou Good Hope Investment Management Company Limited* ( 杭州好望角投資管理
有限公司)( ‘ ‘Good Hope Investment ’’), subscribed for 36,380,000 shares, 4,547,500 shares
and 4,547,500 shares of XXF Group, repre senting 16.00%, 2.00% and 2.00% of the
enlarged share capital of XXF Group, at a c onsideration of RMB120.0 million, RMB15.0
million and RMB15.0 million, respectively. Such consideration was determined after arm’s
length negotiation with reference to the the n valuation of XXF Group and was fully settled
in December 2016. As a result, the share capital of XXF Group was further increased to
RMB227.375 million divided into 227,375,000 shares. As confirmed by our Directors, the
proceeds from such inve stment were used for daily operati ons and have been fully utilised.
Hangzhou Chain Reaction, Good Hope Chehang and Good Hope Investment were entitled
to certain special rights under such investments, which were terminated in October 2018
pursuant to a supplemental agreement entered into by parties thereto.
Hangzhou Chain Reaction, Good Hope Chehang and Good Hope Investment are
under ultimate control of Mr. Huang Zhengrong ( 黃崢嶸), an Independent Third Party and
an experienced investor focusing on equity investments in the PRC. Mr. Huang Zhengrong
became acquainted with XXF Group when it was listed on NEEQ, as he was looking for
investment opportunities in the open market and was optimistic about the growth prospects
of XXF Group. The consideration per share paid by Mr. Huang Zhengrong was
approximately HK$1.91, which was calculate d by dividing the total investments made by
Hangzhou Chain Reaction, Good Hope Chehang and Good Hope Investment in XXF
Group in January 2017, as adjusted by the div estments of Hangzhou Chain Reaction in
2018 and 2019 and the divestment of Good Hope Investment on 30 April 2019, by the total
number of Shares held by Direct Solution Holdings Limited (‘‘ Direct Solution ’’) and Mega
Galaxy Enterprises Limited (‘‘ Mega Galaxy ’’), the offshore holding vehicles of Mr. Huang
Zhengrong, immediately following the completion of the Global Offering. The shares held
by Mr. Huang Zhengrong will not be subject to any lock-up after Listing and will count
towards the public float of our Company according to Rule 8.08 of the Listing Rules.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 4–


--- page 154 ---
On 23 March 2017, the share capital of XXF Group was further increased to
RMB341,062,500 divided into 341,062,500 sh ares by way of capitalisation issue and the
shareholding structure of XXF Group remained unchanged.
On 27 November 2018, XXF Group and its then shareholders entered into a capital
increase agreement with Be ijing Chesheng and an investment agreement with Zhuhai
Wanhe (the ‘‘Investment Agreement ’’), pursuant to which, among others, Beijing Chesheng
subscribed for 12,789,844 shares and Zhuhai Wa nhe subscribed for 21,316,406 shares issued
by XXF Group. The share capital of XXF Group was increased to RMB375,168,750
divided into 375,168,750 shares. See ‘‘Pre-IPO investments’’ below in this section for details.
In order to realise part of their respective investments in XXF Group, Hangzhou
Chain Reaction and Mr. Pan Qiu transferred shares held in XXF Group to the following
transferees including certain existing shareholders. The relevant consideration was
determined with reference to the then valu ation of XXF Group and/or the investment
cost in XXF Group and was fully settled by March 2019. The details of the transfers are set
out as below:
Name of transferor Name of transferee Number of shares Consideration Date of agreement
(RMB)
Hangzhou Chain Reaction Zhuhai Wanhe 21,316,406 50,000,000 27 November 2018
Yang Yufen 3,751,688 8,800,000 31 December 2018
Mao Lin 1,500,000 3,518,417 31 December 2018
Fuzhou Shenghui 7,503,375 17,600,000 31 December 2018
Mr. Huang 4,263,281 10,000,000 28 February 2019
Pan Qiu Fuzhou Bojia 2,900,000 5,101,680 2 February 2019
Subsequent to the above share transfers and immediately prior to the acquisition by
XXF HK, the share capital of XXF Group was RMB375,168,750 which has been fully paid
up. See the corporate and shareholding structure of our Group under ‘‘Reorganisation’’
below in this section for further details.
The registered capital of XXF Group was increased to RMB390,168,750 by way of
capital injection by XXF HK of RMB15,000,000 on 17 August 2020, and further increased
to RMB410,168,750 by way of capital injection by XXF HK of RMB20,000,000 on 18 June
2021, both of which have been fully paid up.
Taoqi Internet
Taoqi Internet was established in the PRC as a limited liability company on 29 June
2015 with an initial registered capital of RMB10,000,000. Taoqi Internet is primarily
engaged in software platform development and automobile-related services and is wholly
owned by XXF Group since its establishment.
On 8 May 2018, the registered capital of Taoqi Internet was increased to RMB50.0
million, which had been fully paid up as at the Latest Practicable Date.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 5–


--- page 155 ---
Fujian Heqi
Fujian Heqi was established in the PRC as a limited liability company on 22 June 2016
with an initial registered capital of RMB50, 000,000. Fujian Heqi is primarily engaged in
auto-insurance agency business and is wholly owned by XXF Group since its establishment.
On 14 June 2017, the registered capital of Fujian Heqi was decreased to
RMB10,000,000. Since September 2019, Fujian Heqi ceased to provide auto-insurance
agency services as part of the business consolidation plan of our Group.
Fujian Qoocar
Fujian Qoocar was established in the PR C as a limited liability company on 14 July
2017 with an initial registered capital of RMB10,000,000. Fujian Qoocar is primarily
engaged in provision of after-sales services to car users through 52 Car APP and is wholly
owned by XXF Group since its establishment.
Fujian ZyooCar
Fujian ZyooCar was established in the PRC as a limited liability company on 30
November 2017 with an initial registered c apital of RMB50,000,000. Fujian ZyooCar is
primarily engaged in new energy car-sharing business. Since its establishment, Fujian
ZyooCar is owned as to 51% by XXF Group and 49% by Ningde Transport Investment
Group Company Limited* ( 寧德市交通投資集團有限公司), an Independent Third Party.
Fujian Xidi
Fujian Xidi was established by XXF Group in the PRC as a limited liability company
on 14 September 2018 with an initial registered capital of RMB170,000,000. Fujian Xidi is
primarily engaged in automobile leas e service for e-hailing vehicles.
On 21 January 2019, in connection with the business cooperation arrangement with
Beijing Chesheng, one of our Pre-IPO Investo rs, XXF Group transferred approximately
5.88% of equity interest in Fujian Xidi to B eijing Chesheng at the consideration of
RMB10,000,000. The consideration was determ ined after arm’s length negotiation with
reference to the registered capital of Fujian Xidi at the time of such transfer and was fully
settled on 23 April 2019. Upon completion of such transfer, Fujian Xidi became owned as
to approximately 94.12% by XXF Group and approximately 5.88% by Beijing Chesheng.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 6–


--- page 156 ---
As part of the Reorganisation, the entire equity interest held by Beijing Chesheng was
subsequently acquired by XXF Group. As a result, Fujian Xidi became wholly owned by
XXF Group. For further details, please refer to the paragraph below headed ‘‘—
Reorganisation’’ in this section.
As at the Latest Practicable Date, the registered capital of Fujian Xidi was fully paid
up.
REORGANISATION
In anticipation of the Listing, we undertook a restructuring exercise whereupon our
Company became the listing vehicle of our Group and the holding company of our business
operations.
The following chart sets out our Group’s corporate and shareholding structure
immediately before 30 April 2019 :
100% 100% 100% 51% 100% 100%
11.99%
 Fuzhou Shenghui
(PRC)(4)
13.59%
Tengxin Investment
(PRC)(3)
11.36%
Zhuhai Wanhe
(PRC)(5)
XXF Group
(PRC)
100% 100% 100% 100% 100% 94.12%
Taoqi Internet
(PRC)
100%
Taoqi Yuncar
(PRC)
Fujian Xiqi
(PRC)
Fujian Shenqi
(PRC)
Xiamen Xixiangfeng
(PRC)
Guoxin Zhonglian
(PRC)
Fujian Xidi
(PRC)(7)
Fujian Heqi
(PRC)
Fujian Xidun
(PRC)
Fujian ZyooCar
(PRC)(8)
Fujian Lvyi
(PRC)
Fujian Qoocar
(PRC)
Fujian Anxin
(PRC)
10.43% 1% 15.9%
Fuzhou Bojia
(PRC)(5) Yang Yufen Other
shareholders(6)
3.41%
Beijing Chesheng
(PRC)(5)
Mr. Huang
15.97% 6.79% 4.80% 2.72% 2.04%
Fuzhou Zhitong
(PRC)(2)
Fuzhou Huitong
(PRC)(2)
Fujian Fuyuan
(PRC)(2)
Fujian Xinyuan
(PRC)(2)
Notes:
1. Certain percentage figures included in the ch art above were subject to rounding adjustments.
Accordingly, the total percentage figures may not be equal to an arithmetic aggregation of the
individual figures.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 7–


--- page 157 ---
2. Each of Fuzhou Zhitong, Fuzhou Huitong, Fujian F uyuan and Fujian Xinyuan is controlled by Mr.
Huang as the executive partner and general p artner. As at the Latest Practicable Date,
(i) Fuzhou Zhitong is a limited partnership contr olled by Mr. Huang as the executive partner and
general partner (who owned approximately 19.14% of its partnership interests), and has 16
other limited partners, whose names, respectiv e partnership interests held in Fuzhou Zhitong
and relationships with our Company, if any, are set out below:
Name of limited partner
Approximate
partnership
interests held
in Fuzhou
Zhitong Relationship with our Company
(%)
Ou Wenqing 29.41 Independent Third Party
Wang Youbin 8.82 Independent Third Party
Wang Jie 7.40 Independent Third Party
Zheng Ying 5.88 Independent Third Party
Chen Huaxing 4.20 Independent Third Party
Xu Zhijun 3.53 Independent Third Party
Fang Jianzhong 3.00 Independent Third Party
Ruan Jianrui 3.00 Independent Third Party
Chen Xiong 3.00 an employee of our Group
Gao Liping 3.00 Independent Third Party
L i nX i n s h e n g 2 . 9 4 a ne m p l o y e eo fo u rG r o u p
Zheng Huarong 2.00 Independent Third Party
Fang Miao 1.50 Independent Third Party
Zhang Xiping 1.41 Independent Third Party
Yuan Juan 0.88 Independent Third Party
Tang Haijian 0.88 Independent Third Party
(ii) Fuzhou Huitong is a limited partnership cont rolled by Mr. Huang as the executive partner and
general partner (who owned approximately 90. 92% of its partnership interests), and has four
other limited partners, whose n ames, respective partnership interests held in Fuzhou Huitong
and relationships with our Company, if any, are set out below:
Name of limited partner
Approximate
partnership
interests held
in Fuzhou
Huitong Relationship with our Company
(%)
Qiu Guohu 4.15 director of Fujian Xidun
Lin Jingfang 3.26 former employee of our Group
Chen Chenhua 0.83 former director of Fujian ZyooCar
Chen Fen 0.83 former employee of our Group
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 8–


--- page 158 ---
(iii) Fujian Fuyuan is a limited partnership c ontrolled by Mr. Huang as the executive partner and
general partner (who owned approximately 14.69 % of its partnership interests), and has five
other limited partners, whose names, respectiv e partnership interests held in Fujian Fuyuan
and relationships with our Company, if any, are set out below:
Name of limited partner
Approximate
partnership
interests held
in Fujian
Fuyuan Relationship with our Company
(%)
Guo Hongzhi 43.89 Pre-IPO Investor
Ye Fuwei 25.00 executive Director
Qiu Guohu 6.13 director of Fujian Xidun
Liu Guangyao 5.88 an employee of our Group
Xie Guotao 4.41 former employee of our Group
(iv) Fujian Xinyuan is a limited partnership cont rolled by Mr. Huang as the executive partner and
general partner (who owned appr oximately 53.16% of its partnership interests), and has six
other limited partners, whose names, respectiv ep a r t n e r s h i pi n t e r e s t sh e l di nF u j i a nX i n y u a n
and relationships with our Company, if any, are set out below:
Name of limited partner
Approximate
partnership
interests held
in Fujian
Xinyuan Relationship with our Company
(%)
Ye Ying 13.89 director of Taoqi Internet
Gao Jinwen 13.89 Independent Third Party
Zhang Jinghua 8.11 executive Director
Lin Yanfeng 6.15 an employee of our Group
Chen Chenhua 3.27 former director of Fujian ZyooCar
Chen Fen 1.53 former employee of our Group
3. Tengxin Investment is owned as to 75%, 10%, 10% and 5% by Mr. Teng Yongxiong, Mr. Teng
Yongyan, Mr. Teng Yongwei and Mr. Teng Yongzhuang, respectively, each an Independent Third
Party.
4. Fuzhou Shenghui is owned as to approximately 4 .48% by Mr. Liu Wei, our non- executive Director,
and approximately 95.52% by father of Mr. Liu Wei.
5. Each of Fuzhou Bojia, Zhuhai Wanhe and Beijing Chesheng is an Independent Third Party.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 4 9–


--- page 159 ---
6. The remaining equity interests of XXF Group are h eld by 11 shareholders detailed as below, all of
whom are Independent Third Parties. Among such shareholders, Hangzhou Chain Reaction, Good
Hope Chehang and Good Hope Investment are under the common control of an Independent Third
Party.
Name of shareholder
Number of
shares
Approximate
shareholding
percentage
Hangzhou Chain Reaction 16,235,250 4.33%
Chen Jia 8,250,000 2.20%
Good Hope Chehang 6,821,250 1.82%
Good Hope Investment 6,821,250 1.82%
Liu Donghu 5,998,500 1.60%
Pan Qiu 5,500,000 1.47%
Mao Lin 4,125,000 1.10%
Li Huan 2,401,500 0.64%
Lin Yanfeng 1,950,000 0.52%
Ye Fuwei 900,000 0.24%
Liu Hao 600,000 0.16%
7. The remaining interest of Fujian Xidi was hel d by Beijing Chesheng, an Independent Third Party
and our Pre-IPO Investor.
8. The remaining equity interest of Fujian ZyooC ar was held by Ningde Transport Investment Group
Company Limited* ( 寧德市交通投資集團有限公司), an Independent Third Party (by virtue of
Fujian ZyooCar being an insignificant subsid iary of our Company as defined under the Listing
Rules).
Incorporation of our Company and the increase of the authorised share capital
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 29 March 2019 to act as the holding company of our Group. The initial
authorised share capital of our Company was HK$380,000 divided into 38,000,000 Shares
of HK$0.01 each. Upon incorporation, one Share, representing the then entire issued share
capital of our Company, was issued and allotted to the initial subscriber and such Share was
transferred to Glorypearl Capital, a company incorporated in BVI and wholly owned by
Mr. Huang, on the same day.
On 30 August 2019, our Company increased its authorised share capital from
HK$380,000 divided into 38,000,000 Shares of HK$0.01 each to HK$10,000,000 divided
into 1,000,000,000 Shares of HK$0.01 each by the creation of an additional 962,000,000
Shares of HK$0.01 each.
Incorporation of offshore subsidiaries
Celestial Bonanza was incorporated in th e BVI as a limited liability company on 8
March 2019. On 30 April 2019, one share of Celestial Bonanza was issued and allotted at
par value to our Company. Upon completion of such allotment, Celestial Bonanza became
a direct wholly-owned subsidiary of our Company.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 0–


--- page 160 ---
XXF HK was incorporated in Hong Kong as a limited liability company on 2 May
2019 with one share of HK$1.00 issued and allo tted to the initial subscriber on the same
day. On 9 May 2019, such one share of XXF HK was transferred to Celestial Bonanza at
the consideration of HK$1.00. Upon completion of such transfer, XXF HK became an
indirect wholly-owned subsidiary of our Company.
Conversion of XXF Group to a foreign-invested company
On 26 March 2019, XXF Group passed a shareholders’ resolution to approve, among
other matters, the conversion of XXF Group from a joint stock company with limited
liability into a limited liability company. U pon completion of such conversion, the
registered capital of XXF Group was RMB375,168,750 and its shareholding structure
remained unchanged.
On 30 April 2019, Good Hope Investment and Well Creative Investment Limited ( 麗創
投資有限公司)( ‘ ‘Well Creative ’’), a company wholly owned by Prosper United Holdings
Limited ( 合興控股有限公司)( ‘ ‘Prosper United ’’) which is in turn wholly owned by Ms. Choo
Beng Hiang, an Independent Third Party, entered into an equity transfer agreement,
pursuant to which Good Hope Investment agreed to transfer approximately 1.82% equity
interest in XXF Group to Well Creative at the consideration of RMB16 million. Such
consideration was determined with referenc e to the then valuation of XXF Group assessed
by an independent valuer and was fully settled in August 2019. Please refer to the section
headed ‘‘— Pre-IPO Investments’’ below for further details of the investment by Ms. Choo
Beng Hiang.
Acquisition of XXF Group by XXF HK
During the period from 27 August 2019 to 28 November 2019, XXF HK acquired the
entire equity interest in XXF Group from the t hen registered shareholders of XXF Group at
the total consideration of RMB384,347,500, w hich was determined with reference to the
paid-up share capital of XXF Group and/or their investment cost in XXF Group. As a
result, XXF Group became a wholly foreign-owned enterprise and was wholly owned by
XXF HK.
Restructuring of Fujian Xidi
On 2 December 2019, as part of the reorgan isation, Beijing Chesheng transferred
approximately 5.88% of equity interest in Fujian Xidi to XXF Group at a consideration of
RMB20,000,000 which was determined with re ference to the then valuation of Fujian Xidi
assessed by an independent valuer.
A l l o t m e n to fS h a r e s
As part of the Reorganisation, our Company issued and allotted an aggregate of
375,168,749 Shares to the following Shareholders, the consideration of which was
determined with reference to the respective capital contributions or investment costs by
their respective beneficial owners in XXF Group.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 1–


--- page 161 ---
Name of Shareholder
Name of
beneficial owner
Number of
Shares
Consideration of
the newly issued
Shares
Date of
Shares
allotment
Approximate
shareholding
upon
completion of
the
Reorganisation
and the
Pre-IPO
Investments
(RMB or HK$
equivalent) (%)
Glorypearl Capital Mr. Huang 5 9,913,280 59,913,280 30 August
2019
15.40
Lucky League Limited
瑞盟有限公司 (‘‘Lucky
League ’’)
Chen Jia 8,250,000 8,250,000 30 August
2019
2.12
Gold Chest Investments
Limited 金庫投資有限
公司 (‘‘Gold Chest ’’)
Liu Donghu 5,998,500 5,998,500 30 August
2019
1.54
Regency Gem Limited
帝寶有限公司 (‘‘Regency
Gem ’’)
Pan Qiu 5,500,000 5,500,000 30 August
2019
1.41
Amazing Gold Holdings
Limited 讚金控股有限
公司 (‘‘Amazing Gold ’’)
Mao Lin 4,125,000 4,125,000 30 August
2019
1.06
Fortune Strength
Developments Limited
力鑫發展有限公司
(‘‘Fortune Strength ’’)
Yang Yufen 3,751,688 3,751,688 30 August
2019
0.96
Fantastic Fame
International Limited
妙譽國際有限公司
(‘‘Fantastic Fame ’’)
Li Huan 2,401,500 2,401,500 30 August
2019
0.62
Jade Mount Global Limited
玉峰環球有限公司 (‘‘Jade
Mount ’’)
Lin Yanfeng 1,950,000 1,950,000 30 August
2019
0.50
Billion Aspire Holdings
Limited
億啟控股有限公司
(‘‘Billion Aspire ’’)
Ye Fuwei 900,000 900,000 30 August
2019
0.23
Southern Excellence
Investments Limited
卓南投資有限公司
(‘‘Southern Excellence ’’)
Liu Hao 600,000 600,000 30 August
2019
0.15
Prosperous Splendor Liu Wei as to
4.48% and his
father as to
95.52%
45,003,375 45,003,375 16 October
2019
11.57
Prosper United Choo Beng Hiang 6,821,250 16,000,000 8 November
2019
1.75
Ideal Stand Ventures
Management Limited
(‘‘Ideal Stand ’’)
Tengxin
Investment
51,000,000 51,000,000 2 December
2019
13.11
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 2–


--- page 162 ---
Name of Shareholder
Name of
beneficial owner
Number of
Shares
Consideration of
the newly issued
Shares
Date of
Shares
allotment
Approximate
shareholding
upon
completion of
the
Reorganisation
and the
Pre-IPO
Investments
(RMB or HK$
equivalent) (%)
Brown Oak Holdings
Limited (‘‘Brown Oak ’’)
Zhuhai Wanhe
Jinhua Asset
Management
Co., Ltd.* ( 珠海
萬和錦華資產管
理有限公司)
(‘‘Wanhe
Jinhua ’’)
(1)
42,632,812 42,632,812 2 December
2019
10.96
Charming Tulip Holdings
Limited (‘‘Charming
Tulip ’’)
Shanghai Xuante (2) 39,125,000 39,125,000 2 December
2019
10.06
Precious Luck Shanghai Boyu (3) 33,150,000 33,150,000 2 December
2019
8.52
Happy Gain Shanghai Bo Yu (4) 18,000,000 18,000,000 2 December
2019
4.63
Direct Solution an Independent
Third Party
under the
common control
with Hangzhou
Chain Reaction
16,235,250 16,235,250 2 December
2019
4.17
Hit Drive Limited
(‘‘Hit Drive ’’)
an Independent
Third Party
under the
common control
with Beijing
Chesheng
12,789,844 12,789,844 2 December
2019
3.29
Southern Fortune Shanghai Boyun
(5) 10,200,000 10,200,000 2 December
2019
2.62
Mega Galaxy an Independent
Third Party
under the
common control
with Good Hope
Chehang
6,821,250 6,821,250 2 December
2019
1.75
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 3–


--- page 163 ---
Notes:
(1) Wanhe Jinhua controls Zhuhai Wanhe as its e xecutive partner and general partner.
(2) As at the date of Shares allotment, Charming T ulip was wholly owned by Shanghai Xuante, which
was in turn wholly owned by Fuzhou Bojia. The equity interest in Shanghai Xuante was
subsequently transferred to Fuzhou Bojia’s shar eholders following the deregistration of Fuzhou
Bojia on 7 February 2021. Upon completion of such transfer, Charming Tulip became indirectly
owned as to approximately 47.18% by Ms. Qiu H ui, 32.27% by Mr. Lin Dachun, 10.96% by Mr.
Huang Jianqing and 9.59% by Mr. Wang Yueren, all being Independent Third Parties.
(3) Shanghai Boyu is a limited par tnership controlled by Weichuang Hongjing as the executive partner
and general partner (which owned approximately 0 .025% of its partnership interest), and has two
other limited partners, whose names and respectiv e partnership interests held in Shanghai Boyu are
set out below:
Name of partner
Approximate
partnership
interests held
in Shanghai
Boyu
(%)
Fuzhou Zhitong 76.90
Fujian Xinyuan 23.075
Weichuang Hongjing is owned as to 99% by Mr. Huang and 1% by Fuzhou Zhitong. Each of
Fuzhou Zhitong and Fujian Xinyuan is controll ed by Mr. Huang as the executive partner and
general partner. See note 2 under ‘‘Reorganisati on’’ above in this section for details of the limited
partners of Fuzhou Zhitong and Fujian Xinyuan an d their respective interests therein. Save as
disclosed in note 2 under ‘‘Reorganisation’’ above i n this section, there was no other past or present
relationship between each of Fuzhou Zhitong and Fujian Xinyuan and our Company, its
subsidiaries, shareholders, directors, senior ma nagement, and any of their respective associates.
(4) Shanghai Bo Yu is a limited partnership cont rolled by Weichuang Xingsheng as the executive
partner and general partner (which owned approxim ately 0.05% of its partnership interest), and has
one limited partner, Fuzhou Huitong, which ow ned approximately 99.95% of its partnership
interest. Weichuang Xingsheng is wholly owned by Mr. Huang. Fuzhou Huitong is controlled by
Mr. Huang as the executive partner and general par tner. See note 2 under ‘‘Reorganisation’’ above
in this section for details of the limited partner s of Fuzhou Huitong and their respective interest
therein. Save as disclosed in note 2 under ‘‘Reorganis ation’’ above in this section, there was no other
past or present relationship b etween Fuzhou Huitong and our Company, its subsidiaries,
shareholders, directors, senior management , and any of their respective associates.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 4–


--- page 164 ---
(5) Shanghai Boyun is a limited partnership contro lled by Fujian Fuyuan as the executive partner and
general partner (which owned appr oximately 99.95% of its partnership interest), and has one limited
partner, Fuzhou Weichuang Shengfu Enterprise Management Co., Ltd.* ( 福州偉創盛富企業管理有
限公司)( ‘ ‘Weichuang Shengfu ’’) which owned approximately 0.05% of its partnership interest.
Fujian Fuyuan is controlled by Mr. Huang as the ex ecutive partner and general partner. Weichuang
Shengfu is wholly-owned by Mr. Ye Fuwei , our executive Director. See note 2 under
‘‘Reorganisation’’ above in this section for de tails of the partners of Fujian Fuyuan and their
respective interests therein. Save as disclose d in note 5, there was no other past or present
relationship between Weichuang Shengfu and our Company, its subsid iaries, shareholders,
directors, senior management, and an y of their respective associates.
Deregistration of Fujian Anxin
As part of the Reorganisation, we applied for deregistration of Fujian Anxin on 22
November 2019, which was wholly owned by XXF Group and had not been in business
operation since its establishment, due to a chang e in our business plans. It was deregistered
on 9 July 2020. Our Directors have confirmed that Fujian Anxin had no material
non-compliances with applicable rules and re gulations in the PRC during the Track Record
Period, and as at the Latest Practicable Date, t here were no outstanding claims or liabilities
against Fujian Anxin and there were no outstan ding claims or liabilities against our Group
in connection with the deregistration of Fujian Anxin.
Deregistration of Fujian Xiyun
As part of the Reorganisation, we applied for deregistration of Fujian Xiyun on 9
March 2022, which was wholly owned by XXF Group and had not been in business
operation since its establishment, due to a chang e in our business plans. It was deregistered
on 31 March 2022. Our Directors have confirmed that Fujian Xiyun had no material
non-compliances with applicable rules and re gulations in the PRC during the Track Record
Period, and as at the Latest Practicable Date, t here were no outstanding claims or liabilities
against Fujian Xiyun and there were no outstan ding claims or liabilities against our Group
in connection with the deregistration of Fujian Xiyun.
PRE-IPO INVESTMENTS
Summary of Pre-IPO Investments
Beijing Chesheng, Zhuhai Wanhe, Ms. Yang Yufen ( 楊豫芬), Ms. Mao Lin ( 毛琳),
Fuzhou Shenghui, Fuzhou Bojia, Mr. Guo Hongzhi and Ms. Choo Beng Hiang ( 朱孟香)a r e
collectively referred to as the ‘‘ Pre-IPO Investors ’’ and the investments made by the Pre-IPO
Investors are collectively referred to as the ‘‘ Pre-IPO Investments ’’. During the Track
Record Period and prior to the Reorganisat ion, with a view to realise their respective
investments in XXF Group, certain shareholders of XXF Group transferred their respective
i n t e r e s t si nX X FG r o u pt ot h er e l e v a n tP r e - I PO Investors, details of which are set out in
‘‘Investments in XXF Group’’ below. In addit ion, Beijing Chesheng subscribed additional
shares of XXF Group as part of the Pre-IPO Investments. For further details, see
‘‘Subscription of additional new Shares by Beijing Chesheng’’ below.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 5–


--- page 165 ---
Investments in XXF Group
On 27 November 2018, Beijing Chesheng, XXF Group and all its then shareholders
entered into a capital increase agreement, pursuant to which, among others, Beijing
Chesheng subscribed for 12,789,844 shares, representing approximately 3.4091% of the
enlarged share capital of XXF Group, at the consideration of RMB30 million. Such
consideration was determined with refe rence to the then valuation of XXF Group.
On 27 November 2018, Zhuhai Wanhe, XXF Group and its then shareholders entered
into the Investment Agreement, pursuant to which (i) Zhuhai Wanhe subscribed for
21,316,406 shares, representing approximately 5.6818% of the enlarged share capital of
XXF Group, at the consideration of RMB50 million; and (ii) Hangzhou Chain Reaction
transferred 21,316,406 shares of XXF Group to Zhuhai Wanhe at a consideration of
RMB50 million. Such considerations were deter mined with reference to the then valuation
of XXF Group.
On 31 December 2018, Ms. Yang Yufen ( 楊豫芬) entered into a share transfer
agreement with Hangzhou Chain Reaction, pur suant to which Hangzhou Chain Reaction
transferred 3,751,688 shares of XXF Group to Ms. Yang Yufen at the consideration of
RMB8.8 million. Such consideration was determ ined with reference to the then valuation of
XXF Group.
On 31 December 2018, each of Ms. Mao Lin ( 毛琳) and Fuzhou Shenghui entered into
a share transfer agreement with Hangzhou Chain Reaction, pursuant to which Hangzhou
Chain Reaction agreed to transfer 1,500,000 shares of XXF Group to Ms. Mao Lin and
7,503,375 shares of XXF Group to Fuzhou Shenghui at the consideration of RMB3.5
million and RMB17.6 million, respectively. S uch considerations were determined with
reference to the then valuation of XXF Group. Following such investments, Ms. Mao Lin
and Fuzhou Shenghui held in aggregate 4,125,000 and 45,003,375 shares of XXF Group,
respectively.
On 2 February 2019, Fuzhou Bojia and Mr. Pa n Qiu entered into a share transfer
agreement, pursuant to which Mr. Pan Qiu agreed to transfer 2,900,000 shares of XXF
Group to Fuzhou Bojia at the consideration o f RMB5.1 million which was determined with
reference to the then valuation of XXF Group and his investment cost in XXF Group.
Following such investment, Fuzhou Bojia he ld in aggregate 39,125,000 shares of XXF
Group.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 6–


--- page 166 ---
Fujian Fuyuan held 10,200,000 Shares in XXF Group, and was held as to 53.67% by
Mr. Huang as general partner and 46.33% by the limited partners as at 31 December 2018.
On 10 January 2019, Mr. Guo Hongzhi and Mr. Huang entered into a share of property
transfer agreement ( 財產份額轉讓協議), pursuant to which Mr. Huang agreed to transfer
43.8867% interest in Fujian Fuyuan to Mr. Guo Hongzhi at the consideration of RMB10.5
million. Such consideration was determined with reference to the then valuation of XXF
Group and the interest held by Fujian Fuyuan in XXF Group.
On 30 April 2019, Well Creative, a company indirectly wholly owned by Ms. Choo
Beng Hiang, entered into an equity transfer agreement with Good Hope Investment,
pursuant to which Good Hope Investment agreed to transfer approximately 1.82% equity
interest of XXF Group to Well Creative at the consideration of RMB16 million. Such
consideration was determined with referenc e to the then valuation of XXF Group assessed
by an independent valuer.
As part of the Reorganisation, we issu ed and allotted new Shares to the offshore
holding vehicles of such investors during the period from 30 August 2019 to 2 December
2019 subsequent to the acquisitions of their respective equity interests in XXF Group by
XXF HK. Please see the paragraph headed ‘‘— Reorganisation — Allotment of Shares’’
above.
Subscription of additional new Shares by Beijing Chesheng
As part of the Pre-IPO Investments, on 2 December 2019, Hit Drive, a company under
the common control with Beijing Chesheng as its offshore holding vehicle, subscribed for
6,821,250 Shares for a consideration of RMB20.0 million or an equivalent amount in Hong
Kong dollars, which was determined with reference to the then valuation of our Group. On
21 June 2021, Hit Drive further subscribed for 6,945,273 Shares for a consideration of
RMB20.0 million or an equivalent amount in Hong Kong dollars, which was determined
with reference to the then valuation of our Group.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 7–


--- page 167 ---
The table below sets out details of the above investments:
Beijing Chesheng Zhuhai Wanhe Ms. Yang Yufen M s. Mao Lin Fuzhou Shenghui Fuzhou Bojia (2) Mr. Guo Hongzhi (3) Ms. Choo Beng
Hiang
Date of the agreement 27 November 2018 18 November 2019 10 June 2021 27 November 2018 31 December 2018 31 December 2018 31 December 2018 2 February 2019 10 January 2019 30 April 2019
Consideration paid RMB30 million RMB20 million or an
equivalent amount in Hong
Kong dollars
RMB20 million or an
equivalent amount in Hong
Kong dollars
RMB100 million RMB8.8 million RMB3.5 million RMB17. 6 million RMB5.1 million RMB10.5 million RMB16 million
Payment date 7 December 2018 2 December 2019 18 June 2021 26 June 2019 4 Janua ry 2019 2 January 2019 7 January 2019 12 March 2019 28 December 2018 16 August 2 019
Investment cost per Share (1) HK$2.33 HK$2.92 HK$2.86 HK$2.33 HK$2.33 HK$2.33 HK$2.33 HK$1.75 HK$2.33 HK$2.33
Discount to the Offer Price N/A (4) N/A (4) N/A (4) N/A (4) N/A (4) N/A (4) N/A (4) N/A (4) N/A (4) N/A (4)
Use of proceeds As confirmed by our
Directors, the proceeds
received have been utilised
for Fujian Xidi or other
commercial cooperation with
Beijing Chesheng through
Fujian Xidi. Our Directors
confirmed that as at the
Latest Practicable Date, such
proceeds had been fully
utilised.
As confirmed by our
Directors, the proceeds
received will be utilised for
our daily operations and
working capital. Our
Directors confirmed that as
at the Latest Practicable
Date, such proceeds had been
fully utilised.
As confirmed by our
Directors, the proceeds
received will be utilised for
our daily operations and
working capital. Our
Directors confirmed that as
at the Latest Practicable
Date, such proceeds had been
fully utilised.
As confirmed by our Directors, the
proceeds of RMB50 million received
from the subscription of shares of
XXF Group have been utilised for the
daily operations, business development
and working capital of XXF Group,
unless otherwise approved by the
board or general meeting of XXF
G r o u pi nt h ef o r mo fs p e c i a l
resolutions. Our Directors confirmed
that as at the Latest Practicable Date,
such proceeds had been fully utilised.
Our Directors further confirmed that
our Company did not receive the
remaining proceeds of RMB50 million
as a result of the relevant equity
transfer.
Our Directors further confirmed that our Group did not receive any proceeds as a result of the relevant equity transfers
Strategic benefits Our Directors are of the view tha t we benefit from the additional funding, the synergy
generated by combining our operations with Beijing Chesheng’s expertise and network in the
e-hailing market, the resources and industry experiences and the value added to our profile
from Beijing Chesheng, being a party connected to a leading mobile transportation platform.
Our Directors are of the view that we
benefit from the additional funding,
the synergy generated by combining
the resources and expertise of the
parties, the industry experiences and
the value added to our profile, as
Zhuhai Wanhe is controlled by a
famous private equity fund.
Our Directors are of the view that we benefit from our shareholders’ knowledge, experience and also their commitment to our Group
as their investments demonstrate their confidence in our operation and serve as endorsements of our performance, strengths and
growth prospects, and has added value to our Group including boosting our Shareholder base.
Interest in our Shares in respect of the pre-IPO
investment immediately upon the
completion of the Global Offering and the
Capitalisation Issue
2.63% 1.40% 1.43% 8.77% 0.77% 0.31% 1.54% 0.60% 0.92% 1.40%
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 8–


--- page 168 ---
Notes:
1. Being the cost of the Pre-IPO Investments per Sha re immediately after the Global Offering and the
Capitalisation Issue.
2. Fuzhou Bojia held its interest in our Company indi rectly through Shanghai Xuante. Following the
deregistration of Fuzhou Bojia on 7 February 2021, the equity interest in Shanghai Xuante was
subsequently transferred to F uzhou Bojia’s shareholders.
3. Mr. Guo Hongzhi holds interests in our Compan y indirectly through Fujian Fuyuan, which is the
executive partner and general partner of Shanghai Boyun. For details, please refer to the note 4 to
the corporate and shareholding structure of our Group under ‘‘(1) Immediately after completion of
the Reorganisation but before the completion of the Global Offering and the Capitalisation Issue’’.
4. None of the above Pre-IPO Investments has a discount to the Offer Price.
As advised by our PRC Legal Advisers, (i) when the Pre-IPO Investments were
concluded, the articles of association and the business licence of each of the corporate
Pre-IPO Investors were in full force and in compliance with the relevant PRC laws and
regulations, and (ii) the transfer of equity interests in the Pre-IPO Investments were duly
authorised and the registered capital was duly paid by the Pre-IPO Investors in accordance
with the articles of association of XXF Group . As advised by our PRC Legal Advisers, the
Pre-IPO Investments were conducted in com pliance with PRC laws and regulations.
Based solely on a review of the register of members of the Company and the board
allotment resolutions, as advised by the Caym an Islands attorneys-at-law of the Company,
the new shares issued pursuant to the following shareholders on the respective dates as set
out below were prima facie validly issued and d uly authorised in accordance with the then
articles of association of the Company in force at the time from the Cayman Islands law
perspective:
Shareholder Date of allotment
Number of
Shares
Fortune Strength 30 August 2019 3,751,688
Amazing Gold 30 August 2019 4,125,000
Prosperous Splendor 16 October 2019 45,003,375
Proposer United 8 November 2019 6,821,250
Charming Tulip 2 December 2019 39,125,000
Hit Drive 2 December 2019 12,789,844
2 December 2019 6,821,250
21 June 2021 6,945,273
Brown Oak 2 December 2019 42,632,812
Southern Fortune 2 December 2019 10,200,000
Background of the Pre-IPO Investors
Beijing Chesheng is a limited liability com pany established in the PRC, which is
primarily engaged in the business of automob ile finance, sales, lease and e-hailing. At the
time of its establishment, Beijing Chesheng w as wholly-owned by Beijing Xiaoju Science
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 5 9–


--- page 169 ---
and Technology Co., Ltd.* ( 北京小桔科技有限公司)( ‘ ‘Beijing Xiaoju ’’), which is the main
operating entity of Didi Group. Based on public ly available information, Beijing Chesheng
is wholly owned by EasyCar (HK) Limited, an Independent Third Party and an indirectly
wholly-owned subsidiary of DiDi Global Inc., a company listed on the OTC Markets of the
U.S. (stock code: DIDIY). Beijing Xiaoju is a va riable interest entity of DiDi Global Inc.
As such, Beijing Chesheng and DiDi Group are affiliated companies by virtue of being
under the control of the same entity, DiDi Group Inc. Our Directors confirmed that we
became acquainted with Beijing Chesheng in 2018 as the contact person of our supplier then
became an employee of Beijing Chesheng.
Zhuhai Wanhe is a limited partnership established in the PRC controlled by Wanhe
Jinhua (a wholly-owned subsidiary of SDIC RE Asset (as defined below)) as the executive
partner and general partner, and has 19 other limited partners whose names and respective
partnership interests held in Zhuhai Wanhe are set out below:
Name of limited partner
Approximate
partnership
interests held in
Zhuhai Wanhe
(%)
SDIC RE Asset Management Co., Ltd. ( 國彤萬和私募基金管理
有限公司, formerly known as 國投萬和資產管理有限公司)
(‘‘SDIC RE Asset ’’)
(1) 37.03
SDIC Taikang Trust Co., Ltd. ( 國投泰康信託有限公司)
(‘‘SDIC Taikang ’’)(1) 20.00
Fuzhou Zhongzhi Network Technology Co., Ltd.*
(福州中智網絡技術有限公司)( ‘ ‘Fuzhou Zhongzhi ’’)(2) 2.96
Shanghai Yibei Management Consulting Co., Ltd.*
(上海益倍管理諮詢有限公司)( ‘ ‘Shanghai Yibei ’’)(3) 2.78
Zhou Hexian ( 周和仙)5 . 5 6
Huang Yijuan ( 黃義娟)5 . 5 6
Li Jing ( 李靖)4 . 6 3
Peng Fuhui ( 彭福惠)3 . 1 5
Chi Xiaoqiu ( 池曉秋)2 . 7 8
H u a n gS o n g(黃嵩)2 . 7 8
Ma Feiping ( 馬飛萍)2 . 4 1
Zhang Hang ( 張航)1 . 8 5
Luo Yunzhong ( 羅雲中)1 . 8 5
Deng Qiuming ( 鄧秋明)1 . 8 5
Zhang Chao ( 張超)1 . 1 1
Kong Wenbin ( 孔文濱)0 . 9 3
Gong Kefan ( 宮克凡)0 . 9 3
Dai Haibin ( 戴海彬)0 . 9 3
Zhao Hongyun ( 趙紅雲)0 . 9 3
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 0–


--- page 170 ---
Notes:
(1) As at the Latest Practicable Date, SDIC RE Asset was held as to 45% by SDIC Taikang as its single
largest shareholder. SDIC Taikang was an indire ct non wholly-owned subsidiary of SDIC Capital
Co., Ltd. ( 國投資本股份有限公司), an investment management company listed on the Shanghai
Stock Exchange (stock code: 600061).
(2) As at the Latest Practicable Date, Fuzhou Z hongzhi was owned as to approximately 66.33% by Gao
Ping ( 高萍) and approximately 33.67% by Lin Dachun , each being an Independent Third Party.
(3) As at the Latest Practicable Date, Shang hai Yibei was owned as to 90% by Guo Xinping ( 郭新平)
and 10% by Guo Huaiyu ( 郭懷予), each being an Independent Third Party.
Based on information publicly available and to the best knowledge of our Directors,
save for the equity interest in SDIC RE Asset held by SDIC Taikang, each of the limited
partners of Zhuhai Wanhe is independent from each other.
Ms. Yang Yufen ( 楊豫芬) is an Independent Third Party with over 11 years of
experience in the pharmaceutical industry. Ms. Yang is currently a chairperson of a private
company focused on the research, development, production and sales of biopharmaceuticals
in the PRC. Ms. Yang became acquainted with us through Mr. Huang and Mr. Ye Fuwei
during her study of EMBA at Xiamen University in the PRC.
Ms. Mao Lin ( 毛琳) is an Independent Third Party and an individual investor. Ms.
Mao is a general manager of a private components supplier for the electrical and fire
engineering projects. She became acquainted with us in 2015 through a former employee of
the Group.
Fuzhou Shenghui is a company established under the laws of the PRC and owned as to
approximately 4.48% by Mr. Liu Wei, our non-executive Director, and approximately
95.52% by his father. It is principally engaged in the investments in various businesses of
technology services, automobile inspection and other sectors. Fuzhou Shenghui became an
investor of XXF Group in May 2015 in preparation of listing of shares of XXF Group on
NEEQ by XXF Group and has maintained relationship with us since then.
Fuzhou Bojia was an investment holding company established by Ms. Qiu Hui, Mr.
Lin Dachun and Mr. Huang Jianqing, then shareholders of XXF Group and Independent
Third Parties, to hold their interests in XXF Group. We introduced Ms. Qiu Hui, Mr. Lin
Dachun and Mr. Huang Jianqing as our invest ors in May 2015 in preparation of listing of
shares of XXF Group on NEEQ. At the time of its pre-IPO investment in XXF Group,
Fuzhou Bojia was owned as to approximately 47.18% by Ms. Qiu Hui, 32.27% by Mr. Lin
Dachun, 10.96% by Mr. Huang Jianqing and 9.59% by Mr. Wang Yueren, all being
Independent Third Parties. Shanghai Xuante w a se s t a b l i s h e du n d e rt h el a w so ft h eP R Co n
5 July 2019 and was then wholly-owned by Fuzhou Bojia. Fuzhou Bojia was subsequently
deregistered on 7 February 2021 and the equity interest in Shanghai Xuante was transferred
to Fuzhou Bojia’s shareholders. As at the Latest Practicable Date, Shanghai Xuante was
owned as to 47.18% by Ms. Qiu Hui, 32.27% by Mr. Lin Dachun, 10.96% by Mr. Huang
Jianqing and 9.59% by Mr. Wang Yueren.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 1–


--- page 171 ---
M r .G u oH o n g z h i(郭洪志) is an Independent Third Party having over 31 years of
experience in the property industry. He is the founder and director of several companies
engaged in property development, investment and other sectors. Mr. Guo became
acquainted with us through Mr. Ye Fuwei during his study of EMBA at Xiamen
University in the PRC.
Ms. Choo Beng Hiang ( 朱孟香) is an Independent Third Party having over 15 years of
experience in the investment and management consultancy industry. She is currently a
chairman of a private company engaged in the i nvestment consultancy services. Ms. Choo
became acquainted with us through a friend of Mr. Huang in 2013.
Special rights of the Pre-IPO Investors
Pursuant to a shareholders’ agreement ent ered into between, among others, Beijing
Chesheng, Zhuhai Wanhe and XXF Group dated 27 November 2018 (the ‘‘ Shareholder
Agreement ’’) as supplemented by (i) two undertakings given by our Company, XXF Group
and Mr. Huang dated 18 November 2019 and 10 June 2021, respectively, (ii) a first
supplemental agreement entered into by, am ong others, Beijing Chesheng, our Company,
XXF Group and Mr. Huang dated 27 Januar y 2022, and (iii) a second supplemental
agreement entered into by, among others, Beijing Chesheng, our Company, XXF Group
and Mr. Huang dated 30 August 2022, Beijing Che sheng was granted cer tain special rights,
including, among others, (i) pre-emptive rights, rights of first refusal, tag-along rights,
liquidation priority, anti-dilution rights, i nformation rights, most-favoured investment
right, director appointment rights, redempti on right (which was not exercisable upon the
filing of the Listing application and will be terminated upon Listing, and will resume
automatically only if the Listing application i s rejected by the Stock Exchange, withdrawn
or lapsed following which no re-submission is made within six months thereafter (for the
avoidance of doubt, only one re-submission would be allowed)) and veto rights, none of
which shall survive after Listing; (ii) specia l redemption right, which has been suspended
upon the first filing of our Listing applicatio n to the Stock Exchange and will not survive
after Listing; and (iii) any share transfer by any existing shareholders of our Company or
XXF Group to any competitors of Beijing Che sheng, and any capital increase by our
Company or XXF Group to, or acceptance of any investments by, any competitors of
Beijing Chesheng shall be subject to the writ ten consent of Beijing Chesheng, where such
right will survive after Listing unless the D irectors consider complying with such term
would constitute a breach of their fiduciary duties.
Pursuant to the Shareholder Agreement and as supplemented by (i) an undertaking by
our Company, XXF Group, Celestial Bonanza and Mr. Huang dated 15 November 2019,
(ii) a supplemental agreement entered into by, among others, Zhuhai Wanhe, our Company,
XXF Group and Mr. Huang dated 25 August 2022 and (iii) a second supplemental
agreement entered into by, among others, Zhuhai Wanhe, our Company, XXF Group and
Mr. Huang dated 26 June 2023, Zhuhai Wanhe was granted certain special rights, including,
among others, restrictions on the introduction of new investors, pre-emptive rights, rights
of first refusal, tag-along rights, liquidation priority, anti-dilution rights, information
rights, most-favoured investment right, dir ector appointment rights, redemption right
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 2–


--- page 172 ---
(which will be terminated upon Listing and exercisable only if the listing application is
rejected by the Stock Exchange, withdrawn or lapsed following which no re-submission was
made within one year thereafter) and veto right s, none of which shall survive after Listing.
No special rights were granted to the remaining Pre-IPO Investors in respect of their
respective Pre-IPO Investments.
Lock-up
The Shares held by each of the Pre-IPO Investors will not be subject to any lock-up
after Listing.
Public float
The Shares held by the Pre-IPO Investors will be counted as part of the public float
upon Listing as (i) each of them is not a core connected person of our Company; (ii) the
subscriptions of their respective equity interests in the Shares were not financed directly or
indirectly by any core connected person of o ur Company; and (iii) each of them and their
respective ultimate beneficial owners are not accustomed to take instructions from a core
connected person in relation to the subscriptions, disposals, voting or other dispositions of
securities of our Company registered in their names or otherwise held by them.
Immediately upon completion of the Global Offering and the Capitalisation Issue,
without taking into account of Shares which may be issued pursuant to the exercise of the
Over-allotment Option or options granted under the Pre-IPO Share Option Scheme or
options which may be granted under the Share Option Scheme, the Shares held by certain of
our Shareholders who are, or are indirectly controlled by, our core connected persons, will
not be counted towards the public float. Details of these Shareholders and their controllers
as at the Latest Practicable Date are set out below:
(i) Each of Glorypearl Capital, Precious Luck, Happy Gain and Southern Fortune
was controlled by Mr. Huang; and
(ii) Billion Aspire was beneficia lly and wholly owned by Mr. Ye Fuwei.
Save as provided above, the Pre-IPO Investors, other Shareholders and the public
Shareholders will collectively hold approximately 64.38% of the issued shares of our
Company immediately following the Capitalis ation Issue and the Global Offering without
taking into account of Shares which may be issued pursuant to the exercise of the
Over-allotment Option or options granted under the Pre-IPO Share Option Scheme or
options which may be granted under the Share Option Scheme.
Sole Sponsor’s confirmation
The Sole Sponsor confirms that the Pre-IPO Investments by the Pre-IPO Investors are
in compliance with the requirements of the I nterim Guidance on Pre-IPO Investments,
Guidance Letter HKEx-GL43–12 and Guidance Letter HKEx-GL44–12.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 3–


--- page 173 ---
Amount due to Beijing Chesheng
On 27 November 2018, XXF Group as borrower entered into a convertible bond
agreement with Beijing Chesheng as lender, pursuant to which Beijing Chesheng agreed to
grant a loan in the principal amount of RMB60 million to XXF Group at the interest rate of
8% per annum, which was convertible into shares of XXF Group at a fixed conversion price
subject to the terms of the agreement. Such lo an is secured by a share charge of 50% equity
interest in Fujian Xidi held by XXF Group a nd guaranteed by Mr. Huang. As amended by
a supplemental agreement dated 18 Novem ber 2019, Beijing Chesheng agreed not to
exercise the conversion right attached to such loan. The aggregate principal amount of such
loan was received by XXF Group on 4 April 2019. As further amended by a second
supplemental agreement dated 10 June 2021, the interest payable in respect of such loan
shall be repaid every six months commencing from 1 July 2021 and the principal shall be
repaid in two instalments: (i) RMB20 million by 11 June 2021 and (ii) RMB50.76 million on
30 June 2023. As further amended by a third sup plemental agreement dated 3 July 2023, (i)
an interest in an amount of RMB2,030,000 shall be repaid before 30 June 2023, (ii) the
principal in an amount of RMB7,614,000 shall be repaid before 3 July 2023, and (iii) the
remaining balance, consisting of outstanding principal (in the amount of RMB43,146,000,
carried at an interest rate of 8% per annum) and interest shall be repaid in 12 monthly
instalments by 30 June 2024, each in an amoun t of approximately RMB3.75 million, by the
end of each month commencing from July 2023. As at the Latest Practicable Date, the
Company has repaid all outstanding interest and principal which were repayable by July
2023, and the outstanding principal and interest under such loan amounted to
approximately RMB33,779,000.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 4–


--- page 174 ---
CORPORATE STRUCTURE
(1) Immediately after completion of the Reorganisation but before completion of the Global Offering and the Capitalisation Issue
The following chart sets out our Group’s corporate structure immediately after completion of the Reorganisation, but before
completion of the Global Offerin g and the Capitalisation Issue:
1.75%10.96%13.11% 6.83%11.57% 10.06% 0.96% 13.55%
Prosperous
Splendor(6)
(BVI)
Charming
Tulip(8)
(BVI)
Fortune
Strength(10)
(BVI)
Other
Shareholders(12)
Brown Oak(7)
(BVI)
Hit Drive(9)
(BVI)
Prosper
United(11)
(BVI)
100%
Ideal Stand(5)
(BVI)
2.62%
Shanghai Boyun(4)
(PRC)
100%
Mr. Huang
4.63%
100%
8.52%
Shanghai Boyu(2)
(PRC)
Shanghai Bo Yu(3)
(PRC)
15.40%
Southern
Fortune
(BVI)
Happy Gain
(BVI)
Precious Luck
(BVI)
100%
Glorypearl Capital
(BVI)
100%
100%
100%
XXF HK
(Hong Kong)
XXF Group
(PRC)
Cheyijia Automobile
(PRC)
Fujian Cheyixing
(PRC)
Celestial Bonanza
(BVI)
Our Company
(Cayman Islands)
100%
100% 100% 100% 100% 100% 100%
100% 100% 100% 51% 100%
Taoqi Yuncar
(PRC)
Taoqi Internet
(PRC)
Fujian Xiqi
(PRC)
100% 100%
Fujian Shenqi
(PRC)
Xiamen Xixiangfeng
(PRC)
Guoxin Zhonglian
(PRC)
Fujian Xidi
(PRC)
Fujian Heqi
(PRC)
Fujian Xidun
(PRC)
100%
Fujian Xitu
(PRC)
100%
100%
Shanxi Zhonghong
(PRC)
100%
Guangdong Minyue
(PRC)
Fujian ZyooCar(13)
(PRC)
Shaoxing Xidi
(PRC)
Taizhou Xidi
(PRC)
Tianjin Xidi
(PRC)
Zhongshan Xidi
(PRC)
Nanning Xidi
(PRC)
Fujian Lvyi
(PRC)
Fujian Qoocar
(PRC)
100% 100% 100%
Other subsidiaries
(PRC)(15)
100%100%
100%
Other subsidiaries
(PRC)(14)
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 5–


--- page 175 ---
Notes:
1. Certain percentage figures included in the ch art above were subject to rounding adjustments.
Accordingly, the total percentage figures may not be equal to an arithmetic aggregation of the
individual figures.
2. Shanghai Boyu is a limited partn ership controlled by Weichuang H ongjing as the executive partner
and general partner (which owned approximately 0 .025% of its partnership interest), and has two
other limited partners, whose names and respectiv e partnership interests held in Shanghai Boyu are
set out below:
Name of partner
Approximate
partnership
interests held
in Shanghai
Boyu
(%)
Fuzhou Zhitong 76.90
Fujian Xinyuan 23.075
Weichuang Hongjing is owned as to 99% by Mr. Huang and 1% by Fuzhou Zhitong. Each of
Fuzhou Zhitong and Fujian Xinyuan is controll ed by Mr. Huang as the executive partner and
general partner. See note 2 under ‘‘Reorganisati on’’ above in this section for details of the limited
partners of Fuzhou Zhitong and Fujian Xinyuan an d their respective interests therein. Save as
disclosed in note 2 under ‘‘Reorganisation’’ above i n this section, there was no other past or present
relationship between each of Fuzhou Zhitong and Fujian Xinyuan and our Company, its
subsidiaries, shareholders, directors, senior ma nagement, and any of their respective associates.
3. Shanghai Bo Yu is a limited partnership cont rolled by Weichuang Xingsheng as the executive
partner and general partner (which owned approxim ately 0.05% of its partnership interest), and has
one limited partner, Fuzhou Huitong, which ow ned approximately 99.95% of its partnership
interest. Weichuang Xingsheng is wholly owned by Mr. Huang. Fuzhou Huitong is controlled by
Mr. Huang as the executive partner and general par tner. See note 2 under ‘‘Reorganisation’’ above
in this section for details of the limited partner s of Fuzhou Huitong and their respective interest
therein. Save as disclosed in note 2 under ‘‘Reorganis ation’’ above in this section, there was no other
past or present relationship b etween Fuzhou Huitong and our Company, its subsidiaries,
shareholders, directors, senior management , and any of their respective associates.
4. Shanghai Boyun is a limited partnership controll ed by Fujian Fuyuan as the executive partner and
general partner (which owned appr oximately 99.95% of its partnership interest), and has one limited
partner, Weichuang Shengfu, which owned approximat ely 0.05% of its partnership interest. Fujian
Fuyuan is controlled by Mr. Huang as the execu tive partner and general partner. Weichuang
Shengfu is wholly owned by Mr. Ye Fuwei, our executive Director. See note 2 under
‘‘Reorganisation’’ above in this section for de tails of the partners of Fujian Fuyuan and their
respective interests therein. Save as disclose d in note 4, there was no other past or present
relationship between Weichuang Shengfu and our Company, its subsid iaries, shareholders,
directors, senior management, and an y of their respective associates.
5. Ideal Stand is indirectly wholly owned by Tengxin Investment, which is owned as to 75%, 10%, 10%
and 5% by Mr. Teng Yongxiong, Mr. Teng Yongyan, Mr. Teng Yongwei and Mr. Teng
Yongzhuang, respectively, each an Independent Third Party.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 6–


--- page 176 ---
6. Prosperous Splendor is owned as to 4.48% by Mr . Liu Wei, our non-executive Director, and 95.52%
by father of Mr. Liu Wei. Prosperous Splendor is th e offshore holding vehicle of Fuzhou Shenghui.
7. Brown Oak is indirectly controlled by Wanhe Ji nhua, which controls Zhuhai Wanhe as the executive
partner and general partner . Brown Oak is the offshore holding vehicle of Zhuhai Wanhe.
8. Charming Tulip Holdings Limit ed is indirectly owned as to appr oximately 47.18% by Ms. Qiu Hui,
32.27% by Mr. Lin Dachun, 10.96% by Mr. Huang Jianqing and 9.59% by Mr. Wang Yueren.
9. Hit Drive is indirectly wholly owned by EasyC ar Inc., which in turn wholly owns EasyCar (HK)
Limited as well as Beijing Chesheng. Hit Drive is t he offshore holding vehicl e of Beijing Chesheng.
10. Fortune Strength is wholly owned by Ms. Ya ng Yufen, one of our Pre-IPO Investors and an
Independent Third Party.
11. Prosper United is wholly owned by Ms. Choo Beng Hiang, one of our Pre-IPO Investors and an
Independent Third Party.
12. The shareholding of other Shareholders in our Company is set out below:
Name Shareholding Ultimate beneficial owner
Direct Solution 4.17% an Independent Third Party which controls Hangzhou
Chain Reaction as well as Good Hope Chehang
Lucky League 2.12% Ms. Chen Jia, an Independent Third Party
Mega Galaxy 1.75% an Independent Th ird Party which controls Good Hope
Chehang as well as Hangzhou Chain Reaction
Gold Chest 1.54% Mr. Liu Donghu, an Independent Third Party
Regency Gem 1.41% Mr. Pan Qiu, an Independent Third Party
Amazing Gold 1.06% Ms. Mao Lin, an Independent Third Party
Fantastic Fame 0.62% Mr. Li Huan, an Independent Third Party
Jade Mount 0.50% Mr. Lin Yanfeng, an employee of the Group and an
Independent Third Party
Billion Aspire 0.23% Mr. Ye F uwei, our executive Director
Southern Excellence 0.15% Mr. Liu Hao, an Independent Third Party
13. The remaining equity interest of Fujian ZyooC ar is held by Ningde Transport Investment Group
Company Limited* ( 寧德市交通投資集團有限公司), an Independent Third Party (by virtue of
Fujian ZyooCar being an insignificant subsid iary of our Company as defined under the Listing
Rules).
14. Other subsidiaries consist of f our subsidiaries, all of which wer e established under the laws of the
PRC with no material contribution to the Group’s r evenue during the Track Record Period and up
to the Latest Practicable Date.
15. Other subsidiaries consist of nine subsidiarie s, all of which were established under the laws of the
PRC with no material contribution to the Group’s r evenue during the Track Record Period and up
to the Latest Practicable Date.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 7–


--- page 177 ---
(2) Immediately after the Global O ffering and the Capitalisation Issue
The following chart sets out our Group’s corporate structure after completion of the Reorganisation, the Global Offering and
the Capitalisation Issue (assuming that th e Over-allotment Option is not exercised and without taking into account of any Shares
which may be issued pursuant to the exercise of options granted under the Pre-IPO Share Option Scheme or options that may be
granted under the Share Option Scheme):
Shanghai Bo Yu(1)
(PRC)
6.82%
Precious Luck
(BVI)
Shanghai Boyu(1)
(PRC)
100%
3.70%
Happy Gain
(BVI)
100%
1.40%10.49% 8.77% 5.46%9.26% 8.05% 0.77%
Prosperous
Splendor(1)
(BVI)
Charming
Tulip(1)
(BVI)
Fortune
Strength(1)
(BVI)
10.86% 20%
Other public
Shareholders
Other
Shareholders(1,2)
Brown Oak(1)
(BVI)
Hit Drive(1)
(BVI)
Prosper
United(1)
(BVI)
Ideal Stand(1)
(BVI)
12.32%
100%
Glorypearl Capital
(BVI)
2.10%
Southern
Fortune
(BVI)
Shanghai Boyun(1)
(PRC)
100%
Mr. Huang
100%
100%
100%
XXF HK
(Hong Kong)
XXF Group
(PRC)
Cheyijia Automobile
(PRC)
Fujian Cheyixing
(PRC)
Celestial Bonanza
(BVI)
Our Company
(Cayman Islands)
100%
100% 100% 100% 100% 100% 100%
100% 100% 100% 51%
Taoqi Yuncar
(PRC)
Taoqi Internet
(PRC)
Fujian Xiqi
(PRC)
Fujian Shenqi
(PRC)
Xiamen Xixiangfeng
(PRC)
Guoxin Zhonglian
(PRC)
Fujian Xidi
(PRC)
100%
Fujian Xidun
(PRC)
Fujian Heqi
(PRC)
Fujian ZyooCar(3)
(PRC)
Fujian Lvyi
(PRC)
Fujian Qoocar
(PRC)
100%
Fujian Xitu
(PRC)
100%
100%
Shanxi Zhonghong
(PRC)
100%
Guangdong Minyue
(PRC)
Shaoxing Xidi
(PRC)
Taizhou Xidi
(PRC)
Tianjin Xidi
(PRC)
Zhongshan Xidi
(PRC)
Nanning Xidi
(PRC)
100% 100% 100%
Other subsidiaries
(PRC)(5)
100%100%
100% 100% 100%
Other subsidiaries
(PRC)(4)
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 8–


--- page 178 ---
Notes:
1. See the respective notes to the corporate and shareholding structure of our Group under ‘‘(1)
Immediately after completion of the Reorgani sation but before the completion of the Global
Offering and the Capitalisatio n Issue’’ above in this section.
2. The shareholding of other Shareholders in our Company is set out below:
Name Shareholding
Direct Solution 3.34%
Lucky League 1.70%
Mega Galaxy 1.40%
Gold Chest 1.23%
Regency Gem 1.13%
Amazing Gold 0.85%
Fantastic Fame 0.49%
Jade Mount 0.40%
Billion Aspire 0.19%
Southern Excellence 0.12%
3. The remaining equity interest of Fujian ZyooC ar is held by Ningde Transport Investment Group
Company Limited* ( 寧德市交通投資集團有限公司), an Independent Third Party (by virtue of
Fujian ZyooCar being an insignificant subsid iary of our Company as defined under the Listing
Rules).
4. Other subsidiaries consist of four subsidiaries , all of which were established under the laws of the
PRC with no material contribution to the Group’s r evenue during the Track Record Period and up
to the Latest Practicable Date.
5. Other subsidiaries consist of nine subsidiaries, all of which were established under the laws of the
PRC with no material contribution to the Group’s r evenue during the Track Record Period and up
to the Latest Practicable Date.
PRE-IPO SHARE OPTION SCHEME
We have conditionally adopted the Pre-IPO Share Option Scheme, summary of the
principal terms of which is set out in the section headed ‘‘Statutory and General
Information — D. Other Information — 2. Pre-IPO Share Option Scheme’’ in Appendix
V to this prospectus.
PRC LEGAL COMPLIANCE
M&A Rules
Our PRC Legal Advisers have confirmed that the share transfers, the Reorganisation,
acquisitions and disposals in the PRC in respect of the PRC companies in our Group as
described above have been properly and legally completed and all regulatory approvals
have been obtained in accordance with PRC laws and regulations.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 6 9–


--- page 179 ---
According to the Regulations on Merger wit h and Acquisition of Domestic Enterprises
by Foreign Investors ( 《關於外國投資者併購境內企業的規定》) (the ‘‘M&A Rules ’’) jointly
issued by the MOFCOM, the State-owned A ssets Supervision and Administration
Commission of the State Council, the SAT, the CSRC, SAIC and the SAFE on 8 August
2006, effective as at 8 September 2006 and amended on 22 June 2009, a foreign investor is
required to obtain necessary approvals whe n it (i) acquires the equity of a domestic
enterprise so as to convert the do mestic enterprise into a foreign-invested enterprise; (ii)
subscribes the increased capital of a domest ic enterprise so as to convert the domestic
enterprise into a foreign-invested enterprise; (iii) establishes a foreig n-invested enterprise
through which it purchases the assets of a domes tic enterprise and operates these assets; or
(iv) purchases the assets of a domestic enterprise, and then invests such assets to establish a
foreign invested enterprise. The M&A Rules, among other things, further purport to require
that an offshore special vehicle, or a special purpose, vehicle, formed for listing purposes
and controlled directly or indirectly by PRC companies or individuals, shall obtain the
approval of the CSRC prior to the listing and trading of such special purpose vehicle’s
securities on an overseas stock exchange, especially in the event that the special purpose
vehicle acquires shares of or equity interests in the PRC companies in exchange for the
shares of offshore companies.
Our PRC Legal Advisers are of the opinion that prior CSRC approval for this Global
Offering is not required because the acquisition of XXF Group’s equity interest by our
Company does not fall within the scope such acquisition by the foreign investor as
stipulated under the M&A Rules.
SAFE Circular 37 and ODI Rules
Pursuant to the Circular of the SAFE on Foreign Exchange Administration of
Overseas Investment, Financing and Round-trip Investments Conducted by Domestic
Residents through Special Purpose Vehicles ( 《關於境內居民通過特殊目的公司境外投融資
及返程投資外匯管理有關問題的通知》) (the ‘‘SAFE Circular 37 ’’), promulgated by SAFE, a
PRC resident must register with the local SAFE branch before he or she contributes assets
or equity interests in an overseas special purpose vehicle that is directly established or
indirectly controlled by the PRC resident for the purpose of conducting investment or
financing.
Pursuant to the Circular of the SAFE on Further Simplification and Improvement in
Foreign Exchange Administr ation on Direct Investment ( 《關於進一步簡化和改進直接
投資
外匯管理政策的通知》) (the ‘‘ SAFE Circular 13 ’’), promulgated by SAFE and became
effective on 1 June, 2015, the power to accept S AFE registration was delegated from local
SAFE to local banks where the assets or interest in the domestic entity was located.
Pursuant to the Administrative Measures for the Outbound Investment of Enterprises
(《企業境外投資管理辦法》) and the Measures on the Administration of Overseas
Investments ( 《境外投資管理辦法》) (collectively, ‘‘ ODI Rules ’’), promulgated by the
NDRC and the MOFCOM respectively, a domestic institution shall undergo approval or
record-filing or other procedure with the re levant authorities prior to its overseas
investment in accordance with the provisions of the ODI Rules.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 7 0–


--- page 180 ---
As advised by our PRC Legal Advisers, our ult imate PRC individual shareholders (as
PRC residents as defined under the applicab le provisions under SAFE Circular 37) have
completed the registration under the SAFE Circular 37 by August 2019, and the relevant
ultimate PRC corporate shareholders of our Company have completed the overseas direct
investment record-filing with the local autho rities in October 2019 pursuant to the ODI
Rules in relation to their respective offshor e investments by domestic institutions.
HISTORY, REORGANISATION AND CORPORATE STRUCTURE
–1 7 1–


--- page 181 ---
OVERVIEW
We are an established automobile retailer providing automobile finance lease service
primarily through our self-operated sales outlets in the PRC. Our Group’s principal
businesses comprise: (i) automobile retail and finance, where we sell non-luxury
automobiles mostly on direct finance lease; and (ii) automobile-related businesses, where
we principally offer automobile operating l ease service and other automobile-related
services. We are one of the offline third party RAFLCs among all the RAFLCs in the
market (i.e. bank-affiliated, automaker or a utomobile dealer-affiliated, third party
RAFLCs and internet-backed third party RAFLCs). According to the CIC report, in
terms of transaction volume of direct finance lease, we ranked 4th and had market share of
approximately 4.1% in the PRC in 2022. In terms of transaction volume of retail
automobile finance lease among all RAFLCs, including both direct finance lease and
sale-leaseback, we ranked 19th and had a market share of approximately 0.7% in the PRC
in 2022. Please refer to ‘‘Industry Overview — A nalysis of The Retail Automobile Finance
and Retail Automobile Finance Lea se Market in China’’ for details.
We offer a wide range of non-luxury automobiles to customers primarily in the PRC’s
tier two, and tier three and below cities. We have established an extensive sales network
with sales outlets mainly located in tier t wo cities, and tier three and below cities
throughout the PRC. As at the Latest Practica ble Date, we operated 77 sales outlets across
25 provinces and municipalities in the PRC.
Our fleet of automobile for sale and for lease
Matching automobiles
to customers’ need
Sale with finance lease
e-hailing operating lease
Other operating lease
 Bulk purchases of
new automobiles
Used Car
 Automobiles returned
to us at the end of
operating lease
 Repossessed automo-
biles from delinquent
customers
BUSINESS
–1 7 2–


--- page 182 ---
OUR COMPETITIVE STRENGTHS
We believe that our competitive strengths contribute to our success and our ability to
capture future growth opportunities. Our competitive strengths include the following:
We specialise in matching the supply of non-luxury automobiles with the demand of our
customers in tier two, and tier three and below cities in the PRC
We are a third party RAFLC that sell automobiles mostly on direct finance lease.
According to the CIC Report, we ranked 4th in terms of transaction volume of direct
finance lease among all RAFLCs in the PRC in 2022.
We focus on providing non-luxury automobiles under finance leases for customers
in tier two, and tier three and below cities in the PRC. Through our sales outlets
located principally in tier two, and tier t hree and below cities, we have developed an
in-depth understanding of the customers’ needs.
According to CIC, compared with automobile dealer-affiliated RAFLCs, we have
advantages in wider selection of automotive b rands, flexible offerings of finance lease
services, and focused geographical coverage.
Wider selection of automotive brands. Our sales outlets offer a wide array of
automotive brands to our customers, while automotive dealers generally contracted
with automotive manufacturers and are s ubject to automotive manufacturers
requirements of focusing on the sales of the specific brands and thus provide limited
selection of brands to customers.
Flexible offerings of finance lease services. We are capable of providing flexible
finance lease service which enables us to tailor the different needs of our target
customers. In contrast, other automotive dealers generally rely on other financial
services providers to provide financing s ervice to their customers, and have limited
discretion of designing finance lease services on their own, and thus auto dealers
generally provide limited or rigid financing method to their customers.
Focused geographical coverage. W ef o c u so nt i e rt w oa n dt i e rt h r e ea n db e l o w
cities in China with strong offline capability to serve target customers in these regions.
However, automotive dealers generally fo cus on tier one and tier two cities in China,
4S stores networks have less presence in lowe r tier cities or counties, leading to lower
penetration rate of automobile finance lea se services for customers in tier three and
below cities in the PRC.
We endeavour to work closely with our suppliers to offer a broad selection of
automobiles. During the Track Reco rd Period, we offered over 50 brands of
non-luxury automobiles. We provide different finance lease options for the purchase
of automobiles to suit the needs of our customers. We believe that we are well
positioned to capture the growth opportunities of the automobile retail and finance
market in the tier two, and tier three and below cities in the PRC.
BUSINESS
–1 7 3–


--- page 183 ---
Our extensive automobile service offering s provide tailored finance lease service for
customers’ different needs
We provide our customers practical finance lease service tailored to their different
needs at automobile pre-purchase stage and usage stage. At the automobile
pre-purchase stage, we generally offer automobiles with automobile finance lease
service. We typically offer two-to-four-year f inance lease to meet the financing needs of
customers in making automobile purchases. At the automobile usage stage, our 52 Car
APP provides car-user customers with a variety of user-friendly automobile
aftermarket services, including scheduling monthly payments, locating automobile
repairing and maintenance service providers, locating nearby petrol stations, and
providing other useful automotive information. We believe the abundant information
and convenient services available on our 52 Car APP could enhance our customers’
automobile-related experience. We also offer automobile operating lease solutions to
customers, including e-hailing operating le ase and short-term/long-term operating
lease.
According to CIC, we are a retail automobile finance lease company with
extensive automobile service offerings to provide tailored options for customers’
different needs, and other peers that provide retail automobile finance lease services
through direct finance lease rarely pro vide e-hailing operating lease services.
The table below sets out the rankings of the RAFLCs in terms of transaction
volume of retail automobile finance lease through direct finance lease in China in 2022 :
Rank Companies
Transaction
volume Market share 1
Offline
capacity 2
Number of
self-operated
offline stores
(thousand units,
approximate)
(%) (unit,
approximate)
(unit,
approximate)
1 Group A 50 16.1 36,000 None
2 Group J 35 11.3 70 None
3 Group N 28 9.0 150 75
4 Our Group 13 4.1 68 68
5 Group T 11 3.7 20–100 2
Total 44.2
Notes:
(1) Refers to the market share among all RAFLCs i n terms of transaction volume through direct
finance lease.
(2) Refers to the number of physical stores acros s China, including both self-operated sales
outlets and dealership stores in their cooperative sales network.
We believe that our business model has enabled us to cater to different customers’
needs. This allows us to generate recurri ng and diverse income streams along the
automobile life cycle and enhance our reputation and competitiveness among our
industry peers.
BUSINESS
–1 7 4–


--- page 184 ---
We have an established and extensive sales network
We have established an extensive sales network with self-operated sales outlets
strategically located in tier two cities, and tier three and below cities throughout the
PRC. As at the Latest Practicable Date, we operated 77 sales outlets across 25
provinces and municipalities in the PRC. Our self-operated sales outlets are supported
by a team of experienced frontline staff and sales personnel, who have equipped
themselves with effective sales techniques and product knowledge in retail and leasing
of automobiles under the guidance of our management team. Therefore, we believe we
are able to continuously improve the customers’ in-store experience. Since 2018, we
have also commenced operation of our online automobile aftermarket service
platforms, principally including our 52 Car APP and 52 Car (Business Version)
APP, where car users are able to access over 500 automobile aftermarket service
locations operated by our third party autom obile aftermarket service providers in the
PRC as at the Latest Practicable Date.
According to CIC, we are one of the few market participants that mainly focus on
the construction of offline self-operated sal es network assisted by online platforms. In
2022, we were the 4th largest RAFLC in terms of direct finance lease transaction
volume in China, with the top three compani es primarily relying on cooperative sales
networks to serve their customers instead of self-operated offline stores. The
cooperative sales networks of the other companies are mainly composed of
independent third-party auto dealers tha t help facilitate automobile transaction
services.
We believe our extensive sales network complemented by our mobile applications
on automobile aftermarket services enable us to cover a large customer base, retain
customer engagement and continue to capture the growth opportunities in our target
markets.
We have developed a risk management system
We place top priority on the managem ent of the risks associated with our
business. We have developed and implemented extensive risk management and internal
control procedures to deal with various risks relating to our business. See the section
headed ‘‘Risk Management and Operations’’ for further details of our risk management
measures.
Compared to internet-backed RAFLCS, our offline capability brings about an
advantage in customer acquisition and credit risk control. Our extensive offline
presence allows us to directly engage with potential customers through physical sales
outlets, providing face-to-face consultati ons and services, which will foster trust and
build personal relationships with our custom ers. In addition, our offline outlets enable
us to gain deeper insights into custome rs’ credit profiles. Through in-person
communication and document verification, we enhance the effectiveness of our risk
management process.
BUSINESS
–1 7 5–


--- page 185 ---
We will continue to develop our propri etary algorithms and data analytics
capabilities in our risk management system to screen, assess and manage credit risks
during pre-lease stage and post-lease stage of our automobile retail and finance
business. It enables a bilateral flow of statistics and data between our pre-lease credit
risk management system and post-lease cred it risk management system. For instance,
in order to deal with post-lease credit risks, we install our patent-protected GPS
tracking devices on our automobiles leased to our customers and conduct risk analysis
on our automobile monitoring platform, which is capable of detecting, analysing and
reporting vehicle trajectory abnormality, vanishing GPS signal and usage pattern of
automobiles. These functions effectively f acilitate our tracking and repossession of the
automobiles in case of default or delinquency in the repayment by our customers.
Under our risk management system, the statistics of default or delinquent behaviours
identified in our post-lease credit risk man agement system will be synchronised with
our pre-lease credit risk management syst em for identifying and rejecting potential
customers with similar background in the pre-lease stage, and thus, improving our
credit risk control. See the section headed ‘‘Risk Management and Operations’’ for
further details of our risk management measures.
As a result of our developed risk management system, we managed to maintain
relatively low non-performing asset ratio s during the Track Record Period. As at 31
December 2020, 2021, 2022 and 30 June 2023, our non-performing asset ratios were
0.7%, 0.7%, 0.7% and 0.8%, respectively. According to the CIC Report, the industry
average of non-performing asset ratios as at 31 December 2021 and 2022 were 1.5%
and 2.0%, respectively. In comparison with the industry average, our non-performing
asset ratios as at 31 December 2021 and 2022 were lower than the industry average.
On the basis of our automobile repossession and disposal measures, as well as the
legal proceedings we initiated against our customers, our Directors confirm that,
during the Track Record Period and up to the Latest Practicable Date, we did not
experience any material adverse financial impact resulting from the default by our
customers. As at the Latest Practicable Date, amongst the automobiles under the early
terminated finance lease contracts for the years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, 99.6%, 99.3%, 99.9% and 99.5% of the
automobiles were successfully repossessed and sold, leased or put into our own
commercial use (the ‘‘ Re-deployed Automobiles ’’), representing 97.3%, 96.2%, 96.9%
and 96.5% of the outstanding amount of finance lease receivables of such early
terminated finance lease contracts for the co rresponding year/perio d, respectively (the
‘‘Re-deployed Rate ’’). The Re-deployed Rate is calculated by dividing the number/value
of all repossessed automobiles as at the end of the relevant financial year by the total
number/value of the Re-deployed Automobiles as at the Latest Practicable Date and is
in general higher if there is a longer lap se of time as the Group can repossess and
re-deploy more automobiles relating to overd ue loans during that period. For instance,
as at the Latest Practicable Date, the Group had approximately 46 months to re-deploy
the repossessed automobiles relating to loans defaulted in January 2020; whereas the
Group only had approximately 22 months to redeploy the repossessed automobiles
relating to loans defaulted in January 2022.
BUSINESS
–1 7 6–


--- page 186 ---
Our centralised automobile procurement leads to cost advantage
We endeavour to offer multiple brands and models of automobiles, and negotiate
a lower purchase price on automobiles to lower our cost. We principally purchase
automobiles through our centralised automobile procurement arrangement. Our head
office consolidates and arranges monthly automobile procurement based on the
expected demand and inventory level of eac h of our sales outlets, and leverages our
bargaining power to procure more favourable terms and offers from our suppliers,
including bulk purchase discounts, longer credit period and revolving credit lines from
certain automaker-affiliated financial inst itutions, which we believe are not available
to small-scale competitors. We believe that our centralised automobile procurement
arrangement enables us to enjoy a cost advantage in our business operation.
We are led by a visionary and experienced management team
Our Group was established in 2007 by Mr. Huang. Prior to 2012, we primarily
engaged in the provision of automobile rental services by way of operating lease. Since
2012, we have expanded our service offerings with a focus on automobile retail and
finance business. We were one of the 13th batch of pilot enterprises of domestic-funded
finance lease business ( 第十三批內資融資租賃業務試點企業) jointly approved by the
MOFCOM and the SAT. Mr. Huang, an executive Director, the chairman and chief
executive officer of our Group, has approximately 16 years of experience in the
automobile industry. Our executive Direct ors (including Mr. Huang) have an average
of over eight years of experience in auto mobile industry. See the section headed
‘‘Directors and Senior Management’’ for further details of the qualifications and
experience of our Directors and senio r management team. Over the years, our
executive Directors and senior management team have been leading the growth of our
business, formulating the business objectives and strategies of our Group and
overseeing the implementation of such strategies in the day-to-day operations. We
believe that the vision and experience of our senior management team are critical to the
success of our business.
OUR STRATEGIES
We intend to expand the scale of our operations by pursuing the following business
strategies:
Capture the potential growth in the direct finance lease market and the automobile
operating lease market
According to the CIC Report, the penetration rate of the retail automobile
finance lease services in the United States was approximately 38.0% in 2022. The
penetration rate of the retail automobile fi nance lease services in the PRC was still at a
relatively low level in 2022 and is expected to reach approximately 5.4% in 2027. Retail
automobile finance lease has become increasingly acceptable to consumers in the PRC.
As stated in the CIC report, with the increase in consumer disposable income and the
introduction of flexible automobile finance lease products, the penetration rate of
retail automobile finance lease in the PRC over the past few years has been increasing
BUSINESS
–1 7 7–


--- page 187 ---
and is expected to increase further in the foreseeable future. Driven by the benefit of
lower down payment and the expansion of e- hailing vehicle platform, the loan volume
of direct finance lease market is expected to reach 0.6 million units in 2027,
representing in CAGR of 15.6% from 2022 to 2027.
In addition, according to the CIC Repor t, with the development of e-hailing
vehicle platforms, the increasing spending on self-drive trips and the favourable policy
reforms, the market size of automobile oper ating lease market in China is projected to
increase to RMB82.6 billion in 2027, rep resenting in CAGR of 5.4% from 2022 to
2027.
Our business is capital intensive. Genera lly, we are required to settle the payment
in respect of our purchases of automobiles with our suppliers before delivery, which
generally takes a few days to a few months from placing of orders. We principally
finance our purchases of automobiles by debt financing. We obtain funding from
banks and other financial institutions under finance lease arrangements, loans pledged
by vehicle mortgage and other loans. We recorded average inventory turnover days for
our automobile finance lease business ranging from 54 days to 96 days during the
Track Record Period. Our new automobiles have been sold on finance lease generally
within a term of two to four years. We strive to match the cash outflow of our
borrowings with cash inflow of our custom ers’ automobile finance lease. We have
maintained diversified funding sources. W e believe that gaining access to an equity
financing platform for future fundraising t hrough the Listing is one of the effective
ways to maintain diversified funding sources.
To capture the potential growth in the direct finance lease market and the
automobile operating lease market in the PRC, we intend to apply 72% or HK$28.7
million (equivalent to RMB27.0 million) of th e net proceeds from the Global Offering
to replenish our capital for procuring aut omobiles. See the section headed ‘‘Future
Plans and Use of Proceeds’’ for further details.
Expand our sales network to increase our market penetration
We have established an extensive sales n etwork with sales outlets strategically
located in tier two cities, and tier three and below cities throughout the PRC.
According to the CIC Report, the sales volume of new automobiles in tier one cities is
expected to grow at CAGR of 0.7%, from 2022 to 2027, while that in tier two cities,
and tier three and below cities are expected to grow, with CAGR of 5.3% and 5.5%,
respectively, over the same period. As such, we intend to expand our sales network by
establishing new sales outlets in tier two cities, and tier three and below cities where we
have little or no presence in order to capture the potential growth in the automobile
markets in these cities by leveraging our experiences gained from operations in other
cities. The detailed plan for expanding our sales network is as follows:
(i) our Directors have identified various provinces of the PRC, including
Guangxi, Shanxi, Hunan, Sichuan, Shandong, Jiangxi, Anhui and Yunnan
Provinces, where we plan to open 11 sales outlets in the coming two years
after the Listing; and
BUSINESS
–1 7 8–


--- page 188 ---
(ii) to support the expansion of our sales network, we plan to recruit 84
additional staff and introduce more incentives to our sales team.
(iii) to correspond with the expansion of our sales network, we plan to scale up
our marketing effort and launch new advertising and promotional activities.
We expect that the new sales outlets th at we plan to open will have a breakeven
period of approximately three months and an investment payback period of
approximately five months.
Breakeven period refers to the period for a sales outlet to achieve breakeven point,
i.e. its monthly revenue at least equals to its monthly expenses. We expect that the new
sales outlets that we plan to open will have a breakeven period of approximately three
months, based on our analysis of historical performance of eight selected sales outlets
opened between 2017 and 2021 and with over 24 months in operation up to the Latest
Practicable Date.
Investment payback period refers to the period required for the accumulated
operating cash inflow generated from a sales outlet to cover the accumulated operating
cash outflow and initial capital expenditure s. We expect that the new sales outlets that
we plan to open will have an investment payb ack period of approximately five months,
based on our analysis of historical performance of eight selected sales outlets opened
between 2017 and 2021 and with over 24 months in operation up to the Latest
Practicable Date.
To this end, we intend to apply 28% or HK$11.3 million (equivalent to RMB10.7
million) of the net proceeds from the Global Offering and our internal resources for
expanding our sales network to increase our market penetration. See the section
headed ‘‘Future Plans and Use of Proceeds’’ for further details.
Continue to incorporate new technologies and upgrade our automobile-related software
and mobile applications
We intend to continue to incorporate new technologies and upgrade our
automobile-related software and mobile applications. We plan to recruit additional
engineers and data specialists to e nhance our technology capabilities.
Continue to enhance our risk management capabilities
We intend to continue to enhance our risk management capabilities to protect the
long term interests of our Group. As we plan to establish new sales outlets in the cities
w h e r ew eh a v el i t t l eo rn op r e s e n c e ,w em a yb es u b j e c tt or i s k st h a tw eh a v en o t
encountered in our existing operations. To cope with this, we will devote more efforts
in managing the risk exposure and continue to upgrade and optimise our risk
management system, in particular, our credit risk management system in order to
improve the utilisation of the data colle cted regarding customer behaviour and
automobile activities. We will continue to integrate our internal customer account
management system, finance system and c redit management system to improve our
BUSINESS
–1 7 9–


--- page 189 ---
operational efficiencies, and optimise our data analytics algorithms to strengthen our
customer credit risk assessment capabilitie s. Further, we will proactively conduct
comprehensive prior study and research on the applicable policies and market
conditions in relation to the geographical regions we plan to venture into and assess
our potential risk exposure in these geo graphical regions, leveraging our risk
management experience gained from the geo graphical regions we currently operate in.
OUR BUSINESS MODEL AND OPERATION
Our business model and operation
Our businesses involve (i) automobile retail and finance; and (ii) automobile-related
businesses in the PRC. Under our automobile retail and finance business, we derive our
revenue through selling together with lea sing our automobiles to our finance lease
customers. Under our automobile-related businesses, we principally generate revenue from
automobile operating lease and other automob ile-related services. The following table sets
out a breakdown of our revenue for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Automobile retail and finance
Sales of automobile under
finance lease (Note 1) 362,934 48.4 777,856 66.4 734,600 64.4 331,012 61.5 384,710 64.0
Finance lease income (Note 2) 234,705 31.3 234,561 20.0 262,498 23.0 131,093 24.4 148,191 24.7
Sub-total 597,639 79.7 1,012,417 86.4 997,098 87.4 462,105 85.9 532,901 88.7
Automobile-related businesses
Automobile operating lease 132,606 17.7 144,163 12.3 126,018 11.0 69,247 12.9 61,433 10.2
Other automobile-related
income 19,516 2.6 14,682 1.3 18,410 1.6 6,786 1.2 6,667 1.1
Sub-total 152,122 20.3 158,845 13.6 144,428 12.6 76,033 14.1 68,100 11.3
Total 749,761 100.0 1,171,262 100.0 1,141,526 100.0 538,138 100.0 601,001 100.0
Notes:
1 Revenue generated from the sales of new automobiles.
2 Revenue generated from the provision of finance lease for automobiles to customers.
BUSINESS
–1 8 0–


--- page 190 ---
 Broad selection of
automobile choices
 Our sales offer amicable
customer services
 Understand the customers’
needs
 Tailor-made purchasing
options for customers
 Confirm automobile purchase
and financing options
 Offer finance lease and prepare
relevant documents
 Offer operating lease for short
term use
 Offer road safety advices and
other promotional cross-sales
 52 Car APP to enhance
customers' experience
 APP to schedule repayment
 APP to locate repairing and
maintenance
 Customer services to advise
on road accidents
Pre-purchasestage
Purchase
stage Usage
stage
New purchase
(A) Automobile retail and finance
We sell automobiles, including both pa ssenger vehicles and e-hailing vehicles,
primarily under direct finance lease. We sell new automobiles purchased from automobile
manufacturers or automobile dealers and also repossessed automobiles that we sold and
were recovered from early terminated customers previously. We provide a variety of
financing options to our customers. Our direct fi nance lease involves leasing of (i) our newly
acquired automobiles mainly from automobile dealers where we generate both sales of
automobile and finance lease i ncome; and (ii) repossessed automobiles due to customers’
default where we record finance lease income only. Occasionally, depending on the
availability of our resources, we may also prov ide automobile sale-leaseback arrangement
to customers to generate finance lease incom e. During the Track Record Period, our sales
were generated in the PRC primarily through our strategically located sales outlets, and our
third party automobile agents. For the years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023, the number of new automobiles sold under finance lease
was 3,901 units, 7,375 units, 7,153 units and 3,740 units, respectively, and the number of
newly entered finance lease agreements was 7,8 59, 11,308, 12,754 and 6,728, respectively.
Our revenue from sales of automobile under direct finance lease accounted for 98.9%,
99.7%, 99.8% and 99.95% of total revenue generated from our automobile retail and
finance business for the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, respectively. Our revenue from sales of automobile under
sale-leaseback arrangem ent amounted to RMB6.6 million, RMB3.5 million, RMB1.8
million and RMB0.2 million, accounted for 1. 1%, 0.3%, 0.2% and 0.05% of total revenue
BUSINESS
–1 8 1–


--- page 191 ---
generated from our automobile retail and finance business for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, respectively. The number of new
energy e-hailing vehicles sold under finance le ase was nil, nil, 164 units and 30 units, and the
revenue from sales of new energy e-hailing vehic les under finance lease amounted to nil, nil,
RMB17.0 million and RMB3.4 million for the y ears ended 31 Decemb er 2020, 2021, 2022
and the six months ended 30 June 2023, respectively. The number of agreements we entered
for new energy e-hailing vehicles was to 1 unit, nil, 1,064 units and 381 units, and the
revenue from finance lease income of new ener gy e-hailing vehicles amounted to RMB1,279,
RMB6,247, RMB20.2 million and RMB5.8 millio n for the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023, respectively.
We offer a wide range of non-luxury automobiles to match the needs of our customers
primarily from China’s tier two, and tier thre e and below cities. By purchasing multiple
brands and models of automobiles in bulk, we are able to broaden our product portfolio
and lower our purchase costs. Coupling finance lease service with automobile sales enables
customers to make purchase with a low initial payment.
In retailing our automobiles, we set the pr ice of all our automobiles as a packaged
automobile finance lease product. Upon execution of the agreements, we require our
customers (as lessees) to settl e the initial payment, which ma y include the first monthly
payment, service fee and/or down payment which is typically up to approximately 20% of
the purchase price, depending on the credit rating and preference of the customers. We
generally charge our customers a service fee, the annual average of which ranges from
approximately RMB6,000 to RMB8,000 during the Track Record Period, based on the
value of the leased automobile for every auto mobile retail and finance transaction. The
service fee charged to our customers generally includes (i) fee for ancillary services, such as
administrative assistance in purchasing insur ance and obtaining automobile registration
documents; (ii) automobile inspection and cl eaning fee before delivery to customers; and
(iii) equipment installation fee of GPS and elect ronic toll collection devices. We then lease
the automobiles to our customers in return for monthly lease payments throughout the lease
period, typically between two years and four years in accordance with the finance lease
offering selected based on their needs. Throug hout the lease term, the customers are granted
the right to use the automobiles and they have to bear the costs of automobile repair and
maintenance. At the end of the lease term, ownership of the automobile will be transferred
to the respective customer after settl e m e n to fa l lo u t s t a n d i n gp a y m e n t s .
During the Track Record Period, we bore t he insurance cost for the period after
procuring automobiles inventories and before s elling the automobiles to customers. For the
majority of sales of automobile under finance lease, we required our customers to purchase
the compulsory traffic accident liability ins urance and commercial i nsurance throughout
the lease term. For a small portion of automobiles sold under finance lease, we arranged the
insurance for the first year typically at the option of the customers, such insurance cost was
borne by us and reflected in the down payment, while the insurance cost for the remainder
of lease term was borne by the customers.
BUSINESS
–1 8 2–


--- page 192 ---
The following diagram illustrates the typical arrangements among automobile
suppliers, our customers and our Group:
Our Group
(Lessor)
Our customer
(Lessee)
(1) Selection of automobile and settlement
of payment(Note)
(2) Delivery of automobile
Automobile
supplier
(3) Selection of automobile and settlement of
initial payment
(5) Settlement of monthly lease payments
(4) Handing over automobile
(6) Transfer of ownership at the end of the lease term
Note: We finance the payment to our automobile supplie rs by debt financing and/or internal resources.
During the Track Record Period, the automobiles we sold under finance lease were
typically of retail price ranging from approximately RMB40,000 to RMB300,000 per
vehicle. The following tables set out the top five automobile brands in terms of revenue
contribution to sales of automobile under finance lease and the corresponding number of
new automobiles sold under finance lease during the Track Record Period:
For the year ended 31 December 2020
Rank Brand
Number of new
automobiles sold
under finance
lease
Revenue
contribution to
sales of
automobile under
finance lease
Percentage
of revenue
to sales of
automobile under
finance lease
RMB’000 %
1R o e w e ( 上汽榮威) 524 45,783 12.6
2H y u n d a i ( 北京現代) 408 40,619 11.2
3T r u m p c h i ( 廣汽傳褀) 413 40,121 11.0
4B u i c k ( 上汽通⽤別克) 386 35,499 9.8
5S A I C M o t o r ( 上汽集團) 311 31,413 8.7
Total 2,042 193,435 53.3
For the year ended 31 December 2021
Rank Brand
Number of new
automobiles sold
under finance
lease
Revenue
contribution to
sales of
automobile under
finance lease
Percentage
of revenue
to sales of
automobile under
finance lease
RMB’000 %
1C H E R Y ( 奇瑞汽車) 1,104 95,364 12.3
2V o l k s w a g e n ( 上汽大眾) 652 89,511 11.5
3C h a n g a n A u t o ( 長安汽車) 811 83,755 10.8
4T r u m p c h i ( 廣汽傳褀) 702 70,945 9.0
5 AEOLUS ( 東風風神) 513 50,251 6.5
Total 3,782 389,826 50.1
BUSINESS
–1 8 3–


--- page 193 ---
For the year ended 31 December 2022
Rank Brand
Number of new
automobiles sold
under finance
lease
Revenue
contribution to
sales of
automobile under
finance lease
Percentage
of revenue
to sales of
automobile under
finance lease
RMB’000 %
1 AEOLUS ( 東風風神) 1,445 134,679 18.3
2V o l k s w a g e n ( 上汽大眾) 601 80,493 11.0
3C H E R Y ( 奇瑞汽車) 887 76,493 10.4
4B A I C M o t o r ( 北京汽車) 626 68,517 9.3
5H y u n d a i ( 北京現代) 450 53,487 7.3
Total 4,009 413,669 56.3
For the six months ended 30 June 2023
Rank Brand
Number of new
automobiles sold
under finance
lease
Revenue
contribution to
sales of
automobile under
finance lease
Percentage
of revenue
to sales of
automobile under
finance lease
RMB’000 %
1 AEOLUS ( 東風風神) 612 53,674 13.9
2 Dongfeng Nissan ( 東風日產) 381 48,474 12.6
3B A I C M o t o r ( 北京汽車) 260 31,056 8.1
4 Great Wall Motor ( 長城汽車) 297 29,544 7.7
5C H E R Y ( 奇瑞汽車) 318 26,719 6.9
Total 1,868 189,467 49.2
BUSINESS
–1 8 4–


--- page 194 ---
The following tables set out the top five automobile models in terms of revenue
contribution to sales of automobile under finance lease and the corresponding number of
automobiles sold under finance lease during the Track Record Period:
For the year ended 31 December 2020
Rank Model
Number of
new
automobiles
sold under
finance lease
Revenue
contribution
to sales of
automobile
under finance
lease
Percentage
of revenue
to sales of
automobile
under finance
lease
RMB’000 %
1T r u m p c h i G S 3 ( 廣汽傳褀 GS3) 378 35,846 9.9
2 Buick Excelle XT/GT
(上汽通⽤別克英朗 XT/GT)
385 35,313 9.7
3 Chevrolet Cavalier
(上汽通⽤雪佛蘭科沃茲)
322 23,337 6.4
4S A I C M o t o r M G 6 ( 上汽集團名爵6) 221 22,956 6.3
5 Roewe RX3 ( 上汽榮威 RX3) 255 22,848 6.3
Total 1,561 140,300 38.6
For the year ended 31 December 2021
Rank Model
Number of
new
automobiles
sold under
finance lease
Revenue
contribution
to sales of
automobile
under finance
lease
Percentage
of revenue
to sales of
automobile
under finance
lease
RMB’000 %
1 Volkswagen Lavida ( 上汽大眾朗逸) 464 60,451 7.8
2T r u m p c h i G S 3 ( 廣汽傳褀GS3) 608 59,924 7.7
3 Buick Excelle ( 上汽通用別克英朗) 508 48,460 6.2
4E A D O ( 長安汽車逸動) 424 42,823 5.5
5 ELANTRA ( 北京現代伊蘭特) 303 37,737 4.9
Total 2,307 249,395 32.1
BUSINESS
–1 8 5–


--- page 195 ---
For the year ended 31 December 2022
Rank Model
Number of
new
automobiles
sold under
finance lease
Revenue
contribution
to sales of
automobile
under finance
lease
Percentage
of revenue
to sales of
automobile
under finance
lease
RMB’000 %
1 Volkswagen Lavida ( 上汽大眾朗逸) 510 65,905 9.0
2 AEOLUS ( 東風風神奕炫) 759 60,683 8.3
3 ELANTRA ( 北京現代伊蘭特) 428 50,746 6.9
4 AEOLUS ( 東風風神奕炫MAX) 418 44,830 6.1
5 BEIJING-X7 ( 北京X7) 291 36,681 5.0
Total 2,406 258,845 35.3
For the six months ended 30 June 2023
Rank Model
Number of
new
automobiles
sold under
finance lease
Revenue
contribution
to sales of
automobile
under finance
lease
Percentage
of revenue
to sales of
automobile
under finance
lease
RMB’000 %
1 AEOLUS ( 東風風神奕炫) 426 33,651 8.7
2 Hongqi H5 ( 一汽紅旗H5) 182 23,097 6.0
3 BEIJING-X7 ( 北京X7) 177 21,862 5.7
4 ELANTRA ( 北京現代伊蘭特) 188 21,794 5.7
5V e n u c i a ( 東風日產啟辰大V) 155 16,961 4.4
Total 1,128 117,365 30.5
According to CIC, as at the Latest Practicable Date, there were eight provinces and cities in
China that have restrictions on the number of automobile registrati ons, including Beijing, Shanghai,
Guangzhou, Shenzhen, Tianjin , Hangzhou, Shijiazhuang, and Ha inan province. Among these
regions, Guangzhou, Hangzhou, and Shijiazhuang are cities where we operated during the Track
Record Period. The number of our new automobiles sold under finance lease from these three
regions were 181 units, 345 units, 281 units and 184 units for the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023, accounted for 4.6%, 4.7%, 3.9% and 4.9% of
total new automobiles sold under finance lease. During the Track Record Period and up to the
Latest Practicable Date, we had not experienced any material adverse effect on our business due to
restrictions on the number of automobile registrations in the cities we operate.
BUSINESS
–1 8 6–


--- page 196 ---
The following table sets out certain key figures in relation to newly entered finance
lease agreements for the years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Average principal amount of
newly entered finance lease
agreements (RMB’000) 83.1 94.2 90.6 90.2
Range of principal amount of
newly entered finance lease
agreements (RMB’000) 16.5–293.8 14.7–286.1 20.1–186.5 17.5–195.7
Number of customers entered
into new finance lease
agreement 7,830 11,278 12,079 6,482
Number of newly entered finance
lease agreements 7,859 11,308 12,754 6,728
Range of effective interest rates
charged for newly entered
finance lease agreement per
annum (%)
(Note) 0.1–152.3 0.2–143.8 0.1–86.6 0.1–93.5
A v e r a g ee f f e c t i v ei n t e r e s tr a t e
charged for newly entered
finance lease agreements per
annum (%) 20.5 19.4 18.5 18.7
Note: The extraordinarily high effective interest rat es for certain finance lease agreements during the
Track Record Period were mainly related to repos sessed automobiles with relatively small amount
of finance lease receivable brought forward from the previous corresponding finance lease
agreements. When the repossessed automobiles w ere subsequently sold on finance lease, new
finance lease agreements with new terms would be ent ered. The calculation of the effective interest
rates of such contracts is based on, among other thi ngs, the amount of finance lease receivables
brought forward from the previous correspondi ng finance lease agreements. Particular low
balances of finance lease receivable brought fo rward could lead to the extraordinarily high
effective interest rates. The extraordinarily low effective interest rates for certain finance lease
agreements during the Track Record Period were mainly due to occasional promotion events we
launched on certain automobile models.
BUSINESS
–1 8 7–


--- page 197 ---
According to CIC, the average effective interest rates per annum charged by RAFLCs
reflect average pricing, that is primarily affected by funding cost, risk management cost,
operating cost, and profit margin. According to CIC, the effective interest rates per annum
charged by RAFLCs in China in 2022 fell in the range of between 5% and 24%, thus the
average effective interest rate charged by our Group for newly entered finance lease
agreements per annum of 18.5% in 2022 was in line with the industry norm. The effective
interest rate charged by our Group may change in the future. According to CIC, there was
no major issue which may exert significant downward pressure on effective interest rates
charged by industry players as at the Latest Pra cticable Date. Lower effective interest rates
of automobile finance lease services may be charged by industry players from time to time if
the RAFLCs offer occasional promotions and more competitive pricing options to car
buyers, and fluctuations in market interest ra tes could also affect the level of effective
interest rates charged by RAFLCs. However , the greater market acceptance of automobile
finance lease services in China can potenti ally offset the aforesaid impacts, if any.
BUSINESS
–1 8 8–


--- page 198 ---
The following table sets out the movement in the number of financ e lease agreements, principal amount and average effective
interest rate charged per annum during the years/periods and as at the dates indicated:
As at/Year ended 31 December As at/Six months ended 30 June
2020 2021 2022 2022 2023
Lease term
Number of
finance lease
agreements
Total
principal
Average
effective
interest rate
charged per
annum
Number of
finance lease
agreements
Total
principal
Average
effective
interest rate
charged per
annum
Number of
finance lease
agreements
Total
principal
Average
effective
interest rate
charged per
annum
Number of
finance lease
agreements
Total
principal
Average
effective
interest rate
charged per
annum
Number of
finance lease
agreements
Total
principal
Average
effective
interest rate
charged per
annum
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Beginning 16,077 1,418,169 25.1 15,839 1, 404,263 22.1 19,152 1,802,410 20.1 19, 152 1,802,410 20.1 22,001 2,059,665 19.0
— One year or shorter — — — — — — — — — —
— Over one year but not more than
two years 191 16,353 93 9,132 278 23,985 278 23,985 796 56,773
— Over two years but not more than
three years 5,219 489,202 3,674 385,174 5,033 530,642 5,033 530,642 7,130 701,708
— More than three years 10,667 912,614 12,072 1,009,957 13,841 1,247,783 13,841 1,247,783 14,075 1,301,184
Newly signed agreements 7,859 652,741 20.5 11,308 1,065,070 19. 4 12,754 1,156,110 18.5 5,476 521,505 17.9 6,728 607,063 18.7
— One year or shorter — — — — — — — — — —
— Over one year but not more than
two years 72 5,923 272 23,692 717 49,820 221 17,972 430 27,036
— Over two years but not more than
three years 1,656 135,114 3,457 312,965 4,853 420,814 1,948 178,446 2,265 196,205
— More than three years 6,131 511,704 7,579 728,413 7,184 685,476 3,307 325,087 4,033 383,822
Completed agreements (2,373) (163,850) 26.4 (2,902) (225,697) 23.0 ( 3,384) (288,335) 20.5 (1,448) (123,212) 20.7 (1,282) (109,871) 19.5
— One year or shorter — — — — — — — — — —
— Over one year but not more than
two years (156) (12,108) (31) (4,064) (74) (6,264) (16) (1,228) (80) (6,604)
— Over two years but not more than
three years (1,897) (124,613) (1,079) (81,934) (1,070) (96,302) (589) (53,159) (306) (24,708)
— More than three years (320) (27,129) (1,792) (139,699) (2,240) (185,768) (843) (68,825) (896) (78,559)
Terminated agreements (5,724) (502,797) 21.1 ( 5,093) (441,226) 20.4 (6,521) (610,520) 19.2 ( 3,321) (310,963) 19.6 (3,760) (350,485) 19.2
— One year or shorter — — — — — — — — — —
— Over one year but not more than
two years (14) (1,036) (56) (4,775) (125) (10,769) (57) (5,210) (104) (8,365)
— Over two years but not more than
three years (1,304) (114,529) (1,019) (85,563) (1, 686) (153,446) (822) (75,171) (1,086) (98,720)
— More than three years (4,406) (387,232) (4,018) (350,888) (4,710) (446,306) (2,442) (230,582) (2,570) (243,400)
Ending 15,839 1,404,263 22.1 19,152 1,802,410 20.1 22,001 2,05 9,665 19.0 19,859 1,889,740 19.4 23,687 2,206,372 19.0
— One year or shorter — — — — — — — — — —
— Over one year but not more than
two years 93 9,132 278 23,985 796 56,773 426 35,519 1,042 68,840
— Over two years but not more than
three years 3,674 385,174 5,033 530,642 7,130 701,708 5,570 580,758 8,003 774,485
— More than three years 12,072 1,009,957 13,841 1,247, 783 14,075 1,301,184 13,863 1,273,463 14,642 1,363,047
BUSINESS
–1 8 9–


--- page 199 ---
Operational workflow
Our automobile retail and finance le ase operation generally follows our
operational workflow as shown below. The chart below shows the typical process
workflow of our automobile retail and finan ce lease business operation, which applies
to both passenger vehicles and e-hailing vehicles:
Stage E
Portfolio
management
and monitoring
Stage D
Handing
over the
automobiles
Stage C
Execution of
agreement and
settlement of
initial payment
Stage B
Customer
due diligence
and credit
assessment
Stage A
Placing of
order and
preparation
Stage F
Completion
and transfer
of ownership
of automobiles
Stage A: Placing of order and preparation
Once we receive orders from our customers to purchase a new or repossessed
automobile, we require our customers to provide information and documents,
such as identification documents and driving licence for the purpose of
conducting due diligence and credit assessment.
We require our third party automobile agents to provide guidance to the
customers referred by them, such as collecting information and documents. Since
2021, we have been gradually phasing out working with third party automobile
agents to promote our passenger vehicles under our automobile retail and finance
business. On the other hand, we continue to work with third party automobile
agents to promote e-hailing vehicles f or our automobile retail and finance
business.
Stage B: Customer due diligence and credit assessment
We conduct both computerised and ma nual due diligence and preliminary
credit assessment on our customers through checking against our internal
blacklist as well as third party blacklists which we subscribed for credit
checking. Our third party automobile ag ents also conduct preliminary screening
and assessment on the background information of the customers they referred. At
our discretion, we may also obtain credit assessment reports from third parties.
Stage C: Execution of agreement and settlement of initial payment
After assessments, we will notify our customers of the assessment results.
Before execution of the agreements, we con duct face-to-face interviews with our
customers in order to verify their identity and to ensure that our customers
understand the terms and conditions of the agreements. Our customers are then
required to settle the initial payment and execute the agreements and other
necessary documents. The customers’ information will be recorded onto our ERP
system at the same time.
BUSINESS
–1 9 0–


--- page 200 ---
Stage D: Handing over the automobiles
Before the automobile handover, we will ensure our GPS tracking devices
installed on the automobiles function properly. After completion of the standard
procedures, we will hand over the automobiles to our customers.
Stage E: Portfolio management and monitoring
After the automobile handover, our customers are obliged to make timely
payment according to the finance lease agreement. We monitor the status of our
leased automobiles through the GPS tracking devices installed and/or our
automobile monitoring platform fr om time to time. We also send payment
reminders to our customers usually three days before the due date of the
respective payments mostly through text messages.
Under our finance lease agreements, we are usually entitled to take various
remedial actions when our customers default on their lease payment, including
repossession of the leased automobiles and imposing overdue interest on the
default amount. In deciding the remedy to be pursued, we take into account
considerations such as the number of days the respective repayment overdue and
any irregular activities of the subject automobile.
Various risk control measures and procedures are consistently applied to
transactions under our automobile retail and finance business, involving the
active participation of different departments in our Group. See ‘‘Risk
Management and Operations’’ for further details on the risk control measures
we have adopted.
Stage F: Completion and transfer of ownership of automobiles
The finance lease term is completed upon full performance of the finance
lease agreement. During the completion stage, we will ensure due receipt of lease
payments and timely despatch of lease receipts. We will also remove the GPS
tracking devices from the automobiles upon the completion of the transfer of
ownership of the automobiles.
Cooperation with automobile finance providers
During the Track Record Period, we had worked with certain automobile finance
partners, Company A, Company G and other funding providers, to provide finance
lease service to our customers under the arrangement stated below. We mainly consider
the diversity of funding sources when we coope rate with automobile finance providers.
Under these arrangements, our Group is able to match our source of funding with
customers’ funding needs at the time the customers enter into the transactions of
purchasing automobiles. We believe that through cooperations with the automobile
finance partners, we can serve more cu stomers and increase our revenue.
BUSINESS
–1 9 1–


--- page 201 ---
The typical arrangements with the automobile finance partners are set out below:
. Customer sourcing. For the purpose of our fund management, we may refer
our prospective customers under our automobile retail and finance business
to the relevant automobile finance partner, which enables the prospective
customers to obtain finance lease service for purchasing automobiles from us.
. Customer due diligence and credit assessment.
a) We will conduct customer due dilig ence and credit assessment based on
our own internal procedures.
b) We will sign a sales contract with the customer once the customer has
passed our due diligence check and credit assessment. We will then
accept the initial payment and arrange finance options for the
outstanding payment owed to us by the customer.
c) After obtaining prospective customer’s consent, we will pass the
customer’s information and our a ssessment results to the relevant
automobile finance partner.
d) Our automobile finance partner will independently perform its own
credit assessment and make the final credit approval decision. Our
automobile finance partner may reject the customer’s application. In
case of such rejection, we will guide the customer to look for other
alternative finance solutions.
. Finance lease execution. After the loan application is approved by the
relevant automobile finance partner , a sale-leaseback agreement will be
entered between the customer and the automobile finance partner, following
which the automobile finance partner will remit the loan proceeds to us to
settle the remaining portion of the purchase price of the automobile (being
the purchase price less the down payment paid by the customer). We will then
pledge the subject automobile to the automobile finance partner. During the
lease term, the title of the subject auto mobile continues to be registered under
our name for automobile asset management purposes and is subject to the
pledge.
. Repayment administration . Under the finance lease agreement between the
customer and the relevant automobile finance partner, and our service
contract, the customer is required to make monthly repayments to the
automobile finance partner directly or through us, and monthly service fees
to us. During the lease term, we will provide a range of services to the
customer, including repayment notification services, traffic rules violation
handling services, repair and maintenance services, and other relevant and
related services. The customer also gains access to our 52 Car APP and our
customer services for finding other automotive aftermarket services.
BUSINESS
–1 9 2–


--- page 202 ---
. Automobile asset management. During the lease term, together with some of
our automobile finance partners, we ac tively monitor the loan’s scheduled
repayments and promptly act upon any delinquency. When delinquency
arises or any abnormal behaviour is observed in respect of a leased
automobile, upon our automobile fi nance partner’s request, we will take
action to repossess the subject automobile. After the subject automobile is
repossessed, our finance partner will negotiate the purchase price of the
repossessed automobile with us, if an agreement on the purchase price can be
reached, we will purchase the repossessed automobile and the pledge of the
repossessed automobile will be released by our finance partner. If an
agreement on the value of the repossessed automobile cannot be agreed
upon, we will return the repossessed automobile to our finance partner to
proceed with their own resolution.
Coverage ratio
Our aggregate coverage ratio for newly signed automobile finance lease agreements is
generally more than one. The aggregate principal of the automobile finance lease
agreements is generally smaller than the aggregate book value of our leased automobiles
at the signing of those agreements as our cus tomers are required to settle the initial
payments, which generally include down payments contributed to the value of our leased
automobiles, upon signing of those agreements. The following table sets out the aggregate
book value of leased automobiles, principals (net of initial payments), average down
payment ratio, aggregate coverage ratio and range of coverage ratio for newly signed
automobile finance lease ag reements entered into for the years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Aggregate book value of leased
automobiles, immediately after
the execution of the
corresponding finance lease
agreements (RMB’000) 710,641 1,181,606 1,283,357 673,556
Principals (net of initial
payments) (RMB’000) 615,792 1,022,121 1,093,921 577,423
Average down payment
ratio
(Note 1) 0.15 0.15 0.15 0.15
Aggregate coverage ratio (Note 2) 1.15 1.16 1.17 1.17
Range of coverage ratio (Note 3) 1.00–1.66 1.00–1.70 1.00–2.69 1.00–2.58
BUSINESS
–1 9 3–


--- page 203 ---
Notes:
1. Down payment ratio is calculated as the initial payment of a leased automobile related to the
corresponding finance lease agreement signed in the years/period indicated, divided by the sum of
such initial payment and the principal related to the same agreement.
2. Aggregate coverage ratio is calculated as the aggregate book va lue of leased automobiles related to
all finance lease agreements signed in the years/p eriod indicated, divided by the aggregate principal
amounts (net of initial payments) related to the s ame agreements, immediately after their execution.
3. Coverage ratio is calculated by the book value of a leased automobile related to the corresponding
finance lease agreement signed in the years/period indicated, divided by the principal amount (net of
initial payments) related to the same agreement, immediately after its execution.
We were able to cover most of our finance lease receivables as at each of the dates
indicated below. The following table sets out the aggregate book value of leased
automobiles, finance lease receivables, aggregate coverage ratio and range of coverage
ratio for all the existing finance lease agreements as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
Aggregate book value of leased
automobiles (RMB’000) 1,288,930 1,660,637 1,890,929 2,003,872
Finance lease receivables (net of
initial payments) (RMB’000) 1,004,379 1,297,017 1,475,382 1,535,535
Aggregate coverage ratio (Note 1) 1.28 1.28 1.28 1.30
Range of coverage ratio (Note 2) 0.81 (Note 3)
–179.97 (Note 4)
0.46 (Note 3)
–289.12 (Note 4)
0.42 (Note 3)
–600.19 (Note 4)
0.50 (Note 3)
–46.10 (Note 4)
Notes:
1. Aggregate coverage ratio is calculated as the a ggregate book value of leased automobiles as at the
date indicated, divided by the total finance leas e receivables (net of initial payments) as at the same
date.
2. Coverage ratio is calculated by the book value of a leased automobile as at the date indicated,
divided by the corresponding finance lease receivab le (net of initial payments) as at the same date.
3. As at 31 December 2020, 2021, 2022 and 30 June 2023, there were 279, 517, 780 and 898 finance lease
contracts with individual customers recorded with coverage ratios lower than one, respectively,
which were primarily due to delay payments fro m those individual customers to us while the book
values of the leased automobiles concerned were decreasing due to depreciation charges to the extent
that their book values were not able to cover the corresponding finance lease receivables. The
balance of the finance lease receivables of those finance lease contracts were RMB17.9 million,
RMB39.3 million, RMB49.8 milli on and RMB56.8 million, representing 1.8%, 3.0%, 3.4% and
3.7% of the finance lease receivables as at 31 December 2020, 2021, 2022 and 30 June 2023,
respectively. Taking into consideration of the af oresaid, our Directors believe that there was no
material financial impact on our Group in this regard.
BUSINESS
–1 9 4–


--- page 204 ---
4. The extraordinarily high cove rage ratio for certain finance lease agreements during the Track
Record Period was mainly related to repossessed au tomobiles with relatively small residual amount
brought forward from the previous corresponding fi nance lease arrangements. When the repossessed
automobiles were subsequently sold on finance lea se, a new finance lease agreement with new terms
was formulated. The customers were normally r equired to pay initial payments which further
reduced the principal amounts concerned and theref ore drove up the coverage ratio of the finance
lease agreements.
(B) Automobile-related businesses
Under our automobile-related businesses , we principally generate revenue from
automobile operating lease and other automobile-related services.
i. Automobile operating lease
Our automobile operating lease busine ss principally involves: (i) e-hailing
operating lease; (ii) new energy car-sharing; and (iii) other operating lease. The
following table sets out a breakdown of our revenue from automobile operating lease
by type of services for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
E-hailing operating lease 116,599 87.9 132,846 92.1 115,930 92.0 64,443 93.1 52,833 86.0
New energy car-sharing 5,166 3.9 3,959 2.7 791 0.6 749 1.0 — —
Other operating lease 10,841 8.2 7,358 5.2 9,297 7.4 4,055 5.9 8,600 14.0
Total 132,606 100.0 144,163 100.0 126,018 100.0 69,247 100.0 61,433 100.0
In an automobile operating lease transa ction, we lease the automobiles to our
customers in return for periodic rental payments. The lease term usually ranges from
(i) six months to one year for e-hailing operating lease; (ii) a few hours and up to six
months for new energy car-sharing; an d (iii) a few days to three years for other
operating lease. During the lease term, the ownership of the leased automobiles
remains with us and we bear the costs of automobile insurance, repair and maintenance
for all our vehicles under automobile operating lease services. At the end of the lease
term, our customers shall return the leased automobiles to us.
BUSINESS
–1 9 5–


--- page 205 ---
(1) E-hailing operating lease
The following table sets out a breakdown of our revenue generated from
e-hailing operating lease business and th e number of new e-hailing operating lease
agreements entered into with drivers sou rced from Didi Group, which operates
mobile transportation platforms i n the PRC, and other channels for the
years/periods indicated:
Channel Year ended 31 December
2020 2021 2022
Number of
agreements Revenue
Number of
agreements Revenue
Number of
agreements Revenue
RMB’000 % RMB’000 % RMB’000 %
Didi Group (Note 1) 962 3,301 2.8 3,662 56, 181 42.3 1,514 33,834 29.2
Other channels (Note 2) 5,085 113,298 97.2 4,089 76, 665 57.7 4,392 82,096 70.8
Total 6,047 116,599 100.0 7,751 132,846 100.0 5,906 115,930 100.0
Channel Six months ended 30 June
2022 2023
Number of
agreements Revenue
Number of
agreements Revenue
RMB’000 % RMB’000 %
(unaudited)
Didi Group (Note 1) 1,142 22,530 35.0 768 10,538 19.9
Other channels (Note 2) 2,555 41,913 65.0 2,683 42,295 80.1
Total 3,697 64,443 100. 0 3,451 52,833 100.0
Notes:
1. We started to generate revenue from e-hail ing operating lease agr eements with drivers
sourced from Didi Group for the year ende d 31 December 2020 as the driver referral
cooperation with Didi Group started in July 2020.
2. We may require drivers sourced from other cha nnels to lease our e-hailing vehicles listed
on Didi Group’s e-hailing vehicles leasing platform.
For the years ended 31 December 2020, 2021, 2022 and the six months ended
30 June 2023, the average occupancy rate o f our e-hailing vehicles under operating
lease (defined as the aggregate number of e -hailing vehicles under operating lease
at each month end in the year/period divi ded by the aggregate number of e-hailing
vehicles at each month end in the year/period) was approximately 78.8%, 90.7%,
85.0% and 69.8%, respectively. We also provide options for our customers to
change the lease of e-hailing vehicles fro m operating lease to finance lease. Such
flexibility in our service can satisfy custo mers who decide to own rather than lease
the e-hailing vehicles. As at 31 Decembe r 2020, 2021, 2022 a nd 30 June 2023, the
number of e-hailing vehicles under operat ing lease was 3,930 units, 4,114 units,
4,122 units and 5,058 units, respectively. During the Track Record Period, the
number of e-hailing vehicles switched fro m operating lease to finance lease was
BUSINESS
–1 9 6–


--- page 206 ---
five units, nil, 1,121 units and 483 units, respectively. The average number of
e-hailing automobiles under operating le ase during the Track Record Period was
3,325 units, 4,072 units, 3,877 units and 4,252 units, respectively. The decrease in
the average number of e-hailing vehicles under operating lease for the year ended
31 December 2022, was mainly due to we switched and subsequently sold 1,121
units of e-hailing vehicles from operating lease to finance lease during the year to
meet our customers’ demand. The signifi cant increase in the number of e-hailing
vehicles switched from operating lease to finance lease for the year ended 31
December 2022 was mainly due to the increasing demand from our customers as
(i) for certain customers who plan to engage in e-hailing business for a longer
term, the total payment of purchasing an e -hailing vehicle under finance lease is
lower than the total payment of leasing an e-hailing vehicle through operating
lease, and (ii) in certain case, vehicles under finance lease require a lower monthly
lease payment as compared to leasing e-h ailing vehicles under operating lease.
Therefore, purchasing our e-hailing vehic les under finance lease is commercially
more appealing to such customers especially our customer may take ownership of
the e-hailing vehicles at the end of finance lease term, where as operating lease our
customers will have to return the e-hailin g vehicle at the end of the lease term. The
average number of automobiles under e- hailing operating lease increased from
3,877 units for the year ended 31 December 2022 to 4,252 units for the six months
ended 30 June 2023, mainly due to the increase in our automobile purchase for our
e-hailing operating lease business during the period.
Didi Group
Leveraging our experience in the automobile industry, we have
expanded our automobile le ase business to cover e-hailing vehicles. Since
late 2018, we have been supplying compliant e-hailing vehicles to individual
e-hailing drivers through the e-hailing v ehicles leasing platform operated by
Didi Group.
On 27 November 2018, we entered into, among others, a business
cooperation agreement (the ‘‘ Business Cooperation Agreement ’’) with one of
our Pre-IPO Investors, Beijing Chesheng, an affiliate of Didi Group. At the
time of its establishment, Beijing Chesheng was wholly-owned by Beijing
Xiaoju, which is the main operating entity of Didi Group.
Based on publicly available information, Beijing Chesheng is
wholly-owned by EasyCar (HK) Limited, which is an indirectly
wholly-owned subsidiary of DiDi Gl obal Inc., a company listed on the
OTC Markets of the U.S. (stock code: DIDIY). Beijing Xiaoju is a variable
interest entity of DiDi Global Inc. As such, Beijing Chesheng and DiDi
Group are affiliated companies by virtue of being under the control of the
same entity, DiDi Group Inc. Under t he Business Cooperation Agreement,
Didi Group agreed to facilitate and supp ort our business development in the
e-hailing vehicle leasing business, provide favourable e-hailing vehicle
procurement arrangement and provi de favourable auxiliary services in
BUSINESS
–1 9 7–


--- page 207 ---
relation to our e-hailing vehicles. In exchange for the foregoing and in view
of other investments and financial support from Didi Group, we agreed,
under the Business Cooperation Agreem ent, to provide and list our e-hailing
vehicles exclusively on the e-hailing v ehicles leasing platform operated by
Didi Group when entering into lease agr eements with our potential e-hailing
drivers. Under the Business Cooperation Agreement, we were not restricted
from sourcing drivers through other channels, such as our own sales outlets
or automobile agents for our e-hailing ope rating lease business. The e-hailing
drivers sourced from our own sales outlets or our automobile agents for
e-hailing business transacted with us on Didi Group’s e-hailing vehicles
leasing platform. The Business Cooper a t i o nA g r e e m e n tw a st e r m i n a t e do n2 1
May 2021 with the mutual consent of the parties to the agreement as a result
of changes in the regulatory enviro nment such as promulgation of ‘‘the
Anti-Monopoly Guidelines of the Anti-Monopoly Committee of the State
Council on Platform Economy’’ on 7 February 2021 by the Anti-Monopoly
Committee of the State Council (the ‘‘ Anti-Monopoly Guidelines ’’) targeting
Internet platforms which signaled a str engthening of antitrust enforcement
against monopolistic behaviours in China’s Internet platform sector.
Subsequent to the termination of the exclusive agreement, we entered into
new cooperation agreements with Didi Group on 21 May 2021 and 10
November 2021. We renewed our cooperation agreement with Didi Group on
4 November 2022 with a validity period between 10 November 2022 and 9
November 2023, and further renewed the agreement with Didi Group on 25
October 2023 with a validity period between 10 November 2023 and 9
November 2024. Our PRC Legal Advisers are of the view that the
cooperation agreements with Didi Group would not result in our Group’s
e-hailing operating lease business being subject to the impact of the
regulatory changes of the Anti-Monopoly Guidelines, on the basis that our
PRC subsidiary only serves as an e-ha iling vehicles provider, which neither
owns the online service platforms nor operates any e-hailing business, as
confirmed by our Directors. As advised by our PRC Legal Advisers, the
Anti-Monopoly Guidelines and the new-published laws and regulations on
e-hailing industry as set out in ‘‘Regulatory Overview — Laws and
Regulations on e-hailing services’’ mainly regulate online e-hailing platform
enterprises and are not applicable to our businesses, and do not have any
bearing on our businesses and operation.
BUSINESS
–1 9 8–


--- page 208 ---
The business arrangements under the four cooperation agreements are
substantially the same as those under the exclusive agreement, apart from the
terms in respect of exclusivity requirements and deposit amounts. A summary
of the terms of the cooperation agreements dated 21 May 2021, 10 November
2021, 4 November 2022 and 25 October 2023 is set out as follows:
Term : One year
Leasing of e-hailing
vehicles
: Our Group shall list our e-hailing vehicles
on the e-hailing vehicles leasing platform
operated by Didi Group. The registered
e-hailing drivers of Didi Group can rent
our e-hailing vehicles by entering into
operating lease agreements with us
directly.
Insurance for e-hailing
vehicles
: Our Group shall buy automobile
insurance for our e-hailing vehicles in
compliance with the applicable laws and
regulations.
Fees charged by Didi
Group
: Promotion service fee and automobile
custody service fee shall be payable by us
to Didi Group for the customers referred
by Didi Group.
Deposit : Our Group shall pay a contingency
deposit as a guarantee of our
performance obligation under the
cooperation agreements and the rules of
Didi Group. Didi Group can pay out of
the contingency deposit any compensation
to the platform users if the users incur
losses as a result of the breach of terms or
warrants by us.
Between November 2018 and July 2020, we listed our e-hailing vehicles
on the e-hailing vehicle leasing pla tform operated by Didi Group only and
sourced driver customers from our sales outlets and other channels that we
managed directly, and thus no service fee was charged by Didi Group for the
BUSINESS
–1 9 9–


--- page 209 ---
listing of vehicles on its platform. Didi Group has referred customers to us
since July 2020, when it started referring its platform’s driver customers to its
platform’s vehicle suppliers nationwi de. Since July 2020, we have incurred
service fees payable to Didi Group for the provision of customer referral,
promotion and other services provided by Didi Group. The service fees
incurred were RMB0.4 million, RMB5.0 million, RMB2.3 million and
RMB1.4 million for the years ended 3 1 December 2020, 2021, 2022 and the
six months ended 30 June 2023, respectively.
For the years ended 31 December 2020 , 2021, 2022 and the six months
ended 30 June 2023, our revenue generated from e-hailing operating lease
from customers sourced from Didi Group was RMB3.3 million, RMB56.2
million, RMB33.8 million and RMB1 0.5 million, accounted for 2.8%,
42.3%, 29.2% and 19.9% of our reve nue from e-hailing operating lease
business, respectively. The number of new e-hailing operating lease
agreements entered into with custome rs sourced from Didi Group was 962,
3,662, 1,514 and 768, accounted for 15.9%, 47.2%, 25.6% and 22.3% of our
total number of e-hailing operating lease agreements that we entered into for
the corresponding year/period.
The chart below shows the typical process workflow of our business
operation of e-hailing operating lease with customers referred by Didi
Group.
Stage C
Execution of
agreements,
settlement of
initial payment
and handing
over the
e-hailing
vehicles
Stage B
Notification of
details for
picking up
e-hailing
vehicles
Stage A
Placing orders
by customers
Stage E
Returning the
e-hailing
vehicles
Stage D
Lease
management
and
maintenance
Stage A: Placing orders by customers
Potential e-hailing driver customers of Didi Group can search, compare,
and select their interested automobile brand and model supplied by us on the
e-hailing vehicles leasing platform operated by Didi Group, and the platform
automatically lists a few options with different quotations prepared by us.
Once the customers have confirmed their selection, placed an order and paid
the required deposit, we will be able to retrieve customers’ order information,
and start to prepare the selected automo biles for handing over to customers.
To the best knowledge of our Directors, Didi Group performs a background
check on all of its customers, thus all the customers referred by Didi Group
have passed the background check and are approved by Didi Group. We
BUSINESS
–2 0 0–


--- page 210 ---
have reviewed Didi Group’s backgroun d check procedures and criteria for
admission of new customers which we considered to be in conformity with
our own criteria and procedures, therefore we do not perform additional
background checks on customers referred by Didi Group. During the Track
Record Period, there was no material cu stomer default associated with the
customers referred by Didi Group as confirmed by our Directors.
Stage B: Notification of details for picking up e-hailing vehicles
Once the selected e-hailing vehicles are ready for collection, we will
notify the customers about the loca tion and time to pick up the e-hailing
vehicles, and relevant identification documents to be prepared for
verification.
Stage C: Execution of agreements
Before execution of the agreements, we conduct face-to-face interviews
with customers in order to verify their identity and to ensure that our
customers understand the terms and conditions of the agreements. Our
customers are then required to settle t he initial payment and execute the
agreements and other necessary docume nts. The customers’ information will
be recorded onto our ERP system at th e same time. Following the execution
of agreements, we will direct the customer to pick up the e-hailing vehicle
from Didi Group’s centralised vehicle management centre.
For stages D and E, the process workflow follows our other operating
lease. Please refer to the paragraph headed ‘‘Our Business Model and
Operation — (B) Automobile operating lease — i. Automobile operating
lease — (3) Other operating lease ’’ in this section for details.
Other channels
In addition to the e-hailing drivers referred by Didi Group, we have
individual customers and corporate customers sourced from other channels,
including our own self-operated sales outlets and third party automobile
agents. For the customers sourced from our own self-operated sales outlets,
we generally received customers’ inquiries on e-hailing vehicles leasing
followed by signing lease documents in our sales outlets. For the customers
sourced from our third party automo bile agents, the automobile agents
introduce customers to us through their own business development efforts.
For the year ended 31 December 2021, the revenue and number of
e-hailing operating lease agreements sourced from other channels decreased
by RMB36.6 million and 996 agreements, respectively, mainly due to the
decrease in e-hailing operating lease business generated from third party
automobile agents, as we reduced the number of such agents due to their
under-performance, and we put more effort into developing our self-operated
outlets’ e-hailing operating lease business in certain sales outlets. Our
BUSINESS
–2 0 1–


--- page 211 ---
revenue and number of e-hailing opera ting lease agreements sourced from
other channels for the year ended 31 December 2022 increased by RMB5.4
million and 303 agreements, respectiv ely, as compared to the year ended 31
December 2021, mainly due to we put more effort into developing our
self-operated outlets’ e-hailing oper ating lease busines s in certain sales
outlets. Our revenue and number of e -hailing operating lease agreements
sourced from other channels for the six months ended 30 June 2023 increased
by RMB0.4 million and 128 agreements, as compared to the six months
ended 30 June 2022, mainly due to the efforts in developing our self-operated
outlets’ e-hailing operating lease business during the period.
During the Track Record Period, according to our internal policy, only
vehicles which have obtained the Transpo rt Certificates for E-hailing vehicle
can be allocated to e-hailing vehicles bus inesses, hence all the vehicles that
have been allocated to e-hailing vehicle s businesses in both operating lease
and e-hailing automobiles under sales a nd finance lease have obtained the
Transport Certificates for E-hailing vehicle.
Internal policies in respect of e-hailing ve hicles leasing platforms and e-hailing
drivers
We have adopted a set of ‘‘Revie w Standards for Online E-hailing
Vehicles Leasing Platform Policy’’ 《網約車平台審核標準》. Under such
policy, the detailed assessment criteri a for online e-hailing vehicle leasing
platform in the PRC included (1) obtai ned the ‘‘Online E-Hailing Business
Permit’’ 《網絡預約出租汽車經營許可證》 or relevant business licenses
which complied with the national and regional e-hailing related laws and
regulations; (2) the online e-hailing veh icle leasing platform is operating in
both national and multiple regions in the PRC; (3) the online e-hailing
platform is required to have branches or wholly-owned operating subsidiaries
in more than five cities in the PRC, wit h the local branches or wholly-owned
subsidiaries and local qualified staff in operation to conduct administration
procedures of operating leasing of vehi cles and online e-hailing operations in
accordance with the local laws and regulations; and (4) the registered capital
of the online e-hailing platform comp any should not be less than RMB50
million; and the company is not in the ‘ ‘List of Enterprises with Abnormal
Operations’’ (《經營異常名錄》) and ‘‘List of Untrustworthy with Serious
Violations’’ (《嚴重違法失信企業名單》). If the online e-hailing vehicle leasing
platform fulfils the above assessment criteria, a Framework Agreement is
signed with the relevant online e-hailin g vehicle leasing platform. Before the
business cooperation agreement is s igned with e-hailing platform, our
business department will submit the cooperation agreement to legal
department to review according to the aforementioned criteria to ensure
the online e-hailing platform that we directly work with has obtained the
valid E-hailing Business Permit. Du ring the Track Record Period, the
e-hailing platform we worked with was Didi Group, which has obtained the
E-hailing Business Permit.
BUSINESS
–2 0 2–


--- page 212 ---
We have adopted a set of ‘‘Policies over Transport Certificate of
e-hailing service’’ 《網約車運輸證辦理規範》. Under such policy, a
Transport Certificate for E-hailing vehicle is required to apply for all
e-hailing vehicles by the Sales and Rental Department (‘‘ 租售部’’). When the
Transport Certificate for E-hailing veh icle is obtained, the staff of the Sales
and Rental Department is required to pass the original Transport Certificates
for E-hailing vehicle to the Logistics Vehicle Management Department (‘‘ 後
勤車務管理部’’). The staff of the Logistics Vehicle Management Department
uploaded the Transport Certificate fo r E-hailing vehicle to the business
intelligent system. Before the vehicle is released to provide e-hailing service,
staff of the Sales and Rental Department is required to check the validity
period of the relevant Transport Certi ficate for E-hailing vehicle. We have
adopted a set of ‘‘Policies for asse ssment on online e-hailing drivers’’ ( 《喜滴
網約車司機前控審核標準》). Under such policy, the assessment criteria for
online e-hailing drivers included (1) a v alid online e-hailing drivers driving
license, identification documents and t he debit/credit card; (2) 52 Car APP to
be installed and complete the address book authorization; (3) signing a
third-party credit inquiry authorization letter; (4) aged between 21 to 60
years old with Driver License for E-hailing obtained for at least three years;
(5) do not have any penalty record of a one-off 12 points deduction of the
driver license; and (6) online e-ha iling drivers are not in the Blacklist
Incident. Only the above mentioned crit eria were all satisfied, our agreements
with our e-hailing drivers can be finalised.
Laws and regulations on e-hailing services
There are mainly four regulations related to e-hailing service industry
published recently: (i) the Provisional Measures for Administration of
E-Hailing Services ( 《網絡 預約出租汽車經營服務管理暫行辦法》) (the
‘‘E-Hailing Measures ’’); (ii) the Notice on Maintaining Market Order for
the Fair Competition and Accelerating the Compliance of E-hailing Vehicles
(《關於維護公平
競爭市場秩序加快推進網約車合規化的通知》); (iii) Opinions
on Strengthening the Protection of the Rights and Interests of Employees in
the New Transportation Industry ( 《關於加強交通運輸新業態從業人員權益保
障工作的通知》); and (iv) the Notice on Strengthening the Work Related to
the Joint Supervision of the Whole Industry Chain of the E-hailing ( 《關於加
強網絡 預約出租汽車行業事中事 後全鏈條聯合監管有關工作的通知》). As
advised by CIC, the four recently published regulations in relation to the
e-hailing service industry as mentio ned are not expected to have material
impact on the e-hailing platform operat ors or the e-hailing service industry at
large as they only provide for further details of the requirements on e-hailing
platform operators by existing legislations and do not impose new onerous
requirements. The Directors concur with CIC’s view and do not expect that
such regulations to have material direct or indirect impact on the Group’s
e-hailing operating lease business. For details of the aforementioned four
BUSINESS
–2 0 3–


--- page 213 ---
regulations related to e-hailing service industry published recently, please
refer to ‘‘Regulatory Overview — La ws and Regulations on e-hailing
Services’’.
According to the E-hailing Measures, the E-hailing Business Permit is
issued to online e-hailing platform comp anies, the Transport Certificate for
E-hailing is issued to passenger transpor t vehicles, and the Driver License for
E-hailing is issued to e-hailing drivers. The E-hailing Measures also provide
that an online e-hailing platform company failing to obtain the E-hailing
Business Permit and the party failing to obtain the Transport Certificate for
E-hailing vehicle or the Driver License of E-hailing shall be fined. Our
Directors confirmed that our PRC subsidiary only serves as an e-hailing
vehicles provider, which neither owns the online service platforms nor
operates any e-hailing business. As advised by our PRC Legal Advisers and
our Directors confirm that our PRC subsidiary was only responsible for
obtaining Transport Certificates fo r E-hailing vehicles during the Track
Record Period. As advised by our PRC L egal Advisers after due diligence
and as confirmed by our Directors, all of our E-hailing vehicles under
operating lease and finance lease during the Track Record Period and up to
the Latest Practicable Date have ob tained Transport Certificates for
E-hailing. In addition, if the vehicle t hat provides the af oresaid services
operates without the Transport Certi ficate for E-hailing, the e-hailing
platform company or the drivers, rather than the e-hailing vehicle
providers, may be ordered to make rect ification or fined by the competent
administrative departments of transportation and prices. Therefore, as
advised by our PRC Legal Advisers, these four newly-published laws and
regulations on e-hailing industry main ly regulate online e-hailing platform
enterprises and are not applicable to Group’s businesses, and do not have
any bearing on our business and operation.
(2) New energy car-sharing
During the Track Record Period, we operated our new energy car-sharing
business in several cities in the Fujian Province of the PRC through our Go Ziyou
APP, where our customers could rent our new-energy vehicles for shorter term
with greater flexibility. However, our new energy car-sharing business
underperformed as compared to our e-hailing operating lease business in terms
of return on assets. We intended to focus and allocate our resources on expanding
our automobile retail and finance business and e-hailing operating lease business,
hence we suspended Go Ziyou APP service for our new energy car-sharing
business in July 2022. By the end of 2022, our new energy car-sharing automobiles
had been disposed of or reallocated to our automobile retail and finance business.
During the operation period of our Go Ziyou APP, we published the new
energy car-sharing locations and price information in the form of texts and
pictures on our Go Ziyou APP without any charge, and our Go Ziyou APP users
could browse such information for free and rent new energy automobiles of their
BUSINESS
–2 0 4–


--- page 214 ---
choice on our Go Ziyou APP. Our customers were required to download our Go
Ziyou APP, on which our customers could locate and reserve our available new
energy automobiles in their proximity. We generated revenue from the rental
payment of our new energy automobiles, which was generally priced and charged
by minute and/or distance travelled. In relation to our new energy car-sharing
business through our Go Ziyou APP, for t he years ended 31 December 2020, 2021,
2022 and the six months ended 30 June 2023, we generated revenue of RMB5.2
million, RMB4.0 million, RMB0.8 million a nd nil, respectively, and recorded
gross loss of RMB1.2 million, RMB4.1 million, RMB1.6 million and nil,
respectively.
The chart below was the typical process workflow of our new energy
car-sharing business during the op e r a t i o np e r i o do fo u rG oZ i y o uA P P :
Stage C
Reserving the
automobiles
Stage B
Payment of
security
deposit or
credit card
binding
Stage A
Registration
of membership
through our
Go Ziyou APP
and conducting
customer
due diligence
Stage E
Returning the
automobiles
and
settlement of
payment
Stage D
Locating,
picking up
and using
automobiles
Stage A: Registration of membership through our Go Ziyou APP and
conducting customer due diligence
Customers were required to download the Go Ziyou APP, followed by
registering their relevant personal information details, including uploading
photos of personal identification documents and drivers’ licences onto the
Go Ziyou APP. Customers were required to agree with our lease terms and
conditions for using our service to comp lete the registration process on the
Go Ziyou APP. After obtaining customers’ registration information, we
would process the information and complete background checks on
customers online in accordance with our credit risk assessment requirements.
Stage B: Payment of security deposit or credit card binding
Once the customers’ background checks were passed, customers were
required to pay a fixed amount of security deposit before proceeding to select
and reserve their preferred automobiles.
Stage C: Reserving the automobiles
Customers were able to select and reserve their preferred automobiles
that were available on the Go Ziyou APP directly.
BUSINESS
–2 0 5–


--- page 215 ---
Stage D: Locating, picking up and using automobiles
Once the preferred automobiles were selected, customers were able to
locate the automobiles and use the automobiles.
Stage E: Returning the automobiles and settlement of payment
At the end of the lease term, our cust omers shall return the automobiles
to any of our parking sites and pay for their actual usage of the leased
automobiles.
We would conduct inspections on the conditions of the leased
automobiles returned to the designated parking sites by the customers. If
the condition of the automobiles failed t o meet the requirements stated in the
lease agreements, we would make arrangements for the cost of repair
according to the lease terms.
(3) Other operating lease
In addition to e-hailing operating lease and new energy car-sharing services,
we also provide other operating lease services to our customers. The lease term of
other operating lease varies from a few days to three years. We have provided
chauffeured service at the request of our automobile operating lease customers,
the fee of which have taken into account when we determined the amount of the
periodic rental payments. As at the Latest Practicable Date, we had no longer
provided chauffeured service.
In May 2021, we launched our Kuai Ya Car Rental WeChat mini programme
(快呀租⾞微信小程序) for our other operating lease business, which can be
accessed by WeChat users without any ch arge and allows the users to browse our
selection of automobiles available for oper ating lease, and reserve their selected
automobiles. Since its launch and up to the Latest Practicable Date, we had
completed approximately 4,000 automob ile operating leases through this mini
programme.
For the years ended 31 December 2020, 2021, 2022 and the six months ended
30 June 2023, the average occupancy rate of our other operating lease automobiles
(defined as the sum of number of other operating lease automobiles under
operating lease at month end date over the period divided by the sum of number
of other operating lease automobiles at month end date over the year/period) was
approximately 59.0%, 35.8%, 36.3% and 43.4%, respectively.
BUSINESS
–2 0 6–


--- page 216 ---
The chart below shows the typical process workflow of our other operating
lease business operation. The process workflow also applies to our e-hailing
operating lease with customers.
Stage C
Execution of
agreement,
procurement
of automobiles
(if required),
initial payment,
and handing
over the
automobiles
Stage B
Customer
background
checks and
preparation
Stage A
Customer
enquiry
and
quotation
Stage E
Returning the
automobiles
Stage D
Lease
management
and
automobile
maintenance
Stage A: Customer enquiry and quotation
When we receive enquiries from potential customers on our automobile
operating lease, we will obtain inform ation from them on their preferred
terms of the operating lease such as the lease period and the choice of
automobile model. Having considered the information obtained, we will then
provide our quotation to the customers.
Stage B: Customer background checks and preparation
After confirming the order, we will require our customers to provide
necessary information for the pur pose of conducting our credit risk
assessment and approval. Once approved, we will prepare the automobile
operating lease agreements setting out, among others, lease term, rent,
automobile model and automobile licence number, for our customers’
execution.
Stage C: Execution of agreement, procurement of automobiles (if required)
and handing over the automobiles
We execute the automobile operating lease agreement with our
customers upon confirmation of the agreed lease terms, and process the
initial payment. If the automobile model chosen by our customer is not
available from our inventories, our procurement department will place an
order for such automobile model. Prior to handing over the automobiles, we
will conduct inspections on the condition of the automobiles, perform
pre-handover checks and record the information of the automobiles such as
appearance, mileage and tools and kits that go along with the automobiles.
After all these inspection checks, we will hand over the automobiles to our
customers.
BUSINESS
–2 0 7–


--- page 217 ---
Stage D: Lease management and automobile maintenance
Throughout the lease term, our customers are obliged to make periodic
rental payments timely. We bear the costs of the automobile insurance,
annual inspection, repair and maintenance.
Stage E: Returning the automobiles
At the end of the lease term, our cust omers shall return the automobiles
to us. We will then conduct inspections on the condition of the automobiles.
After such inspections, we will then decide whether such automobiles are
suitable to be retained as part of our automobile fleet for operating lease.
ii. Other automobile-related businesses
For our other automobile-related services, we mainly promote our business-end
customers’ insurance service and automob ile after-market service to our car-user
customers, in return, we receive service f ees from our business-end customers for such
services we provided.
We provide automobile-related services to business-end customers. We generate
income from business-end customers, which can be an agreed lump sum over the
service period or determined based on the number of automobile transactions
promoted.
We provide auto-insurance promotion service through our cooperation with
insurance providers. By the insurance providers’ promotion of auto-insurance at our
sales outlets, we receive promotion service fees, which typically represent
approximately 8% to 16% of the transaction amount with the insurance providers.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our revenue generated from the auto-insurance promotion service was RMB17.5
million, RMB12.3 million, RMB12.4 million and RMB4.6 million, respectively.
We also operate an automobile aftermarket service platform through our 52 Car
APP which we assist car-user customers to look for automobile aftermarket usage
solutions to cater for their various needs during the automobile usage stage, including
but not limited to (i) recommendations on ov er 500 automobile service locations as at
the Latest Practicable Date operated by th ird party automobile aftermarket service
providers in the PRC; and (ii) provision of information and assistance in relation to
repair works on the damaged automobiles. Our Directors confirm that we do not
charge customers for browsing the afterma rket services listed on 52 Car APP and the
assistance provided, furthermore 52 Car APP does not offer the functionality of
placing orders. As at the Latest Practic able Date, we did not charge our car-user
customers for downloading or using our 52 Car APP. We publish automobile service
locations and information in the form of texts and pictures on our 52 Car APP without
any charge, and our 52 Car APP users can browse such information for free.
BUSINESS
–2 0 8–


--- page 218 ---
For third party automobile aftermarket service providers (as business-end users)
including repair and maintenance workshop, they can access our automobile
aftermarket service platform through o ur 52 Car (Business Version) APP which
enables them to manage automobile repair or ders, editing their service information
s h o w no no u r5 2C a rA P P ,s u c ha sn a m e ,l o c a t ion, contact details and service offerings
of their repair and maintenance workshops. To ensure the quality of the repair and
maintenance services provided by the third party automobile aftermarket service
providers to the car-user customers, we require them to provide us progress reports
from time to time on the respective automobiles they are working on, supported with
photos and videos showing the condition of the automobiles before and after the repair
and maintenance work performed. We do not charge our business-end users for
downloading or using our 52 Car (Business Version) APP. Instead, we receive service
fees from service providers, such as third party automobile aftermarket service
providers, based on the agreed percentage typically ranging from 5% to 15%, of the
transaction value with the customers referred by us. For the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, our revenue generated from
the services we provided to the third party au tomobile aftermarket service providers
was RMB1.5 million, RMB1.6 million, RMB1.7 million and RMB0.8 million,
respectively.
During the six months ended 30 June 2023, due to customers’ demand, we sold
five units of new automobiles to custome rs who have no financing need. During the
Track Record Period, revenue generated from sales of new automobile without finance
lease amounted to nil, nil, nil and RMB0.4 m illion, respectively. As confirmed by our
Directors, as at the Latest Practicable Date , we did not have any expansion plan in this
regard.
SALES AND MARKETING
Sales
The following table sets out the breakdown of number of new automobiles sold and
our revenue from sales of automobile under finance lease by sales channel for the
years/periods indicated:
Year ended 31 December
2020 2021 2022
Number of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
RMB’000 % RMB’000 % RMB’000 %
Self-operated sales outlets 3,706 344, 445 94.9 7,360 776,299 99.8 7,119 731,232 99.5
Automobile agents 195 18,489 5.1 15 1,557 0.2 34 3,368 0.5
Total 3,901 362,934 100.0 7,375 777,856 100.0 7,153 734,600 100.0
BUSINESS
–2 0 9–


--- page 219 ---
Six months ended 30 June
2022 2023
Number of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
RMB’000 % RMB’000 %
(unaudited)
Self-operated sales outlets 3, 020 328,678 99.3 3,733 383,212 99.6
Automobile agents 24 2,334 0.7 7 1,498 0.4
Total 3,044 331,012 100.0 3,740 384,710 100.0
Self-operated sales outlet
We conduct our sales of automobiles under finance lease principally through our
self-operated sales outlets. As at the Latest Practicable Date, our sales outlets were located
in the provinces and municipa lities in the PRC as shown below:
Qinghai
Xinjiang
Shaanxi
Gansu
Shanxi
Inner Mongolia
Jilin
Heilongjiang
Liaoning
Shandong
Hebei
Jiangsu
Henan
Anhui
Jiangxi
Fujian
Zhejiang
Sichuan Guizhou
ChongqingYunnan
Guangxi Hunan
Hubei
Guangdong
Provinces/municipalities with the presence of our sales outlets
South China
Sea Islands
BUSINESS
–2 1 0–


--- page 220 ---
As at the Latest Practicable Date, we had a s elf-operated sales network comprising of
77 sales outlets across 25 provinces and municip alities in the PRC. The following tables set
out the breakdowns of the number of our sales outlets by geographical location and by city
tier as at the Latest Practicable Date:
By geographical location:
Eastern PRC 32
Southern PRC 11
Southwestern PRC 9
Central PRC 9
Northern PRC 6
Northwestern PRC 5
Northeastern PRC 5
By city tier:
Tier one city 1
Tier two cities 35
Tier three and below cities 41
Our sales outlets are supported by a team of experienced frontline staff and sales
personnel with effective sales techniques and product knowledge in the retail and leasing of
automobiles under the guidance of our management team. For the years ended 31
December 2020, 2021, 2022 and the six months e nded 30 June 2023, our sales commission
paid to our staff amounted to RMB15.2 million, RMB30.8 million, RMB31.3 million and
RMB15.7 million, representing 3.4%, 3.8%, 4. 1% and 3.9% of our total cost of revenue,
respectively. The table below shows the movement in the number of our sales outlets during
the Track Record Period:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
As at the beginning of the year/
period 62 66 65 68
Opened during the year/period 4 2 3 6
Closed during the year/period — (3) — —
As at the end of the year/period 66 65 68 74
As at the Latest Practicable Date, we had 48 and 11 sales outlets offering only
passenger vehicles and only e-hailing vehicles, respectively, and 18 sales outlets offering
both passenger vehicles and e-hailing vehicles.
BUSINESS
–2 1 1–


--- page 221 ---
The number of new automobiles sold represents the new automobiles we sold by way of
finance lease during the year/period. The number of newly entered finance lease agreements
includes the new finance lease agreements for the new automobiles we sold and the new
finance lease agreements for the repossessed automobiles we sold during the year/period.
The following tables set out a breakdown of (i) the number of new automobiles sold under
finance lease; (ii) the number of newly entered finance lease agreements; and (iii) revenue
from our automobile retail and finance business by geographical location:
For the year ended 31 December 2020
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Eastern PRC 1,473 3,120 241,828
Southern PRC 656 1,264 100,895
Southwestern PRC 676 1,405 105,305
Central PRC 434 900 62,601
Northern PRC 368 689 47,728
Northwestern PRC 202 352 28,027
Northeastern PRC 92 129 11,255
Total 3,901 7,859 597,639
For the year ended 31 December 2021
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Eastern PRC 2,750 4,219 395,627
Southern PRC 1,452 2,074 193,048
Southwestern PRC 1,133 1,911 156,951
Central PRC 919 1,357 121,023
Northern PRC 671 1,048 86,661
Northwestern PRC 376 555 49,272
Northeastern PRC 74 144 9,835
Total 7,375 11,308 1,012,417
BUSINESS
–2 1 2–


--- page 222 ---
For the year ended 31 December 2022
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Eastern PRC 2,869 4,754 409,689
Southern PRC 1,402 2,922 194,667
Southwestern PRC 997 1,941 137,979
Central PRC 792 1,363 108,738
Northern PRC 559 968 77,476
Northwestern PRC 407 614 52,867
Northeastern PRC 127 192 15,682
Total 7,153 12,754 997,098
For the six months ended 30 June 2023
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Eastern PRC 1,335 2,342 200,687
Southern PRC 615 1,275 95,726
Southwestern PRC 550 1,086 74,039
Central PRC 457 803 62,378
Northern PRC 372 627 48,891
Northwestern PRC 303 440 38,030
Northeastern PRC 108 155 13,150
Total 3,740 6,728 532,901
BUSINESS
–2 1 3–


--- page 223 ---
The following tables set out a breakdown of the number of new automobiles sold, the
number of newly entered finance lease agreements and revenue from our automobile retail
and finance business by city tier:
For the year ended 31 December 2020
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Tier one city — — 2,278
Tier two cities 3,322 6,511 506,884
Tier three and below cities 579 1,348 88,477
Total 3,901 7,859 597,639
For the year ended 31 December 2021
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Tier one city — — 669
Tier two cities 6,431 9,695 879,744
Tier three and below cities 944 1,613 132,004
Total 7,375 11,308 1,012,417
BUSINESS
–2 1 4–


--- page 224 ---
For the year ended 31 December 2022
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Tier one city 10 541 5,470
Tier two cities 6,036 10,383 844,925
Tier three and below cities 1,107 1,830 146,703
Total 7,153 12,754 997,098
For the six months ended 30 June 2023
Number of
new
automobiles
sold under
finance
lease
Number of
newly
entered
finance
lease
agreements
Revenue
from
automobile
retail and
finance
business
RMB’000
Tier one city — 189 5,877
Tier two cities 3,204 5,647 450,720
Tier three and below cities 536 892 76,304
Total 3,740 6,728 532,901
Automobile agents
In addition to our self-operated sales outlets, we also engaged third party agents, via
agency agreements and certain ad hoc arrangements, to promote our passenger vehicles and
e-hailing vehicles, as well as our corresponding finance lease and operating lease solutions
so as to leverage their resources, customer base and experiences in their respective regions.
During the Track Record Period, we worked with passenger vehicle agents to promote
our automobile retail and finance business. Due to the non-performing asset ratio of our
finance lease agreements through this channel was higher than that of our self-operated
sales outlets, we ceased to work with any agents to promote our passenger vehicles under
our automobile retail and finance business in 2021. During the Track Record Period and up
to the Latest Practicable Date, we had cooperated with third party agents to promote
e-hailing vehicles for our automobile retail and finance business and operating lease
business.
BUSINESS
–2 1 5–


--- page 225 ---
Passenger vehicle agents
The following table shows the movement in the number of passenger vehicle agents we
entered into agency agreements with during the Track Record Period:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
As at the beginning of the year/
period 119 25 — —
Engaged during the year/period 23 — — —
Discontinued during the year/
period (117) (25) — —
As at the end of the year/period 25 — — —
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, we had 23, 6, nil and nil passenger vehicle agents referred customers to us,
respectively.
The revenue from sales of automobile attributable to customers referred by the
passenger vehicle agents amounted to RMB11.7 million, RMB1.5 million, nil and nil for the
years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively.
E-hailing vehicle agents
As for e-hailing vehicles, since late 201 8, we have engaged third party agents to
promote our e-hailing vehicles and lease service, including both finance lease and operating
lease. As at 30 June 2023, we had entered into agency agreements with 60 agents for
e-hailing vehicles, of which 1, 42 and 17 were located in tier one city, tier two cities and tier
three and below cities respectively. The following table shows the movement in the number
of e-hailing vehicle agents (including both promoting our finance lease service and
o p e r a t i n gl e a s es e r v i c e )w ee n t e r e di n t oa g e n c ya g r e e m e n t sw i t hd u r i n gt h eT r a c kR e c o r d
Period:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
As at the beginning of the year/
period 172 105 79 42
Engaged during the year/period 70 58 33 32
Discontinued during the year/
p e r i o d ( 1 3 7 )( 8 4 )( 7 0 )( 1 4 )
As at the end of the year/period 105 79 42 60
BUSINESS
–2 1 6–


--- page 226 ---
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, there were 137, 84, 70 and 14 agency agree ments with the e-hailing vehicle agents,
respectively, discontinued in view of the unsa tisfactory performance of certain e-hailing
vehicle agents.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, there were nil, nil, 12 and 4 e-hailing vehic le agents referred finance lease customers to
us. For the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, 163, 55, 25 and 41 e-hailing vehicle agents referred operating lease customers to us.
The salient terms of the agency agreements with the passenger vehicle agents and
e-hailing vehicle agents are set out below:
Contract term : Usually one year
Scope of service : The agents are mainly responsible for:
— promoting and answering customers’ enquiries about
our passenger vehicles and e -hailing vehicles, as well as
the corresponding lease service utilising their own
resources, such as setting up stores/booths for
marketing purpose (if applicable);
— conducting preliminary screening and assessment of
customers’ background information by way of
collecting and verifying customers’ documents; and
— assisting customers in placing orders with us.
Region of service : The agents are only allowed to perform their services within
the agreed region. Certain agents are entitled to exclusive
rights in promoting our products and services in the agreed
region.
Commission to
agents
: For each automobile finance lease transaction the agents
procure, they earn commission, which can be at a fixed
amount typically ranging from approximately RMB2,000 to
RMB11,000 or at an agreed percentage typically ranging
from approximately 1.3% to 7.2% of the value of the
transacted automobile. For each automobile operating lease
transaction the agents procure, they earn a service fee,
which is calculated based on the number of customers
referred to us by the respective agents, subject to due
monthly rental payment by the customers to us.
Termination : Upon agreement by both parties
BUSINESS
–2 1 7–


--- page 227 ---
To exercise control over our automobile agents, we collect feedback from the
customers referred by them from time to time to assess the promotion practice of these
agents. We also conduct assessments on thei r performance from time to time and monitor
the non-performing asset ratio in relation to th e customers referred by the respective agents.
We have the right to request rectification in the case where any unsatisfactory performance
is observed.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our sales commission paid to these agents i n relation to promoting our finance lease
service amounted to RMB1.0 million, RMB0 .1 million, RMB0.2 million and RMB0.05
million, representing 0.2%, 0.01%, 0.03% and 0 .01% of our cost of revenue, respectively.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our service fee paid to these agents in relation to promoting our operating lease
service amounted to RMB5.9 million, RMB7.5 million, RMB3.9 million and RMB0.9
million, representing 7.8%, 9.0%, 4.8% an d 2.0% of our total selling and marketing
expenses, respectively.
Mobile applications
During the Track Record Period, we opera ted various mobile applications and
programmes, which include 52 Car APP, Go Ziyou APP and Kuai Ya Car Rental, a
WeChat mini programme ( 快呀租⾞微信小程序) for car-user customers, and 52 Car
(Business Version) APP for business-end customers. Other than 52 Car APP, 52 Car
(Business Version) and Kuai Ya Car Rental, a WeChat mini programme, the other mobile
applications have been suspended.
All of our mobile applications can be downloaded without any charge. Through our
mobile applications, our customers can have access to a wide range of products and services
we offer in relation to automobile retail and finance, new energy car-sharing and
aftermarket services. We have adopted internal control measures to ensure the security of
our data system and confidentiality of our customers’ personal and behavioural data. Our
employees are required to strictly adhere to the internal control measures and we have
accordingly established a penalty mechanism i n the event of their non-compliance with our
internal control measures. See the sectio n headed ‘‘Risk Management and Operations —
Operational Risk Managemen t’’ for further details.
In relation to the provision of automobile re tail and finance, new energy car-sharing
and aftermarket services through our mobile applications, we may be considered as
conducting information services business through the Internet. According to the
Administrative Measures on Internet Information Services ( 《互聯網信息服務管理辦法》)
promulgated by the State Council (which came into effect on 25 September 2000 and was
last amended on 8 January 2011) (the ‘‘ Measures ’’), Internet information services are
divided into two types, namely, (i) profitable Internet information services; and (ii)
non-profitable Internet information services which the former refers to the provision of
Internet information services with a charge of payment. Please refer to the section headed
‘‘Regulatory Overview — Laws and Regulations on Value-Added Telecommunication
Services’’ for further details.
BUSINESS
–2 1 8–


--- page 228 ---
In the past, we provided Internet informatio n services through our mobile applications
to our car-user customers without charge. Our car-user customers could use our mobile
applications, i.e. Taoqi APP and Go Ziyou APP, to place orders for automobile purchases
with our automobile finance service or new-energy vehicles rentals, and pay for such
products and services. However, they were not required to pay for the use of our mobile
applications (i.e. the Internet information s ervices provided by us). Our Directors confirm
that we did not charge our customers for viewing, searching, downloading
automobile-related informat ion, interacting with customer service representatives, or
transacting on our mobile applications, a nd we did not charge third-party service
providers, such as aftermarket automobile service providers for displaying their
information on our mobile applications. O n such basis, we did not provide Internet
information services at a charge, and our Internet information services provided are hence
regarded as non-profitable Internet information services, as advised by our PRC Legal
Advisers. Our Directors confirmed although o ur car-user customers could purchase our
automobiles with our automobile finance service and rent our new-energy vehicles through
our mobile applications, the provision of such services by us was concluded offline, where
our car-user customers were required to visit our sales outlets or our directed car parks
where we provided onsite assistance to our customers for inspection and picking up the
automobiles before driving off. Our Directors confirmed that the revenue and income from
the provision of automobile retail and finance , new energy car-sharing services through our
mobile applications were entirely generated f rom the conclusion of such automobile services
offline for the customers referred by our Group, instead of the provision of profitable
Internet information services according to th e Measures. To further clarify and confirm our
understanding of ICP Licence requiremen t, we had three interviews with Fujian
Telecommunication Adm inistration Bureau ( 福建省通信管理局) (the ‘‘ FTAB ’’) on 13
November 2018, 14 November 2018 and 20 August 2020 (the ‘‘ Interviews ’’). According to
the Interviews, the person-in-charge of internet management and communication
management of the FTAB concluded that, (i) for a mobile application providing
information service with no charge of paymen t, an ICP Licence is not required, and (ii)
based on our introduction of our mobile applicat ions, including the business and operation
of Taoqi APP, Go Ziyou APP, 52 Car APP and 52 Car (Business Version) APP, the
operations of our Group’s mobile applicatio ns do not fall within the scope of profitable
Internet information services and do not requ ire the ICP Licence. Our PRC Legal Advisers
are of the view that the FTAB is the competent authority supervising the activities of
Internet information services of the operat ions of our Group’s mobile applications and
confirming that the operations of our Group’s mobile applications in China are regarded as
‘‘non-profitable Internet information servi ces’’ and do not require the ICP Licence. In May
2021, we launched our Kuai Ya Car Rental WeChat mini programme ( 快呀租車微信小程序)
for our other operating lease business, which can be accessed by WeChat users without any
charge and allows the users to browse our selection of automobiles available for operating
lease, and reserve their selected automobiles. Our Directors confirm that we do not charge
our customers for viewing, searching, downloading automobile-related information, or
transacting on our Kuai Ya Car Rental WeChat mini programme, and the revenue and
income from the provision of our other operating lease through our Kuai Ya Car Rental
WeChat mini programme were entirely generated from the conclusion of such automobile
services offline, where the customers fro m Kuai Ya Car Rental WeChat mini programme
are required to visit our sales outlets or our directed car parks where we provide onsite
BUSINESS
–2 1 9–


--- page 229 ---
assistance to our customers for inspection and picking up the automobiles before driving
off. Our PRC Legal Advisers advised the operation of our Kuai Ya Car Rental WeChat
mini programme is regarded as ‘‘non-profitable Internet information services’’ and does not
require the ICP Licence, based on the s ame principles of the Interviews.
Marketing
We reach out to our customers through various marketing channels, such as
advertising on trains and high speed tra ins, our own online platforms and mobile
applications, including our 52 Car APP, Ku ai Ya Car Rental, a WeChat mini programme,
and our website at
www.xxfgo.com . In addition, we advertise our business through other
third party media channels such as WeChat ( 微信), Baidu ( 百度), Iqiyi ( 愛奇藝), Tencent ( 騰
訊), and well-known automobile websites such as www.autohome.com.cn on which we place
advertisements for our available automob ile models. We believe that these marketing
efforts have been instrumental in promoting our products and services to our customers and
establishing our Group’s brand image and reputation.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our advertising expenses amounted to RMB8.5 million, RMB10.8 million, RMB8.4
million and RMB3.2 million respectively.
PRICING POLICY
Generally, we formulate our pricing polic y according to (i) the type of products and
services; (ii) the market competition and industrial information; (iii) market trend; and (iv)
the market acceptance of our product pricing.
We set the price of our automobile retail and finance offering, including the finance lease
service for both passenger vehicles and e-hailing vehicles, as a packaged automobile finance
lease product in terms of the number of instalments and the amount of each instalment. The
pricing of our packaged automobile finance lease product is determined by taking into
account factors including but not limited to the cost of automobiles, length of finance lease
terms, the cost of automobile insurance, handlin g fee, vehicle registration fee, initial down
payment, the cost of GPS tracking devices, th e creditworthiness of customers. All of our
automobile finance leases adopt a fixed intere st rate throughout the respective lease term.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, the average yield of finance lease receivables was 22.3%, 20.4%, 19.0% and 19.8%
respectively. Our customers are mainly individuals looking for non-luxury automobiles in
the PRC’s tier two, and tier three and below cities within the age group of 20 to 40 years.
We sell automobiles mostly on direct finance lease. Our target customers are different from
those of bank-affiliated and automaker- or au tomobile dealer-affiliated RAFLCs. The top
five RAFLCs (including our Group) in terms of transaction volume of direct finance lease
in the PRC in 2021 are all third party RAFL Cs. None of them are bank-affiliated and
automaker- or automobile dealer-affilia ted RAFLCs. We have adopted a wide array of
pre-lease and post-lease credit risk management measures and in particular, our post-lease
credit risk management such as monitoring of customers’ periodic payments and
automobile activities, repossession of auto mobiles, disposal of repossessed automobiles
BUSINESS
–2 2 0–


--- page 230 ---
and subsequent legal actions (the details of which are set out in ‘‘Risk Management and
Operations — Our Risk Management Measures — Credit Risk Management’’). Our
Directors believe that we had a greater bargaining power and we were able to sell our
packaged automobile finance lease products at higher prices with higher average yield rates,
implying higher effective interest rates for our customers.
We determine the rent of our automobile operating lease, including both passenger
vehicles and e-hailing vehicles, mainly based on the cost of the leased automobile, the term
of the lease, the cost of depreciation and automobile insurance and maintenance. Our
automobile operating leases are generally charged on a monthly or quarterly basis. In
addition, previously we have provided chauffeured service for our automobile operating
lease customers, the fees of which were taken into account when we determined the price of
our automobile operating lease. During the Track Record Period, the monthly rent of our
e-hailing operating lease was within the range of RMB1,000 and RMB5,700, and the
monthly rent of our other operating lease with chauffeured service was within the range of
RMB3,590 and RMB14,800, and without chauffeured service within the range of RMB800
and RMB15,500, respectively.
We determined the minute and/or distance charge for new energy car-sharing by taking
consideration of the cost or market value o f the leased automobile. During the Track
Record Period, our new energy car-sharing service was priced in the range of RMB0.49 and
RMB0.79 per minute and capped from RMB168 to RMB260 per 24 hours, depending on the
automobile brand and model, the price is different.
Our senior management review and adjust th e pricing policy periodically taking into
account of (i) the demand for our products and services; (ii) our future development and
expansion strategy; (iii) custom ers’ feedback; and (iv) our est imated funding costs to allow
our Group to price our product and service competitively.
SEASONALITY
During the Track Record Period, we generally derived higher revenue generated from
our automobile retail and finance business in December each year until before the Chinese
New Year in the next calendar year. We belie ve that this seasonal pattern is primarily
correlated with typical custom er behaviours in the PRC, where the sales of automobile are
generally higher as a result of the increased demand for automobiles prior to the festive
season in the PRC.
We did not experience any significant seasonal fluctuations in our other businesses
during the Track Record Period.
BUSINESS
–2 2 1–


--- page 231 ---
OUR LENDERS AND FUNDING CAPABILITIES
Our finance department is responsible for conducting regular capital planning,
reporting and forecasting, following which it formulates customised funding plans seeking
to manage our exposure to liquidity and interest rate risks. We have also established a risk
management system to manage our credit, operational, legal and compliance risks. See the
s e c t i o nh e a d e d‘ ‘ R i s kM a n a g e m e n ta n dO p erations’’ for further details on our risk
management and internal control. In addition, we carefully manage our balance sheet by
maintaining our gearing ratio at a level wh ich we consider to be appropriate to meet our
funding needs and comply with the PRC laws and regulations while maximising the return
to Shareholders through balancing our debt financing and equity financing. See ‘‘Financial
Information — Liquidity and Capital Resources — Capital Management’’ for further
details on our gearing ratios during the Track Record Period. See ‘‘Financial Information
— Key Financial Ratios’’ for detailed analysis of our capital adequacy ratio and liquidity
r a t i od u r i n gt h eT r a c kR e c o r dP e r i o d .
We have established diversified funding channels. During the Track Record Period, we
mainly obtained fundings from several sources , namely (i) interest-bearing loans; (ii)
automobile finance lease arrang ements; (iii) factoring of finance lease receivables; and (iv)
asset-backed securities issued by a financial in stitution. We carefully assess various funding
options available in the market and select appropriate funding channel by taking into
account the cost of funds, the financing ratio, duration of the loan and the time required for
the approval of funds. In addition, we received equity investments from our Shareholders as
equity financing. Accordingly, we have been capable of securing sufficient equity and debt
financing to meet our funding needs.
The following table sets out the breakdown of our proceeds from borrowings by
funding source for the years/period indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Interest-bearing loans 294,705 46.1 384 ,598 32.9 359,146 26.8 238,494 35.6
Within one year 203,357 31.8 313,492 26.8 197,901 14.8 56,396 8.4
Between one and two years — — 7,582 0.6 24,830 1.9 35,280 5.3
Between two and four years 91,348 14.3 63,524 5.5 136,415 10.1 146,818 21.9
Automobile finance lease arra ngement 315,688 49.4 710,057 60.7 940,931 70.3 406,843 60.7
Within one year 19,680 3.1 — — — — — —
Between one and two years 30,873 4.8 9,518 0.8 124,519 9.3 6,467 1.0
Between two and four years 265,135 41.5 700,539 59.9 816,412 61.0 400,376 59.7
Finance lease receivables factoring 28, 480 4.5 30,000 2.6 38,247 2.9 24,791 3.7
Asset-backed securities — — 44,260 3.8 — — — —
Total 638,873 100.0 1,168,915 100. 0 1,338,324 100.0 670,128 100.0
Our weighted average effective interest rate of the total outstanding borrowings per
annum remained relatively stable at 8.5%, 8.5%, 8.6% and 8.5% as at 31 December 2020,
2021, 2022 and 30 June 2023, respectively.
BUSINESS
–2 2 2–


--- page 232 ---
Interest-bearing loans
We obtained interest-bearing loans from ba nks and financial institutions, including
automaker-affiliated financial institutions , and from certain individuals in the PRC during
the Track Record Period. As at 31 December 2020, 2021, 2022 and 30 June 2023, our
outstanding interest-bearing loans amo unted to RMB658.4 million, RMB516.7 million,
RMB407.3 million and RMB530.9 million, respec tively. Such interes t-bearing loans bore
fixed interest rate ranging from approximately 4.3% to 14.4% per annum. Some of these
loans were secured by pledging our owned office premises and owned automobiles.
According to CIC, fundings from automaker-affi liated financial institutions are one of the
common sources of financing for third party RAFLCs. Our Directors believe that obtaining
fundings from automaker-affiliated financi al institutions allow us to maintain good
relationships with automakers and to repay the outstanding amounts by instalments for
better management of our cash flow. We also obta ined fundings from certain individuals in
the PRC for the year ended 31 December 2022 and the six months ended 30 June 2023 as
arrangements with them are generally more fl exible and require fewer securities. For
instance, other than personal guarantees, our individual lenders typically do not require
securities such as automobile mortgages or t rade receivable pledges which are common in
loan arrangements with other types of fund ing providers, allowing more flexibility in
obtaining fundings. Our Directors confirm that we had not encountered any difficulties in
obtaining financing from other Independent Third Party financial institutions during the
Track Record Period and up to the Latest Practicable Date.
The following table sets out the breakdown of our proceeds from interest-bearing loans
by type of funding providers for the years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Automaker-affiliated financial
institutions 81,271 34,631 60,691 70,125
Banks 30,021 51,786 51,626 15,195
Other financial institutions 183,413 298,181 212,830 143,173
Individuals
(Note) — — 34,000 10,000
Total 294,705 384,598 359,146 238,494
BUSINESS
–2 2 3–


--- page 233 ---
Note: There were three individuals who provided f unding to us during the year ended 31 December 2022
and the six months ended 30 June 2023. One of the individuals was one of the shareholders of our
Supplier B. The other two individuals are one of our executive Director’s acquaintances who are
also Independent Third Parties. The three indi vidual fund providers had idle cash and were
looking for a stable return of interest on their idl e cash. The interest rate of these loans was within
the range of 9.0% and 12.8%, which is within the range of 4.3% and 14.4% for the interest we
paid to banks. As both the purposes of providing l oans to us and the interest rate charged to us
had no difference from other funding sources, as advised by our PRC Legal Advisers, we treated
the loans from the three individuals the same as other loans. Our Directors confirm that the
negotiations of the terms of our fundings and purchases from Supplier B were conducted on an
individual basis and the terms of transaction s with Supplier B are similar to those transactions
with our other financiers or suppliers. Supplier B w as also our customer, mainly business-end
customer of our third party automobile aftermar ket service providers, during the Track Record
Period, to which our Group provided automobile-r elated promotion services. For more details of
Supplier B, please refer to ‘‘Business — Our Supplie rs and Procurement’’. To the best knowledge
and belief of our Directors, Supplier B and its ulti mate beneficial owners are Independent Third
Parties.
The following table sets out a summary of the salient terms of the typical
interest-bearing loans we obtained from (i) auto maker-affiliated financial institutions; (ii)
banks; (iii) other financial institutions; and (iv) individuals in the PRC during the Track
Record Period:
Automaker-affiliated
financial institutions Banks
Other financial
institutions Individuals in the PRC
Effective interest rate Ranging from
approximately 6.2% to
10.5% per annum
Ranging from
approximately 4.3% to
14.4% per annum
Ranging from
approximately 3.6% to
14.4% per annum
Ranging from
approximately 10.0% to
12.8% per annum
Loan purpose Typically expressed for purchase of automobiles May or may not be specified
Duration 36 to 48 months 6 to 36 months 1 to 45 months 12 to 24 months
Securities Typically may include:
1. Personal guarantee
2. Vehicle mortgage
3. Property mortgage
Typically may include:
1. Personal guarantee
2. Vehicle mortgage
3. Deposit pledge
Typically may include:
1. Personal guarantee
2. Trade receivable
pledge
Typically may include:
1. Personal guarantee
Representations and
warranties
We may represent that we have the requisite civil c apacity to enter into and perform our obligations
under the agreements, and that for such purpos es, we have obtained all necessary approvals,
permissions and authorisations . Where applicable, we may also undertake to use the proceeds in
accordance with the relevant use provisions of the agreements. Under agreements with certain
automaker-affiliated financial institutions, we also undertake to take out various vehicle insurance with
the approval of the lender.
Penalties The agreements may set forth the additional interest rates if we default on our payments or if we fail to
use the proceeds accordingly to rele vant provisions of the agreements (in cluding without limitation the
loan purpose provision , where applicable).
Early repayments The agreements may state whether early repayment i s permitted, whether any extra charge is payable by
us for such early repayment, and the conditions and steps we should satisfy and undertake to terminate
the agreements
Transferability Lenders are typically entitled to transfer its rights
to third parties
Lenders may or may
not be entitled to
transfer its rights to
third parties
Lenders are typically
not entitled to transfer
i t sr i g h t st ot h i r d
parties
BUSINESS
–2 2 4–


--- page 234 ---
Besides providing interest-bearing loans to our Group and a managerial position held
by our non-executive Director, Ms. Xu Rui ( 徐睿), in an institutional lender of our Group,
Company B, to the best knowledge of our Directors after making all reasonable enquiries,
each of the institutional/individual lenders of our Group during the Track Record Period
has no past or present relationship (business, employment, family, financing or otherwise)
with and is independent from our Company, its subsidiaries, our Directors and senior
management and their respective associates and our Shareholders, except for (i) two
shareholders, namely Ms. Qiu Hui* ( 邱暉) and Mr. Lin Dachun* ( 林大春), and one
shareholder, Mr. Guo Hongzhi* ( 郭洪志), of an institutional lender of our Group, Fujian
Pingtan Tiansha, have indirect interests in our Company’s shareholding through Charming
Tulip Holdings Limited and Southern Fortune, respectively; (ii) one institutional lender of
our Group, Company B, has indirect interest in our Company’s shareholding through
Brown Oak; (iii) one shareholder, Mr. Lin Dachun* ( 林大春), of the institutional lender,
Fujian Pingtan Tiansha, has indirect interest in our Company’s shareholding through
Charming Tulip Holdings Limited, is also a shareholder of another institutional lender of
our Group; and (iv) one institutional lender of our Group, Company A, was one of the
automobile finance providers whom we cooperated with as set out in ‘‘Our Business Model
and Operation — (A) Automobile retail an d finance — Cooperation with automobile
finance providers’’ in this section.
Automobile finance lease arrangements
During the Track Record Period, we obtained funding from different independent
financial institutions through automobile sa le-leaseback arrangement, with effective
interest rate ranging from approximat ely 5.2% to 13.0% per annum. Under this
arrangement, we obtained funding throug h selling automobiles owned by us along with
all the associated rights to the financial inst itutions. We would then lease the automobiles
back from the financial institutions by paying monthly lease payments within the lease term
plus handling fee. At the end of the lease term under both automobile finance lease
arrangements, upon our fulfilment of all payment terms, the ownership of the automobiles
will be transferred to our Group. As confirmed by our PRC Legal Advisers, our sales of
automobiles under finance lease were not subject to restrictions as such sales were sub-lease
in nature, rather than re-sale, which did not violate any restrictions in our sale-leaseback
agreements with the financial institutions and for some of the sale-leaseback agreements
signed earlier with the financial institutions that specified sub-lease was forbidden, we have
obtained consent letters from all the financial institutions and confirmed that we are not
restricted to the sales of automobiles under finance lease. For the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, 3,604, 6,463, 11,805 and 5,782
automobiles were involved in such sale-leaseback arrangements respectively. The increase in
such sale-leaseback arrangem ents for the year ended 31 December 2022 was primarily due
to we lowered the amount of borrowings with term of one year and below, and increased the
amount of borrowings with longer term, such as sale-leaseback funding arrangement, to
better align the terms and schedule of our borrowings with our finance lease income.
BUSINESS
–2 2 5–


--- page 235 ---
Key terms of our automobile finance lease arrangements with funding providers
include the followings:
Principal and lease
payment:
The agreements set out the principal amount which is
typically the aggregate price of procuring the automobiles
concerned less initial payment and fees (if any). The
agreements also set out the sum payable by us in respect
of each repayment period.
Risk allocation: The agreements typically spell out the risk allocation in
respect of loss or damage to the automobile concerned
during the term of the finance lease, together with the steps
that the parties shall take in such circumstances.
Ownership upon expiry
of lease:
The agreements typically provide that upon expiry of the
finance lease and due performance of all our obligations
thereunder, we may obtain ownership of the automobiles
concerned either automatically or through payment of a
nominal consideration.
Insurance: The agreements typic ally set out the minimum types of
vehicle-related insurance which our customers shall take out
throughout the term of the finance lease.
Guarantee: The agreements are typically backed up by credit
enhancement measures, including guarantees, receivables
pledges and vehicle mortgages.
Representations and
warranties:
We may represent that all approvals, permissions and
authorisations have been obtained for the signing and
performance of the finance lease arrangement. Under
sale-leaseback arrangements, we may also represent that
we have full ownership of the automobiles concerned prior
to the sale pursuant to such arrangements and that no third
party has any right over such automobiles.
Penalties: The agreements may provide for the penalties and steps
which the automobile supplier may take if we default on any
payment or otherwise breach the agreement.
Our Directors believe that this method of financing is beneficial to our Group because
we can raise funds while maintaining flexible control of assets that are valuable to our
business operations.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our outstanding balance
towards the financial institutions under sale-leaseback arrangement amounted to
RMB472.3 million, RMB821.7 million, RMB1,258.6 million and RMB1,284.2 million
respectively.
BUSINESS
–2 2 6–


--- page 236 ---
During the Track Record Period, our Supplier H and Supplier C provided automobile
finance lease arrangements to us. Supplier H was also one of our five largest funding
providers, namely Company E, during the Track Record Period. Other than providing
fundings to our Group through automobile finance lease arrangements as disclosed in the
paragraph headed ‘‘Our Lenders and Fundin g Capabilities — Our five largest funding
providers’’ in this section and the above, to the best knowledge of our Directors after
making all reasonable enquiries, each of the financial institutions under the automobile
finance lease arrangements during the T rack Record Period had no past or present
relationship (business, employment, family, financing or otherwise) with and is independent
of our Company, its subsidiaries, our Directors and senior management and their respective
associates and our Shareholders.
Factoring of finance lease receivables
During the Track Record Period, we had factored our finance lease receivables to
independent factoring institutions, with effective interest rate ranging from approximately
9.2% to 11.0% per annum. For the years ended 31 December 2020, 2021, 2022 and the six
months ended 30 June 2023, we factored our finance lease receivables amounting to
RMB35.8 million, RMB42.0 million, RMB51.5 million and RMB31.1 million in return for
proceeds of RMB28.5 milli on, RMB30.0 million, RMB38.2 million and RMB24.8 million,
respectively. Our outstanding balance towa rds the independent factoring institutions
amounted to RMB25.3 million, RMB27.7 million, RMB47.5 million and RMB42.8 million
as at 31 December 2020, 2021, 2022 and 30 June 2023, respectively.
Key terms of our factoring arrangements wi th independent factoring institutions
include the followings:
Term: Usually one year.
Type of factoring: We typically factor our rights under automobile finance
leases with our customers, which include mainly lease
payments and other sums receivable by us under such
agreements and our ancillary rights.
We typically enter into factoring arrangements with
recourse, pursuant to which we agree to repurchase all
factored but uncollected receivables from the independent
factoring institutions if such receivables could not be
collected in full by or if a sum equivalent could not be
paid to such institutions by a specified date.
Principal: The agreements typica lly set out a percentage limit whereby
the amount advanced to us on a certain occasion shall not
exceed such portion of the receivables factored on that
occasion. The agreements ma y also provide for a limit in
respect of the aggregate amount advanced to us thereunder.
Interest rate and fees: The agreements specify the interest rate and fees payable in
connection with the factoring arrangement.
BUSINESS
–2 2 7–


--- page 237 ---
Guarantee: The agreements are typically backed up by credit
enhancement measures, including guarantees and vehicle
mortgages.
Representations and
warranties:
We may represent that the und erlying transactions are
within our usual course of busi ness, all factored receivables
originate from genuine, lawful and bona fide sale or
provision of goods or services, and that we have
performed all our obligations under the underlying
transactions.
Penalties: The agreements may provide for the penalties if we default
on any interest or fee payment, fail to repurchase the
receivables in accordance with relevant provisions of the
agreements or otherwise breach the agreement.
To the best knowledge of our Directors after making all reasonable enquiries, each of
the factoring institutions of our Group during the Track Record Period had no past or
present relationship (business, employment, family, financing or otherwise) with and is
independent from our Company, its subsidiaries, our Directors and senior management and
their respective associates and our Shareholders.
Asset-backed securities
During the year ended 31 December 2021, we tr ansferred our finance lease receivables
amounting to RMB59.1 million to a trust fir m, Sinolink Securities Company Limited, in
exchange for proceeds amountin g to RMB44.3 million, while the trust firm issued securities
backed by these finance lease receivables throug h a trust plan to investors for subscription.
The table below sets out the key terms of our asset-backed securities arrangements with
the trust firm:
Principal and
backed assets
: The trust firm purchases our underlying assets, which in
particular, include the claims that our Group has towards
our automobile lessees and relevant security interests
attached to the claims.
Payment and
repurchase
: If the finance lease receivables do not generate sufficient
funds to meet the payment obligations of the trust, our
Group needs to make up for the shortfall of the payment
obligations in full from our own funds. Our Group also
needs to repurchase finance lease receivables which do not
satisfy the requirements of the trust firm throughout the
trust plan.
Replacement and
redemption
: The trust firm has the right to require our Group to replace
the underlying assets which are unqualified or have no
payment record with other eligible assets, or to directly
redeem such unqualified underlying assets. The default rate
of unqualified assets shall be restricted to 5%.
BUSINESS
–2 2 8–


--- page 238 ---
Our five largest funding providers
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, the proceeds obtained from our five largest funding providers in each year during the
Track Record Period were RMB489.0 millio n, RMB862.1 million, RMB781.3 million and
RMB545.9 million, representing 76.5%, 70. 6%, 58.4% and 81.0% of our total proceeds
obtained from funding providers, respectivel y. During the Track Record Period, we worked
with various funding providers to maintain diverse funding sources. We do not rely on any
single source of funding and we regularly adjust our borrowings according to our
operational needs. The following tables set out the details of our five largest funding
providers during the Track Record Period:
For the year ended 31 December 2020
Rank Funding provider
Background and
financial scale
Nature of
funding source
Year of
commencement
of relationship
with our Group
Approximate
interest rate per
annum
Proceeds
from
borrowings
Percentage
of total
proceeds
from
borrowings
% RMB’000 %
1 Company A
(Note 1) A financial institution
headquartered in
Guangzhou, with
registered capital of
approximately
RMB1,175 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2019 9.6–10.3 243,095
(Note 4)
37.9
2 Company B (Note 2) A financial institution
headquartered in
Beijing, with registered
capital of
approximately
RMB2,671 million
Interest-bearing
loan
2017 7.8–10.9 77,228 12.1
3 Beijing Hyundai Auto
Finance Co. Ltd.*
(北京現代汽車金融有限
公司)
(Note 3)
An automaker affiliated
finance lease company
headquartered in
Beijing
Interest-bearing
loan
2018 9.5–10.5 73,981 11.6
4 Company C A financial institution
headquartered in
Fujian, with registered
capital of
approximately
RMB180 million
Interest-bearing
loan
2020 12.0 57,278 9.0
5 Company D An automaker affiliated
finance lease company
headquartered in
Guangzhou, with
registered capital of
approximately
RMB1,000 million
Automobile
finance lease
arrangement
2019 10.0 37,449 5.9
Total 489,031 76.5
BUSINESS
–2 2 9–


--- page 239 ---
For the year ended 31 December 2021
Rank Funding provider
Background and
financial scale
Nature of
funding source
Year of
commencement
of relationship
with our Group
Approximate
interest rate per
annum
Proceeds
from
borrowings
Percentage
of total
proceeds
from
borrowings
% RMB’000 %
1 Company A
(Note 1) A financial institution
headquartered in
Guangzhou, with
registered capital of
approximately
RMB1,175 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2019 9.2–9.8 412,831 33.8
2 Company B
(Note 2) A financial institution
headquartered in
Beijing, with registered
capital of
approximately
RMB2,671 million
Interest-bearing
loan
2017 7.2–9.5 166,315 13.6
3 Company C A financial institution
headquartered in
Fujian, with registered
capital of
approximately
RMB180 million
Interest-bearing
loan
2020 12.0 112,283 9.2
4 Company E
(Note 4) An automaker affiliated
finance lease company
headquartered in
Wuhan, with registered
capital of
approximately
RMB15,600 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2018 7.1–11.0 87,975 7.2
5 Company F An automaker affiliated
finance lease company
headquartered in
Tianjin, with registered
capital of
approximately
RMB1,070 million
Automobile
finance lease
arrangement
2018 10.8–10.9 82,737 6.8
Total 862,141 70.6
BUSINESS
–2 3 0–


--- page 240 ---
For the year ended 31 December 2022
Rank Funding provider
Background and
financial scale
Nature of
funding source
Year of
commencement
of relationship
with our Group
Approximate
interest rate per
annum
Proceeds
from
borrowings
Percentage
of total
proceeds
from
borrowings
% RMB’000 %
1 Company E
(Note 4) An automaker affiliated
finance lease company
headquartered in
Wuhan, with registered
capital of
approximately
RMB15,600 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2018 7.1–13.4 254,846 19.0
2 Company G
(Note 1) A financial institution
headquartered in
Nanjing, with
registered capital of
approximately
RMB4,000 million
Automobile
finance lease
arrangement
2022 8.6–8.8 189,331 14.2
3 Company A
(Note 1) A financial institution
headquartered in
Guangzhou, with
registered capital of
approximately
RMB1,175 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2019 9.2 154,211 11.5
4 Company B
(Note 2) A financial institution
headquartered in
Beijing, with registered
capital of
approximately
RMB2,671 million
Interest-bearing
loan
2017 6.7–10.9 117,781 8.8
5 Company F An automaker affiliated
finance lease company
headquartered in
Tianjin, with registered
capital of
approximately
RMB1,070 million
Automobile
finance lease
arrangement
2018 10.8 65,153 4.9
Total 781,322 58.4
BUSINESS
–2 3 1–


--- page 241 ---
For the six months ended 30 June 2023
Rank Funding provider
Background and
financial scale
Nature of
funding source
Year of
commencement
of relationship
with our Group
Approximate
interest rate per
annum
Proceeds
from
borrowings
Percentage
of total
proceeds
from
borrowings
% RMB’000 %
1 Company G
(Note 1) A financial institution
headquartered in
Nanjing, with
registered capital of
approximately
RMB4,000 million
Automobile
finance lease
arrangement
2022 8.6 227,986 33.8
2 Company H An automaker affiliated
finance lease company
headquartered in
Beijing, with registered
capital of
approximately
RMB19,960 million
Automobile
finance lease
arrangement
2019 7.5–10.0 168,577 25.0
3 Company I A financial institution
headquartered in
Shanghai, with
registered capital of
approximately
RMB600 million
Interest-bearing
loan
2022 12.0 55,828 8.3
4 Company E An automaker affiliated
finance lease company
headquartered in
Wuhan, with registered
capital of
approximately
RMB15,600 million
Interest-bearing
loan and
automobile
finance lease
arrangement
2018 9.0–9.7 47,719 7.1
5 Company J A financial institution
headquartered in
Shanghai, with
registered capital of
approximately
RMB500 million
Interest-bearing
loan
2023 7.1–7.3 45,772 6.8
Total 545,882 81.0
BUSINESS
–2 3 2–


--- page 242 ---
Notes:
1. The proceeds from borrowings of RMB212.3 mil lion, RMB412.8 million and RMB154.2 million
during the Track Record Period were for the arra ngement through cooperation with Company A,
and nil, nil, RMB189.3 million and RMB228.0 mi llion with Company G during the Track Record
Period, which was borrowed by our referred customers who would use the proceeds to fully pay the
purchase price of automobiles to us with the condition that the automobiles will be pledged to
Company A and Company G by us until the relevant borrowings were fully settled. Details of the
automobile finance lease arrangement are set out in the paragraph headed ‘‘Our Business Model and
Operation — Cooperation with automobi le finance providers’’ in this section.
2. To the best knowledge of our Directors, Company B held 45% equity interests in a company which
held the entire issued share ca pital of Wanhe Jinhua. Wanhe Jinhua is the executive partner and
general partner of Shanghai Jili Enterprise Man agement Partnership (Limited Partnership) ( 上海霽
礫企業管理合夥企業（有限合夥）), which held the entire issued capital of Brown Oak, which holds
approximately 8.77% of our issued Shares immediat ely upon completion of the Global Offering and
the Capitalisation Issue.
3. Beijing Hyundai Auto Finance Co. Ltd.* ( 北京現代汽車金融有限公司)( ‘ ‘Beijing Hyundai ’’) was also
our customer for the years ended 31 December 2020 and 2021, to which our Group provided other
automobile-related services. Revenue from Be ijing Hyundai for the years ended 31 December 2020
and 2021 amounted to approximately RMB0.3 mi llion and RMB0.1 million , respectively. Our
Directors confirm that the negotiations of th e terms of our fundings from and sales to Beijing
Hyundai were conducted on an individual basis and the terms of transactions with Beijing Hyundai
are similar to those transactions with our other fi nanciers or customers. To the best knowledge and
belief of our Directors, Beijing Hyundai and its ultimate beneficial owners are Independent Third
Parties.
4. Company E was also our supplier H for the years ended 31 December 2021, 2022 and the six months
ended 30 June 2023. The total transaction value with Company E as our supplier was RMB46.7
million, RMB50.2 million and RMB7.3 million for the years ended 31 December 2021, 2022 and the
six months ended 30 June 2023. Our Directors conf irm that the negotiations of the terms of our
fundings and purchases from Company E were cond ucted on an individual basis and the terms of
transactions with Company E are similar to t hose transactions with our other financiers or
suppliers. To the best knowledge and belief of our Di rectors, Company E and its ultimate beneficial
owners are Independent Third Parties.
As our automobile retail and finance business and automobile operating lease business
are capital intensive, we require and obtain funding on a rolling basis. It is our strategy to
diversify our sources of funding to allow flexi bility in capital management. Our Directors
confirm that, during the Track Record Period and up to the Latest Practicable Date, we had
not encountered any difficulties in obtaining financing in general. Our PRC Legal Advisers
are of the view that we had complied with all th e applicable laws, rules and regulations in
the PRC in relation to our debt financing from each of the funding channels for our
business operations during the Track Record Period and up to the Latest Practicable Date.
BUSINESS
–2 3 3–


--- page 243 ---
Events of default
Our financing agreements with our lenders contain a number of covenants,
undertakings, restrictions and default provisions. Examples of major covenants,
undertakings and restrictions that may trigger default provisions include:
. failure to make the repayment of the loan in a timely manner;
. infringement of the lessor’s ownership of the leased properties; and
. recession in our business operations which the lender may deem to affect our
capacity to repay the debt.
Under certain finance lease agreements between us and the financial institutions, we
are not allowed to transfer, sublease, use or otherwise dispose of the automobiles leased
back from the financial institutions without their consents. In the event that we transfer or
sublease such automobiles to our customers in the course of our business without consents,
the financial institutions may terminate the finance lease agreements and deem the
outstanding loan amounts be immediately due, and we may be liable for the loss suffered by
the financial institutions.
As advised by our PRC Legal Advisers, in respect of the subsisting finance lease
agreements containing the aforesaid restrict ions, we have obtained written confirmations or
verbal confirmation through interviews from t he relevant financial institutions from which
consents were required to be sought according to the agreements, confirming that it (i) does
not and will not consider our Group to be in breach of the restrictive clause by subleasing or
transferring the automobiles to our customers in the course of our business and (ii) will not
make any claim against us. As such, our PRC Legal Advisers are of the view that the
financial institutions will not claim against us for the breach of the relevant restrictive
clause and the risk of our Group being made liable for the breach is remote.
During the Track Record Period, and as at the Latest Practicable Date, none of our
lenders had claimed default against us under any of the provisions in the financing
agreements and we had not breached any of the provisions that could result in any event of
default under such financing agreements.
OUR DEBT MANAGEMENT
As our business develops, we expect our level of debt to increase due to the nature of
our business. We have strictly complied, and w ill continue to comply the applicable law and
regulations to ensure that the level of our risk assets is maintained at a reasonable level,
such that our level of risk assets will comp ly with the requirements stipulated by the
relevant PRC laws and regulations. See ‘‘Re gulatory Overview — Laws and regulations on
finance lease industry’’ for further details.
BUSINESS
–2 3 4–


--- page 244 ---
We have systematic procedures for the approval of our financing plans. Based on
assessment of our business needs through communications among different departments,
cash flow forecast and review on market c onditions, our procurement department
formulates and submits financing request to our finance department. Our capital
management department will then analyse different financing plans to determine the
suitable financing method to secure working capital for our business operations.
We have also devised the following strategies to manage our level of debt:
. Determining a reasonable level of debt on an annual basis;
. Determining the most appropriate timing for borrowing;
. Arranging appropriate means of funding and planning proportional debt
repayment structure; and
. Diversifying our funding sources.
The proceeds from the Global Offering will increase our funding for expanding our
operations. Our Directors believe that through our Group’s debt management measures and
strategies, we can ensure that we have suffici ent working capital to meet our business needs
and repay our debts promptly when they fall due, and effectively limit our exposure to
liquidity risk.
Liquidity risk management
Liquidity risk refers to the risk that we encounter difficulty in raising funds through
financing facilities or the inability to sell our financial assets quickly to meet the payment
obligations to our creditors a s such obligations fall due.
Maturity profile of our assets and liabilitie s may not be the same. Our funding strategy
aims to avoid any significant gap between the maturity profile of assets and liabilities and to
diversify our sources of funding to minimize our liquidity risk. For details of our liquidity
risk management, please refer to the section headed ‘‘Risk Management and Operations —
Operational Risk Management — Liqu idity risk’’ in this prospectus.
Liquidity gap is defined as the difference between financial assets and financial
liabilities based on contractual undiscounted cash flows. We had positive net liquidity gaps
for the categories of between one and two yea rs and between two and five years as well as
the overall position (including on demand and less than one year) as at 31 December 2020,
31 December 2021 and 31 December 2022. However, we had a negative net liquidity gap for
the category of on demand and less than on e year of RMB268.1 million, RMB132.5 million,
RMB74.7 million and RMB32.8 million as at 3 1 December 2020, 202 1, 2022 and 30 June
2023, respectively. For details of the calculation, please refer to the section headed
‘‘Financial information — Capital Management — Liquidity’’ in this prospectus.
BUSINESS
–2 3 5–


--- page 245 ---
Maturity gap is calculated by subtracting borrowings under the automobile retail and
finance segment from finance lease receivables. We had positive maturity gaps for
categories of between one and two years and between two and five years as well as the
overall position (including on demand and less than one year) as at 31 December 2020, 31
December 2021, 31 December 2022 and 30 June 2023. However, we had a negative maturity
gap for the category of on demand and less than one year of RMB87.3 million, RMB86.0
million, RMB89.4 million and RMB59.2 millio n as at 31 December 2020, 2021, 2022 and 30
June 2023, respectively. For details of the cal culation, please refer to the section headed
‘‘Financial information — Capital Management — Liquidity’’ in this prospectus.
As majority of our automobile purchases for our automobile retail and finance were
funded by our borrowings, these automobiles were recorded as inventories before they were
sold, which were classified as non-financial ass ets. However, the borrowings related to these
unsold automobiles were recorded as finan cial liabilities, which caused the negative
liquidity gap and negative maturity gap in the category of on demand/less than one year.
According to CIC, cash flow mismatch wit h negative net liquidity gap and negative
maturity gap is an industry norm in the automobile finance leasing industry.
Our negative net liquidity gap and negative maturity gap for the category of ‘‘on
demand/less than one year’’ do not indicate that we have a liquidity issue. Set out below is
further information relating to our liquidity position:
(i) our automobiles under inventories category that were not pledged amounted to
approximately RMB65.8 million, RMB74.5 million, RMB80.4 million and
RMB46.2 million as at 31 December 20 20, 2021, 2022 and 30 June 2023,
respectively. As automobile s are not financial assets, they are not included in the
calculation of the net liquidity gap. These automobiles are ready for sale; and
(ii) our automobiles under inventories category that were pledged amounted to
approximately RMB80.3 million, RMB73.7 million, RMB117.2 million and
RMB86.5 million as at 31 December 20 20, 2021, 2022 and 30 June 2023,
respectively. These automobiles are not fin ancial assets and, thus, not included in
the calculation of liquidity gap. In the extreme case, we can surrender the
automobiles to settle part of our current liabilities.
In addition, we had unutilised facilities o f approximately RMB3,991.1 million as at 31
August 2023.
OUR CUSTOMERS
Due to the nature of our businesses, we serve a large number of customers, including (i)
individual customers mainly for automobile retail and finance business, and automobile
operating lease business; and (ii) business-en d customers for other automobile-related
services, mainly consisting of third party insurance providers and third party automobile
aftermarket service providers. We do not have any major customers in terms of revenue
contribution.
BUSINESS
–2 3 6–


--- page 246 ---
Our five largest customers during t he Track Record Period accounted for
approximately 3.2%, 1.6%, 2.1% and 1.4% of our total revenue for the years ended 31
December 2020, 2021, 2022 and the six months en ded 30 June 2023, respectively. All of our
five largest customers are Independent Third Parties. None of our Directors, their close
associates or any Shareholders (which to the knowledge of our Directors owns more than
5.0% of the Shares) has any interest in any of our five largest customers that are required to
be disclosed under the Listing Rules.
For our automobile retail and finance business, our customers are mainly individuals
within the age group of 20 to 40 years looking for non-luxury automobiles and e-hailing
drivers looking to purchase e-hailing vehic les in the PRC. The table below sets out a
summary of the key terms of the typical finance lease agreements, which we (as lessor)
entered with our customers (as lessees):
Term: Typically ranging from two to four years.
Title of the automobile
under the lease:
Our customer agrees that we may mortgage the automobile
but we shall compensate our customer if such pledge affects
the right to use the automobile by our customer. The title of
the automobile will be transferred to our customer upon
completion of the finance lease agreement and settlement of
all payables under the lease.
Use of the automobile: Our customer shall not use the automobile for illegal
purpose. For e-hailing vehicle, our customer shall only use
the automobile for the purpose of providing e-hailing
services.
Monitoring of the
automobile:
Our customer agrees to the installation of GPS tracking
devices on the leased automobile.
Insurance: Our customer agrees to purchase the compulsory traffic
accident liability insurance and commercial insurance.
Lease payment: Our customer shall make an initial payment to us at the
commencement of the lease and a monthly payment during
the term of the lease.
Default provision: If our customer fails to pay any lease payment or fails to
perform any of its obligations under the lease, we shall have
the right to demand prompt payment in full of the lease
receivables, terminate the lease agreement, repossess the
automobile and claim for the loss we suffer.
Dispute resolution: First through negotiation and if no consensus could be
reached, legal proceedings at a court in a jurisdiction where
we are located or where the lease agreement is executed.
BUSINESS
–2 3 7–


--- page 247 ---
In the above table, the key terms of a typical finance lease agreement which we entered
with our customers are generally in line with those of comparable RAFLCs in the PRC.
For our automobile operating lease business, our customers are primarily individual
customers looking for automobile rental se rvice and e-hailing drivers looking to rent
e-hailing vehicles in the PRC. The following table sets out a summary of the key terms of
the typical automobile operating l ease agreements with our customers:
Term: For passenger vehicles, ranging from a few days to three
years. For e-hailing vehicle s, ranging from six months to
one year.
Title: The ownership of the leased automobile remains with us.
Use of the automobile: Our customer shall not use the automobile for illegal
purpose. For e-hailing vehicle, our customer shall only use
the automobile for the purpose of providing e-hailing
services.
Maintenance of the
automobile:
We shall be responsible for the repair and maintenance of
the lease automobile.
Under certain operating lease arrangement for passenger
vehicles, if there is a breakdown of the leased automobile,
which is not due to any accident nor any fault on the
customer, we shall make available a replacement vehicle for
their use.
Insurance: We bear the cost of insurance for all operating lease vehicles
throughout the lease term.
Lease payment: Our customer shall make monthly or quarterly payments
during the term of the lease as determined by our Group.
For a lease period of less than one month, our customer
shall make a security deposit of RMB3,000.
Default provision: If our customer fails to pay any lease payment or fails to
perform any of its obligations under the lease, we shall have
the right to demand prompt payment in full of the lease
receivables, terminate the lease agreement, repossess the
automobile and claim for the loss we suffered.
Dispute resolution: First through negotiation and if no consensus could be
reached, legal proceedings at a court in which we are
located.
BUSINESS
–2 3 8–


--- page 248 ---
OUR SUPPLIERS AND PROCUREMENT
Our suppliers mainly consist of (i) auto deal ers which supply us with automobiles for
our automobile retail and finance business and operating lease business; and (ii) insurance
and other service providers. Our other suppliers also include GPS component
manufacturers which supply us GPS components. Our business is driven by the needs of
our customers. From time to time, customers’ preferences for different automobile brands
and models change. As a result, during the Track Record Period, we worked with different
suppliers to find the best offerings and we adju sted our procurement strategy and execution
plans to meet the needs of our customers. The change in composition of our top five largest
suppliers during the Track Reco rd Period typically reflected the changes of our customers’
needs.
Our procurement team adopts a systematic approach to strategically select appropriate
suppliers which match our business needs. We formulate procurement plans mainly on a
monthly basis based on sales review and collection of feedbacks from sales outlet managers.
We also formulate yearly, quarterly and temporary procurement plans to align our
automobiles inventories with our business plans. To ensure that we provide automobiles
which are of a promised quality to our customers while managing our purchase costs at the
same time, our procurement team will purcha se automobiles based on market research,
latest industry trend, quality feedbacks fro m our sales team, and the supplier’s pricing
policy. We also evaluate our suppliers from time to time to ensure that these suppliers are
suitable for cooperation taking into account past cooperation experience and track record.
Our Directors confirmed that during the Track Record Period, we did not experience
any significant shortage or delay in supply mainly due to our strategy of procuring multiple
brands and models of automobiles. In terms of automobile warranties, supply of parts and
product recalls which fall into automobile manufacturers’ obligations, our Directors
confirmed that all the new automobiles sold by our Group have the same rights as those
sold by their respective automobile official dealers.
In addition, we have entered into framework agreements with a number of suppliers,
where we enjoy bulk purchase discount for purchasing an agreed quantity of automobiles
on an annual basis. Further, some of our automobile suppliers allow us to pay the full
purchase price after the delivery of automobiles. Since we purchase all of our automobiles
in the PRC, in accordance with the Provisions on the Liabilities for the Repair,
Replacement and Return of Household Automotive Products ( 家用汽車產品修理、更換、
退貨責任規定), sellers of household automobiles such as our Group are entitled to seek
compensation from the manufacturers or other dealers of household automobiles if the
liability is attributable to the fault o f the manufacturers or other dealers.
BUSINESS
–2 3 9–


--- page 249 ---
The following table sets out a summary of the key terms of the procurement
agreements with our major automobile suppliers during the Track Record Period:
Purchase price: The agreements set out the purchase price of the
automobiles we intend to procure. Some agreements also
provide for a price reduction mechanism pursuant to which
the supplier may decide to lowe r the market guidance price
of the automobiles concerned after signing.
Payment terms: We are generally required to settle an upfront payment of up
to approximately 30% of the total contractual amount
within a specified time after signing. The remaining
purchase price may be payable by us or by the third party
financial institutions as agreed by the suppliers before or
after the delivery of automobiles.
Delivery: The suppliers are gen erally required to deliver the
automobiles to our premises or other places designated by
us at their cost.
Quality and safety: The automobiles sup plied shall be new and shall satisfy the
relevant national, industry and/or manufacturer’s quality
standards. Some agreements al so require the supplier to give
warranties on the safety of the automobiles under normal
use and that such automobiles do not have any latent safety
issue.
Representations and
warranties:
In respect of agreements where we obtained a discounted
purchase price due to the granting of national or local
subsidisation, we undertake to comply with all requirements
in connection therewith and to compensate the supplier for
any loss arising from our failure to comply with such
requirements.
After-sales services: The suppliers are g enerally required to provide after-sale
services, including maintenance and repair services, within a
certain time or mileage limit, or otherwise in accordance
with the manufacturer’s warranty policies.
Minimum purchase
commitment:
There is no minimum purchase commitment requirement.
Renewal and
termination:
Each of the agreements contain its respective renewal and
termination clause. We ar e not obliged to renew the
agreements and can terminate the agreements under the
respective renewal and termination clauses in each of the
agreements.
BUSINESS
–2 4 0–


--- page 250 ---
Penalties: Some agreements specif y the penalties if we default on our
payment obligations or if we refuse to take delivery of the
automobiles without valid reason, or if the supplier fails to
deliver the automobiles in accordance with the provisions of
the agreement.
For the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, transaction amounts with our five largest suppliers in each year during the Track
Record Period were RMB236.4 million, RMB364.5 million, RMB394.9 million and
RMB267.6 million, representing 62.9%, 54.5% , 49.1% and 65.2% of our total transaction
amount with suppliers respectively. For the years ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023, transaction amounts with our largest supplier were
RMB80.2 million, RMB108.0 million, RMB1 62.5 million and RMB105.9 million,
representing 21.4%, 16.2%, 20.2% and 25.8% of our total transaction amounts with
suppliers, respectively. All of our five largest s uppliers are Independent Third Parties. None
of our Directors, their close associates or any Shareholders (which to the knowledge of our
Directors owns more than 5.0% of the Shares) has any interest in any of our five largest
suppliers that are required to be disclosed under the Listing Rules.
Our Directors confirmed that during the Track Record Period, we did not experience
any breach of the key clauses of the afo rementioned framework agreements.
Our Directors confirmed that during the Track Record Period, the Group adopted the
practice of referring the product recalls and p roduct return request from our customers to
the respective automobile manufacturers. We ar e not responsible for any liability originated
from product recalls and product return and, thus, no respective provision was provided
during the Track Record Period.
We adopted the practice of referring our customers’ complaints on the quality issue of
the leased automobiles or any other issues related to the leased automobiles to the
corresponding automobile manufacturers directly during the Track Record Period.
We have adopted a set of customer complaint policy and procedures to handle
customer complaints during the Track Record Period, which contains the procedures of
collecting complaints from the customers, inve stigating on the issue raised by the customers
and providing feedbacks to our customers.
During the Track Record Period, our Directors confirmed that our Group had not
received from our customers any complaints with a material impact on our business
operation.
BUSINESS
–2 4 1–


--- page 251 ---
Our five largest suppliers
The following tables set out the details of our five largest suppliers during the Track
Record Period:
For the year ended 31 December 2020
Rank Supplier
Principal business
and financial scale
Major products or
services procured
by us
Year of
commencement
of relationship
with our
Group Credit terms
Payment
method
Transaction
amount
Percentage
of total
transaction
amount with
suppliers
RMB’000 %
1 Supplier A Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB212
million
Automobiles 2017 15% or 20% to be paid as
initial payment and the
remaining 85% or 80% to
be paid within five days
after confirmation of
delivery and vehicle
inspection
Bank transfer 80,157 21.4
2 Supplier B Sales of automobile and
provision of after-sales
services
Four private companies under
one legal person with
registered capital of
approximately RMB50
million, RMB10 million,
RMB10 million and RMB
10 million, respectively
Automobiles 2017 25% to be paid as initial
payment within 95 days of
execution of contract and
the remaining 75% to be
paid after confirmation of
delivery and vehicle
inspection/Full payment
within five days of
execution of contract/1.5%
to be paid as initial
payment and the remaining
98.5% to be paid after
confirmation of delivery
and vehicle inspection/10%
to be paid within 10 days
of execution of contract
and the remaining 90% to
be paid within seven days
after confirmation of
delivery and vehicle
inspection
Bank transfer 42,309 11.2
3 Supplier C Sales of automobile and
provision of after-sales
services
A private company with a
registered capital of
approximately RMB500
million
Automobiles 2019 20% to be paid within five
days of execution of
contract and the remaining
80% to be paid within 20
days after the initial
payment
Bank transfer 42,095 11.2
4 Supplier D Sales of automobile and
provision of after-sales
services
Two private companies under
one group, one with
registered capital of
approximately RMB30
million and RMB11
million, respectively
Automobiles 2014 20% to be paid as initial
payment within five days
of execution of contract
and the remaining 80% to
be paid within seven days
after confirmation of
delivery and vehicle
inspection/10% to be paid
as initial payment and the
remaining 90% to be paid
after confirmation of
delivery and vehicle
inspection
Bank transfer 38,144 10.1
5 Supplier E Sales of automobile and
provision of after-sales
services
Subsidiaries under a company
listed on the Main Board
of the Stock Exchange,
China Yongda Automobile
Services Holdings Limited
(stock code: 3669), with a
total revenue of
approximately RMB68,201
million for the financial
year 2020
Automobiles 2015 20% to be paid as initial
payment within seven days
of execution of contract
and the remaining 80% to
be paid after confirmation
of delivery and vehicle
inspection
Bank transfer 33,727 9.0
Total 236,432 62.9
BUSINESS
–2 4 2–


--- page 252 ---
For the year ended 31 December 2021
Rank Supplier
Principal business
and financial scale
Major products or
services procured
by us
Year of
commencement
of relationship
with our
Group Credit terms
Payment
method
Transaction
amount
Percentage
of total
transaction
amount with
supplier
RMB’000 %
1 Supplier B Sales of automobile and
provision of after-sales
services
Four private companies under
the control of one legal
person with registered
capital of approximately
RMB50 million, RMB10
million, RMB10 million
and RMB 10 million,
respectively
Automobiles 2017 Full payment within 45 days
after the issuance of
invoices/10% to be paid as
initial payment and the
remaining 90% to be paid
after the issuance of invoices
Bank transfer 108,027 16.2
2 Supplier A Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB139
million
Automobiles 2017 10% to be paid as initial
payment within 7 days of
execution of contract and the
remaining 90% to be paid
within 15 days after the
issuance of invoices
Bank transfer 85,933 12.8
3 Supplier F Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB10
million
Automobiles 2019 20% to be paid as initial
payment after execution of
contract and the remaining
80% to be paid after the
issuance of invoices
Bank transfer 63,728 9.5
4 Supplier E Sales of automobile, provision
of after-sale services and
automobile lease services
Subsidiaries under a company
listed on the Main Board
of the Stock Exchange,
China Yongda Automobile
Services Holdings Limited
(stock code: 3669), with a
total revenue of
approximately RMB77,917
million for the financial
year 2021
Automobiles 2015 20% to be paid as initial
payment within 7 days of
execution of contract and
the remaining 80% to be
paid after the confirmation
of delivery/Issue of invoice
within 7 days of execution
of contract followed by full
payment before delivery
Bank transfer 55,320 8.3
5 Supplier D Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB30
million
Automobiles 2014 Approximately 10% to be paid
as initial payment and the
remaining 90% to be paid
with 10 days after
confirmation of delivery and
inspection of vehicle
Bank transfer 51,525 7.7
Total 364,533 54.5
BUSINESS
–2 4 3–


--- page 253 ---
For the year ended 31 December 2022
Rank Supplier
Principal business
and financial scale
Major products or
services procured
by us
Year of
commencement
of relationship
with our
Group Credit terms
Payment
method
Transaction
amount
Percentage
of total
transaction
amount with
supplier
RMB’000 %
1 Supplier B Sales of automobile and
provision of after-sales
services
Four private companies under
one legal person with
registered capital of
approximately RMB50
million, RMB10 million,
RMB10 million and
RMB10 million,
respectively
Automobiles 2017 Full payment within 45 days
after the issuance of
invoices/10% to be paid as
initial payment and the
remaining 90% to be paid
after the issuance of
invoices
Bank transfer 162,451 20.2
2 Supplier G Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB100
million
Automobiles 2021 Approximately 5% or 10% to
be paid as initial payment
and the remaining to be
paid after the issuance of
invoices
Bank transfer 77,034 9.6
3 Supplier A Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB139
million
Automobiles 2017 10% to be paid as initial
payment within 2 days of
execution of contract and
the remaining 90% to be
paid within 10 days after
the issuance of invoices
Bank transfer 60,753 7.6
4 Supplier H Sales of automobile and
provision of after-sales
services
Two private companies under
one legal person with
registered capital of
approximately RMB1
billion and RMB16 billion
respectively
Automobiles 2021 Full payment within 15 days
before purchase order
Bank transfer 50,181 6.2
5 Supplier I Sales of automobile and
provision of after-sales
services
A private company with
registered capital of
approximately RMB10
million
Automobiles 2021 20% to be paid as initial
payment and the remaining
to be paid within 35 days
after the issuance of
invoices
Bank transfer 44,504 5.5
Total 394,924 49.1
BUSINESS
–2 4 4–


--- page 254 ---
For the six months ended 30 June 2023
Rank Supplier
Principal business
and financial scale
Major products or
services procured
by us
Year of
commencement
of relationship
with our
Group Credit terms
Payment
method
Transaction
amount
Percentage
of total
transaction
amount with
supplier
RMB’000 %
1 Supplier B
(Note) Sales of automobile and
provision of after-sales
services
Automobiles 2017 Full payment within 20 days
after the issuance of
invoices/10% to be paid as
initial payment and the
remaining 90% to be paid
after the issuance of
invoices
Bank transfer 105,935 25.8
Two private companies under
one legal person with
registered capital of
approximately RMB13
million and RMB10 million,
respectively
2 Supplier J
(Note) Sales of automobile and
provision of after-sales
services
Automobiles 2019 20% to be paid as initial
payment and the remaining
80% to be paid after the
issuance of invoices
Bank transfer 90,809 22.1
Two private companies under
one legal person with
registered capital of
approximately RMB50
million and RMB10 million,
respectively
3 Supplier K Sales of automobile Automobiles 2022 Full payment within 90 days
with minimum 5% as
initial payment
Bank transfer 25,137 6.1
A private company with
registered capital of
approximately RMB100
million
4 Supplier I Sales of automobile and
provision of after-sales
services
Automobiles 2021 Full payment within 30 days
after the issuance of
invoices
Bank transfer 24,454 6.0
A private company with
registered capital of
approximately RMB10
million
5 Supplier L Sales of automobile and
provision of after-sales
services
Automobiles 2021 15% to be paid as initial
payment and the remaining
85% to be paid within 10
days after the issuance of
invoices
Bank transfer 21,302 5.2
Two private companies under
one legal person with
registered capital of
approximately RMB10
million and RMB1 million,
respectively
Total 267,637 65.2
Note: Supplier B transferred its interests in two privat e companies to Supplier J on 19 April 2023 and 21 April
2023, respectively. As at 30 June 2023, the two private companies were subsidiaries under Supplier J.
BUSINESS
–2 4 5–


--- page 255 ---
Major suppliers which are also our customers
Three of our major suppliers, namely Suppl ier A, Supplier B and Supplier H, were also
our customers, mainly business-end customers of our third party automobile aftermarket
service providers, during the Track Record Period, to which our Group provided
automobile-related promotion services. The amount of revenue from these suppliers for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023 as
our business-end custome rs were approximately RMB 0.3 million, RMB0.5 million,
RMB1.9 million and RMB0.01 million, respectiv ely, representing 0.03%, 0.04%, 0.2%
and 0.002% of our total revenue for the re spective years/period, respectively.
Our Directors confirm that negotiations of the terms of our purchases from and sales
to all the above mentioned entities were conducted on an individual basis and the terms of
transactions with all these entities are similar to those transactions with our other customers
or suppliers. To the best knowledge and belief of our Directors, all the abovementioned
entities and their ultimate beneficial owners are Independent Third Parties.
Major suppliers which are also our funding providers
During the Track Record Period, Supplier C and Supplier H (Company E) were also
our funding providers. The amount of transaction value from Supplier C and Supplier H for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023 were
approximately RMB42.1 million, RMB55.7 million, RMB50.2 million and RMB7.3 million,
respectively, accounted for 11.2%, 7.7%, 6.2% and 1.8% of our total transaction value with
our automobile suppliers for the respective years, respectively.
Our Directors confirm that negotiations of the terms of our purchases from and our
debt financings from all the above mentioned entities were conducted on individual basis
and the terms of transactions with all these ent ities are similar to those transactions with
our other suppliers or funding providers. To the best knowledge and belief of our Directors,
all the abovementioned entities and their ultim ate beneficial owners are Independent Third
Parties.
INVENTORY MANAGEMENT
Our inventories consist of new and repossessed automobiles for our automobile retail
and finance business and vehicle telematics equipment. We monitor our inventories from
time to time and strive to maintain an optimal inventory level of automobiles. We keep
moving record of our inventory levels with the aid of our IT systems and physical records.
We conduct daily inspection of the physical condition of our inventories and monthly
physical inventory stocktake to ensure the accuracy of our inventory record. The inventory
information will be recorded in our IT syste m and reviewed by our senior management on a
monthly basis. Our procurement team is required to formulate procurement plans based on
the inventory record to ensure that we are a ppropriately stocked with inventory. We
formulate procurement plans mainly on a monthly basis based on sales reviews and
collection of feedbacks from sales outlet man agers. We also formulate yearly, quarterly and
ad hoc procurement plans to align our automobile inventories with our business plans. We
normally select automobiles by taking into a ccount factors including popularity of the
BUSINESS
–2 4 6–


--- page 256 ---
brand, price and market ability of the automobiles. Similarly, our sales and marketing team
is required to launch marketing campaigns for promoting the sales of certain automobile
models to adjust the inventory level for long aged inventories which are aged over 90 days.
Our product development team perform weekly sales analysis and identify such long aged
inventories. We also hold meetings to disc uss inventory related issues and formulate
solutions and provide suggestions for the procurement plans. If necessary, we will also
transfer automobiles between sales outlets a ccording to their respective inventory levels.
We assess our provision for inventories at the end of each month. For details of our
inventory provision policy, please refer to note 2.11 of the accountant’s report set out in
Appendix I to this prospectus. Our automobile inventory provision amounted to RMB5.8
million, RMB7.8 million, RMB6.1 million a nd RMB5.6 million as at 31 December 2020,
2021, 2022 and 30 June 2023, respectively.
As at 31 December 2020, 2021, 2022 and 30 June 2023, our automobile inventories
amounted to RMB146.1 million, RMB148 .2 million, RMB197.6 million and RMB131.3
million, respectively. The following tables se t out the top five automobile brands of our
automobile inventories in terms of inventory balance as at 31 December 2020, 2021, 2022
and 30 June 2023 :
As at 31 December 2020
Rank Brand
Inventory
balance
Number of
automobiles
Percentage
of inventory
balance
to total
inventory
balance
RMB’000 %
1J E T O U R ( 捷途) 20,849 229 14.3
2V o l k s w a g e n ( 上汽大眾) 15,814 144 10.8
3B u i c k ( 上汽通⽤別克) 12,084 145 8.3
4 Dongfeng Nissan ( 東風日產) 10,674 96 7.3
5C H E R Y ( 奇瑞汽車) 9,565 128 6.5
Total 68,986 742 47.2
BUSINESS
–2 4 7–


--- page 257 ---
As at 31 December 2021
Rank Brand
Inventory
balance
Number of
automobiles
Percentage
of inventory
balance
to total
inventory
balance
RMB’000 %
1 AEOLUS ( 東風風神) 18,192 223 12.3
2V o l k s w a g e n ( 上汽大眾) 13,087 138 8.8
3T r u m p c h i ( 廣汽傳褀) 11,534 148 7.8
4B u i c k ( 上汽通⽤別克) 10,525 141 7.1
5H y u n d a i ( 北京現代) 9,978 107 6.7
Total 63,316 757 42.7
As at 31 December 2022
Rank Brand
Inventory
balance
Number of
automobiles
Percentage
of inventory
balance
to total
inventory
balance
RMB’000 %
1 AEOLUS ( 東風風神) 23,138 297 11.7
2 Dongfeng Nissan ( 東風日產) 21,356 218 10.8
3V o l k s w a g e n ( 上汽大眾) 16,466 157 8.3
4H y u n d a i ( 北京現代) 14,397 159 7.3
5B A I C M o t o r ( 北京汽車) 12,565 133 6.4
Total 87,922 964 44.5
BUSINESS
–2 4 8–


--- page 258 ---
As at 30 June 2023
Rank Brand
Inventory
balance
Number of
automobiles
Percentage
of inventory
balance
to total
inventory
balance
RMB’000 %
1 AEOLUS ( 東風風神) 15,830 219 12.1
2B A I C M o t o r ( 北京汽車) 10,522 126 8.0
3C H E R Y ( 奇瑞汽車) 9,677 141 7.4
4V o l k s w a g e n ( 上汽大眾) 8,460 86 6.4
5H y u n d a i ( 北京現代) 8,057 90 6.1
Total 52,546 662 40.0
We are subject to fluctuations in automobile market prices, however, the impact of
such fluctuations were not significant during the Track Record Period, mainly due to our
high inventory turnover and our flexibility to adjust our procurement plan and a wide
variety of choices in automobile brand and model.
The market prices of automobiles were fluctuant during the Track Record Period.
According to CIC, the automobile manufact urers may launch time-limited promotion
campaign to stimulate the sale volume.
The top five automobile brands held by our Group as at 30 June 2023 were AEOLUS
(東風風神), BAIC Motor ( 北京汽車), CHERY ( 奇瑞汽車), Volkswagen ( 上汽大眾)a n d
Hyundai ( 北京現代) .A c c o r d i n gt oC I C ,f o rt h ep e r i o df r o m3 0J u n e2 0 2 3t ot h eL a t e s t
Practicable Date, these top five automobile brands had not launched any promotion
campaign which could potentially lead to sign ificant price decrease. Therefore, we do not
foresee there will be any material downward price pressure on the major automobile brands
of which we held inventories as at 30 June 2023.
According to CIC, the impact of the price pr essure on our automobile purchase can be
limited, as we have a high inventory turnover and can procure new models to confront the
price fluctuations.
Our average inventory turnover days for our automobile finance lease business were 96
days, 54 days, 58 days and 53 days for the years ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023, respectively. As at 31 December 2020, 2021, 2022 and 30
June 2023, our inventories amounted to RMB1 42.0 million, RMB141.9 million, RMB193.6
million and RMB127.5 million, respectively.
See ‘‘Financial Information — Descri ption of Certain Items of Consolidated
Statements of Financial Position — Inventories’’ for further details.
BUSINESS
–2 4 9–


--- page 259 ---
MANAGEMENT OF AUTOMOBILES U NDER PROPERTY AND EQUIPMENT
Our automobiles for operating lease business and for our own use are included in
property and equipment. We formulate procurement plans of automobiles for operating
lease business mainly on a monthly basis prim arily based on the occupancy rate of vehicles
under operating lease, budget allocation and overall business development plan. We
normally select automobiles based on a series of factors including the popularity of the
model, price and marketability. During the operating lease period, customers can choose to
switch from the operating lease to the finance lease for the vehicles they rented. In such
cases, we will transfer the automobiles from the property and equipment to inventories.
When customers return the automobiles under operating lease at the end of the lease term,
we will inspect the condition of the automob iles to assess if such automobiles are under
good condition for further leasing. If the condition of the automobiles are deemed
unsuitable for leasing, we will dispose of such automobiles with reference to market prices.
During the Track Record Period, our disposal loss of automobiles under property and
equipment was RMB0.7 million, RMB4.2 million, RMB2.1 million and RMB2.5 million,
respectively.
The following tables set out the movement of net book amount of our automobiles
under property and equipment during the Track Record Period:
For the year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Opening net book amount 312, 055 398,052 324,096 342,766
Addition 169,578 50,538 206,018 222,801
Depreciation charge (71,793) (89,609) (86,845) (45,970)
Transfer to inventories (3,005) (9,022) (68,808) (40,374)
Disposal (8,783) (25,863) (31,695) (15,777)
Closing net book amount 398,052 324,096 342,766 463,446
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cost 501,913 511,206 530,963 661,630
Accumulated depreciation (103,861) (187,110) (188,197) (198,184)
Net book amount 398,052 324,096 342,766 463,446
BUSINESS
–2 5 0–


--- page 260 ---
As at 31 December 2020, 2021, 2022 and 30 June 2023, the number of automobiles for
operating lease business was 4,860, 5,000, 5,223 and 6,619, respectively, and the
corresponding aggregate n et book amount of the autom obiles was RMB390.9 million,
RMB317.8 million, RMB324.7 million and RMB447.6 million , respectively.
RESEARCH AND DEVELOPMENT
We have research and development capabilit ies and new technologies for our business
operation and risk management. In particular, we have developed an automobile
monitoring platform based on our understanding of the management characteristics of
automobile finance lease business. The automobile monitoring platform, through the GPS
tracking technology, provides various functions including the positioning of leased
automobiles, risk analysis through detecting v ehicle trajectory abnormality, vanishing
GPS signal and usage pattern of automobiles, and alarm system sending timely warning
messages to our system upon the detection of irregu lar activities. Once an irregular activity
is detected, our fieldwork team will take actions such as contacting the customers or onsite
tracking the leased automobiles to investigate. We believe the automobile monitoring
platform serves as an effective channel fo r us to monitor our leased automobiles from
different angles. We continue to develop our proprietary algorithms and data analytics
capabilities in our risk management system to screen, assess and manage credit risks during
pre-lease stage and post-lease stage. It enable s a bilateral flow of sta tistics and data between
our pre-lease credit risk management system and post-lease credit risk management system.
As at 30 June 2023, our research and development team had 19 staff members, most of
whom have completed a college education or a bove in computing sof tware, information
engineering or other related areas. Expenditu re on research and development activities is
recognised in the year/period in which it is i ncurred. For the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023, we incurred research and development
expenditures of RMB11.8 million, RMB13.4 million, RMB12.0 million and RMB5.2
million, of which RMB11.4 million, RMB11.3 million, RMB9.4 million and RMB4.4
million were capitalised, respectively.
Our Directors believe that our IT infrastruc ture is important to numerous aspects of
our business operations, including transaction processing, risk management and customer
services. Hence, we will continue to inve st in our research facilities and focus on
technological innovation.
RISK MANAGEMENT AND INTERNAL CONTROL
As a finance lease service provider, we are exposed to a variety of risks, namely credit
risk, operational risk and legal and compliance risk. We have developed a risk management
and internal control systems to address the r isks we are subject to. See the section headed
‘‘Risk Management and Operations’’ for further details.
In preparation for the Listing, we engaged an internal control consultant to evaluate
our internal control system. We have implemented the recommendations from the internal
control consultant to improve and enhance our internal control system.
BUSINESS
–2 5 1–


--- page 261 ---
The internal control consultant also performed follow-up reviews on the status of our
actions to address the findings in the abovementioned evaluation and reported that the
deficiencies identified have been remedied.
We have placed emphasis on data security and personal information protection, and in
view of the regulatory updates in respect of data security and personal information
protection, we have the following in ternal control policies in place:
. updated a series of internal control policies in November 2021, including
operating procedures for handling reports and complaints from our customers
and employees in relation to leakage of p ersonal information, formulated an
emergency response plan for information security emergencies, and developed an
information security management system and putting in place of related operating
procedures;
. amended the user agreements and the personal information protection and
privacy policies of our Taoqi APP, 52 C a rA P Pa n dG oZ i y o uA P Pi nM a r c ha n d
August 2022, with a view to stepping up the protection of users’ privacy, including
but not limited to providing users wi th enhanced access to their personal
information. Our PRC Legal Advisers confirm that the user agreements and the
personal information protection and privacy policies amended in March and
August 2022 are in compliance with relevant laws;
. in respect of the installation of GPS tra cking devices on the leased automobiles,
the user agreements of the Taoqi APP and 52 Car APP were updated in March
2022 to indicate that the Taoqi APP and 52 Car APP lessee will set the default
data collection mode to ‘‘no collection of data’’ but all APP users irrevocably
consent and authorise our Group to inquire GPS tracking data for internal use
only;
. updated a set of personal privacy data security management operating procedures
in November 2021 which includes access rights and password controls. Our
category-based access restrictions are formulated based on the position of the
employees and the departments where the employees are working in; and
. implemented a set of security training policy in November 2021 in respect of
personal data protection, which stipulated that regular training on a quarterly
basis should be provided for all employees as a reminder and update on personal
data protection and mandatory acknowle dgement of the collection of personal
data protection policy by all new employees should be required.
BUSINESS
–2 5 2–


--- page 262 ---
Based on the above measures, we are not required to enter into supplemental
agreements with customers in order to amend the terms of the user agreements signed
before March 2022 for the following reasons:
. the original agreements and policies have clearly stated that to provide better
service and with the development of business, these documents will be updated
from time to time and we will make public announcement before such updates
take effect on websites and APPs. If users continue to use such websites or APPs,
they will be deemed to agree upon the upd ated agreements. However, if those
agreements involve sensitive issues, such as biological recognition, whereabouts,
the consent of users should be specifically obtained; and
. these updates are made to optimise our personal information protection service
and do not constitute any material chang e of the users’ rights and obligations
compared with the original ones.
We have implemented a software management policy. The policy requires inspection of
our computers to be conducted at least annually to verify if there are any unauthorised
software installed on our computers. Only IT department staff has access rights to install
computer software on our computers. Under the recommendation of the internal control
consultant, we further enhanced the software management policy and required us to record
and maintain a list of software licenses owned by us and its respective users.
Having reviewed the existing internal con trol measures, the above internal control
measures, and the internal control review report prepared by the internal control
consultant, our Directors consider, and the Sole Sponsor concurs, that our internal
control measures are adequate and effective in preventing the unauthorised use of software.
To strengthen our internal control and ensure future compliance with the applicable
laws and regulations (including the Listing Rules) after the Listing, we have also adopted
the following additional internal control measures:
. our Board will continuously monitor, evaluate and review our internal control
system to ensure compliance with the applicable legal and regulatory requirements
and will adjust, refine and enhance our in ternal control system as appropriate;
. in February 2021, our Group designated a deputy general manager of the legal
affairs department to be responsible fo r the regular review of legal compliance;
. we arranged training for our employees to deepen their understanding of laws and
regulations;
. in April 2021, we engaged an external legal adviser to advise us on the relevant
rules and regulations; and
. we have appointed Quam Capital Limited as our compliance adviser pursuant to
Rule 3A.19 of the Listing Rules to provide advice to our Directors and
management team relati ng to the Listing Rules.
BUSINESS
–2 5 3–


--- page 263 ---
Laws and Regulations on Cybersecurity Review
China Cybersecurity Review Technology and Certification Center (CCRC, formerly
known as China Information Security Certification Center) undertakes network security
review technical support and certification work, according to Cybersecurity Review
Measures, which was promulgated by the CAC. The CAC is the rule-making authority and
the CCRC is responsible for undertaking the rules promulgated by the CAC.
On 16 November 2021, the Cyberspace Administration of China (the ‘‘ CAC’’), with
other governmental authorities, jointly issued the Cybersecurity Review Measures ( 《網絡安
全審查辦法》) (the ‘‘ Cybersecurity Review Measures ’ ’ ) ,w h i c hc a m ei n t oe f f e c to n1 5
February 2022. The Cybersecurity Review Measures provide that the procurement of
network products and services by critical information infrastructure operators ( 關鍵信息基
礎設施運營者) and the data processing activities carried out by network platform operators
(網絡平台運營者) that affect or may affect national security shall be subject to the
cybersecurity review by the CAC. Network platform operators holding personal
information of more than one million users seeking abroad public listing must apply for
a cybersecurity review as well. Critical inform ation infrastructure refers to any network
facilities and information systems in importa nt industries and fields that may seriously
endanger national security, national economy and people’s livelihood, and public interests
in the event that they are damaged or lose their functions or their data are leaked. As
advised by our PRC Legal Advisers, we do not hold or operate any of the abovementioned
properties, and the type of data we collect is mainly personal information, including our
customers’ names, dates of birth, ID numbers, addresses, phone numbers, account numbers,
passwords, etc., hence we will not be considere d as a critical information infrastructure
operator. However, there are no relevant laws and regulations to define ‘‘online platform
operators’’, hence it is uncertain whethe r we will be considered as an online platform
operator. Our Directors confirmed as at the Latest Practicable Date, we had approximately
0.27 million registered users in total on o ur 52 Car APP, Kuai Ya Car Rental, a WeChat
mini programme ( 快呀租⾞微信小程序), Taoqi APP and Go Ziyou APP, which is far less
than one million, and the PRC Legal Advisers advised that the Cybersecurity Review
Measures do not apply to the Group’s business. In addition, the CAC may also voluntarily
conduct the cybersecurity review if any netwo rk products and services and data processing
activities affect or may affect national security.
On 14 November 2021, the CAC released the Administration of Cyber Data Security
(Draft for Comments) ( 《網絡數據安全管理條例（徵求意見稿）》) (the ‘‘Draft Data Security
Regulations ’’, together with the Cybersecurity Review Measures, the ‘‘ Cybersecurity
Regulations ’’. The Draft Data Security Regulations cover a wide range of cyber data
security issues and govern the use of networks to carry out data processing activities, as well
as the supervision and management of cyber data security in the PRC. The Draft Data
Security Regulations are applicable to the use of networks to carry out data processing
activities, and the supervision and management of network data security in the PRC, as well
as several situations of overseas data proces sing activities that process personal and
organisational data of PRC. We conducted a verbal consultation with the CCRC on 15
December 2022 for further clarification. The interviewee opined that the cybersecurity
review will not apply to enterprises seeking public listings in Hong Kong.
BUSINESS
–2 5 4–


--- page 264 ---
As advised by our PRC Legal Advisers, since the Cybersecurity Review Measures do
not define ‘‘online platform oper ators’’, it is uncertain whether the Group will be considered
as an online platform operator. The Cybersecurity Review Measures also provide that to go
public abroad, an online platform operator who possesses the personal information of more
than one million users shall declare to the Office of Cybersecurity Review for cybersecurity
review. Our Directors confirmed that as at the Latest Practicable Date, we had
approximately 0.27 million registered u sers in total on our 52 Car APP, Kuai Ya Car
Rental, a WeChat mini programme ( 快呀租⾞微信小程序), Taoqi APP and Go Ziyou APP,
which is far less than one million, and our PRC Legal Advisers advised that the
Cybersecurity Review Measures do not apply to the Group’s business.
The internal control consultant has reviewed the Group’s general IT controls. The
Group has implemented an IT security management policy that has restrictions on logical
access and physical access. According to the IT security management policy, different access
rights are assigned to the staff based on their ro les and such assignments requires approval
from superiors, and the staffs’ accounts are password protected. Physical servers are
required to be installed in an access-controlled environment. Cloud servers are protected by
the service agreement between the vendor and the cloud service provider. The Group has
also obtained the Service Organization Control 3 report from the cloud service provider. As
advised by our PRC Legal Advisers and based on the internal control measures we have
taken, our Directors are of the view that our Group fulfils the requirement to establish
relevant data security mechanisms. According to the Cybersecurity Review Measures, the
Cybersecurity Review Measures shall apply to cr itical information inf rastructure operators
and online platform operators.
As confirmed by our Directors, as at the Lat est Practicable Date, we were not involved
in any investigations on the cybersecurity review made by the CAC, and we had not received
any inquiry, notice or warning, or been subject to any penalties or sanctions in such respect.
As advised by our PRC Legal Advisers, our Group’s relevant internet data protection
mechanism has been established. Our Directors confirmed that as at the Latest Practicable
Date, we had approximately 0.27 million registered users in total on our 52 Car APP, Kuai
Ya Car Rental, a WeChat mini programme ( 快呀租⾞微信小程序), Taoqi APP and Go
Ziyou APP, which is far less than one millio n users. In the event such number exceeds one
million in the future, according to the Cybers ecurity Review Measures and the Draft Data
Security Regulations, which would be effective at that time, there is a possibility that we
may be considered as ‘‘online platform operator’’ by the CAC, and thus need to apply for
cybersecurity review. According to the Cybersecurity Regulations, to file an application for
cybersecurity review, the operator shall submit a list of documents, including a written
declaration and an analysis report concerning the impact or possible impact on national
security, the procurement documents, and business agreements and/or IPO related
application documents, etc. As confirmed by our Directors, we are able to provide these
documents timely and accurately. In addition, the Cybersecurity Regulations do not require
the applicant to suspend the business until the completion of the cybersecurity review.
Therefore, as advised by our PRC Legal Advise rs, if the Cybersecurity Regulations takes
effect in the current form in the future, the Group does not have any obstacles in meeting
the requirements and comple ting the application timely.
BUSINESS
–2 5 5–


--- page 265 ---
Accordingly, our PRC Legal Advisers advised, and our Directors concur, that (i) our
Group would be able to comply with the Cyberse curity Regulations in all material aspects;
(ii) the Cybersecurity Regulations would not have any material adverse impact on our
business; and (iii) our Listing in Hong Kong will not give rise to national security risks
based on the factors set out in Article 10 of the Cybersecurity Review Measures, assuming
the Draft Data Security Regulations are impl emented in their current form. The PRC legal
advisers to the Sole Sponsor co ncur with the aforesaid view.
MARKET
Automobile retail and finance
According to the CIC Report, the total sales volume of non-luxury automobiles is
estimated to reach 25.8 million units in 2027, representing a CAGR of 4.6% from 2022 to
2027.
According to the CIC Report, the retail automobile finance lease services penetration
rates of both new and used automobiles of the United States, Germany and France were
approximately 38.0%, 25.5% and 23.5%, respectively. The penetration rate of retail
automobile finance lease services of both new and used automobiles in China, when
compared with the aforementi oned developed countries, was still at a relatively low level in
2022, indicating a strong growth potential an d is expected to reach approximately 5.4% in
2027.
The PRC’s direct finance lease market experienced significant growth from 2018 to
2022 in terms of loan volume. Such volume grew from 0.2 million units in 2018 to 0.3
million units in 2022, representing a CAGR of 11.1%. Driven by the benefit of lower down
payment and the expansion of e-hailing vehicle platform, the loan volume of direct finance
lease market is expected to reach 0.6 million units in 2027, representing a CAGR of 15.6%
from 2018 to 2022.
We are one of the offline third party RAFLCs among all the RAFLCs (i.e.
bank-affiliated, automaker or automobile deal er-affiliated, offline third party RAFLCs
and internet-backed third party RAFLCs). In terms of transaction volume of direct finance
lease, we ranked 4th and had market share of approximately 4.1% in the PRC in 2022. In
terms of transaction volume of retail automobile finance lease among all RAFLCs,
including both direct finance lease and sale-leaseback, we ranked 19th and had a market
share of approximately 0.7% in the PRC in 2022. Please refer to ‘‘Industry Overview —
Analysis of The Retail Automobile Finance and Retail Automobile Finance Lease Market
in China’’ for details.
BUSINESS
–2 5 6–


--- page 266 ---
Operating lease
The automobile operating lease market in the PRC has expanded at a fast pace over the
past years, and the market size has increased from RMB50.9 billion in 2018 to RMB63.4
billion in 2022, with a CAGR of 5.7%. With the development of e-hailing vehicle platforms,
the increasing spending on self-drive trips and the favourable policy reforms, the market
size of automobile operating lease market in China is projected to increase to RMB82.6
billion in 2027, representing a CAGR of 5.4% from 2022 to 2027.
E-hailing vehicles
According to CIC, more e-hailing platforms h ave begun to provide e -hailing services
and the overall demand of consumers for e-ha iling has been continuously increasing. The
market size of e-hailing vehicle platform mark et in terms of GMV is expected to increase at
a CAGR of 9.7% from RMB263.2 billion in 2022 to RMB419.0 billion in 2027.
Furthermore, CIC is of the view that more stringent regulations on the compliance of
e-hailing vehicles will drive an increasing dema nd for compliant e-hailing vehicles provided
by e-hailing vehicle service providers like us , having considered that the number of rides
with the required Transport Certificate for E-hailing vehicle* ( 網絡預約出租汽車運輸證)
and the necessary Driver License of E-hailing* ( 網絡預約出租汽車駕駛員證) only accounted
for approximately 70% of the tot al number of rides served by all e-hailing vehicle platforms
in 2022.
Our ability to compete against our competito rs is, to a significant extent, dependent on
our ability to distinguish our products and services from those of our competitors through
the following factors:
(i) we specialise in matching the supply of non-luxury automobiles with the demand
of our customers primarily in tier two, and tier three and below cities;
(ii) our extensive automobile service off erings provide tailored solutions for
customers’ different needs;
(iii) we have established an extensive sales network;
(iv) we have developed a risk management system;
(v) our centralised automobile procurement leads to cost advantage; and
(vi) we are led by a visionary and experienced management team.
Details of our competitive strengths are s et out in ‘‘Business — Our Competitive
Strengths’’ above.
BUSINESS
–2 5 7–


--- page 267 ---
Our Directors believe there is growth pot ential for automobile retail and finance
business and operating lease business and we will continue to strengthen our market
position in the competitive business environment.
See ‘‘Industry Overview’’ for further details on the competitive landscape of the
industries in which we operate.
INSURANCE
In accordance with the applicable PRC laws and regulations, the owner or manager of
an automobile operating on the roads within the PRC must apply for compulsory traffic
accident liability insurance. Pursuant to our standard finance lease contracts, our customers
must pay for and we will arrange the compulsory traffic accident liability insurance and also
the commercial insurance policies for the automobiles underlying our finance leases to
cover any loss or damage to such assets before the commencement of the finance lease term.
For a small portion of automobiles sold under finance lease, we bore the insurance cost for
a period of time, and our customers bore such insurance cost for the rest of the lease term.
We maintain compulsory traffic accident liab ility insurance and commercial insurance for
the automobiles underlying our operating leases. To effectively manage our operational
expenses, the costs of such insurance premiums are reflected on the periodic rental
payments paid by our operating lease customers.
Our Directors believe that our insurance coverage to be customary for businesses of
our size and type and is adequate with respect to our current business operations and the
availability of insurance products in the P RC. During the Track Record Period and up to
the Latest Practicable Date, we had not experienced any business interruptions which had a
material adverse effect on our business, nor had we submitted any material insurance claims
other than those arisen during our ordinary course of business operations.
INTELLECTUAL PROPERTY
As at the Latest Practicable Date, we had registered, or had applied for the registration
of, a number of intellectual property rights which, in the opinion of our Directors, are
material in relation to our business. Most notab ly, these include nine design patents related
to our GPS tracking devices for risk management control and 96 computer software
copyrights. See ‘‘Statutory and General Information — B. Information About our Business
— 2. Intellectual Property Rights of our Group’’ in Appendix IV to this prospectus for
further details on our intellectual property rights.
During the Track Record Period and up to the Latest Practicable Date, to the best
knowledge of our Directors after having made all reasonable enquiries, we did not have any
intellectual property infringement claims by third parties which had material impact on our
Group.
BUSINESS
–2 5 8–


--- page 268 ---
PROPERTIES
Owned Properties
As at the Latest Practicable Date, we owned four properties in the PRC which we use
as the premises of our sales outlets. As at the Latest Practicable Date, we had obtained all
title certificates for our owned properties. The following table sets out further details of the
properties owned by us as at the Latest Practicable Date:
No. Address Registered owner Description/usage
Approximate
gross land area
Approximate
gross floor area
1. Shop 01, 1st Floor, 2nd Building,
Junlin Dongcheng (originally Lijing
Feoso),No.16 Puqian Road, Gushan
Town, Jinan District, Fuzhou City,
Fujian Province, the PRC* ( 中國福建省
福州市晉安區鼓山鎮浦乾路16號君臨東
城小區（原山水麗景)2 # 1 層01店面)
XXF Group Commercial 17.8 sq.m. 60.2 sq.m.
2. Shop 07, 1st Floor, 3rd Building,
Junlin Dongcheng (originally Lijing
Feoso),No.16 Puqian Road, Gushan
Town, Jinan District, Fuzhou City,
Fujian Province, the PRC* ( 中國福建省
福州市晉安區鼓山鎮浦乾路16號君臨東
城小區（原山水麗景)3 # 樓1層07店面)
XXF Group Commercial 16.3 sq.m. 55.2 sq.m.
3. Shop 16, 1st Floor, 3rd Building,
Junlin Dongcheng (originally Lijing
Feoso),No.16 Puqian Road, Gushan
Town, Jinan District, Fuzhou City,
Fujian Province, the PRC* ( 中國福建省
福州市晉
安區鼓山鎮浦乾路16號君臨東
城小區（原山水麗景)3 # 樓1層16店面)
XXF Group Commercial 9.8 sq.m. 33.1 sq.m.
4. Shop 17, 1st Floor, 3rd Building,
Junlin Dongcheng (originally Lijing
Feoso),No.16 Puqian Road, Gushan
Town, Jinan District, Fuzhou City,
Fujian Province, the PRC* ( 中國福建省
福州市晉安區鼓山鎮浦乾路16號君臨東
城小區（原山水麗景)3 # 樓1層17店面)
XXF Group Commercial 13.4 sq.m. 45.4 sq.m.
As at 30 June 2023, we had no single property with a carrying amount of 15% or more
of our total assets, and on this basis, we are not required by Rule 5.01B of the Listing Rules
to include in this prospectus any valuation report. Pursuant to section 6(2) of the
Companies (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice (Chapter 32L of the Laws of Hong Kong), this prospectus is exempted from
compliance with the requirements of section 342(1)(b) of the Companies (Winding Up and
BUSINESS
–2 5 9–


--- page 269 ---
Miscellaneous Provisions) Ordinance in relation to paragraph 34(2) of the Third Schedule
to the Companies (Winding Up and Miscellaneous Provisions) Ordinance, which requires a
valuation report with respect to all o fo u ri n t e r e s t si nl a n do rb u i l d i n g s .
Leased Properties
As at the Latest Practicable Date, we had 16 9 leased properties located in Fuzhou,
Suzhou, Xiamen and various other cities in the PRC which serve as our sales outlets, staff
dormitories, offices and car park. As at the Latest Practicable Date, 135 lease agreements
had not been registered with the relevant reg ulatory authorities. See ‘‘Legal Compliance —
Non-compliance’’ in this section for further details. According to our PRC Legal Advisers,
a rental lease without registration will not in validate the lease agreement. Based on our
PRC Legal Advisers’ advice, we believe that the risks of being forced to withdraw from the
lease agreements without registration are remo te. With respect to the aforesaid leases, save
as to the Fuxing Property which is our principal place of business and headquarter, our
Directors confirmed that we are able to relocate the offices situated in 10 properties out of
the 135 properties to our headquarter and subsidiaries, and accommodate 12 sales outlets
out of the 135 properties in our local offices at no significant cost. Based on our market
research and as advised by CIC, for 52 sales outlets out of the 135 properties, our Directors
confirmed that there is sufficient supply of substitute properties available at reasonable
market prices; for the remaining 49 properties out of the 135 properties which are mostly
leased for the purposes of dormitories and car parks, each of a size of generally less than
120 sq.m., our Directors confirmed that there is sufficient supply of substitute properties
available at reasonable market prices. According to CIC and our own market research, the
overall potential costs (including removal co sts and renovation costs) to relocate the 135
properties, if required, are estimated at approximately RMB150,000. As advised by our
PRC Legal Advisers, our Group had not breached any lease agreement, therefore, no
penalty is accounted for in the total cost estimation. Our Directors are of the view, with the
support of CIC’s advice, that substitute properties are available in the market and the
relocation costs are not expected to be material.
Mr. Huang has undertaken to indemnify us for any unpaid amount, penalties, other
monetary damages costs and expenses incurred from or in connection with our failure to
register lease agreements with relevant PRC authorities in full amount prior to the Listing.
In the past, we had occupied the Fuxing Prope rty as offices without lease agreement at
nil consideration between 11 November 2018 and 31 January 2019 (the ‘‘ Rent-Free Period ’’).
The use of the Fuxing Property as offices was granted and approved in November 2018 by
the CPC Fuzhou City Jin’an District Committee Office ( 中共福州市晉安區委辦公室), which
is, according to our PRC Legal Advisers, the competent authority for granting such
approval. In April 2020, Fuzhou Fuxing Economic Development District Assets Operating
Development Co., Ltd. ( 福州福興經濟開發區資產運營開發有限公司) as the lessor and XXF
Group as the lessee, entered into a lease agreement relating to the Fuxing Property for a
term of six years starting from 21 January 2019 retrospectively at a monthly rent of
RMB133,050 (subject to adjustment according to the terms of the lease agreement).
Pursuant to such lease agreement, the rent would accrue from 1 February 2019 onwards.
Our Directors confirmed that we were granted the benefit of not paying any rent during the
BUSINESS
–2 6 0–


--- page 270 ---
Rent-Free Period as a measure to facilitate the establishment of presence of our Group in
the Fuxing Economic Development District. Ou r PRC Legal Advisers confirm that the lease
agreement is valid and Fuzhou Fuxing Economic Development District Assets Operating
D e v e l o p m e n tC o . ,L t d .(福州福興經濟開發區資產運營開發有限公司) has the capacity to
enter into the lease agreement as the lessor.
Mr. Huang has executed the Deed of Indemnity whereby he agreed to indemnify our
Company and each member of our Group against any c laims, penalties, losses, liabilities or
damages resulting from or in connection with the occupation of the property without a lease
agreement on or before the date on which dea lings in the Shares first commence on the
Main Board.
Properties leased from connected persons
Six of our leased properties have been leased from connected persons of our Company,
which we have entered into the following tenancy agreements with Shenghui Logistic Group
Co., Ltd. ( 盛輝物流集團有限公司)( ‘ ‘Shenghui Logistic ’’), our connected person by virtue of
being an associate of Mr. Liu Wei, our non-executive Director, and Mr. He Xiaowu ( 何曉
武), our connected person by virtue of being an associate of Mr. Huang, our chairman,
executive Director and one of our substantial Shareholders, pursuant to Chapter 14A of the
Listing Rules. As confirmed by our Directors, none of these properties is individually
material to our operation. Details of such Tenancy Agreements are set out as follows:
No.
Date of tenancy
agreement Property address Parties
Approximate
gross floor
area
Total
rent Term
Use of
premises
(sq.m.) (RMB’000)
1 28 August 2015 Unit 01/02/03/05/06/07/08/09/
10/11/12/13, 13/F, Shenghui
Guoji, No. 169 Qianheng
Road, Jinan District,
Fuzhou City, Fujian
Province, the PRC* ( 中國福
建省福州市晉安區前橫路169
號盛輝國際第十三層 01/02/
03/05/06/07/08/ 09/10/11/12/
13單元)
Landlord:
Shenghui
Logistic
Tenant:
XXF Group
1,698.9 8,618 1 September 2015–
31 August
2021
(Note 1)
Office premises
2 1 March 2016 Units 05-06, 14/F, Shenghui
Guoji Building, No. 169
Qianheng Road, Jinan
District, Fuzhou City, the
PRC* ( 中國福州市晉安區前
橫路169 號盛輝國際大廈14層
05–06 單元)
Landlord:
Shenghui
Logistic
Tenant:
XXF Group
146.0 576.4 1 March 2016–
1A p r i l
2020
(Note 2)
Office premises
BUSINESS
–2 6 1–


--- page 271 ---
No.
Date of tenancy
agreement Property address Parties
Approximate
gross floor
area
Total
rent Term
Use of
premises
(sq.m.) (RMB’000)
3 1 August 2016 Unit located at northeast
corner, 14/F, Shenghui
Guoji, No. 169 Qianheng
Road, Jinan District,
Fuzhou City, Fujian
Province, the PRC* ( 中國福
建省福州市晉安區前橫路169
號盛輝國際第十四層東北角單
元)
Landlord:
Shenghui
Logistic
Tenant:
XXF Group
45.0 170 1 August 2016–
15 July 2020
(Note 3)
Office premises
4 1 May 2018 Unit 108, No. 1 Building,
Junlin Dongcheng (originally
Lijing Feoso), Gushan
Town, Jinan District,
Fuzhou City, Fujian
Province, the PRC* ( 中國福
建省福州市晉安區鼓山鎮君臨
東城社區（原山水麗景）1號樓
108 棟)
Landlord:
Mr. He Xiaowu
Tenant:
XXF Group
160.5 210 1 May 2018–
1 September
2021
(Note 4)
Staff
dormitories
5 5 September
2018
Unit 01–02, 08–13, 15/F,
Shenghui Guoji, No. 169
Qianheng Road,
Gushanzhen, Jinan District,
Fuzhou City, Fujian
Province, the PRC* ( 中國福
建省福州市晉安區鼓山鎮前橫
路169 號盛輝國際15層01–02 、
08–13 單元)
Landlord:
Shenghui
Logistic
Tenant:
XXF Group
1,153.7 4,354 1 October 2018–
31 August 2024
Office premises
6 5 September
2018, 5
August 2023
Unit 03–07, 15/F, Shenghui
Guoji, No. 169 Qianheng
Road, Gushanzhen, Jinan
District, Fuzhou City,
Fujian Province, the PRC*
(中國福建省福州市晉安區鼓
山鎮前橫路169 號盛輝國際
15層03–07 單元)
(Note 5)
Landlord:
Shenghui
Logistic
Tenant:
Taoqi Internet
181.0 1,919 1 October 2018–
31 August 2024
Office premises
In addition, certain car parking spaces have been leased from Ningde Yongsheng
Property Management Co., Ltd. ( 寧德市永盛物業管理有限公司)( ‘ ‘Ningde Yongsheng ’’),
which is wholly owned by Fuzhou Shenghui, and in turn owned as to approximately 4.48%
by Mr. Liu Wei, our non-executive Director, and approximately 95.52% by his father and
an associate of Mr. Liu Wei, and thus a connected person of our Company.
BUSINESS
–2 6 2–


--- page 272 ---
No.
Date of tenancy
agreement Property address Parties
Number of
car parking
spaces Total rent Term Use of premises
(RMB’000)
7 5 September
2018, 28
May 2021
Basement garage of Shenghui
Guoji, No. 169
Qianheng Road, Jinan
District, Fuzhou City,
Fujian Province, the PRC*
(中國福建省福州市晉安區前
橫路169 號盛輝國際地下車庫)
Landlord:
Ningde
Yongsheng
Tenant:
XXF Group
Taoqi Internet
20 or 16
(Note 6)
375.1 1 October 2018–
31 August 2024
Car parking
spaces
Notes:
1. The tenancy agreement was early terminated with effect from 31 August 2021 by mutual consent of
Shenghui Logistic and XXF Group.
2. The tenancy agreement was early terminated with effect from 1 April 2020 by mutual consent of
Shenghui Logistic and XXF Group.
3. The tenancy agreement was early terminated with effect from 15 July 2020 by mutual consent with
Shenghui Logistic and XXF Group.
4. The tenancy agreement was early terminated with effect from 1 September 2021 by mutual consent
of Mr. He Xiaowu and XXF Group.
5. Pursuant to the latest tenancy agreement dated 5 August 2023, we only rented Unit 07 at the
premises.
6. We rented 20 car parking spaces from September 2 018 to April 2021 and 16 car parking spaces from
May 2021 onwards.
The following table sets out the right-of-use assets recognised in relation to the above
properties leased from connected persons as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Shenghui Logistic 4,374 1,067 427 107
Mr. He Xiaowu 86 32 — —
Note: No right-of-use asset was recognised in respect of the car parking spaces leased from Ningde
Yongsheng as at 31 December 2020, 2021, 2022 and 30 June 2023, as these car parking spaces are
low-value assets according to IFRS.
These transactions were entered into before the Listing and were accounted as one-off
in nature under IFRS 16. If these transactions were entered into after the Listing, such
transactions would constitute connected transactions of our Group. Details of such
transactions are set out above in order to facilit ate potential investors to anticipate that we
BUSINESS
–2 6 3–


--- page 273 ---
have, before the Listing, entered into transactions which would otherwise be considered as
connected transactions should our Company be listed on the Stock Exchange at the time of
the relevant transactions.
Our Directors confirmed that the rents were on normal commercial terms determined
after arm’s length negotiations based on the prevailing market rates no less favourable to
those offered by Independent Third Parties for similar properties at comparable locations.
Our Group has been using the leased properties no. 3, 5, 6 and 7 as our offices and car
park. Having considered that the rent of the properties are comparable to the prevailing
market rates of comparable properties in the locality, and the additional renovation and
associated costs which we may incur if we move out of the properties and relocate to
another premises, our Directors consider that it is desirable and in the interests of our
Company and the Shareholders as a whole to continue using these properties as our offices
and car park.
EMPLOYEES
As at 30 June 2023, we had a total of 1,084 employees. The following table sets out the
breakdown of our employees by function as at 30 June 2023 :
Function(s)
Number of
employees
CEO office 16
Procurement, sales and marketing 726
Risk management and internal control 181
Finance and capital management 80
Human resources and administration 62
Research and development 19
Total 1,084
In addition to our employees as mentioned above, during the Track Record Period and
up to the Latest Practicable Date, we also ent ered into labour dispatch agreements with
independent labour dispatch providers. Under the labour dispatch agreements, we pay
dispatch fees to the labour dispatch providers, and they provide suitable workers for our
Group based on our business needs.
Under the relevant agreements, the labour dispatch providers are responsible for
making contributions to the social insurance, housing provident funds and other welfare
benefits in respect of the dispatched workers. There is no employment relationship between
us and the dispatched workers under the labour dispatch arrangements and the dispatched
workers are employed by the labour dispatch providers. As confirmed by our PRC Legal
Advisers, the arrangements with the labour dispatch providers during the Track Record
Period and up to the Latest Practicable Date were in compliance with the applicable PRC
laws and regulations in all material aspects.
BUSINESS
–2 6 4–


--- page 274 ---
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our total staff costs were RMB109.8 million, RMB120.5 million, RMB120.6 million
and RMB60.3 million, respectively, represent ing 14.6%, 10.3%, 10.6% and 10.0% of our
revenue during the respective year/period.
Employee Training
We highly value the contributions of our employees, and we believe skilled and
committed employees are the key to achieving our success. To ensure the top quality of our
employees at all levels, we place great empha sis on the training and development of our
employees. We have developed a systematic training system comprising of an e-learning
platform, internal seminars and management trainings to improve the essential
work-related skills of our employees. We also c ooperate with other external institutions
to host trainings and facilitate industry excha nge. We have established an internal training
programme which serves to improve and standardise the training activities and system for
our employees. We believe that by continuous ly evaluating and improving our training
system based on our accumulated industry experience, our employees are equipped with the
necessary knowledge and expertise to perform their duties.
We have also placed emphasis on data security and personal information protection. In
view of the regulatory updates in respect of data security and personal information
protection, we implemented a set of security training policy in November 2021 in respect of
personal data protection, which stipulates that regular training on a quarterly basis should
be provided for all employees as a reminder and update on personal data protection and
mandatory acknowledgement of the collection o f personal data protection policy by all new
employees should be required. To keep the e mployees updated with the latest industry
regulations, we arrange trainings for our employees to deepen their understanding of laws
and regulations as needed.
Employee Relations and Benefits
Our employees are mainly recruited by us t hrough online platforms or job fairs. We
believe we provide competitive remuneration packages and benefits (such as staff
dormitories) to solicit and retain talented ind ividuals. We also provide year-end bonus to
o u re m p l o y e e s ,a sw e l la ss h a r ei n c e n t i v ef o rour key management personnel. In addition,
we offer performance bonus subject to regula r performance appraisals. We believe the
aforementioned transparen t promotion mechanism can encourage our employees to
progress and develop continuously and contribute to the success of our Company.
We have also established an employee labour union in the PRC. Our labour union
represents the interests of our employees. The union also organises various activities for our
employees. We believe that we maintain a good w orking relationship with our employees.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any strikes or significant labou r disputes which materially affected our
operations.
BUSINESS
–2 6 5–


--- page 275 ---
We have conditionally adopted the Pre-IPO Share Option scheme and conditionally
adopted the Share Option Scheme. See ‘‘Statutory and General Information — D. Other
Information — 2. Pre-IPO Share Option Scheme ’’ and ‘‘Statutory and General Information
— D. Other Information — 1. Share Option Scheme’’, respectively in Appendix IV to this
prospectus for further details.
ENVIRONMENTAL, SOCIAL AN D CORPORATE GOVERNANCE
In view of the increasing risk from climate change, environmental protection is
regarded as an integral corporate responsibility at our Group, and our Group is dedicated
to lowering the environmental impact of all aspects of our business operations.
Environmental stewardship and corporate social responsibility are key parts of our
Group’s core growth philosophy, which, alon g with our focus on sustainability, diversity,
and public interests, shall generate value for our Shareholders. Accordingly, our Board has
adopted a extensive policy on ESG responsibilities (the ‘‘ ESG Policy ’’) in accordance with
the Listing Rules, which sets forth our cor porate social responsibility objectives and
provides guidance on practising corporate s ocial responsibility in our daily operations.
Compliance Requirement with ESG-related Laws
As advised by our PRC Legal Advisers, the ESG-related laws and regulations in the
PRC mainly consist of Environmental Protection Law of the People’s Republic of China ( 中
華人民共和國環境保護法), Law of the People’s Republic of China on the Protection of
Rights and Interests of Consumers ( 中華人民共和國消費者權益保護法), Labour Law of the
People’s Republic of China ( 中華人民共和國勞動法), Labour Contract Law of the People’s
Republic of China ( 中華人民共和國勞動合同法), Law of the People’s Republic of China
Against Unfair Competition ( 中華人民共和國反不正當競爭法) and Company Law of the
People’s Republic of China ( 中華人民共和國公
司法).
Our Directors confirmed that with respect to environmental-related and social-related
laws, we had not been subject to any materia l claim or penalty. As advised by our PRC
Legal Advisers, we have complied with all environmental-related and social-related laws in
the PRC.
With respect to governance-related laws, each entity in our Group has been duly
incorporated and validly exists as a company with limited liability and enterprise legal
person status under the PRC laws and the current articles of a ssociation and the business
license of each entity in the Group comply wi th applicable PRC laws and are in full force
and effect. Therefore, as advised by our PRC Legal Advisers, we have complied with all
governance-related laws in the PRC.
BUSINESS
–2 6 6–


--- page 276 ---
Governance Regarding ESG Risks
Our Board has overall responsibility for our Group’s sustainability strategy and
reporting, and we oversee sustainability issu es related to our Group’s operations, which
include legal compliance, anti-corruptio n measures, supply chain, product quality
assurance, human resources, and employee development. Our Board also plans to engage
an Independent Third Party to assess our Gro up’s performance regarding environmental
protection, climate change, as well as social and governance issues to give independent
advice.
Our Board has set up and established an ESG task force team in April 2023, consisting
of a representative from the human resources department as the team head, representatives
from the risk management department and finance leasing services department of our
Group as team members, and representatives from subsidiaries of our Group as supporting
staff and coordinators. The ESG task force tea m shall be handling all ESG issues that arise
in our Group’s operations and report to our Board directly. In addition to the
above-mentioned ESG aspects, the ESG task force team shall also be responsible for
ESG climate risk discussions and ensuring th at effective climate risk management is in
place. The ESG task force team shall set ESG and climate goals for our Board’s
consideration at the beginning of each financial year, during which it shall also review our
Group’s progress in achieving the goals of the preceding financial year. Additionally, the
ESG task force team shall convene meetings twice a year to bring ESG concerns to our
Board’s attention, as well as offer to our Board recommendations and solutions that can be
applied in our Group. Since its establishment and during the Track Record Period, the ESG
task force team had convened one meeting to dis cuss, among others, strategies in relation to
reducing various kinds of resource consumption and climate-related risks.
With respect to the management of ESG issues, our Group has adopted the
Environmental, Social and Governance Management Procedure to manage ESG risks and
to establish an internal control system, which adopts ISO14001 to manage, monitor and
improve its environmental performance. Furth ermore, the internal c ontrol system also gives
guidance on remedial actions which could be taken by the Group in response to ESG
incidents with reference to relevant laws and regulations.
Currently, our Group has not engaged any independent adviser to advise on our
workplace safety management, emissions standards and our Group’s compliance with
related ESG rules and regulations. However, our Directors confirmed that our Group
closely follows and monitors the latest requirements regarding ESG disclosure and
regulatory compliance.
BUSINESS
–2 6 7–


--- page 277 ---
Impact of Climate-related Issues and Opportunities
Our Directors are aware of the risks posed by global climate change on our Group.
Climate change has been of increasing concern to our Group as well as the automobile
industry as a whole for the foreseeable future. In response to that, our Group has
endeavoured to identify the risks and opportunities that climate change poses to our
business operations, along with corresponding strategies to mitigate risks and take
advantage of arising opportunities. The risks can be divided into two major categories:
physical risks and transition risks.
Our Directors believe that extreme weath er events brought about by climate change
pose multiple physical risks to our business. Unstable weather conditions may not only have
the potential of causing damage to our Group’s sales outlets, offices and inventories, but
may also disrupt logistics and lead to delays in the transportation of automobiles from
suppliers, potentially causing financial losses to our Group. As such, our Group has
formulated a number of strategies to mitigate d amages from these identified physical risks,
including buying wading insurance for our inventories, setting guidelines to exempt
employees from commuting to their workplaces under unstable weather, and incorporating
parts of the automobile purchasing procedures into our online website and various APPs.
In terms of transition risks, based on our assessment of the potential shift in the
market sentiment towards more environmenta lly friendly products, transition towards a
low-carbon economy and relevant changes in l aws and regulations, we believe that we may
suffer financial loss if customers associat e automobiles with air pollution and forego
purchasing automobile products or if the operation of fossil fuel-consuming automobiles is
prohibited. In order to mitigate damages from these identified transition risks, we have
formulated a number of strategies, such as to enhance the use of cleaner energy with the aim
of lowering the reputation risk and the financial risk from changes in market preference, to
expand our line-up of new energy vehicles through further procurement to our customers in
the future and to carry out extensive advertising campaigns and promotions as part of our
Group’s efforts of branding as a company with dedicated efforts to becoming
environmentally friendly.
Notwithstanding the abovementioned risks, our Group also endeavours to capture
these opportunities which may be brought about by the aforementioned changes. In
addition to our plans to offer additional electric automobiles for lease or purchase beyond
its current line-up, our Group had been operating a new energy car sharing business in
several cities in the Fujian Province of the PRC through our Go Ziyou APP since early
2018. While the new energy car sharing business operation had been suspended in July 2022,
our Group has begun transferring the new energy vehicles to our automobile retail and
finance lease business for better resource allocation and utilisation. By the end of 2022, our
new energy car-sharing automobiles had been disposed of or transferred to our automobile
retail and finance business.
BUSINESS
–2 6 8–


--- page 278 ---
Metrics and Targets on ESG-related Risks
We have assessed quantitative information that reflects our management of
ESG-related risks, which includes information on resource consumption and greenhouse
gas emissions. Greenhouse gas emissions consist of Scope 1, Scope 2 and Scope 3 emissions.
Scope 1 direct emissions include the greenhouse gas emissions from our vehicles. Scope 2
indirect emissions include greenhouse gas emissions from the consumption of purchased
electricity. Scope 3 greenhouse gas emissions refer to other indirect upstream and
downstream emissions that occur outside our Group, including methane gas generation
at landfills due to disposal of paper waste, gr eenhouse gas emissions due to electricity used
for processing fresh water and sewage by third party handlers, and greenhouse gas
emissions from employees’ business travel. For the purpose of calculating the Scope 3
greenhouse gas emissions, (i) upstream emissions were not relevant to our Group as an
automobile retailer and distributor sin ce greenhouse gas emissions from vehicle
manufacturing were already accounted for by the vehicle manufacturers in order to avoid
double counting; (ii) indirect emissions along the whole supply chain of our Group were not
accounted for as such data was difficult to be obtained by our Group from its suppliers,
which included vehicle manufacturers and fa lls outside our Group’s direct management or
ownership; and (iii) greenhous e gas emissions generated from the use of our Group’s
vehicles by its customers after they have been sold by our Group were also not accounted
for as our Group’s downstream emissions. Th e table below sets forth a summary of these
emissions of our Group during the Track Record Period:
2020 Intensity 2021 Intensity 2022 Intensity
Six months
ended 30
June 2023 Intensity
(per million
RMB
revenue)
(per million
RMB
revenue)
(per million
RMB
revenue)
(per million
RMB
revenue)
Resource Consumption
Purchased Electricity (kWh) 1,331,247.4 1,775.6 1,360,451.8 1,159.5 1,501,890.8 1,315.7 720,111.3 1,198.2
Freshwater Usage (m 3) 18,032.9 24.1 11,465.2 9.8 20,167.8 17.7 5,419.7 9.0
Paper Waste (kg) 8,804.8 11.7 13,321.9 11.4 11,395.7 10.0 4,297.5 7.2
Emissions
Scope 1 + Scope 2 Emissions
(tonnes CO 2e) 1,070.6 1.4 830.0 0.7 872.6 0.8 418.4 0.7
Scope 3 Emissions
(tonnes CO 2e for emission level/kg
CO2e for intensity) 121.6 162.1 139.0 118.5 95.5 83.7 69.2 115.2
Our Group’s resource consumption recorded a decrease in intensity for the year ended
31 December 2022 despite an increase in the total amount as compared to the year ended 31
December 2020, primarily attributable to the s ignificant differences in revenue recorded by
our Group between the two years as our Group recorded an increase of over 50% in revenue
for the year ended 31 December 2022 in compa rison to the year ended 31 December 2020.
As for the six months ended 30 June 2023, our Group’s resource consumption continued to
record a decrease in intensity as compared to the preceding year ended 31 December 2022,
demonstrating our Group’s efforts to minimise energy consumption.
BUSINESS
–2 6 9–


--- page 279 ---
Our Group’s scope 1 and scope 2 emissions for the year ended 31 December 2022
recorded a decrease in both total amount and intensity as compared to the year ended 31
December 2020, primarily attributable to th e lowered emission factor of electricity
purchased from the National Grid of the PRC due to a gradual transition of a cleaner
energy mix during the Track Record Period. As a result, our Group recorded a lower total
amount of Scope 1 and Scope 2 emissions despite an overall increase in the total amount of
purchased electricity. As for the six months ended 30 June 2023, our Group’s Scope 1 and
Scope 2 emissions continued to record a decrease in intensity as compared to the preceding
year ended 31 December 2022, demonstrating ou r Group’s efforts to minimise greenhouse
gas emissions.
Scope 3 emissions recorded an insignificant level of emissions as compared to Scope 1
and 2 emissions during the Track Record Period, and has limited impact on our Group’s
business operations. For the year ended 31 December 2022, our Group recorded a lower
aggregate level of Scope 3 emissions as compared to the preceding years in the Track
Record Period. Such emissions only accounted for a small portion of our Group’s total
greenhouse gas emissions during the Track Record Period. Our Group recorded a
significant increase in the emissions intensity of Scope 3 emissions for the six months
ended 30 June 2023 as compared to the year ended 31 December 2022, primarily due to the
resumption of business air travel.
According to the report prepared by an independent ESG expert engaged by our
Group, the average emissions intensity of selected industry peers for Scope 1 and Scope 2
e m i s s i o n sf o rt h ey e a re n d e d3 1D e c e m b e r2 0 2 2w a s0 . 8 7t o n n e sC O
2e. For the year ended
31 December 2022, our Group re corded (i) a lower aggregate level of Scope 1 and Scope 2
emissions (measured in tonnes CO 2e) as compared to all four sampled industry peers; and
(ii) a slightly lower emissions intensity (measured in tonnes CO 2e (per million RMB
revenue)) as compared to the average of the sampled industry peers. As the emissions
intensity of the four sampled industry peers ranged from 0.22 tonnes CO
2e (per million
RMB revenue) to 1.03 tonnes CO 2e (per million RMB revenue), the Group recorded a
higher emissions intensity as compared to one sampled industry peer, which was partially
attributable by the lower revenue recorded by our Group in comparison to its industry peer.
As for the consumption of electricity, a ccording to the report prepared by the
independent ESG expert engaged by our Group, for the year ended 31 December 2021, our
Group’s aggregate level of electricity consumption (measured in kWh) was lower than all
four sampled industry peers, but we recorded a higher electricity consumption intensity as
compared to the average electr icity consumption intensity (measured in kWh (per million
RMB revenue)) of the four sampled industry peers of approximately 1,190.4 kWh (per
million RMB revenue) which was partially attr ibutable by the lower revenue recorded by
our Group in comparison to its industry peers. As for the consumption of freshwater,
according to the report prepared by the independent ESG expert engaged by our Group, for
the year ended 31 December 2022, our Group’s aggregate level of freshwater usage
(measured in m
3) was lower than three out of four sampled industry peers, but we recorded
a higher freshwater usage intensity as compare d to the average freshwater usage intensity
(measured in m 3 (per million RMB revenue)) of 13.21 m 3, which was partially attributable
to the lower revenue recorded by our Group in comparison to its industry peers.
BUSINESS
–2 7 0–


--- page 280 ---
We are committed to fulfilling our sustainability and environmental obligations. We
target to reduce the intensity of purchased el ectricity, freshwater usage, paper waste and
Scope 1 and Scope 2 emissions by approximately 10% in the coming 10 years as compared
to the current emission level. Our ESG task force team may adjust the target based on our
yearly key environmental data and adopt mitigation measures, such as considering to
purchase the corresponding required amount of carbon certificate if our Group has fallen
behind on the original emissions target. To fulfil our social responsibility, and to align with
the national target of carbon neutrality by 2060, our Group has also set the target of
becoming carbon neutral by 2050.
Environmental Protection
Our Group is not required to obtain any environmental approval permits, approvals
and registrations to conduct our business. While our Group is an automobile finance lease
and operating lease service provider, our Group is not responsible for any fuel used by our
customers. In addition, our Group does not operate any staff canteens. Non-hazardous
waste generated by our Group primarily consists of daily waste from our Group’s offices
and sales outlets operations, which has been de emed insignificant and thus is not recorded.
Further, while the operations of our Group have not generated any significant amount of
hazardous waste, our Group has nonetheless adopted internal policies with respect to
handling hazardous waste.
We are dedicated to reducing our environmental footprint with emphasis on energy
saving, emissions control, and sustainable development. We have adopted control and
mitigation measures for a number of risk it ems, such as pledging to purchase energy
efficient equipment when replacements are n eeded, encouraging our staff to turn off idling
appliances and equipment, as well as monitoring energy consumption across our site
locations, which would allow us to identify the highest relative energy consumption portion
of our business operations, and thus formulate more tailored measures to further reduce
energy consumption.
Identification, Assessment, Manag ement and Mitigation of ESG Risks
We have worked with an external consultant to establish a materiality assessment
process and identify the material ESG risks to our Group. Our Board has adopted the
Sustainability Accounting Standard Board Sta ndard as the basis for its material assessment
and has identified the most material issues relevant to our Group’s performance, namely
‘‘automobiles’’ and ‘‘car rental and leasing’’. We have identified the following ESG risks
which we consider material and may have an impact on our business, strategies or financial
performance:
Greenhouse gases emissions
Combustion of petroleum-based fuels by automobiles accounts for a significant share
of greenhouse gases emissions is identified as one of the risks that contribute to global
climate change. More stringent emissions standards on automobiles may be put in place,
coupled with changing consumer preferences for electric vehicles and hybrids, may drive
down demand for traditional automobiles. If our Group is unable to adapt to the changing
BUSINESS
–2 7 1–


--- page 281 ---
market preference or innovate, we may witness a decline in our competitiveness, or even
lose out on market share. As such, we have adopted control and mitigation measures as set
out in the paragraph headed ‘‘Environmental, Social and Corporate Governance —
Environmental Protection’’ in this section.
Labour practices
We recognised the importance of workers’ rights and entitlement to fair wages, safe
working conditions and freedom of association. Our Board identified that improper
management of labour issues may breed conflicts with workers, which in turn could lead to
extended periods of strikes and may reduce our Group’s revenue and impose operational
risk of our Group. In order to implement measures to enhance protection for workers’
rights, such as the establishment of a workers’ labour union, we may incur higher labour
costs in the short term. However, we believe such measures may enhance workers’
productivity in the long term. For further details of the mitigation measures, please refer to
the paragraphs headed ‘‘Environmental, So cial and Corporate Governance — Labour
Standards’’ and ‘‘Environmental, Social and Corporate Governance — Occupational
Health and Safety’’ in this section.
Labour standards
We compensate our employees with remunera tion packages and welfare benefits which
commensurate with their experience and re sponsibilities; whereas working hours and
overtime work arrangement are arranged in accordance with our Group’s working hours
and holiday management system. Furthermore, our Group also offers other working
benefits to retain its employees, including but not limited to statutory holidays, basic social
insurance, end-of-year bonuses, and long service awards.
In addition, our Group has also been promoting diversity through continuous
implementation of equal opportunity management practices and fair treatment for all
employees regardless of their backgrounds. Our Group also plans to implement a
comprehensive set of diversity policies in the near future. Moreover, we have
incorporated practices of equal opportunities and anti-discrimination in our Group’s
promotion management system, recruitmen t and labour relations management system.
In the event of employee dismissal, whether initiated by the employees or our Group,
our Group shall act in accordance with the int ernal procedures of our Group to ensure fair
treatment for employees, which includes requiring the said employee to fill out a dismissal
report and checklist with the human resources department and arranging an exit interview
to facilitate work transition and gain a better u nderstanding of the rea sons behind employee
dismissal.
Our Group strictly follows relevant laws and regulations such as the Labour Law of
the PRC and the Labour Contract Law of the PRC. No child labour, forced, or compulsory
labour was reported and/or identified wit hin any sites of our Group during the Track
Record Period and up to the Latest Practicable Date. If any incident of non-compliance is
identified within our Group’s operation sites, our Group shall immediately suspend
employment and carry out internal investigation.
BUSINESS
–2 7 2–


--- page 282 ---
Occupational Health and Safety
We strive to provide and maintain a safe and healthy working environment for all of
our employees. To ensure compliance with app licable laws and regulations, from time to
time, we would, if necessary and after consultation with our legal advisers, adjust our
human resources policies to accommodate mate rial changes to relevant labour and safety
laws and regulations. Our ESG task force team will also review our Group’s policies on a
regular basis.
During the Track Record Period and up to the Latest Practicable Date, our Group had
not experienced any significant incidents or accidents in relation to workers’ safety.
Furthermore, our Directors confirm that we had not been subject to any material claim,
whether for personal or property damage, or penalty in relation to health, work safety,
social and environmental protection and had not been involved in any accident or fatality
and had been in compliance with the applicable laws and regulations in all material aspects
during the Track Record Period and up to the Latest Practicable Date.
Our Board considers that the annual cost of compliance with the applicable health,
safety, social and environmental laws and regulations was not material during the Track
R e c o r dP e r i o da n dd on o te x p e c tt h ec o s to fs u c hc o m p l i a n c et ob em a t e r i a li nt h ef u t u r e .
Under the ESG Policy, our Group strives to operate in a manner that protects the
environment and the safety and health of our employees and communities, with the aim of
sustainably connecting with our employees, customers, and business partners through a
combination of initiatives, which will crea te long-lasting benefits to our Group as a
community.
In this regard, our Group has put in place various measures, including publishing
guidelines governing workplace safety and f ire control, inspecting office premises to
identify emergencies and safety hazards and minimise related risks, and keeping health
records for all employees and conduct health examinations during their employment with
our Group.
Supply Chain Management
Our Group has formulated internal policies specifying the methods for supplier
selection and procurement process under diffe rent circumstances. Our Group evaluates
supplier performance on an annual basis, ta king into consideration factors such as
qualification, service quality, prices, delivery periods, and environmental consciousness of
each supplier before renewing any agreements with them.
LICENCES, PERMITS AND APPROVALS
During the Track Record Period and up to the Latest Practicable Date, save for certain
incidents set out in the section headed ‘‘L egal Compliance — Non-compliance’’, our PRC
Legal Advisers confirm that we have obtained and maintained all material licences, permits
and approvals required by PRC laws and regulations for our operation.
BUSINESS
–2 7 3–


--- page 283 ---
The table below sets out details of our material licences in full effect:
Licence/permit Holder Granting authority Grant date Expiry date
Automobile lease
business licence ( 汽
車租賃經營許可證)
Fujian Zyoocar Ningde City Jiaocheng
District
Transportation
Bureau* ( 寧德市蕉城
區交通運輸局)
11 February 2022 13 February 2026
XXF Group Fuzhou City Jinan
District
Transportation
Development Centre*
(福州市道路運輸事業
發展中心晉安分中心)
15 February 2022 14 February 2026
Guoxin
Zhonglian
Fuzhou City Jinan
District
Transportation
Development Centre*
(福州市道路運輸事業
發展中心晉安分中心)
15 February 2022 14 February 2026
Fujian Xidi Fuzhou City Jinan
District Traffic
Administration
Centre* ( 福州市晉安
道路運輸管理所)
6 March 2020 5 March 2024
See ‘‘Regulatory Overview — Regulations on Finance Lease Industry and Regulations
on Automobile Operating Industry’’ for further details on the requisite approvals, licences
and permits.
LEGAL COMPLIANCE
Our Directors confirm that, to their bes t knowledge after making all reasonable
enquiries, save for certain incidents of non-compliance set out below, we complied in all
material aspects with the applicable PRC law sa n dr e g u l a t i o n si nr e l a t i o nt oo u rb u s i n e s s
and operation during the Track Record Period and up to the Latest Practicable Date.
BUSINESS
–2 7 4–


--- page 284 ---
Non-compliance
The following table sets out the non-compliance incident our Group was involved in
during the Track Record Period:
Particulars of
non-compliance
Reasons for the
non-compliance incident
Legal consequences and
potential penalties
Rectification and
preventive actions taken
Failure to register lease agreeme nts with relevant PRC authorities
As at the Latest
Practicable Date, we
had 169 leased
properties located in
Fuzhou, Suzhou,
Xiamen and various
cities in the PRC which
serve as our sales
outlets, staff
dormitories, offices and
car park. As at the
Latest Practicable
Date, 135 lease
agreements had not
been registered with the
relevant regulatory
authorities.
This non-compliance
incident was primarily
due to (i) the relevant
lessors were not able to
provide documents
proving legal title of
the properties, thus we
were not able to file
the relevant leases; and
(ii) the relevant lessors
did not cooperate in
filing the lease
agreements.
Pursuant to the Measures for
Administration of Lease of
Commodity Properties ( 《商品房
屋租賃管理辦法》), registration
of leases is required, and a fine
will be imposed on the parties
to a lease agreement for failure
to register a lease (a range of
RMB1,000 to RMB10,000 for
entities and not more than
RMB1,000 for individuals).
As advised by our PRC Legal
Advisers, the mere failure to
register the lease agreements
with the competent authorities
by itself will not result in: (i)
the agreements being deemed to
be invalid or non-binding; or
(ii) we being required to vacate
the leased properties.
As at the Latest Practicable Date, we did not receive any
rectification order, nor have we been subject to any fine or
penalty in respect of the failure to register lease
agreements.
In view of our PRC Legal Advisers’ advice, our Directors
consider that such non-compliance, individually or in
aggregate, would not have a material adverse effect on our
Group. Accordingly, no provis ion was made in this regard.
Further, Mr. Huang has undertaken to indemnify us for
any unpaid amount, penalties, other monetary damages
costs and expenses incurred from or in connection with
our failure to register lease agreements with relevant PRC
authorities in full amount prior to the Listing.
With respect to the aforesaid leases, save as to the Fuxing
Property which is our principal place of business and
headquarter, our Directors confirmed that we are able to
relocate the offices situated in 10 properties out of the 135
properties to our headquarter and subsidiaries, and
accommodate 12 sales outlets out of the 135 properties in
our local offices at no significant cost. Based on our
market research and as advised by CIC, for 52 sales
outlets out of the 135 properties, our Directors confirmed
that there is sufficient supply of substitute properties
available at reasonable market prices; for the remaining 49
properties out of the 135 properties which are mostly
leased for the purposes of dormitories, car parks, and
small-size sales outlets, each o f a size of generally less than
120 sq.m., our Directors confirmed that there is sufficient
supply of substitute propertie s available at reasonable
market prices. According to CIC and our own market
research, the overall poten tial costs (including removal
costs and renovation costs) to relocate the 135 properties,
if required, are estimated at approximately RMB150,000.
As advised by our PRC Legal Advisers, our Group had
not breached any lease agreement, therefore, no penalty is
accounted for in the total cost estimation. Our Directors
are of the view, with the support of CIC’s advice, that
substitute properties are available in the market and the
relocation costs are not expected to be material.
Meanwhile, we have been taking proactive steps to liaise
with the landlords regarding registration of the lease
agreements. In the event that we are required by
competent authorities to rectify the non-compliance but
are unable to rectify due to failure of cooperation by the
landlords, we will consider terminating the non-compliant
leases, finding alternative loc ations nearby and relocating
without causing any material disturbances to our usual
business operations.
BUSINESS
–2 7 5–


--- page 285 ---
Having considered the facts and circumstances leading to the non-compliance incident
as disclosed in this section and our Group’s internal control measures, our Directors are of
the view, and the Sole Sponsor concurs that (i) we have adequate and effective internal
control procedures in place in accordance with the requirements under the Listing Rules;
and (ii) the past non-compliance incident will no t affect the suitability of our Directors to
act as directors of a listed issuer under Rules 3.08, 3.09 and 8.15 of the Listing Rules, and
the suitability for listing of our Company under Rule 8.04 of the Listing Rules.
LEGAL PROCEEDINGS
During the Track Record Period and up to the Latest Practicable Date, we had been
involved in a number of claims, litigations and p ending or threatened claims in our ordinary
and usual course of business.
(i) Defendant in vehicle accident claims
Due to the nature of our business, it is inev itable and beyond our control that we may
be joined as one of the defendants for car accident cases involving our customers as we are
the legal owner of the automobiles during the le ase term. As at the Latest Practicable Date,
we were involved in a total of 82 outstanding proceedings with an aggregate claim amount
of approximately RMB5.7 million.
According to Article 49 of the Law of the Peo ple’s Republic of China on Tort Liability,
when the owner and the user of the motor vehicle are not the same entity due to
circumstances of leasing, it is the user of the motor vehicle whom will bear the liability for
compensation. As we are the le ssor of the automobiles leased and do not enjoy the right to
use the automobiles, our PRC Legal Advisers are of the view that we do not need to bear
the corresponding liability attracted by our cu stomers when using the leased automobiles
unless there is negligence on our part. Our Directors confirm that we had not committed
any negligence in respect of the vehicle accid ent proceedings we were involved as defendant.
Taking into account our experience and track record in handling default payments or
joint defendant claims, we do not anticipate any significant material adverse change to our
results of operations if any of these legal proceedings are decided against us.
During the Track Record Period, we had paid a total of approximately RMB2.0
million as compensation for traffic accidents. Our risk exposure to vehicle accident claims
was limited as the risks associated with traffic accidents are mostly borne by the car user
customers legally according to our agreemen ts with such customers. The compensation of
approximately RMB1.5 million paid was relate d to our operating lea se business where we
provided chauffeured service. As at the Latest Practicable Date, we had no longer provided
such chauffeured service.
BUSINESS
–2 7 6–


--- page 286 ---
(ii) Plaintiff in recovery of overdue payment
We initiate legal proceedings from time to ti me in the ordinary course of our business,
primarily to retrieve leased automobiles due to our customers’ material breach of lease
contracts or to recover amounts owed to us. A s at the Latest Practicable Date, we had a
total of 75 outstanding legal proceedings mainly against our customers for recovery of
overdue payment with an aggregate claim amount of approximately RMB2.1 million.
Relevant allowance for impairment of finance lease receivables were made in relation to the
overdue payment of our customers by applying the simplified approach permitted by IFRS
9. See ‘‘Financial Information — Description o f certain items of consolidated statement of
financial position — Finance lease receivables’’ in this prospectus for further details.
Our Directors believe that utilising legal proceedings will help us to preserve our
automobile assets, to put pressure on our customers for figuring out a repayment schedule
with us, or to identify additional assets that our customers can provide as collateral to
secure the outstanding receivables. With the implementation of our extensive risk
management system that effectively manages our exposure to credit risk, our Directors
believe that the number of legal proceedings has been kept to a reasonable number which
would not have a material impact on our financial condition.
OTHER INCIDENTS
(i) The Ganzhou incident
Prior to the Track Record Period, Ganzhou branch of XXF Group (‘‘ XXF Group
Ganzhou Branch ’’) was evaluated as unqualified (lost contact) on 29 October 2019 pursuant
to the circular on the investigat ion of finance lease companies ( 《關於融資租賃公司梳理排查
情況通報》) published by Financial Work Office of Ganzhou Municipal People’s
Government ( 贛州市人民政府金融工作辦公室) and on 18 December 2019, XXF Group
Ganzhou Branch was required by Ganzhou Zhanggong District Finance Bureau ( 贛州市章
貢區金融局) to (i) cease entering into new finance lease agreements and processing existing
finance lease agreements properly; and (ii) remove ‘‘finance lease’’ from its business scope
and submit a settlement plan on existing finance lease agreements (the ‘‘ Ganzhou Incident ’’).
To the best knowledge of our Directors, XXF Group Ganzhou Branch was classified as
‘‘lost contact’’ because (i) the employees of the XXF Group Ganzhou Branch were assigned
to attend a store management seminar held in Nanchang and hence, no employee was in the
office of XXF Group Ganzhou Branch on 13 June 2019 and 14 June 2019; and (ii) XXF
Group Ganzhou Branch’s office phone for ex t e r n a lc o n t a c tw a so u to fo r d e r ,w h i c hw a s
inadvertently overlooked by XXF Group Ganzhou Branch until XXF Group Ganzhou
Branch was notified of its inclusion on the lost contact list. On 20 December 2019, a
settlement plan was submitted to the relevant PRC local government authority pursuant to
w h i c hX X FG r o u pG a n z h o uB r a n c hw o u l dp e r f orm the existing finance lease agreements
until such contracts expire. In March 2020, the activity of engaging in ‘‘finance lease’’ was
removed from the business scope of XXF Group Ganzhou Branch on its application and a
renewed business licence was obtained. Our Directors confirmed that since April 2020 up to
BUSINESS
–2 7 7–


--- page 287 ---
the Latest Practicable Date, XXF Group Ganzhou Branch had not entered into new finance
lease agreements and had not received further notices of correction or penalty (including
fines) from relevant PRC local government authority.
According to the Administrative Measures on Supervision of Finance Lease Enterprise
(《融資租賃企業監督管理辦法》) promulgated by MOFCOM on 18 September 2013 and
became effective on 1 October 2013, it does not specify the loss contact of the finance lease
enterprise or regard the loss contact as a non -compliant matter. According to the Interim
Measures for the Supervision and Administration of Finance Lease Companies ( 《融資租賃
公司監督管理暫行辦法》) promulgated by the China Banking and Insurance Regulatory
Commission on 26 May 2020, the local financial regulatory authorities shall divide finance
lease companies into three categories: normal operation, abnormal operation and operation
in violation of laws and regulations. The category of abnormal operation mainly refers to
‘‘companies out of contact’’, ‘‘shell companies’’ and other finance lease companies that
operate abnormally. One of the situations of ‘‘companies out of contact’’ refers to the
finance lease company that cannot be contacted. Therefore, as advised by our PRC Legal
Advisers, our Directors are of the view that the Ganzhou Incident does not constitute
non-compliance of the applicable laws and regulations, considering that XXF Group
Ganzhou branch was evaluated as unqualified (lost contact) because it could not be
contacted by the PRC local government and was thus recognised as ‘‘abnormal operation’’
instead of ‘‘operation in violation of laws and regulations’’.
We implemented a management policy for screening of operational contact
abnormality on 12 August 2022. An operational risk team was established pursuant to
such policy and comprises of the heads of various departments. Designated personnel under
the operational risk team is responsible for liaising with the government authorities,
particularly such person acts as the primary contact point for the government authorities
and cooperates with the government authorities for any investigations.
The above enhanced internal control policy was adopted following the
recommendations of our internal control consultant to address the internal control
deficiencies and weaknesses that may have l e dt ot h eG a n z h o uI n c i d e n t .O u rD i r e c t o r s
confirmed that there had been no occurrence of similar incidents after the adoption of the
enhanced internal control policy up to the Late st Practicable Date. As such, our Directors
are of the view, and the Sole Sponsor concurs, that such enhanced internal control policy
could avoid the occurrence of similar incidents.
As at the Latest Practicable Date, 8 contracts entered into by our Ganzhou Branch
remained in effect. Given that (i) our PRC Legal Advisers do not consider the Ganzhou
Incident constituting non-compliance of the applicable laws and regulations; (ii) the
revenue contribution from XXF Group Ganz hou Branch for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, only amounted to approximately
RMB2.0 million, RMB0.9 million, RMB0.3 million and RMB0.1 million, representing
approximately 0.27%, 0.08%, 0.03% and 0.02% of the total revenue of our Group,
respectively; and (iii) our Group’s sales out lets in other cities in the vicinity of Ganzhou
BUSINESS
–2 7 8–


--- page 288 ---
continue to be in operation to serve the customers from Ganzhou, our Directors consider
that the operational and financial impacts of the Ganzhou incident to the Group were
minimal.
(ii) The Xidi Blacklist Incident
On 4 May 2021, one of our e-hailing vehicles r egistered under the name of Fujian Xidi
Guangzhou Branch was involved in a car accident, causing the death of a pedestrian. It was
determined that the driver of the subject e-h ailing vehicle, who was our customer, bore the
equal liability as the deceased. Fujian Xidi Gua ngzhou Branch was subsequently notified of
being listed on the ‘‘Transportation Companies’ Blacklist’’ issued by the PRC local
government authority (the ‘‘ Xidi Blacklist Incident ’’). The Guangzhou Haizhu District Road
Traffic Accident Prevention Joint Force Office carried out a law enforcement inspection in
September 2021 which led to a rectification report prepared by Fujian Xidi Guangzhou
Branch.
We understand that the driver’s lack of tr affic safety awareness led to the Xidi
Blacklist Incident. Accordingly we implement ed an e-hailing vehicle drivers management
policy on 12 August 2022 with the aim to reduc e the e-hailing vehicle car accidents and the
associated insurance costs. Under such policy, (i) a newly onboard e-hailing vehicle driver is
required to attend training; (ii) a e-hailing v ehicle driver involved in a car accident and
insurance claim is required to return for anot her training; and (iii) the e-hailing vehicle
driver who is involved in multiple car accidents and insurance claims within a period is
recommended to quit operation.
The above enhanced internal control policy was adopted following the
recommendations of our internal control consultant to address the internal control
deficiencies and weaknesses that may have led to the Xidi Blacklist Incident. Our Directors
confirmed that there had been no occurrence of similar incidents after the adoption of the
enhanced internal control policy up to the Late st Practicable Date. Our Directors are of the
view, and the Sole Sponsor concurs, that such enhanced internal control policy could raise
the safety awareness of e-ha iling vehicle drivers so as to avoid occurrence of similar
incidents.
Since September 2021 and up to the Latest Practicable Date, Fujian Xidi Guangzhou
Branch had not received further notices of correction or penalty (including fines) from the
relevant PRC local government authority or been listed on the ‘‘Transportation Companies
Blacklist’’ again, as confirmed by our Directors. As advised by our PRC Legal Advisers, the
‘‘Transportation Companies’ Blacklist’’, updated monthly, is published by the PRC local
government authority to warn relevant enterprises involved in serious traffic accidents,
which is not an administrative penalty. As Fujian Xidi Guangzhou Branch has taken
corrective measures, our Directors confirm tha t, it has not been blacklisted since then. Our
Directors are of the view that such incident did not and will not have any material adverse
impact on the Group’s businesses.
BUSINESS
–2 7 9–


--- page 289 ---
(iii) Labour dispute proceeding
In or around May 2021, due to a labour dispute between Taoqi Internet and its former
employee led to a legal proceeding. The labour dispute was due to disagreement of an
unsatisfactory employee performance review which Taoqi Internet and this former
employee terminated the labour contract i n May 2021. However this former employee
held belief that he was laid off unfairly where as Taoqi Internet believed this former
employee had voluntarily terminated the labour contract in May 2021. Such disagreement
led to the legal proceeding. According to the fi nal judgment of the legal proceeding, Taoqi
Internet was ordered to pay its former employee an aggregate amount of RMB119,814, such
judgement debt was settled on 28 November 2022. On 6 December 2022, the People’s Court
of Jinan District, Fuzhou issued a case- closing certificate (No.4935) ((2022) 閩0111 執4935
號結案證明), according to which Taoqi Internet had performed its payment obligations
under the judgment. Our PRC Legal Advisers confirm that such case-closing certificate
indicates that the enforcement action against Taoqi Internet has been fully resolved and
settled.
To the best knowledge, information and belief of the Directors and having made all
reasonable enquiries, our Group was not subje ct to any outstanding enforcement action as
at the Latest Practicable Date, save as to the above. Pursuant to the search performed by
our PRC Legal Advisers on the China enfor cement information publication website
(
http://zxgk.court.gov.cn/) (中國執行信息公開網), our Group was not subject to any
enforcement action as at the Latest Practicable Date, save as to the above.
We have adopted a set of staff promotion/demotion management policy on 19 March
2021 which specifies the result of performance appraisal as the basis for promotion,
demotion and change of position. Performance appraisal is generally carried out
semi-annually or annually. The result of the performance appraisal is documented in the
performance appraisal form. Both the appraiser and appraisee sign on the performance
appraisal form as confirmation of the result of the performance appraisal. The salary is
adjusted according to our Group’s policy.
The policy stipulates detailed procedures and approving authority for promotion and
demotion of employees. In the cases of demotion, the policy requires communication with
written record and appeal can be filed with the human resources department.
The policy also sets out clear criteria for promotion and demotion. The circumstances
for demotion include employee’s serious di sciplinary breach with adverse impact on or
causing loss to our Group.
A confirmation for change of employment terms was adopted by our Group on 1 April
2022. The pre- and post-adjustment job titles an d salaries and the relevant effective date will
be recorded on such confirmation. The relevant employee is required to sign on such
confirmation to acknowledge and agree to the adjustment.
BUSINESS
–2 8 0–


--- page 290 ---
We have updated the Work Manual of Legal Department ( 司法組工作手冊). The Work
Manual of Legal Department states that when j udgment of the legal proceeding is effective
and our Company has a payment obligation, our Group should execute the relevant
payment obligation on a timely basis except for the judgment which the Group was decided
to apply for appeal. The relevant judgment of the legal proceeding, time limit and the action
of execution should be recorded on the Litigation Summary ( 訴訟表). The Litigation
Summary should be reviewed by the Deputy Director of Legal Department ( 法務部副總)o n
a regular basis. The updated Work Manual of Legal Department has been effective since 31
December 2022.
The above enhanced internal control policy was adopted following the
recommendations of our internal control consultant to address the internal control
deficiencies that may have led to the labour dispute and the enforcement action. Our
Directors confirmed that there had been no occurrence of similar incidents after the
adoption of the enhanced internal measure and up to the Latest Practicable Date. Our
Directors are of the view, and the Sole Sponsor concurs, that such enhanced internal
control policy that sets out spec ific guidelines, procedures a nd practices could avoid labour
disputes.
Our Directors confirm that save for the incidents disclosed above under ‘‘Other
Incidents’’, there are no other incidents that need to be disclosed and brought to the Stock
Exchange’s attention, no litigation or c laim of material importance is known to our
Directors to be pending or threatened against any member of our Group or any of our
Directors that would have a material adverse effect on our results of operations or financial
condition as at the Latest Practicable Date.
IMPACT OF COVID-19 OUTBREAK ON OUR BUSINESS
In 2020, the outbreak of a novel coronavirus (COVID-19) materially and adversely
affected the global economy. In response to the spread of COVID-19 in the PRC in 2020,
the PRC government has imposed quaran tine measures across China, and local
governments have also imposed temporary mobility restrictions or travel bans to control
the spread of COVID-19 in the PRC in 2020. As a result, normal economic activities
throughout China has been significantly cur tailed due to the outbreak of COVID-19 in the
PRC in 2020.
We have taken a series of measures in response to the COVID-19 outbreak in the PRC
in 2020, including, among others, remote working arrangements for some of our employees,
temporary closure of some of our sales outle ts, reduction in advertising spending,
headcount freeze, and reduction of purchase of new automobiles.
There has been a significant decrease in th e number of existing confirmed COVID-19
cases in PRC since the second quarter of 2020. The PRC government has gradually lifted
domestic travel restrictions and other quarantine measures, and economic activities have
begun to recover and return to norm al since the second half of 2020.
BUSINESS
–2 8 1–


--- page 291 ---
In 2021, our businesses were recovered. The number of newly signed finance lease
increased by 43.9% from 7,859 agreements for the year ended 31 December 2020 to 11,308
agreements for the year ended 31 December 20 21. The average occupancy rate for e-hailing
vehicles under operating lease increased from 78.8% for the year ended 31 December 2020
to 90.7% for the year ended 31 December 2021.
Following the resurgence of COVID-19 in a number of provinces in the PRC,
lockdown of several cities and regions in the PRC and pandemic control measures were
implemented from October 2022 to early De c e m b e r2 0 2 2a sam e a n st oc o n t a i nt h es p r e a d
of COVID-19. The pandemic control measures impacted our operations as certain of our
self-operated sales outlets had to temporarily suspend operations.
On 11 November 2022, the PRC government released a circular on further optimising
the COVID-19 responses, the ‘‘Notice on Further Optimizing and Implementing Measures
for Prevention and Control of the COVID-19 Pandemic’’, announcing 20 prevention and
control measures, followed b y ten new COVID-19 easing measures on 7 December 2022.
The ten new measures were introduced based on t he latest epidemic situation and mutation
of the virus to contain the epidemic in a more science-based and targeted manner, according
to the circular issued by the Joint Prevention and Control Mechanism of the State Council.
Further on 27 December 2022, the PRC go vernment announced China will manage
COVID-19 with measures against Class B infecti ous diseases, instead of Class A infectious
diseases, in a major shift of its epidemic response policies. Local authorities will drop
quarantine measures against people infected with novel coronavirus and stop identifying
close contacts or designating high-risk and low-risk areas. It was stated that following the
adjustment, China’s COVID-19 prevention an d control efforts will focus on protecting
health and preventing severe cases and such measures will be rolled out to protect people’s
lives and health to the utmost and minimize t he impact of the epidemic on economic and
social development. According to CIC, the sales volume of new automobiles in the PRC
increased by 6.7% for the nine months ended 30 September 2023 as compared to the same
period of 2022. For the e-hailin g industry, according to CIC, d ue to the lock down measures
in several cities in 2022 including some higher tier cities such as Shanghai, Beijing and
Shenzhen and national wide infection of COVID-19, the total travel demand of consumers
have decreased month by month since the beginning of 2022, resulting in the decrease of the
total number of e-hailing rides in 2022. Wit h China announcing to optimise epidemic
prevention and control at the end of 2022, the t otal number of e-hailing rides had gradually
recovered. For the nine months ended 30 Sep tember 2023, the total number of e-hailing
rides had increased by 22.3% as compared to the same period in 2022. For our recent
operation performance, please refer to th e section ‘‘Summary — Recent Development and
No Material Adverse Change — Recent Development’’ for details.
BUSINESS
–2 8 2–


--- page 292 ---
OUR RISK MANAGEMENT STRUCTURE
We are subject to a variety of risks in our daily business operations, including credit
risk, operational risk and legal and complia nce risk, among which we believe credit risk is
our principal exposure. The credit risk management function of our Group is primarily
coordinated by our credit risk management function working with the other three
departments of our Group, namely legal department, fieldwork department and technical
department, to manage the risk management operation.
Legal department
Our legal department is responsible for ensuring that our business operation complies
with any applicable laws and regulations in the PRC and handling legal matters for our
Group, including handling breach of contracts by our customers, reporting the repossession
of leased automobiles to police departments dur ing enforcement action and initiating legal
proceedings from time to time in the ordinary course of our business, primarily to repossess
leased automobiles or to recover lease receivables owed to us.
In March 2019, as part of our effort to enhance our post-lease risk management, we
established the communication unit under our legal department. The communication unit is
mainly responsible for handling customer delinquency, in particular, unauthorised
modification of the automobiles’ identification information, unauthorised transfer of the
automobiles’ ownership, and automobiles tracked running towards the border. Depending
on the situation, our communication unit may t ake different actions in collaboration with
other departments and units, including negotiations with customers or other relevant
parties, automobile interceptions at borders an d initiation of legal actions, to repossess the
automobiles concerned. If repossession is impracticable, we try to recover losses from
delinquent parties to the extent possible. For instance, our communication unit works with
our operation unit to manage more difficult situations in the recovery process, as one of the
measures to enhance our post-lease risk management. Our contract unit is in charge of
conducting legal training, reviewing and drafti ng contracts, discussing business compliance
and issuing legal opinions, and collecting relevant laws and regulations to our business and
compiling them into internal training materia ls for our regular training programme. Our
judicial unit participates in the litigation cas es and important business negotiations as our
delegate, takes responsibility for the drafting and discussion of new business supporting
contracts and gives legal opinions from the perspective of litigation.
Fieldwork department
Our fieldwork department plays an important role in our post-lease credit risk
management. Our staff of fieldwork department monitor the activities of our leased
automobiles through our GPS tracking devices and our automobile monitoring platform on
a regular basis, and conduct on-site inspection and repossession of our leased automobile in
case of irregular activitie so rd e f a u l tb yo u rc u s t o m e r s .
RISK MANAGEMENT AND OPERATIONS
–2 8 3–


--- page 293 ---
In particular, in March 2019, we established the operation unit, which together with
our communication unit, focus on handling more difficult situations, in particular, where
the customers were default in payment for more than three months or that the automobiles
concerned were considered less likely to be successfully repossessed. The operation unit is
mainly responsible for handling difficultie s in the automobile repossession process,
including vanishing GPS signals, automob iles with unusual tracked locations, and
automobiles mortgaged to third parties . Following a set of detailed operational
guidelines, the operation unit collects and analyses various types of data, including
locations of automobiles, customer behaviour, and traffic contravention information, and
collaborates with the fieldwork units to fa cilitate effective aut omobile repossession.
Technical department
Our technical department is responsible for the development of our GPS tracking
devices installed on our leased automobiles and our automobile monitoring platform. Our
staff in the technical department are also responsible for mounting, dismounting and
maintenance of GPS tracking devices on our leased automobiles.
O U RR I S KM A N A G E M E N TM E A S U R E S
We are subject to a variety of risks in our daily business operations, including credit
risk, operational risk and legal and complia nce risk, among which we believe credit risk is
our principal exposure. We recognise the importance of identifying and mitigating these
risks. As such, we have developed a risk management system as follows to address the risks
that we are exposed to.
Credit Risk Management
We are exposed to credit risks from our cu stomers in our automobile retail and
finance, and automobile operating lease businesses. Credit risk arises when our customers
are unable or unwilling to make timely payments to us. As such, we have developed a credit
risk management system which can be divided into pre-lease and post-lease credit risk
management. Our pre-lease and post-lease credit risk management are led by Mr. Chen
Xiong, our vice president of Fujian Xidun and Mr. Chen Shirong, our manager of pre-lease
credit risk management, each respectively has over four years of dedicated experience in risk
management. In particular, with the development of our automobile monitoring platform,
we received the Best Risk Management Capa bility Award at the 3rd China Auto Finance
International Summit ( 第三屆中國汽車金融國際峰會) in 2018.
We actively monitor historical past due ratio and continuously improve our data
analytics capabilities, as well as execute post-lease management and loss recovery measures
through our automobile monitoring platform and our patent-protected GPS tracking
devices installed on all au tomobiles leased by us.
RISK MANAGEMENT AND OPERATIONS
–2 8 4–


--- page 294 ---
The following table sets out the past due ratios as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
Over one month past due ratio 1.8% 1.5% 1.7% 1.8%
Over three months past due ratio 0.7% 0.7% 0.7% 0.8%
Over six months past due ratio 0.4% 0.3% 0.3% 0.2%
Over one year past due ratio 0.1% 0.1% 0.1% 0.1%
See ‘‘Financial Information — Descri ption of Certain Items of Consolidated
Statements of Financial Position — Finance lease receivables’’ for definitions and details
of the past due ratios.
Pre-lease credit risk management
Our pre-lease credit risk management focuses on credit assessment and approval
process. While our potential customers may choose different lease terms and offerings based
on their needs, all of them need to go through a credit assessment and approval process.
During our credit assessment and approval process, we generally consider both (i)
qualitative factors, which may include age, locat ion, driving penalty records, credit history
and litigation records; and (ii) quantitative factors, which may include the proposed
principal amount of the lease transaction, value of the personal assets and personal income
level.
We generally require potential finance lease and operating lease customers to fulfil our
preliminary requirements, including (i) hol ding a valid PRC identity card; (ii) holding a
valid PRC driving licence (with less than 12 points deducted); and (iii) aged between 18 to
60 years old, inclusively. For customers in certain regions, we may also require our
customers to produce (i) property ownership certi ficate; (ii) business registration certificate
(for corporate customers); and/or (iii) pr oof of employment and recent six months of
salaries.
Having satisfied the above preliminary requi rements, we will perform credit assessment
based on the potential customers’ information such as checking their name, identity card
number and mobile phone number against our self-maintained database as well as third
party blacklists. We also analyse the contact lists and call logs of our customers, after
obtaining their permissions to access s uch data, to assess their character and
creditworthiness by checking whether their contact lists include any contact of blacklisted
RISK MANAGEMENT AND OPERATIONS
–2 8 5–


--- page 295 ---
persons or any financial institutions that offer loans on mortgage or pledge, and whether
frequent calls have been made with these contacts. As confirmed by our PRC Legal
Advisers, we were in compliance with the app licable PRC laws, rules and regulations in
relation to analysis of customers’ contact lists and call logs in credit assessments.
Depending on the results of credit assessments and the principal amount of automobile
finance, we might also obtain credit assessm ent reports from third parties. For our
recurring customer, we will also assess the custo mer’s credit history maintained with us and
whether there is any outstanding amount which has not been settled by the customer.
Further, our risk management system allows a b ilateral flow of statistics and data between
our management systems for pre-credit risk and post-credit risk. The statistics of default or
delinquency behaviours identified in our post-lease credit risk management system are
shared with our pre-lease credit risk management system for screening out potential
customers with similar background during our pre-lease credit risk assessment, which is
conducive to the enrichment of our database and the improvement of our future credit risk
analysis. Leveraging our data analytics capa bilities, we are able to complete the credit
assessment and approval within a relatively short period of time to maintain our
competitiveness.
Post-lease credit risk management
Our post-lease credit risk management involves (i) monitoring of periodic payments
and automobile activities; (ii) repossession of automobiles; and (iii) disposal of repossessed
automobiles and legal actions against default or delinquent customers.
Monitoring of periodic payments and automobile activities
We lease our automobiles in return for monthly lease payments or periodic rental
payments by our finance lease and operating lease customers, respectively. Our customer
service department delivers payment remind e r su s u a l l yt h r e et of i v ed a y sb e f o r et h ed u e
date of the respective payment mostly throug h text messages to our customers. Most of the
settlements are conducted by our system automatically. There is a small number of
settlements conducted manually, where our finance department checks and monitors the
collection of payments from our customers on a daily basis and inputs the payment records
into our ERP system. If any default or delinquency on payment arises, our customer service
department will continue to send out reminders to these customers.
RISK MANAGEMENT AND OPERATIONS
–2 8 6–


--- page 296 ---
We closely monitor the quality of our finance lease receivables, which we classified into
the following six categories:
(i) Normal : Lease payments which have always been on time
(ii) Special mention : Lease payments which are overdue up to one month
(iii) Sub-standard : Lease payments which are overdue for one to three
months
(iv) Doubtful : Lease payments which are overdue for three to six months
(v) High risk : Lease payments which are overdue for six months to one
year
(vi) Loss : Lease payments which are overdue for more than one year
Generally, we downgrade the classification of finance lease receivables as the overdue
period of the lease payment increases. We may also consider downgrading the finance lease
receivables from normal to special mention b ased on any irregular activities of the leased
automobile detected by our automobile monitoring platform.
We recognise the impairment of finance lea se receivables by applying the simplified
approach permitted by IFRS 9, which requires expected lifetime losses to be recognised
from initial recognition of the receivables. Th e impairment losses provided for finance lease
receivables are determined based on historica lly observed default rates over the expected life
of finance lease receivables with similar credi t risk characteristics and are adjusted for
forward-looking estimates.
We classify the finance lease receivabl es as non-performing assets when the lease
payments are overdue for more than three months. As at 31 December 2020, 2021, 2022 and
30 June 2023, our non-performing assets ratios were 0.7%, 0.7%, 0.7% and 0.8%,
respectively.
We write off the finance lease receivables when a lessee fails to make contractual
payments for one year, and there is no realis tic prospect of recovery of contractual
payments or automobile repossession. As at 31 December 2020, 2021, 2022 and 30 June
2023, the finance lease rece ivables written-off amoun ted to RMB2.5 million, RMB3.3
million, RMB3.0 million and RMB3.7 million, respectively.
RISK MANAGEMENT AND OPERATIONS
–2 8 7–


--- page 297 ---
According to CIC, our classification criteria of finance lease receivables are set with
reference to the classification set out in the Guidelines on Loan Classification ( 《貸款分類指
導原則》) published by the PBOC. The following table sets out a breakdown of our finance
lease receivables balance before deducting the allowance for impairment losses under our
finance lease receivable classifications:
As at/Year ended 31 December
As at/Six months
e n d e d3 0J u n e
2020 2021 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Normal As at the beginning of the year/
period
1,044,835 955,256 1,233,278 1,398,133
Addition of the year/period, net 5 03,575 810,654 871,054 578,880
Deduction of the year/period, net (593,154) (532,632) (706,199) (528,613)
As at the ending of the year/period 955,256 94.5 1,233,278 94.3 1,398,133 94.2 1,448,400 94.2
Special
mention
As at the beginning of the year/
period
44,140 38,020 54,337 60,501
Addition of the year/period, net 37,036 52,208 58,874 58,993
Deduction of the year/period, net (43 ,156) (35,891) (52,710) (57,327)
As at the ending of the year/period 38,020 3.8 54,337 4.2 60,501 4.1 62,167 4.0
Sub-standard As at the beginning of the year/
period
17,104 10,806 11,638 14,569
Addition of the year/period, net 10,806 11,564 14,509 14,941
Deduction of the year/period, net (17 ,104) (10,732) (11,578) (14,336)
As at the ending of the year/period 10,806 1.1 11,638 0.9 14,569 1.0 15,174 1.0
Doubtful As at the beginning of the year/
period
4,105 3,412 4,158 5,578
Addition of the year/period, net 3,412 4,158 5,578 8,123
Deduction of the year/period, net ( 4,105) (3,412) (4,158) (5,578)
As at the ending of the year/period 3,412 0.3 4,158 0.3 5,578 0.4 8,123 0.5
High risk As at the beginning of the year/
period
1,767 2,723 3,266 3,331
Addition of the year/period, net 2,723 3,266 3,331 2,399
Deduction of the year/period, net ( 1,767) (2,723) (3,266) (3,331)
As at the ending of the year/period 2,723 0.2 3,266 0.2 3,331 0.2 2,399 0.2
Loss As at the beginning of the year/
period
110 844 1,204 1,515
Addition of the year/period, net 844 1,204 1,515 1,235
Deduction of the year/period, ne t (110) (844) (1,204) (1,372)
As at the ending of the year/period 844 0.1 1,204 0.1 1,515 0.1 1,378 0.1
Total 1,011,061 100.0 1,307,881 100.0 1,483,627 100.0 1,537,641 100.0
The amount of doubtful, high risk and loss finance lease receivables were all below 1%
of the total balance as at 31 December 2020, 2021, 2022 and 30 June 2023.
RISK MANAGEMENT AND OPERATIONS
–2 8 8–


--- page 298 ---
Each of our leased automobiles is installe d with our GPS tracking devices by our
technical department, which can be used to track and record the data of the leased
automobile including the travelling speed and real time location. These data will be stored
onto our automobile monitoring platform for analysis. Our automobile monitoring
platform performs automatic risk analysis b y detecting vehicle trajectory and status of
GPS signal. Through its automa ted data analytic ability, th e platform sends timely alert
messages to our staff upon detecting any irregular activities, which typically include the
followings:
Types of irregular activities Potential risk
Vanishing or unstable GPS
signals
Unauthorised dismantling or disabling of the GPS
tracking devices installed in the lease automobiles
Automobiles tracked in unusual
locations in our database
including automobile
dealerships and retailers and
used car transaction market
Unauthorised disposal of the leased automobiles
Automobiles stationed for an
unreasonably long duration
Unauthorised pledge of the leased automobiles
Automobiles tracked running
towards restricted boundaries
Default of payment obligations under the lease
agreements with the intention to run away with the
leased automobiles
Our Directors believe that our automobile monitoring platform improves automation
in our risk management, thereby lowering the risk of human errors. In addition, the
operation unit of our fieldwork department also monitors the status of our leased
automobiles through the GPS tracking devices and the automobile monitoring platform on
a daily basis for every newly leased automobile in the first week, automobiles recorded with
irregular activities, and automobiles the user of which defaulted previous payment, while on
a weekly basis for other automobiles. In case of any sustained irregular activities of our
leased automobiles, our fieldwork unit staf f may conduct an on-site inspection on the
subject automobile by attending to the tracked location, taking photos and reporting the
status of the automobile to the fieldwork department and legal department, either of which
may order to take repossession action as it seems fit.
RISK MANAGEMENT AND OPERATIONS
–2 8 9–


--- page 299 ---
Repossession of automobiles
Generally, if (i) any payment is overdue for over 35 days despite our repeated
reminders; or (ii) any irregular behaviour is observed for at least three days on our
automobile monitoring platform, we may exercise our right to repossess the automobile
directly. Leveraging our patent-protected GPS tracking devices and automobile monitoring
platform, in managing our post-lease credit ri sk for customers in default, we track down the
relevant automobiles and take repossession action. After the repossession, our technical
department will check and remove any GPS tra cking devices not installed by us to avoid
any potential tracking and stealing of the automobiles by the customers in breach. Our legal
department will also negotiate with the relevant customers on the amount of penalty and a
repayment plan, which can either be scheduled periodic payments or a lump sum payment.
The customers may also decide to terminate the contracts and in such case, we will retain
the repossessed automobiles. During the negotiation, we take into account qualitative
factors, such as the attitude of the customer, the difficulty in repossessing the automobile,
the condition of the automobile, and quantita tive factors, such as the income level of the
customers and the market value of the automobile.
Disposal of repossessed automobiles and legal actions
In the case where our customers are unable to continue with the due performance of
the contracts or we cannot get in touch with our customers by all reasonable means, we will
terminate the relevant contracts and proceed t o dispose of the subject automobiles. As a
result, approximately 23.9%, 18.8%, 20.4 % and 13.1% of our finance lease contracts,
respectively, were early terminated for the years ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023. Our early termination rate of finance lease contracts
was calculated by dividing the number of earl y terminated contracts of the year/period by
the sum of the number of finance lease contracts in effect at the beginning of the year/period
and the addition of the number of new finance lease contracts during the year/period. Our
early terminated contracts refer to the contracts terminated mainly due to the default in
payment or breach of contract by our customers. Our early termination rate of finance lease
contracts decreased from 23.9% for the year e nded 31 December 2020 to 18.8% for the year
ended 31 December 2021, mainly due to the d ecrease in the number of early terminated
contracts and the increase in the addition of new finance lease contracts driven by the
recovery from the significant adverse effects caused by the outbreak of COVID-19 in the
PRC in 2020. Our early termination rate of fin ance lease contracts increased from 18.8%
for the year ended 31 December 2021 to 20.4 % for the year ended 31 December 2022,
mainly due to the increase in the number of ear ly terminated contracts partially driven by
the adverse effects caused by the regional outbreaks of COVID-19 variants in the PRC in
2022, and offset by the increase in the number of finance lease contracts at the beginning of
2022 and the increase in the addition of new finance lease contracts in 2022. Our early
terminated rate of finance lease contracts decreased from 20.4% for the year ended 31
December 2022 to 13.1% for the six months ended 30 June 2023, mainly due to the increase
in the number of finance lease contracts at th e beginning of 2023 and the increase in the
addition of new finance lease contracts for the six months ended 30 June 2023, and partially
offset by the increase in the number of early terminated contracts during the period.
RISK MANAGEMENT AND OPERATIONS
–2 9 0–


--- page 300 ---
We will evaluate the condition of the repossessed automobiles such as their mileage,
accident history and conditions of their mechanical parts, in order to determine the way of
disposal, which comprise the followings:
(i) Sale through
finance lease
: Automobiles in good conditions, which run normally
and are accident-free, will generally be sold through
finance lease.
We follow our usual operational flow under our
automobile retail and finan ce business in selling these
automobiles including au tomobile inspection and
cleaning before delivery to customers.
(ii) One-off sale : Automobiles in less satisfactory conditions, which are
either (1) of high mileage; (2) manufactured over four
years; (3) not accident-free; or (4) not running
normally, will be sold in a one-off sale.
We send the list of our repossessed automobiles to be
sold in one-off sales from time to time to automobile
dealers or traders. If they are interested in buying the
automobiles on the list, we will negotiate the
transaction terms and sell such automobiles for a
lump sum payment.
(iii) Rent through
operating lease
: Subject to the demand for our automobile operating
lease business, we may from time to time utilise the
repossessed automobiles which function normally and
had not been involved in any major accident for use in
our automobile operating lease business.
We follow our usual operational flow under our
automobile operating lease business in renting out
these automobiles.
(iv) Converting for our
own commercial
use
: As some of our employees are involved in outdoor
fieldwork such as conducting on-site inspection and
repossession of our leased automobiles, they may
request an automobile for p erforming their duties. We
will assign such employees with repossessed
automobiles that function normally for the
performance of their duties.
RISK MANAGEMENT AND OPERATIONS
–2 9 1–


--- page 301 ---
If the repossessed automobiles that do not m eet the normal safety requirements, such
as with severe paint scratches, and severely damaged automobile parts, they will be sent to
third party automobile service workshop for re pair, in order to be sold under finance lease
or operate as operating lease vehicles. Auto mobiles with severe accidents histories, the
repair cost of which is significantly higher than one-off selling price, will be sold directly
through one-off sales.
The following table sets out the number, principal amount, outstanding balance and
value recovered as at the Latest Practicable Date for our early terminated finance lease
agreements by nature of termination for the y ears ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023 :
Number of
agreements
Principal
amount
Outstanding
balance
Value recovered
as at the Latest
Practicable Date
RMB’000 RMB’000 RMB’000 %
For the year ended 31 December 2020
Finance agreements terminated by the
Group arose from default in payment 4,619 406,884 352,235 343,018 81.1
Finance lease agreements voluntarily
terminated by customers 886 76,632 65,644 64,947 15.4
Finance lease agreements terminated by
the Group for reasons other than
default in payment 215 18,959 16,520 14,746 3.5
Other
(Note 1) 4 322 298 267 —
Total 5,724 502,797 434,697 422,978 100.0
For the year ended 31 December 2021
Finance agreements terminated by the
Group arose from default in payment 3,925 339,251 294,653 282,461 76.1
Finance lease agreements voluntarily
terminated by customers 970 84,250 75,548 74,577 20.1
Finance lease agreements terminated by
the Group for reasons other than
default in payment 197 17,668 15,678 14,053 3.8
Other
(Note 1) 15 75 55 5 —
Total 5,093 441,226 385,934 371,146 100.0
RISK MANAGEMENT AND OPERATIONS
–2 9 2–


--- page 302 ---
Number of
agreements
Principal
amount
Outstanding
balance
Value recovered
as at the Latest
Practicable Date
RMB’000 RMB’000 RMB’000 %
For the year ended 31 December 2022
Finance agreements terminated by the
Group arose from default in payment 5,334 499,738 431,989 417,603 81.5
Finance lease agreements voluntarily
terminated by customers 1,015 95,040 84,115 82,524 16.1
Finance lease agreement terminated by
the Group for reasons other than
default in payment 172 15,742 12,923 12,368 2.4
Other (Note 1) ———— —
Total 6,521 610,520 529,027 512,495 100.0
For the six months ended 30 June 2023
Finance agreements terminated by the
Group arose from default in payment 2,876 267,601 226,701 218,644 75.7
Finance lease agreements voluntarily
terminated by customers 775 72,701 63,206 62,095 21.5
Finance lease agreement terminated by
the Group for reasons other than
default in payment 107 9,980 9,067 7,927 2.7
Other
(Note 1) 2 203 160 160 0.1
Total 3,760 350,485 299,134 288,826 100.0
Note: ‘‘—’’ represents percentage less than 0.1%.
1. Other represented the number of finance leas e agreements terminated due to the customers
decided to switch their automobiles t o another automobiles of their choice.
RISK MANAGEMENT AND OPERATIONS
–2 9 3–


--- page 303 ---
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Number of finance lease
agreements in effect as at the
beginning of the year/period 16,077 15,839 19,152 22,001
Number of early terminated
agreements during the year/
period
(Note 1) 5,724 5,093 6,521 3,760
Addition of new finance lease
agreements during the year/
period 7,859 11,308 12,754 6,728
Early termination rate
(Note 2) 23.9% 18.8% 20.4% 13.1%
Number of finance lease
agreements terminated by the
Group arose from default in
payment 4,619 3,925 5,334 3,525
Default rate
(Note 3) 19.3% 14.5% 16.7% 12.3%
Number of finance lease
agreements terminated by the
Group for reasons other than
default in payment 215 197 172 107
Other termination rate (Note 4) 0.9% 0.7% 0.5% 0.4%
Notes:
1. As our finance lease agreements generally had a t erm ranging from two to four years, the number of
early terminated agreements during the year/perio d may include the agreements entered into prior to
the Track Record Period.
2. Early termination rate of finance lease agreem ents was calculated by dividing the number of early
terminated agreements of the year/period by the sum of the number of finance lease agreements in
effect at the beginning of the year/period and the addition of the number of new finance lease
agreements during the year/period.
3. Default rate of finance lease agreements was calculated by dividing the number of default in
payment and finance agreements terminated by the Group of the year/period by the sum of the
number of finance lease agreements in effect at the b eginning of the year/pe riod and the addition of
the number of new finance lease agreements during the year/period.
4. Other termination rate was calculated by div iding the total number of finance agreements
terminated other than default in payment of the ye ar/period by the total number of finance lease
agreements in effect at the beginning of the yea r/period and the addition of the number of new
finance lease agreements during the year/period.
RISK MANAGEMENT AND OPERATIONS
–2 9 4–


--- page 304 ---
Our early termination rate and default rate of finance lease agreements decreased from
23.9% and 19.3% for the year ended 31 December 2020 to 18.8% and 14.5% for the year
ended 31 December 2021, respectively, mainly due to the increase in our addition of new
finance lease agreements for the year ended 3 1 December 2021, driven by the recovery from
the outbreak of the COVID-19 in the PRC in 2020, then increased to 20.4% and 16.7% for
the year ended 31 December 2022, respectivel y, due to the increase in the number of early
terminated agreement during the year, driven by the regional outbreaks of COVID-19
variants in the PRC in 2022. The fluctuation of our early termination rate during the Track
Record Period mainly depended on (i) the growth rate of the number of early terminated
agreements during the year; and (ii) the gro wth rate of addition of new finance lease
agreements during the year. For the year en ded 31 December 2021, the number of addition
of new finance lease agreements increased by 43.9% as compared to the year ended 31
December 2020, as our business recovered f rom the adverse impact of COVID-19 in the
PRC in 2020, in comparison, the number of ear ly terminated agreements decreased by
11.0% for the corresponding year, hence our early termination rate decreased. For the year
ended 31 December 2022, the number of addition of new finance lease agreements increased
by 12.8% as compared to the year ended 31 December 2021, however, the number of early
terminated agreements increased by 28.0% due to the regional outbreaks of COVID-19
variants in the PRC in 2022, hence our early termination rate increased. Our early
termination rate and default rate of finance lease agreements decreased to 13.1% and 12.3%
for the six months ended 30 June 2023, respectively, mainly due to the increase in our
addition of new finance lease agreements during the period. Customers may voluntarily
terminate the finance lease contracts due to th eir own considerations such as finance needs.
The actual loss incurred related to the early terminated contracts during the Track
Record Period was set out as below, including (i) disposal loss of repossessed automobiles;
(ii) provision for inventories; and (iii) finance lease receivables written-off.
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Disposal loss of repossessed
automobiles 5,694 5,883 6,750 2,293
Provision for inventories 2,876 7,674 6,886 3,774
Finance lease receivables
written-off 2,459 3,328 2,951 3,707
Total 11,029 16,885 16,587 9,774
The actual loss incurred from the early ter minated contracts in creased from RMB11.0
million for the year ended 31 December 202 0 to RMB16.9 million for the year ended 31
December 2021, mainly due to the increase in our provision for inventories for our
increased number of finance lease agreements du ring the year. The actual loss incurred from
RISK MANAGEMENT AND OPERATIONS
–2 9 5–


--- page 305 ---
the early terminated contracts remained rel atively stable at RMB16.6 million for the year
ended 31 December 2022. The actual loss incurred from the early terminated contracts was
RMB9.8 million for the six months ended 30 June 2023.
The following table sets out the number of repossessed and disposed automobiles, and
the value recovered, as at the Latest Practicable Date, from our early terminated finance
lease agreements by the source of recovery for the years ended 31 December 2020, 2021,
2022 and the six months ended 30 June 2023 :
Number of
repossessed
and disposed
automobiles Value recovered
RMB’000 %
For the year ended 31 December 2020
Sale through finance lease 3,256 258,702 59.8
One-off sale 1,913 125,025 28.9
Rent through operating lease 504 45,365 10.5
Convert for our own commercial use 30 3,507 0.8
Total 5,703 432,599 100.0
For the year ended 31 December 2021
Sale through finance lease 3,114 249,948 65.3
One-off sale 1,482 97,103 25.4
Rent through operating lease 446 34,184 8.9
Convert for our own commercial use 13 1,383 0.4
Total 5,055 382,618 100.0
For the year ended 31 December 2022
Sale through finance lease 4,590 397,423 75.1
One-off sale 1,124 64,866 12.3
Rent through operating lease 796 65,540 12.4
Convert for our own commercial use 7 917 0.2
Total 6,517 528,746 100.0
For the six months ended 30 June 2023
Sale through finance lease 2,714 228,823 77.0
One-off sale 508 28,005 9.4
Rent through operating lease 518 40,373 13.6
Convert for our own commercial use 1 146 —
Total 3,741 297,347 100.0
RISK MANAGEMENT AND OPERATIONS
–2 9 6–


--- page 306 ---
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, the number of instances of customer defa ult on repayments, which refers any payment
of principal or interest being overdue for more than three months, were 80, 99, 126 and 158,
respectively. The following table sets out the non-performing asset ratio by sales channel for
the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
Self-operated sales outlets 0.7% 0.6% 0.7% 0.8%
Automobile agents 0.7% 2.4% 0.03% 0.002%
As a result of our risk management system, we had managed to maintain relatively low
credit losses during the Track Record Period. As at 31 December 2020, 2021, 2022 and 30
June 2023, our non-performing asset ratios were 0.7%, 0.7%, 0.7% and 0.8%, respectively.
According to the CIC Report, the industry a verage non-performing asset ratio as at 31
December 2021 and 2022 were 1.5% and 2.0%, res pectively. As such, our non-performing
asset ratios as at 31 December 2021 and 2022 were lower than the industry average.
We also initiate legal proceedings agains t the default or delinquent customers to
recover overdue payments and related admini strative fees from time to time in order to
preserve our automobile assets, to put pressure on our customers for figuring out a
repayment schedule with us, or to identify additional assets that our customers can provide
as collateral to secure the outstanding receivables. As at the Latest Practicable Date, we had
a total of 75 outstanding legal proceedings mainly against our customers.
As at the Latest Practicable Date, out of the early terminated contracts, 99.6%, 99.3%,
99.9% and 99.5% of the automobiles were successfully repossessed and sold, leased or put
into our own commercial use, representing 97.3%, 96.2%, 96.9% and 96.5% of the
outstanding amount of lease receivables of the early terminated contracts for the years
ended 31 December 2020, 2021, 2 022 and the six months ended 30 June 2023, respectively.
As a result of our effective automobile repossession and disposal measures, as well as the
legal proceedings we initiated against our defau lt customers, the actual loss incurred related
to the early terminated contracts accounted for 1.5%, 1.4%, 1.5% and 1.9% of the total
revenue for the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2023, respectively.
Operational Risk Management
Liquidity risk
Liquidity risk is the risk that we may not ha ve sufficient funds to meet our payment
obligations as they become due. We aim at mainta ining an appropriate level of liquidity,
allowing our Group to meet payment obligations and support our operations.
RISK MANAGEMENT AND OPERATIONS
–2 9 7–


--- page 307 ---
We believe that our funding strategy that aims to avoid any significant gap between the
maturity profile of assets and liabilities and to diversify our sources of funding can minimise
our liquidity risk. We use a broad range of financing instruments such as shareholders’
equity, interest-bearing loans, automobile finance lease arrangement, factoring of finance
lease receivables to maintain diverse funding sources. Please see the section headed
‘‘Business — Our Lenders and Funding Capab ilities’’ for further details. We also aim to
maintain an appropriate level of liquid assets.
Our liquidity risk management is led by our finance department under the leadership of
Ms. Zhang Jinghua, our executive Director who has over 18 years of experience in financial
management. For further details of Ms. Zhang’s qualifications and experience, please see
the section headed ‘‘Directors and Senio r Management — Executive Directors’’.
We have adopted the following measures to control and monitor our short-term and
long-term liquidity risk exposure:
. strive to match the cash outflow relating to our borrowings with the cash inflow of
our automobile finance leases (generally not more than four years);
. maintain diverse funding sources;
. maintain an appropriate level of liquid assets;
. maintain an appropriate level of unutilised funding facilities; and
. monitor our short-term and l ong-term liquidity risk us ing internal metrics and
regulatory indicators as set out below:
— without taking into account the financin g of e-hailing vehicle operating lease,
current ratio shall not be lower than one;
The aforesaid automobiles are classi fied as non-current assets. Thus, our
Company considers that the inclusion of such current liabilities in the
calculation of current ratio is not appropriate.
— debt ratio (defined as total assets div ided by total liabilities) shall not exceed
85%; and
— the level of risk assets shall comply wi th the requirements stipulated by the
relevant PRC laws and regulations.
RISK MANAGEMENT AND OPERATIONS
–2 9 8–


--- page 308 ---
Data Privacy
Our operating risk management is princi pally led by our vice president of Fujian
Xidun, Mr. Chen Xiong. Operating risk is the risk resulting from inadequate internal
controls and systems, human er rors, information technology s y s t e mf a i l u r e so re x t e r n a l
events. In particular, we face the risk of failing to protect the confidentiality of our
customers’ personal data. During our credit assessment and approval process, we collect
and store personal information about our customers, for example, names, identity card
numbers, driving licences, bank card numbers, addresses and mobile phone numbers. We
also collect behavioural data on customers’ usage of the leased automobiles through the
GPS tracking devices installed on the auto mobiles with customers’ consent. We have
adopted corresponding internal control measures to ensure the security of our data system
and confidentiality of our customers’ personal and behavioural data, which we require our
employees to strictly adhere to and have established a penalty mechanism to ensure our
employees’ compliance with our internal control measures. Such measures include, but not
limited to the followings:
. Access to our customers’ data is restri cted by assigning different security
clearance level to our employees of different departments. Our employees are
generally allowed to access such data for the purpose of conducting our credit
assessment and approval, and monitoring and tracking automobile activities.
However, they can only access our custom ers’ data for other purposes based on
business needs with prior approval of the head of our technical department and
Fujian Xidun. We cancel the right of access to customers’ personal data for
resigned or dismissed employees. In rel ation to employees on leave for more than
one month, we suspend their access to customers’ personal data during their leave
period. Our employees are required to adhere to all relevant laws and regulations,
as well as our internal control measures in relation to the data privacy protection.
. We store the data on customers’ usage of the leased automobiles on third party
cloud servers, the operators of which are not allowed to disclose such data to
other third parties without our prior consents. Our agreement with third party
cloud server operators stipulated that third party cloud server operators shall not
use or disclose any data to other third parties without our prior consent. We also
require third party operators to provid e periodical ‘‘Service Organisation
Control’’ reports during the service period to verify that the security,
availability and confidentiality of cloud servers are effective.
. We store our customers’ personal data i n our internal server. Our computer
systems and information processing fac ilities are protected by firewalls and
anti-virus software to prevent and detect threats by computer viruses and other
malicious software. Our employees are not allowed to install any computer
software or plug in any external hard drives to our office computers unless
approved by our technical department. We have put in place information security
measures to implement strict data access control. The passwords for the
administrator accounts with higher access rights are set by the database
administrator of our IT department. The passwords for the administrator
RISK MANAGEMENT AND OPERATIONS
–2 9 9–


--- page 309 ---
accounts with higher access rights are set by the database administrator of our IT
department without revealing to any other person. Any alteration of data, such as
addition, deletion, and modification, by way of database back-end operation
requires authorisation by our IT department and can only be carried out by the
personnel of our IT department.
. Repair and maintenance work on our computer systems and information
processing facilities are generally performed by our technical department. For
any such repair and maintenance works performed by external parties, the staff of
our technical department will monitor such works performed on site. If any of our
computer systems and information processing facilities have to be taken away for
repair and maintenance work, to the extent possible, we will back up and erase all
data stored in such device before such device leaves our properties. We will also
scan such device for computer virus or any other malicious software before
putting it back into our computer systems.
. Our contracts with third party automobile aftermarket service providers generally
stipulate that they are not allowed to d isclose or publish any information,
including customers’ personal data, to other third parties without our prior
consents.
We have taken various measures to ensure the collection, storage and use of our
customers’ personal data are in compliance w ith applicable laws and regulations. For
example, our customers are required to provide consent to our collection, use and disclosure
of their personal data before we conduct our credit assessment, either by signing a consent
letter or by acknowledging and consenting to our data privacy policy which can be accessed
on our mobile applications. Our collection, us e and disclosure of our customers’ personal
data are for the purposes consented to by the data subject, who provided the relevant data
and remain the owner of such data, and the personal data will not be utilised for any other
purposes without their prior consent. We do not set a fixed duration for how long the
personal data will be kept on our system. Therefore, unless the owner of the data requests
for deletion, we generally will continue to main tain this data in accordance with our policy
to ensure security and confidentiality.
Further, our customers are required to provide consent to the installation of GPS
tracking devices on the leased automobiles. As advised by our PRC Legal Advisers, as at the
Latest Practicable Date, there was no applic able law and regulation in the PRC in relation
to the ownership of GPS tracking data. We ge nerally do not set a ﬁxed duration for how
long the GPS tracking data will be kept on our system. Such data will generally be kept for
a period of at least thirty days. We will remove the GPS tracking devices installed on the
leased automobiles at the end of the lease terms.
RISK MANAGEMENT AND OPERATIONS
–3 0 0–


--- page 310 ---
During the Track Record Period, we had not been in material breach of any PRC laws
or regulations in relation to the privacy and personal information protection during our
collection, use, disclosure and protection of personal information. During the Track Record
Period, our Directors confirmed that we had not received any complaints from any third
party, or been involved in any dispute with any third party, or been investigated or
punished by any competent authority in relation to privacy and personal information
protection. Taking into account the above, our PRC Legal Advisers are of the view that our
Group complied with the applicable PRC law s, rules and regulations relating to the
collection, storage, use, disclosure of persona l data in all material respects during the Track
Record Period.
We have also implemented the following measures to monitor and control our other
operational risk exposure:
. maintaining a corporate governance structure with clearly defined duties of the
Board, senior management, as well as the various committees and departments;
. formulating and adopting standard commercial contracts for our business
operations; and
. maintaining and continuously improving our operational procedures and internal
control system, and utilising our information technology system to monitor and
control the performance of each procedure.
. We have implemented a bribery prevention policy that forbids our Directors, our
staff and agents from accepting benefits and giving benefits to business partners.
The policy also contains procedures fo r handling conflicts of interest and
whistleblowing. Whistleblowers are given financial rewards for preventing
financial loss if the incident was not discovered.
. We have also implemented an anti-corruption policy that further lists out in detail
all the benefits that our Directors, our staff and agents should not receive from
business partners, including monetary benefits, entertainment-related benefits,
discounts, services, loans, employment, stocks, education and gambling. The
policy also forbids the use of our assets for personal purposes and gambling, and
contains rules on gifting between staff and management. The policy requires the
establishment of an internal audit function and lists out its roles and
responsibilities.
. Our Directors, our staff and agents are responsible for abiding by the bribery
prevention policy and anti-corruption policy. Penalties are given according to the
policies if any violations are raised or detected.
RISK MANAGEMENT AND OPERATIONS
–3 0 1–


--- page 311 ---
Interest rate risk
Interest rate risk represents exposure to adverse movements in interest rates. The
interest rate risk that we face is relatively limited because our assets and liabilities are
generally based on fixed interest rates. Ou r exposure to the risk of changes in market
interest rates relates primarily to our interest-b earing borrowings and lease receivables. Our
interest rate risk is principally managed by our finance department under the leadership of
our executive Director, Ms. Zhang Jinghua. See ‘‘Directors and Senior Management —
Executive Directors’’ in the prospectus for further details of Ms. Zhang’s qualification and
experience.
To manage our interest rate risk, we have adopted the following measures:
. monitoring interest rate fluctuations regularly; and
. tracking the sensitivity of projected net interest income under varying interest rate
scenarios.
Legal and Compliance Risk Management
We are subject to regulation and supervis ion by national, provincial and local
government authorities with regard to our finance lease operations, online platforms and
mobile applications. XXF Group, Fujian Xidi and Fujian Shenqi are subject to certain
regulatory measures, including the Measures for Finance Lease Enterprises ( 《融資租賃企業
監督管理辦法》) prior to 26 May 2020, which stipulates that the risk assets of a finance lease
company shall not exceed 10 times of its total net assets; and the Interim Measures for the
Supervision and Administration of Finance Lease Companies ( 《融資租賃公司監督管理暫行
辦法》) (the ‘‘Interim Measures ’’) since 26 May 2020, which stipulates that the risk assets of a
finance lease company shall not exceed eight times of its net assets. Please see the section
headed ‘‘Regulatory Overview’’ for further de tails of the applicable laws and regulations. If
we fail to comply with these laws and regulations, we may be penalised and be required to
rectify.
Our legal and compliance risk is managed by our legal department under the leadership
of our legal manager, Ms. Ye Ying, who has over eight years of legal-related experience.
During the Track Record Period, we have not been prosecuted nor sanctioned for any
material non-compliance by any government authorities. In addition, we have implemented
the following measures to strengthen our legal and compliance risk management:
. establishing risk-monitoring thresholds (our level of risk assets not exceeding (i)
10 times of our total net assets prior to 26 May 2020; and (ii) eight times of our
total net assets since 26 May 2020) in our system in accordance with the relevant
legal and regulatory requirements, to monitor and identify and the irregularities
and non-compliance incidents in our opera tions. The risk assets, registered capital
and net assets value of each of the XXF Group, Fujian Xidi and Fujian Shenqi
were in compliance with the Measures fo r Finance Lease Enterprise during the
RISK MANAGEMENT AND OPERATIONS
–3 0 2–


--- page 312 ---
Track Record Period. The following table sets out the risk assets, registered
capital and net assets value of each of the XXF Group and Fujian Xidi as at the
dates indicated based on the respectiv e statutory/management accounts:
XXF Group
As at 31 December
As at
30 June
2020 2021 2022 2023
Risk assets (total assets net of cash
and cash equivalents and pledged
and restricted deposits) (RMB’000) 1,719,766 2,118,879 2,407,377 2,380,763
Net assets value (RMB’000) 601,363 662,792 693,916 712,405
Risk assets/Net assets value (times) 2 . 93 . 23 . 53 . 3
Fujian Xidi
As at 31 December
As at
30 June
2020 2021 2022 2023
Risk assets (total assets net of cash
and cash equivalents and pledged
and restricted deposits) (RMB’000) 488,477 340,650 — —
Net assets value (RMB’000) 174,080 168,006 — —
Risk assets/Net assets value (times) 2.8 2.0 — —
Fujian Shenqi started to engage in auto mobile finance lease business since
September 2023. Fujian Xidi has terminated finance lease business since 22 July
2022.
. monitoring legal updates, including updates on the interpretation of applicable
laws and regulations by relevant regulatory authorities; and
. e n g a g i n gl a w y e r st oa d v i s eo u rG r o u pi nr e l a t i o nt ol e g a lc o m p l i a n c ew h e n
necessary.
RISK MANAGEMENT AND OPERATIONS
–3 0 3–


--- page 313 ---
OVERVIEW
As at the Latest Practicable Date, Glorypearl Capital, Precious Luck, Happy Gain and
Southern Fortune, all of which were controlled by Mr. Huang, held in aggregate
approximately 31.18% of our issued share c apital. Immediately upon completion of the
Global Offering and the Capitalisation Issue, M r. Huang will, through Glorypearl Capital,
Precious Luck, Happy Gain and Southern Fortune, hold approximately 24.94% of the
issued share capital of our Company without taking into account of Shares which may be
issued pursuant to the exercise of the Over-a llotment Option or options granted under the
Pre-IPO Share Option Scheme or options which may be granted under the Share Option
Scheme. Glorypearl Capital is wholly owned by Mr. Huang. Precious Luck is wholly owned
by Shanghai Boyu, a limited partnership controlled by Weichuang Hongjing as the
executive partner and general partner, which is owned as to 99% by Mr. Huang and 1% by
Fuzhou Zhitong. Mr. Huang is also the executive partner and general partner of Fuzhou
Zhitong, therefore Shanghai Boyu is indirectly controlled by Mr. Huang. Happy Gain is
wholly owned by Shanghai Bo Yu, a limited partnership controlled by Weichuang
Xingsheng as the executive partner and general partner, which is wholly owned by Mr.
Huang. Southern Fortune is wholly owned by Shanghai Boyun, a limited partnership
controlled by Fujian Fuyuan as the executive partner and general partner, which is in turn
controlled by Mr. Huang as the executive par tner and general partner. For Mr. Huang’s
background, please refer to the section heade d ‘‘Directors and Senior Management’’ in this
prospectus.
INDEPENDENCE FROM OUR SINGLE LARGEST SHAREHOLDER
We believe that our Group is capable of carrying on its business independently of Mr.
Huang and his close associates after Listing for the following reasons:
Management Independence
Our Board currently comprises three ex ecutive Directors, two non-executive
Directors and three independent non-executive Directors. Mr. Huang is one of our
executive Directors and the chairman of our Board. We believe all of our Directors,
including the independent non-executive Directors, have the requisite qualifications,
integrity and experience to maintain an e ffective board and observe their fiduciary
duties in the event of a conflict of interest. In the event that there is a potential conflict
of interest arising out of any transaction to be entered into between our Group and our
Directors or their respective associates, the interested Director(s) shall abstain from
voting at the relevant Board meetings of our Company in respect of such transactions
and shall not be counted towards the quorum. Further, our Company’s three
independent non-executive Directors will bring independent judgement to the
decision-making process of the Board.
Having considered the above factors, our D irectors are satisfied that they are able
to perform their roles in our Company independently, and our Directors are of the
view that we are capable of managing our business independently from Mr. Huang and
his close associates following the completion of the Global Offering.
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 4–


--- page 314 ---
Operational Independence
We operate independently from Mr. Huang and his close associates. We have
independent access to our customers and suppliers and are also in possession of all
relevant licences necessary to carry on and ope rate our business and we have sufficient
operational capacity in terms of capital and employees to operate independently from
our single largest Shareholder.
Although we have entered into certain co ntinuing connected transactions with
Mr. Huang and his close associate(s) which will continue after Listing, such
transactions have been entered into and will continue to be entered into on normal
commercial terms or better and in the ordinary course of business of our Company.
The details of the connected transactions that will continue after Listing are set out in
the section headed ‘‘Connected Transactions’’ in this prospectus.
Financial Independence
We have our own internal control and accounting systems, accounting and finance
department, independent treasury function for cash receipts and payment which are
independent from our single largest Shareholder. We have an independent financial
system and make financial decisions according to our Group’s own business needs.
Mr. Huang, his spouse Ms. Xie Xiaohui and Mr. Ye Fuwei, our executive
Director, have jointly and/or individually provided personal guarantees in favour of
our Group in respect of certain financing arrangements (the ‘‘ Debt Financing ’’)
including finance lease or loans entered into by our Group with Independent Third
Party creditors, which have been mainly used to finance our automobile retail and
finance business and automobile operating lease business. The terms and conditions of
the Debt Financing were negotiated on an arm’s length basis between the Independent
Third Party creditors, Mr. Huang, his close associate, Mr. Ye Fuwei and our Group
with reference to the normal prevailing com mercial practice. According to CIC, the
retail automobile finance lease industry is capital intensive in nature and debt
financing is a common practice for retail auto mobile finance lease service providers in
the retail automobile finance lease industry . Details of the Debt Financing which were
subsisting as at the Latest Practicable Date and are expected to continue after Listing
are set out below:
No.
Member of our
Group
(as borrower) Creditor Maturity date
Annual
Interest
rate
Balance as at the
Latest Practicable
Date Guarantor(s) Securities
(RMB’000)
1. XXF Group Beijing Chesheng (Note) 30 June 2024 8.00% 33,779 Mr. Huang Charge of 50%
equity interest in
Fujian Xidi held
by XXF Group
2. XXF Group Creditor A 1 June 2024 7.12% 2,408 Mr. Huang Pledge of
automobiles
3. XXF Group Creditor B 29 November 2023 or
9 December 2023
8.70% to 8.73% 909 Mr. Huang and
XXF Group
Pledge of
automobiles
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 5–


--- page 315 ---
No.
Member of our
Group
(as borrower) Creditor Maturity date
Annual
Interest
rate
Balance as at the
Latest Practicable
Date Guarantor(s) Securities
(RMB’000)
4. XXF Group Creditor C 25 December 2023,
11 January 2024 or
11 February 2024
10.00% 2,992 Mr. Huang, Ms. Xie
Xiaohui and Mr.
Ye Fuwei
Charge of 10% of
equity interest in
XXF Group held
by XXF HK and
mortgage of real
estate
5. XXF Group Creditor D 15 January 2025,
22 January 2025,
24 April 2025,
31 May 2025 or
1 June 2025
9.97% to 10.02% 16,655 Mr. Huang Pledge of
automobiles
6. XXF Group Creditor D 15 November 2025,
16 December 2025,
17 December 2025,
11 January 2026,
14 January 2026,
21 January 2026,
7A p r i l2 0 2 6o r
13 May 2026
9.99% to 10.01% or
13.00% to 13.01%
10,816 Mr. Huang and Ms.
Xie Xiaohui
Pledge of
automobiles
7. XXF Group Creditor E 19 January 2025,
21 July 2025,
20 August 2025,
16 September 2025,
24 October 2025,
28 October 2025,
18 November 2025,
15 December 2025,
27 January 2026,
11 March 2026,
31 March 2026,
11 May 2026,
2 June 2026,
21 June 2026,
9 August 2026,
11 August 2026,
23 September 2026
or 12 October 2026
10.00% 28,165 Mr. Huang Pledge of
automobiles
8. Fujian Xidi Creditor E 5 November 2023 or
11 November 2023
9.00% 232 Mr. Huang and
XXF Group
Pledge of
automobiles and
finance lease
receivables
9. Fujian Qoocar Creditor F 25 March 2024 or
17 August 2024
9.46% or 11.34% 454 Mr. Huang N/A
10. Guoxin Zhonglian Creditor F 25 March 2024 11.34% 114 Mr. Huang N/A
11. Guoxin Zhonglian Creditor G 19 May 2024 9.94% 131 Mr. Huang N/A
12. Fujian Xiqi Creditor G 10 December 2023,
12 April 2024 or
15 September 2024
8.45%, 9.50% or
13.24%
356 Mr. Huang N/A
13. Fujian Qoocar Creditor G 12 June 2024 9.79% 146 Mr. Huang N/A
14. Fujian Xiqi Creditor H 12 April 2024 or
15 September 2024
8.45% or 9.50% 476 Mr. Huang N/A
15. XXF Group Creditor I 30 August 2025 12.09% 3,122 Mr. Huang Pledge of
automobiles
16. Fujian Xidi Creditor I 12 May 2024 12.09% 809 Mr. Huang and
XXF Group
Pledge of
automobiles
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 6–


--- page 316 ---
No.
Member of our
Group
(as borrower) Creditor Maturity date
Annual
Interest
rate
Balance as at the
Latest Practicable
Date Guarantor(s) Securities
(RMB’000)
17. Fujian Xidi Creditor J 21 June 2025,
16 September 2025,
28 September 2025,
14 October 2025,
20 October 2025,
25 October 2025,
31 October 2025 or
9 November 2025
7.35% 46,227 Mr. Huang and
XXF Group
Pledge of
automobiles
18. Fujian Xidi Creditor K 8 February 2025 11.46% 1,453 Mr. Huang, Ms. Xie
Xiaohui and XXF
Group
Pledge of
automobiles
19. XXF Group Creditor L 31 August 2024,
30 September 2024,
24 November 2024 or
17 March 2026,
11 May 2026,
29 May 2026,
28 June 2026,
28 July 2026,
15 August 2026,
15 September 2026 or
22 September 2026
8.44%, 8.48%,
8.54%, 8.55%,
8.86%, 8.93%,
8.96%, 9.18%,
9.19% or 9.24%
18,889 Mr. Huang, Ms. Xie
Xiaohui and an
Independent
Third Party
Pledge of
automobiles
20. XXF Group Creditor M 12 August 2025,
7 September 2025,
27 September 2025 or
24 November 2025
9.08%, 9.23%,
9.35% or 9.39%
5,847 Mr. Huang, Ms. Xie
Xiaohui and an
Independent
Third Party
Pledge of
automobiles
21. XXF Group Creditor N 10 November 2025,
30 November 2025,
5 December 2025,
8 December 2025,
15 December 2025 or
16 December 2025,
22 August 2026,
23 August 2026 or
24 August 2026
6.27% or 10.49% 4,383 Mr. Huang Pledge of
automobiles
22. XXF Group Creditor O 10 August 2027,
28 August 2027,
6 September 2027 and
28 September 2027
8.49% or 8.99% 13,361 Mr. Huang Pledge of
automobiles
23. XXF Group Creditor P 8 February 2026,
30 June 2026,
17 August 2026,
24 August 2026 or
8 September 2026
8.99%, 9.00% or
9.01%
10,262 Mr. Huang Pledge of
automobiles
24. XXF Group Creditor Q 23 December 2023 6.25% 10,000 Mr. Huang, Ms. Xie
Xiaohui and
Fujian Xidi
Mortgage of
property
25. Fujian Xidi Creditor R 15 March 2025 or
29 May 2026
7.14% or 7.28% 36,976 Mr. Huang, Ms. Xie
Xiaohui and XXF
Group
Pledge of
automobiles
26. XXF Group Creditor S 26 May 2024 10.00% 6,125 Mr. Huang,
Ms. Xie and
Fujian Xidi
Pledge of finance
lease receivables
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 7–


--- page 317 ---
No.
Member of our
Group
(as borrower) Creditor Maturity date
Annual
Interest
rate
Balance as at the
Latest Practicable
Date Guarantor(s) Securities
(RMB’000)
27. XXF Group Creditor T 30 June 2026,
4 July 2026,
21 July 2026,
25 July 2026,
30 August 2026,
27 September 2026 or
16 October 2026
5.92% or 9.99% 7,260 Mr. Huang and
XXF Group
Pledge of
automobiles
28. XXF Group Creditor T 30 August 2026 9.99% 773 Mr. Huang Pledge of
automobiles
29. Fujian Xidi Creditor V 1 August 2026 6.35% 951 Mr. Huang and
XXF Group
Pledge of
automobiles
Total 264,071
Note: See ‘‘History, Reorganisation and Corpor ate Structure — Pre-IPO Investments — Amount
due to Beijing Chesheng’’ for further details.
The reasons for not releasing before the Listing
Given that (i) it would not be in our commercial interest to refinance the Debt
Financing before the maturity dates as it wou ld result in unnecessary additional costs,
expenses and time; and (ii) we did not manage to obtain positive feedback from the
relevant creditors for early release of the guarantees, it would be highly difficult and
impractical for our Group to release the guarantees under the Debt Financing without
such consent, waiver and/or assistance. Taking into account the following
circumstances and measures taken by our Group, we believe that the continuation of
the Debt Financing after Listing will not s ignificantly impact our ability to operate
independently from Mr. Huang and his close associates:
(a) the Debt Financing does not account for a significant portion of our total
indebtedness, and will be our only debt instruments with guarantees provided
by Mr. Huang or his close associates upon Listing. As at the Latest
Practicable Date, the outstanding balance of the Debt Financing that we
expected to continue after Listing amounted to approximately RMB264.1
million, representing approximately 1 3.2% of the total indebtedness of our
Group;
(b) we are able to obtain financing from independent financial institutions
without financial assistance from Mr. Huang and his close associates.
Subsequent to the Track Record Period and up to the Latest Practicable
Date, we had obtained loan and other financing facilities in an aggregate
principal amount of approximately RMB287.7 million without any security
or guarantee from any of Mr. Huang or his close associates from independent
financial institutions; and
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 8–


--- page 318 ---
(c) not all of our borrowings are secured or guaranteed by Mr. Huang or his
close associates. As at the Latest Practicable Date, we had unutilised
financing facilities of approximately RMB3,806.8 million which are and will
not be secured or guaranteed by Mr. Huang or his close associates after
Listing.
All amounts due from or due to Mr. Huang and his close associates not arising
out of the ordinary course of business will be fully settled before Listing. Save for the
guarantees provided under the Debt Financing disclosed above, all share pledges and
guarantees provided by Mr. Huang and his close associates on our Group’s borrowing
or by us on borrowings of Mr. Huang and his close associates will be released upon
Listing.
CORPORATE GOVERNANCE MEASURES
Our Directors believe that there are adequate corporate governance measures in place
to manage existing and potential conflicts of interest. In order to further avoid potential
conflicts of interest, we have imple mented the following measures:
(a) as part of our preparation for the Global Offering, we have amended our Articles
to comply with the Listing Rules. In partic ular, our Articles provide that, unless
otherwise provided, a Director shall not vote on any resolution approving any
contract or arrangement or any other proposal in which such Director or any of
his/her close associates has a material interest nor shall such Director be counted
in the quorum for the voting;
(b) a Director with himself/herself or his/her close associates having material interests
shall make full disclosure at the meeting of the Board in respect of such interest
and unless permitted under the Articles, shall abstain from voting on such matters
and not be counted in the quorum;
(c) we are committed that our Board should include a balanced composition of
executive and independent non-executive Directors. We have appointed three
independent non-executive Directors and we believe our independent
non-executive Directors possess sufficient experience and they are free of any
business or other relationship which could interfere in any material manner with
the exercise of their independent judgement and will be able to provide an
impartial, external opinion to protect the interests of our public Shareholders.
Details of our independent non-executive Directors are set out in the section
headed ‘‘Directors and Senior Management — Board of Directors — Independent
non-executive Directors’’ in this prospectus; and
(d) we have appointed Quam Capital Limited as our compliance adviser pursuant to
Rule 3A.19 of the Listing Rules, which will provide advice and guidance to us in
respect of compliance with the applicable laws and the Listing Rules including
various requirements relating to direct ors’ duties and corporate governance.
RELATIONSHIP WITH OUR SINGLE LARGEST SHAREHOLDER
–3 0 9–


--- page 319 ---
OVERVIEW
We have entered into the following transactions with our connected persons which will
constitute continuing connected transactions for our Company under chapter 14A of the
Listing Rules upon Listing.
FULLY EXEMPT CONTINUING C ONNECTED TR ANSACTIONS
Property Management Services
On 23 October 2023, XXF Group entered into a property management services
framework agreement (the ‘‘ Property Management Services Framework Agreement ’’) with
Ningde Yongsheng Property Management Co., Ltd. ( 寧德市永盛物業管理有限公司)
(‘‘Ningde Yongsheng ’’), pursuant to which XXF Gro up agreed to engage Ningde
Yongsheng to provide property management services for certain offices leased by XXF
Group or its subsidiaries (the ‘‘ Property Management Services ’’). The Property Management
Services Framework Agreement has a term commencing from the Listing Date to 31
December 2025.
For each of the three years ended 31 December 2022 and the six months ended 30 June
2023, the total service fees incurred and paid by XXF Group for the Property Management
Services amounted to approximately RMB 0.3 million, RMB0.2 million, RMB0.1 million
and RMB0.06 million, respectively. The s ervice fees to be charged for Property
Management Services are determined after arm’s length negotiations taking into account
the prevailing market price of similar services in the open market and the historical fee rate.
Our Directors estimate that the maximum t ransaction amounts under the Property
Management Services Framework Agreement for each of the three years ending 31
December 2025 will not exceed RMB0.4 million. Su ch estimate is based on (i) the estimated
gross floor area of the properties for which Ningde Yongsheng will provide the Property
Management Services; and (ii) the historical t ransaction amounts during the Track Record
Period.
The Property Management Services Framework Agreement is a framework agreement
which provides the mechanism for the operati on of the connected transaction described
therein. It is envisaged that from time to time and as required, individual service contracts
may be entered into between XXF Group or its subsidiaries and Ningde Yongsheng or its
branches. The individual service contracts may only contain provisions which are in all
material respects consistent with the binding principles, guidelines, terms and conditions set
out in the Property Management Services Framework Agreement.
Ningde Yongsheng is wholly owned by Fuzhou Shenghui, which is in turn owned as to
approximately 4.48% by Mr. Liu Wei, our non-executive Director, and approximately
95.52% by his father and an associate of Mr. Liu Wei. Ningde Yongsheng is therefore a
connected person of our Company for the purpose of the Listing Rules. Accordingly, the
transactions under the Property Management Services Framework Agreement will
constitute continuing connected transactions for our Company under Chapter 14A of the
Listing Rules upon Listing.
CONNECTED TRANSACTIONS
–3 1 0–


--- page 320 ---
As each of the applicable percentage ratios under the Listing Rules in respect of the
annual caps in relation to the Property Management Services Framework Agreement is
expected to be less than 0.1% on an annual basis, such transactions will be within the de
minimis threshold provided under Rule 14A.76 of the Listing Rules upon Listing, and will
be exempt from the reporting, annual review, announcement and independent Shareholders’
approval requirements under Chapter 14A of the Listing Rules.
Connected Guarantees
Mr. Huang, his close associate and Mr. Ye Fuwei provided personal guarantees (the
‘‘Connected Guarantees ’’) in favour of our Group in respect of certain financing
arrangements entered into by our Group. Please refer to the section headed
‘‘Relationship with our Single Largest Shareholder — Independence from our Single
Largest Shareholder — Financial Independence’’ of this prospectus for further details.
In addition, Mr. Ye Fuwei individually and/or together with our Group provided
personal guarantees in favour of our Group in r espect of certain financing arrangements
(the ‘‘Mr. Ye Connected Guarantees ’’) entered into by our Group with an Independent Third
Party creditor in an aggregate principal amo unt of approximately RMB34.5 million with an
annual interest rate between 9.98% and 10.00%. Mr. Ye Connected Guarantees were
subsisting as at the Latest Practicable Date and are expected to survive after Listing.
Mr. Huang is one of our executive Directors and our substantial Shareholder. Mr. Ye
Fuwei is one of our executive Directors. As su ch, each of Mr. Huang, his close associate and
Mr. Ye Fuwei is our connected person for the purpose of the Listing Rules. Accordingly,
the Connected Guarantees and the Mr. Ye Conn ected Guarantees will co nstitute continuing
connected transactions for our Company under Chapter 14A of the Listing Rules upon
Listing.
As our Directors are of the view that each of the Connected Guarantees and the Mr.
Ye Connected Guarantees are on normal commercial terms to our Group and the
Connected Guarantees and the Mr. Ye Connected Guarantees are not secured by assets of
our Group in favour of any of Mr. Huang, his close associate or Mr. Ye Fuwei, the
Connected Guarantees and the Mr. Ye Conn ected Guarantees are exempted from the
reporting, annual review, announcement and independent shareholders’ approval
requirements pursuant to Rule 14A.90 of the Listing Rules.
CONNECTED TRANSACTIONS
–3 1 1–


--- page 321 ---
BOARD OF DIRECTORS
Our Board currently consists of eight Direct ors, comprising three executive Directors,
two non-executive Directors and three independent non-executive Directors. The powers
and duties of our Board include convening general meetings and reporting our Board’s
work at our Shareholders’ meetings, determining our business and investment plans,
preparing our annual financial budgets and final reports, formulating proposals for profit
distributions and for exercising other powers, functions and duties as conferred by the
Articles. None of our Directors and members of our senior management team have any
relationship with any other Director or member of our senior management team.
The table below shows certain information in respect of members of our Board:
Name Age
Date of joining
our Group
Date of
appointment as
our Director Position(s) Roles and responsibilities
Mr. Huang Wei
(黃偉)
41 25 September
2007
29 March 2019 Chairman, chief executive
officer and executive
Director
Responsible for the overall
management, strategic
planning and major
operational decisions of
our Group
Mr. Ye Fuwei
(葉富偉)
36 10 October 2012 28 November
2019
Executive Director and
executive vice president
Responsible for overseeing
the automobile retail and
finance for e-hailing
vehicles, the automobile
operating lease and other
automobile-related
business of our Group
Ms. Zhang Jinghua
(張景花)
42 1 May 2015 28 November
2019
Executive Director, senior
vice president and
financial controller
Responsible for the
financial management
and internal control of
our Group
Mr. Liu Wei
(劉偉)
36 2 July 2015 28 November
2019
Non-executive Director Responsible for providing
strategic advice and
guidance on the business
d e v e l o p m e n to fo u r
Group
Ms. Xu Rui
(徐睿)
40 28 November
2019
28 November
2019
Non-executive Director Responsible for providing
strategic advice and
guidance on the business
d e v e l o p m e n to fo u r
Group
Mr. Wu Fei
(吳飛)
51 9 October 2023 9 October 2023 Independent non-executive
Director
Responsible for supervising
and providing
independent advice to the
Board
DIRECTORS AND SENIOR MANAGEMENT
–3 1 2–


--- page 322 ---
Name Age
Date of joining
our Group
Date of
appointment as
our Director Position(s) Roles and responsibilities
Mr. Fung Che
Wai, Anthony
(馮志偉)
54 9 October 2023 9 October 2023 Independent non-executive
Director
Responsible for supervising
and providing
independent advice to the
Board
Mr. Chen Shuo
(陳碩)
57 9 October 2023 9 October 2023 Independent non-executive
Director
Responsible for supervising
and providing
independent advice to the
Board
Executive Directors
Mr. Huang Wei ( 黃偉), aged 41, was appointed as our Director on 29 March 2019
and was re-designated as our executive Director on 28 November 2019. Mr. Huang is
also the chairman and chief executive officer of our Group and is primarily responsible
for the overall management, strategic planning and major operational decisions of our
Group. He also holds directorship in a number of subsidiaries of our Group. Mr.
Huang founded XXF Group in September 2007 where he has been serving as the
chairman of the board and the general manager since its inception and has been
primarily responsible for its overall manage ment and decision-making in its day-to-day
business operations.
Prior to founding our Group, from April 2001 to April 2007, Mr. Huang worked
at CPTF Optronics Co., Ltd.* ( 華映光電股份有限公司), a manufacturer of cathode ray
monochrome and colour display tubes, where he was in charge of manufacturing.
Since January 2023, Mr. Huang has been serving as the legal representative of
Fuzhou Jin’an Non-party Intellectuals Fellowship* ( 福州市晉安區黨外知識分子聯誼
會). Mr. Huang was appointed as a representative of the Sixteenth Fuzhou People’s
Congress ( 福州市第十六屆人民代表大會) in January 2022. In November 2020, Mr.
Huang was awarded the Advanced Individual in Fighting the New Coronary
Pneumonia Epidemic ( 福建省抗擊新冠肺炎疫情先進個人) by Fujian Provincial
Committee of the Communist Party of Ch ina and People’s Government of Fujian
Province. In September 2020, Mr. Huang was awarded the 18th Outstanding
Entrepreneurs of Fujian Province ( 第十八屆福建省優秀企業家) by Fujian Enterprise
and Enterpriser Federation* ( 福建省企業與企業家聯合
會). In November 2019, he was
awarded the 2019 National Commerce Outstanding Entrepreneur by the Association at
China Commercial Enterprise Management* ( 中國商業企業管理協會). Mr. Huang
served as a vice president of Fuzhou Jin’an Federation of Industry and Commerce* ( 福
州市晉安區工商業聯合會) in December 2017.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 3–


--- page 323 ---
Mr. Huang was enrolled in the executiv e master of business administration
programme jointly organised by Tsinghua University ( 清華大學)i nt h eP R C ,E´cole des
Ponts ParisTech in France and E ´cole nationale de l’aviation civile in France in 2019.
Mr. Huang was (i) a director and general manager of Shaanxi Xixiangfeng
Automobile Lease Co., Ltd.* ( 陝西喜相逢汽車租賃有限公司), a then wholly-owned
subsidiary of XXF Group established in the PRC and deregistered on 20 July 2015;
and (ii) a director and manager of Fujian A nxin, a then wholly-owned subsidiary of
XXF Group established in the PRC and deregistered on 9 July 2020. Mr. Huang has
confirmed that, to the best of his information, knowledge and belief, each of the
companies was deregistered due to the fact that it had not commenced any business
since its establishment. Mr. Huang was also (i) an executive partner of Fuzhou
Gongcheng Investment Partnership (Limited Partnership)* ( 福州功成投資合夥企業（有
限合夥）), a limited partnership established in the PRC and deregistered on 22
September 2016; and (ii) an executive partner of Fujian Pilot Free Trade Zone Pingtan
Area Hongyuan Investment Partne rship (Limited Partnership)* ( 福建自貿試驗區平潭
片區宏元投資合夥企業（有限合夥）), a limited partnership established in the PRC and
deregistered on 27 September 2020. Mr. Huang has confirmed that, to the best of his
information, knowledge and belief, each of th e limited partnerships was deregistered
due to the fact that it had no business operation immediately prior to its deregistration.
Mr. Huang further confirms that each of such companies and partnerships was solvent
at the time of its deregistration and as at the Latest Practicable Date, no claim had
been made against him and he was not aware of any threatened and potential claims
made against him and there are no outstandi ng claims and/or liabilities as a result of
the deregistration of such companies and partnerships.
Mr. Ye Fuwei ( 葉富偉), aged 36, was appointed as our executive Director on 28
November 2019. Mr. Ye joined our Group in 2012 and has been serving as executive
vice president since December 2015. He is p rimarily responsibl e for overseeing the
automobile finance lease and operating lease, the automobile retail and finance for
e-hailing vehicles and other automobile-related business of our Group. Mr. Ye is also a
director of XXF Group.
Prior to joining our Group, from July 2007 to October 2011, Mr. Ye served as a
director at the sales department of Shanghai Didu Agent Co., Ltd.* ( 上海帝都房地產
經
紀有限公司), a real estate agent.
Mr. Ye received his associate degree in human resources management and
self-study undergraduate certificate in bus iness administration from Jimei University
(集美大學) in the PRC in June 2015 and December 2019, respectively. Mr. Ye was
enrolled in the Executive Finance Progr amme Advanced Financial Management
Course, a distance learning programme jointly delivered by Shanghai Advanced
Institute of Finance* ( 上海高級金融學院), an institute affiliated with Shanghai Jiao
Tong University ( 上海交通大學) in the PRC, Shanghai National Accounting Institute*
(上海國家會計學院) in the PRC and the Arizona State University in the United States
in 2021.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 4–


--- page 324 ---
Mr. Ye was appointed as a member of the 10th Jin’an District of Fuzhou
Municipal Committee of the Chinese People’s Political Consultative Conference* ( 中國
人民政治協商會議第十屆福州市晉安區委員會) in December 2021.
Mr. Ye was a director of Fujian Xiyun, a then indirect subsidiary owned as to
60% by XXF Group and 40% by Fujian Nebula Electronics Co., Ltd.* ( 福建星雲電子
股份有限公司), an Independent Third Party (by virtue of Fujian Xiyun being an
insignificant subsidiary of our Compan y as defined under the Listing Rules)
established in the PRC and deregistered on 31 March 2022.
Mr. Ye has confirmed that, to the best of h is information, knowledge and belief,
the company was deregistered due to the fact that it had no business operation
immediately prior to its deregistration. Mr. Ye further confirms that such company
was solvent at the time of its deregistration and as at the Latest Practicable Date, no
claim had been made against him and he was not aware of any threatened and potential
claims made against him and there is no outstanding claims and/or liabilities as a result
of the deregistration of such company.
Ms. Zhang Jinghua ( 張景花), aged 42, was appointed as our executive Director on
28 November 2019. Ms. Zhang joined our Group in 2015 and has been serving as our
senior vice president and financial controller since May 2017. She is primarily
responsible for the financial management and internal control of our Group. Ms.
Zhang is also a director of XXF Group.
Ms. Zhang has over 18 years of experience in financial management. Prior to
joining our Group, from September 2011 to April 2015, Ms. Zhang served as an
accounting supervisor at Fujian Sunnada Communication Co., Ltd.* ( 福建三元達通訊
股份有限公司) (now known as Suna Co., Ltd* ( 深南金科股份有限公司)), a service
provider of mobile devices and mobile TV network previously listed on the Shenzhen
Stock Exchange (stock code: 002417), where she was primarily responsible for its
financial management. From December 2 007 to August 2011, Ms. Zhang worked at
Fuzhou Shenzhou Digital Co., Ltd.* ( 福州神州數碼有限公司), a company principally
engaged in the wholesales of computer hardware and accessories, where she was
primarily responsible for its financial matters. From June 2004 to January 2006, Ms.
Zhang worked at CPTF Optronics Co., Ltd.* ( 華映光電股份有限
公司), a manufacturer
of cathode ray monochrome and colour display tubes, where she was primarily
responsible for its financial and accounting matters.
Ms. Zhang received her bachelor’s degr ee of management in accounting from
Northeast Forestry University ( 東北林業大學) in the PRC in July 2003.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 5–


--- page 325 ---
Non-executive Directors
M r .L i uW e i(劉偉), aged 36, was appointed as our non-executive Director on 28
November 2019. Mr. Liu has been serving as a director of XXF Group since July 2015.
Mr. Liu has also been serving as a vice presid ent at Shenghui Logistic Group Co. Ltd.*
(盛輝物流集團有限公司) since March 2013 and has been primarily in charge of its
information technology department and human resources department.
Mr. Liu received his bachelor’s degree in process equipment and control
engineering from Fuzhou University ( 福州大學) in the PRC in June 2009 and his
master’s degree of science in management and entrepreneurship from University of
Sussex in the United Kingdom in January 2013.
Mr. Liu was appointed as a member of the 13th Fuzhou Municipal Committee of
the Chinese People’s Political Consultative Conference* ( 中國人民政治協商會議第十三
屆福州市委員會) in December 2016.
Mr. Liu was a supervisor of Fujian Shenghui Asset Management Co., Ltd.* ( 福建
省盛輝資產管理有限公司), a limited liability company established in the PRC and
deregistered on 2 March 2016. Mr. Liu has confirmed that, to the best of his
information, knowledge and belief, the company was deregistered due to the fact that it
had not commenced any business since its est ablishment. Mr. Liu further confirms that
such company was solvent at the time of its deregistration and as at the Latest
Practicable Date, no claim had been made against him and he was not aware of any
threatened and potential claims made against him and there is no outstanding claims
and/or liabilities as a result of the deregistration of such company.
Ms. Xu Rui ( 徐睿), aged 40, was appointed as our non-executive Director on 28
November 2019. Ms. Xu has been serving as the general manager of the investment
banking department at SDIC Taikang Trust Co., Ltd. ( 國投泰康信託有限公司)s i n c e
October 2016 and has been primarily responsible for equity investment, mergers and
acquisitions.
From January 2009 to December 2012, Ms . Xu worked at Beijing Zhongzheng
Wanrong Investment Group Co., Ltd.* ( 北京中證萬融投資集
團有限公司), a company
principally engaged in equity investment.
Ms. Xu received her bachelor’s degree of arts in business English from Central
University of Finance and Economics ( 中央財經大學)i nt h eP R Ci nJ u l y2 0 0 7a n dh e r
master’s degree in busin ess administration fro m Peking University ( 北京大學)i nt h e
PRC in June 2014. Ms. Xu also received the fund qualification certificate* ( 基金從業人
員資格證) from Asset Management Association of China* ( 中國證券投資基金業協會)
in November 2016.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 6–


--- page 326 ---
Independent Non-executive Directors
Mr. Wu Fei ( 吳飛), aged 51, was appointed as our independent non-executive
Director on 9 October 2023. Since May 2023, Mr. Wu has been serving as an
independent non-executive director of New Hope Dairy Co., Ltd.* ( 新希望乳業股份有
限公司), a dairy products manufacturer and seller listed on the Shenzhen Stock
Exchange (stock code: 002946), where he was primarily responsible for supervising and
providing independent advice to the board. Mr. Wu has also been serving as the legal
representative of Shanghai Gaojin Education Technology Co., Ltd.* ( 上海高金教育科
技有限公司) since February 2023.
From January 2020 to April 2023, Mr. Wu served as an independent
non-executive director of Anhui Anfu Battery Technology Co., Ltd. ( 安徽安孚電池
科技股份有限公司), formerly known as Anhui Andeli Department Store Co., Ltd. ( 安
徽安德利百貨股份有限公司), a batteries manufacturer and seller listed on the Shanghai
Stock Exchange (stock code: 603031), where he was primarily responsible for
supervising and providing independent advice to the board. From November 2020 to
March 2022, Mr. Wu served as an independent non-executive director of Shanghai Lily
& Beauty Cosmetics Co., Ltd. ( 上海麗人麗妝化妝品股份有限公司), an e-commerce
retail company listed on the Shanghai Stock Exchange (stock code: 605136), where he
was primarily responsible for supervising and providing independent advice to the
board.
From February 2018 to January 2021, Mr. Wu served as an independent
non-executive director of CEFC Hong Kong Financial Investment Company Limited
(香港華信金融投資有限公司) (now known as Virtual Mind Holding Company Limited
(天機控股
有限公司)), an apparel manufacturer and seller listed on the Main Board of
the Stock Exchange (stock code: 1520), w here he was primarily responsible for
supervising and providing independent advice to the board. From December 2016 to
December 2019, Mr. Wu served as an indepen dent non-executive director of Fujian
Raynen Technology Co., Ltd.* ( 福建睿能科技股份有限公司), a high-tech company
listed on the Shanghai Stock Exchange (stock code: 603933), where he has been
primarily responsible for supervising and providing independent advice to the board.
Since June 2013, Mr. Wu has been serving as a professor at Shanghai Advanced
Institute of Finance of Shanghai Jiao Tong University* ( 上海交通大學上海高級金融學
院). He served as a professor at Jiangxi Un iversity of Finance and Economics* ( 江西財
經大學) from November 2010 to October 2013, a member of its Academic Committee*
(學術委員會) from October 2009 to September 2013 and an associate dean of its
International Academy of Financial Management* ( 金融管理國際研究院)f r o mM a r c h
2012 to June 2013. From June 2004 to March 2010, Mr. Wu served as a senior lecturer
presenting finance related lectures at Massey University in New Zealand.
Mr. Wu received his bachelor’s degree in industrial economics from South China
University of Technology* ( 華南理工大學) in the PRC in July 1994, his master’s degree
in financial investment from University of Aberdeen in the United Kingdom in
November 2000, and his doctor’s degree of philosophy in banking and finance from
University College Dublin in the Republic of Ireland in March 2005.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 7–


--- page 327 ---
Mr. Wu Fei was a director of Jiangxi Daoerfen Technology Co., Ltd.* ( 江西道而
芬科技有限公司), a limited liability company established in the PRC and deregistered
on 6 March 2018. Mr. Wu has confirmed that, to the best of his information,
knowledge and belief, the company was deregistered as it had ceased operations. Mr.
Wu further confirm that such company was solvent at the time of its deregistration and
as at the Latest Practicable Date, no claim had been made against him and he was not
aware of any threatened and potential claims made against him and there is no
outstanding claims and/or liabilities as a re sult of the deregistration of such company.
Mr. Fung Che Wai, Anthony ( 馮志偉), aged 54, was appointed as our independent
non-executive Director on 9 October 2023. Since November 2021, Mr. Fung has been
serving as an independent non-executive director of Zhong An Group Limited ( 眾安集
團有限公司), a Chinese property developer listed on the Main Board of the Stock
Exchange (stock code: 0672), where he is p rimarily responsible for supervising and
providing independent advice to the Board. Since 9 October 2020, Mr. Fung has been
serving as an independent non-executive director of KWG Living Group Holdings
Limited ( 合景悠活集團控股有限公司), a comprehensive property management service
provider listed on the Main Board of the Stock Exchange (stock code: 3913). From
April 2017 to August 2023, Mr. Fung has been serving as an independent
non-executive director of FY Financial (Shenzhen) Co., Ltd. ( 富銀融資租賃（深圳）股
份有限公司), a financial services company listed on the GEM of the Stock Exchange
(stock code: 8452), where he has been primarily responsible for supervising and
providing independent advice to the board of directors. From May 2017 to December
2022 and from March 2019 to December 2022, Mr. Fung served as the chief financial
officer and company secretary, respectivel y, of Beijing Enterprises Urban Resources
Group Limited ( 北控城市資源集團有限公司), an integrated waste management
solution provider listed on the Main Board of the Stock Exchange (stock code:
3718), where he was primarily responsible for the overall financial and investor
relations matters. From June 2017 to October 2021, Mr. Fung served as an
independent non-executive director of S&P International Holding Limited ( 椰豐集團
有限公司), a coconut food manufacturer and seller listed on the Main Board of the
Stock Exchange (stock code: 1695), where he was primarily responsible for supervising
and providing independent advice to the board. From September 2014 to April 2017,
Mr. Fung served as an external supervisor of Chery HuiYin Motor Finance Service
Co., Ltd.* ( 奇瑞徽
銀汽車金融股份有限公司), an automobile finance joint venture,
where he was primarily responsible for mon itoring the company’s operations as a
member of the board of supervisors. From July 2014 to April 2017, Mr. Fung served as
the chief financial officer and company secretary of Kong Sun Holdings Limited ( 江山
控股有限公司), a solar power plants investor and operator listed on the Main Board of
the Stock Exchange (stock code: 0295), where he was primarily responsible for overall
financial operation, company secretarial matters and investor relations. From January
2011 to July 2014, Mr. Fung served as the chief financial officer and company secretary
of Zall Development (Cayman) Holding Co., Ltd. ( 卓爾發展（開曼）控股有限公司)
(now known as Zall Smart Commerce Group Ltd. ( 卓爾智聯集團有限公司)), a
property developer listed on the Main Board of the Stock Exchange (stock code:
2098), where he was primarily responsible for financial and compliance matters. From
January 2008 to August 2010, Mr. Fung served as the vice president of NagaCorp Ltd.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 8–


--- page 328 ---
(金界控股有限公司) ,al i c e n s e dc a s i n ol i s t e do nt h eM a i nB o a r do ft h eS t o c kE x c h a n g e
(stock code: 3918), where he was primarily responsible for development of investor
relations procedures, policies and strategi es for the company and liaison with existing
and potential investors as well as analysts. From October 1999 to August 2007, Mr.
Fung served as a director of Winsmart Consultants Limited ( 弘陞投資顧問有限公司), a
financial consulting company, where he wa s primarily responsible for advising the
client on corporate finance and investor relations related matters. From August 1992
to September 1999, he successively served as a staff accountant, semi senior
accountant, senior accountant and manager in Deloitte Touche Tohmatsu, where he
was primarily responsible for audit planning and control.
Mr. Fung received his bachelor’s degree of arts in accountancy from Hong Kong
Polytechnic University in October 1992. Mr. Fung was admitted as a fellow member of
the Association of Chartered Certified Accountants and the Hong Kong Institute of
Certified Public Accountants in October 2001 and September 2005, respectively.
M r .C h e nS h u o(陳碩), aged 57, was appointed as our independent non-executive
Director on 9 October 2023. Since November 2020, he has served as the vice president
of China Haichuang Technology (Fujian) Group Co., Ltd* ( 中海創科技（福建）集團有
限公司), an automation and information technology provider in the PRC, where he
was primarily responsible for investment development and technological co-operation.
From January 2009 to July 2014, Mr. Chen served as the legal representative of
Fuzhou Chengjian Construction Drawing Review Firm* ( 福州成建施工圖審查事務所).
From January 2009 to April 2013, Mr. Chen served as the legal representative of
Fuzhou Guowei Construction Design Co., Ltd* ( 福州國偉建設設計有限公司). From
October 2006 to October 2009, Mr. Chen served as a deputy director of Digital City
Research Centre of Wuhan University* ( 武漢大學數字城市研究中心). From July 1989
to September 2020, Mr. Chen worked at Fuzhou Planning and Design Institute* ( 福州
市規
劃設計研究院), a survey, planning and design research institute, where he had held
a professional title of professor level senior engineer and had served as the vice
president and was in charge of the operations and scientific research activities.
Mr. Chen was appointed as a member of the 12th and 13th of the Fuzhou
Municipal Committee of the Chinese People’s Political Consultative Conference* ( 中國
人民政治協商會議第十二屆及第十三屆福州市委員會), and as a vice president at Fujian
Green Construction Innovation Alliance* ( 福建省綠色建築創新聯盟) in December
2014. In January 2000, Mr. Chen was appointed as the supervisor of master’s student
at the College of Electrical Engineering of Fuzhou University ( 福州大學).
Mr. Chen received his bachelor’s degree in computer science from Fuzhou
University ( 福州大學) in the PRC in July 1989, and attended postgraduate training in
international economics at Xiamen University ( 廈門大學) in the PRC from March 1996
to May 1998. From February 2002 to August 2002, Mr. Chen was a visiting scholar of
the Imperial College of Science, Techno logy and Medicine in the United Kingdom.
From December 2006 to January 2008, Mr. C hen was a visiting scholar at the
Department of Engineering Science at the University of Oxford in the United
Kingdom. Mr. Chen was admitted as a regis tered automation system engineer of
DIRECTORS AND SENIOR MANAGEMENT
–3 1 9–


--- page 329 ---
Chinese Association of Automation in June 2005 and a professor grade senior engineer
(with the treatment of professors and researchers) of Fuzhou Planning and Design
Institute* ( 福州市規劃設計研究院) in June 2006.
As at the Latest Practicable Date, none of our Directors and their respective close
associates had any interest in any business which competes or is likely to compete,
either directly or indirectly with our Group’s business which would require disclosure
under Rule 8.10 of the Listing Rules.
Save as disclosed above, none of our Directors have held any other directorships
in listed companies during the three years immediately preceding the date of this
Prospectus. There is no other information relating to the relationship of any of our
Directors with other Directors and memb er of the senior management that should be
disclosed pursuant to Rule 13.51(2) or paragraph 41(3) of Appendix 1A of the Listing
Rules.
Save as disclosed herein, to the best of the knowledge, information and belief of
our Directors having made all reasonable inquiries, there was no other matter with
respect to the appointment of our Directors that needed to be brought to the attention
of our Shareholders and there was no information relating to our Directors that was
required to be disclosed pursuant to Rules 13 .51(2)(h) to (v) of the Listing Rules as of
the Latest Practicable Date.
SENIOR MANAGEMENT
Our executive Directors are our senior management who are responsible for the
day-to-day operations and management of the business of our Group. Please refer to the
paragraph entitled ‘‘Board of Directors — Ex ecutive Directors’’ in this section for the
biographical details of our executive Directors, Mr. Huang Wei, Mr. Ye Fuwei and Ms.
Zhang Jinghua.
COMPANY SECRETARY
Mr. Wong Yuk ( 王旭), aged 52, was appointed as our company secretary on 28
November 2019.
Mr. Wong has over 25 years of work experience in finance and accounting. Since May
2023, Mr. Wong has been serving as an executive director of Winto Group (Holdings)
Limited (stock code: 8238), a publications and advertising provider, where he has been
primarily responsible for the management o f its operations. Since August 2022, Mr. Wong
has been serving as an executive director of Tian Cheng Holdings Limited ( 天成控股有限公
司), formerly known as Yue Kan Holding Limited ( 裕勤控股有限公司), a Hong Kong-based
marine construction works subcontractor listed on the Main Board of the Stock Exchange
(stock code: 2110), where he has been primarily responsible for financial management and
assisting to manage the day-to-day business operations. Since December 2019, Mr. Wong
has been serving as an independent non-executive director of Hygieia Group Limited, a
cleaning service provider listed on the Main Board of the Stock Exchange (stock code:
1650), where he has been primarily responsible for providing independent opinion and
DIRECTORS AND SENIOR MANAGEMENT
–3 2 0–


--- page 330 ---
judgement to the board of directors. From May 2017 to February 2019, Mr. Wong served as
a senior consultant at Huanian Xinxing Chanye Jituan Company Limited* ( 華年新興產業集
團有限公司) where he was primarily responsible for managing investment projects. From
May 2015 to January 2017, Mr. Wong served as the company secretary of Success Dragon
International Holdings Limited ( 勝龍國際控股有限公司), a company principally engaged in
the provision of management services for electronic gaming equipment and listed on the
Main Board of the Stock Exchange (stock code: 1182). From December 2010 to June 2012,
Mr. Wong served as the chief financial officer and company secretary of Yuanda China
Holdings Limited ( 遠大中國控股有限公司), a company listed on the Main Board of the
Stock Exchange (stock code: 2789), where he was primarily responsible for financing and
investor relations affairs. Mr. Wong start ed his career in KPMG Hong Kong in September
1996 and left the firm as a senior account ant in April 1999. Mr. Wong also worked for
various Hong Kong and Singapore listed c ompanies from October 1999 to November 2010
on financial and accounting affairs both in H ong Kong and the PRC, including subsidiaries
of the Swire Group, Hong Kong and China Gas Company Limited, Lung Kee Metal Ltd.
and China Oilfield Technology Se rvices Group Ltd. respectively.
Mr. Wong received his bachelor’s degree in accountancy from the Hong Kong
Polytechnic University in Hong Kong in November 1996. He was admitted as a member of
the Hong Kong Institution of Certified Public Accountants in January 2004 and a fellow
member of the Association of Chartered C ertified Accountants in August 2005.
BOARD COMMITTEES
Audit committee
Our Company has established the audit committee on 9 October 2023 with written
terms of reference in compliance with Rule 3.2 1 of the Listing Rules and paragraph D.3 of
the Corporate Governance Code (the ‘‘ CG Code ’’) as set out in Appendix 14 to the Listing
Rules. The audit committee consists of t hree members, namely Mr. Fung Che Wai,
Anthony, Mr. Wu Fei and Mr. Chen Shuo. Mr. Fung Che Wai, Anthony has been
appointed as the chairman of the audit committee, and is our independent non-executive
Director with the appropriate professional qualifications. The primary duties of the audit
committee are to assist our Board by providing an independent view of the effectiveness of
the financial reporting system, risk management and internal control systems of our Group,
to oversee the audit process, to develop and review our policies and to perform other duties
and responsibilities as assigned by our Board.
Remuneration committee
Our Company has established the remuneration committee on 9 October 2023 with
written terms of reference in compliance with Rule 3.25 of the Listing Rules and paragraph
E.1 of the CG Code as set out in Appendix 14 to the Listing Rules. The remuneration
committee has three members, namely Mr. Wu Fei, Mr. Huang Wei and Mr. Fung Che Wai,
Anthony. Mr. Wu Fei has been appointed as the chairman of the remuneration committee.
The primary duties of the remuneration committee are to establish and review the policy
and structure of the remuneration for our Directors and senior management and make
recommendations on emplo yee benefit arrangement.
DIRECTORS AND SENIOR MANAGEMENT
–3 2 1–


--- page 331 ---
Nomination committee
Our Company has established the nomination committee on 9 October 2023 with
written terms of reference in compliance with paragraph B.3 of the CG Code as set out in
Appendix 14 to the Listing Rules. The nomination committee consists of three members,
namely Mr. Huang Wei, Mr. Wu Fei and Mr. Chen Shuo. Mr. Huang Wei has been
appointed as the chairman of the nomination committee. The primary duties of the
nomination committee are to make recommendations to our Board on the appointment of
members of our Board.
CORPORATE GOVERNANCE
Our Directors recognise the importance of incorporating elements of good corporate
governance in the management structures and internal control procedures of our Group so
as to achieve effective accountability.
Our Company has adopted the code provisions stated in the CG Code. Our Company
is committed to the view that the Board should include a balanced composition of executive
Directors, non-executive Directors and indepe ndent non-executive Directors so that there is
a strong independent element on the Board, which can effectively exercise independent
judgement.
Except for the deviation from CG Code provision C.2.1, our corporate governance
practices have complied with the CG Code. CG Code provision C.2.1 stipulates that the
roles of the chairman and chief executive should be separate and should not be performed
by the same individual. Mr. Huang is the chairman and chief executive officer of our
Group. In view of the fact that Mr. Huang has be en assuming day-to-day responsibilities in
operating and managing our Group since September 2007, our Board believes that it is in
the best interest of our Group to have Mr. Huang taking up both roles for effective
management and business development. Th erefore, the Directors consider that the
deviation from CG Code provision C.2.1 is appropriate in such circumstance.
Notwithstanding the above, our board is of the view that this management structure is
effective for our Group’s operations and sufficient checks and balances are in place.
Our Directors are aware that upon Listing, we are expected to comply with such code
provision. Any such deviation shall however be carefully considered, and the reasons for
such deviation shall be given in our interim report and annual report in respect of the
relevant period. We are committed to achieving high standards of corporate governance
with a view to safeguarding the interests of our Shareholders as a whole. Save as disclosed
above, we will comply with the code provisions set out in the CG Code after the Listing.
DIRECTORS AND SENIOR MANAGEMENT
–3 2 2–


--- page 332 ---
BOARD DIVERSITY POLICY
Our Board has adopted a board diversity policy which sets out the approach to achieve
diversity on our Board. Our Company recognises and embraces the benefits of having a
diverse Board and sees increasing diversity at Board level as an essential element in
supporting the attainment of our Company’s strategic objectives and sustainable
development. Our Company seeks to achieve Board diversity through the consideration
of a number of factors, including but not limited to talents, skills, gender, age, cultural and
educational background, ethnicity, professional experience, independence, knowledge and
length of service. We will continue to impl ement measures and steps to promote and
enhance gender diversity at all levels of our Company. We will select potential Board
candidates based on merit and his/her potential contribution to our Board while taking into
account our board diversity policy and other factors. Our Company will also take into
consideration our own business model and specific needs from time to time. All Board
appointments will be based on meritocracy and candidates will be considered against
objective criteria, having due regard to the benefits of diversity on our Board.
Our Board comprises of eight members, including one female executive Director and
one female non-executive Director. Our Directors also have a balanced mix of knowledge,
skills and experience, including business deve lopment, financial m anagement, investor
relations, information technology, manufacturing, teaching, procurement, investment and
law. They obtained degrees in various majors including but without limitation to business
administration, human resource management, entrepreneurship management, accounting,
engineering, economics, finance, language and law. Furthermore, our Board has a wide
range of age, ranging from 36 years old to 57 years old. We have taken and will continue to
take steps to promote gender diversity at all levels of our Company, including but without
limitation at our Board and senior management levels. Taking into account our business
model and specific needs as well as the presence of two female Directors out of a total of
eight Board members, we consider that the composition of our Board satisfies our board
diversity policy.
With regards to gender diversity on the Board, our board diversity policy further
provides that our Board shall take opportunities to increase the proportion of female
members over time when selecting and making recommendations on suitable candidates for
Board appointments. We will also ensure that there is gender diversity when recruiting staff
at mid to senior level so that we will have a p ipeline of female senior management and
potential successors to our Board going forward. It is our objective to maintain an
appropriate balance of gender diversity with reference to the stakeholders’ expectation and
international and local recommended best practices.
Our nomination committee is responsible for ensuring the diversity of our Board
members. After Listing, our nomination committee will review our board diversity policy
and its implementation from time to time to ensure its implementation and monitor its
continued effectiveness and we will disclose the implementation of our board diversity
policy in our corporate governance report on an annual basis.
DIRECTORS AND SENIOR MANAGEMENT
–3 2 3–


--- page 333 ---
COMPENSATION OF OUR DIRECTORS AND SENIOR MANAGEMENT
Our Directors and members of our senior management receive compensation from our
Company in the form of salaries, bonuses and other benefits in kind such as contributions
to pension plans. The aggregate remuneration (including salaries, wages, bonuses, pension
cost and share-based compensation expenses) paid to our Directors for each of the three
years ended 31 December 2022 and the six months ended 30 June 2023 was approximately
RMB12.4 million, RMB2.7 million, RMB2.8 million and RMB1.4 million, respectively.
Save as disclosed above, no other amounts had been paid or were payable by any member of
our Group to our Directors during the Track Record Period.
The aggregate amount of wages, salaries and bonuses, contribution to pension plans,
social security costs, other employee benefits and share-based compensation expenses paid
to our five highest paid individuals (including our Directors) in respect of each of the three
years ended 31 December 2022 and the six months ended 30 June 2023 was approximately
RMB15.1 million, RMB5.0 million, RMB4.0 m illion and RMB1.9 million, respectively.
No remuneration was paid by us to our Directors or the five highest paid individuals as
an inducement to join or upon joining us or as a compensation for loss of office in respect of
each of the three years ended 31 December 2022 and the six months ended 30 June 2023.
Further, none of our Directors had waived or agreed to waive any remuneration during the
same periods.
Under the arrangement currently in force, the aggregate remuneration (including
salaries, wages, bonuses, pension cost and share-based compensation expenses) of our
Directors for the year ending 31 December 2023 is estimated to be no more than RMB3.5
million. Our Board will review and determine th e remuneration and compensation packages
of our Directors and senior management which, following the Listing, will receive
recommendation from the remuneration committee which will take into account salaries
paid by comparable companies, time commitme nt and responsibilities of our Directors and
performance of our Group.
PRE-IPO SHARE OPTION SCHEME
Our Company has conditionally adopted the Pre-IPO Share Option Scheme, the
purpose of which is to incentivise and reward eligible participants by reason of their
contribution or potential contribution to our Company and/or any of our subsidiaries. For
details of the Pre-IPO Share Option Scheme, pl ease refer to the sectio n headed ‘‘Statutory
and General Information — D. Other information — 2. Pre-IPO Share Option Scheme’’ in
Appendix IV to this prospectus.
SHARE OPTION SCHEME
Our Company has conditionally adopted the Share Option Scheme on 9 October 2023.
For details of the Share Option Scheme, pleas e refer to the section headed ‘‘Statutory and
General Information — D. Other Information — 1. Share Option Scheme’’ in Appendix IV
to this prospectus.
DIRECTORS AND SENIOR MANAGEMENT
–3 2 4–


--- page 334 ---
COMPLIANCE ADVISER
Our Company has appointed Quam Capital Limited as our compliance adviser
pursuant to Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules,
our compliance adviser will advise our Company in the following circumstances:
. before the publication of any regulatory announcement, circular or financial
report;
. where a transaction, which might be a notifiable or connected transaction, is
contemplated including share issues and share repurchases;
. where our Company proposes to use th e proceeds of the Global Offering in a
manner different from that detailed in this prospectus or where our business
activities, developments or results deviate from any forecast, estimate or other
information in this prospectus; and
. where the Stock Exchange makes an inquiry of our Company under Rule 13.10 of
the Listing Rules.
T h et e r mo ft h ea p p o i n t m e n to fo u rc o m p l i a n ce adviser shall commence on the Listing
Date and end on the date on which our Company distribute our annual report in respect of
our financial results for the first full fina ncial year commencing after the Listing Date.
DIRECTORS AND SENIOR MANAGEMENT
–3 2 5–


--- page 335 ---
SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, the following persons will, immediately prior to and
following the completion of the Global Offering and the Capitalisation Issue (taking no
account of any Shares which may be issued pursuant to the exercise of the Over-allotment
Option or Shares which may be issued upon the exercise of any options granted under the
Pre-IPO Share Option Scheme and any options which may be granted under the Share
Option Scheme), have interests or short positions in our Shares or underlying Shares which
would be required to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV
of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting
shares of any other member of our Group:
Name of Shareholder
Nature of
interest
Shares held immediately prior to
the completion of the Global
Offering and the Capitalisation
Issue (1)
Shares held immedi ately following
the completion of the Global
Offering and the Capitalisation
Issue (1)
Number
Approximate
percentage Number
Approximate
percentage
Mr. Huang (2)(3)(4) Interest in
controlled
corporation
121,263,281 (L) 31.18% 128,610,355 (L) 24.94%
Glorypearl Capital
(2) Beneficial
owner
59,913,281 (L) 15.40% 63,543,294 (L) 12.32%
Weichuang
Hongjing (3)
Interest in
controlled
corporation
33,150,000 (L) 8.52% 35,158,485 (L) 6.82%
Shanghai Boyu (3) Interest in
controlled
corporation
33,150,000 (L) 8.52% 35,158,485 (L) 6.82%
Precious Luck
(3) Beneficial
owner
33,150,000 (L) 8.52% 35,158,485 (L) 6.82%
Teng Yongxiong (5) Interest in
controlled
corporation
51,000,000 (L) 13.11% 54,089,977 (L) 10.49%
Tengxin Investment (5) Interest in
controlled
corporation
51,000,000 (L) 13.11% 54,089,977 (L) 10.49%
Shanghai Boli
Enterprise
Management Co.,
Ltd.
(5)
Interest in
controlled
corporation
51,000,000 (L) 13.11% 54,089,977 (L) 10.49%
Ideal Stand
(5) Beneficial
owner
51,000,000 (L) 13.11% 54,089,977 (L) 10.49%
Liu Yonghui (6) Interest in
controlled
corporation
45,003,375 (L) 11.57% 47,730,030 (L) 9.26%
Prosperous Splendor
(6) Beneficial
owner
45,003,375 (L) 11.57% 47,730,030 (L) 9.26%
Zhuhai Wanhe Jinhua
Asset Management
Co., Ltd.
(7)
Interest in
controlled
corporation
42,632,812 (L) 10.96% 45,215,840 (L) 8.77%
SUBSTANTIAL SHAREHOLDERS
–3 2 6–


--- page 336 ---
Name of Shareholder
Nature of
interest
Shares held immediately prior to
the completion of the Global
Offering and the Capitalisation
Issue (1)
Shares held immedi ately following
the completion of the Global
Offering and the Capitalisation
Issue (1)
Number
Approximate
percentage Number
Approximate
percentage
Shanghai Jili
Enterprise
Management
Partnership
(Limited
Partnership)
(7)
Interest in
controlled
corporation
42,632,812 (L) 10.96% 45,215,840 (L) 8.77%
Brown Oak Holdings
Limited
(7)
Beneficial
owner
42,632,812 (L) 10.96% 45,215,840 (L) 8.77%
Qiu Hui (8) Interest in
controlled
corporation
39,125,000 (L) 10.06% 41,495,497 (L) 8.05%
Lin Dachun
(8) Interest in
controlled
corporation
39,125,000 (L) 10.06% 41,495,497 (L) 8.05%
Shanghai Xuante (8) Interest in
controlled
corporation
39,125,000 (L) 10.06% 41,495,497 (L) 8.05%
Charming Tulip
Holdings Limited
(8)
Beneficial
owner
39,125,000 (L) 10.06% 41,495,497 (L) 8.05%
Hit Drive Limited Beneficial
owner
26,556,367 (L) 6.83% 28,165,358 (L) 5.46%
Notes:
(1) The letter ‘‘L’’ denotes the person’s long position in our Shares.
(2) Glorypearl Capital is beneficially and whol ly owned by Mr. Huang. By virtue of the SFO, Mr.
Huang is deemed to be interested in the Shares held by Glorypearl Capital.
(3) Precious Luck is wholly owned by Shanghai Boy u, a limited partnership controlled by Weichuang
Hongjing as the executive partner and general p artner, which is owned as to 99% by Mr. Huang and
1% by Fuzhou Zhitong. Mr. Huang is also the executive partner and general partner of Fuzhou
Zhitong, therefore Shanghai Boyu is indirectly c ontrolled by Mr. Huang. By virtue of the SFO, each
of Mr. Huang, Weichuang Hongjing and Shangha i Boyu is deemed to be interested in the Shares
held by Precious Luck.
(4) Each of Happy Gain and Southern Fortune direct ly held 18,000,000 Share s and 10,200,000 Shares,
respectively, as at the Latest Practicable Date, and will held 19,090,580 Shares and 10,817,995
Shares immediately following the completion of th e Global Offering and the Capitalisation Issue.
Happy Gain is wholly owned by Shanghai Bo Yu, a limited partnership controlled by Weichuang
Xingsheng as the executive partner and general partner which is wholly owned by Mr. Huang.
Southern Fortune is wholly owned by Shanghai Boy un, a limited partnershi p controlled by Fujian
Fuyuan as the executive partner and general partner which is in turn controlled by Mr. Huang as the
executive partner and general partner. By virtue of the SFO, Mr. Huang is deemed to be interested
in the Shares held by Happy Gain and Southern Fortune.
SUBSTANTIAL SHAREHOLDERS
–3 2 7–


--- page 337 ---
(5) Ideal Stand is wholly owned by Shangha i Boli Enterprise Management Co., Ltd.* ( 上海渤礫企業管
理有限公司), which is wholly owned by Tengxin Investment. Tengxin Investment is owned as to 75%
by Mr. Teng Yongxiong, an Independent Third Party. By virtue of the SFO, each of Mr. Teng
Yongxiong, Tengxin Investment and Shanghai Bol i Enterprise Management Co., Ltd. is deemed to
be interested in the Shares held by Ideal Stand.
(6) Prosperous Splendor is owned as to 95.52% by Mr. Liu Yonghui, father of Mr. Liu Wei (our
non-executive Director). By virtue of the SFO, M r. Liu Yonghui is deemed to be interested in the
Shares held by Prosperous Splendor.
(7) Brown Oak Holdings Limited is wholly owned by Shanghai Jili Enterprise Management Partnership
(Limited Partnership)* ( 上海霽礫企業管理合夥企業（有限合夥）), which is controlled by Zhuhai
Wanhe Jinhua Asset Management Co., Ltd.* ( 珠海萬和錦華資產管理有限公司) as the executive
partner and general partner. By virtue of the SFO, each of Zhuhai Wanhe Jinhua Asset Management
Co., Ltd. and Shanghai Jili Enterprise Management Partnership (Limited Partnership) is deemed to
be interested in the Shares held by Brown Oak Holdings Limited.
(8) Charming Tulip Holdings Limited is wholly owned by Shanghai Xuante, which is owned as to
approximately 47.18% by Ms. Qiu Hui and 32.27% by Mr. Lin Dachun. By virtue of the SFO, each
of Ms. Qiu Hui, Mr. Lin Dachun and Shanghai Xua nte Enterprise Management Co., Ltd. is deemed
to be interested in the Shares held by Charming Tulip Holdings Limited.
Except as disclosed in this section, our Directors are not aware of any person who will,
immediately following the completion of the Global Offering and the Capitalisation Issue
(assuming the Over-allotment Option is not exercised and no Shares are to be issued upon
the exercise of any options granted under the Pre-IPO Share Option Scheme and any
options which may be granted under the Share Option Scheme), have beneficial interests or
short positions in any Shares or underlying Shares, which would be required to be disclosed
to us under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is, directly or
indirectly interested in 10% or more of the issued voting shares of any member of our
Group. Our Directors are not aware of any arrangement which may at a subsequent date
result in a change of control of our Company.
SUBSTANTIAL SHAREHOLDERS
–3 2 8–


--- page 338 ---
SHARE CAPITAL
The following is a description of the authorised and issued share capital of our
Company in issue and to be issued as fully paid or credited as fully paid immediately before
and following the completion of the Global Offering (without taking into account the
exercise of the Over-allotment Option o r Shares which may be issued pursuant to the
exercise of options granted under the Pre-IP O Share Option Scheme and options which may
be granted under the Share Option Scheme) a nd the Capitalisation Issue (assuming the
Over-allotment Option is not exercised):
Nominal value
(HK$)
Authorised share capital:
4,000,000,000 Shares of HK$0.01 each 40,000,000.00
Issued and to be issued, fully paid or credited as fully paid:
388,935,273 Shares in issue as at the da te of this prospectus 3,889,352.73
23,564,727 Shares to be issued pursuant to the
Capitalisation Issue
235,647.27
103,125,000 Shares to be issued under the Global Offering 1,031,250.00
515,625,000 Total 5,156,250.00
ASSUMPTIONS
The above table assumes that the Global Offering becomes unconditional and the issue
of Shares pursuant to the Global Offering and Capitalisation Issue are made. It takes no
account of any Shares which may be issued an da l l o t t e dp u r s u a n tt ot h ee x e r c i s eo ft h e
Over-allotment Option or pursuant to the exercise of the options granted under the Pre-IPO
Share Option Scheme and options which may be granted under the Share Option Scheme or
any Shares which may be issued or repurchased by us pursuant to the general mandates
granted to our Directors to issue or repurchase Shares as described below.
RANKINGS
The Offer Shares will be ordinary Shares in the share capital of our Company and will
carry the same rights in all respects with all Shares in issue or to be issued as mentioned in
this prospectus and, in particular, will rank in full for all dividends or other distributions
declared, made or paid on the Shares in respect of a record date which falls after the date of
this prospectus save for the entitlement under the Capitalisation Issue.
SHARE CAPITAL
–3 2 9–


--- page 339 ---
GENERAL MANDATE TO ALLO T AND ISSUE NEW SHARES
Subject to the Global Offering becoming unconditional, our Directors have been
granted a general mandate to allot, issue and deal with Shares in the share capital of our
Company with a total number of issued shares of not more than the sum of:
(1) 20% of the total number of Shares in issue immediately following the completion
of the Global Offering and the Capitalisation Issue (excluding Shares which may
b ei s s u e da n da l l o t t e dp u r s u a n tt ot h ee x e rcise of the Over-allotment Option or
any options granted under the Pre-IPO Share Option Scheme and any options
which may be granted under the Share Option Scheme); and
(2) the total number of Shares repurchased by our Company (if any) pursuant to the
general mandate to repurchase Shares gran t e dt oo u rD i r e c t o r sr e f e r r e dt ob e l o w .
Our Directors may, in addition to the Shares which they are authorised to issue under
this general mandate, allot, issue or deal wit h Shares under a rights issue, scrip dividend
scheme or similar arrangement, or on the exercise of any option granted under the Pre-IPO
Share Option Scheme and any options which may be granted under the Share Option
Scheme.
This general mandate will remain in effect until the earliest of:
(i) the conclusion of our Company’s next annual general meeting; or
(ii) the expiry of the period within which our Company is required by any applicable
laws or the Articles to hold its next annual general meeting; or
(iii) when varied or revoked by an ordinary r esolution of the Shareholders in general
meeting.
Further information on this general mandate is set out in the section headed ‘‘Statutory
and General Information — A. Further information about our Group — 3. Resolutions in
writing of the Shareholders of our Company passed on 9 October 2023’’ in Appendix IV to
this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Subject to the Global Offering becoming unconditional, our Directors have been
granted a general mandate to exercise all the powers of our Company to repurchase Shares
with a total number of Shares of not more than 10% of the total number of Shares in issue
immediately following the completion of the Global Offering and the Capitalisation Issue
(excluding Shares which may be issued and allotted pursuant to the exercise of the
Over-allotment Option or any options granted under the Pre-IPO Share Option Scheme and
any options which may be granted under the Share Option Scheme).
SHARE CAPITAL
–3 3 0–


--- page 340 ---
This mandate only relates to repurchases made on the Stock Exchange or any other
Stock exchange on which the Shares are listed (and which is recognised by the SFC and the
Stock Exchange for this purpose), and which are in accordance with the Listing Rules. A
summary of the relevant Listing Rules is se t out in the section headed ‘‘Statutory and
General Information — A. Further information about our Group — 6. Repurchases of our
Shares’’ in Appendix IV to this prospectus.
This general mandate to repurchase Shares w ill remain in effect until the earliest of:
(i) the conclusion of our Company’s next annual general meeting; or
(ii) the expiry of the period within which our Company is required by any applicable
laws or the Articles to hold its next annual general meeting; or
(iii) when varied or revoked by an ordinary r esolution of the Shareholders in general
meeting.
Further information on this general mandate is set out in the section headed ‘‘Statutory
and General Information — A. Further information about our Group — 3. Resolutions in
writing of the Shareholders of our Company passed on 9 October 2023’’ in Appendix IV to
this prospectus.
PRE-IPO SHARE OPTION SCHEME AND SHARE OPTION SCHEME
Pursuant to the written resolutions of the Shareholders dated 9 October 2023, we
conditionally adopted the Pre-IPO Share Option Scheme and pursuant to the written
resolutions of the Shareholders dated 9 October 2023, we conditionally adopted the Share
Option Scheme. Summaries of the principal terms of the Pre-IPO Share Option Scheme and
Share Option Scheme are respectively set out i nt h es e c t i o nh e a d e d‘ ‘ S t a t u t o r ya n dG e n e r a l
Information — D. Other Information — 2. Pre-IPO Share Option Scheme’’ and ‘‘Statutory
and General Information — D. Other Information — 1. Share Option Scheme’’ in Appendix
IV to this prospectus.
CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING
ARE REQUIRED
Our Company has only one class of shares, namely ordinary shares, each of which
carries the same rights as the other shares.
Pursuant to the Cayman Companies Act and the terms of our Memorandum and
Articles of Association, our Company may from time to time by ordinary shareholders’
resolution (i) increase its capital; (ii) conso lidate and divide its capital into Shares of larger
amount; (iii) divide its Shares into classes; (i v) subdivide its Shares into Shares of smaller
amount; and (v) cancel any Shares which have not been taken. In addition, our Company
may reduce or redeem its share capital by shareh olders’ special resolution. For more details,
please see ‘‘Summary of the Constitution o f Our Company and Cayman Islands Companies
Law — 2. Articles of Association — (a) Share s — (iii) Alteration of Capital’’ in Appendix
III to this prospectus.
SHARE CAPITAL
–3 3 1–


--- page 341 ---
Pursuant to the Cayman Companies Act and the terms of our Memorandum and
Articles of Association, all or any of the special rights attached to the Share or any class of
Shares may be varied, modified or abrogate d either with the consent in writing of the
holders of not less than three-fourths in nominal value of the issued Shares of that class or
with the sanction of a special resolution passed at a separate general meeting of the holders
of the Shares of that class. For more details, please see ‘‘Summary of the Constitution of
Our Company and Cayman Islands Company Law — 2. Articles of Association — (a)
Shares — (ii) Variation of Rights of Existing S h a r e so rC l a s s e so fS h a r e s ’ ’i nA p p e n d i xI I I
to this prospectus.
SHARE CAPITAL
–3 3 2–


--- page 342 ---
You should read this section in conjunction with our financial information, including
the notes thereto, as set out in ‘‘Appendix I — Accountant’s Report’’ to this prospectus. The
financial information has been prepared in accordance with IFRS. You should read the
entire Accountant’s Report and not merely rely on the information contained in this section.
The following discussion and analysis contains forward-looking statements that
involves risks and uncertainties. These statements are based on assumptions and analysis
made by us in light of our experience and perception of historical trends, current conditions
and expected future developments, as well as o ther factors we believe are appropriate under
the circumstances. However, our actual results may differ significantly from those projected
in the forward-looking statements. Factors that might cause future results to differ
significantly from those projected in the forward-looking statements include those discussed
in ‘‘Risk Factors’’.
OVERVIEW
We are an established automobile retailer providing automobile finance lease service
primarily through our self-operated sales outlets in the PRC. Our Group’s principal
businesses comprise: (i) automobile retail and finance, where we sell non-luxury
automobiles mostly on direct finance lease; and (ii) automobile-related businesses, where
we primarily offer automobile operating lease se rvice and other automobile-related services.
We are one of the offline third party RAFLCs among all the RAFLCs (i.e. bank-affiliated,
automaker or automobile dealer-affiliated, off line third party RAFLCs and internet-backed
third party RAFLCs). According to the CIC R eport, in terms of transaction volume of
direct finance lease, we ranked 4th and had market share of approximately 4.1% in the PRC
in 2022. In terms of transaction volume of retail automobile finance lease among all
RAFLCs, including both direct finance lease and sale-leaseback, we ranked 19th and had a
market share of approximately 0.7% in the PRC in 2022. Please refer to ‘‘Industry Overview
— Analysis of The Retail Automobile Finance and Retail Automobile Finance Lease
Market in China’’ for details.
During the Track Record Period, our automo bile retail and finance business was the
principal revenue contributor, which accounted for 79.7%, 86.4%, 87.4% and 88.7% of
total revenue for the years ended 31 Decemb er 2020, 2021, 2022 and the six months ended
30 June 2023, respectively.
We recorded profit for the year/period of RMB10.3 million, RMB30.7 million,
RMB77.1 million and RMB62.3 million for the y ears ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, respect ively. Our profit for the year increased by
199.3% from RMB10.3 million for the year e nded 31 December 2020 to RMB30.7 million
for the year ended 31 December 2021, mainly driven by our revenue growth due to the
recovery from the adverse impact of COVID-19 in 2020. Our profit for the year increased by
151.2% from RMB30.7 million for the year e nded 31 December 2021 to RMB77.1 million
for the year ended 31 December 2022, mainly du e to the fair value gain on ordinary shares
with redemption right of RMB47.3 million for the year ended 31 Dece mber 2022 whereas we
recorded fair value loss on ordinary shares w ith redemption right of RMB4.2 million for the
FINANCIAL INFORMATION
–3 3 3–


--- page 343 ---
year ended 31 December 2021. Our profit i ncreased by 40.4% from RMB44.3 million from
the six months ended 30 June 2022 to RMB62 .3 million for the six months ended 30 June
2023, mainly driven by (i) our revenue g rowth from RMB538.1 million to RMB601.0
million, principally due to the recovery from the adverse impact of COVID-19 in 2022 and
our increased sales and marketing efforts by hiring more sales staff and opening new
self-operated sales outlets to grow our business; and (ii) the increase in the fair value gain
on ordinary shares with redemption right b y RMB11.8 million for the six months ended 30
June 2023.
Our adjusted net profit (non-IFRS me asures) amounted to RMB21.3 million,
RMB49.5 million, RMB42.4 million and RMB22.1 million for the years ended 31
December 2020, 2021, 2022 an d the six months ended 30 June 2023, respectively. The
adjusted net profit (non-IFRS measures) is presented as an additional financial measure
which is not required by, nor presented in accordance with IFRS. See ‘‘Financial
Information — Non-IFRS Measures’’ for further details.
We place top priority on the management of the risks associated with our business. As
a result of our risk management system, we have managed to maintain relatively low
non-performing asset ratios during the Track Record Period. As at 31 December 2020,
2021, 2022 and 30 June 2023, our non-performing asset ratios were 0.7%, 0.7%, 0.7% and
0.8%, respectively. As a result of our effective automobile repossession and disposal
measures, as well as the legal proceedings we in itiated against our default customers, as at
the Latest Practicable Date, out of the early terminated contracts for the years ended 31
December 2020, 2021, 2022 and the six months ended 30 June 2023, 99.6%, 99.3%, 99.9%
and 99.5% of the automobiles were successfully repossessed and sold, leased or put into our
own commercial use, representing 97.3%, 96.2%, 96.9% and 96.5% of the outstanding
amount of finance lease receivables of such early terminated contracts for the
corresponding year/period, respectively.
BASIS OF PRESENTATION
Our Company was incorporated in the Cayman Islands on 29 March 2019 as an
exempted company with limited liability u nder the Cayman Companies Act. Through a
corporate reorganisation as further explaine d in ‘‘History, Reorganisation and Corporate
Structure — Reorganisation’’ in this prospectus, the Listing Business (as defined in the
Accountant’s Report in Appendix I to this prospectus) was transferred to and held by our
Company. The Reorganisation is merely a recap italisation of the Listing Business with no
change in management of such business and th e ultimate owners of the Listing Business
remain substantially the same. Accordingly, our Group resulting from the Reorganisation is
regarded as a continuation of the Listing Business. Financial information of our Group has
been prepared and presented as a continuation of the Listing Business (as defined in the
Accountant’s Report in Appendix I to this pro spectus) with the assets and liabilities of our
Group recognised and measured at the carrying amounts of the Listing Business for all
periods presented, on the basis set out in the Accountant’s Report in Appendix I to this
prospectus.
FINANCIAL INFORMATION
–3 3 4–


--- page 344 ---
Our financial information has been prepar ed in accordance with IFRS issued by the
IASB and has been prepared on a historical cost basis, except for financial assets and
financial liabilities (including derivative in struments) that are measured at fair value. The
financial information is presented in RMB, which is our Group’s functional currency.
Inter-company transactions, balances and unrealised gains/losses on transactions
between group companies are el iminated on consolidation.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Our financial condition and results of opera tion have been, and/or will be affected by a
number of factors, including those set out below:
Demand for automobile direct finance lease in the PRC
Our business, financial condition and results of operations depend significantly on
automobile retail and finance business. Ou r operations primarily focus on tier two, and
tier three and below cities in the PRC. Therefore, the demand for non-luxury
automobiles in tier two, and tier three and below cities in the PRC, and especially for
the automobiles of the brands we sell, directly affects our sales of automobile under
finance lease upon which our business, financial condition and results of operations
depend significantly. Our revenue from automobile retail an d finance business
contributed 79.7%, 86.4%, 87.4% and 88.7% of total revenue for the years ended
31 December 2020, 2021, 2022 a nd the six months ended 30 June 2023, respectively. We
sold 3,901, 7,375, 7,153 and 3,740 automob i l e su n d e rf i n a n c el e a s ef o rt h ey e a r se n d e d
31 December 2020, 2021, 2022 and the six m onths ended 30 June 2023, respectively.
According to the CIC Report, market demand for retail automobile finance lease
in general in the PRC is driven by various factors including, among others, the rising
consumer awareness of retail automobile finance lease, the development of the residual
value forecasting model, the legal and regu latory environment, online platforms and
mobile applications, the risk control systems, the maturing used car market, favorable
policies and regulations and the stimulation by the Internet. In 2022, the loan volume
of the direct finance lease market reached 0.3 million units, increasing from 0.2 million
units in 2018, representing a CAGR of 11.1% from 2018 to 2022. Driven by benefit of
lower down payment and the expansion of e- hailing vehicle platform, the loan volume
of direct finance lease market is expected to reach 0.6 million units in 2027,
representing a CAGR of 15.6% from 2022 to 2027.
Interest rate environment
We generate a portion of our revenue from interest arising from our finance lease
arrangements. For the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, our finance lease income accounted for 31.3%, 20.0 %, 23.0% and
24.7% of our total revenue for the corresponding year/period, respectively. Our
FINANCIAL INFORMATION
–3 3 5–


--- page 345 ---
average effective interest rate charged on newly entered finance lease agreements was
at 20.5%, 19.4%, 18.5% and 18.7% for the ye ars ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, respectively.
We primarily finance our business through borrowings. As at 31 December 2020,
2021, 2022 and 30 June 2023, our borrowings amounted to RMB1,156.0 million,
RMB1,382.8 million, RMB1,713.4 million a nd RMB1,857.9 million, respectively, and
our weighted average effective interest rate of borrowings was 8.5%, 8.5%, 8.6% and
8.5%, respectively. For details of analysis, please refer to the paragraph below headed
‘‘Indebtedness’’ in this section.
The interest rates we charge our customers are an important factor that influences
our revenue. The interest rate charged to a customer is determined by taking into
account factors including prevailing marke t interest rates, market competition, the
creditworthiness of customers, our funding cost, potential impairment losses and our
target profit margin. Such funding cost is sensitive to many factors beyond our control,
including the regulatory framework of the banking and financial sectors in the PRC
and domestic and international economic and political conditions. Significant change
in interest rates will have a direct impact o n our finance lease income, cost of funding
and net interest margin, which will in turn affect our profitability and financial
condition. In the event of interest rate increase or the perception of increase, our
ability to obtain funding at a favourable rate could be adversely affected. If we are
unable to obtain funding at a favourable ra te or we cannot fully pass the finance cost
increment onto our customers, there will be a material adverse impact on our financial
condition and results of operation.
Our funding capabilities
Our automobile retail and finance busin ess and automobile operating lease
b u s i n e s sa r ec a p i t a li n t e n s i v e .D u r i n gt h eT r a c kR e c o r dP e r i o d ,w ew e r ea b l et of u n d
our Group through debt financing and equity financing. Our debt financing included
(i) interest-bearing loans; (ii) automobile fi nance lease arrangement; (iii) factoring of
finance lease receivables; and (iv) asset-backed securities. As at 31 December 2020,
2021, 2022 and 30 June 2023, our borrowings in aggregate amounted to RMB1,156.0
million, RMB1,382.8 million, RMB1,713.4 million and RMB1,857.9 million,
respectively. Our equity financing was mainly from equity investment from our
Shareholders.
We do not rely on any single source of funding and we regularly adjust our
borrowings with our operational needs. After the Listing, as we become a public
company, we expect to have better access to capital markets and enhanced funding
capabilities. Our ability to continue to access additional funding may be influenced by
factors affecting the PRC and global credit environment over which we have no
control, including the cyclical nature of th e credit supply and any changes in policies or
regulations or new policies and regulations that impact these funding sources. Any
developments such as these may impact our a bility to sustain our funding or to expand
our business and would impact our business and profitability.
FINANCIAL INFORMATION
–3 3 6–


--- page 346 ---
Our risk management capabilities
We are subject to a variety of risks, primarily interest rate risk, credit risk and
liquidity risk. We have developed a risk ma nagement and internal control system to
address the risks we are subject to and to min imise the potential adverse effect on the
financial performance of our Group. Our management also continue to monitor,
evaluate and review the operation and performance of our risk management and
internal control system, and adapt to the changes in market conditions, our product
and service offerings, and the regulatory environment. For details of our Group’s risk
management, please refer to the section hea ded ‘‘Risk Management and Operations’’ in
this prospectus.
Product and service mix
We provide a wide range of automobile re lated finance and operating lease
products and services. Our Group’s principal businesses comprise: (i) automobile retail
and finance, where we sell non-luxury automobiles mostly on direct finance lease
primarily through our sales outlets; and (ii) automobile-related businesses, where we
primarily offer automobile operating lease service and other automobile-related
services.
During the Track Record Period, sales of automobile under finance lease was the
largest component of our total revenue, which contributed 48.4%, 66.4%, 64.4% and
64.0% of our total revenue for the years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023, respectively. However, the gross profit margin of our
sales of automobile under finance lease was lower than the gross profit margin of our
finance lease income during the Track Record Period. For example, our gross profit
margin decreased from 40.5% for the year ended 31 December 2020 to 30.9% for the
year ended 31 December 2021, which was mainly attributable to the significant increase
in the revenue from sales of automobile un der finance lease from RMB362.9 million
for the year ended 31 December 2020 to RMB777.9 million for the year ended 31
December 2021, the contribution of which to our total revenue increased from 48.4%
for the year ended 31 December 2020 to 66.4% for the year ended 31 December 2021.
As each of the existing or new services and products often carries a different cost
structure and gross profit margin, our product and service mix will impact our overall
cost structure and gross profit margin. Thus, our results of operation may vary from
period to period as a result of the change in the composition of our revenue from
different product and service mix.
Expansion of our self-operated sales outlets
Expansion of our self-operated sales outlets has an effect on our results of
operations and financial condition. During the Track Record Period, our self-operated
sales outlets were mainly located in tier two , tier three and below cities in the PRC. As
at 30 June 2023, we operated one self-operated sales outlet in tier one city in the PRC,
34 self-operated sales outlets in tier two cities in the PRC and 39 self-operated sales
outlets in tier three and below cities in the PRC.
FINANCIAL INFORMATION
–3 3 7–


--- page 347 ---
The growth of our business, to a certain extent, depends on our ability to expand
into new markets and acquire new customers efficiently. We have a proven track
record of successfully expanding our geogra phic footprint in tier two, tier three and
below cities.
Impact of outbreak of disease or epidemic in the PRC
In 2020, the outbreak of a novel coronavirus (COVID-19) affected the economic
activities in the PRC. In response to the spread of COVID-19 in the PRC in 2020, the
PRC government imposed quarantine measures across the PRC, and local
governments imposed temporary mobility restrictions or travel bans to control the
spread of COVID-19 in the PRC in 2020, which affected market demand for our
products and services.
Following the resurgence of COVID-19 in a number of provinces in the PRC,
lockdown of several cities and regions in the PRC and pandemic control measures were
implemented during the period from October 2022 to early December 2022 as a means
to contain the spread of COVID-19. The pandemic control measures impacted our
operations as certain of our self-operated sales outlets had to temporarily suspend
operations.
Any occurrence of pandemics or epidemics in the PRC may adversely affect our
financial results and financial condition.
For details, please refer to ‘‘Business — Impact of COVID-19 on Our Business’’
and ‘‘Risk Factors — Risks Relati ng to Our Business and Industry’’.
SIGNIFICANT ACCOUNTING POLIC IES AND CRITICAL ACCOUNTING
ESTIMATES AND JUDGEMENTS
We have identified certain accounting po licies that are most significant to the
preparation of our Group’s financial statem ents in accordance with IFRSs. The financial
statements of our Group has been prepared in accordance with the principal accounting
policies as set out in Accountant’s Report w hich are in accordance with IFRSs issued by
IASB. Note 2 to the Accountant’s Report in Appendix I to this prospectus sets out these
significant accounting policies, which are important to understand our financial conditions
and results of operations.
Some of our accounting policies involve subjective assumptions, estimates, as well as
complex judgements relating to assets, liab ilities, income, expenses and other accounting
items. In each case, the determination of the se items requires management judgments based
on information and financial data that may change in future periods. The significant
accounting estimates and judgements are set out in detail in note 4 to the Accountant’s
Report in Appendix I to this prospectus. We set out below those accounting policies and
estimates that we believe involve the most sign ificant estimates and judgements used in the
preparation of our consolidated financial statements.
FINANCIAL INFORMATION
–3 3 8–


--- page 348 ---
In the relation to the valuation of our Group’s f inancial assets and liabilities measured
at fair value through profit and loss (FVTPL ) categorised within level 3 of fair value
measurement, our Group had (i) carefully considered the valuation model prepared by the
independent qualified valuer in determining the fair value of such financial assets and
liabilities and the valuation related policie s, methodologies and techniques; and (ii)
reviewed relevant agreements and supporting documents, including investment agreements,
memorandum of associations, among others, to understand the detailed underlying terms
and conditions that may affect the valuation of financial instruments. Based on the
above-mentioned work, our management is satisfied with the categorisation within level 3
of fair value measurement pursuant to the SFC’s ‘‘Guidance note on directors’ duties in the
context of valuations in corporate transactions.’’
The Sole Sponsor has conducted relevan t due diligence work, including (i)
understanding from our Company the nature and details of the financial assets and
liabilities measured at FVTPL categorised w ithin level 3 of fair value measurement and
obtaining and reviewing the list of such finan cial assets and liabilities during the Track
Record Period; (ii) obtainin g and reviewing the terms of the relevant agreements and
documents regarding such financial assets and lia bilities; (iii) reviewing relevant notes in the
Accountant’s Report set out in Appendix I to this prospectus; (iv) understanding the
background and qualifications of the valuer in relation to such financial assets and
liabilities; (v) obtaining and reviewing the val uation reports by the valuer in relation to such
assets and liabilities; (vi) understanding from the independent qualified valuer the key
bases, assumptions and methodologies used in the valuation reports; (vii) understanding
from the Company the key bases and assumptions for the valuation of the financial assets
and liabilities; and (viii) discussing with th e Reporting Accountant to understand the work
it has performed in relation to financial asset s and liabilities for the purpose of reporting on
the historical financial information, as a whole, of the Group. Having considered the work
done by the management and the independent qualified valuer, and the relevant due
diligence done as stated above, nothing material has come to the Sole Sponsor’s attention
that indicates that the Company’s manage ment have not undertaken independent and
sufficient investigation and due diligence on such financial assets and liabilities.
Details of the fair value measurement of s uch financial assets and liabilities,
particularly the fair value hierarchy, the valuation techniques and key inputs, including
significant unobservable inputs, and the relationship of unobservable inputs to fair value
are disclosed in note 3.3 to the Accountant’s Report set out in Appendix I to this
prospectus, which was reported by the Reporting Accountant in accordance with Hong
Kong Standard on Investment Circular Reporting Engagement 200 ‘‘Accountants’ Reports
on Historical Financial Information in Investment Circulars’’ issued by the Hong Kong
Institute of Certified Public Accountants. The Reporting Accountant’s opinion on the
historical financial information of our Group for the Track Record Period as a whole is set
out on pages I-1 to I-3 of Appendix I to this prospectus.
FINANCIAL INFORMATION
–3 3 9–


--- page 349 ---
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and
represents amounts receivable for sales of goods and services rendered in the ordinary
course of our Group’s activities, stated net of discounts and after eliminated sales within
our Group. Revenue is recognised when or as the control of goods or services is transferred
to the customer. Depending on the terms of t he contract and the laws that apply to the
contract, revenue may be recognised over time or at a point in time.
Control of the good or service is transferr ed over time if our Group’s performance:
— provides all of the benefits received and consumed simultaneously by the
customer;
— creates or enhances an asset that the customer controls as our Group performs; or
— does not create an asset with an alternative use to our Group and our Group has
an enforceable right to payment for performance completed to date.
If control of the asset transfers over time, revenue is recognised over the period of the
contract by reference to the progress toward s complete satisfaction or that performance
obligation. Otherwise, revenue is recognised at a point in time when the customer obtains
control of the asset.
A contract liability is our Group’s obligation to render the goods or services to a
customer for which our Group has receiv ed consideration from the customer.
Further details of our Group’s revenue and other income recognition policies are as
follows:
(a) Sales of automobile under finance lease arrangement
Revenue from sales of automobile under f inance lease arrangement is recognised
upon transfer of control to customer which generally coincides with the time when the
automobiles are delivered and accepted by the customers, which is determined as the
lower of the fair value of the underlying auto mobiles and the present value of the lease
payment accruing to our Group. The corresponding leased asset is derecognised when
finance lease receivable is recognised on the consolidated statements of financial
position.
(b) Finance lease income
Our Group provides automobile finance lea se services to customers, with the sales
of automobile. The income under finance lease is recognised on an accrual basis using
the effective interest method by applying the rate that exactly dis counts the estimated
future cash receipts over the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the financial lease receivables.
FINANCIAL INFORMATION
–3 4 0–


--- page 350 ---
(c) Automobile operating lease income
Our Group provides automobile operating lease services to individual and
corporate customers. Revenue from these services is recognised on a straight-line basis
in accordance with the terms of the operating leases.
(d) Other automobile-related income
Our Group operates automobile aftermar ket service platform for car users to
facilitates third party vendors to provide aftermarket usage solutions to car users
during automobile usage life cycle. Facilitat ion income is charged to the business-end
customer at a fixed percentage of the volume of transactions completed with no
variable consideration and is not refundable. Our Group recognises revenue when the
facilitation services are completed.
Revenue from other services including promotion of insurance solutions provided
by third party vendors is recognised when performance obligation is satisfied, and
when our Group has an enforceable right to payment for performance completed to
date.
Lease
The determination of whether an arrangement is, or contains, a lease is based on the
substance of the arrangement at the inception date. The arrangement is assessed for whether
fulfillment of the arrangemen t is dependent on the use of a specific asset or assets or the
arrangement conveys a right to use the asset o r assets, even if that right is not explicitly
specified in an arrangement.
(a) Our Group as a lessee
Our Group leases various properties t o operate our offices and stores. These
leases are typically made for fixed periods of one to eight years. Lease terms are
negotiated on an individual basis and contain various different terms and conditions.
The lease agreements do not impose any covenants, but leased assets may not be used
as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the
date at which the leased asset is available for use by our Group. Each lease payment is
allocated between the liability and fina nce cost. The finance cost is charged to
consolidated statement of comprehensive in come over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each
period. The right-of-use asset is depreciated over the shorter of the asset’s useful life
and the lease term on a straight-line basis. N either extension nor termination options
are included in property leases across our Group.
FINANCIAL INFORMATION
–3 4 1–


--- page 351 ---
Assets and liabilities arising from a lease are initially measured on a present value
basis. Lease liabilities substantially include the net present value of fixed payments
(including in-substance fixed payments). The lease payments are discounted using the
interest rate implicit in the lease, if tha t rate can be determined, or our Group’s
incremental borrowing rate.
Right-of-use assets are measured at cost comprising the following:
. the amount of the initial measurement of lease liability;
. any lease payments made at or before the commencement date less any lease
incentives received;
. any initial direct costs; and
. restoration costs.
Payments associated with short-term le ases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are
leases with a lease term of twelve months or less. Low-value assets comprise
IT-equipment and small items of office furniture.
(b) Our Group as a lessor
Operating lease
Leases of leased assets where our Group retains substantially all risks and
rewards incidental to ownership are classi fied as operating leases. Rental income
from operating leases (net of any incentives given to the lessees) is recognised in
consolidated statements of comprehensiv e income on a straight-line basis over the
lease term.
Initial direct costs incurred by our Group in negotiating and arranging
operating leases are added to the carrying amount of the leased assets and
recognised as an expense in consolidated statements of comprehensive income
over the lease term on the same basis as th e lease income. Contingent rents are
recognised as income in consolidated st atements of comprehensive income when
earned.
Finance lease
Leases where our Group has transferred substantially all risks and rewards
incidental to ownership of the leased assets to the lessees are classified as finance
leases. Our Group will recognise as sales revenue, arising from the leased assets, at
a lower of the fair value or present value of the minimum lease payments
computed at a market interest rate. The difference between the sales revenue and
the cost of sales is the selling profit or loss.
FINANCIAL INFORMATION
–3 4 2–


--- page 352 ---
The leased asset is derecognised and the present value of the lease receivable
is recognised on the consolidated statemen ts of financial position and included in
finance lease receivables. The difference between the gross receivables and the
present value of the lease receivables is recognised as unearned finance income.
Each lease payment received is applied a gainst the gross investment in the
finance lease receivables to reduce both the principal and the unearned finance
income. The finance income is recognised in consolidated statement of
comprehensive income on a basis that reflects a constant periodic rate of return
on the net investment in the finance lease receivables.
Initial direct costs incurred by our Group in negotiating and arranging
finance leases is recognised in consolidated statements of comprehensive income
in the financial period corresponding to the recognition of selling profit.
Finance lease receivables that are factored out to financial institutions with
recourse to our Group is not derecognised until the recourse period has expired
and the risk and rewards of the finance lease receivables have been fully
transferred.
R E S U L T SO FO P E R A T I O N S
The following table summarises our consolidated statements of comprehensive income
for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2022
and 2023, as extracted from the Accountan t’s Report set out in Appendix I to this
prospectus:
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue 749,761 1,171,262 1,141,526 538,138 601,001
Cost of revenue (446,163) (809,506) (767,079) (352,824) (403,710)
Gross profit 303,598 361,756 374,447 185,314 197,291
Selling and marketing
expenses (75,056) (83,164) (81,096) (41,976) (44,086)
Administrative expenses (105,629) (114,879) (115,146) (61,066) (56,896)
Research and development
expenses (423) (2,106) (722) (374) (273)
Provision for credit loss (2,098) (3,870) (4,877) (1,904) (2,793)
FINANCIAL INFORMATION
–3 4 3–


--- page 353 ---
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Fair value (loss)/gain on
ordinary shares with
redemption right (6,932) (4,153) 47,251 34,555 46,335
Other income, net 23,302 15,960 21,748 9,183 11,629
Other losses, net (6,621) (8,713) (6,814) (2,579) (4,015)
Operating profit 130,141 160,831 234,791 121,153 147,192
Finance income 1,849 2,008 973 496 835
Finance cost (111,021) (119,829) (143,991) (73,679) (82,868)
Finance cost, net (109,172) (117,821) (143,018) (73,183) (82,033)
Profit before income tax 20,969 43,010 91,773 47,970 65,159
Income tax expenses (10,716) (12,323) (14,691) (3,628) (2,905)
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Profit/(loss) attributable to:
— Owners of the Company 12,341 34,112 78,913 45,627 62,402
— Non-controlling interests (2,088) (3,425) (1,831) (1,285) (148)
10,253 30,687 77,082 44,342 62,254
NON-IFRS MEASURES
To supplement our historical financial information set out in Appendix I to this
prospectus, we also present adjusted net profit (non-IFRS measures) and adjusted net profit
margin (non-IFRS measures) as additional fi nancial measures, which are not required by,
nor presented in accordance with IFRS. We pre sent these financial measures because our
management use them to evaluate our financial performance by eliminating the impact of
certain items. We believe that these non-IFRS measures provide additional information to
investors and others in understanding and evaluating our business performance.
FINANCIAL INFORMATION
–3 4 4–


--- page 354 ---
Adjusted net profit (non-IFRS measures) an d adjusted net profit margin (non-IFRS
measures) eliminate the effect of certain item s, mainly listing expenses and fair value
loss/(gain) on ordinary shares with redemption right.
The following table reconciles our adjusted net profit (non-IFRS measures) and
adjusted net profit margin (non-IFRS measures) presented to the most directly comparable
financial measures calculated and presented in accordance with IFRS. Listing expenses
represent expenses relate to the Listing, net of the PRC enterprise income tax. Fair value
loss/(gain) on ordinary shares with redemption right represents the changes arising from
change in fair value to ordinary shares with r edemption right. Such changes are non-cash in
nature. Upon the Listing, all ordinary shares with redemption right will be automatically
converted into ordinary shares which will no lo nger be recognised as financial liabilities at
fair value through profit or loss.
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Add:
Listing expenses, net of tax 4,148 14,636 12,533 8,016 6,226
Fair value loss/(gain) on
ordinary shares with
redemption right 6,932 4,153 (47,251) (34,555) (46,335)
Adjusted net profit
(non-IFRS measures) 21,333 49,476 42,364 17,803 22,145
Adjusted net profit margin
(non-IFRS
measures)
(Note) 2.8% 4.2% 3.7% 3.3% 3.7%
Note:
Adjusted net profit margin (non-IFRS measures) is cal culated based on the adjusted net profit (non-IFRS
measures) for the year/period divided by revenue for the respective year/period.
FINANCIAL INFORMATION
–3 4 5–


--- page 355 ---
DESCRIPTION OF SELECTED ITEMS IN CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Revenue
Our Group’s principal businesses mainly com prise (i) automobile retail and finance;
and (ii) automobile-related businesses. For our automobile retail and finance business, we
mainly generate revenue through sales of automobile mostly on direct finance lease. Our
automobile-related businesses primarily represent the revenue generated from automobile
operating lease.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our revenue was RMB749.8 million, RM B1,171.3 million, RMB1,141.5 million and
RMB601.0 million, respectively. One of the key r easons behind the significant increase in
revenue from RMB749.8 million for the year ended 31 December 2020 to RMB1,171.3
million for the year ended 31 December 2021, was driven by our tactic changes in hiring in
sales headcounts to counter the challenges that COVID-19’s related control measures
introduced by the Chinese national and regional governments during the Track Record
Period. Our overall business performance was materially affected by COVID-19’s situation
in China due to the nature of our business in automobile industry. In 2020, we took a series
of measures in response to the COVID-19 outbreak in the PRC, such as temporary closure
of some of our sales outlets due to the limitations on in-store operation during the
pandemic, and executed headcount freeze. Wh en the market recovered in 2021, we increased
our hiring to capture the market opportunities. Therefore, the decrease in revenue for the
year ended 31 December 2020 created a low base , and with our efforts in 2021, we quickly
adjusted our hiring plan to capture the market opportunities and delivered a stronger
performance for the year ended 31 Decem ber 2021 comparing to the year ended 31
December 2020. As at 31 Decemb er 2020, 2021, 2022 and 30 June 2023, the number of sales
headcounts for our self-operated sales outlets was 336, 495, 472 and 624, respectively. Our
total revenue for the year ended 31 December 2022 decreased by 2.5% as compared to the
year ended 31 December 2021, mainly due to the impact on the operation of our sales
outlets in various cities in the PRC brought by the strict pandemic control and lockdown
measures as a result of the resurgence of COVID-19 pandemic in various parts in the PRC
in 2022, which led to the decrease in our sale s of automobile under finance lease and our
revenue from e-hailing operating lease busin ess in certain regions in the PRC for the year
ended 31 December 2022. Our revenue for the six months ended 30 June 2023 increased by
approximately 11.7% as compared to the six months ended 30 June 2022 primarily due to
the increase in revenue of 15.3% from our automobile retail and finance, mainly driven by
the recovery from the adverse impact of COVID-19 in the PRC in 2022 and our increased
FINANCIAL INFORMATION
–3 4 6–


--- page 356 ---
sales and marketing efforts by hiring more sales staff and opening new self-operated sales
outlets to grow our business. The following table sets out a breakdown of our revenue by
service type for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Automobile retail and finance
Sales of automobile under
finance lease (Note 1) 362,934 48.4 777,856 66.4 734,600 64.4 331,012 61.5 384,710 64.0
Finance lease income (Note 2) 234,705 31.3 234,561 20.0 262,498 23.0 131,093 24.4 148,191 24.7
Sub-total 597,639 79.7 1,012,417 86.4 997,098 87.4 462,105 85.9 532,901 88.7
Automobile-related businesses
Automobile operating lease 132,606 17.7 144,163 12.3 126,018 11.0 69,247 12.9 61,433 10.2
Other automobile-related
income 19,516 2.6 14,682 1.3 18,410 1.6 6,786 1.2 6,667 1.1
Sub-total 152,122 20.3 158,845 13.6 144,428 12.6 76,033 14.1 68,100 11.3
Total 749,761 100.0 1,171,262 100.0 1,141,526 100.0 538,138 100.0 601,001 100.0
Notes:
(1) Revenue generated from the sales of new automobiles.
(2) Revenue generated from the provision of finance lease for automobiles to customers.
Automobile retail and finance
We sell our automobiles, including both pas senger vehicles and e-hailing vehicles,
mainly on direct finance lease. We provide a variety of financing packages to our customers.
Our direct finance lease involves leasing of (i) our newly acquired automobiles mainly from
auto dealers where we generate both sales of automobile and finance lease income; and (ii)
repossessed automobiles due to customers’ default where we record finance lease income
only. Occasionally, depending on the availa bility of our resources, we may also provide
automobile sale-leaseback arrangement to cus tomers to generate finance lease income. For
the years ended 31 December 2020, 2021, 202 2 and the six months ended 30 June 2023, the
number of new automobiles sold under finance lease was 3,901 units, 7,375 units, 7,153
units and 3,740 units, respectively, and the number of newly entered finance lease
agreements was 7,859, 11,308, 12,754 and 6,728, respectively.
Our revenue from automobile retail and finance business amounted to RMB597.6
million, RMB1,012.4 million, RMB997.1 million and RMB532.9 million, representing
79.7%, 86.4%, 87.4% and 88.7% of our total revenue for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023. Our revenue from automobile
retail and finance by way of direct finance lease accounted for 98.9%, 99.7%, 99.8% and
99.95% of total revenue generated from our au tomobile retail and finance business for the
years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively.
FINANCIAL INFORMATION
–3 4 7–


--- page 357 ---
Sales of automobile under finance lease
During the Track Record Period, we conducted our sales of automobile under finance
lease principally through our self-operated sales outlets. We also worked with third party
agents to promote passenger vehicles and e-h ailing vehicles for our automobile retail and
finance business. However, the non-performing asset ratio of our finance lease agreements
through this channel was higher than that through our sales outlets. In 2021, we ceased to
work with any third party agents to promote passenger vehicles for our automobile retail
and finance business.
The following table sets out the breakdown of the number of new automobiles sold, the
average price of new automobiles sold and our revenue from sales of automobile under
finance lease by sales channel for the years/periods indicated:
Year ended 31 December
2020 2021 2022
Number of
new
automobiles
sold
Average
price of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Average
price of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Average
price of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 %
Self-operated sales
outlets 3,706 93 344,445 94.9 7,360 105 776,299 99.8 7,119 103 731,232 99.5
Automobile agents 195 95 18,489 5.1 15 104 1,557 0.2 34 99 3,368 0.5
Total 3,901 93 362,934 100.0 7,375 105 777,856 100.0 7,153 103 734,600 100.0
Six months ended 30 June
2022 2023
Number of
new
automobiles
sold
Average
price of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
Number of
new
automobiles
sold
Average
price of
new
automobiles
sold
Revenue from sales of
automobile under
finance lease
RMB’000 RMB’000 % RMB’000 RMB’000 %
(unaudited)
Self-operated sales outlets 3,020 109 328,678 99.3 3,733 103 383,212 99.6
Automobile agents 24 97 2,334 0.7 7 214 1,498 0.4
Total 3,044 109 331,012 100.0 3,740 103 384,710 100.0
Self-operated sales outlets
Our sales of automobile under finance lease f rom self-operated sales outlets amounted
to RMB344.4 million, RMB776.3 million, RMB7 31.2 million and RMB383.2 million for the
years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively, accounted for 94.9%, 99.8%, 99.5%and 99.6% of our sales of automobile
under finance lease for the corresponding year/period, respectively. During the Track
Record Period, we took a series of measures in response to the COVID-19 outbreak in the
PRC, such as temporary closure of some of ou r sales outlets due to the limitations on
in-store operation during the pandemic, and executed headcount freeze in 2020, and when
the market recovered in 2021, we increased our hiring in 2021 to capture the market
opportunities. Our sales headcounts remained relatively stable for the year ended 31
December 2022, then increased for the six months ended 30 June 2023, as the market
gradually recovered. As at 31 December 2020, 2021, 2022 and 30 June 2023, the number of
sales headcounts for our self-operated sales outlets was 336, 495, 472 and 624, respectively.
FINANCIAL INFORMATION
–3 4 8–


--- page 358 ---
Our sales of automobile under finance lease f rom self-operated sales outlets increased
by RMB431.9 million or 125.4% from RMB344.4 million for the year ended 31 December
2020 to RMB776.3 million for the year en ded 31 December 2021. Such increase was
attributable to the increase in the number of new automobiles sold under finance lease
through our self-operate sales outlets from 3,706 units for the year ended 31 December 2020
to 7,360 units for the year ended 31 December 2021, primarily due to the strong recovery
from the significant adverse effects cause d by the outbreak of COVID-19 in the PRC in
2020 that led to (i) the demand of new automobiles under finance lease reduced during the
year ended 31 December 2020; and (ii) the temporary diversion of sales focus to the finance
lease of our repossessed automobiles during the period from February 2020 to July 2020 to
better manage our inventory level and minimise non-performing assets as there was a
significant increase in the number of terminated contracts during the aforesaid period.
Our sales of automobile under finance lease f rom self-operated sales outlets decreased
by RMB45.1 million or 5.8% from RMB776.3 m illion for the year ended 31 December 2021
to RMB732.2 million for the year ended 31 De cember 2022, mainly due to the impact on
our in-store operation in various cities of the PRC brought by the strict pandemic control
and lockdown measures as a result of the resurgence of COVID-19 pandemic in various
parts of the PRC in 2022.
Our sales of automobile under finance lease f rom self-operated sales outlets increased
by RMB54.5 million or 16.6% from RMB328.7 m illion for the six months ended 30 June
2022 to RMB383.2 million for the six months ended 30 June 2023, mainly due to the
recovery from the adverse impact of COVID-19 in the PRC in 2022, our increased sales and
marketing efforts and the opening of new self-operated sales outlets to grow our business.
We had 66, 65, 68 and 74 self-operated sales outlets as at 31 December 2020, 2021, 2022
and 30 June 2023, respectively. As at the Latest Practicable Date, the majority of our sales
outlets were located in tier two, and tier three and below cities. During the Track Record
Period, more than one-third of our sales of automobile under finance lease were generated
from sales outlets located in Eastern PRC.
FINANCIAL INFORMATION
–3 4 9–


--- page 359 ---
The following table sets out the breakdown of the number of new automobiles sold, number of sales outlets, sales of
automobile under finance lease from self-operated sales outlets an d average price of new automobiles sold by geographical location
for the years/periods and dates indicated:
As at/Year ended 31 December
2020 2021 2022
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000
Eastern PRC 1,457 27 135,709 39.4 93 2,749 25 291,593 37.6 106 2,841 27 293,497 40.1 103
Southern PRC 654 8 60,940 17.7 93 1,452 9 152,993 19.7 105 1,401 10 141,739 19.4 101
Southwestern PRC 652 9 60,847 17.7 93 1,131 9 118,761 15.3 105 997 9 102,967 14.1 103
Central PRC 429 9 39,799 11.6 93 918 8 97,385 12.5 106 792 8 82,129 11.2 104
Northern PRC 332 5 30,717 8.9 93 670 5 70,068 9.0 105 559 5 58,059 7.9 104
Northwestern PRC 175 4 15,573 4.5 89 375 4 38,626 5.0 103 402 4 40,148 5.5 100
Northeastern PRC 7 4 860 0.2 123 65 5 6,873 0.9 106 127 5 12,693 1.8 100
Total 3,706 66 344,445 100.0 93 7,360 65 776,299 100.0 105 7,119 68 731,232 100.0 103
As at/Six months ended 30 June
2022 2023
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
RMB’000 % RMB’000 RMB’000 % RMB’000
(unaudited)
Eastern PRC 1,242 25 135,553 41.2 109 1,486 30 153,166 40.0 103
Southern PRC 536 9 57,201 17.4 107 457 10 46,861 12.2 103
Southwestern PRC 438 9 48,207 14.7 110 550 9 56,598 14.8 103
Central PRC 357 8 39,247 11.9 110 457 9 47,532 12.4 104
Northern PRC 227 5 25,038 7.6 110 372 6 37,916 9.9 102
Northwestern PRC 163 4 17,602 5.4 108 303 5 30,013 7.8 99
Northeastern PRC 57 5 5,829 1.8 102 108 5 11,128 2.9 103
Total 3,020 65 328,678 100.0 109 3,733 74 383,213 100.0 103
FINANCIAL INFORMATION
–3 5 0–


--- page 360 ---
Our sales of automobile under finance lease from self-operated sales outlets in most
provinces of the PRC increased for the year ended 31 December 2021 as compared to the
year ended 31 December 2020, primarily owing to the recovery from the significant adverse
effects caused by the outbreak of COVID-19 in the PRC in 2020 that led to (i) the demand
of new automobiles under finance lease redu ced during the year ended 31 December 2020;
and (ii) the temporary diversion of sales focus to the finance lease of our repossessed
automobiles during the period from February 2020 to July 2020 to better manage our
inventory level and minimise non-performing a ssets as there was a significant increase in the
number of terminated contracts during the aforesaid period.
Our sales of automobile under finance lease f rom self-operated sales outlets decreased
for the year ended 31 December 2022 as com pared to the year ended 31 December 2021,
primarily due to the impact on our in-store operation in various cities in the PRC brought
by the strict pandemic control and lockdown measures as a result of the resurgence of
COVID-19 pandemic in various parts in the PRC in 2022.
Our sales of automobile under finance lease f rom self-operated sales outlets increased
for the six months ended 30 June 2023 as compared to the six months ended 30 June 2022,
primarily due to the recovery from the adve rse impact of COVID-19 in the PRC in 2022,
our increased sales and marketing efforts and t he opening of new self-operated sales outlets
to grow our business.
FINANCIAL INFORMATION
–3 5 1–


--- page 361 ---
The following table sets out the breakdown of the number of new automobiles sold, number of sales outlets, sales of
automobile under finance lease from self-operated sales outlets and average price of new automobiles sold by city tier for the years/
periods and dates indicated:
As at/Year ended 31 December
2020 2021 2022
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
RMB’000 % RMB’000 RMB’000 % RMB’000 RMB’000 % RMB’000
T i e r o n e c i t y — 1————————1 0 1 9 9 4 0 . 19 9
Tier two cities 3,212 30 297,737 86.4 93 6,425 32 678,178 87.4 106 6,008 33 619,084 84.7 103
Tier three and below cities 494 35 46,708 13.6 95 935 33 98,121 12.6 105 1,101 34 111,154 15.2 101
Total 3,706 66 344,445 100.0 93 7,360 65 776,299 100.0 105 7,119 68 731,232 100.0 103
As at/Six months ended 30 June
2022 2023
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
Number of
new
automobiles
sold
Number of
sales outlets
Revenue from sales of
automobile under
finance lease from
self-operated sales outlets
Average price
of new
automobiles
sold
RMB’000 % RMB’000 RMB’000 % RMB’000
(unaudited)
Tier one city —————— 1———
Tier two cities 2,639 32 288,467 87.8 109 3,197 34 327,289 85.4 102
Tier three and below cities 381 33 40,211 12.2 106 536 39 55,924 14.6 104
Total 3,020 65 328,678 100.0 109 3,733 74 383,213 100.0 103
FINANCIAL INFORMATION
–3 5 2–


--- page 362 ---
We had one self-operated sales outlet in Guangzhou, which we re-purposed and
engaged in automobile finance lease and operating lease business in 2020 and did not
generate any revenue from sales of automobile under finance lease for the year ended 31
December 2020 and 2021. In la te 2022, we expanded our Guangzhou branch office to a
self-operated sales outlet which focused on automobile retail and finance and operating
lease of e-hailing vehicles.
Our revenue from sales of automobile under finance lease generated from a
self-operated sales outlet located in a tier one city was nil, nil, RMB1.0 million and nil
for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
accounted for nil, nil, 0.1% and nil of our sales of automobile under finance lease generated
from self-operated sales outlets for the corresponding year/period. As at 31 December 2020,
2021, 2022 and 30 June 2023, the number of our self-operated sales outlet in tier one city
was one, nil, one and one, respectively.
Our revenue from sales of automobile under finance lease generated from self-operated
sales outlets located in tier two cities was RMB297.7 million, RMB678.2 million,
RMB619.1 million and RMB327.3 million for th e years ended 31 De cember 2020, 2021,
2022 and the six months ended 30 June 2023, accounted for 86.4%, 87.4%, 84.7% and
85.4%, respectively, of our revenue from sales of automobile under finance lease generated
from self-operated sales outlets for the corresponding year/period. As at 31 December 2020,
2021, 2022 and 30 June 2023, the number of our self-operated sales outlets in tier two cities
was 30, 32, 33 and 34, respectively.
Our revenue from sales of automobile under finance lease generated from self-operated
sales outlets located in tier three and bel ow cities was RMB46.7 million, RMB98.1 million,
RMB111.2 million and RMB55.9 million for th e years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, acco unted for 13.6%, 12.6%, 15.2% and 14.6%,
respectively, of our revenue from sales of automobile under finance lease generated from
self-operated sales outlets for the corresponding year/period. As at 31 December 2020,
2021, 2022 and 30 June 2023, the number of our self-operated sales outlets in tier three and
below cities was 35, 33, 34 and 39, respectively.
Automobile agents
Our revenue from sales of automobile under finance lease through our automobile
agents were RMB18.5 million, RMB1.6 mill ion, RMB3.4 million and RMB1.5 million for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
accounted for 5.1%, 0.2%, 0.5% and 0.4% of total revenue generated from sales of
automobile under finance lease for the corresp onding year/period, respectively. The lower
contribution of our sales of automobile under finance lease through our automobile agents
for the years ended 31 December 2021 and 202 2 as compared to the year ended 31 December
2020, and the six months ended 30 June 2023 as compared to the six months ended 30 June
2022, was mainly because we reduced the number of automobile agents to promote
passenger vehicles in 2021, due to the higher non-performing asset ratio on the sales of
automobile under finance lease through our automobile agents as compared to that through
our self-operated sales outlets as at the end of 2020. In 2021, we ceased working with any
FINANCIAL INFORMATION
–3 5 3–


--- page 363 ---
automobile agent to promote our passenger ve hicles for our automobile retail and finance
business. We continue to engage third party agents to promote ou r e-hailing vehicles for our
automobile retail and finance business.
Finance lease income
Our finance lease income represents income arising from the provision of finance lease
services primarily to individual customers for acquisition of new automobiles under finance
lease and repossessed automobiles under fina nce lease. For our repossessed automobiles
sold under finance lease, we only recognise finance lease income as revenue from sales of
automobile under finance lease in respect of such vehicles had been recognised when such
automobiles were first sold as brand new automobiles. Occasionally, depending on the
availability of our resources, we may also prov ide automobile sale-leaseback service to
business-end customers in respect of automobiles in batches to generate finance lease
income. Our finance lease income amo unted to RMB234.7 million, RMB234.6 million,
RMB262.5 million and RMB148.2 million, accounted for 31.3%, 20.0%, 23.0% and 24.7%
of our total revenue for the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, respectively.
Our finance lease income depends on the interest rate of the outstanding finance lease
agreements and the outstanding principal amount of the finance lease agreements during
the period. For the purpose of illustrating th e impacts of the two factors on our finance
lease income, the average of average effective interest rate charged (calculated by the sum of
the average effective interest rate of finance lease agreements as at 1 January and 31
December divided by two) and the average total principal amount of finance lease
agreements (calculated by the sum of the to tal principal amount as at 1 January and 31
December divided by two) are used in the below analysis.
Our Directors do not regard our Group generating revenue from sales of automobile
under finance lease for finance leasing of repossessed automobiles, as (i) the finance lease of
the repossessed automobiles is seen as one of the primary methods to recover the value of
the outstanding finance lease receivables from the terminated contracts; (ii) we apply the
accounting policy for manufacturer or dealer lessor to the finance lease of new automobiles,
however, in the finance lease of repossessed automobiles, we did not identify a profit
attributable to activities similar to a dealer; a nd (iii) we price the finance lease contracts of
the repossessed automobiles based on a target interest rate. The pricing only represented the
finance income our management required to earn. We determine that manufacturer or
dealer lessor accounting rules under IFRS 16 para 71 is not applicable to the finance lease
of repossessed automobiles. Accordingly, no sa les revenue of finance lease of repossessed
automobile is generated.
Under automobile finance lease income, we recorded other fee-related income such as
late penalties and early termination fee, which amounted to RMB19.6 million, RMB21.1
million, RMB25.8 million and RMB11.0 milli on, accounted for 2.6%, 1.8%, 2.3% and
1.8% of our total revenue during the Track Record Period, respectively.
FINANCIAL INFORMATION
–3 5 4–


--- page 364 ---
Our finance lease income remained relatively stable at RMB234.7 million and
RMB234.6 million for the year ended 31 Decem ber 2020 and 2021, respectively, which
was primarily attributable to the combined e ffect of (i) the increase by 13.6% in the average
total principal amount of finance lease agreements for the year ended 31 December 2021 as
compared to that for the year ended 31 December 2020; and (ii) the completion of certain of
relatively higher average yield finance lease agreements, which were entered into prior to
2019 and generally had a term ranging from two to four years and led to the further
decrease in the average of effective interest rate charged for finance lease agreements from
23.6% for the year ended 31 December 2020 to 21.1% for the year ended 31 December 2021.
Our finance lease income increased from RMB234.6 million for the year ended 31
December 2021 to RMB262.5 million for the y ear ended 31 December 2022, primarily due
to (i) the increase by 20.4% in the average total principal amount of finance lease
agreements for the year ended 31 December 202 2 as compared to that for the year ended 31
December 2021; and partially offset by (ii) the decrease in the average effective interest rate
charged for finance lease agreements from 21.1% for the year ended 31 December 2021 to
19.6% for the year ended 31 December 2022.
Our finance lease income increased from RMB131.1 million for the six months ended
30 June 2022 to RMB148.2 million for the six months ended 30 June 2023, primarily due to
the increase in the average total principal amount of finance lease agreements by 15.5% for
the six months ended 30 June 2023 as compared to that for the six months ended 30 June
2022.
Please refer to the section headed ‘‘Business — Our Business Model and Operation —
(A) Automobile retail and finance’’ for details about the movement in the number of finance
lease agreements, principal amount and average effective interest rate charged for finance
lease agreements during the Track Record Period.
Automobile-related businesses
Our automobile-related businesses consist of (i) automobile operating lease; and (ii)
other automobile-related income. Our revenue generated from automobile-related
businesses amounted to RMB152.1 million, RMB158.8 million, RMB144.4 million and
RMB68.1 million, representing 20.3%, 13.6%, 12.6% and 11.3% of our total revenue for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively.
FINANCIAL INFORMATION
–3 5 5–


--- page 365 ---
Automobile operating lease
Our automobile operating lease business pr incipally involves: (i) e-hailing operating
lease; (ii) new energy car-sharing lease, where we offer new energy vehicles on short-term
lease; and (iii) other operating lease. The following table sets out a breakdown of our
revenue from automobile operating lease for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
E-hailing operating lease 116,599 87.9 132,846 92.1 115,930 92.0 64,443 93.1 52,833 86.0
New energy car-sharing 5,166 3.9 3,959 2.7 791 0.6 749 1.0 — —
Other operating lease 10,841 8.2 7,358 5.2 9,297 7.4 4,055 5.9 8,600 14.0
Total 132,606 100.0 144,163 100.0 126,018 100.0 69,247 100.0 61,433 100.0
For our e-hailing operating lease business, we lease e-hailing vehicles to our customers
in return for periodic rental payments. For the years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, our revenue from e-hailing operating lease
amounted to RMB116.6 million, RMB132. 8 million, RMB115.9 million and RMB52.8
million, accounted for 87.9%, 92.1%, 92.0% and 86.0% of our total revenue from
automobile operating lease for the correspon ding year/period, respectively. The average
occupancy rate for e-hailing vehicles under op erating lease was 78.8%, 90.7%, 85.0% and
69.8% for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, respectively.
In 2018, we started to provide car-sharing services where we offered new energy
automobiles to individual users with shorter l ease term, principally priced and charged by
minute and/or distance travelled with greater flexibility. For the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, our revenue generated from new
energy car-sharing business was RMB5.2 m illion, RMB4.0 million, RMB0.8 million and nil,
accounted for 3.9%, 2.7%, 0.6% and nil of our total revenue from automobile operating
lease for the corresponding year/period, respectively.
For our other operating lease business, we lease automobiles to our customers upon
customers’ request in return for periodic ren tal payments. For the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, our revenue from other operating
lease amounted to RMB10.8 million, RM B7.4 million, RMB9.3 million and RMB8.6
million, accounted for 8.2%, 5.2%, 7.4% and 1 4.0% of our total revenue from automobile
operating lease for the corresponding year/period, respectively.
FINANCIAL INFORMATION
–3 5 6–


--- page 366 ---
The table below sets out the number of automobiles under our operating lease as at the
dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
E-hailing operating lease 3,930 4,114 4,122 5,058
New energy car-sharing 326 325 — —
Other operating lease 604 561 1,101 1,561
Total 4,860 5,000 5,223 6,619
The table below sets out the number of e-h ailing vehicles switched from e-hailing
operating lease to finance lease, and the average number of e-hailing vehicles under
e-hailing operating lease for th e years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Switched from e-hailing
operating lease to retail and
finance 5 — 1,121 483
The average number automobiles
under e-hailing operating lease 3,325 4,072 3,877 4,252
As at 31 December 2020, 2021, 2022 and 30 June 2023, we had 4,860, 5,000, 5,223 and
6,619 automobiles in our operating lease, respectively.
For our e-hailing operating lease busines s, we had 3,930, 4,114, 4,122 and 5,058
automobiles, respectively, as at 31 De cember 2020, 2021, 2022 and 30 June 2023,
respectively. We increased the number of aut omobiles for e-hailing operating lease from
3,930 units as at 31 December 2020 to 4,114 units as at 31 December 2021 to expand our
e-hailing operating lease, th en maintained the number of e -hailing operating lease
automobiles relatively stable as at 31 December 2022. We further increased the number
of automobiles for our e-hailing operating le ase to 5,058 units as at 30 June 2023 to grow
our e-hailing operating lease business.
FINANCIAL INFORMATION
–3 5 7–


--- page 367 ---
We provide options for our customers to swi tch the e-hailing vehicles from e-hailing
operating lease to e-hailing under finance lease . Such flexibility in our service options can
satisfy customers who have financing need s. For the years ended 31 December 2020, 2021
and 2022, and the six mont hs ended 30 June 2023, the number of e-hailing vehicles switched
from e-hailing operating lease to e-hailing unde r finance lease as required by our customers
was five units, nil and 1,121 units, and 483 units , respectively. The significant increases in
the number of e-hailing vehicles switched from operating lease to finance lease for the year
ended 31 December 2022 and the six months ended 30 June 2023 were mainly due to the
demand from our customers as (i) for certain customers who plan to engage in e-hailing
business for a longer term, the total payme nt of purchasing an e-hailing vehicle under
finance lease is lower than the total payme nt of leasing an e-hailing vehicle through
operating lease, and (ii) in certain case, leas ing of e-hailing vehicles by way of finance lease
require a lower monthly lease payment as compared to operating lease. Therefore,
purchasing our e-hailing vehicles under fin ance lease is commercially more appealing to
such customers especially our customers may take ownership of the e-hailing vehicles at the
end of finance lease term, whereas for operating lease, our customers will have to return the
e-hailing vehicles at the end of the lease term.
The average number of e-hailin g automobiles under operating lease for the years ended
31 December 2020, 2021 and 2022, and the six m onths ended 30 June 2023 was 3,325 units,
4,072 units and 3,877 units, and 4,252 units, respectively. The decrease in the average
number of e-hailing vehicles und er e-hailing operating lease for the year ended 31 December
2022, was mainly due to the switch of 1,121 units of e-hailing vehicles from e-hailing
operating lease to e-hailing under finance lea se during the year ended 31 December 2022 to
meet our customers’ demand and we purchased 897 e-hailing operating lease vehicles in
November and December 2022. The increase in the average number of e-hailing vehicles
under e-hailing operating lease for the six months ended 30 June 2023 was mainly due to our
expansion in our e-hailing operating lease business during the period.
For our new energy car-sharing business, we had 326, 325, nil and nil automobiles,
respectively, as at 31 December 2020, 2021, 2022 and 30 June 2023. We maintained the
number of automobiles allocated to new energy car-sharing relatively stable as at 31
December 2020 and 2021, which then decrease d to nil as at 31 December 2022, as we
intended to focus and allocate our resources on expanding our automobile retail and
finance business, and e-hailing operating le ase business, hence we suspended Go Ziyou APP
service for our new energy car-sharing business in July 2022. By the end of 2022, all our new
energy car-sharing automobiles had been dispos ed of or reallocated to our automobile retail
and finance business.
For our other operating lease business, we had 604, 561, 1,101 and 1,561 automobiles,
respectively, as at 31 December 2020, 2021, 2022 and 30 June 2023. We maintained the
number of automobiles in our other operating lease business relatively stable as at 31
December 2020 and 2021, which then increased to 1,101 units and 1,561 units as at 31
December 2022 and 30 June 2023, mainly due to our efforts in developing our other
operating lease business as COVID-19 contro l measures had been lifted in late 2022, which
eased travel restrictions.
FINANCIAL INFORMATION
–3 5 8–


--- page 368 ---
Other automobile-related income
For our other automobile-related income, we mainly promote our business-end
customers’ insurance service and automobile a fter-market service to o ur car-user customers,
in return we receive service fees from our business-end customers for such services we
provided. For the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2023, our revenue generated from the auto -insurance promotion service was RMB17.5
million, RMB12.3 million, RMB12.5 million and RMB4.6 million, respectively. We also
assist our car-user customers who look for automobile aftermarket usage solutions through
our 52 Car APP to cater their various needs during the automobile usage stage. We do not
charge our car-user customers or business-end users for downloading or using our 52 Car
APP and 52 Car (Business Version) APP. In stead, we receive service fees from our
business-end users based on the agreed percentage typically ranging from 5% to 15% of the
transaction value of automobile repair orders through our 52 Car App from our car-user
customers. For the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2023, our revenue generated from the services we provided to the third party
automobile aftermarket service provider s was RMB1.5 million, RMB1.6 million, RMB1.7
million and RMB0.8 million, respectively.
Cost of revenue
Our cost of revenue mainly included (i) cost of inventories; (ii) depreciation expenses;
(iii) auto-insurance premium; and (iv) employe e benefit expenses. The following table sets
out a breakdown of our cost of revenue for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Cost of inventories 305,900 68.6 633,364 78.2 595,601 77.6 268,547 76.1 312,293 77.4
Depreciation expenses 70,288 15.8 88,192 10.9 83,356 10.9 45,026 12.8 43,517 10.8
Auto-insurance premium 40,153 9.0 35,923 4.4 37,356 4.9 17,479 5.0 21,996 5.4
Employee benefit expenses 15,200 3.4 30,759 3.8 31,284 4.1 11,876 3.4 15,718 3.9
Provision for inventories 2,876 0.6 7,674 0.9 6,886 0.9 3,499 1.0 3,774 0.9
Motor vehicle expenses 5,509 1.3 7,265 1.0 7,101 0.9 3,466 1.0 4,005 1.0
Transportation expenses 3,217 0.7 4,027 0.5 3,648 0.5 1,702 0.5 2,139 0.5
Amortisation expenses 1,992 0.4 2,229 0.3 1,653 0.2 1,098 0.3 217 0.1
Sales commission to
automobile agents 1,028 0.2 75 — 194 — 130 — 49 —
Total 446,163 100.0 809,506 100.0 767,079 100.0 352,824 100.0 403,710 100.0
Note: ‘‘—’’ represents percentage less than 0.1%.
Our cost of inventories is the value of our new automobiles sold on finance lease. For the
years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023, our cost of
inventories amounted to RMB305.9 million, RMB633.4 million, RMB595.6 million and
RMB312.3 million, representing 68.6%, 78.2%, 77.6% and 77.4% of our total cost of revenue
and 84.3%, 81.4%, 81.1% and 81.2% of our reven ue generated from sales of automobile under
finance lease for the corresponding year/period, respectively. Our increased cost of inventories
for the year ended 31 December 2021 was primarily due to the recovery of our automobile
retail and finance business from the adverse impact of COVID-19 in the PRC in 2020,
resulting in higher sales of automobile unde r finance lease for the year ended 31 December
FINANCIAL INFORMATION
–3 5 9–


--- page 369 ---
2021, as compared to the year ended 31 Decemb er 2020. Our cost of inventories decreased
for the year ended 31 December 2022, as comp ared to the year ended 31 December 2021,
primarily due to the decrease in our sales of automobile under finance lease for the year
ended 31 December 2022 mainly due to the impa ct on our in-store operation in various
cities in the PRC brought by the strict pandemic control and lockdown measures as a result
of the resurgence of COVID-19 pandemic in various parts in the PRC in 2022, which
decreased the demand for new automobile purchases in certain regions in the PRC for the
year ended 31 December 2022. Our increased cost of inventories for the six months ended 30
June 2023 was in line with the growth in au tomobile retail an d finance business.
Our cost of inventories to our revenue generated from sales of automobiles under
finance lease remained relatively stable at 81.4%, 81.1% and 81.2% for the years ended 31
December 2021, 2022 and the six months ended 30 June 2023, respectively.
As cost of inventories was the largest component of our cost of revenue, the following
sensitivity analysis illustrates the impact of hypothetical fluctuations of our cost of
inventories on our profit before tax during the Track Record Period. Fluctuations in our
cost of inventories are assumed to be 5% and 10% by reference to the historical fluctuations
during the Track Record Period, with o ther variables remained constant:
Changes in cost of inventories
+/– 5% +/– 10%
RMB’000 RMB’000
Decrease/increase in profit before tax
Year ended 31 December 2020 –/+ 15,295 –/+ 30,590
Year ended 31 December 2021 –/+ 31,668 –/+ 63,336
Year ended 31 December 2022 –/+ 29,780 –/+ 59,560
Six months ended 30 June 2023 –/+ 15,615 –/+ 31,229
Our depreciation expenses mainly represent the depreciation charge of our vehicles for
our automobile operating lease business. Fo r the years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, our dep reciation expenses amounted to RMB70.3
million, RMB88.2 million, RMB83.4 million and RMB43.5 million, representing 15.8%,
10.9%, 10.9% and 10.8% of our total cost of revenue and 53.0%, 61.2%, 66.1% and 70.8%
of our revenue generated from automobile operating lease for the corresponding
year/period, respectively. The increase in t he amount of depreciation expenses for the
year ended 31 December 2021, as compared to the year ended 31 December 2020 was
primarily due to the average number of our operating lease vehicles increased from 3,885
units for the year ended 31 December 2020 t o 4,873 units for the year ended 31 December
2021. For the year ended 31 December 2022, our depreciation expenses decreased to
RMB83.4 million, mainly due to the average nu mber of our operating lease vehicles
decreased from 4,873 units for the year ended 31 December 2021 to 4,676 units for the year
ended 31 December 2022. Our depreciation e xpenses decreased from RMB45.0 million for
the six months ended 30 June 2022 to RMB43 .5 million for the six months ended 30 June
2023, mainly due to the higher portion of new automobile purchases were recognised in the
second quarter of 2023 as compared to the six months ended 30 June 2022.
FINANCIAL INFORMATION
–3 6 0–


--- page 370 ---
During the Track Record Period, we bore t he insurance cost for the period after
procuring automobiles inventories and before s elling the automobiles to customers. For the
majority of sales of automobile under finance lease, we required our customers to purchase
the compulsory traffic accident liability ins urance and commercial i nsurance throughout
the lease term. For a small portion of automobiles sold under finance lease, we arranged the
insurance for the first year typically at the option of the customers, such insurance cost was
borne by us and reflected in the down payment, while the insurance cost for the remainder
of lease term was borne by the customers. Fo r the years ended 31 December 2020, 2021,
2022 and the six months ended 30 June 2023, our auto-insurance premium amounted to
RMB40.2 million, RMB35.9 million, RMB37.4 million and RMB22.0 million, representing
9.0%, 4.4%, 4.9% and 5.4% of our total cost of revenue for the corresponding year/period,
respectively. The decrease in auto-insurance premium in the year ended 31 December 2021
as compared to the year ended 31 December 2 020, was mainly due to the decrease in our
automobile inventory turnover days of which we bore the insurance cost for these
automobile inventories as aforementioned. Th e increases in auto-insurance premium in the
year ended 31 December 2022 and the six months ended 30 June 2023 as compared to the
year ended 31 December 2021 and the six months ended 30 June 2022, respectively, was
mainly due to the increase in the automobile inventories during the year/period, for which
we bore the insurance cost.
Our employee benefit expenses mainly repr esent sales commission paid to our sales
staff for the new automobiles sold under finance lease. Our employee benefit expenses
amounted to RMB15.2 million, RMB30.8 million, RMB31.3 million and RMB15.7 million
for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
representing 3.4%, 3.8%, 4.1% and 3.9% of our total cost of revenue for the corresponding
year/period, respectively. The increase in our employee benefit expenses under cost of
revenue for the year ended 31 December 2021, as compared to the year ended 31 December
2020, was mainly attributable to (i) the increase in our sales of automobile under finance
lease; and (ii) the commission rate varies with the model of new automobiles sold. Our
employee benefit expenses remained relativ ely stable for the year ended 31 December 2022.
The increase in our employee benefit expenses under the cost of revenue for the six months
ended 30 June 2023 as compared to the six months ended 30 June 2022 was mainly
attributable to the increase in our sa les of automobile under finance lease.
Gross profit and gross profit margin
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, our gross profit was RMB303.6 millio n, RMB361.8 million, RMB374.4 million and
RMB197.3 million, respectively, while our g ross profit margin was 40.5%, 30.9%, 32.8%
and 32.8% for the corresponding year/period, respectively.
FINANCIAL INFORMATION
–3 6 1–


--- page 371 ---
The following table sets out our gross prof it and gross profit margin by revenue stream
for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin Gross profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Automobile retail and finance 257,905 43.2 328,527 32.4 340,910 34.2 170,746 36.9 184,637 34.6
Automobile-related businesses
Automobile operating lease
— e-hailing operating lease 23,438 20.1 25,665 19.3 20,715 17.9 11,952 18.5 9,295 17.6
— New energy car-sharing (1,170) (22.7) (4,061) (102.6) (1,555) (196.6) (1,377) (183.7) — —
— Other operating lease 5,639 52.0 (2,361) (32.1) (2,586) (27.8) (2,031) (50.1) (2,611) (30.4)
— Other automobile-related
income 17,786 91.1 13,986 95.3 16,963 92.1 6,024 88.8 5,971 89.6
Sub-total 45,693 30.0 33,229 20.9 33,537 23.2 14,568 19.2 12,654 18.6
Total 303,598 40.5 361,756 30.9 374,447 32.8 185,314 34.4 197,290 32.8
Automobile retail and finance
Our gross profit in relation to our automobile retail and finance business amounted to
RMB257.9 million, RMB328.5 million, RMB340.9 million and RMB184.6 million for the
years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
accounted for 84.9%, 90.8%, 91.0% and 93.6% of our total gross profit for the
corresponding year/period, respectively.
Other than the year ended 31 December 2020, our gross profit margin of our
automobile retail and finance segment remaine d relatively stable during the Track Record
Period. The higher gross profit margin for the year ended 31 December 2020 as compared to
the years ended 31 December 2021 and 2022, wa s primarily due to the decreased sales of
automobile as a result of the impact of the outbreak of COVID-19 in the PRC in 2020,
hence the proportional contribution from our sales of automobile for the year ended 31
December 2020 was lower than the years ende d 31 December 2021 and 2022. Our cost of
revenue principally included cost of inventories, which is the value of our new automobiles
sold on finance lease. For the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, our cost of inventories represented 84.3%, 81.4%, 81.1% and 81.2% of
our revenue generated from sales of automobile under finance lease. As gross profit margin
of sales of automobile under finance lease was lower than that of finance lease income, the
change in revenue mix led to the fluctuation o f our gross margin for automobile retail and
finance segment during the Track Record Period.
Automobile-related businesses
E-hailing operating lease
The gross profit from our e-hailing opera ting lease business amounted to RMB23.4
million, RMB25.7 million, RMB20.7 million and RMB9.3 million for the years ended 31
December 2020, 2021, 2022 and the six months end ed 30 June 2023, respectively. Our gross
FINANCIAL INFORMATION
–3 6 2–


--- page 372 ---
profit from our e-hailing operating lease business increased from RMB23.4 million for the
year ended 31 December 2020 to RMB25.7 m illion for the year ended 31 December 2021
was mainly due to the increase in revenue from e-hailing operating lease primarily resulted
from the increase in the average occupancy rate f or e-hailing vehicles under operating lease
from 78.8% for the year ended 31 December 2020 to 90.7% for the year ended 31 December
2021. The gross profit from our e -hailing operating lease bus iness decreased to RMB20.7
million for the year ended 31 Dece mber 2022 primarily attribute to the decrease in revenue
from our e-hailing operating lease business resulted from the decrease in the average
occupancy rate for e-hailing vehicles under op erating lease from 90.7% for the year ended
31 December 2021 to 85.0% for the year ended 31 December 2022. The gross profit from
our e-hailing operating lease business decr eased from RMB12.0 million for the six months
ended 30 June 2022 to RMB9.3 million for the six months ended 30 June 2023, mainly due
to (i) the decrease in the aver age occupancy rate for e-hailing vehicles under operating lease
from 88.3% to 69.8% for the corresponding period, mainly due to the expansion of our
e-hailing automobile fleet and the 1,462 units of e-hailing vehicles newly purchased during
the six months ended 30 June 2023, which had not completed the automobile registration
and, hence, were not leased fully during the period; and (ii) the decrease in revenue from our
e-hailing operating lease business resulte d from the decrease in the average number of
automobiles available for lease as we switche d 483 units e-hailing vehicles from operating
lease to finance lease during the six months ended 30 June 2023.
The gross profit margin of our e-hailing operating lease business was 20.1%, 19.3%,
17.9% and 17.6%, respectively, during the Track Record Period. The gross profit margin of
our e-hailing operating lease remained relat ively stable at 20.1% and 19.3% for the years
ended 31 December 2020 and 2021, respectively. The gross profit margin of our e-hailing
operating lease business decreased to 17.9% for the year ended 31 December 2022, which
was mainly due to the rate of decrease in our r evenue from our e-hailing operating lease
business was higher than the rate of decrease in the relevant cost for our e-hailing operating
lease business, which was mainly depreciati on charges. The decrease in revenue from our
e-hailing operating lease business for the y ear ended 31 December 2022 as compared to the
year ended 31 December 2021, was mainly attrib utable to (i) the decrease in the average
occupancy rate from 90.7% to 85.0% for our e-h ailing vehicles under ope rating lease for the
corresponding year, due to the impact of the regional outbreaks of COVID-19 variants in
the PRC in 2022; and (ii) the decrease in the average number of e-hailing vehicles from
4,072 units for the year ended 31 December 2021 to 3,877 units for the year ended 31
December 2022, as we switched 1,121 e-hailing v ehicles from e-hailing operating lease to
e-hailing under finance lease, which was driv en by more e-hailing customers selected our
e-hailing under finance lease service in 202 2. The gross profit margin of our e-hailing
operating lease business decreased from 18.5% for the six months ended 30 June 2022 to
7.6% for the six months ended 30 June 2023, m ainly due to (i) the decrease in the average
occupancy rate for e-hailing vehicles under operating lease from 88.3% to 69.8% for the
corresponding period, mainly due to the expansion of our e-hailing automobile fleet and the
1,462 units of e-hailing vehicles newly purchased during the six months ended 30 June 2023,
which had not completed the automobile registration and, hence, were not leased fully
during the period; and (ii) the decrease in r evenue from our e-hailing operating lease
business resulted from the decrease in the average number of automobiles available for lease
as we switched 483 units e-hailing vehicles fro m operating lease to finance lease during the
six months ended 30 June 2023.
FINANCIAL INFORMATION
–3 6 3–


--- page 373 ---
New energy car-sharing
We recorded gross loss for our new-energy car sharing business during the Track
Record Period, amounted to RMB1.2 million, RMB4.1 million, RMB1.6 million and nil for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. Our gross loss for the new energy car-sharing business during the Track
Record Period was mainly due to (i) the decrease in our revenue generated from our new
energy car-sharing as we gradually shifted our focus on e-hailing operating lease; and (ii)
the depreciation expenses of the automobiles used for our new-energy car sharing incurred
during the Track Record Period.
We suspended our new energy car-sharing business in July 2022. By the end of 2022,
our new energy car-sharing automobiles had been disposed of or transferred to our
automobile retail and finance business.
Other operating lease
The gross profit from our other operating lease business amounted to RMB5.6 million
for the year ended 31 December 2020. For the years ended 31 December 2021, 2022 and the
six months ended 30 June 2023, we recorded gross loss from other operating lease,
amounted to RMB2.4 million, RMB2.6 million a nd RMB2.6 million, respectively. Such
gross loss was mainly due to (i) the overall decrease in our revenue generated from other
operating lease as we gradually shifted our focus to e-hailing operating lease; and (ii) the
depreciation expenses of the automobiles for other operating lease incurred during the
Track Record Period.
Other automobile-related income
The gross profit of our other automobile-related income decreased from RMB17.8
million for the year ended 31 December 202 0 to RMB14.0 million for the year ended 31
December 2021, which was mainly due to t he decrease in revenue from our other
automobile-related income. Our gross pro fit increased to RMB17.0 million for the year
ended 31 December 2022, which was mainly attrib utable to the increase in revenue from our
other automobile-related services in 2022. The gross profit of our other automobile-related
income remained relatively stable at RMB6 .0 million for the six months ended 30 June
2023, as compared to the six months ended 30 June 2022.
The gross profit margin of our other automobile-related income was 91.1%, 95.3%,
92.1% and 89.6%, respectively, during the Track Record Period. The increase in the gross
profit margin of our other automobile-related income from 91.1% for the year ended 31
December 2020 to 95.3% for the year ended 31 D ecember 2021, was primarily due to the
decrease in amortisation expenses attributable to other automobile-related services incurred
for the year ended 31 December 2021. The decrease in the gross profit margin of our other
automobile-related income from 95.3% for the year ended 31 December 2021 to 92.1% for
the year ended 31 December 2022 was mainly due to the increase in amortisation expenses
attributable to other automobile-related services for the year ended 31 December 2022. The
FINANCIAL INFORMATION
–3 6 4–


--- page 374 ---
gross profit margin of our other automobile-r elated income remained relatively stable at
89.6% for the six months ended 30 June 2023 as compared to the six months ended 30 June
2022.
Net interest margin and net interest spread
The following table sets out the key financial indicators such as our finance lease
income, cost of funding, net interest income, n et interest spread and net interest margins,
average effective interest rate charged for newly entered finance lease agreements, and
weighted average effective interest rate of borrowings for the years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
(RMB’000, except for percentage)
Finance lease income 234,705 234,561 262,498 148,191
Cost of funding (98,682) (108,831) (131,381) (76,001)
Net interest income 136,023 125,730 131,117 72,190
Average balance of finance lease
receivables
(Note 1) 1,052,541 1,149,328 1,383,649 1,497,559
Average balance of
borrowings (Note 2) 1,230,067 1,269,390 1,548,119 1,785,637
Average yield of finance lease
receivables (Note 3) 22.3% 20.4% 19.0% 19.8%
Average cost of borrowings (Note 4) 8.0% 8.6% 8.5% 8.5%
Net interest spread (Note 5) 14.3% 11.8% 10.5% 11.3%
Net interest margin (Note 6) 12.9% 10.9% 9.5% 9.6%
A v e r a g ee f f e c t i v ei n t e r e s tr a t e
charged for newly entered finance
lease agreements (Note 7) 20.5% 19.4% 18.5% 18.7%
Weighted average effective interest
rate of borrowings (Note 8) 8.5% 8.5% 8.6% 8.5%
Notes:
(1) Average balance of finance lease receivables is calculated as the sum of th e beginning and the ending
balance of finance lease receivables for the relevant year/period divided by two.
(2) Average balance of borrowings is calculated a s the sum of the beginning and the ending balance for
the relevant year/period divided by two.
(3) Calculated by dividing finance lease income for the relevant year/period by the average balance of
finance lease receivables.
FINANCIAL INFORMATION
–3 6 5–


--- page 375 ---
(4) Calculated by dividing cost of funding for the relevant year/period by the average balance of
borrowings.
(5) Calculated as the difference between the average yield of finance lease receivables and the average
cost of borrowings for the relevant year/period.
(6) Calculated by dividing net interest income for t he relevant year/period by the average balance of
finance lease receivables.
(7) Calculated by dividing sum of effective interest r ate of newly entered finance lease agreements by the
total number of newly entered finance lease agreements entered for the relevant year/period.
(8) Calculated by multiplying the effective interes t rate of each borrowing by the corresponding ending
balance and dividing by the total ending balanc e of the borrowings as at each year/period end.
Our average effective interest rate charged for newly entered finance lease agreements
remained relatively stable for the years ended 31 December 2020 and 2021 and decreased to
18.5% for the year ended 31 December 2022, wh ich was primarily attr ibutable to the lower
contribution of newly entered finance lease agreements for new automobiles to the total
newly entered finance lease agreements for the year ended 31 December 2022 as compared
to the year ended 31 December 2021, which generally had higher average effective interest
rate during the Track Record Period. Our average effective interest rate charged for newly
entered finance lease agreements increased t o 18.7% for the six months ended 30 June 2023,
mainly due to the higher contribution of newly entered finance lease agreements for new
automobiles for the six months ended 30 June 2023 as compared to the six months ended 30
June 2022.
Our average yield of finance lease receivables was 22.3%, 20.4%, 19.0% and 19.8% for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. The decrease in the average yield of finance lease receivables during the years
ended 31 December 2020, 2021 and 2022 was primarily due to the completion of relatively
higher average yield finance lease agreements entered into prior to 2019 which generally had
a term ranging from two to four years. According to CIC, the industry average yield of
interest-earning assets before 2019 was relatively higher than during the Track Record
Period due to higher average effective interest rate per annum charged by RAFLCs prior to
2019. We enjoyed first-mover advantage by ope rating finance lease business since 2012
ahead of other major third-party RAFLCs . The competition in the RAFLC market in
China intensified during 2018 and 2019 with some internet-backed RAFLCs adopted
competitive pricing in order to win more cu stomers, and it was followed by more RAFLCs
in order to sustain market share, leading to a downward adjustment of the industry range of
the average effective interest rate per annum f or finance lease agreements in 2018 and 2019.
O u rn e wa u t o m o b i l e sh a v eb e e ns o l do nf i n a nce lease generally with a term of two to four
years. As such, our sales of automobile under finance lease entered into prior to 2019 with
higher average effective interest rate will last through the subsequent two to four years.
While we also entered into new sales of autom obile under finance le ase with lower average
effective interest rate subsequent to 2019, hence our average yield of interest-earning assets
was lower than prior to 2019. According to CIC, we were able to charge higher average
interest rates for the finance lease agreemen ts than other RAFLCs, because of our flexible
product offerings, strong offline capabilit y and developed risk management system to
FINANCIAL INFORMATION
–3 6 6–


--- page 376 ---
expand customer reach and control asset quality. According to CIC, there was no major
issue which may exert significant downward pre ssure on effective interest rates charged by
industry players as at the Latest Practicable Date. Lower effective interest rates of
automobile finance lease services may be cha rged by industry players from time to time if
the RAFLCs offer occasional promotions and more competitive pricing options to car
buyers, and fluctuations in market interest ra tes could also affect the level of effective
interest rates charged by RAFLCs. However , the greater market acceptance of automobile
finance lease services in the PRC can potential ly offset the aforesaid impacts, if any. The
average yield of our finance lease receivables increased slightly from 19.0% for the year
e n d e d3 1D e c e m b e r2 0 2 2t o1 9 . 8 %f o rt h es i xm o n t h se n d e d3 0J u n e2 0 2 3 .
Our average cost of borrowings was 8.0%, 8.6%, 8.5% and 8.5% for the years ended
31 December 2020, 2021, 2022 and the six months ended 30 June 2023, respectively. Our
average cost of borrowings increased from 8.0% for the year ended 31 December 2020 to
8.6% for the year ended 31 December 2021, primarily owing to the fact that the increase in
the average balance of borrowings (calculated by the sum of the beginning balance and the
ending balance divided by two) by RMB39.3 million or 3.2% from RMB1,230.1 million for
the year ended 31 December 2020 to RMB1,2 69.4 million for the year ended 31 December
2021, while the cost of funding increased by RMB10.1 million or 10.3% from RMB98.7
million for the year ended 31 December 2020 t o RMB108.8 million for the year ended 31
December 2021. Our average cost of borrowings r emained relatively stable at 8.5% for the
year ended 31 December 2022 and 8.5% for the six months ended 30 June 2023.
The net interest spread decreased from 14.3% for the year ended 31 December 2020 to
11.8% for the year ended 31 December 2021, and then remained relatively stable at 10.5%
for the year ended 31 December 2022, primar ily due to that the average yield of finance
lease receivables decreased from 22.3% for the year ended 31 December 2020 to 20.4% for
the year ended 31 December 2021, then further decreased to 19.0% for the year ended 31
December 2022, while the average cost of borrowings increased from 8.0% for the year
ended 31 December 2020 to 8.6% for the year ended 31 December 2021, and then remained
relatively stable at 8.5% for the year ended 31 December 2022. Our net interest spread
increased to 11.3% for the six months ended 30 June 2023, primarily due to the increase in
the average yield of finance lease receivables.
The net interest margin decreased from 12.9% for the year ended 31 December 2020 to
10.9% for the year ended 31 December 2021, and then further decreased to 9.5% for the
year ended 31 December 2022, which was primar ily due to the increase in our finance cost
during the Track Record Period, driven by o ur increased borrowings to support our
business growth. Our net interest margin remained relatively stable at 9.6% for the six
months ended 30 June 2023.
Our weighted average effective interest rate of borrowings was relatively stable at
8.5%, 8.5%, 8.6% and 8.5% for the years ended 31 December 2020, 2021, 2022 and the six
months ended 30 June 2023, respectively.
The fluctuations in net interest spread and net interest margin were primarily due to
the fluctuations in the average yield of finance lease receivables as explained above.
FINANCIAL INFORMATION
–3 6 7–


--- page 377 ---
Yield of operating lease
The following table sets out the yield of our operating lease for the years/period
indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Yield of operating lease 31.6% 28.9% 25.0% 21.5%
Notes:
1. Yield of operating lease is calculated by dividin g the operating lease income during the year/period
generated from operating lease assets owned by us by the average book value automobiles under
property and equipment and multiplied by 100%. A verage book value automobiles under property
and equipment is calculated as the sum of the beginning and the ending balance of the book value of
the automobiles under property and equipment f or the relevant year/period divided by two.
2. The calculation excluded lease income generated from sub-operating lease of the automobiles rented
by us.
Our yield of operating lease decreased from 31.6% for the year ended 31 December
2020 to 28.9% for the year ended 31 December 2021, primarily due to the significant
increase in the number of e-hailing vehicles purchased for our automobile operating lease
business from 3,930 units as at 31 December 2 020 to 4,114 units as at 31 December 2021.
Our yield of operating lease decreased to 25.0% for the year ended 31 December 2022,
which was mainly due to our automobile operating lease income decreased by 12.6% for the
year ended 31 December 2022 as compared to th e year ended 31 December 2021; while the
average book value of our automobiles under property and equipment decreased by 7.7%
for the year ended 31 December 2022 as compared to the year ended 31 December 2021 as
result of the decrease in the average number of our operating lease vehicles from
approximately 4,900 for the year ended 31 Dec ember 2021 to approximately 4,700 for the
year ended 31 December 2022. Our yield of operating lease decreased to 21.5% for the six
months ended 30 June 2023, mainly due to the e xpansion of our e-hailing automobile fleet
and the 1,462 units of e-hailing vehicles newly pu rchased during the period, which typically
takes one to two months to complete the e-ha iling registration, were not fully utilised
during the six months ended 30 June 2023.
As advised by our PRC Legal Advisers, there is no specific regulation which governs
the yield on operating lease business. After reviewing the relevant operating lease
agreements provided by our Group, our PRC Legal Advisers are of view that the yield of
operating lease of our Group during the Track Record Period did not violate any applicable
PRC laws and regulations on operating lease business in the PRC.
FINANCIAL INFORMATION
–3 6 8–


--- page 378 ---
Other income, net
The following table sets out a breakdown of our other income, net for the years/period
indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Government grants 24,395 16,676 22,638 11,499
Donation (395) — (340) —
Others (698) (716) (550) 130
23,302 15,960 21,748 11,629
Other income, net, includes (i) government grants, comprising (a) VAT related tax
benefits; and (b) government subsidies; (ii) donations; and (iii) others. For the years ended
31 December 2020, 2021, 2022 and the six months ended 30 June 2023, we recorded other
income, net of RMB23.3 million, RMB16.0 million, RMB21.7 million and RMB11.6
million, respectively. Government grants prima rily consist of the fisc al support that local
governments offer to the Group entities engaged in the finance leasing business in the PRC.
There are no unfulfilled condi tions or other contingencies attaching to these grants.
(a) VAT related tax benefits
Pursuant to the Circular on Comprehensively Promoting the Pilot Scheme of the
Collection of Value-added Tax In Lieu of Business Tax ( 《關於全面推開營業稅改徵增值稅試
點的通知》) (the ‘‘Circular 36 ’’), which was implemented on 1 May 2016 and last amended
and became effective on 1 April 2019, the pilo t programme of the collection of VAT in lieu
of business tax shall be promoted nationwide in a comprehensive manner starting from 1
May 2016. We have received VAT related tax ben efits since 2016. According to the Circular
36, for pilot scheme taxpayers approv ed by PBOC, CBRC or MOFCOM to engage in
finance lease business and provide finance l ease services, the sales amount shall be the
balance after deducting loan interest paid (in cluding interest of foreign currency loans and
Renminbi loans), interest on bonds issued and vehicle purchase tax from the total money
and other charges received.
For general taxpayers among pilot scheme t axpayers approved by the PBOC, CBRC or
MOFCOM to engage in finance lease, if they provide services of finance lease of tangible
movables and sale-leaseback financing of tangible movables, the portion of their actual
amount of VAT which exceeds 3 % shall be subject to refund upon levy of the VAT. For
general taxpayers among pilot scheme taxpayers approved to engage in finance lease
business and sale-leaseback financing by the provincial commerce authorities and national
economic and technological development zones authorised by MOFCOM, if the paid
capital attains RMB170 million after 1 May 2016, the aforesaid provisions will be
FINANCIAL INFORMATION
–3 6 9–


--- page 379 ---
applicable to such taxpayer with effect from th e month in which the threshold is reached. As
we were an entity engaging in finance lease bus iness and its registered capital had attained
RMB170 million as at 1 May 2016, we were eligible for the tax refund if it has paid VAT at
a rate of over 3%.
According to the Announcement on Relevant P olicies for Deepening Value-Added Tax
Reform ( 《關於深化增值稅改革有關政策的公告》) promulgated by MOFCOM, SAT and
General Administration of Customs on 20 March 2019 and became effective on 1 April
2019, taxpayers in the production and living service industries (including the finance lease
industry) are entitled to an additional 10% of deductible input tax for the current tax period
from the amount of payable tax from 1 April 2019 to 31 December 2021, which was further
extended to 31 December 2 023 pursuant to the Announcement on VAT Policies for
Facilitating the Relief and Development of Indus tries with Difficulties in the Service Sector
(《關於促進服務業領域困難行業紓困發展有關增值稅政策的公告》) promulgated by
MOFCOM and SAT on 3 March 2022 and the An nouncement on Clarifying VAT Relief
and Other Policies for Small-scale VAT Taxpayers ( 《關於明確增值稅小規模納稅人減免增值
稅等政策的公告》) promulgated by MOFCOM and SAT on 9 January 2023.
The abovementioned tax benefits, including refunds for VAT payment and the
additional 10% of deductible input tax, were computed based on the net VAT paid and tax
payable respectively, both of which directly arose from our finance lease income and
purchase of finance lease automobiles during our ordinary and usual course of business.
Accordingly, we consider that such tax benef its as other income generated in the ordinary
and usual course of business.
(b) Government subsidies
Examples of the various government subsidies received include rebates of handling fees
from the relevant tax authorities arising from withholding and payment of employees’
personal income tax by us at the time of wage payment (the ‘‘
Handling Fee Rebates ’’) which
incurred annually; subsidies for share transfer s; rewards for stable industrial production
and operation; and various employment subsidies, including those for long-term job
stabilisation and employment support in o rder to stabilise the employment during the
outbreak of COVID-19 in the PRC in 2020.
Amongst the various government subsidies granted to us, certain types of government
subsidies arose from the ordinary and usual c ourse of business, such as rewards for stable
industrial production and operation and employment support subsidies, which are
recurring; while certain types of government subsidies did not arise from the usual and
ordinary course of our business and one-off subsidies are not recurring, such as share
transfer subsidies and the Handling Fee Rebates. The government subsidies amounted to
approximately RMB4.1 million, RMB3.8 millio n, RMB1.6 million and RMB0.8 million for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. Government subsidies, net of tax together amounted to approximately
RMB3.2 million, RMB3.0 million, RMB1.2 million and RMB0.6 million for the years
ended 31 December 2020, 2021, 2 022 and the six months ended 30 June 2023, respectively.
FINANCIAL INFORMATION
–3 7 0–


--- page 380 ---
Other losses, net
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Loss on disposal of property and
equipment (927) (2,822) (2,062) (2,582)
Others (5,694) (5,891) (4,752) (1,433)
(6,621) (8,713) (6,814) (4,015)
Our other losses, net, primarily included loss on disposal of property and equipment.
Selling and marketing expenses
Selling and marketing expenses amounted to RMB75.1 million, RMB83.2 million,
RMB81.1 million and RMB44.1 million, resp ectively, for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 J une 2023. Selling and marketing expenses
mainly include (i) employee benefit expenses; (ii) depreciation and amortisation; and (iii)
advertising expenses.
The following table sets out a breakdown of our selling and marketing expenses for the
years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit expenses 31,979 42.6 33,214 39.9 33,374 41.2 17,233 41.1 17,655 40.0
Depreciation and amortisation 13,042 17.4 15,201 18.3 16,209 20.0 8,029 19.1 8,257 18.7
Repair and maintenance 6,316 8.4 9,812 11.8 10,379 12.8 5,045 12.0 6,543 14.8
Advertising expenses 8,537 11.4 10,834 13.0 8,423 10.4 4,982 11.9 3,215 7.3
Motor vehicle expenses 6,382 8.5 4,711 5.7 5,208 6.4 2,483 5.9 3,959 9.0
Travelling expenses 1,592 2.1 1,239 1.5 637 0.8 315 0.8 698 1.6
Office expenses 1,562 2.1 1,458 1.8 1,084 1.3 511 1.2 815 1.8
Rental expenses 2,030 2.7 3,712 4.5 2,511 3.1 1,342 3.2 1,246 2.8
Other expenses 3,616 4.8 2,983 3.5 3,271 4.0 2,036 4.8 1,698 4.0
75,056 100.0 83,164 100.0 81,096 100.0 41,976 100.0 44,086 100.0
Employee benefit expenses mainly consist of salaries, bonuses and contribution to
social insurance for our sales staff. Employee benefit expenses amounted to RMB32.0
million, RMB33.2 million, RMB33.4 million and RMB17.7 million for the years ended 31
December 2020, 2021, 2022 and the six months ended 30 June 2023, respectively. Our
employee benefit expenses increased for the year ended 31 December 2021 as compared to
the year ended 31 December 2020 , primarily due to the increase in the average number of
headcounts of sales staff to capture the market opportunities as a result of recovery of the
FINANCIAL INFORMATION
–3 7 1–


--- page 381 ---
market in 2021. Our employee benefit expenses re mained relatively stable for the year ended
31 December 2022 as compared to the year ended 31 December 2021. Our employee benefit
expenses increased by 2.4% for the six mont hs ended 30 June 2023 as compared to the same
period in 2022, primarily due to the increase in the average number of headcounts of sales
staff to capture the market opportunities.
Depreciation and amortisation mainly consist of depreciation charges of our
right-of-use assets, office equipment and leas ehold improvement and amortisation of our
intangible assets. Depreciation and amorti sation expenses amounted to RMB13.0 million,
RMB15.2 million, RMB16.2 millio n and RMB8.3 million for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, respectively. The increasing trend
in deprecation and amortisation expenses was primarily due to the continuous enhancement
of our existing self-developed internal operation systems and applications.
Advertising expenses amounted to RMB8.5 million, RMB10.8 million, RMB8.4
million and RMB3.2 million for the years en ded 31 December 2020, 2021, 2022 and the six
months ended 30 June 2023, respectively. The increase in advertising expenses from the year
ended 31 December 2020 to the year ended 31 D ecember 2021 was mainly attributable to
more marketing efforts made to capture the bus iness opportunity when the overall market
recovered from the outbreak of COVID-19 in th e PRC. Our advertising expenses decreased
for the year ended 31 December 2022 as com pared to the year ended 31 December 2021,
primarily due to our cost control measures on advertising as a result of the regional
outbreaks of COVID-19 variants in the PRC in 2 022. Our advertising expenses decreased
for the six months ended 30 June 2023 as comp ared to the same period in 2022, mainly due
to our cost control measures during the six months ended 30 June 2023.
Motor vehicle expenses were mainly the exp enses related to the GPS devices attached
to the automobiles under automobile retail an df i n a n c ea n do p e r a t i n gl e a s e ,s u c ha sd a t a
roaming fees and GPS purchases expenses. Motor vehicle expenses amounted to RMB6.4
million, RMB4.7 million, RMB5.2 million and RMB4.0 million for the years ended 31
December 2020, 2021, 2022 an d the six months ended 30 June 2023, respectively. The
fluctuations of the motor vehicle expenses during the Track Record Period were mainly due
to the growth of our automobile retail an d finance and operating lease business.
Administrative expenses
Administrative expenses amounted to RMB105.6 million, RMB114.9 million,
RMB115.1 million and RMB56.9 million, resp ectively, for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023. Administrative expenses mainly
include (i) employee benefit expenses; (ii) lis ting expenses; (iii) travelling expenses; (iv)
traffic contravention penalty; and (v) de preciation and amortisation expenses.
FINANCIAL INFORMATION
–3 7 2–


--- page 382 ---
The following table sets out a breakdown of our administrative expenses for the
years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’ 000 % RMB’000 % RMB’000 %
(unaudited)
Employee benefit expenses 62,229 58.9 54,452 47.4 55,178 47.9 30,248 49.5 26,608 46.8
Listing expenses (Note) 4,633 4.4 17,731 15.4 13,694 11.9 8,847 14.5 6,461 11.4
Depreciation and
amortisation 12,030 11.4 10,987 9.6 10,663 9.3 4,556 7.5 5,060 8.9
Travelling expenses 4,568 4.3 3,948 3.4 6,334 5.5 3,181 5.2 3,835 6.7
Traffic contravention penalty 4,818 4.6 5,688 5.0 4,305 3.7 2,295 3.8 1,503 2.6
Legal and professional expenses 2,119 2.0 3,529 3.1 4,089 3.6 1,350 2.2 2,769 4.9
Office expenses 3,427 3.2 3,174 2.8 3,582 3.1 1,885 3.1 1,777 3.1
Other taxation expenses 4,029 3.8 6,868 6.0 9,268 8.0 4,801 7.9 5,024 8.8
Other expenses 7,776 7.4 8,502 7.3 8,033 7.0 3,902 6.3 3,859 6.8
105,629 100.0 114,879 100.0 115,146 100.0 61,066 100.0 56,896 100.0
Note:
The listing expenses in the aggregate amount of appr oximately HK$935,000 paid to certain professional
parties between June 2022 and July 2022 which wer e settled by Mr. Ye Fuwei and Ms. Qiu Hui, being
Shareholders, on behalf of our Group, through their of fshore accounts and we have settled the equivalent
amounts in RMB to the onshore accounts of the relevant Shareholders by utilising our internal resources
(the ‘‘Offshore Payment Arrangement ’’).
As advised by our PRC Legal Advisers, in respect of the Offshore Payment Arrangement, which was made
due to the lack of Hong Kong dollars to be paid to the relevant professional parties for necessary expenses
of this proposed listing and did not lead to any loss of f oreign exchange or other harmful consequences, we
have obtained confirmations from Mr. Ye Fuwei an d Ms. Qiu Hui, confirming that (i) the Hong Kong
dollars they paid on behalf of the Group was their income sourced outside the PRC instead of being
transferred from the PRC and (ii) they did not benefi t from the Offshore Payment Arrangement. As such,
our PRC Legal Advisers are of the view that the risk of our Group being penalised as violating regulations
on foreign exchange for the Offshore Payment Arrangement is remote.
Employee benefit expenses mainly consist of salaries, bonuses, social insurance and
share-based compensation expenses for our a dministrative staff. For the years ended 31
December 2020, 2021, 2022 and the six months ended 30 June 2023, our employee benefit
expenses amounted to RMB62.2 million, RMB54.5 million, RMB55.2 million and
RMB26.6 million, respectively. The decrease in employee benefit expenses for the years
ended 31 December 2021, as compared to the years ended 31 December 2020 was primarily
due to the decrease in the average number of headcounts of administration staff. Our
employee benefit expenses remained relat ively stable at RMB55.2 million and RMB54.5
million for the years ended 31 December 2021 and 2022, respectively. Our employee benefit
expenses decreased for the six months ende d 30 June 2023 as compared to the same period
in 2022, mainly due to the decrease in the average number of headcounts of administration
staff due to our cost control measures for the six months ended 30 June 2023. For the years
ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023, the average
number of headcounts of our administration staff was 687, 559, 579 and 557, respectively.
FINANCIAL INFORMATION
–3 7 3–


--- page 383 ---
Traffic contravention penalty mainly represents fees in relation to handling and
settlement of traffic contravention penalties incurred by our finance lease and operating
l e a s ec u s t o m e r sw h i c hw ew e r eu n a b l et or e c o v e rf r o mt h e m .S i n c et h ef i n a n c el e a s e
automobiles were registered under our Group, we incurred expenses to handle and settle the
traffic contravention penalty. Traffic contr avention penalty amounted to RMB4.8 million,
RMB5.7 million, RMB4.3 million and RMB1.5 million for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, respectively.
Up to 30 June 2023, we incurred Listing expenses of RMB66.9 million of which (i)
R M B 4 2 . 5m i l l i o nw a sc h a r g e dt oo u ra d m i n i s trative expenses during the Track Record
Period; (ii) RMB17.4 million was charged to our administrative expenses prior to the Track
Record Period; and (iii) RMB7.0 million will be deducted from equity upon Listing. For
details, please refer to the section headed ‘‘F inancial Information — Listing Expenses’’.
Provision for credit loss
Provision for credit loss comprises of pro vision of trade and other receivables and
finance lease receivables. Provision for credit loss was RMB2.1 million, RMB3.9 million
and RMB4.9 million for the years ended 31 Dece mber 2020, 2021 and 2022, respectively.
The provision for credit loss for the six mo nths ended 30 June 2023 was RMB2.8 million, as
compared to RMB1.9 million for the six mont hs ended 30 June 2022. The increase in our
provision for credit loss was in line with the in crease in the average balance of our finance
lease receivables during t he Track Record Period.
Fair value loss/gain on ordinar ys h a r e sw i t hr e d e m p t i o nr i g h t
We recorded fair value gain on ordinary s hares with redemption right of RMB47.3
million and RMB46.3 million for the year e nded 31 December 2022 and the six months
ended 30 June 2023, primarily due to a decreas e in the fair value of ordinary shares with
redemption right issued by our Company to certain Pre-IPO Investors during the Track
Record Period, which was mainly attributable to a decrease in our Group’s underlying
equity value based on the valuation by an independent valuer. In the valuation of our
Group, the independent valuer has taken into account effect of the economic condition of
China in general during the six months ended 30 June 2023. For details about the issuance
of ordinary shares with redemption right, se e ‘‘History, Reorganisation and Corporate
Structure — Pre-IPO Investments’’.
Research and development expenses
During the Track Record Period, we incurre d research and development expenses in
developing intangible assets such as automobile monitoring platform and mobile
applications. Our research and develop ment expenses amounted to RMB0.4 million,
RMB2.1 million, RMB0.7 millio n and RMB0.3 million, for the years ended 31 December
2020, 2021, 2022 and the six months ended 30 June 2023, respectively. See ‘‘Business —
Research and development’’ for further details.
FINANCIAL INFORMATION
–3 7 4–


--- page 384 ---
Finance cost, net
We incurred net finance cost amount ed to RMB109.2 million, RMB117.8 million,
RMB143.0 million and RMB82.9 million for th e years ended 31 December 2020, 2021, 2022
and the six months ended 30 June 2023, respectively. Our finance cost comprises (i) costs of
funding; (ii) interest expenses on other borro wings; and (iii) interest expenses on lease
liabilities, while our finance income mainly co mprises (i) bank interest income; and (ii)
imputed interest income from deposits for borrowings.
The following table sets out a breakdown of our finance cost, net for the years/period
indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finance cost:
Cost of funding
(Note) (98,682) (108,831) (131,381) (76,001)
Interest expenses on other
borrowings (10,887) (10,122) (11,807) (6,501)
Interest expenses on lease
liabilities (1,452) (876) (803) (366)
(111,021) (119,829) (143,991) (82,868)
Finance income:
Bank interest income 763 320 228 344
N e tg a i no ne x t e n s i o no f
borrowing from a Pre-IPO
Investor — 683 — —
Imputed interest income from
deposits for borrowings 1,086 1,005 745 491
1,849 2,008 973 835
Finance cost, net (109,172) (117,821) (143,018) (82,033)
Note: Cost of funding represented finance cost for purchase of automobiles for lease.
Our cost of funding mainly represents interest expenses of our borrowings for the
purchase of automobiles for lease. For the years ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023, our costs of funding amounted to RMB98.7 million,
RMB108.8 million, RMB131.4 million and RMB 76.0 million, respectively. The increasing
FINANCIAL INFORMATION
–3 7 5–


--- page 385 ---
trend of our cost of funding during the Track Record Period was primarily due to the
overall increase in borrowing to finance our au tomobile retail and fin ance business as well
as our automobile operating lease business for e-hailing vehicles.
The following table sets out the breakdown of our cost of funding and interest expenses
on other borrowings by funding sources for the years/period indicated:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Interest-bearing loans 71,722 51,564 41,265 16,657
Automobile finance lease
arrangements 37,430 62,441 97,765 63,427
Factoring of finance lease
receivables 417 3,197 3,403 1,955
Asset-backed securities — 1,751 755 463
Total 109,569 118,953 143,188 82,502
For illustrative purpose, the following sens itivity analysis illustrates the impact of
hypothetical fluctuations of our costs of funding on our profit before tax during the Track
Record Period, assuming the fluctuation of our costs of funding to be 1%, 3% and 5% by
reference to the historical fluctuation during the Track Record Period, with other variables
remained constant:
Changes in costs of funding
+ / –1 % + / –3 % + / –5 %
RMB’000 RMB’000 RMB’000
Decrease/increase in profit before
tax
Year ended 31 December 2020 –/+ 987 –/+ 2,960 –/+ 4,934
Year ended 31 December 2021 –/+ 1,088 –/+ 3,265 –/+ 5,442
Year ended 31 December 2022 –/+ 1,314 –/+ 3,941 –/+ 6,569
Six months ended 30 June 2023 –/+ 760 –/+ 2,280 –/+ 3,800
Income tax expenses
Our PRC subsidiaries are subject to the ent erprise income tax in the PRC. The income
tax of our Group in respect of its operations in the PRC was calculated at the tax rate of
25% on the assessable profits for the Track Record Period, other than our two subsidiaries
certified as High and New Technology En terprises (HNTE) which is entitled to
FINANCIAL INFORMATION
–3 7 6–


--- page 386 ---
concessionary tax rate of 15% for three consecutive years from 2020 to 2022. Since 2022,
one of the certified subsidiary did not renew the HNTE certificate and therefore the tax rate
was changed to 25%.
No Hong Kong profits tax was provided for as there was no assessable profit that was
subject to Hong Kong profits tax during the Track Record Period.
Under the current laws of the BVI, the BVI subsidiary is not subject to tax on its
income or capital gains. In addition, any payments of dividends are not subject to
withholding tax in the BVI.
Our Company was incorporated under the law of the Cayman Islands as an exempted
company with limited liability and is not subject to the Cayman Islands income tax.
Our income tax expenses were RMB10.7 million, RMB12.3 million, RMB14.7 million
and RMB2.9 million for the years ended 31 De cember 2020, 2021, 2022 and the six months
ended 30 June 2023, respectively. The effective t ax rates for the corresponding year/period
were 51.1%, 28.7%, 16.0% and 4.5%, respectively. The effective tax rates for the years
ended 31 December 2020 and 2021 were higher than the statutory enterprise income tax of
25%, primarily due to the tax effect of some expenses recognised for the years ended 31
December 2020 and 2021, including (i) fair valu e loss on ordinary shares with redemption
right; and (ii) certain listing expenses, which are not deductible for tax purposes. The
effective tax rates decreased to 16.0% and 4.5% for the year ended 31 December 2022 and
the six months ended 30 June 2023, which was primarily attributable to the tax effect of the
fair value gain on ordinary shares with red emption right of RMB47.3 million and RMB46.3
million for the year ended 31 December 2022 a nd the six months ended 30 June 2023, which
is not taxable for tax purpose; while we recorded fair value loss on ordinary shares with
redemption right for the years ended 31 December 2020 and 2021.
REVIEW OF HISTORICAL RESULTS OF OPERATION
Six months ended 30 June 2023 compared to six months ended 30 June 2022
Revenue
Our total revenue increased by 11.7% fr om RMB538.1 million for the six months
ended 30 June 2022 to RMB601.0 million for th e same period in 2023. The increase was
primarily driven by the combined effect of:
(i) Automobile retail and finance
Our revenue generated from the sales of automobile under finance lease increased
by 16.2% from RMB331.0 million for the six months ended 30 June 2022 to RMB384.7
million for the six months ended 30 June 2023, driven by the increase in the number of
automobiles sold under finance lease from 3,044 units to 3,740 units for the
corresponding period, mainly due to the recovery from the adverse impact of the
outbreaks of COVID-19 in 2022, our increa sed sales and marketing efforts and the
opening of new self-operated sales outlets to grow our business.
FINANCIAL INFORMATION
–3 7 7–


--- page 387 ---
Our revenue generated from finance lease income increased by 13.0% from
RMB131.1 million for the six months en ded 30 June 2022 to RMB148.2 million for the
six months ended 30 June 2023, driven by the increase in the average total principal
amount of finance lease agreements by 15. 5% for the six months ended 30 June 2023 as
compared to that for the same period in 2022.
(ii) Automobile-related businesses
Our revenue from automobile-related bu sinesses decreased from RMB76.0 million
for the six months ended 30 June 2022 to RMB68.1 million, or 10.4%, for the six
months ended 30 June 2023, primarily due to the decrease in revenue generated from
our automobile operating lease business for the corresponding period. The decrease in
revenue from our automobile operating lease business was mainly due to the decrease
in revenue from our e-hailing operating lease business for the six months ended 30 June
2023 as compared to the six months ended 30 June 2022, which was mainly due to (i)
the decrease in the average occupancy rate of e-hailing vehicles under operating lease
from 88.3% to 69.8% for the corresponding period, mainly due to the expansion of our
e-hailing automobile fleet and the 1,462 unit s of e-hailing vehicles newly purchased
during the period, which typically takes one to two months to complete the e-hailing
registration, were not fully utilised durin g the six months ended 30 June 2023; and (ii)
the decrease in the average number of e-hailin g vehicles available for lease during the
period as we switched and subsequently sold 483 units e-hailing vehicles from
operating lease to finance lease during the six months ended 30 June 2023.
During the six months ended 30 June 2023, due to customers’ demand, we sold
five units of new automobiles to custome rs who have no financing need. During the
Track Record Period, revenue generated from sales of new automobile without finance
lease amounted to nil, nil, nil and RMB0.4 million, respectively. From 1 July 2023 to
the Latest Practicable Date, we did not have any such automobile sales. As confirmed
by our Directors, as at the Latest Practicable Date, we did not have any expansion plan
in this regard.
Cost of revenue
Our cost of revenue increased from RMB 352.8 million for the six months ended 30
June 2022 to RMB403.7 million for the six mo nths ended 30 June 2023, mainly resulted
from the increase in the cost of inventorie s from RMB268.5 million for the six months
ended 30 June 2022 to RMB312.3 million for the s ix months ended 30 June 2023, primarily
due to the increase in our sales of automobile under finance lease as aforementioned.
Gross profit and gross profit margin
As a result of the foregoing, our gross prof it increased from RMB185.3 million for the
six months ended 30 June 2022 to RMB197.3 m illion for the six months ended 30 June 2023.
Our gross profit margin decreased from 34.4% for the six months ended 30 June 2022 to
32.8% for the six months ended 30 June 2023, mainly due to a higher gross profit
contribution from our sales of automobile under finance lease, which has a lower gross
profit margin as compared to finance lease income.
FINANCIAL INFORMATION
–3 7 8–


--- page 388 ---
Other income, net
Our other income, net, increased from RMB9.2 million for the six months ended 30
June 2022 to RMB11.6 million for the six months ended 30 June 2023, primarily due to the
increase in refund of VAT from the government as a result of the increase in net VAT paid
and tax payable arose from the increase in our finance lease income and our purchase of
finance lease automobiles for the six months ended 30 June 2023 as compared to the six
months ended 30 June 2022. See ‘‘Other income, net — (a) VAT related tax benefits’’ for
details in this section.
Other losses, net
Our other losses, net, increased from RMB2 .6 million for the six months ended 30 June
2022 to RMB4.0 million for the six months en ded 30 June 2023, mainly due to the increase
in loss on disposal of property and equipment from RMB0.5 million to RMB2.6 million for
the corresponding period.
Selling and marketing expenses
Selling and marketing expenses remained rel atively stable at RMB44.1 million for the
six months ended 30 June 2023, as compared to RMB42.0 million for the six months ended
30 June 2022.
Administrative expenses
Administrative expenses decreased fro m RMB61.1 million for the six months ended 30
June 2022 to RMB56.9 million for the six months ended 30 June 2023, primarily due to the
decrease in employee benefit expenses, attributable to the decrease in the average number of
headcounts of administration staff due to our cost control measures. For the six months
ended 30 June 2022 and 2023, the average number of headcounts of our administration staff
was 584 and 557, respectively.
Research and development expenses
We had insignificant research and development expenses of RMB0.3 million for the six
months ended 30 June 2023, a s compared to RMB0.4 million f or the six months ended 30
June 2022.
Finance cost, net
Our finance cost, net, inc reased from RMB73.2 million for the six months ended 30
June 2022 to RMB82.9 million for the six months ended 30 June 2023, primarily due to the
increase in the average balance of borrowi ngs from RMB1,337.7 million for the six months
ended 30 June 2022 to RMB1,785.6 million for the six months ended 30 June 2023.
FINANCIAL INFORMATION
–3 7 9–


--- page 389 ---
Income tax expenses
Our income tax expenses decreased to RMB2.9 million for the six months ended 30
June 2023 as compared to RMB3.6 million for the six months ended 30 June 2022. Our
effective tax rate was 4.5% for the six months ended 30 June 2023, mainly attributable to
the tax effect of the fair value gain on ordinary shares with redemption right of RMB46.3
million for the period, which is not taxable for tax purposes.
Profit for the period
As a result of the foregoing, we recorded net profit of RMB62.3 million for the six
months ended 30 June 2023, as compared to RM B44.3 million for the six months ended 30
June 2022, mainly driven by (i) our revenue gr owth from RMB538.1 million to RMB601.0
million due to the recovery from the adverse impact of COVID-19 in 2022, our increased
sales and marketing efforts and the opening of new self-operated sales outlets to grow our
business; and (ii) the increase in the fair value gain on ordinary shares with redemption right
by RMB11.8 million for the six months ended 30 June 2023.
Non-IFRS measures
Adjusted net profit (non-IFRS measures) and adjusted net profit margin (non-IFRS
measures)
Our adjusted net profit (non-IFRS measu res) increased from RMB16.8 million for the
six months ended 30 June 2022 to RMB22.1 million for the six months ended 30 June 2023,
mainly due to the increase in total revenue from RMB538.1 million to RMB601.0 million
for the corresponding period, driven by (i) the increase in revenue from sales of automobile
under finance lease from RMB331.0 million t o RMB384.7 million, or 16.2% increase for
the corresponding period, attributable to the recovery from the adverse impact of
COVID-19 in 2022, our increased sales and marketing efforts and the opening of new
self-operated sales outlets to grow our busine ss; and partially offset by (ii) the decrease in
revenue from e-hailing operating lease bus iness from RMB69.2 million for the six months
ended 30 June 2022 to RMB61.4 million for th e six months ended 30 June 2023 or 11.3%
decrease for the corresponding period, mainly due to (a) the decrease in the average
occupancy rate of e-hailing vehicles under operating lease from 88.3% to 69.8% for the
corresponding period, mainly due to the expansion of our e-hailing automobile fleet and the
1,462 units of e-hailing vehicles newly purcha sed during the period, which typically takes
one to two months to complete the e-hailing reg istration, were not fully utilised during the
six months ended 30 June 2023; and (b) the decrease in the average number of e-hailing
vehicles available for lease during the period as we switched 483 units e-hailing vehicles
from operating lease to finance lease during the six months ended 30 June 2023.
Adjusted net profit margin (non-IFRS measures) was 3.3% and 3.7% for the six
months ended 30 June 2022 and 2023, respectively.
FINANCIAL INFORMATION
–3 8 0–


--- page 390 ---
Year ended 31 December 2022 compared to year ended 31 December 2021
Revenue
Our total revenue decreased by 2.5% from R MB1,171.3 million for the year ended 31
December 2021 to RMB1,141.5 million for the y ear ended 31 December 2022. The decrease
was primarily driven by the combined effect of:
(i) Automobile retail and finance
Our revenue generated from the sales of a utomobile under finance lease decreased
by 5.6% from RMB777.9 million for the ye ar ended 31 December 2021 to RMB734.6
million for the year ended 31 December 2022, which was mainly driven by the decrease
in the number of automobiles sold under finance lease from 7,375 units to 7,153 units
for the corresponding year, mainly due to the impact on the operation of our sales
outlet in various cities in the PRC brought by the strict pandemic control and
lockdown measures as a result of the resu rgence of COVID-19 pandemic in various
parts in the PRC, which led to the decrease in the demand for new automobile
purchases in certain regions in the PRC in 2022.
Our revenue generated from finance lease income increased by 11.9% from
RMB234.6 million for the year ended 31 De cember 2021 to RMB262.5 million for the
year ended 31 December 2022, which was primarily driven by the increase in the
average total principal amount of finance lease agreements by 20.4% for the year
ended 31 December 2022 as compared to tha t for the year ended 31 December 2021;
and partially offset by (ii) the decrease in the average effective interest rate charged for
finance lease agreements from 21.1% for the year ended 31 December 2021 to 19.6%
for the year ended 31 December 2022.
(ii) Automobile-related businesses
Our revenue from automobile-related businesses decreased from RMB158.8
million for the year ended 31 December 2 021 to RMB144.4 million, or 9.1%, for the
year ended 31 December 2022, primarily due to the decrease in revenue generated from
our automobile operating lease business, which was partially offset by the increase in
revenue from our other automobile-related services. The decrease in revenue from our
automobile operating lease business was mainly due to the decrease in revenue from
our e-hailing operating lease busines s for the year ended 31 December 2022 as
compared to the year ended 31 December 2021 , was attributable to (i) the decrease in
the average occupancy rate from 90.7% to 85.0% for our e-hailing vehicles under
operating lease for the corresponding year, due to the impact of the regional outbreaks
of COVID-19 variants in the PRC in 2022; and (ii) the decrease in the average number
of e-hailing vehicles from 4,072 units f or the year ended 31 December 2021 to 3,877
units for the year ended 31 D ecember 2022, mainly due to w e switched 1,121 e-hailing
vehicles from e-hailing operating lease to e-hailing under finance lease, which was
driven by more e-hailing customers selected our e-hailing vehicles under finance lease
during the year.
FINANCIAL INFORMATION
–3 8 1–


--- page 391 ---
Cost of revenue
Our cost of revenue decreased from RMB8 09.5 million for the year ended 31 December
2021 to RMB767.1 million for the year ended 3 1 December 2022, mainly resulted from the
decrease in cost of inventories, from RM B633.4 million for the yea r ended 31 December
2021 to RMB595.6 million for the year ended 31 December 2022, primarily due to the
decrease in our sales of automobile under finance lease as aforementioned.
Gross profit and gross profit margin
As a result of the foregoing, our gross prof it increased from RMB361.8 million for the
year ended 31 December 2021 to RMB374.4 millio n for the year ended 31 December 2022.
Our gross profit margin increased from 30.9% for the year ended 31 December 2021 to
32.8% for the year ended 31 December 2022, mainly due to a higher gross profit
contribution from our finance lease incom e, which has a higher gross profit margin as
compared to sales of automobile under finance lease.
Other income, net
Our other income, net, increased from RMB16.0 million for the year ended 31
December 2021 to RMB21.7 million for the year e nded 31 December 2022, primarily due to
the increase in refund of VAT from the government as a result of the increase in net VAT
paid and tax payable arose from the increase in our finance lease income and our purchase
of finance lease automobiles for the year ended 31 December 2022 as compared to the year
ended 31 December 2021. See ‘‘Other income — ( a) VAT related tax benefits’’ for details in
this section.
Other losses, net
Our other losses, net, decreased from RM B8.7 million for the year ended 31 December
2021 to RMB6.8 million for the year ended 31 December 2022, mainly due to the change
from fair value loss on revaluation of financial assets at fair value through profit and loss of
RMB8,000 for the year ended 31 December 2021 to fair value gain on revaluation of
financial assets at fair value through profit and loss of RMB1.5 million for the year ended
31 December 2022.
Selling and marketing expenses
Selling and marketing expenses decrease d from RMB83.2 million for the year ended 31
December 2021 to RMB81.1 million for the year e nded 31 December 2022, primarily due to
the decrease in advertising expenses by RMB2.4 million from RMB10.8 million for the year
ended 31 December 2021 to RMB8.4 million for th e year ended 31 Decem ber 2022, resulted
from our cost control measures on advertising during the regional outbreaks of COVID-19
variants in the PRC in 2022.
FINANCIAL INFORMATION
–3 8 2–


--- page 392 ---
Administrative expenses
Administrative expenses increased from RMB114.9 million for the year ended 31
December 2021 to RMB115.1 million for the y ear ended 31 December 2022, primarily due
to (i) the decrease in listing expenses by RMB4.0 million; and partially offset by the increase
in (ii) other taxation expenses by RMB2.4 m illion mainly resulted from the increase in
addition of our operating lease vehicles amounted to RMB206.0 million for the year ended
31 December 2022 as compared to that amoun ted to RMB50.5 million for the year ended 31
December 2021; and (iii) travelling expenses b y RMB2.4 million for th e corresponding year.
Research and development expenses
We had insignificant research and development expenses of RMB0.7 million for the
year ended 31 December 2022, as compared to RMB2.1 million for the year ended 31
December 2021.
Finance cost, net
Our finance cost, net, increased from RMB117.8 million for the year ended 31
December 2021 to RMB143.0 million for the y ear ended 31 December 2022, primarily due
to the increase in the average balance of borrowings from RMB1,269.4 million for the year
ended 31 December 2021 to RMB1,548.1 mill ion for the year ended 31 December 2022.
Income tax expenses
Our income tax expenses increased fro m RMB12.3 million for the year ended 31
December 2021 to RMB14.7 million for the yea r ended 31 December 2022. Our effective tax
rate was 16.0% for the year ended 31 December 2022, which was mainly attributable to the
tax effect of the fair value gain on ordinary shares with redemption right of RMB47.3
million for the year ended 31 December 2022, which is not taxable for tax purposes.
Profit for the year
As a result of the foregoing, we recorded net profit of RMB77.1 million for the year
ended 31 December 2022, as compared to R MB30.7 million for the year ended 31 December
2021.
Non-IFRS measures
Adjusted net profit (non-IFRS measures) and adjusted net profit margin (non-IFRS
measures)
Our adjusted net profit (non-IFRS measure s) decreased from RMB49.5 million for the
year ended 31 December 2021 to RMB42.4 m illion for the year end ed 31 December 2022,
mainly due to the decrease in total revenue from RMB1,171.3 million to RMB1,141.5
million for the corresponding year. The decrea se in total revenue for the year ended 31
December 2022 as compared to the year ended 31 December 2021 was mainly due to (i) the
decrease in revenue from sale s of automobile under finance l ease from RMB777.9 million
FINANCIAL INFORMATION
–3 8 3–


--- page 393 ---
for the year ended 31 Decembe r 2021 to RMB734.6 million for the year ended 31 December
2022, or 5.6% decrease for the corresponding year, caused by the regional outbreaks of
COVID-19 variants in the PRC in 2022; and (ii) the decrease in revenue from e-hailing
operating lease business from RMB132.8 milli on for the year ended 31 December 2021 to
RMB115.9 million the year ended 31 December 2022 or 12.7% decrease for the
corresponding year, affected by (a) the decr ease in the average occupancy rate from
90.7% to 85.0% for our e-hailing vehicles under operating lease for the corresponding year,
due to the impact of the regional outbreaks of COVID-19 variants in the PRC in 2022; and
(b) the decrease in the aver age number of e-hailing vehicles from 4,072 units for the year
ended 31 December 2021 to 3,877 units for the year ended 31 December 2022, which was
driven by more customers selected our finance lease service in 2022, resulting the revenue
from these switched e-hailing vehicles were recorded in finance lease income instead of
e-hailing operating lease.
Adjusted net profit margin (non-IFRS mea sures) was 4.2% and 3.7% for the years
ended 31 December 2021 and 2022, respectively.
Year ended 31 December 2021 compared to year ended 31 December 2020
Revenue
For the year ended 31 December 2021, our t otal revenue was RMB1,171.3 million,
increased by 56.2% from RMB749.8 millio n for the year ended 3 1 December 2020. The
increase was primarily due to the combined effect of:
(i) Automobile retail and finance
Our sales of automobile under finance lease was RMB777.9 million for the year
ended 31 December 2021, increased by 11 4.3% from RMB362.9 million for the year
ended 31 December 2020. Such increase was primarily attributable to the increase in
the number of new automobiles sold under finance lease from 3,901 units in 2020 to
7,375 units in 2021 driven by the recovery of our operation along with the recovery of
the automobile sales market after the adverse impact of COVID-19 outbreak in the
PRC in 2020, and our increased sales headcounts in our self-operated sales outlets
from 336 as at 31 December 2020 to 495 as at 31 December 2021 to capture the market
opportunities.
Our revenue generated from finance lease income slightly decreased to RMB234.6
million for the year ended 31 December 2021 from RMB234.7 million for the year
ended 31 December 2020, primarily due to a combined impact of (i) the fading out of
our finance lease agreements entered into prior to 2019 which had relatively higher
average yield and generally had a term ranging from two to four years; and (ii)
partially offset by an increase of 20.9% in the number of finance lease agreements in
effect from 15,839 agreements as at 31 December 2020 to 19,152 agreements as at 31
December 2021, while our average effective interest rate charged for the newly signed
finance lease agreements remained relatively stable at 20.5% and 19.4% for the years
ended 31 December 2020 and 2021, respectively.
FINANCIAL INFORMATION
–3 8 4–


--- page 394 ---
(ii) Automobile-related businesses
Our revenue generated from automobile -related businesses was RMB158.8 million
for the year ended 31 December 2021, incr eased by 4.4% from RMB152.1 million for
the year ended 31 December 2020, primarily driven by the increase in revenue
generated from our automobile operatin g lease business from RMB132.6 million for
the year ended 31 December 2020 to R MB144.2 million for the year ended 31
December 2021, which was primarily attribut able to the increase in revenue generated
from (i) our e-hailing operating lease bus iness from RMB116.6 million to RMB132.8
million as a result of the continuous exp ansion of our e-hailing operating lease
business; and partially offset by the decrease in revenue generated from (ii) our new
energy car-sharing business by RMB1.2 million; and (iii) our other operating lease
business by RMB3.5 million, for the corresponding year, respectively.
Cost of revenue
Our cost of revenue increased from RMB44 6.2 million for the year ended 31 December
2020 to RMB809.5 million for the year en ded 31 December 2021. Such increase was
primarily due to (i) the increase in cost of inve ntories by RMB327.5 million as a result of the
increase in the number of automobiles sold under finance lease for the year ended 31
December 2021; (ii) the increase in depreciation expenses by RMB17.9 million as a result of
purchase of automobiles for the expansion of our e-hailing operating lease business; and
(iii) the increase in employee benefit expens es by RMB15.6 million due to the increase in the
sales commission paid to our sales staff resulted from the increase in the sales of automobile
under finance lease for the year ended 31 December 2021 as compared to the year ended 31
December 2020.
Gross profit and gross profit margin
Our gross profit increased from RMB3 03.6 million for the year ended 31 December
2020 to RMB361.8 million for the year ended 3 1 December 2021. Our gross profit margin
decreased from 40.5% for the year ended 31 December 2020 to 30.9% for the year ended 31
December 2021. The lower gross profit mar gin for the year ended 31 December 2021 as
compared to the year ended 31 December 2020 was primarily owing to the higher revenue
contribution from the sales of automobile under finance lease for the year ended 31
December 2021, as compared to the year ended 31 December 2020, as a result of the
recovery of our sales of automobile under fin ance lease from the impact of COVID-19 in the
PRC. Our gross profit margin of sales of automobile under finance lease was lower than
that of finance lease. The lower contribution from our sales of automobile under finance
lease in 2020 led to a mathematically inflated gross profit margin for automobile retail and
finance segment for the year ended 31 Dece mber 2020. For the year ended 31 December
2021, the sales of automobile under finance lease recovered, thus the revenue contribution
of our sales of automobile under finance lease increased, which decreased our overall gross
profit margin as compared to the year ended 31 December 2020.
FINANCIAL INFORMATION
–3 8 5–


--- page 395 ---
Other income, net
Our other income net decreased from RMB23.3 million for the year ended 31
December 2020 to RMB16.0 million for the year e nded 31 December 2021, primarily due to
the decrease in the refund of VAT.
Other losses, net
Our other net losses increased from RMB6 .6 million for the year ended 31 December
2020 to RMB8.7 million for the year ended 31 D ecember 2021, primarily attributable to the
increase in loss on disposal of property an d equipment by RMB1.9 million, mainly due to
the increase in the number of our automobiles used for our operating lease business
disposed during the yea r ended 31 December 2021.
Selling and marketing expenses
Selling and marketing expenses increas ed from RMB75.1 million for the year ended 31
December 2020 to RMB83.2 million for the year e nded 31 December 2021, primarily due to
the increase in (i) repair and maintenance expenses by RMB3.5 million, mainly for our
operating lease vehicles and repossessed autom obiles; (ii) advertising expenses by RMB2.3
million; (iii) depreciation and amortisation e xpenses by RMB2.2 million primarily resulted
from the increase in our self-developed app lication for the year ended 31 December 2021;
and partially offset by (iv) the decrease in motor vehicle expenses by RMB1.7 million for the
corresponding year.
Administrative expenses
Administrative expenses increased from RMB105.6 million for the year ended 31
December 2020 to RMB114.9 million for the y ear ended 31 December 2021, primarily due
to the increase in (i) listing expenses by RMB13.1 million; (ii) our taxes and surcharges by
RMB2.8 million, mainly resulted from the gro wth of our operation; and partially offset by
the decrease in (iii) employee benefit exp enses by RMB7.8 million, as a result of the
decrease in the average number of headcounts of administrative staff, for the corresponding
year.
Research and development expenses
Our research and development expenses i ncreased from RMB0.4 million for the year
ended 31 December 2020 to RMB2.1 millio n for the year ended 31 December 2021,
primarily due to the increased expenses incurred for the enhancement of our internal
operation system, of which we did not put too much focus and efforts during the year ended
31 December 2020 mainly because of the outbreak of COVID-19 in the PRC in 2020.
FINANCIAL INFORMATION
–3 8 6–


--- page 396 ---
Finance cost, net
Our finance cost, net, increased from RMB109.2 million for the year ended 31
December 2020 to RMB117.8 million for the y ear ended 31 December 2021, primarily due
to the increase in the average balance of borrowings for the year ended 31 December 2020 as
compared to that for the year ended 31 December 2021.
Income tax expenses
Income tax expenses increased from RMB1 0.7 million for the year ended 31 December
2020 to RMB12.3 million for the year end ed 31 December 2021, primarily due to the
increase in profit before income tax. Our effective tax rate decreased from 51.1% for the
year ended 31 December 2020 to 28.7% for the year ended 31 December 2021, primarily
attributable to the increase of listing expe nses by RMB13.1 million and certain of which are
not deductible for tax purposes.
Profit for the year
As a result of the foregoing, our net prof it increased from RMB10.3 million for the
year ended 31 December 2020 to RMB30.7 m illion for the year end ed 31 December 2021,
whereas our net profit margin improved from 1.4% to 2.6% for the corresponding year,
respectively.
Non-IFRS measures
Adjusted net profit (non-IFRS measures) and adjusted net profit margin (non-IFRS
measures)
Our adjusted net profit (non-IFRS measu res) increased from RMB21.3 million for the
year ended 31 December 2020 to RMB49.5 m illion for the year end ed 31 December 2021.
Our adjusted net profit margin (non-IFRS measures) increased from approximately 2.8%
for the year ended 31 December 2020 to 4.2 % for the year ended 31 December 2021.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Our primary uses of capital are to fund our automobiles for finance leases and
operating leases and to manage the working capital of our daily operations. During the
Track Record Period, we financed our business operations primarily through our own
capital and interest-bearing borrowings. After Listing, we also expect to fund part of our
capital needs using the net proceeds from the Gl obal Offering. As at the Latest Practicable
Date, we did not experience any material difficulty in raising funds by borrowings or any
liquidity problems in settling our payables in the normal course of business and repaying
our borrowings when they fall due. We invest in purchasing automobiles for our automobile
retail and finance lease business, while the payments made by our automobile finance lease
FINANCIAL INFORMATION
–3 8 7–


--- page 397 ---
customers are based on periodic installments. Our business model may lead to a net
operating cash outflow from operating activiti es for a particular period. The certainty of
our cashflow thus depends on our operating act ivities, which vary from period to period.
The following table summarises our consolidated statements of cash flows during the
Track Record Period:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Operating cash flow before
changes in working capital 240,327 295,967 311,248 166,195
Changes in working capital 130,884 (266,037) (227,379) (63,171)
Income tax paid (15,737) (8,958) (14,406) (11,527)
Interest paid (125,593) (98,381) (143,463) (84,253)
Net cash (used in)/generated
from operating activities 229,881 (77,409) (74,000) 7,244
N e tc a s hu s e di ni n v e s t i n g
activities (171,219) (58,172) (119,133) (130,093)
Net cash generated from/ (used
in) financing activities (163,009) 203,073 314,827 135,240
Net (decrease)/increase in cash
and cash equivalents (104,347) 67,493 121,694 12,391
Cash and cash equivalents at
beginning of year 119,160 11,880 79,373 201,078
Effect on foreign exchange rate
difference (2,933) — 11 562
Cash and cash equivalents at end
of year 11,880 79,373 201,078 214,031
Operating activities
During the Track Record Period, our cash inflow from operating activities was
principally from sales of automobile under finan ce lease, interest income from finance leases
and automobile rentals. Our operating cash outflow mainly comprises purchase of
automobiles for our automobile retail and finance business as well as payments for our
operating expenses, interest expenses and tax payments.
For the year ended 31 December 2020, our Group had net cash generated from
operating activities of RMB229.9 million, main ly as a result of operating cash flows before
changes in working capital of RMB240.3 million, income tax paid of RMB15.7 million,
FINANCIAL INFORMATION
–3 8 8–


--- page 398 ---
interest paid of RMB125.6 million and positiv e changes in working capital of RMB130.9
million. Changes in working capital mainly rep resented (i) the decrease in trade and other
receivables and finance lease receivable s of RMB100.1 million mainly as a result of the
impact of the outbreak of COVID-19 in the PRC in 2020 which resulted in (a) the decrease
in the number of new finance lease agreements entered during the year ended 31 December
2020; and (b) the increase in the number of early termination of the existing finance lease
agreements and led to repossession during t he year ended 31 December 2020; and (ii) the
decrease in inventories of RMB41.5 million p rimarily as a result of the decrease in the
number of finance lease agr eements terminated during the fourth quarter in 2020 as
compared to that during the corresponding period in 2019.
For the year ended 31 December 2021, our Group had net cash used in operating
activities of RMB77.4 million, mainly as a result of operating cash flows before changes in
working capital of RMB296.0 million, income tax paid of RMB9.0 million, interest paid of
RMB98.4 million and negative changes in work ing capital of RMB266.0 million. Changes
in working capital were mainly due to the in crease in trade and other receivables and
finance lease receivables of RMB287.8 million mainly as a result of the increase in the total
number of finance lease agreements that were in effect.
For the year ended 31 December 2022, our Group had net cash used in operating
activities of RMB74.0 million, mainly as a result of operating cash flows before changes in
working capital of RMB311.2 million, income tax paid of RMB14.4 million, interest paid of
RMB143.5 million and negative changes in wor king capital of RMB227.4 million. Changes
in working capital mainly represented (i) the increase in inventories aged 0–30 days of
RMB41.5 million mainly due to the increase in purchase of automobiles in December 2022
so as to take advantage of preferential tax be nefit, which was set to expire by the end of
2022, according to the Announcement on Reduction of Vehicle Purchase Tax for Certain
Passenger Vehicles ( 《關於減徵部分乘用車車輛購置稅的公告》) ,w h i c hc a m ei n t oe f f e c to n1
June 2022, of which the vehicle purchase ta x was halved for passenger vehicles with a
displacement up to 2.0 liters with price lower t han RMB300,000 per unit, that are purchased
between 1 June 2022 and 31 December 2022; (ii) the increase in trade and other payables of
RMB38.4 million mainly due to the increase in p urchase of automobiles in December 2022;
and (iii) the increase in trade and other rece ivables and finance lease receivables of
RMB207.7 million.
For the six months ended 30 June 2023, our Group had net cash generated from
operating activities of RMB7.2 million, mainly as a result of operating cash flows before
changes in working capital of RMB166.2 million, income tax paid of RMB11.5 million,
interest paid of RMB84.3 million and negative changes in working capital of RMB63.2
million. Changes in working capital were mainl y due to (i) the increase in trade and other
receivables and finance lease receivables o f RMB35.8 million mainly as a result of the
increase in the total number of finance lease agreements in effect; (ii) the increase in
inventories of RMB17.8 million due to the incre ased purchase of auto mobile inventories;
and partially offset by (iii) the decrease i n trade and other payables of RMB49.2 million
during the period.
FINANCIAL INFORMATION
–3 8 9–


--- page 399 ---
We experienced the net cash used in operating activities for business growth during the
Track Record Period. This was mainly due to the fact that our new automobile purchases
are mainly financed by debt financings, such debt financings are included in another cash
flow category, namely net cash generated from financing activities.
While we believe that the net cash used in operating activities for the years ended 31
December 2021 and 2022 were attributable to our business growth, we have taken the
following measures to monitor our overall liquidity position, including (i) our finance
department prepares cash flow forecasts regularly to project liquidity position of our Group
for our management to review; and (ii) we continuously enhance our risk management, in
particular, we have established the communication unit and the operation unit to manage
finance lease receivables where our customer s default in repayment for over three months in
general, in order to ensure prompt collection o f finance lease receivables or repossession of
leased automobiles. We also strive to match t he cash inflow of our finance leases with the
cash outflow relating to our borrowings with t he respective terms and tenor. With the above
measures, we strive to achieve net cash flow generated from operating activities, and reduce
liquidity risk. For details about our liquidity risk control measures, please refer to the ‘‘Risk
Management and Operation — Operational Risk Management — Credit Risk
Management’’ and ‘‘Risk Management and O peration — Operational Risk Management
—L i q u i d i t yR i s k ’ ’ .
Investing activities
During the Track Record Period, our cash inflow from investing activities was
principally from the interest received and proceeds from the disposal of property and
equipment. Our cash outflow from investing activities mainly comprised payment for the
purchase of property and equipment, payment for the addition of intangible assets and
payment for acquisition of financial a ssets at fair value through profit or loss.
For the year ended 31 December 2020, our Group had net cash used in investing
activities of RMB171.2 million, primarily a ttributable to payment for the purchase of
property and equipment of RMB 166.9 million, mainly for the purchase of automobiles used
for our operating lease business.
For the year ended 31 December 2021, our Group had net cash used in investing
activities of RMB58.2 million, primarily attrib utable to (i) the payment for the purchase of
property and equipment of RMB45.6 million, mainly for the purchase of automobiles used
for our operating lease business; (ii) payment for financial assets at fair value through profit
or loss of RMB28.0 million; and (iii) payment for addition of intangible assets of RMB11.5
million. Such net cash used in investing activit ies was partially offset by proceeds obtained
from disposal of property and equipment of RMB24.6 million.
For the year ended 31 December 2022, our Group had net cash used in investing
activities of RMB119.1 million, primarily attr ibutable to (i) payment for the purchase of
property and equipment of RMB 137.9 million, mainly automob iles for our operating lease
business; and (ii) payment for addition of in tangible assets of RMB11.3 million. Such net
cash used in investing activities was partially offset by proceeds from disposal of property
and equipment of RMB29.8 million.
FINANCIAL INFORMATION
–3 9 0–


--- page 400 ---
For the six months ended 30 June 2023, our Group had net cash used in investing
activities of RMB85.4 million, primarily attr ibutable to (i) payme nt for the purchase of
property and equipment of RMB94.5 million, ma inly automobiles for our operating lease
business; and (ii) payment for addition of in tangible assets of RMB4.9 million. Such net
cash used in investing activities was partially offset by proceeds from disposal of property
and equipment of RMB13.7 million.
Financing activities
During the Track Record Period, our cash inflow from financing activities was
principally from proceeds from borrowings, capital injection to our Company upon
issuance of shares to give effect to the Reorgan isation and issuance of ordinary shares with
redemption right. Our cash outflow used in financing activities mainly comprises the
repayments of borrowings and deemed distribution to the shareholders of the XXF Group
for purchasing the Listing Business (as defined in Accountant’s Report in Appendix I to this
prospectus) as a result of the Reorganisation.
For the year ended 31 December 2020, our G r o u ph a dn e tc a s hu s e di nf i n a n c i n g
activities of RMB163.0 million, primarily attr ibutable to (i) repayments of borrowings of
RMB772.3 million; and (ii) deemed distributio n to the shareholders of the XXF Group for
purchasing the Listing Business (as defined in Accountant’s Report in Appendix I to this
prospectus) of RMB219.3 million. Such net cash used in financing activities was partially
offset by (i) proceeds from borrowings of RMB638.9 million; and (ii) capital injection to
our Company upon issuance of Shares to give effect to the Reorganisation of RMB214.1
million.
For the year ended 31 December 2021, our Group had net cash generated from
financing activities of RMB203.1 million, pr imarily attributable to (i) proceeds from
borrowings of RMB1,168.9 million; (ii) repa yments of borrowings of RMB963.8 million;
(iii) receipt from issuance of ordinary shares of XXF Group with redemption right of
RMB20.0 million from Hit Drive Limited, an offs hore holding vehicle of Beijing Chesheng;
(iv) placement of deposits for borrowing s of RMB17.0 million; and (v) redemption of
deposits for borrowings of RMB14.0 million.
For the year ended 31 December 2022, our Group had net cash generated from
financing activities of RMB314.9 million, pr imarily attributable to (i) the proceeds from
borrowings of RMB1,338.3 million; and (ii) the r edemption of deposits for borrowings of
RMB18.5 million, which was partially offset by (iii) the repayments of borrowings of
RMB1,003.1 million; and (iv) the placement of deposits for borrowings of RMB29.2
million.
For the six months ended 30 June 2023, our Group had net cash generated from
financing activities of RMB133.6 million, pr imarily attributable to (i) the proceeds from
borrowings of RMB670.1 million; and partially offset by (ii) the rep ayments of borrowings
of RMB525.7 million.
FINANCIAL INFORMATION
–3 9 1–


--- page 401 ---
Capital Management
Our Group regularly reviews and manages our capital structure to maintain a balance
between debt financing and equity financing and makes adjustments to the capital structure
in light of changes in economic conditions. No material changes were made in the
objectives, policies or processes of our capital management during the Track Record
Period.
Our Directors confirmed that our Group do es not expect any material changes in the
mix and relative cost of capital resources in the foreseeable future.
Our Group monitors capital on the basis of the gearing ratio. The gearing ratio as at
the end of the years/period indicated are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Borrowings 1,155,958 1,382,822 1,713,415 1,857,860
Lease liabilities 19,161 14,305 13,856 13,619
Less: cash and cash equivalents (11,880) (79,373) (201,078) (214,031)
Net debt 1,163,239 1,317,754 1,526,193 1,657,448
Total equity 408,172 443,512 506,614 565,374
Total capital 1,571,411 1,761,266 2,032,807 2,222,822
Gearing ratio 74.0% 74.8% 75.1% 74.6%
Note: Gearing ratio is calculated as net debt divided by total capital. Net debt is calculated as total
borrowings (including ‘‘borrowings and lease liabili ties’’ as shown in the consolidated statement of
financial position) less cash and cash equiva lents. Our Group does not consider the amount of
ordinary shares with redemption right when calcu lating net debt. Total capital is calculated as
‘equity’ as shown in the consolidated statement of financial position plus net debt.
Our Group manages our capital to ensure that our group companies can repay or
refinance debts when they fall due and comp ly with the PRC laws and regulations while
maximising the return to Shareholders through balancing our debt financing and equity
financing. We strive to balance the objectives o f matching the cash inflow of our customers’
automobile finance lease with the cash o utflow of our borrowings and growing our
business. See ‘‘Business — Our Debt Management’’ for further details of our debt
management policy.
FINANCIAL INFORMATION
–3 9 2–


--- page 402 ---
Net Current Assets/(Liabilities)
We recorded net current liabilities of RMB57.7 million and RMB147.2 million as at 31
December 2020 and 2021, and net current asse ts of RMB41.8 million, RMB86.1 million and
RMB90.4 million as at 31 December 2022, 30 Ju ne 2023 and 31 August 2023, respectively.
The following table sets out our current as sets and current liabilities as at the dates
indicated:
As at 31 December
As at
30 June
2023
As at
31 August
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current assets
Inventories 142,021 141,883 193,634 127,541 133,655
Finance lease receivables 379,303 464,397 560,061 594,355 615,388
Trade receivables 6,837 6,741 9,940 6,009 6,558
Prepayments, deposits and
other receivables 238,405 244,535 265,968 249,260 240,172
Amount due from
shareholders 5,733 5,569 6,085 6,280 6,235
Restricted cash 9,675 5,000 4,534 538 3,612
Cash and cash equivalents 11,880 79,373 201,078 214,031 203,769
Total current assets 793,854 947, 498 1,241,300 1,198,014 1,209,389
Current liabilities
Borrowings 708,578 726,603 828,573 909,885 878,755
Ordinary shares with
redemption right — 196,640 163,129 49,663 49,270
Amounts due to
shareholders 7,687 7,467 8,158 8,420 8,360
Trade payables 41,565 68,463 105,860 48,316 79,756
Other payables and
accruals 83,054 78,544 78,939 86,983 91,954
Lease liabilities 6,419 5,781 6,087 5,762 5,708
Current income tax
payables 4,246 11,225 8,786 2,882 5,151
Total current liabilities 851,549 1, 094,723 1,199,532 1,111,911 1,118,954
Net current assets/(liabilities) (57,695) (147,225) 41,768 86,103 90,435
FINANCIAL INFORMATION
–3 9 3–


--- page 403 ---
We recorded net current liabilities of R MB147.2 million as at 31 December 2021 as
compared to net current liabilities of RMB57 .7 million as at 31 December 2020, primarily
due to a combined effect of (i) the increase in fi nance lease receivables; (ii) the increase in
cash and cash equivalents; (iii) the increase in p repayment, deposits and other receivables;
(iv) the reclassification of ordinary shares with redemption right from n on-current liabilities
to current liabilities pursuant to the origin al agreements entered into between the Group
and each of the two Pre-IPO Investors of which the redemption right upon failure of a
qualified initial public offering would be exercisable within one year from 31 December
2021; (v) the increase in borrowings; (vi) the increase in trade payables; and (vii) the
increase in current income tax payable.
We recorded net current assets of RMB41.8 million as at 31 December 2022, as
compared to net current liabilities of RMB 147.2 million as at 31 December 2021, primarily
due to (i) the increase in cash and cash equivalent from RMB79.4 million as at 31 December
2021 to RMB201.1 million as at 31 December 2 022, mainly resulted from our net cash
generated from financing activities and partially offset by our net cash used in operating
and investing activities; (ii) the increase in inventories from RMB141.9 million as at 31
December 2021 to RMB193.6 million as at 31 Dece mber 2022 mainly attributable to the
increase in the purchase of our automobiles in December 2022 as compared to that as at 31
December 2021; (iii) the increase in finance lease receivables mainly resulted from the
increase in the average number of finance lease agreements for the year ended 31 December
2022 as compared to the year ended 31 December 2021; (iv) the decrease in ordinary shares
with redemption right from RMB196.6 m illion as at 31 December 2021 to RMB163.1
million as at 31 December 2022, mainly attribut able to the fair value change for the year
ended 31 December 2022; and partially offs et by (v) the increase in borrowings from
RMB726.6 million as at 31 December 2021 t o RMB828.6 million as at 31 December 2022
mainly attributable to the increase in purchas e of the automobiles used for our finance lease
and operating lease business; and (vi) the in crease in trade payables from RMB68.5 million
as at 31 December 2021 to RM B105.9 million as at 31 Decem ber 2022, mainly due to the
increase in purchase of automobiles in December 2022.
We recorded an increase in net current assets of RMB86.1 million as at 30 June 2023 as
compared to net current assets of RMB41.8 m illion as at 31 December 2022, primarily due
to (i) the increase in finance lease receivable s by RMB34.3 million mainly resulted from the
increase in the number of finance lease agreements in effect as at 30 June 2023 as compared
to that as at 31 December 2022; (ii) the decrease in inventories by RMB66.1 million as at 30
June 2023 as compared to that as at 31 December 2022, mainly attributable to the decrease
in the purchase of our automobiles in June 2 023 as compared to that in December 2022; (iii)
the decrease in ordinary shares with redem ption right by RMB113.5 million as at 30 June
2023 as compared to that as at 31 December 2022, mainly attributable to the transfer of
RMB70.9 million of ordinary shares with red emption right from current liabilities to
non-current liabilities as at 3 0 June 2023; (iv) the decrease in trade payables by RMB57.5
million as at 30 June 2023 as compared to that as at 31 December 2022, mainly due to the
decrease in purchase of automobiles in June 2023 as compared to that in December 2022;
and partially offset by (v) the increase in bo rrowings by RMB81.3 million as at 30 June 2023
as compared to that as at 31 December 2022, mainly attributable to the decrease in purchase
of the automobiles used for our finance lease and operating lease business in June 2023 as
FINANCIAL INFORMATION
–3 9 4–


--- page 404 ---
compared to that in December 2022; and (vi) t he decrease in prepayment, deposits and
other receivables by RMB16.7 million as at 30 June 2023 as compared to that as at 31
December 2022.
As at 31 August 2023, being the latest practicable date for the purpose of indebtedness
statement, we had net current assets of RMB90.4 million.
The net current liabilities position as at 3 1 December 2020 and 2021 was mainly due to
the factors stated in the sub-sect ion headed ‘‘Liquidity’’ below.
Liquidity
Liquidity risk refers to the risk that our Gro up encounters difficulty in raising funds
through financing facilities or the inability t o sell our financial assets quickly to meet the
payment obligations to our creditors as such obligations fall due. See ‘‘Risk Management
and Operations — Liquidity Risk’’ for further details.
The following table sets out the maturity profile of our Group’s financial assets and
liabilities based on contract ual undiscounted cash flows as at the dates indicated:
On demand/
Less than
one year
Between
one and
two years
Between
two and
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2020
Financial assets
Trade receivables 7,106 — — — 7,106
Finance lease receivables 524,722 403,494 350,496 — 1,278,712
Deposits and other receivables 50,998 22,052 — — 73,050
Amount due from shareholders 5,733 — — — 5,733
Restricted cash 9,675 — — — 9,675
Cash and cash equivalents 11,880 — — — 11,880
Total financial assets 610,114 425,546 350,496 — 1,386,156
Financial liabilities
Trade payables 41,565 — — — 41,565
Other payables and accruals 48,170 — — — 48,170
Lease liabilities 7,333 6,828 6,722 — 20,883
Borrowings 773,436 332,582 155,251 — 1,261,269
Amounts due to shareholders 7,687 — — — 7,687
Total financial liabilities
(Note) 878,191 339,410 161,973 — 1,379,574
Net liquidity gap (268,077) 86,136 188,523 — 6,582
FINANCIAL INFORMATION
–3 9 5–


--- page 405 ---
On demand/
Less than
one year
Between
one and
two years
Between
two and
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2021
Financial assets
Trade receivables 7,026 — — — 7,026
Finance lease receivables 647,928 528,257 491,920 — 1,668,105
Deposits and other receivables 68,681 5,577 7,793 — 82,051
Amount due from shareholders 5,569 — — — 5,569
Restricted cash 5,000 — — — 5,000
Cash and cash equivalents 79,373 — — — 79,373
Financial assets at fair value through
profit or loss 5,992 — — 20,000 25,992
Total financial assets 819,569 533,834 499,713 20,000 1,873,116
Financial liabilities
Trade payables 68,463 — — — 68,463
Other payables and accruals 37,869 — — — 37,869
Lease liabilities 6,409 4,774 4,285 — 15,468
Borrowings 831,872 437,155 323,693 — 1,592,720
Amounts due to shareholders 7,467 — — — 7,467
Total financial liabilities
(Note) 952,080 441,929 327,978 — 1,721,987
Net liquidity gap (132,511) 91,905 171,735 20,000 151,129
As at 31 December 2022
Financial assets
Trade receivables 10,567 — — — 10,567
Finance lease receivables 752,427 597,330 492,366 — 1,842,123
Deposits and other receivables 65,566 7,538 24,619 — 97,723
Amount due from shareholders 6,085 — — — 6,085
Restricted cash 4,534 — — — 4,534
Cash and cash equivalents 201,078 — — — 201,078
Financial assets at fair value through
profit or loss — — — 21,647 21,647
Total financial assets 1,040,257 604,868 516,985 21,647 2,183,757
Financial liabilities
Trade payables 105,860 — — — 105,860
Other payables and accruals 33,186 — — — 33,186
Lease liabilities 6,680 4,548 3,727 — 14,955
Borrowings 961,026 585,085 405,718 — 1,951,829
Amounts due to shareholders 8,158 — — — 8,158
Total financial liabilities
(Note) 1,114,910 589,633 409,445 — 2,113,988
Net liquidity gap (74,653) 15,235 107,540 21,647 69,769
FINANCIAL INFORMATION
–3 9 6–


--- page 406 ---
On demand/
Less than
one year
Between
one and
two years
Between
two and
five years
Over
five years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 30 June 2023
Financial assets
Trade receivables 6,858 — — — 6,858
Finance lease receivables 817,498 617,702 500,317 — 1,935,517
Deposits and other receivables 69,288 7,538 24,619 — 101,445
Amount due from shareholders 6,280 — — — 6,280
Restricted cash 538 — — — 538
Cash and cash equivalents 214,031 — — — 214,031
Financial assets at fair value through
profit or loss — — — 22,508 22,508
Total financial assets 1,114,493 625,240 524,936 22,508 2,287,177
Financial liabilities
Trade payables 48,316 — — — 48,316
Other payables and accruals 45,697 — — — 45,697
Lease liabilities 6,341 4,349 3,983 — 14,673
Borrowings 1,038,500 601,513 442,103 — 2,082,115
Amounts due to shareholders 8,420 — — — 8,420
Total financial liabilities
(Note) 1,147,274 605,862 446,085 — 2,199,221
Net liquidity gap (32,781) 19,379 78,850 22,508 87,956
Note: Our Group’s current liabilities a rising from ordinary sh ares with redemption right were excluded
from the above analysis, as such redemption righ t was no longer exercisable upon the filing of the
Listing application and will be terminated upon List ing. In the event that we complete the Listing,
there will be no cash outflow from such redempti on right from us. Contractual undiscounted cash
flows arising from ordinary shares with rede mption right were RMB188.2 million, RMB206.7
million, RMB237.8 million and RMB96.4 million, as at 31 December 2020, 2021, 2022 and 30 June
2023, respectively.
FINANCIAL INFORMATION
–3 9 7–


--- page 407 ---
To manage the maturity gap between our finance lease receivables and relevant
borrowing terms, we monitor the maturity profile of our finance lease receivables under
financial assets and the relevant borrowing s under liabilities based on contractual
undiscounted cash flows. The following table sets out the maturity profile of our Group’s
finance lease receivables and the relevant b orrowings under the automobile retail and
finance segment as at the dates indicated:
On demand/
Less than
one year
Between
one and
two years
Between
two and
five years Total
RMB’000 RMB’000 RMB’000 RMB’000
As at 31 December 2020
Finance lease receivables 524,722 403,494 350,496 1,278,712
Borrowings (automobile retail and finance) 612,045 247,552 142,648 1,002,245
Maturity gap (87,323) 155,942 207,848 276,467
As at 31 December 2021
Finance lease receivables 647,928 528,257 491,920 1,668,105
Borrowings (automobile retail and finance) 733,943 424,533 320,549 1,479,025
Maturity gap (86,015) 103,724 171,371 189,080
As at 31 December 2022
Finance lease receivables 752,427 597,330 492,366 1,842,123
Borrowings (automobile retail and finance) 841,840 500,565 350,307 1,692,712
Maturity gap (89,413) 96,765 142,059 149,411
As at 30 June 2023
Finance lease receivables 817,498 617,702 500,317 1,935,517
Borrowings (automobile retail and finance) 876,717 487,450 329,307 1,693,475
Maturity gap (59,219) 130,252 171,010 242,042
Note: Maturity gap is calculated by subtracting rele vant borrowings under the automobile retail and
finance segment from finance lease receivables.
FINANCIAL INFORMATION
–3 9 8–


--- page 408 ---
For our finance assets and liabilities with t he category of ‘‘on demand/less than one
year’’, we had a negative net liquidity gap o f approximately RMB 268.1 million, RMB132.5
million, RMB74.7 million and RMB32.8 million, as at 31 December 2020, 2021, 2022 and 30
June 2023, respectively. For our finance leas e receivables and the relevant borrowings under
the automobile retail and finance segment with the category of ‘‘on demand/less than one
year’’, we had a maturity gap of approximately RMB87.3 million, RMB86.0 million,
RMB89.4 million and RMB59.2 million, as at 31 December 2020, 2021, 2022 and 30 June
2023, respectively. Our negative net liquidity gap and negative maturity gap for the category
of ‘‘on demand/less than one year’’ do not indicate that we have a liquidity issue. Set out
below is further information relating to our liquidity position:
(i) our automobiles under inventories category that were not pledged amounted to
approximately RMB65.8 million, RMB74.5 million, RMB80.4 million and
RMB46.2 million as at 31 December 20 20, 2021, 2022 and 30 June 2023,
respectively. As automobile s are not financial assets, they are not included in the
calculation of the net liquidity gap. These automobiles are ready for sale; and
(ii) our automobiles under inventories category that were pledged amounted to
approximately RMB80.3 million, RMB73.7 million, RMB117.2 million and
RMB86.5 million, as at 31 December 2020, 2021, 2022 and 30 June 2023,
respectively. These automobiles are not fin ancial assets and, thus, not included in
the calculation of liquidity gap. In the extreme case, we can surrender the
automobiles to settle part of our current liabilities.
We have established diversified funding channels to ensure the sufficiency of our
working capital and manage our capital. Duri ng the Track Record Period, we were able to
fund our business through debt financing and equity financing. Our debt financings mainly
includes (i) interest-bearing loans; (ii) autom obile finance lease arrangement; (iii) factoring
of finance lease receivables; and (iv) asset-ba cked securities. We carefully assess various
funding options available in the market and select appropriate funding channel by taking
into account the cost of funds, the financing ratio, tenor of the loan and the time required
for the approval of funds. Accordingly, we have been capable of securing sufficient equity
a n dd e b tf i n a n c i n g st om a t c ht h eg r o w t ho fo u rbusiness operations. See ‘‘Risk Management
and Operations — Liquidity Risk’’ for our measures to manage our liquidity risk.
As majority of our automobile purchases for our automobile retail and finance
business were funded by our borrowings, before we sold these automobiles, these
automobiles were recorded as inventories, which are non-financial assets, however, the
borrowings related to these unsold automobiles w ere recorded as financia l liabilities, which
caused the negative liquidity gap and negative maturity gap in the category of on
demand/less than one year. According to C IC, cash flow mismatch with negative net
liquidity gap and negative maturity gap is an industry norm in the automobile finance
leasing industry.
FINANCIAL INFORMATION
–3 9 9–


--- page 409 ---
To manage our liquidity risk, we have adopted the following measures: (i) strive to
match the cash outflow relating to our borrowings with the cash inflow of our automobile
finance leases (generally not more than four years); (ii) maintain diverse funding sources;
(iii) maintain an appropriate level of liquid a ssets; (iv) maintain an appropriate level of
unutilised funding facilities; and (v) monito r our short-term and long-term liquidity risk
using internal metrics and regulatory indicators.
Our gearing ratio remained relatively stable at 74.0%, 74.8%, 75.1% and 74.6% as at
31 December 2020, 2021, 2022 an d 30 June 2023, respectively.
As at 31 August 2023, being the latest practicable date for the purpose of indebtedness
statement, we had aggregate facilities of RMB4,909.8 million, of which RMB3,991.1 million
was unutilised.
As at 31 December 2020, 2021, 2022 and 30 June 2023, finance lease receivables
amounted to RMB787.3 million, RMB1,2 27.6 million, RMB1,358.2 million and
RMB1,498.7 million were pledged as collat erals for our borrowings. As at 31 August
2023, being the latest practicable date for the purpose of indebtedness statement, the
finance lease receivables available for utilis ation in obtaining additional borrowings was
RMB67.2 million.
Having considered the above, our Directors believe that (i) we have relevant measures
to manage our liquidity; and (ii) we have adequate facilities to support our business
operation.
Capital Expenditures
Our Group’s capital expenditures principa lly consist expenditures on (i) purchases of
property and equipment; and (ii) additions of intangible assets. During the Track Record
Period, our Group recorded capital expe nditures of RMB185.3 million, RMB77.1 million,
RMB224.9 million and RMB232.3 million, for the years ended 31 December 2020, 2021,
2022 and the six months ended 30 June 2023, respectively.
Working Capital
We had net cash used in operating activities for the years ended 31 December 2021 and
2022, which was primarily due to the increase in our finance lease receivables as a result of
our overall business growth in our automobile retail and finance business. During the Track
Record Period, we invested in purchasing automobiles to expand our automobile finance
lease and operating lease businesses and we principally financed our purchase of
automobiles by borrowings, while payments by our automobile finance and operating
lease customers are based on periodic instalments under the terms in the lease contract,
which would generate net cash outflow for a particular period. We may record net cash used
in operating activities in the future, in which case our working capital may be limited and
our financial results and results of operations may be materially and adversely affected. Our
cash and cash equivalents amounted to appr oximately RMB11.9 million, RMB79.4 million,
RMB201.1 million and RMB214.0 million as a t 31 December 2020, 20 21, 2022 and 30 June
2023, respectively.
FINANCIAL INFORMATION
–4 0 0–


--- page 410 ---
Our Directors confirm that, taking into consi deration the facilities presently available,
other working capital and the estimated net proceeds from the Global Offering, we have
sufficient working capital for our present requirements and for at least the next 12 months
commencing from the date of this prospectus.
DESCRIPTION OF CERTAIN ITEMS OF CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
Property and equipment
Our property and equipment comprise (i) righ t-of-use assets; (ii) buildings; (iii) office
equipment; (iv) automobiles; and (v) leaseh old improvements. As at 31 December 2020,
2021, 2022 and 30 June 2023, the net book value of our property and equipment was
RMB431.2 million, RMB353.1 million, RMB367.7 million and RMB487.7 million,
respectively.
The following table sets out a breakdown of the carrying amounts of our property and
equipment as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets 18,115 13,936 13,646 13,443
Buildings 3,830 3,685 3,540 3,468
Office equipment 3,840 2,395 1,626 1,768
Automobiles 398,052 324,096 342,766 463,446
Leasehold improvements 7,334 9,026 6,126 5,548
431,171 353,138 367,704 487,673
Our property and equipment decrease d from RMB431.2 million as at 31 December
2020 to RMB353.1 million as at 31 December 2021 , primarily due to the decrease in our
automobiles from RMB398.1 million as at 3 1 December 2020 to RMB324.1 million as at 31
December 2021, mainly resulted from the decre ase in new addition of automobiles for our
operating lease business and the depreciation expenses incurred during the year.
Our property and equipment increased by RMB14.6 million from RMB353.1 million as
at 31 December 2021 to RMB367.7 million as a t 31 December 2022, mainly resulted from
the increase in automobiles by RMB18.7 million, primarily due to the addition of the
automobiles for the year ended 31 December 2022, in order to take advantage of the
preferential tax benefit during 2022.
FINANCIAL INFORMATION
–4 0 1–


--- page 411 ---
Our property and equipment increased by RMB68.2 million from RMB367.7 million as
at 31 December 2022 to RMB 487.7 million as at 30 June 2023, mainly resulted from the
increase in automobiles by RMB120.7 million, primarily due to the addition of the
automobiles for the six months ended 30 June 2023 to grow our automobile retail and
finance business.
For the years ended 31 December 2020, 2021 , 2022 and the six months ended 30 June
2023, automobiles classified under property and equipment which were subsequently
transferred to inventories amounted to RMB3.0 million, RMB9.0 million, RMB68.8 million
and RMB40.4 million, respectively. Such chan ges during the Track Record Period were
mainly due to the changes of the usage of automo biles from operating lease to finance lease.
We adjusted the usage of the operating lease automobiles based on operational needs.
Intangible assets
Our intangible assets comprise (i) computer so ftware; (ii) self-developed applications;
and (iii) intangible assets under development . The following table sets out a breakdown of
our intangible assets as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Computer softwares 3,324 1,229 238 32
Self-developed applications 18,807 22,061 18,844 17,133
Intangible assets under
development 4,532 831 2,697 3,268
26,663 24,121 21,779 20,433
Our intangible assets decreased from R MB26.7 million as at 31 December 2020 to
RMB24.1 million as at 31 December 2021, prim arily due to the decrease in our intangible
assets under development from RMB4.5 millio n as 31 December 2020 to RMB0.8 million as
at 31 December 2021. Our intangible asse ts decreased from RMB24.1 million as at 31
December 2021 to RMB21.8 million as at 31 December 2022, primarily due to the decrease
in (i) self-developed applications from RMB22.1 million as at 31 December 2021 to
RMB18.8 million as at 31 December 2022 result ed from the amortisation charged during
the year; and (ii) computer software fr om RMB1.2 million as at 31 December 2021 to
RMB0.2 million as at 31 December 2022 resulted from the amortisation charged during the
year, and partially offset by (iii) the increase i n intangible assets under development from
RMB0.8 million as at 31 December 2021 to RMB2.7 million as at 31 December 2022. Our
intangible assets decreased from RMB21 .8 million as at 31 December 2022 to RMB20.4
million as at 30 June 2023, primarily due to the decrease in self-developed applications from
RMB18.8 million as at 31 December 2022 to RMB17.1 million resulted from the
amortisation charged during the period.
FINANCIAL INFORMATION
–4 0 2–


--- page 412 ---
Impairment assessment
Our Group has developed the software whi ch is internally used for finance lease
operation. Our Group has recognised RMB4 .5 million, RMB0.8 million, RMB2.7 million
and RMB3.3 million of intangible assets under d evelopment as at 31 December 2020, 2021,
2022 and 30 June 2023, respectively, based on the stage of completion. The intangible assets
under development generally would be completed within 12 months and the amount would
b et r a n s f e r r e dt o‘ ‘ s e l f - d e v e l o p ed applications’’ upon completion.
The carrying amounts of intangible a ssets under development of RMB4.5 million,
RMB0.8 million, RMB2.7 million and RMB3.3 million as at 31 Decemb er 2020, 2021, 2022
and 30 June 2023 were attributable to our Group ’s cash-generating units of finance lease
business.
For the purpose of impairment test on sof tware under development as at 31 December
2020, 2021, 2022 and 30 June 2023, the recoverable amounts of the finance lease business
units were determined based on value-in-use calculations.
These calculations use pre-tax free cash f low of finance lease business projections
based on profit forecast approved by management covering a five-year period and a pre-tax
discount rate of 15.1%, which reflects the specifi c risks relating to the finance lease business
in the PRC. The pre-tax discount rate was derived from the post-tax weighted average cost
of capital of the cash generating unit with adoption of Capital Asset Pricing Model
(‘‘CAPM ’’) to estimate the cost of equity. The CAPM inputs including levered beta and
historical debt-to capital ratio were obtained via market data of comparable companies,
which are listed in major exchange markets an d focused in the leasing industry and these
inputs were relatively stable throughout the T rack Record Period. Please refer to note 15 to
Accountant’s Report as set out in Appendix I for more details.
The cash flows beyond the five-year period are extrapolated using zero growth rate and
the business is assumed that it would operate perpetually.
Other key assumptions to the valuation model used are as follows:
As at 31 December
2020 2021 2022
Average yield of finance lease receivables 22.3% 20.4% 19.0%
As at 31 December 2020, 2021 and 2022, ou r management assessed the recoverable
amount of the cash generated unit (CGU) and determined that no impairment loss was
recognised for the capitalised development c osts as the recoverable amounts exceeded the
carrying amounts.
FINANCIAL INFORMATION
–4 0 3–


--- page 413 ---
The estimated recoverable amount shall exceed its carrying amount (i.e. the headroom)
a sl i s t e di nb e l o wt a b l e :
As at 31 December
2020 2021 2022
RMB’000 RMB’000 RMB’000
CGU of finance lease business 67,189 68,990 78,427
The Directors performed sensitivity anal ysis based on the assumptions that revenue
growth rate or average yield of finance lease receivables has been changed. Had the
estimated key assumption during the forecast period been changed as below, the headroom
would decrease to the amounts as follows:
As at 31 December
2020 2021 2022
RMB’000 RMB’000 RMB’000
CGU of finance lease business
— Average yield of finance lease receivables
decrease by 1% 36,737 38,425 43,951
— Pre-tax WACC increase by 1% 28,516 28,524 32,422
Our Directors have not identified any reasonably possible change in the key
assumptions on which the recoverable amoun t is based that would cause the carrying
amounts of the CGU to exceed their respect ive recoverable amounts as at 31 December
2020, 2021 and 2022, respectively.
Inventories
Our inventories include new and repossessed automobiles and vehicle telematics
equipment. The following table sets out a breakdown of our inventories as at the dates
indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Automobiles 146,130 148,151 197,625 131,315
Vehicle telematics equipment 1,655 1,559 2,106 1,873
147,785 149,710 199,731 133,188
Provision for inventories (5,764) (7,827) (6,097) (5,647)
142,021 141,883 193,634 127,541
FINANCIAL INFORMATION
–4 0 4–


--- page 414 ---
The following table sets out the ageing analy sis of inventories as at the dates indicated:
As at 31 December
As at
30 June
2023
Subsequent
sales/
utilisation of
30 June
2023
inventories
up to
the Latest
Practicable
Date2020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
0–30 days 93,457 104,906 146,023 83,494 77,298
31–60 days 13,705 19,844 19,149 24,017 22,389
61–90 days 14,651 6,678 10,926 8,986 7,913
91–180 days 11,006 7,658 13,009 12,671 10,935
181–365 days 10,425 7,793 8,750 3,099 2,513
Over 365 days 4,541 2,831 1,874 921 850
Total 147,785 149,710 199,731 133,188 121,898
Our inventories remained relatively st able at RMB141.9 million as at 31 December
2021 as compared to RMB142.0 million as a t 31 December 2020, then increased to
RMB193.6 million as at 31 December 2022, pr imarily attributable to the increase in
automobiles by RMB49.5 million mainly due to the increase in inventories aged 0–30 days
by RMB41.5 million attributable to the incre ase in automobile purchase in December 2022
as to take advantage of preferential tax benefit, which was set to expire by the end of 2022.
Our inventories decreased from RMB193. 6 million as at 31 December 2022 to RMB127.5
million as at 30 June 2023, mainly due to the increased automobile purchase in December
2022 as to take advantage of the afore said preferential tax benefit.
We monitor our inventories from time to time and strive to maintain an optimal
inventory level of automobiles. We keep moving record of our inventory level with the aid
of our IT systems and physical records. We conduct daily inspections of the physical
condition of our inventories and monthly physical inventory stocktake to ensure the
accuracy of our inventory record. During the Track Record Period, provision for
inventories amounted to RMB5.8 million, RMB7.8 million, RMB6.1 million and RMB7.1
million, respectively, for automobiles wit h sufficient stock and decreased demand.
FINANCIAL INFORMATION
–4 0 5–


--- page 415 ---
The following table sets out the average inventory turnover days for our automobile
retail and finance business for the years/period indicated:
For the year ended 31 December
For the
six months
ended
30 June
2020 2021 2022 2023
Average inventory turnover
days for automobile retail and
finance lease business
(Note) 96 54 58 53
Note: Average inventory turnover days was calculated usi ng the average balances of inventories divided
by cost of inventories for finance lease for the relevant year and multiplied by 365 days for the
years ended 31 December 2020, 2021 and 2022, and 181 days for the six months ended 30 June
2023. Average balance of inventories is calculated as the sum of the beginning balance and the
ending balance for the relevant year divided by two.
Our average inventory turnover days for au tomobile retail and finance business were
96 days, 54 days, 58 days and 53 days for the years ended 31 December 2020, 2021, 2022 and
the six months ended 30 June 2023, respectively. The average inventory turnover days then
decreased from 96 days for the year ended 31 December 2020 to 54 days for the year ended
31 December 2021, primarily due to the increase in cost of inventories for finance lease for
the year ended 31 December 2021, as a result o f the recovery of our sales of automobile
under finance lease from the impact of COVID-19 in the PRC, while the inventory balance
remained relatively stable as at 31 December 2020 and 2021. The average inventory
turnover days increased to 58 days for th e year ended 31 December 2022 which was
primarily attributable to the increase in inventories as at 31 December 2022 as compared to
that as at 31 December 2021 mainly resulted fro m the increase in purchase of automobiles in
December 2022 as to take advantage of preferential tax benefit, which was set to expire by
the end of 2022. The average inventory turnover days remained relatively stable at 53 days
for the six months ended 30 June 2023.
As at the Latest Practicable Date, RMB121.9 million or 91.5% of our inventories
outstanding as at 30 June 2 023 were sold or utilised.
Our automobiles aged over 90 days mainly represented repossessed automobiles not
yet leased or disposed. Repossessed automobiles generally have longer turnover days as
these repossessed automobiles usually take long er time for us to release the pledging status
in order to be leased or disposed.
Our Directors believe that automobiles are in general durable and not fast obsolete. As
such, the inventories aged over 90 days as at 30 June 2023 that were not subsequently sold
or utilised as at the Latest Practicable Date do es not imply that such inventories are unable
to be sold or utilised.
FINANCIAL INFORMATION
–4 0 6–


--- page 416 ---
Finance lease receivables
Our finance lease receivables primarily cons ist receivables from our automobile finance
leases business. Finance lease receivables is the gross finance lease receivables less (i)
unearned finance income to be recognised over the lease period; and (ii) allowance for
impairment of finance lease receivables. Gross finance lease receivables include both
interests and principal amounts we expect to re ceive from our customers under finance lease
contracts. Our finance lease receivables under our automobile finance leases are secured by
the leased automobiles. At the end of the lease term, the ownership of the automobile will
be transferred to our customers who purchase d automobiles by way of direct finance lease
upon settlement of all outstanding balances. The following table sets out our net finance
lease receivables as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finance lease receivables
— Finance lease receivables,
gross 1,278,712 1,668,105 1,842,123 1,935,517
— Unearned finance income (267,651) (360,224) (358,496) (397,876)
Finance lease receivables, net 1,011, 061 1,307,881 1,483,627 1,537,641
Less: allowance for impairment
of finance lease
receivables (9,372) (10,915) (13,296) (12,853)
Carrying amount of finance lease
receivables 1,001,689 1,296 ,966 1,470,331 1,524,788
Our finance lease receivables increase d from RMB1,001.7 million as at 31 December
2020 to RMB1,297.0 million as at 31 December 20 21, primarily attributable to the increase
in the total number of finance lease agreements that were in effect which was mainly caused
by the recovery of our sales of automobile under finance lease from the impact of the
outbreak of COVID-19 in the PRC in 2020. Our finance lease receivables further increased
to RMB1,470.3 million as at 31 December 2022, primarily due to the increased number of
finance lease agreements that were in effect from 19,152 as at 31 December 2021 to 22,001
as at 31 December 2022. Our finance lease r eceivables increased from RMB1,470.3 million
as at 31 December 2022 to RMB 1,524.8 million as at 30 June 2023, primarily due to the
increase in the total number of finance lease agreements that were in effect, mainly
attributable to the recovery of our sales of automobile under finance lease from the adverse
impact of the outbreak of COVID-19 in the PRC in 2022, our increased sales and marketing
efforts and the opening of new self-operated sales outlets to grow our business.
FINANCIAL INFORMATION
–4 0 7–


--- page 417 ---
The following table sets out the breakdown of our finance lease receivables by current
and non-current asset classification as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets 622,386 832,569 910,270 930,433
Current assets 379,303 464,397 560,061 594,355
1,001,689 1,296,966 1,470,331 1,524,788
The following table sets out the breakdown of net finance lease receivables by
geographical location as at the dates indicated:
As at 31 December As at 30 June
2020 2021 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 %
Eastern PRC 435,225 43.0 524,325 40.1 587,622 39.6 582,648 37.9
Southern PRC 173,812 17.2 233,435 17.8 294,778 19.9 301,049 19.6
Southwestern PRC 174,472 17.3 210,415 16.1 217,881 14.7 225,719 14.7
Central PRC 103,659 10.3 150,554 11.5 163,759 11.0 174,843 11.4
Northern PRC 74,248 7.3 116,262 8.9 126,007 8.5 137,124 8.9
Northwestern PRC 37,619 3.7 57,488 4.4 73,184 4.9 88,918 5.8
Northeastern PRC 12,026 1.2 15,402 1.2 20,396 1.4 27,339 1.7
Total 1,011,061 100.0 1,307,881 100.0 1,483,627 100.0 1,537,640 100.0
The following table sets out the breakdown of net finance lease receivables by city tier
as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Tier one city 5,367 1,044 29,965 34,717
Tier two cities 848,324 1,121,293 1,241,026 1,286,198
Tier three and below cities 157,370 185,544 212,636 216,725
Total 1,011,061 1,307,881 1,483,627 1,537,640
FINANCIAL INFORMATION
–4 0 8–


--- page 418 ---
Our finance lease agreements generally have a term ranging from two to four years.
The following table sets out the details of finance lease receivables as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finance lease receivables, gross
— Within one year 524,722 647,928 752,427 817,498
— Between one and two years 403,494 528,257 597,330 617,702
— Between two and five years 350,496 491,920 492,366 500,317
1,278,712 1,668,105 1,842,123 1,935,517
Finance lease receivables, net
— Within one year 383,816 469,316 566,894 601,124
— Between one and two years 318,039 409,520 479,080 494,025
— Between two and five years 309,206 429,045 437,653 442,492
1,011,061 1,307,881 1,483,627 1,537,641
The following table sets out an ageing analysis based on due dates of our finance lease
receivables, net as a t the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Not past due 955,256 1,233,278 1,398,133 1,448,400
Past due
Up to one month 38,020 54,337 60,501 62,167
One to three months 10,806 11,638 14,569 15,174
Three to six months 3,412 4,158 5,578 8,123
Six to twelve months 2,723 3,266 3,331 2,399
Over twelve months 844 1,204 1,515 1,378
Finance lease receivables, net 1,011, 061 1,307,881 1,483,627 1,537,641
Less: allowance for impairment
of finance lease
receivables (9,372) (10,915) (13,296) (12,853)
Carrying amount of finance lease
receivables 1,001,689 1,296 ,966 1,470,331 1,524,788
FINANCIAL INFORMATION
–4 0 9–


--- page 419 ---
We monitor all financial assets that are su bject to impairment requirements to assess
whether there has been a significant increase i n credit risk since initial recognition. Our
Group applies the simplified approach to provide for expected credit losses prescribed by
IFRS 9, which permits the use of the lifetim e credit loss provision for finance lease
receivables. In considering the expected credit losses for finance lease receivable, our Group
considers historical loss rates for each category of debtors and adjusts for forward-looking
macroeconomic data. As a result of our risk management system, we had managed to
maintain relatively low credit losses during the Track Record Period. As at 31 December
2020, 2021, 2022 and 30 June 2023, our non-performing asset ratios, were 0.7%, 0.7%,
0.7% and 0.8%, respectively. According to the CIC Report, the industry average
non-performing asset ratios as at 31 December 2021 and 2022 were 1.5% and 2.0%,
respectively. As such, our non-performing asset ratios as at 31 December 2021 and 2022
were lower than the industry average. As at 31 December 2020, 2021, 2022 and 30 June
2023, our allowance for impairment of finance lease receivables amounted to RMB9.4
million, RMB10.9 million, RMB13.3 million and RMB12.9 million, respectively.
The following table sets out our net finance le ase receivables, the amount of net finance
lease receivables that are past due and the corresponding past due ratios, and the amount of
provision for credit losses and the corresponding coverage ratios as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
(RMB’000, except for percentage)
Finance lease receivables, net 1,011, 061 1,307,881 1,483,627 1,537,641
Allowance for impairment of
finance lease receivables 9,372 10,915 13,296 12,853
Allowance to net finance lease
receivables ratio
(Note 1) 0.9% 0.8% 0.9% 0.8%
Past due net finance lease
receivables
Over one month 17,785 20,266 24,993 27,074
Over three months 6,979 8,628 10,424 11,900
Over six months 3,567 4,470 4,846 3,777
Over one year 844 1,204 1,515 1,378
Past due ratio (Note 2)
Over one month 1.8% 1.5% 1.7% 1.8%
Over three months 0.7% 0.7% 0.7% 0.8%
Over six months 0.4% 0.3% 0.3% 0.2%
Over one year 0.1% 0.1% 0.1% 0.1%
Past due coverage ratio (Note 3)
Over one month 52.7% 53.9% 53.2% 47.5%
Over three months 134.3% 126.5% 127.5% 108.0%
Over six months 262.7% 244.2% 274.4% 340.3%
Over one year 1,110.2% 906.5% 877.6% 932.9%
FINANCIAL INFORMATION
–4 1 0–


--- page 420 ---
Notes:
1. Represents allowance for impairment of financ e lease receivables as at the end of that corresponding
year/period divided by net finance lease receivables as at the end of that corresponding year/period.
2. Represents past due net finance lease receivables as at the end of that corresponding year/period
divided by total net finance lease receivables as at the end of the corresponding year/period.
3. Represents allowance for impairment of financ e lease receivables as at the end of that corresponding
year/period divided by past due net finance lease receivables as at the end of that corresponding
year/period.
We actively monitor historical past due ratio and continuously improve our data
analytics capabilities, as well as execute post-lease management and loss recovery measures
through our automobile monitoring platform and our patent-protected GPS tracking
devices installed on all automobiles leased by us. Therefore, our past due ratios remained at
a relatively low level. Our over one month past due ratio decreased from 1.8% as at 31
December 2020 to 1.5% as at 31 December 2021, primarily due to the increase by 28.4% in
the total principal amount of finance leas e agreements as at 31 December 2021 as compared
to that as at 31 December 2020 mainly resulted from the strong recovery from the
significant adverse effects caused by the o u t b r e a ko fC O V I D - 1 9i nt h eP R Ci n2 0 2 0 ;w h i l e
the past due net finance lease receivables over one month only increased by 13.9% as at 31
December 2021 as compared to that as at 31 December 2020. Our over one month past due
ratio then increased to 1.7% as at 31 December 2022, primarily due to the increase by
14.3% in the total principal amount of finance lease agreements as at 31 December 2022 as
compared to 31 December 2021 mainly resulted from our organic growth of our business;
while the past due net finance lease receivables for over one month increased by 23.3% as at
31 December 2022 as compared to that as at 31 December 2021. Our over one month past
due ratio remained at a relatively low level as at 31 December 2020, 2021, 2022 and 30 June
2023. Our over three months past due ratio, over six months past due ratio and over one
year past due ratio were below 1% as at 31 December 2020, 2021, 2022 and 30 June 2023.
Our over one month past due coverage ratio remained relatively stable at 52.7%,
53.9% and 53.2% as at 31 December 2020, 2021 and 2022. Our over one month past due
coverage ratio decreased to 47.5% as at 30 June 2023, mainly due to the increase in finance
lease receivables being over due for over one month.
Our over three months past due coverage ratio decreased from 134.3% as at 31
December 2020 to 126.5% as at 31 December 2021, m ainly attributable to the increase in
our allowance for impairment of finance lea se receivables by 16.5%; while our past due
finance lease receivables for over three months increased by 23.6% as at 31 December 2021
as compared to 31 December 2020. Our over thr ee months past due coverage ratio remained
relatively stable at 127.5% as at 31 December 2022. Our over three months past due
coverage ratio decreased to 108.0% as at 30 June 2023, mainly due to the increase in finance
lease receivables being over due for over three months.
FINANCIAL INFORMATION
–4 1 1–


--- page 421 ---
Our over six months past due coverage ratio decreased from 262.7% as at 31 December
2020 to 244.2% as at 31 December 2021 and our over one year past due coverage ratio
decreased from 1,110.2% as at 31 December 2020 to 906.5% as at 31 December 2021,
mainly due to the increase in our finance lease receivables being overdue for more than six
months and over one year. Our over six months past due coverage ratio then increased to
274.4% as at 31 December 2022, primarily du e to the increase in our provision for our
finance lease receivables and partially offset by the increase in our finance lease receivables
being overdue for more than six months. Our over six months past due coverage ratio
increased to 340.3% as at 30 June 2023 as compared to that as at 31 December 2022, mainly
due to the decrease in our finance lease receivables being overdue for more than six months,
partially offset by the decrease in our provision for our finance lease receivables as at 30
June 2023. Our over one year past due coverage ratio decreased from 906.5% as at 31
December 2021 to 877.6% as at 31 December 202 2, primarily due to the increase in our
finance lease receivables being overdue for over one year. Our over one year past due
coverage ratio increased to 932.9% as at 30 June 2023 as compared to that as at 31
December 2022, mainly due to the decrease in ou r finance lease receivables being overdue
for over one year, and partially offset by the d ecrease in our provision for our finance lease
receivables as at 30 June 2023.
As at the Latest Practicable Date, RMB3 32.3 million or 17.2% of our finance lease
receivables as at 30 June 2023 had been settled. The low subsequent settlement was mainly
because the majority of the lease payments were not yet due as at the Latest Practicable
Date. Our finance lease receivables were settled by our customers according to the payment
schedule under the finance lease agreements which generally have a term ranging from two
to four years, and we have made sufficient a llowance for impairment of finance lease
receivables to cover the potential customers’ default, therefore there is no major
recoverability issue.
Trade receivables
Our trade receivables represe nt receivables from our automobile-related services. The
following table sets out our trade receivables as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 7,106 7,026 10,567 6,858
Less: allowance for impairment
of trade receivables (269) (285) (627) (849)
6,837 6,741 9,940 6,009
Our trade receivables rem ained stable at RMB6.7 million as at 31 December 2021 as
compared to RMB6.8 million as at 31 December 20 20. Our trade receivables then increased
to RMB9.9 million as at 31 December 2022, prima rily attributable to the trade receivables
FINANCIAL INFORMATION
–4 1 2–


--- page 422 ---
for the promotion service we provided to one of our business-end customers in November
and December 2022. Our trade receivables de creased to RMB6.0 million as at 30 June 2023,
primarily due to the promotion service provided to one of our business-end customers in
November and December 2022 has completed in the six months ended 30 June 2023.
The table sets out an ageing analysis of our trade receivables (net of allowance for
impairment of trade receivables) based on invoice date as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Up to three months 6,572 6,591 9,052 5,189
Three to six months 51 108 445 478
Over six months 214 42 443 342
6,837 6,741 9,940 6,009
Trade receivables were non-interest bearing and generally on 15 to 30 days terms. We
normally assess and approve credit term s on a case by case basis. Our Group used a
simplified approach for measuring the expected credit losses, which used a lifetime expected
loss allowance for all trade receivables. As at 31 December 2020, 2021, 2022 and 30 June
2023, our allowance for impairment of trad e receivables amounted to RMB0.3 million,
RMB0.3 million, RMB0.6 million and RMB0.8 million, respectively.
The following table sets out our average trade receivables turnover days for the
years/period indicated:
For the year ended 31 December
For the
six months
ended
30 June
2020 2021 2022 2023
Average trade receivables
turnover days
(Note) 15 16 21 21
Note: Average trade receivables turnover days was calculated using the average balance of trade
receivables divided by revenue from automobile-related businesses for the relevant year and
multiplied by 365 days for the years ended 31 December 2020, 2021, 2022, and 181 days for the six
months ended 30 June 2023. Average balance of trade receivables is calculated as the sum of the
beginning and the ending balance for the r elevant year/period divided by two.
Our average trade receivables turnover days were 15 days, 16 days, 21 days and 21 days
for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. Our average trade receivables tu rnover days remained stable at 16 days for the
year ended 31 December 2021 as compared to 15 days for the year ended 31 December 2020,
FINANCIAL INFORMATION
–4 1 3–


--- page 423 ---
then increased to 21 days for the year ended 31 December 2022, mainly due to the trade
receivables for the promotion service we provided to one of our business-end customers in
November and December 2022. Our average trade receivables turnover days remained
relatively stable at 21 days for the six months ended 30 June 2023.
As at the Latest Practicable Date, RMB5.0 million or 72.3% of our trade receivables
outstanding as at 30 June 2023 had been settled.
Prepayment, deposits and other receivables
Our prepayment, deposits and other receivables mainly consisted of other tax
recoverable, prepayment for auto-insurance premium, deposits and prepayment for
inventories. Other tax recoverable refers to the input taxes paid that are deductible
during the year/period pursuant to relevant tax laws in the PRC. The amount of input taxes
are determined with reference to the applicable VAT tax rate in effect during the
year/period when the purchase from suppliers and the periodic lease payments are made.
Prepaid Listing expenses refer to the prepayment of equity portion of the listing expenses
which will be capitalised in equity upon Listing. The following table sets out a breakdown
of our prepayment, deposits and other receivables as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Non-current assets:
Deposits 20,646 13,037 32,157 38,409
20,646 13,037 32,157 38,409
Current assets:
Deposits 13,427 24,274 18,528 17,305
Purchase rebate receivables 5,641 2,811 4,880 1,930
Value added tax refund
receivables 10,214 13,222 11,309 12,039
Other receivables 21,478 28,001 28,882 29,970
50,760 68,308 63,599 61,244
Less: allowance on impairment of
other receivables (683) (262) (278) (323)
50,077 68,046 63,321 60,921
Total financial assets 70,723 81,083 95,478 99,330
FINANCIAL INFORMATION
–4 1 4–


--- page 424 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-financial assets
Current
Prepayment for inventories 41,813 61,217 62,232 39,669
Prepayment for auto-insurance
premium 26,338 31,199 42,499 35,566
Prepaid listing expenses 6,264 4,480 5,173 6,970
Prepaid expenses 18,105 22,400 20,317 21,259
Other tax recoverable 94,570 55,988 70,823 83,334
Other receivables 1,238 1,205 1,603 1,541
Total non-financial assets 188,328 176,489 202,647 188,339
Total prepayments, deposits and
other receivables 259,051 2 57,572 298,125 287,669
As at the Latest Practicable Date, RMB25.2 million or 30.2% of our other tax
recoverable as at 30 June 2023 h ad been subsequently utilised.
As at the Latest Practicable Date, RMB 37.4 million or 94.4% of our prepayment for
inventories as at 30 June 2023 had been utilised.
As at the Latest Practicable Date, RMB119.7 million or 41.6% of total prepayments,
deposits and other receivables as at 30 June 2023 had been utilised.
Our prepayments, deposits and other recei vables decreased from RMB259.1 million as
at 31 December 2020 to RMB257.6 million as a t 31 December 2021. Such decrease was
primarily due to (i) the decrease in other tax recoverable under current non-financial assets
by RMB38.6 million as a result of the increased VAT tax paid; and partially offset by (ii)
the increase in prepayment for inventories under current non-financial assets by RMB19.4
million.
Our prepayments, deposits a nd other receivables increa sed from RMB257.6 million as
at 31 December 2021 to RMB298.1 million as a t 31 December 2022. Su ch increase was
primarily due to (i) the increase in other tax recoverable under non-financial assets by
RMB14.8 million resulted from the increase in ou r new automobile sale s under finance lease
during December 2022 as compared to the corresponding month in 2021; and (ii) the
increase in prepayment for aut o-insurance premium by RMB11.3 million mainly due to the
increase in the number of automobiles for our operating lease and finance lease businesses
as at 31 December 2022 as compared to that a s at 31 December 2021. Our prepayments,
deposits and other receivables decrease d from RMB298.1 million as at 31 December 2022 to
RMB287.7 million as at 30 June 2023, primarily due to (i) the decrease in prepayment for
FINANCIAL INFORMATION
–4 1 5–


--- page 425 ---
automobile purchase by RMB22.6 million as at 30 June 2023 as compared to that as at 31
December 2022; and partially offset by (ii) the i ncrease in other tax recoverable as a result
of the decreased VAT tax paid.
Financial assets at fair value through profit or loss
We have established investment policie s, namely Investment Management Policy ( 投資
管理制度), to monitor and manage our investment act ivities, and control the risks relating
to the purchase of financial assets. Our Investment Management Policy sets out the
guidelines for the types of investment assets w e invest in, including equity investment and
non-equity investment. Our Investment Management Policy sets out the criteria for the
selection of investment targets, the maximum a mount of investment committed for different
level of investment decisions, and the level of the senior management team to approve the
investment decision. Before the investment, th e investment project leader, and the leader of
the finance team review the terms of the relevant assets prudently, consider all information
available, and apply various applicable valuat ions in determining whether to invest in the
relevant assets. We mainly invest in equity assets or principal-protected non-equity assets
such as bonds or assets backed securities. For our investments prior to the Listing, we
normally require shareholder’s approval unless the assets or profit ratio of such investment
as compared with that of the Group is less than 10% or the assets or profit of such
investment is less than a certain amount, wh ere the Board could delegate the investment
decision to the general manager.
During the Track Record Period, our financ ial assets at fair value through profit or
loss represented the asset-backed securities units we acquired from Sinolink Securities
Company Limited and the interest we acquired in Hangzhou Jinmuji New Energy
Technology Partnership ( Limited Partnership)* ( 杭州金木吉新能源科技合夥企業（有限合
夥）)( ‘ ‘Hangzhou Jinmuji ’’).
Sinolink Securities Company Limited, a tr ust firm, has established the asset-back
securities plan of Sinolink — Automobile Cons umption III. Accordin g to the arrangement,
Sinolink Securities Company Limited shall use the funds raised in the special plan to
purchase our Group’s underlying assets, which in particular, include the claims that our
Group has towards our automobile lessees and r elevant security interests attached to the
claims. Our Group, as one of the original stakeholders of such underlying assets, shall pay
the balance amount to Sinolink Securities Company Limited at a rate of approximately
9.8% per year. On 31 March 2021, we acquired 80,000 units of asset-backed securities from
Sinolink Securities Company Limited. We sol d 20,000 units of asset-backed securities
during the year ended 31 December 2021. The remaining 60,000 units of asset-backed
securities were redeemed during the year ended 31 December 2022. We recorded fair value
loss on revaluation of the asset-backed securities of RMB8,000 and fair value gain of
RMB351,000 for the years ended 31 December 2021 and 2022, respectively.
In 2021, we acquired an interest in Hangzhou Jinmuji, in which we had 33.33% equity
interest, to engage in investment in electric car charging ports. Hangzhou Jinmuji was
incorporated in the PRC and has its principal place of business in the PRC.
FINANCIAL INFORMATION
–4 1 6–


--- page 426 ---
Hangzhou Jinmuji has a finite life of 7 years. Please refer to note 23 to Accountant’s Report
as set out in Appendix I for more details. The table below sets out the changes in these
assets as at the dates indicated:
Year ended 31 December
Six months
ended
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
At the beginning of year/period
— Asset-backed securities 8,000 5,992 —
— Interest in a partnership 20,000 20,000 21,647
28,000 25,992 21,647
Disposal of financial assets at fair value
through profit or loss (2,000) (6,343) —
Fair value (loss)/gain on revaluation
recognised in profit or loss (8) 1,998 861
At the end of year/period 25,992 21,647 22,508
After Listing, the investment in such financial assets may constitute notifiable
transactions under Chapter 14 of the Listing Rules and we shall comply with the relevant
requirements under the Listing Rules.
Trade payables
Our trade and bills payables mainly repre sent payable for acquisition of our
automobiles and vehicle telematics equipment. The following table sets out our trade and
bills payables as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 22,215 58,463 64,493 37,432
Bills payables 19,350 10,000 41,367 10,884
41,565 68,463 105,860 48,316
Our trade payables increased from RM B41.6 million as at 31 December 2020 to
RMB68.5 million as at 31 December 2021, primarily due to the increase in purchase of
automobiles near the year end of 2021 to gr ow our automobile retail and finance, and
operating lease business. Our trade and bill s payables increased from RMB68.5 million as at
31 December 2021 to RMB105.9 million as at 31 D ecember 2022, primarily owing to the
FINANCIAL INFORMATION
–4 1 7–


--- page 427 ---
increase in purchase of automobiles as to take advantage of the preferential tax benefit,
which was set to expire by the end of 2022. Our trade and bills payables decreased from
RMB105.9 million as at 31 December 2022 to RMB48.3 million as at 30 June 2023,
primarily due to the decrease in trade and b ills payables for automobile purchase as at 30
June 2023 as compared to th at as at 31 December 2022.
The average credit period taken for trade purchases was generally 30 to 90 days. The
following table sets out our average trade payables turnover days for the years/period
indicated:
For the year ended 31 December
For the
six months
ended
30 June
2020 2021 2022 2023
Average trade payables turnover
days
(Note) 36 32 53 45
Note: Average trade and bills payables t urnover days was calculated usi ng the average balance of trade
and bills payables divided by cost of inventories for the relevant year/period and multiplied by 365
days for the years ended 31 December 2020, 2021, 2022, and 181 days for the six months ended 30
June 2023. Average balance of trade and bills payables is calculated as the sum of the beginning
and the ending balance for the relev ant year/period divided by two.
Our average trade payables turnover days were 36 days, 32 days, 53 days and 45 days
for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. Our average trade payables turnover days slightly decreased from 36 days for
the year ended 31 December 2020 to 32 da ys for the year ended 31 December 2021,
primarily due to the decrease in the average ba lance of trade and bills payables for the year
ended 31 December 2021 as compared to that for the year ended 31 December 2020. Our
average trade payables turnover days increased from 32 days for the year ended 31
December 2021 to 53 days for the year ended 31 December 2022, mainly due to the increase
in the average balance of trade and bills paya bles for the year ended 31 December 2022 as
compared to that for the year ended 31 December 2021. Our average trade payables
turnover days decreased from 53 days for the year ended 31 December 2022 to 45 days for
the six months ended 30 June 2023, mainly due to the decrease in the average balance of
trade and bills payables for the six months e nded 30 June 2023 as compared to that for the
year ended 31 December 2022.
As at the Latest Practicable Date, RMB46.4 million or 96.0% of our trade payables
outstanding as at 30 June 2023 had been settled.
FINANCIAL INFORMATION
–4 1 8–


--- page 428 ---
Other payables and accruals
Our other payables and accruals mainly represented (i) guarantee deposit from lessees;
(ii) staff costs and welfare accruals; (iii) adva nce receipt from potential customers; and (iv)
other tax payables. The following table sets out a breakdown of our other payables and
accruals as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Guarantee deposit from lessees 30,760 26,810 18,688 30,715
Staff costs and welfare accruals 11,645 14,225 21,601 18,398
Advance receipt from potential
customers 7,793 10,956 7,223 7,042
Other tax payables 6,035 6,348 6,079 3,964
Advance receipt from scrap sales
of inventories 4,487 5,149 6,083 6,550
Dividend payable 9,688 3,365 3,365 3,365
Accrued listing expenses 2,725 2,688 5,311 5,691
Contract liabilities 1,998 1,644 910 392
Others 7,923 7,359 9,679 10,866
83,054 78,544 78,939 86,983
Our other payables and accruals decrea sed from RMB83.1 million as at 31 December
2020 to RMB78.5 million as at 31 December 202 1. Such decrease was primarily due to (i)
the decrease in guarantee deposit from less ees by RMB4.0 million as a result of refund of
guarantee deposit from lessees upon comple tion of contracts; and (ii) the decrease in
dividend payable by RMB6.3 million; and partially offset by (iii) the increase in advance
receipt from potential customers by RMB3.2 million; and (iv) the increase in staff cost and
welfare accruals by RMB2.6 million, mainly at tributable to the increase in the year end
bonus payable to our staff resulted from the growth of our business for the year ended 31
December 2021 as compared to the year ended 31 December 2020.
Our other payables and accruals increa sed from RMB78.5 million as at 31 December
2021 to RMB78.9 million as at 31 December 2022, primarily due to (i) the increase in staff
costs and welfare accruals by RMB7.4 million mai nly resulted from the increase in the sales
commission for our increased sales of autom obiles under finance lease at the year end; (ii)
the increase in accrued listing expenses by RMB2.6 million; and partially offset by (iii) the
decrease in guarantee depos it from lessees by RMB8.1 million mainly resulted from the
decrease in the average number of the operating lease agreements in effect from 4,191 for
the year ended 31 December 2021 to 3,614 for the year ended 31 December 2022,
respectively.
FINANCIAL INFORMATION
–4 1 9–


--- page 429 ---
Our other payables and accruals increa sed to RMB87.0 million as at 30 June 2023,
primarily due to the increase in guarantee deposit from lessees mainly resulted from the
increase of the number of operating lease agreements in effect from 2,911 as at 31 December
2022 to 4,126 as at 30 June 2023.
We had dividend payable of RMB3.4 million as at 30 June 2023, which will be settled
prior to Listing.
Amounts due to Shareholders
Our amounts due to Shareholders amo unted to RMB7.7 million, RMB7.5 million,
RMB8.2 million and RMB8.4 million as at 31 D ecember 2020, 2021, 20 22 and 30 June 2023,
respectively. Our amounts due to Shareholders arose from the transfer of the equity interest
of XXF Group as a result of Reorganisation. Amounts due to Shareholders were unsecured,
interest-free, non-trade in nat ure, repayable on demand and will be settled before Listing.
Amounts due from Shareholders
Our amount due from Shareholders amo unted to RMB5.7 million, RMB5.6 million,
RMB6.1 million and RMB6.3 million as at 31 D ecember 2020, 2021, 20 22 and 30 June 2023,
respectively. Our amount due from Shareholders represented amount due from
shareholders for the transfer of the equity interests of XXF Group as a result of
Reorganisation. Such balance was unsecur ed, interest-fee, non-trade in nature and
repayable on demand. Our amount due from Shareholders will be settled before Listing.
Investment in a partnership
In 2021, the Group acquired the interest i n Hangzhou Jinmuji, in which the Group had
33.33% equity interest, to engage in investm ent in electric car charging ports. Hangzhou
Jinmuji was incorporated in the PRC and has its principal place of business in the PRC.
Hangzhou Jinmuji had a finite life of 7 years. As at 30 June 2023, the fair value of the
Group’s interest in Hangzhou Jin muji amounted to RMB22.5 million.
CAPITAL COMMITMENTS
As at 31 December 2020, 2021, 2022 and 30 June 2023, we had no capital
commitments.
FINANCIAL INFORMATION
–4 2 0–


--- page 430 ---
INDEBTEDNESS
The following table sets out the breakdown of our indebtedness as at the dates
indicated:
As at 31 December
As at
30 June
2023
As at
31 August
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Borrowings 1,155,958 1,382,822 1,713,415 1,857,860 1,816,877
Ordinary shares
with redemption
right 177,886 196,640 163,129 120,611 119,656
Lease liabilities 19,161 14,305 13,856 13,619 12,934
Total 1,353,005 1,593,767 1,890,400 1,992,090 1,949,467
Borrowings
Our borrowings are incurred primarily to finance our business operation. The
following table sets out a breakdown of our indebtedness as at the dates indicated:
As at 31 December
As at
30 June
2023
As at
31 August
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Bank borrowings, secured 8,977 13,430 23,077 31,115 31,248
Bank borrowings,
unsecured 9,527 22,610 16,182 6,488 4,273
Other borrowings, secured 1,135,954 1,337,537 1,609,668 1,771,565 1,733,717
Other borrowings,
unsecured 1,500 9,245 64,488 48,692 47,639
1,155,958 1,382,822 1,713,415 1,857,860 1,816,877
Less: non-current portion (447,380) (656,219) (884,842) (947,975) (938,122)
Current portion 708,578 726,603 828,573 909,885 878,755
As at 31 December 2020, 2021, 2022 and 30 June 2023 and 31 August 2023, our
Group’s borrowings are primarily denominated in RMB. We may be subject to certain
restrictions in connection with our borrowings. For details, please see the section headed
‘‘Business — Our Lenders and Funding Capabilit ies — Events of default.’’ We have capital
FINANCIAL INFORMATION
–4 2 1–


--- page 431 ---
management measures in place to monitor our funding requirements and the restrictions.
We consider our capital management measures to have been effective in managing liquidity
risk.
The following table sets out the repayment dates of our borrowings as at the dates
indicated:
As at 31 December
As at
30 June
2023
As at
31 August
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Within one year 708,578 726,603 828,573 909,885 878,755
Between one and two
years 302,828 367,118 510,668 534,378 531,764
Between two and five
years 144,552 289,101 374,174 413,597 406,357
1,155,958 1,382,822 1,713,415 1,857,860 1,816,877
The weighted average effective interest rates of borrowings as at 31 December 2020,
2021, 2022 and 30 June 2023 are as follows:
As at 31 December
As at
30 June
20232020 2021 2022
Weighted average effective
interest rate 8.5% 8.5% 8.6% 8.5%
Our weighted average effective interest rates of borrowings is calculated by the average
effective interest rate of the borrowings, weighted by the corresponding ending balance of
each borrowing as at each year end, which re mained relatively stable during the Track
Record Period.
As at 31 December 2020, 2021, 2022 and 30 June 2023, and 31 August 2023, our
borrowings of RMB1,144.9 million, RMB1 ,351.0 million, RMB1,632.7 million,
RMB1,802.7 million and RMB1,067.2 million w ere secured by personal guarantee and
indemnity provided by our Directors, 50% equity interest in Fujian Xidi and certain assets
of our Group. As at 31 August 2023, being the latest practicable date for the purpose of
indebtedness statement, our borrowing s of RMB1,067.2 million secured by personal
guarantee and indemnity provided by Dir ectors, of which RMB808.9 million will be
released prior to our Listing.
FINANCIAL INFORMATION
–4 2 2–


--- page 432 ---
As at 31 December 2020, 2021, 2022 and 30 June 2023, finance lease receivables
amounted to RMB787.3 million, RMB1,2 27.6 million, RMB1,358.2 million and
RMB1,498.7 million was pledged as collate rals for our borrowings. As at 31 August
2023, being the latest practicable date for the purpose of indebtedness statement, the
finance lease receivables available for utilis ation in obtaining additional borrowings was
RMB67.2 million.
As at 31 August 2023, being the latest practicable date for the purpose of indebtedness
statement, we had aggregate facilities of RMB4,909.8 million, of which RMB3,991.1 million
was unutilised. Among the aggregate facilitie s of RMB4,909.8 million, aggregate facilities
of RMB254.8 million was secured by personal g uarantee and indemnity provided by our
Directors, of which RMB115.9 million was unutilised.
Ordinary shares with redemption right
On 28 November 2019, as part of the Reor ganisation, XXF HK acquired 55,422,656
ordinary shares of XXF Group from Beijing Chesheng and Zhuhai Wanhe at RMB1.00 per
share. On 2 December 2019, our Company issued an aggregate of 55,422,656 ordinary
Shares with redemption right at the same consideration. As a result, ordinary shares with
redemption right issued by XXF Group were converted into 55,422,656 ordinary shares
with redemption right issued by our Company at par value of HK$0.01 per share at no
consideration.
On 2 December 2019, our Company issued and allotted 6,821,250 ordinary Shares to
Hit Drive Limited, an offshore holding vehicl e of Beijing Chesheng, with redemption right
at a total consideration of RMB20.0 millio n. On 10 June 2021, we entered into an
agreement with the Pre-IPO Investor 1 whereby our Company issued and allotted 6,945,273
ordinary shares with redemption right at RMB2.88 per share totaling RMB20,000,000 as
partial settlement of the other borrowing s of RMB70.8 million due to the Pre-IPO Investor
1. The issuance price is approximated to the fair value of the ordinary shares with
redemption right.
Our Group has engaged an independent valuer to determine the underlying share value
of our Group by discounted cash flow method and adopted equity allocation model to
determine the fair value of the ordinary shares with redemption right as of the date of
issuance and at the end of each reporting pe riod. As at 31 December 2020, 2021, 2022 and
30 June 2023, fair value of the ordinary shares with redemption right amounted to
RMB177.9 million, RMB196.6 million, RMB163.1 million and RMB120.6 million
respectively, resulting in (i) a fair value loss of RMB6.9 million, RMB4.2 million and a
fair value gain of RMB47.3 million and RMB46.3 million for the corresponding
year/period; (ii) exchange loss arising f rom translation of RMB11.0 million and RMB5.4
million for the years ended 31 December 202 0 and 2021, exchange gain arising from
translation of RMB16.2 million and RMB3.6 million for the year ended 31 December 2022
and the six months ended 30 June 2023, respectively.
FINANCIAL INFORMATION
–4 2 3–


--- page 433 ---
For the year ended 31 December 2022, due to the impact of the regional outbreaks of
COVID-19 variants in the PRC and the fluctuation of the capital market environment, we
have adopted a more prudent expected long term growth rate which in turn lowered the
estimate of the equity value. In the valuation of our Group, the independent valuer has
taken into account of the economic condition in China in general during the six months
ended 30 June 2023. As such, the value of ordinary shares with redemption right has
declined after applying the equity allocati on model. Accordingly, the fair value gain of
RMB47.3 million and RMB46.3 million was reco gnised for the year ended 31 December
2022 and the six months ended 30 June 2023.
The table below sets out the details of changes in our ordinary shares with redemption
right for the years/period indicated an d the value as at the dates indicated:
Year ended 31 December
Six months
ended
30 June2020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of year/
period 181,966 177,886 196,640 163,129
Issuance of ordinary shares
with redemption right — 20,000 — —
Changes in fair value
through profit or loss 6,932 4,153 (47,251) (46,335)
Change in fair value due to
own credit risk — — (2,432) 203
Exchange difference arising
from translation (11,012) (5,399) 16,172 3,614
At the end of year/period 177,886 196,640 163,129 120,611
Less: non-current portion (177,886) — — (70,948)
Current portion — 196,640 163,129 49,663
Lease liabilities
We record lease liabilities with respect to all lease agreements in which we were the
lessee at the lease commencement date, except for short-term leases (defined as leases with a
lease term of 12 months or less) and leases of low value assets.
FINANCIAL INFORMATION
–4 2 4–


--- page 434 ---
The following table sets out our lease liabilities as at the dates indicated:
As at 31 December
As at
30 June
2023
As at
31 August
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current 6,419 5,781 6,087 5,762 5,708
Non-current 12,742 8,524 7,769 7,857 7,226
19,161 14,305 13,856 13,619 12,934
Our Group leased various pr operties and the lease liabilities were measured at the
present value of the lease payments that ar e not yet paid. As at 31 December 2020, 2021,
2022 and 30 June 2023, we recorded lease lia bilities of approximately RMB19.2 million,
RMB14.3 million, RMB13.9 million and RMB13.6 m illion, respectively. The decrease from
RMB19.2 million as at 31 December 2020 t o RMB14.3 million as at 31 December 2021,
RMB13.9 million as at 31 December 2022 and RMB13.6 million as at 30 June 2023, was
primarily due to the decrease in our newly ente red properties lease agreements for the use as
our offices.
Contingent liabilities
As at 31 August 2023, we had no material contingent liabilities.
Apart from intra-group liabilities, as at indebtedness date, being the latest practicable
date for the purpose of the indebtedness statement for this prospectus, we did not have any
outstanding loan capital issued or agreed to be issued, loans, debt securities, bank
overdrafts, borrowings or other similar indeb tedness, liabilities under acceptance (other
than normal trade bills) or accep tance credits debentures, mortgages, charges, finance
leases, hire purchase commitments, guarant ees or other material contingent liabilities.
OFF-BALANCE SHEET ARRANGEMENT
As at the Latest Practicable Date, we had not entered into any off-balance sheet
transaction.
TRANSACTIONS WITH RELATED PARTIES
With respect to the related party transactions set out in note 35 to the Accountant’s
Report in Appendix I to this prospectus, our Dir ectors confirm that these transactions were
conducted on an arm’s length basis and carried out in the normal course of business.
FINANCIAL INFORMATION
–4 2 5–


--- page 435 ---
KEY FINANCIAL RATIOS
The following table sets out our key financ ial ratios for the years/period as at each of
the dates indicated:
For the year ended 31 December
For the
six months
ended
30 June
20232020 2021 2022
Gross profit margin (%) (1) 40.5 30.9 32.8 32.8
N e tp r o f i tm a r g i n( % )(2) 1.4 2.6 6.8 10.4
Return on equity (%) (3) 2.5 6.9 15.2 11.0
Return on total assets (%) (4) 0.5 1.4 3.0 2.3
As at 31 December
As at
30 June
20232020 2021 2022
Current ratio (times) (5) 0.9 0.9 1.0 1.1
Quick ratio (times) (6) 0.8 0.7 0.9 1.0
Gearing ratio (%) (7) 74.0 74.8 75.1 74.6
Risk assets to equity ratio
(times) (8) 4.6 4.8 4.7 4.4
Non-performing asset ratio
(%)(9) 0.7 0.7 0.7 0.8
Allowance coverage ratio for
non-performing assets (%) (10) 134.3 126.5 127.5 108.0
Ratio of allowance for
impairment losses to net
finance lease receivables
(%)
(11) 0.9 0.8 0.9 0.8
Capital adequacy ratio (12) 83.8% 83.1% 84.9% 89.3%
Liquidity ratio
(due in one month) (13) 142.3% 118.1% 116.2% 115.8%
Notes:
(1) Gross profit margin represents gross profit divid ed by revenue for the respective year and multiplied
by 100%. See ‘‘Financial Information — Review o f Historical Results of Operation’’ for more
details on our gross profit margin.
(2) Net profit margin represents profit for the respective year divided by revenue for the respective year
and multiplied by 100%. See ‘‘Financial Informat ion — Review of Historical Results of Operation’’
for more details on our net profit margin.
(3) Return on equity represents profit for the respect ive year/period divided by the total equity as at the
respective dates and multiplied by 100%.
FINANCIAL INFORMATION
–4 2 6–


--- page 436 ---
(4) Return on total assets represents profit for the re spective year/period divided by the total assets as at
the respective dates and multiplied by 100%.
(5) Current ratio represents total current asset s divided by the total current liabilities as at the
respective dates.
(6) Quick ratio represents total current assets less inv entories divided by the total current liabilities as at
the respective dates.
(7) Gearing ratio represents net debt divided by total capital. Net debt is calculated as total borrowings
(including borrowings, and lease liabilities) less cash and cash e quivalents. We do not consider the
amount of ordinary shares with re demption right when calculating net debt. Total capital is
calculated as ‘total equity’ as shown in the consol idated statement of financial position plus net
debt.
(8) Risk assets to equity ratio represents risk assets divided by total equity as at the respective dates.
Risk assets are the total amount of residual assets determined by deducting cash, bank deposit, PRC
treasury securities and entrusted leased assets from the total assets.
(9) Non-performing asset ratio represents the perce ntage of non-performing assets in the total finance
lease receivables, net, before deducting allowanc e for impairment of finance lease receivables.
(10) Allowance coverage ratio for non- performing assets represents allowance for impairment of finance
lease receivables divided by the balance of non-performing assets.
(11) Ratio of allowance for impairment losses to net fi nance lease receivables represents allowance for
impairments of finance lease receivables divided b y the amount of net finance lease receivables as at
the respective dates.
(12) Capital adequacy ratio represents total capital d ivided by risk assets as at the respective dates. Total
capital is calculated as ‘total equity’ as shown in t he consolidated statemen t of financial position
plus net debt. Net debt is calculated as total borrowin gs (including ‘‘borrowing s and lease liabilities’’
as shown in the consolidated statement of financi al position) less cash and cash equivalents. Risk
assets are the total amount of residual assets determined by deducting cash, bank deposit, PRC
treasury securities and entrusted leased assets from the total assets.
(13) Liquidity ratio due in one month represents fin ance lease receivables due in one month divided by
relevant borrowings under the automobile retail and finance segment as at the respective dates.
Return on equity
Our return on equity increased from 2.5% for the year ended 31 December 2020 to
6.9% for the year ended 31 December 2021 and 15.2% for the year ended 31 December
2022, primarily driven by the increase in net profit for the year ended 31 December 2021 and
2022, as compared to the year ended 31 December 2020 and 2021, respectively.
Return on total assets
Our return on total assets increased from 0.5% for the year ended 31 December 2020 to
1.4% and 3.0% for the year ended 31 December 2021 and 2022, primarily driven by the
increase in net profit for the year ended 31 December 2021 and 2022, as compared to the
year ended 31 December 2020 and 2021, respectively.
FINANCIAL INFORMATION
–4 2 7–


--- page 437 ---
Current ratio
Our current ratio remained relatively stable at 0.9 times, 0.9 times, 1.0 times and 1.1
times as at 31 December 2020, 2021, 2022 and 30 June 2023.
Quick ratio
Our quick ratio remained relatively stable at 0.8 times, 0.7 times, 0.9 times and 1.0
times as at 31 December 2020, 2021, 2022 and 30 June 2023, respectively.
Gearing ratio
Our gearing ratio remained relatively stable at 74.0%, 74.8%, 75.1% and 74.6% as at
31 December 2020, 2021, 2022 an d 30 June 2023, respectively.
Risk assets to equity ratio
On 26 May 2020, the CBIRC promulgated the Interim Measures for the Supervision
and Administration of Finance Lease Companies ( 《融資租賃公司監督管理暫行辦法》) (the
‘‘Interim Measures ’’) with the immediate effect, which made supplement and further
requirements for finance leas e enterprises on the basis of Measures for Finance Lease
Enterprises. Under the Interi m Measures, the total amount of risk assets of finance lease
companies shall not exceed eight times of their net assets (total equity).
Our risk assets to equity ratio remained relatively stable at 4.6 times, 4.8 times, 4.7
times and 4.4 times as at 31 December 2020, 2021, 2022 and 30 June 2023, respectively.
Non-performing asset ratio
Our non-performing asset ratio remained stable at 0.7%, 0.7%, 0.7% and 0.8% as at
31 December 2020, 2021, 2022 and 30 June 2023, respectively. According to the CIC
Report, the industry average non-performing asset ratios as at 31 December 2021 and 2022
were 1.5% and 2.0%, respectively. As such, our non-performing asset ratios as at 31
December 2021 and 2022 were lower than the industry average. As at the Latest Practicable
Date, our non-performing asset ratio was 0 .8%. Our non-performing asset is defined as
finance lease receivables that is overdue for three months or more.
Allowance coverage ratio for non-performing assets
Our allowance coverage ratio for non-per forming assets was 134.3%, 126.5% and
127.5% as at 31 December 2020, 2021 and 2022, respectively, primarily due to the increase
in finance lease receivables being overdue for over three months. Our allowance coverage
ratio for non-performing assets decreased to 108.0% as at 30 June 2023, mainly due to the
increase in finance lease receivables being over due for over three months.
FINANCIAL INFORMATION
–4 2 8–


--- page 438 ---
Ratio of allowance for impairment losses to finance lease receivables, net
Our ratio of allowance for impairment losses to net finance lease receivables remained
relatively stable at 0.9%, 0.8%, 0.9% and 0 .8% as at 31 December 2020, 2021, 2022 and 30
June 2023, respectively.
Capital adequacy ratio
Our capital adequacy ratios were at 83.8%, 83.1%, 84.9% and 89.3% as at 31
December 2020, 2021, 2022 and 30 June 2023, respectively.
Liquidity ratio due in one month
Our liquidity ratio due in one month decr eased from 142.3% as at 31 December 2020
to 118.1% as at 31 December 2021, mainly du e to the increased borrowings under the
automobile retail and finance segment whi ch was due in one month as at the respective
dates. Our liquidity ratio due in one month remained relatively stable at 116.2% and
115.8% as at 31 December 2022 and 30 June 2023.
QUANTITATIVE AND QUALITATIVE DI SCLOSURES ABOUT MARKET RISKS
We are exposed to a variety of financial risk including market risk (including currency
risk and cash flow and fair value interest risk) , credit risk and liquidity risk. Details of the
risks to which we are exposed are set out in note 3 to the Accountant’s Report in Appendix I
to this prospectus.
DIVIDENDS AND DIVIDEND POLICY
Our Company did not declare any dividend during the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023. The foregoing should not be viewed as
basis to determine the level of dividends that may be declared in the future. After the
completion of the Global Offering, our Share holders will be entitled to receive dividends
only when declared by our Board.
Our Directors may recommend a payment of dividends in the future after taking into
account, among others, our operation and earnings, capital requirements and surplus,
general financial condition, contractual restrictions, capital expenditure and future
development requirements, shareholders’ interests and other factors which they may
deem relevant at such time. Any declaration and payment as well as the amount of
dividends will be subject to our constitutional documents and the Cayman Companies Act.
Our Shareholders in a general meeting may approve any declaration of dividends, which
must not exceed the amount recommended by our Board. No dividend shall be declared or
payable except out of our profits and reserves law fully available for distribution. Our future
declarations of dividends may or may not reflect our historical declaration of dividends and
will be at the absolute discretion of the Board. Any distributable profits that are not
distributed in any given year will be retained and available for distribution in subsequent
years. To the extend profits are distributed as dividends, such portion of profits will not be
a v a i l a b l et ob er e i n v e s t e di no u ro p e r a t i o n s .
FINANCIAL INFORMATION
–4 2 9–


--- page 439 ---
There will be no assurance that we will be able to declare or distribute any dividend
after completion of the Global Offering, and as at the Latest Practicable Date, we did not
have any specific dividend policy nor pre-determined dividend payout ratio.
DISTRIBUTABLE RESERVES
Our Company was incorporated in the Cayman Islands and has not carried out any
business since the date of its incorporation, save for investment holding and the
transactions related to the Reorganisation. Accordingly, our Company had no reserve
available for distribution to the Shareholders as at the Latest Practicable Date.
LISTING EXPENSES
Our listing expenses mainly comprise pr ofessional fees paid and payable to the
professional parties for their services rendered in relation to the Listing and the Global
Offering. Listing expenses in connection wi th the Global Offering consist primarily of
underwriting commissions and professional fee s. We estimate that total expenses in relation
to the Listing (assuming an Offer Price of HK$1.205 per Offer Share, being the mid-point of
the indicative Offer Price range of HK$1.05 to HK$1.36 per Offer Share, and no exercise of
the Over-allotment Option) will be RMB 79.6 million, comprising (a) underwriting
commissions of approximat ely RMB4.7 million; (b) sponsor fees of RMB10.7 million;
and (c) non-underwriting related expenses o f approximately RMB64.2 million, including (1)
fees and expenses of legal advisers and the Reporting Accountant of approximately
RMB49.0 million; and (2) other fees and exp enses of approximately RMB15.2 million,
representing approximately 67.8% of the gross proceeds of the Global Offering (assuming
an Offer Price of HK$1.205 per Offer Share, being the mid-point of the indicative Offer
Price range of HK$1.05 to HK$1.36 per Offer Share, and no exercise of the Over-allotment
Option). Up to 30 June 2023, we incurred Lis ting expenses of RMB66.9 million, of which
(a) RMB42.5 million was charged to our adminis trative expenses during the Track Record
Period; (b) RMB17.4 million was charged to our ad ministrative expenses prior to the Track
Record Period; and (c) RMB7.0 million will be deducted from equity upon Listing. We
expect to incur additional Listing expens es of RMB12.7 million, of which RMB6.4 million
expected to be recognised as administrati ve expenses and RMB6.3 million (together with
the previously incurred Listing expenses recorded as prepayment) expected to be recognised
as a deduction in equity for the year ending 31 December 2023. The listing expenses directly
attributable to the issue of our shares will be deducted from equity upon listing.
UNAUDITED PRO FORMA ADJUSTED NET TANGIBLE ASSETS
Please refer to section headed ‘‘Unaudited pro forma financial information’’ in
Appendix II to this prospectus for details.
DISCLOSURE UNDER RULES 13.13 TO 13.19 OF THE LISTING RULES
Our Directors confirm that as at the Latest Practicable Date, there was no
circumstance that would give rise to a disclosure requirement under Rules 13.13 to 13.19
of the Listing Rules.
FINANCIAL INFORMATION
–4 3 0–


--- page 440 ---
RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE
For the recent development, subsequent to the Track Record Period and up to the date
of this prospectus, see ‘‘Summary — Recent Dev elopment and No Material Adverse Change
— Recent Development’’.
Our Directors confirm that after perfor ming all the due diligence work which our
Directors consider appropriate, save as disclosed in ‘‘Summary — Recent Development and
No Material Adverse Change — No Material Adverse Change’’, there had been no material
adverse change in our financial or trading position or prospects since 30 June 2023 and up
to the date of this prospectus, and that there has been no event since 30 June 2023 which
would materially affect the information shown in the Accountant’s Report, the text of
which as set out in Appendix I to this prospectus. Our Directors also confirm that there has
not been any material change in our indebtedne ss and contingent liabilities since 30 June
2023.
FINANCIAL INFORMATION
–4 3 1–


--- page 441 ---
FUTURE PLANS
See ‘‘Business — Our Strategies’’ for a detailed description of our future plans.
REASONS FOR THE LISTING
We apply for the Listing as part of our efforts to foster our growth to the next stage
and strengthen our competitive position in the PRC’s automobile retail, finance, operating
lease and service market. In particular, we b elieve that the Listing will (i) broaden our
access to international capital markets so th at we may raise capital more efficiently both
upon and after the Listing to support our growth instead of primarily relying on debt
financing; (ii) promote our public profile and v isibility in the domestic market so that we
may attract more consumers; and (iii) enable us to offer publicly tradable shares under the
Share Option Scheme to attract and retain talents whose contribution are or will be
beneficial to the long-term growth of our Group. In addition, we choose Listing in Hong
Kong because Hong Kong is a strategic gateway to access both the high-growth PRC
market where we currently operate our business and the international capital markets that
broadens our access to capital.
In view of the above, although our Group had sufficient financial resources to meet the
working capital requirements during the Track Record Period, our Directors consider that
it is strategically and commercially justifiabl e to pursue the Listing and the Global Offering,
and the net proceeds from the Global Offeri ng are required and necessary to finance the
implementation plan as well as the future growth and expansion of our Group.
USE OF PROCEEDS
The estimated net proceeds of the Global Offering, after deducting underwriting fees
and estimated total expenses paid and payable by us in connection thereto, are estimated to
be HK$40.0 million (equivalent to RMB37.7 million) before any exercise of the
Over-allotment Option, assuming the Offer Price of HK$1.205 per Offer Share, being the
mid-point of the indicative Offer Price range from HK$1.05 to HK$1.36 per Offer Share.
We intend to use the net proceeds of the Global Offering for the following purposes:
. HK$28.7 million (equivalent to RMB27.0 million or approximately 71.6% of our
estimated net proceeds) for purchasing automobiles, so as to increase our revenue.
We normally formulate procurement plans in relation to the models and quantity
of the automobiles based on the market demand and conditions at the material
time with reference to sales review and feedbacks from sales outlets managers. In
general, as confirmed by our Directors, we are inclined to focus most of our
resources in procuring automobiles of a pproximately 10 brands, with a view to
maximising our bargaining power to obtain more favourable terms and offers and
ensure stable supply from our automobile suppliers. The brands we intended to
procure include NISSAN ( 東風日產), Volkswagen ( 上汽大眾), TOYOTA ( 一汽豐
田), CHERY ( 奇瑞汽車), Hyundai ( 北京現代), BAIC Motor ( 北京汽車), JAC ( 江
汽集團), AEOLUS ( 東風風神) and BAIC BJEV ( 北汽新能源). We will select
vehicle models based on the customers’ demand in the prevailing market
accordingly. In terms of vehicle usage, 80% of automobiles to be purchased will
FUTURE PLANS AND USE OF PROCEEDS
–4 3 2–


--- page 442 ---
be utilised for our automobile retail and f inance business as passenger vehicles,
and the remaining 20% will be utilised fo r our e-hailing operating lease business.
Of the new automobiles to be acquired, (i ) approximately 80% of the automobiles
are fossil fuel automobiles and (ii) the remaining approximately 20% of the
automobiles are new energy automobiles.
The net proceeds earmarked for purchasing new automobiles are for financing
part of our automobile procurement n eeds in 2023. We plan to utilise the net
proceeds to acquire 217 new automobiles for our automobile retail and finance
business, representing approximately 3% of the total number of new automobiles
sold under finance lease for the year ended 31 December 2022, and 54 new
automobiles for our operating lease business, representing approximately 1% of
the total number of automobiles under our operating lease business as at 31
December 2022. Having considered that, among other things, according to CIC,
(i) the loan volume of direct finance lease market in China is expected to reach 0.6
million units in 2027, representing a C AGR of 15.6% from 2022 to 2027; and (ii)
the market size of automobile operating lease market in China in terms of gross
merchandise volume is projected to increase to RMB82.6 billion in 2027,
representing a CAGR of 5.4% from 2022 to 2027, our Directors believe that
our procurement plan is supported by mar ket demand and the net proceeds from
the Global Offering will help strengthen our financial resources in purchasing
more automobiles to captu re the potential growth in the automobile retail and
finance market and the automobile operating lease market;
For the years ended 31 December 2020 and 2021, we purchased 232 units and 51
units of new energy automobiles, respect ively, mainly operated as e-hailing
operating lease. For the year ended 31 December 2022, we purchased 1,445 units
of new energy automobiles mainly operate d as e-hailing operating lease, and 164
units of new energy automobiles for our automobile retail and finance business.
The table below sets out the revenue from our new energy vehicles, including
brand new vehicles and repossessed vehicles, under automobile retail and finance
and automobile-related businesses, and the revenue share of the corresponding
segment for the years/periods indicated:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % (Note) RMB’000 % (Note) RMB’000 % (Note) RMB’000 % (Note) RMB’000 % (Note)
(unaudited)
Automobile retail and finance
Sales of automobile under
finance lease — — — — 16,982 2.3 2,937 0.9 3,403 0.9
Finance lease income 5,173 2.2 1,879 0.8 3,461 1.3 1,959 1.5 10,410 7.0
Automobile-related businesses
New energy car-sharing 5,166 100.0 3,959 100.0 791 100.0 749 100.0 — —
e-hailing operating lease 95,781 82.1 106,800 80.4 97,203 83.8 52,741 81.8 48,883 92.5
Total 106,120 14.2 112,638 9.6 118,437 10.4 58,386 10.8 62,696 10.4
Note: The percentage represents the revenue sh are of the corresponding segment for the
years/periods indicated.
FUTURE PLANS AND USE OF PROCEEDS
–4 3 3–


--- page 443 ---
With respect to the ESG-related risk man agement of the aforesaid procurement
strategy, our Group anticipates that the market sentiment would shift towards
environmentally friendly products in the foreseeable future. According to the
statistics published by the Ministry of Public Security of the People’s Republic of
China on 11 January 2023, the ownership of new energy vehicles recorded a
67.13% year-on-year growth in 2022, accoun ting for approximately 23.05% of the
total number of newly-registered automobiles during the year. Our Directors
believe that offering electric automobiles on a wide scale would allow our Group
to gain an early foothold in the electric automobile retail market. Furthermore,
our Group believes that there is low risk associated with this strategy as our
Directors are of the view that the shift in customer preference for more
environmentally friendly products shall be of increasing prevalence and
long-lasting in light of the regulatory environment, as such the stock of electric
automobiles procured by our Group can be sold or leased to customers in a
reasonable time frame to generate profit. As advised by CIC, according to the
report released by China Association o f Automobile Manufactures (CAAM) on
12 January 2023, the sales of new energy passenger vehicles has reached 6.5
million units in 2022, a 96.7% increase as compared to 2021, accounting for
approximately 27.7% of the total number of automobiles sold in 2022. It is
expected that the sales volume of new energy passenger vehicles will exceed 20
million units in 2027 and account for over 7 0% of the sales volume of automobiles
in 2027, driven by the promotion of new energy vehicles industry in China and
consumers’ growing preferences for new energy vehicles. In view of the above, our
Directors are of the view that there is sufficient demand for the new energy
automobiles both in automobile retail and finance business and e-hailing
operating lease business. Our Directors are therefore optimistic about the new
business opportunities in automobile retail and finance and e-hailing operating
lease that new energy automobiles could bring to us.
In addition, since Scope 1 and Scope 2 emissions do not include any downstream
emissions from sold or leased automobiles, the changes in our Group’s vehicle
procurement strategy might only have little impact on achieving our Group’s
emissions targets. The proposed further procurement of electric automobiles is in
line with and forms part of our Group’s management strategy to mitigate the
impacts resulted from greenhouse gases emissions. Our Group expects that by
offering more electric automobiles which cater to changing customer preferences
for electric vehicles and hybrids, our Gro up may maintain its competitiveness in
the automobile market and better manage th e transition risks related to climate
change.
. HK$11.3 million (equivalent to RMB10.7 million or approximately 28.4% of our
estimated net proceeds) for expanding our sales network to increase market
penetration.
FUTURE PLANS AND USE OF PROCEEDS
–4 3 4–


--- page 444 ---
Our self-operated sales outlets play a n important part to reach out to our
potential customers and to sell automobile s on direct finance lease. Our Directors
believe that it is common for customers to purchase automobiles in their local
cities or in close proximity for convenience sake. It would be difficult for us to
reach out to our potential customers in cities where we have little or no presence.
Therefore, we plan to continue to focus on tier two, tier three and below cities and
open new sales outlets in these cities. A ccording to CIC Report, the sales volume
of new automobiles in tier two and tier three and below cities amounted to
approximately 20.9 million units in 2022, representing approximately 88.8% of
the sales volume of new automobiles in China in 2022. The sales volume of new
automobiles in tier two, and tier three a nd below cities are projected to grow at
CAGR of 5.3% and 5.5% respectively from 2022 to 2027. In 2022, the loan
volume of retail automobile finance lease in tier two and tier three and below
cities reached 1.7 million units, representing nearly 91% of the total loan volume
of the retail automobile finance lease in China for the same year. In order to
capture the growth of the market, our Direc tors believe that it is in the interests of
our Group to open new outlets in tier two, and tier three cities and below where
we have little or no presence.
The table below sets out the expected imp lementation timetable of our business
plans and planned use of our net proceeds:
Expected periods of allocation of the Net Proceeds
From the
date of the
Listing to
June
2024
From July
2024 to
December
2024
From
January
2025 to
June
2025 Total
The number of automobiles to be
procured 271 — — 271
The number of sales outlets to be opened 8 3 — 11
Funding requirements:
Purchase of automobiles (RMB’000) 27,046 — — 27,046
Expansion of sales network (RMB’000) 3,735 3,722 3,246 10,703
— Purchase of office equipment and
renovation costs of sales outlets
(RMB’000) 1,150 431 — 1,581
— Rental and utility expenses
(RMB’000) 1,781 2,233 2,052 6,066
— Staff costs (RMB’000) 804 1,058 1,194 3,056
Total (RMB’000) 37,749
FUTURE PLANS AND USE OF PROCEEDS
–4 3 5–


--- page 445 ---
Our Directors have identified various provinces of the PRC in which we plan to
open our new sales outlets, including Guangxi, Shanxi, Hunan, Sichuan,
Shandong, Jiangxi, Anhui and Yunnan Provinces, with reference to the market
condition and our historical sales in th e same provinces and municipalities. In
selecting an appropriate city for opening a new sales outlet, we will carefully
evaluate various factors including t he respective city size, population
composition, level of economic devel opment, GDP, the development of urban,
commercial and transportation infrastru cture, the number of automobile agents,
the number of competitors, the living standard and consumption expenditure level
of the local residents therein.
Upon deciding an appropriate city, we will choose the location of the new sales
outlet based on the composition, consumption pattern and consumption level of
the target customer group, the pedestrian traffic, the available size and the rental
costs of the store, and whether there are any car parks and competitors in the
neighbourhood.
To ensure consistency of the image of our Group, we will generally adopt the
uniform standard in configuration and decoration of the new sales outlets. We
expect the size of the new sales outlets will range from approximately 90 to 250
sq.m. each.
The opening of each new sales outlet will require an average capital expenditure of
approximately RMB143,700 and the estimated monthly operating costs, including
fixed cost such as rental and utility expenses, is expected to be approximately
RMB33,200 for each new sales outlet.
To support the business expansion of the new sales outlets, we plan to recruit
approximately 7 additional sales staff for each new sales outlet, with proposed
salary ranging from RMB1,500 to RMB3, 000 per month, plus additional sales
commission. The employees would be required to have the minimum academic
qualification of high school education. The estimated monthly staff cost for each
new sales outlet is expected to be approximately RMB19,600.
We expect that the new sales outlets will have a breakeven period of
approximately three months and an investment payback period of
approximately five months. Please refer to ‘‘Business — Our Strategies —
Expand our sales network to increase our market penetration’’ for details.
Our expected budget investment for opening 11 new sales outlets and recruiting
approximately 77 total additional sales staff in the tier two cities, and tier three
and below cities in the coming two years upon the Listing is approximately
RMB10.7 million.
FUTURE PLANS AND USE OF PROCEEDS
–4 3 6–


--- page 446 ---
If the Offer Price is fixed at HK$1.36 per Share, being the high-end of the indicative
Offer Price range, and given that the Over-allotment Option is not exercised, we will receive
additional net proceeds of HK$15.3 million. If the Offer Price is fixed at HK$1.05 per
Share, being the low-end of the indicative Offer Price range, and given that the
Over-allotment Option is not exercised, th e net proceeds we receive will be reduced by
HK$15.4 million. We intend to apply the addi tional amounts to, or reduce the amounts
allocated to, purchase automobiles while maintaining aboveme ntioned automobile
procurement ratio.
If the Over-allotment Option is exercised in full, we estimate that the additional net
proceeds from the offering of these additi onal Shares will be HK$17.9 million, after
deducting the underwriting commissions and other estimated expenses payable by us in
connection with the Global Offering, assuming an Offer Price of HK$1.205 per Share, being
the mid-point of the indicative Offer Price range. We intend to apply the additional
amounts to purchase automobiles and maintaining abovementioned automobile
procurement ratio.
To the extent that the net proceeds of the Global Offering are not immediately applied
to the disclosed purposes and to the extent permitted by the relevant laws and regulations,
we will only deposit the unused net proceeds in to short-term interest-bearing accounts at
licensed commercial banks and/or other authori sed financial institutions (as defined under
the SFO or the Law of the People’s Republic of China on Commercial Banks ( 《中華人民共
和國商業銀行法》)).
FUTURE PLANS AND USE OF PROCEEDS
–4 3 7–


--- page 447 ---
HONG KONG UNDERWRITERS
Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and Joint Lead
Manager
Quam Securities Limited
Joint Bookrunners and Joint Lead Managers
CCB International Capital Limited
China Galaxy International Securities (Hong Kong) Co., Limited
CMB International Capital Limited
Eddid Securities and Futures Limited
Fortune (HK) Securities Limited
Innovax Securities Limited
Livermore Holdings Limited
Luk Fook Securities (HK) Limited
Shenwan Hongyuan Securities (H.K.) Limited
SPDB International Capital Limited
ZMF Asset Management Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering
10,312,500 Hong Kong Offer Shares for subscription by the public in Hong Kong on, and
subject to, the terms and conditions set out in this prospectus and the Application Form.
Subject to:
(a) the Stock Exchange granting the listing of, and permission to deal in, our Shares
in issue and to be issued as mentioned in this prospectus and such listing and
permission not subsequently being revoked; and
(b) certain other conditions set out in the Hong Kong Underwriting Agreement,
the Hong Kong Underwriters have agreed severally, and not jointly, to subscribe for, or
procure subscribers for, the Hong Kong Offer Shares which are being offered but are not
taken up under the Hong Kong Public Offering, on the terms and conditions set out in this
prospectus and the Application Form and the Hong Kong Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional upon and subject to the
International Underwriting Agreement hav ing been signed and becoming unconditional
and not having been terminated.
UNDERWRITING
–4 3 8–


--- page 448 ---
Grounds for termination
The respective obligations of the Hong Kong Underwriters to subscribe or procure
subscribers for the Hong Kong Offer Shares under the Hong Kong Underwriting
Agreement are subject to termination. The Sole Overall Coordinator (for itself and on
behalf of the other Hong Kong Underwrite rs) will, subject to the consent of the Sole
Sponsor, be entitled to terminate the Hong Kong Underwriting Agreement with immediate
effect by notice (orally or in writing) to our Co mpany, if prior to 8 : 00 a.m. on the Listing
Date:
(a) there shall develop, occur, exist or come into effect:
(i) any event, or series of events, in the nature of force majeure (including,
without limitation, any acts of government or orders of any courts,
declaration of a national or international emergency or war, calamity,
crisis, epidemic, pandemic, outbreak of disease, economic sanctions, strikes,
lock-outs, fire, explosion, flooding, e arthquake, nuclear leakage, volcanic
eruption, civil commotion, riots, public disorder, acts of war, outbreak or
escalation of hostilities (whether or not war is declared), acts of God or acts
of terrorism) in or affecting Hong Kong, the PRC, the BVI or the Cayman
Islands (together, the ‘‘ Specific Jurisdictions ’’); or
(ii) any change or any development involving a prospective change, or any event
or series of events likely to result in any change or development or a
prospective change, in any local, regional, national, or international
financial, economic, political, milita ry, industrial, fiscal, regulatory,
currency, credit or market conditio ns (including, without limitation,
conditions in any stock and bond mark ets, money and foreign exchange
markets, the interbank markets and credit markets) in or affecting the
Specific Jurisdictions; or
(iii) any new law or any change or any d evelopment involving a prospective
change or any event or circumstance likely to result in a change in existing
laws or development involving a prospective change in (or in the
interpretation or application by any court or other competent authority in
or affecting the existing laws of the Specific Jurisdictions; or
(iv) any moratorium, suspension or restrict ion (including, wit hout limitation, any
imposition of or requirement for any minimum or maximum price limit or
price range) in or on trading in securi ties generally on the Stock Exchange,
the New York Stock Exchange, the NASDAQ Global Market, the London
Stock Exchange, the Shanghai Stock Exchange or the Shenzhen Stock
Exchange; or the imposition of any general moratorium on commercial
banking activities in the Specific Jurisdictions declared by the relevant
authorities or any disruption in commercial banking or foreign exchange
trading or securities settlement or clearance services or procedures in any of
the Specific Jurisdictions; or
UNDERWRITING
–4 3 9–


--- page 449 ---
(v) the imposition of economic sanctions, in whatever form, directly or
indirectly, by or on any of the Specific Jurisdictions; or
(vi) a change or development involving a prospective change in or affecting
taxation or exchange control, currency exchange rates or foreign investment
laws (including, without limitation, a material devaluation of the Hong Kong
dollars or the Renminbi against any foreign currencies), or the
implementation of any exchange control, in any of the Specific
Jurisdictions or adversely affecting an investment in the Shares; or
(vii) any change or development involving a prospective change, or a
materialisation of, any of the risk s set out in the section headed ‘‘Risk
Factors’’ in this prospectus; or
(viii) any litigation or claim of any third party being instigated against any
member of the Group; or
(ix) any of the Directors or senior management member of the Company (as
disclosed in this prospectus) being c harged with an indictable offence or
prohibited by operation of Law or otherwise disqualified from taking part in
the management of a company; or
(x) the chairman or chief executive o fficer or financial controller of the
Company vacating his/her office; or
(xi) the commencement by any governmental, regulatory or political body or
organisation in any relevant jurisdic tion commencing any investigation or
taking other action, against any Director or such an announcement by any
governmental, regulatory or political body or organisation that it intends to
take any such action; or
(xii) save as disclosed in this prospectu s, a contravention by any member of the
Group of the Listing Rules or applicable laws; or
(xiii) non-compliance of this prospectus (or any other documents used in
connection with the contemplated offer of the Shares) or any aspect of the
Global Offering with the Listing Rules or any other applicable laws; or
(xiv) the issue or requirement to issue by the Company of any supplement or
amendment to this prospectus (or to an y other documents used in connection
with the contemplated offer of the Shares) pursuant to the Companies
(Winding Up and Miscellaneous) Ordinance or the Listing Rules or any
requirement or request of the Stock Exchange and/or the SFC without the
prior written consent of the Sole Sponsor and the Sole Overall Coordinator;
or
UNDERWRITING
–4 4 0–


--- page 450 ---
(xv) any breach of any of the obligations imposed upon any party to the Hong
Kong Underwriting Agreement or the International Underwriting Agreement
(other than upon any of the Sole Sponsor or the Underwriters); or
(xvi) any event, act or omission which gives rise to any liability of any of the
warrantors under the Hong Kong Underw riting Agreement pursuant to the
indemnities contained therein; or
(xvii) any adverse change, or any development involving a prospective adverse
change or development in conditions, in the assets, liabilities, business
affairs, management, prospects, shareholders’ equity, profits, losses, results
of operations, position or condition, financial or otherwise, or performance
of any member of the Group; or
(xviii) any loss or damage has been sustained by any member of the Group
(howsoever caused and whether or not the subject of any insurance or claim
against any person) which is considered by the Sole Overall Coordinator (for
itself and on behalf of the other Hong Kong Underwriters) in its sole
absolute opinion to be material; or
(xix) any breach of any warranties under the Hong Kong Underwriting Agreement
or any event or circumstances rendering such warranties be or would be when
repeated untrue, incorrect or misleading in any material respect; or
(xx) a valid demand by any creditor for repayment or payment of any
indebtedness of the Company or any of its Subsidiaries or in respect of
which the Company or any of its subsidiaries is liable prior to its stated
maturity; or
(xxi) a petition or an order for the winding-up of any member of the Group or any
composition or arrangement made by any member of the Group with its
creditors or a scheme of arrangement entered into by any member of the
Group or any resolution for the winding-up of any member of the Group or
the appointment of a provisional liquidator, receiver or manager over all or
part of the assets or undertaking of any member of the Group or anything
analogous thereto occurring in respect of any member of the Group,
which, individually or in the aggregate, in the sole opinion of the Sole Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters):
(1) has or will have or is likely to have a material adverse effect on the
assets, liabilities, business, gene ral affairs, management, prospects,
shareholders’ equity, profits, losse s, results of operations, position or
condition, financial or otherwise, or performance of the Company or
any of its subsidiaries taken as a whol e or prospective shareholder of the
Company in his, her or its capacity as such; or
UNDERWRITING
–4 4 1–


--- page 451 ---
(2) has or will or is likely to have a material adverse effect on the success,
marketability or pricing of the G lobal Offering or the number of
applications under the Hong Kong Public Offering or the level of
interest under the International Placing; or
(3) makes or will make or is likely to mak e it inadvisable or inexpedient or
impracticable for the Global Offering to proceed; or
(4) has or will have or is likely to have the effect of making any part of the
Hong Kong Underwriting Agreement (including underwriting)
incapable of performance in accordance with its terms or preventing
the processing of applications and/or payments pursuant to the Global
Offering or pursuant to the underwriting thereof; or
(b) there has come to the notice of the Sole Overall Coordinator:
(i) that any statement contained in the Hong Kong Public Offering Documents,
the Formal Notice issued or used by or on behalf of the Company in
connection with the Hong Kong Public Offering (the ‘‘ HKPO Documents ’’)
and/or in any notices, announcements, advertisements, communications or
other documents issued or used by or on behalf of the Company in
connection with the Hong Kong Public Offering (including any supplement
or amendment thereto) was, when it was issued, or has become, untrue or
incorrect in any material respect or misleading, or that any forecast, estimate,
expression of opinion, intention or expectation contained in any of the
HKPO Documents is not fair and honest and based on reasonable
assumptions, when taken as a whole; or
(ii) a portion of the orders in the book building process, which is considered by
the Sole Overall Coordinator (for itself and on behalf of the other Hong
Kong Underwriters) in its absolute op inion to be material, at the time the
International Underwriting Agreement is being entered into, have been
withdrawn, terminated or cancelled, and the Sole Overall Coordinator, in its
sole and absolute discretion, conclude that it is therefore inadvisable or
inexpedient or impracticable to proceed with the Global Offering; or
(iii) that any matter has arisen or has been discovered which would, had it arisen
or been discovered immediately before the date of this prospects, constitute
an omission from any of the HKPO Documents and/or in any notices,
announcements, advertisements, communications or other documents
including any supplement or amendment thereto; or
(iv) a prohibition on the Company for wha tever reason from offering, allotting,
issuing or selling any of the Offer Share s (including Shares to be allotted and
issued under the Over-allotment Option) pursuant to the terms of the Global
Offering; or
UNDERWRITING
–4 4 2–


--- page 452 ---
(v) that any person (other than the Sole Overall Coordinator, the Sole Sponsor
or any of the Hong Kong Underwriters) has withdrawn or sought to
withdraw its consent to being named in any of this prospectus, the
Application Form and any other document issued, given or used by or on
behalf of our Company in connection with the contemplated offering of the
Offer Shares or otherwise in connection with the Global Offering, including,
without limitation, any roadshow materials relating to the Offer Shares and,
in each case, all amendments or supplements thereto (the ‘‘ Offering
Documents ’’) or to the issue of any of the Offering Documents; or
(vi) approval by the Stock Exchange of the listing of, and permission to deal in,
the Shares to be issued or sold (including any additional Shares that may be
issued pursuant to the exercise of the Over-allotment Option) under the
Global Offering is refused or not granted, other than subject to customary
conditions, on or before the Listing Date, or if granted, the approval is
subsequently withdrawn, qualified (other than by customary conditions) or
withheld; or
(vii) the Company withdraws this prospectus (and/or any other documents issued
or used in connection with the Global Offering) or the Global Offering.
Undertakings given to the Stock Exchange pursuant to the Listing Rules
By our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock
Exchange that within six months from the Li sting Date, no further Shares or securities
convertible into equity securities of our Company (whether or not of a class already listed)
may be issued or form the subject of any agreement to such an issue (whether or not such
issue of Shares will be completed within six months from the Listing Date), except for the
Offer Shares to be issued pursuant to the Global Offering, any Shares which may be issued
pursuant to the Capitalisation Issue or upon the exercise of the options granted pursuant to
IPO Share Scheme or under any of the circumstances provided under Rule 10.08 of the
Listing Rules.
Undertakings given to the Hong Kong Underwriters
Undertakings by our Company
Our Company has undertaken to each of the Sole Sponsor, the Sole Overall
Coordinator, the Joint Bookrunners, the Joint Lead Managers and the Hong Kong
Underwriters that except for t he Capitalisation Issue, the offer of the Offer Shares pursuant
to the Global Offering (including the grant o f, and the allotment and issue of the Shares
pursuant to the exercise of the Over-allotment Option) and the grant of, and the allotment
and issue of Shares pursuant to the exercise of any option granted under the Pre-IPO Share
Option Scheme or which may be granted under the Share Option Scheme, respectively,
during the period commencing on the date of the Hong Kong Underwriting Agreement and
UNDERWRITING
–4 4 3–


--- page 453 ---
ending on, and including, the date that is six months after the Listing Date (the ‘‘ First
Six-Month Period ’’), we will not without the prior written consent of the Sole Sponsor and
the Sole Overall Coordinator (for itself and on behalf of the other Hong Kong
Underwriters) and unless in compliance with the requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription fo r, offer to allot, issue or sell, contract or
agree to allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or
sell any option, warrant, contract or right to subscribe for or purchase, grant or
purchase any option, warrant, contract or right to allot, issue or sell, or otherwise
transfer or dispose of or create any mortgage, charge, pledge, lien or other
security interest or any option, restriction, right of first refusal, security interest,
claim, right of pre-emption, equity interest or other third party claim, right,
interest or preference of the same nature as that of the foregoing or any other
encumbrance or security interest of any kind or another type of preferential
arrangement (including without limitatio n, retention arrangement) having similar
effect (‘‘Encumbrance ’’) over, or agree to transfer or dispose of or create an
Encumbrance over, either directly or indirectly, conditionally or unconditionally,
any Shares or other securities of our Company or any interest in any of the
foregoing (including, without limitatio n, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any
other warrants or other rights to purchase, any Shares or any shares of such other
member of the Group, as applicable), or deposit any Shares or other securities of
our Company with a depositary in connection with the issue of depositary
receipts; or repurchase any Shares or other securities of our Company; or
(b) enter into any swap or other arrangemen t that transfers to another, in whole or in
part, any of the economic consequences of ownership of any Shares or other
securities of our Company or any interest in any of the foregoing (including,
without limitation, any securities convert ible into or exchangeable or exercisable
for or that represent the right to receive, or any warrants or other rights to
purchase, any Shares or other securities of our Company); or
(c) enter into any transaction with the s ame economic effect as any transaction
specified in (a) or (b) above; or
(d) offer to or agree to or announce any intention to effect any transaction specified
in (a), (b) or (c) above,
in each case, whether any of the transactions specified in paragraph (a), (b) or (c) above is
to be settled by delivery of Shares or such other securities of our Company or in cash or
otherwise (whether or not the issue of such Shares or other shares or securities will be
completed within the First Six-Month Period) or publicly disclose that the Group will or
may enter into any transaction described above.
In the event that, at any time during the period of six-months immediately following
the expiry of the First Six-month Period (the ‘‘ Second Six-Month Period ’’), our Company
enters into any of the transactions specified i n (a), (b), (c) or (d) above or offers to or agrees
UNDERWRITING
–4 4 4–


--- page 454 ---
to or announces any intention to effect any such transaction, our Company shall take all
reasonable steps to ensure that it will not create a disorderly or false market for any of the
Shares or other securities of our Company.
By Mr. Huang
Mr. Huang has undertaken to each of our Company, the Sole Sponsor, the Sole
Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead
Managers and the other Hong Kong Underwriters that, except pursuant to the Stock
Borrowing Agreement:
(a) at any time during the First Six-Month Period, he shall not, and shall procure that
the relevant registered holder(s) and his associates and companies controlled by
him and any nominee or trustee holding on trust for him and the companies
controlled by him (together, the ‘‘ Controlled Entities ’’) shall not,
(i) sell, offer to sell, contract or agree to sell, mortgage, charge, pledge,
hypothecate, lend, grant or sell any option, warrant, contract or right to sell,
or otherwise transfer or dispose of or create an Encumbrance over, or agree
to transfer or dispose of or create an Encumbrance over, either directly or
indirectly, conditionally or unconditionally, any Shares or any other
securities of our Company or any interest therein (including, without
limitation, any securities convertible into or exchangeable or exercisable
for, or that represent the right to receive, or any warrants or other rights to
purchase, any Shares) legally and/or beneficially owned by him directly or
indirectly through his C ontrolled Entities (the ‘‘ Relevant Securities ’’), or
deposit any Relevant Securities with a dep ositary in connection with the issue
of depositary receipts; or
(ii) enter into any swap or other arrangement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Relevant
Securities, whether any of the foregoing transactions is to be settled by
delivery of the Shares or such other securities, in cash or otherwise (whether
or not the issue of such Shares or other securities will be completed within the
First Six-Month Period); or
(iii) agree (conditionally or unconditionally) to enter into or effect any
transaction with the same economic effect as any of the transactions
referred to in sub-paragraphs (i) or (ii) above; or
(iv) offer to or agree to or announce any intention to enter into or effect any of
the transactions referred to in sub-paragraphs (i), (ii) or (iii) above.
(b) during the second Six-Month Period, he shall not, and shall procure that the
relevant registered holder(s) and their respective associates or companies
controlled by him and any nominee or tru stee holding in trust for him shall
not, without the prior written consent of the Sole Sponsor and the Sole Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters) and unless
UNDERWRITING
–4 4 5–


--- page 455 ---
in compliance with the Listing Rules, dis pose of, nor enter into any agreement to
dispose of or otherwise create any options, rights, interests or encumbrances in
respect of, any Relevant Securities held by him or any of his associates or
companies controlled by him or any nominee or trustee holding in trust for him if,
immediately following such disposal or upon the exercise or enforcement of such
options, rights, interests or encumbrances, he would cease to be the single largest
Shareholder.
(c) in the event of a disposal of any Relevant Securities or our Company’s securities
or any interest therein within the Second Six-Month Period, he shall take all
reasonable steps to ensure that such a disposal shall not create a disorderly or
false market for any Shares or other securities of our Company; and
(d) he shall, and shall procure that his associates and companies controlled by and
nominees or trustees holding in trust for him shall, comply with all the restrictions
and requirements under the Listing Rules on the sale, transfer or disposal by him
or by the registered holder controlled by him of any Shares.
Mr. Huang has further undertaken to each of our Company, the Sole Sponsor, the Sole
Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead
Managers and the other Hong Kong Underwriters that, from the date of the Hong Kong
Underwriting Agreement up to the expiry of th e first twelve months from the Listing Date,
he will:
(i) when he pledges or charges any securities or interests in the Relevant Securities,
immediately inform our Company, the Sole Overall Coordinator (for itself and on
behalf of the Underwriters) and the Sole Sponsor in writing of such pledges or
charges together with the number of securities and nature of interest so pledged or
charged; and
(ii) when he receives indications, either verbal or written, from any pledgee or chargee
that any of the pledged or charged securiti es or interests in the securities of our
Company will be sold, transferred or disposed of, immediately inform our
Company, the Sole Overall Coordinator (for itself and on behalf of the
Underwriters) and the Sole Sponsor in writing of such indications.
For the avoidance of doubt, the above shall not prevent Mr. Huang from using the
Relevant Securities as security (including a charge or a pledge) in favor of an authorized
institution (as defined in the Banking Ordinance (Chapter 155 of the Laws of Hong Kong))
for a bona fide commercial loan.
UNDERWRITING
–4 4 6–


--- page 456 ---
Underwriters’ interests in our Group
Save for their respective obligations under the Hong Kong Underwriting Agreement
and the International Underwriting Agreement or as otherwise disclosed in this prospectus,
as at the Latest Practicable Date, none of the Underwriters was interested directly or
indirectly in any of our Shares or securities or any shares or securities of any other member
of our Group or had any right or option (whether legally enforceable or not) to subscribe
for, or to nominate persons to subscribe for, any of our Shares or securities or any shares or
securities of any other member of our Group.
Following the completion of the Global Offeri ng, the Underwriters and their affiliated
companies may hold a certain portion of our Shar es as a result of fulfilling their respective
obligations under the Hong Kong Underwriting Agreement and the International
Underwriting Agreement.
The Sole Sponsor’s Independence
The Sole Sponsor satisfies the independence criteria applicable to sponsors set out in
Rule 3A.07 of the Listing Rules despite the financing relationship between the Group and a
fellow subsidiary of the Sole Sponsor as detailed below.
China Tonghai Finance Limited (currently known as Quam Finance Limited) (the
‘‘Lender ’’) entered into a facility agreement dated 26 July 2022 (the ‘‘ Facility Agreement ’’)
with XXF HK (the ‘‘ Borrower ’’), an indirect wholly-owned subsidiary of the Company, in
relation to a facility of HK$25,000,000 for p ayment of the expenses in relation to the
Listing and the Facility for a term of no more than one year from the first drawdown date
(the ‘‘Facility ’’). On 5 May 2023, the Borrower repaid all outstanding debts pursuant to the
Facility together with the interest incu rred thereon. On 22 May 2023, the Facility
Agreement was terminated by mutual agreement between the Lender and the Borrower with
immediate effect. The Lender is a money lend ers licensed company and a fellow subsidiary
of the Sole Sponsor. Both the Lender and the Sole Sponsor are wholly-owned subsidiaries
of Quam Plus International Financial Limited, the shares of which are listed on the Stock
Exchange (stock code: 952).
The criteria for assessment of independence of the Sponsor with regard to the lending
relationship between the Group and the Sole Sponsor group is subject to Rule 3A.07(5) and
Rule 3A.07(6) of the Listing Rules. The maximum amount of the principal of the loans due
to Lender under the Facility of HK$25,000,000 is equivalent to merely 0.86% of the total
assets of the Group as at 31 December 2022, which is 97.1% lower than the 30% threshold
set out in Rule 3A.07(5) of the Listing Rules for the Sole Sponsor’s independence to be
affected by such lending relationship. Furthermore, the maximum amount of principal of
the loans available under the Facility of HK$25,000,000 is equivalent to only 0.53% of the
total assets of the Sole Sponsor group as at 31 December 2022, which is 94.7% lower than
the 10% threshold set out in Rule 3A.07(6) of the Listing Rules for the Sole Sponsor’s
independence to be affected by such lending relationship. It is apparent that the maximum
amount of the Facility relative to the total assets value of the Group or the Sole Sponsor
group is far less than the relevant specific threshold set out under Rule 3A.07 of the Listing
UNDERWRITING
–4 4 7–


--- page 457 ---
Rules. Based on the aforesaid, the Sole Sponsor is considered to be independent as it can
satisfy the independence criteria set out under Rule 3A.07(5) and Rule 3A.07(6) of the
Listing Rules.
The International Placing
International Placing
In connection with the International Placing , we expect to enter into the International
Underwriting Agreement on or around the last day for lodging an application under the
Hong Kong Public Offering with our single largest Shareholder, our executive Directors,
the Sole Sponsor, the Sole Overall Coordinator and the International Underwriters. Under
the International Underwriting Agreement, the International Underwriters would, subject
to certain conditions, severally and not jointl y, agree to purchase the International Placing
Shares or procure purchasers for the Internati onal Placing Shares initially being offered
pursuant to the International Placing. Please see ‘‘Structure and Conditions of the Global
Offering — International Placing’’ for further details.
Under the International Underwriting Agreement, we intend to grant to the
International Underwriters the Over-allotme nt Option, exercisable in whole or in part at
one or more times, at the sole and absolute discretion of the Sole Overall Coordinator on
behalf of the International Underwriters from the Listing Date until 30 days from the last
day for the lodging of applications under the Hong Kong Public Offering to require us to
issue and allot up to an aggregate of 15,468,750 additional Offer Shares, representing 15%
of the Offer Shares initially available under the Global Offering and at the Offer Price, to
cover, among other things, any over-allocations in the International Placing, if any.
Total Commission and Expenses
We will pay the Sole Overall Coordinator (for itself and on behalf of the other
Underwriters) an underwriting commission of 3.0% of the aggregate Offer Price of the
Offer Shares initially offered under the Globa l Offering, out of which the Underwriters will
be paid all sub-underwriting commission, if any. In addition, we will pay to the Sole Overall
Coordinator an additional incentive fee of not less than HK$500,000, and at our discretion,
up to 1% of the aggregate Offer Price of the Offer Shares from the Global Offering,
including proceeds from the exercise of the Over-allotment Option. The ratio of fixed fees
(being the underwriting commission and fixed portion of incentive fee of HK$500,000) and
discretionary fees (being the discretionary portion of incentive fee exceeding, if fully paid) is
therefore approximately 85 : 15.
Assuming the Over-allotment Option is not exercised and based on an Offer Price of
HK$1.205, being the mid-point of the indicative price range, the aggregate commissions and
estimated expenses, together with the Stock Exchange listing fee, SFC transaction levy,
AFRC transaction levy, Stock Exchange trading fee, legal and other professional fees,
printing and other fees and expenses relat ing to the Global Offering, are estimated to
amount in aggregate to RMB79.6 m illion in total and are payable by us.
UNDERWRITING
–4 4 8–


--- page 458 ---
Indemnity
We have undertaken to indemnify and keep indemnified on demand (on an after-tax
basis) and hold harmless each of the Sole Sponsor, the Sole Overall Coordinator, the Sole
Global Coordinator, the Joint Bookrunners, the Joint Lead Managers and the Hong Kong
Underwriters (for themselves, respectively, and on trust for their respective subsidiaries,
branches, associates and affiliates, their respe ctive delegates, their respective directors,
officers, employees and agents) from and against certain losses which they may suffer,
including losses arising from their performance of their obligations under the Hong Kong
Underwriting Agreement and any breach by us of the Hong Kong Underwriting Agreement.
Restrictions on the Offer Shares
No action has been taken to permit a public offering of the Offer Shares, other than in
Hong Kong, or the distribution of this prospectus in any jurisdiction other than Hong
Kong. Accordingly, this prospectus may not be used for the purpose of, and does not
constitute, an offer or invitation in any jurisd iction or in any circumstances in which such
an offer or invitation is not authorised or to any person to whom it is unlawful to make such
an offer or invitation.
UNDERWRITING
–4 4 9–


--- page 459 ---
THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The Global Offering comprises:
. the Hong Kong Public Offering of initially 10,312,500 Offer Shares (subject to
reallocation as mentioned below) in Hong Kong as described below in the
paragraph headed ‘‘The Hong Kong Public Offering’’; and
. the International Placing of initially 92,812,500 Offer Shares (subject to
reallocation and the Over-allotment O ption as described below) outside the
United States (including to professional, institutional and corporate investors and
other investors anticipated to have a sizeable demand for the Offer Shares in
Hong Kong) in offshore transactions in reliance on Regulation S.
Investors may either:
. apply for the Hong Kong Offer Shares under the Hong Kong Public Offering; or
. apply for or indicate an interest for the International Placing Shares under the
International Placing,
but may not do both.
The 103,125,000 Offer Shares in the Global Offering will represent 20% of our
enlarged share capital immediately after t he completion of the Global Offering and the
Capitalisation Issue, without taking into account the exercise of the Over-allotment Option.
If the Over-allotment Option is exercis ed in full, the Offer Shares will represent
approximately 22.33% of our enlarged share capital immediately following the
completion of the Global Offerin g and the Capitalisation Issue.
References to applications, application f orms, application monies or procedure for
applications relate solely to the Hong Kong Public Offering.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
We are initially offering for subscription by the public in Hong Kong 10,312,500 Offer
Shares, representing 10% of the total number of Offer Shares initially available under the
Global Offering. Subject to the reallocation of Offer Shares between the International
Placing and the Hong Kong Public Offering, the number of Offer Shares offered under the
Hong Kong Public Offering will represent approximately 2% of our enlarged issued share
capital immediately after completion of the Global Offering and the Capitalisation Issue,
assuming the Over-allotment Option is not exercised.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 0–


--- page 460 ---
The Hong Kong Public Offering is open to members of the public in Hong Kong as
well as to institutional and professional investors. Professional investors generally include
brokers, dealers, companies (including fund managers) whose ordinary business involves
dealing in shares and other securities and corporate entities that regularly invest in shares
and other securities.
Completion of the Hong Kong Public Offering is subject to the conditions as set out
below in ‘‘Conditions of the Global Offering’’.
Allocation
Allocation of Hong Kong Offer Shares to investors under the Hong Kong Public
Offering will be based on the level of valid applications received under the Hong Kong
Public Offering. The basis of allocation may vary depending on the number of Hong Kong
Offer Shares validly applied for by applic ants. We may, if necessary, allocate the Hong
Kong Offer Shares on the basis of balloting, which would mean that some applicants may
receive a higher allocation than others who have applied for the same number of Hong
Kong Offer Shares and those applicants who are not successful in the ballot may not receive
any Hong Kong Offer Shares.
For allocation purposes only, the total number of Offer Shares available under the
Hong Kong Public Offering is to be divided equally into two pools (to the nearest board lot
a n dw i t ha n yo d dl o t sb e i n ga l l o c a t e dt op o o lA ) :
. Pool A: The Hong Kong Offer Shares in pool A will be allocated on an equitable
basis to applicants who have applied for the Hong Kong Offer Shares with an
aggregate subscription price of HK$5 million or less (excluding brokerage, SFC
transaction levy, AFRC transaction levy and Stock Exchange trading fee
payable); and
. Pool B: The Hong Kong Offer Shares in pool B will be allocated on an equitable
basis to applicants who have applied for the Hong Kong Offer Shares with an
aggregate subscription price of more than HK$5 million and up to the value of
pool B (excluding brokerage, SFC transaction levy, AFRC transaction levy and
Stock Exchange trading fee payable).
Investors should be aware that applicat ions in pool A and applications in pool B may
receive different allocation ratios. If the Hong Kong Offer Shares in one (but not both) of
the pools are under-subscribed, the surplus Hong Kong Offer Shares will be transferred to
the other pool to satisfy demand in the pool and be allocated accordingly. For the purpose
of this subsection only, the ‘‘subscription price’’ for the Hong Kong Offer Shares means the
price payable on application t herefor. Applicants can only receive an allocation of Hong
Kong Offer Shares from either pool A or pool B but not from both pools. Multiple or
suspected multiple applications under the Hon g Kong Public Offering and any application
for more than 5,155,000 Hong Kong Offer Shares will be rejected.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 1–


--- page 461 ---
Reallocation
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Placing is subject to realloca tion at the discretion of the Sole Overall
Coordinator, subject to the following:
(a) where the International Placing Shares are fully subscribed or oversubscribed:
(i) if the Hong Kong Offer Shares are undersubscribed, the Sole Overall
Coordinator has the authority to reallocate all or any unsubscribed Hong
Kong Offer Shares to the International Placing, in such proportions as it
deems appropriate;
(ii) if the number of Offer Shares validly applied for under the Hong Kong
Public Offering represents less than 15 times the number of the Offer Shares
initially available for subscription under the Hong Kong Public Offering,
then up to 10,312,500 Offer Shares may be reallocated to the Hong Kong
Public Offering from the International Placing, so that the total number of
the Offer Shares available under the Hong Kong Public Offering will be
increased to 20,625,000 Offer Shares, representing 20% of the total number
of the Offer Shares initially available under the Global Offering;
(iii) if the number of Offer Shares validly applied for under the Hong Kong
Public Offering represents (1) 15 times or more but less than 50 times, (2) 50
times or more but less than 100 times, and (3) 100 times or more of the
number of Offer Shares initially available under the Hong Kong Public
Offering, the Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Placing in accordance with the clawback
requirements set out in paragraph 4.2 of Practice Note 18 of the Listing
Rules, so that the total number of Hong Kong Offer Shares will be increased
to 30,937,500 Offer Shares (in the case of (1)), 41,250,000 Offer Shares (in the
case of (2)) and 51,562,500 Offer Shares (in the case of (3)), representing
30%, 40% and 50% of the Offer Shares initially available under the Global
Offering, respectively;
(b) where the International Placing Shares are undersubscribed:
(i) if the Hong Kong Offer Shares are also undersubscribed, the Global Offering
will not proceed unless the Underwri ters would subscribe for or procure
subscribers for their respective applicable proportions of the Offer Shares
being offered which are not taken up under the Global Offering on the terms
and conditions of this prospectus, the Application Form and the
Underwriting Agreements; and
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 2–


--- page 462 ---
(ii) if the Hong Kong Offer Shares are fully subscribed or oversubscribed
(irrespective of the extent of over-subscription), then up to 10,312,500 Offer
Shares may be reallocated to the H ong Kong Public Offering from the
International Placing, so that the total number of the Offer Shares available
under the Hong Kong Public Offering will be increased to 20,625,000 Offer
Shares, 20% of the total number of the Offer Shares initially available under
the Global Offering.
In all cases of reallocation of Offer Shares from the International Placing to the Hong
Kong Public Offering, the additional Offe r Shares reallocated to the Hong Kong Public
Offering will be allocated between pool A and pool B in equal proportion and the number
of Offer Shares allocated to the International Placing will be correspondingly reduced.
In addition, the Sole Overall Coordinator may allocate Offer Shares from the
International Placing to the Hong Kong Pubic O ffering to satisfy valid applications under
the Hong Kong Public Offering. The Offer Shares to be offered in the Hong Kong Public
Offering and the International Placing may in c ertain circumstances be reallocated between
these offerings at the sole discretion of the S ole Overall Coordinator (for itself and on
behalf of the Underwriters). In accordan ce with Guidance Letter HKEx-GL91–18
(February 2018) (updated in August 2022) issued by the Stock Exchange, if such
reallocation is conducted other than pursuant to Practice Note 18 of the Listing Rules,
the maximum total number of Offer Shares that may be allocated to the Hong Kong Public
Offering shall be not more than 20,625,000 Offer Shares, representing double of the initial
allocation to the Hong Kong Public Offering and the final Offer Price shall be fixed at
HK$1.05 per Offer Share, the low-end of the indicative Offer Price range stated in this
prospectus.
Details of any reallocation of Offer Shares between the Hong Kong Public Offering
and the International Placing will be disclosed in the results announcement of the Global
Offering, which is expected to be published on Wednesday, 8 November 2023. If the Hong
Kong Public Offering is not fully subscribed for, the Sole Overall Coordinator (for itself
and on behalf of the Hong Kong Underwriters) has the authority to reallocate all or any of
the unsubscribed Hong Kong Offer Shares originally included in the Hong Kong Public
Offering to the International Placing in such number as it deems appropriate to satisfy
demand under the International Placing.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an
undertaking and confirmation in the application submitted by him/her that he/she and any
person(s) for whose benefit he/she is making the application has not applied for or taken
up, or indicated an interest for, and will not app ly for or take up, or indicate an interest for,
any International Placing Shares under the I nternational Placing, and such applicant’s
application is liable to be rejected if the said undertaking and/or confirmation is breached
and/or untrue (as the case may be) or it has been or will be placed or allocated International
Placing Shares under the International Placing.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 3–


--- page 463 ---
Applicants under the Hong Kong Public Offe r i n ga r er e q u i r e dt op a y ,o na p p l i c a t i o n ,
the maximum Offer Price of HK$1.36 per Offer Share in addition to brokerage of 1%, SFC
transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC
transaction levy of 0.00015% on each Offer Share, amounting to a total of HK$3,434.29 for
one board lot of 2,500 Shares. For further details, please see ‘‘How to Apply for Hong Kong
Offer Shares’’.
THE INTERNATIONAL PLACING
Number of Offer Shares Initially Offered
We will be initially offering for subscriptio n under the International Placing 92,812,500
Offer Shares, representing 90% of the Offer Shares under the Global Offering. Subject to
the reallocation of Offer Shares between th e International Placing and the Hong Kong
Public Offering, the number of Offer Shares offered under the International Placing will
represent approximately 18.0% of our enlarg ed issued share capital immediately after
completion of the Global Offering and the Capitalisation Issue, assuming the
Over-allotment Option is not exercised.
Allocation
The International Placing Shares will condit ionally be offered to sel ected professional,
institutional and corporate investors and oth er investors anticipated to have a sizeable
demand for our Offer Shares in Hong Kong and other jurisdictions outside the United
States in offshore transactions in reliance on Reg ulation S. Professional investors generally
include brokers, dealers, comp anies (including fund manage rs) whose ordinary business
involves dealing in shares and other securities a nd corporate entities which regularly invest
in shares and other securities. Prospective prof essional, institutional and other investors
will be required to specify the number of the International Placing Shares under the
International Placing they would be prepared to acquire either at different prices or at a
particular price. This process, known as ‘‘book-building’’ is expected to continue up to, and
to cease on or around, the last day for lodging applications under the Hong Kong Public
Offering.
Allocation of the International Placing Shares pursuant to the International Placing
will be determined by the Sole Overall Coordinator and will be based on a number of
factors including the level and timing of dem and, total size of the relevant investor’s
invested assets or equity assets in the relevant sector and whether or not it is expected that
the relevant investor is likely to buy further, and/or hold or sell its Shares, after the listing
of the Shares on the Stock Exchange. Such allocation is intended to result in a distribution
of the International Placing Shares on a basis which would lead to the establishment of a
solid professional and institutional shareholder base to the benefit of our Company and our
Shareholders as a whole.
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may
require any investor who has been offered Offer Shares under the International Placing and
who has made an application under the Hong Kong Public Offering to provide sufficient
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 4–


--- page 464 ---
information to the Sole Overall Coordinat or so as to allow it to identify the relevant
applications under the Hong Kong Public Offering and to ensure that they are excluded
from any applications of Hong Kong Offer Shares under the Hong Kong Public Offering.
Reallocation
The total number of Offer Shares to be issued pursuant to the International Placing
may change as a result of the clawback arrang ement as described above in the paragraph
headed ‘‘The Hong Kong Public Offering — Reallocation’’ or the Over-allotment Option in
whole or in part and/or any reallocation of unsubscribed Offer Shares originally included in
the Hong Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, it is expected that we will grant the
Over-allotment Option to the In ternational Underwriters.
Pursuant to the Over-allotment Option, the International Underwriters will have the
right, exercisable by the Sole Overall Coordinator (for itself and on behalf of the
International Underwriters) at any time fro m the Listing Date until 30 days after the last
day for lodging applications under the Hong Kong Public Offering, to require our
Company to issue up to 15,468,750 Shares, representing 15% of the Offer Shares initially
available under the Global Offering, at the Offer Price under the International Placing to,
among other things (such as effecting the perm itted stabilising actions as set out in the
section headed ‘‘Stabilisation’’ below), cover o ver-allocations in the International Placing, if
any.
If the Over-allotment Option is exercised in full, the additional Shares to be issued
pursuant thereto will represent approximate ly 2.91% of our enlarged issued share capital
immediately following the completion of the Global Offering and the Capitalisation Issue.
In the event that the Over-allotment Option i s exercised, an announcement will be made.
STABILISATION
Stabilisation is a practice used by underw riters in some markets to facilitate the
distribution of securities. To stabilise, th e underwriters may bid for, or purchase, the
securities in the secondary market, during a specified period of time, to retard and, if
possible, prevent a decline in the initial public market price of the securities below the Offer
Price. Such transactions may be effected in all jurisdictions where it is permissible to do so,
in each case in compliance with all applicable la ws and regulatory requirements, including
those of Hong Kong. In Hong Kong, the price at which stabilisation is effected is not
p e r m i t t e dt oe x c e e dt h eO f f e rP r i c e .
In connection with the Global Offering, the Stabilising Manager, or any person acting
for it, on behalf of the Underwriters, may over- allocate or effect transactions with a view to
stabilising or supporting the market price of o ur Shares at a level higher than that which
might otherwise prevail in the open market for a limited period after the Listing Date.
However, there is no obligation on the Stab ilising Manager or any persons acting for it, to
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 5–


--- page 465 ---
conduct any such stabilising action. Such stab ilising action, if taken, will be conducted at
the absolute discretion of the Stabilising Manager or any person acting for it and may be
discontinued at any time, and is required to be brought to an end within 30 days of the last
day for lodging applications under the Hong Kong Public Offering.
Stabilisation action permitted in Hong Kon g under the Securities and Futures (Price
Stabilising) Rules of the SFO includes (i) over -allocating for the purpose of preventing or
minimising any reduction in the market price of our Shares, (ii) selling or agreeing to sell
our Shares so as to establish a short position in them for the purpose of preventing or
minimising any reduction in the market price of our Shares, (iii) purchasing, or agreeing to
purchase, our Shares pursuant to the Over-allotment Option in order to close out any
position established under (i) or (ii) above, (iv) purchasing, or agreeing to purchase, any of
our Shares for the sole purpose of preventing or minimising any reduction in the market
price of our Shares, (v) selling or agreeing to sell any Shares in order to liquidate any
position established as a result of those purchases, and (vi) offering or attempting to do
anything as described in (ii), (iii), (iv) or (v) above.
Specifically, prospective applicants for and investors in Shares should note that:
. the Stabilising Manager (or any person acting for it) may, in connection with the
stabilising action, maintain a long position in the Shares;
. there is no certainty as to the extent to which and the time or period for which the
Stabilising Manager (or any person acting for it) will maintain such a long
position;
. liquidation of any such long position b y the Stabilising Manager (or any person
acting for it) and selling in the open ma rket, may have an adverse impact on the
market price of the Shares;
. no stabilising action can be taken to support the price of the Shares for longer
than the stabilising period which will begin on the Listing Date and is expected to
expire on Saturday, 2 December 2023, being the 30th day after the last day for
lodging applications under the Hong Kong Public Offering. After this date, when
no further action may be taken to support the price of the Shares, demand for the
Shares, and therefore the price of the Shares, could fall;
. the price of the Shares cannot be assured t o stay at or above the Offer Price by the
taking of any stabilising action; and
. stabilising bids or transactions effected in the course of the stabilising action may
be made at any price at or below the Offer P rice, which means that stabilising bids
or transactions effected may be made at a price below the price paid by applicants
for, or investors in, the Offer Shares.
Our Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Ru les of the SFO will be made within seven days
of the expiration of the stabilisation period.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 6–


--- page 466 ---
OVER-ALLOCATION
Following any over-allocation of Shares in connection with the Global Offering, the
Stabilising Manager (or any person acting for it) may cover such over-allocations by
(among other methods) exercising the Over-allotment Option in full or in part, using Shares
purchased by the Stabilising Manager (or any pe rson acting for it) in the secondary market
at prices that do not exceed the Offer Price, or through the stock borrowing arrangement as
detailed below or a combination of these means.
STOCK BORROWING AGREEMENT
In order to facilitate the settlement of over- allocations in connection with the Global
Offering, the Stabilising Manager may choose to enter into an agreement with Glorypearl
Capital and Precious Luck, each a substantial shareholder, to borrow, whether on their own
or through their affiliates, up to 15,468,750 Sh ares, representing 15% of the total number of
the Offer Shares initially available for the Global Offering. The stock borrowing
arrangement under such an agreement, if entered into, will not be subject to the
restrictions of Rule 10.07(1)(a) of the Listing Rules, provided that the requirements set
out in Rule 10.07(3) of the Listing Rules are complied with as follows:
. such stock borrowing arrangement is fully described in this prospectus and must
be for the sole purpose of covering any short position prior to the exercise of the
Over-allotment Option;
. the maximum number of Shares to be borrowed from Glorypearl Capital and
Precious Luck by the Stabilising Manag er (or any person acting for it) is the
maximum number of Shares that may be issued upon full exercise of the
Over-allotment Option;
. the same number of Shares so borrowed must be returned to Glorypearl Capital
and Precious Luck or their nominee(s) within three business days following the
earlier of (a) the last day on which the Ov er-allotment Option may be exercised,
and (b) the day on which the Over-allo tment Option is exercised in full;
. the stock borrowing arrangement will be effected in compliance with all applicable
listing rules, laws and other re gulatory requirements; and
. no payment will be made to Glorypearl Capital and Precious Luck by the
Stabilising Manager (or any person acting for them) in relation to such stock
borrowing arrangement.
PRICING AND ALLOCATION
The Offer Price will not exceed HK$1.36 per Offer Share and is currently expected to
be not less than HK$1.05 per Offer Share unless otherwise announced. If you apply for the
Offer Shares under the Hong Kong Public Offering, you must pay the maximum indicative
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 7–


--- page 467 ---
Offer Price of HK$1.36 per Offer Share, plu s brokerage of 1%, SFC transaction levy of
0.0027% and Stock Exchange trading fee of 0.00565% fee and AFRC transaction levy of
0.00015%, amounting to a total of HK$3,434.29 for one board lot of 2,500 Shares.
Prospective investors should be aware that the Offer Price to be determined on the
Price Determination Date may be, but not expected to be, lower than the indicative Offer
Price range stated in this prospectus. If the Offer Price as finally determined in the manner
described below is less than HK$1.36, appropriate refund payments (including the
brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock Exchange
trading fee attributable to the surplus app lication monies) will be made to the successful
applicants without interest. For details, p lease see ‘‘How to Apply for Hong Kong Offer
Shares — 13. Refund of Application Monies’’.
Determining the Offer Price
The International Underwriters are solicitin g from prospective investors indications of
interest in acquiring our Shares in the International Placing. Prospective investors will be
required to specify the number of Offer Shares under the International Placing they would
be prepared to acquire either at different prices or at a particular price. This process, known
as ‘‘book-building’’, is expected to continue up to, and to cease on the Price Determination
Date.
T h eO f f e rP r i c ei se x p e c t e dt ob ef i x e db ya g r e e m e n tb e t w e e nt h eS o l eO v e r a l l
Coordinator (for itself and on behalf of the Underwriters) and our Company on the Price
Determination Date, when market demand for the Offer Shares will be determined. The
Price Determination Date is expected to be on or about Thursday, 2 November 2023.
If, for any reason, our Company and the Sole Overall Coordinator (for itself and on
behalf of the Underwriters) are unable to reach agreement on the Offer Price, the Global
Offering will not become uncondit ional and will lapse immediately.
Reduction in Offer Price range and/or number of Offer Shares
The Sole Overall Coordinator (for itself and on behalf of the Underwriters) may, where
considered appropriate, based on the level of in terest expressed by prospective professional,
institutional and other investors during the book-building process, and with the consent of
our Company, reduce the number of Offer Shares and/or the indicative Offer Price range
below that stated in this prospectus prior to the morning of the last day for lodging
applications under the Hong Kong Public Of fering. In such a case, we will as soon as
practicable following the decision to make such reduction and in any event not later than
the morning of the last day for lodging applications under the Hong Kong Public Offering
publish an announcement on our website at
www.xxfqc.com and the website of the Stock
Exchange at www.hkexnews.hk (the content of the websites do not form a part of this
prospectus). Upon issue of such an announcement, the revised number of Offer Shares
and/or revised Offer Price range will be final and conclusive.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 8–


--- page 468 ---
Before submitting applications for the Hong Kong Offer Shares, applicants should
have regard to the possibility that any annou ncement of a reduction in the number of Offer
Shares and/or the indicative Offer Price range below that is stated in this prospectus may
not be made until the day which is the last da y for lodging applications under the Hong
Kong Public Offering. Such notice will also confirm or revise, as appropriate, the working
capital statement, the Global Offering statistics as currently set out in ‘‘Summary’’ in this
prospectus, and any other financial information which may change as a result of such
reduction and the Offer Price, if agreed upon by our Company and the Sole Overall
Coordinator (for itself and on behalf of the Underwriters) will be fixed within such revised
Offer Price range.
As soon as practicable of such reduction of the number of Offer Shares and/or the
indicative Offer Price range, we will also issu e a supplemental prospectus updating investors
of such reduction together with an update of all financial and other information in
connection with such change and, where appropriate, extend the period under which the
Hong Kong Public Offering was open for acceptance to allow potential investors sufficient
time to consider their subscriptions or reconsider their submitted subscriptions, and require
investors who had applied for the Hong Kong Offer Shares to positively confirm their
applications for Offer Shares in light of the change in the number of Offer Shares and/or the
Offer Price. In the absence of any such notice and supplemental prospectus so published,
the number of Offer Shares will not be reduced and/or the Offer Price, if agreed upon
between our Company and the Sole Overall Coordinator (for itself and on behalf of the
Underwriters), will under no circumstances be set outside the Offer Price range stated in this
prospectus.
If you have already submitted an application for the Hong Kong Offer Shares before
the last day for lodging applications under the Hong Kong Public Offering, you will not be
allowed to subsequently withdraw your application. However, if the number of Offer Shares
and/or indicative the Offer Price range is reduc ed, applicants will be notified that they are
required to confirm their applications. If a pplicants have been so notified but have not
confirmed their applicatio ns in accordance with the procedure to be notified, all
unconfirmed applications will be deemed revoked.
In the event of a reduction in the number of Offer Shares, the Sole Overall Coordinator
(for itself and on behalf of the Underwriters) ma y, at its discretion, reallocate the number of
Offer Shares to be offered in the Hong Kong Pub lic Offering and the International Placing,
provided that the number of Offer Shares comprised in the Hong Kong Public Offering
shall not be less than 10% of the total number of Offer Shares available under the Global
Offering (assuming the Over-allotment Option is not exercised).
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 5 9–


--- page 469 ---
Announcement of final Offer Price and basis of allocations
The final Offer Price, the level of applicat ions in the Hong Kong Public Offering, the
level of indications of interest in the International Placing, the basis of allotment of Offer
Shares available under the Hong Kong Public Offering are expected to be announced on
Thursday, 2 November 2023 on the website of our Company at
www.xxfqc.com and the
website of the Stock Exchange at www.hkexnews.hk . Results of allocations in the Hong
Kong Public Offering, including the Hong Kong identity card/passport/Hong Kong
business registration numbers of successful applicants under the Hong Kong Public
Offering are expected to be made available in a variety of channels in the manner described
in ‘‘How to Apply for Hong Kong Offer Shares — 11. Publication of Results’’ in this
prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares is conditional on:
. the Stock Exchange granting approval for the listing of, and permission to deal in,
our Shares in issue and to be issued as described in this prospectus (including the
Shares which may be issued pursuant to the exercise of the Over-allotment
Option);
. the Offer Price having been duly agreed on the Price Determination Date;
. the execution and delivery of the International Underwriting Agreement on or
about the last day for lodging application under the Hong Kong Public Offering;
and
. the obligations of the Hong Kong Underwriters under the Hong Kong
Underwriting Agreement and the obligations of the International Underwriters
under the International Underwriting Agreement becoming unconditional and not
having been terminated in accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the Hong Kong Underwriting
Agreement and/or the International Underwr iting Agreement, as the case may be (unless
and to the extent such conditions are validly waived on or before such dates and times) and
in any event not later than Wednesday, 29 November 2023, being the 30th day after the date
of this prospectus.
The consummation of each of the Hong Kong Public Offering and the International
Placing is conditional upon, among other things, each other offering becoming
unconditional and not having been terminated in accordance with its respective terms. If
the above conditions are not fulfilled or waive d prior to the times and dates specified, the
Global Offering will lapse and the Stock Exchange will be notified immediately. Notice of
the lapse of the Hong Kong Public Offering will be published by our Company on our
website at
www.xxfqc.com and the website of the Stock Exchange at www.hkexnews.hk on
the next day following such lapse. In such an ev ent, all application monies will be returned,
without interest, on the terms set out in ‘‘How to Apply for Hong Kong Offer Shares — 13.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 6 0–


--- page 470 ---
Refund of Application Monies’’ in this prosp ectus. In the meantime, all application monies
will be held in separate bank account(s) wit ht h er e c e i v i n gb a n ko ro t h e rb a n k ( s )i nH o n g
Kong licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).
UNDERWRITING AGREEMENTS
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement and is subject to, among other
conditions, the entering into the International Underwriting Agreement.
We expect to enter into the International Underwriting Agreement relating to the
International Placing on or about the last day for lodging application under the Hong Kong
Public Offering.
Certain terms of the underwriting arrangements, the Hong Kong Underwriting
Agreement and the International Underwriting Agreement, are summarised in the section
headed ‘‘Underwriting’’ in this prospectus.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before
8 : 00 a.m. in Hong Kong on Thursday, 9 November 2023, it is expected that dealings in our
Shares on the Stock Exchange will commence at 9 : 00 a.m. on Thursday, 9 November 2023.
The Shares will be traded in board lots of 2,500 Shares each.
STRUCTURE AND CONDITIONS OF THE GLOBAL OFFERING
–4 6 1–


--- page 471 ---
IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public Offer.
We will not provide any printed copies of this prospectus or any printed copies of any
application forms for use by the public.
This prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the ‘‘HKEXnews > New Listings > New Listing
Information’’ section, and our website at www.xxfqc.com . If you require a printed copy
of this prospectus, you may download and print from the website addresses above.
The contents of the electronic version of this prospectus are identical to the printed
prospectus as registered with the Registrar of Companies in Hong Kong pursuant to
Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Set out below are procedures through which you can apply for the Hong Kong Offer
Shares electronically. We will not provide any physical channels to accept any application
for the Hong Kong Offer Shares by the public.
If you are an intermediary, broker or agent, please remind your customers, clients or
principals, as applicable, that this prospectus is available online at the website addresses
above.
1. HOW TO APPLY
We will not provide any printed application forms for use by the public.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online through the designated website of the White Form eIPO service at
www.eipo.com.hk ;o r
(2) apply through CCASS EIPO service to electronically cause HKSCC Nominees to
apply on your behalf, including by:
(i) instructing your broker or custodian who is a CCASS Clearing Participant or
a CCASS Custodian Participant to give electronic application instructions via
CCASS terminals to apply for the Hong Kong Offer Shares on your behalf;
or
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 2–


--- page 472 ---
(ii) (if you are an existing CCASS Investor Participant) giving electronic
application instructions through the CCASS Internet System
(https://ip.ccass.com ) or through the CCASS Phone System by calling
+852 2979 7888 (using the procedures in HKSCC’s ‘‘An Operating Guide
for Investor Participants’’ in effect from time to time). HKSCC can also input
electronic application instructions for CCASS Investor Participants through
HKSCC’s Customer Service Centre at 1/F, One & Two Exchange Square, 8
Connaught Place, Central, Hong Kong by completing an input request.
If you apply through channel (1) above, t he Hong Kong Offer Shares successfully
applied for will be issued in your own name.
If you apply through channels (2)(i) or (2)(ii) above, the Hong Kong Offer Shares
successfully applied for will be issued in t h en a m eo fH K S C CN o m i n e e sa n dd e p o s i t e d
d i r e c t l yi n t oC C A S St ob ec r e d i t e dt oy o u ro rad e s i g n a t e dC C A S SP a r t i c i p a n t ’ ss t o c k
account.
None of you or your joint applicant(s) may make more than one application,
except where you are a nominee and provide the required information in your
application.
The Company, the Sole Overall Coordinator, the White Form eIPO Service
Provider and their respective agents may reject or accept any application in full or in
part for any reason at their discretion.
2. WHO CAN APPLY
You can apply for the Hong Kong Offer Shares if you or the person(s) for whose
benefit you are applying:
. a r e1 8y e a r so fa g eo ro l d e r ;
. h a v eaH o n gK o n ga d d r e s s ;a n d
. are outside the United States, and are not a United States Person (as defined in
Regulation S under the U.S. Securities Act).
If you apply online through the White Form eIPO service, in addition to the above, you
must also: (i) have a valid Hong Kong identi ty card number and (ii) provide a valid e-mail
address and a contact telephone number.
If you are applying for the Hong Kong Offer Shares online by instructing your broker
or custodian who is a CCASS Clearing Participant or a CCASS Custodian Participant to
give electronic application instructions via CCASS terminals, please contact them for the
items required for the application.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 3–


--- page 473 ---
If you are a firm, the application must be in the individual members’ names. If you are
a body corporate, the application form must be signed by a duly authorised officer, who
must state his/her representative capacity, and stamped with your corporation’s chop.
If an application is made by a person under a power of attorney, the Sole Overall
Coordinator may accept it at their discretion and on any conditions they think fit, including
evidence of the attorney’s authority.
The number of joint applicants may not exceed four and they may not apply by means
of the White Form eIPO service for the Hong Kong Offer Shares.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer
Shares if you:
. are an existing beneficial owner of shares in our Company and/or any its
subsidiaries;
. are a Director or chief executive officer of our Company and/or any of its
subsidiaries;
. are close associate (as defined in the Listing Rules) of any of the above; or
. have been allocated or have applied for or indicated an interest in any
International Placing Shares or otherwise participate in the International Placing.
3. TERMS AND CONDITIONS OF AN APPLICATION
By applying through the application channels specified in this prospectus, among other
things, you:
(i) undertake to execute all relevant documents and instruct and authorise our
Company and/or the Sole Overall Coordinator (or their agents or nominees), as
agents of the Company, to execute any documents for you and to do on your
behalf all things necessary to register any Hong Kong Offer Shares allocated to
you in your name or in the name of HKSCC Nominees as required by the Articles
of Association;
(ii) agree to comply with the Cayman Companies Act, the Companies (Winding Up
and Miscellaneous Provisions) Ordinance, the Companies Ordinance and the
Articles of Association;
(iii) confirm that you have read the terms and conditions and application procedures
set out in this prospectus and on the designated website under the White Form
eIPO service, and agree to be bound by them;
(iv) confirm that you have received and read this prospectus and have only relied on
the information and representations contained in this prospectus in making your
application and will not rely on any other information or representations except
those in any supplement to this prospectus;
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 4–


--- page 474 ---
(v) confirm that you are aware of the restrictions on the Global Offering set out in
this prospectus;
(vi) agree that none of the Company, the Sole Sponsor, the Sole Overall Coordinator,
the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead Managers,
the Underwriters, the White Form eIPO Service Provider, their respective
directors, officers, employees, partners, agents, advisers and any other parties
involved in the Global Offering is or will be liable for any information and
representations not in this prospectus (and any supplement to it);
(vii) undertake and confirm that you or the person(s) for whose benefit you have made
the application have not applied for or taken up, or indicated an interest for, and
will not apply for or take up, or indicate an interest for, any Offer Shares under
the International Placing nor participated in the International Placing;
(viii) agree to disclose to our Company, our Hong Kong Share Registrar, receiving
bank(s), the Sole Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the U nderwriters and/or their respective
advisers and agents any personal data which they may require about you and the
person(s) for whose benefit you have made the application;
(ix) if the laws of any place outside Hong Kong apply to your application, agree and
warrant that you have complied with all such laws and none of the Company, the
Sole Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners,
the Joint Lead Managers and the Underwriters nor any of their respective
directors, officers, employees, partners, agents, advisers and any other parties
involved in the Global Offering will brea ch any law outside Hong Kong as a result
of the acceptance of your offer to purchase, or any action arising from your rights
and obligations under the terms and conditions contained in this prospectus and
on the designated website under the White Form eIPO service;
(x) agree that once your application has been accepted, you may not rescind it
because of an innocent misrepresentation;
(xi) agree that your application will be governed by the laws of Hong Kong;
(xii) represent, warrant and undertake that (i) you understand that the Hong Kong
Offer Shares have not been and will not b e registered under the U.S. Securities
Act; and (ii) you and any person for whose benefit you are applying for the Hong
Kong Offer Shares are outside the United States (as defined in Regulation S) or
are a person described in paragraph (h)(3) of Rule 902 of Regulation S;
(xiii) warrant that the information you have provided is true and accurate;
(xiv) agree to accept the Hong Kong Offer Shares applied for, or any lesser number
allocated to you under the application;
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 5–


--- page 475 ---
(xv) authorise our Company to place your name(s) or the name of the HKSCC
Nominees, on the Company’s register of members as the holder(s) of any Hong
Kong Offer Shares allocated to you, and the Company and/or its agents to send
any Share certificate(s) and/or any e-Refund payment instructions and/or any
refund cheque(s) to you or the first na med applicant for joint application by
ordinary post at your own risk to the address stated on the application, unless you
are eligible to collect the Share certificat e(s) and/or refund cheque(s) in person;
(xvi) declare and represent that this is the only application made and the only
application intended by you to be made to benefit you or the person for whose
benefit you are applying;
(xvii) understand that our Company and the Sole Overall Coordinator, the Sole Global
Coordinator, the Joint Bookrunners, the Joint Lead Managers, the Underwriters
and/or their respective advisers and agents will rely on your declarations and
representations in deciding whether or not to make any allotment of any of the
Hong Kong Offer Shares to you and tha t you may be prosecuted for making a
false declaration;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC or to the White Form eIPO Service Provider by you or by
any one as your agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (i) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC; and (ii)
you have due authority to give electronic application instructions on behalf of that
other person as their agent.
For the avoidance of doubt, our Company and all other parties involved in the
preparation of this prospectus acknowledge that each applicant and CCASS Participant
who gives or causes to give electronic application instructions is a person who may be
entitled to compensation under Sectio n4 0o ft h eC o m p a n i e s( W i n d i n gU pa n d
Miscellaneous Provisions) Ordinance (a s applied by Section 342E of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance).
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 6–


--- page 476 ---
4. MINIMUM APPLICATION AMOUNT AND PERMITTED NUMBERS
Your application through the White Form eIPO service or the CCASS EIPO service
must be for a minimum of 2,500 Hong Kong Offer Shares and in one of the numbers set out
in the table below. You are required to pay the amount next to the number you select.
XXF Group Holdings Limited (Stock Code 2473)
(HK$1.36 per Hong Kong Offer Share)
NUMBER OF HONG KONG OFFER SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
2,500 3,434.29 35,000 48,080.05 250,000 343,428.90 1,500,000 2,060,573.40
5,000 6,868.57 40,000 54,948.62 300,000 412,114.68 2,000,000 2,747,431.20
7,500 10,302.88 45,000 61,817.20 350,000 480,800.45 2,500,000 3,434,289.00
10,000 13,737.16 50,000 68,685.78 400,000 549,486.25 3,000,000 4,121,146.80
12,500 17,171.45 60,000 82,422.93 450,000 618,172.02 3,500,000 4,808,004.60
15,000 20,605.73 70,000 96,160.09 500,000 686,857.80 4,000,000 5,494,862.40
17,500 24,040.02 80,000 109,897.25 600,000 824,229.35 4,500,000 6,181,720.20
20,000 27,474.31 90,000 123,634.40 700,000 961,600.92 5,155,000
(Note) 7,081,503.92
22,500 30,908.61 100,000 137,371.55 800,000 1,098,972.48
25,000 34,342.89 150,000 206,057.35 900,000 1,236,344.05
30,000 41,211.47 200,000 274,743.12 1,000,000 1,373,715.60
Note: Maximum number of Hong Kong Offer Shares you may apply for.
No application for any other number of the Hong Kong Offer Shares will be
considered and any such application is liable to be rejected.
5. APPLYING THROUGH THE WHITE FORM eIPO SERVICE
General
Individuals who meet the criteria as described in the paragraph headed ‘‘2. Who
Can Apply’’, may apply through the White Form eIPO service for the Offer Shares to
be allotted and registered in their own names through the designated website at
www.eipo.com.hk .
Detailed instructions for application through the White Form eIPO service are on
the designated website. If you do not follo w the instructions, your application may be
r e j e c t e da n dm a yn o tb es u b m i t t e dt ot h eC o m p a n y .I fy o ua p p l yt h r o u g ht h e
designated website, you authorise the White Form eIPO Service Provider to apply on
the terms and conditions in this prospectus, as supplemented and amended by the
terms and conditions of the White Form eIPO service.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 7–


--- page 477 ---
Time for Submitting Applications under the White Form eIPO Service
You may submit your application through the White Form eIPO service on the
designated website at www.eipo.com.hk (24 hours daily, except o n the last application
day) from 9 : 00 a.m. on Monday, 30 October 2023 until 11 : 30 a.m. on Thursday, 2
November 2023 and the latest time for completing full payment of application monies
in respect of such applications will be 12 : 00 noon on Thursday, 2 November 2023 or
such later time under the paragraph headed ‘‘10. Effect of Bad Weather and/or
Extreme Conditions on the Opening of the Applications Lists’’ in this section.
No Multiple Applications
If you apply by means of White Form eIPO , once you complete payment in respect
of any electronic application instruction given by you or for your benefit through the
White Form eIPO service to make an application for Hong Kong Offer Shares, an
actual application shall be deemed to have been made. For the avoidance of doubt,
giving an electronic application instruction under White Form eIPO more than once and
obtaining different application reference numbers without effecting full payment in
respect of a particular reference number will not constitute an actual application.
If you are suspected of submitting mo re than one application through the White
Form eIPO service or by any other means, all of your applications are liable to be
rejected.
Section 40 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
For the avoidance of doubt, our Company and all other parties involved in the
preparation of this prospectus acknowledge that each applicant who gives or causes to
give electronic application instructions is a person who may be entitled to compensation
under Section 40 of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (as applied by Section 342E of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance).
6. APPLYING THROUGH CCASS EIPO SERVICE
General
CCASS Participants may give electronic application instructions to apply for the
Hong Kong Offer Shares and to arrange payment of the money due on application and
payment of refunds under their participant agreements with HKSCC and the General
Rules of CCASS and the CCASS Operational Procedures.
If you are a CCASS Investor Participant, you may give these electronic application
instructions through the CCASS Phone System by calling +852 2979 7888 or through
the CCASS Internet System at
https://ip.ccass.com (using the procedures in HKSCC’s
‘‘An Operating Guide for Investor Participants’’ in effect from time to time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 8–


--- page 478 ---
HKSCC can also input electronic application instructions for you if you go to:
Hong Kong Securities Clearing Company Limited
Customer Service Centre
1/F, One & Two Exchange Square
8 Connaught Place, Central
Hong Kong
and complete an input request form.
If you are not a CCASS Investor Participant, you may instruct your broker or
custodian who is a CCASS Clearing Partici pant or a CCASS Custodian Participant to
give electronic application instructions via CCASS terminals to apply for the Hong
K o n gO f f e rS h a r e so ny o u rb e h a l f .
You will be deemed to have authorised HKSCC and/or HKSCC Nominees to
transfer the details of your application to the Company, Sole Overall Coordinator and
our Hong Kong Share Registrar.
Applying through CCASS EIPO Service
Where you have given electronic application instructions (either indirectly through
a broker or custodian or directly) to apply for the Hong Kong Offer Shares and an
application is made by HKSCC Nominees on your behalf:
(i) HKSCC Nominees will only be acting as a nominee for you and is not liable
for any breach of the terms of this prospectus;
(ii) HKSCC Nominees will do the fo llowing things on your behalf:
. agree that the Hong Kong Offer Shares to be allotted shall be issued in
the name of HKSCC Nominees and deposited directly into CCASS for
the credit of the CCASS Participant’s stock account on your behalf or
your CCASS Investor Participant’s stock account;
. agree to accept the Hong Kong Offer Shares applied for or any lesser
number allocated;
. undertake and confirm that you have not applied for or taken up, will
not apply for or take up, or indicate an interest for, any Offer Shares
under the International Placing;
. (if the electronic application instructions a r eg i v e nf o ry o u rb e n e f i t )
declare that only one set of electronic application instructions has been
given for your benefit;
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 6 9–


--- page 479 ---
. (if you are an agent for another person) declare that you have only given
one set of electronic application instructions for the other person’s
benefit and are duly authorised to give those instructions as their agent;
. confirm that you understand that our Company, the Directors, the Sole
Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters and/or their
respective advisers and agents will rely on your declarations and
representations in deciding whether or not to make any allotment of any
of the Hong Kong Offer Shares to you and that you may be prosecuted
if you make a false declaration;
. authorise our Company to place HKSCC Nominees’ name on our
Company’s register of members as the holder of the Hong Kong Offer
Shares allocated to you and to send Share certificate(s) and/or refund
monies under the arrangements separately agreed between us and
HKSCC;
. confirm that you have read the terms and conditions and application
procedures set out in this prospectus and agree to be bound by them;
. confirm that you have received and/or read a copy of this prospectus
and have relied only on the information and representations in this
prospectus in causing the application to be made, save as set out in any
supplement to this prospectus;
. agree that none of our Company, the Sole Sponsor, the Sole Overall
Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters, their respective directors,
officers, employees, partners, agents, advisers and any other parties
involved in the Global Offering, is or will be liable for any information
and representations not contained in this prospectus (and any
supplement to it);
. agree to disclose your personal data to our Company, our Hong Kong
Share Registrar, receiving bank(s), the Sole Overall Coordinator, the
Underwriters and/or their respective advisers and agents;
. agree (without prejudice to any other rights which you may have) that
once HKSCC Nominees’ application has been accepted, it cannot be
rescinded for innocent misrepresentation;
. agree that any application made by HKSCC Nominees on your behalf is
irrevocable on or before the fifth day after the time of the opening of the
application lists (excluding an y day which is a Saturday, Sunday or
public holiday in Hong Kong), such agreement to take effect as a
collateral contract with us and to become binding when you give the
instructions and such collateral contract to be in consideration of our
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 0–


--- page 480 ---
Company agreeing that it will not offer any Hong Kong Offer Shares to
any person on or before the fifth day after the time of the opening of the
application lists (excluding any day which is Saturday, Sunday or public
holiday in Hong Kong), except by means of one of the procedures
referred to in this prospectus. Ho wever, HKSCC Nominees may revoke
the application on or before the fifth day after the time of the opening of
the application lists (excluding for this purpose any day which is a
Saturday, Sunday or public holiday in Hong Kong) if a person
responsible for this prospectus under Section 40 of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance (as applied by
Section 342E of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance) gives a public notice under that section which
excludes or limits that person’s res ponsibility for this prospectus;
. agree that once HKSCC Nominees’ app lication is accepted, neither that
application nor your electronic application instructions can be revoked,
and that acceptance of that application will be evidenced by the
Company’s announcement of the results of the Hong Kong Public
Offering;
. agree to the arrangements, undertakings and warranties under the
participant agreement between you and HKSCC, read with the General
Rules of CCASS and the CCASS Operational Procedures, for the giving
electronic application instructions to apply for Hong Kong Offer Shares;
. agree with our Company, for itself and for the benefit of each
Shareholder (and so that our Company will be deemed by its
acceptance in whole or in part of the application by HKSCC
Nominees to have agreed, for itself and on behalf of each of the
Shareholders, with each CCASS Participant giving electronic application
instructions ) to observe and comply with the Cayman Companies Act,
the Companies (Winding Up and Miscellaneous Provisions) Ordinance,
the Companies Ordinance and the Articles of Association; and
. agree that your application, any acceptance of it and the resulting
contract will be governed by the Laws of Hong Kong.
Effect of Applying through CCASS EIPO Service
By applying through CCASS EIPO service, you (and, if you are joint applicants,
each of you jointly and severally) are deemed to have done the following things.
Neither HKSCC nor HKSCC Nominees shall be liable to the Company or any other
person in respect of the things mentioned below:
. instructed and authorised HKSCC to cause HKSCC Nominees (acting as
nominee for the relevant CCASS Participants) to apply for the Hong Kong
O f f e rS h a r e so ny o u rb e h a l f ;
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 1–


--- page 481 ---
. instructed and authorised HKSCC to arrange payment of the Offer Price,
brokerage, SFC transaction levy, AFRC transaction levy and the Stock
Exchange trading fee by debiting your designated bank account and, in the
case of a wholly or partially unsuccessful application and/or if the Offer Price
is less than the Offer Price per Offer Sh are initially paid on application,
refund of the application monies (includ ing brokerage, SFC transaction levy,
AFRC transaction levy and the Stock Exchange trading fee) by crediting
your designated bank account; and
. instructed and authorised HKSCC to cause HKSCC Nominees to do on your
behalf all the things stated in this prospectus.
Time for Inputting Electronic Application Instructions
(1)
CCASS Clearing/Custodian Participants can input electronic application
instructions at the following times on the following dates:
Monday, 30 October 2023 — 9 : 00 a.m. to 8 : 30 p.m.
Tuesday, 31 October 2023 — 8 : 00 a.m. to 8 : 30 p.m.
Wednesday, 1 November 2023 — 8 : 00 a.m. to 8 : 30 p.m.
Thursday, 2 November 2023 — 8 : 00 a.m. to 12 : 00 noon
CCASS Investor Participants can input electronic application instructions from
9 : 00 a.m. on Monday, 30 October 2023 until 12 : 00 noon on Thursday, 2 November
2023 (24 hours daily, except on Thursday, 2 November 2023, the last application day).
The latest time for inputting your electronic application instructions will be 12 : 00
noon on Thursday, 2 November 2023, the la st application day or such later time as
described in the paragraph headed ‘‘10. Effect of Bad Weather and/or Extreme
Conditions on the Opening of the Application Lists’’ in this section.
(1) These times in this sub-paragraph are subj ect to change as HKSCC may determine from time
to time with prior notification to CCASS Clea ring/Custodian Participants and/or CCASS
Investor Participants.
Personal Data
The following Personal Information Collection Statement applies to any personal
data held by our Company, the Hong Kong Share Registrar, the receiving bank(s), the
Sole Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the
Joint Lead Managers, the Underwriters and/ or their respective advisers and agents
about you in the same way as it applies to personal data about applicants other than
HKSCC Nominees. By applying through CCASS EIPO service or the White Form
eIPO service, you agree to all of the terms o f the Personal Information Collection
Statement below.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 2–


--- page 482 ---
Personal Information Collection Statement
This Personal Information Collection Sta tement informs applicant for, and holder
of, the Hong Kong Offer Shares, of the policies and practices of the Company and its
Hong Kong Share Registrar in relation to personal data and the Personal Data
(Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong).
Reasons for the Collection of Your Personal Data
It is necessary for applicants and regis tered holders of the Hong Kong Offer
Shares to supply correct personal data to our Company or its agents and the Hong
Kong Share Registrar when applying for the Hong Kong Offer Shares or transferring
the Hong Kong Offer Shares into or out of their names or in procuring the services of
the Hong Kong Share Registrar.
Failure to supply the requested data may result in your application for the Hong
Kong Offer Shares being rejected, or in delay or the inability of our Company or its
Hong Kong Share Registrar to effect transfers or otherwise render their services. It
may also prevent or delay registration or transfers of the Hong Kong Offer Shares
which you have successfully applied for and/or the dispatch of Share certificate(s) to
which you are entitled.
It is important that the holders of the Hong Kong Offer Shares inform our
C o m p a n ya n dt h eH o n gK o n gS h a r eR e g i s t r a ri m m e d i a t e l yo fa n yi n a c c u r a c i e si nt h e
personal data supplied.
Purposes
Your personal data may be used, held, processed, and/or stored (by whatever
means) for the following purposes:
. processing your application and refund cheque or e-Refund payment
instruction, where applicable, verif ication of compliance with the terms
and application procedures set out in this prospectus and announcing results
of allocation of the Hong Kong Offer Shares;
. compliance with applicable laws an d regulations in Hong Kong and
elsewhere;
. registering new issues or transfers into or out of the names of the holders of
the Shares including, where applicable, HKSCC Nominees;
. maintaining or updating our Company’s Register of Members;
. verifying identities of the holders of the Shares;
. establishing benefit entitlements of holders of the Shares, such as dividends,
rights issues, bonus issues, etc.;
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 3–


--- page 483 ---
. distributing communications from our Company and its subsidiaries;
. compiling statistical information and profiles of the holder of the Shares;
. disclosing relevant information to f acilitate claims on entitlements; and
. any other incidental or associated purposes relating to the above and/or to
enable our Company and the Hong Kong Share Registrar to discharge their
obligations to holders of the Shares and/or regulators and/or any other
purposes to which the holders of the Shares may from time to time agree.
Transfer of Personal Data
Personal data held by our Company and the Hong Kong Share Registrar relating
to the holders of the Hong Kong Offer Shares will be kept confidential but our
Company and the Hong Kong Share Regis trar may, to the extent necessary for
achieving any of the above purposes, disclose, obtain or transfer (whether within or
outside Hong Kong) the personal data to, from or with any of the following:
. our Company’s appointed agents such as financial advisers, receiving
bankers and overseas principal share registrar;
. where applicants for the Hong Kong O ffer Shares request a deposit into
CCASS, HKSCC or HKSCC Nominees, who will use the personal data for
the purposes of operating CCASS;
. any agents, contractors or third-party service providers who offer
administrative, telecommunications, computer, payment or other services
to our Company or the Hong Kong Share Registrar in connection with their
respective business operation;
. the Stock Exchange, the SFC and any other statutory regulatory or
governmental bodies or otherwise as required by laws, rules or regulations;
and
. any persons or institutions with which the holders of the Hong Kong Offer
Shares have or propose to have dealings, such as their bankers, solicitors,
accountants or stockbrokers etc.
Retention of Personal Data
Our Company and the Hong Kong Share Registrar will keep the personal data of
the applicants and holders of the Hong Kong Offer Shares for as long as necessary to
fulfil the purposes for which the personal data were collected. Personal data which is
no longer required will be destroyed or dea lt with in accordance with the Personal
Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong).
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 4–


--- page 484 ---
Access to and Correction of Personal Data
Holders of the Hong Kong Offer Shares have the right to ascertain whether our
Company or the Hong Kong Share Registrar hold their personal data, to obtain a copy
of that data, and to correct any data that is inaccurate. Our Company and the Hong
Kong Share Registrar have the right to charge a reasonable fee for the processing of
such requests. All requests for access to data or correction of data should be addressed
to our Company, at our Company’s registered address disclosed in ‘‘Corporate
Information’’ in this prospectus or as notif ied from time to time, for the attention of
the secretary, or our Company’s Hong Kong Share Registrar for the attention of the
privacy compliance officer.
7. WARNING FOR ELECTRONIC APPLICATIONS
The subscription of the Hong Kong Offer Shares by giving electronic application
instructions to HKSCC is only a facility provided to CCASS Participants. Similarly, the
application for Hong Kong Offer Shares through the White Form eIPO service is also only a
facility provided by the White Form eIPO Service Provider to public investors. Such
facilities are subject to capacity limitations an d potential service interruptions and you are
advised not to wait until the last applicatio n day in making your electronic applications.
Our Company, the Directors, the Sole Sponsor, the Sole Overall Coordinator, the Sole
Global Coordinator, the Joint Bookrunners and the Joint Lead Managers and the
Underwriters take no responsibility for such ap plications and provide no assurance that any
CCASS Participant or person applying through the White Form eIPO service will be
allotted any Hong Kong Offer Shares.
To ensure that CCASS Investor Participants can give their electronic application
instructions , they are advised not to wait until the last minute to input their instructions to
the systems. In the event that CCASS Investor Pa rticipants have problems in the connection
to CCASS Phone System/CCASS Internet System for submission of electronic application
instructions , they should go to HKSCC’s Customer Service Centre to complete an input
request form for electronic application instructions before 12 : 00 noon on Thursday, 2
November 2023, or such later time as described in ‘‘10. Effect of Bad Weather and/or
Extreme Conditions on the Opening of the Application Lists’’ in this section.
8. HOW MANY APPLICATIONS CAN YOU MAKE
Multiple applications for the Hong Kong Offer Shares are not allowed except by
nominees.
All of your applications will be rejected if more than one application through the
CCASS EIPO service (directly or indirectly through your broker or custodian) or through
the White Form eIPO service is made for your benefit (including the part of the application
made by HKSCC Nominees acting on electronic application instructions ), and the number of
Hong Kong Offer Shares applied by HKSCC Nominees will be automatically reduced by
the number of Hong Kong Offer Shares for which you have given such instructions and/or
for which such instructions have been given for your behalf.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 5–


--- page 485 ---
For the avoidance of doubt, giving an electronic application instruction under the White
Form eIPO service more than once and obtaining di fferent application reference numbers
without effecting full payment in respect of a particular reference number will not constitute
an actual application. However, any electronic application instructions to make an
application for the Hong Kong Offer Shares given by you or for your benefit to HKSCC
will be deemed to be an actual application for the purposes of considering whether multiple
applications have been made.
If an application is made by an unlisted company and:
. the principal business of that company is dealing in securities; and
. you exercise statutory control over that company,
then the application will be trea ted as being for your benefit.
‘‘Unlisted company ’’ means a company with no equity securities listed on the Stock
Exchange.
‘‘Statutory control ’’ means you:
. control the composition of the board of directors of the company;
. control more than half of the voting power of the company; or
. hold more than half of the issued share capital of the company (not counting any
part of it which carries no right to participate beyond a specified amount in a
distribution of either profits or capital).
9. HOW MUCH ARE THE HONG KONG OFFER SHARES
The maximum Offer Price is HK$1.36 per Offer Share. You must also pay brokerage of
1%, SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and Hong
Kong Stock Exchange trading fee of 0.00565%. This means that for one board lot of 2,500
Hong Kong Offer Shares, you will pay HK$3,434.29.
You must pay the maximum Offer Price, b rokerage, SFC transaction levy, AFRC
transaction levy and the Stock Exchange tr ading fee in full upon application for Hong
Kong Offer Shares.
You may submit an application through the White Form eIPO service or the CCASS
EIPO service in respect of a minimum of 2,500 Ho ng Kong Offer Shares. Each application
or electronic application instruction in respect of more than 2,500 Hong Kong Offer Shares
must be in one of the numbers set out in the table in ‘‘4. Minimum Application Amount and
Permitted Numbers’’ in this section, or as otherwise specified on the designated website at
www.eipo.com.hk .
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 6–


--- page 486 ---
If your application is successful, brokerage will be paid to the Exchange Participants,
and the SFC transaction levy, AFRC transaction levy and the Stock Exchange trading fee
are paid to the Stock Exchange (in the case of the SFC transaction levy and AFRC
transaction levy, collected by the Stock Exchange on behalf of the SFC and the AFRC
respectively).
For further details on the Offer Price, see ‘ ‘Structure of the Global Offering — Pricing
and Allocation’’ in this prospectus.
10. EFFECT OF BAD WEATHER AND/OR EXTREME CONDITIONS ON THE
OPENING OF THE APPLICATION LISTS
The application lists will not open if there is:
. a tropical cyclone warning signal number 8 or above;
. a ‘‘black’’ rainstorm warning; and/or
. Extreme Conditions;
in force in Hong Kong at any time between 9 : 00 a.m. and 12 : 00 noon on Thursday, 2
November 2023. Instead they will open between 11 : 45 a.m. and 12 : 00 noon on the next
Business Day which does not have either of those warnings and/or Extreme Conditions in
Hong Kong in force at any time between 9 : 00 a.m. and 12 : 00 noon.
If the application lists do not open and close on Thursday, 2 November 2023 or if there
is/are a tropical cyclone warning signal number 8 or above, a ‘‘black’’ rainstorm warning
signal and/or Extreme Conditions in force in Hong Kong that may affect the dates
mentioned in ‘‘Expected Timetable’’ in th is prospectus, an announcement will be made in
such event.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 7–


--- page 487 ---
11. PUBLICATION OF RESULTS
Our Company expects to announce the final Offer Price, the level of indication of
interest in the International Placing, the level of applications in the Hong Kong Public
Offering and the basis of allocation of th e Hong Kong Offer Shares on Wednesday, 8
November 2023 on the Company’s website at
www.xxfqc.com and the website of the Stock
Exchange at www.hkexnews.hk .
The results of allocations and the Hong Kong identity card/passport/Hong Kong
business registration numbers of successful applicants under the Hong Kong Public
Offering will be available at the times and date and in the manner specified below:
. in the announcement to be posted on the Company’s website at
www.xxfqc.com
and the Stock Exchange’s website at www.hkexnews.hk by no later than 9 : 00 a.m.
on Wednesday, 8 November 2023;
. from the designated results of allocations website at www.iporesults.com.hk
(alternatively: English https://www.eipo.com.hk/en/Allotment ;C h i n e s e
https://www.eipo.com.hk/zh-hk/Allotment with a ‘‘search by ID’’ function on a
24-hour basis from 8 : 00 a.m. on Wednesd ay, 8 November 2023 to 12 : 00 midnight
on Tuesday, 14 November 2023; and
. from the allocation results telephon e enquiry line by calling +852 2862 8555
between 9 : 00 a.m. and 6 : 00 p.m. from Wednesday, 8 November 2023 to Monday,
13 November 2023 (excluding Saturd ay, Sunday and public holiday in Hong
Kong).
If our Company accepts your offer to purchase (in whole or in part), which it may do
by announcing the basis of allocations and/or making available the results of allocations
publicly, there will be a binding contract under which you will be required to purchase the
Hong Kong Offer Shares if the conditions of the Global Offering are satisfied and the
Global Offering is not otherwise terminated. Fur ther details are contained in ‘‘Structure of
the Global Offering’’ in this prospectus.
You will not be entitled to exercise any remedy of rescission for innocent
misrepresentation at any time after acceptance of your application. This does not affect
any other right you may have.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 8–


--- page 488 ---
12. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOTTED HONG KONG
OFFER SHARES
You should note the following situations in which the Hong Kong Offer Shares will
n o tb ea l l o t t e dt oy o u :
(i) If your application is revoked:
By applying through the CCASS EIPO service or the White Form eIPO service,
you agree that your application or the application made by HKSCC Nominees on your
behalf cannot be revoked on or before the fifth day after the time of the opening of the
application lists (excluding for this purpose any day which is Saturday, Sunday or
public holiday in Hong Kong). This agreement w ill take effect as a collateral contract
with our Company.
Your application or the application m ade by HKSCC Nominees on your behalf
may only be revoked on or before such fifth day if a person responsible for this
prospectus under Section 40 of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (as applied by Sec tion 342E of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance) gives a public notice under that section on or
before the fifth day after the time of the open ing of the application lists (excluding any
days which is a Saturday, Sunday or public holiday in Hong Kong) which excludes or
limits that person’s responsibility for this prospectus.
If any supplement to this prospectus is issued, applicants who have already
submitted an application will be notifie d that they are required to confirm their
applications. If applicants have been so notified but have not confirmed their
applications in accordance with the procedure to be notified, all unconfirmed
applications will be deemed revoked.
If your application or the application made by HKSCC Nominees on your behalf
has been accepted, it cannot be revoked. For this purpose, acceptance of applications
which are not rejected will be constituted by n otification in the press of the results of
allocation, and where such basis of allocation is subject to certain conditions or
provides for allocation by ballot, such accept ance will be subject to the satisfaction of
such conditions or results of the ballot respectively.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 7 9–


--- page 489 ---
(ii) If our Company or its agents exercise their discretion to reject your application:
Our Company, the Sole Overall Coordinator, the White Form eIPO Service
Provider and their respective agents and nominees have full discretion to reject or
accept any application, or to accept only par t of any application, without giving any
reasons.
(iii) If the allotment of Hong Kong Offer Shares is void:
The allotment of Hong Kong Offer Shares w ill be void if the Stock Exchange does
not grant permission to list the Shares either:
. within three weeks from the closing date of the application lists; or
. within a longer period of up to six weeks if the Stock Exchange notifies the
C o m p a n yo ft h a tl o n g e rp e r i o dw i t h i nt h r e ew e e k so ft h ec l o s i n gd a t eo ft h e
application lists.
(iv) If:
. you make multiple applications or su spected multiple applications;
. you or the person for whose benefit you are applying have applied for or
taken up, or indicated an interest for, or have been or will be placed or
allocated (including conditionally and/or provisionally) Hong Kong Offer
Shares and International Placing Shares;
. your electronic application instructions through the White Form eIPO service
are not completed in accordance with the instructions, terms and conditions
on the designated website;
. your payment is not made correctly;
. the Underwriting Agreements do not become unconditional or are
terminated;
. our Company or the Sole Overall Coordinator believe that by accepting your
application, it or they would violate app licable securities or other laws, rules
or regulations; or
. your application is for more than 50% of the Hong Kong Offer Shares
initially offered under the Hong Kong Public Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 8 0–


--- page 490 ---
13. REFUND OF APPLICATION MONIES
If an application is rejected, not accepted or accepted in part only, or if the Offer Price
as finally determined is less than the maxim um Offer Price of HK$1.36 per Offer Share
(excluding brokerage, SFC transaction levy, AFRC transaction levy and Stock Exchange
trading fee thereon) or if the conditions of t he Hong Kong Public Offering are not fulfilled
in accordance with ‘‘Structure of the Global Offering — Conditions of the Global Offering’’
in this prospectus or if any application is revoked, the application monies, or the
appropriate portion thereof, together with the related brokerage, SFC transaction levy,
AFRC transaction levy and the Stock Exchan ge trading fee, will be refunded, without
interest or the cheque or banker’s cashier order will not be cleared.
Any refund of your application monies will be made on or before Wednesday, 8
November 2023.
14. DESPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND
MONIES
You will receive one Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
CCASS EIPO service where the Share certificates will be deposited into CCASS as
described below).
No temporary document of title will be issued in respect of the Shares. No receipt will
be issued for sums paid on application.
Subject to arrangement on despatch/collection of Share certificates and refund monies
as mentioned below, any refund cheques and Share certificates are expected to be posted on
or before Wednesday, 8 November 2023. The right is reserved to retain any Share
certificate(s) and any surplus application monies pending clearance of cheque(s) or banker’s
cashier’s order(s).
Share certificates will only become valid ev idence of title at 8 : 00 a.m. on Thursday, 9
November 2023 provided that the Global Offering has become unconditional and the right
of termination described in ‘‘Underwriting ’’ in this prospectus has not been exercised.
Investors who trade Shares prior to the receipt of Share certificates or the Share certificates
becoming valid do so at their own risk.
Personal Collection
(i) If you apply through the White Form eIPO service
If you apply for 1,000,000 or more Hong Kong Offer Shares and your application
is wholly or partially successful, you may c ollect your Share certificate(s) and/or
refund cheque(s) (where applicable) from the Hong Kong Share Registrar,
Computershare Hong Kong Investor Ser vices Limited at Shops 1712–1716, 17th
Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong, from 9 : 00
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 8 1–


--- page 491 ---
a.m. to 1 : 00 p.m. on Wednesday, 8 November 2023, or such other date as notified by
the Company in the newspapers as the date of despatch/collection of Share
certificates/e-Refund payment instructions/refund cheques.
If you do not collect your Share certificate(s) and/or refund cheque(s) (where
applicable) personally within the time speci fied for collection, they will be sent to the
address specified in your application instructions by ordinary post at your own risk.
If you apply for less than 1,000,000 Hong Kong Offer Shares, your Share
certificate(s) and/or refund cheque(s) (wh ere applicable) will be sent to the address
specified in your application instructions on or before Wednesday, 8 November 2023
by ordinary post at your own risk.
If you apply and pay the application monies from a single bank account, any
refund monies will be despatched to that bank account in the form of e-Refund
payment instructions. If you apply and pay the application monies from multiple bank
accounts, any refund monies will be despatched to the address as specified in your
application instructions in the form of refund cheque(s) by ordinary post at your own
risk.
(ii) If you apply through the CCASS EIPO service
Allocation of Hong Kong Offer Shares
For the purposes of allocating Hong Kong Offer Shares, HKSCC Nominees will
not be treated as an applicant. Instead, each CCASS Participant who gives electronic
application instructions or each person for whose benefit instructions are given will be
treated as an applicant.
Deposit of Share Certificates into CCASS and Refund of Application Monies
. If your application is wholly or partially successful, your Share certificate(s)
will be issued in the name of HKSCC No minees and deposited into CCASS
for the credit of your designated CCASS Participant’s stock account or your
CCASS Investor Participant stock acc ount on Wednesday, 8 November 2023,
or, on any other date determined by HKSCC or HKSCC Nominees.
. The Company expects to publish the application results of CCASS
Participants (and where the CCASS Participant is a broker or custodian,
the Company will include information relating to the relevant beneficial
owner), your Hong Kong identity card number/passport number or other
identification code (Hong Kong business registration number for
corporations) and the basis of allotment of the Hong Kong Public Offering
in the manner specified in ‘‘11. Publication of Results’’ above on Wednesday,
8 November 2023. You should cheque the announcement published by the
Company and report any discrepancies to HKSCC before 5 : 00 p.m. on
Wednesday, 8 November 2023 or such other date as determined by HKSCC
or HKSCC Nominees.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 8 2–


--- page 492 ---
. If you have instructed your broker or custodian to give electronic application
instructions on your behalf, you can also cheque the number of Hong Kong
Offer Shares allotted to you and the amount of refund monies (if any)
payable to you with that broker or custodian.
. I fy o uh a v ea p p l i e da saC C A S SI n v e s t o rP a r t i c i p a n t ,y o uc a na l s oc h e q u e
the number of Hong Kong Offer Shares allotted to you and the amount of
refund monies (if any) payable to you via the CCASS Phone System and the
CCASS Internet System (under the procedures contained in HKSCC’s ‘‘An
Operating Guide for Investor Participants’’ in effect from time to time) on
Wednesday, 8 November 2023. Immediately following the credit of the Hong
Kong Offer Shares to your stock account and the credit of refund monies to
your bank account, HKSCC will also make available to you an activity
statement showing the number of Hong Kong Offer Shares credited to your
CCASS Investor Participant stock account and the amount of refund monies
( i fa n y )c r e d i t e dt oy o u rd e s i g n a t e db a n ka c c o u n t .
. Refund of your application monies (if any) in respect of wholly and partially
unsuccessful applications (including brokerage, SFC transaction levy, AFRC
transaction levy and the Stock Exchan ge trading fee but without interest) will
be credited to your designated bank account or the designated bank account
of your broker or custodian on Wednesday, 8 November 2023.
15. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Shares and
we comply with the stock admission requireme nts of HKSCC, the Shares will be accepted as
eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect
from the date of commencement of dealings in the Shares or any other date HKSCC
chooses. Settlement of transactions between Exchange Participants (as defined in the
Listing Rules) is required to take place in CCASS on the second settlement day after any
trading day.
All activities under CCASS are subject to the General Rules of CCASS and CCASS
Operational Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional adviser for
details of the settlement arr angement as such arrangements may affect their rights and
interests.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–4 8 3–


--- page 493 ---
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION
The following is the text of a report set out on pages I-1 to I-4, received from the
Company’s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed to
the directors of the Company and to the Sole Sponsor pursuant to the requirements of HKSIR
200, Accountants’ Reports on Historical Financial Information in Investment Circulars issued
by the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF XXF GROUP HOLDINGS LIMITED AND QUAM CAPITAL
LIMITED
Introduction
We report on the historical financial information of XXF Group Holdings Limited
(the ‘‘Company’’) and its subsidiaries (together, the ‘‘Group’’) set out on pages I-5 to I-101,
which comprises the consolidated statements of financial position as at 31 December 2020,
2021 and 2022 and 30 June 2023, statements of financial position of the Company as at 31
December 2020, 2021 and 2022 and 30 June 2023, and the consolidated statements of
comprehensive income, the consolidated statements of changes in equity and the
consolidated statements of cash flows for each of the years ended 31 December 2020,
2021 and 2022 and the six months ended 30 June 2023 (the ‘‘Track Record Period’’) and
material accounting policy information and o ther explanatory information (together, the
‘‘Historical Financial Information’’). The Historical Financial Information set out on pages
I-5 to I-101 forms an integral part of this report, which has been prepared for inclusion in
the prospectus of the Company dated 30 October 2023 (the ‘‘Prospectus’’) in connection
with the initial listing of shares of the Company on the Main Board of The Stock Exchange
of Hong Kong Limited.
Directors’ responsibility for the H istorical Financial Information
The directors of the Company are responsible for the preparation of Historical
Financial Information that gives a true and fair view in accordance with the basis of
preparation sets out in Note 2.1 to the Historical Financial Information, and for such
internal control as the directors determine is necessary to enable the preparation of
Historical Financial Information that is free from material misstatement, whether due to
fraud or error.
APPENDIX I ACCOUNTANT’S REPORT
–I - 1–


--- page 494 ---
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and
to report our opinion to you. We conducted our work in accordance with Hong Kong
Standard on Investment Circular Reporting Engagements 200, Accountants’ Reports on
Historical Financial Information in Investment Circulars issued by the Hong Kong
Institute of Certified Public Accountants (‘‘HKICPA’’). This standard requires that we
comply with ethical standards and plan and perform our work to obtain reasonable
assurance about whether the Historical Financial Information is free from material
misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgement, including the assessment of risks of material
misstatement of the Historical Financial Information, whether due to fraud or error. In
making those risk assessments, the reporting ac countant considers internal control relevant
to the entity’s preparation of Historical Fina ncial Information that gives a true and fair
view in accordance with the basis of preparation sets out in Note 2.1 to the Historical
Financial Information in order to design procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. Our work also included evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the Historical Financial
Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountant’s report, a true and fair view of the financial position of the Company as at 31
December 2020, 2021 and 2022 and 30 June 2023 an d the consolidated financial position of
the Group as at 31 December 2020, 2021 and 202 2 and 30 June 2023 and of its consolidated
financial performance and i ts consolidated cash flows for the Track Record Period in
accordance with the basis of preparation sets out in Note 2.1 to the Historical Financial
Information.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2–


--- page 495 ---
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group
which comprises the consolidated statement of comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the six
months ended 30 June 2022 and other explanatory information (the ‘‘Stub Period
Comparative Financial Information’’). The directors of the Company are responsible for
the presentation and preparation of the Stub Pe riod Comparative Financial Information in
accordance with the basis of preparation sets out in Note 2.1 to the Historical Financial
Information. Our responsibility is to express a conclusion on the Stub Period Comparative
Financial Information based on our review. We conducted our review in accordance with
International Standard on Review Engagements 2410, Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued by the
International Auditing and Assurance Stand ards Board (‘‘IAASB’’). A review consists of
making inquiries, primarily of persons respons ible for financial and accounting matters,
and applying analytical and other review proced ures. A review is substantially less in scope
than an audit conducted in accordance with International Standards on Auditing and
consequently does not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit. Accordingly, we do not express an
audit opinion. Based on our review, nothing has come to our attention that causes us to
believe that the Stub Period Comparative Financial Information, for the purposes of the
accountant’s report, is not prepared, in all ma terial respects, in accordance with the basis of
preparation sets out in Note 2.1 to the Historical Financial Information.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3–


--- page 496 ---
REPORT ON MATTERS UNDER THE RULES GOVERNING THE LISTING OF
SECURITIES ON THE STOCK EXCHANGE OF HONG KONG LIMITED (THE
‘‘LISTING RULES’’) AND THE COMPANIES (WINDING UP AND MISCELLANEOUS
PROVISIONS) ORDINANCE
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-5 have been made.
Dividends
We refer to Note 13 to the Historical Financial Information which states that no
dividends have been paid by XXF Group Holdings Limited in respect of the Track Record
Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 30 October 2023
APPENDIX I ACCOUNTANT’S REPORT
–I - 4–


--- page 497 ---
I HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historica l Financial Information
Set out below is the Historical Financial Information which forms an integral part
of this accountant’s report.
The financial statements of the Group fo r the Track Record Period, on which the
Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with International Standards on Auditing issued by the IAASB
(‘‘Underlying Financial Statements’’).
The Historical Financial Information is p resented in Renminbi and all values are
rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5–


--- page 498 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue 5 749,761 1,171,262 1,141,526 538,138 601,001
Cost of revenue 8 (446,163) (809,506) (767,079) (352,824) (403,710)
Gross profit 303,598 361,756 374,447 185,314 197,291
Selling and marketing expenses 8 (75, 056) (83,164) (81,096) (41,976) (44,086)
Administrative expenses 8 (105,62 9) (114,879) (115,146) (61,066) (56,896)
Research and development
expenses 8 (423) (2,106) (722) (374) (273)
Provision for credit loss (2,098) (3,870) (4,877) (1,904) (2,793)
Fair value (loss)/gain on ordinary
shares with redemption right (6,932) (4,153) 47,251 34,555 46,335
Other income, net 6 23,302 15,960 21,748 9,183 11,629
Other losses, net 7 (6,621) (8,713) (6,814) (2,579) (4,015)
Operating profit 130,14 1 160,831 234,791 121,153 147,192
Finance income 10 1,849 2,008 973 496 835
Finance cost 10 (111,021) (119,829) (143,991) (73,679) (82,868)
Finance cost, net (109,172) (117,821) (143,018) (73,183) (82,033)
Profit before income tax 20,969 43,010 91,773 47,970 65,159
Income tax expenses 11 (10,716) (12,323) (14,691) (3,628) (2,905)
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Profit/(loss) attributable to:
— Owners of the Company 12,341 34,112 78,913 45,627 62,402
— Non-controlling interests (2,088) (3,425) (1,831) (1,285) (148)
10,253 30,687 77,082 44,342 62,254
APPENDIX I ACCOUNTANT’S REPORT
–I - 6–


--- page 499 ---
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit for the year/period 10,253 30,687 77,082 44,342 62,254
Other comprehensive income/(loss)
Items that will not be reclassified to
profit or loss:
Exchange difference arising from
the translation of the
Company’s functional currency
to presentation currency 9,778 5,631 (17,966) (8,793) (4,309)
Changes in fair value of ordinary
share with redemption right due
to own credit risk — — 2,432 940 (203)
Items that will be reclassified to
profit or loss:
Exchange difference arising from
the translation of a subsidiary’s
functional currency to
presentation currency 2,376 (978) 1,554 829 1,018
12,154 4,653 (13,980) (7,024) (3,494)
Total comprehensive income
for the year/period 22,407 35,340 63,102 37,318 58,760
Total comprehensive income/(loss)
for the year/period
attributable to:
— Owners of the Company 24,495 38,765 64,933 38,603 58,908
— Non-controlling interests (2,088) (3,425) (1,831) (1,285) (148)
22,407 35,340 63,102 37,318 58,760
Earnings per share for profit
attributable to owners of the
Company for the year/period
(RMB cents)
— Basic 12 3.86 10.67 24.68 14.27 19.52
— Diluted 12 3.86 9.92 8.14 2.85 4.13
APPENDIX I ACCOUNTANT’S REPORT
–I - 7–


--- page 500 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
As at
30 June
2020 2021 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000
Assets
Non-current assets
Property and equipment 14 431,171 353,138 367,704 487,673
Intangible assets 15 26,663 24,121 21,779 20,433
Finance lease receivables 18 622,386 832,569 910,270 930,433
Deposits 20 20,646 13,037 32,157 38,409
Financial assets at fair value through
profit or loss 23 — 25,992 21,647 22,508
Deferred income tax assets 30 3,009 6,623 3,900 6,595
1,103,875 1,255,480 1,357,457 1,506,051
Current assets
Inventories 22 142,021 141,883 193,634 127,541
Finance lease receivables 18 379,303 464,397 560,061 594,355
Trade receivables 19 6,837 6,741 9,940 6,009
Prepayments, deposits and other
receivables 20 238,405 244,535 265,968 249,260
Amounts due from shareholders 34 5,733 5,569 6,085 6,280
Restricted cash 21(b) 9,675 5,000 4,534 538
Cash and cash equivalents 21(a) 11,880 79,373 201,078 214,031
793,854 947,498 1,241,300 1,198,014
Total assets 1,897,729 2,202,978 2,598,757 2,704,065
Equity and liabilities
Equity attributable to owners of
the Company
Share capital 24 2,858 2,858 2,858 2,858
Other reserves and retained earnings 24, 25 393,681 432,446 497,379 556,287
396,539 435,304 500,237 559,145
Non-controlling interests 11,633 8,208 6,377 6,229
Total equity 408,172 443,512 506,614 565,374
APPENDIX I ACCOUNTANT’S REPORT
–I - 8–


--- page 501 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000
Liabilities
Non-current liabilities
Borrowings 28 447,380 656,219 884,842 947,975
Lease liabilities 14(b) 12,742 8,524 7,769 7,857
Ordinary shares with redemption right 29 177,886 — — 70,948
638,008 664,743 892,611 1,026,780
Current liabilities
Borrowings 28 708,578 726,603 828,573 909,885
Ordinary shares with redemption right 29 — 196,640 163,129 49,663
Amounts due to shareholders 34 7,687 7,467 8,158 8,420
Trade payables 26 41,565 68,463 105,860 48,316
Other payables and accruals 27 83,054 78,544 78,939 86,983
Lease liabilities 14(b) 6,419 5,781 6,087 5,762
Current income tax payables 4,246 11,225 8,786 2,882
851,549 1,094,723 1,199,532 1,111,911
Total liabilities 1,489,557 1,759,466 2,092,143 2,138,691
Net current (liabilities)/assets (57,695) (147,225) 41,768 86,103
Total equity and liabilities 1,897,729 2,202,978 2,598,757 2,704,065
APPENDIX I ACCOUNTANT’S REPORT
–I - 9–


--- page 502 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at 31 December
As at
30 June
2020 2021 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000
Assets
Non-current asset
Investment in a subsidiary 16 1,013,379 1,002,856 1,095,671 837,332
Current assets
Prepayments 20 12,136 6,485 8,646 7,534
Amounts due from shareholders 34 16,447 15,976 17,456 18,016
Cash and cash equivalents 4 16 44 33
28,587 22,477 26,146 25,583
Total assets 1,041,966 1,025,333 1,121,817 862,915
Equity
Equity attributable t o equity holders of
the Company
Share capital 24 2,858 2,858 2,858 2,858
Other reserves 25 863,544 839,950 917,232 935,323
Accumulated losses 25 (28,118) (51,489) (14,408) (254,217)
Total equity 838,284 791,319 905,682 683,964
Liabilities
Non-current liabilities
Ordinary shares with redemption right 29 177,886 — — 70,948
Current liabilities
Ordinary shares with redemption right 29 — 196,640 163,129 49,663
Accruals and other payables 27 2,872 2,748 5,352 5,701
Amounts due to subsidiaries 22,924 34,626 47,654 52,639
25,796 234,014 216,135 108,003
Total liabilities 203,682 234,014 216,135 178,951
Total equity and liabilities 1,041,966 1,025,333 1,121,817 862,915
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 0–


--- page 503 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share
capital
Share
premium
(Note 25)
Other
reserves
(Note 25)
Retained
earnings
(Note 25) Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’ 000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2020 2,858 326,067 1,180 41,939 372,044 13,721 385,765
Comprehensive income
Profit for the year — — — 12,341 12,341 (2,088) 10,253
Exchange difference arising
from translation of
functional currency to
presentation currency — — 12,154 — 12,154 — 12,154
Total comprehensive income
for the year — — 12,154 12,341 24,495 (2,088) 22,407
Transactions with owners in
t h e i rc a p a c i t ya so w n e r s
Transfer to statutory reserve — — 3,457 (3,457) — — —
Total transactions with owners
in their capacity as owners — — 3,457 (3,457) — — —
Balance at 31 December 2020 2,858 326,067 16,791 50,823 396,539 11,633 408,172
Balance at 1 January 2021 2,858 326,067 16,791 50,823 396,539 11,633 408,172
Comprehensive income
Profit for the year — — — 34,112 34,112 (3,425) 30,687
Exchange difference arising
from translation of
functional currency to
presentation currency — — 4,653 — 4,653 — 4,653
Total comprehensive income
for the year — — 4,653 34,112 38,765 (3,425) 35,340
Transactions with owners in
t h e i rc a p a c i t ya so w n e r s
Transfer to statutory reserve — — 6,123 (6,123) — — —
Total transactions with owners
in their capacity as owners — — 6,123 (6,123) — — —
Balance at 31 December 2021 2,858 326,067 27,567 78,812 435,304 8,208 443,512
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 1–


--- page 504 ---
Share
capital
Share
premium
(Note 25)
Other
reserves
(Note 25)
Retained
earnings
(Note 25) Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’ 000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2022 2,858 326,067 27,567 78,812 435,304 8,208 443,512
Comprehensive income
Profit for the year — — — 78,913 78,913 (1,831) 77,082
Exchange difference arising
from translation of
functional currency to
presentation currency — — (16,412) — (16,412) — (16,412)
Changes in fair value of
ordinary share with
redemption right due to
own credit risk — — 2,432 — 2,432 — 2,432
Total comprehensive income
for the year — — (13,980) 78,913 64,933 (1,831) 63,102
Transactions with owners in
t h e i rc a p a c i t ya so w n e r s
Transfer to statutory reserve — — 3,774 (3,774) — — —
Total transactions with owners
in their capacity as owners — — 3,774 (3,774) — — —
Balance at 31 December 2022 2,858 326,067 17,361 153,951 500,237 6,377 506,614
Balance at 1 January 2022
(unaudited) 2,858 326,067 27,567 78,812 435,304 8,208 443,512
Comprehensive income
Profit for the period — — — 45,627 45,627 (1,285) 44,342
Exchange difference arising
from translation of
functional currency to
presentation currency — — (7,964) — (7,964) — (7,964)
Changes in fair value of
ordinary share with
redemption right due to
own credit risk — — 940 — 940 — 940
Total comprehensive income
for the period — — (7,024) 45,627 38,603 (1,285) 37,318
Transactions with owners in
t h e i rc a p a c i t ya so w n e r s
Transfer to statutory reserve — — 1,105 (1,105) — — —
Total transactions with owners
in their capacity as owners — — 1,105 (1,105) — — —
Balance at 30 June 2022 2,858 326,067 21,648 123,334 473,907 6,923 480,830
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 2–


--- page 505 ---
Share
capital
Share
premium
(Note 25)
Other
reserves
(Note 25)
Retained
earnings
(Note 25) Total
Non-
controlling
interests
Total
equity
RMB’000 RMB’000 RMB’000 RMB’ 000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2023 2,858 326,067 17,361 153,951 500,237 6,377 506,614
Comprehensive income
Profit for the period — — — 62,402 62,402 (148) 62,254
Exchange difference arising
from translation of
functional currency to
presentation currency — — (3,291) — (3,291) — (3,291)
Changes in fair value of
ordinary share with
redemption right due to
own credit risk — — (203) — (203) — (203)
Total comprehensive income
for the period — — (3,494) 62,402 58,908 (148) 58,760
Transactions with owners in
t h e i rc a p a c i t ya so w n e r s
Transfer to statutory reserve — — 1,831 (1,831) — — —
Total transactions with owners
in their capacity as owners — — 1,831 (1,831) — — —
Balance at 30 June 2023 2,858 326,067 15,698 214,522 559,145 6,229 565,374
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 3–


--- page 506 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from operating activities
Cash generated from operations 31(a) 371,211 29,930 83,869 155,209 103,024
Income tax paid (15,737) (8,958) (14,406) (14,395) (11,527)
Interest paid (125,593) (98,381) (143,463) (66,699) (84,253)
Net cash generated from/(used in)
operating activities 229,881 (77,409) (74,000) 74,115 7,244
Cash flows from investing activities
Interest received 763 320 228 104 344
Proceeds from disposal of
property and equipment 31(b) 8,023 24,615 29,823 21,084 13,666
Payment for purchase of
property and equipment 31(c) (166,90 8) (45,623) (137,912) (16,704) (139,175)
Payment for addition of
intangible assets (13,097) ( 11,484) (11,272) (5,091) (4,928)
Payment for acquisition of
financial assets at fair value
through profit or loss — (28,000) — — —
Proceeds for sales of financial
assets at fair value through
profit or loss — 2,000 — — —
Net cash used in investing activities (171,219) (58,172) (119,133) (607) (130,093)
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 4–


--- page 507 ---
Year ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from financing activities
Issuance of ordinary shares with
redemption right 31(d) — 20,000 — — —
Proceeds from borrowings 31(d) 6 38,873 1,168,915 1,338,324 428,890 670,128
Repayments of borrowings 31(d) (772,32 7) (963,754) (1,003,175) (521,755) (524,123)
Repayment of lease liabilities 31(d) (9,812) (8,114) (7,255) (3,611) (3,554)
Placement of deposits for
borrowings (6,625) (16,986) (29,216) (3,726) (11,475)
Redemption of deposits for
borrowings 8,702 14,040 18,545 7,116 5,218
Prepaid listing expenses (3,048) (4,705) (2,396) (311) (954)
Dividend paid to owners of the
companies now comprising
the Group (13,509) (6,323) — — —
Capital injection to the
Company upon issuance of
shares to give effect to the
R e o r g a n i s a t i o n 2 1 4 , 0 6 8————
Deemed distribution to the
shareholders of XXF Group
for purchasing the Listing
B u s i n e s s ( 2 1 9 , 3 3 1 ) ————
Net cash (used in)/generated from
financing activities (163,009) 203,073 314,827 (93,397) 135,240
Net (decrease)/increase in cash and
cash equivalents (104,347) 67,493 121,694 (19,889) 12,391
Cash and cash equivalents at
beginning of year/period 119,160 11,880 79,373 79,373 201,078
Effect on foreign exchange rate
difference (2,933) — 11 234 562
Cash and cash equivalents at
end of year/period 11,880 79,373 201,078 59,718 214,031
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 5–


--- page 508 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 GENERAL INFORMATION AND REORGANISATION
1.1 General information
The Company was incorporated in the Cayman Isl ands on 29 March 2019 as an exempted company
with limited liability under the Companies Act (As R evised) of the Cayman Islands. The address of the
Company’s registered office is Cricket Square, Hut chins Drive, PO Box 2681, Grand Cayman, KY1-1111,
Cayman Islands.
The Company is an investment holding company. The Company and the companies shown in Note
37 below now comprising the Group (together, the ‘‘G roup’’) are principally engaged in the provision of
automobile services, including automobiles retai l, automobiles financing, automobiles rental and
automobile-related services in the People’s Republi c of China (the ‘‘PRC’’) (the ‘‘Listing Business’’).
The ultimate owners of the Group are Mr. Huang Wei, Ms. Chen Jia, Mr. Liu Donghu, Mr. Pan
Qiu, Ms. Mao Lin, Ms. Yang Yufen, Mr. Li Huan, Mr. Lin Yanfeng, Mr. Ye Fuwei, Mr. Liu Hao, Mr.
Liu Wei, Mr. Liu Yonghui, Tengxin Investment Com pany Limited, Beijing Chesheng Technology
Company Limited (‘‘Pre-IPO Investor 1’’, see onshor e reorganisation step (i) in Note 1.2), Zhuhai Wanhe
Xingsheng Investment Management Center (Limited Partnership) (‘‘Pre-IPO Investor 2’’, see onshore
reorganisation steps (ii) and (iii) in Note 1.2), Ms. Choo Beng Hiang (‘‘Pre-IPO Investor 3’’, see onshore
reorganisation step (iv) in Note 1.2), Fuzhou Boji a Investment Co., Ltd., Hangzhou Chain Reaction
Investment Partnership Enterpris e (Limited Partnership) (‘‘Hangzhou Chain Reaction’’) and Hangzhou
Good Hope Chehang Investment Partnership Enterpri se (Limited Partnership) (‘‘Good Hope Chehang’’).
1.2 History of the Group
Prior to the incorporation of the Company and the completion of the reorganisation (the
‘‘Reorganisation’’) as described below, the Listing Business was carrie d out by Xixiangfeng Finance Lease
Group Co., Ltd. (‘‘XXF Group’’, formerly known as Fu jian Xixiangfeng Automobile Service Co., Ltd.
and Xixiangfeng Group Co., Ltd), and its subsidiaries (collectively, the ‘‘Operating Companies’’).
In preparation for the listing of the Company’s shares on the Main Board of the Stock Exchange of
Hong Kong Limited (the ‘‘Listing’’), the Group underw ent the Reorganisation wh ich primarily consists of
setting up holding and intermediate holding comp anies to form the Group, and also introduction of
strategic investors to the Group. The Reorganisation is principal ly involved the following steps:
Onshore reorganisation steps
(i) On 27 November 2018, Pre-IPO Investor 1, Pre-IPO Investor 2, each of those being an
independent party, entered into a series of agreements (collectively the ‘‘Investment
Agreements’’) with XXF Group and all its then shareholders, pursuant to which XXF
Group agreed to allot and issue 12,789,844 ordin ary shares with redemption right of par value
of RMB1.00 each to Pre-IPO Investor 1 for a total cash consideration of RMB30,000,000. The
redemption right is to be cancelled upon success o f Listing. The transaction was completed on
4 March 2019. (Series A Shares as described in Note 29)
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 6–


--- page 509 ---
(ii) Pursuant to the Investment Agreements, XXF Group agreed to allot and issue 21,316,406
ordinary shares with redemption right of par value of RMB1.00 each to the Pre-IPO Investor
2, for a total cash consideration of RMB50,000,000. The redemption right is to be cancelled
upon success of Listing. The transaction was completed on 4 March 2019. (Series A Shares as
described in Note 29)
(iii) Pursuant to the Investment Agreements, Hangzhou Chain Reaction agreed to transfer
21,316,406 shares of XXF Group to Pre-IPO Investor 2, for a total cash consideration of
RMB50,000,000. Redemption right and certain ot her rights are given to shares acquired by
Pre-IPO Investor 2 by XXF Group. The transacti on was completed on 12 April 2019. (Series B
Shares as described in Note 29)
(iv) On 30 April 2020, pursuant to a share transfer agreement entered into between Well Creative
Investment Limited, a company incorporat ed in Hong Kong and wholly-owned by Pre-IPO
Investor 3 and Hangzhou Good Hope Investment Management Company Limited (‘‘Good
Hope Investment’’), Well Creative Investment Limited acquired 6,821,250 ordinary shares of
XXF Group from Good Hope Investment at a consideration of RMB16,000,000.
(v) XXF Group (Hong Kong) Limited (‘‘XXF HK’’) acquired the entire equity interest in XXF
Group from the then registered shareholders of XXF Group as disclosed in the step (v) of the
offshore reorganisation steps. As a result , XXF Group became a wholly foreign-owned
enterprise and was wholly owned by the Company indirectly.
(vi) On 2 December 2019, pursuant to a share transfer agreement entered into between XXF
Group and Pre-IPO Investor 1, XXF Group acquire d 5.88% of equity interests in Fujian Xidi
Automobile Sale Co., Ltd. (‘‘Fujian Xidi’’) from Pre-IPO Investor 1 at a consideration of
RMB20,000,000. (Series C Shares as described in Note 29)
Offshore reorganisation steps
(i) On 26 March 2019, Glorypearl Capital Resources Company Limited (‘‘Glorypearl Capital’’)
was incorporated in the BVI with limited liabilit y. Glorypearl Capital issued and allotted 1
shares at USD1 to Mr. Huang Wei.
(ii) The Company was incorporated in the Cayman Islands on 29 March 2019. The initial
authorised share capital of the Company was HK$380,000 divided into 38,000,000 Shares of
HK$0.01 each. Upon incorporation, one Share, r epresenting the then entire issued share
capital of the Company, was allotted and issued to the initial subscriber and such Share was
transferred to Glorypearl Capital on the same day. The Company became a wholly-owned
subsidiary of Glorypearl Capital.
(iii) On 8 March 2019, Celestial Bonanza Group Limited (‘‘Celestial Bonanza’’) was incorporated
in the British Virgin Islands (the ‘‘BVI’’) with li mited liability and is authorised to issue 50,000
shares of a single class, each with a par value of US$1.00, of which 1 share has been allotted
and issued to the Company for cash at par upon incorporation. Celestial Bonanza became a
wholly-owned subsidiary of the Company.
(iv) XXF HK was incorporated in Hong Kong as a limited liability company on 2 May 2019 with
the initial issued share capital of HK$1.00 of one share of HK$1.00, which was issued and
allotted to the initial subscriber on the same day. On 9 May 2019, one share of XXF HK was
transferred to Celestial Bonanza at the consideration of HK$1.00. XXF HK became an
indirect wholly-owned subsidiary of the Company.
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 7–


--- page 510 ---
(v) During the period of 27 August 2019 to 28 November 2019, XXF HK acquired the entire
equity interest in XXF Group from the then registered shareholders of XXF Group at the
total consideration of RMB384,347,500, which was determined with reference to the paid-up
share capital of XXF Group and/or their investment cost in XXF Group. During the same
period, the Company issued and allotted a number of shares in the same portion to the
respective then shareholders of XXF Group, totalling 319,746,093 ordinary shares and
55,422,656 ordinary shares with redemption ri ght, with total proceed of RMB384,347,499.
Upon the completion of the transactions, the Group was beneficially owned by the ultimate
owners as disclosed in Note 1.1.
(vi) On 2 December 2019, an agreement was entered into between Pre-IPO Investor 1 and the
Company. Pursuant to the agreement, the Company issued and allotted 6,821,250 ordinary
shares with redemption right to Hit Drive Limit ed, an offshore investment holding company
related to Pre-IPO Investor 1, at a consideration of RMB20,000,000, representing the
consideration for XXF Group acquiring the 5 .88% interests in Fujian Xidi as set out in
onshore reorganisation step (vi).
2 MATERIAL ACCOUNTING POLICY INFORMATION
This note provides a list of significant accounting pol icies adopted in the preparation of the Historical
Financial Information. These policies have been consis tently applied to all the years and periods presented,
unless otherwise stated.
2.1 Basis of preparation
This note provides a list of significant accountin g policies adopted in the preparation of the
Historical Financial Information. These policies have been consistently applied to all the years and
periods presented, unless otherwise stated. The Hi storical Financial Information is for the Group
consisting of the Company and the companies now comprising the Group.
(i) Compliance with IFRSs
The Historical Financial Information of the Group has been prepared in accordance with the
principal accounting policies as set out below which are in accordance with International Financial
Reporting Standards (‘‘IFRSs’’) issued by Intern ational Accounting Standards Board (‘‘IASB’’).
(ii) Historical cost convention
The Historical Financial Information has been prepared on a historical cost basis, except for
financial assets and financial liabi lities (including derivative inst ruments) that are measured at fair
value.
(iii) Critical accounting estimates
The preparation of the Historical Financial In formation in conformity with IFRS requires the
use of certain critical accounting e stimates. It also requires manage ment to exercise its judgement in
the process of applying the Group’s accounting pol icies. The areas involving a higher degree of
judgement or complexity, or areas w here assumptions and estimates ar e significant to the Historical
Financial Information, are disclosed in Note 4.
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 8–


--- page 511 ---
(iv) New standards, amendments and interpretation not yet adopted
Standards Subject of amendment
Effective for
accounting period
beginning on or after
Amendments to IAS 1 Non-cu rrent Liabilities with
Covenants
1 January 2024
Amendments to IAS 1 Classification of Liabilities as
Current or Non-current
1 January 2024
Amendment IFRS 7 and IAS 7 Supplier Financing Arrangement 1 January 2024
Amendments to IFRS 16 Lease Liability in a Sale and
Leaseback
1 January 2024
Amendments to IFRS 10 and
IAS 28
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
To be determined
Amendments to IAS 12 ’International Tax Reform — Pillar Two Model Rules’
On 23 May 2023, the IASB issued amendments to IAS 12 — International Tax Reform
— Pillar Two Model Rules, which became effect ive immediately. The disclosures in respect of
the current tax expense related to the Pillar Two income taxes and the known or reasonably
estimable exposure to Pillar Two income tax es are required for annual reporting periods
beginning on or after 1 January 2023, but they ar e not required to be disclosed in interim
financial reports for any interim period ending on or before 31 December 2023.
According to the preliminary assessment made by the directors. no significant impact on
the Group’s financial performance and position is expected when the new standards and
amendments to existing standards above beco me effective. The Group expects to adopt the
relevant new standards and amendments to standards when they become effective.
2.2 Principles of consolidation
(a) Consolidation
A subsidiary is an entity over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, varia ble returns from its invol vement with the entity
and has the ability to affect those returns thr ough its power over the ent ity. Subsidiaries are
consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
(i) Business combinations
The Group applies the acquisition method of accounting to account for business
combinations not under common control. The consid eration transferred for the acquisition of
a subsidiary is the fair values of the assets transf erred, the liabilities incurred to the former
owners of the acquiree and the equity interests issued by the Group. The consideration
transferred includes the fair value of any ass et or liability resulting from a contingent
consideration arrangement. Identifiable as sets acquired and liabilities and contingent
liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date.
APPENDIX I ACCOUNTANT’S REPORT
–I - 1 9–


--- page 512 ---
The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basi s. Non-controlling interests in the acquiree that are present
ownership interests and entitle their holders to a proportionate share of the entity’s net assets
in the event of liquidation are measured at either f air value or the present ownership interests’
proportionate share in the recognised amounts of t he acquiree’s identif iable net assets. All
other components of non-controlling interests are measured at their acquisition date fair
value, unless another measurement basis is required by IFRS.
(b) Separate financial statements
Investments in subsidiaries are carried at cost less impairment. Cost includes direct
attributable costs of investment. On disposal of investments in subsid iaries, the difference
between disposal proceeds and the carrying amount s of the investments are recognised in profit
or loss. The results of subsidiaries are accounted for by the Company on the basis of dividend
received or receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend
from these investments if the dividend exceeds the total comprehensive income of the subsidiary in
the period the dividend is declared or if the carrying amount of the investment in the separate
financial statements exceeds the carrying amount in the consolidated financial statements of the
investee’s net assets including goodwill.
2.3 Segment reporting
Operating segments are reported in a manner consiste nt with the internal reporting provided to the
chief operating decision-makers (‘‘CODM’’). The chie f operating decision-makers, who are responsible for
allocating resources and assessing performance of the operating segments, has been identified as the
executive directors of the Group that make strategic decisions.
2.4 Foreign currencies
(a) Functional and presentation currency
Items included in the Historical Financial I nformation of each of the Group’s entities are
measured using the currency of the primary economic environment in which the entity operates (the
‘‘functional currency’’). The Historical Financ ial Information are presented in RMB, which is the
Group’s presentation currency. The functional currency of the Company is Hong Kong Dollar
(‘‘HK$’’).
(b) Transactions and balances
Foreign currency transactions are translated i nto the functional currency using the exchange
rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign
exchange gains and losses resulting from the s ettlement of such transactions and from the
translation at year-end exchange rates of moneta ry assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
Foreign exchange gains and losses that relate t o borrowings and cash and cash equivalents are
presented in the consolidated statements of compre hensive income within the ‘‘Finance cost, net’’.
All other foreign exchange gains and losses are presented in the consolidated statements of
comprehensive income within ‘‘Other losses, net’’.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 0–


--- page 513 ---
(c) Group companies
The results and financial position of foreign operations (none of which has the currency of a
hyperinflationary economy) th at have a functional currency different from the presentation
currency are translated into the pre sentation currency as follows:
. assets and liabilities for each statement of fi nancial position presented are translated at
the closing rate at the date of that statement of financial position;
. income and expenses, and after comprehensive income for each statement of
comprehensive income are translated at average exchange rates (unless this is not a
reasonable approximation of the cumulati ve effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the dates of the
transactions); and
. all resulting exchange differences are reco gnised in other comprehensive income.
On consolidation, exchange differences arisin g from the translation of any net investment in
foreign entities, and of borrowings and other fin ancial instruments designated as hedges of such
investments, are recognised in ot her comprehensive income. When a foreign operation is sold or any
borrowings forming part of the net investment are r epaid, the associated exchange differences are
reclassified to profit or loss, a s part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are
treated as assets and liabilities of the foreig n operation and translated at the closing rate.
2.5 Property and equipment
Property and equipment are initially stated at cos t. The cost of an item of property and equipment
initially recognised includes its purchase price and an y cost that is directly attributable to bringing the
asset to the location and condition necessary for it t o be capable of operating in the manner intended by
management.
Subsequent costs are include in the asset’s carryi ng amount or recognised as a separate asset, as
appropriate, only when it is probable that future ec onomic benefits associated with the item will flow to
the Group and the cost of the item can be measured re liably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are c harged to profit or loss during the financial period in
which they are incurred.
The property and equipment are depreciated on the s traight line method to allocate the cost to their
residual values over their estimated u seful lives, summarised as follows:
Right-of-use assets Shorter of lease term or useful life
Building 30 years
Office equipment 5 years
Leasehold improvement Shorter of lease term or 5 years
Automobiles 5–8 years
The assets’ residual values and usef ul lives of assets are reviewed, and adjusted if appropriate, at the
end of each reporting period. An asset’s carrying am ount is written down immediately to its recoverable
amount if the assets’ carrying amount is greater t han its estimated recov erable amount (Note 2.7).
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount
and are recognised within ‘‘other losses, net’’ in the consolidated statements of comprehensive income.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 1–


--- page 514 ---
2.6 Intangible assets
The Group’s intangible assets mainly include ac quired computer software and self-developed
software.
Intangible assets can be recognised only when f uture economic benefits expected to be obtained
from the use of item will flow into the Group and its costs can be measured reliably. Intangible assets
acquired separately are measured on initial recognition at cost.
Intangible assets with a finite useful life are amor tised using the straight-line method over their
estimated useful economic life. At each balance sheet da te, intangible assets are reviewed for indications of
impairment or changes in estimated future benefits . If such indications exit, the intangible assets are
analysed to assess whether their carrying amount is fu lly recoverable. An impairment loss is recognised if
the carrying amount exceeds the recoverable amount.
(a) Acquired computer software
Separately acquired computer software are show n at historical cost. The computer software
acquired are recognised at fair value at the acquisition date. They have a finite useful life and are
subsequently carried at cost less accumula ted amortisation and impairment losses.
(b) Self-developed applications
Costs associated with maintaining self-devel oped applications are recognised as an expense as
incurred. Development costs that ar e directly attributable to the design and testing of identifiable
and unique software products controlled by the Gr oup are recognised as intangible assets when the
following criteria are met:
. it is technically feasible to complete the product so that it will be available for use;
. it is technically feasible to complete the product and use or sell it;
. there is an ability to use or sell the products;
. it can be demonstrated how the products will generate probable future economic
benefits;
. adequate technical, financial and other r esources to complete the development and to
use or sell the products are available; and
. the expenditure attributable to the produc ts during its development can be reliably
measured.
Directly attributable costs tha t are capitalised as part of the a pplication product include the
application development employee costs and a n appropriate portion of relevant overheads.
Research expenditure and development expendi ture that do not meet the criteria in (b) above
are recognised as an expense as incurred. Developm ent costs previously recognised as an expense are
not recognised as an asset in a subsequent period.
The estimated useful lives of int angible assets are as follows:
Software 5 years
Self-developed applications 3 years
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 2–


--- page 515 ---
2.7 Impairment of non-financial assets
Intangible assets that have an indefinite useful life or intangible assets not ready to use are not
subject to amortisation and are tested annually for imp airment, or more frequently if events or changes in
circumstances indicate that they might be impaired. O t h e ra s s e t sa r et e s t e df o ri m p a i r m e n tw h e n e v e r
events or changes in circumstances indicate th at the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which t he asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an ass et’s fair value less costs of disposal and value in
use. For the purposes of assessing impairment, asset s are grouped at the lowest levels for which there are
separately identifiable cash inflows which are large ly independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets ot her than goodwill that suffered an
impairment are reviewed for possible reversa l of the impairment at the each report date.
2.8 Financial assets
(a) Classification
The Group classifies its financial assets in the following measurement categories:
. those to be measured subsequently at fair va lue (either through other comprehensive
income (‘‘OCI’’) or through profit or loss), and
. those to be measured at amortised cost.
The classification depends on the entity’s busin ess model for managing the financial assets and
the contractual terms of the cash flows.
For assets measured at fair value, gains and los ses will either be recorded in profit or loss or
OCI. For investments in equity instruments tha t are not held for trading, this will depend on
whether the Group has made an irrevocable electio n at the time of initial recognition to account for
the equity investment at fair value through o ther comprehensive income (‘‘FVOCI’’).
The Group reclassifies debt investments whe n and only when its business model for managing
those assets changes.
(b) Recognition and derecognition
Regular way purchases and sales of financial ass ets are recognised on trade-date, the date on
which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the r ights to receive cash flows from the financial
assets have expired or have been transferred and the G roup has transferred subs tantially all the risks
and rewards of ownership.
De-recognition of financial assets sold on condition of repurchase is determined by the
economic substance of the transaction. If a financi al asset is sold under an agreement to repurchase
the same or substantially the same asset at a fixed p rice or at the sale price plus a reasonable return,
the Group will not derecognise the asset. If a fin ancial asset is sold together with an option to
repurchase the financial asset at its fair value at th e time of repurchase (in case of transferor sells
such financial asset), the Group will derecognise the financial asset.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 3–


--- page 516 ---
(c) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of
a financial asset not at fair value through profit or l oss (‘‘FVPL’’), transaction costs that are directly
attributable to the acquisition of the financial asse t. Transaction costs of fi nancial assets carried at
FVPL are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model
for managing the asset and the cash flow characteristics of the asset. There are three
measurement categories into which the G roup classifies its debt instruments:
. Financial assets measured at amortised cost
The Group measures financial assets at am ortised cost when both of the following
conditions are met:
— the asset is held within a business m odel whose objective is to collect the
contractual cash flows; and
— the contractual terms give rise to cash flows that are solely payments of
principal and interest.
Interest income from these financial assets is included in finance income using the
effective interest rate method. Any gain or l oss arising on derecognition is recognised
directly in profit or loss and presented in othe r losses, net together with foreign exchange
gains and losses. Impairment losses are prese nted as separate line item in profit or loss.
. Financial assets measured at fair value through other comprehensive income
The Group measures financial assets at FVOCI when both of the following
conditions are met:
— the financial asset is held within a business model whose objective is
achieved by both collecting contractua l cash flows and selling financial
assets; and
— the contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
Movements in the carrying amount are taken through other comprehensive
income, except for the recognition of impairment gains or losses, interest income and
foreign exchange gains and losses which are recognised in profit or loss. When the
financial asset is derecognised, the cumulati ve gain or loss previously recognised in other
comprehensive income is reclassified from equity to profit or loss and recognised in
other gains/(losses). Interest income from t hese financial assets is included in finance
income using the effective interest rate method. Foreign exchange gains and losses are
presented in other gains/(losses) and impairm ent expenses are presented as separate line
item in profit or loss.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 4–


--- page 517 ---
. Financial assets measured at fa ir value through profit or loss
All financial assets that are other than those categorised as financial assets
measured at amortised cost or financial assets at FVOCI are categorised as financial
assets measured at FVPL.
Equity instruments
The Group subsequently measures all equi ty investments at fair value. Where the
Group’s management has elected to present fair v alue gains and losses on equity investments
in other comprehensive income, there is no subs equent reclassification of fair value gains and
losses to profit or loss following the derecogn ition of the investment. Dividends from such
investments continue to be recognised in profit or loss as other income when the Group’s right
to receive payments is established.
Changes in the fair value of financial asset s at FVPL are recognised in profit or loss as
applicable. Impairment losses (and reversal o f impairment losses) on equity investments
measured at FVOCI are not re ported separately from other changes in fair value.
(d) Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its
debt instruments carried at amortised cost and fi nancial assets measured at fair value through other
comprehensive income. The impairment methodology applied depends on whether there has been a
significant increase in credit risk.
For trade receivables and finance lease receivabl es, the Group applies the simplified approach
permitted by IFRS 9, which requires expected li fetime losses to be recognised from initial
recognition of the receivables. The provision mat rix is determined based on historical observed
default rates over the expected life of trade and f inance lease receivables with similar credit risk
characteristics and is adjusted for forward-looking estimates. At every reporting date the historical
observed default rates are updated and changes in t he forward-looking estimates are analysed.
Impairment on other financial assets at amor tised cost are measured as either 12-month
expected credit losses or lifetime expected credit losses, depending on whether there has been a
significant increase in credit risk since initial recognition. If a significant increase in credit risk of a
receivables has occurred since initial recognition, then impairment is measured as lifetime expected
credit losses.
2.9 Offsetting financial instruments
Financial assets and liabilities a re offset and the net amount reporte d in the consolidated statements
of financial position when there is a legally enforcea ble right to offset the recognised amounts and there is
an intention to settle on a net basis or realise the asse t and settle the liability simultaneously. The legally
enforceable right must not be contingent on future ev ents and must be enforceable in the normal course of
business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
2.10 Trade and other receivables
Trade receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business. They are generally due for settlement within 30 to 90 days and therefore are
all classified as current.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 5–


--- page 518 ---
Trade receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, wh en they are recognised at fair value. The Group holds
the trade receivables with the objective to collect th e contractual cash flows and therefore measures them
subsequently at amortised cost using the effective i nterest method. See Note 3.1 for a description of the
Group’s impairment policies.
2.11 Inventories
Inventories mainly represent vehicles for finance le ase and vehicle telematics equipment. Inventories
are stated at the lower of cost and net realisable value . Cost of vehicle includes the purchase price of motor
vehicle, licensing fee, tax and cost of telematics equipment installed.
Net realisable value is the estimated selling p rice in the ordinary course of business and the
estimated costs necessary to make the sale.
2.12 Cash and cash equivalent
In the consolidated statements of cash flows, ca sh and cash equivalents include cash on hand and
other short-term highly liquid inv estments with original maturiti es of three months that are readily
convertible to known amounts of cash and which are subj ect to an insignificant risk of changes in value, in
the consolidated statements of financial position.
2.13 Share capital
Ordinary shares is classified as equity.
Incremental costs directly attributable to the i ssue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
2.14 Trade and other payables
Trade and other payables are obligations to pay f or goods or services that have been acquired in the
ordinary course of business from suppliers. They are c lassified as current liabi lities if payment is due
within one year or less (or in the normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities.
Trade and other payables are recognised initia lly at fair value and subsequently measured at
amortised cost using the e ffective interest method.
2.15 Borrowings
Borrowings are recognised initially at fair values, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any differenc e between the proceeds (net of transaction costs) and
the redemption value is recognised in profit or loss over the period of the borrowings using the effective
interest method.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
2.16 Borrowing costs
All borrowing costs are recognised in the consolid ated statements of comprehensive income in the
year in which they are incurred. The interest expe nses associated with the borrowings of the Group,
including cost of funding for finance lease and intere st expenses for general operations, are recognised as
finance costs.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 6–


--- page 519 ---
2.17 Current and deferred tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or
loss, except to the extent that it relates to items reco gnised in other comprehensive income or directly in
equity. In this case, the tax is also recognised in ot her comprehensive income or directly in equity,
respectively.
(a) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or
substantively enacted at the reporting date in th e countries where the company’s subsidiaries operate
and generate taxable income. Management periodica lly evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to interpretation and considers
whether it is probable that a taxation authorit y will accept an uncertain tax treatment. The Group
measures its tax balances either based on the mo st likely amount or the expected value, depending
on which method provides a better prediction of the resolution of the uncertainty.
(b) Deferred income tax
Deferred income tax is provided in full, using th e liability method, on temporary differences
arising between the tax bases of ass ets and liabilities and their carrying amounts in the consolidated
financial statements. However, deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial
recognition of an asset or liability in a transaction other than a business combination that at the
time of the transaction affects n either accounting nor taxable profit or loss. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the end of
the reporting period and are expected to apply when t he related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is p robable that future taxable amounts will be
available to utilise those tem porary differences and losses.
Deferred tax liabilities and assets are not reco gnised for temporary differences between the
carrying amount and tax bases of investments in foreign operations where the company is able to
control the timing of the reversal of the temporary d ifferences and it is probable that the differences
will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset whe n there is a legally enforceable right to offset
current tax assets and liabilities and when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable
right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously.
2.18 Employee benefits
(a) Pension obligations
The Group participates in a defined contri bution plan. A defined contribution plan is a
pension plan under which the Group pays fixed c ontributions, on a mandatory, contractual or
voluntary basis, into a separate entity. The Gr oup’s subsidiaries operating in the PRC have to make
contribution to staff retirement scheme managed by local government authorities in accordance with
the relevant rules and regulations. Contributions to these schemes are charged to profit or loss as
and when incurred. The Group has no legal or constr uctive obligations to pay further contributions
if the fund does not hold sufficient assets to pay al l employees the benefits relating to employee
service in the current and prior periods.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 7–


--- page 520 ---
The contributions are recognised as employment costs when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in the
future payments is available.
(b) Housing funds, medical insurances and other social insurances
PRC employees of the Group are entitled to par ticipate in various government-supervised
housing funds, medical insurance and other social i nsurance plan. The Group contributes to these
funds based on certain percentages of the sala ries of these employees on a monthly basis. The
Group’s liability in respect of these funds is limited to the contribution payable in each period.
Contributions to the housing funds, medical insura nces and other social insurance are expensed as
incurred.
(c) Employee leave entitlements
Employee entitlements to annual leave are r ecognised when they accrue to employees. A
provision is made for the estimated liability for annual leave as a result of services rendered by
employees up to the balance sheet date. Employee ent itlements to sick leave and maternity leave are
not recognised until the time of leave.
(d) Bonus plans
The expected cost of bonuses is recognised as a lia bility when the Group has a present legal or
constructive obligation for payment of bonus as a result of services rendered by employees and a
reliable estimate of the obligation can be made. L iabilities for profit sharing and bonus plans are
expected to be settled within 1 year and are measured at the amounts expected to be paid when they
are settled.
2.19 Government grants
Grants from the government are recognised at thei r fair value where there is a reasonable assurance
that the grant will be received and the Group will comply with all attached conditions.
Government grants are recognised as income over the period necessary to match them with the
related costs which they are intended to compensate, on a systematic basis. Gover nment grants relating to
assets are deducted against the carrying amount of the assets.
2.20 Provisions
Provisions are recognised when the Group has a pres ent legal or constructive obligation as a result
of past events, it is probable that an outflow of res ources will be required to settle the obligation and a
reliable estimate of the amount can be made.
Where the Group expects a provision to be reim bursed by another party, the reimbursement is
recognised as a separate asset but only when the reim bursement is virtually certain. Provisions are not
recognised for future operating losses.
Provisions are measured at the present value of ma nagement’s best estimate of the expenditures
expected to be required to settle the obligation u sing a pre-tax rate that reflects current market
assessments of the time value of money and the ris ks specific to the obligation. The increase in the
provision due to passage of time is recognised as finance cost expense.
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 8–


--- page 521 ---
2.21 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable, and represents
amounts receivable for sales of goods and service s rendered in the ordinary course of the Group’s
activities, stated net of discounts and after elimina ted sales within the Group. Revenue is recognised when
or as the control of goods or services is transferre d to the customer. Depending on the terms of the
contract and the laws that apply to the contract, revenue may be recognised over time or at a point in time.
Control of the good or service is transferred over time if the Group’s performance:
— provides all of the benefits received and consumed simultaneously by the customer;
— creates or enhances an asset that the customer controls as the Group performs; or
— does not create an asset with an alternative use to the Group and the Group has an
enforceable right to payment for performance completed to date.
If control of the asset transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfa ction or that performance obligation. Otherwise,
revenue is recognised at a point in time when the customer obtains control of the asset.
A contract liability is the Group’s obligation to re nder the goods or services to a customer for which
the Group has received consideration from the customer.
Further details of the Group’s revenue and other income recognition policies are as follows:
(a) Sales of automobiles under finance lease arrangement
Revenue from sale of new motor vehicle under finance lease arrangement where the Group
earns a selling margin as a dealer are recognis ed upon transfer of control to customer which
generally coincides with the time when the motor vehicles are delivered and accepted by the
customers, which is determined as the lower of the fair value of the underlying automobiles and the
present value of the lease payment accruing to the Group. The corresponding leased asset is
derecognised when finance lease receivables is reco gnised on the consolidated statements of financial
position (Note 2.22(b)). Non-lease service com ponent, if any, are separated and accounted under
Note 2.21(d)(2).
(b) Finance lease income
The Group provides auto vehicle finance lease s ervices to individual customers, with the sales
of auto vehicles (Note 2.22(a)). The income unde r finance lease is recognised on an accrual basis
using the effective interest method by applying th e rate that exactly discounts the estimated future
cash receipts over the expected life of the financial instrument or a shorter period, when appropriate,
to the net carrying amount of the finance lease receivables (Note 2.22(b)).
(c) Automobiles rental
The Group provides auto vehicle operating lease services to indi vidual and corporate
customers. Revenue from these services is recognis ed on a straight-line basis in accordance with the
terms of the operating leases. For detail of the policy please refer to Note 2.22(b).
APPENDIX I ACCOUNTANT’S REPORT
–I - 2 9–


--- page 522 ---
(d) Other automobile-related income
The Group operates automobile aftermarket servi ce platform for car users to facilitates third
party vendors to provide aftermar ket usage solutions to car users during automobile usage life cycle.
Facilitation income is charged to the business-en d customer at a fixed percentage of the volume of
transactions completed with no variable conside ration and is not refundable. The Group recognises
revenue when the facilitation services are completed.
Revenue from other services including promotio n of insurance solutions provided by third
party vendors is recognised when performance ob ligation is satisfied, and when the Group has an
enforceable right to payment for performance completed to date.
2.22 Lease
The determination of whether an arrangement is, or contains, a lease is based on the substance of
the arrangement at the inception date. The arrang ement is assessed for whether fulfilment of the
arrangement is dependent on the use of a specific asse t or assets or the arrangement conveys a right to use
the asset or assets, even if that right is not explicitly specified in an arrangement.
(a) The Group as a lessee
The Group leases various properties to operate its o ffices and stores. These leases are typically
made for fixed periods of one to eight years. Lease t erms are negotiated on a n individual basis and
contain various different terms and conditions. T he lease agreements do not impose any covenants,
but leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset a nd a corresponding liability at the date at which
the leased asset is available for use by the Group. Each lease payment is allocated between the
liability and finance cost. The finance cost is cha rged to profit or loss over the lease period so as to
produce a constant periodic rate of i nterest on the remaining balance of the liability for each period.
The right-of-use asset is depreciated over the shorte r of the asset’s useful life and the lease term on a
straight-line basis. Neither extension nor terminat ion options are included in property leases across
the Group.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease
liabilities substantially include the net present value of fixed payments (including in-substance fixed
payments). The lease payments are discounted using t he interest rate implicit in the lease, if that rate
can be determined, or the Group’s incremental borrowing rate.
Right-of-use assets are measured a t cost comprising the following:
. the amount of the initial measurement of lease liability;
. any lease payments made at or before the commencement date less any lease incentives
received;
. any initial direct costs; and
. restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a
straight-line basis as an expense in profit or lo ss. Short-term leases are lea ses with a lease term of
twelve months or less. Low-value assets comprise IT -equipment and small items of office furniture.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 0–


--- page 523 ---
(b) The Group as a lessor
Operating leases
Leases of leased assets where the Group reta ins substantially all risks and rewards
incidental to ownership are classi fied as operating leases. Renta l income from operating leases
(net of any incentives given to the lessees) is reco gnised in profit or loss on a straight-line basis
over the lease term.
Initial direct costs incurred by the Group in ne gotiating and arranging operating leases
are added to the carrying amount of the leased assets and recognised as an expense in
consolidated statements of comprehensive inc ome over the lease term on the same basis as the
lease income. Contingent rents are recognis ed as income in consolidated statements of
comprehensive income when earned.
Finance lease
Leases where the Group has transferred substantially all risks and rewards incidental to
ownership of the leased assets to the lessees ar e classified as finance leases. When the Group
earns a selling profit from dealership of automobile under finance lease, the Group will
recognise as sales revenue (Note 2.21(a)), arising from the leased assets, at a lower of the fair
value or present value of the minimum lease pay ments computed at a market interest rate. The
difference between the sales revenue and the cost of sales is the selling profit or loss. The
Group does not consider itself to be a dealer w hen leasing a repossessed automobile from
previously default leases.
The leased asset is derecognised and the present value of the lease receivable is
recognised on the consolidated statements of fi nancial position and included in finance lease
receivables. The difference between the gross receivables and the present value of the lease
receivables is recognised as unearned finance income.
Each lease payment received is applied against the gross investment in the finance lease
receivables to reduce both the principal and the unearned finance income. The finance income
is recognised in profit or loss on a basis that reflects a constant periodic rate of return on the
net investment in the finance lease receivables.
Initial direct costs incurred by the Group in ne gotiating and arranging finance leases is
recognised in profit or loss in the financial pe riod corresponding to the recognition of selling
profit.
Finance lease receivables that are factored out to financial institutions with recourse to
the Group is not derecognised until the recourse period has expired and the risk and rewards
of the finance lease receivables have been fully transferred.
2.23 Vendor rebate
Volume-related vendor rebates are recognised as a deduction from cost of sales on accruals basis
with reference to the expected entitlement earne d up to the reporting date for each relevant supplier
contract. Rebates relating to item s purchased but still held at the reporting date are deducted from the
carrying value of these items so that the cost of inventories is recorded net of applicable rebates.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 1–


--- page 524 ---
2.24 Ordinary shares with redemption right
Ordinary shares with redemption right are redeemable upon occurrence of certain future events and
at the option of the holders.
The ordinary shares with redemption right are designa ted as financial liabilities at fair value through
profit or loss. They are initially recognised at fair va lue. Any directly attributable transaction costs are
recognised at finance costs in profit or loss.
Subsequent to initial recognition, the ordinary share s with redemption right are carried at fair value
with changes in fair value recognised in profit or loss , except for the portion attributable to credit risk
change that should be charged to other comprehensive income.
2.25 Dividend
Dividend declared to the Company’s shareholders is recognised as a liability in the Group’s and the
Company’s financial statements in the period in w hich the dividends are approved by the Company’s
shareholders or directors, where appropriate.
3 FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: marke t risk (including currency risk,
fair value interest rate risk and cash flow interest r ate risk), credit risk and liquidity risk. The Group’s
overall risk management programme focuses on the unpr edictability of financial markets and seeks to
minimise potential adverse effects on t he Group’s financial performance.
Risk management is carried out under policies appr oved by the board of directors. The management
identifies and evaluates financi al risks in close co-operation wi th the Group’s operating units.
(a) Market risk
(i) Currency risk
The Group mainly operates with most of the tr ansactions settled in Renminbi (‘‘RMB’’).
In respect of transactions settled in Hong Kong Dollars, the Group did not have significant
exposure to foreign exchange rate risk during the Track Record Period due to these
transactions being generally denominated in the functional currency of the respective group
entities. Management does not consider there t o be any significant currency risk associated
with the Company.
(ii) Cash flow and fair value interest risk
The Group’s interest rate risk mainly ari ses from the Group’s borrowings, lease
liabilities and finance lease receivables. Bo rrowings obtained at variable rates expose the
Group to cash flow interest rate risk; while bo rrowings, lease liabilit ies and finance lease
receivables at fixed rates expose the Group to fair value interest rate risk.
If interest rates on the borrowings at variabl e rates had risen/fallen 100 basis points
while all other variables had been held consta nt, the Group’s profit after tax for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023 would have
been approximately RMB1,125,000 lower /higher, RMB876,000 lower/higher and
RMB354,000 lower/higher, RMB607, 000 lower/higher respectively.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 2–


--- page 525 ---
If interest rates on the cash and cash equivalen ts had risen/fallen 100 basis points while
other variables had been held constant, the Gr oup’s profit after tax for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023 would have been
approximately RMB64,000 higher/lower , RMB557,000 higher/lower and RMB2,065,000
higher/lower, RMB1,073,000 h igher/lower respectively.
The exposure of the Group’s borrowings to int erest rate changes and the contractual
re-pricing dates of the borrowings at the en d of the reporting period are as follows:
As of 31 December
As of
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Variable rate borrowings 149,984 116,738 47,139 80,954
Other borrowings
— repricing dates:
1 year or less 310,815 660,331 798,254 866,770
1 to 2 years 376,934 335,774 495,161 498,057
2 to 5 years 318,225 269,979 372,861 412,079
1,155,958 1,382,822 1,713,415 1,857,860
The Group manages its interest rate risk by performing regular review and continually
monitoring its interest rate exposure and trac king the sensitivity of projected net interest
income under varying interest rate scenarios. To manage its exposure to i nterest rate risks, the
Group regulates the proportion of variable rate borrowings in its financing portfolio and
reacts to the change in interest rates throug h pricing of its finance leases to customers.
(b) Credit risk
Credit risk refer to the risk that the counter-par ty will default on its contractual obligations
resulting in financial loss to the Group. The major classes of financial assets of the Group are cash
at banks, trade and other receivables and finance lease receivables. For trade receivables and finance
leases receivables, the Group adopts policy of dea ling only with customers of appropriate credit
profile. For other financial assets, the Group a dopts the policy that exposure to credit risks are
monitored on an ongoing basis.
Majority of bank balances and fixed deposits are deposited with reputable banks.
Management considers the Group has limited cred it risk with its banks which are state-owned or
large medium sized commercial banks in the PRC and reputable banks or financial institution
outside of the PRC and are assessed as having low cre dit risk. Therefore, the expected credit loss is
minimal.
The Group has no significant concentration of c redit risk. The Group has put in place policies
to ensure that transactions are conducted with cus tomers with an appropriate credit history. The
Group will charge a market interes t rate based on their credit worthiness. The Group also performs
periodic credit evaluations of its customers based o n their past payment patterns and other factors.
For individual customers who purchased the motor vehicles under finance lease arrangement, the
Group has policies in place to review their cre dit worthiness periodically after inception.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 3–


--- page 526 ---
Credit risk policy
The Group has credit policy to monitor the level of credit risk. In general the credit record for
each customer or debtor are regularly assessed, based on the customer or debtor’s financial
condition, their credit records and other factors such as current market condition.
For finance lease receivables, the Group monito rs the credit worthiness of the customers
closely with reference to factors such as instalm ent payment pattern and usage of automobiles by the
Group’s real time GPS tracking device. In the event of any delinquent payment, the Group keeps the
right to collect the overdue interest on the def ault amount, until the overdue payment have been
fully paid. Generally, if any monthly repayment is overdue for 20 to 30 days, the Group will arrange
staff to repossess the leased assets, and engage in enforcement activities (including repayment
reminders and negotiation with lessee) for repaym ent of overdue amounts. Those finance lease
receivables, for which the customers missed the sc hedule instalment for three months or more, or the
lessee is unlikely to pay the credit obligations to th e Group in full, will be cons idered as default. The
Group has a designated team focusing on recove ry of finance lease receivables that has become
default. The team would execute various actions, i ncluding but not limited to, initialling legal
proceeding against customers in default to recove r the overdue receivables. The Group considers
those finance lease receivables for write off whe n a lessee fails to make contractual payments for
twelve months, and there is no realistic prospect of recovery.
For trade and other receivables, including amounts due from related parties, the Group
monitors debtors with long outstanding balances and will engage in enforcement activities to
recover the receivables due. The Group closely m onitors trade and other receivables collection
pattern. Those overdue trade and ot her receivables with financial difficulties, declining credit
standing and poor historical payment pattern, are considered as default. The Group will write off
these unrecovered receivables after all po ssible means of debt recovery activities.
Where finance lease receivables, trade or oth er receivables have been written off, the Group
continues to attempt to recover the receivable due . Where recoveries are made, these are recognised
in profit or loss.
Expected credit loss measurement
The simplified approach is applied for measur ing the expected credit losses which use a
lifetime expected loss allowance for all trade receivables and finance lease receivables. The
measurement of expected credit losses is a probability-weighted estimate of credit losses, i.e. a
function of the probability of default, loss given d efault (i.e. the magnitude of the loss if there is a
default) and the exposure at default.
The assessment of the probability-weighted est imate of credit losses is based on historical
data, adjusted by forward-looking information on m acroeconomic factors affecting the ability of the
debtors to settle the receivables. Generally, th e loss given default is the difference between all
contractual cash flows that are due to the Group in accordance with the contracts, and cash flows
that the Group expects to receive (‘‘expected cash shor tfalls’’), given that the Group has historically
recovered partial amounts owing via the proceeds f rom the finance lease of collected vehicles and
other legal means. The expected cash shortfall s are discounted using effective interest rate
determined at initial recognition for trade recei vables, and implied discount rate used in the
measurement of the finance lease receivables for finance lease receivables.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 4–


--- page 527 ---
Forward-looking information
The calculation of expected credit loss (‘‘ECL ’’) incorporates forwar d-looking information,
includes, the Group has performed historical anal ysis and identified the key economic variables
impacting credit risk and ECL for the receivable portfolio.
Judgment has been applied in this process of determining the key economic variables and their
associated impact on the l oss rate, forecasts of these economic var iables are estimated by statistical
method, and the impact of these economic variables on the loss rate was determined by statistical
regression analysis. Economic variables identi fied included GDP growth, unemployment rates and
money supply (‘‘M1’’), etc.
As at 30 June 2023, 31 December 2022, 2021 and 2020, the loss allowance was determined as
follows for both trade receivables and finance lease receivables:
As at 30 June 2023
Gross
carrying
amount
Expected
loss rate
Loss
allowance
RMB’000 RMB’000
Finance lease receivables:
Not yet past due 1,448,400 0.12% 1,738
Past due:
Less than 1 month 62,167 1.99% 1,237
1 to 3 months 15,174 20.57% 3,121
3 to 6 months 8,123 36.68% 2,980
6 to 12 months 2,399 100.00% 2,399
Over 1 year 1,378 100.00% 1,378
1,537,641 12,853
Trade receivables:
Not yet past due 3,791 0.01% —
Past due:
Less than 6 months 1,895 1.01% 19
6 to 12 months 361 35.09% 126
1 to 2 years 559 80.69% 452
2 to 3 years 17 100.00% 17
Over 3 years 235 100.00% 235
6,858 849
1,544,499 13,702
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 5–


--- page 528 ---
As at 31 December 2022
Gross
carrying
amount
Expected
loss rate
Loss
allowance
RMB’000 RMB’000
Finance lease receivables:
Not yet past due 1,398,133 0.11% 1,538
Past due:
Less than 1 month 60,501 2.28% 1,380
1 to 3 months 14,569 21.42% 3,121
3 to 6 months 5,578 43.23% 2,411
6 to 12 months 3,331 100.00% 3,331
Over 1 year 1,515 100.00% 1,515
1,483,627 13,296
Trade receivables:
Not yet past due 7,477 0.01% 1
Past due:
Less than 6 months 2,061 1.01% 21
6 to 12 months 596 35.09% 209
1 to 2 years 189 80.69% 152
2 to 3 years 15 100.00% 15
Over 3 years 229 100.00% 229
10,567 627
1,494,194 13,923
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 6–


--- page 529 ---
As at 31 December 2021
Gross
carrying
amount
Expected
loss rate
Loss
allowance
RMB’000 RMB’000
Finance lease receivables:
Not yet past due 1,233,278 0.10% 1,234
Past due:
Less than 1 month 54,337 2.00% 1,087
1 to 3 months 11,638 19.20% 2,234
3 to 6 months 4,158 45.46% 1,890
6 to 12 months 3,266 100.00% 3,266
Over 1 year 1,204 100.00% 1,204
1,307,881 10,915
Trade receivables:
Not yet past due 5,396 0.01% 1
Past due:
Less than 6 months 1,305 0.17% 2
6 to 12 months 63 39.41% 24
1 to 2 years 25 84.44% 21
2 to 3 years 78 99.72% 78
Over 3 years 159 100.00% 159
7,026 285
1,314,907 11,200
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 7–


--- page 530 ---
As at 31 December 2020
Gross
carrying
amount
Expected
loss rate
Loss
allowance
RMB’000 RMB’000
Finance lease receivables:
Not yet past due 955,256 0.12% 1,146
Past due:
Less than 1 month 38,020 1.93% 734
1 to 3 months 10,806 21.00% 2,269
3 to 6 months 3,412 48.53% 1,656
6 to 12 months 2,723 100.00% 2,723
Over 1 year 844 100.00% 844
1,011,061 9,372
Trade receivables:
Not yet past due 4,588 0.00% —
Past due:
Less than 6 months 2,142 5.00% 107
6 to 12 months 121 10.00% 12
1 to 2 years 78 20.00% 16
2 to 3 years 85 50.00% 42
Over 3 years 92 100.00% 92
7,106 269
1,018,167 9,641
The ageing analysis of finance lease receivable s and trade receivables are disclosed in Notes 18
and 19 of this Historical Financi al Information respectively.
For other financial assets at amortised cost , the Group applies either a 12-month expected
credit losses or lifetime expected credit losses, depending on whether there has been a significant
increase in credit risk since initial recognition. If a significant increase in credit risk of a receivable
has occurred since initial recognition then impairment is measured as lifetime expected credit losses.
Management, considered among other factors, ana lysed historical pattern and concluded that the
expected credit losses for other fi nancial assets at amortised cost to be immaterial as the credit risk is
assessed as low.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in raising funds to meet
commitments associated with financial instrumen ts. Liquidity risk may result from an inability to
sell a financial asset quickly at close to its fair value.
The Group manages its liquidity risk by ensuring the availability of fund ing through its ability
to operate profitably, maintaining sufficien t cash to enable it to meet its normal operating
commitments, having adequate amount of committed cr edit facilities. The fair value of non-current
financial assets and liab ilities are determined from the cash f lows analyses, discounted at market
bank borrowing rates of an equivalent instrument at reporting date.
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 8–


--- page 531 ---
The table below analyses the maturity profil e of the Group’s financial liabilities based on
contractual undiscounted cash flows:
On
demand/
Less than
1y e a r
Between
1 and
2y e a r s
Between
2 and
5y e a r s
Over
5y e a r s
Total
contractual
cash flows
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2020
Trade payables 41,565 — — — 41,565 41,565
Other payables 48,170 — — — 48,170 48,170
Amounts due to
shareholders 7,687 — — — 7,687 7,687
Lease liabilities 7,333 6,828 6,722 — 20,883 19,161
Ordinary shares with
redemption right — 188,228 — — 188,228 177,886
Borrowings 773,436 332,582 155,251 — 1,261,269 1,155,958
878,191 527,638 161,973 — 1,567,802 1,450,427
At 31 December 2021
Trade payables 68,463 — — — 68,463 68,463
Other payables 37,869 — — — 37,869 37,869
Amounts due to
shareholders 7,467 — — — 7,467 7,467
Lease liabilities 6,409 4,774 4,285 — 15,468 14,305
Ordinary shares with
redemption right 206,656 — — — 206,656 196,640
Borrowings 831,872 437,155 323,693 — 1,592,720 1,382,822
1,158,736 441,929 327,978 — 1,928,643 1,707,566
At 31 December 2022
Trade payables 105,860 — — — 105,860 105,860
Other payables 33,186 — — — 33,186 33,186
Amounts due to
shareholders 8,158 — — — 8,158 8,158
Lease liabilities 6,680 4,548 3,727 — 14,955 13,856
Ordinary shares with
redemption right 237,768 — — — 237,768 163,129
Borrowings 961,026 585,085 405,718 — 1,951,829 1,713,415
1,352,678 589,633 409,445 — 2,351,756 2,037,604
APPENDIX I ACCOUNTANT’S REPORT
–I - 3 9–


--- page 532 ---
On
demand/
Less than
1y e a r
Between
1 and
2y e a r s
Between
2 and
5y e a r s
Over
5y e a r s
Total
contractual
cash flows
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 30 June 2023
Trade payables 48,316 — — — 48,316 48,316
Other payables 45,697 — — — 45,697 45,697
Amounts due to
shareholders 8,420 — — — 8,420 8,420
Lease liabilities 6,341 4,349 3,983 — 14,673 13,619
Ordinary shares with
redemption right 96,397 151,398 — — 247,795 120,611
Borrowings 1,038,500 601,512 442,103 — 2,082,115 1,857,860
1,243,671 757,259 446,086 — 2,447,016 2,094,523
3.2 Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a
going concern in order to provide returns for share holders and benefits for other stakeholders and to
maintain an optimal capital struct ure to reduce the cost of capital.
In order to maintain or adjust the capital struc ture, the Group may adjust the amount of dividends
paid to shareholders, return capital to shareholde rs, issue new shares or sell assets to reduce debt.
The Group monitors capital on the basis of the gear ing ratio. This ratio is calculated as net debt
divided by total capital. Net debt is calculated as t otal borrowings (including ‘borrowings’ and ‘‘lease
liabilities’’ as shown in the consolidated statement o f financial position) less cash and cash equivalents.
The Group does not consider the amount of ordinary sh ares with redemption right when calculating net
debt. Total capital is calculated a s ‘equity’ as shown in the consolidat ed statement of financial position
plus net debt.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 0–


--- page 533 ---
The gearing ratio of the Group as at 31 December 2020, 2021 and 2022 and 30 June 2023 was as
follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Total borrowings 1,155,958 1,382,822 1,713,415 1,857,860
Lease liabilities 19,161 14,305 13,856 13,619
Less: cash and cash equivalents ( 11,880) (79,373) (201,078) (214,031)
Net debt 1,163,239 1,317,754 1,526,193 1,657,448
Total equity 408,172 443,512 506,614 565,374
Total capital 1,571,411 1,761,266 2,032,807 2,222,822
Gearing ratio 74.03% 74.82% 75.08% 74.57%
3.3 Fair value estimation
(a) Fair value hierarchy
Financial assets and financial liabilities measured at fair value in the consolidated statements
of financial position are grouped into three levels of a fair value hierarchy. The three levels are
defined based on the observability of signifi cant inputs to the measurement, as follows:
Level 1 : quoted prices (unadjusted) in active ma rkets for identical assets or liabilities.
Level 2 : inputs other than quoted prices include d within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 3 : unobservable inputs f or the asset or liability.
The carrying amounts of the Group’s current fi nancial assets, including trade and other
receivables, finance lease receivables, amounts due from related parties, cash and cash equivalents,
restricted cash and; current financial liabili ties, including trade payables, other payables and
accruals, lease liabilities and borrowings, approx imate their fair values as at the reporting date due
to their short term maturities. The carrying value of non-current financial assets and liabilities
approximate its fair value as at the reporting date.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 1–


--- page 534 ---
The following table presents the Group’s assets a nd liabilities that are measured at fair value:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Recurring fair value measurements
As at 31 December 2020
Financial liabilities at FVPL
Ordinary shares with redemption right — — (177,886) (177,886)
Total financial liabilities — — (177,886) (177,886)
Recurring fair value measurements
As at 31 December 2021
Financial assets at FVPL
Assets-backed securities 3,234 — 2,758 5,992
Interest in a partnership — — 20,000 20,000
Total financial assets 3,234 — 22,758 25,992
Financial liabilities at FVPL
Ordinary shares with redemption right — — (196,640) (196,640)
Total financial liabilities — — (196,640) (196,640)
Recurring fair value measurements
As at 31 December 2022
Financial assets at FVPL
Interest in a partnership — — 21,647 21,647
Total financial assets — — 21,647 21,647
Financial liabilities at FVPL
Ordinary shares with redemption right — — (163,129) (163,129)
Total financial liabilities — — (163,129) (163,129)
Recurring fair value measurements
As at 30 June 2023
Financial assets at FVPL
Interest in a partnership — — 22,508 22,508
Total financial assets — — 22,508 22,508
Financial liabilities at FVPL
Ordinary shares with redemption right — — (120,611) (120,611)
Total financial liabilities — — (120,611) (120,611)
There were no transfer of financial assets and l iabilities between the fair value hierarchy
classification during the years ended 31 Decem ber 2020, 2021 and 2022 and the six months ended 30
June 2023.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 2–


--- page 535 ---
Financial instrument in Level 1
The fair value of financial instruments trad ed in active markets (such as publicly traded
derivatives, and equity securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financ ial assets held by the Group is the current bid
price. These instruments are included in level 1.
Financial instrument in Level 2
The fair value of financial instruments that are not traded in an active market (for
example, over-the-counter de rivatives) is determined usi ng valuation techniques which
maximise the use of observable market data and rely as little as possible on entity-specific
estimates. If all significant inputs required t o fair value an instrument are observable, the
instrument is included in level 2.
Financial instrument in Level 3
If one or more of the significant inputs is not based on observable market data, the
instrument is included in level 3.
(b) Fair value measurement using si gnificant unobservable inputs (Level 3)
Specific valuation techniques used to value financial instruments include:
. Discounted cash flow model and unobservabl e inputs mainly including assumptions of
expected future cash flows and discount rate;
. A combination of observable and unobservable inputs, including risk-free rate, discount
rate, discount rate for lack of marke tability, market multiples, etc.
Level 3 instruments of the Group’s assets and liabilities include unlisted asset-backed
securities, unlisted equity investment and ordin ary shares with redemption right. The changes in
ordinary shares with redemption right and thei r major assumptions used in the valuation, are
presented in the Note 29.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 3–


--- page 536 ---
The following table summarises the quanti tative information about the significant
unobservable inputs used in Level 3 fair value measurements:
Ordinary shares with redemption rights
Description
Fair value as at
30 June 2023
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Ordinary shares with
redemption right
(120,611) Discounted cash
flow and equity
allocation model
Discount rate 18% The higher the
discount rate, the
lower the fair value
Possibility under
listing scenario
95% The higher the
possibility under
listing scenario, the
lower the fair value
Long-term
average growth
4.32% The higher the
long-term average
growth rate, the
higher the fair value
Description
Fair value as at
31 December
2022
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Ordinary shares with
redemption right
(163,129) Discounted cash
flow and equity
allocation model
Discount rate 17% The higher the
discount rate, the
lower the fair value
Possibility under
listing scenario
90% The higher the
possibility under
listing scenario, the
lower the fair value
Long-term
average growth
4.89% The higher the
long-term average
growth rate, the
higher the fair value
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 4–


--- page 537 ---
Description
Fair value as at
31 December
2021
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Ordinary shares with
redemption right
(196,640) Discounted cash
flow and equity
allocation model
Discount rate 17% The higher the
discount rate, the
lower the fair value
Possibility under
listing scenario
90% The higher the
possibility under
listing scenario, the
lower the fair value
Long-term
average growth
10.89% The higher the
long-term average
growth rate, the
higher the fair value
Description
Fair value as at
31 December
2020
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Ordinary shares with
redemption right
(177,886) Discounted cash
flow and equity
allocation model
Discount rate 17% The higher the
discount, the lower
the fair value
Possibility under
listing scenario
90% The higher the
possibility under
listing scenario, the
lower the fair value
Long-term
average growth
11.05% The higher the
long-term average
growth rate, the
higher the fair value
If the Group’s discount rate had increased/ decreased by one percentage point with all
other variables held constant, the profit be fore income tax for the years ended 31 December
2020, 2021 and 2022 and the six months ended 30 June 2023 would have been approximately
RMB11,911,000 higher/RMB13,915,000 lowe r, RMB15,588,000 higher/RMB18,035,000
lower, RMB7,575,000 higher/RMB8 ,734,000 lower, and RMB5,550,000
higher/RMB6,308,000 lower.
If the possibility under listing scenario had inc reased/decreased by five percentage points
with all other variables held constant, the profit before income tax for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023 would have been
approximately RMB2,269,000 lower/higher , RMB4,302,000 lower/ higher, RMB4,860,000
lower/higher, and RMB6,338,000 lower/higher.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 5–


--- page 538 ---
If the long-term average growth rate had inc reased/decreased by two percentage points
with all other variables held constant, the profit before income tax for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023 would have been
approximately RMB21,143,000 higher /RMB19,921,000 lower, RMB24,030,000
higher/RMB22,758,000 lower, RMB17,763, 000 higher/RMB16,717,000 lower, and
RMB21,600,000 higher/RMB23,167,000 lower.
Unlisted assets-backed securities
For unlisted assets-backed securities , bond yield of 8.26% was the significant
unobservable input applied for the fair value as at 31 December 2021. If the bond yield had
increased/decreased by 5% with all other variabl es held constant, the profit before income tax
for the year ended 31 December 2021 would have been approximately RMB129,000
lower/RMB142,000 higher.
Interest in a partnership
Description
Fair value as at
30 June 2023
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Interest in a
partnership
22,508 Discount cash
flow model
Discount rate 8.0% The lower the
discount rate, the
higher the fair value
Description
Fair value as at
31 December
2022
Valuation
technique
Unobservable
inputs
Range of
inputs
Relationship of
unobservable inputs
to fair value
RMB’000
Interest in a
partnership
21,647 Market approach Discount for
Lack of
marketability
(‘‘DLoM’’)
33.0% The lower the
DLoM, the higher
the fair value
The fair value of interest in a partnership approximates its carrying amount of assets
and liabilities as at 31 December 2021.
As at 31 December 2022, given the short operati ng history, reliable financial projections
were not available and hence the market approach was adopted by the Directors.
If the DLoM had increased/decreased by 5% w ith all other variables held constant, the
profit before income tax for the year ended 31 December 2022 and the six months ended 30
June 2023 would have been RMB2,183,000 lower/RMB1,494,000 higher.
As at 30 June 2023, more operating data of the partnership was available for
establishing a forecast. The Directors consider ed that using discounted cashflow model results
in a more representative fair value.
If the discount rate had increased/decreased by 1% with all the variables held constant,
the profit before income tax for the six months ended 30 June 2023 would have been
RMB769,000 lower/RMB497,000 higher.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 6–


--- page 539 ---
4 CRITICAL ACCOUNTING E STIMATES AND JUDGMENTS
Estimates and judgments are cont inually evaluated and are based on historical experience and other
factors, including expectations of future events that are believed to be reasonable under the circumstances.
(a) Revenue recognition
The Group’s finance lease service involves bot h income from dealership of automobiles and
provision of financing to customer . The allocation of lease income towards sales of automobile revenue
and finance lease income requires accounting estim ation. The Group measures the fair value of the
automobile and recognises revenue from sales of automobile upon inception of lease. The Group makes
use of public information to measure the amount of au tomobiles selling price as the Group does not sell
automobiles without financing servi ces. Information such as, competitors and suppliers quotes for similar
products are considered to estimate the s elling price for sales of automobiles.
(b) Provision for credit losses of trade and ot her receivables and finance lease receivables
Management reviews its receivables for objectiv e evidence of provision on a monthly basis. The
provision policy for trade receivables and finance le ase receivables of the Group is based on the evaluation
of collectability and ageing anal ysis of accounts and on management ’s judgement. A considerable amount
of judgement is required in assessing the ultimate re alisation of these receivables, including the current
creditworthiness, past collection of each custome r and forward looking information. If the financial
conditions of customers of the Group were to deteriorat e, resulting in impairment of their ability to make
payments, additional pro vision may be required.
Details of provision of expected credit losses are disclosed in Note 3.1(b).
(c) Current and deferred income tax
The Group is subject to income taxes under the PR C and Hong Kong. Significant judgement is
required in determining the provision for income t axes in different jurisdictions. There are many
transactions and calculations for which the ultimate t ax determination is uncertain. The Group recognises
liabilities for anticipated tax audit issues based on estimates of whether a dditional taxes will be due.
Where the final tax outcome of these matters is differ ent from the amounts that were initially recorded,
such differences will impact the current and deferre d income tax assets and liabilities in the period in
which such determination is made.
In addition, a deferred income tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which the asset can be utilised. Significant management judgement
is required to determine the amount of deferred tax a ssets that can be recognised based upon the likely
timing and the level of future taxable profits of th e individual entities together with tax planning
strategies.
(d) Estimation of fair value of financial liabilities at FVPL
The financial instruments issued by the Group represented ordinary shares with redemption right
that is not traded in an active market and the respec tive fair values are deter mined using valuation
techniques. The discounted cash flow method was use d to determine the total equity value of the Group
and the equity allocation model was adopted to dete rmine the fair value of the ordinary shares with
redemption right. Key assumptions, such as discount rate, risk-free interest rate and volatility are
disclosed in Note 29. Any changes in key assumptions (as disclosed in note 3.3) used in the equity
allocation model will have impacts on the fair values.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 7–


--- page 540 ---
(e) Impairment of non-financial assets
The Group follows the guidance of IAS 36 ‘‘Impai rment of Assets’’ to determine when assets are
impaired, which requires significant judgement. In making this judgement, the Group evaluates, among
other factors, the duration and extent to which the recoverable amount of assets is less than their carrying
balance, including factors such as the industry per formance and changes in operational cash flows. For
the purpose of assessing impairment , assets (including intangible assets) are grouped at the lowest level for
which there are separately ident ifiable cash flows (a CGU). The recoverable amount of the CGU has been
determined using the higher of value in use or fair val ue less cost of disposal. These calculations require
the use of estimates, including operating results, income and expenses of the business, future economic
conditions on growth rates and future returns.
5 REVENUE AND SEGMENT INFORMATION
The Executive Directors have been identified as the c hief operating decision-makers (‘‘CODM’’) of the
Group who review the Group’s internal reporting in orde r to assess performance and allocate resources. The
Executive Directors regard the Group’s business as a single operating segmen t and review financial information
accordingly.
Other information, together with the segment info rmation, provided to the CODM, is measured in a
manner consistent with that applied in these financial s tatements. There was no separate segment assets and
segment liabilities information provided to the CO DM, as CODM does not use this information to allocate
resources to or evaluate the performance of the operating segments.
Geographical information
The Group’s revenue is mainly derived from cus tomers in the PRC. The principal assets of the
Group were also located in the PRC as at 31 December 2020, 2021 and 2022 and 30 June 2023.
Accordingly, no analysis by geog raphical segment is provided.
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 8–


--- page 541 ---
Information about major customers
There are no single external customers contri buted to more than 10% revenue of the Group during
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
Revenue during the Track Record Period are as follows:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Sales of automobiles
under finance lease 362,934 777,856 734,600 331,012 384,710
Finance lease income 234,705 234,561 262,498 131,093 148,191
Operating lease income 132,606 144,163 126,018 69,247 61,433
Other automobile-related
income 19,516 14,682 18,410 6,786 6,667
749,761 1,171,262 1,141,526 538,138 601,001
Revenue from leases
under IFRS 16 730,245 1,156,580 1,123,116 531,352 594,334
Revenue from contract
with customer under
IFRS 15 19,516 14,682 18,410 6,786 6,667
749,761 1,171,262 1,141,526 538,138 601,001
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Timing of revenue
recognition for revenue
from contract with
customer under
IFRS 15
Recognised at a point
in time 1,502 1,602 1,715 798 1,185
Recognised over time 18,014 13,080 16,695 5,988 5,482
19,516 14,682 18,410 6,786 6,667
APPENDIX I ACCOUNTANT’S REPORT
–I - 4 9–


--- page 542 ---
Liabilities related to contract with customers
The Group has recognised the following liab i l i t i e sr e l a t e dt oc o n t r a c t sw i t hc u s t o m e r s :
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Contract liabilities, included in other
payables and accruals (Note 27) 1,998 1,644 910 392
Revenue recognised in relatio n to contract liabilities
The following table shows how much of the revenue recognised during the Track Record Period
relates to carried-forward contract liabilities:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue recognised that
was included in the
contract liability
balance at the
beginning of the year/
period 394 1,998 1,644 1,644 910
All contracts are for periods of one year or less or are billed based on time incurred. As permitted
under IFRS 15 practical expedient, the transaction price allocated to the uns atisfied performance
obligations is not disclosed.
6 OTHER INCOME, NET
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Government grants (Note) 24,395 16,676 22,638 9,340 11,499
Donation (395) — (340) (10) —
Others (698) (716) (550) (147) 130
23,302 15,960 21,748 9,183 11,629
Note: Government grants primarily consist of the fisc al support that local governments offer to the
Group entities engaged in the finance leasing business in the PRC. There are no unfulfilled
conditions or other contingencie s attaching to these grants.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 0–


--- page 543 ---
7 OTHER LOSSES, NET
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss on disposal of property
and equipment, net (927) (2,822) (2,062) (484) (2,582)
Others (5,694) (5,891) (4,752) (2,095) (1,433)
(6,621) (8,713) (6,814) (2,579) (4,015)
8 EXPENSES BY NATURE
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Costs of inventory 305,900 633,364 595,601 268,547 312,293
Sales commission 1,028 75 194 130 49
Auto-insurance premium 40,153 35,923 37,356 17,479 21,996
Employee benefit expenses
(Note 9) 109,823 120,530 120,558 59,731 60,254
Advertising expenses 8,537 10,834 8,423 4,982 3,215
Depreciation expenses
(Note 14) 86,996 102,583 98,267 51,572 50,776
Amortisation expenses
(Note 15) 10,357 14,026 13,614 7,138 6,274
Transportation expenses 3,217 4,027 3,648 1,702 2,139
Rental expenses 2,402 4,295 2,584 1,375 1,276
Traffic contravention penalty
and handling fee 4,818 5,688 4,305 2,295 1,503
Travelling expenses 6,160 5,187 6,971 3,496 4,533
Listing expenses 4,633 17,731 13,694 8,847 6,461
Auditors’ remuneration 272 721 315 194 107
Legal and professional expenses 2,867 3,391 4,245 1,917 2,280
Office expenses 4,989 4,632 4,666 2,396 2,592
Motor vehicle expenses 12,792 13,245 13,401 6,515 8,347
Provision for inventories 2,876 7,674 6,886 3,499 3,774
Repair and maintenance 6,615 9,937 10,615 5,108 6,624
Other taxes 2,270 6,868 9,268 4,515 5,446
Other expenses 10,566 8,924 9,432 4,802 5,026
627,271 1,009,655 964,043 456,240 504,965
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 1–


--- page 544 ---
9 EMPLOYEE BENEFIT EXPENSES (INC LUDING SALES COMMISSION TO STAFF)
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Wages, salaries and bonuses 94,740 77,969 75,165 40,866 37,012
Contribution to defined
contribution plans and social
security costs 9,659 16,492 15,970 7,960 8,507
Sales commission 15,200 30,759 31,284 11,876 15,718
119,599 125,220 122,419 60,702 61,237
Capitalised as intangible assets (9,776) (4,690) (1,861) (971) (983)
109,823 120,530 120,558 59,731 60,254
(a) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for each of the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023 include 2, 2, 3, 3 and 3
directors whose emoluments are reflected in the ana lysis shown in Note 35. The emoluments payable to
the remaining 3, 3, 2, 2 and 2 individuals for each of the years ended 31 December 2020, 2021 and 2022
and the six months ended 30 June 2022 and 2023 are as follows:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Wages, salaries and
bonuses 2,535 2,000 1,092 482 517
Contribution to defined
contribution plans and
social security costs 140 257 128 43 48
2,675 2,257 1,220 525 565
The emoluments fell within the following bands:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(unaudited)
HK$0 to HK$500,000 — — — 2 2
HK$500,001 to
HK$1,000,000 2 3 2 — —
HK$1,000,001 to
HK$1,500,000 1 — — — —
33222
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 2–


--- page 545 ---
10 FINANCE COST, NET
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Finance cost:
Costs of funding (Note) (98,682) (108,831) (131,381) (66,889) (76,001)
Interest expenses on other
borrowings (10,887) (10,122) (11,807) (6,388) (6,501)
Interest expenses on lease
liabilities (1,452) (876) (803) (402) (366)
(111,021) (119,829) (143,991) (73,679) (82,868)
Finance income:
Bank interest income 763 320 228 104 344
Net gain on extension of
borrowing from Pre-IPO
Investor 1 (Note 28) — 683 — — —
Imputed interest income from
deposits for borrowings 1,086 1,005 745 392 491
1,849 2,008 973 496 835
Finance cost, net (109,172) (117,821) (143,018) (73,183) (82,033)
Note: Cost of funding represented finance cost for purchase of automobiles for lease.
11 INCOME TAX EXPENSES
The income tax expenses of the Group is analysed as follows:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Income tax expenses
Current income tax 1,887 15,937 11,968 8,174 5,600
Deferred income tax
(Note 30) 8,829 (3,614) 2,723 (4,546) (2,695)
10,716 12,323 14,691 3,628 2,905
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 3–


--- page 546 ---
A reconciliation of the tax charge applicable to prof it before income taxes using the applicable tax rates
for relevant tax jurisdictions to the tax expenses is as follows:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit before income tax 20,969 43,010 91,773 47,970 65,159
Tax calculated at PRC statutory
income tax rate of 25% 5,242 10,753 22,943 11,993 16,290
Effect of preferential tax rates
applicable to relevant
jurisdictions/group entities (373) (426) (624) (330) —
Tax effects of:
Expenses not deductible for tax
purposes 3,981 1,781 2,019 777 504
Income not taxable for tax
purpose — — (12,137) (9,682) (12,976)
Tax loss not recognised 1,866 1,775 1,250 870 327
Withholding tax — — 1,240 — (1,240)
Additional tax deductible
allowed — (1,560) — — —
10,716 12,323 14,691 3,628 2,905
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, the
weighted average applicable tax rate were 23%, 23%, 24%, 24% and 25%, respectively. The change in weighted
average applicable tax rate was mainly caused by a cha nge in mix of profits earned or losses incurred by the
group entities.
During the year ended 31 December 2022 and the six months ended 30 June 2022 and 2023, income not
taxable for tax purpose mainly represented the fair value gain of ordinary shares with redemption right.
1 Cayman Islands Income Tax
The Company is incorporated under the law of the Cayman Islands as an exempted company with
limited liability under the Companies Act of the C ayman Islands and is not subject to Cayman Islands
income tax.
2 British Virgin Islands Income Tax
Under the current laws of the British Virgin Islands (‘‘BVI’’), the BVI subsidiary is not subject to tax
on its income or capital gains. In addition, any payme nts of dividends are not subject to withholding tax in
the BVI.
3 Hong Kong Income Tax
No Hong Kong profits tax was provided for as th ere was no estimated assessable profit that was
subject to Hong Kong profits tax during the Track Record Period.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 4–


--- page 547 ---
4 Withholding Tax
The Group is subject to withholding tax at the rate of 10% on the distributions of profits generated
from the Group’s PRC subsidiaries which are direct ly owned by the Group’s subsidiaries incorporated in
Hong Kong.
5 PRC Enterprise Income Tax (‘‘EIT’’)
The income tax of the Group in respect of its operations in the PRC was calculated at the tax rate of
25% on the assessable profits for the Track Record Period, other than two subsidiaries which were
certified as High and New Technology Enterprises (H NTE) and were entitled to c oncessionary tax rate of
15% for three consecutive years from 2019 to 2021 and 2020 to 2022, respectively. Subsequently, these
subsidiaries did not renew the HNTE Certificate an d therefore the tax rate was changed to 25% from 2022
and 2023, respectively.
12 EARNINGS PER SHARE
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(unaudited)
Profit attributable to owners of the
Company (RMB’000) 12,341 34,112 78,913 45,627 62,402
Weighted average number of
ordinary shares in issue 319,746,094 319 ,746,094 319,746,094 319,746,094 319,746,094
D i l u t e di m p a c to np r o f i t
(RMB’000) — 4,153 (47,251) (34,555) (46,335)
Diluted profit attributable to
owners of the Company
(RMB’000) 12,341 38,265 31,662 11,072 16,067
Numbers of ordinary shares with
redemption right with potential
dilutive effect — 65,935,366 69,189,179 69,189,179 69,189,179
Weighted average number of issued
ordinary shares for calculating
diluted profit per share 319,746,094 385,681,460 388,935,273 388,935,273 388,935,273
Profit per share
— Basic (RMB cents per share) 3.86 10.67 24.68 14.27 19.52
— Diluted (RMB cents per share) 3.86 9.92 8.14 2.85 4.13
(i) Basic
Basic earnings per share is calculated by dividin g the profit attributable to owners of the Company
by the weighted average number of ordinary shares in issue during the Track Record Period.
The earnings per share presented below has not b een taken into account the capitalisation issue
where by the total number of ordinary shares and ordina ry shares with redemption right will increase from
388,935,273 shares to 412,500,000 shares. The capitalisation issue has not become effective as at the date
of this report and will only take place upon the Listing.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 5–


--- page 548 ---
(ii) Diluted
Diluted earnings per share is calculated by adj usting the weighted average number of ordinary
shares outstanding to assume conversion of all dilutive potential ordinary shares.
Diluted earnings per share for the year ended 31 December 2020 were the same as the basic earnings
per share as the effect of the ordinary shares with redemption right would have been anti-dilutive.
For the years ended 31 December 2021 and 2022 and the six months ended 30 June 2022 and 2023,
the ordinary share with redemption right was diluti ve and has been taken into account in the calculation
of diluted EPS.
13 DIVIDEND
No dividend has been paid or declared by the Company since its incorporation.
14 PROPERTY AND EQUIPMENT
(a) Property and equipment
Right-of-
use assets Building
Office
equipment
Auto-
mobiles
Leasehold
improvement Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As of 1 January 2020
Cost 52,900 4,638 11,282 348,025 20,007 436,852
Accumulated depreciation (23,091) (664) (5,447) (35,970) (9,068) (74,240)
Net book amount 29,809 3,974 5,835 312,055 10,939 362,612
For the year ended
31 December 2020
Opening net book amount 29,809 3,974 5,835 312,055 10,939 362,612
Addition 1,928 — 368 169,578 291 172,165
Depreciation charge (9,115) (144) (2,048) (71,793) (3,896) (86,996)
Transfer to inventories — — — (3,005) — (3,005)
Disposal (4,507) — (315) (8,783) — (13,605)
Closing net book amount 18,115 3,830 3,840 398,052 7,334 431,171
As of 31 December 2020
Cost 45,506 4,638 10,930 501,913 20,298 583,285
Accumulated depreciation (27,391) (808) (7,090) (103,861) (12,964) (152,114)
Net book amount 18,115 3,830 3,840 398,052 7,334 431,171
For the year ended
31 December 2021
Opening net book amount 18,115 3,830 3,840 398,052 7,334 431,171
Addition 7,819 — 1,442 50,538 5,771 65,570
Depreciation charge (7,124) (145) (1,626) (89,609) (4,079) (102,583)
Transfer to inventories — — — (9,022) — (9,022)
Disposal (4,874) — (1,261) (25,863) — (31,998)
Closing net book amount 13,936 3,685 2,395 324,096 9,026 353,138
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 6–


--- page 549 ---
Right-of-
use assets Building
Office
equipment
Auto-
mobiles
Leasehold
improvement Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As of 31 December 2021
Cost 48,451 4,638 10,329 511,206 26,069 600,693
Accumulated depreciation (34,515) (953) (7,934) (187,110) (17,043) (247,555)
Net book amount 13,936 3,685 2,395 324,096 9,026 353,138
For the year ended
31 December 2022
Opening net book amount 13,936 3,685 2,395 324,096 9,026 353,138
Addition 6,861 — 358 206,018 344 213,581
Depreciation charge (6,940) (145) (1,093) (86,845) (3,244) (98,267)
Transfer to inventories — — — (68,808) — (68,808)
Disposal (211) — (34) (31,695) — (31,940)
Closing net book amount 13,646 3,540 1,626 342,766 6,126 367,704
As of 31 December 2022
Cost 54,209 4,638 10,427 530,963 26,413 626,650
Accumulated depreciation (40,563) (1,098) (8,801) (188,197) (20,287) (258,946)
Net book amount 13,646 3,540 1,626 342,766 6,126 367,704
As of 31 December 2022
Cost 54,209 4,638 10,427 530,963 26,413 626,650
Accumulated depreciation (40,563) (1,098) (8,801) (188,197) (20,287) (258,946)
Net book amount 13,646 3,540 1,626 342,766 6,126 367,704
For the six months ended
30 June 2023
Opening net book amount 13,646 3,540 1,626 342,766 6,126 367,704
Addition 3,354 — 450 222,801 799 227,404
Depreciation charge (3,069) (72) (288) (45,970) (1,377) (50,776)
Transfer to inventories — (40,374) — (40,374)
Disposal (488) — (20) (15,777) — (16,285)
Closing net book amount 13,443 3,468 1,768 463,446 5,548 487,673
As of 30 June 2023
Cost 56,048 4,638 10,712 661,630 27,212 760,240
Accumulated depreciation (42,605) (1,170) (8,944) (198,184) (21,664) (272,567)
Net book amount 13,443 3,468 1,768 463,446 5,548 487,673
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 7–


--- page 550 ---
Depreciation expenses have been charged to the cons olidated statements of comprehensive income
as follows:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cost of revenue 70,288 88,192 83,357 45,026 43,517
Selling and marketing
expenses 9,547 8,233 7,376 3,610 3,499
Administrative expenses 7,161 6,158 7,534 2,936 3,760
86,996 102,583 98,267 51,572 50,776
As at 31 December 2020, 2021 and 2022 and 30 June 2023, automobiles of RMB390,852,000,
RMB317,753,000, RMB324,702,000 and RMB447,585, 000 were subject to operating leases, respectively.
(b) Leases
This note provides information for leases where the Group is a lessee.
(i) Amounts recognised in the consolidated statements of financial position
The consolidated statements of fi nancial position shows the foll owing balances relating to the
leases:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
Office and shop premises 17,936 13,831 13,512 12,427
Staff quarters 179 79 114 85
Car parks — 26 20 931
18,115 13,936 13,646 13,443
Lease liabilities
Current 6,419 5,781 6,087 5,762
Non-current 12,742 8,524 7,769 7,857
19,161 14,305 13,856 13,619
Additions to the right-of-use assets durin g the years ended 31 December 2020, 2021 and 2022
and the six months ended 30 June 2023 amount ed to RMB1,928,000, RMB7,819,000,
RMB6,861,000, and RMB3,354,000, representi ng the lease of office and shop premises, staff
quarters and car parks.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 8–


--- page 551 ---
(ii) Amounts recognised in the consolidated statements of comprehensive income
The consolidated statements of comprehensiv e income shows the following amounts relating
to the leases:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Depreciation charge
of right-of-use
assets (Note 8) 9,115 7,124 6,940 3,379 3,068
Expenses relating to
short-term leases
(Note 8) 2,402 4,295 2,584 1,375 1,276
Interest expense
(Note 10) 1,452 876 803 402 366
12,969 12,295 10,327 5,156 4,710
Depreciation expenses related to right- of-use assets are recognised as below:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Right-of-use assets
Office and shop
premises 8,560 6,977 6,853 3,309 2,959
Staff quarters 405 146 82 67 29
C a r p a r k s 1 5 0153 8 0
9,115 7,124 6,940 3,379 3,068
The total cash outflow for leases for the years ended 31 December 2020, 2021 and 2022 and the
six months ended 30 June 2022 and 2023 amounted to RMB13, 666,000, RMB13,285,000,
RMB11,642,000, RMB5,388,000 an d RMB5,196,000 respectively.
(iii) The Group’s leasing activities and how these are accounted for
The Group leases various properties including o ffice, and shop premises, staff quarters and car
parks.
Leases entered by the Group are generally wi th lease term of 1 to 7 years without renewal
option. The lease agreements do not impose any cove nants other than the security interests in the
leased assets that are held by the lessors. Leased assets must not be used as security for borrowing
purposes.
APPENDIX I ACCOUNTANT’S REPORT
–I - 5 9–


--- page 552 ---
15 INTANGIBLE ASSETS
Computer
software
Self-developed
application
Intangible
assets under
development Total
RMB’000 RMB’000 RMB’000 RMB’000
As of 1 January 2020
Cost 5,377 25,948 4,686 36,011
Accumulated amortisation (2,115) (9,973) — (12,088)
Net book amount 3,262 15,975 4,686 23,923
For the year ended
31 December 2020
Opening net book amount 3,262 15,975 4,686 23,923
Additions 1,729 — 11,368 13,097
Transfer upon completion — 11,522 (11,522) —
Amortisation charge (1,667) (8,690) — (10,357)
Closing net book amount 3,324 18,807 4,532 26,663
As of 31 December 2020
Cost 7,106 37,470 4,532 49,108
Accumulated amortisation (3,782) (18,663) — (22,445)
Net book amount 3,324 18,807 4,532 26,663
For the year ended
31 December 2021
Opening net book amount 3,324 18,807 4,532 26,663
Additions 163 — 11,321 11,484
Transfer upon completion — 15,022 (15,022) —
Amortisation charge (2,258) (11,768) — (14,026)
Closing net book amount 1,229 22,061 831 24,121
As of 31 December 2021
Cost 7,269 52,493 831 60,593
Accumulated amortisation (6,040) (30,432) — (36,472)
Net book amount 1,229 22,061 831 24,121
For the year ended
31 December 2022
Opening net book amount 1,229 22,061 831 24,121
Additions — — 11,272 11,272
Transfer upon completion — 9,406 (9,406) —
Amortisation charge (991) (12,623) — (13,614)
Closing net book amount 238 18,844 2,697 21,779
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 0–


--- page 553 ---
Computer
software
Self-developed
application
Intangible
assets under
development Total
RMB’000 RMB’000 RMB’000 RMB’000
As of 31 December 2022
Cost 7,269 61,900 2,697 71,866
Accumulated amortisation (7,031) (43,056) — (50,087)
Net book amount 238 18,844 2,697 21,779
For the six months ended
30 June 2023
Opening net book amount 238 18,844 2,697 21,779
Additions — — 4,928 4,928
Transfer upon completion — 4,357 (4,357) —
Amortisation charge (206) (6,068) — (6,274)
Closing net book amount 32 17,133 3,268 20,433
As of 30 June 2023
Cost 7,269 66,257 3,268 76,794
Accumulated amortisation (7,237) (49,124) — (56,361)
Net book amount 32 17,133 3,268 20,433
Amortisation expenses have been ch a r g e dt op r o f i to rl o s sa sf o l l o w s :
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cost of revenues 1,992 2,229 1,652 1,098 216
Selling expenses 3,495 6,968 8,833 4,419 4,758
Administrative expenses 4,870 4,829 3,129 1,621 1,300
10,357 14,026 13,614 7,138 6,274
The intangible assets under development are genera lly completed within 1 year, and no amortisation is
provided.
Impairment assessment
The Group has developed the software which is int ernally used for finance lease operation. The
Group has recognised RMB4,532,000, RMB831,000 , RMB2,697,000 and RMB3,268,000 of intangible
assets under development as at 31 December 2020, 2021 and 2022 and 30 June 2023 respectively based on
the stage of completion. The intangible assets unde r development would be completed within 12 months
and the amount would be transferred to ‘‘self -developed software’’ upon the completion.
These intangible assets under development are attributable to the Group’s CGU of finance lease
business. For the purpose of impairment test as at 31 December 2020, 2021 and 2022, the recoverable
amounts of the CGU of finance lease business are de termined based on value-in-use calculations.
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 1–


--- page 554 ---
The recoverable amount of the CGU is determined based on a value-in-use calculation which uses
cash flow projection based on a fiv e-year financial budgets approved by the management. The financial
budgets are prepared based on a five-year business p lan which is appropriate after considering the
sustainability of business growth, stability of core business developments and achievement of business
targets.
For CGU of finance lease business, the pre-tax WA CC applied to cash flow projections was around
15.1%. The pre-tax discount rate was derived from th e post-tax weighted average cost of capital of the
cash generating unit with adoption o f Capital Asset Pricing Model (‘‘CAPM’’) to estimate the cost of
equity. The CAPM inputs, including levered beta and hi storical debt-to-capital ratio, were obtained via
market data of comparable companies which are listed in major exchange markets and focused in the
leasing industry and these inputs were relativ ely stable throughout Track Record Period.
Other key assumptions to the valua tion model used are as follows:
As at 31 December
2020 2021 2022
Average yield of finance lease receivables 22.3% 20.4% 19.0%
As at 31 December 2020, 2021 and 2022, the management assessed the recoverable amount of the
CGU and determined that no impairment loss was recogn ised for the capitalised development costs as the
recoverable amounts exceeded the carrying amounts.
The excess of the estimated recoverable amount ov er its carrying amount (i.e. the headroom) is as
listed in below table:
As at 31 December
2020 2021 2022
RMB’000 RMB’000 RMB’000
CGU of finance lease business 67,189 68,990 78,427
The directors of the Company performed sensitivit y analysis based on the assumptions that revenue
growth rate or average yield of finance lease receivables has been changed. Had the estimated key
assumption during the forecast period been chan ged as below, the headroom would decrease to the
amounts as follows:
As at 31 December
2020 2021 2022
RMB’000 RMB’000 RMB’000
CGU of finance lease business
— Average yield of finance lease receivables decrease
by 1% 36,737 38,425 43,951
— Pre-tax WACC increase by 1% 28,516 28,524 32,422
The management does not foresee any reasonable change in the key assumptions used in the
value-in-use calculations that wi ll cause the recoverable amount of intangible assets under development to
be less than its carrying amount.
As at 30 June 2023, management of the Group considers the key assumption used at 31 December
2022 remain valid and concluded that there is no mate rial change in the headroom position of recoverable
amount over the carrying value and therefore, there is no impairment of the Gr oup’s intangible assets.
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 2–


--- page 555 ---
16 SUBSIDIARIES
The Company
The investment in a subsidiary of the Company repr esents the fair values of the Listing Business
attributable to owners of the C ompany transferred under the Company upon the completion of the
Reorganisation (Note 1.2) on 28 November 2019.
During the period ended 30 June 2023, due to the changes in the market condition, the management
assessed the recoverable amount of investment in a subsidiary by discounted cashflow model with the
relevant assumptions used in valuati on of ordinary shares with redemption right in note 29. Accordingly,
investment in subsidiary has been impaired by RM B293,556,000 in the Company statement of financial
position as at 30 June 2023.
The Group
Particulars of the subsidiaries for the Group as at 31 December 2020, 2021 and 2022 and 30 June
2023 are set out in Note 37.
Material non-controlling interests
The total non-controlling interests as at 31 December 2020, 2021 and 2022 and 30 June 2023
represents net equity shared by non-controll ing shareholders of RMB11,633,000, RMB8,208,000,
RMB6,377,000, and RMB6,229,000, respectively.
On 30 November 2017, the Group entered into an agreement with Ningde Transport Investment
Group Company Limited (‘‘Ningde Transport Investm ent’’) to incorporate Fujian ZyooCar where the
Group owns 51% equity interest. 1 7,150,000 shares at RMB1.00 each were subscribed by Ningde
Transport Investment Group Company Limited.
During the year ended 31 December 2022, the Group entered into a supplemental agreement with
Ningde Transport Investment which was subsequent ly terminated during the same year with no impact on
the non-controlling interest as at 31 December 2022.
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 3–


--- page 556 ---
Summarised financial information on subsidia ries with material non-controlling interests
Set out below are the summarised financial informat ion for the subsidiaries that has non-controlling
interests that are material to the Group.
Summarised statements of financial position
Fujian ZyooCar
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current
Assets 27,749 26,945 41,146 12,232
Liabilities (19,782) (19, 695) (30,664) (2,501)
Current net assets 7,967 7,250 10,482 9,731
Non-current
Assets 16,618 10,649 3,682 3,013
Liabilities (845) (1,149) (1,149) (31)
Non-current net assets 15,773 9,500 2,533 2,982
Net assets 23,740 16,750 13,015 12,713
Accumulated non-controlling i nterests 11,633 8,208 6,377 6,229
Summarised statements of comprehensive income
Fujian ZyooCar
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue 5,579 4,345 4,447 1,030 878
Loss before income tax (4,252) (6,997) (3,632) (2,622) (262)
Income tax expense/(credits) (9) 7 (104) (2) (40)
Loss for the year/period (4,261) (6,990) (3,736) (2,624) (302)
Other comprehensive income — — — — —
Total comprehensive loss (4,261) (6,990) (3,736) (2,624) (302)
Total comprehensive loss
allocated to non-controlling
interests (2,088) (3,425) (1,831) (1,286) (148)
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 4–


--- page 557 ---
Summarised cash flows
Fujian ZyooCar
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Cash flows from operating
activities
Cash generated from operations 1,563 1,573 621 289 168
Income tax paid — — — — —
Net cash generated from
operating activities 1,563 1,573 621 289 168
N e tc a s hu s e di ni n v e s t i n g
activities (1,939) (673) (197) — —
Net cash generated from
financing activities — — — — —
Net (decrease)/increase in cash
and cash equivalents (376) 900 424 289 168
Cash and cash equivalents at
beginning of year/period 494 118 1,018 1,018 1,442
Cash and cash equivalents at
end of year/period 118 1,018 1,442 1,307 1,610
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 5–


--- page 558 ---
17 FINANCIAL INSTR UMENTS BY CATEGORY
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Assets as per consolidated statements of
financial position
Financial assets at fair value through
profit or loss — 25,992 21,647 22,508
Financial asset at amortised cost:
Finance lease receivables (Note 18) 1,001,689 1,296,966 1,470,331 1,524,788
Trade receivables (Note 19) 6,837 6,741 9,940 6,009
Deposits and other receivables 70,723 81,083 95,478 99,330
Amounts due from shareholders 5,733 5,569 6,085 6,280
Restricted cash (Note 21(b)) 9,675 5,000 4,534 538
Cash and cash equivalents (Note 21(a)) 11,880 79,373 201,078 214,031
1,106,537 1,500,724 1,809,093 1,873,484
Liabilities as per consolidated statements of
financial position
Financial liabilities at fair value through profit
or loss:
Ordinary shares with redemption right
(Note 29) 177,886 196,640 163,129 120,611
Financial liabilities at amortised cost:
Borrowings (Note 28) 1,155,958 1,382,822 1,713,415 1,857,860
Amounts due to shareholders 7,687 7,467 8,158 8,420
Lease liabilities (Note 14(b)) 19,161 14,305 13,856 13,619
Trade payables (Note 26) 41,565 68,463 105,860 48,316
Other payables (excluding advances from
customers, contract liabilities, staff costs
and welfare accruals and other tax
payables) 48,170 37,869 33,186 45,697
1,450,427 1,707,566 2,037,604 2,094,523
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 6–


--- page 559 ---
18 FINANCE LEASE RECEIVABLES
The Group provides automobile financing lease serv ices. Details of finance lease receivables as at 31
December 2020, 2021 and 2022 and 30 June 2023 are as below:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finance lease receivables
— Finance lease receivables, gross 1,278,712 1,668,105 1,842,123 1,935,517
— Unearned finance income (267,651) (360,224) (358,496) (397,876)
Finance lease receivables, net 1, 011,061 1,307,881 1,483,627 1,537,641
Less: allowance for impairment of finance
lease receivables (9,372) (10,915) (13,296) (12,853)
Carrying amount of finance lease receivabl es 1,001,689 1,296,966 1,470,331 1,524,788
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Finance lease receivables, gross
— Within one year 524,722 647,928 752,427 817,498
— Between one and two years 403,494 528,257 597,330 617,702
— Between two and five years 350,496 491,920 492,366 500,317
1,278,712 1,668,105 1,842,123 1,935,517
Finance lease receivables, net
— Within one year 383,816 469,316 566,894 601,124
— Between one and two years 318,039 409,520 479,080 494,025
— Between two and five years 309,206 429,045 437,653 442,492
1,011,061 1,307,881 1,483,627 1,537,641
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 7–


--- page 560 ---
An ageing analysis of finance lease receivables is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Not past due 955,256 1,233,278 1,398,133 1,448,400
Past due
Up to 1 month 38,020 54,337 60,501 62,167
1 to 3 months 10,806 11,638 14,569 15,174
3 to 6 months 3,412 4,158 5,578 8,123
6 to 12 months 2,723 3,266 3,331 2,399
Over 12 months 844 1,204 1,515 1,378
Finance lease receivables 1,011, 061 1,307,881 1,483,627 1,537,641
Less: allowance for impairment of finance
lease receivables (9,372) (10,915) (13,296) (12,853)
Carrying amount of finance lease receivabl es 1,001,689 1,296,966 1,470,331 1,524,788
As of 31 December 2020, 2021 and 2022 and 30 June 2023, carrying amounts of the finance lease
receivables are denominated in RMB and approximat e their fair values at each of the reporting dates.
Movements on the Group’s allowance for impairmen t of finance lease receivables are as follows:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of year/period 8,670 9,372 10,915 13,296
Recovery of finance receivables written-off 772 596 812 738
Charge for the year/period 2,389 4,275 4,520 2,526
Written-off (2,459) (3,328) (2,951) (3,707)
At end of year/period 9,372 10,915 13,296 12,853
19 TRADE RECEIVABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 7,106 7,026 10,567 6,858
Less: allowance for impairment of trade
receivables (269) (285) (627) (849)
6,837 6,741 9,940 6,009
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 8–


--- page 561 ---
As of 31 December 2020, 2021 and 2022 and 30 June 2023, the carrying amounts of trade receivables were
primarily denominated in RMB and approximate t heir fair values at each of the reporting dates.
Trade receivables are non-interest bearing and are gen erally on 15 to 30 days terms. The credit terms are
assessed and approved on a case by case basis.
An ageing analysis of trade receivables (net of allo wance for impairment) based on invoice date is as
follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Up to 3 months 6,572 6,591 9,052 5,189
3 to 6 months 51 108 445 478
Over 6 months 214 42 443 342
6,837 6,741 9,940 6,009
Movements on the Group’s allowance for impai rment of trade receivables are as follows:
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of year/period 239 269 285 627
Charge for the year/period, net 30 16 342 222
At end of year/period 269 285 627 849
APPENDIX I ACCOUNTANT’S REPORT
–I - 6 9–


--- page 562 ---
20 PREPAYMENTS, DEPOSITS AND OTHER RECEIVABLES
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Non-current assets:
Deposits 20,646 13,037 32,157 38,409
20,646 13,037 32,157 38,409
Current assets:
Deposits 13,427 24,274 18,528 17,305
Purchase rebate receivables 5,641 2,811 4,880 1,930
Value added tax refund receivables 10,214 13,222 11,309 12,039
Other receivables 21,478 28,001 28,882 29,970
50,760 68,308 63,599 61,244
Less: allowance on impairment of other
receivables (683) (262) (278) (323)
50,077 68,046 63,321 60,921
Total financial assets 70,723 81,083 95,478 99,330
Non-financial assets
Current
Prepayment for inventories 41,813 61,217 62,232 39,669
Prepayment for auto-insurance premium 26,338 31,199 42,499 35,566
Prepaid listing expenses 6,264 4,480 5,173 6,970
Prepaid expenses 18,105 22,400 20,317 21,259
Other tax recoverable 94,570 55,988 70,823 83,334
Other prepayments 1,238 1,205 1,603 1,541
Total non-financial assets 188,328 176,489 202,647 188,339
Total prepayments, deposits and other
receivables 259,051 257,572 298,125 287,669
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Current assets:
Prepaid listing expenses 6,264 4,480 5,173 6,970
Prepaid expenses 5,872 2,005 3,473 564
12,136 6,485 8,646 7,534
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 0–


--- page 563 ---
21 CASH AND BANK BALANCE
(a) Cash and cash equivalents
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cash at licensed payment platforms
(Note (i)) 2,959 4,639 6,117 5,988
Cash at banks (Note (ii)) 8,921 74,734 194,961 208,043
11,880 79,373 201,078 214,031
Notes:
(i) Cash at licensed payment platforms, which are denominated in RMB, are deposited with
major licensed payment platforms in the PRC. T he balances are unsecured and non-interest
bearing.
(ii) Cash at banks earns interest either at floatin g rates based on daily bank deposit rates or fixed
rates determined at deposit dates. The Group’ s cash at banks are mostly denominated in RMB
deposited with reputable banks in the PRC with in significant credit risk. As at 31 December
2020, 2021 and 2022 and 30 June 2023, the Group had cash at banks amounting to
RMB8,527,000, RMB74,283,000, RMB194,701,0 00 and RMB207,531,000 respectively held in
the PRC. These cash at banks are subject to the rules and regulations of foreign exchange
control promulgated by the PRC government.
The carrying amounts of the Group’s cash at li censed payment platforms and cash at banks are
denominated in the following currencies:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
RMB 11,809 79,310 200,768 213,519
HK$ 71 63 310 512
11,880 79,373 201,078 214,031
(b) Restricted cash
Cash that is restricted as to withdrawal for use or pledged as security is reported separately on the
face of the consolidated statements of financial pos ition, and is not included in the total cash and cash
equivalents in the consolidated st atements of cash flows (Note 31).
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Deposits pledged for bills payable 9,675 5,000 4,534 538
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 1–


--- page 564 ---
As of 31 December 2020, 2021 and 2022 and 30 June 2023, the Group’s restricted cash was
denominated in RMB.
22 INVENTORIES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Automobiles 146,130 148,151 197,625 131,315
Vehicle telematics equipm ent 1,655 1,559 2,106 1,873
147,785 149,710 199,731 133,188
Provision for inventories (5,764) (7,827) (6,097) (5,647)
142,021 141,883 193,634 127,541
Automobiles included new and repossessed automobiles. For the years ended 31 December 2020, 2021 and
2022 and the six months ended 30 June 2023, the cost of inventories recognised as expenses included in cost of
revenue amounted to approximately RMB305, 900,000, RMB633,364,000, RMB595,601,000 and
RMB312,293,000 respectively.
23 FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
As at 31 December
As at
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
Asset-backed securities 5,992 — —
Interest in a partnership 20,000 21,647 22,508
25,992 21,647 22,508
(a) Asset-backed securities
Asset-backed securities are denominated in RMB. Its fair value is analysed as follow:
Year ended 31 December
Six months
ended
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
At the beginning of year/period — 5,992 —
Acquisition of financial assets at fair value through
profit or loss 8,000 — —
Fair value change on revaluation recognised in
profit or loss (8) 351 —
Disposal/redemption of financial assets at fair value
through profit or loss (2,000) (6,343) —
At the end of year/period 5,992 — —
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 2–


--- page 565 ---
On 31 March 2021, the Group acquired 80,000 units of asset-backed securities from Sinolink
Securities Company Limited. The Group sold 20,000 units of asset-backed securities during the year ended
31 December 2021. The remaining 60,000 units of asset-backed securities were redeemed during the year
ended 31 December 2022.
(b) Interest in a partnership
Year ended 31 December
Six months
ended
30 June
2021 2022 2023
RMB’000 RMB’000 RMB’000
At the beginning of year/period 20,000 20,000 21,647
Financial assets at fair value through profit or loss — 1,647 861
At the end of year/period 20,000 21,647 22,508
Name of entity
Place of
incorporation
Principal
place of
operation
Measurement
method
Proportion
of issued
shares/
registers
capital held
by the Group
As at 31 December
As at
30 June
2023 Principal activities2021 2022
RMB’000 RMB’000 RMB’000
杭州金木吉新能源
科技合夥企業
（有限合夥）
The PRC The PRC Fair value
through
profit or loss
33.33% 20,000 21,647 22,508 Investment in
electric car
charging ports
The limited partnership had a finite life of 7 years. The net assets value of the partnership will be
distributed to the partners in proportion to the resp ective contribution ratio at the end of its term. The
Group does not have control or significant influence o ver the limited partnership as a limited partner. As
such, the interest in the limited partnership is measured at fair value through profit and loss.
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 3–


--- page 566 ---
24 SHARE CAPITAL
Share capital of the Company
Number of
ordinary
shares Share capital nominal value
HK$’000 RMB’000
Authorised:
At 1 January 2020, 31 December 2020,
2021 and 2022 and 30 June 2023 1,000,000,000 10,000 9,016
Issued and fully paid:
At 1 January 2020, 31 December 2020,
2021 and 2022 and 30 June 2023 319,746,094 3,198 2,858
Ordinary share with redemption right as financial
liabilities (Note 29)
At 1 January 2020 and 31 December 2020 62,243,906 622 556
Issue of ordinary shares with redemption right
(Note a) 6,945,273 69 62
At 31 December 2021 and 2022 and 30 June 2023 69,189,179 691 618
Total 388,935,273 3,889 3,476
Note a: The ordinary shares with redemption rights of the Company are designated as financial liabilities
at fair value through profit or loss. Detail of this type of shares are disclosed in Note 29.
Note b: Pursuant to the shareholders’ resolutions passed on 9 October 2023, subject to the share
premium account of the Company being credited as a result of the global offering. The directors
of the Company are authorized to allocate an d issue a total of 23,564,727 ordinary shares
credited as fully paid at par by way of capitali sation of the sum of HK$236,000 standing to the
credited of the share premium account upon the Listing.
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 4–


--- page 567 ---
25 OTHER RESERVES AND RETAINED EARNINGS
The Group
Share
premium
Capital
reserve
Exchange
reserve
Statutory
reserve
(Note a) Others
Retained
earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balances as at 1 January 2020 326,067 (23,505) (829) 25,514 — 41,939 369,186
Profit for the year — — — — — 12,341 12,341
Other comprehensive income
for the year — — 12,154 — — — 12,154
Transactions with owners:
Transfer to statutory reserve — — — 3,457 — (3,457) —
Balances as at 31 December 2020 326,067 (23,505) 11,325 28,971 — 50,823 393,681
Balances as at 1 January 2021 326,067 (23,505) 11,325 28,971 — 50,823 393,681
Profit for the year — — — — — 34,112 34,112
Other comprehensive income
for the year — — 4,653 — — — 4,653
Transactions with owners:
Transfer to statutory reserve — — — 6,123 — (6,123) —
Balances as at 31 December 2021 326,067 (23,505) 15,978 35,094 — 78,812 432,446
Balances as at 1 January 2022 326,067 (23,505) 15,978 35,094 — 78,812 432,446
Profit for the year — — — — — 78,913 78,913
Exchange difference arising from
translation of functional
currency to presentation
currency — — (16,412) — — — (16,412)
Changes in fair value of ordinary
shares with redemption right
due to own credit risk — — — — 2,432 — 2,432
Transactions with owners:
Transfer to statutory reserve — — — 3,774 — (3,774) —
Balances as at 31 December 2022 326,067 (23,505) (434) 38,868 2,432 153,951 497,379
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 5–


--- page 568 ---
Share
premium
Capital
reserve
Exchange
reserve
Statutory
reserve
(Note a) Others
Retained
earnings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balances as at 1 January 2022 326,067 (23,505) 15,978 35,094 — 78,812 432,446
Profit for the period — — — — — 45,627 45,627
Exchange difference arising from
translation of functional
currency to presentation
currency — — (7,964) — — — (7,964)
Changes in fair value of ordinary
shares with redemption right
due to own credit risk — — — — 940 — 940
326,067 (23,505) 8,014 35,094 940 124,439 471,049
Transactions with owners:
Transfer to statutory reserve — — — 1,105 — (1,105) —
Balances as at 30 June 2022
(unaudited) 326,067 (23,505) 8,014 36,199 940 123,334 471,049
Balances as at 1 January 2023 326,067 (23,505) (434) 38,868 2,432 153,951 497,379
Profit for the period — — — — — 62,402 62,402
Exchange difference arising from
translation of functional
currency to presentation
currency — — (3,291) — — — (3,291)
Changes in fair value of ordinary
shares with redemption right
due to own credit risk — — — — (203) — (203)
326,067 (23,505) (3,725) 38,868 2,229 216,353 556,287
Transactions with owners:
Transfer to statutory reserve — — — 1,831 — (1,831) —
Balances as at 30 June 2023 326,067 (23,505) (3,725) 40,699 2,229 214,522 556,287
Note:
(a) In accordance with the relevant applicable PRC r egulations, the PRC subsid iaries are required to
appropriate to reserve fund an amount of not less than 10% of the profit after income tax,
calculated based on the PRC accounting standards. Should the accumulated total of this reserve
fund reaches 50% of the registered capital of th e PRC subsidiaries, the subsidiaries will not be
required to make any further appr opriation. The reserve fund ca n only be used, upon approval by
the shareholders’ meeting or simila r authorities, to offset accumulated losses or increase capital.
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 6–


--- page 569 ---
The Company
Share
premium
Exchange
reserve
Accumulated
losses Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance as at 1 January 2020 916,311 (1,057) (14,332) — 900,922
Loss for the year — — (13,786) — (13,786)
Currency translation differences — (51,710) — — (51,710)
Balances as at 31 December 2020 916,311 (52,767) (28,118) — 835,426
Balance as at 1 January 2021 916,311 (52,767) (28,118) — 835,426
Loss for the year — — (23,371) — (23,371)
Currency translation differences — (23,594) — — (23,594)
Balances as at 31 December 2021 916,311 (76,361) (51,489) — 788,461
Balances as at 1 January 2022 916,311 (76,361) (51,489) — 788,461
Profit for the year — — 37,081 — 37,081
Change in fair value of ordinary
shares with redemption right
due to own credit risk — — — 2,432 2,432
Currency translation differences — 74,850 — — 74,850
Balances as at 31 December 2022 916,311 (1,511) (14,408) 2,432 902,824
Balances as at 1 January 2022 916,311 (76,361) (51,489) — 788,461
Profit for the period 27,613 — 27,613
Change in fair value of ordinary
shares with redemption right
due to own credit risk — — — 940 940
Currency translation differences — 37,314 — — 37,314
Balances as at 30 June 2022 916,311 (39,047) (23,876) 940 854,328
Balances as at 1 January 2023 916,311 (1,511) (14,408) 2,432 902,824
Loss for the period (239,809) — (239,809)
Change in fair value of ordinary
shares with redemption right
due to own credit risk — — — (203) (203)
Currency translation differences — 18,294 — — 18,294
Balances as at 30 June 2023 916,311 16,783 (254,217) 2,229 681,106
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 7–


--- page 570 ---
26 TRADE PAYABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 22,215 58,463 64,493 37,432
Bills payables 19,350 10,000 41,367 10,884
41,565 68,463 105,860 48,316
Trade payables approximate their fair values and ar e denominated in RMB. The average credit period
taken for trade purchase is generally 30 to 90 days.
An ageing analysis of trade payables based on invoice date is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Up to 3 months 20,026 56,388 62,296 36,226
3 to 6 months 20 — 52 10
Over 6 months 2,169 2,075 2,145 1,196
22,215 58,463 64,493 37,432
27 OTHER PAYABLES AND ACCRUALS
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Advance receipt from potential cu stomers 7,793 10,956 7,223 7,042
Contract liabilities (Note 5) 1,998 1,644 910 392
Staff costs and welfare accruals 11,645 14,225 21,601 18,398
Other tax payables 6,035 6,348 6,079 3,964
Deposit from lessees 30,760 26,810 18,688 30,715
Accrued listing expenses 2,725 2,688 5,311 5,691
Dividend payable (Note) 9,688 3,365 3,365 3,365
Advance receipt for scrap sales of inventories 4,487 5,149 6,083 6,550
Others 7,923 7,359 9,679 10,866
83,054 78,544 78,939 86,983
Note: The directors confirmed that dividend payable t o the shareholders will be settled prior to the
Listing.
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 8–


--- page 571 ---
The Company
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Accrued listing expenses 2,725 2,688 5,311 5,691
Staff costs and welfare accruals 70 51 — —
Others 77 9 41 10
2,872 2,748 5,352 5,701
28 BORROWINGS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Bank borrowings, secured 8,977 13,430 23,077 31,115
Bank borrowings, unsecured 9,527 22,610 16,182 6,488
Other borrowings, secured 1,135,954 1,337,537 1,609,668 1,771,565
Other borrowings, unsecured 1,500 9,245 64,488 48,692
1,155,958 1,382,822 1,713,415 1,857,860
Less: non-current portion (447,380) (656,219) (884,842) (947,975)
Current portion 708,578 726,603 828,573 909,885
Other borrowings represented borrowings from non-ba nking financial instituti ons and individual lenders.
The borrowings are repayable as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within 1 year 708,578 726,603 828,573 909,885
Between 1 and 2 years 302,828 367,118 510,668 534,378
Between 2 and 5 years 144,552 289,101 374,174 413,597
At end of the year/period 1,155,958 1,382,822 1,713,415 1,857,860
As of 31 December 2020, 2021 and 2022 and 30 June 2023, the borrowings are denominated in RMB and
the carrying amounts approximate their fair values at each of the balance sheet date.
APPENDIX I ACCOUNTANT’S REPORT
–I - 7 9–


--- page 572 ---
The weighted average effective interest rates as at 31 December 2020, 2021 and 2022 and 30 June 2023 are
as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Bank borrowings, secured 5.47% 7.61% 7.00% 7.24%
Bank borrowings, unsecured 6.99% 6.38% 7.45% 8.12%
Other borrowings, secured 8.51% 8.53% 8.59% 8.47%
Other borrowings, unsecured 10.00% 7.63% 9.25% 9.00%
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group’s borrowings of RMB1,144,931,000,
RMB1,350,967,000, RMB1,632,745, 000 and RMB1,802,680,000 were secured by personal guarantee and
indemnity provided by the directors, 50% equity inte rest in Fujian Xidi, 20% equity interest in XXF HK and
certain assets of the Group as summarised below.
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Property and equipment 336,416 241,298 255,097 404,866
Deposits for borrowings (Note 20) 28,516 31,475 40,186 46,619
Inventories 77,806 71,440 116,143 86,499
Finance lease receivables 787,303 1,227,628 1,358,175 1,498,716
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group has unutilised facilities of
RMB1,725,621,000, RMB1,350,967, 000, RMB3,737,470,000 and RMB3,803,063,000 respectively. During the
Track Record Period, the Group have not breached any o f the provisions that could result in any event of
default.
The Group did not derecognise finance lease receivables of RMB22,885,000, RMB26,415,000,
RMB44,864,000 and RMB40,303,000 transferred as collate ral in connection with factoring agreements as at
31 December 2020, 2021 and 2022 and 30 June 2023 respectively. None of the legal title of the collateral pledged
has been transferred to counterparties, as the Group re tained substantially all the risks and rewards of
ownership of the finance lease receivables.
The directors confirmed that among the borrowings secured by personal guarantee of RMB1,061,767,000
as at 30 June 2023, personal guarantee of borrowi ngs amounted RMB578,953,000 will be released upon the
Listing.
On 10 June 2021, pursuant to an agreement entered into between the Group and the Pre-IPO Investor 1,
the Company issued and allotted 6,945,273 ordinary sha res with redemption right to the Pre-IPO Investor 1 at a
consideration of RMB20,000,000 (Note 29) as partial s ettlement of the other borrowings of RMB70,760,000 due
to the Pre-IPO Investor 1. According to the same agr eement, the remaining balance of RMB50,760,000 will be
repayable on 30 June 2023 carried at an interest rate o f 8% per annum. The transaction was accounted for as an
extinguishment of part of the borrowings with a corres ponding recognition of ordinar y shares with redemption
right. A net gain from the extinguishment amounted to RMB683,000 was recognised in finance income during
the year ended 31 December 2021 (Note 10).
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 0–


--- page 573 ---
On 3 July 2023, pursuant to a supplementary agreement entered into between the Group and the Pre-IPO
Investor 1, the company partially repaid the other bor rowing of RMB7,614,000 and the remaining balance of
RMB43,146,000 will be repayable in 1 2 monthly instalments by 30 June 2024 carried at an interest rate of 8%
per annum.
29 ORDINARY SHARES WITH REDEMPTION RIGHT
Pursuant to the Investment Agreements as set out in Note 1.2, XXF Group issued 34,106,250 ordinary
shares with redemption right at the s ubscription price of approximately RMB2.35 per ordinary share for a total
consideration of RMB80,000,000 to Pre-IPO Investor 1 and P re-IPO Investor 2 (together ‘‘Series A Shares’’).
Also, in connection with Pre-IPO Investor 2’s acquisi tion of 21,316,406 ordinary shares from Hangzhou Chain
Reaction at the same time, XXF Group has granted Pre-IP O Investor 2 the same redemption right in relation to
the transferred shares (‘‘Series B Shares’’) at no c onsideration, the impact of which is immaterial.
On 28 November 2019, as part of the Reorganisation, XXF HK acquired the above mentioned 55,422,656
ordinary shares with redemption right from Pre-IPO Investor 1 and Pre-IPO Investor 2 at RMB1.00 per share.
On 2 December 2019, the Company issued 55,422,656 ordinary shares with redemption right at the same
consideration. As a result, ordinary shares with rede mption right issued by XXF Group were converted into
55,422,656 ordinary shares with redemption right issued by the Company at par value of HK$0.01 per share at
no consideration.
On 2 December 2019, pursuant to the agreement enter ed between Pre-IPO Investor 1 and the Group, the
Company issued and allotted 6,821,250 ordinary shares wi th redemption right (‘‘Series C1 Shares’’) at RMB2.93
per share totalling RMB20,000,000, the impact of which is immaterial as the issuance price is approximated to
the fair value of the ordinary shares with redemption right.
On 10 June 2021, the Group entered into an agreement with Pre-IPO Investor 1 whereby the Company
issued and allotted 6,945,273 ordina ry shares with redemption right (‘‘Series C2 Shares’’) at RMB2.88 per share
totaling RMB20,000,000. The issuance price is approxim ated to the fair value of the ordinary shares with
redemption right.
T h ek e yt e r m sf o ra l ls e r i e so fo r d i n a r ys h a r e sw i th redemption right are summarised as follows:
(a) Conversion feature
Pursuant to the confirmations from the holders of the ordinary shares with redemption right, all
ordinary shares with redemption right will be automat ically converted to ordinary shares upon the closing
of the global offering in connection with the list ing of the Company on the Main Board of The Stock
Exchange of Hong Kong Limited.
(b) Voting rights
Each ordinary share with redemption right has vot ing rights equivalent to the ordinary shares at the
record date. The holders of ordinary shares with rede mption right shall vote together with the ordinary
shareholders, and not as a separate class or series, on all matters put before the shareholders.
(c) Redemption feature
The holders of ordinary shares with redemption ri ght have the right to request redemption from the
Company if the Group has not consummated the conditi on of achieving a qualified initial public offering
as defined in the shareholder agreement within three years or occurrence of certain events as defined in the
shareholder agreement after the closing date of the issue. As at the date of this report, none of the defined
events have occurred.
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 1–


--- page 574 ---
The redemption price shall be paid by the Company to the holders of ordinary shares with
redemption right in an amount equal to: (i) one hundred percent (100%) of the original issue price on each
ordinary share plus (ii) a ten percent (10%) per annum interest of the original issue price on each ordinary
share accrued during the period from the issue date o f each ordinary share until the date on which the
redemption price is paid in full, and (ii i) any accrued but unpaid dividends thereon.
On 27 January 2022, the Group entered into a suppl emental agreement with Pre-IPO Investor 1
under which the Group and Pre-IPO Investor 1 agreed to amend the conditions that the holders may have
rights to request redemption from the company if the C ompany does not achieves a qualified initial public
offering as defined in the original shareholder agreement before 31 December 2023.
On 25 August 2022, the Group entered into a supplemental agreement with Pre-IPO Investor 2
under which the Group and Pre-IPO Investor 2 agreed to amend the conditions that the holder may have
rights to request redemption from the Company if the Company does not achieve a qualified initial public
offering on a recognised exchange before 31 December 2023. On 26 June 2023, the Group entered into
another supplemental agreement with Pre-IPO Invest or 2, under which, the Group and Pre-IPO Investor 2
agreed to amend the conditions that the holder m ay request for redemption from the Company be
extended to if the company does not achieve a qualifi ed initial public offering on a recognised exchange
before 31 December 2024.
(d) Liquidation preferences
In the event of any liquidation, dissolution or w inding up of the Company, either voluntarily or
involuntarily, the ordinary shares with redemptio n right shall be entitled to receive the liquidation
amount, prior and in preference to any distributio n of any of the assets or surplus funds of the Company
to the holders of ordinary shares. The liquidati on amount per share is calculated as follows:
The liquidation amount = Original issue price* (1 + 10%*N)
N: The total days from the settlement date to the actual payment date of the settlement/365 days
If the value of the remaining assets of the Com pany is less than aggregate liquidation amount
payable to the holders of ordinary shares with rede mption right, then the remaining assets of the
Company shall be distributed pro rata amongst the holders of all outstandi ng ordinary shares with
redemption right. Also, Series A Shares have a higher priority than Series B Shares, Series C1 Shares and
Series C2 Shares. If the amount payable is less than th e liquidation amount, the remaining assets shall be
first distributed pro rata amongst holders of Series A Shares, then the r emaining part would be distributed
amongst the holders of Series B Shares, Series C1 Sha res and Series C2 Shares. After distributing or
paying in full the liquidation amount to all of the holde rs of ordinary shares with redemption right, the
remaining assets of the Company available for distribut ion to members, if any, shall be distributed to the
holders of ordinary shares and the holders of ordinary shares with redemption right on a pro rata basis,
based on the number of ordinary shares then held by each shareholder on an as converted basis.
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 2–


--- page 575 ---
Presentation and Classification
The Group and the Company have designated th e ordinary shares with redemption right as
financial liabilities at FVPL. The fair value chang e of the ordinary shares with redemption right is
recognised in profit or loss except for the portion attributable to credit risk change which shall be
recognised in other comprehensive income, if any.
Year ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of year/period 181,966 177,886 196,640 163,129
Issuance of ordinary shares with
redemption right — 20,000 — —
Changes in fair value through
profit or loss 6,932 4,153 (47,251) (46,335)
Change in fair value due to own
credit risk — — (2,432) 203
Exchange difference arising from
translation (11,012) (5,399) 16,172 3,614
At the end of year/period 177,886 196,640 163,129 120,611
Less: non-current portion (177,886) — — (70,948)
Current portion — 196,640 163,129 49,663
The Group has engaged an independent valuer to determine the underlying share value of the
Group by discounted cash flow method and adopted e quity allocation model to determine the fair
value of the ordinary shares with redemption righ t as of the date of issuance and at the end of each
reporting period.
Key valuation assumptions us ed to determine the fair value of ordinary shares with
redemption right are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
Long-term average growth rate 11.05% 10.89% 4.89% 4.32%
Discount rate 17.00% 17.00% 17.00% 18.00%
Volatility 51.10% 52.70% 52.20% 44.00%
Possibilities under listing s cenario 90.00% 90.00% 90.00% 95.00%
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 3–


--- page 576 ---
Discount rate was estimated by cost of equity wi th adoption of Capital Asset Pricing Model
(‘‘CAPM’’). The CAPM inputs, including levered bet a and historical debt-to-capital ratio, were
obtained via market data of comparable companie s which are listed in major exchange markets and
focused in the leasing industry and these inputs w ere relatively stable t hroughout the Track Record
Period. Volatility was estimated based on annualised standard deviation of daily stock price return
of comparable companies ungeared with their resp ective capital structures and market risks for the
period before valuation date and with similar spa n as time to exit. Probability weight under each of
the redemption feature and liquidation preferen ces was based on the direct ors’ best estimates. In
addition to the assumptions adopted above, the Com pany’s projections of future performance were
also factored into the determination of the fair val ue of the ordinary shares with redemption right on
31 December 2020, 2021 and 2022 and 30 June 2023.
Changes in fair value of the ordinary shares wit h redemption right were recorded in profit or
loss. For the years ended 31 December 2020 and 2021, management considered that fair value
changes in these ordinary share with redemption r ight that are attributable to changes of its own
credit risk are not significant. For the year ended 31 December 2022 and the six months ended 30
June 2023, the fair value change due to own credit ris k was recorded in other comprehensive income
and charged to other reserve in Note 25.
30 DEFERRED INCOME TAX
The analysis of deferred income tax assets is as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Deferred income tax assets:
To be recovered after more than 12 months 1,568 4,666 3,357 1,768
To be recovered within 12 months 1,441 1,957 543 4,827
3,009 6,623 3,900 6,595
The gross movements on the deferred income tax account are as follows:
Year ended 31 December
Six month
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period 11,838 3,009 6,623 3,900
(Charged)/credited to consolidated statement
of comprehensive income (8,829) 3,614 (2,723) 2,695
At end of the year/period 3,009 6,623 3,900 6,595
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 4–


--- page 577 ---
The movements in deferred income tax assets and li abilities during the Track Record Period, without
taking into consideration the offsetting of balan ces within the same tax jurisdiction, are as follows:
Deferred tax assets/(liabilities)
Provision for
receivable
and
inventory Provision
Accelerated
tax
depreciation
Decelerated
tax
depreciation
Share based
payment Tax losses
Withholding
tax Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 3,787 4,045 — 1,536 780 1,061 — 629 11,838
Credited/(charged) to
consolidated statement of
comprehensive income 235 (665) (9,223) 4 — 906 — (86) (8,829)
At 31 December 2020 4,022 3,380 (9,223) 1,540 780 1,967 — 543 3,009
At 1 January 2021 4,022 3,380 (9,223) 1,540 780 1,967 — 543 3,009
Credited/(charged) to
consolidated statement of
comprehensive income 800 3,094 (1,307) 658 — 879 — (510) 3,614
At 31 December 2021 4,822 6,474 (10,530) 2,198 780 2,846 — 33 6,623
At 1 January 2022 4,822 6,474 (10,530) 2,198 780 2,846 — 33 6,623
Credited/(charged) to
consolidated statement of
comprehensive income 510 1,161 (1,831) 1,684 — (2,367) (1,240) (640) (2,723)
At 31 December 2022 5,332 7,635 (12,361) 3,882 780 479 (1,240) (607) 3,900
At 1 January 2023 5,332 7,635 (12,361) 3,882 780 479 (1,240) (607) 3,900
(Charged)/credited to
consolidated statement of
comprehensive income (58) 796 (1,188) 2,324 — (399) 1,240 (20) 2,695
At 30 June 2023 5,274 8,431 (13,549) 6,206 780 80 — (627) 6,595
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 5–


--- page 578 ---
Deferred income tax assets are recognised for deduc tible temporary differences to the extent that the
realisation of the related tax benefits through future taxable profits is probable.
The Group did not recognise deferred income tax assets of RMB7,191,000, RMB9,571,250,
RMB7,923,000 and RMB8,798,000, in respect of tax losses amounted to RMB28,764,000, RMB38,285,000,
RMB32,729,000 and RMB31,856,000 as at 31 December 2020, 2021 and 2022 and 30 June 2023, respectively, as
it is not certain that future taxable profits against whic h the tax losses can be utilis ed will be available in the
relevant tax jurisdiction and entities.
The expiry date of these tax losses are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Within one year 979 881 3,336 5,867
Between two to five years 26,989 36,608 28,597 25,193
No expiry date 796 796 796 796
28,764 38,285 32,729 31,856
As at 31 December 2020, 2021 and 2022 and 30 June 2023, deferred income tax liability has not been
provided for in the consolidated financial statement s in respect of temporary differences attributable to
unremitted profits earned by certain PRC subsidia ries of the Group amounting to approximately
RMB5,082,000, RMB7,881,000, RMB10,735,000 and R MB12,566,000, respectively as the Group is able to
control the timing of the reversal of the temporary diffe rences and it is probable that the temporary differences
will not reverse in the foreseeable future.
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 6–


--- page 579 ---
31 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Cash generated from operations
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Profit before income tax 20,969 43,010 91,773 47,970 65,159
Adjustment for:
Provision for credit losses 2,098 3,870 4,877 1,904 2,793
Provision for inventories 2,876 7,674 6,886 3,499 3,774
Depreciation 86,996 102,583 98,267 51,572 50,776
Amortisation of
intangible assets 10,357 14,026 13,614 7,138 6,274
Loss on disposals of
property and
equipment 927 2,822 2,062 484 2,582
Fair value loss/(gain) on
ordinary shares with
redemption right 6,932 4,153 (47,251) (34,555) (46,335)
Fair value loss/(gain) on
financial assets through
profit or loss — 8 (1,998) (607) (861)
Finance income (1,849) (2,008) (973) (496) (835)
Finance cost 111,021 119,829 143,991 73,679 82,868
Operating cash flow
before changes in
working capital 240,327 295,967 311,248 150,588 166,195
Decrease/(increase) in
trade and other
receivables and finance
lease receivables 100,078 (287, 825) (207,693) 35 (35,769)
(Decrease)/increase in
trade and other
payables (1,003) 27,755 38,485 (468) (49,216)
(Increase)/decrease in
restricted cash (9,675) 4,675 466 2,000 3,996
Decrease/(increase) in
inventories 41,484 (10,642) (58,637) 3,054 17,818
Cash generated from
operations 371,211 29,930 83,869 155,209 103,024
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 7–


--- page 580 ---
(b) Disposal of property and equipment
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Proceeds 8,023 24,615 29,823 21,084 13,666
Lease liabilities
written-off 4,655 4,561 55 46 37
Net book value of
disposed property and
equipment (Note 14) (13,605) (31,998) (31,940) (21,614) (16,285)
Loss on disposals (927) (2,822) (2,062) (484) (2,582)
(c) Reconciliation of cash used in purchase of property and equipment
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Total property and
equipment addition
during the year/period
(Note 14) 172,165 65,570 213,581 68,150 227,404
Less: transfer from
inventory to property
and equipment (3,329) (12,128) (68,808) (46,878) (84,875)
Less: addition of
right-of-use assets
(Note 14) (1,928) (7,819) (6,861) (4,568) (3,354)
Cash used in purchase of
property and
equipment during
the year/period 166,908 45,623 137,912 16,704 139,175
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 8–


--- page 581 ---
(d) Cash flow information — Financing activities
Borrowings
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of year/
period 1,304,176 1,155,958 1,382,822 1,382,822 1,713,415
Non-cash movements
Interest 109,569 118,953 143,188 73,277 82,502
Discount effect of
deposits for
borrowings (192) 938 1,259 (49) (175)
Net gain on extension
of borrowing from
Pre-IPO Investor 1 — (683) — — —
Non-cash repayment of
borrowing (Note) —— ( 6 , 3 4 3 ) ——
Cash flow from operating
activities
Interest paid (124,141) (97,505) (142,660) (72,557) (83,887)
Cash flow from financing
activities
Addition 638,873 1,168,915 1,338,324 428,890 670,128
Repayment (772,327) (963,754) (1,003,175) (521,755) (524,123)
At the end of year/period 1,155,958 1,382,822 1,713,415 1,290,628 1,857,860
Note: During the year ended 31 December 2022, the Group and an individual lender mutually
agreed to off-set the borrowing of RMB6 ,343,000 with the redemption amount of
asset-backed securities (Note 23).
Lease liabilities
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of year/
period 31,700 19,161 14,305 14,305 13,856
Non-cash movements
Addition 1,928 7,819 6,861 4,568 3,354
Interest 1,452 876 803 402 366
Write-off (4,655) (4,561) (55) (46) (37)
Cash flow from operating
activities
Interest paid (1,452) (876) (803) (402) (366)
Cash flow from financing
activities
Repayment (9,812) (8,114) (7,255) (3,611) (3,554)
At the end of year/period 19,161 14,305 13,856 15,216 13,619
APPENDIX I ACCOUNTANT’S REPORT
–I - 8 9–


--- page 582 ---
Ordinary shares with redemption right
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of year/
period 181,966 177,886 196,640 196,640 163,129
Cash flow from financing
activities
Issuance of ordinary
shares with
redemption right — 20,000 — — —
Non-cash movements
Fair value changes
through profit or loss 6,932 4,153 (47,251) (34,555) (46,335)
Fair value change due
to own credit risk — — (2,432) (940) 203
Exchange difference
arising from translation (11,012) (5,399) 16,172 7,881 3,614
At the end of year/period 177,886 196,640 163,129 169,026 120,611
Dividend payable
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
At the beginning of year/
period 36,129 9,688 3,365 3,365 3,365
Non-cash movements
Expenses paid by the
Group on behalf (12,932) — — — —
Cash flow from financing
activities
Dividend paid (13,509) (6,323) — — —
At the end of year/period 9,688 3,365 3,365 3,365 3,365
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 0–


--- page 583 ---
Amount due to shareholders
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of year/
period — 7,687 7,467 7,467 8,158
Non-cash movements
Exchange difference (3,457) (220) 691 343 262
Cash flow from financing
activities
Capital injection to the
Company upon
issuance of shares to
give effect to the
Reorganisation 195,742 — — — —
Deemed distribution to
the shareholders of
XXF Group for
purchasing the
Listing Business (184,598) — — — —
At the end of year/period 7,687 7,467 8,158 7,810 8,420
32 CONTINGENT LIABILITIES
The Group had no material contingent liabil ities as at 31 December 2020, 2021 and 2022 and 30 June
2023.
33 RELATED PARTY TRANSACTIONS
The following significant transac tions were carried out between the Group and its related parties during
the Track Record Period. In the opinion of the directors of the Company, the related party transactions were
carried out in the normal course of business and at term s negotiated between the Group and the respective
related parties.
(a) The directors of the Company are of the view that the following companies were related parties that
had transactions or balances with the Group during the Track Record Period:
Related party Relationship with the Group
Ningde Public Transport Company
Limited (‘‘寧德市公共交通有限公司’’)
Related company controlled by non-controlling
shareholder of a subsidiary with significant influence
Shenghui Logistic Group Co., Ltd.
(‘‘盛輝物流集團有限公司’’)
A company controlled by a director of the Company
Ningde Yongsheng Property
Management Co., Ltd.
(‘‘寧德市永盛物業管理有限公司’’)
A company controlled by a director of the Company
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 1–


--- page 584 ---
(b) Transactions with related parties
During the Track Record Period, the following tran saction was carried out with related parties at
terms mutually agreed by the Group and the relevant related parties:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Lease payment (Note i)
— Ningde Public Transport
Company Limited 342 273 140 140 145
— Shenghui Logistic Group
Co. Ltd. 2,310 1,633 869 426 443
— Ningde Yongsheng
Property Management
Co. Ltd. 342 172 12 6 6
2,994 2,078 1,021 572 594
Property management fee
(Note ii)
— Ningde Yongsheng
Property Management
Co., Ltd. 321 235 120 33 59
Delivery charge (Note iii)
— Shenghui Logistic Group
Co. Ltd. — 380 — — —
Notes:
(i) Lease payment is charged in accordance with the agreement entered into between the Group
a n dt h er e l a t e dp a r t y .
(ii) Management fee is charged in accordance with the agreement entered into between the
relevant parties.
(iii) Delivery charge is charged in accordance wi th the agreement entered into between the relevant
parties.
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 2–


--- page 585 ---
(c) Balances with related parties
The Group
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use asset (trade nature)
— Ningde Public Transport Company
Limited 785 498 249 125
— Shenghui Logistic Group Co. Ltd. 4,374 1,067 427 107
5,159 1,565 676 232
Lease liabilities (trade nature)
— Ningde Public Transport Company
Limited 834 552 288 —
— Shenghui Logistic Group Co. Ltd. 2,973 1,392 579 147
3,807 1,944 867 147
Note: Lease liabilities are settled in accordance wi th the agreement entered into between the Group
and the related party.
(d) Key management compensation
Key management includes executive and non-executive directors and the senior management of the
Group. The compensation paid or payable to key management for employee services is shown below:
Year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Salaries, bonuses,
allowances and benefits
in kind 13,976 3,205 2,548 1,257 1,257
Retirement benefit costs
— defined contribution
plans 225 203 220 104 111
14,201 3,408 2,768 1,361 1,368
34 AMOUNTS DUE FROM/TO SHAREHOLDERS
The balances with shareholders were non-trade related , unsecured, interest-free and repayable on demand
and the Directors confirmed that the balance with s hareholders will be settle d prior to the Listing.
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 3–


--- page 586 ---
35 BENEFITS AND INTERESTS OF DIRECTORS
(a) Directors’ remuneration
The remuneration of every director is set out below:
Director’s
fees
Salaries,
wages and
bonuses
Pension cost
— defined
contribution
plan
Share-based
compensation
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
For the year ended
31 December 2020
Executive directors
Huang Wei — 10,590 57 — 10,647
Ye Fuwei — 1,149 57 — 1,206
Zhang Jinghua — 506 55 — 561
Non-executive directors
L i u W e i —————
X u R u i —————
Total — 12,245 169 — 12,414
For the year ended
31 December 2021
Executive directors
Huang Wei — 1,004 68 — 1,072
Ye Fuwei — 1,004 68 — 1,072
Zhang Jinghua — 504 66 — 570
Non-executive directors
L i u W e i —————
X u R u i —————
Total — 2,512 202 — 2,714
For the year ended
31 December 2022
Executive directors
Huang Wei — 1,004 74 — 1,078
Ye Fuwei — 1,039 74 — 1,113
Zhang Jinghua — 506 71 — 577
Non-executive directors
L i u W e i —————
X u R u i —————
Total — 2,549 219 — 2,768
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 4–


--- page 587 ---
Director’s
fees
Salaries,
wages and
bonuses
Pension cost
— defined
contribution
plan
Share-based
compensation
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
F o rt h es i xm o n t h se n d e d
30 June 2022 (unaudited)
Executive directors
Huang Wei — 502 35 — 537
Ye Fuwei — 502 35 — 537
Zhang Jinghua — 253 34 — 287
Non-executive directors
L i u W e i —————
X u R u i —————
Total — 1,257 104 — 1,361
F o rt h es i xm o n t h se n d e d
30 June 2023
Executive directors
Huang Wei — 502 37 — 539
Ye Fuwei — 502 37 — 539
Zhang Jinghua — 253 37 — 290
Non-executive directors
L i u W e i —————
X u R u i —————
Total — 1,257 111 — 1,368
During the Track Record Period, the non-execut ive directors had not received any remuneration.
(b) Directors’ retirement benefits
None of the directors received or will receive any r etirement benefits during the Track Record
Period.
(c) Directors’ termination benefits
None of the directors received or will receive any termination benefits during the Track Record
Period.
(d) Consideration provided to third parties for making available directors’ services
During the Track Record Period, the Company did not pay consideration to any third parties for
making available directors’ services.
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 5–


--- page 588 ---
(e) Information about loans, quasi-loans and other d ealings in favour of directors, controlled bodies
corporate by and connected entities with such directors
There are no loans, quasi-loans and other dealin g in favour of directors, during the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
(f) Directors’ material interests in transactions, arrangements or contracts
No significant transactions, arr angements and contracts in relation to the Company’s business to
which the Company was a party and in which a director of the Company had a material interest, whether
directly or indirectly, subsisted at the end of the re porting period or at any time during the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023.
36 EVENTS AFTER REPORTING PERIOD
On 3 July 2023, pursuant to a supplementary agreement entered into between the Group and the Pre-IPO
Investor 1, the Company repaid the other borrowing of RMB7,614,000, and the remaining balance of
RMB43,146,000 will be repayable in 12 monthly instalmen ts by 30 July 2024 carried at an interest rate of 8% per
annum.
Subsequent to the Track Record Period, the Company made an adjustment to the offer size of the Global
Offering (the ‘‘Adjustment’’). The cumulative imp act of the listing expenses recognised up to 30 June 2023
arising from the Adjustment will be recognised in the c onsolidated financial statements for the year ending 31
December 2023. As a result, the estimated impact on the listing expenses to be reco gnised in the consolidated
statement of comprehensive income and prepayments , deposits and other receivables in the consolidated
statement of financial position would be a debit of RMB 1,394,000 and a credit of the s ame amount, respectively,
for the year ending 31 December 2023.
By a shareholders’ resolution dated 9 October 2023 , the Company conditionally adopted a pre-IPO share
option scheme and a share option scheme under which the board of directors may grant options to employees,
directors or other selected participants of the Gr oup to acquire shares of the Company. On 18 October 2023,
options to subscribe an aggregate of 38,199,000 share s were granted under the pre-IPO share option scheme.
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 6–


--- page 589 ---
37 PARTICULARS OF SUBSIDIARIES
Particulars of the subsidiaries for the Group are set out as below:
Effective interest held by the Group
Company name
Place and
date of
incorporation
Principal activities
and place of
operation Registered capital
As at 31 December
As at
30 June
2023
As at the
date of this
report Note2020 2021 2022
Directly held:
Celestial Bonanza Group
Limited
BVI Investment holding,
BVI
USD50,000 100% 100% 100% 100% 100% (i), (iii), (v)
Indirectly held:
XXF Group (Hong Kong)
Limited (‘‘XXF HK’’)
HK Investment holding,
HK
HK$5 100% 100% 100% 100% 100% (vi)
XXF Group PRC Leasing service,
PRC
RMB410,168,750 100% 100% 100% 100% 100% (ii), (iv), (v)
Fujian Shenqi Financial
Lease Co., Ltd.*
(‘‘Fujian Shenqi’’)
PRC Leasing service,
PRC
RMB10,000,000 100% 100% 100% 100% 100% (i), (iii), (v),
(xxviii)
Fujian Xiqi Automobile Sale
Co., Ltd.* (‘‘Fujian Xiqi’’)
PRC Trading of
automobile, PRC
RMB10,000,000 100% 100% 100% 100% 100% (i), (iv), (v)
Fujian Lvyi Information
Technology Co., Ltd.*
(‘‘Fujian Lvyi’’)
PRC Information
technology, PRC
RMB50,000,000 100% 100% 100% 100% 100% (i), (iii), (v),
(xxviii)
Fujian Anxin Second-hand
Car Market Co., Ltd.*
(‘‘Fujian Anxin’’)
PRC Dormant, PRC RMB10,000,000 N/A N/A N/A N/A N/A (vii)
Fujian Xidun Automobile
Service Co., Ltd.* (‘‘Fujian
Xidun’’)
PRC Information
technology, PRC
RMB50,000,000 100% 100% 100% 100% 100% (i), (iii), (v),
(xxviii)
Fujian Qoocar Information
Technology Co., Ltd.*
(‘‘Fujian Qoocar’’)
PRC Information
technology, PRC
RMB10,000,000 100% 100% 100% 100% 100% (ii), (iv), (v)
Fujian ZyooCar Technology
Co., Ltd.* (‘‘Fujian
ZyooCar’’)
PRC Leasing service,
PRC
RMB50,000,000 51% 51% 51% 51% 51% (ii), (iv), (v)
Xixiangfeng (Xiamen)
Automobile Service Co.,
Ltd.*
(‘‘Xiamen Xixiangfeng’’)
PRC Leasing service,
PRC
RMB10,000,000 100% 100% 100% 100% 100% (i), (iii), (v),
(xxviii)
Fujian Taoqi Internet
Technology Co., Ltd.*
(‘‘Taoqi Internet’’)
PRC Information
technology, PRC
RMB50,000,000 100% 100% 100% 100% 100% (ii), (iv), (v)
Fujian Taoqi Yuncar
Information Consultancy
Co., Ltd.*
(‘‘Taoqi Yuncar’’)
PRC Information
technology, PRC
RMB10,000,000 100% 100% 100% 100% 100% (ii), (iii), (v),
(xxviii)
Guoxin Zhonglian (Fuzhou)
Automobile Service Co.,
Ltd.*
(‘‘Guoxin Zhonglian’’)
PRC Leasing service,
PRC
RMB50,000,000 100% 100% 100% 100% 100% (ii), (iv), (v)
Fujian Xidi Automobile
Service Co., Ltd.* (‘‘Fujian
Xidi’’)
PRC Leasing service,
PRC
RMB170,000,000 100% 100% 100% 100% 100% (ii), (iv), (v)
Fujian Heqi Technology
Co., Ltd.* (‘‘Fujian Heqi’’)
PRC Insurance agency
service, PRC
RMB10,000,000 100% 100% 100% 100% 100% (i), (iii), (v),
(xxviii)
Tianjin Xidi Automobile
Service Co., Ltd.* (‘‘Tianjin
Xidi’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (xiii), (xxviii)
Taizhou Xidi Automobile
Service Co., Ltd.*
(‘‘Taizhou Xidi’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (xiv)
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 7–


--- page 590 ---
Effective interest held by the Group
Company name
Place and
date of
incorporation
Principal activities
and place of
operation Registered capital
As at 31 December
As at
30 June
2023
As at the
date of this
report Note2020 2021 2022
Shaoxing Xidi Automobile
Service Co., Ltd.*
(‘‘Shaoxing Xidi’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (xv)
Fujian Xiyun New Energy
Technology Co., Ltd.*
(‘‘Fujian Xiyun’’)
PRC Dormant, PRC RMB25,000,000 N/A 60% N/A N/A N/A (iii), (v), (viii)
Fujian Xitu Technology
Co., Ltd.* (‘‘Fujian Xitu’’)
PRC Information
technology, PRC
RMB10,000,000 N/A 100% 100% 100% 100% (iii), (v)
Shanxi Zhonghong
Automobile Service Co.,
Ltd.* (‘‘Shanxi
Zhonghong’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (v), (ix),
(xxviii)
Guangdong Minyue
Automobile Service Co.,
Ltd.* (‘‘Guangdong
Minyue’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (v), (x),
(xxviii)
Nanning Xidi Automobile
Hailing Operation
Service Co., Ltd.*
(‘‘Nanning Xidi’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (xi), (xxviii)
Zhongshan Xidi Automobile
Service Co., Ltd.*
(‘‘Zhongshan Xidi’’)
PRC Leasing service,
PRC
RMB10,000,000 N/A N/A 100% 100% 100% (xii), (xxviii)
Putian Xidi Network Car
Appointment Service Co.,
Ltd.* (‘‘Putian Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xvi)
Zhoushan Xidi Automobile
Service Co., Ltd.*
(‘‘Zhoushan Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xvii)
Zhu Zhou Xidi Automobile
Service Co., Ltd.*
(‘‘Zhu Zhou Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xviii), (xxviii)
An Qing Xidi Automobile
Service Co., Ltd.* (‘‘An
Qing Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xix)
Wu Xi Xidi Automobile
Service Co., Ltd.* (‘‘Wu Xi
Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xx), (xxviii)
Tangshan Xiqi Automobile
Sales Co., Ltd.* (‘‘Tangshan
Xiqi’’)
PRC Car sales,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxi)
Xin Jiang Xiqi Automobile
Sales Co., Ltd.* (‘‘Xin Jiang
Xiqi’’)
PRC Car sales,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxii)
Dong Guan Xidi Automobile
Service Co., Ltd.*
(‘‘Dong Guan Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxiii), (xxviii)
Kunming Xidi Network Car
Service Co., Ltd.*
(‘‘Kunming Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxiv), (xxviii)
Nan Tong Xiqi Automobile
Sales Co., Ltd.* (‘‘Nan
Tong Xiqi’’)
PRC Car sales,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxv), (xxviii)
Yin Chuan Xidi Automobile
Service Co., Ltd.*
(‘‘Yin Chuan Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxvi), (xxviii)
Jia Xing Xidi Automobile
Service Co., Ltd.* (‘‘Jia
Xing Xidi’’)
PRC Operating lease,
PRC
RMB10,000,000 N/A N/A N/A N/A 100% (xxvii),
(xxviii)
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 8–


--- page 591 ---
Effective interest held by the Group
Company name
Place and
date of
incorporation
Principal activities
and place of
operation Registered capital
As at 31 December
As at
30 June
2023
As at the
date of this
report Note2020 2021 2022
Fu Jian Cheyijia Automobile
Sales Co., Ltd.* (‘‘Fu Jian
Cheyijia’’)
PRC Car sales, PRC RMB50,000,000 N/A N/A N/A N/A 100% (xxix)
Fu Jian Cheyixing Technology
Co., Ltd.* (‘‘Fu Jian
Cheyixing’’)
PRC Information
technology, PRC
RMB50,000,000 N/A N/A N/A N/A 100% (xxix)
Mao Ming Xiqi Automobile
Sales Co., Ltd* (‘‘Mao Ming
Xiqi’’)
PRC Car sales, PRC RMB10,000,000 N/A N/A N/A N/A 100% (xxix)
Notes:
(i) No statutory financial statements were issued for the year ended 31 December 2020.
(ii) The statutory financial statements for the year ended 31 December 2020 prepared in accordance
with Chinese accounting standards have been audited by 福建中誠信德會計師事務所, a certified
public accounting firm registered in the PRC.
(iii) No statutory financial statements were issued for the year ended 31 December 2021.
(iv) The statutory financial statements for the year ended 31 December 2021 prepared in accordance
with Chinese accounting standards have been audited by 福建中誠信德會計師事務所, a certified
public accounting firm registered in the PRC.
(v) No statutory financial statements were issued for the year ended 31 December 2022.
(vi) The statutory financial statements for the period from 2 May 2019 (date of incorporation) to 31
December 2020 and for the years ended 31 December 2021 and 2022 prepared in accordance with
Hong Kong Small and Medium-Si zed Entity Financial Reporting Standard have been audited by
Centurion ZD CPA Limited, a certified public accounting fir m registered in Hong Kong.
(vii) The company was deregistered on 9 July 2020.
(viii) The company was deregistered on 31 March 2022.
(ix) The company was established on 17 May 2022. No st atutory financial statements were issued from
the establishment date to 31 December 2022.
(x) The company was established on 18 May 2022. No statutory financial statements were issued from
the establishment date to 31 December 2022.
(xi) The company was established on 31 October 2022. No statutory financial statements were issued
from the establishment date to 31 December 2022.
(xii) The company was established on 28 September 2022. No statutory financial statements were issued
from the establishment date to 31 December 2022.
(xiii) The company was established on 15 July 2022. No st atutory financial statements were issued from
the establishment date to 31 December 2022.
APPENDIX I ACCOUNTANT’S REPORT
–I - 9 9–


--- page 592 ---
(xiv) The company was established on 21 November 2022. No statutory financial statements were issued
from the establishment date to 31 December 2022.
(xv) The company was established on 24 November 2022. No statutory financial statements were issued
from the establishment date to 31 December 2022.
(xvi) The company was established on 13 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xvii) The company was established on 7 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xviii) The company was established on 3 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xix) The company was established on 24 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xx) The company was established on 6 April 2023. No st atutory financial statement was issued up to the
date of this report.
(xxi) The company was established on 15 May 2023. No statutory financial statement was issued up to the
date of this report.
(xxii) The company was established on 15 May 2023. No statutory financial statement was issued up to the
date of this report.
(xxiii) The company was established on 9 June 2023. No statutory financial statement was issued up to the
date of this report.
(xxiv) The company was established on 7 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xxv) The company was established on 15 June 2023. No st atutory financial statement was issued up to the
date of this report.
(xxvi) The company was established on 3 March 2023. No st atutory financial statement was issued up to
the date of this report.
(xxvii) The company was established on 30 May 2023. No statutory financial statement was issued up to the
date of this report.
(xxviii) The company was inactive as at 30 June 2023.
(xxix) The company was established on 12 July 2023. No stat utory financial statement was issued up to the
date of this report.
* The English name of companies established in the PRC a re translations of their Chinese names at the best
effort of the directors of the Company as they do not have official English names.
APPENDIX I ACCOUNTANT’S REPORT
– I-100 –


--- page 593 ---
III SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the
companies now comprising the Group in respect of any period subsequent to 30 June 2023
u pt ot h ed a t eo ft h i sr e p o r t .
No dividend or distribution have been declared, made or paid by the Company or, any
of the companies now comprising the Group in respect of any period subsequent to 30 June
2023.
APPENDIX I ACCOUNTANT’S REPORT
– I-101 –


--- page 594 ---
The information set out in this Appendix does not form part of the Accountant’s Report
from the reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong
Kong, as set out in Appendix I, and is included herein for illustrative purposes only. The
unaudited pro forma financial information should be read in conjunction with the section
entitled ‘‘Financial Information’’ in this prospectus and the Accountant’s Report set out in
Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE
ASSETS
The following unaudited pro forma statement of adjusted net tangible assets of the
Group prepared in accordance with Rule 4.29 of the Listing Rules is for illustrative
purposes only, and is set out below to illustrate the effect of the Global Offering on the net
tangible assets of the Group attributable to the owners of the Company as at 30 June 2023
as if the Global Offering had taken place on 30 June 2023 assuming the over-allotment is
not exercised.
This unaudited pro forma statement of adjusted net tangible assets has been prepared
for illustrative purposes only and because of its hypothetical nature, it may not give a true
picture of the consolidated net tangible assets of the Group as at 30 June 2023 or at any
future dates following the Global Offering. I t is prepared based on the consolidated net
assets of the Group as at 30 June 2023 as set out in the Accountant’s Report of the Group,
the text of which is set out in Appendix I to this prospectus, and adjusted as described
below. The unaudited pro forma statement of adjusted net tangible assets does not form
part of the Accountant’s Report.
Audited
consolidated
net tangible
assets of the
Group
attributable
to owners of
the Company
as at
30 June 2023
Estimated
net proceeds
from the
Global
Offering
Estimated
impact to the
net tangible
assets
upon the
conversion of
the ordinary
shares with
redemption
right
Unaudited
pro forma
adjusted net
tangible
assets
attributable
to owners of
the Company
as at
30 June 2023
Unaudited pro forma
adjusted net tangible assets
per Share
(Note 1) (Note 2) (Note 3) (Note 4) (Note 6)
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
B a s e do na nO f f e rP r i c eo f
HK$1.05 per Share 538,712 83,213 120,611 742,536 1.44 1.52
B a s e do na nO f f e rP r i c eo f
HK$1.36 per Share 538,712 112,204 120,611 771,527 1.50 1.58
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
–I I - 1–


--- page 595 ---
Notes:
(1) The audited consolidated net tangible asset s of the Group attributable to the owners of the
Company as at 30 June 2023 is extracted from the Accountant’s Report set out in Appendix I to this
prospectus, which is the audited consolidated net a ssets of the Group attributable to the owners of
the Company as at 30 June 2023 of RMB559,145,000, with an adjustment for the intangible assets as
of 30 June 2023 of RMB20,433,000.
(2) The estimated net proceeds from the Global Offer ing are based on 103,125,000 Offer Shares and the
indicative Offer Prices of HK$1.05 and HK$1.36 per Share, being the low end and high end of the
indicative Offer Price range per Share, respectively, after deduction of the underwriting fees and
other related expenses (excluding listing exp enses of approximately RMB59,955,000 which have
been accounted for in the consolidated statement of comprehensive income of the Group up to 30
June 2023) paid/payable by the Group and tak es no account of any Shares which may be issued
upon the exercise of options granted under the Pr e-IPO Share Option Scheme, any Shares which
may be issued upon the exercise of the options which may be granted under the Share Option
Scheme, any Shares which may fall to be issued upon the exercise of the Over-allotment Option or
any Shares which may be allotted and issued or repurchased by the Company pursuant to the
general mandate to issue Shares and the general mandate to repurchase Shares as described in the
section headed ‘‘Share Capi tal’’ in this prospectus.
(3) Upon the Listing, all of the ordinary shares with r edemption right will be automatically converted
into ordinary shares pursuant to the respective sha re subscription agreements. Accordingly, for the
purpose of the unaudited pro forma adjusted net tan gible assets, the unaudited pro forma adjusted
net tangible assets attributable to owners of th e Company will be increased by RMB120,611,000,
being the carrying amounts of the ordinary shares as of 30 June 2023.
(4) The unaudited pro forma net tangible assets per Share is arrived at after the adjustments referred to
in the preceding paragraphs and on the basis that 515,625,000 Shares were in issue assuming that the
Global Offering and the Capitalisation Issue have been completed on 30 June 2023 but takes no
account of any Shares which may be issued upon the e xercise of options granted under the Pre-IPO
Share Option Scheme, any Shares which may be iss ued upon the exercise of the options which may
be granted under the Share Option Scheme, any Shares which may be issued upon the exercise of the
Over-allotment Option or any Shares which ma y be allotted and issued or repurchased by the
Company pursuant to the general mandate to issue Shares and general mandate to repurchase
Shares as described in the section headed ‘‘Share Capital’’ in this prospectus.
(5) No adjustment has been made to reflect any trading result or other transactions of the Group
entered into subsequent to 30 June 2023.
(6) For the purpose of preparing this unaudited pro fo rma statement of adjusted net tangible assets, the
amount denominated in Chinese Renminbi have been converted to Hong Kong dollars, and vice
versa, at a rate of RMB1 to HK$1.0585 as set out in ‘‘Information About this Prospectus and the
Global Offering — Currency Conversion’’ to this p rospectus. No representation is made that the
Chinese Renminbi amounts have been, could have been or may be converted to Hong Kong dollars,
or vice versa, at that rate or at all.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
–I I - 2–


--- page 596 ---
The following is the text of a report received from PricewaterhouseCoopers, Certified
Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO F ORMA FINANCIAL INFORMATION
To the Directors of XXF Group Holdings Limited
We have completed our assurance engag ement to report on the compilation of
unaudited pro forma financial informat ion of XXF Group Holdings Limited (the
‘‘Company’’) and its subsidiaries (collectively the ‘‘Group’’) by the directors of the
Company (the ‘‘Directors’’) for illustra tive purposes only. The unaudited pro forma
financial information consists of the unaudited pro forma statement of adjusted
consolidated net tangible assets of the Group as at 30 June 2023, and related notes (the
‘‘Unaudited Pro Forma Financial Informat ion’’) as set out on pages II-1 to II-2 of the
Company’s prospectus dated 30 October 2023, in connection with the proposed initial
public offering of the shares of the Company (th e ‘‘Prospectus’’). The applicable criteria on
the basis of which the Directors have compiled the Unaudited Pro Forma Financial
Information are described on pages II-1 to II-2 of the Prospectus.
The Unaudited Pro Forma Financial Inform ation has been compiled by the Directors
to illustrate the impact of the proposed initia l public offering on the Group’s financial
position as at 30 June 2023 as if the proposed initial public offering had taken place at 30
June 2023. As part of this process, information about the Group’s financial position has
been extracted by the Directors from the Group’s financial information for the six months
ended 30 June 2023, on which an accoun tant’s report has been published.
Directors’ Responsibility for the Unaud ited Pro Forma Finan cial Information
The Directors are responsible for compiling the Unaudited Pro Forma Financial
Information in accordance with paragraph 4.29 of the Rules Governing the Listing of
Securities on The Stock Exchange of Hong Kong Limited (the ‘‘Listing Rules’’) and with
reference to Accounting Guideline 7, Preparation of Pro Forma Financial Information for
Inclusion in Investment Circulars (‘‘AG 7’’) issued by the Hong Kong Institute of Certified
Public Accountants (‘‘HKICPA’’).
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on
fundamental principles of integrity, objectivity, professional competence and due care,
confidentiality and professional behaviour.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
–I I - 3–


--- page 597 ---
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements , issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies or
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma F inancial Information and to report our
opinion to you. We do not accept a ny responsibility for any reports previously given by us
on any financial information used in the comp ilation of the Unaudited Pro Forma Financial
I n f o r m a t i o nb e y o n dt h a to w e dt ot h o s et ow h om those reports were addressed by us at the
dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus , issued by the HKICPA. This standard
requires that the reporting accountant plans and performs procedures to obtain reasonable
assurance about whether the Directors have compiled the Unaudited Pro Forma Financial
I n f o r m a t i o ni na c c o r d a n c ew i t hp a r a g r a p h4 . 2 9o ft h eL i s t i n gR u l e sa n dw i t hr e f e r e n c et o
AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Unaudited
Pro Forma Financial Information, nor have we, in the course of this engagement,
performed an audit or review of the financial information used in compiling the Unaudited
Pro Forma Financial Information.
The purpose of unaudited pro forma financial information included in a prospectus is
solely to illustrate the impact of a significant e vent or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been
undertaken at an earlier date selected for pur poses of the illustration. Accordingly, we do
not provide any assurance that the actual outcome of the proposed initial public offering at
30 June 2023 would have been as presented.
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly comp iled on the basis of the applicable criteria
involves performing procedures to assess wh ether the applicable criteria used by the
directors in the compilation of the unaudited pro forma financial information provide a
reasonable basis for presenting the significant effects directly attributable to the event or
t r a n s a c t i o n ,a n dt oo b t a i ns u f f i c i e nt appropriate evidence about whether:
. The related pro forma adjustments give app ropriate effect to those criteria; and
. The unaudited pro forma financial informat ion reflects the proper application of
those adjustments to the unadj usted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
–I I - 4–


--- page 598 ---
The procedures selected depend on the repor ting accountant’s judgment, having regard
to the reporting accountant’s understanding of the nature of the company, the event or
transaction in respect of which the unaudite d pro forma financial information has been
compiled, and other relevant e ngagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Opinion
In our opinion:
(a) the Unaudited Pro Forma Financial Information has been properly compiled by
the Directors on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 30 October 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
–I I - 5–


--- page 599 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman Islands company law.
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 29 March 2019 under the Companies Act (As Revised) of the Cayman
Islands (the ‘‘ Companies Act ’’). The Company’s constitutional documents consist of its
Memorandum of Association (the ‘‘ Memorandum ’’) and its Articles of Association (the
‘‘Articles ’’).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum states, inter alia , that the liability of members of the Company
is limited to the amount, if any, for the time being unpaid on the shares
respectively held by them and that the objects for which the Company is
established are unrestricted (including acting as an investment company), and that
the Company shall have and be capable of exercising all the functions of a natural
person of full capacity irrespective of any question of corporate benefit, as
provided in section 27(2) of the Companies Act and in view of the fact that the
Company is an exempted company that the Company will not trade in the
Cayman Islands with any person, firm or corporation except in furtherance of the
business of the Company carried on outside the Cayman Islands.
(b) The Company may by special resolution alter its Memorandum with respect to
any objects, powers or other matters specified therein.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted o n 9 October 2023 with effect from the Listing
Date. The following is a summary of certain provisions of the Articles:
(a) Shares
(i) Classes of shares
The share capital of the Compan y consists of ordinary shares.
(ii) Variation of rights of existing shares or classes of shares
Subject to the Companies Act, if at any time the share capital of the
Company is divided into different classes of shares, all or any of the special rights
a t t a c h e dt ot h es h a r e so ra n yc l a s so fs h a r e sm a y( u n l e s so t h e r w i s ep r o v i d e df o rb y
the terms of issue of that class) be varied, modified or abrogated either with the
consent in writing of the holders of not less than three-fourths in nominal value of
the issued shares of that class or with the sanction of a special resolution passed at
a separate general meeting of the holders of the shares of that class. To every such
separate general meeting the provision s of the Articles relating to general
meetings will mutatis mutandis apply, but so that the necessary quorum (including
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1–


--- page 600 ---
an adjourned meeting) shall be two persons holding or representing by proxy not
less than one-third in nominal value of the issued shares of that class. Every
holder of shares of the class shall be entitled to one vote for every such share held
by him.
Any special rights conferred upon the holders of any shares or class of shares
shall not, unless otherwise expressly provided in the rights attaching to the terms
of issue of such shares, be deemed to be varied by the creation or issue of further
shares ranking pari passu therewith.
(iii) Alteration of capital
The Company may by ordinary resolution of its members:
(i) increase its share capital by the creation of new shares;
(ii) consolidate all or any of its capital into shares of larger amount than its
existing shares;
(iii) divide its shares into several c lasses and attach to such shares any
preferential, deferred, qualified or special rights, privileges, conditions
or restrictions as the Company in general meeting or as the directors
may determine;
(iv) subdivide its shares or any of them into shares of smaller amount than is
fixed by the Memorandum; or
(v) cancel any shares which, at the date of passing of the resolution, have
not been taken and diminish the amount of its capital by the amount of
the shares so cancelled.
The Company may reduce its share capital or any capital redemption reserve
or other undistributable reserve in any way by special resolution.
(iv) Transfer of shares
All transfers of shares may be effected by an instrument of transfer in the
usual or common form or in a form prescribed by The Stock Exchange of Hong
Kong Limited (the ‘‘ Stock Exchange ’’) or in such other form as the board may
approve and which may be under hand or, if the transferor or transferee is a
clearing house or its nominee(s), by hand or by machine imprinted signature or by
such other manner of execution as the board may approve from time to time.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2–


--- page 601 ---
Notwithstanding the foregoing, for s o long as any shares are listed on the
Stock Exchange, titles to such listed shares may be evidenced and transferred in
accordance with the laws applicable to an d the rules and regulations of the Stock
Exchange that are or shall be applicable to such listed shares. The register of
members in respect of its listed shares (whether the principal register or a branch
register) may be kept by recording the particulars required by Section 40 of the
Companies Act in a form otherwise than legible if such recording otherwise
complies with the laws applicable to an d the rules and regulations of the Stock
Exchange that are or shall be applicable to such listed shares.
The instrument of transfer shall be exec uted by or on behalf of the transferor
and the transferee provided that the board may dispense with the execution of the
instrument of transfer by the transferee. The transferor shall be deemed to remain
the holder of the share until the name of the transferee is entered in the register of
members in respect of that share.
The board may, in its absolute discretion, at any time transfer any share
upon the principal register to any branch register or any share on any branch
register to the principal register or any other branch register.
The board may decline to recognise any instrument of transfer unless a fee
(not exceeding the maximum sum as the Stock Exchange may determine to be
payable) determined by the Directors is paid to the Company, the instrument of
transfer is properly stamped (if applicab le), it is in respect of only one class of
share and is lodged at the relevant registration office or registered office or such
other place at which the principal regis ter is kept accompanied by the relevant
share certificate(s) and such other evidence as the board may reasonably require
to show the right of the transferor to mak e the transfer (and if the instrument of
transfer is executed by some other person on his behalf, the authority of that
person so to do).
The registration of transfers may be s uspended and the register closed on
giving notice by advertisement in any newspaper or by any other means in
accordance with the requirements of the Stock Exchange, at such times and for
such periods as the board may determine. The register of members must not be
closed for periods exceeding in the whole thirty (30) days in any year. The period
of thirty (30) days may be extended for a further period or periods not exceeding
thirty (30) days in respect of any year if approved by members by ordinary
resolution.
Subject to the above, fully paid shares are free from any restriction on
transfer and free of all liens in favour of the Company.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 3–


--- page 602 ---
(v) Power of the Company to purchase its own shares
The Company is empowered by the Companies Act and the Articles to
purchase its own shares subject to certain restrictions and the board may only
exercise this power on behalf of the Company subject to any applicable
requirements imposed from time to time by the Stock Exchange.
The board may accept the surrender for no consideration of any fully paid
share.
(vi) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles r elating to ownership of shares in the
Company by a subsidiary.
(vii)Calls on shares and forfeiture of shares
The board may from time to time make such calls upon the members in
respect of any monies unpaid on the shares held by them respectively (whether on
account of the nominal value of the shares or by way of premium). A call may be
made payable either in one lump sum or by instalments. If the sum payable in
respect of any call or instalment is not paid on or before the day appointed for
payment thereof, the person or persons from whom the sum is due shall pay
interest on the same at such rate not exceeding twenty per cent. (20%) per annum
as the board may agree to accept from the day appointed for the payment thereof
to the time of actual payment, but the board may waive payment of such interest
wholly or in part. The board may, if it thi nks fit, receive from any member willing
to advance the same, either in money or money’s worth, all or any part of the
monies uncalled and unpaid or instalments payable upon any shares held by him,
and upon all or any of the monies so advanced the Company may pay interest at
such rate (if any) as the board may decide.
If a member fails to pay any call on the day appointed for payment thereof,
the board may serve not less than fourteen (14) clear days’ notice on him requiring
p a y m e n to fs om u c ho ft h ec a l la si su n p a i d, together with any interest which may
have accrued and which may still accrue up to the date of actual payment and
stating that, in the event of non-payment at or before the time appointed, the
shares in respect of which the call wa s made will be liable to be forfeited.
If the requirements of any such notice are not complied with, any share in
respect of which the notice has been given may at any time thereafter, before the
payment required by the notice has been made, be forfeited by a resolution of the
board to that effect. Such forfeiture will include all dividends and bonuses
declared in respect of the forfeited share and not actually paid before the
forfeiture.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 4–


--- page 603 ---
A person whose shares have been forfeited shall cease to be a member in
respect of the forfeited shares but shall, notwithstanding, remain liable to pay to
the Company all monies which, at the date of forfeiture, were payable by him to
the Company in respect of the shares, to gether with (if the board shall in its
discretion so require) interest thereon from the date of forfeiture until the date of
actual payment at such rate not exceeding twenty per cent. (20%) per annum as
the board determines.
(b) Directors
(i) Appointment, retirement and removal
At each annual general meeting, one third of the Directors for the time being
(or if their number is not a multiple of three, then the number nearest to but not
less than one third) shall retire from office by rotation provided that every
Director shall be subject to retirement a t an annual general meeting at least once
every three years. The Directors to retire by rotation shall include any Director
who wishes to retire and not offer himself for re-election. Any further Directors so
to retire shall be those who have been longest in office since their last re-election
or appointment but as between persons who became or were last re-elected
Directors on the same day those to retire will (unless they otherwise agree among
themselves) be determined by lot.
Neither a Director nor an alternate Director is required to hold any shares in
the Company by way of qualification. Further, there are no provisions in the
Articles relating to retirement of Directors upon reaching any age limit.
The Directors have the power to appoint any person as a Director either to
fill a casual vacancy on the board or as an addition to the existing board. Any
Director so appointed shall hold office only until the first annual general meeting
of the Company after his appointment and shall then be eligible for re-election.
A Director (including a managing or o ther executive Director) may be
removed by an ordinary resolution of the Company before the expiration of his
term of office (but without prejudice to any claim which such Director may have
for damages for any breach of any contract between him and the Company) and
members of the Company may by ordinary resolution appoint another in his
place. Unless otherwise determined by the Company in general meeting, the
number of Directors shall not be less than two. There is no maximum number of
Directors.
T h eo f f i c eo fd i r e c t o rs h a l lb ev a c a t e di f :
(aa) he resigns by notice in writing delivered to the Company;
(bb) he becomes of unsound mind or dies;
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 5–


--- page 604 ---
(cc) without special leave, he is absen t from meetings of the board for six (6)
consecutive months, and the board resolves that his office is vacated;
(dd) he becomes bankrupt or has a receiving order made against him or
suspends payment or compounds with his creditors;
(ee) he is prohibited from being a director by law; or
(ff) he ceases to be a director by virtue of any provision of law or is removed
from office pursuant to the Articles.
The board may appoint one or more of its body to be managing director,
joint managing director, or deputy managing director or to hold any other
employment or executive office with the Company for such period and upon such
terms as the board may determine and the board may revoke or terminate any of
such appointments. The board may delegate any of its powers, authorities and
discretions to committees consisting of such Director or Directors and other
persons as the board thinks fit, and it may from time to time revoke such
delegation or revoke the appointment of and discharge any such committees either
wholly or in part, and either as to persons or purposes, but every committee so
formed must, in the exercise of the pow ers, authorities and discretions so
delegated, conform to any regulations that may from time to time be imposed
upon it by the board.
(ii) Power to allot and issue shares and warrants
Subject to the provisions of the Companies Act and the Memorandum and
Articles and to any special rights conferred on the holders of any shares or class of
shares, any share may be issued (a) with or have attached thereto such rights, or
such restrictions, whether with regard to dividend, voting, return of capital, or
otherwise, as the Directors may determi ne, or (b) on terms that, at the option of
the Company or the holder thereof, it is liable to be redeemed.
The board may issue warrants or convertible securities or securities of similar
nature conferring the right upon the holders thereof to subscribe for any class of
shares or securities in the capital of the Company on such terms as it may
determine.
Subject to the provisions of the Companies Act and the Articles and, where
applicable, the rules of the Stock Exchange and without prejudice to any special
rights or restrictions for the time being attached to any shares or any class of
shares, all unissued shares in the Company are at the disposal of the board, which
may offer, allot, grant options over or otherwise dispose of them to such persons,
at such times, for such consideration and on such terms and conditions as it in its
absolute discretion thinks fit, but so that no shares shall be issued at a discount to
their nominal value.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 6–


--- page 605 ---
Neither the Company nor the board is obliged, when making or granting any
allotment of, offer of, option over or disposal of shares, to make, or make
available, any such allotment, offer, option or shares to members or others with
registered addresses in any particular territory or territories being a territory or
territories where, in the absence of a registration statement or other special
formalities, this would or might, in the opinion of the board, be unlawful or
impracticable. Members affected as a result of the foregoing sentence shall not be,
or be deemed to be, a separate class of members for any purpose whatsoever.
(iii) Power to dispose of the assets of the Company or any of its subsidiaries
There are no specific provisions in the A rticles relating to the disposal of the
assets of the Company or any of its subsidiaries. The Directors may, however,
exercise all powers and do all acts and things which may be exercised or done or
approved by the Company and which are not required by the Articles or the
Companies Act to be exercised or done by the Company in general meeting.
(iv) Borrowing powers
T h eb o a r dm a ye x e r c i s ea l lt h ep o w e r so ft h eC o m p a n yt or a i s eo rb o r r o w
money, to mortgage or charge all or any part of the undertaking, property and
assets and uncalled capital of the Company and, subject to the Companies Law, to
issue debentures, bonds and other securities of the Company, whether outright or
as collateral security for any debt, liab ility or obligation of the Company or of any
third party.
(v) Remuneration
The ordinary remuneration of the Directors is to be determined by the
Company in general meeting, such sum (unless otherwise directed by the
resolution by which it is voted) to be divided amongst the Directors in such
proportions and in such manner as the board may agree or, failing agreement,
equally, except that any Director holding office for part only of the period in
respect of which the remuneration is payab le shall only rank in such division in
proportion to the time during such period for which he held office. The Directors
are also entitled to be prepaid or repaid all travelling, hotel and incidental
expenses reasonably expected to be incurred or incurred by them in attending any
board meetings, committee meetings or ge neral meetings or separate meetings of
any class of shares or of debentures of the Company or otherwise in connection
with the discharge of their duties as Directors.
Any Director who, by request, goes or resides abroad for any purpose of the
Company or who performs services which in the opinion of the board go beyond
the ordinary duties of a Director may b e paid such extra re muneration as the
board may determine and such extra remuneration shall be in addition to or in
substitution for any ordinary remuneration as a Director. An executive Director
appointed to be a managing director, joint managing director, deputy managing
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 7–


--- page 606 ---
director or other executive officer shall receive such remuneration and such other
benefits and allowances as the board may from time to time decide. Such
remuneration may be either in addition to or in lieu of his remuneration as a
Director.
The board may establish or concur or join with other companies (being
subsidiary companies of the Company or companies with which it is associated in
business) in establishing and making contributions out of the Company’s monies
to any schemes or funds for providing pensions, sickness or compassionate
allowances, life assurance or other benefits for employees (which expression as
used in this and the following paragraph shall include any Director or past
Director who may hold or have held any executive office or any office of profit
with the Company or any of its subsidiaries) and ex-employees of the Company
and their dependents or any class or classes of such persons.
The board may pay, enter into agreemen ts to pay or make grants of revocable
or irrevocable, and either subject or not subject to any terms or conditions,
pensions or other benefits to employees and ex-employees and their dependents,
or to any of such persons, including pensions or benefits additional to those, if
any, to which such employees or ex-emp loyees or their dependents are or may
become entitled under any such scheme or fund as is mentioned in the previous
paragraph. Any such pension or benefit may, as the board considers desirable, be
granted to an employee either before and in anticipation of, or upon or at any
time after, his actual retirement.
The board may resolve to capitalise all or any part of any amount for the
time being standing to the credit of any reserve or fund (including a share
premium account and the profit and loss account) whether or not the same is
available for distribution by applying such sum in paying up unissued shares to be
allotted to (i) employees (including dire ctors) of the Company and/or its affiliates
(meaning any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated associ ation or other entity (other than the
Company) that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with, the Company) upon
exercise or vesting of any options or awards granted under any share incentive
scheme or employee benefit scheme or other arrangement which relates to such
persons that has been adopted or approved by the members in general meeting, or
(ii) any trustee of any trust to whom shares are to be allotted and issued by the
Company in connection with the operation of any share incentive scheme or
employee benefit scheme or other arrang ement which relates to such persons that
has been adopted or approved by the members in general meeting.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 8–


--- page 607 ---
(vi) Compensation or payments for loss of office
Pursuant to the Articles, payments to any Director or past Director of any
sum by way of compensation for loss of office or as consideration for or in
connection with his retirement from office (not being a payment to which the
Director is contractually entitled) must be approved by the Company in general
meeting.
(vii)Loans and provision of security for loans to Directors
The Company must not make any loan, directly or indirectly, to a Director or
his close associate(s) if and to the extent it would be prohibited by the Companies
Ordinance (Chapter 622 of the laws of Hong Kong) as if the Company were a
company incorporated in Hong Kong.
(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries
A Director may hold any other office or place of profit with the Company
(except that of the auditor of the Company) in conjunction with his office of
Director for such period and upon such terms as the board may determine, and
may be paid such extra remuneration therefor in addition to any remuneration
provided for by or pursuant to the Articles. A Director may be or become a
director or other officer of, or otherwise interested in, any company promoted by
the Company or any other company in which the Company may be interested, and
shall not be liable to account to the Company or the members for any
remuneration, profits or other benefits received by him as a director, officer or
member of, or from his interest in, such o ther company. The board may also cause
the voting power conferred by the shares in any other company held or owned by
the Company to be exercised in such manner in all respects as it thinks fit,
including the exercise thereof in favour of any resolution appointing the Directors
or any of them to be directors or officers of such other company, or voting or
providing for the payment of remuneration to the directors or officers of such
other company.
No Director or proposed or intended Director shall be disqualified by his
office from contracting with the Company, either with regard to his tenure of any
office or place of profit or as vendor, purchaser or in any other manner
whatsoever, nor shall any such contract or any other contract or arrangement in
which any Director is in any way interested be liable to be avoided, nor shall any
Director so contracting or being so interested be liable to account to the Company
or the members for any remuneration, profit or other benefits realised by any such
contract or arrangement by reason of such Director holding that office or the
fiduciary relationship thereby establis hed. A Director who to his knowledge is in
any way, whether directly or indirectly, interested in a contract or arrangement or
proposed contract or arrangement with the Company must declare the nature of
his interest at the meeting of the board at which the question of entering into the
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 9–


--- page 608 ---
contract or arrangement is first taken into consideration, if he knows his interest
then exists, or in any other case, at the first meeting of the board after he knows
that he is or has become so interested.
A Director shall not vote (nor be counted in the quorum) on any resolution
of the board approving any contract or arrangement or other proposal in which he
or any of his close associates is materially interested, but this prohibition does not
apply to any of the following matters, namely:
(aa) the giving of any secu rity or indemnity either:
(aaa) to the Director or his close associate(s) in respect of money lent or
obligations incurred or undertaken by him or any of them at the
request of or for the benefit of the Company or any of its
subsidiaries; or
(bbb) to a third party in respect of a debt or obligation of the Company
or any of its subsidiaries for which the Director or his close
associate(s) has himself/themselves assumed responsibility in whole
or in part and whether alone or jointly under a guarantee or
indemnity or by the giving of security;
(bb) any proposal concerning an offe ro fs h a r e so rd e b e n t u r e so ro t h e r
securities of or by the Company or any other company which the
Company may promote or be interested in for subscription or purchase
where the Director or his close associate(s) is/are or is/are to be
interested as a participant in the underwriting or sub-underwriting of
the offer;
(cc) any proposal or arrangement concerning the benefit of employees of the
Company or its subsidiaries including:
(aaa) the adoption, modification or operation of any employees’ share
scheme or any share incentive or share option scheme under which
the Director or his close associate(s) may benefit; or
(bbb) the adoption, modification or operation of a pension fund or
retirement, death or disability benefits scheme which relates to the
Directors, his close associate(s) and employee(s) of the Company or
any of its subsidiaries and does not provide in respect of any
Director, or his close associate(s), as such any privilege or
advantage not generally accorded to the class of persons to which
such scheme or fund relates;
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 0–


--- page 609 ---
(dd) any contract or arrangement in which the Director or his close
associate(s) is/are interested in the same manner as other holders of
shares or debentures or other securities of the Company by virtue only
of his/their interest in shares or debentures or other securities of the
Company.
(c) Proceedings of the Board
The board may meet for the despatch of business, adjourn and otherwise regulate
its meetings as it considers appropriate. Questions arising at any meeting shall be
determined by a majority of votes. In the case of an equality of votes, the chairman of
the meeting shall have an additional or casting vote.
(d) Alterations to constitutional documents and the Company’s name
The Articles may be rescinded, altered or amended by the Company in general
meeting by special resolution. The Articl es state that a special resolution shall be
required to alter the provisions of the Memorandum, to amend the Articles or to
change the name of the Company.
(e) Meetings of members
(i) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less
than three-fourths of the votes cast by such members as, being entitled so to do,
vote in person or, in the case of such members as are corporations, by their duly
authorised representatives or, where proxies are allowed, by proxy at a general
meeting of which notice has been duly given in accordance with the Articles.
Under the Companies Act, a copy of any special resolution must be
forwarded to the Registrar of Companies in the Cayman Islands within fifteen
(15) days of being passed.
An ordinary resolution is defined in the Articles to mean a resolution passed
by a simple majority of the votes of such members of the Company as, being
entitled to do so, vote in person or, in the case of corporations, by their duly
authorised representatives or, where proxies are allowed, by proxy at a general
meeting of which notice has been duly given in accordance with the Articles.
(ii) Voting rights and right to demand a poll
Subject to any special rights or restrictions as to voting for the time being
attached to any shares, at any general meeting on a poll every member present in
person or by proxy or, in the case of a member being a corporation, by its duly
authorised representative shall have one vote for every fully paid share of which
h ei st h eh o l d e rb u ts ot h a tn oa m o u n tp a i du po rc r e d i t e da sp a i du po nas h a r ei n
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 1–


--- page 610 ---
advance of calls or instalments is treated for the foregoing purposes as paid up on
the share. A member entitled to more than one vote need not use all his votes or
cast all the votes he uses in the same way.
At any general meeting a resolution put to the vote of the meeting is to be
decided by way of a poll save that the chairman of the meeting may in good faith,
allow a resolution which relates purely to a procedural or administrative matter to
b ev o t e do nb yas h o wo fh a n d si nw h i c hc a s ee v e r ym e m b e rp r e s e n ti np e r s o n( o r
being a corporation, is present by a duly authorised representative), or by
proxy(ies) shall have one vote provided that where more than one proxy is
appointed by a member which is a clearin g house (or its nominee(s)), each such
proxy shall have one vote on a show of hands. Votes (whether on a show of hands
or by way of poll) may be cast by such means, electronic or otherwise, as the
Directors or the chairman of the meeting may determine.
Any corporation which is a member may by resolution of its directors or
other governing body authorise such person as it thinks fit to act as its
representative at any general meeting of the Company or at any meeting of any
class of members.
The person so authorised shall be entitled to exercise the same powers on
behalf of such corporation as the corporation could exercise if it were an
individual member and such corporation shall for the purposes of the Articles be
deemed to be present in person at any such meeting if a person so authorised is
present thereat.
If a recognised clearing house (or its nominee(s)) is a member of the
Company it may authorise such person o r persons as it thinks fit to act as its
representative(s) at any meeting of the Company or at any meeting of any class of
members of the Company provided that, if more than one person is so authorised,
the authorisation shall specify the number and class of shares in respect of which
each such person is so authorised. A person authorised pursuant to this provision
shall be deemed to have been duly authorised without further evidence of the facts
a n db ee n t i t l e dt oe x e r c i s et h es a m ep o w ers on behalf of the recognised clearing
house (or its nominee(s)) as if such person was the registered holder of the shares
of the Company held by that clearing house (or its nominee(s)) including, the right
to speak and to vote, and where a show of hands is allowed, the right to vote
individually on a show of hands.
All members have the right to speak and vote at a general meeting except
where a member is required, by the rules of the Stock Exchange, to abstain from
voting to approve the matter under consideration.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 2–


--- page 611 ---
Where the Company has any knowledge that any member is, under the rules
of the Stock Exchange, required to abs tain from voting on any particular
resolution of the Company or restricted to voting only for or only against any
particular resolution of the Company, any votes cast by or on behalf of such
member in contravention of such requirement or restriction shall not be counted.
(iii) Annual general meetings and e xtraordinary general meetings
The Company must hold an annual general meeting of the Company for each
financial year and such general meeting must be held within six (6) months after
the end of the Company’s financial year unless a longer period would not infringe
the rules of the Stock Exchange.
Extraordinary general meetings may b e convened on the requisition of one or
more members holding, at the date of deposit of the requisition, not less than
one-tenth of the paid up capital of the Company having the right of voting at
general meetings, on a one vote per share basis. Such requisition shall be made in
writing to the board or the secretary for the purpose of requiring an extraordinary
general meeting to be called by the board for the transaction of any business or
resolution specified in such requisiti on. Such meeting shall be held within 2
months after the deposit of such requisition. If within 21 days of such deposit, the
board fails to proceed to convene suc h meeting, the requisitionist(s)
himself/herself (themselves) may do so in the same manner, and all reasonable
expenses incurred by the requisitionis t(s) as a result of the failure of the board
shall be reimbursed to the requisitionist(s) by the Company.
Notwithstanding any provisions in th e Articles, any general meeting or any
class meeting may be held by means of such telephone, electronic or other
communication facilities as to permit all persons participating in the meeting to
communicate with each other, and particip ation in such a meeting shall constitute
presence at such meeting.
(iv) Notices of meetings and business to be conducted
An annual general meeting must be called by notice of not less than
twenty-one (21) clear days. All other general meetings must be called by notice of
at least fourteen (14) clear days. The notice is exclusive of the day on which it is
served or deemed to be served and of the day for which it is given, and must
specify the time and place of the meeting and particulars of resolutions to be
considered at the meeting and, in the case of special business, the general nature of
that business.
In addition, notice of every general meeting must be given to all members of
the Company other than to such members as, under the provisions of the Articles
or the terms of issue of the shares they hold, are not entitled to receive such
notices from the Company, and also to, among others, the auditors for the time
being of the Company.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 3–


--- page 612 ---
Any notice to be given to or by any person pursuant to the Articles may be
served on or delivered to any member of the Company personally, by post to such
member’s registered address or by advertisement in newspapers in accordance
with the requirements of the Stock Exchange. Subject to compliance with Cayman
Islands law and the rules of the Stock Exchange, notice may also be served or
delivered by the Company to any member by electronic means.
All business that is transacted at an extraordinary general meeting and at an
annual general meeting is deemed speci al, save that in the case of an annual
general meeting, each of the following business is deemed an ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and
the reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.
(v) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum shall
not preclude the appointment of a chairman.
The quorum for a general meeting shall be two members present in person
(or, in the case of a member being a corporation, by its duly authorised
representative) or by proxy or, for quorum purpose only, two persons appointed
by the clearing house as authorised representative or proxy, and entitled to vote.
In respect of a separate class meeting (in cluding an adjourned meeting) convened
to sanction the modification of class rights the necessary quorum shall be two
persons holding or representing by proxy not less than one-third in nominal value
of the issued shares of that class.
(vi) Proxies
Any member of the Company entitled to attend and vote at a meeting of the
Company is entitled to appoint another person as his proxy to attend and vote
instead of him. A member who is the holder of two or more shares may appoint
more than one proxy to represent him and vote on his behalf at a general meeting
of the Company or at a class meeting. A proxy need not be a member of the
Company and is entitled to exercise the same powers on behalf of a member who
is an individual and for whom he acts as proxy as such member could exercise. In
addition, a proxy is entitled to exercise the same powers on behalf of a member
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 4–


--- page 613 ---
which is a corporation and for which he acts as proxy as such member could
exercise as if it were an individual membe r. Votes may be given either personally
(or, in the case of a member being a corporation, by its duly authorised
representative) or by proxy.
(f) Accounts and audit
The board shall cause true accounts to be kept of the sums of money received and
expended by the Company, and the matters in respect of which such receipt and
expenditure take place, and of the propert y, assets, credits and liabilities of the
Company and of all other matters required by the Companies Act or necessary to give
a true and fair view of the Company’s affairs and to explain its transactions.
The accounting records must be kept at the registered office or at such other place
or places as the board decides and shall always be open to inspection by any Director.
No member (other than a Director) shall h ave any right to inspect any accounting
record or book or document of the Company except as conferred by law or authorised
by the board or the Company in general meeting. However, an exempted company
must make available at its registered office in electronic form or any other medium,
copies of its books of account or parts thereof as may be required of it upon service of
an order or notice by the Tax Information Authority pursuant to the Tax Information
Authority Law of the Cayman Islands.
A copy of every balance sheet and profit and loss account (including every
document required by law to be annexed thereto) which is to be laid before the
Company at its general meeting, together with a printed copy of the Directors’ report
and a copy of the auditors’ report, shall not less than twenty-one (21) days before the
date of the meeting and at the same time as the notice of annual general meeting be sent
to every person entitled to receive notices of general meetings of the Company under
the provisions of the Articles; however, sub ject to compliance with all applicable laws,
including the rules of the Stock Exchange, the Company may send to such persons
summarised financial statements derived from the Company’s annual accounts and the
directors’ report instead provided that any such person may by notice in writing served
on the Company, demand that the Company sends to him, in addition to summarised
financial statements, a complete printed copy of the Company’s annual financial
statement and the directors’ report thereon.
At the annual general meeting or at a subsequent extraordinary general meeting in
each year, the members shall by ordinary resolution appoint an auditor to audit the
accounts of the Company and such auditor shall hold office until the next annual
general meeting. Moreover, the members may, at any general meeting, by ordinary
resolution remove the auditor at any time before the expiration of his terms of office
and shall by ordinary resolution at that meeting appoint another auditor for the
remainder of his term. The remuneration of the auditors shall be fixed and approved by
the Company by an ordinary resolution passed at a general meeting or in such manner
a st h em e m b e r sm a yb yo r d i n a r yr e s o l u t i o nd e t e r m i n e .
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 5–


--- page 614 ---
The financial statements of the Company shall be audited by the auditor in
accordance with generally accepted auditing standards which may be those of a
country or jurisdiction other than the Cayman Islands. The auditor shall make a
written report thereon in accordance with generally accepted auditing standards and
the report of the auditor must be submitted to the members in general meeting.
(g) Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid
to the members but no dividend shall be declared in excess of the amount
recommended by the board.
The Articles provide dividends may be declared and paid out of the profits of the
Company, realised or unrealised, or from a ny reserve set aside from profits which the
directors determine is no longer needed. With the sanction of an ordinary resolution
dividends may also be declared and paid out of share premium account or any other
fund or account which can be authorised for this purpose in accordance with the
Companies Act.
Except in so far as the rights attaching to, or the terms of issue of, any share may
otherwise provide, (i) all dividends shall be declared and paid according to the amounts
paid up on the shares in respect whereof the dividend is paid but no amount paid up on
a share in advance of calls shall for this purpose be treated as paid up on the share and
(ii) all dividends shall be apportioned and paid pro rata according to the amount paid
up on the shares during any portion or portions of the period in respect of which the
dividend is paid. The Directors may deduct from any dividend or other monies payable
to any member or in respect of any shares all sums of money (if any) presently payable
by him to the Company on account of calls or otherwise.
Whenever the board or the Company in general meeting has resolved that a
dividend be paid or declared on the share capital of the Company, the board may
further resolve either (a) that such dividen d be satisfied wholly or in part in the form of
an allotment of shares credited as fully paid up, provided that the members entitled
thereto will be entitled to elect to receive suc h dividend (or part thereof) in cash in lieu
of such allotment, or (b) that members entitl ed to such dividend will be entitled to elect
to receive an allotment of shares credited as fully paid up in lieu of the whole or such
part of the dividend as the board may think fit.
The Company may also upon the recommendation of the board by an ordinary
resolution resolve in respect of any one particular dividend of the Company that it may
be satisfied wholly in the form of an allotment of shares credited as fully paid up
without offering any right to members to elect to receive such dividend in cash in lieu
of such allotment.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 6–


--- page 615 ---
Any dividend, interest or other sum payable in cash to the holder of shares may be
paid by cheque or warrant sent through the post addressed to the holder at his
registered address, or in the case of joint holders, addressed to the holder whose name
stands first in the register of the Company in respect of the shares at his address as
appearing in the register or addressed to such person and at such addresses as the
holder or joint holders may in writing direct. Every such cheque or warrant shall,
unless the holder or joint holders otherwise direct, be made payable to the order of the
holder or, in the case of joint holders, to the order of the holder whose name stands
first on the register in respect of such shar es, and shall be sent at his or their risk and
payment of the cheque or warrant by the bank on which it is drawn shall constitute a
good discharge to the Company. Any one of two or more joint holders may give
effectual receipts for any dividends or other moneys payable or property distributable
in respect of the shares held by such joint holders.
Whenever the board or the Company in general meeting has resolved that a
dividend be paid or declared the board ma y further resolve that such dividend be
satisfied wholly or in part by the distribution of specific assets of any kind.
All dividends or bonuses unclaimed for one year after having been declared may
be invested or otherwise made use of by the board for the benefit of the Company until
claimed and the Company shall not be constituted a trustee in respect thereof. All
dividends or bonuses unclaimed for six years after having been declared may be
forfeited by the board and shall revert to the Company.
No dividend or other monies payable by the Company on or in respect of any
share shall bear intere st against the Company.
(h) Inspection of corporate records
Pursuant to the Articles, the register and branch register of members maintained
in Hong Kong shall be open to inspection for at least two (2) hours during business
hours by members without charge, or by any other person upon a maximum payment
of HK$2.50 or such lesser sum specified by the board, at the registered office or such
other place at which the register is kept in accordance with the Companies Act or,
upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the
office where the branch register of members is kept, unless the register is closed in
accordance with the Articles.
(i) Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles rel ating to rights of minority shareholders
in relation to fraud or oppression. Howeve r, certain remedies are available to members
of the Company under Cayman Islands law, as summarised in paragraph 3(f) of this
Appendix.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 7–


--- page 616 ---
(j) Procedures on liquidation
Unless otherwise provided by the Compan ies Act, a resolution that the Company
be wound up by the court or be wound up voluntarily shall be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of
available surplus assets on liquidation for the time being attached to any class or
classes of shares:
(i) if the Company is wound up and the assets available for distribution amongst
the members of the Company shall be more than sufficient to repay the whole
of the capital paid up at the commencement of the winding up, the excess
shall be distributed pari passu amongst such members in proportion to the
amount paid up on the shares held by them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst
the members as such shall be insufficient to repay the whole of the paid-up
capital, such assets shall be distributed so that, as nearly as may be, the losses
shall be borne by the members in proportion to the capital paid up, or which
ought to have been paid up, at the commencement of the winding up on the
shares held by them respectively.
If the Company is wound up (whether the liquidation is voluntary or by the court)
the liquidator may, with the authority of a special resolution and any other sanction
required by the Companies Act divide among the members in specie or kind the whole
or any part of the assets of the Company whether the assets shall consist of property of
one kind or shall consist of properties of d ifferent kinds and the liquidator may, for
such purpose, set such value as he deems fair upon any one or more class or classes of
property to be divided as aforesaid and may determine how such division shall be
carried out as between the members or different classes of members. The liquidator
may, with the like authority, vest any part of the assets in trustees upon such trusts for
the benefit of members as the liquidator, with the like authority, shall think fit, but so
that no contributory shall be compelled to accept any shares or other property in
respect of which there is a liability.
(k) Subscription rights reserve
The Articles provide that to the extent that it is not prohibited by and is in
compliance with the Companies Act, if warrants to subscribe for shares have been
issued by the Company and the Company does any act or engages in any transaction
which would result in the subscription pri ce of such warrants being reduced below the
par value of a share, a subscription rights reserve shall be established and applied in
paying up the difference between the subscription price and the par value of a share on
any exercise of the warrants.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 8–


--- page 617 ---
3. CAYMAN ISLANDS COMPANY LAW
The Company is incorporated in the Cayman Islands subject to the Companies Act
and, therefore, operates subject to Cayman Islands law. Set out below is a summary of
certain provisions of Cayman Islands company law, although this does not purport to
contain all applicable qualifications and ex ceptions or to be a complete review of all matters
of Cayman Islands company law and taxation, which may differ from equivalent provisions
in jurisdictions with which interested parties may be more familiar:
(a) Company operations
As an exempted company, the Company’s operations must be conducted mainly
outside the Cayman Islands. The Company is required to file an annual return each
year with the Registrar of Companies of t he Cayman Islands and pay a fee which is
based on the amount of its authorised share capital.
(b) Share capital
The Companies Act provides that where a company issues shares at a premium,
whether for cash or otherwise, a sum equal to the aggregate amount of the value of the
premiums on those shares shall be transferred to an account, to be called the ‘‘share
premium account’’. At the option of a company, these provisions may not apply to
premiums on shares of that company allo tted pursuant to any arrangement in
consideration of the acquisition or cancellation of shares in any other company and
issued at a premium.
The Companies Act provides that the share premium account may be applied by
the company subject to the provisions, if any, of its memorandum and articles of
association in (a) paying distributions or dividends to members; (b) paying up unissued
shares of the company to be issued to members as fully paid bonus shares; (c) the
redemption and repurchase of shares (subject to the provisions of section 37 of the
Companies Act); (d) writing-off the pre liminary expenses of the company; and (e)
writing-off the expenses of, or the commission paid or discount allowed on, any issue
of shares or debentures of the company.
No distribution or dividend may be paid to members out of the share premium
account unless immediately following the dat e on which the distribution or dividend is
proposed to be paid, the company will be able to pay its debts as they fall due in the
ordinary course of business.
The Companies Act provides that, subject to confirmation by the Grand Court of
the Cayman Islands (the ‘‘ Court ‘‘), a company limited by shares or a company limited
by guarantee and having a share capital may, if so authorised by its articles of
association, by special resolution reduce its share capital in any way.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 1 9–


--- page 618 ---
(c) Financial assistance to purchase shares of a company or its holding company
There is no statutory restriction in the Cayman Islands on the provision of
financial assistance by a company to another person for the purchase of, or
subscription for, its own or its holding company’s shares. Accordingly, a company
may provide financial assistance if the d irectors of the company consider, in
discharging their duties of care and acting in good faith, for a proper purpose and
in the interests of the company, that such assistance can properly be given. Such
assistance should be on an arm’s-length basis.
(d) Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limited by guarantee and having a
share capital may, if so authorised by its articles of association, issue shares which are
to be redeemed or are liable to be redeemed at the option of the company or a
shareholder and the Companies Law expressly provides that it shall be lawful for the
rights attaching to any shares to be varied , subject to the provisions of the company’s
articles of association, so as to provide that such shares are to be or are liable to be so
redeemed. In addition, such a company may, if authorised to do so by its articles of
association, purchase its own shares, inclu ding any redeemable shares. However, if the
articles of association do not authorise the manner and terms of purchase, a company
cannot purchase any of its own shares unless the manner and terms of purchase have
first been authorised by an ordinary resolution of the company. At no time may a
company redeem or purchase its shares unless they are fully paid. A company may not
redeem or purchase any of its shares if, as a result of the redemption or purchase, there
would no longer be any issued shares of the company other than shares held as treasury
shares. A payment out of capital by a company for the redemption or purchase of its
own shares is not lawful unless immediately following the date on which the payment is
proposed to be made, the company shall be able to pay its debts as they fall due in the
ordinary course of business.
Shares purchased by a company is to be treated as cancelled unless, subject to the
memorandum and articles of association of the company, the directors of the company
resolve to hold such shares in the name of th e company as treasury shares prior to the
purchase. Where shares of a company are held as treasury shares, the company shall be
entered in the register of members as holdi ng those shares, however, notwithstanding
the foregoing, the company is not be treated as a member for any purpose and must not
exercise any right in respect of the treasury shares, and any purported exercise of such
a right shall be void, and a treasury share must not be voted, directly or indirectly, at
any meeting of the company and must not be counted in determining the total number
of issued shares at any given time, whether for the purposes of the company’s articles
of association or the Companies Act.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 0–


--- page 619 ---
A company is not prohibited from purchasing and may purchase its own warrants
subject to and in accordance with the terms and conditions of the relevant warrant
instrument or certificate. There is no requirement under Cayman Islands law that a
company’s memorandum or articles of association contain a specific provision
enabling such purchases and the directors of a company may rely upon the general
power contained in its memorandum of association to buy and sell and deal in personal
property of all kinds.
Under Cayman Islands law, a subsidiary may hold shares in its holding company
and, in certain circumstances, may acquire such shares.
(e) Dividends and distributions
The Companies Act permits, subject to a solvency test and the provisions, if any,
of the company’s memorandum and articles of association, the payment of dividends
and distributions out of the share premium account. With the exception of the
foregoing, there are no statutory provisions relating to the payment of dividends.
Based upon English case law, which is regarded as persuasive in the Cayman Islands,
dividends may be paid only out of profits.
No dividend may be declared or paid, and no other distribution (whether in cash
or otherwise) of the company’s assets (including any distribution of assets to members
on a winding up) may be made to the company, in respect of a treasury share.
(f) Protection of minorities and shareholders’ suits
The Courts ordinarily would be expected to follow English case law precedents
which permit a minority shareholder to commence a representative action against or
derivative actions in the name of the company to challenge (a) an act which is ultra
vires the company or illegal, (b) an act whic h constitutes a fraud against the minority
and the wrongdoers are themselves in control of the company, and (c) an irregularity in
the passing of a resolution which requires a qualified (or special) majority.
In the case of a company (not being a bank) having a share capital divided into
shares, the Court may, on the application of members holding not less than one fifth of
the shares of the company in issue, appoint an inspector to examine into the affairs of
the company and to report thereon in such manner as the Court shall direct.
Any shareholder of a company may petition the Court which may make a winding
up order if the Court is of the opinion that it is just and equitable that the company
should be wound up or, as an alternative to a winding up order, (a) an order regulating
the conduct of the company’s affairs in the future, (b) an order requiring the company
to refrain from doing or continuing an act complained of by the shareholder petitioner
or to do an act which the shareholder petitioner has complained it has omitted to do,
(c) an order authorising civil proceedings to be brought in the name and on behalf of
the company by the shareholder petitioner on such terms as the Court may direct, or
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 1–


--- page 620 ---
(d) an order providing for the purchase of the shares of any shareholders of the
company by other shareholders or by the company itself and, in the case of a purchase
by the company itself, a reduction of the company’s capital accordingly.
Generally claims against a company by its shareholders must be based on the
general laws of contract or tort applicable in the Cayman Islands or their individual
rights as shareholders as established by the company’s memorandum and articles of
association.
(g) Disposal of assets
The Companies Act contains no specific restrictions on the power of directors to
dispose of assets of a company. However, as a matter of general law, every officer of a
company, which includes a director, managing director and secretary, in exercising his
powers and discharging his duties must do so honestly and in good faith with a view to
the best interests of the company and exe rcise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
(h) Accounting and auditing requirements
A company must cause proper books of account to be kept with respect to (i) all
sums of money received and expended by the company and the matters in respect of
which the receipt and expenditure takes place; (ii) all sales and purchases of goods by
the company; and (iii) the asset s and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such
books as are necessary to give a true and fair view of the state of the company’s affairs
and to explain its transactions.
An exempted company must make available at its registered office in electronic
form or any other medium, copies of its books of account or parts thereof as may be
required of it upon service of an order or notice by the Tax Information Authority
pursuant to the Tax Information Authority Act of the Cayman Islands.
(i) Exchange control
There are no exchange control regulations or currency restrictions in the Cayman
Islands.
(j) Taxation
Pursuant to the Tax Concessions Act of the Cayman Islands, the Company has
obtained an undertaking:
(1) that no law which is enacted in the Cayman Islands imposing any tax to be
levied on profits, income, gains or appreciation shall apply to the Company
or its operations; and
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 2–


--- page 621 ---
(2) that the aforesaid tax or any tax in the nature of estate duty or inheritance
tax shall not be payable on or in respec to ft h es h a r e s ,d e b e n t u r e so ro t h e r
obligations of the Company.
The undertaking for the Company is for a period of twenty years from 10 April
2019.
The Cayman Islands currently levy no taxes on individuals or corporations based
upon profits, income, gains or appreciations and there is no taxation in the nature of
inheritance tax or estate duty. There are no other taxes likely to be material to the
Company levied by the Government of the Cayman Islands save for certain stamp
duties which may be applicab le, from time to time, on certain instruments executed in
or brought within the jurisdiction of the Cayman Islands. The Cayman Islands are a
party to a double tax treaty entered into with the United Kingdom in 2010 but
otherwise is not party to any double tax treaties.
(k) Stamp duty on transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman
Islands companies except those which hol d interests in land in the Cayman Islands.
(l) Loans to directors
There is no express provision in the Co mpanies Act prohibiting the making of
loans by a company to any of its directors.
(m) Inspection of corporate records
The notice of registered office is a matte r of public record. A list of the names of
the current directors and alternate directors (if applicable) is made available by the
Registrar of Companies for inspection by any person on payment of a fee. The register
of mortgages is open to inspection by creditors and members.
Members of the Company have no general right under the Companies Act to
inspect or obtain copies of the register of members or corporate records of the
Company. They will, however, have such rights as may be set out in the Company’s
Articles.
(n) Register of members
An exempted company may maintain its principal register of members and any
branch registers at such locations, whether within or without the Cayman Islands, as
the directors may, from time to time, think f it. The register of members shall contain
such particulars as required by Section 40 of the Companies Act. A branch register
must be kept in the same manner in which a principal register is by the Companies Act
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 3–


--- page 622 ---
required or permitted to be kept. The company shall cause to be kept at the place
where the company’s principal register is kept a duplicate of any branch register duly
e n t e r e du pf r o mt i m et ot i m e .
There is no requirement under the Companies Act for an exempted company to
make any returns of members to the Registrar of Companies of the Cayman Islands.
The names and addresses of the members are, accordingly, not a matter of public
record and are not available for public in spection. However, an exempted company
shall make available at its registered office, in electronic form or any other medium,
such register of members, including any branch register of members, as may be
required of it upon service of an order or notice by the Tax Information Authority
pursuant to the Tax Information Authority Law of the Cayman Islands.
(o) Register of Directors and Officers
The Company is required to maintain at its r egistered office a register of directors
and officers which is not available for inspection by the public. A copy of such register
must be filed with the Registrar of Companies in the Cayman Islands and any change
must be notified to the Registrar within thirty (30) days of any change in such directors
or officers.
(p) Beneficial Ownership Register
An exempted company is required to maintain a beneficial ownership register at
its registered office that records details of the persons who ultimately own or control,
directly or indirectly, 25% or more of the equity interests or voting rights of the
company or have rights to appoint or remove a majority of the directors of the
company. The beneficial ownership register is not a public document and is only
accessible by a designated competent authority of the Cayman Islands. Such
requirement does not, however, apply to an exempted company with its shares listed
on an approved stock exchange, which includes the Stock Exchange. Accordingly, for
so long as the shares of the Company are listed on the Stock Exchange, the Company is
not required to maintain a beneficial ownership register.
(q) Winding up
A company may be wound up (a) compulsorily by order of the Court, (b)
voluntarily, or (c) under the supervision of the Court.
The Court has authority to order winding up in a number of specified
circumstances including where the members of the company have passed a special
resolution requiring the company to be wound up by the Court, or where the company
is unable to pay its debts, or where it is, in the opinion of the Court, just and equitable
to do so. Where a petition is presented by members of the company as contributories
on the ground that it is just and equitable that the company should be wound up, the
Court has the jurisdiction to make certain other orders as an alternative to a
winding-up order, such as making an order regulating the conduct of the company’s
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 4–


--- page 623 ---
affairs in the future, making an order authorising civil proceedings to be brought in the
name and on behalf of the company by the petitioner on such terms as the Court may
direct, or making an order providing for the purchase of the shares of any of the
members of the company by other members or by the company itself.
A company (save with respect to a limited duration company) may be wound up
voluntarily when the company so resolves by special resolution or when the company
in general meeting resolves by ordinary resolution that it be wound up voluntarily
because it is unable to pay its debts. In the case of a voluntary winding up, such
company is obliged to cease to carry on its business (except so far as it may be
beneficial for its winding up) from the time of passing the resolution for voluntary
winding up or upon the expiry of the period or the occurrence of the event referred to
above.
For the purpose of conducting the proceedings in winding up a company and
assisting the Court therein, there may be a ppointed an official liquidator or official
liquidators; and the court may appoint to such office such person, either provisionally
or otherwise, as it thinks fit, and if more persons than one are appointed to such office,
the Court must declare whether any act required or authorised to be done by the
official liquidator is to be done by all or any one or more of such persons. The Court
may also determine whether any and what security is to be given by an official
liquidator on his appointment; if no official liquidator is appointed, or during any
vacancy in such office, all the property of the company shall be in the custody of the
Court.
As soon as the affairs of the company are fully wound up, the liquidator must
make a report and an account of the winding up, showing how the winding up has been
conducted and how the property of the company has been disposed of, and thereupon
call a general meeting of the company for the purposes of laying before it the account
and giving an explanation thereof. This fina l general meeting must be called by at least
21 days’ notice to each contributory in any manner authorised by the company’s
articles of association and published in the Gazette.
(r) Reconstructions
There are statutory provisions which facilitate reconstructions and
amalgamations approved by (i) a majority i n number representing seventy-five per
cent. (75%) in value of creditors, or (ii) seventy-five per cent. (75%) in value of
shareholders or class of shareholders, as the case may be, as are present at a meeting
called for such purpose and thereafter sanctioned by the Court. Whilst a dissenting
shareholder would have the right to express to the Court his view that the transaction
for which approval is sought would not provide the shareholders with a fair value for
their shares, the Court is unlikely to disapprove the transaction on that ground alone
in the absence of evidence of fraud o r bad faith on behalf of management.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 5–


--- page 624 ---
The Companies Act also contains statu tory provisions which provide that a
company may present a petition to the Court for the appointment of a restructuring
officer on the grounds that the company (a) is or is likely to become unable to pay its
debts within the meaning of section 93 of the Companies Act; and (b) intends to
present a compromise or arrangement to its creditors (or classes thereof) either,
pursuant to the Companies Act, the law of a foreign country or by way of a consensual
restructuring. The petition may be presented by a company acting by its directors,
without a resolution of its shareholder s or an express power in its articles of
association. On hearing such a petition, the Court may, among other things, make an
order appointing a restructuring officer or make any other order as the Court thinks
fit.
(s) Take-overs
Where an offer is made by a company for the shares of another company and,
within four (4) months of the offer, the holders of not less than ninety per cent. (90%)
of the shares which are the subject of the offer accept, the offeror may at any time
within two (2) months after the expiration of the said four (4) months, by notice in the
prescribed manner require the dissenting shareholders to transfer their shares on the
terms of the offer. A dissenting shareholder may apply to the Court within one (1)
month of the notice objecting to the transfer. The burden is on the dissenting
shareholder to show that the Court should exercise its discretion, which it will be
unlikely to do unless there is evidence of fraud or bad faith or collusion as between the
offeror and the holders of the shares who have accepted the offer as a means of unfairly
forcing out minority shareholders.
(t) Indemnification
Cayman Islands law does not limit the extent to which a company’s articles of
association may provide for indemnification of officers and directors, except to the
extent any such provision may be held by the Court to be contrary to public policy (e.g.
for purporting to provide indemnificatio n against the consequences of committing a
crime).
(u) Economic Substance Requirements
Pursuant to the International Tax Cooperation (Economic Substance) Act of the
Cayman Islands (‘‘ES Act ’’) that came into force on 1 January 2019, a ‘‘relevant entity’’
is required to satisfy the economic substance test set out in the ES Act. A ‘‘relevant
entity’’ includes an exempted company incorporated in the Cayman Islands as is the
Company; however, it does not include an entity that is tax resident outside the
Cayman Islands. Accordingly, for so long as t h eC o m p a n yi sat a xr e s i d e n to u t s i d et h e
Cayman Islands, including in Hong Kong, it is not required to satisfy the economic
substance test set out in the ES Act.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 6–


--- page 625 ---
4. GENERAL
Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law,
have sent to the Company a letter of advice summarising certain aspects of Cayman Islands
company law. This letter, together with a c opy of the Companies Act, is available for
inspection as referred to in the paragraph headed ‘‘Documents available on display’’ in
Appendix V to this prospectus. Any person wishing to have a detailed summary of Cayman
Islands company law or advice on the differences between it and the laws of any jurisdiction
with which he is more familiar is recomme nded to seek independent legal advice.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LAW
–I I I - 2 7–


--- page 626 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation of our Company
Our Company was incorporated in the Cayman Islands under the Cayman
Companies Act as an exempt ed company with limited liability on 29 March 2019 and
was registered with the Registrar of Companies in Hong Kong as a non-Hong Kong
company under Part 16 of the Companies Ordinance on 19 December 2019. We have
established a principal place of business in Hong Kong at Room 1901, 19th Floor, Lee
Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong. Mr. Wong Yuk, our
company secretary, has been appointed a s the authorised representative of our
Company for the acceptance of service of process and notices on behalf of our
C o m p a n yi nH o n gK o n g .
As our Company was incorporated in the Cayman Islands, it operates subject to
the Cayman Companies Act and its constitution comprising the Memorandum and the
Articles. A summary of certain provisions of its constitution and relevant aspects of
the company law of the Cayman Islands is set out in Appendix III to this prospectus.
2. Changes in the share capital of our Company
Our authorised share capital as at the date of our incorporation was HK$380,000
divided into 38,000,000 Shares of HK$0.01 each. On 29 March 2019, one Share was
allotted and issued to the initial subscriber and such Share was transferred to
Glorypearl Capital on the same day.
Pursuant to the written resolutions of the then sole Shareholder passed on 30
August 2019, our authorised share capita l was increased from HK$380,000 divided
into 38,000,000 Shares of HK$0.01 each to HK$10,000,000 divided into 1,000,000,000
Shares of HK$0.01 each by the creation of additional 962,000,000 Shares.
Pursuant to the written resolutions of our Shareholders passed on 9 October 2023,
our authorised share capital was further increased from HK$10,000,000 divided into
1,000,000,000 Shares of HK$0.01 each to HK$40,000,000 divided into 4,000,000,000
Shares of HK$0.01 each by the creation of an additional 3,000,000,000 Shares of
HK$0.01 each.
Immediately following the completion of the Global Offering and the
Capitalisation Issue but not taking into account any Shares which may be issued
upon the exercise of the Over-allotment Option and the options granted under the
Pre-IPO Share Option Scheme and options which may be granted under the Share
Option Scheme, the issued share capital of our Company will be HK$5,156,250 divided
into 515,625,000 Shares of HK$0.01 each, all fully paid or credited as fully paid and
3,484,375,000 Shares will remain unissued.
Save for the aforesaid, there has been no alteration in the authorised share capital
of our Company since its incorporation.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 627 ---
3. Resolutions in writing of the Shareholders of our Company passed on 9 October
2023
(a) Pursuant to written resolutions of the Shareholders passed on 9 October
2023 :
(i) we approved and adopted the Memorandum of Association with
immediate effect;
(ii) we approved and conditionally adopted the Articles of Association
which will become effective from the Listing Date;
(iii) the authorised share capital of our Company was increased from
HK$10,000,000 divided into 1,000,000,000 Shares to HK$40,000,000
divided into 4,000,000,000 Shares by the creation of an additional
3,000,000,000 Shares;
(iv) conditional on (i) the Stock Exchange granting the listing of, and
permission to deal in, the Shares in i ssue, Shares to be issued pursuant to
the Global Offering and the Capitalisation Issue and Shares to be issued
as mentioned in this prospectus (including any additional Shares which
may be issued and allotted pursuant to the exercise of the
Over-allotment Option and the exercise of the options which were
granted under the Pre-IPO Share Option Scheme and options which may
be granted under the Share Option Scheme); (ii) the entering into of the
agreement on the Offer Price between the Sole Overall Coordinator (for
itself and on behalf of the Underw riters) and our Company; (iii) the
obligations of the Underwriters under the Underwriting Agreements
becoming unconditional and not being terminated in accordance with
the terms therein or otherwise, in each case on or before such dates as
may be specified in the Underwriting Agreements:
(1) the Global Offering was approved and our Directors were
authorised to allot and issue the new Shares pursuant to the
Global Offering;
(2) the Over-allotment Option was approved;
(3) the rules of the Pre-IPO Share Option Scheme, the principal terms
of which are set out in the paragraph headed ‘‘D. Other
Information — 2. Pre-IPO Share Option Scheme’’ below in this
Appendix, were approved and adopted and our Directors were
authorised, at their absolute discretion, to grant options to
subscribe for Shares thereunder and to allot, issue and deal with
Shares pursuant to the exercise of options granted under the
Pre-IPO Share Option Scheme;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 628 ---
(4) the rules of the Share Option Scheme, the principal terms of which
are set out in the paragraph headed ‘‘D. Other Information — 1.
Share Option Scheme’’ below in this Appendix, were approved and
adopted and our Directors were authorised, at their absolute
discretion, to grant options to subscribe for Shares thereunder and
to allot, issue and deal with Shares pursuant to the exercise of
options granted under the Share Option Scheme; and
(5) conditional on the share premium account of our Company being
credited as a result of the issue of the Offer Shares by our Company
pursuant to the Global Offering, our Directors were authorised to
capitalise an amount of HK$235,647.27 standing to the credit of
the share premium account of our Company by applying such sum
in paying up in full at par 23,564,727 Shares, such Shares to be
allotted and issued to our Shareholder(s) whose names are
registered on the register of members of the Company on the date
of the passing of the resolution on a pro rata basis.
(v) a general unconditional mandate was given to our Directors to allot,
issue and deal with (including the power to make an offer or agreement,
or grant securities which would or might require Shares to be issued and
allotted), otherwise than pursuant to a rights issue or pursuant to any
scrip dividend schemes or simila r arrangements providing for the
allotment and issue of Shares in lieu of the whole or part of a
dividend on Shares in accordance with the Articles or pursuant to the
grant of options under the Pre-IPO Share Option Scheme or the Share
Option Scheme or other similar arrangements or pursuant to a specific
authority granted by the Shareholders in general meeting, unissued
Shares not exceeding the aggrega te of 20% of the number of issued
Shares immediately following the completion of the Global Offering and
Capitalisation Issue (but taking no account of any Shares which may be
issued and allotted pursuant to the exercise of the Over-allotment
Option and the exercise of the options granted under the Pre-IPO Share
Option Scheme and options which may be granted under the Share
Option Scheme), such mandate to remain in effect until the conclusion
of the next annual general meeting of our Company, or the expiration of
the period within which the next annual general meeting of our
Company is required by the Articles or any applicable laws to be held,
or until revoked or varied by an ordinary resolution of the Shareholders
in general meeting, whichever occurs first;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 629 ---
(vi) a general unconditional mandate was given to our Directors authorising
them to exercise all powers of our Co mpany to repurchase on the Stock
Exchange or on any other approved stock exchange on which the
securities of our Company may be listed and which is recognised by the
SFC and the Stock Exchange for this purpose such number of Shares as
will represent up to 10% of the number of issued Shares immediately
following the completion of the Global Offering and the Capitalisation
Issue (but taking no account of any Shares which may be issued and
allotted pursuant to the exercise of the Over-allotment Option and the
exercise of the options granted under the Pre-IPO Share Option Scheme
and options which may be granted under the Share Option Scheme),
such mandate to remain in effect until the conclusion of the next annual
general meeting of our Company, or the expiration of the period within
which the next annual general meeting of our Company is required by
the Articles or any applicable laws to be held, or until revoked or varied
by an ordinary resolution of the Shareholders in general meeting,
whichever occurs first; and
(vii) the general unconditional mandate mentioned in paragraph (v) above
was extended by the addition to the number of issued Shares which may
be issued and allotted or agreed cond itionally or unconditionally to be
issued and allotted by our Directors pursuant to such general mandate
of an amount representing the total number of issued Shares
repurchased by our Company pursuant to the mandate to repurchase
Shares referred to in paragraph (vi) above.
4. Corporate Reorganisation
The companies comprising our Group underwent the Reorganisation in
preparation for the Listing. For information relating to the Reorganisation, please
refer to the section headed ‘‘History, Reorg anisation and Corporate Structure’’ in this
prospectus.
5. Changes in share capital of subsidiaries
Our subsidiaries are referred to in the Accountant’s Report in Appendix I to this
prospectus. Save for the subsidiaries mentioned in the Accountant’s Report and in the
section headed ‘‘History, Reorganisation a nd Corporate Structure’’, our Company has
no other subsidiaries.
On 28 June 2022, four shares of XXF HK of an aggregate of HK$4.00 were issued
and allotted to Celestial Bonanza.
Save as disclosed above, there are no changes in share capital of our subsidiaries
within the two years immediately preceding the date of this prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 630 ---
6. Repurchases of our Shares
(a) Provisions of the Listing Rules
The Listing Rules permit companies whose primary listing is on the Main
Board of the Stock Exchange to repurchase their securities on the Stock Exchange
subject to certain restrictions, the more important of which are summarised
below:
(i) Shareholders’ approval
All proposed repurchases of securities on the Stock Exchange by a
company with a primary listing on th e Stock Exchange must be approved in
advance by an ordinary resolution of its shareholders in general meeting,
either by way of general mandate or by specific approval of a particular
transaction.
Note: Pursuant to the written resolutions passed by the Shareholders on 9 October
2023 a general unconditional mandate (the ‘‘ Buyback Mandate ’’) was granted to
our Directors authorising the repurchase of shares by our Company on the Stock
Exchange, or on any other stock exchange on which the securities of our
Company may be listed and which is recognised by the SFC and the Stock
Exchange for this purpose, with the total number of Shares not exceeding 10%
of the total number of Shares in issue and to be issued as mentioned herein, at
any time until the conclusion of the next annual general meeting of our
Company, the expiration of the period within which the next annual general
meeting of our Company is required by an applicable law or the Articles to be
held or when such mandate is revoked or varied by an ordinary resolution of our
Shareholders in general meeting, whichever is the earliest.
(ii) Source of funds
Repurchases must be funded out of funds legally available for the
purpose in accordance with our Articles and the laws of the Cayman Islands.
A listed company may not repurchase its own securities on the Stock
Exchange for a consideration other than cash or for settlement otherwise
than in accordance with the trading rules of the Stock Exchange in effect
from time to time.
(b) Reasons for repurchases
Our Directors believe that it is in the best interests of our Company and
Shareholders for our Directors to have general authority from our Shareholders
to enable our Directors to repurchase Shares in the market. Repurchases of Shares
will only be made when our Directors believe that such repurchases will benefit
our Company and its members. Such repurchases may, depending on market
conditions and funding arrangements at the time, lead to an enhancement of the
net asset value of our Company and its assets and/or its earnings per Share.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 631 ---
(c) Funding of repurchases
In repurchasing securities, our Company may only apply funds legally
available for such purpose in accordance with the Articles, the Listing Rules and
the applicable laws of the Cayman Islands.
It is presently proposed that any repurchase of Shares will be made out of the
profits of our Company, the share premium amount of our Company or the
proceeds of a fresh issue of Shares made for the purpose of the repurchase and, in
the case of any premium payable on the purchase over the par value of the Shares
to be repurchased must be provided for, out of either or both of the profits of our
Company or from sums standing to the credit of the share premium account of
our Company. Subject to the Cayman Companies Act, a repurchase of Shares may
also be made out of capital.
Our Directors do not propose to exercise the Buyback Mandate to such an
extent as would, in the circumstances , have a material adverse effect on the
working capital requ irements of our Company or its gearing levels which, in the
opinion of our Directors, are from time to time appropriate for our Company.
However, there might be a material adverse impact on the working capital or
gearing level as compared with the posit ion disclosed in this prospectus in the
event that the Buyback Mandate is exercised in full.
(d) Share capital
Exercise in full of the Buyback Mandate, on the basis of 515,625,000 Shares
in issue immediately after the Listing (but not taking into account our Shares
which may be issued pursuant to the exe rcise of the Over-allotment Option and
the options granted under the Pre-IPO Share Option Scheme and options which
may be granted under the Share Option Scheme), could accordingly result in up to
51,562,500 Shares being repurchased by our Company during the period until:
(i) the conclusion of the next annual general meeting of our Company;
(ii) the expiration of the period within which the next annual general
meeting of our Company is required by any applicable law or the
Articles to be held; or
(iii) the date on which the Buyback Mandate is revoked or varied by an
ordinary resolution of our Shareholders in general meeting, whichever
occurs first.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 632 ---
(e) General
None of our Directors nor, to the best of their knowledge, information and
belief, having made all reasonable enquiries, any of their respective close
associates (as defined in the Listing Rule s), has any present intention to sell any
Shares or our subsidiaries.
Our Directors have undertaken to the Stock Exchange that, so far as the
same may be applicable, they will exerc ise the Buyback Mandate in accordance
with the Listing Rules, the Memorandu m and Articles of Association, and the
applicable laws of the Cayman Islands.
No core connected person (as defined in the Listing Rules) has notified us
that he/she/it has a present intention to sell Shares to us, or has undertaken not to
do so, if the Buyback Mandate is approved and exercised by the Directors.
If as a result of a securities repurcha se pursuant to the Buyback Mandate, a
Shareholder’s proportionate interest in the voting rights of our Company
increases, such increase will be treated as an acquisition for the purpose of the
Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in
concert (within the meaning of the Takeovers Code), depending on the level of
increase of the Shareholders’ interest, could obtain or consolidate control of our
Company and become obliged to make a mandatory offer in accordance with Rule
26 of the Takeovers Code as a result of any such increase. Our Directors are not
aware of any other consequences which may arise under the Takeovers Code if the
Buyback Mandate is exercised.
If the Buyback Mandate is fully exerci sed immediately following completion
of the Global Offering and the Capitalisation Issue (but not taking into account
our Shares which may be issued pursuant t o the exercise of the Over-allotment
Option or the options granted under the Pre-IPO Share Option Scheme and
options which may be granted under the Share Option Scheme), the total number
of Shares which will be repurchased pursuant to the Buyback Mandate will be
51,562,500 Shares, being 10% of the total number of Shares based on the
aforesaid assumptions. The percentage shareholding of our Single Largest
Shareholder will be increased to approximately 24.94% of the issued share
capital of our Company immediately follo wing the full exercise of the Buyback
Mandate. Any repurchase of Shares which results in the number of Shares held by
the public being reduced to less than the prescribed percentage of our Shares then
in issue could only be implemented with the approval of the Stock Exchange to
waive the Listing Rules requirements regarding the public float under Rule 8.08 of
the Listing Rules. However, our Directors have no present intention to exercise
the Buyback Mandate to such an extent that, in the circumstances, there is
insufficient public float as prescribed under the Listing Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 633 ---
B. INFORMATION ABOUT OUR BUSINESS
1. Summary of Material Contracts
The following contracts (not being contracts entered into in the ordinary course of
business) have been entered into by us or any of our subsidiaries within the two years
preceding the date of this prospectus that are or may be material:
(a) a supplemental agreement dated 27 January 2022 entered into by Beijing
Chesheng Technology Company Limited* ( 北京車勝科技有限公司)( ‘ ‘Beijing
Chesheng ’’), XXF Group, Mr. Huang Wei, Fuzhou Zhitong Investment
Partnership Enterprise (Limited Partnership)* ( 福州智通投資合夥企業（有限
合夥）)( ‘ ‘Fuzhou Zhitong ’’), Fuzhou Huitong Investment Partnership
Enterprise (Limited Partnership)* ( 福州惠通投資合夥企業（有限合夥）)
(‘‘Fuzhou Huitong ’’), Fujian Free Trade Zone Pingtan Area Xinyuan
Investment Partnership Enterp rise (Limited Partnership)* ( 福建自貿試驗區
平潭片區鑫元投資合夥企業（有限合夥）)( ‘ ‘Fujian Xinyuan ’’), Fujian Free
Trade Zone Pingtan Area Fuyuan Investment Partnership Enterprise
(Limited Partnership)* ( 福建自貿試驗區平潭片區富元投資合夥企業（有限合
夥）)( ‘ ‘Fujian Fuyuan ’’) (XXF Group, Mr. Huang Wei, Fuzhou Zhitong,
Fuzhou Huitong, Fujian Xinyuan and F ujian Fuyuan collectively, the
‘‘Existing Shareholders ’’) and our Company, pursuant to which certain terms
of the shareholders’ agreement entered i nto by Beijing Chesheng, the Existing
Shareholders and other relevant parties dated 27 November 2018 were
supplemented;
(b) a supplemental agreement dated 25 August 2022 (the ‘‘ Zhuhai Wanhe
Supplemental Agreement ’’) entered into by Zhuhai Wanhe Xingsheng
Investment Management Cent er (Limited Partnership)* ( 珠海萬和興盛投資
管理中心（有限合夥）)( ‘ ‘Zhuhai Wanhe ’’), the Existing Shareholders and our
Company, pursuant to which certain terms of the shareholders’ agreement
entered into by Zhuhai Wanhe, the Existing Shareholders and other relevant
parties dated 27 November 2018, as well as the letter of undertaking signed
by XXF Group, our Company and Mr. Huang Wei were supplemented;
(c) a second supplemental agreement dated 30 August 2022 entered into by
Beijing Chesheng, the Existing Share holders and our Company, pursuant to
which certain terms of the shareholde rs’ agreement entered into by Beijing
Chesheng, the Existing Shareholders and other relevant parties dated 27
November 2018, as well as the letter of undertaking signed by XXF Group,
our Company and Mr. Huang Wei dated 10 June 2021 were supplemented;
(d) a supplemental agreement dated 26 June 2023 entered into by Zhuhai Wanhe,
the Existing Shareholders and our Company, pursuant to which certain terms
of the shareholders’ agreement enter ed into by Zhuhai Wanhe, the Existing
Shareholders and other relevant parties dated 27 November 2018, the letter
of undertaking signed by XXF Group, our Company and Mr. Huang Wei, as
well as the Zhuhai Wanhe Supplemental Agreement were supplemented;
(e) a third supplemental agreement dated 3 July 2023 entered into by XXF
Group, Mr. Huang Wei and Beijing Chesheng, pursuant to which the
repayment terms for the outstanding loan amount under a convertible bond
agreement entered into by XXF Group, Beijing Chesheng and other relevant
parties dated 27 November 2018 and its supplemental agreements were
supplemented;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 634 ---
(f) the Deed of Indemnity; and
(g) the Hong Kong Underwriting Agreement.
2. Intellectual Property Rights of Our Group
(a) Trademarks
As at the Latest Practicable Date, our Group was the registered proprietor of
the following trademarks which, in the opinion of our Directors, are material to
our business:
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
304870512 35 XXF Group Hong Kong 26 March 2019 25 March 2029
27751822 37 XXF Group PRC 28 January
2019
27 January
2029
27768169 39 XXF Group PRC 28 March 2019 27 March 2029
27778218 45 XXF Group PRC 7 February
2019
6F e b r u a r y
2029
27770062 45 XXF Group PRC 21 November
2018
20 November
2028
27785009 39 XXF Group PRC 14 January
2019
13 January
2029
27779250 45 XXF Group PRC 14 January
2019
13 January
2029
23524916 39 XXF Group PRC 28 March 2018 27 March 2028
23524605 39 XXF Group PRC 21 March 2018 20 March 2028
23524591 36 XXF Group PRC 21 March 2018 20 March 2028
17673087 45 XXF Group PRC 7 October 2016 6 October 2026
17672902 39 XXF Group PRC 7 December
2016
6 December
2026
17672718 36 XXF Group PRC 7 October 2016 6 October 2026
17672630 35 XXF Group PRC 28 November
2016
27 November
2026
16812752 36 XXF Group PRC 21 June 2016 20 June 2026
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 635 ---
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
16812299 39 XXF Group PRC 14 August 2016 13 August 2026
7787362 39 XXF Group PRC 28 January
2021
27 January
2031
38130026 35 XXF Group PRC 7 February
2020
6F e b r u a r y
2030
38132412 39 XXF Group PRC 21 March 2020 20 March 2030
38132066 12 XXF Group PRC 7 April 2020 6 April 2030
38139843 36 XXF Group PRC 21 March 2020 20 March 2030
38144569 45 XXF Group PRC 21 April 2020 20 April 2030
38135250 42 XXF Group PRC 21 May 2020 20 May 2030
38149123 37 XXF Group PRC 21 May 2020 20 May 2030
40950589 37 XXF Group PRC 14 May 2020 13 May 2030
40949086 36 XXF Group PRC 14 May 2020 13 May 2030
40938933 35 XXF Group PRC 14 May 2020 13 May 2030
40950022 39 XXF Group PRC 21 May 2020 20 May 2030
40941055 12 XXF Group PRC 21 July 2020 20 July 2030
40946402 42 XXF Group PRC 21 July 2020 20 July 2030
40965173 9 XXF Group PRC 7 February
2021
6F e b r u a r y
2031
40952428 36 XXF Group PRC 14 September
2020
13 September
2030
40965242 42 XXF Group PRC 14 September
2020
13 September
2030
40943884 39 XXF Group PRC 14 September
2020
13 September
2030
40945783 12 XXF Group PRC 28 February
2021
27 February
2031
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 0–


--- page 636 ---
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
40967964 35 XXF Group PRC 28 June 2021 27 June 2031
40943053 9 XXF Group PRC 21 June 2021 20 June 2031
40941415 37 XXF Group PRC 28 June 2021 27 June 2031
55919354 9 XXF Group PRC 28 November
2021
27 November
2031
55912540 12 XXF Group PRC 7 December
2021
6 December
2031
55912590 35 XXF Group PRC 28 November
2021
27 November
2031
55968690 36 XXF Group PRC 21 November
2021
20 November
2031
55975702 37 XXF Group PRC 21 November
2021
20 November
2031
55960156 38 XXF Group PRC 21 November
2021
20 November
2031
55965913 39 XXF Group PRC 21 November
2021
20 November
2031
55963894 42 XXF Group PRC 21 November
2021
20 November
2031
55974181 39 XXF Group PRC 21 November
2021
20 November
2031
55963907 42 XXF Group PRC 21 November
2021
20 November
2031
55955468 37 XXF Group PRC 21 November
2021
20 November
2031
55946040 36 XXF Group PRC 21 November
2021
20 November
2031
55941766 38 XXF Group PRC 21 November
2021
20 November
2031
55935508 12 XXF Group PRC 28 November
2021
27 November
2031
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 1–


--- page 637 ---
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
55928410 9 XXF Group PRC 28 November
2021
27 November
2031
55910545 35 XXF Group PRC 7 December
2021
6 December
2031
22723376 39 Taoqi Internet PRC 21 April 2018 20 April 2028
29245736 42 Taoqi Internet PRC 28 December
2018
27 December
2028
29246112 35 Taoqi Internet PRC 28 December
2018
27 December
2028
29246131 39 Taoqi Internet PRC 28 December
2018
27 December
2028
29248298 36 Taoqi Internet PRC 28 December
2018
27 December
2028
25963261 39 Fujian Qoocar PRC 21 August 2018 20 August 2028
25963279 42 Fujian Qoocar PRC 21 August 2018 20 August 2028
25965231 12 Fujian Qoocar PRC 21 August 2018 20 August 2028
25971159 37 Fujian Qoocar PRC 21 August 2018 20 August 2028
25971900 38 Fujian Qoocar PRC 21 August 2018 20 August 2028
25977726 35 Fujian Qoocar PRC 21 August 2018 20 August 2028
25978733 36 Fujian Qoocar PRC 21 August 2018 20 August 2028
25980333 45 Fujian Qoocar PRC 21 August 2018 20 August 2028
25980564 9 Fujian Qoocar PRC 21 August 2018 20 August 2028
25963524 37 Fujian Qoocar PRC 14 August 2018 13 August 2028
25965637 45 Fujian Qoocar PRC 14 August 2018 13 August 2028
25975826 39 Fujian Qoocar PRC 21 November
2018
20 November
2028
25980260 38 Fujian Qoocar PRC 14 August 2018 13 August 2028
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 2–


--- page 638 ---
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
25965279 35 Fujian Qoocar PRC 14 August 2018 13 August 2028
25967730 45 Fujian Qoocar PRC 14 August 2018 13 August 2028
25970797 39 Fujian Qoocar PRC 14 August 2018 13 August 2028
25970822 42 Fujian Qoocar PRC 14 August 2018 13 August 2028
25971156 37 Fujian Qoocar PRC 14 August 2018 13 August 2028
25980638 36 Fujian Qoocar PRC 14 August 2018 13 August 2028
31272146 37 Fujian Qoocar PRC 7 March 2019 6 March 2029
31273600 42 Fujian Qoocar PRC 7 March 2019 6 March 2029
31273624 45 Fujian Qoocar PRC 14 March 2019 13 March 2029
31273877 12 Fujian Qoocar PRC 7 March 2019 6 March 2029
31275930 9 Fujian Qoocar PRC 14 March 2019 13 March 2029
31276095 36 Fujian Qoocar PRC 14 March 2019 13 March 2029
31276184 39 Fujian Qoocar PRC 14 March 2019 13 March 2029
31282563 35 Fujian Qoocar PRC 7 March 2019 6 March 2029
31283876 38 Fujian Qoocar PRC 7 March 2019 6 March 2029
31284098 12 Fujian Qoocar PRC 14 May 2019 13 May 2029
31292020 42 Fujian Qoocar PRC 14 May 2019 13 May 2029
31292057 45 Fujian Qoocar PRC 7 March 2019 6 March 2029
31267762 39 Fujian Qoocar PRC 28 May 2019 27 May 2029
31346774 36 Guoxin
Zhonglian
PRC 14 March 2019 13 March 2029
31344260 35 Guoxin
Zhonglian
PRC 21 May 2019 20 May 2029
31332720 39 Guoxin
Zhonglian
PRC 21 May 2019 20 May 2029
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 3–


--- page 639 ---
Trademark
Registration
Number Class
Name of
Registered
Proprietor
Place of
Registration
Date of
Registration Expiry Date
33442749 39 Fujian Xidun PRC 28 May 2019 27 May 2029
33446830 45 Fujian Xidun PRC 28 May 2019 27 May 2029
33452024 36 Fujian Xidun PRC 28 May 2019 27 May 2029
33446473 36 Fujian Xidun PRC 28 May 2019 27 May 2029
33450492 45 Fujian Xidun PRC 21 July 2019 20 July 2029
33284261 39 Fujian Zyoocar PRC 14 June 2019 13 June 2029
33289444 35 Fujian Zyoocar PRC 21 June 2019 20 June 2029
33287707 12 Fujian Zyoocar PRC 14 June 2019 13 June 2029
48524914 35 Fujian Xidi PRC 7 May 2021 6 May 2031
48542323 36 Fujian Xidi PRC 28 March 2021 27 March 2031
48527146 39 Fujian Xidi PRC 28 March 2021 27 March 2031
48521470 36 Fujian Xidi PRC 28 March 2021 27 March 2031
48513299 39 Fujian Xidi PRC 21 March 2021 20 March 2031
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 4–


--- page 640 ---
(b) Patents
As at the Latest Practicable Date, our Group was the registered proprietor of
the following patents which, in the opinion of our Directors, are material to our
Group’s business:
Patent
Patent
Certificate No. Type of Patent
Name of
Registered
Proprietor
Place of
Registration
Date of
Application
Date of
Registration
BDS/GPS vehicle
positioning
terminal (FK-001)
(BDS/GPS 車載定
位終端 (FK-001))
ZL201730314213.6 Design XXF Group PR C 17 July 2017 5 December
2017
Vehicle positioning
terminal (FK-040)
(車載定位終端
(FK-040))
ZL2018305094663 Design Fujian Xidun PRC 11 September
2018
31 May 2019
Vehicle positioning
terminal ( 車載定位
終端(BDS/
GPS.FK-003))
ZL2019300421926 Design Fujian Xidun PRC 25 January
2019
1 October
2019
Vehicle positioning
terminal ( 車載定位
終端(BDS/
GPS.FK-004))
ZL2019305474366 Design Fujian Xidun PRC 9 October
2019
3 April 2020
Vehicle positioning
terminal( 車載定位
終端(GPS.
FK-006))
ZL202030020721.5 Design Fujian Xidun PRC 13 January
2020
12 June 2020
GPS positioning
device of detection
of signal scanning
preventable ( 一種
可防止信號掃描探
測GPS定位裝置)
ZL201921606385.0 Utility Fujian Xidun PRC 25 September
2019
27 October
2020
Mini vehicle
positioning
terminal ( 一種mini
型車載定位終端)
ZL202021928978.1 Utility Fujian Xidun PRC 7 September
2020
13 April 2021
Vehicle positioning
device ( 車載定位裝
置(FK007))
ZL202030224598.9 Design Fujian Xidun PRC 15 May 2020 16 October
2020
Vehicle tripod for
rescue services
(一種可提供救援服
務的車用三腳架)
ZL202123230893.3 Utility Fujian Xidun PRC 21 December
2021
10 May 2022
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 5–


--- page 641 ---
(c) Copyright
As at the Latest Practicable Date, our Group was the registered proprietor of
the following copyright which, in the opinion of our Directors, are material to our
Group’s business:
Copyright Name Registration Number
Name of Registered
Proprietor
Place of
Registration
Date of
Registration
XXF Integrated Business Management
System V1.0
(喜相逢綜合業務管理系統V1.0)
2015SR090774 XXF Group PRC 1 April 2015
Taoqi Android client software V2.0
(淘汽Android 客戶端軟件V2.0)
2023SR0206496 Fujian Qoocar PRC 1 December 2017
Taoqi iOS client software V2.0
(淘汽iOS 客戶端軟件V2.0)
2023SR0206494 Fujian Qoocar PRC 11 December 2017
XXF yinqi direct connection system
V1.1 ( 喜相逢銀企直連系統V1.1)
2019SR0093464 XXF Group PRC 25 January 2019
‘‘Xibao’’《喜寶》 國作登字–
2019-F-00823860
XXF Group PRC 6 February 2019
‘‘Kuaiya’’《快呀》 閩作登字–
2021-F-00065827
XXF Group PRC 15 April 2021
‘‘Kuaiya’’《快呀》 閩作登字–
2021-F-00065829
XXF Group PRC 15 April 2021
Taoqi iOS intelligent supply chain
client software V1.0
(淘汽iOS
智能供應鏈客戶端軟件
V1.0)
2018SR485445 Taoqi Internet PRC 18 October 2017
Taoqi Android inte lligent supply chain
client software V1.0
(淘汽Android 智能供應鏈客戶端軟件
V1.0)
2018SR486079 Taoqi Internet PRC 20 November 2017
Taoqi big data intelligent wind control
system software V1.0
(淘汽大數據智慧風控系統軟件V1.0)
2018SR484305 Taoqi Internet PRC 11 August 2017
Taoqi customer credit information
inquiry system software v1.0
(淘汽客戶信用信息查詢系統軟件
v1.0)
2018SR084110 Taoqi Internet PRC 30 September 2017
Taoqi relationship network anti-fraud
analysis system software V1.0
(淘汽關係網絡反欺詐分析系統軟件
V1.0)
2018SR488208 Taoqi Internet PRC 15 August 2017
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 6–


--- page 642 ---
Copyright Name Registration Number
Name of Registered
Proprietor
Place of
Registration
Date of
Registration
Taoqi blacklist query system software
V1.0
(淘汽黑名單查詢系統軟件V1.0)
2018SR488773 Taoqi Internet PRC 18 July 2017
Taoqi activity marketing information
System V1.0
(淘汽活動營銷信息系統V1.0)
2018SR484318 Taoqi Internet PRC 22 December 2017
Taoqi multi-channel management
system V1.0
(淘汽多渠道管理系統V1.0)
2018SR484297 Taoqi Internet PRC 28 November 2017
Taoqi vehicle real-time monitoring
system software V1.0
(淘汽車輛實時監控系統軟件V1.0)
2018SR484292 Taoqi Internet PRC 20 July 2017
Taoqi strategy words early warning
system software V1.0
(淘汽策略化預警系統軟件V1.0)
2018SR484348 Taoqi Internet PRC 25 July 2017
Invisible intelligent monitoring
platform V1.0
(無形智能監控平台V1.0)
2016SR361459 Taoqi Internet PRC 21 November 2016
Taoqi invisible intelligent monitoring
platform software V2.0
(淘汽無
形智能監控平台軟件V2.0)
2018SR084125 Taoqi Internet PRC 31 August 2017
Invisible tracking IOS client software
V1.0
(無形追蹤IOS 客戶端軟件V1.0)
2017SR086324 Taoqi Internet PRC 24 February 2017
Invisible tracking Android client
software V1.0
(無形追蹤Android 客戶端軟件V1.0)
2017SR086328 Taoqi Internet PRC 24 February 2017
Taoqi Rule engine system V1.0
(淘汽規則引擎系統V1.0)
2019SR0627614 Taoqi Internet PRC 21 September 2018
Taoqi promise user open platform
V1.0
(淘汽無極用戶開放平台V1.0)
2019SR0627619 Taoqi Internet PRC 25 October 2018
Taoqi star pulse procurement
management platform V1.0
(淘汽星脈採購管理平台V1.0)
2019SR0463656 Taoqi Internet PRC 25 December 2018
Taoqi galaxy asset management
platform V1.0
(淘汽銀河資產管理平台V1.0)
2019SR0337604 Taoqi Internet PRC 25 September 2018
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 7–


--- page 643 ---
Copyright Name Registration Number
Name of Registered
Proprietor
Place of
Registration
Date of
Registration
Taoqi intelligent automatic letter
review system V1.0
(淘汽智能自動信審系統V1.0)
2019SR0337494 Taoqi Internet PRC 16 April 2018
Get a car with ease
(輕鬆有車用)
閩作登字–
2017-F-00050895
Taoqi Internet PRC 19 September 2017
E a s i e rw a yt og e tac a r
(用車更輕鬆)
閩作登字–
2017-F-00050897
Taoqi Internet PRC 19 September 2017
Get a family car with ease
讓每個家庭輕鬆有車用
閩作登字–
2018-F-00064580
Taoqi Internet PRC 1 May 2018
Taoqi vehicle purchase platform
淘汽購車平台
閩作登字–
2018-F-00076416
Taoqi Internet PRC 6 November 2018
52 Car — Business Version
(management platform) V1.2.1
52車商家版（管理平台）V1.2.1
2019SR0343991 Fujian Qoocar PRC 15 October 2018
52 Car — Business Version (mobile
client end Android version) V1.2.1
52車商家版（手機客戶端Android 版）
V1.2.1
2019SR0337611 Fujian Qoocar PRC 15 October 2018
52 Car — Business Version (mobile
client end iOS version) V1.2.1
52車商家版（手機客戶端iOS 版）
V1.2.1
2019SR0204740 Fujian Qoocar PRC 15 October 2018
52 Car application software (Android
version) V1.5.4
52車應用軟件（Android 版）V1.5.4
2019SR0646121 Fujian Qoocar PRC 28 February 2019
52 Car application software (IOS
version) V1.5.4
52車應用軟件（iOS 版）V1.5.4
2019SR0646086 Fujian Qoocar PRC 28 February 2019
52 Car application software
(management backstage) V1.5.4
52車應用軟件（管理後台）V1.5.4
2019SR0646095 Fujian Qoocar PRC 28 February 2019
Zhiyourong management
platform V1.3
致優融管理平台V1.3
2019SR0710804 Fujian Qoocar PRC 1 March 2019
Qizhi Xiaomeng
(汽致小萌)
國作登字–
2018-F-00625016
Fujian Qoocar PRC 26 September 2018
Xixiangfeng car service platform V1.0
(喜
相逢汽車服務平台 V1.0)
2021SR2057914 Fujian Qoocar PRC 19 November 2021
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 8–


--- page 644 ---
Copyright Name Registration Number
Name of Registered
Proprietor
Place of
Registration
Date of
Registration
Vehicle automatic quotation system
(車輛自動報價系統V1.0)
2021SR2066387 Fujian Qoocar PRC 20 August 2021
XXF Sales Assistant ios app V1.0 ( 喜
相逢銷售助手ios app V1.0)
2021SR2058111 Fujian Qoocar PRC 25 August 2021
XXF Sales Assistant Android app
V1.0 ( 喜相逢銷售助手Android app
V1.0)
2021SR2058110 Fujian Qoocar PRC 25 August 2021
Xidi online car hailing service
platform V1.0 ( 喜滴汽車網約車服務
平台V1.0)
2021SR2058108 Fujian Qoocar PRC 19 November 2021
XXF Group integrated service
platform V1.0 ( 喜相逢綜合服務平台
V1.0)
2021SR2058054 Fujian Qoocar PRC 30 August 2021
File management system V1.0
(檔案管理系統 V1.0)
2021SR2058162 Fujian Qoocar PRC 25 August 2021
Pre-loan risk control system V1.0
(貸前風控系統 V1.0)
2021SR2058161 Fujian Qoocar PRC 20 August 2021
XXF Group direct rental management
platform V1.0 ( 喜相逢直租管理平台
V1.0)
2021SR2174423 Fujian Qoocar PRC 30 August 2021
(d) Domain names
As at the Latest Practicable Date, our Group was the registered proprietor of
the following domain names which, in the opinion of our Directors, are material
to our business:
Domain name
Name of Registered
Proprietor
Place of
Registration Expiry Date
xxfqc.com XXF Group PRC 25 October 2024
xxfgo.com XXF Group PRC 8 September 2024
xxfcar.com XXF Group PRC 28 March 2029
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 9–


--- page 645 ---
C. FURTHER INFORMATION ABOUT DIRECTORS AND SUBSTANTIAL
SHAREHOLDERS
1. Directors
(a) Disclosure of Interests — Interests and short positions of the Directors and the
chief executive of our Company in the Shares, underlying Shares and
debentures of our Company and its associated corporations
Immediately following completion of the Global Offering and the
Capitalisation Issue and assuming th at the Over-allotment Option is not
exercised and without taking into account Shares to be issued and allotted upon
the exercise of any options granted under the Pre-IPO Share Option Scheme and
options which may be granted under the Share Option Scheme, the interests or
short positions of our Directors or chief executives of our Company in the shares,
underlying shares and debentures of our Company or its associated corporations
(within the meaning of Part XV of the SFO) which will be required to be notified
to our Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part
XV of the SFO (including interests or short positions which they were taken or
deemed to have under such provisions of the SFO) or which will be required,
pursuant to section 352 of the SFO, to be entered in the register referred to
therein, or which will be required, pursuant to the Model Code for Securities
Transactions by Directors of Listed Issu ers to be notified to our Company and the
Stock Exchange, once our Shares are listed will be as follows:
Interest in our Company
Name of Director Nature of Interest
Number of
Shares (1)
Approximate
percentage of
shareholding
Mr. Huang (2) Interest in controlled
corporation
128,610,355 (L) 24.94%
Mr. Ye Fuwei (3) Interest in controlled
corporation
954,529 (L) 0.19%
(1) The letter ‘‘L’’ denotes the person’s long position in our Shares.
(2) Glorypearl Capital is beneficially and wholly owned by Mr. Huang. Each of Precious
Luck, Happy Gain and Southern Fortune is indi rectly controlled by Mr. Huang. Please
refer to the notes to the corporate and share holding structure of our Group in ‘‘History,
Reorganisation and Corporate Structure’’ for details. By virtue of the SFO, Mr. Huang
is deemed to be interested in the Shares held by Glorypearl Capital, Precious Luck,
Happy Gain and Southern Fortune.
(3) Billion Aspire Holdings Limited is benef icially and wholly owned by Mr. Ye Fuwei. By
virtue of the SFO, Mr. Ye Fuwei is deemed to be interested in the Shares held by Billion
Aspire Holdings Limited.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 0–


--- page 646 ---
(b) Particulars of service agreements and letters of appointment
Each of our executive Directors has entered into a service agreement with our
C o m p a n yf o rat e r mo ft h r e ey e a r sc o m m e n c i n gf r o mt h eL i s t i n gD a t e ,w h i c hm a y
be terminated by not less than three months’ notice in writing served by either
party on the other.
Each of our non-executive Directors and independent non-executive
Directors has entered into a letter of appointment with our Company for a
term of three years commencing from the L isting Date, which may be terminated
by not less than three months’ notice in writing served by either party on the
other.
(c) Directors’ remuneration
Each of our executive Directors and non-executive Directors is entitled to a
remuneration and shall be paid on the basis of a twelve-month year. The
aggregate remuneration (including salaries, wages, bonuses, pension cost and
share-based compensation expenses) paid to our Directors for each of the three
years ended 31 December 2022 and the six months ended 30 June 2023 was
approximately RMB12.4 million, RMB2.7 million, RMB2.8 million and RMB1.4
million, respectively. For details, ple ase refer to note 35 of the Accountant’s
Report set out in Appendix I to this prospectus.
Each of our independent non-executive Directors has been appointed for a
term of three years. Save for directors’ fees, none of our independent
non-executive Directors is expected to receive any other remuneration for
holding their office as an independent non-executive Director.
Under the arrangement currently in force, the aggrega te remuneration
(including salaries, wages, bonuses, pens ion cost and share-based compensation
expenses) of our Directors for the year ending 31 December 2023 is estimated to
be no more than RMB3.5 million.
2. Substantial Shareholders
Save as disclosed in the section headed ‘‘Substantial Shareholders’’ in this
prospectus, so far as our Directors are aware, immediately following the completion of
the Global Offering and the Capitalisati on Issue assuming that the Over-allotment
Option is not exercised and taking no account of any Shares that may be issued
pursuant to the exercise of any options which were granted under the Pre-IPO Share
Option Scheme and any options which may be granted under the Share Option
Scheme, no person (other than our Directors and chief executives of our Company)
will have or be deemed or taken to have an interest and/or short position in our Shares
or the underlying Shares which would fall to be disclosed under the provisions of
Division 2 and 3 of Part XV of the SFO, or who will be, directly or indirectly,
interested in 10% or more of the issued voting shares of any other member of our
Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 1–


--- page 647 ---
3. Agency fees or commissions received
Save as disclosed in the section headed ‘‘Underwriting’’, no commissions,
discounts, brokerages or other special terms were granted in connection with the
issue or sale of any capital of any member of our Group within the two years
immediately preceding the date of this prospectus.
4. Disclaimers
(a) save as disclosed in this section, none of our Directors or chief executives of
our Company has any interest or short position in our shares, underlying
shares or debentures of our Company or any of its associated corporation
(within the meaning of the SFO) which will have to be notified to our
Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV
of the SFO or which will be required, pursuant to section 352 of the SFO, to
be entered in the register referred to therein, or which will be required to be
notified to our Company and the Stock Exchange pursuant to the Model
C o d ef o rS e c u r i t i e sT r a n s a c t i o n sb yD i r e c t o r so fL i s t e dI s s u e r so n c eo u r
Shares are listed;
(b) none of our Directors or experts referred to under the paragraph headed ‘‘—
D. Other information — 9. Qualification of Experts’’ in this Appendix has
any direct or indirect interest in the promotion of our Company, or in any
assets which have within the two years immediately preceding the date of this
prospectus been acquired or disposed of by or leased to any member of our
Group, or are proposed to be acquired or disposed of by or leased to any
member of our Group;
(c) none of our Directors is materially inte rested in any contract or arrangement
subsisting at the date of this prospectus which is significant in relation to the
business of our Group taken as a whole;
(d) save as disclosed in this section, none of our Directors has any existing or
proposed service contracts with any member of our Group (excluding
contracts expiring or determinable by the employer within one year without
payment of compensation (other t han statutory compensation));
(e) save as disclosed in the section headed ‘‘Substantial Shareholders’’ in this
prospectus, taking no account of Shares which may be taken up under the
Global Offering, none of our Directors knows of any person (not being a
Director or chief executive of our Company) who will, immediately following
completion of the Global Offering, have an interest or short position in our
Shares or underlying Shares of our Company which would fall to be disclosed
to our Company under the provisions of Divisions 2 and 3 of Part XV of SFO
or be interested, directly or indirectly, in 10% or more of the issued voting
shares of any member of our Group;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 2–


--- page 648 ---
(f) none of the experts referred to under the paragraph headed ‘‘— D. Other
information — 9. Qualification of E xperts’’ in this Appendix has any
shareholding in any member of our Group or the right (whether legally
enforceable or not) to subscribe for or to nominate persons to subscribe for
securities in any member of our Group; and
(g) so far as is known to our Directors as at the Latest Practicable Date, none of
our Directors, their respective close associates (as defined under the Listing
Rules) or Shareholders of our Company who are interested in more than 5%
of the issued share capital of our Company has any interests in the five
largest customers or the five largest suppliers of our Group.
D. OTHER INFORMATION
1. Share Option Scheme
The following is a summary of the principal terms of the Share Option Scheme
conditionally adopted by the written resolutions of our Shareholders passed on 9
October 2023.
(a) Purpose
The Share Option Scheme is a share incentive scheme prepared in accordance
with Chapter 17 of the Listing Rules and is established to recognise and
acknowledge the contributions that th e Eligible Participants (as defined in
paragraph (b) below) had or may have made to our Group. The Share Option
Scheme will provide the Eligible Partic ipants an opportunity to have a personal
stake in our Company with the view to achieving the following objectives:
(i) motivate the Eligible Particip ants to optimise their performance
efficiency for the benefit of our Group; and
(ii) attract and retain or otherwise maintain an on-going business
relationship with the Eligible Partic ipants whose contributions are or
will be beneficial to the long-term growth of our Group.
(b) Who may join
The Board may, at its discretion, offer to grant an option to the following
persons (collectively the ‘‘ Eligible Participants ’’) to subscribe for such number of
new Shares as the Board may determine at an exercise price determined in
accordance with paragraph (f) below:
(i) any full-time or part-time employees, executives or officers of our
Company or any of its subsidiaries;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 3–


--- page 649 ---
(ii) any directors (including non-executive directors and independent
non-executive directors) of our Company or any of its subsidiaries; and
(iii) any advisers, consultants, supplie rs, distributors and such other persons
who provide services to our Company and/or any of its subsidiaries on a
continuing and recurring basis in the ordinary and usual course of
business of our Group, the grant of options to whom is in the interests
of the long-term growth of the Group as determined by our Board, but
excluding (i) placing agents or finan cial advisers providing advisory
services for fundraising, mergers or acquisitions of our Company or its
subsidiaries, and (ii) professional se rvice providers such as the auditors
or valuers who provide assurance or are required to perform their
services with impartiality and objectivity (‘‘ Service Providers ’’).
Upon acceptance of the option, the grantee shall pay RMB1.00 to our
Company by way of consideration for the grant.
(c) Acceptance of an offer of options
An option shall be deemed to have been granted and accepted by the grantee
and to have taken effect when the duplicate offer document constituting
acceptances of the options duly signed by the grantee, together with a
remittance or payment in favour of our Company of RMB1.00 by way of
consideration for the grant thereof, is received by our Company on or before the
relevant acceptance date. Such remittanc e or payment shall in no circumstances be
refundable. Any offer to grant an option to subscribe for Shares may be accepted
in respect of less than the number of Shares for which it is offered provided that it
is accepted in respect of a board lot for dealing in Shares on the Stock Exchange
or an integral multiple thereof and such number is clearly stated in the duplicate
offer document constituting acceptance of the option. To the extent that the offer
to grant an option is not accepted by any pr escribed acceptance date, it shall be
deemed to have been irrevocably declined.
Subject to paragraphs (m), (n), (o), (p) a nd (q), an option shall be exercised in
whole or in part and, other than where it is exercised to the full extent
outstanding, shall be exercised in integral multiples of such number of Shares as
shall represent one board lot for dealing in Shares on the Stock Exchange for the
time being, by the grantee by giving notice in writing to our Company stating that
the option is thereby exercised and the number of Shares in respect of which it is
exercised. Each such notice must be accompanied by a remittance or payment for
the full amount of the exercise price for our Shares in respect of which the notice is
given. Within 21 days after receipt of the notice and the remittance or payment
and, where appropriate, receipt of the certificate by the auditors to our Company
or the approved independent financial adviser as the case may be pursuant to
paragraph (s), our Company shall allot and issue the relevant number of Shares to
the grantee credited as fully paid and issue to the grantee certificates in respect of
our Shares so allotted.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 4–


--- page 650 ---
The exercise of any option shall be subject to our Shareholders in general
meeting approving any necessary increase in the authorised share capital of our
Company.
(d) Maximum number of Shares
The maximum number of Shares in respect of which all options which may be
granted under the Share Option Scheme and all share options and share awards
under any other share schemes of our Company must not in aggregate exceed 10%
of the total number of Shares in issue immediately following completion of the
Global Offering (‘‘ Scheme Mandate Limit ’’), being 51,562,500 Shares, excluding
for this purpose Shares which would have been issuable pursuant to options which
have lapsed in accordance with the terms of the Share Option Scheme (or any
other share option schemes of our Company).
Subject to the foregoing, the total number of Shares which may be allotted
and issued in respect of all options to be granted under the Share Option Scheme
and under any other share option schemes of our Company to the Service
Providers shall be within the Scheme Mandate Limit and must not in aggregate
exceed 1% of Shares in issue immediately after completion of the Global Offering
(‘‘Service Provider Sublimit ’’).
The Scheme Mandate Limit and the Service Provider Sublimit may be
refreshed at any time subject to the issue of a circular by our Company and the
approval of our Shareholders in general meeting after three years from the date of
the approval of our Shareholders for the adoption of Share Option Scheme or the
last refreshment, provided that:
(i) the total number of Shares which may be issued in respect of all options
to be granted under the Share Option Scheme and all share options and
share awards to be granted under any other share schemes of our
Company under the Scheme Mandate Limit as refreshed (‘‘ New Scheme
Mandate Limit ’’) shall not exceed 10% (and the Service Provider
Sublimit as refreshed (‘‘ New Service Provider Sublimit ’’) shall not exceed
1%) of the Shares in issue as at the date of the approval of the New
Scheme Mandate Limit and the New S ervice Provider Sublimit by our
Shareholders in general meeting. Our Company shall issue a circular to
our Shareholders containing the number of options that were already
granted under the Scheme Mandate Limit and the Service Provider
Sublimit, and the reason for the refreshment;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 5–


--- page 651 ---
(ii) any refreshment to the Scheme Mandate Limit and the Service Provider
Sublimit within any three-year period shall be approved by our
Shareholders in general meeting subject to:
(1) any controlling shareholders and their associates (or if there is no
controlling shareholder, Directors (excluding independent
non-executive Directors) and the chief executive of our Company
and their respective associates) must abstain from voting in favour
of the relevant resolution at the general meeting; and
(2) our Company must comply with the requirements under Rules
13.39(6) and (7), 13.40, 13.41 and 13.42 of the Listing Rules.
The requirements under sub-paragraph (ii) above do not apply if the
refreshment is made immediately after an issue of securities by our Company to
our Shareholders on a pro rata basis as set out in Rule 13.36(2)(a) of the Listing
Rules such that the unused part of the scheme mandate (as a percentage of the
relevant class of shares in issue) upon refreshment is the same as the unused part
of the scheme mandate immediately before the issue of securities, rounded to the
nearest whole Share.
The total number of Shares which may be allotted and issued upon exercise
of all options to be granted under the Share Option Scheme (or any other share
option schemes of our Company) under the Scheme Mandate Limit as refreshed
shall not exceed 10% of the Shares in issue as at the date of the approval by our
shareholder in general meeting of the limit.
Subject to the issue of a circular by our Company and the approval of our
Shareholders in general meeting and/or suc h other requirements prescribed under
the Listing Rules from time to time, the B oard may grant options under the Share
Option Scheme (or any other share option schemes of our Company) beyond the
Scheme Mandate Limit or, if applicable, the New Scheme Mandate Limit
provided the options in excess of the Scheme Mandate Limit or, if applicable, the
New Scheme Mandate Limit, are granted only to the Eligible Participants
specifically identified by our Company before such approval is sought. The
circular issued by our Company to our Shareholders shall contain the information
required under Rule 17.03C(3) of the Listing Rules.
The maximum number of Shares in respect of which options may be granted
shall be adjusted, in such manner as the auditors of our Company or an approved
independent financial adviser shall cert ify to be appropriate, fair and reasonable
in the event of any alteration in the capital structure of our Company in
accordance with paragraph (s) belo w whether by way of consolidation,
capitalisation issue, rights issue, sub-division or reduction of the share capital
of our Company but in no event shall exceed the limit prescribed in this
paragraph.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 6–


--- page 652 ---
(e) Maximum number of options to any one individual
The total number of Shares issued and which may fall to be issued upon
exercise of all options granted under the Share Option Scheme and all share
options and share awards granted under any other share schemes of our Company
(including both exercised and outstanding share options and share awards) to
each Eligible Participant in any 12-mon th period up to the date of grant shall not
exceed 1% of our Shares in issue as at the date of grant. Any further grant of
options in excess of this 1% limit shall be subject to:
(i) the issue of a circular by our Company containing the identity of the
Eligible Participant, the numbers of and terms of the options to be
granted (and options previously granted to such participant). The
applicable requirements of Rule 17.03(D) of the Listing Rules shall be
complied with; and
(ii) the approval of our Shareholders in general meeting and/or other
requirements prescribed under the L isting Rules from time to time with
such Eligible Participant and his c lose associates (as defined in the
Listing Rules) (or his/her associates if the Eligible Participant is a core
connected person) abstaining from voting. The numbers and terms
(including the exercise price) of options to be granted to such participant
must be fixed before our Shareholders’ approval and the date of the
Board meeting at which the Board proposes to grant the options to such
Eligible Participant shall be taken as the date of grant for the purpose of
calculating the subscription price of our Shares. The Board shall
forward to such Eligible Participan t an offer document in such form as
t h eB o a r dm a yf r o mt i m et ot i m ed e t e r m i n e( o r ,a l t e r n a t i v e l y ,
documents accompanying the offer document which state), among
others:
(1) the Eligible Participant’s name, address and occupation;
(2) the date on which an option is offered to an Eligible Participant
which must be a date on which the Stock Exchange is open for the
business of dealing in securities;
(3) the date upon which an offer for an option must be accepted;
(4) the date upon which an option is deemed to be granted and
accepted in accordance with paragraph (c);
(5) the number of Shares in respect of which the option is offered;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 7–


--- page 653 ---
(6) the subscription price and the manner of payment of such price for
our Shares on and in consequence of the exercise of the option;
(7) the date of the expiry of the option as may be determined by the
Board;
(8) the method of acceptance of the option which shall, unless the
Board otherwise determines, be as set out in paragraph (c); and
(9) other terms and conditions (inc luding, without limitation, any
m i n i m u mp e r i o df o rw h i c ha no p t i o nm u s tb eh e l db e f o r ei tc a nb e
exercised and/or any performance targets which must be achieved
before the option can be exercised) relating to the offer of the
option which in the opinion of the Board are fair and reasonable
but not being inconsistent with Share Option Scheme and the
Listing Rules.
(f) Price of Shares
Subject to any adjustments made as described in paragraph (s) below, the
subscription price of a Share in respect of any particular option granted under the
Share Option Scheme shall be such price as the Board in its absolute discretion
shall determine, save that such price must be at least the higher of:
(i) the official closing price of our Shares as stated in the Stock Exchange’s
daily quotation sheets on the date of grant, which must be a day on
which the Stock Exchange is open for the business of dealing in
securities;
(ii) the average of the official closin g prices of our Shares as stated in the
Stock Exchange’s daily quotation sheets for the five business days
immediately preceding the date of grant; and
(iii) the nominal value of a Share.
(g) Granting options to a director, chief executive or substantial shareholder of our
Company or any of their respective associates
Any grant of options to a director, chief executive or substantial shareholder
(as defined in the Listing Rules) of our Company or any of their respective
associates (as defined in the Listing Ru les) is required to be approved by the
independent non-executive Directors (excluding any independent non-executive
Director who is the grantee of the options). If the Board proposes to grant options
to a substantial shareholder or any independent non-executive Director (or any of
their respective associates (as defined in the Listing Rules)) which will result in the
number of Shares issued and to be issued upon exercise of options granted and to
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 8–


--- page 654 ---
be granted (excluding any options lapsed in accordance with the terms of the
Share Option Scheme) to such person in the 12-month period up to and including
the date of such grant representing in aggregate over 0.1% or such other
percentage as may be from time to time p rovided under the Listing Rules of our
Shares in issue, such further grant of options will be subject to the issue of a
circular by our Company and the approval of our Shareholders in general meeting
at which the grantee, his/her associates and all core connected persons (as defined
in the Listing Rules) of our Company shal l abstain from voting in favour, and/or
such other requirements prescribed und er the Listing Rules from time to time.
The circular to be issued by our Company to our Shareholders pursuant to
the above paragraph shall contain the following information:
(i) the details of the number and terms of the options to be granted to each
selected Eligible Participant which must be fixed before our
Shareholders’ meeting and the date of Board meeting for proposing
s u c hf u r t h e rg r a n ts h a l lb et a k e na st h ed a t eo fg r a n tf o rt h ep u r p o s eo f
calculating the exercise price of such options;
(ii) the views of the independent non-executive Directors (excluding any
independent non-executive Director who is the grantee of the options) as
to whether the terms of the grant are fair and reasonable and whether
such grant is in the interests of the issuer and its shareholders as a whole,
and their recommendation to the independent Shareholders as to voting;
(iii) the information require d under Rule 17.02(2)(c); and
(iv) the information required under Rule 2.17 of the Listing Rules.
(h) Restrictions on the times of grant of options
A grant of options shall not be made after inside information has come to the
knowledge of our Company until it has announced such inside information
pursuant to the requirements of the Listing Rules and the Inside Information
Provisions of Part XIVA of the SFO. In particular, no options shall be granted
during the period commencing one month immediately preceding the earlier of:
(i) the date of the Board meeting (as such date to first notified to the Stock
Exchange in accordance with the Listing Rules) for the approval of our
Company’s annual results or half-year, quarterly or other interim period
(whether or not required under the Listing Rules); and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2 9–


--- page 655 ---
(ii) the deadline for our Company to publish an announcement of its annual
results or half-year, or quarterly or other interim period (whether or not
required under the Listing Rules,
and ending on the date of actual publication of the results announcement, and
where an option is granted to a Director:
(i) no options shall be granted during the period of 60 days immediately
preceding the publication date of the annual results or, if shorter, the
period from the end of the relevant financial year up to the publication
date of the results; and
(ii) no option shall be granted during the period of 30 days immediately
preceding the publication date of the quarterly results (if any) and
half-year results or, if shorter, the period from the end of the relevant
quarterly or half-year period up to the publication date of the results.
(i) Rights are personal to grantee
An option and an offer to grant an option shall be personal to the grantee
and shall not be transferrable or assignable and no grantee shall in any way sell,
transfer, charge, mortgage, encumber or create any interest (legal or beneficial) in
favour of any third party over or in relation to any option or attempt so to do
(save that the grantee may nominate a nominee in whose name our Shares issued
pursuant to the Share Option Scheme may be registered). Any breach of the
foregoing shall entitle our Company to cancel any outstanding options or any part
thereof granted to such grantee.
(j) Time of exercise of option and duration of the Share Option Scheme
An option may be exercised in accordance with the terms of the Share Option
Scheme at any time after the date upon which the option is deemed to be granted
and accepted and prior to the expiry of 10 years from that date. The period during
which an option may be exercised will be determined by the Board in its absolute
discretion, save that no option may be exercised more than 10 years after it has
been granted. No option may be granted more than 10 years after the date of
approval of the Share Option Scheme. Subject to earlier termination by our
Company in general meeting or by the Board, the Share Option Scheme shall be
valid and effective for a period of 10 years from the date of its adoption.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 0–


--- page 656 ---
(k) Vesting period
The vesting period of an option shall be determined by our Board and in any
case, shall not be less than 12 months. A shorter vesting period may be granted to
directors and employees of the Company or any of its subsidiaries (including
persons who are granted options or awards under the scheme as an inducement to
enter into employment contracts with these companies) at the discretion of the
Board in certain circumstances as provided under the rules of the Share Option
Scheme.
(l) Performance target
A grantee may be required to achieve an y performance targets as the Board
may then specify in the grant before any options granted under the Share Option
Scheme can be exercised. Such performance targets may include, among others,
financial targets and management targets which shall be determined based on the
(i) individual performance, (ii) performance of our Group and/or (iii)
performance of business groups, busine ss units, business lines, functional
departments and/or geographical area managed by the Grantees. For the
avoidance of doubt, an option shall not be subject to any performance targets,
criteria or conditions if none are set out in the relevant grant.
(m) Rights on ceasing employment or death
If the grantee of an option ceases to be an employee of our Company or any
of its subsidiaries:
(i) by any reason other than death or termination of his employment on the
grounds specified in paragraph (n) below, the grantee may exercise the
option up to the entitlement of the g rantee as at the date of cessation (to
the extent not already exercised) within a period of one month from such
cessation; or
(ii) by reason of death, his/her persona l representative(s) may exercise the
option within a period of 12 months from such cessation, which date
shall be the last actual working day with our Company or the relevant
subsidiary whether salary is paid in lieu of notice or not, failing which it
will lapse.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 1–


--- page 657 ---
(n) Rights on dismissal
If the grantee of an option ceases to be an employee of our Company or any
of its subsidiaries on the grounds that he/she has been guilty of serious
misconduct, or has been convicted of any criminal offence involving his/her
integrity or honesty or in relation to an employee of our Group (if so determined
by the Board), or has become insolvent, bankrupt or has made arrangements or
compositions with his/her creditors generally, or on any other ground on which an
employee would be entitled to terminate his/her employment at common law or
pursuant to any applicable laws or under the grantee’s service contract with our
Group, his/her option will lapse and not be exercisable after the date of
termination of his/her employment.
(o) Rights on takeover
If a general offer is made to all our Shareholders (or all such Shareholders
other than the offeror and/or any person controlled by the offeror and/or any
person acting in concert with the offeror (as defined in the Takeovers Codes)) and
such offer becomes or is declared unconditional during the option period of the
relevant option, the grantee of an option shall be entitled to exercise the option in
full (to the extent not already exercised) at any time within 14 days after the date
on which the offer becomes or is declared unconditional.
(p) Rights on winding-up
In the event a notice is given by our Company to its members to convene a
general meeting for the purposes of considering, and if thought fit, approving a
resolution to voluntarily wind-up our Company, our Company shall forthwith
give notice thereof to all grantees and thereupon, each grantee (or his/her legal
personal representative(s)) shall be entitled to exercise all or any of his/her options
(to the extent not already exercised) at any time not later than two business days
prior to the proposed general meeting of our Company referred to above by giving
notice in writing to our Company, accompanied by a remittance for the full
amount of the aggregate subscription price for our Shares in respect of which the
notice is given, whereupon our Company shall as soon as possible and, in any
event, no later than the business day immediately prior to the date of the proposed
general meeting, allot the relevant Shares to the grantee credited as fully paid and
register the grantee as holder thereof.
(q) Rights on compromise or arrangement between our Company and its members
or creditors
If a compromise or arrangement between our Company and its members or
creditors is proposed for the purposes of a scheme for the reconstruction of our
Company or its amalgamation with any other companies pursuant to the laws of
jurisdictions in which our Company was incorporated, our Company shall give
notice to all the grantees of the options on the same day as it gives notice of the
meeting to its members or creditors summoning the meeting to consider such a
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 2–


--- page 658 ---
compromise or arrangement and any grantee may by notice in writing to our
Company accompanied by a remittance for the full amount of the aggregate
subscription price for our Shares in respect of which the notice is given (such
notice to be received by our Company not later than two business days prior to
the proposed meeting), exercise the option to its full extent or to the extent
specified in the notice and our Company s hall as soon as possible and in any event
no later than 12 : 00 noon (Hong Kong time) on the business day immediately
prior to the date of the proposed meeting, allot and issue such number of Shares
to the grantee which falls to be issued on such exercise of the option credited as
fully paid and register the grantee as holder thereof.
With effect from the date of such meeting, the rights of all grantees to
exercise their respective options sh all forthwith be suspended. Upon such
compromise or arrangement becoming effective, all options shall, to the extent
that they have not been exercised, lapse and determine. If for any reason such
compromise or arrangement does not become effective and is terminated or
lapses, the rights of grantees to exercise their respective options shall with effect
from such termination be restored in full but only upon the extent not already
exercised and shall become exercisable.
(r) Ranking of Shares
Our Shares to be allotted upon the exercise of an option will not carry voting,
dividend or other rights until completion of the registration of the grantee (or any
other person) as the holder thereof. Subject to the aforesaid, Shares issued and
allotted on the exercise of options will carry the same rights in all respects and
shall have the same voting, dividend, transfer and other rights, including those
arising on liquidation as attached to the other fully-paid Shares in issue on the
date of issue and rights in respect of any dividend or other distributions paid or
made on or after the date of issue.
(s) Effect of alterations to capital
In the event of any alteration in the capital structure of our Company whilst
any option may become or remains exercis able, whether by way of capitalisation
issue, rights issue, open offer (if there is a price dilutive element), consolidation,
sub-division or reduction of share capital of our Company, or otherwise
howsoever, such corresponding alterations (if any) shall be made in the number
of Shares subject to any options so far as unexercised and/or the subscription
price per Share of each outstanding option as the auditors of our Company or an
independent financial adviser shall certify in writing to the Board to be in
their/his/her opinion fair and reasonable in compliance with Rule 17.03(13) of the
Listing Rules and the note thereto and th e supplementary guid ance issued by the
Stock Exchange on 5 September 2005 and any future guidance and interpretation
of the Listing Rules issued by the Stock Exchange from time to time and the note
thereto. The capacity of the auditors of our Company or the approved
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 3–


--- page 659 ---
independent financial adviser, as the case may be, in this paragraph is that of
experts and not arbitrations and their ce rtificate shall, in absence of manifest
error, be final and conclusive and binding on our Company and the grantees.
Any such alterations will be made on the basis that a grantee shall have the
same proportion of the issued share capital of our Company, rounded to the
nearest whole Share for which any grantee of an option is entitled to subscribe
pursuant to the options held by him/her before such alteration and the aggregate
subscription price payable on full exercise of any option is to remain as nearly as
possible the same (and in any event not greater than) as it was before such event.
No such alteration will be made the effect of which would be to enable a Share to
be issued at less than its nominal value. Th e issue of securities as consideration in
a transaction is not to be regarded as a circumstance requiring any such
alterations.
(t) Expiry of option
An option shall lapse automatically and not be exercisable (to the extent not
already exercised) on the earliest of:
(i) the date of expiry of the option as may be determined by the Board;
(ii) the expiry of any of the periods referred to in paragraphs (m), (n), (o),
(p) or (q);
(iii) the date on which the scheme of arrangement of our Company referred
to in paragraph (q) becomes effective;
(iv) subject to paragraph (p), the date of commencement of the winding-up
of our Company;
(v) the date on which the grantee ceases to be an Eligible Participant by
reason of such grantee’s resignation from the employment of our
Company or any of its subsidiaries or the termination of his/her
employment or contract on any one or more of the grounds that he or
he/she has been guilty of serious misconduct, or has been convicted of
any criminal offence involving his/her integrity or honesty, or in relation
to an employee of our Group (if so determined by the Board), or has
been insolvent, bankrupt or has made compositions with his/her
creditors generally or any other ground on which an employee would
be entitled to terminate his/her em ployment at common law or pursuant
to any applicable laws or under the grantee’s service contract with our
Group. A resolution of the Board to the effect that the employment of a
grantee has or has not been terminated on one or more of the grounds
specified in this paragraph shall be conclusive; or
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 4–


--- page 660 ---
(vi) the date on which the Board shall exercise our Company’s right to
cancel the option at any time after the grantee commits a breach of
paragraph (i) above or the options are cancelled in accordance with
paragraph (v) below.
(u) Alteration of the Share Option Scheme
The Share Option Scheme may be altered in any respect by resolution of the
Board except that:
(i) any alteration to the advantage of the grantees or the Eligible
Participants (as the case may be) in respect of the matters contained
in Rule 17.03 of the Listing Rules; and
(ii) any material alteration to the terms and conditions of the Share Option
Scheme or any change to the terms of options granted,
shall first be approved by our Shareholders in general meeting provided that if the
proposed alteration shall adversely affect any option granted or agreed to be
granted prior to the date of alteration, such alteration shall be further subject to
the grantees’ approval in accordance with the terms of the Share Option Scheme.
The amended terms of the Share Option Scheme shall still comply with Chapter 17
of the Listing Rules and any change to the authority of the Board in relation to
any alteration to the terms of the Share Option Scheme must be approved by
Shareholders in general meeting.
(v) Cancellation of Options
Subject to paragraph (i) above, any cancellation of options granted but not
exercised must be approved by the grantees of the relevant options in writing. For
the avoidance of doubt, such approval is not required in the event any Option is
cancelled pursuant to paragraph (n).
(w) Termination of the Share Option Scheme
Our Company may by resolution in general meeting or the Board at any time
terminate the Share Option Scheme and in such event no further option shall be
offered but the provisions of the Share Option Scheme shall remain in force to the
extent necessary to give effect to the exerc ise of any option granted prior thereto
or otherwise as may be required in accordance with the provisions of the Share
Option Scheme. Options granted prior to such termination but not yet exercised at
the time of termination shall continue t o be valid and exercisable in accordance
with the Share Option Scheme.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 5–


--- page 661 ---
(x) Administration of the Board
The Share Option Scheme shall be subject to the administration of the Board
whose decision as to all matters arising in relation to the Share Option Scheme or
its interpretation or effect (save as otherwise provided herein) shall be final and
binding on all parties.
(y) Conditions of the Share Option Scheme
The Share Option Scheme is conditional on:
(i) the Stock Exchange granting the listing of and permission to deal in our
Shares which may fall to be issued pursuant to the exercise of options to
be granted under the Share Option Scheme;
(ii) the obligations of the Underwriters under the Underwriting Agreements
becoming unconditional (including, if relevant, as a result of the waiver
of any such condition(s)) and not being terminated in accordance with
the terms of the Underwriting Agreements or otherwise;
(iii) the commencement of dealings in our Shares on the Stock Exchange.
If the conditions in paragraph (y) above a re not satisfied within six calendar
months from the adoption date:
(i) the Share Option Scheme shall forthwith determine;
(ii) any option granted or agreed to be granted pursuant to the Share
Option Scheme and any offer of such a grant shall be of no effect; and
(iii) no person shall be entitled to any rights or benefits or be under any
obligations under or in respect of the Share Option Scheme or any
option granted thereunder.
(z) Disclosure in annual and interim reports
Our Company will disclose details of the Share Option Scheme in its annual
and interim reports including the number of options, date of grant, exercise price,
exercise period and vesting period during the financial year/period in the
annual/interim reports in accordance with the Listing Rules in force from time
to time. We will also disclose in the remun eration report or corporate governance
report a summary of material matters re lating to the Share Option Scheme that
were reviewed and approved by the remuneration committee during the financial
year.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 6–


--- page 662 ---
(aa)Present status of the Share Option Scheme
As at the Latest Practicable Date, no option had been granted or agreed to be
granted under the Share Option Scheme.
Application has been made to the Stock Exchange for the listing of and
permission to deal in our Shares which may fall to be issued pursuant to the
exercise of the options to be granted under the Share Option Scheme, being
51,562,500 Shares in total.
2. Pre-IPO Share Option Scheme
The following is a summary of the principal terms of the Pre-IPO Share Option
Scheme conditionally approved and adopted by the written resolution of the
Shareholders passed on 9 October 2023.
(a) Purpose
The Pre-IPO Share Option Scheme is to enable the Company to grant options
to Pre-IPO Eligible Participants (as defin ed in sub-paragraph (b)) as incentives or
rewards for their contribution or potential contribution to any member of our
Group.
(b) Who may join
The Board may at its discretion grant options to persons who satisfy the
following eligibility criteria (‘‘ Pre-IPO Eligible Participant(s) ’’):
(i) any full-time employee, administrative personnel, and senior staff of our
Group;
(ii) any director (including non-executive director and independent
non-executive director) of our Group; and
(iii) any other eligible person who, in the discretion of our Board, has made
contributions or will make contributions to our Group.
(c) Maximum number of Shares
The maximum number of Shares in respect of which options may be granted
under the Pre-IPO Share Option Scheme is 38,671,875 Shares.
(d) Price of Shares
The exercise price per Share in respect of any particular option granted under
the Pre-IPO Share Option Scheme is 50% of the Offer Price.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 7–


--- page 663 ---
(e) Grant of options
Our Board shall have the authority but shall not be bound at any time of any
business day within 120 days on or after the adoption date of the Pre-IPO Share
Option Scheme (both days inclusive) to grant options to any Pre-IPO Eligible
Participant as our Board may at the absolute discretion. Each grant of options
shall be made to a Pre-IPO Elig ible Participant (the ‘‘ Grantee ’ ’ )i ns u c hf o r ma s
our Board may from time to time determine (the ‘‘ Grantee Letter ’’). For the
avoidance of doubt, no option shall be granted under the Pre-IPO Share Option
Scheme on or after the Listing Date.
An offer shall be deemed to have been accepted when the duplicate letter
comprising acceptance of the offer is duly signed by the Grantee, together with a
remittance in favour of our Company of RMB1.00 by way of consideration for the
grant thereof, is received by our Company. Such remittance shall not be
refundable.
To the extent that the offer is not accepted within 30 days from the offer date
in accordance with (e) above, it will be d eemed to have been irrevocably declined.
(f) Rights are personal to Grantee
An option is personal to the Grantee and shall not be assignable and no
Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any
interest (legal or beneficial) in favour of any third party over or in relation to any
option or attempt to do so (save that the Grantee may nominate a nominee in
whose name the Shares issued pursuant to the Pre-IPO Share Option Scheme may
be registered).
(g) Exercise of options
An option may be exercised according to the terms of the Pre-IPO Share
Option Scheme in whole or in part by the Grantee after vesting but before the
expiry of five years after the grant date (‘‘ Exercisable Period ’’) by giving notice in
writing to our Company stating that the option is to be exercised and the number
of Shares in respect of which it is exercised, provided that the conditions which
our Board may in its absolute discretion to consider, including without limitation
any performance target and personal asse ssment indicator (if any) as set out in the
Grant Letter are satisfied and the number of Shares shall be equal to the size of a
board lot for dealing in Shares on the Stock Exchange or an integral number
thereof. The Grantee shall also fully pay to our Company the exercise price in
Hong Kong dollars in immediately available funds. Within 28 days after receipt of
the notice and the relevant payment amoun t, and (where applicable) receipt of the
auditors of our Company’s or independent financial adviser’s certificate under
sub-paragraph (k), our Company shall allot and issue the relevant Shares to the
Grantee credited as fully paid and issue to the Grantee.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 8–


--- page 664 ---
(h) Vesting
Subject to the terms of Pre-IPO Share Option Scheme, the options granted
should be subject to the following vesting conditions:
(i) the conditions which our Board may in its absolute discretion to
consider, including without limitation any performance target and
personal assessment indicator;
(ii) the options granted to the Grantees will be vested in the Grantee based
on the following rates provided that the conditions in paragraph (h) (i)
above are satisfied in the relevant financial year:
. 20% of the total number of the share options will be vested in the
financial year of the Listing Date;
. 20% of the total number of the share options will be vested in the
financial year immediately following the Listing Date;
. 20% of the total number of the share options will be vested in the
second financial year after the Listing Date;
. 20% of the total number of the share options will be vested in the
third financial year after the Listing Date; and
. 20% of the total number of the share options will be vested in the
fourth financial year after the Listing Date.
(iii) if the vesting conditions in parag raph (h)(i) above have not been fulfilled
during the relevant financial year, t he corresponding percentage of the
share options granted will lapse;
(iv) subject to the compliance with the terms of the Pre-IPO Share Option
Scheme, in respect of exercising of options, the Grantee may exercise the
option at any time during the Exercisable Period after the vesting date
for such share options, however:
. if a general offer by way of voluntary offer or takeover, schemes of
arrangement or otherwise is made to all the Shareholders (other
than the offeror and/or any person c ontrolled by the offeror and/or
any person acting in association or concert with the offeror) and
such offer becomes or is declared unconditional, our Company
shall forthwith notify all the Grantees and any Grantee (or his/her
personal representatives) that th ey may by notice in writing to our
Company within 14 days after such offer becoming or being
declared unconditional exercise the option to its full extent or to
extent specified in such notice;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3 9–


--- page 665 ---
. in the event of a compromise or arrangement between our
Company and its members and/or creditors is proposed for the
purpose of or in connection with a scheme for the reconstruction of
our Company or its amalgamation with any other company or
companies, our Company shall give notice thereof to all Grantees
on the same day as it first gives notice of the meeting to its members
and/or creditors to consider such a scheme or arrangement and the
Grantee may at any time by 12 : 00 noon (Hong Kong time) on the
business day immediately prior to the date of the meeting held by
relevant court in relation to su ch compromise or arrangement
exercise all or any of his/her options; and
. a notice is given by our Company to its members to convene a
general meeting for the purposes of considering, and if thought fit,
approving a resolution to voluntarily winding-up our Company,
our Company shall on the same date as or soon after it dispatches
such notice to each member of our Company give notice thereof to
all Grantees (together with a notice of the existence of the
provisions of this paragraph) and thereupon, each Grantee (or
his/her personal representatives) shall be entitled to exercise all or
any of his/her options at any time not later than two business days
prior to the proposed general meeting of our Company by giving
notice in writing to our Company, accompanied by a remittance of
the full amount of the aggregate exercise price for the Shares in
respect of which the notice is given whereupon our Company shall
as soon as possible and, in any event, no later than the business day
immediately prior to the date of the proposed general meeting
referred to above, allot the relevant Shares to the Grantee credited
as fully paid.
(i) Ranking of Shares
The Shares to be allotted upon the exercise of an option will not carry voting
rights until completion of the registration of the Grantee (or any other person
nominated by the Grantee) as the holder thereof. Subject to the aforesaid, Shares
issued and allotted on the exercise of options will rank pari passu and shall have
the same voting, dividend, transfer and other rights, including those arising on
liquidation as attached to the other fu l l y - p a i dS h a r e si ni s s u eo nt h ed a t eo f
exercise, save that they will not rank for any dividend or other distribution
declared or recommended or resolved to be paid or made by reference to a record
date falling on or before the date of allotment.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 0–


--- page 666 ---
(j) Lapse of options
An option shall lapse automatically and not be exercisable, to the extent not
already exercised, on the earliest of:
(i) the date of lapse referred to in sub-paragraph (h)(iii) above;
(ii) the expiry of Exercisable Period in respect of any vested but unexercised
share option;
(iii) the expiry of each of the periods referred to in sub-paragraph (h)(iv)
above (in respect of any unexercised option);
(iv) the date of the commencement of the winding-up of our Company;
(v) the date of termination of employment (which should be the last actual
working day at any member of our Group, and no matter whether the
payment in lieu of notice has been made), if the Grantee is a director or
an employee of our Group who for any reason ceases to be employed by
our Group, or for any reason changes his/her current positions and fails
to meet the conditions for exercise his/her options;
(vi) the date of Grantee’s retirement, death or lo ss of capacity to work;
(vii) the date on which the Grantee commits a breach of paragraph (f) and
our Board exercises our right to cancel the option;
(viii) the date on which the Grantee violates the law, violates professional
ethics, divulges our confidential information and other official
misconducts that severely damage our interests and reputation; or
(ix) the date on which our Board, at its discretion, cancels any options
granted but not yet exercised by the Grantee.
(k) Effect of alteration in share
In the event of any alteration in the capital structure of our Company
including a capitalisation issue, rights issue, open offer, subdivision, or
consolidation or reduction of the share capital of our Company (other than an
issue if any share capital as consideration in respect of a transaction), such
corresponding adjustments (if any) shall be made to:
(i) the number of Shares subject to any unexercised option; and/or
(ii) the exercise price.
The auditors or the independent financial advisor engaged by our Company
shall certify in writing to our Board that such adjustments are in their opinion fair
and reasonable.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 1–


--- page 667 ---
Any such adjustments shall give each participant the same proportion of the
equity capital of our Company for which such participant was entitled to
subscribe for prior to such adjustments, and any adjustments to the advantage of
the participants to the exercise price or to the number of Shares subject to the
options must be approved by the Sharehold ers in general meeting. No adjustment
may be made to the extent that Shares would be issued at less than their nominal
value.
(l) Alteration of the Pre-IPO Share Option Scheme
The Pre-IPO Share Option Scheme may be altered in any respect by
resolution of our Board at its discretion.
(m) Termination of the Pre-IPO Share Option Scheme
We may by resolution in general meeting or our Board at any time terminate
the Pre-IPO Share Option Scheme and in such event no further option shall be
offered but the provisions of the Pre-IPO Share Option Scheme shall remain in
force to the extent necessary to give effect to the exercise of any option granted
prior thereto or otherwise as may be required in accordance with the provisions of
the Pre-IPO Share Option Scheme.
(n) Administration of our Board
The Pre-IPO Share Option Scheme shall be subject to the administration of
our Board whose decision as to all matters ar ising in relation to the Pre-IPO Share
Option Scheme or its interpretation or effect (except as otherwise provided herein)
shall be final and binding on all parties.
(o) Disclosure in annual and interim report
We will disclose details of the Pre-IPO Share Option Scheme in our annual
and interim reports in accordance with the Listing Rules in force from time to
time.
(p) Summary of Grantees
On 18 October 2023, options to subscribe an aggregate of 38,199,000 Shares
were granted to a total of 213 Grantees, representing approximately 7.41% of the
issued share capital of our Company immediately following the completion of the
Global Offering, taking no account of Shares which may be issued pursuant to the
exercise of the Over-allotment Option or Shares which may be issued upon the
exercise of options granted under the Pre-IPO Share Option Scheme and options
which may be granted under the Share Option Scheme. As at the Latest
Practicable Date, no option granted und er the Pre-IPO Share Option Scheme had
been exercised. The Company will not grant further options under the Pre-IPO
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 2–


--- page 668 ---
Share Option Scheme after the Listing. Details of the options granted to our (i)
Directors and senior management, (ii) co nnected persons, (iii) other grantees of
our Group entitling them to subscribe for not less than 150,000 Shares, and (iv)
other grantees who have been granted options to subscribe for an aggregate of
38,199,000 Shares under the Pre-IPO Share Option Scheme are set out below:
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Director and senior management
Mr. Huang Chairman, chief
executive officer and
executive Director
Room 3106, Building 10,
Taihejinzun Garden 1,
165 Yangtouwei Road
Yuefeng Zhen, Jin’an
District, Fuzhou, Fujian
Province, PRC
0.603 18 October
2023
Note 5 1.00 3,819,900 0.74% Note 6
Ye Fuwei Executive Director and
executive vice president
Room 4602, Shiouwangzhuang
B, 2 Jinlian Road, Jin’an
District, Fuzhou, Fujian
Province, PRC
0.603 18 October
2023
Note 5 1.00 3,809,100 0.74% Note 6
Zhang Jinghua Executive Director,
senior vice president
and financial controller
Baima Garden 10–406,
17 Baimazhong Road,
Shanghai Jiedao, Taijiang
District, Fuzhou, Fujian
Province, PRC
0.603 18 October
2023
Note 5 1.00 1,000,000 0.19% Note 6
Connected persons
Ye Ying ( 葉影) Vice president and legal
manager of XXF
Group and director of
Taoqi Internet
Unit 602, Block 7,
28 Cangshanqu Xiaoxiang,
Fuzhou, Fujian Province,
PRC
0.603 18 October
2023
Note 5 1.00 1,800,000 0.35% Note 6
Qiu Guohu
(邱國虎)
Vice president of XXF
Group and director of
Fujian Xidun
82 Qiujiacun, Jiangbu
Township, Yugan County,
Shangrao, Jiangxi Province,
PRC
0.603 18 October
2023
Note 5 1.00 800,000 0.16% Note 6
Ye Song ( 葉松) Vice president of XXF
Group and director of
Taizhou Xidi
Unit 604, Block 19,
Wenhua Xiaoqu,
18 Changchun-hou Road,
Jin’an District, Fuzhou,
Fujian Province, PRC
0.603 18 October
2023
Note 5 1.00 600,000 0.12% Note 6
He Xiaowu
(何曉武)
(Note 3)
Manager of second-hand
automobiles
department of XXF
Group
22 Chaoyang Street, Xiaoyang
Village, Xiaoyang Town,
Fu’an, Fujian Province,
PRC
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 3–


--- page 669 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Yang Jiabin
(楊佳斌)
Supervisor and vice
president of marketing
of XXF Group,
supervisor of Taoqi
Internet and Fujian
Qoocar
Unit 708, Block 1, Bailian
Huayuan, 246 Shang San
Road, Cang Shan District,
Fuzhou, Fujian Province,
PRC
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Other grantees with entitlement of not less than 150,000 Shares upon full exercise of options granted to them
Chen Yilin
(陳益林)
Vice President of IT
Center
Room 603, Building 3, No. 83,
Changle North Road, Jin’an
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 1,820,000 0.35% Note 6
Liu Guangyao
(劉光耀)
Vice President of Supply
Chain Center
No. 51, North Moucheng
Road, Yanzhou District,
Jining City, Shandong
Province
0.603 18 October
2023
Note 5 1.00 600,000 0.12% Note 6
Chen Xiong
(陳雄 )
Vice President of Risk
Control Center
Unit 203, Tower 5, Fuxing
Great Wall Garden, No. 95
Qianheng Road, Gushan
Town, Jin’an District,
Fuzhou City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 500,000 0.10% Note 6
Lin Yanfeng
(林炎峰)
Vice President of
Business Support
Center
Unit 404, Tower 1, No. 97
Guanglufang, Gulou
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 500,000 0.10% Note 6
Lin Yi ( 林藝) Director of Finance BP
Department of
Business Support
Department (Finance)
Room 403, Building 5, Huifu
Garden, Fuzhou City
0.603 18 October
2023
Note 5 1.00 250,000 0.05% Note 6
Hou Yanping
(侯
豔萍)
Accounting Manager at
Accounting and
Management
Department
No. 92, Fengmei Piece, Shilin
Village, Jintao Town,
Nan’an City, Quanzhou,
Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
You Dong
(游冬)
Securities Affairs
Representative
(Director) of Securities
Affairs Department
Fuzhou Talent Reserve Center,
No. 6 Jinhuan Road,
Cangshan District, Fuzhou
City, Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Zheng Yi
(鄭義)
Vice President of Field
Service of Field
Department
No. 3, Duwu, Yongfeng
Village, Jingxi Town,
Minhou County, Fuzhou
City, Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 4–


--- page 670 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Jiang Ming
(江明)
Field Director of Field
Department
Room 606, Building B,
Jinshan New Village, No.
369 Wangqijing, Mawei
Town, Mawei District,
Fuzhou City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Lu Mingmin
(盧明敏)
Field Director of Field
Department
N o .9 ,X i n y a n g ,T o n g y a n g
Village, Qingyuan Township,
Shouning County, Fujian
Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Zhou Yi ( 周毅) Vice President of Supply
Chain Center of
Ministry of Finance
Qinyuanchun, No. 1, Denglong
Branch Road, Mawei
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Ye Jian ( 葉健) Governor of North
China Region of
Financial Leasing
Business Management
Department
No. 36, Tanghou Village,
Renshou Town, Shunchang
County, Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Yu Jianai
(于建愛)
Head of western region
of Financial Leasing
Business Management
Department
No. 12, Yuyang, Huayang
Village, Zhongxian, Youxi
County, Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Wu Gaowen
(吳高文)
Vice President of Sales
of Rental and Sales
Operation Management
Department
No. 37, Mowu Village,
Shunchang County, Nanping
City, Fujian Province
0.603 18 October
2023
Note 5 1.00 200,000 0.04% Note 6
Chen Ruiqiong
(陳瑞瓊 )
Cost Audit Director of
Cost Audit Team
No. 153, Qianheng South
Road, Gushan Town, Jin’an
District, Fuzhou City
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Chen Yixiang
(陳懿祥)
Director of Brand
Operations Department
Boao City, No. 3 Ninghua
Road, Taijiang District,
Fuzhou City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Lin Lezhu
(林樂助)
HR Director of Human
Resources Department
No. 133, Yangchun Village,
Wushan Town, Datian
County, Sanming City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Wu Weijie
(吳洧傑)
Store manager of
Financial Leasing
Business Management
Department
No. 8, Zhongyao, Jinshan
Village, Jukou Town,
Jianyang City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 5–


--- page 671 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Lu Xi ( 呂希)S t o r e m a n a g e r o f
Financial Leasing
Business Management
Department
No. 122, Group 4, Tianxin
Village, Matouqiao
Township, Xinning County,
Hunan Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Xie Junyao
(謝俊堯)
Store manager of
Financial Leasing
Business Management
Department
No. 260, Wusi Road, Gulou
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Lin Daohu
(林道虎)
Store manager of
Financial Leasing
Business Management
Department
No. 82, Xiacun Old Street,
Xiaxiang Road, Pingnan
County, Fujian Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Qi Zhongkui
(齊忠魁)
Director of Operations
Management
Department Rental
and Sales Operation
Management
Department
No. 32, Qi’an, Qi’an Village,
Gaishan Town, Cangshan
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Zhang
Guolang
(張國浪)
East China Region
Director of Rental and
Sales Operation
Management
Department
No. 60, Erfang Village,
Legang Town, Leping City,
Jiangxi Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Li Yongji
(李永繼)
Asset Operations
Director of Asset
Operation Department
No. 4/615, Yijin Huating,
Yangqiao East Road, Gulou
District
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Chen Shihai
(
陳仕海)
Vice President of User
Operations Center of
User Operation
Department
No. 15, Huancun Road,
Guanjiang Village, Chengxi
Street, Gutian County,
Fujian Province
0.603 18 October
2023
Note 5 1.00 180,000 0.03% Note 6
Niu Jun ( 牛軍)S t o r e m a n a g e r o f
Financial Leasing
Business Management
Department
No. 41, Zhangheshe, Gaoling
Village, Zhongchuan
Township, Huining County,
Gansu Province
0.603 18 October
2023
Note 5 1.00 160,000 0.03% Note 6
Lin Xiuhua
(林秀花)
Treasury Manager of
Fund Management
Department
N o .2 ,L a n k o uV i l l a g e ,
Lankou Village, Xiazhu
Township, Minqing County,
Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Lin Lei ( 林磊) Tax director of Tax
Administration
Department
N o .1 ,Z h a n j i nR o a d ,
Cangshan District, Fuzhou
City, Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Lan Xin ( 蘭鑫) Data Group Director of
Central data group
No. 110, Futai, Chengbei
S t r e e t ,F u ’ a nC i t y ,F u j i a n
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 6–


--- page 672 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Xie Zuzhi
(謝祖枝)
Risk Control Operations
Director of Operation
and Maintenance
Department
No. 60, Qian Street, Wuyi
New Village, Taijiang
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Yang
Chengdong
(楊成棟)
Key Group Manager of
Risk Control
Technology
Department
Unit 104, Tower 2, No. 9 Gule
Road, Gulou District,
Fuzhou City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Xu Chenhui
(許晨暉 )
Risk Control Outreach
Director of External
Relations Department
Room 802, Building 3,
Guixiangyuan, No. 1
Kangshan Road, Jin’an
District, Fuzhou City
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Chen Nengjie
(陳能傑)
Field Manager of Field
Department
No. 26, Tianfu, Tianfu Village,
Luozhou Town, Cangshan
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zheng Yu
(鄭雨)
Field Manager of Field
Department
No. 17, Gewei, Mingdeng
Village, Wutong Town,
Yongtai County, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Huang
Xiaoyong
(黃小勇)
Field Manager of Field
Department
Gaotang Formation, Jinpen
Village, Bailin Town,
Yongxing County, Hunan
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zheng Yanping
(
鄭豔萍)
Director of Insurance
Department
No. 40 Yanhe Road, Kouqian
Village, Pushang Town,
Shunchang County, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Chen Songsong
(陳嵩松)
Director of Purchasing
Department
No. 57, Tianfu, Tianfu Village,
Luozhou Town, Cangshan
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Xie Qiujin
(謝秋錦)
Business group director
of Ministry of Finance
No. 16, Huangdun, Datian
Village, Xushi Town,
Jianyang City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Li Yuan ( 李園) Compensation
Performance Manager
of Human Resources
Department
No. 8, Group 4, Xiaotang
Village, Yuanbao Township,
Lichuan City, Hubei
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zhu Xiongwei
(朱雄偉)
Store manager of
Financial Leasing
Business Management
Department
No. 083, Xucun West District,
Desert Retreat Office,
Huozhou City, Shanxi
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 7–


--- page 673 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Huang Jie
(黃傑)
Store manager of
Financial Leasing
Business Management
Department
N o .8 ,W e i m i nR o a d ,Z h e n g h e
County, Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Chen Lingyun
(陳淩雲)
Store manager of
Financial Leasing
Business Management
Department
No. 008, Team 6, Luotai
Branch, Jianghu Farm,
Tianmen City, Hubei
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Fang Ping
(方萍)
Store manager of
Financial Leasing
Business Management
Department
No. 18, Xinjian Road,
Fangcuo Village, Luolian
Township, Changle District,
Fuzhou, Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Hu Rui ( 胡睿) South China Region
Director of Rental and
Sales Operation
Management
Department
N o .2 ,3 r dF l o o r ,N o .1 8 3 ,
Hannan Village, Hanyang
District, Wuhan City
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zhang
Shengren
(張聖仁)
Ningbo City Manager of
Rental and Sales
Operation Management
Department
Xingshan Village, Yugou
T o w n ,L i n g b iC o u n t y ,
Suzhou City, Anhui
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Liu Jiliang
(劉際良)
Business Security Group
Manager of Rental and
Sales Operation
Management
Department
Unit 406, Building 181,
Residential Theme Park, No.
233, Shanbei Road, Xindian
Town, Jin’an District,
Fuzhou City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Xu Yan ( 徐豔) North China Region
Director of Rental and
Sales Operation
Management
Department
No. 260, Wusi Road, Gulou
District, Fuzhou City,
Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zeng Haiyan
(曾海燕)
Platform operations
manager of Asset
Operation Department
63 Zengcuolong, Cunqian
Village, Mabi Town,
Lianjiang County, Fuzhou
City, Fujian Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Li Tian ( 李甜) Headquarters
Administrative
Professional Manager
of Business Support
Department
No. 99, Yutang Village,
Youcheng Township, Poyang
County, Shangrao City,
Jiangxi Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Liu Yibo
(劉宜波)
Business Support
Director of Business
Support Department
No.2, Longgong Hengkeng
Village, Baizhang Town,
Minqing County, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 8–


--- page 674 ---
Grantee
Position/Relationship with
our Company Address
Exercise Price
(HK$ per
option)
Date of
grant
Exercise
Period
Consideration
paid (RMB)
Number of Shares
underlying the
options granted
immediately
following the
completion of the
Global Offering
Approximate
percentage of
enlarged issued
capital of our
Company
immediately after
completion of the
Global Offering
Vesting
schedule
(Note 1) (Note 2)
Lin Qiong
(林瓊)
Violation Management
Director of User
Operation Management
Department
No. 64, Xinqiao, Xinqiao
Village, Dongqiao Town,
Minqing County, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Ai Qing ( 艾青)D i r e c t o r o f U s e r
Operations Department
No. 39, Wudubian, Xiasha
Village, Xiasha Town,
Shaowu City, Fujian
Province
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Zhang
Fangning
(張芳寧)
Director of External
Affairs
Qilin Garden, No. 150,
Jinkang Road, Cangshan
District, Fuzhou City
0.603 18 October
2023
Note 5 1.00 150,000 0.03% Note 6
Other grantees with entitlement of 100,001–149,999 Shares upon full exercise of options granted to them
Other 21
grantees
(Note 4)
0.603 18 October
2023
Note 5 1.00 2,520,000 0.49% Note 6
Other grantees with entitlement of 80,001–100,000 Shares upon full exercise of options granted to them
Other 70
grantees
(Note 4)
0.603 18 October
2023
Note 5 1.00 7,000,000 1.36% Note 6
Other grantees with entitlement of no more than 80,000 Shares upon full exercise of options granted to them
Other 61
grantees
(Note 4)
0.603 18 October
2023
Note 5 1.00 4,840,000 0.94% Note 6
Notes:
1. Based on the mid-point Offer Price range.
2. Calculated based on 515,625,000 Shares in i ssue immediately after completion of the
Global Offering (taking no account of Shares which may be issued pursuant to the
exercise of the Over-allotment Option or Shares which may be issued upon the exercise
of options granted under the Pre-IPO Share Option Scheme and options which may be
granted under the Share Option Scheme).
3. He Xiaowu is an associate of Mr. Huang, the chairman, chief executive officer and an
executive Director of our Company.
4. The grantees are neither (i) Directors, (ii) members of the senior management of our
Company nor (iii) connected persons of our Company, and each of such employees had
been granted less than 150,000 options. All of these options rema in outstanding and
unexercised, and will be exercisable in a ccordance with their vesting schedules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4 9–


--- page 675 ---
5. The exercise period of the options granted to the Grantees shall be five years from the
respective vesting date of the relevant options.
6. The options granted to the Grantees will be vested in the Grantee in the following
manners and in accordance with the following vesting schedule provided that the vesting
conditions determined by the Board are satis fied in the relevant financial year: (i) 20%
of the total number of the share options granted will be vested in the financial year of
the Listing Date; (ii) 20% of the total number o f the share options granted will be vested
in the financial year immediately following the Listing Date; (iii) 20% of the total
number of the share options granted will be ves ted in the second financial year after the
Listing Date; (iv) 20% of the total number of t he share options granted will be vested in
the third financial year after the Listing Date; and (v) 20% of the total number of the
share options granted will be vested in the f ourth financial year after the Listing Date.
For further details of the vesting conditi ons and vesting schedule under the Pre-IPO
Share Option Scheme, please refer to the paragraph headed ‘‘Statutory and General
Information — D. Other Information — 2. Pre-IPO Share Option Scheme — (h)
Vesting’’ in this Appendix.
Assuming the full exercise of the options granted under the Pre-IPO Share
Option Scheme, the dilution effect on the shareholding of the Shareholders and
earnings per Share immediately after the completion of the Global Offering
(assuming that the Over-allotment O ption is not exercised) would be
approximately 6.90%.
Application has been made to the Stock Exchange for the listing of and
permission to deal in the 38,199,000 Shares that were granted and will be allotted
and issued pursuant to the Pre-IPO Share Option Scheme.
3. Tax and other indemnities
Mr. Huang has entered into a Deed of Indemnity in favour of our Company (for
itself and as trustee for its subsidiaries) (be ing the contract referred to in paragraph (f)
of the section headed ‘‘B. — Information about our business — 1. Summary of material
contracts’’ above) to provide indemnities in respect of, among other matters, (i)
taxation resulting from income, profits or gains earned, accrued or received to which
any member of our Group may be subject on or before the date on which dealings in
the Shares first commence on the Main Board ; and (ii) any claims, penalties or other
indebtedness resulting from any non-compliance incidents by any Group member on or
before the date on which dealings in the Sha res first commence on the Main Board and
also those disclosed in the paragraphs headed ‘‘Business — Legal Compliance —
Non-compliance’’ and ‘‘Business — Properties — Leased Properties’’ in this
prospectus.
4. Litigation
Save as disclosed in the section headed ‘‘Business — Legal proceedings’’ as at the
Latest Practicable Date, we were not aware of any other litigation or arbitration
proceedings of material importance pending or threatened against us or any of our
Directors that could have a material adverse effect on our financial condition or results
of operations.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5 0–


--- page 676 ---
5. Sole Sponsor
The Sole Sponsor has made an application on behalf of our Company to the Stock
Exchange for the listing of, and permission to deal in, the Shares in issue and to be
issued as mentioned in this prospectus (including any Shares which may be issued
pursuant to the exercise of the Over-allotment Option and any Shares which may be
issued upon the exercise of any options granted under the Pre-IPO Share Option
Scheme and options which may be granted under the Share Option Scheme).
The Sole Sponsor satisfies the independence criteria applicable to sponsors as set
out in Rule 3A.07 of the Listing Rules despite the previous financing relationship
between the Group and a fellow subsidiary of the Sole Sponsor as further disclosed in
the section headed ‘‘Underwriting’’. The m aximum amount of the Facility relative to
the total assets value of the Group or the Sole Sponsor group was far less than the
relevant specific threshold set out under Rule 3A.07 of the Listing Rules. Based on the
aforesaid, the Sole Sponsor is considered to be independent as it can satisfy the
independence criteria set out under Rule 3A.07(5) and Rule 3A.07(6) of the Listing
Rules.
The Sole Sponsor’s fees are approximately HK$6.3 million and are payable by our
Company. The Sole Sponsor also received HK$200,000 from our Company as financial
advisory fees prior to the engagement as sponsor.
6. Preliminary Expenses
The preliminary expenses incurred and paid by our Company were approximately
US$5,615.
7. Promoter
The Company has no promoter for the purpose of the Listing Rules. Within the
two years immediately preceding the date of this prospectus, no cash, securities or
other benefit has been paid, allotted or giv en nor are any proposed to be paid, allotted
or given to any promoters in connection with the Global Offering and the related
transactions described in this prospectus.
8. Taxation of holders of Shares
(a) Hong Kong
The sale, purchase and transfer of Shares registered with our Company’s
Hong Kong branch register of members will be subject to Hong Kong stamp duty,
the current rate charged on each of the purchaser and seller is 0.1% of the
consideration of, if higher, of the fair value of the Shares being sold or
transferred. Profits from dealings in the Shares arising in or derived from Hong
Kong may also be subject to Hong Kong profits tax. Our Directors have been
advised that no material liability or estate duty under the laws of China or Hong
Kong would be likely to fall upon any member of our Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5 1–


--- page 677 ---
(b) Cayman Islands
Under the present Cayman Islands law, there is no stamp duty payable in the
Cayman Islands on transfers of Shares.
(c) Consultation with professional advisers
Intending holders of the Shares are recommended to consult their
professional advisers if they are in doubt as to the taxation implications or
subscribing for, purchasing, holding or d isposing of or dealing in the Shares. It is
emphasised that none of our Company, our Directors or the other parties
involved in the Global Offering can accept r esponsibility for any tax effect on, or
liabilities of, holders of Shares resulting from their subscription for, purchase,
holding or disposal of or dealing in Shares or exercise of any rights attaching to
them.
9. Qualification of Experts
The following are the qualifications of the experts who have given opinion or
a d v i c ew h i c ha r ec o n t a i n e di nt h i sp r o s p e c t u s :
Name Qualifications
Quam Capital Limited A corporation licensed under the SFO to
engage in Type 1 (dealing in securities) and
Type 6 (advising on corporate finance)
regulated activities
Beijing Dacheng Law Offices,
LLP (Shanghai)
Legal advisers to our Company as to PRC
law
PricewaterhouseCoopers Certified public accountants under
Professional Accountant Ordinance (Cap.
50) and Registered Public Interest Entity
Auditor under Accounting and Financial
Reporting Council Ordinance (Cap. 588)
Conyers Dill & Pearman Cayman Islands attorneys-at-law
China Insights Industry
Consultancy Limited
Independent industry consultant
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5 2–


--- page 678 ---
10. Consents of Experts
Each of the experts named in ‘‘— D. Other information — 9. Qualification of
Experts’’ in this Appendix has given and has not withdrawn its respective written
consent to the issue of this prospectus with the inclusion of its report and/or letter
and/or opinion and/or the references to its name included herein in the form and
context in which it is respectively included.
11. Interests of Experts in our Company
None of the persons named in ‘‘— D. Other information — 9. Qualification of
Experts’’ in this Appendix is interested beneficially or otherwise in any Shares or shares
of any member of our Group or has any right or option (whether legally enforceable or
not) to subscribe for or nominate persons to subscribe for any shares or securities in
any member of our Group.
12. Binding Effect
This prospectus shall have the effect, if an application is made in pursuance
hereof, of rendering all persons concerned bound by all of the provisions (other than
the penal provisions) of sections 44A and 44B of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance so far as applicable.
13. Miscellaneous
(a) Within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of our subsidiaries has
been issued or agreed to be issued or is proposed to be fully or partly
paid either for cash or a consideration other than cash;
(ii) no share or loan capital of our Company or any of our subsidiaries is
under option or is agreed conditionally or unconditionally to be put
under option;
(iii) no commissions, discounts, brokerages or other special terms have been
g r a n t e do ra g r e e dt ob eg r a n t e di nc o n n e c t i o nw i t ht h ei s s u eo rs a l eo f
any share or loan capital of our Company or any of our subsidiaries;
and
(iv) no commission has been paid or is payable for subscription, agreeing to
subscribe, procuring subscription or agreeing to procure subscription of
any share in our Company or any of our subsidiaries;
(b) there are no founder, management or deferred shares nor any debentures in
our Company or any of our subsidiaries;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5 3–


--- page 679 ---
(c) our Directors confirm that there has been no material adverse change in the
financial or trading position or prospects of our Group since 30 June 2023
(being the date which the latest audited consolidated financial information of
our Group were made up);
(d) there has not been any interruption in the business of our Group which may
have or has had a significant effect on the financial position of our Group in
the 12 months preceding the date of this prospectus;
(e) the principal register of members of our Company will be maintained in the
Cayman Islands by Conyers Trust Company (Cayman) Limited and a branch
register of members of our Company will be maintained in Hong Kong by
Computershare Hong Kong Investor Services Limited. Unless our Directors
otherwise agree, all transfer and other documents of title of Shares must be
lodged for registration with and registered by our Hong Kong Share
Registrar and may not be lodged in the Cayman Islands. All necessary
arrangements have been made to enable the Shares to be admitted to CCASS;
( f ) n oc o m p a n yw i t h i no u rG r o u pi sp r e s e n t l yl i s t e do na n ys t o c ke x c h a n g eo r
traded on any trading system;
(g) our Directors have been advised th at under Cayman Islands law the use of a
Chinese name by our Company in conjunction with our English name does
not contravene Cayman Islands law;
(h) our Company has no outstanding convertible debt securities or debentures;
(i) there is no arrangement under which future dividends are waived or agreed to
be waived; and
(j) there is no restriction affecting the remittance of profits or repatriation of
capital by us into Hong Kong from outside Hong Kong.
14. Bilingual Prospectus
The English and Chinese language versions of this prospectus are being published
separately, in reliance upon the exempti on provided by section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5 4–


--- page 680 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) a copy of the GREEN Application Form;
(b) the written consents referred to in ‘‘S tatutory and General Information — D.
Other information — 10. Consents of Experts’’ in Appendix IV to this prospectus;
and
(c) a copy of each of the material contracts referred to in ‘‘Statutory and General
Information — B. Information about our business — 1. Summary of material
contracts’’ in Appendix IV to this prospectus.
DOCUMENTS AVAILABLE ON DISPLAY
The following documents will be published on the website of the Stock Exchange at
www.hkexnews.hk and our website at www.xxfqc.com up to and including the date which is
14 days from the date of this prospectus:
(a) the Memorandum of Association and the Articles;
(b) the Accountant’s Report from PricewaterhouseCoopers, the text of which is set
out in Appendix I to this prospectus;
(c) the report from PricewaterhouseCoopers in respect of the unaudited pro forma
financial information, the text of which is set out in Appendix II to this
prospectus;
(d) the audited consolidated financial statements of our Group for the three financial
years ended 31 December 2022 and th e six months ended 30 June 2023;
(e) the PRC legal opinion issued by our PRC Legal Advisers, in respect of certain
general corporate matters and pro perty interests of our Group;
(f) the letter of advice from Conyers D ill & Pearman, our Cayman legal adviser,
summarising certain aspects of Cayma n Islands company law referred to in
‘‘Summary of the Constitution of our Company and Cayman Islands Company
Law’’ in Appendix III to this prospectus;
(g) the CIC Report;
(h) the Cayman Companies Act;
(i) the material contracts referred to in ‘ ‘Statutory and General Information — B.
Information about our business — 1. Summary of material contracts’’ in
Appendix IV to this prospectus;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND AVAILABLE ON DISPLAY
–V - 1–


--- page 681 ---
(j) the service agreements and letters of appointment with each of the Directors
referred to in ‘‘Statutory and General I nformation — C. Further information
about Directors and substantial sharehol ders — 1. Directors — (b) Particulars of
service agreements and letters of appointment’’ in Appendix IV to this prospectus;
(k) the written consents referred to in ‘‘S tatutory and General Information — D.
Other information — 10. Consents of Experts’’ in Appendix IV to this prospectus;
(l) the rules of the Share Option Scheme; and
(m) the rules of the Pre-IPO Share Option Scheme.
DOCUMENTS AVAILABLE FOR INSPECTION
A copy of a list of grantees under the Pre-IPO Share Option Scheme, containing all
details as required under the Listing Rules and the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, will be available for inspection at the office of
Dentons Hong Kong LLP at Suite 3201, Jardine House, 1 Connaught Place, Central, Hong
Kong, during normal business hours up to and including the date which is 14 days from the
date of this prospectus.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND AVAILABLE ON DISPLAY
–V - 2–


--- page 682 ---
(Incorporated in the Cayman Islands with limited liability)
Sole Sponsor
Sole Overall Coordinator, Sole Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers (in alphabetical order)
Stock code: 2473
