--- page 1 ---
Sole Sponsor
Overall Coordinators, Joint Global Coordinators, Joint Bookrunners
and Joint Lead Managers
Stock Code : 6657
(A joint stock company incorporated in the People’s Republic of China with limited liability)
百望股份有限公司
BAIWANG CO., LTD.
GLOBAL OFFERING


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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
BAIW ANG CO., LTD.
ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Total number of Offer Shares under
the Global Offering
: 9,262,000 H Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 926,200 H Shares (subject to reallocation)
Number of International Offer Shares : 8,335,800 H Shares (subject to reallocation
and the Over-allotment Option)
Maximum Offer Price : HK$40.00 per H 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 and subject
to refund on final pricing)
Nominal value : RMB1.00 per H Share
Stock code : 6657
Sole Sponsor
Overall Coordinators
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
Joint Lead Managers
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 h owsoever arising 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 in Hong Kong and Avai lable on Display” 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 an d Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong K ong take no
responsibility for the contents of this prospectus or any of the other documents referred to above. The Offer Price is expected to be fixed by agreement between the Sponsor-OC,
on behalf of the Underwriters, and our Company on or about Friday, July 5, 2024 or such later time as may be agreed between the parties, but in any event, no later than 12:00
noon on Friday, July 5, 2024. If, for any reason, the Sponsor-OC, on behalf of the Underwriters, and our Company are unable to reach an agreement on the Of fer Price by 12:00
noon on Friday, July 5, 2024, the Global Offering will not become unconditional and will lapse immediately.
The Sponsor-OC, on behalf of the Underwriters, may, with the consent of our Company, reduce the indicative Offer Price range below that stated in this p rospectus (being
HK$36.00 per H Share to HK$40.00 per H Share) at any time on or prior to the morning of the last date for lodging applications under the Hong Kong Public Off ering.
In such a case, notices of the reduction in the number of Hong Kong Offer Shares and/or the indicative Offer Price range will be published on the websites of the Stock
Exchange at www.hkexnews.hk and our Company at www.baiwang.com as soon as practicable but in any event not later than the morning of the day which is the last day
for lodging applications under the Hong Kong Public Offering. For further information, see the sections headed “Structure of the Global Offering” an d “How to Apply
for Hong Kong Offer Shares” in this prospectus.
Pursuant to the termination provisions contained in the Hong Kong Underwriting Agreement in respect of the Hong Kong Offer Shares, the Sponsor-OC on b ehalf of the Hong Kong
Underwriters, have the right in certain circumstances, in their absolute discretion, to terminate the obligation of the Hong Kong Underwriters purs uant to the Hong Kong
Underwriting Agreement at any time prior to 8:00 a.m. on the Listing Date. Further details of the terms of the termination provisions are set out in the s ection headed
“Underwriting—Underwriting Arrangements and Expenses—The Hong Kong Public Offering—Grounds for Termination.” It is important that you refer to t hat section for further
details.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may be offered and sold only
outside the United States in an offshore transaction in accordance with Regulation S under the U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus to the p ublic in relation
to the Hong Kong Public Offering.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk and our website at www.baiwang.com.
If you require a printed copy of this prospectus, you may download and print from the website addresses above.
IMPORTANT
June 28, 2024


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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 to the public
in relation to the Hong Kong Public Offering.
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.baiwang.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 through the White Form eIPO service at www.eipo.com.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian who
is a HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
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 prospectus 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 the section headed “How to Apply for Hong Kong Offer Shares” in
this prospectus for further details of the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT
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Y our application must be for a minimum of 100 Hong Kong Offer Shares and in one of
the numbers set out in the table. Y ou are required to pay the amount next to the number you
select.
BAIW ANG CO., LTD.
(HK$40.00 PER HONG KONG OFFER SHARE)
NUMBER OF HONG KONG OFFER SHARES
THAT MAY BE APPLIED FOR AND PAYMENTS
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
100 4,040.35 1,500 60,605.10 8,000 323,227.20 90,000 3,636,306.00
200 8,080.68 2,000 80,806.80 9,000 363,630.60 100,000 4,040,340.00
300 12,121.02 2,500 101,008.50 10,000 404,034.00 150,000 6,060,510.00
400 16,161.35 3,000 121,210.20 20,000 808,068.00 200,000 8,080,680.00
500 20,201.70 3,500 141,411.90 30,000 1,212,102.00 250,000 10,100,850.00
600 24,242.05 4,000 161,613.60 40,000 1,616,136.00 300,000 12,121,020.00
700 28,282.38 4,500 181,815.30 50,000 2,020,170.00 350,000 14,141,190.00
800 32,322.72 5,000 202,017.00 60,000 2,424,204.00 400,000 16,161,360.00
900 36,363.05 6,000 242,420.40 70,000 2,828,238.00 463,100
(1) 18,710,814.55
1,000 40,403.40 7,000 282,823.80 80,000 3,232,272.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and
Accounting and Financial Reporting Council (“ AFRC ”) transaction levy. If your application is successful,
brokerage will be paid to the Exchange Participants (as defined in the Listing Rules) and the SFC transaction
levy, the Stock Exchange trading fee and AFRC transaction levy are paid to the Stock Exchange (in the case
of the SFC transaction levy and in the case of the AFRC transaction levy, collected by the Stock Exchange on
behalf of the SFC and the AFRC respectively).
No application for any other number of Hong Kong Offer Shares will be considered and
any such application is liable to be rejected.
IMPORTANT
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If there is any change in the following expected timetable (1) of the Hong Kong
Public Offering, we will issue an announcement in Hong Kong to be published on the
Company’ s website at www.baiwang.com and the website of the Stock Exchange at
www.hkexnews.hk.
Hong Kong Public Offering commences ....................... .9:00 a.m. on Friday,
June 28, 2024
Latest time to complete electronic applications
under White Form eIPO service through
the designated website at www.eipo.com.hk (2) ............... 1 1:30 a.m. on Thursday,
July 4, 2024
Application lists open (3) ................................. 1 1:45 a.m. on Thursday,
July 4, 2024
Latest time to (a) lodge completing payment of
White Form eIPO applications by effecting internet
banking Transfers(s) or PPS payment transfer(s) and
(b) giving electronic application instructions
to HKSCC
(4) ....................................... .12:00 noon on Thursday,
July 4, 2024
If you are instructing your broker or custodian who is a HKSCC Participant to give
electronic application instructions via HKSCC’s FINI System 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 close (3) ................................ .12:00 noon on Thursday,
July 4, 2024
Expected Price Determination Date (5) ........................b y 12:00 noon Friday,
July 5, 2024
Announcement of the Offer Price, the level of indications
of interest in the International Offering, the level of
applications in the Hong Kong Public Offering and
the basis of allocations of the Hong Kong Offer Shares to be
published on the website of our Company at
www.baiwang.com
(6) and the website of the Stock Exchange at
www.hkexnews.hk on or before ..................................... Monday,
July 8, 2024
EXPECTED TIMETABLE (1)
– iii –


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The results of allocations in the Hong Kong Public Offering
(with successful applicants’ identification document numbers,
where appropriate) to be available through a variety of channels,
including:
 in the announcement to be posted on our website
and the website of the Stock Exchange at
www.baiwang.com and
www.hkexnews.hk respectively ...................b y1 1:00 p.m. on Monday,
July 8, 2024
 from the designated results of allocations
website at www.iporesults.com.hk
(alternatively: www.eipo.com.hk/eIPOAllotment )
with a “search by ID” function from ................... 1 1:00 p.m. on Monday,
July 8, 2024
to 12:00 midnight on Sunday,
July 14, 2024
 from the allocation results telephone enquiry
by calling 2862 8555 between 9:00 a.m. and
6:00 p.m. on .....................................T uesday, July 9, 2024
Wednesday, July 10, 2024
Thursday, July 11, 2024
and Friday, July 12, 2024
H Share certificates in respect of wholly or partially
successful applications to be dispatched or
deposited into CCASS on or before
(7) ................................. Monday,
July 8, 2024
White Form e-Refund payment instructions/refund checks in
respect of wholly or partially successful applications if the
final Offer Price is less than the maximum Offer Price per
Offer Share initially paid on application (if applicable) or
wholly or partially unsuccessful applications to be
dispatched/collected on or before
(8)(9) .................................T uesday,
July 9, 2024
Dealings in the H Shares on the Stock Exchange expected
to commence at ....................................... .9:00 a.m. on Tuesday,
July 9, 2024
EXPECTED TIMETABLE (1)
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The application for the Hong Kong Offer Shares will commence on Friday, June 28,
2024 through Thursday, July 4, 2024. For details on the payments and refund
arrangements, see the section headed “How to Apply for Hong Kong Offer Shares” in this
prospectus. Applicants should be aware that the dealings in H Shares on the Stock
Exchange are expected to commence on Tuesday, July 9, 2024.
(1) Unless otherwise stated, all dates and times refer to Hong Kong dates and times.
(2) Y ou 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 for submitting applications. If you
have already submitted your application and obtained 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 12:00 noon on the last day for submitting applications, when the application lists
close.
(3) If there is/are a “black” rainstorm warning or a tropical cyclone warning signal number 8 or above and/or an
announcement of “extreme conditions” caused by a super typhoon by the Government of Hong Kong in
accordance with revised “Code of Practice in Times of Typhoons and Rainstorms” issued by the Hong Kong
Labour Department in June 2019 in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on
Thursday, July 4, 2024, the application lists will not open and will close on that day. For further details, please
see the section headed “How to Apply for Hong Kong Offer Shares—(E) Severe Weather Arrangements” in this
prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC
via CCASS should refer to the section headed “How to Apply for Hong Kong Offer Shares—(A) Applications
for Hong Kong Offer Shares—2. Application Channels” in this prospectus.
(5) The Price Determination Date is expected to be on or about Friday, July 5, 2024, and in any event, not later
than 12:00 noon on Friday, July 5, 2024. If, for any reason, the Offer Price is not agreed between the
Sponsor-OC (for itself and on behalf of the Underwriters) and us by 12:00 noon on Friday, July 5, 2024, the
Global Offering will not proceed and will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this prospectus.
(7) H Share certificates will only become valid at 8:00 a.m. on the Listing Date provided that the Global Offering
has become unconditional and the right of termination described in “Underwriting—Underwriting
Arrangements and Expenses—Hong Kong Public Offering—Grounds for Termination” has not been exercised.
Investors who trade Shares on the basis of publicly available allocation details prior to the receipt of H Share
certificates or prior to the Share certificates becoming valid evidence of title do so entirely at their own risk.
(8) e-Refund payment instructions/refund cheques will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Offering and in respect of wholly or partially successful applicants
in the event that the final Offer Price is less than the price payable per H Share on application. Part of the
applicant’s Hong Kong identity card number or passport number, or, if the application is made by joint
applicants, part of the Hong Kong identity card number or passport number of the first-named applicant,
provided by the applicant(s) may be printed on the refund check, if any. Such data would also be transferred
to a third party for refund purposes. Banks may require verification of an applicant’s Hong Kong identity card
number or passport number before encashment of the refund check. Inaccurate completion of an applicant’s
Hong Kong identity card number or passport number may invalidate or delay encashment of the refund check.
(9) Applicants who have applied for Hong Kong Offer Shares through HKSCC EIPO channel should refer to the
section headed “How to Apply for Hong Kong Offer Shares—(D) Dispatch/Collection of H Share Certificates
and Refund of Application Monies” in this prospectus for details.
EXPECTED TIMETABLE (1)
–v–


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Applicants who have applied through the White Form eIPO service and paid their applications monies
through single bank accounts may have refund monies (if any) dispatched to the bank account in the form of
e-Refund payment instructions. Applicants who have applied through the White Form eIPO service and paid
their application monies through multiple bank accounts may have refund monies (if any) dispatched to the
address as specified in their application instructions in the form of refund checks by ordinary post at their own
risk.
Further information is set out in the section headed “How to Apply for Hong Kong Offer Shares—(D)
Dispatch/Collection of H Share Certificates and Refund of Application Monies.”
The above expected timetable is a summary only. For further details of the structure of
the Global Offering, including its conditions, and the procedures for applications for Hong
Kong Offer Shares, please see the sections headed “Structure of the Global Offering” and
“How to Apply for Hong Kong Offer Shares” in this prospectus, respectively.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such case, the Company will make an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE (1)
–v i–


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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.
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 or the distribution of this prospectus
in any jurisdiction other than Hong Kong. The distribution of this Prospectus for
purposes of a public offering and the offering and sale of the Offer Shares in other
jurisdictions are subject to restrictions and may not be made except as permitted under
applicable securities laws of such jurisdictions pursuant to registration with, or
authorization 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. Our Company has not authorized 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
authorized by our Company, the Overall Coordinators, the Joint Global Coordinators,
the Sole Sponsor , any of the Underwriters, any of our or their respective directors,
officers, representatives, or affiliates, or any other person or party involved in the Global
Offering. Information contained in our website, located at www.baiwang.com , does not
form part of this prospectus.
Page
Expected Timetable ................................................. i i i
Contents ......................................................... v i i
Summary ......................................................... 1
Definitions ........................................................ 2 6
Glossary ......................................................... 3 7
Forward-Looking Statements ......................................... 4 1
Risk Factors ...................................................... 4 3
Waivers from Strict Compliance with the Requirements
under the Listing Rules ............................................ 9 1
CONTENTS
– vii –


--- page 10 ---
Information about this Prospectus and the Global Offering ................ 9 9
Directors, Supervisors and Parties Involved in the Global Offering .......... 1 0 4
Corporate Information .............................................. 1 1 0
Industry Overview ................................................. 1 1 3
Regulatory Overview ............................................... 1 3 2
History and Corporate Structure ...................................... 1 5 9
Business .......................................................... 1 9 1
Relationship with our Controlling Shareholders .......................... 3 0 0
Connected Transactions ............................................. 3 0 5
Directors, Supervisors and Senior Management .......................... 3 1 0
Share Capital ..................................................... 3 2 5
Substantial Shareholders ............................................ 3 3 6
Cornerstone Investor ................................................ 3 3 8
Financial Information ............................................... 3 4 5
Future Plans and Use of Proceeds ..................................... 4 1 3
Underwriting ...................................................... 4 2 0
Structure of the Global Offering ...................................... 4 3 4
How to Apply for Hong Kong Offer Shares ............................. 4 4 5
Appendix I – Accountants’ Report ............................... I - 1
Appendix II – Unaudited Pro Forma Financial Information ............ II-1
Appendix III – Summary of Articles of Association ................... III-1
Appendix IV – Statutory and General Information ................... I V - 1
Appendix V – Documents Delivered to the Registrar of Companies in
Hong Kong and Available on Display ................ V - 1
CONTENTS
– viii –


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This summary aims to give you an overview of the information contained in this
prospectus and should be read in conjunction with the full text of this prospectus. Since
this is a summary, it does not contain all the information that may be important to you.
You should read the whole prospectus, including our financial statements and the
accompanying notes, before you decide to invest in the Offer Shares. There are risks
associated with any investment. Some of the particular risks of investing in the Offer
Shares are set forth in the section headed “Risk Factors.” You should read that carefully
before you decide to invest in the Offer Shares.
OVERVIEW
We are an enterprise digitalization solutions provider in China, focusing on offering SaaS
financial & tax digitalization and data-driven analytics services through our Baiwang Cloud
platform. We process a variety of transaction documents, including among others, invoices,
receipts, bills, and other accounting records, that accurately reflect key business transactions
of enterprises. Empowered by insights into voluminous transaction data and equipped with big
data analytics capabilities, we facilitate the automated and digitalized business decision-
making by financial service providers and other enterprise customers. We have achieved the
leadership position in the markets we operate in as evidenced by the following, according to
the F&S Report:
 we ranked first in China’s cloud financial and tax-related transaction digitalization
market in 2023 in terms of revenue, representing a market share of 7.1%, and second
in China’s financial and tax-related transaction digitalization market in 2023 in
terms of revenue, representing a market share of 4.9%
1;
 we ranked first among financial and tax-related transaction digitalization solution
providers in China, with approximately 0.7 billion invoice processing requests
fulfilled through our cloud solutions in 2023;
 we ranked second among financial and tax-related transaction digitalization solution
providers in China, with approximately 2.6 billion V A T invoices issued through our
cloud solutions in 2023; and
 we ranked second in China’s transaction-based big data analytics for SMB financing
market in 2023 in terms of revenue, representing a market share of 6.4%
2.
(1) The market size of China’s financial and tax-related transaction digitalization market, as a percentage
of the total transaction digitalization market in China in terms of revenue, was 4.0% and 3.4% in 2019
and 2023, respectively, and is expected to increase to 8.7% in 2028. The market size of China’s financial
and tax-related transaction digitalization market, as a percentage of the total enterprise digitalization
market in China in terms of revenue, remained relatively stable at 1.0% and 0.9% in 2019 and 2023,
respectively, and is expected to increase to 2.6% in 2028.
(2) The market size of China’s transaction-based big data analytics for SMB financing market, as a
percentage of the total big data analytics for SMB financing market in China in terms of revenue,
remained relatively stable at 20.5% in 2019 and 19.5% in 2023, and is expected to increase to 24.1%
in 2028.
SUMMARY
–1–


--- page 12 ---
Since our inception, we have strategically leveraged information security and compliance
technologies, which we believe are an indispensable component of the digital transaction
infrastructure, to facilitate the digitalized processing and circulation of transaction documents.
We have launched a suite of digitalization solutions covering the key processes of enterprise
transactions, from procurement, billing, invoicing, to automated management of account
receivables and payables and tax filings. As we continue to provide financial & tax
digitalization solutions and with proper authorization from customers and users, we have
access to a massive volume of transaction documents and data, including 14.3 billion
transaction documents processed by us, covering business activities of 101.9 million
enterprises, as of December 31, 2023.
We have attracted a large base of KA customers, including some of the largest commercial
banks, insurance companies, internet giants, and other industry-leading corporate
conglomerates in China. The industry know-how and reputation accumulated through serving
these KA customers have allowed us to attract a growing number of mid-market customers and
further penetrate into more industry verticals.
Leveraging our big data analytics technology, we have developed data-driven analytics
services that facilitate the optimization of decision making and risk management of financial
service providers and other enterprises across industries. In 2023, we served 134 customers
with our data-driven analytics services, and we fulfilled approximately 17.5 million viewing
requests for enterprise operation reports, with approximately 2.6 million enterprises included
in the enterprise operation reports.
Our Business Model
We have strategically developed our proprietary Baiwang Cloud platform, which is a
technology-integrated business platform encompassing digital certificate, digital signature,
open fixed-layout document (“OFD”), big data analytics, AI and blockchain. Baiwang Cloud
platform enables us to provide customers in an array of industry verticals with modularized
solutions, including: (1) financial & tax digitalization solutions, delivered in cloud and/or
on-premises applications and consisting of tax invoice compliance management, financial and
tax management and supply chain collaboration solutions, and (2) data-driven analytics
services, consisting of digital precision marketing services and risk management services. Our
financial & tax digitalization solutions are compatible with both e-invoices and digital
invoices. During the Track Record Period, we generated revenue primarily through charging (i)
annual subscription fees, usage-based fees, sales-based fees and solution delivery fees for
cloud financial & tax digitalization solutions, (ii) sales-based fees, annual subscription fees,
usage-based fees and project-based fees for our data-driven analytics services, and (iii)
software license fees, implementation fees, annual maintenance fees and hardware equipment
fees for on-premises financial & tax digitalization solutions. The following diagram sets forth
the key aspects of our business model.
SUMMARY
–2–


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AI
Big data
analyticsOFD
Digital
signature
Supply chain
collaboration
Tax invoice compliance
management
Financial and tax
management
Risk management
Digital precision
marketing
Financial & tax
digitalization solutions
Data-driven
analytics services
Customers and users across various industry sectors
KA customers
Mid-market customers
and non-paying users
Financial service providers
Data assets
Baiwang Cloud platform
Digital
certificate Blockchain
Solutions Products and Services Key Functions and Features
Principal
Customers/Users Pricing
Cloud financial & tax
digitalization
solutions ( ථʷৌ೼ᅰ
ࣩ)
Tax invoice compliance
management solutions
(ୃኽΥ஝၍ଣ༆Ӕ˙
ࣩ)
Enable customers to digitalize the
process of, among others, tax invoice
issuance, delivery and compliance
Enterprises of all
sizes across various
industry sectors
 Annual subscription fees;
 Usage-based fees;
 Sales-based fees; and
 Solution delivery fees
Financial and tax
management solutions
(ࣩ)
Enable customers to record, store and
verify tax invoices received by them,
streamline accounting document
archiving and complete tax filing
Supply chain
collaboration solutions
(ࣩ)
Enable customers to automate account
payment and settlement with their
business partners
Data-driven analytics
services (ٙ
ਕ)
Digital precision
marketing services ( ၚ
ਕ)
Recommend financial products launched
by financial service providers to
potential product users
Financial service
providers and
licensed credit
reporting agencies
 Sales-based fees
Risk management
services (؂
ਕ)
(1) Enable customers to understand
business performance and operation
status of potential and existing users
based on their tax invoice and
transaction records
 Annual subscription fees;
 Usage-based fees; and
 Project-based fees
SUMMARY
–3–


--- page 14 ---
Solutions Products and Services Key Functions and Features
Principal
Customers/Users Pricing
(2) Recommend potential users of
financial products to financial
service providers
(3) Optimize customers’ risk control
modeling and risk management
measures
On-premises financial
& tax digitalization
solutions ( ͉ή௅໇ৌ
ࣩ)
1) Centralize and automate tax invoice
compliance and tax management
with on-premises application
Large enterprises and
corporate
conglomerates
 Software license fees;
 Implementation fees;
 Annual maintenance fees;
and
 Hardware equipment fees(2) Collect and store structured data for
enterprise expenditure and related
tax invoices locally in a centralized
data base
(3) Automate transaction record
collection and logging and store
electronic accounting archive locally
Our Financial & Tax Digitalization Solutions
Tax invoice compliance management solutions (ࣩOur tax invoice
compliance management solutions enable enterprise customers to digitalize the full-cycle tax
invoice management, from issuance, circulation, analysis to archiving, to help enterprises
improve their operational efficiency, cost-saving and compliance. Our tax invoice compliance
management solutions enable customers to issue, deliver and manage tax invoices in a
centralized, automated manner through a unified channel, featuring the automated tax invoice
processing function and tax invoice compliance control function, which allow customers to
conveniently manage their tax invoice issuance activities and improve compliance with invoice
and tax laws. We generally charge annual subscription fee, usage-based fee and solution
delivery fees for our tax invoice compliance management solutions. The number of V A T
invoices issued through our cloud solutions in 2023 was approximately 2.6 billion,
representing an aggregate transaction amount of approximately RMB123.1 trillion. In addition
to our chargeable tax invoice compliance management solutions, we have developed an array
of complimentary applications, exclusively under our tax invoice compliance management
service offerings, with basic tax invoice generation, printing, search and delivery functions,
which shall be provided to users free of charge pursuant to the applicable PRC laws and
regulations.
SUMMARY
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Financial and tax management solutions (ࣩOur financial and tax
management solutions streamline, digitalize and automate enterprise spending and tax
management processes, including tax invoice collection, verification and certification,
expenditure management, electronic accounting archiving and tax filing, which enable
enterprises to gain greater control of spending, achieve cost savings, optimize tax management
and improve management efficiency. We generally charge annual subscription fee, usage-based
fee and solution delivery fees for our financial and tax management solutions. The number of
invoice processing requests fulfilled through our cloud solutions in 2023 was approximately
0.7 billion, and the transaction amount underlying the invoices processed was approximately
RMB78.5 trillion.
Supply chain collaboration solutions (ࣩOur supply chain
collaboration solutions connect enterprises with their business partners along the supply
chains, automate account payment management process and streamline settlement
collaboration among transaction parties. We generally charge sales-based fees and solution
delivery fees for our supply chain collaboration solutions. As of December 31, 2023,
transactions with an aggregated amount of approximately RMB117.7 billion had been
processed with our supply chain collaboration solutions.
The following diagram illustrates the transaction and fund flow for our financial & tax
digitalization solutions.
Suppliers Our Group Customers
Products and
services(1)
Purchase
fees
Financial &
tax digitalization
solutions
Subscription,
usage-based and
solution delivery
fees
(1) Primarily include hardware and IT services.
Our Data-driven Analytics Services
Digital precision marketing services (ਕ). Our digital precision
marketing services connect eligible potential users with suitable financial products and
empower financial service providers to effectively identify, access and acquire users of
financial products. In provision of our digital precision marketing services, we engage
marketing agents to identify potential product users and facilitate such potential users to
register on our platform and fill in financial product applications. We generally charge
sales-based fees for our digital precision marketing services. During the Track Record Period,
nearly all of our revenue from digital precision marketing services was attributable to fees
charged to financial service providers for sales of financial products facilitated by us to users
referred by our marketing agents.
SUMMARY
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Risk management services (ਕ). Our risk management services primarily
comprise enterprise operation reporting services, user analytics services, risk analytics services
and procurement optimization services. Our enterprise operation reporting services enable
financial service providers to develop comprehensive and meaningful understanding of
relevant enterprises’ operational performance and financial well-being as reflected in their
digital transaction documents. Our user analytics services identify potential users of financial
products based on our analysis of their transaction data, and facilitate the user acquisition by
financial service providers. Our risk analytics services devise and configure risk management
system for financial service providers, and enable them to optimize their risk control strategies
and enhance their ability to independently monitor, detect and manage risks. Our procurement
optimization services compute average merchandise prices with our big data algorithm and
serve as market price references for our customers and empower better procurement decisions
and cost savings. We generally charge annual subscription fees, usage-based fees and
project-based fees for our risk management services.
The following diagram illustrates the data, transaction and fund flows for our digital
precision marketing services.
Financial products(2)
Application information(1) and performance under the terms of financial products(2)
Application information(1), and,
upon request, data analysis
results
Service fees
Identification of potential
financial product users
Referral fees
Lists of financial products that users are
eligible to apply for after comparing
user profiles against application criteria
Preliminary information upon registration,
and application information(1) Financial
service
providers
Financial
product users
Marketing
agents
Referral of potential
financial product users
Our Group
(1) We generally redirect potential financial product users to the application page of the relevant financial service
providers to complete and submit application information. To a lesser extent, if potential financial product
users need to submit their application information through us, we transmit application information to credit
reporting agencies that we collaborate with or credit reporting agencies affiliated with financial service
providers, which will then transmit such application information to the relevant financial service providers.
(2) We do not participate in the decision-making process of financial product applications or the subsequent
performance under the terms of relevant financial products, which are solely the responsibilities of financial
service providers.
SUMMARY
–6–


--- page 17 ---
The following diagram illustrates the data, transaction and fund flows for our enterprise
operation reporting services.
Third-party
data provider Our Group
Data
Data Service
fees
Public domain
Data
Customers and
users
Data
(1)
Financial & taxdigitalization solutions
Financial service
providers
Enterprise operation
reports
Service fees
Licensed credit
reporting agencies
we collaborate with
Other licensed
credit reporting
agencies affiliated
with financial
service providers
Data and services
Data and services
Service fees
Service fees
(1) We obtain consent from our customers and users prior to using their data and financial and tax information for
our enterprise operation reporting services.
The following diagram illustrates the data, transaction and fund flows for our user
analytics and risk analytics services.
Our Group
Public domain
Data
Customers and
users
Data
(1)
Financial & taxdigitalization services
Financial service
providers
List of eligible financial
product users and/or
risk control modeling
and strategies
Service fees
(1) We obtain consent from our customers and users prior to using their data and financial and tax information for
our data-driven analytics services.
SUMMARY
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Our Key Operating Data
The following table sets forth the key operating metrics of our cloud financial & tax
digitalization solutions, data-driven analytics services and on-premises financial & tax
digitalization solutions for the periods indicated.
Y ear ended December 31,
2021 2022 2023
Cloud financial & tax digitalization
solutions
Number of customers
— KA customers 205 217 366
— Mid-market customers 12,163 14,591 20,734
Number of non-paying users (in
million) 7.7 17.0 23.9
Number of tax identification numbers
served (in million) 35.3 40.5 47.3
Average revenue per customer
(RMB in thousands) 12.7 10.7 10.4
Number of retained customers
(1) 9,282 11,510 13,273
Dollar-based retention rate for KA
customers 119.7% 104.4% 146.7%
Dollar-based retention rate for
mid-market customers (2) 90.2% 96.5% 91.1%
Dollar-based retention rate (3) 102.0% 84.5% 116.9%
Conversion rate for non-paying users (4) 0.05% 0.07% 2.8%
Data-driven analytics services
Number of customers 91 101 134
Average revenue per customer
(RMB in thousands) 1,962.6 2,609.1 2,630.0
Number of viewing requests fulfilled
for enterprise operation reports
(in millions) 15.5 13.0 17.5
Number of enterprises included in the
enterprise operation reports
(in thousands) 1,318.5 1,553.0 2,645.0
Average price charged for each
enterprise included in the enterprise
operating reports RMB48.0 RMB47.8 RMB40.1
V alue of financial product sales
facilitated by us in connection with
digital precision marketing services
(RMB in billions) 14.7 29.6 41.6
Number of retained customers
(1) 58 75 68
Dollar-based retention rate (3) 221.5% 135.8% 120.3%
SUMMARY
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Y ear ended December 31,
2021 2022 2023
On-premises financial & tax
digitalization solutions
Number of customers 917 1,309 2,051
Average revenue per customer
(RMB in thousands) 120.1 71.4 67.3
Number of retained customers
(1) 480 600 719
Dollar-based retention rate (2) 82.8% 67.5% 94.5%
(1) Represent the number of customers in a given year who were also our customers in the preceding year.
(2) Represent the quotient with the numerator being revenue from mid-market customers in a given year,
who are also mid-market customers in the preceding year, and the denominator being revenue from the
same group of customers in the preceding year.
(3) Represent the quotient obtained from dividing revenue in a given year by the relevant revenue generated
from the same group of customers in the preceding year.
(4) Represent the quotient with the denominator being (A) the number of tax identification numbers
registered on our platform in a given year that initially only used our complimentary services, and the
numerator being (B) the number of tax identification numbers in (A) that later purchased our chargeable
services in the same year.
Under our cloud financial & tax digitalization solutions, the numbers of KA customers
and mid-market customers generally increased during the Track Record Period, primarily due
to the increase in customer demands for our solutions. The decrease in average revenue per
customer for our cloud financial & tax digitalization solutions from RMB12.7 thousand in 2021
to RMB10.4 thousand in 2023 was primarily because there was a decrease in overall enterprise
budget allocated for financial & tax digitalization solutions primarily among KA customers.
Moreover, the digital invoice reform brought about an increase in the number of market
participants in the financial and tax digitalization market, and the intensified market
competition has caused a decrease in average price charged for financial and tax digitalization
solutions. Our dollar-based retention rate for KA customers decreased in 2022, primarily due
to delay in project delivery and the decrease in demand from KA customers, both as a result
of the adverse impact of the COVID-19 pandemic. The dollar-based retention rate for KA
customers increased significantly in 2023, primarily due to the increase in completion of
project delivery after the pandemic. Our dollar-based retention rate for mid-market customers
remained relatively stable at 90.2%, 96.5% and 91.1% in 2021, 2022 and 2023, respectively,
and was lower than 100% during the Track Record Period, because we strategically lowered
our solution pricing to incentivize customer purchases. Dollar-based retention rate for cloud
financial & tax digitalization solutions decreased in 2022, primarily due to the adverse impact
of the COVID-19 pandemic. Dollar-based retention rate for cloud financial & tax digitalization
solutions increased in 2023, primarily due to the increase in customer demands for our
solutions as our customers gradually recovered from the adverse impact of the COVID-19
pandemic. The conversion rate for non-paying users remained relatively stable at 0.05% and
0.07% in 2021 and 2022, respectively, and increased significantly to 2.8% in 2023, primarily
due to our expanded marketing efforts, especially with the assistance with our business
collaborators, that converted non-paying user accounts as measured by the number of tax
identification numbers.
SUMMARY
–9–


--- page 20 ---
The number of customers for our data-driven analytics services generally increased
during the Track Record Period, which was generally in line with our business growth in
offering data-driven analytics services. Average price charged for each enterprise included in
the enterprise operating reports generally decreased during the Track Record Period, primarily
because we granted more favorable subscription and usage-based packages to customers to
incentivize them to use our services. The value of financial product sales facilitated by us in
connection with digital precision marketing services significantly increased during the Track
Record Period, primarily due to our broadened access to potential financial product users as a
result of our collaboration with marketing agents and the increase in SMB financing needs. The
number of retained customers for data-driven analytics services increased from 58 in 2021 to
75 in 2022, and decreased to 68 in 2023, with the decrease primarily related to our risk
management services. Dollar-based retention rate for data-driven analytics services decreased
during the Track Record Period, primarily due to the slowed growth rate of our digital precision
marketing services from 2021 to 2023. The number of viewing requests fulfilled for enterprise
operation reports decreased from 15.5 million in 2021 to 13.0 million in 2022, primarily
because certain project for a customer in 2021 resulted in a substantial number of viewing
requests for our enterprise operations reports.
For our on-premises financial & tax digitalization solutions, the number of customers
increased from 917 in 2021 to 1,309 in 2022, and further to 2,051 in 2023, primarily due to our
efforts to expand our customer base from corporate conglomerates to more large and mid-sized
enterprises, which also contributed to the general decrease in average revenue per customer
during the Track Record Period. Dollar-based retention rate for on-premises financial & tax
digitalization solutions decreased in 2022, primarily due to the adverse impact of the
COVID-19 pandemic. Dollar-based retention rate for on-premises financial & tax digitalization
solutions increased in 2023, primarily due to the increase in customer demands for our
solutions as our customers gradually recovered from the adverse impact of the COVID-19
pandemic.
See “Business—Our Key Operating Data” for details on the fluctuation of our operating
results during the Track Record Period.
Our Financial Track Record
We experienced significant growth during the Track Record Period. In 2021, 2022 and
2023, our total revenue was RMB453.8 million, RMB525.8 million and RMB713.0 million,
respectively. Our gross profit was RMB216.2 million, RMB214.3 million and RMB282.0
million in 2021, 2022 and 2023, respectively. We recorded net loss of RMB448.4 million,
RMB156.2 million and RMB359.3 million in 2021, 2022 and 2023, respectively. We recorded
adjusted net loss (non-IFRS measure) of RMB16.7 million, RMB70.3 million and RMB83.4
million in 2021, 2022 and 2023, respectively. See “Financial Information—Consolidated
Statements of Profit or Loss and Other Comprehensive Income—Non-IFRS Measure” for
details.
COMPETITIVE STRENGTHS
We believe the following competitive strengths have contributed to our success and
differentiated us from our competitors: (1) industry-leading provider of enterprise
digitalization solutions through self-developed Baiwang Cloud platform; (2) comprehensive
solution offerings empowering enterprises’ transaction, compliance management and business
decision-making; (3) extensive customer network from diversified industries; (4) robust R&D
and technology innovation capabilities; and (5) experienced and visionary management team.
SUMMARY
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GROWTH STRATEGIES
We intend to pursue the following strategies to further grow our business: (1) continue to
enrich solution functions and expand solution portfolio; (2) expand customer base in more
industry verticals and improve monetization opportunities; (3) invest in core technologies and
drive product innovation on Baiwang Cloud platform; and (4) cultivate business ecosystem
through strategic cooperation, investment, mergers and acquisitions.
RISKS AND CHALLENGES
Our business and the Global Offering involve certain risks, which are set out in the
section headed “Risk Factors” in this prospectus, including but not limited to: (1) our limited
history in our solution offerings and evolving business portfolio make it difficult to evaluate
our prospects and the risks and challenges we face, and our historical growth is not indicative
of our future performance; (2) the PRC regulatory framework for data security and personal
information protection is rapidly evolving, and we could face challenges in our continued
compliance with heightened regulatory scrutiny; (3) our business is subject to complex and
evolving laws and regulations, many of which are relatively new and could result in changes
to our business practices; (4) we had net loss, net liabilities, net current liabilities and net cash
used in operating activities during the Track Record Period, and may continue to incur net loss,
net liabilities, net current liabilities and net cash used in operating activities in the foreseeable
future, which can expose us to liquidity risks; (5) if we fail to improve and customize our
solutions and services to suit our customers’ evolving needs and adapt to changes in relevant
tax and invoice laws, we may lose our customers, which, in turn, will have a material adverse
effect on our business, financial condition and results of operations; (6) our success depends
on the growth in market acceptance for our various solutions and services; (7) if the industries
in which we operate develop more slowly than we expect, or even stagnates or shrinks, it could
have a material adverse effect on our business, financial condition and results of operations;
and (8) certain customers for our project-based services may cease to be our customers once
the projects were delivered.
As different investors may have different interpretations and criteria when determining
the significance of a risk, you should carefully read the “Risk Factors” section in its entirety
before you decide to invest in our H Shares.
OUR CUSTOMERS AND SUPPLIERS
Since our inception, we have accumulated a large and diversified enterprise customer
base with our product and service offerings. For each year during the Track Record Period,
revenue generated from our largest customer in 2021, 2022 and 2023 accounted for 6.5%,
18.0% and 15.1%, respectively, of our total revenue in the same periods. For each year during
the Track Record Period, revenue generated from our five largest customers in 2021, 2022 and
2023 accounted for 21.6%, 34.5% and 35.4%, respectively, of our total revenue in the same
periods. See “Business—Our Customers” for details.
SUMMARY
–1 1–


--- page 22 ---
Our suppliers primarily include hardware and software providers, outsourcing service
providers, business collaborators, marketing agents and data providers. We select our suppliers
based on the quality of their products and services, their operation scale, qualifications, prices
and our business needs. For each year during the Track Record Period, purchases from our top
five suppliers accounted for 27.5%, 41.4% and 33.7% of our total purchases in 2021, 2022 and
2023, respectively. For each year during the Track Record Period, purchases from our largest
supplier accounted for 8.5%, 21.9% and 12.2% of our total purchases in the same periods,
respectively. See “Business—Our Suppliers” for details.
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following tables set forth summary of our financial information for the Track Record
Period, and should be read together with the consolidated financial statements in the
Accountants’ Report set out in Appendix I to this prospectus, including the accompanying notes
and the information set forth in “Financial Information.” Our consolidated financial
information was prepared in accordance with IFRSs.
Summary of Consolidated Statements of Profit or Loss and Other Comprehensive Income
The following table set forth a summary of our consolidated statements of profit or loss
and other comprehensive income for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands, except for percentages)
Revenue 453,763 100.0 525,765 100.0 712,996 100.0
Cost of sales (237,600) (52.4) (311,475) (59.2) (430,965) (60.4)
Gross profit 216,163 47.6 214,290 40.8 282,031 39.6
Operating loss (198,148) (43.7) (112,350) (21.4) (305,106) (42.8)
Loss before tax (448,373) (98.8) (156,025) (29.7) (359,174) (50.4)
Income tax expenses — — (199) (0.0) (116) (0.0)
Loss and total comprehensive
expense for the year (448,373) (98.8) (156,224) (29.7) (359,290) (50.4)
Loss and total comprehensive
expense for the year
attributable to
– Owners of the Company (446,938) (98.5) (153,501) (29.2) (357,980) (50.2)
– Non-controlling interests (1,435) (0.3) (2,723) (0.5) (1,310) (0.2)
SUMMARY
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Non-IFRS Measure
To supplement our consolidated financial statements, which are presented in accordance
with IFRSs, we also use adjusted net loss (non-IFRS measure) as an additional financial
measure, which may not be comparable to similar measures presented by other companies. We
believe this non-IFRS measure facilitates comparisons of operating performance from period
to period and company to company by excluding potential impacts of certain items. We believe
this measure provides useful information to investors and others in understanding and
evaluating our consolidated results of operations in the same manner as they help our
management. However, our presentation of adjusted net loss (non-IFRS measure) may not be
comparable to similarly titled measures presented by other companies. The use of this
non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation from, or as a substitute for an analysis of, our results of operations or financial
condition as reported under IFRSs.
We define adjusted net loss (non-IFRS measure) as net loss for the year, adjusted by
adding share-based payment expenses, listing expenses, and fair value changes of financial
liabilities at FVTPL relating to shares with preferential rights issued by us, which are non-cash
in nature. Share-based payments are non-cash expenses arising from granting share economic
rights in our share incentive platforms to senior management and employees. Listing expenses
were incurred in connection with the Global Offering. Fair value changes of financial liabilities
at FVTPL represent fair value changes relating to shares with preferential rights issued by us.
We do not expect to record any fair value changes in such instruments following the completion
of the Global Offering. See Note 33 to the Accountants’ Report in Appendix I to this prospectus
for details.
The following table reconciles our adjusted net loss (non-IFRS measure) for the periods
presented:
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Reconciliation of net loss to adjusted
net loss (non-IFRS measure):
Loss for the year (448,373) (156,224) (359,290)
Add
Share-based payment expenses 161,418 10,469 191,064
Listing expenses 6,366 16,307 24,107
Fair value changes of financial
liabilities at FVTPL
– shares with preferential rights 263,850 59,153 60,707
Adjusted net loss (non-IFRS measure) (16,739) (70,295) (83,412)
SUMMARY
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--- page 24 ---
Our adjusted net loss (non-IFRS measure) increased from RMB16.7 million in 2021 to
RMB70.3 million in 2022, primarily due to the increase in our operating expenses (net of the
effect of share-based payment expenses), especially our research and development expenses
and administrative expenses. Our adjusted net loss (non-IFRS measure) further increased to
RMB83.4 million in 2023, primarily due to the increase in our operating expenses (net of the
effect of share-based payment expenses) as a result of the increase in our staff costs, driven by
the increase in our employee headcount. See “Financial Information—Consolidated Statements
of Profit or Loss and Other Comprehensive Income—Non-IFRS Measure” for details.
We experienced rapid revenue growth during the Track Record Period, which was
primarily driven by the growth of our data-driven analytics services. From 2021 to 2023, our
gross profit generally increased in line with our revenue and business growth. Our referral fees
increased substantially during the Track Record Period, primarily due to the expansion of the
business scale of our digital precision marketing services. Our gross profit margin decreased
from 47.6% in 2021 to 40.8% in 2022, primarily due to the decrease in gross profit margin for
our digital precision marketing services, as the growth of referral fees in 2022 in connection
with our marketing agents outpaced that of revenue in the same period. Our gross profit margin
decreased from 40.8% in 2022 to 39.6% in 2023, primarily because the increase in our cost of
sales outpaced our revenue growth, especially our staff costs, cloud service fees and
share-based payment expenses. We incurred accumulated net loss during the Track Record
Period, primarily due to substantial cost and expenses incurred in growing our business,
including (1) referral fees to strengthen our service capabilities for our digital precision
marketing services, (2) staff costs to recruit and retain skilled personnel and (3) research and
development expenses to enhance our R&D capability and improve solution functionality.
Revenue
The following table sets forth a breakdown of our revenue by business line, both in
absolute amount and as a percentage of our total revenue, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 156,615 34.5 157,996 30.1 219,539 30.8
Data-driven analytics services 178,597 39.4 263,519 50.1 352,425 49.4
— Digital precision
marketing services 94,603 20.9 170,229 32.4 210,187 29.5
— Risk management services 83,994 18.5 93,290 17.7 142,238 19.9
On-premises financial & tax
digitalization solutions 110,168 24.3 93,491 17.8 138,132 19.4
Others
(1) 8,383 1.8 10,759 2.0 2,900 0.4
Total 453,763 100.0 525,765 100.0 712,996 100.0
(1) Includes primarily advertisement publishing services.
SUMMARY
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Gross Profit and Gross Profit Margin
The following table sets forth a breakdown of our gross profit and gross profit margin by
business line for the periods indicated.
Y ear ended December 31,
2021 2022 2023
Gross
profit
Gross
Profit
Margin
(%)
Gross
profit
Gross
Profit
Margin
(%)
Gross
profit
Gross
Profit
Margin
(%)
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 82,301 52.5 87,251 55.2 119,995 54.7
Data-driven analytics services 90,820 50.9 88,363 33.5 124,587 35.4
— Digital precision
marketing services 29,073 30.7 14,377 8.4 14,742 7.0
— Risk management services 61,747 73.5 73,986 79.3 109,845 77.2
On-premises financial & tax
digitalization solutions 35,738 32.4 30,593 32.7 37,133 26.9
Others 7,304 87.1 8,083 75.1 316 10.9
Total 216,163 47.6 214,290 40.8 282,031 39.6
Share-based Payment Expenses
During the Track Record Period, we granted share economic rights in our share incentive
platforms to our senior management and employees, and we incurred substantial share-based
payment expenses of RMB161.4 million, RMB10.5 million and RMB191.1 million in 2021,
2022 and 2023, respectively, accounting for 35.6%, 2.0% and 26.8% of our total revenue in the
same periods, respectively. Our share-based payment expenses contributed to our net loss
position during the Track Record Period. The following table sets forth a breakdown of our
share-based payment expenses by categorization in our consolidated statements of profit and
loss and other comprehensive income, both in absolute amount and as a percentage of total
share-based payments, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cost of sales 18,719 11.6 2,031 19.4 13,297 7.0
Research and development
expenses 14,428 8.9 4,775 45.6 30,322 15.9
Administrative expenses 82,744 51.3 2,288 21.9 80,234 42.0
Distribution and selling
expenses 45,527 28.2 1,375 13.1 67,211 35.1
Total 161,418 100.0 10,469 100.0 191,064 100.0
SUMMARY
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Summary of Consolidated Statements of Financial Position
The following table sets forth a summary of our consolidated statements of financial
position as of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Total non-current assets 303,052 322,308 193,596
Total current assets 1,022,807 938,409 958,273
Total current liabilities 512,078 2,483,842 2,552,173
Net current assets/(liabilities) 510,729 (1,545,433) (1,593,900)
Total deficits
Deficits attributable to owners of
the Company (1,086,267) (1,229,299) (1,396,215)
Non-controlling interests (1,435) (4,158) (5,468)
Total non-current liabilities 1,901,483 10,332 1,379
Net liabilities (1,087,702) (1,233,457) (1,401,683)
We had net current assets of RMB510.7 million as of December 31, 2021, which was
primarily attributable to our cash and cash equivalents, financial assets at FVTPL, trade and
other receivables, and short-term bank deposits with maturity over three months, partially
offset by financial liabilities at FVTPL, contract liabilities and trade and other payables.
Our net current liabilities remained relatively stable at RMB1,545.4 million and
RMB1,593.9 million as of December 31, 2022 and 2023, respectively, primarily due to the
reclassification of financial liabilities at FVTPL in connection with our shares with preferential
rights from non-current to current liabilities.
Our net liabilities increased from RMB1,087.7 million as of December 31, 2021 to
RMB1,233.5 million as of December 31, 2022, primarily due to the loss and total
comprehensive expenses for 2022 of RMB156.2 million. Our net liabilities further increased
to RMB1,401.7 million as of December 31, 2023, primarily due to the increase in our
accumulated losses, arising from the loss and total comprehensive expenses for 2023 of
RMB359.3 million.
SUMMARY
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Our shares with preferential rights will be re-designated from liabilities to equity as a
result of the automatic conversion into our Shares upon the Listing, resulting in a net asset
position. See Note 33 to the Accountants’ Report in Appendix I to this prospectus for details.
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our consolidated statements of cash flows for
the periods indicated.
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Net cash used in operating activities (13,989) (64,276) (99,330)
Net cash (used in)/from investing
activities (189,776) (189,804) 216,810
Net cash from/(used in) financing
activities 435,669 (13,720) (19,655)
Net increase/(decrease) in cash and
cash equivalents 231,904 (267,800) 97,825
Cash and cash equivalents at the
beginning of the year 273,102 505,006 237,206
Cash and cash equivalents at
the end of the year 505,006 237,206 335,031
We incurred net operating cash outflow during the Track Record Period. Although our net
loss decreased from RMB448.4 million in 2021 to RMB156.2 million in 2022, our net cash
used in operating activities increased from RMB14.0 million in 2021 to RMB64.3 million in
2022, primarily due to (1) the decrease in fair value changes of financial assets and liabilities
at FVTPL from RMB265.5 million in 2021 to RMB53.5 million in 2022 and (2) the decrease
in share-based payment expenses from RMB161.4 million in 2021 to RMB10.5 million in
2022, which was partially offset by the movement in working capital that positively affected
our cash position in 2022. Our net cash used in operating activities increased to RMB99.3
million in 2023, primarily due to the increase in net loss.
SUMMARY
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KEY FINANCIAL RATIOS
The following table sets forth certain of our key financial ratios for the periods indicated.
As of/for the year ended December 31,
2021 2022 2023
Profitability ratios
Gross profit margin 47.6% 40.8% 39.6%
Net loss margin 98.8% 29.7% 50.4%
Revenue growth rate — 15.9% 35.6%
Liquidity ratios
Current ratio 2.0 0.4 0.4
Trade receivable turnover days 22.0 days 23.1 days 22.8 days
Trade payable turnover days 48.3 days 38.7 days 30.4 days
See “Financial Information—Key Financial Ratios” for details.
SUSTAINABILITY OF OUR BUSINESS
We aim to achieve profitability by (1) leveraging market opportunities and favorable
government policies to grow our financial & tax digitalization solutions, (2) retaining existing
KA customers and expanding our customer base; (3) increasing cross-sales and up-sales of our
solutions and services, (4) improving profit margin of digital precision marketing services, (5)
optimizing operations and increasing economies of scale and cost-efficiency; and (6)
improving operating cash flow position.
Leveraging Market Opportunities and Favorable Government Policies to Grow Our
Financial & Tax Digitalization Solutions
As China’s financial and tax-related transaction digitalization market continues to
develop, significant market opportunities continue to emerge in the market, especially in light
of the implementation of the digital invoice reform. We are well-positioned to seize the upside
market potential brought by the digital invoice reform with (1) our first-mover advantage as a
service provider for the SA T; (2) technological strength accumulated through prior provision
of financial & tax digitalization solutions; and (3) customer resources accumulated through
prior solution and service offerings.
As of April 30, 2024, a total of 189 customers had entered into service contract with us
for system upgrade and connection to the Direct Connection System with the contract value
totaling at approximately RMB106.1 million, of which 84 customers had previously purchased
our cloud and on-premises financial & tax digitalization solutions and 105 were new customers
who had not previously purchased our cloud or on-premises financial & tax digitalization
solutions. We also expect to generate from these customers stable revenue stream of annual
SUMMARY
–1 8–


--- page 29 ---
software subscription fees from our cloud solutions and annual maintenance fees from our
on-premises solutions after their systems are connected to the Direct Connection System. As
of April 30, 2024, over 3.1 million of our non-paying users had connected to the Web-based
System using our upgraded complimentary applications.
Retaining Existing KA Customers and Expanding Our Customer Base
We have implemented and will continue to strengthen our direct sales team with strategic
focus on key industries, including the banking and insurance, lifestyle services, retail and
manufacturing and logistics industries, and regional sales network in southwestern, central,
northwestern and northeastern China.
Increasing Cross-sales and Up-sales of Our Solutions and Services
We have been able to expand our customer base and increase their spending on our
solutions. User resources from our digital precision marketing services also contributed to
growth of our enterprise operation reporting services. Further, with our risk analytics services,
we devise and configure online risk management systems for financial service providers based
on their risk preferences, and leveraging our risk modelling and analysis capabilities, we
deepened collaboration with financial service providers and helped them devise application
criteria for their financial products, which were exclusively marketed by us.
Improving Profit Margin of Digital Precision Marketing Services
To improve our profitability of digital precision marketing services, we have implemented
the following measures: (1) deepening collaboration with financial service providers, (2)
improving capability to directly reach potential financing product users, and (3) optimizing the
mix of financial products marketed by us.
We have deepened collaboration with financial service providers to launch financial
products for our exclusive marketing. We have launched an internal system to screen qualified
potential financial product users based on transaction and invoice data of such users and utilize
telemarketing to reach potential financial product users and promote financial products
launched by financial service providers.
Optimizing Operations and Increasing Economies of Scale and Cost-Efficiency
We expect our future costs and operating expenses to decrease as a percentage of our total
revenue for the following reasons: (1) strategic front-loading of preparational work for the
digital invoice reform, (2) improvement of business collaborator network efficiency and (3)
adjustment of recruitment strategy.
SUMMARY
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Improving Operating Cash Flow Position
In the future, we expect to improve our net operating cash outflows position by taking
advantage of (1) our continuous revenue growth fueled by our growing customer base and
expanding product and service offerings, (2) our improved operating leverage as we expect our
revenue growth to exceed the increase in expenses gradually, (3) our budget control and
optimization of operating expenses, and (4) our improved working capital.
Based on the foregoing, our Directors are of the view that our business is sustainable
despite the current loss-making position.
The foregoing forward-looking statements are based on numerous assumptions regarding
our present and future business strategies and the environment in which we will operate in the
future. These forward-looking statements involve known and unknown risks, uncertainties and
other factors, some of which are beyond our control, which may cause the actual results,
performance or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by these forward-looking
statements. See “Risk Factors—Risks Relating to Our Business and Industry—We had net loss,
net liabilities, net current liabilities and net cash used in operating activities during the Track
Record Period, and may continue to incur net loss, net liabilities, net current liabilities and net
cash used in operating activities in the foreseeable future, which can expose us to liquidity
risks,” and “Risk Factors—Risks Relating to the Global Offering—Forward-looking statements
contained in this prospectus are subject to risks and uncertainties.”
OUR CONTROLLING SHAREHOLDERS
As of the Latest Practicable Date, Ms. Chen controlled 43.22% of the voting power at the
general meetings of our Company, comprising (1) 27.10% beneficially owned by her directly,
(2) 9.23% beneficially owned by Ningbo Xiu’an, which is controlled by Ms. Chen as its
general partner, and (3) 6.89% beneficially owned by Tianjin Duoying, which is controlled by
Ms. Chen as its general partner. Upon the Listing, Ms. Chen will control 41.44% of the voting
power at the general meetings of our Company, comprising (i) 25.98% beneficially owned by
her directly, (ii) 8.85% beneficially owned by Ningbo Xiu’an, and (iii) 6.61% beneficially
owned by Tianjin Duoying, assuming the Over-allotment Option is not exercised. Therefore,
Ms. Chen, Ningbo Xiu’an and Tianjin Duoying were our Controlling Shareholders as of the
Latest Practicable Date and will continue to be our Controlling Shareholders upon the Listing.
See “Relationship with Our Controlling Shareholders” for details.
CONNECTED TRANSACTIONS
We have entered into transactions with entities that will, upon the Listing, become the
connected persons of our Company. Certain transactions with such entities will continue after
Listing and constitute our continuing connected transactions subject to reporting, annual
review and announcement requirements but exempt from independent Shareholders’ approval
requirement under Chapter 14A of the Listing Rules. See “Connected Transactions” for details.
SUMMARY
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PRE-IPO INVESTMENTS
To fund our rapid business expansion and broaden our Shareholder base, our Company
historically underwent several rounds of financing. Our Pre-IPO Investors include, among
others, a number of reputable and influential institutional or corporate investors, such as
Alibaba, Fosun, SCGC Group and Oriental Fortune (each as defined in the section headed
“History and Corporate Structure” in this prospectus). See “History and Corporate
Structure—Pre-IPO Investments” for details.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Listing Committee of the Stock Exchange for the grant of the
listing of, and permission to deal in, our H Shares to be issued pursuant to the Global Offering
(including any H Shares which may be issued pursuant to the exercise of the Over-allotment
Option) and the H Shares to be converted from Domestic Shares, on the basis that, among other
things, we satisfy the market capitalization/revenue test under Rule 8.05(3) of the Listing
Rules.
LISTING EXPENSES
We expect to incur a total of approximately RMB96.3 million (HK$105.7 million) of
listing expenses in connection with the Global Offering, representing approximately 30.0% of
the proceeds from the Global Offering (assuming an Offer Price of HK$38.00, being the
mid-point of the indicative Offer Price range between HK$36.00 and HK$40.00, and assuming
that the Over-allotment Option is not exercised), including (1) sponsor fees and underwriting
commissions, SFC transaction levy, stock code donation fee, Stock Exchange trading fees,
initial listing application fee and AFRC transaction levy for all Offer Shares of approximately
RMB28.8 million (HK$31.6 million), and (2) non-underwriting expenses of approximately
RMB67.5 million (HK$74.1 million), which consist of (i) fees and expenses of legal advisors
and accountants of approximately RMB49.0 million (HK$53.8 million), and (ii) other fees and
expenses of approximately RMB18.5 million (HK$20.3 million). Approximately RMB46.8
million of the listing expenses were charged to our consolidated statements of profit or loss
during the Track Record Period. Out of our remaining listing expenses, approximately
RMB20.4 million is expected to be charged to our consolidated statements of profit or loss, and
approximately RMB29.1 million is expected to be deducted from equity. The listing expenses
above are the best estimate as of the Latest Practicable Date and for reference only. The actual
amount may differ from this estimate.
SUMMARY
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GLOBAL OFFERING STATISTICS
All statistics in this table are based on the assumption that (1) the Global Offering has
been completed and 9,262,000 Offer Shares are issued pursuant to the Global Offering; and (2)
the Over-Allotment Option is not exercised.
Based on an Offer
Price of HK$36.00
per Offer Share
Based on an Offer
Price of HK$40.00
per Offer Share
Market capitalization of our Shares (1) HK$8,132.6
million
HK$9,036.3
million
Unaudited pro forma adjusted consolidated total
tangible assets less liabilities of the Group
attributable to owners of the Company
per Share
(2)
HK$(8.44) HK$(8.20)
(1) The calculation of market capitalization is based on 225,906,754 total issued Shares immediately upon
completion of the Global Offering (assuming the Over-allotment Option is not exercised).
(2) The unaudited pro forma adjusted consolidated total tangible assets less liabilities of the Group
attributable to owners of the Company per Share as of December 31, 2023 is calculated after making
the adjustments referred to in Appendix II and on the basis of 149,262,000 total issued Shares
immediately upon the completion of the Global Offering (i.e. 225,906,754 total issued Shares excluding
76,644,754 Shares which carries preferential rights, and assuming the Over-allotment Option is not
exercised). It does not take into account (i) any Shares which may be allotted and issued upon the
exercise of the Over-allotment Option; (ii) any Shares which may be issued or repurchased by the
Company pursuant to the general mandates or (iii) cessation of the preferential rights of shares with
preferential rights.
Upon completion of the Global Offering, the cessation of the preferential rights of shares with
preferential rights would have resulted in a reclassification of such financial liabilities at carrying
amount of RMB2,212,629,000 as of December 31, 2023 (the “Shares Reclassification”) assuming no
further changes in fair values of shares with preferential rights existing on December 31, 2023 upon
Global Offering, to ordinary shares under equity.
The effect of Shares Reclassification would have increased the total number of Shares in issue of
149,262,000 Shares immediately following the completion of the Global Offering by 76,644,754 Shares
to a total of 225,906,754 Shares and would have adjusted the unaudited pro forma adjusted consolidated
total tangible assets less liabilities of the Group attributable to owners of the Company as of
December 31, 2023 by RMB2,212,629,000 to RMB1,065,259,000 based on an Offer Price of HK$36.00
per Offer Share and RMB1,096,996,000 based on an Offer Price of HK$40.00 per Offer Share. Had the
Shares Reclassification been taken into account, the unaudited pro forma adjusted consolidated total
tangible assets less liabilities of the Group attributable to owners of the Company as at December 31,
2023 per Share would be RMB4.72 (equivalent to HK$5.18) based on an Offer Price of HK$36.00 per
Offer Share and RMB4.86 (equivalent to HK$5.33) based on an Offer Price of HK$40.00 per Offer
Share, respectively.
SUMMARY
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FUTURE PLANS AND USE OF PROCEEDS
We estimate the net proceeds of the Global Offering which we will receive, assuming an
Offer Price of HK$38.00 per Offer Share (being the mid-point of the Offer Price range stated
in this prospectus), will be approximately HK$246.3 million, after deduction of underwriting
fees and commissions and other estimated expenses in connection with the Global Offering,
assuming the Over-allotment Option is not exercised. We intend to use the net proceeds of the
Global Offering for the following purposes: (1) approximately 31.5% or HK$77.5 million to
further upgrade and enhance the functions and features of our solutions and further expand our
solution portfolio; (2) approximately 29.4% or HK$72.5 million to enhance R&D capabilities;
(3) approximately 19.3% or HK$47.5 million to develop our marketing and branding
initiatives; (4) approximately 11.5% or HK$28.2 million to selectively pursue strategic
investment and acquisition opportunities to expand our existing product and service offerings,
improve our technology capabilities and enhance our value propositions to our customers; and
(5) approximately 8.3% or HK$20.5 million for working capital and general corporate
purposes.
See “Future Plans and Use of Proceeds” for further information relating to our future
plans and use of proceeds from the Global Offering, including the adjustment on the allocation
of the proceeds in the event that the Offer Price is fixed at a higher or lower level compared
to the midpoint of the estimated Offer Price range.
DIVIDEND
According to the PRC Company Law, a PRC incorporated company is required to set
aside at least 10% of its after-tax profits each year, after making up previous year’s
accumulated losses, if any, to contribute to certain statutory reserve funds until the aggregate
amount contributed to such funds reached 50% of its registered capital. We may pay dividends
out of after-tax profits after making up for accumulated losses and contributing to statutory
reserve funds as mentioned above. As advised by our PRC Legal Advisor, we cannot pay
dividends if we are in an accumulated loss position. We did not make any dividend distribution
during the Track Record Period. As of the Latest Practicable Date, we did not set any
pre-determined dividend payout ratio after the Listing. The payment and amounts of dividends
(if any) depend on our results of operations, cash flows, financial position, statutory and
regulatory restrictions on the dividend paid by us, future prospects and other factors which we
consider relevant. The declaration, payment and amount of dividends will be subject to the
discretion of the Board in accordance with our Articles of Association, pursuant to which an
annual profit distribution proposal shall be proposed and approved by the Board and then be
submitted to the Shareholders’ general meeting for consideration. We may distribute profits by
cash, Shares or a combination of cash and Shares. PRC laws require that dividends be paid only
out of net profits calculated according to PRC GAAP . Although the calculation of our
distributable profits is in accordance with PRC GAAP or IFRSs, whichever is lower, we do not
expect such difference between distributable profits calculated under PRC GAAP and IFRSs to
be material or have any substantive impact on any dividend to be declared. PRC laws also
require foreign invested enterprises to set aside part of their net profit as statutory reserves,
which are not available for distribution as cash dividends. Distributions from our subsidiaries
SUMMARY
–2 3–


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may also be restricted if they incur debt or losses, or in accordance with any restrictive
covenants in bank credit facilities or other agreements that we or our subsidiaries may enter
into in the future. Our future declarations of dividends may or may not reflect our historical
declarations of dividends and will be determined by our Shareholders.
RECENT DEVELOPMENTS AND MATERIAL ADVERSE CHANGE
Operational and Financial Performance
Our net loss fluctuated during the Track Record Period, which decreased from RMB448.4
million in 2021 to RMB156.2 million in 2022, mainly due to the decrease in fair value loss of
financial liabilities at FVTPL, and increased to RMB359.3 million in 2023, primarily driven
by the increases in our share-based payment expenses and staff costs. Subsequent to the Track
Record Period and up to the date of this prospectus, there was no material adverse change with
respect to our business operations in all material respects, although we expect to continue to
incur net loss and net operating cash outflow in 2024, primarily because we expect to continue
to incur (1) substantial costs and expenses, in particular with respect to our project delivery,
especially under the digital invoice regime, and R&D activities, to further our business growth,
as well as (2) fair value changes of financial liabilities at FVTPL. Moreover, in the four months
ended April 30, 2024, we experienced a decrease in revenue compared to the four months ended
April 30, 2023, as we optimized the mix of marketed financial products and strategically
reduced marketing efforts for financial products with low profit margin, which resulted in a
decrease in revenue contribution from our digital precision marketing services, and
correspondingly there was a decrease in our referral fees, which resulted in the decrease in our
cost of sales in the same period. We also experienced a slight decrease in our gross profit
margin for the four months ended April 30, 2024 compared to that for the four months ended
April 30, 2023, as the increase in our staff costs did not bring comparable revenue growth,
because we downwardly adjusted pricing for our cloud and on-premises solutions to
incentivize customer purchases. For the four months ended April 30, 2024, the number of
invoices issued with our cloud financial & tax digitalization solutions was 522.8 million, as
compared to 913.0 million in the four months ended April 30, 2023. The number of viewing
requests fulfilled for enterprise operation reports was 7.3 million for the four months ended
April 30, 2024, as compared to 4.7 million in the four months ended April 30, 2023. The
number of enterprises included in the enterprise operation reports was 2.3 million in the four
months ended April 30, 2024, as compared to 1.1 million in the four months ended April 30,
2023.
We, together with another software and technology company which is a Chinese
state-owned enterprise specializing in the provision of IT infrastructure services, such as those
in relation to operating system and database, were the joint bid-winner, joint developer and the
exclusive service providers for the system application development of the Digital Invoice
Service Platform, the total contract value of which is approximately RMB23.2 million. We did
not record any revenue in our consolidated statements of profit or loss during the Track Record
Period, and expect to recognize revenue upon final acceptance by the SA T as revenue of our
on-premises financial & tax digitalization solutions.
SUMMARY
–2 4–


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Our Directors confirm that, save as disclosed in this section, up to the date of this
prospectus, there has been no material adverse change in our financial, operational, or trading
position or prospects since December 31, 2023, which is the end date of the periods reported
on in the Accountants’ Report included in Appendix I to this prospectus, and there has been no
event since December 31, 2023 that would materially affect the information as set out in the
Accountants’ Report included in Appendix I to this prospectus.
COVID-19 Outbreak and Effects on Our Business
Since the COVID-19 outbreak, we have seen an increase in demands for enterprise
digitalization solutions from customers. However, during the regional resurgence of COVID-
19, we had to temporarily close certain of our offices. In addition, our ability to carry out
effective sales and marketing activities were also temporarily restrained by the pandemic. In
response to the deteriorated financial conditions of our customers as a result of the COVID-19
pandemic, we downwardly adjusted the price of certain solutions in 2022, and have
strengthened marketing efforts for our basic and standardized cloud financial & tax
digitalization solutions towards price-sensitive customers with basic invoice processing needs.
The COVID-19 pandemic did not adversely affect our solution pricing in 2023.
In 2022, we experienced temporary delays in delivering our on-premises financial & tax
digitalization solutions primarily because a number of our employees contracted COVID-19.
In addition, our dollar-based retention rate for KA customers decreased in 2022, primarily due
to delay in project delivery and the decrease in demand from KA customers for digital
invoice-related services, both as a result of the adverse impact of the COVID-19 pandemic. Our
contract liabilities increased from RMB130.6 million as of December 31, 2021 to RMB165.5
million as of December 31, 2022, partially as a result of delay in contract delivery. As our
operations returned to normal since early 2023, we picked up our solutions delivery pace and
did not experience material delays in solution delivery, and our contract liabilities decreased
to RMB122.7 million as of December 31, 2023. Our contract costs increased from RMB54.7
million as of December 31, 2021 to RMB80.1 million as of December 31, 2022, partially due
to the increase in costs associated with our service contracts that were not completed as of the
end of 2022 due to the impact of the COVID-19 pandemic.
As of the Latest Practicable Date, we did not experience material business disruptions or
operating difficulties due to the COVID-19 outbreak. We believe the COVID-19 outbreak has
not materially affected our business relationships with our business partners. Based on the
above, our Directors are of the view that the COVID-19 outbreak had not had any material
adverse impact on our operations and financial performance during the Track Record Period
and up to the Latest Practicable Date.
SUMMARY
–2 5–


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In this prospectus, unless the context otherwise requires, the following terms and
expressions have the meanings set forth below.
“affiliate” any other person, directly or indirectly, controlling or
controlled by or under direct or indirect common control
with such specified person
“AFRC” Accounting and Financial Reporting Council
“Articles of Association” or
“Articles”
the articles of association of our Company, as amended,
which shall become effective on the Listing Date, a
summary of which is set out in Appendix III to this
prospectus
“Audit Committee” audit committee of the Board
“Board” or “Board of Directors” the Board of Directors of our Company
“Business Day” or “business
day”
any day (other than a Saturday, Sunday or public holiday)
on which banks in Hong Kong are generally open for
normal banking business to the public
“CAC” the Cyberspace Administration of the PRC ( ʕശɛ͏΍
܃)
CAGR” compound annual growth rate
“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries identified in “Directors,
Supervisors and Parties Involved in the Global Offering”
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“China” or “PRC” the People’s Republic of China, excluding, for the
purpose of this prospectus only, Hong Kong, Macau and
Taiwan
“CIIO” critical information infrastructure operator
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
DEFINITIONS
–2 6–


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“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” Baiwang Co., Ltd. (ʮ̡), a joint stock
company incorporated under the laws of the PRC with
limited liability on May 4, 2015
“Company Law” or “PRC
Company Law”
Company Law of the People’s Republic of China ( ʕശɛ
جas amended, supplemented or otherwise
modified from time to time, which was last amended on
October 26, 2018 to take effective on the same date
“Controlling Shareholder(s)” has the meaning ascribed thereto under the Listing Rules
and unless the context requires otherwise, refers to Ms.
Chen, Ningbo Xiu’an and Tianjin Duoying
“Conversion of Domestic Shares
into H Shares”
the conversion of 81,580,048 Domestic Shares into H
Shares on a one-for-one basis upon the completion of the
Global Offering. Such conversion of Domestic Shares
into H Shares has been approved by the CSRC on
January 2, 2024 and an application for H Shares to be
listed on the Stock Exchange has been made to the
Listing Committee
“CSDC” China Securities Depository and Clearing Corporation
Limited (ப΂ʮ̡)
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Director(s)” the director(s) of our Company
“Domestic Shares” ordinary Shares in the share capital of our Company with
a nominal value of RMB1.00 each, which are subscribed
for and paid up in RMB and are unlisted Shares not
currently listed or traded on any stock exchange
“EIT Law” Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ਷
جas amended, supplemented or otherwise
modified from time to time
DEFINITIONS
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“Exchange Participant(s)” a person: (a) who, in accordance with the Listing Rules,
may trade on or through the Stock Exchange; and
(b) whose name is entered in a list, register or roll kept by
the Stock Exchange as a person who may trade on or
through the Stock Exchange
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“F&S Report” an industry report commissioned by us and independently
prepared by Frost & Sullivan
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., the
industry consultant of our Company
“GAAP” Generally Accepted Accounting Principles
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group,” “our Group,” “we” or
“us”
our Company and its subsidiaries (or our Company and
any one or more of its subsidiaries, as the context may
require)
“Guide” Guide for New Listing Applicants issued by the Stock
Exchange (as amended, supplemented or otherwise
modified from time to time)
“H Share(s)” overseas-listed foreign shares in the share capital of our
Company with nominal value of RMB1.00 each, which
are to be subscribed for and traded in HK dollars and are
to be listed on the Stock Exchange
“H Share Registrar” Computershare Hong Kong Investor Services Limited
“HK$” or “HK dollars” Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
DEFINITIONS
–2 8–


--- page 39 ---
“HKSCC Operational
Procedures”
the Operational Procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Offer Shares” the 926,200 H Shares initially offered by our Company
for subscription at the Offer Price pursuant to the Hong
Kong Public Offering (subject to reallocation as
described in the section headed “Structure of the Global
Offering”)
“Hong Kong Public Offering” the offer of the Hong Kong Offer Shares for subscription
by the public in Hong Kong (subject to reallocation as
described in the section headed “Structure of the Global
Offering”) at the Offer Price (plus brokerage, SFC
transaction levies, Stock Exchange trading fees and
AFRC transaction levy), on and subject to the terms and
conditions described in this prospectus and as further
described in “Structure of the Global Offering—Hong
Kong Public Offering” in this prospectus
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in “Underwriting—Hong Kong Underwriters” in this
prospectus
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated June 27, 2024 relating
to the Hong Kong Public Offering and entered into by,
among others, our Company, the Sponsor-OC, the Sole
Sponsor and the Hong Kong Underwriters, as
further described in “Underwriting—Underwriting
Arrangements and Expenses” in this prospectus
DEFINITIONS
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“IFRSs” International Financial Reporting Standards,
amendments, and interpretations, as issued from time to
time by the International Accounting Standard Board
“independent third party(ies)” person(s) or company(ies) , who/which, to the best of our
Directors’ knowledge, information and belief, having
made all reasonable enquiries, is/are not connected
person(s) of our Company within the meaning ascribed
thereto under the Listing Rules
“International Offer Shares” the 8,335,800 H Shares initially offered by our Company
for subscription pursuant to the International Offering
together with, where relevant, any additional H Shares
which may be issued by our Company pursuant to the
exercise of the Over-allotment Option (subject to
reallocation as described in the section headed “Structure
of the Global Offering”)
“International Offering” the offer of the International Offer Shares by the
International Underwriters at the Offer Price to persons
outside the United States in offshore transactions in
accordance with Regulation S, including to professional
investors in Hong Kong, as further described in the
section headed “Structure of the Global Offering” in this
prospectus
“International Underwriters” the group of international underwriters that is expected to
enter into the International Underwriting Agreement to
underwrite the International Offering
“International Underwriting
Agreement”
the underwriting agreement expected to be entered into
on or around the Price Determination Date by, among
others, our Company, the Sponsor-OC, the Overall
Coordinators and the International Underwriters in
respect of the International Offering, as further described
in “Underwriting—Underwriting Arrangements and
Expenses—International Offering” in this prospectus
DEFINITIONS
–3 0–


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“Joint Bookrunners” Haitong International Securities Company Limited, CMB
International Capital Limited, Fosun International
Securities Limited, Huatai Financial Holdings (Hong
Kong) Limited, BOCI Asia Limited and Shenwan
Hongyuan Securities (H.K.) Limited
“Joint Global Coordinators” Haitong International Securities Company Limited, CMB
International Capital Limited and Fosun International
Securities Limited
“Joint Lead Managers” Haitong International Securities Company Limited, CMB
International Capital Limited, Fosun International
Securities Limited, Huatai Financial Holdings (Hong
Kong) Limited, BOCI Asia Limited, Shenwan Hongyuan
Securities (H.K.) Limited, Futu Securities International
(Hong Kong) Limited and Livermore Holdings Limited
“Latest Practicable Date” June 19, 2024, being the latest practicable date for the
purpose of ascertaining certain information contained in
this prospectus prior to its publication
“Listing” listing of the H Shares on the Main Board of the Stock
Exchange
“Listing Committee” the Listing Committee of the Stock Exchange
“Listing Date” the date, expected to be on or around Tuesday, July 9,
2024, on which our H Shares of the Company are listed
and from which dealings therein are permitted to take
place on the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited (as amended
from time to time)
“Main Board” the stock market (excluding the option market) operated
by the Stock Exchange which is independent from and
operated in parallel with the GEM of the Stock Exchange
“MIIT” the Ministry of Industry and Information Technology of
the PRC (ʷ௅)
“MOF” the Ministry of Finance of the PRC (݁
௅)
DEFINITIONS
–3 1–


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“MOFCOM” the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷
ਠਕ௅)
“Ms. Chen” Ms. Chen Jie (؏our founder, Controlling
Shareholder, executive Director and chairlady of our
Board
“Nasdaq” the National Association of Securities Dealers Automated
Quotations
“NDRC” the National Development and Reform Commission of
the PRC (ึ)
“Ningbo Xiu’an” Ningbo Xiu’an Enterprise Management Partnership
(Limited Partnership) (τΆุ၍ଣΥྫΆุ(ࠢ
Υྫ)), a limited partnership established under the laws
of the PRC on August 2, 2017 and controlled by Ms.
Chen (as the general partner who controls and manages
Ningbo Xiu’an). Ningbo Xiu’an is a share incentive
platform and one of our Controlling Shareholders. See
“History and Corporate Structure—Share Incentive
Platforms—Ningbo Xiu’an” for further details
“Nomination Committee” the nomination committee of our Board
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍
ɽึ)
“Offer Price” the final price per H Share in Hong Kong dollars
(exclusive of brokerage fee of 1%, SFC transaction levy
of 0.0027%, Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%) of not less than
HK$36.00 and expected to be not more than HK$40.00,
at which Hong Kong Offer Shares are to be subscribed, to
be determined in the manner further described in
“Structure of the Global Offering—Pricing and
Allocation” in this prospectus
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares, together with, where relevant, any additional H
Shares which may be issued by our Company pursuant to
the exercise of the Over-allotment Option
DEFINITIONS
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--- page 43 ---
“Over-allotment Option” the option expected to be granted by our Company to the
International Underwriters, exercisable by the
Sponsor-OC (on behalf of the International Underwriters)
pursuant to the International Underwriting Agreement,
pursuant to which our Company may be required to allot
and issue up to an aggregate of 1,389,300 additional H
Shares at the Offer Price to, cover over-allocations in the
International Offering, if any, further details of which are
described in the section headed “Structure of the Global
Offering” in this prospectus
“Overall Coordinators” Haitong International Securities Company Limited and
CMB International Capital Limited
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC GAAP” generally accepted accounting principles of the PRC
“PRC Legal Advisor” Tian Y uan Law Firm, being the legal advisor as to the
PRC laws
“Pre-IPO Investor(s)” the investor(s) from whom our Company obtained several
rounds of investments, details of which are set out in the
section headed “History and Corporate Structure—Pre-
IPO Investments” in this prospectus
“Price Determination Agreement” the agreement to be entered into by the Sponsor-OC (on
behalf of the Underwriters) and our Company on the
Price Determination Date to record and fix the Offer
Price
“Price Determination Date” the date, expected to be on or around Friday, July 5, 2024
(Hong Kong time) on which the Offer Price is
determined, or such later time as the Sponsor-OC (for
itself and on behalf of the Underwriters) and our
Company may agree, but in any event no later than 12:00
noon on Friday, July 5, 2024
“Regulation S” Regulation S under the U.S. Securities Act
DEFINITIONS
–3 3–


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“Remuneration and Appraisal
Committee”
the remuneration and appraisal committee of our Board
“Reporting Accountants” Deloitte Touche Tohmatsu
“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
“SASAC” State-owned Assets Supervision and Administration
Commission of the State Council ( ਷ਕ৫਷Ϟ༟ପ္ຖ
ึ)
“SA T” the State Administration of Taxation of the PRC ( ʕ਷਷
೼ਕᐼ҅)
“SCNPC” the Standing Committee of the National People’s
Congress of the PRC (ɽึ
ึ)
“Securities Law” or “PRC
Securities Law”
the Securities Law of the PRC (ج,)
as amended, supplemented or otherwise modified from
time to time
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary shares in the capital of our Company with a
nominal value of RMB1.00 each, comprising Domestic
Shares and H Shares
“Shareholders(s)” holder(s) of the Share(s)
“Sole Sponsor” Haitong International Capital Limited
“Sponsor-OC” Haitong International Securities Company Limited
“Stabilizing Manager” Haitong International Securities Company Limited
DEFINITIONS
–3 4–


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“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“Stock Exchange” The Stock Exchange of Hong Kong Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“Supervisor(s)” member(s) of our Board of Supervisors
“Taobao” Taobao China and Zhejiang Taobao
“Taobao China” Taobao (China) Software Co., Ltd. ( ଇᘒ(ʕ਷)ࠢ
ʮ̡), an associate of Alibaba (China) Technology Co.,
Ltd. (Ԣˋˋ(ʕ਷)ʮ̡), our substantial
Shareholder
“Tianjin Duoying” Tianjin Duoying Technology Center (Limited
Partnership) (Ҧʕː(Υྫ)), a limited
partnership established under the laws of the PRC on July
27, 2017 and controlled by Ms. Chen (as the general
partner who controls and manages Tianjin Duoying).
Tianjin Duoying is a share incentive platform and one of
our Controlling Shareholders. See “History and
Corporate Structure—Share Incentive
Platforms—Tianjin Duoying” for further details
“Track Record Period” the three years ended December 31, 2023
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“U.S.” or “United States” the United States of America, its territories, its
possessions and all areas subject to its jurisdiction
“U.S. Securities Act” the United States Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder
“US$,” “USD” or “U.S. dollars” United States dollars, the lawful currency of the United
States
DEFINITIONS
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“Watertek” Beijing Watertek Information Technology Co., Ltd. ( ̏ԯ
ʮ̡), a Shareholder and pre-IPO
investor of our Company. Where the context requires,
“Watertek Group” refers to Watertek and any one or
several or all of its subsidiaries
“White Form eIPO ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website of the White Form eIPO Service
Provider, at www.eipo.com.hk
“White Form eIPO Service
Provider”
Computershare Hong Kong Investor Services Limited
“Zhejiang Taobao” Zhejiang Taobao Network Co., Ltd. (ࠢ
ʮ̡), an associate of Alibaba (China) Technology Co.,
Ltd. (Ԣˋˋ(ʕ਷)ʮ̡), our substantial
Shareholder
“%” percent
In this prospectus, the terms “associate,” “close associate,” “connected person,” “core
connected person,” “connected transaction,” “subsidiaries” and “substantial shareholder”
shall have the meanings given to such terms in the Listing Rules, unless the context otherwise
requires.
Certain amounts and percentage figures included in this prospectus have been subject to
rounding. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures preceding them. Any discrepancies in any table or chart between the
total shown and the sum of the amounts listed are due to rounding.
For ease of reference, the names of the PRC established companies or entities, laws or
regulations have been included in this prospectus in both the Chinese and English languages;
in the event of any inconsistency, the Chinese versions shall prevail.
DEFINITIONS
–3 6–


--- page 47 ---
This glossary contains certain technical terms used in this prospectus in connection
with our Company and our business. Such terms and their meanings may not correspond
to standard industry definitions or usage.
“AI” artificial intelligence
“big data” large and diverse data sets used to uncover hidden
patterns, unknown correlations, market trends, customer
preferences and other useful information assets under
new processing model for greater decision-making
power, insight and processing optimization capabilities
“Business Tax to V alue-Added
Tax Reform”
a tax reform implemented by the PRC government and
commenced in pilot cities in 2012 and fully implemented
in 2016 that reclassifies certain taxable income from
business tax to value-added tax
“cloud solutions” cloud computing or cloud services, which deliver IT
resources on demand over the internet
“digital invoice(s)” the fully digitalized invoice is a completely new type of
V A T e-invoice. It has been launched by the SA T in
December 2021, which adopted a new data-driven
management concept. It has simplified issuing and
obtaining procedure. Taxpayers can issue a fully
digitalized invoice as soon as they start the business and
there will be no conventional prepositive procedures. It
has the same legal effect and usage as the existing paper
invoice and V A T e-invoice and would replace the existing
paper invoice and V A T e-invoice in the future
“Digital Invoice Service Platform
(ਕ̨̻)”
a nationwide unified electronic invoice service platform
launched by the SA T, which provides taxpayers with
full-time, online services for applying for, issuing,
delivering, and verifying electronic invoices free of
charge. The Digital Invoice Service Platform currently
consists of two systems: Direct Connection System and
Web-based System
“Direct Connection System” also known as Natural System ( ᆀΆ), a system provided
by the SA T to eligible enterprises that connects the SA T’s
tax system directly with the enterprises’ own information
systems and offers digital invoice services
GLOSSARY
–3 7–


--- page 48 ---
“dollar-based retention rate” the quotient from dividing the relevant revenue generated
from customers for a particular solution in a given period,
by the relevant revenue generated from the same group of
customers in the preceding period
“e-invoice(s)” electronic invoice(s), referring to the receipt and payment
vouchers issued and received in data messages during the
purchase and sale of commodities, provision or
acceptance of services and other business activities.
Electronic invoices are available in layout document
format and non-layout document format, which can be
downloaded and stored in electronic storage devices and
circulated in the form of digital messages. In the context
of tax invoices, e-invoices, launched by the SA T in 2012,
are the digitalized form of traditional paper invoices. The
management processes and methods of e-invoices are
substantially the same as paper invoices, which set forth
limitation on the number and amount of invoices
issuable, and require application for blank invoices from
the SA T
“financial service provider(s)” an institution or company that offers a range of services,
including banking, lending, investment, insurance, and
financial planning, to individuals, businesses and
organizations to help them manage and optimize their
financial resources, such as commercial banks, micro-
lending companies and fintech companies
“Golden Tax Project (೼ʈ೻)” the information management system project based on
computer network that adopts advanced technology, that
effectuates interconnection of tax authorities and
information sharing of related departments, and covers
all tax types and tax management processes
“information security hardware” equipment utilizing information security technology,
used primarily for issuing, collecting and filing of
transaction documents, and recording and filing taxes
“invoice” proof of receipt and payment issued and collected for
purchase and sale of commodities, provision or
acceptance of services, and other business activities
GLOSSARY
–3 8–


--- page 49 ---
“input V A T” the value-added tax paid or borne by a taxpayer typically
for purchasing goods, receiving services, and acquiring
intangible assets
“IT” information technology
“KA customer(s)” key account customer(s), or KA customer(s), is a
commonly utilized operating metric. As for our
Company, KA customer(s) of a specific year/period refers
to customer(s) of our cloud financial & tax digitalization
solutions with revenue contribution of RMB100,000 or
more during the corresponding year/period
“licensed credit reporting
agency”
institutions with legally required licenses and approvals
that are mainly engaged in the business of collecting,
collating, storing and processing credit information of
enterprises and individuals and providing such
information for information users
“machine learning” the study of computer algorithms that improves
automatically through experience
“mid-market customer(s)” mid-market customer(s) of a specific year/period refer to
customer(s) of our cloud financial & tax digitalization
solutions with revenue contribution of less than
RMB100,000 in during the corresponding year/period
“non-paying user(s)” user(s) of our complimentary applications that provide
basic functions of tax invoice generation, printing, search
and delivery
“OFD” open fixed-layout document, the preferred permitted
format for the storage, exchange and filing electronic
documents, electronic licenses and electronic archives
according to the Measures for Accounting File
Management (ج)
on-premises” if a software is on-premises, it is installed and runs on
computers on the premises of the person or organization
using the software, rather than at a remote facility such as
a server farm or cloud
“output V A T” the value-added tax paid or borne by taxpayers based on
sales amounts
GLOSSARY
–3 9–


--- page 50 ---
“SaaS” software as a service, which is a software licensing and
delivery model in which software is licensed on a
subscription basis and is centrally hosted
“SMB financing” the provision of financing to small and micro-sized
businesses by licensed financial service providers
including commercial banks, factoring and leasing
companies, and micro-lending companies, among others
“tax identification number(s)” unique and permanent digital code identifier(s) assigned
by tax authorities to taxpayers, including enterprises and
individuals
“tax invoice(s)” the payment voucher(s) issued and collected for purchase
and sales of goods and services or in other business
activities, which can be used for tax payment and filing
purposes and as accounting vouchers. Tax invoices,
categorized by delivery medium, include traditional
paper tax invoices, e-invoices and digital invoices
“transaction documents” documents that reflect business transactions, including
among others, invoices, receipts, bills, and other
accounting records
“V A T” or “value-added tax” a turnover tax levied on the basis of the value-added
amount of goods (including taxable services) generated
in the circulation process of such goods
“V A T e-invoice(s)” tax invoices electronically designed and issued under the
supervision of the SA T, which are important accounting
vouchers evidencing taxpayers’ input V A T and output
V A T liabilities. V A T e-invoices use digital signature
instead of the invoice special seal, which has the same
legal effect as the V A T paper invoices
“V A T invoice(s)” the critical accounting voucher(s) issued for V A T
payment purposes, including primarily ordinary V A T
invoices, special V A T invoices, and uniform motor
vehicle sales invoices
“Web-based System” a web-based system that offers taxpayers digital invoice
services, which normally requires manual login and
operations by the taxpayers if they do not use the
complimentary applications provided by third-party
solution providers
GLOSSARY
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We have included in this prospectus forward-looking statements. Statements that are
not historical facts, including statements about our intentions, beliefs, expectations or
predictions for the future, are forward-looking statements .
This prospectus contains forward-looking statements that are, by their nature, subject to
significant risks and uncertainties, including the risk factors described in this prospectus.
Forward-looking statements can be identified by words such as “may,” “will,” “should,”
“would,” “could,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “continue,” “seek,”
“estimate,” or the negative of these terms or other comparable terminology. Examples of
forward-looking statements include, but are not limited to, statements we make regarding our
projections, business strategy and development activities as well as other capital spending,
financing sources, the effects of regulation, expectations concerning future operations,
margins, profitability and competition. The foregoing is not an exclusive list of all
forward-looking statements we make.
Forward-looking statements are based on our current expectations and assumptions
regarding our business, the economy and other future conditions. We give no assurance that
these expectations and assumptions will prove to have been correct. Because forward-looking
statements relate to the future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our results may differ materially from those
contemplated by the forward-looking statements. They are neither statements of historical fact
nor guarantees or assurances of future performance. We caution you therefore against placing
undue reliance on any of these forward-looking statements. Important factors that could cause
actual results to differ materially from those in the forward-looking statements include
regional, national or global political, economic, business, competitive, market and regulatory
conditions and the following:
 our business prospects;
 our business strategies and plans to achieve these strategies;
 future developments, trends and conditions in and competitive environment for the
industries and markets in which we operate;
 general economic, political and business conditions in locations where we operate;
 our financial condition and performance;
 our capital expenditure plans;
 our dividend policy;
FORW ARD-LOOKING STATEMENTS
–4 1–


--- page 52 ---
 changes to the regulatory environment, policies, operating conditions of and general
outlook in the industries and markets in which we operate;
 our expectations with respect to our ability to acquire and maintain regulatory
licenses or permits;
 the extent and nature of, and potential for, future development of our business;
 the actions of and developments affecting our competitors;
 the actions of and developments affecting our major customers and suppliers; and
 certain statements in the sections headed “Risk Factors,” “Industry Overview,”
“Regulatory Overview,” “Business,” “Financial Information,” “Relationship with
our Controlling Shareholders” and “Future Plans and Use of Proceeds” with respect
to trends in interest rates, foreign exchange rates, prices, volumes, operations,
margins, risk management and overall market trends.
Any forward-looking statement made by us in this prospectus speaks only as of the date
on which it is made. Factors or events that could cause our actual results to differ may emerge
from time to time, and it is not possible for us to predict all of them. Subject to the
requirements of applicable laws, rules and regulations, we undertake no obligation to update
any forward-looking statement, whether as a result of new information, future developments or
otherwise. All forward-looking statements contained in this prospectus are qualified by
reference to this cautionary statement.
FORW ARD-LOOKING STATEMENTS
–4 2–


--- page 53 ---
Potential investors should read and consider carefully all the information set out in
this prospectus, and, in particular , should evaluate the following risks and uncertainties
before deciding to make any investment in our H Shares. You should pay particular
attention to the fact that we conduct our operations in China, the legal and regulatory
environment of which in some respects may differ from that of Hong Kong. Any of the
risks and uncertainties listed below could have a material adverse effect on our business,
results of operations, financial condition or on the trading price of our H Shares, and
could cause you to lose all or part of your investment. Additional risks and uncertainties
not presently known to us or that we currently deem immaterial may also affect our
business and results of operations.
Our business and operations involve certain risks and uncertainties, many of which are
beyond our control. These risks can be broadly categorized into (1) risks relating to our
business and industry, (2) risks relating to conducting business in China, and (3) risks relating
to the Global Offering.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
Our limited history in our solution offerings and evolving business portfolio make it
difficult to evaluate our prospects and the risks and challenges we face, and our historical
growth is not indicative of our future performance.
Since our inception in 2015, we have continued to expand our business and adjust our
solution and service offerings. We launched our financial & tax digitalization solutions for
enterprise customers across industries in 2015, and have since continually introduced new
solution iterations, and expanded our solution offerings and service scope. Leveraging our data
insights, we have expanded our business by offering data-driven analytics services since 2018.
Our business initiatives, in particular with respect to our data-driven analytics services, may
not have been fully proven or accepted by customers.
Our relatively limited operating history and evolving business make it difficult to
evaluate our prospects and the risks and challenges we face. These risks and challenges include
our ability to:
 attract new customers and retain existing ones;
 effectively leverage cross- or up-selling opportunities;
 comply with existing and new laws and regulations applicable to our business;
 accurately forecast our revenues and expenses;
RISK FACTORS
–4 3–


--- page 54 ---
 successfully develop new platform features, offerings and services to enhance the
customer experience;
 optimize our solution offerings and mix;
 plan for and manage capital expenditures for our current and future solution and
service offerings;
 improve our operational efficiency;
 effectively manage our growth;
 increase our market share in existing industries and expand into new ones;
 hire and retain talented employees;
 ensure compliance in an evolving and complex regulatory environment; and
 anticipate and adapt to evolving market conditions, including technological
developments and changes in the competitive landscape.
If we fail to address any or all of these risks and challenges, our business, financial
condition and results of operations may be materially and adversely affected.
We experienced significant growth during the Track Record Period. Our revenue was
RMB453.8 million, RMB525.8 million and RMB713.0 million in 2021, 2022 and 2023,
respectively, and our gross profit was RMB216.2 million, RMB214.3 million and RMB282.0
million in 2021, 2022 and 2023, respectively. However, you should not consider our historical
growth as indicative of our future financial performance. As a result of our limited history in
our solution offerings and evolving business portfolio, it is difficult to draw a period-over-
period comparison on our business, financial condition and results of operations as a whole.
Our results of operations are also affected by our solution offerings and mix, as the profit
margin of certain data-driven analytics services is affected by changes in various market
factors, some of which are beyond our control, such as the demands for SMB financing and the
risk appetite of financial service providers. Furthermore, as our business continues to develop,
we may modify our business model or adjust our business portfolio. We may launch new
solutions or discontinue existing ones for commercial, strategic or compliance purposes. Any
of such modifications or changes may have a material adverse effect on our business, financial
condition and results of operations.
RISK FACTORS
–4 4–


--- page 55 ---
The PRC regulatory framework for data security and personal information protection is
rapidly evolving, and we could face challenges in our continued compliance with
heightened regulatory scrutiny.
The PRC regulatory framework for data security and personal information protection is
rapidly evolving and is likely to remain uncertain for the foreseeable future. We could be
adversely affected if legislation or regulations in China require changes in business practices
or privacy policies, or if the relevant governmental authorities in China interpret or implement
their legislation or regulations in ways that negatively affect our business, financial condition
and results of operations. For example, on November 7, 2016, the SCNPC promulgated
Cybersecurity Law of the PRC (جwhich took effect on June 1,
2017, and applies to the construction, operation, maintenance and use of networks as well as
the supervision and administration of cybersecurity in China. On June 10, 2021, the SCNPC
promulgated Data Security Law of the PRC (جwhich took effect
on September 1, 2021. Data Security Law of the PRC requires, among other things, data
collection to be conducted in a legitimate and proper manner and stipulates that, for the
purpose of data security, data processing activities must be conducted based on data
classification and hierarchical protection system. Furthermore, along with the promulgation of
the Opinions on Strictly Combating Illegal Securities Activities in Accordance with the Law
(จԈ) (the “July 6 Opinion”), overseas-listed China-based
companies are experiencing a heightened scrutiny over their compliance with laws and
regulations regarding data security, cross-border data flow and management of confidential
information from PRC regulatory authorities.
On August 20, 2021, the SCNPC passed Personal Information Protection Law of the PRC
(جthe “PIPL”), which took effect on November 1, 2021. The
PIPL accentuates the importance of processors’ obligations and responsibilities for personal
information protection and sets out the basic rules for processing personal information and the
rules for cross-border transfer of personal information. Pursuant to the PIPL, a personal
information processor is allowed to process (including to collect, store, use, transmit, provide,
disclose and delete) personal information only under certain circumstances, such as processing
with consent from such individual, or for the necessity of performance of a contract to which
such individual is a contracting party or statutory duties, management of human resource under
the labor rules and regulations developed in accordance with the law or a collective contract
signed in accordance with the law, protection of public interest, or reasonable usage of legally
disclosed information. Processing of sensitive personal information, such as the personal
information that is likely to result in damage to personal dignity, personal or property safety
once illegally disclosed, as well as the personal information of minors under the age of 14, is
subject to higher regulatory requirements including specific purpose, sufficient necessity, duty
of explanation to such individuals and consent from a parent or a guardian of such minors.
During the Track Record Period and up to the Latest Practicable Date, we had not been and
were not involved in any penalty by cybersecurity departments, litigation or dispute related to
data security and personal information protection which, individually or in aggregate, have had
or are reasonably likely to have a material adverse effect on us, our financial performance and
results of operations. As advised by our PRC Legal Advisor, we had complied with the PRC
laws and regulations on data security, personal information protection and cybersecurity in all
material respects during the Track Record Period and up to the Latest Practicable Date.
RISK FACTORS
–4 5–


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On November 14, 2021, the CAC issued the Administrative Regulations of Cyber Data
Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)) (the “Draft Cyber Data
Security Regulations”), which provides that a data processor contemplating to get listed in
Hong Kong which affects or may affect national security is required to apply for a
cybersecurity review pursuant to relevant rules and regulations. There currently have been no
clarifications from the authorities as to the standards for determining such activities that
“affects or may affect national security” and there is no timetable as to when it will be enacted.
As such, substantial uncertainties exist with respect to the enactment timetable, final content,
interpretation and implementation, including the standards for determining whether a listing in
Hong Kong “affects or may affect national security.” As of the Latest Practicable Date, the
Draft Cyber Data Security Regulations were released for public comment only and the final
version and effective date may be subject to change and uncertainty.
On December 28, 2021, the CAC and other 12 government authorities jointly issued the
Measures for Cybersecurity Review (جthe “Cybersecurity Review
Measures”), which took effect on February 15, 2022. According to the Cybersecurity Review
Measures, (1) if a CIIO purchases network products and services or an online platform operator
conducts data processing, either of which affects or may affect national security, a
cybersecurity review shall be carried out according to the Cybersecurity Review Measures; (2)
an issuer who is an internet platform operator holding personal information of more than one
million shall file for a cybersecurity review with respect to its proposed foreign listing; and (3)
the relevant PRC governmental authorities may initiate cybersecurity review if such
governmental authorities determine that the issuer’s network products or services, or data
processing activities affect or may affect national security. However, there has been no further
explanation or interpretation for “foreign listing” or “affect or may affect national security”
under the Cybersecurity Review Measures.
Based on our PRC Legal Advisor’s consultations with China Cybersecurity Review
Technology and Certification Center (ҦஔၾႩᗇʕː) (the “CCRC”) on
behalf of us on June 10, 2022 and June 16, 2023 (the “Consultations”), (1) a listing in Hong
Kong does not fall within the definition of “foreign listing,” and therefore a company does not
need to file a cybersecurity review for its proposed listing in Hong Kong under Article 7 of the
Cybersecurity Review Measures; and (2) the competent government authority will generally
contact and inform the company that has been classified as a CIIO, and if a company had not
been contacted by the competent authority, the company is not classified as a CIIO, and
therefore does not need to file an application for cybersecurity review under Article 5 of the
Cybersecurity Review Measures. The CCRC is a competent authority on this consultation, as
it is entrusted with acceptance and review of application materials by the Cybersecurity
Review Office under the CAC and to set up a hotline for consultation regarding the
cybersecurity review, according to the official announcement by the CAC. During the
consultation with the CCRC, our PRC Legal Advisor discussed our proposed listing in Hong
Kong with the CCRC, and CCRC did not raise any objection at the time of consultation. Based
on the Consultations and the facts that (1) we were not recognized as a CIIO by any competent
authority; and (2) we were not informed by any governmental authority that we were subject
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to cybersecurity review, our PRC Legal Advisor is of the view that, pursuant to currently
effective laws and regulations, we are not required to file an application for cybersecurity
review for the Global Offering under the Cybersecurity Review Measures as of the Latest
Practicable Date.
On July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound
Data Transfer (the “Security Assessment Measures”) (جeffective from
September 1, 2022. The Security Assessment Measures require that any data processor which
processes or exports personal information exceeding certain volume threshold under such
measures shall apply for security assessment by the CAC before transferring any personal
information outbound. The security assessment requirement also applies to any transfer of
important data outside of China. As of the Latest Practicable Date, we had not been involved
in any cross-border data transfer during our daily operations. We do not expect the Security
Assessment Measures to have material impact on our daily operations. However, since the
Security Assessment Measures is newly promulgated, there are uncertainties as to its
interpretation and application. We cannot assure you that relevant regulatory authority will take
the same view as ours. In the event if the regulatory authority deems certain of our activities
as a cross-border data transfer, we will be subject to the relevant requirements.
The interpretation and application of these cybersecurity laws, regulations and standards
are still uncertain and evolving, especially the Draft Cyber Data Security Regulations. We
cannot assure you that relevant governmental authorities will not interpret or implement the
laws or regulations in ways that negatively affect us. Regulatory investigations, restrictions,
penalties and sanctions, whether targeted at us or not, may negatively affect the industries we
operate, existing or potential customers and our solutions and services, which may in turn have
a material adverse effect on our business, financial condition and results of operations. It is also
possible that we may become subject to additional or new laws and regulations regarding data
privacy and protection in connection with the data we have access to and the data-based
solutions and services we provide to customers. Complying with additional or new regulatory
requirements could cause us to incur substantial costs or require us to change our business
operations.
Our business is subject to complex and evolving laws and regulations, many of which are
relatively new and could result in changes to our business practices.
We are subject to various laws and regulations that involve matters vital to our business,
including among others, invoices, tax, telecommunications, data security and privacy. See
“Regulatory Overview” for details. The introduction of new services or other actions that we
may take to expand or diversify our businesses may subject us to additional laws, regulations
or other government scrutiny. These laws and regulations are constantly evolving and can be
subject to significant changes. As a result, the application, interpretation and enforcement of
these laws and regulations are often uncertain, particularly in the rapidly evolving industries
in which we operate, and may be interpreted and applied inconsistently. These laws and
regulations, as well as any associated inquiries or investigations or any other governmental
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actions, may be costly to comply with and may result in negative publicity, increase our cost
of operations, require significant management time and attention, and subject us to liabilities
that may harm our business, including fines or demands or orders that we modify or cease
existing business practices.
Furthermore, the PRC government has adopted several regulations governing credit
reporting businesses. On September 27, 2021, the PBOC issued the Administrative Measures
for Credit Reporting Business (جannounced on September 17, 2021 and
effective on January 1, 2022 (the “2021 Administrative Measures”). See “Regulatory
Overview—Regulations on Credit Reporting Business” for details. Institutions that have not
completed record-filing of enterprise credit reporting agencies but have engaged in credit
reporting business before the promulgation of the 2021 Administrative Measures shall rectify
within 18 months from the effective date of the 2021 Administrative Measures (the
“Compliance Period”). Moreover, financial service providers shall not enter into commercial
cooperation with entities which have not completed record-filing for enterprise credit reporting
business to access credit reporting services.
During the Track Record Period, our enterprise operation reporting services were
delivered primarily to financial service providers, including, among others, commercial banks,
fintech companies and licensed credit reporting agencies. In response to the promulgation of
the 2021 Administrative Measures, we have adjusted the service delivery model for the
provision of our enterprise operation reports services to financial service providers. See
“Business—Data-driven Analytics Services—Risk Management Services—Enterprise
Operation Reporting Services” for details. We billed our customers under the service contracts
entered prior to the effectiveness of the 2021 Administrative Measures (the “Legacy
Contracts”) under the pre-adjustment service delivery model for a total amount of RMB63.8
million from January 1, 2022 to June 30, 2023. Our PRC Legal Advisor is of the opinion that
(1) the adjusted service delivery model of our enterprise operation reporting services complies
with the currently effective laws and regulations regarding credit reporting business; (2) our
performance of the Legacy Contracts under the pre-adjustment service delivery model within
the Compliance Period does not violate the 2021 Administrative Measures or other related laws
and regulations, and such Legacy Contracts are legal and valid; and (3) even if our provision
of enterprise operation reporting services during the Track Record Period pursuant to the
pre-adjustment service delivery model may be deemed to constitute operation of enterprise
credit reporting business as a result of the effectiveness of the 2021 Administrative Measures,
the possibility that any administrative penalties may be imposed on us for our past provision
of enterprise operation reporting services without completing the record-filing procedure is
remote.
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We had net loss, net liabilities, net current liabilities and net cash used in operating
activities during the Track Record Period, and may continue to incur net loss, net
liabilities, net current liabilities and net cash used in operating activities in the
foreseeable future, which can expose us to liquidity risks.
In 2021, 2022 and 2023, we incurred net loss of RMB448.4 million, RMB156.2 million
and RMB359.3 million, respectively, primarily due to significant referral fees paid to
marketing agents in connection with our digital precision marketing services and staff costs
and share-based payment expenses to support our expanding operations. We recorded net
liabilities of RMB1,087.7 million, RMB1,233.5 million and RMB1,401.7 million as of
December 31, 2021, 2022 and 2023, respectively. We recorded net current liabilities of
RMB1,545.4 million and RMB1,593.9 million as of December 31, 2022 and 2023, primarily
because we recorded financial liabilities at FVTPL of RMB2,151.9 million and RMB2,212.6
million as of the same date in connection with the fair value changes relating to shares with
preferential rights issued in our equity financings. Our net cash used in operating activities was
RMB14.0 million, RMB64.3 million and RMB99.3 million in 2021, 2022 and 2023,
respectively, primarily due to our net loss positions during the same periods. See “Financial
Information—Consolidated Statements of Profit or Loss and Other Comprehensive Income”
and “—Liquidity and Capital Resources—Cash Flows.”
We may continue to record net loss and net cash used in operating activities as we expand,
and we cannot assure you that we will not record net current liabilities in the future. If we
record net operating cash outflows in the future, our working capital may be constrained, which
may adversely affect our financial condition. A net current liabilities position and/or net
liabilities position can expose us to the risk of shortfalls in liquidity, in which case our ability
to raise funds, obtain bank loans and declare and pay dividends will be materially and
adversely affected. Our profitability and liquidity position are dependent on, among other
factors, our ability to grow our customer base, expand and diversify our solution and service
offerings, in particular with respect to our data-driven analytics services, implement effective
pricing strategies, and increase operational efficiency. If we are unable to generate adequate
revenue to offset the associated cost and expenses or effectively manage our cost and expenses
structure, we may continue to incur significant loss and may not be able to achieve or
subsequently maintain profitability and improve liquidity position.
We may not be able to maintain or renew all the permits, licenses, certificates and other
regulatory filings required for our business.
We are subject to extensive government regulations for all material respects of our
operations in China. As advised by our PRC Legal Advisor, we had obtained all licenses and
permits and made all necessary filings that are essential to the operation of our business in all
material respects as of the Latest Practicable Date, many of which were generally subject to
regular government review or renewal. Any failure by us to obtain the necessary permits,
licenses and certificates, or to renew or otherwise maintain all the licenses, permits and
certificates required for our business at any time could disrupt our business operations and have
a material adverse effect on our business, financial condition and results of operations.
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Moreover, the interpretation or implementation of existing laws and regulations applicable to
our business are subject to changes from time to time, and the implementation of new laws and
regulations is subject to uncertainties. We may be required to obtain additional or different
licenses, permits or certificates for our business operations. We cannot assure you that we will
be successful in obtaining such licenses, permits or certificates in a timely manner or at all, and
we may be subject to various administrative penalties, including the imposition of fines and the
suspension of our operations. Any such penalties may disrupt our business operations and
materially and adversely affect our business, financial condition and results of operations.
If we fail to improve and customize our solutions and services to suit our customers’
evolving needs and adapt to changes in relevant tax and invoice laws, we may lose our
customers, which, in turn, will have a material adverse effect on our business, financial
condition and results of operations.
The industries in which we operate and compete are characterized by constant changes
and innovation, and we expect the market to continue evolving rapidly. To date, our success has
been based on our ability to identify and anticipate the needs of our customers and design
solutions and services that provide our customers with the tools they require to develop their
businesses and comply with applicable tax and invoice laws and regulations. To achieve the
sustainable growth of our business, we must continually dedicate our efforts to attracting new
customers, retaining existing customers, and increasing their incremental spending on our
solutions and services. In order to retain customers, we are required to thoroughly understand
their evolving needs, launch new solutions and services, and improve existing ones in a timely
manner. We also need to adapt to changes in relevant tax and invoice laws and regulations to
ensure effective compliance management functions.
We cannot assure you that our existing and future solutions or services will sustain the
current level of popularity. For example, our financial & tax digitalization solutions feature
compliance functions, and if our solutions did not properly address the non-compliance issues
in our customers’ tax invoice, financial and taxation matters, our customers may experience
business interruptions and, as a result, may lose confidence in our service offerings. For our
digital precision marketing services, if we are unable to respond to changes in preferences of
financial service providers and provide solutions that address their risk management
requirements, they may switch to competing solution providers, and the demands for our
data-driven analytics services may decline. Moreover, we may not be able to effectively market
potential financial product users with suitable financial products due to various reasons. If
potential financial product users are recommended with financial products but cannot
ultimately obtain approval for the products they desire, they may choose alternative options
and the demands for our solutions may decline as a result. Both the financial product users and
financial service providers may associate their dissatisfaction with our solutions, where the
transaction was initiated. Potential financial product users may consequently be reluctant to
continue to use our solutions and financial service providers may be unwilling to continue to
transact with us. Any of the aforementioned events may materially and adversely affect our
business, financial condition and results of operations.
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In addition, our customers may also demand features and capabilities that our current
solutions and services do not have, or that our current platform cannot support, and we may
need to invest significant resources in R&D to build these features and capabilities. Developing
new technologies and solutions may be costly and time-consuming, which in turn could delay
or prevent the development, introduction or implementation of new solutions and services. In
addition, when we expand into new industry verticals, our existing solutions and services may
not effectively address the business demand of customers operating in such new verticals. If
we fail to correctly identify our customers’ demands or continuously provide them with
solutions and services that add value to their businesses, our customers may be reluctant to
increase their spending on our services, or may cease to use our solutions and services and turn
to our competitors.
On the other hand, our efforts to improve and expand our solutions and services may not
succeed, and may reduce our revenue growth rate. For example, the introduction of significant
technology changes and introduction of new solutions and services may not be successful, and
early-stage interest in and adoption of such new solutions and services may not result in
long-term success or significant revenue for us.
In addition, because our solutions and services are designed to utilize various network
technologies and operate across a variety of mobile devices, operating systems, and computer
hardware and software platforms, we will need to continuously modify and enhance our
services to keep pace with changes in internet-related hardware, software, communication,
application software development platform and database technologies. We may not be
successful in such efforts or in bringing them to market in a timely manner. Furthermore,
uncertainties regarding the timing and nature of new network platforms or technologies, or
modifications to existing ones, could increase our research and development or other
operational expenses. Any failure of our solutions and services to operate effectively with
future network platforms and technologies could reduce the demand for our solutions and
services, result in customer dissatisfaction, and adversely affect our business, financial
condition and results of operations.
Our success depends on the growth in market acceptance for our various solutions and
services. If the industries in which we operate develop more slowly than we expect, or even
stagnates or shrinks, it could have a material adverse effect on our business, financial
condition and results of operations.
We believe that the markets for financial and tax-related transaction digitalization and
transaction-based big data analytics for SMB financing are still in a relatively early stage of
development in China. There is considerable uncertainty over the size and rate at which such
industries will grow, as well as whether our solutions and services will be widely accepted.
Some target customers may be reluctant or unwilling to use our solutions and services for a
number of reasons, including concerns about costs, uncertainty regarding the efficacy,
reliability and security of our offerings, or lack of awareness of the benefits of our solutions
and services. Our ability to expand sales depends on several factors, including market
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awareness and acceptance, competition, technological challenges and developments, and other
market factors, many of which are beyond our control. We cannot assure you that the trend of
adopting and utilizing our solutions and services will continue to grow in the future.
Market expansion for financial and tax-related transaction digitalization and transaction-
based big data analytics for SMB financing in China depends on a number of factors, including
government policies and the performance and perceived value associated with our various
solutions and services. Specifically, if the relevant government authorities curtail favorable
government policies for enterprise digitalization solution providers, the industry in which we
operate and our business may be materially and adversely affected. If the industries in which
we operate, or demand for our solutions and services do not grow or decrease due to, among
others, deteriorating economic conditions, decreases in corporate spending, technical
challenges, data security or privacy concerns, government regulations, competing technologies
and solutions or services, our business, financial condition and results of operations would be
materially and adversely affected.
Our business depends, in part, on our ability to attract new customers and retain existing
customers. A decline in our customer retention and spending could materially and
adversely affect our business, financial condition and results of operations.
During the Track Record Period, we generated revenue primarily from our financial & tax
digitalization solutions and our data-driven analytics services. Customer retention upon the
expiry of subscription terms and our ability to attract new customers are vital for us to improve
our results of operations. Our customers are not obligated to renew their subscriptions upon
expiration, and we cannot assure you that customers will renew subscriptions, or purchase new
solutions or services. For instance, the number of retained customers for data-driven analytics
services decreased from 75 in 2022 to 68 in 2023, primarily because certain customers for our
project-based services ceased to be our customers once the projects were delivered. Moreover,
certain income generated from customer projects for connection to the Direct Connection
System are in the form of one-off implementation fee. The loss or reduction of business from
customers, in particular KA customers, could harm our business, financial condition and results
of operations. In addition, our business growth depends on our ability to expand our
relationships with our existing customers by providing additional solutions and services to
serve their evolving needs. This may require more sophisticated and costly sales efforts.
Historical data with respect to rates of customer retention may not accurately predict their
future trends, and may fluctuate or decline because of several factors, including customers’
satisfaction with our solutions and services, the prices of our solutions and services, the quality
and prices of similar solutions and services offered by our competitors, or reductions in
customer spending due to the macroeconomic environment or other factors beyond our control.
If a large number of our customers do not renew their subscriptions for our solutions and
services, or renew them on less favorable terms, or otherwise do not increase their spending
on our solutions and services, our revenue may decline or grow more slowly than expected, and
our ability to achieve and maintain profitability will be harmed.
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Moreover, we must expand our customer base to increase our revenue. See
“Business—Growth Strategies—Expand customer base in more industry verticals and improve
monetization opportunities.” If our growth strategy turns out to be less effective than as
expected in the future, we may not be able to achieve profitability. As our industry matures,
or as competitors introduce lower-cost and/or differentiated products or services, our ability to
attract new customers and retain existing ones could be impaired, and as a result, our business,
financial condition and results of operations may be materially and adversely affected.
If we are not able to continue to broaden data access in the future, or if our data are out
of date, inaccurate or become unreliable, and our solutions may become less effective.
The provision of our data-driven analytics services requires access to massive data, and
we previously obtained tax invoice and transaction data of enterprises primarily from the
provision of our financial & tax digitalization solutions. However, we may not be able to
maintain and continually expand our data access for our development of data-driven analytics
services. In addition, interruptions, failures or defects in our data access and processing
systems, as well as privacy concerns could also limit our ability to analyze data. Furthermore,
our accessibility to data may be restricted by new laws and regulations. Because we derived
a substantial portion of our revenue from data-driven analytics services during the Track
Record Period, if any of the above events occurs, the growth of our business, financial
condition and results of operations may be materially and adversely affected.
Moreover, if the data we utilized for our data-driven analytics services were inaccurate,
incomplete or otherwise misleading as to the actual financial condition of enterprises, such low
quality and inaccurate data could materially affect the accuracy and validity of our data
solutions, which could adversely affect our reputation, business operations and financial
performance.
We face competition from existing or new market players in the industries in which we
operate, and we may not compete effectively.
The markets of financial and tax-related transaction digitalization and transaction-based
big data analytics for SMB financing in China are competitive and characterized by rapid
changes in technology, shifting customer preferences, and frequent introductions of new
solutions and services. China’s financial and tax-related transaction digitalization market is
relatively fragmented, with top five players accounting for 21.4% of total market share in terms
of revenue in 2023, and more than 100 market players competing in such market in 2023,
according to the F&S Report. Top five players in China’s market for transaction-based big data
analytics for SMB financing accounted for 22.7% of total market share in terms of revenue in
2023, with a total of more than 150 players competing in such market, according to the same
source. As such, we face competition in various aspects of our business, and we expect such
competition to continue growing in the future, both from current competitors and new market
entrants that may be more well-established and enjoy greater resources or other strategic
advantages. If we are unable to anticipate or react to these competitive challenges, our
competitive position could weaken, or fail to improve, and we could experience growth
stagnation or even a decline in revenue, which could materially and adversely affect our
business, financial condition and results of operations.
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Our competitors may have larger customer bases, stronger brand recognition, more
extensive commercial relationships in China, and greater financial, technical, marketing, R&D,
and other resources than we do. As a result, such competitors may be able to develop solutions
and services better received by customers, or may be able to respond more quickly and
effectively to new or changing opportunities, technologies, regulations or market demands. In
addition, some of our competitors may be able to leverage a larger existing customer base and
sales network to adopt more aggressive pricing policies and offer more attractive sales terms.
Any of the aforementioned events could cause us to lose potential sales or compel us to sell
our solutions and services at lower prices to remain competitive, which may have a material
adverse effect on our financial condition and results of operations. Furthermore, our current
and potential competitors may enter into business partnerships or alliances among themselves
or with third parties that may further enhance their resources and offerings. Established
companies from other market segments may also expand into our market segment. See
“Business—Competition” for factors that affect our ability to compete effectively. If we are
unable to compete successfully against our current or potential competitors, our business,
financial condition and results of operations could be materially and negatively affected.
We are subject to customer concentration risk with respect to our digital precision
marketing services, and if we are unable to maintain business relationship with the
relevant customer or develop business relationship with new customers with comparable
revenue contribution, our business, financial condition and results of operations may be
materially and adversely affected.
During the Track Record Period, revenue contribution of Customer A, being our largest
customer in 2023, was RMB14.3 million, RMB94.5 million and RMB107.7 million in 2021,
2022 and 2023, respectively, accounting for 3.1%, 18.0% and 15.1% of our total revenue in the
same periods, respectively. Customer A procures from us digital precision marketing services,
and revenue from Customer A accounted for 15.1%, 55.5% and 51.2% of our total revenue of
digital precision marketing services in 2021, 2022 and 2023, respectively. We are therefore
subject to customer concentration risk with respect to our digital precisions marketing services.
If we are unable to resume business relationship with Customer A or develop business
relationship with new customers with comparable revenue contribution, our business, financial
condition and results of operations may be materially and adversely affected.
We rely on certain suppliers for our solution offerings, and if we are unable to maintain
business relationship with them, our business, financial condition and results of
operations may be materially and adversely affected.
Our suppliers primarily include, marketing agents, hardware and software providers,
outsourcing service providers, business collaborators and data providers. For each year during
the Track Record Period, purchases from our top five suppliers accounted for 27.5%, 41.4%
and 33.7% of our total purchases in 2021, 2022 and 2023, respectively. For each year during
the Track Record Period, purchase from our largest supplier accounted for 8.5%, 21.9% and
12.2% of our total purchases in the same periods, respectively. In particular, for our digital
precision marketing services, we engage marketing agents to identify potential financial
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product users and to promote financial products launched by financial service providers, and
we rely on certain major marketing agents for their referrals. Any interruptions or changes in
our cooperation with major suppliers, or our inability to obtain alternative suppliers meeting
our quality standards at acceptable prices in a timely manner, may impair our ability to meet
the demands of our customers.
We cannot assure you that our suppliers will continue their business relationship with us
on commercially reasonable terms or at all. Nor can we assure you that we will be able to
secure a stable supply of products and services required to conduct our business at all times
going forward. In the event that our major suppliers terminate their business relationships with
us, or fail to provide us with adequate supply to meet our needs, we may not be able to find
suitable alternative suppliers within a short period of time. Therefore, if we cannot retain
business relationships with our existing suppliers, or if these suppliers increase prices, delay
in delivery, provide unqualified products or services, or encounter financial, operating or other
difficulties, our business, financial condition and results of operations could be materially and
adversely affected.
If we fail to derive the desired benefits from our R&D efforts in an efficient and timely
manner, we may not be able to effectively compete with our competitors.
Strong product development capability is the cornerstone of our competitiveness and
long-term growth. However, rapid changes and intense competition in our industry require us
to invest significant resources in the technology and product development, and there can be no
assurance that we will continue to be successful in responding to these technological changes.
New products or technologies may render our existing products or technologies less
competitive. Furthermore, we formulate our R&D plan based on our prediction on
technological development, production and market trends. We cannot assure you that we are
able to accurately predict and assess actual changes and trends in the markets of financial and
tax-related transaction digitalization and transaction-based big data analytics for SMB
financing in China. Our R&D efforts may not lead to results and desired benefits as expected
by us.
If we fail to derive the desired benefits from our R&D efforts, or respond to technological
changes and evolving industry standards in an efficient and timely manner, we may not be able
to continue to effectively serve our customers’ demands, and our business, financial condition
and results of operations may be materially and adversely affected.
If we fail to effectively maintain, promote and enhance our brand, or if we incur negative
publicity, our business and competitive advantage may be harmed.
We believe that maintaining and enhancing our reputation and brand recognition is
critical to our relationships with existing customers and users and to our ability to attract new
customers. As our growth depends, in part, on positive recommendations and referrals from our
current and past customers, our failure to maintain and provide high-quality solutions and
services, or a market perception or negative publicity that we do not maintain or provide
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high-quality solutions and services, may harm our reputation and impair our ability to secure
new customers. Any decisions we make regarding regulatory compliance, user privacy and
other issues, and any media, legislative or regulatory scrutiny of our business, or our current
or former directors, employees, contractors or vendors, could negatively affect our brand
image. Any factor that diminishes our reputation or that of our management, including failing
to meet the expectations of our customers, or any non-compliance of our customers with
respect to their tax invoice, financial and tax matters, could make it substantially more difficult
for us to attract new customers. In addition, unaffiliated businesses operating in our industries
may have trademark and trade names similar to ours. Some of our business collaborators
operate under a trade name similar to ours. Any negative publicity regarding such businesses
may be unfairly attributed to us, which may negatively affect the perception of us by our
customers and the public, and adversely affect our business, financial condition and results of
operations. If we do not successfully maintain and enhance our reputation and brand
recognition among our customers, our business may not grow and we could lose existing
customers, which would harm our business, financial condition and results of operations.
We believe the importance of brand recognition will increase as competition in our market
increases. In addition to our ability to provide reliable and useful solutions and services at
competitive prices, the successful promotion of our brand will also depend on the effectiveness
of our marketing efforts. We intend to increase our efforts and investment in sales and
marketing and brand promotion activities. We cannot assure you, however, that such spending
will lead to increased customers or increased revenue, and even if so, such increases in revenue
will be sufficient to offset expenses we incur in building and maintaining our reputation and
brand recognition.
Certain participants in China’s financial and tax-related transaction digitalization
market use brand names that are similar to our Baiwang (
ϵૐ) brand name, which may
cause dilution to and confusion regarding our brand and subject us to negative publicity
that is unrelated to our business operations.
A number of participants in China’s financial and tax-related transaction digitalization
market use brand names similar to our Baiwang (
ϵૐ) brand name, and our brand may lose its
distinctiveness by association of another similar name. Moreover, if such industry participants
are involved in incidents with negative publicity, the public may mistakenly associate such
negative publicity with our brand, which may cause brand dilution and harm our reputation.
As of the Latest Practicable Date, we have registered a number of trademarks under our
brand which we consider to be material to our business operations. In case we fail to maintain
the effectiveness of such trademarks, we may have difficulty defending our intellectual
property rights from infringement by third parties, which could have a material adverse effect
on our brands and business.
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Our business is subject to system and data security risks, and our security measures may
be inadequate to address these risks, making our systems susceptible to compromise,
which could materially adversely affect our business, financial condition and results of
operations.
Nowadays, cyberattacks, distributed denial of service attacks, hacking and phishing
attacks, security breaches, computer malware, and other malicious internet-based activity
continue to increase, and cloud solution providers have been and are expected to be targeted.
Our business is at risk of similar attacks and breaches. While we have adopted and
implemented security protocol, network protection mechanisms, applicable recovery system or
other defense procedures, we cannot assure you that these measures are, or will be, adequate
to prevent any of such attacks or breaches and protect us from any network or service
interruptions, system failures or data losses. We may not be able to anticipate or prevent all
techniques that could be used to obtain unauthorized access or to compromise our systems
because such techniques change frequently and are generally not detected until after an
incident has occurred. Additionally, we cannot be certain that we will be able to address any
vulnerabilities in our software that we may become aware of in the future. Attacks or security
breaches could delay or interrupt our services to our customers, damage our reputation and
brand, expose us to risks of potential litigation and liabilities, and require us to expend
significant capital and other resources to alleviate problems caused by such attacks or security
breaches. During the Track Record Period and up to the Latest Practicable Date, we had not
experienced hacker attacks, technical errors, and breaches that resulted in service interruptions,
system failures or data losses.
In addition, our customers store and transmit substantial amounts of data and information,
including confidential information relating to themselves and relevant stakeholders, on cloud
computing platforms when using our solutions. We cannot assure you that third parties will not
succeed in their attempts to obtain unauthorized access to any confidential information relating
to our customers. If any security incident, human error or other malfeasance occurs in the
future causing unauthorized access to our system, loss of, or unauthorized disclosure of such
information, we may be subject to regulatory enforcement actions, litigation, indemnification
obligations, and other potential liabilities, as well as negative publicity, which could materially
and adversely affect our reputation, business, financial condition and results of operations.
Furthermore, security incidents experienced by us, or by others, such as our competitors
or customers, may lead to public disclosures and widespread negative publicity for us, our
customers, or the transaction digitalization market generally and customers may lose
confidence in the security of our cloud solutions as a whole. Although we have instituted
technical security measures and implemented relevant internal control procedures, to the extent
we do not effectively address these risks, our business, financial condition and results of
operations could be materially and adversely affected.
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We may not implement our growth strategies or manage our growth effectively.
Our future success depends, to a large extent, on our ability to implement our future plans.
We intend to, among other things, enrich our solution functions and portfolio, expand customer
base, enhance technological capabilities, and build our business ecosystem. See
“Business—Growth Strategies” and “Future Plans and Use of Proceeds” for details.
However, our ability to grow and implement our future plans will be subject to a wide
range of operational and financial requirements, including, among others, appropriate
allocation of capital investments in implementing various plans and adequate human resources.
Continuous expansion may increase the complexity of our business, and we may encounter
various difficulties. We may fail to develop and improve our operational, financial and
management controls, enhance our financial reporting systems and procedures, recruit, train
and retain highly skilled personnel, retain business relationships with major customers and
suppliers, or maintain customer satisfaction. We may also fail to realize our future plans in
accordance with the expected timetable, or at all, due to other risks and uncertainties beyond
our control, such as intensifying competition, the general market conditions, and the domestic
and international economic and political environment. Our failure to implement our growth
strategies or manage our growth effectively may hinder our ability to capture new business
opportunities and maintain our competitive edge, and therefore, our business, financial
condition and results of operations may be materially and adversely affected.
If we fail to effectively develop and expand our sales and marketing capabilities, we may
not increase our customer and user base and achieve broader market acceptance and
utilization of our solutions and services.
Our ability to increase our customer and user base and achieve broader market acceptance
of our solutions and services will depend to a significant extent on our ability to enhance our
sales and marketing capabilities and to deploy our sales and marketing resources efficiently. An
important component of our growth strategy is to increase the cross- and up-selling of our
solutions and services to current and future customers. However, if our sales force is not
successful in effecting such strategy, or our existing and potential customers and users find our
additional solutions and services to be unnecessary or unattractive, we may not be able to
expand our customer base. We have invested, and plan to continue to invest, significant
resources in expanding our direct sales force and business collaborator network. However, we
may not achieve anticipated revenue growth from expanding our sales and marketing force if
we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if
our new and existing sales personnel are unable to achieve desired productivity levels in a
reasonable period of time, or if we cannot cost-effectively expand our business collaborator
network that helps us extend our customer outreach.
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We may not be able to continue to successfully expand our solution and service offerings.
Failure to launch commercially viable solutions or services, to keep pace with
technological developments or to do so in a timely manner may have a material adverse
effect on our business, financial condition and results of operations.
We plan to continue to expand and diversify our solution and service offerings to sustain
our growth and meet customer demands. Expanding into new product categories requires
substantial capital investment for R&D resources in new technologies, product designs and
compliance features. In particular, developing new and technologically advanced products is a
time-consuming and expensive process, which requires innovation, skilled R&D personnel as
well as accurate estimation of technological and market trends and, for our compliance
solutions, accurate interpretation and application of relevant laws, regulations and rules. We
may not be able to develop the core technologies necessary to develop new solutions or
services, license these technologies from third parties, or remain competitive in our R&D
capabilities. Therefore, we cannot assure you that we will be able to successfully develop new
solutions or services with desired functionality and technological advances, if at all, or on a
timely basis. Even if we are able to develop and introduce new solutions or services to the
market, they may fail to meet customer demands and gain market acceptance. Hence, if we fail
to successfully develop or market our new solutions or services, our business, financial
condition and results of operations may be materially and adversely affected.
Our ability to provide high-quality customer services will affect our brand, business,
financial condition and results of operations.
We believe our focus on customer success and support is critical to attracting new
customers, retaining existing customers, driving their spending on our solutions, and growing
our business. While we have designed our solutions and services to be easy-to-use, our
customers depend on our customer service teams to provide customer care and support
services. If we do not provide effective ongoing support, our ability to sell additional solutions
and services to existing customers could be adversely affected, and our reputation with
prospective customers or the industry could be damaged. If we experience increased customer
demand for support, we may face increased costs that may harm our results of operations. The
increasing number of our customers has placed, and may continue to place, additional pressure
on our customer service team. We cannot assure you that we will be able to maintain and
improve customer satisfaction over time. If we are unable to provide efficient support services
or if we need to hire additional support resources, potentially through third parties, our
business, financial condition and results of operations could be adversely affected.
Additionally, our ability to acquire new customers and users is highly dependent on our
business reputation and on positive recommendations from existing customers. Any failure to
maintain high-quality support, or a market perception that we do not maintain high-quality
support, for our customers could materially and adversely affect our business, financial
condition and results of operations.
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Unsatisfactory performance of or defects in our solutions may harm our reputation,
subject us to significant product liability litigations and have a material adverse effect on
our business, financial condition and results of operations.
Our users and customers expect a consistent level of quality in the provision of our
solutions. However, complex technological solutions such as ours often contain errors, defects,
security vulnerabilities or software issues that are difficult to detect and correct, particularly
when first introduced or when new versions or enhancements are released. Despite internal
testing, our solutions may contain serious errors or defects, security vulnerabilities or software
issues which we are unable to successfully correct in a timely manner or at all, which could
result in revenue loss, significant expenditures of capital, a delay or loss in market acceptance
and damage to our reputation and brand, any of which could materially and adversely affect our
reputation, business, financial condition and results of operations.
Additionally, our cloud financial & tax digitalization solutions are delivered on cloud
applications which allow us to deploy new versions and enhancements to all of our customers
simultaneously. To the extent that we deploy new versions or enhancements that contain errors,
defects, security vulnerabilities or software issues concurrently to all of our customers, the
consequences would be more severe than if such versions or enhancements were only deployed
to a smaller number of customers.
Given that many of our customers and users use our solutions in processes that are critical
to their businesses, any error, defect, security vulnerability, service interruption or software
issue related to our solutions could result in losses to them, which may subject us to claims for
damages. Our customers and users may seek significant compensation from us for any losses
they suffer or cease doing business with us. Furthermore, our customers and users may share
information about their negative experiences on social media, which could damage our
reputation and negatively impact our ability to attract potential customers. We cannot assure
you that provisions limiting our exposure to claims, which we typically include in agreements
with our customers, would be enforceable, adequate or would otherwise protect us from
liabilities or damages with respect to any particular claim. Even if unsuccessful, a claim
brought against us by any of our customers would likely be time-consuming, costly to defend
and may have a material adverse effect on our reputation and brand, making it more difficult
for us to increase our sales and grow our business.
If we are unable to develop and maintain relationships with our business collaborators
and marketing agents, our business, financial condition and results of operations could be
materially and adversely affected.
During the Track Record Period, we worked with our business collaborators to market our
cloud financial & tax digitalization solutions to enterprise customers that our direct sales force
does not cover, and we engaged marketing agents to identify potential users for the financial
products sold by financial service providers as a part of our digital precision marketing
services. See “Business—Sales and Marketing—Sales Model.”
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We believe it is important to identify, develop and maintain stable relationships with our
business collaborators and marketing agents to drive our revenue growth. However, we cannot
assure you that our existing or prospective business collaborators and marketing agents will
strictly comply with the terms of our agreements with them. They may terminate our business
cooperation with limited or no notice. If we fail to identify additional business collaborators
and marketing agents in line with our business growth in a timely and cost-effective manner,
or at all, or are unable to provide meaningful assistance for our current and future business
collaborators and marketing agents, our business, financial condition and results of operations
may be materially and adversely affected. Moreover, if our business collaborators and
marketing agents do not effectively market, price and sell our products, or fail to meet the
needs of our customers, our reputation among prospective and existing customers and ability
to grow our business may also be adversely affected. Moreover, if we are unable to promptly
collect customer or user feedback from business collaborators and marketing agents, we may
fail to obtain insights into our business performance to make informed business decisions.
While we have comprehensive measures in place to ensure that our business collaborators
and marketing agents market, sell and implement our solutions and services in a consistent
manner as our direct sales force does, there can be no assurance such measures will always be
effective or be complied with. If our business collaborators and marketing agents do not
effectively market and sell our solutions and services, or fail to meet the needs of customers,
we may lose existing and prospective customers of new solutions and services. Additionally,
any fraud or other misconduct by our business collaborators and marketing agents or any
material disputes between them and our customers or the potential financial product users may
damage our reputation and adversely affect our business.
Unsatisfactory performance by or unavailability of outsourced service providers may
adversely affect our profitability, financial performance and reputation.
During the Track Record Period, we outsourced a portion of our operations and
technology projects to third-party service providers. Outsourcing exposes us to certain risks
such as delayed and substandard performance by outsourced service providers, and potential
shortage of qualified and experienced outsourced service providers. There is no assurance that
we are able to supervise the performance of our outsourced service providers as effectively and
efficiently as with our own employees. Furthermore, we may be unable to hire suitable
outsourced service providers that fully satisfy our business needs. If the work of our outsourced
service providers is delayed or substandard, we may incur additional costs and time to
supervise their work, and we may be liable for their misconduct and subject to claims by our
customers. Accordingly, our profitability, financial performance and reputation will be
materially and adversely affected.
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We may be held liable for information or content displayed on, retrieved from or linked
to our platform, which may materially and adversely affect our business and results of
operations.
The PRC government has adopted regulations governing internet access and distribution
of information over the internet. Under these regulations, internet content providers and
internet publishers are prohibited from posting or displaying over the internet content that,
among other things, violates PRC laws and regulations, impairs the national dignity of China,
contains terrorism, extremism, content of force or brutality, or is reactionary, obscene,
superstitious, fraudulent or defamatory. Failure to comply with these requirements may result
in the revocation of licenses to provide internet content and other licenses, the closure of the
concerned websites and criminal liabilities. In particular, the MIIT has published regulations
that subject website operators to potential liability for content displayed on their websites and
the actions of users and others using their systems. According to the Administrative Provisions
on Mobile Internet Applications Information Services (ਕ၍ଣ஝
֛which was promulgated by the CAC and became effective on August 1, 2016 and amended
on June 14, 2022, providers of mobile apps shall ensure information content compliance and
network security.
During the Track Record Period, we provided advertisement publishing services, and
advertising agencies could place advertisements on our websites and WeChat official account.
We are required to adopt and implement management systems of information security and
establish and improve procedures on content examination and administration. We have
implemented internal control procedures screening the information and content on our websites
and WeChat official account to ensure their compliance with these provisions. However, there
can be no assurance that all the information or content displayed on, retrieved from or linked
to our websites and WeChat official account complies with the requirements of the provisions
at all times. If content displayed on our websites and WeChat official account were found to
violate the provisions, we may be subject to administrative penalties, including warning,
service suspension or removal of our websites and WeChat official account, which may
materially and adversely affect our business and results of operations. We may also become
involved in legal disputes with third parties that disagree with the content on our platform,
which could result in substantial costs and a diversion of our managerial and financial
resources.
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Changes in laws and regulations relating to the internet or changes in the internet
infrastructure itself may diminish the demand for our services and have a negative impact
on our business.
The future success of our business depends upon the continued use of the internet as a
primary medium for commerce, communication and business solutions. The PRC government
has in the past adopted, and may in the future adopt, laws or regulations affecting the use of
the internet as a commercial medium. Changes in these laws or regulations could require us to
modify our products and solutions in order to comply with these changes. In addition,
government agencies may begin to impose taxes, fees or other charges for accessing the
internet. These laws and changes could limit the growth of internet-related commerce or
communications generally and reduce the demand for internet-based services such as ours.
In addition, use of the internet as a business tool could be adversely affected. The
performance of the internet and its acceptance as a business tool has been adversely affected
by “viruses,” “worms” and similar malicious programs and the internet has experienced a
variety of outages and other delays as a result of damage to portions of its infrastructure. If the
use of the internet is adversely affected by these issues, demand for our services could suffer.
Our employees, service providers, or any other third parties involved in our business
operations may engage in misconduct or other improper activities, including
noncompliance with regulatory standards and requirements.
We are exposed to the risk that our employees, service providers, or any other third parties
involved in our business operations may engage in fraudulent or other illegal activities which
could include intentional, reckless and/or negligent conducts or unauthorized activities that
violate laws, regulations, industry rule, or our internal policies. In particular, in connection
with our business nature, misconduct by these parties could involve individually identifiable
information or other sensitive data and information, which could result in regulatory sanctions
and harm to our reputation.
Moreover, our business operations are subject to anti-bribery and anti-corruption laws and
regulations in China, which prohibit companies and their intermediaries from making improper
payments or other benefits to government or other parties for the purpose of obtaining or
retaining business. While we have adopted and implemented internal controls and procedures
to monitor compliance with anti-bribery and anti-corruption laws, regulations and policies, we
cannot guarantee that such internal controls and procedures will always be effective in
preventing non-compliance and exculpating us from penalties or liabilities that may be
imposed by relevant government authorities due to violations committed by our employees or
other third-party business partners. If our employees or third-party business partners are found
or alleged to have violated anti-bribery or anti-corruption laws and regulations, we may face
or be involved in fines, lawsuits and damage to our reputation, which could have a material
adverse effect on our business, financial condition and results of operations.
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We may be unable to identify and deter misconduct by employees or third parties in a
timely manner, or at all, and the precautions we take to detect and prevent these potential
misconduct may not be effective in controlling unknown or unmanaged risks or losses, or
protecting us from governmental investigations stemming from a failure to be in compliance
with such laws or regulations, or claims or lawsuits initiated from our customers or business
partners resulting from our contract breach due to such misconduct. If any such actions are
instituted against us, and we are not successful in defending ourselves or asserting our rights,
those actions could have a significant impact on our business, including the imposition of civil,
criminal and administrative penalties, damages, monetary fines, contractual damages,
reputational harm, diminished profits and future earnings and curtailment of our operations.
Any interruptions or delays in services from third parties or from our inability to
adequately plan for and manage service interruptions or infrastructure capacity
requirements, may impair the delivery of our services, and materially and adversely affect
our business and results of operations.
We rely on computer hardware purchased from, and cloud computing platforms provided
by, third parties in order to deliver our solutions and services. Any damage to, or disruption or
failure of, our systems generally, including systems of our third-party service providers, could
result in interruptions in our services. In the past, we have experienced interruptions in our
services, and such interruptions may occur in the future. Interruptions in our services may have
a material adverse effect on our ability to retain existing customers and attract new ones, which
in turn would reduce our revenue. Our business and reputation may also be harmed if our
customers, or potential customers, believe that our solutions and services are unreliable.
We do not control the operation of any of facilities provided by third-party providers,
which may be vulnerable to damage or interruption from earthquakes, floods, fires, power loss,
telecommunications failures, and similar events. These facilities may also be subject to
break-ins, sabotage, intentional acts of vandalism and similar misconduct, as well as local
administrative actions, changes to legal or regulatory requirements and litigious proceedings to
stop, limit or delay operations. Despite precautions taken by our third-party providers at these
facilities, such as disaster recovery and business continuity arrangements, the occurrence of an
act of terrorism or natural disaster, a decision to close the facilities without adequate notice or
other unanticipated problems at these facilities could result in lengthy interruptions to our
services.
Additionally, these hardware, software, data and cloud computing services may not
continue to be available to us at reasonable prices, on commercially reasonable terms, or at all.
If we lose our right to use any of these services, this could significantly increase our expenses
or otherwise result in delays in the delivery of our solutions and services. If the performance
of such third parties proves unsatisfactory, or if any of them violates its contractual obligations
to us, we may need to replace such third party and/or take other remedial action, which could
result in additional costs and materially and adversely affect the solutions and services we
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provide to our customers. Furthermore, the financial condition of our third-party providers may
deteriorate over the course of our contract term with them, which may also impact the ability
of such third party to provide the agreed services and have a material adverse effect on our
business operations.
We may have insufficient computing resources, transmission bandwidth and storage
space, which could result in disruptions and our business, financial condition and results
of operations could be adversely affected.
Our operations are dependent in part upon transmission bandwidth provided by
third-party telecommunications network providers, access to data centers to house our servers
and other computing resources. There can be no assurance that we are adequately prepared for
unexpected increases in bandwidth and data center demands by our customers. The bandwidth
we have contracted to use or the data centers we have established may become unavailable for
a variety of reasons, including service outages, payment disputes, network providers going out
of business, natural disasters, networks imposing traffic limits, or governments adopting
regulations that impact network operations. Moreover, if bandwidth providers have their own
services that compete with us, or they may choose to develop their own services that will
compete with us, these bandwidth providers may become unwilling to sell us adequate
transmission bandwidth at fair market prices, if at all. This risk is heightened where market
power is concentrated with one or a few major networks. We also may be unable to move
quickly enough to augment capacity to reflect growing traffic or security demands. Failure to
put in place the capacity we require could result in a reduction in, or disruption of, service to
our customers and ultimately a loss of those customers. Such a failure could also result in our
inability to acquire new customers demanding capacity not available on our platform.
Our intellectual property rights are critical to our success and infringement of our
intellectual property right by any third party may materially and adversely affect our
business, reputation, financial condition and results of operations.
Our trade secrets, trademarks, copyrights, patents, domain names and other intellectual
property rights are critical to our success. We rely on, and expect to continue to rely on, a
combination of confidentiality and non-compete, invention assignment and license agreements
with our employees, and third parties with whom we have relationships, as well as our
trademark, domain name, copyrights, trade secrets, patent rights, and other intellectual
property rights to protect our brand. However, various events beyond our control may pose a
threat to our intellectual property rights and our solutions and services. Effective protection of
trademarks, copyrights, domain names, patent rights, and other intellectual property rights is
expensive and difficult to maintain, both in terms of application and maintenance costs and the
costs of defending and enforcing those rights. While we have taken measures to protect our
intellectual property rights, we cannot assure you that such efforts are either sufficient or
effective. Our intellectual property rights may nevertheless be infringed, misappropriated, or
challenged, which could result in them being narrowed in scope or declared invalid or
unenforceable.
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As of the Latest Practicable Date, we had 18 patents registered in China, as well as 58
pending invention patent applications. We also held 234 registered software copyrights, 116
registered domain names and 138 registered trademarks as of the same date. The expected
timeframes to register each of the pending patents and trademarks depend on various factors.
If we fail to register a substantial amount of these patents and trademarks, our business
operations may be materially and adversely affected.
Similarly, our reliance on unpatented proprietary information and technology, such as
trade secrets and confidential information, depends in part on our agreements with employees
and third parties which contain restrictions on the use and disclosure of such intellectual
property. These agreements may be insufficient or may be breached, either of which could
potentially result in the unauthorized use or disclosure of our trade secrets and other
intellectual property, including to our competitors. As a result, we could lose our crucial
competitive advantage derived from such intellectual property. Significant impairments to our
intellectual property rights, and limitations on our ability to assert our intellectual property
rights against others, may result in a material adverse effect on our business.
We may be subject to intellectual property infringement claims from third parties, which
may materially and adversely affect our business, financial condition and results of
operations.
We depend on our ability to effectively develop and maintain intellectual property rights
relating to our business. However, third parties may claim that our business infringes upon or
otherwise violates patents, copyrights or other intellectual property rights which they hold,
whether such claims are valid or otherwise. We may face allegations that we have infringed the
trademarks, copyrights, patents and other intellectual property rights of third parties, including
our competitors, or allegations that we are involved in unfair trade practices. The validity,
enforceability and scope of protection of intellectual property rights, particularly within China,
are still evolving. As we face increasing competition and as litigation becomes a more
commonly pursued method for resolving commercial disputes in China, we face a higher risk
of being the subject of intellectual property infringement claims.
Additionally, the application and interpretation of intellectual property right laws and the
procedures and standards for granting trademarks, patents, copyrights, know-how or other
intellectual property rights are evolving and may be uncertain, and we cannot assure you that
courts or regulatory authorities would agree with our analysis. As of the Latest Practicable
Date, we were involved in one ongoing patent infringement appeal with a claim amount of over
RMB7.0 million where we had successfully defended ourselves at the court of first instance,
and if the outcome of such lawsuit were unfavorable to us, we may be subject to liability or
may be prohibited from using such intellectual property, and we may incur licensing fees or be
forced to develop alternatives of our own, which may harm our reputation, business, financial
condition and results of operations. Moreover, defense of such claims, regardless of merits,
would involve substantial litigation expense and would be a substantial diversion of managerial
resources from our business.
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We have been, and may continue to be involved, in claims, disputes and legal proceedings
in our ordinary course of business.
From time to time, we may be involved in claims, disputes and legal proceedings in our
ordinary course of business. These may concern issues relating to, among others, breach of
contract, employment or labor disputes, and infringement of intellectual property rights. If we
are unsuccessful in any claims, disputes and legal proceedings, we may be subject to
substantial damages. Any claims, disputes or legal proceedings initiated by us or brought
against us, with or without merit, may result in substantial costs and diversion of resources and
materially harm our reputation.
Our business relies on the proper operation of our IT systems, any malfunction of which
for extended periods could materially and adversely affect our business, financial
condition and results of operations.
Our business relies on the proper functioning of our IT systems. We use our IT systems
to retrieve and analyze operational data, including procurement, sales and financial and
accounting data. We also use our IT systems to assist us in planning and managing our
budgeting, human resources, sales and financial reporting. As a result, our IT system is critical
for our daily operations. Although we did not experience any IT system breakdown during the
Track Record Period, we cannot assure you that our IT systems will always operate without
interruption.
Any malfunction in a particular part of our IT systems may adversely affect our
operations and our results of operations. In addition, we need to constantly upgrade and
improve our IT systems to keep up with the continuous growth of our operations and business.
We may not always be successful in installing, running or implementing new software or
advanced IT systems as required by our business development. All of these may have a material
adverse effect on our business, financial condition and results of operations.
An occurrence of a natural disaster, widespread health epidemic or other outbreaks, such
as the COVID-19 pandemic, could have a material adverse effect on our business,
financial condition and results of operations.
Our business could be materially and adversely affected by natural disasters, such as
snowstorms, earthquakes, fires or floods, the outbreak of a widespread health epidemic or other
events, such as wars, acts of terrorism, environmental accidents, power shortage or
communication interruptions. The occurrence of such a disaster or prolonged outbreak of an
epidemic illness or other adverse public health developments in China or elsewhere, including
but not limited to the severe acute respiratory syndrome, or SARS, the H5N1 avian flu, the
human swine flu, also known as Influenza A (H1N1), or the novel coronavirus (COVID-19),
could materially disrupt our business and operations.
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The outbreak of COVID-19, which began in late 2019, has materially and adversely
affected the Chinese and global economy. In response to the pandemic, the Chinese government
implemented mitigation measures from time to time to contain the spread of the pandemic.
During the COVID-19 pandemic, a number of our employees were infected with the
COVID-19 in December 2022, which temporarily disrupted our business operations. Moreover,
certain of our customers were adversely affected by the COVID-19 pandemic, and we
experienced difficulty in collecting trade receivables from these customers. Additionally, in
2022, we experienced temporary delays in delivering our on-premises financial & tax
digitalization solutions due to the impact of COVID-19 pandemic, and we downwardly
adjusted the price of certain solutions to attract mid-market customers and retain existing
customers amid the COVID-19 pandemic.
The COVID-19 pandemic may also have the effect of heightening other risks disclosed
in this section, including but not limited to those related to: (1) decreased customer demand for
our solutions and services, which may be caused by economic downturn; (2) disruption of the
operations of our service providers; and (3) increase volatility or significant disruption of
global capital markets due in part to the COVID-19 pandemic, which may adversely affect our
ability to access capital markets and other funding sources on acceptable terms or at all.
Our business depends substantially on the continuing efforts of our management and
other key personnel, as well as competent employees that support our existing operations
and future growth. If we fail to attract, motivate and retain talents, our operations and
growth prospects may be severely disrupted.
Our future success heavily depends upon the continuing services of our management and
other key personnel. In particular, we rely on the expertise, experience and vision of our
founders and our chief executive officer, and other members of our senior management team.
We also rely on the technical know-how and skills of other key personnel. If any of our senior
management or key personnel becomes unable or unwilling to continue to contribute their
services to us, we may not be able to replace them easily or at all. As a result, our business may
be severely disrupted, our financial condition and results of operations may be materially and
adversely affected, and we may incur additional expenses to recruit, train and retain key
personnel.
Our existing operations and future growth require competent employees specializing in,
among other things, cloud computing, financial and tax management, data analytics and sales
and marketing so as to improve our solution functionality and anticipate and effectively
respond to changing customer preferences and market trends. However, our industry is
characterized by high demand and intense competition for talents. In order to attract and retain
talents, we may need to offer higher compensation, better trainings and more attractive career
trajectory and other benefits to our employees, which may be costly and burdensome. We
cannot assure you that we will be able to attract or retain qualified employees necessary to
support our future growth. We may fail to manage our relationship with our current or former
employees, and any disputes between us and them, or any labor-related regulatory or legal
proceedings may divert management and financial resources, negatively impact staff morale,
reduce our productivity, or harm our reputation and future recruiting efforts. In addition, as our
business has grown rapidly, our ability to train and integrate new employees into our operations
may not meet our increasing business demands. Any of the above issues may materially and
adversely affect our results of operations and growth prospects.
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Our financial condition and results of operations may be adversely affected by fair value
changes of financial assets at fair value through profit or loss and valuation uncertainty.
In 2021, we recognized fair value losses of financial assets at FVTPL of RMB1.7 million
and recognized fair value gains of financial assets at FVTPL of RMB6.0 million and RMB2.0
million in 2022 and 2023, respectively, primarily relating to our wealth management products,
investments in associates with preferential rights, and the arrangement/right to receive
additional shares at nominal consideration. Our wealth management products were classified
as level 2 instruments for financial reporting purpose, and the related fair value was measured
using the discounted cash flow technique based on observable market inputs or recently quoted
market prices and unobservable inputs, including volatility. Investment in associates with
preferential rights and the arrangement/right to receive additional shares at nominal
consideration were classified as level 3 instruments for financial reporting purpose, and the
related fair value measurement was based on significant unobservable inputs, including
discount rates, discounts for lack of marketability and expected volatilities, the changes of
which will lead to changes in fair value.
For level 2 financial instruments, valuations are generally obtained from third party
pricing services for identical or comparable assets, or through the use of valuation
methodologies using observable market inputs, or recent quoted market prices. V aluation
service providers typically gather, analyze and interpret information related to market
transactions and other key valuation model inputs from multiple sources, and through the use
of widely accepted internal valuation models, provide a theoretical quote on various securities.
For our level 3 financial assets, fair value is determined using income approach, and the
significant unobservable input is the expected future cash flow. Typically, the more the cash
flow, the higher the fair value. See Note 40 to the Accountants’ Report in Appendix I to this
prospectus for details. As such, we are exposed to fair value change of financial assets at
FVTPL and valuation uncertainty due to the use of unobservable inputs, which will directly
affect our profit and results of operations.
We are also subject to the risks that any of our counterparties, such as the banks that
issued wealth management products, may not perform their contractual obligations, such as in
the event that any such counterparty declares bankruptcy or becomes insolvent. Any material
non-performance of our counterparties with respect to the wealth management products we
invested in could materially and adversely affect our financial position and cash flow.
Furthermore, the wealth management products are subject to the overall market conditions,
including the capital markets. Any volatility in the market or fluctuations in interest rates may
reduce our financial position or cash flow, which, in turn, could materially and adversely
impact our financial condition. In addition, general economic and market conditions affect the
fair value of these wealth management products.
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Our financial condition and results of operations may be adversely affected by fair value
changes of financial liabilities at fair value through profit or loss and valuation
uncertainty due to the use of unobservable inputs.
In 2021, 2022 and 2023, we recognized fair value losses of financial liabilities at FVTPL
of RMB263.9 million, RMB59.5 million and RMB57.9 million, respectively, arising from our
shares with preferential rights issued in our equity financings and contingent consideration for
investment in an associate. Our financial liabilities at FVTPL are level 3 financial instruments.
We applied the income approach to determine our underlying equity value and adopted equity
allocation based on the Black-Scholes option pricing model to determine the fair value of our
shares with preferential rights, involving various parameters and inputs. V aluation techniques
adopted by an independent qualified professional valuer are calibrated to ensure that outputs
reflect market conditions. However, some inputs, such as fair value of the ordinary shares of
the Company, possibilities under different scenarios, qualified initial public offering,
redemption, liquidation, time to liquidation, expected volatility value, discount rate and other
inputs, require management estimates, which may be subject to material changes, and therefore
inherently involves a certain degree of uncertainty. Factors beyond our control can
significantly influence and cause adverse changes to the estimates we use and thereby affect
the fair value of our shares with preferential rights and therefore may cause our estimates to
vary from actual results, which could adversely affect our results of operation and financial
condition. Fair value of our shares with preferential rights is affected by changes in our equity
value. If our equity value had increased or decreased by 2% with all other variables held
constant, the loss before tax for the years ended December 31, 2021, 2022 and 2023 would have
been higher or lower by approximately RMB34.1 million, RMB34.6 million and RMB38.5
million, respectively. See Note 33 to the Accountants’ Report in Appendix I to this prospectus
for details. As such, we are exposed to fair value change of financial liabilities at FVTPL and
valuation uncertainty due to the use of unobservable inputs, which will directly affect our profit
and results of operations.
We may face risk regarding investment in associates and joint ventures, and the share of
results of associates and joint venture may adversely affect our financial performance.
We recorded investments in associates of RMB75.2 million, RMB87.0 million and
RMB88.4 million as of December 31, 2021, 2022 and 2023 and investments in joint ventures
of RMB9.7 million, RMB10.8 million and RMB2.8 million as of the same dates, respectively,
primarily due to the initial investment costs in the associates and joint ventures adjusted by
sharing the profit or loss of the investees after the date of acquisition. However, our investment
in associates and joint ventures may not guarantee a share of profits, and any loss incurred by
such associates or joint ventures shall be apportioned among us and other shareholders of the
associates and joint ventures. We recorded share of profit of associates and joint ventures of
RMB5.0 million and RMB1.1 million in 2021 and 2022, respectively, and share of loss of
associates and joint ventures of RMB4.0 million in 2023. If the associates or joint ventures do
not perform as expected or do not generate sufficient revenue in any financial year, our return
of investment in associates and joint ventures, financial performance and financial position,
could be materially and adversely affected.
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There can be no assurance that our investment in associates and joint ventures will
achieve the results intended and we may be subject to liquidity risk. Our investments in
associates and joint ventures are not as liquid as other investment products as there is no cash
flow until dividends are received even if such associates or joint ventures reported profits
under the equity accounting. Furthermore, the possibility to promptly sell one or more of our
interests in the associates and joint ventures in response to changing economic, financial and
investment conditions is uncertain. The market is affected by various factors, such as general
economic conditions, availability of financing, interest rates and supply and demand, many of
which are beyond our control. We cannot predict whether we will be able to sell any of our
interests in such associates and joint ventures for the price or on the terms set by us, or whether
any price or other terms offered by a prospective purchaser would be acceptable to us.
Therefore, the illiquidity nature of our investment in associates and joint ventures may
significantly limit our ability to respond to adverse changes in the performance of such
associates and joint ventures. In addition, if there is no share of results or dividends from the
associates and joint ventures, we will also be subjected to liquidity risk and our financial
condition or result or operations could be materially affected.
Going forward, from time to time, we may evaluate various investment opportunities,
including investment in other associates or joint ventures. Any future investment in associates
may entail numerous risks, such as increased cash requirements and additional indebtedness or
contingent or unforeseen liabilities.
We are subject to risks arising from recoverability of our contract assets.
Our contract assets represent our rights to receive consideration in exchange of our goods
and services that we had transferred to a customer that is not yet unconditional. Our contract
assets primarily arose from our cloud financial & tax digitalization solutions, digital precision
marketing services, risk management services and on-premises solutions. Our contract assets
are transferred to trade receivables when our rights to receive consideration become
unconditional which usually occurs when we bill our customers. Some of our business is
affected by the recoverability of our contract assets and is subject to a relatively long cash
conversion cycle.
Our contract assets increased from RMB70.1 million as of December 31, 2021 to
RMB78.1 million as of December 31, 2022 and decreased to RMB70.7 million as of December
31, 2023, of which RMB18.2 million, RMB27.2 million and RMB18.3 million aged over 181
days as of the same dates, respectively. We may continue to experience slow billing of contract
assets and a relatively long cash conversion cycle in the future, which in turn could affect our
results of operations and financial position.
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We may not be able to satisfy our working capital requirements if we experience
significant delays or defaults in payments from customers or other counterparties, or
significant delays in our billing and settlement process.
We are subject to the credit risk of our customers. If any of our customers runs into
financial difficulties or we have disputes with our customers which lead to the delay of
payment by our customers to us, we may not be able to receive payments in a timely manner
or at all. We typically grant our customers a credit period between three to six months from
invoice date. As of December 31, 2021, 2022 and 2023, our trade receivables, net of allowance
for credit losses, were RMB28.4 million, RMB30.8 million and RMB49.0 million, respectively.
The gross amount of our trade receivables aging over 181 days as of December 31, 2021, 2022
and 2023 was RMB10.7 million, RMB14.4 million and RMB17.7 million, respectively. We
recorded allowance for credit losses of RMB3.1 million, RMB4.1 million and RMB5.1 million
in 2021, 2022 and 2023, respectively. In the event that our customers experience financial
distress or are unable to settle their payments due to us in a timely manner or at all, our results
of operations and financial condition may be materially and adversely affected. Delays or
defaults in payments from customers or delayed billing process may adversely affect our ability
to satisfy working capital requirements, and in turn increase our working capital needs.
While we monitor overdue payments closely, we cannot assure you that we will be able
to recover all or any part of the amounts due from our customers within the agreed credit terms
or at all. If we fail to collect such payments at the end of the agreed credit terms, it may take
longer than our average trade receivable turnover days for us to collect payments and our
provisions for payments in arrears and losses may increase. Any material delay in payment or
non-payment by our customers may materially and adversely affect our business, results of
operations, and financial condition.
In addition, we recorded other receivables, deposits and prepayments of RMB49.9
million, RMB54.3 million and RMB55.4 million as of December 31, 2021, 2022 and 2023,
respectively, primarily comprising notes receivables, prepayments in relation to purchases of
goods and services, rent and property management fees and listing expenses, V A T recoverable
and deposits refundable within one year. Inability to recover such other receivables or receive
products and services pursuant to the relevant terms of the prepayments and deposits may have
adverse impact on our business operations.
We may not be able to fulfill our obligations in respect of contract liabilities, which may
have a material adverse effect on our results of operations and financial condition.
As of December 31, 2021, 2022 and 2023, our contract liabilities, primarily comprising
non-refundable advance payments made by customers of our financial and tax digitalization
solutions and risk management services, were RMB130.6 million, RMB165.5 million and
RMB122.7 million, respectively. See “Financial Information—Discussion of Major Items of
Consolidated Statements of Financial Position—Contract Liabilities.” If we fail to fulfill our
obligations under our contracts with customers, we may not be able to convert such contract
liabilities into revenue, and our customers may also require us to refund the deposits we have
received, which may adversely affect our cash flow and liquidity condition. In addition, it may
adversely affect our relationship with such customers, which may also affect our reputation and
results of operations in the future.
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We have granted, and may continue to grant, share economic rights in our share incentive
platforms under our share incentive plans, which may result in increased share-based
payment expenses. Those share-based awards may also adversely impact our results of
operations and be dilutive to your shareholding.
We adopted a share incentive scheme on January 31, 2021 to enhance our ability to attract
and retain exceptionally qualified individuals and to encourage them to acquire a proprietary
interest in the growth and performance of us. See “Appendix IV Statutory and General
Information—3. Further Information about Our Directors and Supervisors—C. Share Incentive
Scheme.” We incurred share-based payment expenses of RMB161.4 million, RMB10.5 million
and RMB191.1 million in 2021, 2022 and 2023, respectively. We believe share-based awards
as part of an overall compensation package are important to attracting and retaining key
personnel and employees, and we plan to continue to grant share-based compensation to
employees in the future. As a result, our share-based payment expenses may increase, which
may have an adverse effect on our results of operations and financial condition and dilute your
shareholding.
We may require additional funding to finance our operations, which may not be available
on terms acceptable to us or at all, and if we are able to raise funds, the value of your
investment in us may be negatively impacted .
We may require additional cash resources to finance our continued growth or other future
developments, including any investments or acquisitions we may decide to pursue. To the
extent that our funding requirements exceed our financial resources, we will be required to seek
additional financing or to defer planned expenditures. There is no assurance that we can obtain
additional funds on terms acceptable to us, or at all. In addition, our ability to raise additional
funds in the future is subject to a variety of uncertainties, including but not limited to:
 investors’ perception of, and demand for, the securities in companies like us;
 conditions of the capital markets in which we may seek to raise funds;
 development of PRC laws and regulations on the industries in which we operate;
 our future results of operations, financial condition and cash flows;
 general market conditions for capital raising and debt financing activities; and
 economic, political and other conditions in China and elsewhere.
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Furthermore, if we raise additional funds through equity or equity-linked financings, your
equity interest in us may be diluted. Alternatively, if we raise additional funds by incurring debt
obligations, we may be subject to various covenants under the relevant debt instruments that
may, among other things, restrict our ability to pay dividends or obtain additional financing.
Servicing such debt obligations could also be burdensome to our operations. If we fail to
service such debt obligations or are unable to comply with any of these covenants, we could
be in default under such debt obligations and our liquidity and financial condition could be
materially and adversely affected.
We face certain legal and regulatory risks relating to labor-related laws and regulations.
Pursuant to the relevant PRC laws and regulations, employers are obligated to directly
and duly contribute to the social insurance and housing provident funds for their employees.
During the Track Record Period, instead of making the contributions on our own for our
employees, we and a few of our operating entities engaged third-party agencies to make such
contributions to the social insurance and housing provident funds, which was not in strict
compliance with applicable PRC laws and regulations. Since October 2022, we have ceased all
arrangement with third-party agencies for social insurance and housing provident fund
contribution.
We cannot assure you that the relevant competent government authority will not take the
view that this third-party agency arrangement does not satisfy the requirements under the
relevant PRC laws and regulations. In respect of housing provident fund, we might be ordered
to pay the outstanding balance to the relevant local authority within a prescribed period of time,
and the government authority can apply to the people’s court for compulsory enforcement if we
do not comply, but no penalties are provided under the relevant PRC laws and regulations. In
respect of social insurance, we might be ordered to pay the outstanding balance within a certain
period of time and a late fee that equals 0.05% of the total outstanding balance per day from
the date of the failure to make payment, failing which we may be subject to a fine ranging from
one to three times the total outstanding balance. During the Track Record Period, we did not
have any shortfall with respect to our social insurance and housing provident fund
contributions. As of the Latest Practicable Date, no administrative action or penalty had been
imposed by the relevant regulatory authorities with respect to our social insurance and housing
provident fund contributions, nor had we received any order or been informed to make any
supplementary payments.
Under the agreements between the third-party agencies and our relevant operating
entities, the third-party agencies had the obligations to pay social insurance and housing
provident funds for our relevant employees on time and in full amounts. As of the Latest
Practicable Date, none of the third-party agencies that we used to cooperate with had failed to
pay, or delayed in paying, any social insurance or housing provident fund contributions for our
employees and the third-party agencies had duly paid the social security funds and housing
provident funds contributions for and on behalf of our employees according to our relevant
operating entities’ agreements with them. As of the Latest Practicable Date, we had not
received any administrative penalty or labor arbitration application from employees for the
third-party agency arrangement for social insurance and housing provident funds, and we did
not receive any notice from judicial or administrative authorities on any claim from our current
and former employees regarding any inadequate contribution. As advised by the PRC Legal
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Advisor, on the basis of the foregoing, the risk is relatively low that any administrative penalty
would be imposed on us. Accordingly, our Directors believe that our historical arrangements
with third-party agencies for social insurance and housing provident fund contribution would
not have a material adverse effect on our business, results of operations or financial condition
or the Global Offering, and we did not record any provision in respect of our third-party agency
arrangement.
Our rights to use our leased properties could be challenged by third parties, or we may
be forced to relocate due to title defects, or we may be liable for failure to register our
lease agreements, which may result in a disruption of our operations and subject us to
penalties.
We lease certain properties from third parties to be used mainly as office premises, R&D
facilities, warehouses and staff dormitories. As of the Latest Practicable Date, the ownership
certificates or equivalent proof relating to nine of our leased properties had not been provided
to us by the relevant lessors. Therefore, we cannot assure you that such lessors are entitled to
lease the relevant real properties to us. If the lessors are not entitled to lease the real properties
to us and the owners of such real properties decline to ratify the lease agreements between us
and the respective lessors, we may not be able to enforce our rights under the respective lease
agreements against the owners, and if our lease agreements are declared null and void due to
such title defects, we may be required to vacate the leased properties. As of the Latest
Practicable Date, we were not aware of any claim or challenge brought by any third parties
concerning the use of our leased properties without obtaining proper ownership proof. If we are
forced to vacate from our leased properties, although we believe suitable alternative locations
are readily available on commercially reasonable terms, our business operations may be
interrupted. See “Business—Properties” for details.
As of the Latest Practicable Date, we had not completed the administrative filings of 26
lease agreements. According to applicable PRC laws and regulations, the lessor and the lessee
of a lease agreement are required to file the lease agreement with relevant government
authorities within 30 days after the execution of the lease agreement. While the failure to
complete the administrative filings may not affect the legality, validity or enforceability of the
lease agreement, the government authorities may require that the filing be made within a stated
period of time, failing which, they may impose a fine ranging from RMB1,000 to RMB10,000
for each agreement that has not been properly filed. It is not clear under PRC laws if the fine
will be borne by the lessor or the lessee. According to applicable PRC laws and regulations,
lessors of the related lease agreements need to provide us with certain documents (such as their
business licenses or identification information) in order to complete the administrative filing.
There can be no assurance that the lessors of our leased properties will be cooperative in the
process of completing the filings. If we fail to complete the administrative filings for all
non-registered leases within the period specified by the relevant government authorities, and
the relevant authorities determine that we shall be liable for failing to complete the
administrative filings of all the relevant lease agreements, we might be subject to a fine ranging
from RMB26,000 to RMB260,000.
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Future strategic alliances, acquisitions or investments may have a material adverse effect
on our business, financial condition and results of operations.
We may enter into strategic alliances or investments, including joint ventures or minority
equity investments, with various third parties to further our business purpose from time to time.
These alliances and investments could subject us to a number of risks, including risks
associated with sharing proprietary information, non-performance by the third party and
increased expenses in establishing new strategic alliances, any of which may materially and
adversely affect our business. We may have limited ability to monitor or control the actions of
these third parties and, to the extent any of these strategic third parties suffers negative
publicity or harm to their reputation from events relating to their business, we may also suffer
negative publicity or harm to our reputation by virtue of our association with any such third
party.
In addition, if appropriate opportunities arise, we may acquire additional businesses,
platforms, assets or technologies that we believe can expand and strengthen our solutions and
customer coverage, as well as our technological and service capacities. Future acquisitions and
the subsequent integration of new assets and businesses into our own would require significant
attention from our management and could result in a diversion of resources from our existing
business, which in turn could have an adverse effect on our business operations. Acquired
assets or businesses may not generate the financial results we expect. Acquisitions could result
in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the
occurrence of significant goodwill impairment charges, amortization expenses for other
intangible assets and exposure to potential unknown liabilities of the acquired business. It may
also pose the risk that we may be exposed to successor liability relating to the actions by an
acquired company and its management before and after the acquisition. The due diligence that
we conduct in connection with an acquisition or investment may not be sufficient to discover
unknown liabilities, and any contractual guarantees or indemnities that we receive from the
sellers of the target companies and/or their shareholders may not be sufficient to protect us
from, or compensate us for, actual liabilities. Moreover, the costs of identifying and
consummating investments may be significant. In addition to possible shareholders’ approval,
we may also have to obtain approvals and licenses from relevant government authorities for the
investments and to comply with any applicable PRC laws and regulations, which could result
in delays and increased costs. Additionally, if the management team or key employees of an
acquired company fail to perform as expected, this may adversely affect the business
performance of such acquired company and, in turn, have a material adverse effect on our
business, financial condition and results of operations.
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If we are not able to control our staff costs in an effective manner, our business, financial
condition and results of operations may be adversely affected.
There has been inflation and increased labor costs in China, particularly in large cities
such as Beijing. In addition, we are required by PRC laws and regulations to pay various
statutory employee benefits, including pensions, housing provident fund, medical insurance,
work-related injury insurance, unemployment insurance and maternity insurance to designated
government agencies for the benefit of our employees. Any labor shortage or attrition may
significantly disrupt our business operations or delay our expansion plan. We may have
difficulties in hiring or retaining sufficient and qualified employees. In addition, average wages
in China are expected to continue to rise, which we anticipate will have an upward pressure on
our labor costs and employee salaries and benefits, which in turn will negatively affect our
profit margins. Any failure to attract qualified employees at reasonable cost and in a timely
manner, and any future disputes with our employees may materially and adversely affect our
business, financial condition and results of operations.
Our risk management and internal control systems may not be adequate or effective in all
aspects, which may materially and adversely affect our business and results of operations.
We seek to establish risk management and internal control systems consisting of an
organizational framework, policies, procedures and risk management methods that are
appropriate for our business operations, and seek to continue to improve these systems. For
further information, see “Business—Internal Control and Risk Management.” However, due to
the inherent limitations in the design and implementation of risk management and internal
control systems, we cannot assure you that our risk management and internal control systems
will be able to identify, prevent and manage all risks. Our internal control procedures are
designed to monitor our operations and ensure their overall compliance. However, our internal
control procedures may be unable to identify all non-compliance incidents in a timely manner
or at all. It is not always possible to timely detect and prevent fraud and other misconduct, and
the precautions we take to prevent and detect such activities may not be effective.
Our risk management and internal controls also depend on their effective implementation
by our employees. Due to the significant size of our operations, we cannot assure you that such
implementation will not involve any human errors or mistakes, which may materially and
adversely affect our business and results of operations. As we are likely to offer a broader and
more diverse range of services and solutions in the future, the diversification of our service
offerings will require us to continue to enhance our risk management capabilities. If we fail to
timely adapt our risk management policies and procedures to our changing business, our
business, financial condition and results of operations could be materially and adversely
affected.
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Our limited insurance coverage could expose us to significant costs and business
disruption.
We face various risks in connection with our business and may lack adequate insurance
coverage. As of the Latest Practicable Date, we had not maintained property insurance, key
employee insurance, product liability insurance and business interruption insurance. Neither
had we maintained insurance policies covering damages to our technological infrastructure or
litigation insurance. Any uninsured occurrence of business disruption, litigation or natural
disaster, monetary liabilities or significant damages to our uninsured equipment, facilities or
reputation could have a material adverse effect on our results of operations.
Insurance companies in China do not currently offer as extensive an array of insurance
products as insurance companies in other more developed economies. As such, we may not be
able to insure against certain risks relating to our assets or business even if we desire to. If we
were to incur substantial losses or liabilities due to fire, explosions, floods or other natural
disasters, disruption in our network infrastructure or business operations, or any material
litigation, our results of operations could be materially and adversely affected. Our current
insurance coverage may not be sufficient to prevent us from any loss and there is no certainty
that we will be able to successfully claim our losses under our current insurance policy on a
timely basis, or at all. If we incur any loss that is not covered by our insurance policies, or the
compensated amount is significantly less than our actual loss, our business, financial condition
and results of operations could be materially and adversely affected.
Preferential tax treatment and government grants currently available to us in the PRC
could be discontinued or reduced.
Under the Enterprise Income Tax Law of the PRC (جthe
“EIT Law”) and its relevant regulations, PRC companies are typically subject to an income tax
rate of 25% under the EIT Law. Baiwang Co., Ltd. was qualified as high and new technology
enterprise and was entitled to a preferential income tax rate of 15% during the Track Record
Period. We shall, in accordance with the requirements of the tax authority and other relevant
authorities, retain and submit our financial statements together with details of our R&D
activities and other technological innovation activities for future reference to enjoy the
preferential tax treatment. Furthermore, we were entitled to claim research and development
expenses incurred as tax deductible expenses when determining our assessable profits during
the Track Record Period. Moreover, we recorded government grants of RMB1.0 million,
RMB4.2 million and RMB1.9 million in 2021, 2022 and 2023, respectively.
We cannot assure you that we will continue to qualify for such preferential tax treatments
and government grants, or that the policies providing for the preferential tax treatments and
government grants will continue to be effective. As advised by our PRC Legal Advisor, if we
fail to provide requisite materials retained for future reference, we will not be entitled to enjoy
the preferential tax treatments, as well as other benefits conferred under the accreditations. If
we were not entitled to preferential tax treatments in the future, our effective tax rate may
increase to 25%, and our income tax expense would increase accordingly, which will adversely
affect our net profit.
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RISKS RELATING TO DOING BUSINESS IN CHINA
The economic, political and social conditions in China could affect our business, financial
condition and results of operations.
We conduct all of our business operations in China. Accordingly, our business, financial
condition and results of operations are, to a material extent, subject to economic, political, and
legal developments in China. In particular, factors such as consumer, corporate and government
spending, business investment, level of economic development, an resource allocation could
affect the growth of our business.
The PRC economy has experienced significant growth over the past decades since the
implementation of China’s reform and opening-up policy. In recent years, the PRC government
has implemented measures emphasizing the utilization of market forces in economic reform
and the establishment of sound corporate governance practices in business enterprises. These
economic reform measures may be adaptively adjusted from industry to industry or across
different regions of the country. If the business environment in China changes, our business in
China may also be materially and adversely affected.
The development of the PRC legal system and changes in the interpretation and
enforcement of PRC laws, regulations and policies in China could materially and
adversely affect us.
Our Company is incorporated under the laws of the PRC. The PRC legal system is based
on written statutes. Since the late 1970s, the PRC government has promulgated laws and
regulations dealing with economic matters, such as foreign investment, corporate organization
and governance, commerce, taxation and trade, with a view towards developing a
comprehensive system of commercial law. However, as many of these laws and regulations are
relatively new and continue to evolve, these laws and regulations maybe subject to different
interpretation. As other civil law countries, there is a limited volume of published court
decisions, which may be cited for reference but are not binding on subsequent cases and have
limited precedential value unless the Supreme People’s Court otherwise provides. As these
laws and regulations are continually evolving in response to changing economic and other
conditions, these uncertainties relating to the interpretation and implementation of PRC laws
and regulations may adversely affect the legal protections and remedies that are available to
investors and us.
We may be subject to the approval or other requirements of the CSRC or other PRC
governmental authorities in connection with future security activities.
On July 6, 2021, the General Office of the CPC Central Committee and the General Office
of the July 6 Opinion, which called for the enhanced administration and supervision of
overseas-listed China-based companies, proposed to revise the relevant regulation governing
the overseas issuance and listing of shares by such companies and clarified the responsibilities
of competent domestic industry regulators and government authorities. The July 6 Opinion
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aims to achieve this by establishing a regulatory system and revising the existing rules for
overseas listings of entities in China and their affiliates including potential extraterritorial
application of Chinese securities laws.
On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ
جthe “Overseas Listing Trial Measures”) and relevant five guidelines, which
came into effect on March 31, 2023. The Overseas Listing Trial Measures comprehensively
improve and reform the existing regulatory regime for overseas offering and listing of PRC
domestic companies’ securities and regulate both direct and indirect overseas offering and
listing of PRC domestic companies’ securities. Pursuant to the Overseas Listing Trial
Measures, where a PRC domestic company submits an application for initial public offering to
competent overseas regulators or overseas stock exchanges, such issuer must file with the
CSRC within three business days after such application is submitted. As advised by our PRC
Legal Advisor, we are required to go through the filing procedures with the CSRC under the
Overseas Listing Trial Measures. We submitted the required filing documents to the CSRC on
July 3, 2023, and the CSRC issued a notification on our completion of the PRC filing
procedures for the listing of our Shares on the Stock Exchange and the Global Offering on
January 2, 2024.
In addition, we cannot guarantee that new rules or regulations promulgated in the future
pursuant to the July 6 Opinion and any other related PRC rules and regulations will not impose
any additional requirement on us or otherwise tightening the regulations on us. If it is
determined that we are subject to any CSRC approval, filing, other governmental authorization
or requirements for future capital raising activities, we may fail to obtain such approval or meet
such requirements in a timely manner or at all. Such failure may adversely affect our ability
to finance the development of our business and may have a material adverse effect on our
business and financial condition. Furthermore, any uncertainty and/or negative publicity
regarding such an approval, filing or other requirements may also have a material adverse
effect on the price of our H Shares.
Y ou may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing original actions in China against us and our Directors and
management.
We are a company incorporated under the laws of China, and all our assets and operations
are located in China. In addition, most of our Directors, Supervisors and senior management
reside within China, and the assets of our Directors, Supervisors and senior management are
likely to be located within China. As a result, it may be difficult or impossible for you to effect
service of process within Hong Kong, the United States or elsewhere outside China upon us or
these persons, or to bring an action in Hong Kong against us or these individuals. Moreover,
China does not have treaties with most of the other jurisdictions that provide for the reciprocal
recognition and enforcement of judicial rulings and awards.
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On July 14, 2006, the Supreme People’s Court of the PRC and the Government of the
Hong Kong Special Administrative Region signed an Arrangement on Mutual Recognition and
Enforcement of Judgements in Civil and Commercial Matters by the Courts of the Mainland
China and of the Hong Kong Special Administrative Region Pursuant to Agreed Jurisdiction by
Parties Concerned (ʝႩ̙ձੂБ຅ԫɛ՘ᙄ
τર) (the “2006 Arrangement”). Pursuant to such arrangement, a
party with a final judgment rendered by a Hong Kong court requiring payment of money in a
civil and commercial case according to a choice of court agreement in writing may apply for
recognition and enforcement of the judgment in China, and vice versa. However, it is subject
to the parties in the dispute agreeing to enter into a choice of court agreement in writing under
the 2006 Arrangement.
On January 18, 2019, the Supreme People’s Court of China and Hong Kong entered into
the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and
Commercial Matters by the Courts of the Mainland and of the Hong Kong Special
Administrative Region (τ
ર) (the “2019 Arrangement”), the commencement date of which shall be announced after the
Supreme People’s Court promulgates judicial interpretations and relevant procedures are
completed in Hong Kong. The 2019 Arrangement will supersede the 2006 Arrangement and
afford greater clarity and certainty for reciprocal recognition and enforcement of judgments in
civil and commercial matters. The 2006 Arrangement will remain applicable to a “choice of
court agreement in writing” entered into before the 2019 Arrangement taking effect. However,
there remains uncertainties as to the outcome of any applications to recognize and enforce such
judgments and arbitral awards in China.
Furthermore, an original action may only be brought in China against us or our Directors,
Supervisors and senior management if the actions are not required to be arbitrated by PRC laws
and upon satisfaction of the conditions for commencing a cause of action pursuant to the PRC
civil procedure law. As a result of the conditions set forth in the PRC civil procedure law and
the discretion of the PRC courts to determine whether the conditions are satisfied and whether
to accept the action for adjudication, it is uncertain whether investors will be able to bring an
original action in China in this manner.
The custodians or authorized users of our controlling non-tangible assets, including chops
and seals, may fail to fulfill their responsibilities, or misappropriate or misuse these
assets.
Under the PRC law, legal documents for corporate transactions, including agreements and
contracts are executed using the chop or seal of the signing entity or with the signature of a
legal representative whose designation is registered and filed with relevant PRC market
regulation administrative authorities.
RISK FACTORS
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In order to secure the use of our chops and seals, we have established internal control
procedures and rules for using these chops and seals. In any event that the chops and seals are
intended to be used, the responsible personnel will submit a formal application, which will be
verified and approved by authorized employees in accordance with our internal control
procedures and rules. In addition, in order to maintain the physical security of our chops, we
generally have them stored in secured locations accessible only to authorized employees.
Although we monitor such authorized employees, the procedures may not be sufficient to
prevent all instances of abuse or negligence. There is a risk that our employees could abuse
their authority, for example, by entering into a contract not approved by us or seeking to gain
control of one of our subsidiaries or our affiliated entities or their subsidiaries. If any employee
obtains, misuses or misappropriates our chops and seals or other controlling non-tangible
assets for whatever reason, we could experience disruption to our normal business operations.
We may have to take corporate or legal action, which could involve significant time and
resources to resolve and divert management from our operations, and we may not be able to
recover our loss due to such misuse or misappropriation if the third party relies on the apparent
authority of such employees and acts in good faith.
Fluctuations in exchange rates of Renminbi could adversely affect our results of
operations and the value of your investment.
Fluctuations in the exchange rate of Renminbi against Hong Kong dollar, U.S. dollar and
other foreign currencies are affected by, among other things, the policies of the PRC
Government and changes in China’s and international political and economic conditions. The
proceeds from the Global Offering will be denominated in Hong Kong dollars. As a result, any
appreciation of Renminbi against U.S. dollar, Hong Kong dollar or any other foreign currencies
may result in a decrease in the value of our foreign currency-denominated assets and our
proceeds from the Global Offering. Conversely, any depreciation of Renminbi may adversely
affect the value of, and any dividends payable on our H Shares in foreign currencies. There are
limited instruments available for us to reduce our foreign currency risk exposure at reasonable
cost in China, and we have not utilized, and may not in the future utilize, any such instrument.
All of these factors could materially and adversely affect our business, financial condition and
results of operations, and could reduce the value of, and dividends payable on, our H Shares
in foreign currency terms.
Governmental control of currency conversion, and restrictions on the remittance of
Renminbi into and out of China, could have a material adverse impact on our financial
condition and results of operations, and may reduce the value of, and dividends payable
on, our H Shares in foreign currency terms.
The remittance of currency in and out of China is subject to various laws and regulations.
Our revenues and expenses are substantially denominated in Renminbi, and the net proceeds
from the Global Offering and any dividends we pay on our H Shares will be in Hong Kong
dollars. Under China’s existing foreign exchange regulations, following the completion of the
Global Offering, we will be able to make current account foreign exchange transactions,
including paying dividends in foreign currencies without prior approval from SAFE.
RISK FACTORS
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However, in the future, the PRC government may take measures to restrict access to
foreign currencies for capital account and current account transactions under certain
circumstances. If such measures are implemented, we may not be able to pay dividends in
foreign currencies to holders of our H Shares. Foreign exchange transactions under our capital
account are subject to significant foreign exchange controls and require SAFE’s approval.
These limitations could affect our ability to obtain foreign exchange through offshore
financing.
Furthermore, the net proceeds from the Global Offering are expected to be deposited in
currencies other than Renminbi until we obtain necessary approvals from relevant PRC
regulatory authorities to convert these proceeds into onshore Renminbi. If the net proceeds
cannot be converted into onshore Renminbi in a timely manner, our ability to deploy these
proceeds efficiently may be affected as we will not be able to invest these proceeds on
Renminbi-denominated assets onshore or deploy them in uses onshore where Renminbi is
required. All of these factors could materially and adversely affect our business, financial
condition and results of operations.
Investors of our H Shares may become subject to PRC taxation on dividends received
from us and gains from the disposition of our H Shares.
Non-Chinese resident individual holders of H Shares whose names appear on the register
of members of H Shares (“Non-Chinese Resident Individual Holders”), are subject to Chinese
individual income tax on dividends received from us. Pursuant to the Circular on Questions
Concerning the Collection of Individual Income Tax Following the Repeal of Guo Shui Fa
[1993] No. 045 (Guo Shui Han [2011] No. 348) (਷೼೯[1993]045ɛ
ٝ(਷೼Ռ[2011]348 ໮)) dated June 28, 2011 and issued by the SA T, the
tax rate applicable to dividends paid to Non-Chinese Resident Individual Holders of H Shares
varies from 5% to 20% (usually 10%), depending on whether there is any applicable tax treaty
between China and the jurisdiction in which the Non-Chinese Resident Individual Holder of H
Shares resides, as well as the tax arrangement between China and Hong Kong. Non-Chinese
Resident Individual Holders who reside in jurisdictions that have not entered into tax treaties
with the PRC are subject to a 20.0% withholding tax on dividends received from us. See
“Regulatory Overview.” In addition, under the Individual Income Tax Law of the PRC ( ʕശ
جand its implementation regulations, Non-Chinese Resident
Individual Holders of H Shares are subject to individual income tax at a rate of 20% on gains
realized upon the sale or other disposition of H Shares. However, pursuant to the Circular
Declaring that Individual Income Tax Continues to be Exempted over Income of Individuals
from Transfer of Shares (ٝissued by
MOF and the SA T on March 30, 1998, gains of individuals derived from the transfer of listed
shares of enterprises may be exempt from individual income tax. Based on our knowledge, as
of the Latest Practicable Date, the Chinese tax authorities had not in practice sought to collect
individual income tax on such gains. If such tax is collected in the future, the value of such
individual holders’ investments in H Shares may be materially and adversely affected.
RISK FACTORS
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Under EIT Law and its implementation regulations, a non-Chinese resident enterprise is
generally subject to enterprise income tax at a rate of 10% with respect to its Chinese-sourced
income, including dividends received from a Chinese company and gains derived from the
disposition of equity interests in a Chinese company. This rate may be reduced under any
special arrangement or applicable treaty between the China and the jurisdiction in which the
non-Chinese resident enterprise resides. Pursuant to the Circular of the SA T on Issues Relating
to the Withholding of Enterprise Income Tax by PRC Resident Enterprises on Dividends Paid
by Chinese Resident Enterprises to Overseas Non-PRC Resident Enterprise Shareholders of H
Shares (Guo Shui Han [2008] No. 897) (͏ΆุΣྤ̮H͏Ά
ٝ(਷೼Ռ[2008]897 ໮)) promulgated by the
SA T on November 6, 2008, we intend to withhold tax at 10% from dividends payable to
non-Chinese resident enterprise holders of H Shares (including HKSCC Nominees). Non-
Chinese resident enterprises that are entitled to be taxed at a reduced rate under an applicable
income tax treaty or arrangement will be required to apply to the Chinese tax authorities for
a refund of any amount withheld in excess of the applicable treaty rate, and payment of such
refund will be subject to the Chinese tax authorities’ approval. See “Regulatory Overview.”
There are uncertainties as to the interpretation and implementation of the EIT Law and its
implementation rules by the Chinese tax authorities, including whether and how enterprise
income tax on gains derived upon the sale or other disposition of H Shares will be collected
from non-Chinese resident enterprise holders of H Shares. If such tax is collected in the future,
the value of such non-Chinese resident enterprise holders’ investments in H Shares may be
materially and adversely affected.
Payment of dividends is subject to restrictions under PRC law.
Under PRC law, dividends may be paid only out of distributable profits. Distributable
profits are defined as our profits after taxes as determined under PRC GAAP less any recovery
of accumulated losses and appropriations to statutory and other reserves that we are required
to make. As a result, we may not have sufficient, if any, distributable profits to enable us to
make dividend distributions to our Shareholders in the future, including periods for which our
financial statements indicate that our operations have been profitable. Any distributable profits
not distributed in a given year are retained and available for distribution in subsequent years.
Moreover, because the calculation of distributable profits under PRC GAAP is different
from the calculation under IFRSs in certain respects, our subsidiaries may not have
distributable profits as determined under PRC GAAP , even if they have profits for that year as
determined under IFRSs, or vice versa. Accordingly, we may not receive sufficient
distributions from our subsidiaries. Failure by our subsidiaries to pay dividends to us could
have a negative impact on our cash flows and our ability to make dividend distributions to our
Shareholders in the future, including those periods in which our financial statements indicate
that our operations have been profitable.
RISK FACTORS
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Any failure to comply with PRC regulations regarding the registration requirements for
employee stock incentive plans may subject the PRC plan participants or us to fines and
other legal or administrative sanctions.
Pursuant to the Notices on Issues Concerning the Foreign Exchange Administration for
Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed
Company (ஷ
ٝpromulgated by SAFE on February 15, 2012, PRC citizens and non-PRC citizens who
reside in China for a continuous period of not less than one year who participate in any stock
incentive plan of an overseas publicly listed company, subject to a few exceptions, are required
to register with SAFE through a domestic qualified agent, which could be the PRC subsidiaries
of such overseas listed company, and complete certain other procedures. In addition, an
overseas entrusted institution must be retained to handle matters in connection with the
exercise or sale of stock options and the purchase or sale of shares and interests. We, our
Directors, Supervisors, executive officers and other employees who are PRC citizens or who
reside in the PRC for a continuous period of not less than one year and who have been granted
share-based awards will be subject to these regulations when we become an overseas listed
company upon the completion of this offering. Failure to complete the required registrations
may subject them to fines, and legal sanctions and may also limit our ability to contribute
additional capital into our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute
dividends to us. We also face regulatory uncertainties that could restrict our ability to adopt
additional incentive plans for our Directors, Supervisors, executive officers and employees
under PRC law.
The SA T also issued certain circulars concerning employee share options and restricted
shares. Under these circulars, our employees working in China who exercise share options or
are granted restricted shares will be subject to PRC individual income tax. Our PRC
subsidiaries have obligations to file documents related to employee share options or restricted
shares with relevant tax authorities and to withhold individual income taxes of those employees
who exercise their share options. If our employees fail to pay or we fail to withhold their
income taxes according to relevant laws and regulations, we may face sanctions imposed by the
tax authorities or other PRC governmental authorities.
RISKS RELATING TO THE GLOBAL OFFERING
There has been no prior public market for our H Shares, and the liquidity and market
price of our H Shares may be volatile.
Prior to the Global Offering, there has been no public market for our H Shares. The Offer
Price range for our H Shares was the result of negotiations between us and the Sponsor-OC (for
itself and on behalf of the Underwriters), and the Offer Price may differ significantly from the
market price for our H Shares following the Global Offering. We have applied for listing of,
and permission to deal in, our H Shares on the Stock Exchange. A listing on the Stock
Exchange, however, does not guarantee that an active and liquid trading market for our H
Shares will develop, or if it does develop, that it will be sustained following the Global
RISK FACTORS
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Offering or that the market price of our H Shares will not decline following the Global
Offering. Furthermore, the market price and trading volume of our H Shares may be volatile.
The following factors may affect the trading volume and market price of our H Shares:
 our financial condition;
 actual or anticipated fluctuations in our operating performance;
 news regarding recruitment or departure of key personnel by us or our competitors;
 the history of, and the prospects for, us and the industry in which we operate;
 announcements of competitive developments, acquisitions or strategic alliances in
our industry;
 changes or proposed changes in laws or regulations, or differing interpretations
thereof, affecting our ability to obtain or maintain regulatory approval for our
services;
 potential litigation or regulatory investigations;
 general market conditions or other developments affecting us or our industry;
 inadequate protection of our intellectual property rights or legal proceedings
brought against us for infringement of third parties’ intellectual property rights;
 the operating and stock price performance of other companies and industries, and
other events or factors beyond our control; and
 general political, financial, social and economic conditions.
Moreover, the capital market has from time to time experienced significant price and
trading volume fluctuations that were unrelated or not directly related to the operating
performance of the underlying companies in the market. These broad market and industry
fluctuations may have a material adverse effect on the market price and trading volume of our
H Shares.
RISK FACTORS
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An active and liquid trading market for our H Shares may not develop.
Prior to the Global Offering, our H Shares were not traded on any other market. We
cannot assure you that an active and liquid trading market for our H Shares will be developed
or be maintained after the Global Offering. Liquid and active trading markets usually result in
less price volatility and more efficiency in carrying out investors’ purchase and sale orders. The
market price of our H Shares could vary significantly as a result of a number of factors, some
of which are beyond our control. In the event of a drop in the market price of our H Shares,
you could lose a substantial part or all of your investment in our H Shares.
If the initial public offering price of our H Shares is substantially higher than the
consolidated net tangible assets book value per share, purchasers of our H Shares in the
Global Offering may experience immediate dilution upon such purchases.
As the Offer Price of our H Shares is higher than the consolidated net tangible assets per
share immediately prior to the Global Offering, purchasers of our H Shares in the Global
Offering will experience an immediate dilution in pro forma adjusted consolidated net tangible
assets. Our existing shareholders will receive an increase in the pro forma adjusted
consolidated net tangible asset value per share of their shares. In addition, holders of our H
Shares may experience further dilution of their interest if the Underwriters exercise the
Over-allotment Option or if we issue additional shares in the future to raise additional capital.
We have significant discretion as to how we will use the net proceeds of the Global
Offering, and you may not necessarily agree with how we use them.
Our management may spend the net proceeds from the Global Offering in ways you may
not agree with or that do not yield a favorable return. For details of our intended use of
proceeds, see “Future Plans and Use of Proceeds.” However, our management will have
discretion as to the actual application of our net proceeds. Y ou are entrusting your funds to our
management, upon whose judgment you must depend, for the specific use we will make of the
net proceeds from this Global Offering.
The market price and trading volume of our H Shares may decline if securities or industry
analysts do not publish research reports about our business, or they adversely change
their recommendations regarding our Shares.
The trading market for our H Shares may be affected by research reports about us or our
business published by industry or securities analysts. The market price of our H Shares would
possibly decline if one or more analysts who research us downgrade our H Shares or publish
negative opinions about us regardless of the accuracy of the information. We may lose
visibility in the financial markets if one or more of these analysts cease coverage of us, or fail
to regularly publish reports on us, which could cause the market price or trading volume of our
H Shares to decline.
RISK FACTORS
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Future sales or perceived sales or conversion of substantial amounts of our securities in
the public market, including any future public offering in China or conversion of our
Domestic Shares into H Shares, could have a material adverse effect on the prevailing
market price of our H Shares and our ability to raise additional capital in the future, or
may result in dilution of your shareholdings.
Future sales of substantial amounts of our H Shares or other securities relating to our H
Shares in the public market, or the issuance of new H Shares or other securities relating to our
H Shares, or the perception that such sales or issuances may occur could all cause a decline in
the market price of our H Shares. Future sales, or perceived sales, of substantial amounts of
our securities or other securities relating to our H Shares, including part of any future offerings,
could also materially and adversely affect the prevailing market price of our H Shares and our
ability to raise capital in the future at a time and at a price which we deem appropriate.
Although our Controlling Shareholders are subject to restrictions on their sales of H
Shares within 12 months from the Listing Date as described in “History and Corporate
Structure” in this prospectus, future sales of a significant number of our H Shares by our
Controlling Shareholders or other existing shareholders in the public market after the Global
Offering, or the perception that these sales could occur, could cause the market price of our H
Shares to decline and could materially impair our future ability to raise capital through
offerings of our H Shares. We cannot assure you that our Controlling Shareholders, or other
existing shareholders will not dispose of H Shares held by them.
Our Domestic Shares may be converted into H Shares, and such converted H Shares may
be listed or traded on an overseas stock exchange, provided that prior to the conversion and
trading of such converted shares, any requisite internal approval processes shall have been duly
completed and the approval from the relevant Chinese regulatory authorities, including the
CSRC, shall have been obtained (the “Arrangement”). In addition, such conversion, trading
and listing shall in all respects comply with the regulations prescribed by the State Council’s
securities regulatory authorities and the regulations, requirements and procedures prescribed
by the relevant overseas stock exchange. The Arrangement applies only to Domestic Shares.
All of our Domestic Shares are subject to the Arrangement and may be converted into H Shares
upon the approval of the relevant regulatory authorities, including the CSRC and the Stock
Exchange.
We may not be able to pay any dividends on our H Shares.
No dividend had been declared or paid by us during the Track Record Period. We cannot
guarantee when and in what form dividends will be paid on our H Shares following the Global
Offering. The declaration of dividends is proposed by the Board and is based on, and limited
by, various factors, including without limitation, our business and financial performance,
capital and regulatory requirements, and general business conditions. We may not have
sufficient or any profits to enable us to make dividend distributions to our Shareholders in the
future, even if our financial statements indicate that our operations have been profitable. For
details, see “Financial Information—Dividend.”
RISK FACTORS
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If securities or industry analysts do not publish research reports about our business, or
if they adversely change their recommendations regarding our H Shares, the market price
and trading volume of our H Shares may decline.
The trading market of our H Shares may be influenced by research reports that industry
or securities analysts publish about us or our business. If one or more analysts who cover us
downgrade our H Shares or publish negative opinions about us, the market price of our H
Shares would likely decline regardless of the accuracy of the information. If one or more of
these analysts cease coverage of us or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which, in turn, could cause the market price or trading
volume of our H Shares to decline.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains forward-looking statements with respect to our business
strategies, operating efficiencies, competitive positions, and growth opportunities for existing
operations, plans and objectives of management, certain pro forma information and other
matters.
The words “anticipate,” “believe,” “could,” “potential,” “continue,” “expect,” “intend,”
“may,” “plan,” “seek,” “will,” “would,” “should” and the negative of these terms and other
similar expressions identify a number of these forward-looking statements. These forward-
looking statements, including, among others, those relating to our future business prospects,
capital expenditure, cash flows, working capital, liquidity and capital resources are necessary
estimates reflecting the best judgment of our Directors, Supervisors and management and
involve a number of risks and uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. As a result, these forward-looking
statements should be considered in light of various important factors, including those set out
in “Risk Factors” in this prospectus. Accordingly, such statements are not a guarantee of future
performance and you should not place undue reliance on any forward-looking information. All
forward-looking statements in this prospectus are qualified by reference to this cautionary
statement.
RISK FACTORS
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Certain facts, forecasts and statistics contained in this prospectus are derived from
various official sources and may not be accurate, reliable, complete or up to date.
We have derived certain information and statistics in this prospectus, particularly the
section headed “Industry Overview,” from the report prepared by Frost & Sullivan, which was
commissioned by us, and from, among others, various official government publications and
other publicly available publications provided by the PRC government. The information from
official government sources has not been independently verified by us, the Sole Sponsor, the
Overall Coordinators, the Underwriters, any of their respective directors and advisers, or any
other persons or parties involved in the Global Offering, and, therefore, we cannot assure you
as to the accuracy and reliability of such information and statistics, which may not be
consistent with other information compiled inside or outside the PRC. Due to possibly flawed
or ineffective collection methods or discrepancies between published information and market
practice and other problems, the statistics contained in such government sources may be
inaccurate or may not be comparable with statistics produced for other economies, and you
should not place undue reliance on them. In all cases, you should consider carefully how much
weight or importance you should attach to or place on such information or statistics.
Y ou should read the entire prospectus carefully and we strongly caution you not to place
any reliance on any information contained in press articles and other media regarding us
and the Global Offering.
Prior to the publication of this prospectus, there has been and there may also be,
subsequent to the date of this prospectus but prior to the completion of the Global Offering,
press and media coverage regarding us, our business, our industries and the Global Offering,
which contained, among other things, certain financial information, projections, valuations and
other forward-looking information about us and the Global Offering. We have not authorized
the disclosure of any such information in the press or media and do not accept responsibility
for the accuracy or completeness of such press articles or other media coverage. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any of such
projections, valuations or other forward-looking information about us. To the extent such
statements are inconsistent with, or conflict with, the information contained in this prospectus,
we disclaim responsibility for them. Accordingly, prospective investors are cautioned to make
their investment decisions on the basis of the information contained in this prospectus only and
should not rely on any other information.
RISK FACTORS
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In preparation for the Global Offering, we have applied to the Stock Exchange for the
following waivers from strict compliance with the relevant provisions of the Listing Rules.
MANAGEMENT PRESENCE IN HONG KONG
According to Rule 8.12 of the Listing Rules, all applicants applying for a primary listing
on the Stock Exchange must have sufficient management presence in Hong Kong. This would
normally mean that at least two of the applicant’s executive directors must be ordinarily
resident in Hong Kong.
Our Company’s business operations and assets are primarily located outside Hong Kong.
Our Company’s executive Directors are based in the PRC as our Board believes it is more
effective and efficient for our executive Directors to be based in a location where our
substantial operations are located. Our Company therefore does not, and in the near future will
not, maintain management presence in Hong Kong.
Accordingly, pursuant to Rule 19A.15 of the Listing Rules, we have applied to the Stock
Exchange for, and the Stock Exchange has granted us, a waiver from strict compliance with the
requirements under Rule 8.12 of the Listing Rules, provided that our Company implements the
following arrangements:
(1) We have appointed Ms. Chen Jie (؏Ms. Chen”), our executive Director,
general manager and the chairlady of our Board and Mr. Zheng Tianhao (؀)
Mr. Zheng”), one of our joint company secretaries as our authorized
representatives for the purpose of Rule 3.05 of the Listing Rules. They will serve as
the principal channel of communication with the Stock Exchange and make
themselves readily available to communicate with the Stock Exchange. We have also
appointed Mr. Chiu Ming King (ዽ) (“Mr. Chiu”), the other joint company
secretary of our Company as our alternate authorized representative. Mr. Chiu
resides in Hong Kong and each of Ms. Chen, Mr. Zheng and Mr. Chiu can be readily
contactable by phone and email to deal promptly with enquiries from the Stock
Exchange, and will also be available to meet with the Stock Exchange to discuss any
matters within a reasonable period of time upon the request of the Stock Exchange.
The contact details of our authorized representatives have been provided to the
Stock Exchange.
(2) All Directors who are not ordinarily resident in Hong Kong possess or can apply for
valid travel documents to visit Hong Kong and can meet with the Stock Exchange
within a reasonable period. In addition, each Director has provided his/her contact
details, including phone numbers and email addresses, to our authorized
representatives and alternate authorized representative and to the Stock Exchange.
In the event that a Director expects to be traveling or otherwise be out of office,
he/she will provide the phone number of the place of his/her accommodation or
other contact information to our authorized representatives and alternate authorized
representative to ensure that each of our authorized representatives and alternate
authorized representative will be able to contact all our Directors promptly at all
times if and when the Stock Exchange wishes to contact our Directors.
W AIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES
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(3) We have appointed Guotai Junan Capital Limited as our compliance advisor in
accordance with Rule 3A.19 of the Listing Rules, which will serve as an additional
and alternative channel of communication with the Stock Exchange in addition to
our authorized representatives and alternate authorized representative. The
compliance advisor will have reasonable access, at all times during the term of their
appointment, to our authorized representatives, Directors and other officers of our
Company, participate in the communication between the Stock Exchange and our
Company and answer inquiries from the Stock Exchange.
(4) Any meeting between the Stock Exchange and our Directors will be arranged
through our authorized representatives, alternate authorized representative or our
compliance advisor or directly with our Directors within a reasonable time frame.
We will inform the Stock Exchange promptly in respect of any changes in our
authorized representatives, alternate authorized representative and our compliance
advisor.
(5) We intend to retain our Hong Kong legal advisors on on-going compliance
requirements, any amendment or supplement to and other issues arising under the
Listing Rules and other applicable laws and regulations in Hong Kong after the
Listing.
JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company
secretary who possesses the necessary academic or professional qualifications or relevant
experience, and is therefore capable to discharge the functions of the company secretary. Note
1 to Rule 3.28 of the Listing Rules provides that the Stock Exchange considers the following
academic or professional qualifications to be acceptable:
(1) a member of The Hong Kong Chartered Governance Institute;
(2) a solicitor or a barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(3) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Note 2 to Rule 3.28 of the Listing Rules further sets out the factors that the Stock
Exchange will consider in assessing an individual’s “relevant experience”:
(1) length of employment with the issuer and other issuers and the roles he/she has
undertaken;
W AIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES
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(2) familiarity with the Listing Rules and other relevant laws and regulations including
the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code;
(3) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(4) professional qualifications in other jurisdictions.
Our Company has appointed Mr. Zheng as our joint company secretary. Mr. Zheng joined
our Group in 2017 and possesses relevant understanding and knowledge relating to the
business operations and corporate culture of our Group. In his capacity as the securities affairs
representative of our Board office, Mr. Zheng has actively participated in the preparation of the
application for the Listing and possesses experience in matters relating to our Board and
corporate governance of our Company. Having considered Mr. Zheng’s expertise and
backgrounds, our Directors consider that Mr. Zheng is capable of discharging the functions of
company secretary and is suitable person to perform such role.
As Mr. Zheng currently does not possess the qualifications under Rule 3.28 of the Listing
Rules, and may not be able to fulfill the requirements of the Listing Rules on his own, we have
appointed Mr. Chiu, a fellow member of the Hong Kong Chartered Governance Institute
(formerly known as The Hong Kong Institute of Chartered Secretaries), who is qualified under
Rule 3.28 of the Listing Rules to act as the other company secretary and to work closely with
and provide assistance to Mr. Zheng for an initial period of three years commencing from the
Listing Date.
The following arrangements have been, or will be, put in place to assist Mr. Zheng in
acquiring the qualifications and experience as the joint company secretary of our Company
required under Rules 3.28 and 8.17 of the Listing Rules:
(1) In the course of the preparation of the application for the Listing, Mr. Zheng has
been provided with a memorandum and has attended a training seminar on the
respective obligations of our Directors and senior management and our Company
under the relevant Hong Kong laws and the Listing Rules provided by our Hong
Kong legal advisors.
(2) In addition to the minimum training requirements under Rule 3.29 of the Listing
Rules, our Company will ensure that Mr. Zheng continues to have access to relevant
training and support to familiarize himself with the Listing Rules and the duties of
a company secretary of an issuer listed on the Stock Exchange, and to receive
updates on the latest changes to the applicable Hong Kong laws, regulations and the
Listing Rules. Furthermore, our Company will ensure that Mr. Zheng and Mr. Chiu
will seek and have access to the advice from our Hong Kong legal advisors and other
professional advisors as and when required.
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(3) Mr. Chiu will assist Mr. Zheng to acquire the “relevant experience” as required
under Note 2 to Rule 3.28 of the Listing Rules and to discharge his duties as
company secretary. Mr. Zheng will be assisted by Mr. Chiu for an initial period of
three years commencing from the Listing Date. As part of the arrangement, Mr. Chiu
will act as one of the joint company secretaries and communicate regularly with Mr.
Zheng on matters relating to corporate governance, the Listing Rules as well as other
laws and regulations which are relevant to our Company. He will also assist Mr.
Zheng in organizing Board meetings and Shareholders’ meetings as well as other
matters of our Company which are incidental to the duties of a company secretary.
(4) Our Company has appointed the compliance advisor pursuant to Rule 3A.19 of the
Listing Rules, which will act as our additional channel of communication with the
Stock Exchange and provide professional guidance and advice to us and our joint
company secretaries as to compliance with the Listing Rules and all other applicable
laws and regulations.
We have applied to the Stock Exchange for, and the Stock Exchange has granted us, a
waiver from strict compliance with the requirements of Rules 3.28 and 8.17 of the Listing
Rules. Such waiver will be revoked immediately if and when Mr. Chiu ceases to provide such
assistance or ceases to meet the requirements under Rule 3.28 of the Listing Rules, or if there
are material breaches of the Listing Rules by our Company during the three-year period from
the Listing Date. We will liaise with the Stock Exchange before the end of the three-year period
to enable it to assess whether Mr. Zheng, having had the benefit of Mr. Chiu’s assistance for
three years, will have acquired the relevant experience within the meaning of Rule 3.28 of the
Listing Rules so that a further waiver will not be necessary.
See “Directors, Supervisors and Senior Management” for the biographical details of Mr.
Zheng and Mr. Chiu.
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
We have entered into certain transactions which will constitute non-exempt continuing
connected transactions of our Company under the Listing Rules following the completion of
the Global Offering. We have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with the rules regarding the relevant requirements
under Chapter 14A of the Listing Rules for such non-exempt continuing connected
transactions. See “Connected Transactions” for details.
EQUITY INTEREST ACQUIRED AFTER THE TRACK RECORD PERIOD
Pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules, a new listing applicant is
required to include in its accountants’ report in the listing document the results and balance
sheets of any subsidiary or business acquired, agreed to be acquired or proposed to be acquired
since the date to which the latest audited financial statements of the listing applicant have been
made up in respect of each of the three financial years immediately preceding the issue of the
listing document, or since the incorporation of such subsidiary or the commencement of such
business if this occurred less than three years prior to such issue, or such shorter period as may
be acceptable to the Stock Exchange.
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Pursuant to Rule 4.02A of the Listing Rules, acquisition of business include acquisition
of associates and any equity interest in another company. Pursuant to Note 4 to Rule 4.04 of
the Listing Rules, the Stock Exchange may consider granting a waiver of the requirements
under Rules 4.04(2) and 4.04(4) on a case-by-case basis, and having regard to all relevant facts
and circumstances and subject to certain conditions set out thereunder.
After the end of the Track Record Period, on February 20, 2024, our Group entered into
a capital increase agreement with Hangzhou Xinfengwei Network Technology Co., Ltd. (ψ
ʮ̡)( “ Xinfengwei ”) and its founding shareholders, Shi Nan ( ̦฻) and
Hangzhou Fengguo Technology Partnership Enterprise (Limited Partnership) (ҦΥ
ྫΆุ(Υྫ)) (“ Hangzhou Fengguo ”), both of whom are independent third parties, to
subscribe for certain equity interest in Xinfengwei (the “ Xinfengwei Subscription ”). Details
of the transaction are set out below:
Target company: Xinfengwei
Principal business
activities:
Provision of digitalization solutions to the government,
enterprises, schools and different social organizations
Percentage of equity
interest subscribed:
Upon completion, our Group holds 2.5% of the equity interest
in Xinfengwei.
Consideration, bases
of consideration
and status of
subscription
The total consideration is RMB40.0 million, settled in two
installments. As of the Latest Practicable Date, the
subscription was closed. The consideration had been satisfied
by our Group’s own source of funds, and therefore the
proceeds of the Global Offering will not be used to fund the
Xinfengwei Subscription.
The consideration was determined on an arm’s length basis
with reference to the historical performance and future
development prospects of Xinfengwei and the fair market
value of comparable companies.
Benefit from the
Xinfengwei
Subscription
Our Directors believe that the Xinfengwei Subscription will
promote the future business cooperation between Xinfengwei
and our Group, which will improve the digitalization level of
our tax and finance business. Also, through the deepening
understanding on Xinfengwei’s operation model and
technology features, our Group is able to enhance its R&D
capabilities. Accordingly, our Directors believe that our
Company will benefit from the Xinfengwei Subscription and
the Xinfengwei Subscription is in the interest of our
Company and Shareholders as a whole.
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Upon completion of the Xinfengwei Subscription, Xinfengwei is owned by Dingding
(China) Information Technology Co., Ltd. ( ৥৥(ʕ਷)ʮ̡)( “ Dingding ”), Shi
Nan and Hangzhou Fengguo (an employee incentive platform controlled by Shi Nan) as to
36.51%, 21.91% and 14.60%, respectively, with the rest of its equity interest held by 12
minority shareholders, each being an independent third party (other than ourselves) and
holding less than 10% of the equity interest in Xinfengwei. Dingding is an associate of Alibaba
(China) Technology Co., Ltd. (Ԣˋˋ(ʕ਷)ʮ̡), our substantial
Shareholder. Wuxi Fosun V enture Capital Investment Partnership (௴ุҳ༟ΥྫΆุ
(Υྫ)), one of our pre-IPO investors, is a minority shareholder of Xinfengwei, holding
4.98% of the equity interest in Xinfengwei after the Xinfengwei Subscription.
We have applied for, and the Stock Exchange has granted, a waiver from strict compliance
with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules in relation to the preparation of financial
statements in respect of the Xinfengwei Subscription on the following grounds:
(i) Immateriality of the Xinfengwei Subscription — Based on the financial
information of Xinfengwei available to our Company, all the applicable size test
percentage ratios (as defined under Rule 14.04(9) of the Listing Rules) in relation
to the Xinfengwei Subscription referenced against the financials of our Company in
the most recent financial year of the Track Record Period are less than 5%.
Accordingly, the Directors believe that the Xinfengwei Subscription (i) is
immaterial when compared to the scale of our Group’s operations as a whole; (ii) has
not resulted in any significant change to the financial position of our Group since
December 31, 2023; and (iii) all information that is reasonably necessary for the
potential investors to make an informed assessment of the activities or financial
position of our Group has been included in the prospectus. As such, a waiver from
compliance with the requirements under Rules 4.04(2) and 4.04(4)(a) of the Listing
Rules would not prejudice the interests of the investing public.
(ii) Unavailability of information — Note 2 to Rules 4.04(2) and 4.04(4) of the Listing
Rules requires that “the financial information on the business or subsidiary acquired,
agreed to be acquired or proposed to be acquired must normally be drawn up in
conformity with accounting policies adopted by the new applicant and be disclosed
in the form of a note to the accountants’ report or in a separate accountants’ report”.
As Xinfengwei is a private company incorporated in the PRC, the historical
information of Xinfengwei was prepared in accordance with PRC GAAP as opposed
to IFRS. Our Company confirms that Xinfengwei does not have available historical
financial information which is readily available for disclosure in this prospectus in
accordance with the aforementioned provisions of the Listing Rules.
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The following table sets forth the unaudited consolidated financial information of
Xinfengwei prepared in accordance with PRC GAAP:
For the year ended
December 31,
2023 2022
(RMB in thousands)
Revenue 196,317 257,906
Loss before taxation (52,913) (66,742)
Loss after taxation (52,913) (66,742)
As of
December 31,
2023
(RMB in
thousands)
Net assets 9,604
Total assets 42,802
In addition, it would require considerable time and resources for us and our
reporting accountant to fully familiarize ourselves with the management accounting
policies of Xinfengwei and compile the necessary financial information in
accordance with IFRS that complies with Rule 4.04 of the Listing Rules for
disclosure in the prospectus. It is equally impractical to request the Company to
produce such historical financial information in accordance with IFRS.
(iii) No control or significant influence over Xinfengwei — We are neither able to
exercise any control, nor have any significant influence over Xinfengwei, in light of
our minority shareholding in Xinfengwei. The minority rights given to us are
generally commensurate to our status as a minority shareholder and are for the
protection of our interests as a minority stakeholder in the Xinfengwei Subscription.
These rights are neither intended, nor sufficient to compel or require Xinfengwei to
prepare or to disclose in this prospectus its audited financial statements for the
purposes of compliance with Rules 4.04(2) and 4.04(4)(a) of the Listing Rules. It
could also be prejudicial and potentially harmful to our portfolio relationships and
commercial interests to make such disclosure. In addition, as Xinfengwei is a private
company, disclosing this information could harm its interests and bring it into an
unfavorable competitive position. Accordingly, as we do not expect the Xinfengwei
Subscription to result in any material changes to our financial position after the
Track Record Period, we do not believe the non-disclosure of the required
information pursuant to Rules 4.04(2) and 4.04(4)(a) of the Listing Rules would
prejudice the interest of the investing public.
W AIVERS FROM STRICT COMPLIANCE WITH THE REQUIREMENTS UNDER THE LISTING RULES
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(iv) Alternative disclosure available — Our Company has provided in this prospectus
alternative information regarding the Xinfengwei Subscription which includes:
(a) description of the principal business activities of Xinfengwei and its historical
financial information prepared in accordance with PRC GAAP and available to
our Company;
(b) confirmation on independence of the relevant ultimate beneficial owners of
Xinfengwei;
(c) the date and the status of the Xinfengwei Subscription;
(d) the consideration of the Xinfengwei Subscription, how the consideration was
satisfied and the basis upon which the consideration was determined; and
(e) the reasons for the Xinfengwei Subscription and the benefits which are
expected to accrue to our Group as a result of the Xinfengwei Subscription.
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DIRECTORS’ RESPONSIBILITY STATEMENT
This prospectus, for which our Directors collectively and individually accept full
responsibility, 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 with regard to us. Our Directors, having made all reasonable enquiries, confirm
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 any statement herein or this prospectus
misleading.
FILING PROCEDURES WITH THE CSRC
Our filing procedures with the CSRC for the submission of the application to list our H
Shares on the Stock Exchange and for the Global Offering were completed on January 2, 2024.
In completing such filing, the CSRC accepts no responsibility for our financial soundness, nor
for the accuracy of any of the statements made or opinions expressed in this prospectus. No
other filings in the PRC are required to be completed for the listing of the H Shares on the
Stock Exchange.
UNDERWRITING AND INFORMATION ON THE GLOBAL OFFERING
This prospectus is published solely in connection with the Hong Kong Public Offering.
For applications under the Hong Kong Public Offering, this prospectus contains the terms and
conditions of the Hong Kong Public Offering. The Global Offering comprises the Hong Kong
Public Offering of 926,200 H Shares initially offered and the International Offering of
8,335,800 H Shares initially offered (subject, in each case, to re-allocation on the basis under
the section headed “Structure of the Global Offering”).
The listing of our H Shares on the Stock Exchange is sponsored by the Sole Sponsor.
Pursuant to the Hong Kong Underwriting Agreement, the Hong Kong Public Offering is
underwritten by the Hong Kong Underwriters on a conditional basis, with one of the conditions
being that the Offer Price is agreed between the Sponsor-OC (for itself and on behalf of the
Hong Kong Underwriters) and us. The International Offering is managed by the Joint Global
Coordinators. The International Underwriting Agreement is expected to be entered into on or
about the Price Determination Date, subject to determination of the pricing of the H Shares and
agreement on the Offer Price between the Sponsor-OC (for itself and on behalf of the
Underwriters) and us. For details of the Underwriters and the underwriting arrangements,
please refer to the section headed “Underwriting” in this prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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The H Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person is authorized to give any information in connection with the
Global Offering or to make any representation not contained in this prospectus, and any
information or representation not contained herein must not be relied upon as having been
authorized by our Company, the Sole Sponsor, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their
respective directors, agents, employees or advisors or any other party involved in the Global
Offering.
Neither the delivery of this prospectus nor any subscription or acquisition made under it
shall, under any circumstances, create any implication that there has been no change in our
affairs since the date of this prospectus or that the information in this prospectus is correct as
at any subsequent time.
For details of the structure of the Global Offering, including its conditions, please refer
to the section headed “Structure of the Global Offering” in this prospectus. For the procedures
for applying for our H Shares, please refer to the section headed “How to Apply for Hong Kong
Offer Shares”. For details of the arrangements relating to the Over-allotment Option and
stabilization, please refer to the section headed “Structure of the Global Offering”.
DETERMINATION OF THE OFFER PRICE
The H Shares are being offered at the Offer Price which will be determined by the
Sponsor-OC (for itself and on behalf of the Underwriters) and us on or around Friday, July 5,
2024 or such later date as may be agreed upon between the Sponsor-OC (for itself and on
behalf of the Underwriters) and us, and in any event no later than 12:00 noon on Friday, July
5, 2024. If the Sponsor-OC (on behalf of the Underwriters) and our Company are unable to
reach an agreement on the Offer Price on such date, the Global Offering will lapse.
OVER-ALLOTMENT OPTION AND STABILIZATION
Details of the arrangements relating to the Over-allotment Option and stabilization are set
forth in the section headed “Structure of the Global Offering.”
INFORMATION ABOUT THIS PROSPECTUS
Y ou should rely only on the information contained in this prospectus to make your
investment decision. We have not authorized 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 authorized by us, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Sole Sponsor, any of the Underwriters, any of our or their respective directors, officers or
representatives or any other person involved in the Global Offering. Neither the delivery of this
prospectus nor any offering, sale or delivery made in connection with the H Shares should,
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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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 contained in this prospectus is correct as of any date
subsequent to the date of this 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 set out the terms and conditions of the Hong Kong Public Offering.
RESTRICTIONS ON OFFERS AND SALES OF THE H SHARES
Each person acquiring the H Shares under the Hong Kong Public Offering will be
required to, or be deemed by his/her acquisition of the H Shares to, confirm that he is aware
of the restrictions on offers of the H Shares described in this prospectus.
No action has been taken to permit a public offering of the H Shares or the general
distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, this
prospectus may not be used for the purposes 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 authorized
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 applicable securities laws of
such jurisdictions and pursuant to registration with or authorization by the relevant securities
regulatory authorities or an exemption therefrom.
APPLICATION FOR LISTING OF THE H SHARES ON THE STOCK EXCHANGE
We have applied to the Listing Committee for the listing of, and permission to deal in, the
H Shares to be issued pursuant to the Global Offering (including any H Shares which may be
issued pursuant to the exercise of the Over-allotment Option) and the H shares to be converted
from Domestic Shares.
Our Domestic Shares may be converted to H Shares after obtaining the approval of the
CSRC or the authorized approval authorities of the State Council, details of which are set out
in the section headed “Share Capital.”
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, if the permission for the H Shares to be listed on the Stock Exchange pursuant to
this prospectus has been refused before the expiration of three weeks from the date of the
closing of the Global Offering or such longer period not exceeding six weeks as may, within
the said three weeks, be notified to us by or on behalf of the Stock Exchange, then any
allotment made on an application in pursuance of this prospectus shall, whenever made, be
void.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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Save as disclosed in this prospectus, no part of our Shares 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.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the H Shares (including
any H Shares which may be issued pursuant to the exercise of the Over-allotment Option) on
the Stock Exchange and compliance with the stock admission requirements of HKSCC, the H
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement
in CCASS with effect from the Listing Date or on any other date as determined by HKSCC.
Settlement of transactions between participants of the Stock Exchange 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.
All necessary arrangements have been made for the H Shares to be admitted into CCASS.
Investors should seek the advice of their stockbroker or other professional advisor for details
of those settlement arrangements and how such arrangements will affect their rights and
interests.
PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for Hong Kong Offer Shares are set out in the section headed
“How to Apply for Hong Kong Offer Shares”.
H SHARE REGISTRAR AND STAMP DUTY
Our principal register of members will be maintained in the PRC and our Hong Kong
register of members will be maintained by our H Share Registrar, Computershare Hong Kong
Investor Services Limited in Hong Kong. Our register of members will also be maintained by
us at our legal address in the PRC.
All Offer Shares will be registered on our Hong Kong register of members. Dealings in
the H Shares registered on our Hong Kong register of members will be subject to Hong Kong
stamp duty.
REGISTRATION OF SUBSCRIPTION, PURCHASE AND TRANSFER OF H SHARES
Persons applying for or purchasing H Shares under the Global Offering are deemed, by
their making an application or purchase, to have represented that they are not close associates
(as such term is defined in the Listing Rules) of any of our Directors or any existing
Shareholders or a nominee of any of the foregoing.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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PROFESSIONAL TAX ADVICE RECOMMENDED
Y ou should consult your professional advisors if you are in any doubt as to the taxation
implications of subscribing for, purchasing, holding or disposing of, or dealing in, the H Shares
or exercising any rights attaching to the H Shares. We emphasize that none of our Company,
the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Sole
Sponsor, the Underwriter, any of our or their respective directors, officers or representatives or
any other person involved in the Global Offering accepts responsibility for any tax effects or
liabilities resulting from your subscription, purchase, holding or disposing of, or dealing in, the
H Shares or your exercise of any rights attaching to the H Shares.
EXCHANGE RATE CONVERSION
Unless otherwise specified, this prospectus contains certain translations for the
convenience purposes at the following rates:
US$1.0000 : HK$7.8077
RMB0.9114 : HK$1.0000
US$1.0000 : RMB7.1159
No estimation is made that any amounts in HK$, RMB and US$ can be or could have been
converted at the relevant dates at the above rates or any other rates at all.
LANGUAGE
If there is any inconsistency between this prospectus and the Chinese translation of this
prospectus, this prospectus shall prevail unless otherwise stated. However, the English names
of the PRC national, entities, departments, facilities, certificates, titles, laws, regulations
(including certain of our subsidiaries) and the like included in this prospectus are translations
of their Chinese names and are included for identification purposes only. If there is any
inconsistency, the names in their original languages shall prevail.
COMMENCEMENT OF DEALING IN THE H SHARES
Dealings in the H Shares on the Stock Exchange are expected to commence at 9:00 a.m.
on Tuesday, July 9, 2024. The H Shares will be traded in board lots of 100 H Shares each and
all Offer Shares will be registered on the H Share Registrar in order to enable them to be traded
on the Stock Exchange.
OTHERS
Certain amounts and percentage figures included in this prospectus have been subject to
rounding adjustments. Accordingly, figures 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
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DIRECTORS
Name Address Nationality
Executive Directors
Ms. Chen Jie (؏15-2-102, Ru Y uan Ju North Lane
Xibeiwang Third Street
Haidian District
Beijing
PRC
Chinese
Mr. Y ang Zhengdao ( เ͍༸) Room 2306, Building No. 7
Y ard No. 32 South, Baiziwan Road
Chaoyang District
Beijing
PRC
Chinese
Mr. Zou Y an (֧Room 1108, Building No. 111
Shaoyaoju Beili
Chaoyang District
Beijing
PRC
Chinese
Ms. Jin Xin (㒥) Room 2B, Building No. 10
Division 4, Y uanda Garden
Century City, Haidian District
Beijing
PRC
Chinese
Non-executive Directors
Mr. Huang Miao ( ර↿) 9-A-102, Taoyuan Apartment
Changzhou
Jiangsu Province
PRC
Chinese
Mr. Diao Juanhuan (࣫Room D202, Building No. 2
Great Wall Tower
Futian District, Shenzhen
Guangdong Province
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Independent non-executive Directors
Mr. Tian Lixin ( ͭ͞อ) 2-1-1001, Xinlicheng Jiayuan
Airport Economic Area
Tianjin
PRC
Chinese
Dr. Wu Changhai (ऎ) Room 401, Division No. 1
Building No. 116
Qingshuiwan West Garden
Tongzhou District
Beijing
PRC
Chinese
Dr. Song Hua ( ҂ശ) Room 1302, Division No. 2
Building No. 6
Changqingyuan No. 2 Zone
Haidian District
Beijing
PRC
Chinese
Mr. Ng Kwok Yin ( ю਷ሬ) Flat A, 51/F, Tower 3
The Harbourside
1 Austin Road West
Tsim Sha Tsui, Kowloon
Hong Kong
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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SUPERVISORS
Name Address Nationality
Mr. Li Y unfeng (ࢤ11-5-501, Division No. 3
Longteng Community
Changping District
Beijing
PRC
Chinese
Ms. Shi Haixia ( ̦ऎᒳ) Room 1807, Tower A
Building No. 210
East Wangjing Garden
Chaoyang District
Beijing
PRC
Chinese
Mr. Luo Wenhong ( ᖯ˖҃) Room 3306, Tower B,
Phase III, Tianehu Garden
4261 Qiaoxiang Road
Nanshan District, Shenzhen
Guangdong Province
PRC
Chinese
For the biographies and other relevant information of our Directors and Supervisors, see
“Directors, Supervisors and Senior Management.”
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor Haitong International Capital Limited
Suites 3001-3006 and 3015-3016
One International Finance Centre
1 Harbour View Street
Central
Hong Kong
Sponsor-OC Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
Overall Coordinators Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Joint Global Coordinators, Joint
Bookrunners, Joint Lead Managers and
Capital Markets Intermediaries
Haitong International Securities Company
Limited
22/F, Li Po Chun Chambers
189 Des V oeux Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road
Central
Hong Kong
Fosun International Securities Limited
Suite 2101–2105, 21/F Champion Tower
3 Garden Road
Central Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Joint Bookrunners, Joint Lead Managers
and Capital Markets Intermediaries
Huatai Financial Holdings
(Hong Kong) Limited
62/F, The Center
99 Queen’s Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road
Central, Hong Kong
Shenwan Hongyuan Securities
(H.K.) Limited
Level 6, Three Pacific Place
1 Queen’s Road East
Hong Kong
Joint Lead Managers and Capital
Markets Intermediaries
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway
Admiralty, Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F, Tower II
Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
Legal Advisors to the Company as to Hong Kong and U.S. laws:
Wilson Sonsini Goodrich & Rosati
Suite 1509, 15/F, Jardine House
1 Connaught Place
Central
Hong Kong
as to PRC law:
Tian Yuan Law Firm
5/F, Tower A, Corporate Square
35 Financial Street
Xicheng District
Beijing
PRC
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 108 –


--- page 119 ---
Legal Advisors to the Sole Sponsor
and the Underwriters
as to Hong Kong and U.S. laws:
Latham & Watkins LLP
18
th Floor, One Exchange Square
8 Connaught Place
Central
Hong Kong
as to PRC law:
Commerce & Finance Law Offices
12-14
th Floor
China World Office 2
No. 1 Jianguomenwai Avenue
Chaoyang District
Beijing
PRC
Auditors and Reporting Accountants Deloitte Touche Tohmatsu
Certified Public Accountants
Registered Public Interest Entity Auditors
35/F One Pacific Place
88 Queensway
Hong Kong
Independent Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co.
2504 Wheelock Square
1717 Nanjing West Road
Shanghai
PRC
Receiving Bank Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 109 –


--- page 120 ---
Registered Office in the PRC 14/F & 15/F, Building No. 1
Division 1, No. 81 Beiqing Road
Haidian District
Beijing
PRC
Headquarters and Principal Place of
Business in the PRC
14/F & 15/F, Building No. 1
Division 1, No. 81 Beiqing Road
Haidian District
Beijing
PRC
Principal Place of Business in Hong Kong Room 1901, 19/F Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Company Website www.baiwang.com
(Information contained on this website does
not form part of this prospectus)
Joint Company Secretaries Mr. Zheng Tianhao (؀)
14/F & 15/F, Building No. 1
Division 1, No. 81 Beiqing Road
Haidian District
Beijing
PRC
Mr. Chiu Ming King (ዽ)
(Fellow member of The Hong Kong
Chartered Governance Institute)
Room 1901, 19/F Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
CORPORATE INFORMATION
–1 1 0–


--- page 121 ---
Authorized Representatives Ms. Chen Jie (؏)
15-2-102, Ru Y uan Ju North Lane
Xibeiwang Third Street
Haidian District
Beijing
PRC
Mr. Zheng Tianhao (؀)
14/F & 15/F, Building No. 1
Division 1, No. 81 Beiqing Road
Haidian District
Beijing
PRC
Alternate Authorized Representative Mr. Chiu Ming King (ዽ)
Room 1901, 19/F Lee Garden One
33 Hysan Avenue
Causeway Bay
Hong Kong
Nomination Committee Ms. Chen Jie (؏)chairlady)
Dr. Song Hua ( ҂ശ)
Mr. Tian Lixin ( ͭ͞อ)
Audit Committee Mr. Ng Kwok Yin ( ю਷ሬ) (chairman)
Mr. Tian Lixin ( ͭ͞อ)
Dr. Song Hua ( ҂ശ)
Remuneration and Appraisal Committee Dr. Wu Changhai (ऎ) (chairman)
Mr. Y ang Zhengdao ( เ͍༸)
Mr. Ng Kwok Yin ( ю਷ሬ)
Compliance Advisor Guotai Junan Capital Limited
27/F, Low Block
Grand Millennium Plaza
181 Queen’s Road Central
Hong Kong
H Share Registrar Computershare Hong Kong Investor
Services Limited
Shop 1712-1716, 17
th Floor
Hopewell Centre
183 Queen’s Road East, Wan Chai
Hong Kong
CORPORATE INFORMATION
– 111 –


--- page 122 ---
Principal Banks Bank of Beijing
Weigongcun Branch
1/F, Zhongyang Building
No. 25 Zhongguancun South Avenue
Haidian District
Beijing
PRC
China Minsheng Bank
Beijing Shangdi Branch
1/F, Building No. 4
Division No. 1, Shangdi Dongli
Haidian District
Beijing
PRC
Industrial and Commercial Bank of China
Beijing Y ongding Road Branch
No. 27 Taiping Road
Haidian District
Beijing
PRC
CORPORATE INFORMATION
–1 1 2–


--- page 123 ---
Unless otherwise indicated, the information contained in this section is derived from
various governmental and official publications, other publications and the market
research report commissioned by us and prepared by Frost & Sullivan. We believe that
the sources of information are appropriate, and we have taken reasonable and cautious
care in extracting and reproducing such information. We have no reason to believe that
such information is false or misleading or that any fact has been omitted that would
render such information false or misleading. We, the Sole Sponsor , the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters or any of our or their respective directors, senior
management, representatives or any other person involved in the Global Offering have
not independently verified information and statistics from official government sources
and have made no representation as to the accuracy and completeness thereof.
SOURCE OF INFORMATION
This section includes information from a report commissioned by us and prepared by
Frost & Sullivan (the “F&S Report”), as we believe the F&S Report imparts a greater
understanding of (1) China’s financial and tax-related transaction digitalization market, and (2)
China’s market of transaction-based big data analytics for SMB financing (collectively, the
“Relevant Industries”) for the period from 2019 to 2028. Frost & Sullivan, an independent third
party, is a consulting firm founded in 1961 and provides professional industry consulting
services across multiple industries. We have agreed to pay a commission fee of RMB650,000
for the F&S Report. We are of the view that the payment of such fee does not impair the
fairness of the conclusions drawn in the F&S Report. Figures and statistics provided in this
prospectus and attributed to Frost & Sullivan or the F&S Report have been extracted from the
F&S Report and published with the consent of Frost & Sullivan.
In preparing the F&S Report, Frost & Sullivan conducted both primary and secondary
research through a variety of resources. Primary research involved discussions and interviews
with leading industry participants regarding industry status. Secondary research involved
analyzing information and statistics published by government authorities, industry
associations, publications and studies by industry experts, public company’s corporate reports,
online resources and data from Frost & Sullivan’s research database. The market projections
in the F&S Report are based on the following key assumptions: (1) the social, economic and
political environment in China will remain stable in the forecast period; (2) related key
industry drivers are likely to continue driving the growth of the Relevant Industries during the
forecast period; (3) the data quoted from authorities remains unchanged; and (4) there are no
force majeure events or new industry-wide regulations which would drastically or
fundamentally affect the Relevant Industries.
Except as otherwise noted, all of the data and forecasts contained in this section are
derived from the F&S Report. Our Directors confirm that after taking reasonable care, there is
no material adverse change in the overall market information since the date of the F&S Report
that would materially qualify, contradict or have an impact on such information.
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CHINA’S ENTERPRISE DIGITALIZATION MARKET
Enterprise digitalization solutions are digitalization solutions that improve the level of
business decision-making, and the digitalization and automation of business processes.
Enterprise digitalization solutions can be classified, by business functions, into the
digitalization of (1) transaction, (2) commerce and marketing, and (3) internal operation.
Transaction digitalization solutions enable full-cycle management for transactions between
enterprises and their customers and suppliers, from supplier management and product and
service sourcing to order management, invoicing and transaction compliance management.
Commerce and marketing digitalization solutions enable enterprises to manage marketing
activities, discover sales leads and manage client relationships, thereby achieving customer and
sales growth. Internal operation digitalization solutions enable enterprises to digitalize daily
operational activities within the enterprises, such as resource planning and management, and
human capital management. The following diagram illustrates business functions of each type
of enterprise digitalization solutions.
Suppliers Customers
Enterprise resource
planning (ERP)
Human capital
management (HCM)
Production and
engineering
Others (such as business
analytics, IT operation
and management)
Internal Operation Digitalization
Enterprises
Transaction Digitalization
Supplier
management
Sourcing
Order
management
Invoicing
Payment
management
(AP)
Transaction
compliance
Invoicing Order
management
Commerce and
Marketing
Digitalization
Commerce
and
Marketing
E-signatureE-signature
Payment
management
(AP)
Source: F&S Report
Enterprises have increasingly recognized the benefits brought by enterprise digitalization
solutions, including improvement in efficiency, cost-saving and compliance, which contribute
to the continual growth of China’s enterprise digitalization market. China’s enterprise
digitalization market, in terms of revenue, increased from RMB482.4 billion in 2019 to
RMB775.1 billion in 2023, at a CAGR of 12.6%, and is expected to further reach RMB1,302.8
billion in 2028, at a CAGR of 10.9% from 2023 to 2028. The following chart illustrates the size
of China’s enterprise digitalization market for the periods indicated.
INDUSTRY OVERVIEW
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--- page 125 ---
2019
294.7
391.4
260.5
363.1
392.6
1,302.8
356.7
1,184.8
2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Transaction digitalization
Commerce and marketing digitalization
CAGR
Total
2019-2023
12.6%
2023-2028E
10.9%
Transaction digitalization
Commerce and marketing digitalization
13.7% 12.9%
12.9% 12.6%
Internal operation digitalization 11.7% 8.4%
Internal Operation digitalization
229.2
331.4
200.7
301.1
185.9
284.8
162.9
229.4
140.9
213.2
320.2
1,073.2
282.4
968.5
245.7
869.3
214.4
775.1
187.5
689.3
167.8
638.5
145.4
537.7
128.3
482.4
414.5
495.7
371.8
456.4
331.8
421.2
RMB Billion, 2019-2028E
Market size of China’s enterprise digitalization, in terms of revenue
Source: F&S Report
Drivers of China’s Enterprise Digitalization Market
According to the F&S Report, the following are key growth drivers of China’s enterprise
digitalization market.
Prominent need for efficiency improvement. As enterprises expand in scale, the
complexities with respect to enterprises’ overall business management increase accordingly,
which gives rise to their demands for efficient, automated and reliable solutions. Moreover, the
impact of COVID-19 pandemic on the offline activities has accentuated the importance of
digitalized operations. The growing demand for digitalization, automation and operational
efficiency is expected to propel the adoption of enterprise digitalization solutions among
enterprises in China.
Adoption of cutting-edge technologies. Cutting-edge technologies, such as cloud
computing, big data analytics, AI and blockchain technologies have sparkled the innovation
and digital transformation for enterprise operations. For instance, enterprises can utilize data
insights for their real-time and fact-based decision-making. As more enterprises recognize
benefits of cutting-edge technologies, the demand for digital transformation is expected to
continue to increase.
Favorable government policies . Government authorities in China have promulgated
favorable policies to propel the development of enterprise digitalization. For instance, the State
Council of China, jointly with the Central Committee of Communist Party of China, issued
Overall Layout Plan for the Construction of Digital China (
ண዆᜗б҅஝ྌ) in
2023, which regards digitalization as an important engine for China’s modernization.
INDUSTRY OVERVIEW
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--- page 126 ---
CHINA’S FINANCIAL AND TAX-RELATED TRANSACTION DIGITALIZATION
MARKET
The large number of enterprises in China, their massive volume of transactions and
demands for digitalization contribute to the growth momentum of China’s transaction
digitalization market in terms of revenue, which increased from RMB128.3 billion in 2019 to
RMB214.4 billion in 2023, at a CAGR of 13.7%, and is expected to further increase to
RMB392.6 billion in 2028, at a CAGR of 12.9% from 2023 to 2028. According to the F&S
report, the growth rate of China’s transaction digitalization market is expected to outpace that
of the overall enterprise digitalization market, because enterprises’ internal operation
digitalization is a prerequisite for them to effectuate transaction digitalization, and China’s
internal operation digitalization market has reached a more mature stage and demonstrated
relatively slow growth rate. Transaction digitalization solutions comprise digital payment
solutions, financial and tax-related transaction digitalization solutions, and various other
solutions, such as contract management solutions. The following chart illustrates the size of
China’s transaction digitalization market for the periods indicated.
2019
255.8227.9
392.6
356.7
2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
Digital payment solution
Financial and tax-related transaction digitalization solution
Total
CAGR 2019-2023
13.7%
2023-2028E
12.9%
Digital payment solution
Financial and tax-related transaction
digitalization solution
13.7% 11.4%
9.2% 36.5%
Others1 21.6% 18.1%
Others
201.6177.0157.2136.2120.6
320.2
282.4
245.7
214.4
187.5
167.8
145.4
128.3
345.5
314.9
284.9
RMB Billion, 2019-2028E
Market size of China’s transaction digitalization, in terms of revenue
5.1 2.6 6.1 3.1
6.9 3.7
5.9 4.6
7.2 5.6
11.0 6.8
18.5 8.1
25.7
30.6
34.3
9.6
11.2
12.8
Source: F&S Report
Note:
1) Include other transaction digitalization solutions such as eSignature solutions
INDUSTRY OVERVIEW
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Background of China’s Financial and Tax-related Transaction Digitalization
History of Golden Tax Project in China
In the early 1990s, as part of its comprehensive economic reform program, the PRC
government implemented the V A T and the accompanying major fiscal reform project “Golden
Tax Project,” which mandates the use of information technologies to improve compliance with
China’s V A T laws. Since its initial launch in 1994, China’s Golden Tax Project has progressed
through the following phases.
 The First Phase was introduced in 1994 through a nationwide computerized taxation
network, including the implementation of V A T cross-auditing software system (࠽
ӻ୕) and V A T anti-counterfeit control software system (೼ԣ৽೼
છӻ୕), that connected tax authorities at different administrative levels to prevent
the fraudulent issuance and forgery of V A T invoices.
 The Second Phase was introduced in 1998 and built upon the work of First Phase to
enhance the nationwide monitoring network and further prevent illegal activities
related to V A T invoices, through the introduction of four software subsystems,
including V A T anti-counterfeiting tax control invoicing subsystem (೼ԣ৽೼છ
කୃӻ୕), anti-counterfeiting tax authentication subsystem ( ԣ৽೼છႩᗇӻ୕),
V A T audit subsystem (ӻ୕), and invoice investigation information
management subsystem (၍ଣӻ୕). The Golden Tax Disk (೼ᆵ)
and Tax Control Disk ( ೼છᆵ), each a specific type of information security
hardware, were first introduced during the Second Phase to accommodate the
invoice issuance requirement. See “—Invoice Issuance through V A T Invoicing
Software” for details.
 The Third Phase, launched in 2013, focuses on unifying and integrating national and
local taxation data to enable the swift exchange of tax information between national
and local tax authorities. The Third Phase laid the groundwork for the Business Tax
to V alue-Added Tax reform launched by the PRC government in 2012 as a major
overhaul of China’s tax system to unify the taxation of goods and services under a
single V A T regime. Additionally, the Third Phase has facilitated the “Streamline the
Government, Delegate Power, and Improve Government Services” reform initiated
in 2015 to create a favorable operating environment for small and micro-sized
businesses, stimulating the development of small and micro-sized businesses
(“SMB”) financing. During the Third Phase, V A T e-invoice was also widely adopted
in the PRC, as the government introduced Announcement of the State
Administration of Taxation on Issues Relating to Promoting Issuance of Electronic
Ordinary V A T Invoices (ᄣ
ʮѓ) in 2015 to reduce costs for taxpayers and
improve their overall experience. The Third Phase represents a significant step
towards leveraging big data, interconnectivity, and advanced analytics to modernize
China’s tax administration system and more effectively combat tax evasion. It also
paves the way for the policy goal of “managing tax through big data.” Tax UKey ( ೼
ਕUKey), a free information security hardware, was introduced by the State
Administration of Taxation of the PRC (“SA T”) during the Third Phase.
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 The Fourth Phase (also known as the digital invoice reform), introduced in 2021,
marks the SA T’s transition from “managing tax through invoices” to “managing tax
through big data.” The Fourth Phase involves collecting, integrating, and analyzing
tax-related data from more fields through the digital invoice reform. The SA T has
launched the Digital Invoice Service Platform, with the Company and another
software and technology company, which is a Chinese state-owned enterprise
specializing in the provision of IT infrastructure services, such as those in relation
to operating system and database (the “Co-developer”), as the joint bid-winner, joint
developer and the exclusive service providers for the system application
development of the Digital Invoice Service Platform. The Digital Invoice Service
Platform currently consists of two systems: Direct Connection System, also known
as the Natural System ( ᆀΆ), and Web-based System. Direct Connection System
allows large conglomerates and qualified large and midsized enterprises to directly
connect their IT systems with the tax authority, while Web-based System allows
enterprises to carry out digital invoice issuance and other invoice-related activities
on the web. As of December 2023, the Digital Invoice Service Platform has passed
the preliminary acceptance by the SA T.
Starting in 2024, it is expected that the development of the digital invoice reform
will provide substantial market opportunities for financial and tax-related
transaction digitalization solution providers. For enterprises connecting to the Direct
Connection System, apart from a small number of companies opting for self-
construction, the vast majority of enterprises will connect through digital invoicing
solutions with the direct connection engine provided by financial and tax-related
transaction digitalization solution providers, either through on-premises deployment
or cloud deployment. For enterprises connecting to the Web-based System, besides
manually logging into the system on the web, they will also choose digital invoicing
solutions with the web connection engine developed by financial and tax-related
transaction digitalization solution providers, primarily through cloud deployment, to
utilize value-added services such as automatic invoicing and digital invoice
management to issue and process invoices at large scale. For enterprises, in
particular small and micro-sized enterprises, which do not need to issue digital
invoices at large scale or to use other value-added services, financial and tax-related
transaction digitalization solution providers can also offer free digital invoicing
solutions to help these enterprises issue digital invoices with certain free value-
added features such as automatic filling of invoice title information.
Enterprises in China are currently transitioning from the Third Phase into the Fourth
Phase of the Golden Tax Project. Starting from the second half of 2024, it is estimated that
approximately 100,000 large enterprises will gradually connect to the Direct Connection
System and complete full transition to the Fourth Phase of the Golden Tax Project by 2028.
Additionally, it is estimated that about 20% of the roughly one million medium and large
enterprises will gradually connect to the Direct Connection System, while the remaining 80%
will connect to the Web-based System. For those utilizing the Direct Connection System
through digital invoicing solutions with the direct connection engine, if deployed on-premises,
INDUSTRY OVERVIEW
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--- page 129 ---
enterprises generally need to pay software license fees, one-time deployment implementation
fees, and annual maintenance fees. If cloud-deployed, enterprises usually need to pay one-time
deployment implementation fees and annual software subscription fees. For those utilizing the
Web-based System through digital invoicing solutions with the web connection engine,
enterprises generally need to pay one-time deployment implementation fees and annual
software subscription fees. The transition from the Third Phase into the Fourth Phase of the
Golden Tax Project will create significant market opportunities for financial and tax-related
transaction digitalization solution providers, reaching approximately RMB7.0 billion in 2025,
which are expected to increase gradually through the years from 2025 to 2028 and reach
approximately RMB16.0 billion in 2028.
According to the F&S Report, the Co-developer is not a key market player in China’s
financial & tax-related transaction digitalization market. According to the same source, as
business growth for market players in the financial & tax-related transaction digitalization
market under the Fourth Phase of the Golden Tax Project requires service expertise with
respect to tax invoices, it is expected that the Fourth Phase of the Golden Tax Project will
primarily benefit market players already with substantial service experiences on tax invoices,
including us, Company A and Company C, as discussed below in “—Competitive Landscape
of China’s Financial and Tax-related Transaction Digitalization Market.”
Invoice Issuance through VAT Invoicing Software
According to the F&S Report, there are currently three types of V A T Invoicing Software
of the State Administration of Taxation of the PRC (೼೯ୃකୃழ΁)
(“SA T’s V A T Invoicing Software”), each corresponding with a specific type of information
security hardware, namely, Golden Tax Disk, Tax Control Disk and Tax UKey, the development
of which was commissioned by the SA T. Accordingly, the three types of V A T Invoicing
Software are typically referred to as V A T Invoicing Software (Golden Tax Disk version) (࠽
೼೯ୃකୃழ΁(وV A T Invoicing Software (Tax Control Disk version) (೼೯ୃ
කୃழ΁(وand V A T Invoicing Software (Tax UKey version) (೼೯ୃකୃழ΁
(೼ਕUKeyوrespectively. The history and development of the three types of information
security hardware and their respective corresponding V A T Invoicing Software, including our
cooperation with the SA T, was summarized as follows:
 Golden Tax Disk was the first generation of information security hardware
commissioned by the SA T, and launched during the Second Phase of the Golden Tax
Project and used for taxpayers’ invoice issuance. The SA T commissioned the
development and manufacture of Golden Tax Disk, as well as the development of the
V A T Invoicing Software (Golden Tax Disk version). Prior to the introduction of V A T
Invoicing Software (Tax Control Disk version), V A T Invoicing Software (Golden
Tax Disk version) was the only SA T’s V A T Invoicing Software available in the
market.
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 The SA T further commissioned the development and manufacture of Tax Control
Disk, as well as the development of V A T Invoicing Software (Tax Control Disk
version). Prior to the introduction of V A T Invoicing Software (Tax UKey version),
enterprises in China typically purchased Golden Tax Disk or Tax Control Disk and
installed the corresponding SA T’s V A T Invoicing Software in order to complete V A T
invoice issuance.
 Since early 2020, the SA T launched Tax UKey, which has been provided by the SA T
to enterprises in China free of charge. Tax UKey is a type of information security
hardware typically developed by manufacturers selected by local branches of the
SA T through public tendering process. Since the launch of Tax UKey and V A T
Invoicing Software (Tax UKey version), new taxpayers will only obtain Tax UKey
from the SA T and install V A T Invoicing Software (Tax UKey version) for V A T
invoice issuance.
Market participants in China’s financial and tax-related transaction digitalization market,
including us, have developed a series of financial and tax-related transaction digitalization
software and solutions to enable enterprises in China to effectively manage key aspects for
enterprise transactions, such as procurement, billing, invoicing, management of account
receivables and payables, and tax filings, through the V A T Invoicing Software. Such financial
and tax-related transaction digitalization software and solutions provide value-added services
on top of the basic V A T invoice issuance function offered by SA T’s V A T Invoicing Software,
and must interact with one of the three SA T’s V A T Invoicing Software for V A T invoice issuance
and certain other functions in the case of V A T e-invoice related activities.
Since all three V A T Invoicing Software are compatible only with e-invoices but not digital
invoices, it is expected after China fully transitions into the Fourth Phase of the Golden Tax
Project, all three information security hardware, including Golden Tax Disk, Tax Control Disk,
and Tax UKey, as well as their corresponding V A T Invoicing Software will be gradually phased
out, and the issuance and other invoice-related activities will be carried out through the Digital
Invoice Service Platform through either Direct Connection System or Web-based System.
Foreseeing this trend, leading market participants in China’s financial and tax-related
transaction digitalization market, like us, have upgraded their financial and tax-related
transaction digitalization software and solutions to be compatible with both e-invoices and
digital invoices.
INDUSTRY OVERVIEW
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Invoice Issuance through Other Methods
In addition to invoice issuances through the abovementioned three types of information
security hardware and the corresponding V A T Invoicing Software, enterprises in China may
issue invoices through other methods, including (1) through in-person application for paper
invoice issuances at local branches of the SA T, (2) through tax server assemblies ( ೼છᆵଡ଼)
and tax chips (ؐthat are typically adapted and developed by Watertek Group and
acknowledged by the SA T for use by enterprises in China for invoice issuance purpose, and (3)
through the Digital Invoice Service Platform. Similarly, it is expected that, after China fully
transitions into the Fourth Phase of the Golden Tax Project, invoice issuances through tax
server assemblies and tax chips as well as paper invoice issuances will be gradually phased out.
Main Differences between E-invoices and Digital Invoices
Digital invoice is a new type of invoice that has the same legal status as traditional paper
invoices, but does not require physical medium or conventional prepositive procedures to use.
Digital invoices fully digitize the information on paper invoices, and through tag management,
integrate various types of invoices into a single electronic invoice category. The adoption of
digital invoices facilitates the formation of a nationwide and uniform tax code system, assigns
the total invoice issuance amount, and sets up digital invoice accounts to realize the automatic
transfer and data collection of invoices. The following sets forth the main differences between
digital invoices and e-invoices (i.e., digitalized form of traditional paper invoices):
 Pre-issuance process : Before issuance, e-invoices require taxpayers to apply for
invoice type approval, information security hardware, and invoice numbers from
relevant tax authorities. In contrast, digital invoices do not require such prepositive
procedure before issuance.
 Issuance limitation : Same as traditional paper invoices, e-invoices can only be
issued within a set quantity and face value limits, which requires taxpayers to apply
for additional quantity and face value if such limitation is reached. Digital invoices
utilize a “quota system,” where taxpayers can issue any amount and any number of
invoices within the total face value granted by the SA T.
 Invoice content : Digital invoices no longer display information such as address and
bank account, invoice code, and cipher area that is typically found on e-invoices.
Digital invoices have a 20-digit code, compared to the 8-digit code for e-invoices.
Digital invoices also eliminate the 8 line-item restriction found on e-invoices.
 Issuance platform : E-invoices are issued on public service platforms and can be
issued offline. Digital invoices are issued on the Digital Invoice Service Platform,
and can only be issued online.
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--- page 132 ---
 Invoice types : E-invoices only include generic and special V A T e-invoices. Digital
invoices integrate 17 standard invoice types into one electronic invoice category,
and covers invoice types such as motor vehicle invoices, electronic passenger
itineraries for air transportation, rail tickets, and general medical service invoices,
among others.
 Delivery method : After issuance, e-invoices require the issuer to deliver the
electronic data file (in formats such as open fixed-layout document (“OFD”)) to the
recipient via email, SMS or mail. On the other hand, digital invoices automatically
send the electronic data file to both issuer’s and recipient’s digital invoice accounts,
which can automatically collect data on various types of invoices.
 File format : The electronic data file format for e-invoices is in OFD. Digital
invoices add an internationally recognized XML pure data format while retaining
formats like OFD and PDF.
Overview of China’s Financial and Tax-related Transaction Digitalization Market
Financial and tax-related transaction digitalization solutions enable enterprises to conduct
financial and tax management based on transaction data, including invoices, bills, and other
types of digital documents involved in business transactions. Financial and tax-related
transaction digitalization solutions, by functions, mainly include tax invoice compliance
management solutions, financial and tax management solutions, and supply chain collaboration
solutions.
Tax invoice compliance management solutions centralize invoice management activities
of an enterprise on a unified platform and digitalize the entire management process, including
among others, issuance, delivery, verification and storage, which reduces the need for manual
processing and improves transaction and management efficiency. Moreover, tax invoice
compliance management solutions enable enterprises to strengthen their compliance status and
lower error rates through built-in codes and algorithms configured based on relevant tax and
accounting rules. Financial and tax management solutions refer to a wide range of applications
that digitalize management of enterprise spending, tax filing and accounting archive. By
tracking and analyzing enterprises’ spending patterns and automating expenditure
reimbursement processes, financial and tax management solutions help streamline enterprise
budget control and the cumbersome manual reimbursement procedures. Supply chain
collaboration solutions assist with enterprises’ procurement process, ranging from product and
service requisitioning to transaction settlement. Driven by the need to increase operational
efficiency while remaining compliant with relevant tax regulations, China’s financial and
tax-related transaction digitalization market, in terms of revenue, increased from RMB5.1
billion in 2019 to RMB7.2 billion in 2023, at a CAGR of 9.2%, and is expected to reach
RMB34.3 billion in 2028, at a CAGR of 36.5% from 2023 to 2028.
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China’s financial and tax-related transaction digitalization solutions consist of cloud and
on-premises solutions. China’s cloud financial and tax-related transaction digitalization
market, in terms of revenue, increased from RMB1.4 billion in 2019 to RMB3.1 billion in
2023, at a CAGR of 22.1%, and is expected to reach RMB21.9 billion in 2028, at a CAGR of
47.8% from 2023 to 2028. The proportion of China’s cloud financial and tax-related transaction
digitalization market, in terms of revenue, in the overall financial and tax-related transaction
digitalization market increased from 27.5% in 2019 to 43.0% in 2023 and is expected to reach
64.0% in 2028, driven by the increase in market demand for operational efficiency and market
acceptance of cloud solutions. The following chart illustrates the market size of China’s
financial and tax-related transaction digitalization for the periods indicated.
2019
14.3
21.9
9.0
5.8
34.3
30.6
18.3
2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
CAGR
Total
2019-2023
9.2%
2023-2028E
36.5%
Cloud
On-premises
22.1% 47.8%
2.8% 24.5%
9.5
5.23.12.42.5
On-premises
Cloud
2.0
4.13.54.44.1
1.4
25.7
18.5
11.0
7.25.96.96.15.1
3.7
12.3
12.3
11.4
RMB Billion, 2019-2028E
Market size of China’s transaction digitalization, in terms of revenue
Source: F&S Report
Drivers and Trends of China’s Financial and Tax-related Transaction Digitalization
Market
According to the F&S Report, the following are key growth drivers and trends of China’s
financial and tax-related transaction digitalization market.
Government-initiated tax and invoice reform . An increasing number of government
initiatives have aimed to promote enterprises’ digital transformation in the areas of invoice,
financial and tax management to drive economic growth and achieve more effective
administration. See “—China’s Financial and Tax-related Transaction Digitalization
Market—Background of China’s Financial and Tax-related Transaction
Digitalization—History of Golden Tax Project in China” for details.
Rapid development of compliance and information security technologies . Financial and
tax-related transaction digitalization solutions utilize advanced compliance and information
security technologies to timely detect and rectify security loopholes, fraud and manual errors
occurring in enterprises’ internal and external business activities. Furthermore, with the
increasingly reliable IT infrastructure and the development of data security technologies, such
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as digital signatures, cryptographic algorithms and OFD template, financial and tax-related
transaction digitalization solutions can enable secured end-to-end transaction process. These
technologies are expected to further improve the reliability and effectiveness of financial and
tax-related transaction digitalization solutions, which will drive enterprises’ adoption of such
solutions.
Competitive Landscape of China’s Financial and Tax-related Transaction Digitalization
Market
China’s financial and tax-related transaction digitalization market is relatively
fragmented, with the top five market players accounting for 21.4% of total market share in
terms of revenue in 2023. We ranked second in China’s financial and tax-related transaction
digitalization market, in terms of revenue, accounting for 4.9% of market share in 2023,
according to the F&S Report. The following table sets out our ranking in China’s financial and
tax-related transaction digitalization market in terms of revenue in 2023.
Ranking of China’s Financial and Tax-related Transaction
Digitalization Solution Providers in Terms of Revenue in 2023
Company Revenue Market Share
(RMB million) (%)
Company A (1) 467 6.4
Our Group 358 * 4.9
Company B (2) 293 4.0
Company C (3) 220 3.0
Company D (4) 212 2.9
Source: F&S Report
* Represents our revenue from cloud and on-premises financial & tax digitalization solutions.
(1) Company A is a listed company on Shanghai Stock Exchange with a registered capital of RMB1,863
million, founded in 2000 and headquartered in Beijing. Company A is a traditional invoice-based
solution provider, whose business covers invoice issuance and invoice and tax compliance. As of
December 31, 2023, the number of employees of Company A was approximately 18,000.
(2) Company B is a private company with a registered capital of RMB88 million, founded in 2017 and
headquartered in Shanghai. Company B is an emerging cloud solution provider whose business focuses
on the automated process of external procurement sourcing and reconciliation and settlement. As of
December 31, 2023, the number of employees of Company B was approximately 130.
(3) Company C is a private company with a registered capital of RMB72 million, founded in 2016 and
headquartered in Beijing. Company C is a cloud solution provider with software and value-added
services offerings, including invoice issuance, enterprise reimbursement management, tax declaration,
and tax compliance risk control. As of December 31, 2023, the number of employees of Company C was
approximately 200.
(4) Company D is a private company with a registered capital of RMB10 million, founded in 2014 and
headquartered in Beijing. Company D is a cloud solution provider that helps enterprises achieve cost
reduction and efficiency improvement through a cloud reimbursement platform. As of December 31,
2023, the number of employees of Company D was approximately 90.
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Among the cloud financial and tax-related transaction digitalization solution providers in
China, we ranked first in terms of revenue in 2023, accounting for a market share of 7.1%. In
addition, with approximately 0.7 billion invoice processing requests fulfilled and
approximately 2.6 billion V A T invoices issued through our cloud solutions in 2023, we ranked
first and second among financial and tax-related transaction digitalization solution providers in
China, respectively.
Ranking of China’s Cloud Financial and Tax-related Transaction
Digitalization Solution Providers in Terms of Revenue in 2023
Company Revenue Market Share
(RMB million) (%)
Our Group 220 * 7.1
Company D (1) 170 5.5
Company E (2) 120 3.9
Company B (1) 117 3.8
Company A (1) 93 3.0
Source: F&S Report
* Represents our revenue from cloud financial & tax digitalization solutions.
(1) See footnotes (2) through (4) to the first table under this sub-section.
(2) Company E is a private company with a registered capital of RMB10 million, founded in 2015 and
headquartered in Shanghai. Company E is an emerging cloud solution provider focusing on supply chain
collaboration and V A T invoicing compliance via its cloud invoice management platform. As of
December 31, 2023, the number of employees of Company E was approximately 110.
Ranking of China’s Financial and Tax-related Transaction
Digitalization Solution Providers in 2023
Company
In terms of the number of invoice
processing requests* fulfilled
through cloud solutions in 2023
(in Billion)
Our Group 0.7
Company A (1) 0.6
Company C (2) 0.4
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Company
In terms of the number of
V AT invoices issued through cloud
solutions in 2023
(in Billion)
Company A (1) 3.1
Our Group 2.6
Company C
(2) 1.3
Source: F&S Report
* The number of invoice processing requests counts each request for invoice collection, verification,
download, and certification for tax deduction.
(1) See footnote (1) to the first table under this sub-section.
(2) See footnote (3) to the first table under this sub-section.
Entry Barriers of China’s Financial and Tax-related Transaction Digitalization Market
According to the F&S Report, the following are entry barriers of China’s financial and
tax-related transaction digitalization market.
Technology capabilities. Leading market players typically possess more advanced
technologies to assure functionality, reliability and security of solution offerings. Such
technological capabilities would take significant amount of time for new market entrants to
develop. Moreover, seasoned solution providers, having accumulated more industry-specific
experience and know-how through serving customers of various industries, are more capable
of providing industry-customized solutions that precisely target industry-specific pain points.
One-stop service capabilities. Enterprises have increasing demands for one-stop financial
and tax-related transaction digitalization solutions for centralized and convenient management.
Such one-stop service capabilities require expertise on a diverse range of service areas,
including invoice, financial and tax management, as well as supply chain collaboration. New
market entrants require a substantial amount of time and resources to develop such expertise.
Experience in collaborating with regulatory authorities. As the financial and tax-related
transaction digitalization solutions, especially the tax invoice compliance management
solutions, are designed to strengthen enterprises’ compliance with applicable laws and
regulations, leading market players that work closely with regulatory authorities and possess
more accurate understanding of regulations and policies can develop more effective
compliance solutions, as compared to new market entrants.
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CHINA’S BIG DATA ANALYTICS FOR SMB FINANCING MARKET
Big data analytics solutions offer data-generated insights to identify and correlate hidden
patterns based on massive volume of data. Participants of China’s big data analytics market
primarily include (1) data suppliers, which collect and transmit data related to consumer
behavior, enterprises’ operations, among others; (2) data analytics technology suppliers; and
(3) big data analytics solution providers, which integrate data and data analytics technology
into their product and service offerings.
There are two types of credit reporting agencies in China, namely individual credit
reporting agencies (ዚ࿴) and enterprise credit reporting agencies (ዚ࿴). As
of August 2023, there were two licensed individual credit reporting agencies and 149 licensed
enterprise credit reporting agencies. Licensed enterprise credit reporting agencies are
important market players in the big data analytics for SMB financing market, as it is common
practice for big data analytics solution providers to collaborate with licensed enterprise credit
reporting agencies to provide big data analytics services to financial service providers while
ensuring compliance with the Administrative Measures for Credit Reporting Business (the
“2021 Administrative Measures”) after it took effect. Under the collaboration arrangement
between licensed enterprise credit reporting agencies and big data analytics solutions
providers, licensed enterprise credit reporting agencies typically procure data and data
analytics services from big data analytics solution providers and deliver such services to
financial service providers, while maintaining the requisite licenses and government approvals
for carrying out such activities. Such licensed enterprise credit reporting agencies are required
to complete record-filing procedures with the People’s Bank of China as prescribed under the
2021 Administrative Measures, in order for them to provide credit reporting services for
financial service providers. The following diagram illustrates the typical transaction and
information flow among data suppliers, licensed enterprise credit reporting agencies, financial
service providers and big data analytics solution providers after the 2021 Administrative
Measures took effect.
Big data analytics
solution providers
Licensed enterprise
credit reporting
agencies
Big data analytics
solution services
Service fees
(typically 95%-99% of
service fees they received
from financial service providers
after deducting channel fees)
Financial service
providers
Big data analytics
solution services
Service fees
Third-party data
suppliers and other
data sources
Customers
and users
Data and service fees
Services
Data service fees
Data
According to the F&S Report, licensed enterprise credit reporting agencies typically lack
proprietary data assets and access thereto, and as a result, many licensed enterprise credit
reporting agencies would collaborate with big data analytics solution providers. Due to market
competition and lack of differentiated product and service offerings, licensed enterprise credit
reporting agencies typically have relatively low profit profiles.
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Customers of big data analytics solutions primarily include financial service providers
and other enterprise customers. Enterprise customers typically adopt big data analytics
solutions in the areas of marketing, risk management, product design, client relationship
management and supply chain insights.
Big data analytics solutions are quickly adopted by China’s financial service industry, as
big data analytics solutions can help financial service providers identify potential financial
product users, customize financial product marketing strategies and detect and monitor credit
risks.
SMB financing refers to the provision of financing to small and micro-sized businesses
by licensed financial service providers in China, including commercial banks, factoring and
leasing companies, and micro-lending companies, among others. Growth potential of China’s
big data analytics for SMB financing market is evidenced by relevant loan balances with
financial service providers in China, which increased from RMB36.9 trillion in 2019 to
RMB70.9 trillion in 2023, at a CAGR of 17.7%, and is expected to reach RMB126.4 trillion
in 2028, at a CAGR of 12.3% from 2023 to 2028. Financial service providers are willing to
invest in big data analytics to leverage this market potential. China’s big data analytics for
SMB financing market, in terms of revenue, increased from RMB8.8 billion in 2019 to
RMB28.2 billion in 2023, at a CAGR of 33.7% and is expected to reach RMB78.9 billion in
2028, at a CAGR of 22.9% from 2023 to 2028, as illustrated in the following chart.
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
8.8 11.5
15.9
22.8
28.2
37.0
47.0
57.6
68.4
78.9
59.9
19.015.812.710.07.65.54.5
52.6
44.8
37.0
29.5
22.6
18.4
12.69.07.0
Market size of big data analytics solution for SMB financing, in terms of revenue
RMB Billion, 2019-2028E
2019-2023 2023-2028ECAGR
Total 33.7% 22.9%
Transaction-based 32.7% 28.0%
Non Transaction-based 34.0% 21.5%
2.5 3.31.8
Transaction-based
Non Transaction-based
Source: F&S Report
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Transaction-based Big Data Analytics for SMB Financing Market
China’s transaction-based big data analytics for SMB financing market utilizes primarily
financial and tax-related data generated from enterprises’ transaction information to optimize
efficiency of the provision of SMB financing in China. As transactions directly reflect
enterprises’ operational performance, analytical results based on transactions can accurately
and timely reflect the operation conditions and shed light on the financial performance of
enterprises.
Transaction-based big data analytics for SMB financing have two major functions:
marketing and risk management. As demands for financial services continue to increase in
China, financial service providers are facing mounting challenges in efficiently and effectively
identifying and reaching qualified financial product users. Big data analytics solutions built
upon transaction data are able to reveal potential customers’ financing, investment and
insurance needs and enable financial service providers to precisely identify potential users for
their financial products, and to subsequently launch tailored marketing campaigns.
Transaction-based big data analytics have also become one of the advanced and innovative
approaches for financial service providers to monitor and minimize risk exposure. To construct
a reliable and comprehensive risk profile of users, financial service providers need a large
amount of information to conduct relevant risk analysis. Big data analytics based on
transactions, reflecting users’ financial condition and spending patterns and historical payment
records, enable financial service providers to review and predict potential customers’ financing
needs, and subsequently conduct risk evaluation and adopt risk mitigation measures.
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E
1.8 2.5
3.3
4.5
5.5
7.6
10.0
12.7
15.8
19.0
Market size of transaction-based big data analytics solution for SMB financing, in terms of revenue
RMB Billion, 2019-2028E
2019-2023 2023-2028E
CAGR 32.7% 28.0%
Source: F&S Report
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Key Trends and Drivers
According to the F&S Report, the following are the key trends and drivers of China’s
transaction-based big data analytics for SMB financing market.
Rising preference for independent data analytics solutions . As financial service providers
have attached greater importance to data objectivity and neutrality, many of them have
procured independent big data analytics solutions for risk monitoring and assessment.
Growing demand for multi-dimensional data resources . In order to understand and verify
the financial and operation status of financial product users, financial service providers
increasingly rely on multi-dimensional data resources, such as invoice and transaction data,
based on which they can also customize marketing strategies and recommend products
correspondingly.
Technology advancement . Technology advancement in AI, cloud computing and other
technologies in recent years have improved the precision and effective risk control of big data
analytics solutions, which is expected to promote the adoption of big data analytics solutions
among financial service providers and drive overall market growth.
Entry Barriers
According to the F&S Report, the following are the key entry barriers of China’s
transaction-based big data analytics for SMB financing market.
Technology barrier . Transaction-based big data analytics solution providers need to keep
enhancing their technological capabilities and optimizing precision and accuracy of their
solution offerings, in order to keep up with market trends and customer demands. A
fundamental challenge for new market entrants is to properly utilize the vast volume and
diversity of transaction-related data generated from various business activities. Deriving useful
insights from such data requires sophisticated data processing infrastructure and robust
analytical capabilities. Moreover, different transaction documents typically bear different
formats or structures, presenting challenges for new market entrants to consolidate and analyze
data consistently.
Data barrier . Effective solutions are based on authentic, voluminous, multi-dimensional
and high-quality transaction data accumulated over time. New market entrants, with limited
industry resources, may lack sufficient access to such data.
Brand barrier . Financial service providers value data security and solution reliability.
Financial service providers are more willing to collaborate with reputable solution providers
with secure and reliable solution offerings. New market entrants may not be able to establish
brand influence and reputation at the outset of their business.
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Competitive Landscape of China’s Transaction-based Big Data Analytics for SMB
Financing Market
We ranked second in China’s transaction-based big data analytics for SMB financing
market in terms of revenue in 2023. The following table sets forth our position in China’s
transaction-based big data analytics for SMB financing market as compared to other market
participants in terms of revenue in 2023.
Ranking of China’s Transaction-based Big Data Analytics for
SMB Financing Solution Providers in 2023
Ranking Company Revenue Market Share
(RMB million) (%)
1 Company A (1) 697 12.6
2 Our Group 352 * 6.4
3 Company F (2) 131 2.4
4 Company G (3) 43 0.8
5 Company E (4) 30 0.5
Source: F&S Report
* Represents our revenue from data-driven analytics services.
(1) See footnote (1) to the first table under the sub-section headed “—China’s Financial and Tax-related
Transaction Digitalization Market—Competitive Landscape of China’s Financial and Tax-related
Transaction Digitalization Market.”
(2) Company F is a listed company on the Hong Kong Stock Exchange with a registered capital of RMB530
million, founded in 1993 and headquartered in Shanghai. Company F is an enterprise digitalization
solution provider. As of December 31, 2023, the number of employees of Company F was approximately
12,000.
(3) Company G is a listed company on Shanghai Stock Exchange with a registered capital of RMB3,436
million, founded in 1988 and headquartered in Beijing. Company G is an enterprise digitalization
solution provider. As of December 31, 2023, the number of employees of Company G was
approximately 25,000.
(4) See footnote (2) to the second table under the sub-section headed “—China’s Financial and Tax-related
Transaction Digitalization Market—Competitive Landscape of China’s Financial and Tax-related
Transaction Digitalization Market.”
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OVERVIEW
Our business in the PRC is subject to extensive supervision and regulatory control by the
PRC government. This section sets out a summary of relevant laws and regulations that may
have material impact on our business.
REGULATIONS ON CORPORATION
All companies established in the PRC are subject to the PRC Company Law ( ʕശɛ͏
جwhich was promulgated by the SCNPC on December 29, 1993, implemented
since July 1, 1994, and subsequently revised on December 25, 1999, August 28, 2004, October
27, 2005, December 28, 2013, October 26, 2018 and December 29, 2023. The latest amended
PRC Company Law will come into effect on July 1, 2024. The main amendments in the PRC
Company Law involve improving the company’s establishment and exit system, optimizing the
company’s organizational structure, detailing exercise of shareholder rights, perfecting the
company’s capital system and strengthening the responsibilities of controlling shareholders and
management personnel, etc. The PRC Company Law provides for the establishment, corporate
structure and corporate management of companies, which also applies to foreign-invested
enterprises. Where laws relating to foreign investment provide otherwise, such stipulations
shall apply.
General Meeting
According to the Company Law, a general meeting of a company limited by shares shall
be constituted by all the shareholders; the general meeting shall be the authority of the
company and shall exercise duties and powers in accordance with the provisions of the
Company Law.
A general meeting shall be convened once every year. An extraordinary general meeting
shall be convened within two months in case of the certain events specified in the Company
Law.
The Company Law has no specific provisions on the quorum of shareholders to attend the
general meeting.
Under the Company Law, shareholders present at a general meeting have one vote for
each share they hold, save that the company’s shares held by the company are not entitled to
any voting rights.
Under the Company Law, resolutions of the general meeting shall be passed by more than
half of the voting rights held by shareholders (including those represented by proxy) attending
the general meeting, with the exception of matters relating to merger, division or dissolution
of the company, increase or reduction of registered share capital, change of corporate form or
amendments to the articles of association, which in each case shall be passed by at least
two-thirds of the voting rights held by the shareholders (including those represented by proxy)
attending the general meeting.
REGULATORY OVERVIEW
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Shareholders may entrust a representative to attend the general meeting, and the
representative shall submit a power of attorney to the company and exercise the voting rights
within the scope of the authorization.
Transfer of shares
Shares held by shareholders may be transferred in accordance with the relevant laws and
regulations. Pursuant to the PRC Company Law, transfer of shares by shareholders shall be
carried out at a legally established stock exchange or in other ways stipulated by the State
Council. Registered shares shall be transferred by means of an endorsement by the relevant
shareholders or by any other means stipulated by laws or administrative regulations. Bearer
shares are transferred by delivery of the share certificates to the transferee.
Pursuant to the PRC Company Law, no modification of registration in the register of
members caused by transfer of shares shall be carried out within 20 days prior to the convening
of a shareholders’ general meeting or within 5 days prior to the benchmark date set for
determination of dividend distributions. However, where there are separate provisions by law
on change of registration in the register of members of a listed company, those provisions shall
prevail.
Under the PRC Company Law, shares held by the promoters of a company shall not be
transferred within one year after the date of the company’s incorporation. Shares issued by a
company prior to the public offering of its shares shall not be transferred within one year from
the date of listing of the shares of the company on a stock exchange. Directors, supervisors and
the senior management shall declare to the company their shareholdings in the company and
any changes of such shareholdings. They shall not transfer more than 25% of all the shares they
hold in the company each year during their term of office. They shall not transfer the shares
they hold within one year from the date on which the company’s shares are listed and
commence trading on a stock exchange, nor within 6 months after their resignation from the
company. The articles of association may set other restrictive requirements on the transfer of
the company’s shares held by its directors, supervisors and senior management.
Variation of class rights
The Company Law has no specific provision relating to variation of class rights.
However, the Company Law states that the State Council may formulate separate regulations
on companies issuing other types of shares which are not provided in the Company Law.
REGULATORY OVERVIEW
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REGULATIONS ON FOREIGN INVESTMENT
On March 15, 2019, the Second Session of the 13th NPC of the PRC passed and
promulgated the Foreign Investment Law of the PRC (جthe
“FIL”), which came into force on January 1, 2020. The FIL further expands the opening up,
promotes foreign investment and protects the legitimate rights and interests of foreign
investors. According to the FIL, the foreign investment refers to investment activities carried
out directly or indirectly by foreign natural persons, enterprises or other organizations
(“Foreign Investors”) in the PRC, including the following: (1) Foreign Investors establishing
foreign-invested enterprises in the PRC alone or collectively with other investors; (2) Foreign
Investors acquiring shares, equities, properties or other similar rights of Chinese domestic
enterprises; (3) Foreign Investors investing in new projects in the PRC alone or collectively
with other investors; and (4) Foreign Investors investing through other ways prescribed by laws
and regulations or the State Council. Foreign-invested enterprise refers to the enterprise that
is wholly or partially invested by Foreign Investors and registered in the PRC under the PRC
laws.
Foreign investments in various industries in the PRC shall be subject to the Catalog of
Industries for Encouraged Foreign Investment (2022 V ersion) ( ོᎸ̮ਠҳ༟ପุͦ፽(2022 ϋ
وthe “Encouraged Catalog”) which was promulgated on October 26, 2022 and
implemented on January 1, 2023 and Special Administrative Measures for the Market Entry of
Foreign Investment (2021 V ersion) (݄(૶ఊ)(2021وthe
“Negative List”) which was promulgated on December 27, 2021 and implemented on
January 1, 2022. According to the Encouraged Catalog and Negative List, foreign investment
industries are classified into two categories, (1) industries in which foreign investments are
encouraged by the Encouraged Catalog; and (2) industries in which foreign investments are
restricted or prohibited by the Negative List. According to the Negative List, foreign equity
share in a value-added telecommunication business shall not exceed 50% (excluding
e-commerce, domestic multi-party communication, store-and-forward, and call center).
The State adopts the administrative system of pre-establishment national treatment and
Negative List for foreign investment. A Foreign Investor shall not invest in any field prohibited
from foreign investment under the Negative List. A Foreign Investor shall meet the investment
conditions stipulated under the Negative List for any restricted fields under the Negative List.
For fields not mentioned in the Negative List, domestic and foreign investments shall be treated
equally. For foreign investment, the State established a foreign investment information
reporting system. Foreign Investors or foreign-invested enterprises shall submit investment
information to the competent commerce authorities through the enterprise registration system
and the enterprise credit information publicity system.
REGULATORY OVERVIEW
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REGULATIONS ON V ALUE-ADDED TELECOMMUNICATION SERVICES
License for Value-added Telecommunications Services
According to the Telecommunications Regulation of the PRC (ૢԷ),
which was enacted on September 25, 2000 and recently amended on February 6, 2016, and the
Administrative Measures for the Licensing of Telecommunications Business (ุਕ຾ᐄ஢
جthe “Telecom Licensing Measures”), which was promulgated on March 5, 2009,
latest amended on July 3, 2017 and took effect on September 1, 2017, the telecommunication
business may be operated only after a business permit has been obtained from the
telecommunication administrative department according to the law. Telecommunications
services are divided into basic telecommunications services and value-added
telecommunications services. V alue-added telecommunications services are defined as the
services of providing telecommunications and information services by utilization of public
network infrastructures.
According to the Telecommunications Business Classification Catalog (2015 version) ( ཥ
ุਕʱᗳͦ፽(2015وwhich came into force on March 1, 2016 and was amended on
June 6, 2019 by MIIT, “B25 Information Services” under category “B V alue-added
Telecommunications Services” refer to the information services provided for users via the
public communication network or the internet and by the information collection, development,
processing and construction of information platforms. By technical service methods of
information organization, transmission, etc., information services are classified into
information release platforms and transmission services, information retrieval and inquiry
services, information community platform services, instant information interaction services as
well as information protection and processing services, etc.
Foreign Investment in Valued-Added Telecommunications Business
Foreign direct investment in telecommunications companies in China is governed by the
Regulations for the Administration of Foreign-Invested Telecommunications Enterprises ( ̮ਠ
֛which was promulgated by the State Council on December 11, 2001
and amended on September 10, 2008, February 6, 2016 and March 29, 2022. The Regulations
for the Administration of Foreign-Invested Telecommunications Enterprises requires foreign-
invested value-added telecommunications enterprises in China to be established as sino-foreign
equity joint ventures, which the foreign investors may acquire up to 50% of the equity interests
of such enterprise. In July 2006, the Ministry of Information Industry (the “MII”), the
predecessor of the MIIT, released the Notice on Strengthening the Administration of Foreign
Investment in and Operation of V alue-added Telecommunications Business (̋
ٝthe “MII Notice”), pursuant to which, domestic
telecommunications enterprises are prohibited to rent, transfer or sell a telecommunications
business operation license to foreign investors in any form, or provide any resources, premises,
facilities and other assistance in any form to foreign investors for their illegal operation of any
telecommunications business in China. In addition, under the MII Notice, the Internet domain
names and registered trademarks used by a foreign-invested value-added telecommunication
service operator shall be legally owned by that operator (or its shareholders).
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Internet Information Services
According to the Administrative Measures on Internet Information Services (ࢹڦ
جthe “Internet Measures”), which was promulgated by the State Council on
September 25, 2000 and amended on January 8, 2011, internet information services are
categorized as either commercial or non-commercial services. The commercial internet
information services are subject to a permit system while the non-commercial internet
information services to a record-filing system. Entities engaged in providing commercial
internet information services shall apply for a license for value-added telecommunication
services of internet information services with the competent telecom administrative authority
or State Council’s department in charge of information industry. As for the operation of
non-commercial internet information services, only a filing with the competent telecom
administrative authority or State Council’s department in charge of information industry is
required.
Mobile Internet Applications Information Services
In addition to the Internet Measures above, mobile internet applications are specifically
regulated by the Administrative Provisions on Mobile Internet Application Information
Services (֛the “Mobile Application Administrative
Provisions”), which was promulgated by the Cyberspace Administration of the PRC (the
“CAC”) on June 28, 2016 and amended on June 14, 2022. Pursuant to the Mobile Application
Administrative Provisions, application information service providers and application
information distribution platforms shall obtain the relevant qualifications prescribed by laws
and regulations, strictly implement their information security management responsibilities and
carry out certain duties, including establishing and completing users’ information security
protection mechanism and information content inspection and management mechanism, and
performing various obligations to protect minors online.
Furthermore, on December 16, 2016, the MIIT promulgated the Interim Measures on the
Administration of Pre-Installation and Distribution of Applications for Mobile Smart Terminals
(֛the “Mobile Application Interim
Measures”), which came into force on July 1, 2017. The Mobile Application Interim Measures
requires that the internet information service providers must ensure that the content of the
application are legal, users’ rights are protected, and relevant information of the application are
expressed clearly, and the mobile application, as well as its ancillary resource files,
configuration files and user data, among others, can be uninstalled by the users on a convenient
basis, unless it is a basic function software, which refers to a software that supports the normal
operation of hardware and operating system of a mobile smart device.
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REGULATIONS ON FINANCE AND TAXATION MANAGEMENT
Electronic invoice services
According to the Administrative Measures of the PRC on Invoices ( ʕശɛ͏΍ձ਷೯ୃ
جwhich was promulgated by the State Council on December 23, 1993 and amended
on December 20, 2010, March 2, 2019 and July 20, 2023, invoices shall mean proof of receipt
and payment issued and collected for purchase and sale of commodities, provision or
acceptance of services and other business activities. In order to further promote the application
and promotion of electronic invoices and support the development of China’s digital economy,
on February 6, 2023, the National Archives Administration of China, MOF, MOC and SA T
promulgated the Guide to the Whole-Process Electronic Management of Electronic Invoices
(یܸAccording to the Guide to Whole-Process Electronic
Management of Electronic Invoices, electronic Invoices refer to the receipt and payment
vouchers issued and received in data messages during the purchase and sale of commodities,
provision or acceptance of services and other business activities. Electronic invoices are
available in layout document format and non-layout document format, which can be
downloaded and stored in electronic storage devices and circulated in the form of digital
messages.
On March 21, 2017, in order to satisfy the needs of taxpayers in using electronic general
invoice for V A T and promote the electronic general invoice for V A T, SA T promulgated the
Guidelines of the State Administration of Taxation on Promotion of Electronic General
Invoice for V A T (ኬจԈ).
Pursuant to such guidelines, electronic invoice service platform shall be mainly based on
self-established by taxpayers, or provided by third parties. Electronic invoice service platform
shall provide the generation, printing, search, delivery and other basic services of the layout
documents of electronic invoice free of charge. SA T is in charge of developing the unified
technical standards and management system for the electronic invoice service platform, and
build the tax supervision platform to carry out supervision and management to the service
platform. The electronic invoice service platform shall observe the unified technical standards
and management system. The technical plan and management plan for the platform
development shall be filed with the state taxation authorities for record.
According to the Announcement of MOF, SA T, NDRC, SASAC, State Administration for
Market Regulation and National Archives Administration on the Notice of Cracking down on
Arbitrary Charges imposed by Third Parties in the Name of Tax and Fee Deductions (೼
̹ఙ္ຖ၍ଣᐼ
ٝwhich
was promulgated and became effective on April 4, 2019, third-party platforms for electronic
invoices are required to go through record-filing of the names of operators, technical plans and
management plans with provincial tax authorities. Where any operator fails to go through
record-filing as required or fails to truthfully submit record-filing information, such operator
shall be ordered to make correction within the specified time limit; if it fails to make correction
within the time limit, it shall be prohibited from engaging in the services of third-party
platforms for electronic invoices and subject to joint punishment imposed by relevant
departments in accordance with laws and regulations.
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Entrusted Levying
According to the Rules for the Implementation of the Law of the PRC on the
Administration of Tax Collection (2016 Revision) (ۆ
2016ࠈࡌwhich was promulgated by State Council and became effective on February 6,
2016, tax authorities may, in line with the principles of being conducive to taxation control and
making it as easy as possible for taxpayers to pay tax and according to relevant provisions of
the State, entrust related units or individuals with collection of sporadic, scattered, or
outside-of-the-locality tax payment and shall issue to such units or individuals a certificate for
tax collection. The entrusted units or individuals shall collect tax lawfully in the name of the
tax authorities pursuant to the requirements as stipulated in the certificate, and taxpayers shall
on no account refuse to pay tax. In case of refusal by any taxpayer, the entrusted unit or
individual shall report without delay to the tax authorities.
According to the Administrative Measures on Entrusted Levying (ج,)
which was promulgated by SA T on May 10, 2013 and became effective on July 1, 2013, tax
bureaus of county level and above may entrust relevant organizations and personnel to levy and
collect tax on behalf of tax authorities from sporadic, scattered sources and outside of the
locality pursuant to the laws and regulations. Tax authorities shall enter into an Agreement on
Entrusted Levying with the entrusted levying party, specify matters relating to entrusted
levying. Tax bureaus of county level and above may also enter into a written agreement on
issuance of invoices on behalf with an entrusted levying party to entrust issuance of normal
invoices by the entrusted levying party on behalf of the tax authorities. The main contents of
the written agreement on issuance of invoices on behalf shall include the types of normal
invoices to be issued on behalf, invoice recipients, contents and the relevant responsibilities.
REGULATIONS ON CREDIT REPORTING BUSINESS
According to the Regulation for the Administration of Credit Reporting Industry (ุ
၍ଣૢԷ), which was promulgated by the State Council on January 21, 2013 and became
effective on March 15, 2013, and the Administrative Measures on Credit Agencies (ዚ࿴
جissued by the PBOC on November 15, 2013 and effective on December 20, 2013,
“credit reporting business” and “credit reporting agency” was defined for the first time.
According to the Regulation for the Administration of Credit Reporting Industry, “credit
reporting business” means the activities of collecting, organizing, storing and processing
“credit information” of individuals and enterprises, as well as providing such information to
users, and a “credit reporting agency” refers to a duly established agency whose primary
business is credit reporting.
The Regulation for the Administration of Credit Reporting Industry and the
Administrative Measures on Credit Agencies stipulate that the establishment of a credit
reporting agency to engage in enterprise credit reporting business shall go through record-
filing with the local branch of the PBOC at a level higher than central sub-branches of
provincial capitals (capitals of autonomous regions). Entities or individuals that engage in
enterprise credit reporting business without completing record-filing of enterprise credit
reporting agencies may be ordered to rectify within a specified time limit and may be subject
to fines of RMB20,000 to RMB200,000 where correction is not made within the stipulated
period and the directly responsible person in charge and other directly liable persons be given
a warning and imposed a fine of not more than RMB10,000.
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On September 27, 2021, the PBOC issued the Administrative Measures for Credit
Reporting Business (جwhich became effective on January 1, 2022 (the
“2021 Administrative Measures”). The 2021 Administrative Measures first time defined “credit
information” as the basic information, lending information and other relevant information that
is collected pursuant to the law, that serves financial and other activities and that is used to
identify and determine the credit standings of enterprises and individuals, as well as any
analysis and evaluation information generated based on the foregoing information. Institutions
that have not completed record-filing of enterprise credit investigation agencies but have in
effect engaged in credit reporting business before the implementation of the 2021
Administrative Measures shall complete compliance rectification within 18 months from the
effective date of the 2021 Administrative Measures. Moreover, financial institutions shall not
enter into commercial cooperation with entities which have not obtained legitimate credit
reporting business licences for the access to credit reporting services. The collection of
enterprise credit information shall be based on lawful purposes and shall not infringe upon
trade secrets.
REGULATIONS ON INFORMATION SECURITY AND PRIV ACY PROTECTION
Internet information in China is regulated and restricted from a national security
standpoint.
The SCNPC, has enacted the Decisions on Maintaining Internet Security (ၪᚐʝᑌ
֛on December 28, 2000, amended on August 27, 2009, which may subject
violators to criminal punishment in China for any effort to: (1) gain improper entry into a
computer or system of strategic importance; (2) disseminate politically disruptive information;
(3) leak state secrets; (4) spread false commercial information; or (5) infringe intellectual
property rights. The Ministry of Public Security of the PRC has promulgated the
Administration Measures on the Security Protection of Computer Information Network with
International Connections (جon December 16,
1997 and the State Council of the PRC has amended it on January 8, 2011 to prohibit use of
the Internet in ways which, among other things, result in a leakage of state secrets or a spread
of socially destabilizing content. If an Internet information service provider violates these
measures, the Ministry of Public Security and the local security bureaus may revoke its
operating license and shut down its websites.
According to the Administrative Measures for Hierarchical Protection of Information
Security (جpromulgated by the Ministry of Public Security, the
State Secrecy Bureau and the State Encryption Administration on June 22, 2007 and became
effective on the same date, the security protection levels of information systems shall be
divided into the following five tiers: Tier-1, meaning that after an information system is
damaged, it will cause damage to the legitimate rights and interests of citizens, legal persons
and other organizations, but will not harm national security, public order and public interests;
Tier-2, meaning that after an information system is damaged, it will cause serious damage to
the legitimate rights and interests of citizens, legal persons and other organizations, or will
cause damage to public order and public interests, but will not harm national security; Tier-3,
meaning that after an information system is damaged, it will cause serious damage to public
order and public interests, or will cause damage to national security; Tier-4, meaning that after
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an information system is damaged, it will cause extraordinarily serious damage to public order
and public interests, or will cause serious damage to national security; and Tier-5, meaning that
after an information system is damaged, it will cause extraordinarily serious damage to
national security. The entity operating the information system of tier-2 or higher shall go
through record-filing procedures with the public security organ at or above the level of cities
with districts that is at its domicile. Public security organs that accept record-filing shall
inspect the work of hierarchical protection of information security carried out by entities
operating or using tier-3 or tier-4 information systems. Tier-3 information systems shall be
subject to at least one inspection on a yearly basis, while tier-4 information systems shall be
subject to at least one inspection every six months.
On November 7, 2016, the SCNPC promulgated the Cyber Security Law of the PRC, or
the Cyber Security Law (جwhich became effective on June 1,
2017. The Cyber Security Law requires network operators to comply with laws and regulations
and fulfill their obligations to safeguard security of the network when conducting business and
providing services. The Cyber Security Law further requires network operators to take all
necessary measures in accordance with applicable laws, regulations and compulsory national
requirements to safeguard the safe and stable operation of the networks, respond to cyber
security incidents effectively, prevent illegal and criminal activities, and maintain the integrity,
confidentiality and usability of network data. Personal information and important business data
collected and generated in the operation of key information infrastructures operators within the
territory of the PRC shall be stored within the PRC.
On November 28, 2019, the Secretary Bureau of the CAC, the General Office of the
Ministry of Industry and Information Technology, the General Office of the Ministry of Public
Security and the General Office of the SAMR promulgated the Identification Method of Illegal
Collection and Use of Personal Information Through App (AppБ
جwhich provides guidance for the regulatory authorities to identify the illegal
collection and use of personal information through mobile apps, and for the app operators to
conduct self-examination and self-correction and for other participants to voluntarily monitor
compliance.
On April 13, 2020, the CAC, the National Development and Reform Commission, the
MIIT, among others, jointly promulgated the Cybersecurity Review Measures (ݟ
جthe “Cybersecurity Review Measures 2020”), which became effective on June 1, 2020.
The Cybersecurity Review Measures 2020 requires that where CIIOs purchase the network
product or service, which affects or may affect national security, a cybersecurity review is
required. On December 28, 2021, the CAC and 12 other government authorities revised the
Cybersecurity Review Measures 2020, which replaced the Cybersecurity Review Measures
2020 and replaced into force on February 15, 2022. The revised Cybersecurity Review
Measures 2022 provides that the relevant operators shall apply with the Cybersecurity Review
Office of CAC for a cybersecurity review under the following circumstances: (1) CIIO
purchasing network products and services and internet platform operators carrying out data
processing activities, which affects or may affect national security, are subject to the regulatory
scope; (2) the internet platform operators holding personal information of more than one
million users seeking a listing in a foreign country must file for the cybersecurity review; and
(3) where members of the cybersecurity review working mechanism believe that network
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products and services and data processing activities affect or are likely to affect national
security, the Cybersecurity Review Office shall report as per the procedures to the Central
Cyberspace Affairs Commission for approval, and then conduct the review in accordance with
the Cybersecurity Review Measures.
Our Directors and our PRC Legal Advisor are of the view that the likelihood of our
operations being classified as one that affects or may affect national security is relatively low.
Detailed analysis as to whether the Group’s business operations or the proposed Listing may
give rise to national security risks based on the factors set out in Article 10 of the Cybersecurity
Review Measures is set forth below.
Article 10 of the Cybersecurity Review Measures focuses on the following factors in the
assessment of national security risks: (i) the risk that the use of products and services could
bring about the illegal control of, interference with, or destruction of Critical Information
Infrastructure (the “CII”); (ii) the harm to CII business continuity of product and service supply
disruptions; (iii) the security, openness, transparency, and diversity of sources of products and
services, the reliability of supply channels, as well as the risk of supply disruptions due to
political, diplomatic, and trade factors; (iv) product and service providers’ compliance with
PRC laws, regulations, and department rules;(v) the risk that core data, important data or large
amount of personal information being stolen, leaked, damaged, illegally used and illegally
exported; (vi) the risk of CII, core data, important data, or large amount of personal
information being affected, controlled, or maliciously used by foreign governments, as well as
the risk of network information security, if a company goes public; and; (vii)other factors that
could harm CII security, cybersecurity and data security.
Pursuant to the Regulations for the Security Protection of Critical Information
Infrastructure (ᚐૢԷ) (the “CII Regulations”), which was issued by
the PRC State Council and came into effect on September 1, 2021, CIIOs refer to the operators
of important network facilities and information systems of important industries and sectors,
such as public communications and information services, energy, transport, water conservation,
finance, public services, e-government, and science and technology industry for national
defense, as well as other important network facilities and information systems that may
significantly endanger national security, national economy and the people’s livelihood and
public interests if they are damaged or suffer from malfunctions, or if any leakage of data in
relation thereto occurs. Competent authorities as well as the supervision and administrative
authorities of the above-mentioned important industries and sectors are responsible for the
security protection of CIIOs (the “CII Protection Work Departments”). The CII Protection
Work Departments will establish the rules for the identification of CIIOs based on the
particular situation of the industry and report such rules to the public security department of
the PRC State Council for record. The CII Protection Work Departments are responsible for
organizing the identification of CIIOs in their own industries and sectors in accordance with
relevant identification rules and notifying the operators of the identification results. As of the
Latest Practicable Date, we had not received any notification from CII Protection Work
Departments regarding our identification as Critical Information Infrastructure (“CIIO”) and
therefore, our Directors and our PRC Legal Advisor are of the view that scenarios (i)-(iv) as
set out in Article 10 of the Cybersecurity Review Measures focusing on purchasing network
products or services as CIIO are not applicable to the Group.
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In terms of scenario (v) and (vi) as set out in Article 10 of the Cybersecurity Review
Measures, our Directors and our PRC Legal Advisor are of the view that the risks to trigger
scenario (v) and (vi) are relatively low on the basis that: (i) as the compliance status of the
Group disclosed in the section headed “Business–Data Protection” of the Prospectus, it has
implemented a comprehensive set of internal policies, procedures, and measures to ensure its
cybersecurity and data protection compliance practice; (ii) during the Track Record Period and
up to the Latest Practicable Date, the Group has not been subject to any material administrative
penalties, mandatory rectifications, warning, or other sanctions by any competent regulatory
authorities in relation to cybersecurity and data protection; (iii) the core system of the Group
has obtained National Information System Security Level III Protection Certification (ڦ࢕
ࣣiv) the Group has not been identified as a CIIO by relevant
regulatory authorities; (v) listing in Hong Kong is not listing in a foreign country; (vi) as of
the Latest Practicable Date, we had not received any notices or inquiries from relevant
competent authorities relating to cybersecurity review procedures.
However, as advised by our PRC Legal Advisor, the interpretation and applicability of
“important data”, “core data” and “network information security” and other factors considered
in scenario (vii) remains uncertain and subject to further clarification by the CAC or relevant
regulatory authorities, and the CAC may initiate the cybersecurity review if such governmental
authorities determine that any network products or services or data processing activities affect
or may affect national security. Therefore, our PRC Legal Advisor cannot preclude the
possibility that the cybersecurity review may apply to the Group.
The Data Security Law of the PRC (جpromulgated by the
SCNPC on June 10 2021, effective from September 1, 2021, stipulates that relevant entities
carrying out data processing activities should comply with laws, regulations and codes of
ethics, establish and improve the whole process data security management system in the
process of data processing, strengthen risk monitoring, conduct regular risk assessments and
report to the competent authorities. On December 29, 2011, the MIIT issued Several Provisions
on Regulating the Market Order of Internet Information Services (ਕ̹ఙॣ
֛effective from March 15, 2012, which provides that an Internet information
service provider may not collect any user’s personal information or provide any such
information to third parties without such user’s consent. Pursuant to the Several Provisions on
Regulating the Market Order of Internet Information Services, Internet information service
providers are required to, among others, (1) expressly inform the users of the method, content
and purpose of the collection and processing of such users’ personal information and may only
collect such information necessary for the provision of its services; and (2) properly maintain
the users’ personal information, and in case of any leak or possible leak of a user’s personal
information, online service providers must take immediate remedial measures and, in severe
circumstances, make an immediate report to the telecommunications regulatory authority.
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On August 20, 2021, the SCNPC promulgated the Personal Information Protection Law
of the PRC (جthe “PIPL”), which became effective on
November 1, 2021. The PIPL sets forth that the personal information of natural persons shall
be protected by law, and no organization or individual may infringe upon the personal
information rights and interests of natural persons. The processing of personal information
shall have clear and reasonable purposes, be directly related to the purposes of processing, and
be carried out in a way that has minimal impact on personal rights and interests. The collection
of personal information shall be limited to the smallest scope necessary for achieving the
purpose of processing, and personal information shall not be collected excessively. Personal
information processors shall bear responsibility for their personal information processing
activities, and adopt necessary measures to safeguard the security of the personal information
they process. Otherwise, the personal information processors may be ordered to make
correction or suspend or terminate the provision of services, or be imposed confiscation of
illegal income, fines or other penalties.
On July 30, 2021, the state council promulgated the Regulations on Protection of Critical
Information Infrastructure (ᚐૢԷ), which became effective on
September 1, 2021. Pursuant to the Regulations on Protection of Critical Information
Infrastructure, a critical information infrastructure refers to an important network facilities or
information systems in important industries or fields such as public communication and
information service, energy, communications, water conservation, finance, public services,
e-government affairs and national defense science, which may endanger national security,
people’s livelihood and public interest in case of damage, function loss or data leakage. In
addition, competent departments and administration departments of each important industry
and field, or Protection Departments, shall be responsible to formulate determination rules and
determine the critical information infrastructure operator in the respective important industry
or field. The result of the determination of critical information infrastructure operator shall be
informed to the operator, and notify the public security department of the State Council.
Pursuant to the Ninth Amendment to the Criminal Law of the PRC (ج
ࣩ(ɘ)), issued by the SCNPC in August 2015, which became effective in November 2015,
any Internet service provider that fails to fulfill its obligations related to Internet information
security administration as required under applicable laws and refuses to rectify upon orders
shall be subject to criminal penalty. In addition, on May 8, 2017, the Supreme People’s Court
and the Supreme People’s Procuratorate issued the Interpretations on Several Issues
Concerning the Application of Law in the Handling of Criminal Cases Involving Infringement
of Citizens’ Personal Information (ڦ
༆ᙑ) (the “Interpretations”), which became effective on June
1, 2017 and stipulates that the personal information of a natural person shall be protected by
the law. Any organization or individual shall legally obtain such personal information of others
when necessary and ensure the safety of such information, and shall not illegally collect, use,
process or transmit personal information of others, or illegally purchase or sell, provide or
make public personal information of others.
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The Civil Code of the People’s Republic of China (Պ) (the “Civil
Code”, which issued on May 28, 2020 and came into effect on 1 January 2021. Pursuant to the
Civil Code, the personal information of a natural person shall be protected by the law, any
organization or individual shall legally obtain personal information of others when necessary
and ensure the safety of such information, and shall not unlawfully collect, use, process or
transmit personal information of others, or illegally purchase or sell, provide or make public
personal information of others. On November 14, 2021, the CAC published the Administrative
Regulations of Cyber Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈ
ᇃ)) (the “Draft Cyber Data Security Regulations”), for public comments, which provides that
data processors conducting certain activities shall apply for cybersecurity review, among
others, including: (1) merger, reorganization or division of online platform operators that have
acquired a large amount of data related to national security, economic development or public
interests affects or may affect national security; (2) foreign listing of data processors
processing over one million individuals’ personal information; (3) data processors’ listing in
Hong Kong which affects or may affect national security; or (4) other data processing activities
that affect or may affect national security. The Draft Regulations on Network Data Security
also provide that operators of large Internet platforms that set up headquarters, operation
centers or R&D centers overseas shall report to the national cyberspace administration and
competent authorities. However, as of the Latest Practicable Date, there have been no effective
and specific clarifications from the relevant authorities as to the standards for determining
whether an activity “affects or may affect national security.” In addition, the Draft Regulations
on Network Data Security also requires that data processors processing important data or going
public overseas shall conduct an annual data security self-assessment or entrust a data security
service institution to do so, and submit the data security assessment report of the previous year
to the local branch of CAC before January 31 each year. As of the date of this document, Draft
Regulations on Network Data Security has not been formally adopted.
On July 7, 2022, the CAC promulgated the Security Assessment Measures for Outbound
Data Transfer (the “Security Assessment Measures”) (جwhich became
effective on September 1, 2022. Such Security Assessment Measures require data processors
to apply for a security assessment on data export in one of the following scenarios: (1) where
a data processor provides important data abroad; (2) where a CIIO or a data processor who
processes the personal information of one million or more individuals transfers such personal
information abroad; (3) where a data processor has provided personal information of 100,000
individuals or sensitive personal information of 10,000 individuals in total abroad since
January 1 of the previous year; and (4) other circumstances prescribed by the CAC for which
declaration for security assessment for outbound data transfers is required.
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REGULATIONS ON EMPLOYMENT AND SOCIAL WELFARE
Employment
According to the PRC Labor Law (جpromulgated on July 5, 1994,
became effective on January 1, 1995 and amended on August 27, 2009 and December 29, 2018,
workers are entitled to fair employment, choice of occupation, labor remuneration, leave, a safe
workplace, a sanitation system, social insurance and welfare and certain other rights.
Employers shall establish and improve their work safety and sanitation system, educate
employees on safety and sanitation and provide employees with a working environment that
meets the national work safety and sanitation standards.
The PRC Labor Contract Law (جthe “Labor Contract Law”)
was promulgated on June 29, 2007, amended on December 28, 2012 and became effective on
July 1, 2013, and its implementation regulations were implemented on September 18, 2008.
According to the Labor Contract Law and its implementation regulations, labor contracts must
be executed in writing to establish labor relationships between employers and employees. A
labor contract shall include essential terms, such as the duration of the labor contract, work
content and workplace, working hours and holiday, work remuneration, social insurance, labor
protection and labor terms as well as prevention of occupational hazards. Employees who
fulfill certain criteria, including having continuously worked for the same employer for 10
years or more, may demand that the employer execute an unfixed-term labor contract. Wages
paid by employers may not be lower than the local minimum wage standard. Both employers
and employees must perform their respective obligations stipulated in the labor contracts.
Social Insurance and Housing Provident Fund
Pursuant to the Interim Regulations on Collection and Payment of Social Insurance
Premiums (ᎈ൬ᅄᖮᅲБૢԷ) promulgated on January 22, 1999, and last revised on
March 24, 2019, Decisions of the State Council on Modifying the Basic Endowment Insurance
System for Enterprise Employees (֛)
promulgated on December 3, 2005, Decision of the State Council on the Establishment of the
Urban Employee Basic Medical Insurance Program (ᎈՓ
֛promulgated on December 14, 1998, the Regulations on Unemployment Insurance
(ᎈૢԷ) effective from January 22, 1999, Regulations on Work-Related Injury
Insurance (ᎈૢԷ) promulgated on April 27, 2003 with effect from January 1, 2004, and
latest amended on December 20, 2010, and the Interim Measures concerning the Maternity
Insurance for Enterprise Employees (جpromulgated on December
14, 1994 with effect from January 1, 1995, employers are required to register with the
competent social insurance authorities and provide their employees with welfare schemes
covering pension insurance, unemployment insurance, maternity insurance, work-related
injury insurance and medical insurance.
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Pursuant to the Social Insurance Law of the PRC (جwhich
was promulgated on October 28, 2010, latest amended and became effective on December 29,
2018, all employees are 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 insurance schemes, which must be contributed by the employers.
Employers are required to complete registrations with local social insurance authorities.
Moreover, the employers 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 on 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 the overdue amount.
Pursuant to the Administrative Regulations on Housing Provident Fund (၍ଣ
ૢԷ) effective from April 3, 1999, and latest amended on March 24, 2019, enterprises are
required to register with the competent administrative centers of housing provident fund and
open bank accounts for housing provident funds for their employees. Employers are also
required to timely pay all housing fund contributions for their employees. Where an employer
fails to submit and deposit registration of housing provident fund or fails to go through the
formalities of opening housing provident fund accounts for its employees, the housing
provident fund management center shall order it to go through the formalities within a
prescribed time limit. Failing to do so at the expiration of the time limit will subject the
employer to a fine of not less than RMB10,000 and up to RMB50,000. When an employer fails
to pay housing provident fund due in full and in time, housing provident fund center is entitled
to order it to rectify, failing to do so would result in enforcement exerted by the court.
REGULATIONS ON LEASING OF PROPERTY
Pursuant to the Administrative Measures for the Leasing of Commodity Housing (גۜ
جissued by the Ministry of Housing and Urban-Rural Development of the PRC
on December 1, 2010 and coming into force on February 1, 2011, within 30 days after the
execution of the housing lease contract, parties to the leasing of housing shall handle the
registration and filing procedure of the leasing of housing at the departments in charge of
construction (real estate) of the governments in the municipality directly under the Central
Government, city and county where the leased housing is located. In the event that parties to
the leasing of housing fail to handle the registration and filing procedure of the leasing of
housing, the department in charge of construction (real estate) of the people’s government in
the municipality directly under the Central Government, the cities or the counties shall order
rectification within a time limit. If rectification is not made by an individual within the time
limit, a fine of less than RMB1,000 shall be imposed. If rectification is not made by an entity
within the time limit, a fine of more than RMB1,000 but less than RMB10,000 shall be
imposed.
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Furthermore, under any of the following circumstances, the properties shall not be let out:
(1) illegal buildings; (2) buildings which do not comply with mandatory project construction
standards such as safety, disaster prevention, etc.; (3) change of nature of property use which
violates the provisions; or (4) any other circumstances for which leasing is prohibited as
stipulated by laws and regulations. Persons who violate the provisions above shall be ordered
by the development (real estate) department of the People’s Governments of centrally-
administered municipalities, municipalities or counties to make correction within a stipulated
period; where there is no illegal income, a fine of not more than RMB5,000 may be imposed;
where there is an illegal income, a fine ranging from one to three times the amount of illegal
income may be imposed, subject to a maximum of RMB30,000.
According to the Civil Code (Պ), the lessee may sublease the leased
premises to a third party, subject to the consent of the lessor. Where the lessee subleases the
premises, the lease contract between the lessee and the lessor remains valid. The lessor is
entitled to terminate the lease contract if the lessee subleases the premises without the consent
of the lessor. In addition, if the lessor transfers the premises, the lease contract between the
lessee and the lessor will still remain valid. Where the mortgaged property has been leased and
the possession thereof has been transferred before the creation of mortgage, the original lease
relations shall not be affected by the mortgage.
REGULATIONS ON INTELLECTUAL PROPERTY
Trademark
Trademarks are protected by the Trademark Law of the PRC (ج)
which was promulgated on August 23, 1982 and latest amended on April 23, 2019 as well as
the Implementation Regulation of the PRC Trademark Law (ૢԷ)
adopted by the State Council on August 3, 2002 and amended on April 29, 2014. In China,
registered trademarks include commodity trademarks, service trademarks, collective marks and
certification marks.
The Trademark Office under the China National Intellectual Property Administration,
handles trademark registrations and grants a term of ten years to registered trademarks.
Trademarks are renewable every ten years where a registered trademark needs to be used after
the expiration of its validity term. A registration renewal application shall be filed within
twelve months prior to the expiration of the term. A trademark registrant may license its
registered trademark to another party by entering into a trademark license contract. Trademark
license agreements must be filed with the Trademark Office for record. The licensor shall
supervise the quality of the commodities on which the trademark is used, and the licensee shall
guarantee the quality of such commodities. As with trademarks, the PRC Trademark Law has
adopted a “first-to-file” principle with respect to trademark registration. Where trademark for
which a registration application has been made is identical or similar to another trademark
which has already been registered or been subject to a preliminary examination and approval
for use on the same kind of or similar commodities or services, the application for registration
of such trademark may be rejected. Any person applying for the registration of a trademark may
not prejudice the existing right first obtained by others, nor may any person register in advance
a trademark that has already been used by another party and has already gained a “sufficient
degree of reputation” through such party’s use.
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The Patent Law
Pursuant to the Patent Law of the PRC (جlatest amended by the
SCNPC on October 17, 2020 and came into effect on June 1, 2021 and the Implementation
Rules of The Patent Law of the PRC (ۆlatest amended by the
State Council on December 11, 2023 and came into effect on January 1, 2024, patents in China
are divided into invention patent, utility patent and design patent. Invention patent refers to
new technical solutions for a product, method or its improvement; utility patent refers to new
technical solutions for the shape, structure or the combination of both shape and structure of
a product, which is applicable for practical use; design patent refers to new designs of the
shape, pattern or the combination of shape and pattern, or the combination of the color, the
shape and pattern of a product with esthetic feeling and industrial application value. Invention
patent shall be valid for 20 years from the date of application while utility patent shall be valid
for 10 years and design patent shall be valid for 15 years from the date of application. The
patent right entitled to its owner shall be protected by the laws. Any person shall be licensed
or authorized by the patent owner before using such patent. Otherwise, the use constitutes an
infringement of the patent right.
The Patent Law of the PRC has been amended by the SCNPC on October 17, 2020 and
came into effect on June 1, 2021. Compared with the valid Patent Law which was amended on
December 27, 2008 and come into effect on October 1, 2009, the main changes of the Patent
Law of the PRC (revised in 2020) are concentrated on the following aspects: (1) clarifying the
incentive mechanism for inventor or designer relating to service inventions; (2) extending the
duration of design patent; (3) establishing a new system of “open licensing” (஢̙); (4)
improving the distribution of burden of proof in patent infringement cases; and (5) increasing
the compensation for patent infringement.
The Copyright Law
Pursuant to the Copyright Law of the PRC (جamended by the
SCNPC on February 26, 2010 and came into effect on April 1, 2010, Chinese citizens, legal
persons or other organizations shall, whether published or not, enjoy copyright in their works,
which include, among others, works of literature, art, natural science, social science,
engineering technology and computer software created in writing or oral or other forms. A
copyright holder shall enjoy a number of rights, including the right of publication, the right of
authorship and the right of reproduction. The Copyright Law of the PRC has been amended by
the SCNPC on November 11, 2020 and came into effect on June 1, 2021.
Pursuant to the Measures for the Registration of Computer Software Copyright (ၑዚ
جpromulgated by the National Copyright Administration on February 20,
2002 and the Regulations on Computers Software Protection (ᚐૢԷ) amended
by the State Council on January 30, 2013 and came into effect on March 1, 2013, the National
Copyright Administration is mainly responsible for the registration and management of
software copyright in China and recognizes the China Copyright Protection Center as the
software registration organization. The China Copyright Protection Center shall grant
certificates of registration to computer software copyright applicants in compliance with the
regulations of the Measures for the Registration of Computer Software Copyright and the
Regulations on Computers Software Protection.
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Domain Names
Pursuant to the Administrative Measures for Internet Domain Names ( ʝᑌၣਹΤ၍ଣ፬
جpromulgated by the MIIT on August 24, 2017 and coming into effect on November 1, 2017,
the establishment of any domain name root server and institution for operating domain name
root servers, managing the registration of domain name and providing registration services in
relation to domain name within the territory of China shall be subject to the approval of the
MIIT or provincial, autonomous regional and municipal communications administration. The
registration of domain name shall follow the principle of “first come, first served”. The Notice
of the Ministry of Industry and Information Technology on Regulating the Use of Domain
Names in Internet Information Services (ٙ
ٝpromulgated by the MIIT on November 27, 2017 and coming into effect on January 1,
2018 specifies the obligation of anti-terrorism and maintaining network security of internet
information service providers.
PRC LA WS AND REGULATIONS RELATING TO FOREIGN EXCHANGE
The principal regulations governing foreign currency exchange in China are the Foreign
Exchange Administration Regulations of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ) which was
promulgated by the State Council on January 29, 1996 and was latest amended on August 5,
2008, classifies all international payments and transfers into current items and capital items.
Current items are subject to the reasonable examination of the veracity of transaction
documents and the consistency of the transaction documents and the foreign exchange receipts
and payments by financial institutions engaging in conversion and sale of foreign currencies
and supervision and inspection by the foreign exchange control authorities. For capital items,
overseas entities and overseas individuals making direct investments in China shall, upon
approval by the relevant authorities in charge, process registration formalities with the foreign
exchange control authorities. Foreign exchange income received overseas can be repatriated or
deposited overseas, and foreign exchange and foreign exchange settlement funds under the
capital account are required to be used only for purposes as approved by the competent
authorities and foreign exchange administrative authorities. In the event that international
revenues and expenditure occur or may occur a material misbalance, or the national economy
encounters or may encounter a severe crisis, the State may adopt necessary safeguard and
control measures on international revenues and expenditure.
On December 26, 2014, SAFE issued the Notice of the State Administration of Foreign
Exchange on Issues Concerning the Foreign Exchange Administration of Overseas Listing ( ਷
ٝpursuant to which a domestic company
shall, within 15 business days from the date of the end of its overseas listing issuance, register
the overseas listing with the local branch office of SAFE at the place of its establishment; and
the proceeds from an overseas listing of a domestic company may be remitted to the domestic
account or deposited in an overseas account, but the use of the proceeds shall be consistent with
the content of the prospectus and other disclosure documents.
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According to the Notice of the State Administration of Foreign Exchange of the PRC on
Revolutionizing and Regulating Capital Account Settlement Management Policies (̮ි
ٝwhich was promulgated by SAFE and
implemented on June 9, 2016, foreign currency earnings in capital account that relevant
policies of willingness exchange settlement have been clearly implemented on (including the
recalling of raised capital by overseas listing) may undertake foreign exchange settlement in
the banks according to actual business needs of the domestic institutions. The tentative
percentage of foreign exchange settlement for foreign currency earnings in capital account of
domestic institutions is 100%, subject to adjust of SAFE in due time in accordance with
international revenue and expenditure situations.
PRC LA WS AND REGULATIONS RELATING TO TAXATION
Enterprise Income Tax
In accordance with the Enterprise Income Tax Law of the PRC (ה
جwhich was latest amended and came into effect on December 29, 2018, and the
Implementation provisions for the Enterprise Income Tax Law of the PRC ( ʕശɛ͏΍ձ਷Ά
ૢԷ), enterprise income taxpayers shall include resident and non-resident
enterprises. Resident enterprise refers to an enterprise that is established within China, or is
established under the law of a foreign country (region) but whose actual institution of
management is within China. Non-resident enterprise refers to an enterprise established under
the law of a foreign country (region), whose actual institution of management is not within
China but has offices or establishments within China; or which does not have any offices or
establishments within China but has incomes sourced from China. A resident enterprise shall
pay EIT on its income originating from both inside and outside the PRC at an EIT rate of 25%.
Foreign invested enterprises in the PRC falls into the category of resident enterprises, which
shall pay EIT for the income originated from domestic and overseas sources at an EIT rate of
25%. Qualified small low-profit enterprises are given the reduced enterprise income tax rate of
20%.
According to the Circular of MOF and SA T on Implementing the Inclusive Tax Deduction
and Exemption Policies for Small and Micro Enterprises (ʃฆΆุ
ٝpromulgated on January 17, 2019, during January 1, 2019 to
December 31, 2021, the annual taxable income of a small low-profit enterprise that is not more
than RMB1 million shall be included in its taxable income at the reduced rate of 25%, with the
applicable enterprise income tax rate of 20%; and the annual taxable income that is more than
RMB1 million nor more than RMB3 million shall be included in its taxable income at the
reduced rate of 50%, with the applicable enterprise income tax rate of 20%.
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Enterprises that are recognized as high-tech enterprises in accordance with the
Administrative Measures on Accreditation of High-tech Enterprises (၍ଣ፬
جare entitled to enjoy the preferential enterprise income tax rate of 15%. The validity period
of the high-tech enterprise qualification shall be three years from the date of issuance of the
certificate of high-tech enterprise. The enterprise can re-apply for such recognition as a
high-tech enterprise.
Value-added Tax
According to the Provisional Regulations of the PRC on V alue-Added Tax ( ʕശɛ͏΍
೼ᅲБૢԷ) (the “Regulations on V A T”), which was promulgated by the State
Council on December 13, 1993 and latest amended on November 19, 2017, and the Detailed
Rules for the Implementation of the Provisional Regulations of the PRC on V alue-added Tax
(ۆwhich was promulgated by the MOF of the PRC,
came into effect on December 25, 1993 and latest amended on October 28, 2011, all the
taxpayers engaged in sales of goods or provision of processing, repair and maintenance labor
or import of goods in China shall be subject to value-added tax. Unless otherwise provided by
laws, the value-added tax rate is: 17% for taxpayers selling goods, labor services, or tangible
movable property leasing services or importing goods; 11% for taxpayers selling
transportation, postal, basic telecommunication, construction, or immovable property leasing
services, immovable property, transferring the rights to use land, or selling or importing
specific goods; 0% for domestic entities and individuals selling services or intangible assets
within the scope prescribed by the State Council across national borders; 6% for taxpayers
selling services or intangible assets other than those mentioned above; 0% for exported goods,
except as otherwise specified by the State Council.
Pursuant to Notice on Implementing the Pilot Reform for Transition from Business Tax
to V alue-added Tax Nationwide issued by the MOF and SA T (೼
ٝpromulgated on March 23, 2016, the pilot reform for the transition from business
tax to V A T is implemented nationwide, and the building industry, real estate industry, financial
industry and life service industry are included in such pilot, and the taxpayers in such
industries are required to pay V A T instead of business tax.
According to the Circular on Policies for Simplifying and Consolidating V alue-added Tax
Rates (ٝannounced by the Ministry of Finance and the
State Administration of Taxation on April 28, 2017, the structure of value-added tax rates will
be simplified from July 1, 2017, and the 13% value-added tax rate shall be canceled. The scope
of goods with 11% value-added tax rate and the provisions for deducting input tax are
specified.
According to the Circular of the MOF and the State Taxation Administration on Adjusting
V alue-added Tax Rates (ٝwhich was issued on
April 4, 2018 and came into effect on May 1, 2018, where a tax payer engages in a taxable sales
activity for the value-added tax purpose or imports goods, the previous applicable reduced 17%
and 11% tax rates are adjusted to be 16% and 10%, respectively. According to the
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Announcement of the MOF, the State Taxation Administration and the General Administration
of Customers on Deepening Policies in relation to V alue-added Tax Reform (௅e೼ਕᐼ
ʮѓ) which was promulgated on March 20,
2019 and became effective on April 1, 2019, the V A T rates of 16% and 10% are reduced to 13%
and 9%, respectively.
Taxation on Dividends
Individual Investors
Pursuant to the Individual Income Tax Law of the PRC (ج,)
which was latest amended on August 31, 2018 and the Regulations on Implementation of the
Individual Income Tax Law of the PRC (ૢԷ), which was
latest amended on December 18, 2018 (collectively, the “IIT Law”), dividends distributed by
PRC enterprises are subject to individual income tax levied at a flat rate of 20%. For a foreign
individual who is not a resident of the PRC, the receipt of dividends from an enterprise in the
PRC is normally subject to individual income tax of 20% unless specifically exempted by the
tax authority of the State Council or reduced by relevant tax treaty. According to the Circular
of MOF and the SA T on Issues Concerning Individual Income Tax Policies (೼
ٝpromulgated on May 13, 1994, the income
received by individual foreigners from dividends and bonuses of a foreign-invested enterprise
is exempt from individual income tax for the time being. On February 3, 2013, the State
Council approved and promulgated the Notice of Suggestions to Deepen the Reform of System
of Income Distribution (ٙ
ٝOn February 8, 2013, the General Office of the State Council promulgated the Circular
Concerning Allocation of Key Works to Deepen the Reform of System of Income Distribution
(ٝAccording to these two
documents, the PRC government is planning to cancel foreign individuals’ tax exemption for
dividends obtained from foreign-invested enterprises, and MOF and SA T should be responsible
for making and implementing details of such plan. However, relevant implementation rules or
regulations have not been promulgated by MOF and SA T.
Enterprise Investors
In accordance with the EIT Law, the rate of enterprise income tax shall be 25%. A
non-resident enterprise is generally subject to a 10% enterprise income tax on PRC-sourced
income (including dividends received from a PRC resident enterprise that issues shares in
Hong Kong), if such non-resident enterprise does not have an establishment or premise in the
PRC or has an establishment or premise in the PRC but the PRC-sourced income has no actual
connection with such establishment or premise in the PRC. The aforesaid income tax may be
reduced pursuant to applicable treaties to avoid double taxation. Such withholding tax for
non-resident enterprises are deducted at source, where the payer of the income is required to
withhold the income tax from the amount to be paid to the non-resident enterprise when such
payment is made or due.
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The Circular of the SA T on Issues Relating to the Withholding of Enterprise Income Tax
by PRC Resident Enterprises on Dividends Paid by Chinese Resident Enterprises to Overseas
Non-PRC Resident Enterprise Shareholders of H Shares (͏ΆุΣྤ
̮Hٝissued by the SA T on
November 6, 2008 further clarified that a PRC-resident enterprise shall withhold enterprise
income tax at a rate of 10% on dividends for the year of 2008 and onwards that it distributes
to overseas non-resident enterprise shareholders of H Shares. In addition, the Response to
Issues on Levying Enterprise Income Tax on Dividends Received by Non-resident Enterprise
from Holding Stock such as B-shares (͏Άุ՟੻Bᅄϗ
ҭᔧ) which was issued by the State Administration of Taxation on July 24,
2009, further provides that any PRC-resident enterprise that is listed on overseas stock
exchanges must withhold enterprise income tax at a rate of 10% on dividends of 2008 and
onwards that it distributes to non-resident enterprises. Such tax rates may be further modified
pursuant to the tax treaty or agreement that China has concluded with a relevant jurisdiction,
where applicable.
Pursuant to the Arrangement between the Mainland of China and the Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion (τર) signed on
August 21, 2006, the PRC Government may levy taxes on the dividends paid by a Chinese
company to Hong Kong residents (including natural persons and legal entities) in an amount
not exceeding 10% of the total dividends payable by the Chinese company. If a Hong Kong
resident directly holds 25% or more of the equity interest in a Chinese company, then such tax
shall not exceed 5% of the total dividends payable by the Chinese company. The Fifth Protocol
of the Arrangement between the Mainland of China and the Hong Kong Special Administrative
Region on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (೼ਕ
֛
ࣣeffective on December 6, 2019 states that such provisions shall not apply to any
arrangement or transactions made for the primary purpose of gaining such tax benefit. The
application of the dividend clause of tax agreements is subject to the PRC tax laws and
regulations, such as the Notice of the SA T on the Issues Concerning the Application of the
Dividend Clauses of Tax Agreements (ஷ
ٝ.)
Taxation on Share Transfer
V alue-Added Tax (“VAT”) and Local Additional Tax
Pursuant to the Notice on the Full Implementation of Pilot Program for Transition from
Business Tax to V A T (ٝCircular 36”), effective
from May 1, 2016 and as amended on July 11, 2017, December 25, 2017 and March 20, 2019
respectively, entities and individuals engaged in sales of services within the PRC are subject
to V A T and “sales of services within the PRC” refers to the situation where either the seller or
the buyer of a taxable service is located within the PRC. Circular 36 also provides that transfer
of financial products, including transfer of the ownership of marketable securities, shall be
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subject to V A T at 6% on the taxable revenue (which is the balance of sales price upon deduction
of purchase price), for a general or a foreign V A T taxpayer. However, individuals are exempt
from V A T upon transfer of financial products. According to these regulations, if the holder is
a non-resident individual, the PRC V A T is exempted from the sale or disposal of H shares; if
the holder is a non-resident enterprise and the H-share buyer is an individual or entity located
outside the PRC, the holder is not necessarily required to pay the PRC V A T, but if the H-share
buyer is an individual or entity located in the PRC, the holder may be required to pay the PRC
V A T. However, in absence of explicit rules, there remains uncertainty in the interpretation and
application of the foregoing rules as to whether the disposal of H Shares by non-PRC resident
enterprises is subject to PRC V A T.
At the same time, V A T taxpayers are also subject to urban maintenance and construction
tax, education surcharge and local education surcharge.
Individual Investors
According to the IIT Law, gains on the transfer of equity interests in the PRC resident
enterprises are subject to the individual income tax at a rate of 20%. Pursuant to the Circular
of the MOF and the SA T on Declaring that Individual Income Tax Continues to be Exempted
over Individual Income from Transfer of Shares (ה
ٝissued by the MOF and the SA T on March 30, 1998, from
January 1, 1997, income of individuals from the transfer of shares of listed enterprises
continues to be exempted from individual income tax. In the latest IIT Law, the SA T has not
explicitly stated whether it will continue to exempt individuals from income tax on income
derived from the transfer of listed shares.
However, on December 31, 2009, the MOF, SA T and the CSRC jointly issued the Circular
on Relevant Issues Concerning the Collection of Individual Income Tax over the Income
Received by Individuals from Transfer of Listed Shares Subject to Sales Limitation (ɛ
ٝeffective on December 31, 2009,
which states that individuals’ income from the transfer of listed shares on certain domestic
exchanges shall continue to be exempted from individual income tax, except for the relevant
shares which are subject to sales restriction as defined in the Supplementary Circular on
Relevant Issues Concerning the Collection of Individual Income Tax over the Income Received
by Individuals from Transfer of Listed Shares Subject to Sales Limitation (ɛᔷᜫɪ̹
ٝAs of the Latest Practicable Date, the
aforesaid provision has not expressly provided that individual income tax shall be collected
from non-PRC resident individuals on the sale of shares of PRC resident enterprises listed on
overseas stock exchanges. However, there is no assurance that the PRC tax authorities will not
change these practices which could result in levying income tax on non-PRC resident
individuals on gains from the sale of H shares.
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Enterprise Investors
In accordance with the EIT Law, a non-resident enterprise is generally subject to a 10%
enterprise income tax on PRC-sourced income, including gains derived from the disposal of
equity interests in a PRC resident enterprise, if it does not have an establishment or premise
in the PRC or has an establishment or premise in the PRC but the PRC-sourced income has no
actual connection with such establishment or premise. Such income tax for non-resident
enterprises are deducted at source, where the payer of the income are required to withhold the
income tax from the amount to be paid to the non-resident enterprise when such payment is
made or due. The withholding tax may be reduced or exempted pursuant to applicable treaties
or agreements on avoidance of double taxation.
Stamp Duty
Pursuant to the Provisional Regulations of the PRC on Stamp Duty ( ʕശɛ͏΍ձ਷Ι
೼ᅲБૢԷ) which was latest amended on January 8, 2011, and the Detailed Rules for
Implementation of Provisional Regulations of the PRC on Stamp Duty (ڀ
ۆeffective on October 1, 1988, PRC stamp duty only applies to specific
taxable document executed or received within the PRC, having legally binding force in the
PRC and protected under the PRC laws, thus the requirements of the stamp duty imposed on
the transfer of shares of PRC listed companies shall not apply to the acquisition and disposal
of H Shares by non-PRC investors outside of the PRC.
PRC LA WS AND REGULATIONS RELATING TO ANTI-ESPIONAGE
For the purpose of strengthening counterespionage work, prevent, stop and punish
espionage, safeguard national security, and protect people’s interests, on November 1, 2014,
SCNPC promulgated the Counterespionage Law of the PRC (جthe
“Counterespionage Law”) which was amended on April 26, 2023 and came into effect on July
1, 2023. According to the Counterespionage Law, espionage refers to any of the following acts:
(1) any activity committed by an espionage organization or its agent or by any other person as
instigated or funded by the aforesaid organization or agent, or by any domestic aforesaid
organization or individual in collusion with the aforesaid organization or individual, which
endangers national security; (2) joining an espionage organization or accepting a task assigned
by an espionage organization or its agent, or defect to an espionage organization or its agent;
(3) any activity relating to stealing, spying, buying or illegally providing state secrets,
intelligence or other documents, data, materials or articles relating to national security or
interests, or instigating, luring, coercing or bribing any State staff member to turn traitor; (4)
any activity of cyberattack, intrusion, interference, control or destruction, inter alia, against a
state organ, secret-involved entity or critical information infrastructure, committed by
aforementioned perpetrators in (1); (5) indicating the attack targets for enemies; and (6) other
espionage activities. And national security authorities are the principal regulatory authorities
and executive bodies in charge of counterespionage work.
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Moreover, Counterespionage Law sets out that enterprises shall be responsible for their
own counterespionage security precaution work to safeguard national security, particularly
those key entities for counterespionage security precaution which are obligated to establish
relevant internal risk management system and specify personnel’s relevant responsibilities.
During investigation into espionage, Internet service providers, telecommunications business
operators and other persons shall render necessary supports and assistance to national security
authorities.
As to espionage-related legal liabilities for enterprises, administrative penalties shall be
imposed on the enterprise committing or assisting espionage, such as fines, confiscation of
illegal gains, punishing the person directly in charge and other persons directly liable, and
where necessary, ordering the enterprise to suspend or close its business, revoking its licenses,
or rescinding the registration. There shall also be administrative penalties for enterprises which
fail to fulfill their counterespionage security precaution obligations or malfunction as an
assistant providing necessary supports to national security authorities in espionage
investigation. Furthermore, the act of espionage constituting a crime shall subject the
enterprise to criminal liabilities pursuant to relevant provisions under the Criminal Law of the
PRC (جAs confirmed by our Directors and our PRC Legal Advisor, as of
the Latest Practicable Date, we had not received specifications or warnings, nor had we been
subject to any investigation, fines or penalties in relation to any breach of anti-espionage laws
and regulations.
RECENT DEVELOPMENT ON RULES RELATING TO OVERSEAS LISTING
On 17 February 2023, the CSRC promulgated Trial Administrative Measures of the
Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ
جthe “Overseas Listing Trial Measures”) and relevant five guidelines, which
became effective on 31 March 2023. The Overseas Listing Trial Measures comprehensively
improved and reformed the existing regulatory regime for overseas offering and listing of PRC
domestic companies’ securities and regulates both direct and indirect overseas offering and
listing of PRC domestic companies’ securities by adopting a filing-based regulatory regime.
Pursuant to the Overseas Listing Trial Measures, PRC domestic companies that seek to
offer and list securities in overseas markets, either in direct or indirect means, are required to
fulfill the filing procedure with the CSRC and report relevant information. The Overseas
Listing Trial Measures provides that an overseas offering and listing is explicitly prohibited,
if any of the following: (1) such securities offering and listing is explicitly prohibited by
provisions in laws, administrative regulations and relevant state rules; (2) the intended
overseas securities offering and listing may endanger national security as reviewed and
determined by competent authorities under the State Council in accordance with law; (3) the
domestic company intending to make the securities offering and listing, or its controlling
shareholder(s) and the actual controller, have committed relevant crimes such as corruption,
bribery, embezzlement, misappropriation of property or undermining the order of the socialist
market economy during the latest three years; (4) the domestic company intending to make the
securities offering and listing is currently under investigations for suspicion of criminal
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offenses or major violations of laws and regulations, and no conclusion has yet been made
thereof; or (5) there are material ownership disputes over equity held by the domestic
company’s controlling shareholder(s) or by other shareholder(s) that are controlled by the
controlling shareholder(s) and/or actual controller.
Where an issuer submits an application for initial public offering to competent overseas
regulators, such issuer must file with the CSRC within three business days after such
application is submitted. The Overseas Listing Trial Measures also require subsequent reports
to be filed with the CSRC within three business days upon the occurrence and public disclosure
of any of the material events after an issuer has offered and listed securities in an overseas
market, such as (1) change of control; (2) investigations or sanctions imposed by overseas
securities regulatory agencies or other relevant competent authorities; (3) change of listing
status or transfer of listing segment; and (4) voluntary or mandatory delisting. Where an
issuer’s main business undergoes material changes after overseas offering and listing, and is
therefore beyond the scope of business stated in the filing documents, such issuer shall submit
to the CSRC an ad hoc report and a relevant legal opinion issued by a domestic law firm within
three business days after occurrence of the changes.
Furthermore, on February 24, 2023, the CSRC, together with certain other PRC
governmental authorities, promulgated the Provisions on Strengthening Confidentiality and
Archives Administration of Overseas Securities Offering and Listing by Domestic Companies
(the “Confidentiality and Archives Administration Provisions”) (̋੶ྤʫΆุྤ̮೯Бᗇ
֛which came into effect on March 31, 2023.
According to the Confidentiality and Archives Administration Provisions, PRC domestic
companies that directly or indirectly conduct overseas offerings and listings, shall strictly abide
by applicable PRC laws and regulations on confidentiality when providing or publicly
disclosing, either directly or through their overseas listed entities, documents and materials to
securities services providers such as securities companies and accounting firms or overseas
regulators in the process of their overseas offering and listing. In the event such documents or
materials contain state secrets or working secrets of government agencies, the PRC domestic
companies shall first obtain approval from competent authorities according to law, and file with
the secrecy administrative department at the same level; in the event that such documents or
materials, if leaked, will jeopardize national security or public interest, the PRC domestic
companies shall strictly fulfill relevant procedures stipulated by applicable national
regulations. The PRC domestic companies shall also provide a written statement of the specific
state secrets and sensitive information provided when providing documents and materials to
securities companies and securities service providers, and the securities companies and
securities service providers shall properly retain such written statements for inspection.
Furthermore, the Confidentiality and Archives Administration Provisions also provide where
overseas securities regulators and relevant competent overseas authorities request to inspect,
investigate or collect evidence from PRC domestic companies concerning their overseas
offering and listing or their securities firms and securities service providers that undertake
securities business for such PRC domestic companies, such inspection, investigation and
evidence collection must be conducted under a cross-border regulatory cooperation
mechanism, and the CSRC or other competent authorities of the PRC government will provide
REGULATORY OVERVIEW
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necessary assistance pursuant to bilateral and multilateral cooperation mechanism. Domestic
companies, securities firms and securities service providers shall first obtain approval from the
CSRC or other competent PRC authorities before cooperating with the inspection and
investigation by the overseas securities regulators or competent overseas authority or providing
documents and materials requested in such inspection and investigation.
REGULATIONS RELATING TO THE H SHARE FULL CIRCULATION
According to the CSRC Pilot Program for the Deepening Reforms on Overseas Listing
Systems and the “Full Circulation” of H Shares (࢝Hٰ
ஷ༊ᓃ) issued by the CSRC on December 29, 2017 and the Reply to the Press by the
CSRC Spokesperson, Chang Depeng Regarding the Implementation of the “Full Circulation”
Pilot Program of H Shares (࢝Hᗫԫ
ਪ) issued by the CSRC on December 29, 2017 and approved by the State Council,
the CSRC carried out the “Full Circulation” Pilot Program of H-share Listed Companies, which
required enterprises involved in the pilot program to perform some procedures and meet the
following four basic conditions:
(1) fulfilled the relevant legal provisions and policy requirements of foreign investment
access, state-owned assets management, state security and industrial policy.
(2) their respective industries are in line with the development concept of innovative,
coordinated, green, open and sharing, the development direction of the industrial
policy of the state, as well as the national strategy of serving the real economy and
supporting the “One Belt, One Road” construction, and they also have to be
high-quality enterprises.
(3) the equity structures of existing shares are relatively simple and their respective
market value will be not less than HK$1 billion.
(4) the corporate governance is standard, the internal decision-making procedures are in
compliance with the laws, which can practicably and adequately protect
shareholders’ rights of knowledge, participation and voting.
According to the Guidance for Applying “Full Circulation” for Domestic Unlisted Shares
of H-share Listed Companies (Hˏ) issued by
the CSRC on November 14, 2019, and the Reply to the Press by the CSRC Spokesperson
regarding the Fully Implementation of the “Full Circulation” Reform of H Shares ( ʕ਷ᗇ္ ึ
પකHਪ) issued by the CSRC on November 15,
2019, H Shares company can apply for “full circulation” alone or together with refinance
abroad application. Unlisted corporation can apply for “full circulation” together with overseas
IPO application. Once being approved by the CSRC, shareholders of domestic unlisted shares
shall change share registration according to the relevant rules of CSDC, as well as relevant
rules of share registration and share listing of HK market, and shall disclose information
lawfully.
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OUR HISTORY AND DEVELOPMENT
Overview
We are an enterprise digitalization solutions provider in China, focusing on offering SaaS
financial & tax digitalization and data-driven analytics services through our Baiwang Cloud
platform. We process a variety of transaction documents, including, among others, invoices,
receipts, bills, and other accounting records, that accurately reflect key business transactions
of enterprises. Empowered by insights into voluminous transaction data and equipped with big
data analytics capabilities, we facilitate the automated and digitalized business decision-
making by financial service providers and other enterprise customers.
Our history can be traced back to May 4, 2015, when our Company was founded in the
PRC by Ms. Chen, with Mr. Chen Lin ( ௓೙) (Ms. Chen’s brother and business partner). To
cope with our expansion and strategic needs, there has been a series of share transfers and
capital increases since the incorporation of our Company. As of the Latest Practicable Date,
Ms. Chen controlled 43.22% of the voting power at the general meetings of our Company,
comprising (1) 27.10% beneficially owned by her directly, (2) 9.23% beneficially owned by
Ningbo Xiu’an, which is controlled by Ms. Chen as its general partner, and (3) 6.89%
beneficially owned by Tianjin Duoying, which is controlled by Ms. Chen as its general partner.
Upon the Listing, Ms. Chen will control 41.44% of the voting power at the general meetings
of our Company, comprising (i) 25.98% beneficially owned by her directly, (ii) 8.85%
beneficially owned by Ningbo Xiu’an, and (iii) 6.61% beneficially owned by Tianjin Duoying,
assuming the Over-allotment Option is not exercised. Therefore, Ms. Chen, Ningbo Xiu’an and
Tianjin Duoying were our Controlling Shareholders as of the Latest Practicable Date and will
continue to be our Controlling Shareholders upon the Listing. See “Directors, Supervisors and
Senior Management—Board of Directors—Executive Directors” for the biographical details of
Ms. Chen, and “—Our Company” and “—Pre-IPO Investments” for the details of our
Company’s historical shareholding changes.
Business Milestones
The following table illustrates our major business milestones:
2015 Our Company was incorporated in May
Baiwang Cloud was launched in September
2016 We assisted Taobao with the establishment of its “Ali Invoice Platform”
2017 We were elected in January as the group leader of Electronic Invoices
Group ( ཥɿ೯ୃଡ଼) of China Electronic Documents Management
Promotion Union ( ʕ਷ཥɿ˖΁၍ଣપආᑌຑ), an industrial
organization promoted by users of electronic documents, enterprises,
education institutions and research institutions in the area of electronic
documents management in China
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2018 We were named as a China and Zhongguancun Unicorn Company ( ʕ਷
࿬ʕᗫӀዹԉᖕΆุ) by Great Wall Enterprise Institute (Άุ
הfor the first time in March
2019 We were named as a unicorn company with a valuation over US$1.0
billion by CB Insights, a reputable business analytics platform and
global database that provides market intelligence on private companies
and investor activities
We were named as a “Top 100 Technology Innovation Enterprise 2019
(2019௴ϵ੶Άุ)” by China Entrepreneur ()
magazine in July
2020 We ranked the first in terms of customers’ satisfaction in electronic
invoices industry in 2020 China IT Users’ Satisfaction Survey (2020 ϋ
ʕ਷ITݟconducted by CCW Research (༔)i n
January
2021 We won the bidding for the contract of upgrade of V A T invoices
management system (tax control sector) under the SA T’s Third Phase of
Golden Tax Project in January
We were granted “2021 Digitalization Transformation Innovative
Enterprise Award (2021௴อΆุᆤ)” in June by several
institutions including, among others, Information Research Center,
Chinese Academy of Social Sciences (Ӻʕː)
2022 We were named as a “Beijing Specialized, Sophisticated, Unique and
New ‘Little Giant’ Enterprise ( ̏ԯ̹ਖ਼ၚतอ“ʃ̶ɛ”Άุ)” by
Beijing Municipal Bureau of Economy and Information Technology ( ̏
ʷ҅) in March
We won the bidding for the contract of the SA T’s pilot project of
establishment and application of tax blockchain infrastructure platform
jointly with other collaborators in September
2023 We were named as a “China and Zhongguancun Unicorn Company ( ʕ
਷࿬ʕᗫӀዹԉᖕΆุ)” by Great Wall Enterprise Institute (Ά
הfor the sixth consecutive year
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OUR COMPANY
Incorporation of Our Company
After departure from Watertek, Ms. Chen founded our Company with the name “ ϵૐ
(Baiwang)”, because our headquarters and principal place of business were located near
Baiwang Mountain ( ϵૐʆ), a scenic spot in Beijing, and Ms. Chen wished to echo with the
code name “ ϵૐ” that was industry-wide used in the development of a technology system
associated with the tax and finance business. On May 4, 2015, our Company was promoted and
incorporated as a joint stock company with limited liability under the laws of the PRC by Ms.
Chen and Mr. Chen Lin, with a registered capital of RMB100.0 million divided into
100,000,000 Shares with a nominal value of RMB1.00 per Share. Upon incorporation, our
Company was owned by Ms. Chen and Mr. Chen Lin as to 90.00% and 10.00%, respectively.
Early Shareholding Changes of Our Company
On July 8, 2016, (1) Ms. Chen entered into share transfer agreements with each of
Watertek, Henan Baiwang Jiufu Electronic Technology Co., Ltd. (ࠢ
ʮ̡) (“Henan Jiufu”) (an affiliate of Henan Xuji Information Co., Ltd. (ʮ
̡) (currently known as Henan Baiwang Guorui Technology Co., Ltd. (ࠢ
ʮ̡)) (“Henan Xuji”)) and Mr. Lu Zhenhua (ശ), respectively, pursuant to which, among
others, 30,000,000 Shares, 30,000,000 Shares and 10,000,000 Shares were transferred by Ms.
Chen to Watertek, Henan Jiufu and Mr. Lu Zhenhua, respectively, at par value; and (2) Mr.
Chen Lin entered into a share transfer agreement with Mr. Liu Ming (׼a then senior
management member of Watertek), pursuant to which, among others, 10,000,000 Shares were
transferred by Mr. Chen Lin to Mr. Liu Ming at par value (collectively, “Angel Investment”).
Mr. Chen Lin ceased to be a Shareholder at the level of our Company upon completion of these
share transfers. Mr. Chen Lin disposed of his Shares in pursuit of his other business ventures.
Except for serving as a supervisor until June 2022 at our directly wholly-owned subsidiary,
Beijing Baiwang Jinkong Technology Co., Ltd. (ʮ̡), which was not
an executive role, Mr. Chen Lin did not maintain any role in the Group or hold interest in any
subsidiary of the Company subsequent to his disposal of Shares. Due to internal arrangements,
30,000,000 Shares held by Henan Jiufu was transferred to Henan Xuji at par value pursuant to
the share transfer agreement dated October 10, 2017 between them.
Watertek is a PRC company listed on the Shenzhen Stock Exchange (stock code: 300324),
which is principally engaged in, among others, the provision of information security and
information service products and platforms in the areas of tax and finance. Watertek was
ultimately controlled by Mr. Chen Jiangtao ( ௓Ϫᏹ), who held 18.17% of equity interest in
Watertek directly and through his wife and concert parties as of December 31, 2022, according
to Watertek’s annual report published on April 22, 2023. Henan Xuji is a PRC company,
majority-owned and ultimately controlled by Mr. Lu Zhenhua and principally engaged in R&D
and manufacture of intelligent automation equipment of power distribution systems. At the
time of acquisitions of the Shares from Ms. Chen, both Watertek and Henan Xuji were our
major business cooperation partners and leading and reputable players in their respective
industries, and Ms. Chen wished to utilize their experience and resources in the related
industries in this start-up project and strengthen our cooperation with them.
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To strengthen our capital base, on October 13, 2016, our Company, our then Shareholders
and Beijing Huida Gaoxin Investment Fund Center (Limited Partnership) ( ̏ԯි༺৷อҳ༟
ʕː(Υྫ)) (“Huida Gaoxin”) entered into a capital increase agreement, pursuant to
which, among others, Huida Guoxin invested RMB75.0 million in our Company, among which
RMB4,687,500 was contributed to the registered capital of our Company (“Huida Gaoxin
Investment”). Huida Gaoxin is a PRC private equity fund with Beijing Dalin Investment
Management Co., Ltd. (ʮ̡) (which is in turn majority-owned by Ms.
Liu Na (ࢆݣas to 90.00%) acting as the general partner.
To strengthen our founder’s control over our Company, on September 5, 2017, our then
Shareholders resolved and agreed on the capital injection in the amount of RMB49.2 million
by Ms. Chen, among which RMB40.0 million was contributed to the registered capital of our
Company. Such capital injection was fully settled on March 23, 2018. The consideration was
determined with reference to the then net asset value of our Company.
To provide incentive to our key employees and consultants, our then Shareholders
resolved on June 15, 2017 to authorize our Board to administer the future grant of share
incentive. On October 6, 2017 and April 6, 2018, Tianjin Duoying, our then newly-established
share incentive platform with Ms. Chen acting as the general partner, entered into share
transfer agreements with Mr. Liu Ming and Mr. Lu Zhenhua, respectively, pursuant to which,
among others, each of Mr. Liu Ming and Mr. Lu Zhenhua transfered 2,500,000 Shares and
7,500,000 Shares held by them to Tianjin Duoying at considerations of RMB3.08 million and
RMB9.23 million, respectively. The considerations were determined with reference to the then
net asset value of our Company. The transfers were fully settled on September 14, 2018, and
the Shares held by Tianjin Duoying were reserved for our future share incentive purpose. Upon
completion of such transfer, Mr. Liu Ming and Mr. Lu Zhenhua ceased to be our Shareholders.
On December 29, 2017, Ningbo Xiu’an, our another share incentive platform and a
limited partnership established under the laws of the PRC with Ms. Chen acting as its general
partner, entered into a share transfer agreement with Henan Xuji, pursuant to which, among
others, Henan Xuji transferred 30,000,000 Shares to Ningbo Xiu’an at a consideration of
RMB36.9 million, which was determined with reference to the then net asset value of our
Company. The consideration was fully settled on September 26, 2018. Such Shares held by
Ningbo Xiu’an were reserved for our future share incentive purpose. Upon completion of such
transfer, Henan Xuji ceased to be our Shareholder. See “—Share Incentive Platforms” and
“Appendix IV—Statutory and General Information—C. Share Incentive Scheme” for details of
our share incentive.
On June 15, 2018, Shenzhen Pusu Capital Management Co., Ltd. ( ଉέዎ९༟͉၍ଣϞ
ʮ̡) (“Pusu Capital”), Ningbo Xiu’an and our Company entered into a share transfer and
cooperation agreement, pursuant to which, among others, Ningbo Xiu’an transferred
10,000,000 Shares to Pusu Capital at a consideration of RMB190.0 million (“Pusu Capital
Investment”). Pusu Capital is a PRC private equity fund owned by Mr. Liang Fei ( ૑౵) and
Shenzhen Fangwu Innovation Capital Management Co., Ltd. (ʮ
̡) (which is owned by Mr. Liang Fei, Mr. Li Hui ( ҽሾ) and Mr. Zhao Yi ( Ⴛᆇ) as to 48.50%,
47.00% and 4.50%, respectively) as to 5.00% and 95.00%, respectively.
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Upon completion of the foregoing shareholding changes, our Company was owned by Ms.
Chen, Watertek, Ningbo Xiu’an, Tianjin Duoying, Pusu Capital and Huida Gaoxin as to
41.47%, 20.73%, 13.82%, 13.82%, 6.91% and 3.24%, respectively. To cope with our expansion
and strategic needs, our Company received Series A to Series C+ pre-IPO investments from
several investors. See “—Pre-IPO Investments” for details.
OUR PRINCIPAL SUBSIDIARY
Beijing Baiwang Huiyan Data Technology Co., Ltd. (ʮ̡)
(“Baiwang Huiyan”) is our principal subsidiary which had made material contribution to our
results of operations during the Track Record Period and up to the Latest Practicable Date.
Baiwang Huiyan is primarily engaged in the provision of big data analytics solutions.
Baiwang Huiyan was incorporated as a limited liability company on March 12, 2019
under the laws of the PRC with a registered capital of RMB8.0 million. Upon its incorporation,
Baiwang Huiyan was owned by Beijing Baiwang Jinkong Technology Co., Ltd. (ږ
ʮ̡), Beijing Baiwang Y unxin Technology Center (Limited Partnership) ( ̏ԯϵ
Ҧʕː(Υྫ)) and Yiwu Heying Information Technology Partnership (Limited
Partnership) (ҦஔΥྫΆุ(Υྫ)) as to 51.00%, 29.00% and 20.00%,
respectively. Beijing Baiwang Jinkong Technology Co., Ltd. is our directly wholly-owned
subsidiary. Beijing Baiwang Y unxin Technology Center (Limited Partnership) is owned by Ms.
Chen and Mr. Wu Jingrun ( ю౻ᆗ) (the then chief financial officer of our Company) as to
50.00% and 50.00% with Ms. Chen acting as the general partner. At the time of incorporation
of Baiwang Huiyan, the equity interest in Baiwang Huiyan held by Beijing Baiwang Y unxin
Technology Center (Limited Partnership) was on trust for our Company, for the future
employee share incentive purpose. Yiwu Heying Information Technology Partnership (Limited
Partnership) is owned by Mr. Lin Y unbin (ʪⅳ) and Mr. Xu Lin (؍ࢱboth of whom are
independent third parties, as to 75.00% and 25.00%, respectively.
To streamline our management of and strengthen our control over Baiwang Huiyan, our
Group decided to terminate the entrustment arrangement and implement the employee share
incentive arrangements at the level of our Company. In May 2019, Beijing Baiwang Jinkong
Technology Co., Ltd. and Beijing Baiwang Y unxin Technology Center (Limited Partnership)
transferred their respective equity interest in Baiwang Huiyan to our Company at nil
consideration. At the same time, Yiwu Heying Information Technology Partnership (Limited
Partnership), which had not made any capital contribution to Baiwang Huiyan, transfered its
entire equity interest in Baiwang Huiyan to our Company at nil contribution. Since then,
Baiwang Huiyan have been our directly wholly-owned subsidiary. On May 25, 2020, the
registered capital of Baiwang Huiyan increased to RMB50.0 million, with additional registered
capital contributed by our Company.
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OUR PRINCIPAL ASSOCIATED COMPANIES AND JOINT VENTURES
The table below sets forth the details of our principal associated companies and joint
ventures as of the Latest Practicable Date:
Name of the
associated
companies/joint
ventures
Principal business of
the associated
companies/joint
ventures
The
Shareholding
of our
Company
Name of the other
shareholder(s)
1
The
Shareholding
of the other
shareholder(s)
Guangxi United Credit
Reporting Co., Ltd.
(ࠢ
ʮ̡)
Big data services 15.00% Guangxi Dongxin
Digital Information
Technology Co., Ltd.
(Ҧ
ʮ̡)
85.00%
Boya Zhongke
(Beijing)
Information
Technology Co.,
Ltd. (߅(̏
ԯ)ʮ
̡)
Sales of finance
management software
40.26% Tianjin Minzheng
Software
Development
Partnership (Limited
Partnership) (ઽ
ழ΁ක೯ΥྫΆุ
(Υྫ))
54.74%
Boya Network
Information (Beijing)
Technology Co., Ltd.
(ڦ(̏ԯ)Ҧ
ʮ̡)
5.00%
Note:
1. Such other shareholders and their respective ultimate beneficial owners are independent third parties.
HISTORY AND CORPORATE STRUCTURE
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MATERIAL ACQUISITIONS AND DISPOSALS
Throughout the Track Record Period and as of the Latest Practicable Date, we did not
conduct any material acquisition or disposal.
PRE-IPO INVESTMENTS
Backgrounds of the Pre-IPO Investments
Set out below the general backgrounds of our Series A to Series C+ pre-IPO investments:
(1) Series A Pre-IPO Investment:
 On December 1, 2017, Shanghai Fosun High Technology (Group) Co., Ltd.
(Ҧ(ණྠ)ʮ̡) (“Fosun High-Tech”), Shanghai Fosun
Weishi Fund (ΥྫΆุ(Υྫ)) (“Fosun
Weishi”), Mr. Huang Miao ( ර↿) and Ms. Zhu Liping ( ϡ஁റ) (collectively,
the “Lenders”) entered into an investment agreement with our Company,
pursuant to which, among others, our Company issued convertible bonds of
RMB100.0 million to the Lenders, pursuant to which the conversion right
would be exercisable at the conversion price of RMB11.1 per Share within 36
months after the principal amount of the relevant convertible bonds was
transferred to our Company. On September 2, 2019, our Company was notified
by the Lenders on the full conversion of the convertible loans to 9,042,969
Shares, among which, (i) Fosun High-Tech subscribed for 4,476,270 Shares in
settlement of their convertible loans of RMB49.5 million, (ii) Fosun Weishi
subscribed for 4,476,269 Shares in settlement of their convertible loans of
RMB49.5 million, (iii) Mr. Huang Miao subscribed for 45,215 Shares in
settlement of their convertible loans of RMB500,000, and (iv) Ms. Zhu Liping
subscribed for 45,215 Shares in settlement of their convertible loans of
RMB500,000; and
 on September 20, 2018, Alibaba (China) Technology Co., Ltd. (Ԣˋˋ(ʕ਷)
ʮ̡) (“Alibaba”) entered into a capital increase agreement with
our Company and our then Shareholders, pursuant to which, among others,
Alibaba invested approximately RMB317.7 million in our Company, among
which RMB28,724,721 was contributed to the registered capital of the
Company.
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(2) Series B Pre-IPO Investment:
 on August 15, 2019, Shenzhen Capital Group Co., Ltd. ( ଉέ̹௴อҳ༟ණྠ
ʮ̡) (“SCGC”), Shenzhen Hongtu Intelligent Equity Investment Fund
Partnership (Limited Partnership) (ΥྫΆุ(Ϟ
Υྫ)) (“Shenzhen Hongtu”), Dongguan Hongtu V enture Capital Fund
Partnership (Limited Partnership) (ΥྫΆุ(Υ
ྫ)) (“Dongguan Hongtu”, together with SCGC and Shenzhen Hongtu, “SCGC
Group”), Shenzhen Fortune Gutoubang No. 6 Investment Enterprise (Limited
Partnership) (ҳԞʬ໮ҳ༟Άุ(Υྫ)) (“Shenzhen Oriental
Fortune”), and Small and Medium-sized Enterprises Development Fund
(Shenzhen Nanshan Limited Partnership) (ږ(Υ
ྫ)) (“SME Fund”, together with Shenzhen Oriental Fortune, “Oriental
Fortune”) entered into a capital increase agreement and a supplemental
agreement with our Company and our then Shareholders, pursuant to which,
among others, (i) SCGC, Shenzhen Hongtu and Dongguan Hongtu invested
RMB75.0 million, RMB30.0 million and RMB45.0 million, respectively, in
our Company, among which RMB3,909,754, RMB1,563,902 and
RMB2,345,852 were contributed to the registered capital of our Company,
respectively; and (ii) Shenzhen Oriental Fortune and SME Fund invested
RMB120.0 million and RMB80.0 million, respectively, in our Company,
among which RMB6,255,607 and RMB4,170,404 were contributed to the
registered capital of our Company, respectively;
 on December 24, 2019, Tianjin Duoying and Shenzhen Gongtong Jiayuan
Management Co., Ltd. (ʮ̡) (“Gongtong Jiayuan”)
entered into a share transfer agreement, pursuant to which, among others,
Tianjin Duoying transferred 4,347,826 Shares to Gongtong Jiayuan, at a
consideration of approximately RMB100.0 million;
 on December 26, 2019, Fosun High-Tech and Fosun Weishi entered into a share
transfer agreement with Y ancheng Y annan Unicorn Investment Fund
Partnership (Limited Partnership) (ΥྫΆุ(ࠢ
Υྫ)) (“Y ancheng Y annan Fund”), Mr. Guo Xixing ( ெɼጳ) and Mr. Huang
Shanfan ( රഛᐿ), pursuant to which, among others, (i) Fosun High-Tech
transferred 1,382,225 Shares to Y ancheng Y annan Fund at a consideration of
RMB25.0 million, (ii) Fosun Weishi transferred 525,245 Shares, 746,401
Shares, 110,580 Shares to Y ancheng Y annan Fund, Mr. Guo Xixing and
Mr. Huang Shanfan, at considerations of RMB9.5 million, RMB13.5 million
and RMB2.0 million, respectively; and
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 on June 18, 2020, Huida Gaoxin and Hongzheng Junfang Investment Co., Ltd.
(ʮ̡) (“Hongzheng Junfang”) entered into a share transfer
agreement, pursuant to which, among others, Huida Gaoxin transferred
4,687,500 Shares to Hongzheng Junfang at a consideration of RMB102.0
million. Upon completion of the transaction, Huida Gaoxin ceased to be our
Shareholder.
(3) Series C Pre-IPO Investment:
 on January 5, 2021, Jinjiang Fangzhou No. 2 Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ)) (“Jinjiang
Fangzhou”), Suzhou Wanjia V enture Capital Partnership (Limited Partnership)
(ᘽψຬԳ௴ุҳ༟ΥྫΆุ(Υྫ)) (“Suzhou Wanjia”), Suzhou Muhua
Equity Investment Partnership (Limited Partnership) (ᛆҳ༟Υྫ
Άุ(Υྫ)) (“Suzhou Muhua”), Beijing Xingshi Investment Management
Center (Limited Partnership) (ྼҳ༟၍ଣʕː(Υྫ)) (“Beijing
Xingshi”), Changzhou Xinxing No. 1 Investment Partnership Enterprise
(Limited Partnership) ( ੬ψ̹อጳఠ໮ҳ༟ΥྫΆุ(Υྫ))
(“Changzhou Xinxing”), Tongxiang Zhongrun Enterprise Management Co.,
Ltd. (ʮ̡) (“Tongxiang Zhongrun”), Suqian Jiuzhao
Fengya Equity Investment Partnership (Limited Partnership) (ٰ
ᛆҳ༟ΥྫΆุ(Υྫ)) (“Jiuzhao Y aquan”), Pingxiang Jiuzhao Hongxin
Equity Investment Partnership (Limited Partnership) (ᛆҳ༟
ΥྫΆุ(Υྫ)) (“Pingxiang Jiuzhao”), Mr. Liu Ning ( ᄎྐྵ), Mr. Shi
Zhenyi (ᆇ), Ms. Y u Xiao ( ቱወ), Mr. Guo Xixing and Ms. Zhu Liping
entered into a capital increase agreement with our Company and our then
Shareholders, pursuant to which, among others, Jinjiang Fangzhou, Suzhou
Wanjia, Suzhou Muhua, Beijing Xingshi, Changzhou Xinxing, Tongxiang
Zhongrun, Jiuzhao Y aquan, Pingxiang Jiuzhao, Mr. Liu Ning, Mr. Shi Zhenyi,
Ms. Y u Xiao, Mr. Guo Xixing and Ms. Zhu Liping invested RMB57.01 million,
RMB50.0 million, RMB10.0 million, RMB100.0 million, RMB10.0 million,
RMB59.0 million, RMB79.8 million, RMB1.2 million, RMB0.4 million,
RMB0.3 million, RMB0.4 million, RMB12.0 million and RMB3.2 million in
our Company, respectively, among which RMB1,939,314, RMB1,700,854,
RMB340,171, RMB3,401,708, RMB340,171, RMB2,007,008, RMB2,714,563,
RMB40,820, RMB13,607, RMB10,205, RMB13,607, RMB408,205 and
RMB108,855 were contributed to the registered capital of our Company,
respectively;
 on January 20, 2021, Shanghai Dazhong Public Utilities (Group) Co., Ltd. ( ɪ
ऎɽ଺ʮ͜ԫุ(ණྠ)ʮ̡) (“Dazhong Public”) entered into a share
transfer agreement with Pusu Capital, pursuant to which Dazhong acquired
7,000,000 Shares from Pusu Capital at a consideration of RMB182.0 million;
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 on June 23, 2021, Pusu Capital entered into share transfer agreements with
Chongqing Liangjiang Zhongxin Jialiang Financial Technology RMB Equity
Investment Fund Partnership (Limited Partnership) (߅
ΥྫΆุ(Υྫ)) (“Zhongxin Jialiang”), Mr. Zhang
Lianwen ( ੵஹ˖), Mr. Ma Jingping ( ௦᎑̻), Gongqingcheng Henghui
Ruicheng Equity Investment Management Partnership (Limited Partnership)
(ᛆҳ༟၍ଣΥྫΆุ(Υྫ)) (“Henghui Ruicheng”)
and Beijing Cuihu Original Innovation No. 1 V enture Capital Fund (Limited
Partnership) (ږ(Υྫ)) (“Beijing
Cuihu”), respectively, pursuant to which, among others, (i) Zhongxin Jialiang
acquired 400,000 Shares from Pusu Capital at a consideration of RMB10.4
million, (ii) Mr. Zhang Lianwen acquired 1,442,308 Shares from Pusu Capital
at a consideration of RMB37.5 million, (iii) Mr. Ma Jingping acquired 57,692
Shares from Pusu Capital at a consideration of RMB1.5 million, (iv) Henghui
Ruicheng acquired 750,000 Shares from Pusu Capital at a consideration of
RMB 19.5 million, (v) Beijing Cuihu acquired 350,000 Shares from Pusu
Capital at a consideration of RMB9.1 million. Upon completion of the
transactions, Pusu Capital ceased to be our Shareholder.
(4) Series C+ Pre-IPO Investment:
 on November 10, 2021, Ms. Chen and Suqian Jiuzhao Y unlian Equity
Investment Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆ
ุ(Υྫ)) (“Jiuzhao Y unlian”) entered into a share transfer agreement,
pursuant to which, among others, Ms. Chen transferred 300,000 Shares to
Jiuzhao Y unlian, at a consideration of RMB7.8 million;
 on November 19, 2021, our Company and our Controlling Shareholders
entered into a capital increase agreement with Jinan Haiwang Equity
Investment Partnership (Limited partnership) (ᛆҳ༟ΥྫΆุ(Ϟ
Υྫ)) (“Jinan Haiwang”), pursuant to which, among others, Jinan Haiwang
invested approximately RMB29.4 million in our Company, among which
RMB1.0 million was contributed to the registered capital of our Company;
 on November 29, 2021, Shanghai Guoxin V enture Capital Investment Co., Ltd.
(ʮ̡) (“Shanghai Guoxin”) entered into share transfer
agreements with Ms. Chen and Alibaba, respectively, pursuant to which,
among others, Shanghai Guoxin acquired 1,000,000 Shares and 3,000,000
Shares from Ms. Chen and Alibaba, at considerations of RMB26.0 million and
RMB78.0 million, respectively;
 on November 29, 2021, our Company and our Controlling Shareholders
entered into capital increase agreements with Shanghai Guoxin and Mr. Wen
Xiaoming ( ˖ወჼ), respectively, pursuant to which, among others, (i)
Shanghai Guoxin invested RMB46.0 million in our Company, among which
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RMB1,564,786 was contributed to the registered capital of our Company and
(ii) Mr. Wen Xiaoming invested approximately RMB10.0 million in our
Company, among which RMB340,171 was contributed to the registered capital
of our Company; and
 on December 27, 2021, Watertek, as the transferor, entered into share transfer
agreements with 13 transferees, respectively, pursuant to which, among others,
Watertek transferred an aggregate of 8,536,534 Shares to the transferees at a
total consideration of RMB221.95 million. Subsequent to the share transfers,
Watertek unconditionally and irrevocably undertook not to exercise its director
appointment right in our Company in January 2022. Details of the transactions
are set out below:
Name of transferee
Number of the
transferred
Shares Consideration
(RMB)
Jiaxing Jiuzhao Hexuan Equity
Investment Partnership (Limited
Partnership) (ᛆҳ༟Υ
ྫΆุ(Υྫ)) (“Jiuzhao Hexuan”)
2,011,538 52.3 million
Wuxi Fosun V enture Capital Investment
Partnership (௴ุҳ༟ΥྫΆ
ุ(Υྫ)) (“Fosun VC
Investment”, together with Fosun
High-Tech, Fosun Weishi and Beijing
Xingshi, “Fosun”)
1,923,077 50.0 million
Yinhe Y uanhui Investment Co., Ltd. ( ვ
ʮ̡) (“Yinhe
Y uanhui”)
1,150,000 29.9 million
Changzhou Tianning Hongya Industrial
Investment Partnership (Limited
Partnership) ( ੬ψ̹˂ྐྵ̾ԭྼุҳ༟
ΥྫΆุ(Υྫ)) (“Tianning
Hongya”)
769,230 20.0 million
Ms. Y an Xia ( ᕙᒳ) 769,230 20.0 million
Henghui Ruicheng 350,000 9.1 million
Beijing Cuihu 450,000 11.7 million
Qingdao Ruibeita Equity Investment
Partnership (Limited Partnership) (ڡ
ᛆҳ༟ΥྫΆุ(Υྫ))
(“Qingdao Ruibeita”)
346,153 9.0 million
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Name of transferee
Number of the
transferred
Shares Consideration
(RMB)
Pingxiang Jiuzhao Anyuan Equity
Investment Partnership (Limited
Partnership) (ᛆҳ༟
ΥྫΆุ(Υྫ)) (“Jiuzhao
Anyuan”, together with Jiuzhao
Y aquan, Pingxiang Jiuzhao, Jiuzhao
Y unlian and Jiuzhao Hexuan,
“Jiuzhao”)
230,769 6.0 million
Suqian Qianshan Xinzhuo Equity
Investment Partnership (Limited
Partnership) (ᛆҳ༟Υ
ྫΆุ(Υྫ)) (“Qianshan
Xinzhuo”)
200,000 5.2 million
Chuanjiang Investment Co., Ltd. ( ʇϪҳ
ʮ̡) (“Chuanjiang
Investment”)
192,307 5.0 million
Ms. Zhu Liping 82,692 2.15 million
Mr. Chen Xin (ؚ61,538 1.6 million
 On October 17, 2022, Qingdao Hongma Shengshi Private Equity Investment
Fund Partnership (Limited Partnership) (Υྫ
Υྫ) (“Qingdao Hongma”) entered into a share transfer
agreement with Gongtong Jiayuan (which was supplemented by a supplemental
agreement dated December 31, 2022 between the same parties), pursuant to
which, among others, Qingdao Hongma acquired 421,052 Shares from
Gongtong Jiayuan, at a consideration of RMB12.0 million.
In addition, with a view to acquiring the indirect interest in our Company, (1) Mr. Liu Zhu
(ݒentered into an investment agreement on January 19, 2018 with Mr. Chen Lin and
Tianjin Jinxintong Technology Center (Limited Partnership) (Ҧʕː(Υྫ))
(“Tianjin Jinxintong”), pursuant to which, among others, Mr. Liu Zhu acquired 2.3% of the
partnership interest in Tianjin Jinxintong from Mr. Chen Lin, at a consideration of
approximately RMB3.7 million, and (2) Ms. Wang Yilin ( ˮᖵᎌ) entered into an investment
agreement on March 28, 2018 and a supplemental agreement on April 15, 2018 with Mr. Chen
Lin and Tianjin Jinxintong, pursuant which, among others, Ms. Wang Yilin acquired 5.0% of
the partnership interest in Tianjin Jinxintong from Mr. Chen Lin, at a consideration of RMB6.5
million (collectively, “Liu and Wang Investments”). At the time of Liu and Wang Investments,
Tianjin Jinxintong was a limited partner of Tianjin Duoying, and therefore, upon the
completion of Liu and Wang Investments, Mr. Liu Zhu and Ms. Wang Yilin were interested in
230,000 and 500,000 underlying Shares represented by the partnership interest in Tianjin
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Jinxintong, respectively. In order to facilitate the future realization of economic benefits
attaching to the underlying Shares, in April 2023, Mr. Liu Zhu and Ms. Wang Yilin decided to
hold the underlying Shares through Tianjin Jinxintong (which was a shareholding platform
owned by Mr. Liu Zhu and Ms. Wang Yilin, both of whom are limited partners, as to 31.5%
and 68.5%, respectively, and with Mr. Chen Gang acting as the general partner who holds
0.0001% nominal interest, as of the Latest Practicable Date and after a series of restructuring)
without another secondary intermediate shareholding platform, and therefore Tianjin
Jinxintong withdrew from Tianjin Duoying and ceased to be a limited partner of Tianjin
Duoying, while Tianjin Duoying transfered 730,000 Shares to Tianjin Jinxintong at nil
consideration. After completion of such transfer, Tianjin Jinxintong became our Shareholder
holding 730,000 Shares.
Series A to Series C+ pre-IPO investments, together with Angel Investment, Huida
Gaoxin Investment, Pusu Capital Investment and Liu and Wang Investments, constitute the
pre-IPO investments as defined under Chapter 4.2 of the Guide for New Listing Applicants
published by the Stock Exchange. The considerations for the pre-IPO investments were
determined on an arm’s length basis among the parties to the relevant transactions with
reference to then business prospects and financial performance of our Company.
The following table illustrates (1) the number of Shares held by our existing Shareholders
upon completion of the abovementioned pre-IPO investments and shareholding changes and as
of the Latest Practicable Date and (2) our existing Shareholders’ ownership percentage
immediately prior to and after the completion of the Global Offering:
Name of Shareholder(s)
Number
of Shares
Ownership
percentage
immediately prior
to the completion
of the Global
Offering
Ownership
percentage
immediately after
the completion
of the Global
Offering (1)
(%) (%)
Controlling Shareholders
Ms. Chen 58,700,000 27.10 25.98
Ningbo Xiu’an 20,000,000 9.23 8.85
Tianjin Duoying 14,922,174 6.89 6.61
Subtotal 93,622,174 43.22 41.44
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Name of Shareholder(s)
Number
of Shares
Ownership
percentage
immediately prior
to the completion
of the Global
Offering
Ownership
percentage
immediately after
the completion
of the Global
Offering (1)
(%) (%)
Other Shareholders
Alibaba 25,724,721 11.87 11.39
Watertek 21,463,466 9.91 9.50
Dazhong Public 7,000,000 3.23 3.10
Shenzhen Oriental
Fortune
(3) 6,255,607 2.89 2.77
Shanghai Guoxin 5,564,786 2.57 2.46
Hongzheng Junfang 4,687,500 2.16 2.07
SME Fund
(3) 4,170,404 1.92 1.85
Gongtong Jiayuan 3,926,774 1.81 1.74
SCGC
(4) 3,909,754 1.80 1.73
Beijing Xingshi (2) 3,401,708 1.57 1.51
Fosun High-Tech (2) 3,094,045 1.43 1.37
Fosun Weishi (2) 3,094,043 1.43 1.37
Jiuzhao Y aquan (5) 2,714,563 1.25 1.20
Dongguan Hongtu (4) 2,345,852 1.08 1.04
Jiuzhao Hexuan (5) 2,011,538 0.93 0.89
Tongxiang Zhongrun 2,007,008 0.93 0.89
Jinjiang Fangzhou 1,939,314 0.90 0.86
Fosun VC Investment
(2) 1,923,077 0.89 0.85
Y ancheng Y annan Fund 1,907,470 0.88 0.84
Suzhou Wanjia 1,700,854 0.79 0.75
Shenzhen Hongtu
(4) 1,563,902 0.72 0.69
Mr. Zhang Lianwen 1,442,308 0.67 0.64
Mr. Guo Xixing 1,154,606 0.53 0.51
Yinhe Y uanhui 1,150,000 0.53 0.51
Henghui Ruicheng 1,100,000 0.51 0.49
Jinan Haiwang 1,000,000 0.46 0.44
Beijing Cuihu 800,000 0.37 0.35
Tianning Hongya 769,230 0.36 0.34
Ms. Y an Xia 769,230 0.36 0.34
Tianjin Jinxintong 730,000 0.34 0.32
Qingdao Hongma 421,052 0.19 0.19
Zhongxin Jialiang 400,000 0.18 0.18
Qingdao Ruibeita 346,153 0.16 0.15
Changzhou Xinxing 340,171 0.16 0.15
Suzhou Muhua 340,171 0.16 0.15
HISTORY AND CORPORATE STRUCTURE
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Name of Shareholder(s)
Number
of Shares
Ownership
percentage
immediately prior
to the completion
of the Global
Offering
Ownership
percentage
immediately after
the completion
of the Global
Offering (1)
(%) (%)
Mr. Wen Xiaoming 340,171 0.16 0.15
Jiuzhao Y unlian (5) 300,000 0.14 0.13
Ms. Zhu Liping 236,762 0.11 0.10
Jiuzhao Anyuan
(5) 230,769 0.11 0.10
Qianshan Xinzhuo 200,000 0.09 0.09
Chuanjiang Investment 192,307 0.09 0.09
Mr. Huang Shanfan 110,580 0.05 0.05
Mr. Chen Xin 61,538 0.03 0.03
Mr. Ma Jingping 57,692 0.03 0.03
Mr. Huang Miao 45,215 0.02 0.02
Pingxiang Jiuzhao
(5) 40,820 0.02 0.02
Mr. Liu Ning 13,607 0.006 0.006
Ms. Y u Xiao 13,607 0.006 0.006
Mr. Shi Zhenyi 10,205 0.005 0.005
Subtotal 123,022,580 56.78 54.46
Total 216,644,754 100.00 95.90
(1) Assuming the Over-allotment Option is not exercised.
(2) See “—Pre-IPO Investments—Information regarding Our Principal Pre-IPO Investors—Fosun” for
more details of the relationships among them.
(3) See “—Pre-IPO Investments—Information regarding Our Principal Pre-IPO Investors—Oriental
Fortune” for more details of the relationships among them.
(4) See “—Pre-IPO Investments—Information regarding Our Principal Pre-IPO Investors—SCGC Group”
for more details of the relationships among them.
(5) See “—Pre-IPO Investments—Information regarding Our Principal Pre-IPO Investors—Jiuzhao” for
more details of the relationships among them.
Our Directors are of the view that our Company would benefit from the additional capital
injected by the pre-IPO investments, our Pre-IPO Investors’ business resources, knowledge and
experience, and potential business opportunities and benefits that may be provided by them.
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Principal Terms of the Pre-IPO Investments
The table below summarizes the principal terms of the pre-IPO investments:
Name of Pre-IPO
Investor(s)
Date of
contract Date of settlement
Number of
Shares
subscribed
for/acquired at
the time of Pre-
IPO Investment Consideration
Cost per
Share
paid (1)
Discount
to the
Offer
Price (2)
(RMB) (RMB) (%)
Early Investment
Watertek July 8, 2016 June 6, 2016 30,000,000 30.0 million 1.0 97.11
Henan Xuji
(3)(4) July 8, 2016 July 19, 2016 30,000,000 30.0 million 1.0 97.11
Mr. Liu Ming (4) July 8, 2016 April 7, 2016 10,000,000 10.0 million 1.0 97.11
Mr. Lu Zhenhua (4) July 8, 2016 July 12, 2016 10,000,000 10.0 million 1.0 97.11
Huida Gaoxin (4) October 13, 2016 October 13, 2016 4,687,500 75.0 million 16.0 53.80
Mr. Liu Zhu January 19, 2018 January 30, 2018 230,000 (5) 3.7 million 16.0 53.80
Ms. Wang Yilin March 28, 2018 April 24, 2018 500,000 (5) 6.5 million 16.0 53.80
Pusu Capital (4) June 15, 2018 July 24, 2018 10,000,000 190.0 million 19.0 45.14
Series A Pre-IPO Investment
Fosun High-Tech December 1, 2017 (6) March 14, 2018 (7) 4,476,270 49.5 million 11.1 67.95
Fosun Weishi December 1, 2017 (6) March 14, 2018 (7) 4,476,269 49.5 million 11.1 67.95
Mr. Huang Miao (8) December 1, 2017 (6) March 12, 2018 (7) 45,215 500,000 11.1 67.95
Ms. Zhu Liping December 1, 2017 (6) March 12, 2018 (7) 45,215 500,000 11.1 67.95
Alibaba September 20, 2018 October 18, 2018 28,724,721 317.65 million 11.1 67.95
Series B Pre-IPO Investment
SCGC October 25, 2019 December 31, 2019 3,909,754 75.0 million 19.2 44.56
Shenzhen Hongtu October 25, 2019 December 31, 2019 1,563,902 30.0 million 19.2 44.56
Dongguan Hongtu October 25, 2019 December 31, 2019 2,345,852 45.0 million 19.2 44.56
Shenzhen Oriental
Fortune October 25, 2019 December 31, 2019 6,255,607 120.0 million 19.2 44.56
SME Fund October 25, 2019 January 2, 2020 4,170,404 80.0 million 19.2 44.56
Gongtong Jiayuan December 24, 2019 December 25, 2019 4,347,826 100.0 million 23.0 33.59
Y ancheng Y annan
Fund December 26, 2019 December 24, 2019 1,907,470 34.5 million 18.1 47.74
Mr. Guo Xixing December 26, 2019 December 24, 2019 746,401 13.5 million 18.1 47.74
Mr. Huang Shanfan December 26, 2019 December 26, 2019 110,580 2.0 million 18.1 47.74
Hongzheng Junfang June 18, 2020 July 13, 2020 4,687,500 102.0 million 21.8 37.05
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Name of Pre-IPO
Investor(s)
Date of
contract Date of settlement
Number of
Shares
subscribed
for/acquired at
the time of Pre-
IPO Investment Consideration
Cost per
Share
paid (1)
Discount
to the
Offer
Price (2)
(RMB) (RMB) (%)
Series C Pre-IPO Investment
Jinjiang Fangzhou January 5, 2021 January 8, 2021 1,939,314 57.0 million 29.4 15.11
Suzhou Wanjia January 5, 2021 February 7, 2021 1,700,854 50.0 million 29.4 15.11
Suzhou Muhua January 5, 2021 February 1, 2021 340,171 10.0 million 29.4 15.11
Beijing Xingshi January 5, 2021 February 18, 2021 3,401,708 100.0 million 29.4 15.11
Changzhou Xinxing January 5, 2021 December 31, 2020 340,171 10.0 million 29.4 15.11
Tongxiang
Zhongrun January 5, 2021 January 12, 2021 2,007,008 59.0 million 29.4 15.11
Jiuzhao Y aquan January 5, 2021 February 2, 2021 2,714,563 79.8 million 29.4 15.11
Pingxiang Jiuzhao January 5, 2021 February 2, 2021 40,820 1.2 million 29.4 15.11
Mr. Liu Ning January 5, 2021 February 19, 2021 13,607 400,000 29.4 15.11
Mr. Shi Zhenyi January 5, 2021 February 22, 2021 10,205 300,000 29.4 15.11
Ms. Y u Xiao January 5, 2021 February 19, 2021 13,607 400,000 29.4 15.11
Mr. Guo Xixing January 5, 2021 December 30, 2020 408,205 12.0 million 29.4 15.11
Ms. Zhu Liping January 5, 2021 December 31, 2020 108,855 3.2 million 29.4 15.11
Dazhong Public January 20, 2021 February 9, 2021 7,000,000 182.0 million 26.0 24.93
Zhongxin Jialiang June 23, 2021 July 9, 2021 400,000 10.4 million 26.0 24.93
Henghui Ruicheng June 23, 2021 July 7, 2021 750,000 19.5 million 26.0 24.93
Beijing Cuihu June 23, 2021 July 7, 2021 350,000 9.1 million 26.0 24.93
Mr. Zhang Lianwen June 23, 2021 July 16, 2021 1,442,308 37.5 million 26.0 24.93
Mr. Ma Jingping June 23, 2021 July 9, 2021 57,692 1.5 million 26.0 24.93
Series C+ Pre-IPO Investment
Jiuzhao Y unlian November 10, 2021 December 9, 2021 300,000 7.8 million 26.0 24.93
Shanghai Guoxin November 29, 2021 November 30, 2021 5,564,786 150.0 million 27.0 22.04
Jinan Haiwang November 19, 2021 December 3, 2021 1,000,000 29.4 million 29.4 15.11
Mr. Wen Xiaoming November 29, 2021 December 3, 2021 340,171 10.0 million 29.4 15.11
Jiuzhao Hexuan December 27, 2021 December 28, 2021 2,011,538 52.3 million 26.0 24.93
Fosun VC
Investment December 27, 2021 December 30, 2021 1,923,077 50.0 million 26.0 24.93
Yinhe Y uanhui December 27, 2021 December 30, 2021 1,150,000 29.9 million 26.0 24.93
Tianning Hongya December 27, 2021 December 28, 2021 769,230 20.0 million 26.0 24.93
Ms. Y an Xia December 27, 2021 December 27, 2021 769,230 20.0 million 26.0 24.93
Henghui Ruicheng December 27, 2021 December 30, 2021 350,000 9.1 million 26.0 24.93
Beijing Cuihu December 27, 2021 December 28, 2021 450,000 11.7 million 26.0 24.93
Qingdao Ruibeita December 27, 2021 December 29, 2021 346,153 9.0 million 26.0 24.93
Jiuzhao Anyuan December 27, 2021 December 28, 2021 230,769 6.0 million 26.0 24.93
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Name of Pre-IPO
Investor(s)
Date of
contract Date of settlement
Number of
Shares
subscribed
for/acquired at
the time of Pre-
IPO Investment Consideration
Cost per
Share
paid (1)
Discount
to the
Offer
Price (2)
(RMB) (RMB) (%)
Qianshan Xinzhuo December 27, 2021 December 29, 2021 200,000 5.2 million 26.0 24.93
Chuanjiang
Investment December 27, 2021 December 28, 2021 192,307 5.0 million 26.0 24.93
Ms. Zhu Liping December 27, 2021 December 27, 2021 82,692 2.15 million 26.0 24.93
Mr. Chen Xin December 27, 2021 December 27, 2021 61,538 1.6 million 26.0 24.93
Qingdao Hongma December 31, 2022 February 15, 2023 421,052 12.0 million 28.5 17.71
(1) Calculated by dividing the total consideration paid by the number of Shares subscribed for or acquired
by the relevant Pre-IPO Investors. Under certain transfers of existing Shares between our investors, the
relevant investors considered various factors, such as timing of the transaction, past or present
relationships between the parties and their respective bargaining power in the negotiations when
determining the consideration, in addition to the then valuation of our Company, and thus agreed on an
discount to the then valuation.
(2) The discount to the Offer Price is calculated based on the assumption that the Offer Price is HK$38.00
per H Share, being the mid-point of the indicative Offer Price range of HK$36.00 to HK$40.00 per H
Share, and that the Over-allotment Option is not exercised.
(3) Due to their internal arrangements, the Shares held by Henan Jiufu were later transferred to Henan Xuji
at par value in October 2017.
(4) Such Shareholders later transferred the Shares held by them to other parties and ceased to be our
Shareholders.
(5) This refers to the number of the underlying Shares which was represented by the partnership interest in
Tianjin Jinxintong acquired by the investor.
(6) The date refers to the date on which our Company entered into the investment agreement with the
Lenders in connection with the issuance of the relevant convertible bonds.
(7) The date refers to the date on which the Lenders transferred the principal amount underlying the relevant
convertible bonds to our Company.
(8) Mr. Huang Miao is our non-executive Director.
Use of Proceeds from the Pre-IPO Investments
The proceeds received by us from the pre-IPO investments amounted to approximately
RMB1,311.4 million. As of December 31, 2023, approximately 38.3% of the net proceeds from
the pre-IPO investments, amounting to approximately RMB501.9 million, had been utilized,
for our general operation and business development. The remaining net proceeds from the
pre-IPO investments will continue to be utilized for our general operation and business
development.
HISTORY AND CORPORATE STRUCTURE
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Lock-up Period
Pursuant to the applicable PRC law, within the 12 months following the Listing Date, all
existing Shareholders (including our Pre-IPO Investors) are prohibited from disposing of any
of the Shares held by them.
Public Float
Our Company has made an application for a H-share “Full Circulation,” which has been
approved by the CSRC and pursuant to which, a total of 81,580,048 Domestic Shares will be
converted into H Shares on a one-for-one basis upon the completion of the Global Offering. Of
such 81,580,048 H Shares to be converted from Domestic Shares and listed on the Stock
Exchange following the completion of the Global Offering and the Conversion of Domestic
Shares into H Shares:
(a) 26,863,299 H Shares (representing approximately 11.89% of our total issued Shares
upon the Listing (assuming that the Over-allotment Option is not exercised)) will not
be counted towards the public float for the purpose of Rule 8.08 of the Listing Rules
upon the Listing as such H Shares are held by Ningbo Xiu’an, Tianjin Duoying and
Alibaba, the core connected persons of our Company; and
(b) the remaining 54,716,749 H Shares (representing approximately 24.22% of our total
issued Shares upon the Listing (assuming the Over-allotment Option is not
exercised)) will be counted towards the public float for the purpose of Rule 8.08 of
the Listing Rules after the Listing as such Shareholders are not core connected
persons of our Company upon the Listing nor accustomed to take instructions from
our Company’s core connected persons in relation to the acquisition, disposal,
voting or other disposition of their Shares and their acquisition of Shares were not
financed directly or indirectly by our Company’s core connected persons.
The 135,064,706 Domestic Shares that will not be converted into H Shares (representing
approximately 59.79% of our total issued Shares upon the Listing (assuming the Over-
allotment Option is not exercised)) will not be considered as part of the public float as such
Domestic Shares will not be converted into H Shares and will not be listed on the Stock
Exchange following the completion of the Global Offering.
See “Share Capital—Conversion of Domestic Shares into H Shares” for more details of
the H Shares to be converted from Domestic Shares and listed on the Stock Exchange following
the completion of the Global Offering and the Conversion of Domestic Shares into H Shares.
HISTORY AND CORPORATE STRUCTURE
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Special Rights of Our Pre-IPO Investors
In connection with the pre-IPO investments, our Pre-IPO Investors were granted certain
special rights, including, among others, (1) board nomination right, board observer right and
certain other corporate governance rights, (2) right of co-sale, (3) redemption right, (4) right
of first refusal, (5) drag-along right, (6) transfer restriction and (7) share repurchase right. In
anticipation of the Global Offering, all such special rights granted to our Pre-IPO Investors
were terminated as of the date on which the Company submitted to the Stock Exchange its
application for the Listing.
Information regarding Our Principal Pre-IPO Investors
Set out below is a description of our principal Pre-IPO Investors that are sophisticated
investors, being private equity funds and corporations, and that have made meaningful
investments in our Company (each holding more than 1.00% of our total issued and outstanding
Shares immediately prior to the Global Offering). To the best knowledge of our Directors after
making reasonable enquiries, our Pre-IPO Investors (other than Alibaba and Mr. Huang Miao)
are independent third parties.
Alibaba
Alibaba is an indirectly wholly-owned subsidiary of Alibaba Group Holding Limited
(“Alibaba Holding,” together with its subsidiaries, “Alibaba Group”), a company incorporated
in the Cayman Islands, with its American depositary shares, each representing eight ordinary
shares, listed on the New Y ork Stock Exchange (stock symbol: BABA), and its ordinary shares
listed on the Main Board of the Stock Exchange (stock code: 9988). Alibaba Group’s mission
is to make it easy to do business anywhere. Alibaba Group aims to build the future
infrastructure of commerce and envisions that its customers will meet, work and live at
Alibaba, and that it aspires to be a good company that will last for 102 years. Alibaba Group’s
businesses are comprised of commerce, cloud computing, digital media and entertainment and
innovation initiatives.
Alibaba was as of the Latest Practicable Date and will be upon the Listing a substantial
Shareholder and will become a connected person of our Company upon the Listing.
Fosun
Fosun High-Tech, a limited liability company incorporated under the laws of the PRC, is
a directly wholly-owned subsidiary of Fosun International Limited (ʮ̡), a
company listed on the Main Board of the Stock Exchange (stock code: 656) with its principal
business to create C2M ecosystems in health, happiness and wealth.
HISTORY AND CORPORATE STRUCTURE
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Fosun Weishi is a fund in a form of limited partnership established under the laws of the
PRC. The general partner of Fosun Weishi is Shanghai Fosun Weishi Investment Management
Co., Ltd. (ʮ̡), an indirectly non-wholly-owned subsidiary of
Fosun International Limited.
Fosun VC Investment is a fund in a form of limited partnership established under the laws
of the PRC, with Wuxi Fosun Enterprise Management Partnership (Limited Partnership) ( ೌ፼
Άุ၍ଣΥྫΆุ(Υྫ)) acting as its general partner. The general partner of Wuxi
Fosun Enterprise Management Partnership (Limited Partnership) is Y adong Fosun Industrial
Technology Development Co., Ltd. (ʮ̡), an indirectly wholly-
owned subsidiary of Fosun International Limited.
Beijing Xingshi is a limited partnership established under the laws of the PRC. Its general
partner is Beijing Xingyuan Innovation Equity Investment Fund Management Co., Ltd. ( ̏ԯ
ʮ̡), which is owned by Shanghai Fosun Health Industry
Holding Co., Ltd. (ʮ̡) as to 70%. Shanghai Fosun Health
Industry Holding Co., Ltd. is a directly wholly-owned subsidiary of Fosun High-Tech.
SCGC Group
SCGC is a limited liability company incorporated in the PRC, originally co-founded by
State-owned Assets Supervision and Management Commission of Shenzhen Municipal
People’s Government (ึ), who still holds a 28.20% equity
interest as its largest shareholder, and a group of private partners in 1999. SCGC is now a
state-owned and independently-managed venture capital investment institution with around
RMB442.4 billion under management and primarily invests in innovative high-tech companies
in the emerging industries in their start-up, growth or pre-IPO stage, including investments in
IT, new media, healthcare, new energy, environment protection, chemical engineering, new
material, advanced manufacturing, consumer goods, etc.
Shenzhen Hongtu and Dongguan Hongtu are funds in a form of limited partnership
established under the laws of the PRC and managed by their respective general partners,
Shenzhen Hongtu Intelligent Equity Investment Management Co., Ltd. (ᛆ
ʮ̡) and Dongguan Hongtu Equity Investment Management Co., Ltd. (ߎ
ʮ̡). Shenzhen Hongtu Intelligent Equity Investment Management Co.,
Ltd. and Dongguan Hongtu Equity Investment Management Co., Ltd. are indirectly wholly-
owned subsidiaries of SCGC.
Shenzhen Oriental Fortune and SME Fund
Shenzhen Oriental Fortune and SME Fund, both of which are limited partnerships
established under the laws of the PRC, are venture capital investment funds managed and
controlled by their respective general partners, Shenzhen Oriental Fortune V enture Capital
Investment Management Co., Ltd. (ʮ̡) and Shenzhen
Fortune SME Development Fund Equity Investment Management Co., Ltd. ( ଉέ̹బऎʕʃ
HISTORY AND CORPORATE STRUCTURE
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--- page 190 ---
ʮ̡). Shenzhen Oriental Fortune V enture Capital Investment
Management Co., Ltd. is a wholly-owned subsidiary of Shenzhen Oriental Fortune Capital
Investment Management Co., Ltd. (ʮ̡) (“Oriental
Fortune Capital”), by which SME Fund is ultimately controlled. Oriental Fortune Capital is a
limited liability company incorporated under the laws of the PRC and a reputable venture
capital institutional investor with a focus on small and medium sized growth-oriented
companies.
Jiuzhao
Jiuzhao Y aquan, Pingxiang Jiuzhao, Jiuzhao Anyuan, Jiuzhao Y unlian and Jiuzhao
Hexuan are funds in a form of limited partnership established under the laws of the PRC and
managed by their general partner, Kunshan Jiuzhao Kangqian Investment Management Co.,
Ltd. (ʮ̡), which is owned as to 51%, 39% and 10% by Ms. Chen
Y anfei (࠭Mr. Shen Hongli (л) and Ms. Wang Y uxia (ᒳ), respectively.
Dazhong Public
Dazhong Public is a leading public utility service provider in Shanghai incorporated
under the laws of the PRC and listed on the Stock Exchange (stock code: 1635) and the
Shanghai Stock Exchange (stock code: 600635). It complements its operations with strategic
and financial investments in its associated companies in public utility and other industries.
Gongtong Jiayuan
Gongtong Jiayuan is an investment company incorporated under the laws of the PRC and
indirectly wholly-owned by Greater Bay Area Homeland Investments Limited (࢕
ʮ̡). Greater Bay Area Homeland Investments Limited is a company incorporated
in Hong Kong with limited liability that is owned by a number of international large-scale
industrial institutions, financial institutions and new economic enterprises, each of which holds
less than 15% shareholding in Greater Bay Area Homeland Investments Limited.
Hongzheng Junfang
Hongzheng Junfang is an investment company incorporated under the laws of the PRC
and a directly wholly-owned subsidiary of Hongta Securities Co., Ltd. (ʮ
̡), a company listed on the Shanghai Stock Exchange (stock code: 601236) and a securities
company in the PRC.
HISTORY AND CORPORATE STRUCTURE
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Shanghai Guoxin
Shanghai Guoxin is an investment company incorporated under the laws of the PRC and
an equity investment platform indirectly wholly owned by the State-owned Assets Supervision
and Administration Commission of the People’s Government of Shanghai Municipality ( ɪऎ
ึ), with a focus on high-tech industries and financial and
modern service industries.
Watertek
Watertek is a PRC company listed on the Shenzhen Stock Exchange (stock code: 300324).
It is principally engaged in, among others, the provision of information security and
information service products and platforms in the areas of tax and finance.
As of the Latest Practicable Date, Beijing Watertek Baiwang Technology Co., Ltd. ( ̏ԯ
ʮ̡) (“Beijing Watertek Baiwang”) was a subsidiary of Watertek, and
Baiwang Jinfu Technology Co., Ltd. (ʮ̡) (“Baiwang Jinfu”) was owned
by Beijing Watertek Baiwang and Henan Xuji. Baiwang Jinfu was once a subsidiary of
Watertek. In July 2018, Watertek lost its control over Baiwang Jinfu primarily due to the
decrease of its seats in the board of directors of Baiwang Jinfu, and Watertek has classified
Baiwang Jinfu as a joint venture since then according to Watertek’s annual report for the
financial year 2018. According to the announcement published by Watertek on December 8,
2023, Watertek entered into an equity transfer agreement with Zhejiang Xiaowang Technology
Co., Ltd. (ʮ̡) (“Xiaowang Technology”) on December 8, 2023 to transfer
all of its equity interest in Beijing Watertek Baiwang to Xiaowang Technology. Xiaowang
Technology is a SaaS service provider, which was owned as to 30.35% by Watertek as of the
date of the announcement, with the rest of its equity interest held by nine independent third
parties.
During the Track Record Period, based on reasonable inquiry and publicly available
information, to the best knowledge of the Company, (a) there had not been any sharing of
resources between our Group on the one hand, and Beijing Watertek Baiwang and/or Baiwang
Jinfu on the other hand; (b) Beijing Watertek Baiwang and Baiwang Jinfu did not own any
intellectual property right of any technologies developed or adopted by our Group (or vice
versa) in the operation; (c) save for Ms. Huang Haitao, a former Director who currently serves
as a director of Beijing Watertek Baiwang, our Company is not aware of any overlapping
directors or senior management personnel between our Group on the one hand, and Beijing
Watertek Baiwang and/or Baiwang Jinfu on the other hand; and (d) our Company is not aware
of any relationship (including family, employment, business or financing) between our
Company, its subsidiaries, their shareholders, directors or senior management, or any of the
associates of our Group, on the one hand, and Henan Xuji and/or Xiaowang Technology on the
other hand.
See “—Our Company—Early Shareholding Changes of Our Company” for more details
of Watertek.
HISTORY AND CORPORATE STRUCTURE
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--- page 192 ---
Compliance with the Guide for New Listing Applicants
Based on the documents provided by the Company relating to the pre-IPO investments,
the Sole Sponsor has confirmed that the pre-IPO investments are in compliance with the
Chapter 4.2 of the Guide for New Listing Applicants published by the Stock Exchange.
PRC Legal Advisor’s Confirmation
As advised by our PRC Legal Advisor, the equity transfers and increases in the registered
capital in respect of our Company and our Company’s principal subsidiary, as described above
have been granted all regulatory approvals, registrations or filings in accordance with PRC
laws and regulations.
SHARE INCENTIVE PLATFORMS
In recognition of the contributions of our key employees and consultants and to
incentivize them to further promote our development, we adopted a share incentive scheme (the
“Share Incentive Scheme”) on January 31, 2021, to award the partnership interest in our share
incentive platforms to the scheme participants. As of the Latest Practicable Date, Tianjin
Duoying and its limited partners including Tianjin Shuitong Technology Center (Limited
Partnership) (Ҧʕː(Υྫ)) (“Tianjin Shuitong”), Tianjin Piaoying
Technology Center (Limited Partnership) (Ҧʕː(Υྫ)) (“Tianjin Piaoying”),
Tianjin Piaowang Technology Center (Limited Partnership) (Ҧʕː(Υྫ))
(“Tianjin Piaowang”), Tianjin Piaofu Technology Center (Limited Partnership) (Ҧ
ʕː(Υྫ)) (“Tianjin Piaofu”), and Ningbo Xiu’an and its limited partners including
Tianjin Piaoxiang Technology Center (Limited Partnership) (Ҧʕː(Υྫ))
(“Tianjin Piaoxiang”) and Tianjin Piaohui Technology Center (Limited Partnership) (ୃි
Ҧʕː(Υྫ)) (“Tianjin Piaohui”), were established as our share incentive platforms.
According to the Share Incentive Scheme and the respective grant agreements, our certain
employees and consultant were granted awards and registered as the limited partners of the
relevant share incentive platforms upon grants of their awards. All management and voting
powers of the share incentive platforms are exercised by their sole general partner, Ms. Chen,
according to the respective partnership agreements, whereas the relevant employees and
consultant as the limited partners of such share incentive platforms are entitled to the economic
interest.
HISTORY AND CORPORATE STRUCTURE
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--- page 193 ---
Tianjin Duoying
Tianjin Duoying was established as a limited partnership under the laws of the PRC on
July 27, 2017. As of the Latest Practicable Date, Tianjin Duoying held 6.89% of our Shares.
As of the Latest Practicable Date, the partnership structure of Tianjin Duoying was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Duoying
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 1.79
Tianjin Piaoying Share incentive platform Limited partner 43.16
Tianjin Shuitong Share incentive platform Limited partner 19.00
Tianjin Piaofu Share incentive platform Limited partner 9.58
Tianjin Piaowang Share incentive platform Limited partner 9.38
Ms. Wang Yilin
(ˮᖵᎌ)
External consultant Limited partner 1.34
Mr. Chen Gang
(௓੪)
Procurement director and an
associate of Ms. Chen
Limited partner 0.94
Ms. Shi Haixia
(̦ऎᒳ)
Supervisor Limited partner 0.27
30 other employees N/A Limited partner 14.54
Ningbo Xiu’an
Ningbo Xiu’an was established as a limited partnership under the laws of the PRC on
August 2, 2017. As of the Latest Practicable Date, Ningbo Xiu’an held 9.23% of our Shares.
As of the Latest Practicable Date, the partnership structure of Ningbo Xiu’an was as
follows:
Name Position/function
Capacity of
partnership
interests in
Ningbo Xiu’an
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 14.00
Tianjin Piaoxiang Share incentive platform Limited partner 20.00
Tianjin Piaohui Share incentive platform Limited partner 10.00
Mr. Y ang
Zhengdao
(เ͍༸)
Executive Director Limited partner 22.75
Mr. Zou Y an
(֧)
Executive Director Limited partner 16.50
Four other
employees
N/A Limited partner 16.75
HISTORY AND CORPORATE STRUCTURE
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Tianjin Shuitong
Tianjin Shuitong was established as a limited partnership under the laws of the PRC on
December 15, 2020. Tianjin Shuitong is a limited partner of Tianjin Duoying and held 19.00%
of the partnership interest in Tianjin Duoying as of June 21, 2023.
As of the Latest Practicable Date, the partnership structure of Tianjin Shuitong was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Shuitong
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 3.70
Mr. Zheng Tianhao
(؀)
Joint company secretary Limited partner 0.71
36 other employees N/A Limited partner 95.59
Tianjin Piaoying
Tianjin Piaoying was established as a limited partnership under the laws of the PRC on
December 15, 2021. Tianjin Piaoying is a limited partner of Tianjin Duoying and held 43.16%
of the partnership interest in Tianjin Duoying as of June 21, 2023.
As of the Latest Practicable Date, the partnership structure of Tianjin Piaoying was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Piaoying
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 2.87
Mr. Zou Y an Executive Director Limited partner 10.87
Ms. Jin Xin (㒥) Executive Director Limited partner 10.87
Mr. Hou Shifei (ڨ
࠭)
Vice president, chief financial
officer and Board secretary
Limited partner 7.76
Mr. Li Y unfeng ( ҽ
ࢤ)
Supervisor Limited partner 3.11
23 other employees N/A Limited partner 64.52
HISTORY AND CORPORATE STRUCTURE
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--- page 195 ---
Tianjin Piaowang
Tianjin Piaowang was established as a limited partnership under the laws of the PRC on
December 29, 2021. Tianjin Piaowang is a limited partner of Tianjin Duoying and held 9.38%
of the partnership interest in Tianjin Duoying as of the Latest Practicable Date.
As of the Latest Practicable Date, the partnership structure of Tianjin Piaowang was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin
Piaowang
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 0.0001
Mr. Y ang
Zhengdao
Executive Director Limited partner 50.00
One other
employee
N/A Limited partner 50.00
Tianjin Piaofu
Tianjin Piaofu was established as a limited partnership under the laws of the PRC on
December 23, 2021. Tianjin Piaofu is a limited partner of Tianjin Duoying and held 9.58% of
the partnership interest in Tianjin Duoying as of the Latest Practicable Date.
As of the Latest Practicable Date, the partnership structure of Tianjin Piaofu was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Piaofu
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 5.59
29 other employees N/A Limited partner 94.41
HISTORY AND CORPORATE STRUCTURE
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Tianjin Piaoxiang
Tianjin Piaoxiang is a limited partnership established under the laws of the PRC on
June 15, 2023. Tianjin Piaoxiang is a limited partner of Ningbo Xiu’an and held 20.00% of the
partnership in Ningbo Xiu’an as of the Latest Practicable Date.
As of the Latest Practicable Date, the partnership structure of Tianjin Piaoxiang was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Piaoxiang
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 50.25
38 other employees N/A Limited partner 49.75
Tianjin Piaohui
Tianjin Piaohui is a limited partnership established under the laws of the PRC on June 15,
2023. Tianjin Piaohui is a limited partner of Ningbo Xiu’an and held 10.00% of the partnership
in Ningbo Xiu’an as of the Latest Practicable Date.
As of the Latest Practicable Date, the partnership structure of Tianjin Piaohui was as
follows:
Name Position/function
Capacity of
partnership
interests in
Tianjin Piaohui
Approximate
percentage of
partnership
interests (%)
Ms. Chen Chairlady of our Board,
general manager and
executive Director
General partner 31.75
28 other employees N/A Limited partner 68.25
As advised by our PRC Legal Advisor, during the Track Record Period and up to the
Latest Practicable Date, we had complied with all applicable PRC laws and regulations in
relation to the Company’s current Share Incentive Scheme.
HISTORY AND CORPORATE STRUCTURE
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--- page 197 ---
PROPOSED A SHARE INITIAL PUBLIC OFFERING
On January 7, 2021, we entered into a tutoring agreement with China Securities Co., Ltd.
(ʮ̡) in preparation for the A share listing application (the “Proposed
A Share Listing Application”). Due to the then prolonged and uncertain listing timetable in
light of the overall A share vetting process, and considering that listing on the Stock Exchange
would provide us with an international platform to gain access to foreign capital and to
promote us to overseas investors, in September 2021, we suspended our preparation for the
Proposed A Share Listing Application to seek a listing of our Shares on the Stock Exchange to
expedite our listing plan, and decided not to file the tutoring agreement with the CSRC and
therefore the tutoring has not been commenced in accordance with the terms of the tutoring
agreement. During our preparation for the Proposed A Share Listing Application, save for the
reasons as disclosed above, we did not encounter any material difficulties or legal impediments
which led us to suspend the preparation for the Proposed A Share Listing Application. As of
the Latest Practicable Date, we did not file any A share listing application or any materials for
tutoring and restructuring in preparation for the Proposed A Share Listing Application with any
representative office of the CSRC or domestic stock exchange in the PRC.
To the best of our Directors’ knowledge, the CSRC did not make any comment or enquiry
to us in connection with the Proposed A Share Listing Application, and our Directors are not
aware of (1) any other matters relating to the Proposed A Share Listing Application that are
relevant to the Listing and should be reasonably highlighted in this prospectus for investors to
form an informed assessment of our Company; (2) any enquiries from China Securities Co.,
Ltd. relating to the Proposed A Share Listing Application that would affect our Company’s
suitability for listing on the Stock Exchange; (3) any other matters relating to the Proposed A
Share Listing Application that may have implications on our Company’s suitability for listing
on the Stock Exchange or on the truthfulness, accuracy and completeness of information
disclosed in this prospectus; (4) any disagreement or dispute between us and the professional
parties involving in the Proposed A Share Listing Application; and (5) any other matters that
need to be brought to the attention of the Stock Exchange and investors in Hong Kong in
relation to the Proposed A Share Listing Application.
We plan to resume our preparation for the Proposed A Share Listing Application at an
appropriate time after at least six months after the Listing, subject to the requirements of the
Listing Rules. Notwithstanding the foregoing, there is no assurance that we will conduct an A
share initial public offering in the future.
HISTORY AND CORPORATE STRUCTURE
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--- page 198 ---
CORPORATE STRUCTURE
The following chart sets forth our corporate structure immediately prior to the Global Offering and the Conversion of Domestic Shares into
H Shares:
Baiwang
Huiyan
Beijing Baiwang Jinkong Technology Co., Ltd.
(ʮ̡)(10)
Alibaba(5)
Our Company
11.87%
Other Shareholders(1)
29.69%
Fosun(7)
5.31%
Watertek(6)
9.91%
100%
Beijing Baiwang Enterprise Service
Technology Co., Ltd.
(ʮ̡)(8)
100%
Baiwangyun Technology (Beijing)
Co., Ltd.
(Ҧ(̏ԯ)ʮ̡)(9)
100% 100% 1%
15% 40.26%100% 100% 100% 100% 85%
Suzhou
Baiwang
Huiyan
Information
Technology
Co., Ltd.
(ᘽψϵૐ
ࢹڦ
ࠢ
ʮ̡)
(10)
Baiwangyun
(Hong Kong)
Technology
Co., Limited
(ϵૐථ(࠰
ಥ)ࠢ
ʮ̡)(10)
Jiangsu
Zhishuiyun
Technology
Co., Ltd.
(Ϫᘽ౽೼
Ҧ
ʮ̡)(10)
Chongqing
Zhishuiyun
Technology
Co., Ltd.
(ᅅ౽೼
Ҧ
ʮ̡)(13)
100% 100% 100% 100%
Xi’an
Baiwang
Huiyan
Information
Technology
Co., Ltd.
(Гτϵૐᅆ
ҦϞ
ʮ̡)(10)
Henan
Baiwang
Enterprise
Service Digital
Technology
Co., Ltd.
(ϵૐΆ
ҦϞ
ʮ̡)(11)
Anhui
Zhishuiyun
Information
Technology
Co., Ltd.
(τᏏ౽೼
Ҧ
ʮ̡)(12)
Hangzhou
Baiwangyun
Technology
Co., Ltd.
(ψϵૐ
ࠢ
ʮ̡)(10)
Baiwang
Maoyi
(Suzhou)
Software Co.,
Ltd.
(֝
(ᘽψ)ழ΁Ϟ
ʮ̡)(14)
80% 51%
Hangzhou
Baishangyun
Technology
Co., Ltd.
(ψϵਠ
ࠢ
ʮ̡)(10)(15)
Baiwang
Yunfan
Management
Consulting
Co., Ltd.
(ϵૐථω၍
ࠢ
ʮ̡)(10)(16)
— Equity
Interest
Ms. Chen(2)
Controlling Shareholders
Ningbo Xiu’an(2)(3) Tianjin Duoying(2)(4)
27.10% 9.23% 6.89%
Guangxi
United
Credit
Reporting
Co., Ltd.
(ᄿГᑌΥ
ࠢ
ʮ̡)(17)
Boya
Zhongke
(Beijing)
Information
Technology
Co., Ltd.
(߅
(̏ԯ)ࢹڦ
ࠢ
ʮ̡)(17)
99% Tianjin Bantu Technology Center
(Limited Partnership)
(Ҧʕː(Υྫ))(10)
(1) As of the Latest Practicable Date, 43 other Shareholders who are also our Pre-IPO Investors each held less than 5% shareholding of our Company. See “ —Pre-IPO
Investments” for details.
(2) See “—Our History and Development—Overview” for the relationship among Ms. Chen, Ningbo Xiu’an and Tianjin Duoying.
(3) See “—Share Incentive Platforms—Ningbo Xiu’an” for the shareholding structure of Ningbo Xiu’an.
(4) See “—Share Incentive Platforms—Tianjin Duoying” for the shareholding structure of Tianjin Duoying.
(5) See “—Pre-IPO Investors—Information regarding Our Principal Pre-IPO Investors—Alibaba” for the shareholding structure of Alibaba.
HISTORY AND CORPORATE STRUCTURE
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--- page 199 ---
(6) See “—Our Company—Early Shareholding Changes of Our Company” for the shareholding structure of Watertek.
(7) See “—Pre-IPO Investors—Information regarding Our Principal Pre-IPO Investors—Fosun” for the shareholding structure of Fosun.
(8) Beijing Baiwang Enterprise Service Technology Co., Ltd. is primarily engaged in the provision of technology development services.
(9) Baiwangyun Technology (Beijing) Co., Ltd., is primarily engaged in the provision of technology development services.
(10) Such subsidiaries of our Company did not have any substantial operation during the Track Record Period and up to the Latest Practicable Date.
(11) Henan Baiwang Enterprise Service Digital Technology Co., Ltd. is primarily engaged in the provision of technology development services.
(12) Anhui Zhishuiyun Information Technology Co., Ltd. is primarily engaged in the provision of supply chain collaboration solutions.
(13) Chongqing Zhishuiyun Technology Co., Ltd. is primarily engaged in the provision of the contingent workforce management services.
(14) Baiwang Maoyi (Suzhou) Software Co., Ltd. is primarily engaged in the provision of financial & tax digitalization solutions. As of the Latest Pra cticable Date, 15% of
the equity interest in Baiwang Maoyi (Suzhou) Software Co., Ltd. was owned by Shanghai Yiqin Software Co., Ltd. (ʮ̡). Shanghai Yiqin Software
Co., Ltd. was in turn owned by Tradeshift Asia Holdings Limited, an independent third party, as to 95.00%, and Beijing Baiwang Jinkong Technology Co., Ltd., a
subsidiary of our Company, as to 5.00%. Tradeshift Asia Holdings Limited was indirectly wholly owned by Tradeshift Holdings Inc., an independent thi rd party.
(15) As of the Latest Practicable Date, the entire remaining equity interest in Hangzhou Baishangyun Technology Co., Ltd. was owned by China Industry and Commerce Press
Co., Ltd. (ʮ̡), an independent third party (except for its interest in Hangzhou Baishangyun Technology Co., Ltd.). China Industry and Commerce
Press Co., Ltd. was directly wholly owned by the State Council.
(16) As of the Latest Practicable Date, the entire remaining equity interest in Baiwang Y unfan Management Consulting Co., Ltd. was owned by Beijing Ho ngfan Enterprise
Consulting Co., Ltd. (ʮ̡), an independent third party (except for its interest in Baiwang Y unfan Management Consulting Co., Ltd.). Beijing
Hongfan Enterprise Consulting Co., Ltd. was owned by Mr. Lan Benjun (ࠏand Mr. Lan Zimai ( ᚆɿ௥), both of whom are independent third parties, as to 90%
and 10%, respectively.
(17) See “—Our Principal Associated Companies and Joint V entures” for details.
HISTORY AND CORPORATE STRUCTURE
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--- page 200 ---
The following chart sets forth our corporate structure immediately after the completion of the Global Offering and the Conversion of Domestic
Shares into H Shares, without taking into account any H Shares which may be issued upon the exercise of the Over-allotment Option:
Alibaba(5)(19)
Participants of the
Global Offering
11.39% 4.10%
Our Company
Ms. Chen(2)(18) Ningbo Xiu’an(2)(3)(19) Tianjin Duoying(2)(4)(19)
25.98% 8.85% 6.61%
Controlling Shareholders
28.47%
Watertek(6)(19)
9.50%
Other existing
Shareholders(1)(19)Fosun(7)(19)
5.10%
Baiwang
Huiyan
Beijing Baiwang Jinkong Technology Co., Ltd.
(ʮ̡)(10)
100%
Beijing Baiwang Enterprise Service
Technology Co., Ltd.
(ʮ̡)(8)
100%
Baiwangyun Technology (Beijing)
Co., Ltd.
(Ҧ(̏ԯ)ʮ̡)(9)
100% 100%
100% 100% 100% 100% 85%
Suzhou
Baiwang
Huiyan
Information
Technology
Co., Ltd.
(ᘽψϵૐ
ࢹڦ
ࠢ
ʮ̡)
(10)
Baiwangyun
(Hong Kong)
Technology
Co., Limited
(ϵૐථ(࠰
ಥ)ࠢ
ʮ̡)(10)
Jiangsu
Zhishuiyun
Technology
Co., Ltd.
(Ϫᘽ౽೼
Ҧ
ʮ̡)(10)
Chongqing
Zhishuiyun
Technology
Co., Ltd.
(ᅅ౽೼
Ҧ
ʮ̡)(13)
100% 100% 100% 100%
Xi’an
Baiwang
Huiyan
Information
Technology
Co., Ltd.
(Гτϵૐᅆ
ҦϞ
ʮ̡)(10)
Henan
Baiwang
Enterprise
Service Digital
Technology
Co., Ltd.
(ϵૐΆ
ҦϞ
ʮ̡)(11)
Anhui
Zhishuiyun
Information
Technology
Co., Ltd.
(τᏏ౽೼
Ҧ
ʮ̡)(12)
Hangzhou
Baiwangyun
Technology
Co., Ltd.
(ψϵૐ
ࠢ
ʮ̡)(10)
Baiwang
Maoyi
(Suzhou)
Software Co.,
Ltd.
(֝
(ᘽψ)ழ΁Ϟ
ʮ̡)(14)
80% 51%
Hangzhou
Baishangyun
Technology
Co., Ltd.
(ψϵਠ
ࠢ
ʮ̡)(10)(15)
Baiwang
Yunfan
Management
Consulting
Co., Ltd.
(ϵૐථω၍
ࠢ
ʮ̡)(10)(16)
— Equity
Interest
Tianjin Bantu Technology Center
(Limited Partnership)
(Ҧʕː(Υྫ))(10)
99%
1%
15% 40.26%
Guangxi
United
Credit
Reporting
Co., Ltd.
(ᄿГᑌΥ
ࠢ
ʮ̡)(17)
Boya
Zhongke
(Beijing)
Information
Technology
Co., Ltd.
(߅
(̏ԯ)ࢹڦ
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̡)(17)
(1) to (17) See notes to the corporate structure chart on pages 188 to 189.
(18) The entire Shares held by Ms. Chen will not convert into H Shares upon the completion of the Global Offering and the Conversion of Domestic Shares in to H Shares.
(19) Immediately upon the completion of the Global Offering and the Conversion of Domestic Shares into H Shares, 81,580,048 Domestic Shares (represe nting 36.11% of
total issued Shares of the Company upon completion of the Conversion of Domestic Shares into H Shares and the Global Offering (assuming the Over-allot ment Option
is not exercised)) held by 50 existing Shareholders prior to the conversion will be converted into H Shares. Such Conversion of Domestic Shares into H S hares has been
approved by the CSRC on January 2, 2024 and is still subject to the approval by the Stock Exchange. See “Share Capital–Conversion of Domestic Shares int o H Shares”
for the respective numbers of Domestic Shares and H Shares held by the relevant Shareholders and the corresponding percentages of such Shares in the to tal issued share
capital of our Company immediately after the Global Offering and the Conversion of Domestics Shares into H Shares (assuming the Over-allotment Optio n is exercised).
HISTORY AND CORPORATE STRUCTURE
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OVERVIEW
We are an enterprise digitalization solutions provider in China, focusing on offering SaaS
financial & tax digitalization and data-driven analytics services through our Baiwang Cloud
platform. We process a variety of transaction documents, including among others, invoices,
receipts, bills, and other accounting records, that accurately reflect key business transactions
of enterprises. Empowered by insights into voluminous transaction data and equipped with big
data analytics capabilities, we facilitate the automated and digitalized business decision-
making by financial service providers and other enterprise customers. We have achieved the
leadership position in the markets we operate in, as evidenced by the following, according to
the F&S Report:
 we ranked first in China’s cloud financial and tax-related transaction digitalization
market in 2023 in terms of revenue, representing a market share of 7.1%, and second
in China’s financial and tax-related transaction digitalization market in 2023 in
terms of revenue, representing a market share of 4.9%
(1);
 we ranked first among financial and tax-related transaction digitalization solution
providers in China, with approximately 0.7 billion invoice processing requests
fulfilled through our cloud solutions in 2023;
 we ranked second among financial and tax-related transaction digitalization solution
providers in China, with approximately 2.6 billion V A T invoices issued through our
cloud solutions in 2023; and
 we ranked second in China’s transaction-based big data analytics for SMB financing
market in 2023 in terms of revenue, representing a market share of 6.4%
(2).
(1) The market size of China’s financial and tax-related transaction digitalization market, as a percentage
of the total transaction digitalization market in China in terms of revenue, was 4.0% and 3.4% in 2019
and 2023, respectively, and is expected to increase to 8.7% in 2028. The market size of China’s financial
and tax-related transaction digitalization market, as a percentage of the total enterprise digitalization
market in China in terms of revenue, remained relatively stable at 1.0% and 0.9% in 2019 and 2023,
respectively, and is expected to increase to 2.6% in 2028.
(2) The market size of China’s transaction-based big data analytics for SMB financing market, as a
percentage of the total big data analytics for SMB financing market in China in terms of revenue,
remained relatively stable at 20.5% in 2019 and 19.5% in 2023, and is expected to increase to 24.1%
in 2028.
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The following diagram illustrates our key operating achievements during the periods
indicated.
366
KA customers in 2023, with
~47.3 million
Tax identification numbers
~20,730
Mid-market customers in 2023
~23.9 million
Non-paying users in 2023
101.9 million
Enterprises whose business activities
were covered by December 31, 2023, with
90.2 million buyer-side enterprises
33.7 million seller-side enterprises
~639.9 trillion
Accumulated underlying transaction
value of transaction documents
processed by December 31, 2023
~14.3 billion
Accumulated transaction documents
processed by December 31, 2023
123.6%
Average dollar-based retention rate of KA customers
for cloud solutions in 2021-2023
Data assets
134
Customers in 2023
~17.5 million
Viewing requests fulfilled for enterprise operation reports in 2023
~2.6 million
Enterprises included in enterprise operation reports in 2023
40.5%
Revenue CAGR 2021-2023
Financial & tax digitalization solutions Data-driven analytics services
Since our inception, we have strategically leveraged information security and compliance
technologies, which we believe are an indispensable component of the digital transaction
infrastructure, to facilitate the digitalized processing and circulation of transaction documents.
We have launched a suite of digitalization solutions covering the key processes of enterprise
transactions, from procurement, billing, invoicing, to automated management of account
receivables and payables and tax filings. As we continue to provide financial & tax
digitalization solutions and with proper authorization from customers and users, we have
access to a massive volume of transaction documents and data, including 14.3 billion
transaction documents processed by us, covering business activities of 101.9 million
enterprises as of December 31, 2023.
We have attracted a large base of KA customers, including some of the largest commercial
banks, insurance companies, internet giants, and other industry-leading corporate
conglomerates in China. The industry know-how and reputation accumulated through serving
these KA customers have allowed us to attract a growing number of mid-market customers and
further penetrate into more industry verticals. In 2023, with our cloud financial & tax
digitalization solutions, we served 366 KA customers comprising distinct legal entities with
approximately 47.3 million tax identification numbers, approximately 20,730 mid-market
customers, and approximately 23.9 million non-paying users, which are primarily small and
micro-sized businesses.
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Leveraging our big data analytics technology, we have developed data-driven analytics
services that facilitate the optimization of decision making and risk management of financial
service providers and other enterprises across industries. In 2023, we served 134 customers
with our data-driven analytics services, and we fulfilled approximately 17.5 million viewing
requests for enterprise operation reports, with approximately 2.6 million enterprises included
in the enterprise operation reports.
Our Market Opportunities
We have capitalized on the favorable government policies driving the development of
China’s financial and tax-related transaction digitalization market to rapidly grow our
business. See “Industry Overview—China’s Financial and Tax-related Transaction
Digitalization Market—Background of China’s Financial and Tax-related Transaction
Digitalization Market—History of Golden Tax Project in China” for details.
The adoption and proliferation of e-invoices and digital invoices have facilitated the
digital transformation of enterprises’ financial and tax management. Driven by enterprises’
growing demands for operational efficiency, cost-saving and compliance, China’s financial and
tax-related transaction digitalization market, in term of revenue, increased from RMB5.1
billion in 2019 to RMB7.2 billion in 2023, at a CAGR of 9.2%, and is expected to reach
RMB34.3 billion in 2028, at a CAGR of 36.5% from 2023 to 2028. The market size of China’s
financial and tax-related transaction digitalization market, as a percentage of the total
transaction digitalization market in China in terms of revenue, was 4.0% and 3.4% in 2019 and
2023, respectively, and is expected to increase to 8.7% in 2028. The market size of China’s
financial and tax-related transaction digitalization market, as a percentage of the total
enterprise digitalization market in China in terms of revenue, remained relatively stable at
1.0% and 0.9% in 2019 and 2023, respectively, and is expected to increase to 2.6% in 2028.
In an effort to facilitate economic growth and promote employment, the PRC government
has continued to promote SMB financing. However, due to the massive number of small and
micro-sized businesses in China and the lack of objective and reliable metrics to assess their
financial condition, financial service providers are in dire need of comprehensive risk
management capabilities to accurately evaluate the financial condition of small and micro-
sized businesses to make informed lending decisions. By using big data analytics as a solution
to examine the transaction nature, amount, frequency and other transaction information of
small and micro-sized businesses as reflected in their transaction documents, financial service
providers are able to discern their scales and transaction patterns and identify their potential
financing needs and the associated credit risks.
Driven by the development of SMB financing in China, big data analytics solutions have
been quickly adopted by financial service providers in China for cost-effective risk
management and customer acquisition. China’s transaction-based big data analytics for SMB
financing market, in terms of revenue, increased from RMB1.8 billion in 2019 to RMB5.5
billion in 2023, at a CAGR of 32.7%, and is expected to reach RMB19.0 billion in 2028, at a
CAGR of 28.0% from 2023 to 2028. The market size of China’s transaction-based big data
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analytics for SMB financing market, as a percentage of the total big data analytics for SMB
financing market in China in terms of revenue, remained relatively stable at 20.5% in 2019 and
19.5% in 2023, and is expected to increase to 24.1% in 2028.
China’s financial and tax-related transaction digitalization market and transaction-based
big data analytics for SMB financing market are relatively fragmented with increasingly
intense market competition. Top five players in China’s financial and tax-related transaction
digitalization market accounted for 21.4% of total market share in terms of revenue in 2023,
with more than 100 market players competing in such market in 2023, according to the F&S
Report. Top five players in China’s transaction-based big data analytics for SMB financing
market accounted for 22.7% of total market share in terms of revenue in 2023, with more than
150 market players competing in such market in 2023, according to the same source.
Our Path of Evolution
Since our inception, we have closely tracked the development of China’s financial and
tax-related transaction digitalization market, and promoted market development through the
following stages.
Early stage (from 2015 to 2020). In 2015, we began to develop on-premises applications
for digitalized and centralized invoice and tax management to leverage the vast market
opportunities brought about by the Business Tax to V alue-Added Tax reform, which created
substantial needs for enterprises to centralize management of financial and tax matters. We
primarily focused on industry-leading companies and corporate conglomerates, and quickly
accumulated numerous industry-leading customers. Following multiple government initiatives
to promote tax digitalization and e-invoices, we began to develop our cloud solutions and
digitalized financial and tax management capabilities to meet the growing demand of
enterprises to switch from paper invoices to e-invoices in their daily operations. In 2015, we
established Baiwang Cloud platform and have since attracted a large number of mid-market
customers and non-paying users, and grown to be China’s largest provider for cloud financial
and tax-related transaction digitalization solutions, according to the F&S Report.
Current stage and future development . Starting from 2021, the recent development of
Golden Tax Project has further stimulated the digital transformation of enterprises’ financial
and tax management. See “Industry Overview—China’s Financial and Tax-related Transaction
Digitalization Market—Background of China’s Financial and Tax-related Transaction
Digitalization Market—History of Golden Tax Project in China” for details. To seize the
significant market potential and further enlarge our market share, we have continuously
strengthened our financial & tax digitalization solutions and promoted the adoption of
e-invoices and digital invoices in various business transaction processes. Leveraging our
technology innovation capability and industry experience, we, together with another software
and technology company, which is a Chinese state-owned enterprise specializing in the
provision of IT infrastructure services, such as those in relation to operating system and
database, became the joint bid-winner, joint developer and the exclusive service providers for
the SA T in relation to the system application development of the Digital Invoice Service
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Platform in 2021. In the meantime, catering to the promotion of SMB financing and leveraging
our experiences serving small and micro-sized businesses, we have strategically strengthened
our data-driven analytics services that empower financial service providers in terms of user
acquisition and risk management.
Our Business Model
We have strategically developed our proprietary Baiwang Cloud platform, which is a
technology-integrated business platform encompassing digital certificate, digital signature,
open fixed-layout document (“OFD”), big data analytics, AI and blockchain. Baiwang Cloud
platform enables us to provide customers in an array of industry verticals with modularized
solutions, including: (1) financial & tax digitalization solutions, delivered in cloud and
on-premises applications and compatible with e-invoices and digital invoices, consisting of tax
invoice compliance management, financial and tax management and supply chain collaboration
solutions, and (2) data-driven analytics services, consisting of digital precision marketing
services and risk management services. During the Track Record Period, we generated revenue
primarily through charging (i) annual subscription fees, usage-based fees, sales-based fees and
solution delivery fees for cloud financial & tax digitalization solutions, (ii) sales-based fees,
annual subscription fees, usage-based fees and project-based fees for our data-driven analytics
services, and (iii) software license fees, implementation fees, annual maintenance fees and
hardware equipment fees for on-premises financial & tax digitalization solutions. The
following diagram sets forth the key aspects of our business model.
AI
Big data
analyticsOFD
Digital
signature
Supply chain
collaboration
Tax invoice compliance
management
Financial and tax
management
Risk management
Digital precision
marketing
Financial & tax
digitalization solutions
Data-driven
analytics services
Customers and users across various industry sectors
KA customers
Mid-market customers
and non-paying users
Financial service providers
Data assets
Baiwang Cloud platform
Digital
certificate Blockchain
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Our Financial & Tax Digitalization Solutions
Tax invoice compliance management solutions (ࣩOur tax invoice
compliance management solutions enable enterprise customers to digitalize the full-cycle tax
invoice management, from issuance, circulation, analysis to archiving, to help enterprises
improve their operational efficiency, cost-saving and compliance. Our tax invoice compliance
management solutions enable customers to issue, deliver and manage tax invoices in a
centralized, automated manner through a unified channel, featuring the automated tax invoice
processing function and tax invoice compliance control function, which allow customers to
conveniently manage their tax invoice issuance activities and improve compliance with invoice
and tax laws. We generally charge annual subscription fee, usage-based fee and solution
delivery fees for our tax invoice compliance management solutions. The number of V A T
invoices issued through our cloud solutions in 2023 was approximately 2.6 billion,
representing an aggregate transaction amount of approximately RMB123.1 trillion. In addition
to our chargeable tax invoice compliance management solutions, we have developed an array
of complimentary applications with basic tax invoice generation, printing, search and delivery
functions, which shall be provided to users free of charge pursuant to the applicable PRC rules
and regulations.
Financial and tax management solutions (ࣩOur financial and tax
management solutions streamline, digitalize and automate enterprise spending and tax
management processes, including tax invoice collection, verification and certification,
expenditure management, electronic accounting archiving and tax filing, which enable
enterprises to gain greater control of spending, achieve cost savings, optimize tax management
and improve management efficiency. We generally charge annual subscription fee, usage-based
fee and solution delivery fees for our financial and tax management solutions. The number of
invoice processing requests fulfilled through our cloud solutions in 2023 was approximately
0.7 billion, and the transaction amount underlying the invoices processed was approximately
RMB78.5 trillion.
Supply chain collaboration solutions (ࣩOur supply chain
collaboration solutions connect enterprises with their business partners along the supply
chains, automate account payment management process and streamline settlement
collaboration among transaction parties. We generally charge sales-based fees and solution
delivery fees for our supply chain collaboration solutions. As of December 31, 2023,
transactions with an aggregated amount of approximately RMB117.7 billion had been
processed with our supply chain collaboration solutions.
Our Data-driven Analytics Services
Digital precision marketing services (ਕ). Our digital precision
marketing services connect eligible potential users with suitable financial products and
empower financial service providers to effectively identify, access and acquire users of
financial products. In provision of our digital precision marketing services, we engage
marketing agents to identify potential product users and facilitate such potential users to
register on our platform and fill in financial product applications. We generally charge
sales-based fees for our digital precision marketing services. During the Track Record Period,
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nearly all of our revenue from digital precision marketing services was attributable to fees
charged to financial service providers for sales of financial products facilitated by us to users
referred by our marketing agents.
Risk management services (ਕ). Our risk management services primarily
comprise enterprise operation reporting services, user analytics services, risk analytics services
and procurement optimization services. Our enterprise operation reporting services enable
financial service providers to develop comprehensive and meaningful understanding of
relevant enterprises’ operational performance and financial well-being as reflected in their
digital transaction documents. Our user analytics services identify potential users of financial
products based on our analysis of their transaction data, and facilitate the user acquisition by
financial service providers. Our risk analytics services devise and configure risk management
system for financial service providers, and enable them to optimize their risk control strategies
and enhance their ability to independently monitor, detect and manage risks. Our procurement
optimization services compute average merchandise prices with our big data algorithm and
serve as market price references for our customers and empower better procurement decisions
and cost savings. We generally charge annual subscription fees, usage-based fees and
project-based fees for our risk management services.
Our Data Assets
We process a variety of transaction documents, including among others, invoices,
receipts, bills, and other accounting records, that accurately reflect key business activities. As
of December 31, 2023, we had processed approximately 14.3 billion transaction documents,
covering business activities of approximately 101.9 million enterprises, including
approximately 90.2 million buyer-side enterprises and approximately 33.7 million seller-side
enterprises, and representing transactions with an aggregate value of approximately RMB639.9
trillion. Leveraging our AI and big data capabilities, we generate differentiated and rich data
insights into both internal business operations and transactions among enterprises. Our data
assets continue to grow with the growing number and engagement of our customers, which
have enabled us to continually expand and upgrade our solution and service offerings.
Our Financial Track Record
We experienced significant growth during the Track Record Period. In 2021, 2022 and
2023, our total revenue was RMB453.8 million, RMB525.8 million and RMB713.0 million,
respectively. Our gross profit was RMB216.2 million, RMB214.3 million and RMB282.0
million in 2021, 2022 and 2023, respectively. We recorded net loss of RMB448.4 million,
RMB156.2 million and RMB359.3 million in 2021, 2022 and 2023, respectively. We recorded
adjusted net loss (non-IFRS measure) of RMB16.7 million, RMB70.3 million and RMB83.4
million in 2021, 2022 and 2023, respectively. See “Financial Information—Consolidated
Statements of Profit or Loss and Other Comprehensive Income—Non-IFRS Measure” for
details.
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Our Key Operating Data
The following table sets forth the key operating metrics of our cloud financial & tax
digitalization solutions, data-driven analytics services and on-premises financial & tax
digitalization solutions for the periods indicated.
Y ear ended December 31,
2021 2022 2023
Cloud financial & tax digitalization
solutions
Number of customers
— KA customers 205 217 366
— Mid-market customers 12,163 14,591 20,734
Number of non-paying users (in
million) 7.7 17.0 23.9
Number of tax identification numbers
served (in million) 35.3 40.5 47.3
Average revenue per customer
(RMB in thousands) 12.7 10.7 10.4
Number of retained customers
(1) 9,282 11,510 13,273
Dollar-based retention rate for KA
customers 119.7% 104.4% 146.7%
Dollar-based retention rate for
mid-market customers (2) 90.2% 96.5% 91.1%
Dollar-based retention rate (3) 102.0% 84.5% 116.9%
Conversion rate for non-paying users (4) 0.05% 0.07% 2.8%
Data-driven analytics services
Number of customers 91 101 134
Average revenue per customer
(RMB in thousands) 1,962.6 2,609.1 2,630.0
Number of viewing requests fulfilled
for enterprise operation reports
(in millions) 15.5 13.0 17.5
Number of enterprises included in the
enterprise operation reports
(in thousands) 1,318.5 1,553.0 2,645.0
Average price charged for each
enterprise included in the enterprise
operating reports RMB48.0 RMB47.8 RMB40.1
V alue of financial product sales
facilitated by us in connection with
digital precision marketing services
(RMB in billions) 14.7 29.6 41.6
Number of retained customers
(1) 58 75 68
Dollar-based retention rate (3) 221.5% 135.8% 120.3%
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Y ear ended December 31,
2021 2022 2023
On-premises financial & tax
digitalization solutions
Number of customers 917 1,309 2,051
Average revenue per customer
(RMB in thousands) 120.1 71.4 67.3
Number of retained customers
(1) 480 600 719
Dollar-based retention rate (2) 82.8% 67.5% 94.5%
(1) Represent the number of customers in a given year who were also our customers in the preceding year.
(2) Represent the quotient with the numerator being revenue from mid-market customers in a given year,
who are also mid-market customers in the preceding year, and the denominator being revenue from the
same group of customers in the preceding year.
(3) Represent the quotient obtained from dividing revenue in a given year by the relevant revenue generated
from the same group of customers in the preceding year.
(4) Represent the quotient with the denominator being (A) the number of tax identification numbers
registered on our platform in a given year that initially only used our complimentary services, and the
numerator being (B) the number of tax identification numbers in (A) that later purchased our chargeable
services in the same year.
Under our cloud financial & tax digitalization solutions, the numbers of KA customers
and mid-market customers generally increased during the Track Record Period, primarily due
to the increase in customer demands for our solutions. The number of our non-paying users
surged in 2022 and continued to increase in 2023, primarily due to our enhanced marketing
efforts to attract non-paying users. Our dollar-based retention rate for KA customers decreased
in 2022, primarily due to delay in project delivery and the decrease in demand from KA
customers for digital invoice-related services, both as a result of the adverse impact of the
COVID-19 pandemic. The dollar-based retention rate for KA customers increased significantly
in 2023, primarily due to the combined effects of the increase in completion of project delivery
after the pandemic and the resurgence in customer demand among KA customers due to the
pilot implementation of the digital invoice reform in 2023. Our dollar-based retention rate for
mid-market customers remained relatively stable at 90.2%, 96.5% and 91.1% in 2021, 2022
and 2023, respectively, and was lower than 100% during the Track Record Period, because we
strategically lowered our solution pricing to incentivize customer purchases. The general
decrease in average revenue per customer for our cloud financial & tax digitalization solutions
from RMB12.7 thousand in 2021 to RMB10.4 thousand in 2023 was primarily because there
was a decrease in overall enterprise budget allocated for financial and tax digitalization
solutions primarily among KA customers. Moreover, the digital invoice reform brought about
an increase in the number of market participants in the financial and tax digitalization market,
and the intensified market competition has caused a decrease in average price charged for
financial and tax digitalization solutions. However, as the digital invoice reform continues to
deepen as promoted by national policies, we expect to see increasing adoption of digital
invoices and expanded use scenes of digital invoices in enterprises’ financial and tax
management. The number of retained customers for cloud financial & tax digitalization
solutions increased during the Track Record Period, primarily due to increasing customer
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stickiness for our solutions. Dollar-based retention rate for cloud financial & tax digitalization
solutions decreased in 2022, primarily due to the adverse impact of the COVID-19 pandemic.
Dollar-based retention rate for cloud financial & tax digitalization solutions increased in 2023,
primarily due to the increase in customer demands for our solutions as our customers gradually
recovered from the adverse impact of the COVID-19 pandemic. The conversion rate for
non-paying users remained relatively stable at 0.05% and 0.07% in 2021 and 2022,
respectively, and increased significantly to 2.8% in 2023, primarily due to our expanded
marketing efforts, especially with the assistance with our business collaborators, that converted
user accounts with non-paying tax identification numbers.
The number of customers for our data-driven analytics services increased from 101 in
2022 to 134 in 2023, which was generally in line with our business growth in offering
data-driven analytics services. The average revenue per customer for our data-driven analytics
services was approximately RMB2.0 million, RMB2.6 million and RMB2.6 million in 2021,
2022 and 2023, respectively. The number of enterprises included in the enterprise operation
reports generally increased during the Track Record Period, primarily due to the increase in
customer demand for our reports and our expanded access to enterprises with financing needs.
Average price charged for each enterprise included in the enterprise operating reports generally
decreased during the Track Record Period, primarily because we granted more favorable
subscription and usage-based packages to customers to incentivize them to use our services.
The value of financial product sales facilitated by us in connection with digital precision
marketing services significantly increased during the Track Record Period, primarily due to our
broadened access to potential financial product users as a result of our collaboration with
marketing agents and the increase in SMB financing needs. The number of retained customers
for data-driven analytics services increased from 58 in 2021 to 75 in 2022, driven by the
increase in customer demands for our services. The number of retained customers for
data-driven analytics services decreased to 68 in 2023, and the decrease primarily related to our
risk management services, as certain customers for our project-based services ceased to be our
customers once the projects were delivered. Dollar-based retention rate for data-driven
analytics services decreased during the Track Record Period, primarily due to the slowed
growth rate of our digital precision marketing services from 2021 to 2023. The number of
viewing requests fulfilled for enterprise operation reports decreased from 15.5 million in 2021
to 13.0 million in 2022, primarily because certain project for a customer in 2021 resulted in a
substantial number of viewing requests for our enterprise operations reports.
For our on-premise financial & tax digitalization solutions, the number of customers
increased from approximately 900 in 2021 to approximately 1,300 in 2022, and further to
approximately 2,000 in 2023, primarily due to our efforts to expand our customer base from
corporate conglomerates to more large and mid-sized enterprises, which also contributed to the
general decrease in average revenue per customer during the Track Record Period. The number
of retained customers for on-premises financial & tax digitalization solutions increased during
the Track Record Period, primarily due to increasing customer stickiness for our solutions.
Dollar-based retention rate for on-premises financial & tax digitalization solutions decreased
in 2022, primarily due to the adverse impact of the COVID-19 pandemic. Dollar-based
retention rate for on-premises financial & tax digitalization solutions increased in 2023,
primarily due to the increase in customer demands for our solutions as our customers gradually
recovered from the adverse impact of the COVID-19 pandemic.
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COMPETITIVE STRENGTHS
We believe the following competitive strengths have contributed to our success and
differentiated us from our competitors.
Industry-leading provider of enterprise digitalization solutions through self-developed
Baiwang Cloud platform
We are a pioneer and industry leader in China’s financial and tax-related transaction
digitalization market, dedicated to facilitating the digitalization of enterprise transactions in
China. With a comprehensive and synergistic suite of cloud and on-premises solutions
delivered through our self-developed Baiwang Cloud platform, we have empowered the
transaction digitalization for a large and growing base of enterprise customers across different
industries. We have accumulated deep industry know-how, rich data assets and policy insights
from providing financial & tax digitalization solutions for enterprise customers since 2015. We
have developed acute insights in identifying and addressing the pain points and key compliance
issues involved in enterprises’ invoice, transaction and compliance management, which greatly
strengthens our capabilities to provide transaction digitalization services and reinforces our
competitive advantages against peer companies. According to the F&S Report, we ranked first
in China’s cloud financial and tax-related transaction digitalization market in 2023 in terms of
revenue, representing a market share of 7.1%, and second in China’s financial and tax-related
transaction digitalization market in 2023 in terms of revenue, representing a market share of
4.9%. As a testament of our service capability, we were repeatedly chosen as a service provider
for the development and promotion projects for SA T’s e-invoice and digital invoice services,
management and blockchain platforms during the Track Record Period. During the Track
Record Period, we participated in three projects for the upgrade and improvement of the SA T’s
V A T invoice management system for the design, development, testing, trial operation,
promotion and upgrade of certain system functions. We have accumulated rich industry
experience, and together with another software and technology company, which is a Chinese
state-owned enterprise specializing in the provision of IT infrastructure services, such as those
in relation to operating system and database, became the joint bid-winner, joint developer and
the exclusive service providers for the SA T in relation to the system application development
of the Digital Invoice Service Platform in 2021. In such project, we are responsible for the
development and construction of application functions and access channels of the Digital
Invoice Service Platform and the coordinated testing, pilot, nationwide promotion and
maintenance of the platform. In 2022, we participated in the development and application
program of tax blockchain platform, where we are responsible for the development and
monitoring of certain function module of the tax blockchain platform. We believe our service
experience with the SA T has substantially enhanced our branding and reputation, and our
participation in the upgrade of SA T’s invoice management system, has improved our
understanding of tax and invoice compliance requirements, and, in turn, allowed us to develop
more useful solutions.
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We have accumulated multi-dimensional invoice and transaction data through offering
financial & tax digitalization solutions. Through analyzing transaction data of enterprises, we
empower financial service providers to effectively discern the financial condition of
enterprises, and in particular, small and micro-sized businesses, identify their potential
financing needs, manage risks and make informed lending decisions. According to the F&S
Report, we ranked second in China’s transaction-based big data analytics for SMB financing
market in 2023 in terms of revenue, representing a market share of 6.4%. Since October 2022,
we have collaborated with a number of government agencies or their sponsored institutions on
data modeling projects related to small and micro-sized businesses, market study and joint
development of platforms. We believe such collaborations reflect market recognition of our
data analytics capabilities and our market position, and allows us to further improve the
effectiveness and expand the application scenarios for our solutions.
Comprehensive solution offerings empowering enterprises’ transaction, compliance
management and business decision-making
We are able to continually expand our modularized solution offerings in a timely manner,
catering to customers’ evolving demand. Our financial & tax digitalization solutions comprise
tax invoice compliance management solutions, financial and tax management solutions, and
supply chain collaboration solutions. Our customers can subscribe to a combination of these
solutions based on their specific needs. Our cloud solutions are conveniently accessible
anywhere and anytime through mobile devices or web portal. The accessibility helps reduce the
burden associated with system implementation, upgrade and hosting, enable the delivery of
streamlined transaction experience and encourage rapid adoption of our solutions among our
customers. Our on-premises financial & tax digitalization solutions, delivered through our
proprietary software product, integrate a wide range of self-developed programs, to perform
financial and tax management functions with industry- and customer-specific configurations.
Customers of our on-premises solutions are usually enterprise conglomerates or institutional
customers with a heightened demand for data security, IT governance and customized
solutions. Our financial & tax digitalization solutions enable customers to digitalize the
business activities of their tax invoice, transaction and compliance management, and
encompass functions of tax invoice processing, expenditure management, supply chain
management and collaboration, which we believe improve operational efficiency, realize
cost-savings and strengthen compliance for our customers. We have accumulated substantial
data resources. As of December 31, 2023, we had processed approximately 14.3 billion
transaction documents, covering business activities of approximately 101.9 million enterprises,
including approximately 90.2 million buyer-side enterprises and approximately 33.7 million
seller-side enterprises, and representing transactions with an aggregate value of approximately
RMB639.9 trillion. We have extracted more than 3,000 performance indicators that can be used
to evaluate enterprise operation and are utilized by our data-driven analytics services.
Recognizing the policy trend in favor of SMB financing to facilitate economic growth and
promote employment, we have launched data-driven analytics services. With proper
authorization from customers, we analyze transaction data derived from transaction documents
processed through our solutions, and enable financial service providers to understand the
business performance and operation status of enterprises, especially small and micro-sized
businesses, identify eligible enterprises with financing needs and improve the risk management
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of financial service providers. At the same time, we also assist small and micro-sized
businesses with financing needs to locate suitable financing products. Leveraging our big data
analytics technology, we have also developed procurement optimization services to empower
enterprises to make better procurement decisions.
Our deep customer insights and rich data assets have enabled us to continually expand our
service offerings from addressing financial and tax-related pain points to meeting broader
transaction needs. As we continue to diversify our product matrix and introduce new solutions,
we can aptly accommodate the evolving demands of our customers, and cross- and up-sell our
solutions.
Extensive customer network from diversified industries
Leveraging our industry-leading capabilities in solution design and implementation, we
have accumulated numerous industry-leading enterprise customers in China across a variety of
industry sectors, such as internet, financial services, transportation, manufacturing, retail and
telecommunications. We continue to deepen our engagement with KA customers over the
course of their business development, and develop customer- and industry-specific insights to
address pain points arising out of their business operations and industry background. We have
thus been able to customize existing solutions and developing new ones that accommodate KA
customers’ requirements and explore cross- and up-selling opportunities. We have accumulated
a large and expanding KA customer base. We served 205, 217 and 366 KA customers in 2021,
2022 and 2023, respectively. Our KA customers are primarily industry-leading companies and
corporate conglomerates in China, including all the state-owned national commercial banks in
China, a majority of the insurance companies licensed to operate in China, and a majority of
the top five internet platform companies in China. We have also established longstanding
collaboration with KA customers. Our solutions are also deeply embedded into customers’
day-to-day business operations and have been seamlessly integrated with their internal system,
which further improve customer stickiness. As of December 31, 2023, 88 of our top 100 KA
customers in terms of revenue contribution in 2021 remained with us.
Our extensive collaboration with these industry-leading enterprise customers has
demonstrated our enterprise service capabilities and fostered our brand recognition, which
enables us to effectively reach and attract a growing number of mid-market customers and
non-paying users, primarily small and micro-sized businesses, and further the vertical
penetration for our solutions. Leveraging our experiences in serving KA customers and key
technologies accumulated from our service experiences, we have devised service offerings for
mid-market customers and small and micro-sized companies that are tailored to their business
scenarios with convenient access. We have rapidly achieved nationwide customer coverage
through our in-house marketing force and cooperation with a variety of business collaborators.
We have worked with these business collaborators, including leading e-commerce platforms in
China, to cost-effectively reach and serve a massive number of mid-market customers.
Specifically, we served approximately 23.9 million non-paying users in 2023 with our cloud
financial & tax digitalization solutions, covering a wide variety of industries, such as retail,
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catering, education, travel and lifestyle, among others. Such sweeping industry coverage
provides us with a large potential customer base and significant monetization opportunities for
our financial & tax digitalization and data-driven analytics services.
Robust R&D and technology innovation capabilities
We believe our R&D capabilities form the cornerstone of our competitiveness and
long-term growth. Benefiting from our strong product development capabilities, our expertise
in financial and tax-related transaction management, and the in-depth understanding of
customer needs and industry trends, we have innovated the application of compliance and
information security technologies to our financial & tax digitalization solutions. We have
spearheaded the application of technologies, such as OFD template management, digital
signature management, digital certificate management and blockchain platform, in the
financial & tax digitalization solutions. They underpin our ability to deliver solutions that
effectively address customers’ management and compliance requirement with respect to
transaction-related matters, while securing their information and data security.
We have deployed a suite of AI technologies, including knowledge graph, machine
learning and natural language processing, to support our data analytics capabilities, which
combined with multi-dimensional transaction-related data accumulated from our financial &
tax digitalization solutions, have enabled us to offer effective data-driven analytics services to
empower our customers’ business decision-making and risk management. We have built a
dynamic and flexible cloud infrastructure that adopts distributed micro-service framework and
can automate service deployment and integration, which allows us to shorten service response
time, flexibly customize our solutions based on customer demands and conveniently update the
compliance configurations of our solutions.
We have devoted significant resources to continually improving our product development
capability, including recruiting and training high-caliber R&D talents with extensive
experience in computing and software development related areas, as well as acute insights into
industry trends. As of December 31, 2023, we had a dedicated R&D team of 372 members,
accounting for 36.5% of our total employees as of the same date. In 2021, 2022 and 2023, we
incurred research and development expenses of RMB137.8 million, RMB144.3 million and
RMB188.0 million, respectively, representing 30.4%, 27.4% and 26.4% of our total revenue in
the same periods, respectively. We received a number of accolades for our R&D capability,
including New-Generation Information Technology Innovation Enterprise for 2022 and 2023
from CCID Consulting Co. Ltd., Innovation Enterprise Award for Digital Transformation of
2021 from the Chinese Academy of Social Sciences and Frontier Enterprise of Science and
Technology Innovation of 2020 from the People’s Daily Online .
Experienced and visionary management team
We have benefited from the leadership of an entrepreneurial and seasoned management
team. Their strategic foresight, in-depth industry knowledge, extensive managerial experience
and commitment underpin our current accomplishment and future growth potential. Ms. CHEN
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Jie, our founder and the chairlady of our Board, is experienced with information security
technology and has deep and innovative understanding of financial and tax-related
digitalization and rich managerial experience from prior critical roles at various information
security and financial digitalization solution providers, which provides insightful guidance on
our operations. Mr. Y ANG Zhengdao, our chief executive officer, has more than 21 years of
experience in the IT industry, and served as executive officers and at senior managerial
positions in a number of multi-national technology companies. Mr. ZOU Y an, our chief
marketing officer, has extensive experience in building e-invoice service platforms for the
insurance and transportation industries in China. Ms. JIN Xin, our chief operating officer, has
more than 12 years of experiences in the financial service industry. Additionally, members of
our senior management of R&D team come from leading technology companies such as
Alibaba Group Holding Limited and Microsoft Corporation, and are capable of designing,
developing and operating cloud products and systems effectively. Our sales executive team
come from well-known companies such as SAP Software Solutions and Oracle Corporation,
and have rich experience in market development and promotion of enterprise digitalization
software and services.
The entrepreneurship of our senior management has fueled our product and technology
innovation, leading to the successful development of various innovative digitalization products
and solutions. We are confident that our management team will continue to lead us to innovate,
excel and succeed in our industry.
GROWTH STRATEGIES
We intend to pursue the following strategies to further grow our business.
Continue to enrich solution functions and expand solution portfolio
We plan to continue to optimize and enrich the functions of existing solutions and expand
solution offerings based on market demands. For our financial & tax digitalization solutions,
we plan to expand the compliance and automation capabilities such as expanding the scope of
automatic tax calculation and automatic initiation of reconciliation functions and calculation of
rebates, and the transaction document coverage of our tax invoice compliance management
solutions to diversify their application scenarios and further penetrate into various industry
verticals. We will also improve the financial and tax management solutions by upgrading the
tax filing functions to improve the automated and centralized tax filings and tax deduction
management of all tax types. For our supply chain collaboration solutions, we will upgrade the
functions of reconciliation and account payable automation, and build business collaboration
platforms to expand application scenarios and potential customer base. We will also apply big
data analytics technology to develop industrial tax analysis and risk identification solutions for
enterprises’ internal financial and tax management and compliance requirements.
For our data-driven analytics services, we will continue to accumulate data and apply AI
technology to multi-dimensional and multi-scenario big data analytics models and develop
industry-specific model-as-a-service business model to further empower financial service
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providers’ user acquisition and risk management. We also plan to expand the application of our
data-driven analytics products for enterprise customers to monitor and manage supply chain
demands, and launch products with supplier sourcing, marketing and risk management
function.
Furthermore, we aim to build an integrated digital business ecosystem. We believe the
digital business ecosystem will empower KA customers and their business partners to
efficiently complete business transactions and process related documents. At the same time,
financial service providers will be able to evaluate operation status of enterprises within the
ecosystem, and offer financial products to a wider base of eligible users.
We intend to allocate approximately 31.5% of the net proceeds, or HK$77.5 million, from
the Global Offering for our solution upgrade and function enhancement. See “Future Plans and
Use of Proceeds” for details.
Expand customer base in more industry verticals and improve monetization opportunities
Capitalizing on the recent development of the Golden Tax Project and digital invoice
reform, we expect more enterprise customers will embrace financial & tax digitalization
solutions. We will continue to serve existing KA customers and develop new KA customers in
more industry verticals as we keep track of policy changes and constantly update our solution
offerings according to the latest regulatory requirements. Leveraging our collaborative
relationships with industry-leading KA customers, we plan to fully utilize our nationwide
business collaborator network to increase penetration rate among mid-market customers in
various industries. Furthermore, we will continue to rely on our regional collaborators and
e-commerce platform collaborators to extend our customer outreach.
As we continue to develop and offer financial & tax digitalization solutions that address
pain points of small and micro-sized businesses and build platforms around business
ecosystem, we believe we can increase customer conversion rate, subscription rate, retention
rate and purchase orders from small and micro-sized businesses. We also intend to further
monetize our reconciliation and billing management services. By further improving the
functions of our supply chain collaboration solutions as applied in more industries and
enhancing the digitalization and automation of payment settlements between enterprises along
industry supply chains, we believe we can attract more small and micro-sized businesses, as
well as the business partners of our customers, and convert them into our customers.
We also plan to enhance our data-driven analytics services so that we can more precisely
identify financing needs of small and micro-sized businesses and more effectively match them
with suitable financial products, which will increase customer stickiness for our data-driven
analytics services, while also benefiting small and micro-sized businesses.
We intend to allocate approximately 19.3% of the net proceeds, or HK$47.5 million, from
the Global Offering for our sales and marketing initiatives. See “Future Plans and Use of
Proceeds” for details.
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Invest in core technologies and drive product innovation on Baiwang Cloud platform
We will continue to recruit and train R&D and product development personnel, and
increase our R&D investment in core technology capabilities, including cloud computing, big
data, blockchain, knowledge graph, cybersecurity, natural language processing, deep learning
and data privacy technologies, to improve our solutions and service capability.
We plan to upgrade and equip our Baiwang Cloud platform with a business operation
platform, a data platform, and a technology platform. The business operation platform provides
key services that support our internal operations and external marketing, such as internal
operations control, automated reconciliation and settlement, operational efficiency analysis
and decision analysis to improve our digital capabilities of internal and external operations.
Based on the voluminous data accumulated through our financial & tax digitalization solutions,
the data platform will conduct in-depth data analysis and create cross-industry knowledge
graphs and databases. Utilizing our industry-leading AI algorithm technologies, the data
platform will also provide data support for our continuous product optimization and upgrade.
The technology platform will apply technologies such as cloud computing, rapid application
development, and API configuration, to our solutions to ensure their proper functions and
facilitate the rapid launch of new iterations of our solutions. We plan to deepen collaboration
with academic institutions to further our R&D initiatives to encourage technological
innovation.
We intend to allocate approximately 29.4% of the net proceeds, or HK$72.5 million, from
the Global Offering to enhance R&D capabilities. See “Future Plans and Use of Proceeds” for
details.
Cultivate business ecosystem through strategic cooperation, investment, mergers and
acquisitions
We will cooperate with leading companies and public service organizations in various
industries to build industry-specific business ecosystem. Specifically, we intend to deepen
collaboration with major internet platforms, such as leading e-commerce platforms to more
effectively reach small and micro-sized businesses. We also plan to collaborate with leading
industry players and launch and expand industry-specific solutions, such as tax invoice
solutions designed for highway toll systems, or tax invoice compliance management solutions
designed for insurance companies and supply chain solutions designed for logistic companies.
Furthermore, we will further penetrate the supply chain of industry-leading companies to bring
their business partners into our business ecosystem.
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We also intend to selectively pursue strategic alliance, investment and acquisition
opportunities across the value chain of China’s enterprise digitalization market to create
synergies with our existing business. We will also evaluate and execute alliance, investment
and acquisition opportunities that will complement and scale up our business, enhance our
brand awareness, enrich our product and service matrix, expand our customer base, optimize
our profitability, help us penetrate new industry verticals and add new functions to our
solutions. Specifically, we will consider investing in or acquire companies that develop cloud
products for financial and tax management to complement our cloud service matrix, and
companies that specialize in promoting financial and tax digitalization products within their
respective provincial territories to extend our sales and marketing outreach. As of the Latest
Practicable Date, we had not identified any potential investment or acquisition targets, formed
any specific acquisition plans or entered into any agreements with potential targets.
We intend to allocate approximately 11.5% of the net proceeds, or HK$28.2 million, from
the Global Offering to collaborate with and selectively pursue strategic investment and
acquisition opportunities. See “Future Plans and Use of Proceeds” for details.
OUR BUSINESS
We have strategically developed our Baiwang Cloud platform, through which we provide
users and enterprise customers across industries with SaaS financial & tax digitalization
solutions to facilitate secure and reliable inter-organizational invoice, transaction and
compliance management. Our financial & tax digitalization solutions, compatible with
e-invoices and digital invoices, consist of tax invoice compliance management, financial and
tax management, and supply chain collaboration solutions, all of which can be delivered in
cloud and on-premises applications. Empowered by our data assets, we also offer data-driven
analytics services to facilitate customers’ business decision-making.
The following table summarizes our main solution offerings and their respective
functions and features, principal customers/users and pricing model.
Solutions Products and Services Key Functions and Features
Principal
Customers/Users Pricing
Cloud financial & tax
digitalization
solutions ( ථʷৌ೼ᅰ
ࣩ)
Tax invoice compliance
management solutions
(ୃኽΥ஝၍ଣ༆Ӕ˙
ࣩ)
Enable customers to digitalize the
process of, among others, tax invoice
issuance, delivery and compliance
Enterprises of all
sizes across various
industry sectors
 Annual subscription fees;
 Usage-based fees;
 Sales-based fees; and
 Solution delivery fees
Financial and tax
management solutions
(ࣩ)
Enable customers to record, store and
verify tax invoices received by them,
streamline accounting document
archiving and complete tax filing
Supply chain
collaboration solutions
(ࣩ)
Enable customers to automate account
payment and settlement with their
business partners
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Solutions Products and Services Key Functions and Features
Principal
Customers/Users Pricing
Data-driven analytics
services (ٙ
ਕ)
Digital precision
marketing services ( ၚ
ਕ)
Recommend financial products launched
by financial service providers to
potential product users
Financial service
providers and
licensed credit
reporting agencies
 Sales-based fees
Risk management
services (؂
ਕ)
(1) Enable customers to understand
business performance and operation
status of potential and existing users
based on their tax invoice and
transaction records
 Annual subscription fees;
 Usage-based fees; and
 Project-based fees
(2) Recommend potential users of
financial products to financial
service providers
(3) Optimize customers’ risk control
modeling and risk management
measures
On-premises financial
& tax digitalization
solutions ( ͉ή௅໇ৌ
ࣩ)
1) Centralize and automate tax invoice
compliance and tax management
with on-premises application
Large enterprises and
corporate
conglomerates
 Software license fees;
 Implementation fees;
 Annual maintenance fees;
and
 Hardware equipment fees(2) Collect and store structured data for
enterprise expenditure and related
tax invoices locally in a centralized
data base
(3) Automate transaction record
collection and logging and store
electronic accounting archive locally
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The following table sets forth our revenue by business lines, both in absolute amounts and
as a percentage of our total revenue, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 156,615 34.5 157,996 30.1 219,539 30.8
Data-driven analytics services 178,597 39.4 263,519 50.1 352,425 49.4
— Digital precision
marketing services 94,603 20.9 170,229 32.4 210,187 29.5
— Risk management services 83,994 18.5 93,290 17.7 142,238 19.9
On-premises financial &
tax digitalization solutions 110,168 24.3 93,491 17.8 138,132 19.4
Others
(1) 8,383 1.8 10,759 2.0 2,900 0.4
Total 453,763 100.0 525,765 100.0 712,996 100.0
(1) Includes primarily advertisement publishing services.
CLOUD FINANCIAL & TAX DIGITALIZATION SOLUTIONS
Our cloud financial & tax digitalization solutions, compatible with e-invoices and digital
invoices, digitalize tax invoice management, tax invoice-based transactions and compliance
management for enterprises, enabling them to improve operational efficiency, cost-savings and
compliance. Our cloud financial & tax digitalization solutions comprise (1) tax invoice
compliance management solutions, (2) financial and tax management solutions, and (3) supply
chain collaboration solutions. Based on their specific needs, our customers can subscribe to
these solutions individually or as a combination. As of December 31, 2023, our tax invoice
compliance management solutions and financial and tax management solutions had been
upgraded to become fully compatible with the use and management of digital invoices, and we
had assisted customers with a total of 408.8 thousand tax identification numbers and processed
47.4 million digital invoices.
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The following diagram demonstrates solution modules of our cloud financial & tax
digitalization solutions.
Cloud financial & tax digitalization solutions
Reconciliation and
billing management
Contingent
workforce
management
Automated tax invoice
processing
Tax invoice compliance
control
Spend
management
Tax filing
management
Electronic accounting
archive management
Tax invoice compliance
management
Supply cha
in
collaboration management
Financial andtax management
We primarily charge customers annual subscription fees and/or usage-based fees for our
cloud financial & tax digitalization solutions. In 2021, 2022 and 2023, we had approximately
12,370, 14,810 and 21,100 customers for our cloud financial & tax digitalization solutions,
respectively. We generated revenue of RMB156.6 million, RMB158.0 million and RMB219.5
million from our cloud financial & tax digitalization solutions in 2021, 2022 and 2023,
respectively, accounting for 34.5%, 30.1% and 30.8% of our total revenue in the same periods,
respectively.
Tax Invoice Compliance Management Solutions
Our tax invoice compliance management solutions contain functions covering full-cycle
tax invoice management, including automated tax invoice processing and tax invoice
compliance control services. The following diagram illustrates the capability of our tax invoice
compliance solutions.
Tax invoice
compliance
management
Tax invoice
compliance
control
Automated
tax invoice
processing
Tax invoice compliance controlAutomated tax invoice
processing
Centralized tax invoice control
Automated tax invoice
data conversion
Unified-channel for
tax invoice issuance
Transaction compliance
management
Format eligibility
Risk monitoring and alerts
Our tax invoice compliance management solutions contain value-added features for
enterprise customers to issue, deliver and manage tax invoices in a centralized, automated
manner through a unified channel. Enterprise customers could purchase such value-added
features that suit for their business demands. In addition to chargeable value-added features,
we also offer basic functions of tax invoice generation, printing, search and delivery to users
free of charge in accordance with applicable PRC rules and regulations. When customers and
non-paying users use our solutions and complimentary applications for tax invoice issuance
purposes, we are under no obligation to ensure the genuineness of the relevant transactions
conducted by the customers and non-paying users.
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Automated Tax Invoice Processing
We have developed the automated tax invoice processing function to assist enterprise
customers in coping with their daily tax invoice issuance, delivery and management demands.
In 2023, the number of V A T invoices generated and issued through our cloud solutions was
approximately 2.6 billion, and the corresponding aggregate transaction amount was
approximately RMB123.1 trillion.
Tax invoices are automatically generated and delivered with our solutions, which, with
customer authorization, synchronize with customers’ internal systems and access details of
their business transactions, such as transaction parties, product and service types and
transaction amounts. Our solutions then convert such transaction data into relevant tax invoice
data and generate the corresponding tax invoices. This invoice generation process
automatically matches invoice information with transaction records to achieve efficient invoice
ledger management. Our solutions also allow customers to preview and download issued tax
invoices and support tax invoice delivery in large batches to designated recipients within a
short amount of time. The automated tax invoice issuance process allows customers to save
time and costs associated with issuing and delivering traditional paper invoices and minimize
manual errors.
The following table summarizes major chargeable features of the automated tax invoice
processing function of our solution.
Feature Description
Centralized tax invoice
control
In contrast to traditional tax invoice issuance process, where
finance staff in an organization need to manually input tax
invoice information based on business and transaction data
and generate one piece of tax invoice at one time, our solutions
integrate with customers’ internal information system and
enable centralized and unified management of tax invoice
processing activities within an enterprise. Through system
integration, it is possible to achieve centralized management
of user permissions, products, services, tax rates, tax codes,
and information security hardware. Business personnel of our
customers can directly initiate tax invoice issuance requests
from the business system, and, after our solutions complete tax
invoice issuance, automatically send the tax invoices back to
the customers’ business and financial systems for subsequent
accounting processing, thereby improving business processing
efficiency.
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Feature Description
Automated tax invoice data
conversion
Our solutions import enterprises’ transaction records,
separately calculate and record product or service price and
corresponding tax amounts, and split or combine transaction
amounts from different transactions for tax invoice issuance.
Based on categorized transaction data, our solutions then
convert such transaction data into tax invoice data and
generate tax invoices in accordance with predesignated tax
invoice issuance rules and relevant tax regulations. In addition
to transaction data conversion, our solutions automatically
populate legal name and tax identification number information
based on our data assets. These functions satisfy enterprises’
daily tax invoice issuance demands and help enterprises
integrate invoice and transaction management.
Unified channel for tax
invoice issuance
Currently, there are various types of information
security hardware and V A T invoicing software used by
enterprises in China for tax invoice issuances. See “Industry
Overview—China’s Financial and Tax-related Transaction
Digitalization Market—Background of China’s Financial and
Tax-related Transaction Digitalization” for details. Our multi-
channel unified management function interacts with different
V A T invoicing software, allowing enterprise customers with
multiple information security hardware and V A T invoicing
software to meet all their tax invoice issuance needs with our
solutions, as well as to reduce costs associated with initial
system integration and subsequent system upgrades and
maintenance.
Tax Invoice Compliance Control
Invoices must comply with the specification of applicable laws and regulations in order
to be used for taxation and accounting purposes. According to the Administrative Measures of
the People’s Republic of China on Invoices (جand other related
regulations, an invoice shall meet the sequence and information requirements, and be issued
with digital signature and/or special invoice seal for authentic transactions within the stipulated
time limit. Parties to a transaction and government authorities may refuse to accept invoices
that fail to satisfy these legal requirements.
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Our tax invoice compliance control function enables customers to issue tax invoices in
compliance with invoice and tax laws. It incorporates compliance configuration that identifies
tax invoices that lack the requisite information or contain errors that may result in their
rejections, and correct such deficiencies before actual issuance. Such function ensures that tax
invoices issued through our solutions comply with applicable laws and regulations in the
following aspects.
 Transaction compliance management . Invoices should only be issued for authentic
transactions and for actual transaction amount incurred, and fraudulent issuance of
invoices, including tax invoices, may constitute criminal offense under PRC laws.
Our solutions synchronize with customers’ internal ERP system to access the
relevant transaction details, such as transaction parties, products and services
provided and transaction amount. Based on such system records, our solutions
generate tax invoices that are supported by verifiable and authentic transactions. The
automated tax invoice generation process greatly reduces the incidence of non-
compliant invoices caused by manual errors.
 Risk monitoring and alerts . We issue alerts when it detects potential or existing
non-compliance incidents to assist enterprises in maintaining compliance with
relevant tax and invoice regulations. These non-compliance incidents include
insufficient blank invoices, tax invoice verification failures and incomplete tax
declaration and filing. Moreover, we monitor enterprises’ daily invoice issuance
activities and conduct regular checks on underlying invoice and transaction
information, so as to prevent tax invoice issuance irregularities.
 Format eligibility . Tax invoices must be issued and delivered in compliance with
designated formats, including portable document format (“PDF”) and OFD format.
Therefore, enterprises should possess technical capability to generate and review tax
invoices in OFD format. Tax invoices generated through our solutions are in OFD
format and are recognized by relevant tax authorities. See “—Our
Technology—Compliance and Information Security Technologies” for details.
We charge customers for our tax invoice compliance management solutions primarily on
subscription or usage-based fee models.
Besides our tax invoice compliance management solutions, which are chargeable, in view
of the potential massive demands from enterprises, in particular small and micro-sized
businesses, to conveniently issue and deliver tax invoices, we have developed an array of
complimentary applications. Users of our complimentary applications manually enter tax
invoice and transaction information to populate tax invoices bearing such inputs and issue and
deliver tax invoices to the designated recipients free of charge. To encourage users to utilize
and to improve user experience with our complimentary applications, we have embedded
value-added feature of automatic filling of invoice title information to enable users to more
conveniently issue invoices with our applications. We have upgraded our complimentary
applications to be fully compatible with digital invoices.
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In 2023, the number of non-paying users of our complimentary applications was
approximately 23.9 million. We have been able to up-sell our other solutions to a large number
of the non-paying users of our complimentary applications, and accumulate transaction data.
Financial and Tax Management Solutions
Our financial and tax management solutions deliver a broad range of functions that
traditionally require the use of separate applications. Our solutions automate spending
processes and actively manage enterprise expenditures with greater precision, better budget
control and more effective risk control. We believe our financial and tax management solutions
help enterprise customers achieve cost savings through digital transformation of their financial
and tax management. The following diagram illustrates the service modules of our financial
and tax management solutions.
Input VAT
management
Invoice collection
Archive utilization
Archive storage
Document
collectionCentralized
tax filing
Automatic tax
calculations
Tax data
collection
Expenditure
management
Financial and
tax management
Electronic accountin
g
archive management
Tax
filing management
Spend management
Spend Management
Enterprises in China typically obtain invoices issued by their suppliers to ensure that
eligible costs or expenses can be verified and authenticated for internal recordkeeping,
accounting, reimbursement and tax deduction purposes. Therefore, it is essential that
enterprises properly record, utilize, store and manage invoices received by them and ensure the
validity of such invoices. The number of invoice processing requests fulfilled through our
cloud solutions under usage-based model was 449.8 million, 581.8 million and 467.2 million
in 2021, 2022 and 2023, respectively. Our enterprise spend management solutions enable
enterprises to effectively manage tax invoices and transaction records associated with
enterprise expenditures, primarily through the following functions.
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 Input VAT management . Upon our customers’ receipt of tax invoices issued by their
transaction partners, our solutions automatically examine information accuracy and
conduct compliance checks of such tax invoices. See “—Tax Invoice Compliance
Management Solutions—Tax Invoice Compliance Control” for details. If we
identify any non-compliance incidents, our system will issue an alert and provide
correction suggestions. Notably, tax invoices issued by entities with non-compliance
history in tax related matters may be deemed as invalid, and present tax compliance
risks for enterprises that have already recorded or taken tax deductions for such tax
invoices. Our solutions can continuously monitor tax invoice validity status for our
customers.
 Expenditure management . Through our solutions, customers can manage enterprise
expenditures, generate expenditure vouchers and make reimbursement payment.
Moreover, we analyze customers’ budget control demands and examine tax invoices
against the expenditure and voucher information submitted by employees, thereby
helping enterprise customers review employee reimbursement requests and generate
reimbursement decisions.
Our spend management solutions are particularly well accepted by logistics and insurance
industries. Logistics enterprises have traditionally faced difficulties in obtaining, verifying and
managing paper invoices issued by electronic toll collection (“ETC”). Our solutions, through
interface connection, gains access to waybill data and other relevant transaction information of
logistics enterprises and online freight platform, and automatically initiates ETC e-invoice
issuance requests. We then cross-examine these e-invoices with relevant business data to detect
missing or inaccurate e-invoices. In addition, we have expanded the application of our invoice
verification capability and provided medical bill verification services for insurance companies.
Insurance companies need to review and examine supporting documents, such as medical bills,
when they audit insurance claims. Our services allow insurance companies to scan and upload
medical bills to their internal systems in batches, as well as examine and verify the authenticity
of the medical bills. These functions enable insurance companies to improve their management
capabilities with respect to claim-related documents, increase efficiency for claim auditing and
lower verification-related costs.
Electronic Accounting Archive Management
Our electronic accounting archive management services enable full-cycle management of
enterprises’ electronic accounting files, including accounting vouchers, accounting records,
financial reports and other accounting information, allowing enterprises to centralize collection
and filing of electronic accounting records generated from enterprises’ accounting systems and
internal business systems. Our electronic accounting archive management services enable
customers to improve compliance with respect to accounting archive management, by ensuring
the consistency between archived records and original accounting records, utilizing state
cryptography algorithm to prevent tampering and counterfeit and ensure signatory authenticity
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and tracking archive usage and review history. Our solutions also allow customers to more
efficiently manage accounting archive by reducing the use of paper documents and enabling
intra-company data and information sharing through centralized archive management.
Tax Filing Management
Our tax filing management solutions enable customers to complete tax filings, including,
among others, enterprise income tax and V A T filings, within a few clicks. Our solutions also
improve enterprises’ tax compliance and risk management capabilities, primarily through the
following functions.
 Tax data collection . Through synchronization with customers’ internal systems, our
solutions extract and collect tax data, such as those derived from their financial,
sales, contract and invoice records, and centralize the management and tracking of
tax data.
 Automatic tax amount calculations . After collecting relevant tax data, our solutions
automatically calculate tax payable or return amount pursuant to applicable
calculation and verification formula. Our solutions adopt configuration similar to
tax forms and utilize tax declaration guidance for standardized and accurate online
tax calculations for our customers.
 Centralized tax filing . Customers can generate standard tax declaration forms
through our solutions, which conducts data and form verification against applicable
tax calculation and filing rules to ensure accuracy. Customers can then submit and
complete tax filings with a few simple clicks. Enterprise groups with geographically
disperse or cross-industry operations can complete their tax filings in a centralized
manner, increase transparency for enterprise tax preparation and significantly lower
burden for finance and tax personnel.
Supply Chain Collaboration Solutions
Enterprises in China traditionally conduct business transactions with the circulation of
paper invoices. However, the associated difficulties in securely transmitting and storing paper
invoices may interrupt their transaction process. Moreover, enterprises normally face
challenges in obtaining V A T invoices from third-party individual service providers to claim
applicable tax deduction, as it is generally impractical for individuals to issue V A T invoices to
enterprises. These challenges faced by enterprises prompted us to devise our supply chain
collaboration solutions, comprising reconciliation and billing management services and
contingent workforce management services, to facilitate customers in their transactions with
both enterprise and individual business partners. The following diagram illustrates the service
modules of our supply chain collaboration solutions.
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Supply
chain collaboration
solutionsContingent
workforce
management
Reconciliation
and billing
management
Reconciliation
and billing
management
Seller-side
enterprises
Buyer-side
enterprises
Settlement
Certification
Reconciliation
Invoice issuances
Payment
Individualserviceproviders
Enterprises typically have numerous business partners during their ordinary course of
business, including, among others, their suppliers and customers. The vast transaction volume
among these various parties brings about a massive amount of transaction information and data
entries, and creates challenges for enterprises to keep consistent transaction records of their
business partners. Inconsistent transaction records may cause failure to reconcile or settle
account payables, issuance of invalid invoices bearing inaccurate transaction information, and
invoice rejection and delayed payment, all of which could interrupt the transaction processes.
Moreover, many enterprises still rely on employees to manually complete the payment
settlement process, which leads to extended settlement cycle, high rate of manual errors and
potentially high labor costs.
We have devised our reconciliation and billing management services to facilitate
enterprise customers to conduct and settle transactions with their enterprise business partners.
Our reconciliation and billing management services embed a structured communication
system, which enable our customers and their business partners to share transaction data and
details, and communicate with each other through such system. Our services effect automated
invoice issuance based on transaction and order information reviewed and mutually agreed by
our customers and their business partners, which improves the accuracy of invoice issuance
and reduces potential disputes. Customers of our reconciliation and billing management
services typically request their suppliers to register with us and usually bear the related service
fees for our reconciliation and billing management services, although such fee allocation may
be subject to negotiation between our customers and their suppliers.
With the rapid development of digital economy and shared economy, contingent
workforce has become an important labor service mode. As such, enterprises utilizing
outsourcing workforce are in need of a compliant means to obtain V A T invoices for their
payment settlement and manage tax deduction. We have obtained the necessary authorization
from competent tax authorities, and our financial and tax management solutions enable us to
streamline the reconciliation and payment settlement process for enterprise customers to obtain
the V A T invoices in a compliant manner. Our contingent workforce management services help
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enterprises maintain flexibility in their staffing and employment strategy in a compliant
manner, which facilitate customers to streamline their payment settlement with such individual
service providers and obtain the corresponding V A T invoices to reduce tax deduction losses.
We provide contingent workforce management services under two models, namely,
commissioned invoicing model and entrusted collection model. Under both models, we charge
enterprise customers service fees primarily based on the amount of compensation settled with
the individual service providers using our services. Revenue from contingent workforce
management services under both the commissioned invoicing model and the entrusted
collection model is recognized on net basis. During the Track Record Period, we generated
substantially all of the revenue from our contingent workforce management services under the
commissioned invoicing model.
Under the commissioned invoicing model, we enter into authorization agreements with
competent tax authorities in order to provide our services to enterprise customers. Our
enterprise customers directly settle the service compensation with individual service providers,
and pursuant to the authorization agreements entered between competent tax authorities and us,
we will apply to the competent tax authorities on behalf of individual service providers for
temporary tax registration and tax declaration, help individual service providers make required
tax payments, and apply for issuance of V A T invoices by the relevant competent tax authorities.
We will then deliver such V A T invoices to enterprise customers. Under this model, we served
16, 38 and 44 enterprise customers in 2021, 2022 and 2023, respectively.
Under the entrusted collection model, we enter into entrusted tax collection agreements
with competent tax authorities to provide our services. Based on entrusted collection model and
pursuant to the entrusted tax collection agreement, we enter into business collaboration
agreement with designated enterprises (the “Designated Enterprises”) and invite such
enterprises to register on our contingent workforce online platform, whereby we provide
certain services, such as compensation settlement services, and the Designated Enterprises will
pay us a comprehensive service fee, comprising the expenses incurred by us in settling service
compensation with the individual service providers and the platform service fees. In the
meantime, we enter into service agreement with individual service providers, which provides
that the individual service providers will provide services to the Designated Enterprises and
that we help outsource the business needs of the Designated Enterprises to individual services
providers, pay service compensation to the individual service providers, and collects personal
income tax and other taxes from the individual service providers on behalf of the competent
tax authorities. Based on the aforementioned agreements, the Designated Enterprises are
obligated to pay us service fees, and we are obligated to pay individual service providers the
service compensation. We may advance payments to such individual service providers upon the
requests of Designated Enterprises, and during the Track Record Period, we advanced
payments primarily upon the request of a certain reputable Designated Enterprise. Although the
number of enterprise customers served by us under the entrusted collection model decreased
from 61 in 2021 to 45 in 2022 and further to 10 in 2023, primarily due to our strategic reduction
in marketing efforts for our contingent workforce management services under this model, we
benefited over 11,200, 106,300 and 102,800 individual service providers in the same periods,
respectively. Under this model, service compensation we settled with individual service
providers was approximately RMB127.9 million, RMB310.0 million and RMB323.5 million in
2021, 2022 and 2023, respectively.
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As advised by the PRC Legal Advisor, our contingent workforce management services, as
provided under both commissioned invoicing model and entrusted collection model, comply
with the applicable PRC laws and regulations in all material respects, and are conducted
pursuant to the respective authorization agreement with competent tax authorities. According
to the F&S Report, the business models of and business activities conducted under our
contingent workforce management services are consistent with industry practice. During the
Track Record Period and up to the Latest Practicable Date, we were not subject to any notice,
inquiry, investigation or sanction with respect to our contingent workforce management
services by any PRC government authorities.
Customer Case Study
Background and pain points . Customer X is a leading express delivery company in China.
Customer X is a dual-listed company in the United States and Hong Kong. During its business
operations, Customer X faced the following pain points with respect to invoice and tax
management: (1) limited manpower to manage large volume of invoices, in particular toll
invoices, (2) difficulty in maintaining accurate financial records, and (3) massive number of
nationwide service outlets and the need for centralized invoice and tax management.
Solutions . We devised cloud solutions to address each of Customer X’s pain points. Our
solutions enable Customer X’s staff to verify the eligibility of invoices collected for tax
deduction purposes by simply scanning invoices received by them, and the system processes
qualified invoices in batches to claim tax deduction. Our system accesses Customer X’s
transaction records and automatically issues e-invoices to its clients based on such records,
which reduces workload for Customer X’s staff. Our solutions also allow centralized
management of information security hardware operated in Customer X’s various store
locations, which enables mass and centralized invoice processing.
DATA-DRIVEN ANALYTICS SERVICES
Our data-driven analytics services comprise digital precision marketing services and risk
management services, and facilitate our customers’ user acquisition and risk management.
Harnessing our data analytics technologies, such as knowledge graphs and natural language
processing technologies, we analyze such enterprise transaction data, uncover underlying
trends and construct comprehensive enterprise profiles. See “—Our Technology—Big Data
Analytics and AI” for details. We have implemented data privacy measures so that data we
collect and process are securely encrypted and cannot be used for identification without proper
consent from relevant enterprises. See “—Data Privacy and Security.”
In 2021, 2022 and 2023, we served 91, 101 and 134 customers with our data-driven
analytics services, comprising primarily financial service providers and licensed credit
reporting agencies. Revenue generated from our data-driven analytics services was RMB178.6
million, RMB263.5 million and RMB352.4 million in 2021, 2022 and 2023, respectively,
accounting for 39.4%, 50.1% and 49.4% of our total revenue in the same periods, respectively.
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Digital Precision Marketing Services
We primarily offer our digital precision marketing services to financial service providers
to facilitate their sales of financial products. During the Track Record Period and up to the
Latest Practicable Date, the financial products we facilitated in selling for financial service
providers were credit facility and loans in connection with SMB financing.
We display financial products launched by financial service providers, as well as their
application criteria, which typically include duration of business operations, invoice records
and annual revenue. Potential financial product users provide us with certain preliminary
information, such as their legal names and tax identification numbers, and grant us access to
their operation and transaction records. Leveraging our data analytics capability, we compare
profile of financial product users against application criteria of financial products and generate
a list of financial products that these users are eligible to apply for, and display the list to the
relevant users. If potential financial product users elect to proceed to apply for any of the
financial products on the list, we will then redirect such users to the application page of the
relevant financial service providers, so that these potential users can complete and submit the
applications. To a lesser extent, potential financial product users may need to submit their
application information through us. Prior to June 30, 2023, we used to transmit the application
information to the relevant financial service providers through API interface and delete such
information after transmission. In light of the Administrative Measures for Credit Reporting
Business (جannounced on September 17, 2021 and effective on January 1,
2022 (the “2021 Administrative Measures”), we have been instead transmitting application
information to credit reporting agencies that we collaborate with or credit reporting agencies
affiliated with financial service providers, since June 30, 2023. Similarly, we will delete the
application information after transmitting to these credit reporting agencies, which will then
transmit such application information to the relevant financial service providers. Moreover,
upon request by financial service providers, we also conduct data analysis regarding the
potential financial product users’ financial and operational performance based on invoice
records authorized for access by the relevant financial product users, and deliver such results
(since June 30, 2023, through licensed credit reporting agencies we collaborate with or other
licensed credit reporting agencies affiliated with financial service providers) to financial
service providers to empower their decision-making.
We charge financial service providers service fees based on the value of financial
products we facilitate in selling. For credit facility products, we charge service fees primarily
based on the total amount of credit facilities successfully granted by financial service providers
to enterprises with financing needs, while for loan products, we charge service fees primarily
based on the total amount of loans successfully granted by financial service providers and
withdrawn by enterprises with financing needs. For loan products, the value of loan product
sales facilitated by us was RMB3.8 billion, RMB3.7 billion and RMB2.2 billion in 2021, 2022
and 2023, respectively. Our average service fee ratio for loan products with financial service
providers was 1.31%, 1.10% and 1.33% in 2021, 2022 and 2023, respectively. Our average
referral fee ratio for loan products with marketing agents was 0.71%, 0.78% and 0.77% in
2021, 2022 and 2023, respectively. The value of credit facility products that we facilitated in
selling was RMB10.9 billion, RMB25.8 billion and RMB39.4 billion in 2021, 2022 and 2023,
respectively. Our average service fee ratio for credit facility products with financial service
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providers was 0.47%, 0.54% and 0.49% in 2021, 2022 and 2023, respectively. Our average
referral fee ratio for credit facility products with marketing agents was 0.37%, 0.51% and
0.47% in 2021, 2022 and 2023, respectively. A majority of our revenue from digital precision
marketing services was attributable to credit facility products launched by our financial service
provider customers, and our service fee ratios for such credit facility products ranged from
0.3% to 1.94% during the Track Record Period. Our service fee ratios for loan products
launched by our financial service provider customers ranged from 0.1% to 2.60% during the
Track Record Period. We maintained a record of successful application cases, either derived
from our system or through the regular updates with financial service providers, primarily on
a daily or weekly basis. For financial product applications submitted by potential financial
product users through our platform, financial service providers will prompt their decisions,
including the loan or credit facility amount granted by them, to our platform once such
applications are approved. For financial product applications submitted by potential financial
product users directly through financial service providers’ platforms under our guidance,
financial service providers will regularly provide updates to us regarding the application status.
The value of financial products facilitated by us is ascertained by cross-checking our own
records, financial service providers’ summary statements and records kept by marketing agents,
which will follow up with financial products users and keep record of users’ application results.
We primarily collaborate with marketing agents to promote the financial products
launched by financial service providers and identify potential users for their financial products
based on application criteria of relevant financial products, and nearly all of our revenue from
digital precision marketing services was attributable to fees charged to financial service
providers for sales of financial products facilitated by us to users referred by our marketing
agents during the Track Record Period. During the Track Record Period, financial product
users referred by marketing agents were not converted by us from our existing customer or user
base. The number of our marketing agents was 299, 511 and 666 as of December 31, 2021,
2022 and 2023, respectively, which generally increased in line with our business growth. The
financial service providers designate application criteria for the financial products launched by
them; and we have the right to determine and limit the types of financial products to be
promoted by marketing agents. Based on the application criteria of the financial products
selected by us, marketing agents will identify potential product users by marketing such
financial products, usually on their self-operated platforms, such as their WeChat Official
Accounts and websites, and attracting potential financial product users to reach out to
marketing agents and discuss such users’ financial needs. The marketing agents then guide
such potential users to register on our platform. These potential users, upon registration, will
directly provide us with certain preliminary information, such as their legal names and tax
identification numbers, and grant us access to their operations and transaction records.
Leveraging our data analytics capability, we compare profile of financial product users
(including the aforementioned preliminary information and in most cases, the operations and
transactions records such as invoice data, authorized for our access by potential financial
product users) against application criteria of financial products, and generate a list of financial
products that these users are eligible to apply for, and display the list to the relevant users.
Marketing agents may introduce the terms and characteristics of the relevant financial products
to the potential users. If required, marketing agents may also assist potential financial products
users to fill in financial product applications. During the financial product application process,
if marketing agents encounter contingencies or user inquiries that they are incapable of
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handling, marketing agents will contact our staff for assistance, and we will provide timely
solutions, and if financial service providers are to be involved, we will contact financial service
providers and coordinate the response to marketing agents and potential financial product
users. Marketing agents generally possess substantial resources, including dedicated local
marketing staff, in identifying potential financial product users, which could assist us to
facilitate the sales of the diversified financial products launched by financial service providers,
effectively extending the user outreach for financial service providers and enhance financial
service providers’ satisfaction and stickiness with us.
We charge financial service providers service fees based on the value of financial
products we facilitate in selling, while we pay our marketing agents referral fees based on the
value of financial products we facilitate in selling with the assistance of these marketing
agents. See “—Sales and Marketing—Sales Model—Direct Sales” for details. In provision of
digital precision marketing services to the financial service providers, we generally take
advantage of assistance from marketing agents we collaborate with in facilitating the sales of
financial products. However, we are the only point of contact of the financial service providers,
customers of our digital precision marketing services, during this process and receive service
revenue directly from them. We pay marketing agents, our suppliers, referral fees for their
services. Therefore, we consider such service model of our digital precision marketing services
to be direct sales. The following diagram sets forth the transaction and work flows of our
digital precision marketing services with the assistance of marketing agents.
Financial products(2)
Application information(1) and performance under the terms of financial products(2)
Application information(1), and,
upon request, data analysis
results
Service fees
Identification of potential
financial product users
Referral fees
Lists of financial products that users are
eligible to apply for after comparing
user profiles against application criteria
Preliminary information upon registration,
and application information(1) Financial
service
providers
Financial
product users
Marketing
agents
Referral of potential
financial product users
Our Group
(1) We generally redirect potential financial product users to the application page of the relevant financial service
providers to complete and submit application information. To a lesser extent, if potential financial product
users need to submit their application information through us, we transmit application information to credit
reporting agencies that we collaborate with or credit reporting agencies affiliated with financial service
providers, which will then transmit such application information to the relevant financial service providers.
(2) We do not participate in the decision-making process of financial product applications or the subsequent
performance under the terms of relevant financial products, which are solely the responsibilities of financial
service providers.
As advised by our PRC Legal Advisor, during the Track Record Period and up to the
Latest Practicable Date, with respect to our digital precision marketing services, we were in
compliance with applicable PRC law and regulations in all material respects.
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Risk Management Services
Our risk management services primarily comprise enterprise operation reporting services,
user analytics services, risk analytics services, and procurement optimization services.
Enterprise Operation Reporting Services
During the Track Record Period, our enterprise operation reporting services were
delivered primarily to financial service providers, including commercial banks and fintech
companies that engage in SMB financing business, among others, as well as licensed credit
reporting agencies. Our enterprise operation reporting services allowed financial service
providers to develop meaningful and comprehensive understanding of the business
performance and operation status of small and micro-sized enterprises with financing needs.
Typically, financial service providers initiated requests to view operation reports for specific
enterprises. We collected corporate information of such enterprises from publicly available
resources, as well as their invoice records, after obtaining necessary authorization from them,
based on which we generated enterprise operation reports relating to such enterprises. Prior to
delivering the enterprise operation reports to our customers, we would obtain consent from the
reported enterprises for the initial delivery and subsequent updates of these reports. Each
enterprise operation report typically included information relating to one enterprise, including
enterprise profile summary, annual sales statistics, and certain operation analysis based on
invoice records. We generally updated the enterprise operation reports on a monthly basis for
customers to access and review. Based on authentic invoice and transaction data, enterprise
operation reports reflected relevant enterprises’ operation status and financial well-being,
which we believe allowed our customers to accurately assess credit risks and formulate risk
management and control measures. During the Track Record Period and up to the Latest
Practicable Date, we had obtained requisite consent and authorizations from relevant
enterprises in providing our enterprise operation reporting services in all material respects. The
following diagram illustrates the transaction and fund flows for our enterprise operation
reporting services prior to the adjustment of service delivery model.
Third-party
data provider Our Group
Financial service
providers and
licensed credit
reporting agencies
Data
Data Service
fees
Public domain
Data
Enterprise operation
reports
Service fees
Customers and
users
Data
(1)
Financial & taxdigitalization solutions
(1) We obtain consent from our customers and users prior to using their data and financial and tax information for
our enterprise operation reporting services.
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On September 27, 2021, the PBOC issued the 2021 Administrative Measures, which
requires institutions that have not completed record-filing as enterprise credit reporting
agencies but had engaged in enterprise credit reporting business before the promulgation of the
2021 Administrative Measures to rectify within 18 months from January 1, 2022 (the
“Compliance Period”). According to the Measures for the Administration of Credit Institutions
(جestablishment of an enterprise credit reporting agency shall satisfy the
criteria for company incorporation stipulated in the Company Law of the People’s Republic of
China (جthe “PRC Company Law”), and a record shall be filed with the
provincial branches of People’s Bank of China within 30 days from the grant of registration by
the company registration authorities, and the following materials shall be submitted: (1) filing
form for the enterprise credit reporting agency; (2) photocopy of the business license; (3)
statement on equity structure, including capital, list of shareholders, and their respective
capital contribution amount or shareholding; (4) a statement on organization structure and
staffing; (5) basic information on the scope of business and business rules; (6) basic
information on business systems, including a report on the development status of enterprise
credit information system and a report on the security evaluation of enterprise credit
information system issued by an institution with national information security level protection
evaluation qualifications; and (7) information security and risk prevention measures, including
established internal control system and security management system. See “Regulatory
Overview—Regulations on Credit Reporting Business.” We submitted our record-filing
application with the Business Administration Department of the PBOC (Beijing) in 2021 and
had not received any rejection, denial or any other response or feedback from the relevant
authorities as of the Latest Practicable Date.
In response to the promulgation of the 2021 Administrative Measures, and after
evaluating the uncertainty associated with the lengthy process of completing the record-filing
requirement, we have adjusted the service delivery model for the provision of our enterprise
operation reporting services to financial service providers in order to mitigate the impact of
regulatory changes on our business. Under the adjusted service delivery model, we no longer
deliver enterprise operation reports to financial service providers. Instead, we deliver
enterprise data and invoice records to licensed credit reporting agencies we collaborate with or
credit reporting agencies affiliated with financial service providers after obtaining necessary
authorization from relevant enterprises. We may also offer certain technical assistance for these
licensed credit reporting agencies. These licensed credit reporting agencies will produce
enterprise operation reports for financial service providers after separately obtaining necessary
authorization from relevant enterprises. As of the Latest Practicable Date, we separately
entered into a strategic collaboration agreement with Guangxi United Credit Reporting Co.,
Ltd. (“Guangxi United”), our associated company, and two other licensed credit reporting
agencies, which are independent third parties. We do not believe that the risk of
disintermediation with the introduction of licensed credit reporting agencies to our service
provision will materially and adversely affect our business. We believe our rich invoice and
financial data assets and data analytics capability have provided us with the competitive edges
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that make us irreplaceable when serving financial service providers in collaboration with
licensed credit reporting agencies, which typically lack analytics capability with respect to
invoice data, primarily due to their lack of access to such data assets, according to the F&S
Report.
The following diagram illustrates the transaction and fund flows for our enterprise
operation reporting services after the adjustment of service delivery model.
Third-party
data provider Our Group
Data
Data Service
fees
Public domain
Data
Customers and
users
Data
(1)
Financial & taxdigitalization solutions
Financial service
providers
Enterprise operation
reports
Service fees
Licensed credit
reporting agencies
we collaborate with
Other licensed
credit reporting
agencies affiliated
with financial
service providers
Data and services
Data and services
Service fees
Service fees
(1) We obtain consent from our customers and users prior to using their data and financial and tax information for
our enterprise operation reporting services.
From June 30, 2023 and onwards, the customers of our enterprise operation reporting
services comprise licensed credit reporting agencies only, including the three aforementioned
credit reporting agencies we collaborate with. For service contracts that we entered into prior
to the effectiveness of the 2021 Administrative Measures and were still in effect as of
December 31, 2021 (“Legacy Contracts”), we have either restructured the transactions
underlying the Legacy Contracts pursuant to the adjusted service delivery model or ceased to
provide services under the Legacy Contracts as of June 30, 2023. As of December 31, 2021,
under the then effective Legacy Contracts, we served a total of 38 customers. As of June 30,
2023, we have restructured transactions underlying certain Legacy Contracts, following which
we continue to serve 15 customers under the adjusted service delivery model. We have ceased
to provide services under the remaining Legacy Contracts as of June 30, 2023.
Further, we have adopted the adjusted service delivery model for service contracts we
newly entered into on and after the effectiveness of the 2021 Administrative Measures. During
the period from January 1, 2022 and up to December 31, 2023, we entered into service
contracts with Guangxi United to serve a total of 43 financial services providers, including 26
new ones. We also entered into one service contract with the aforementioned independent
third-party licensed credit reporting agency to serve one additional new financial service
provider. The independent third-party licensed credit reporting agency agrees to pay us 99% of
the service fees it receives from financial service providers.
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The salient terms of our strategic collaboration agreement with Guangxi United are
summarized as follows.
 Term. The collaboration agreement has a term of three years, automatically
renewable upon expiration for additional three years.
 Scope of collaboration . We agree to provide enterprise data, invoice records and
other relevant information to Guangxi United, after obtaining necessary
authorization. Guangxi United agrees to perform data analytics and processing
based on enterprise data and invoice records supplied by us, produce and deliver
enterprise operation reports to financial service providers. Both parties agree that a
back-to-back service agreement between Guangxi United and us shall be entered
into for each service agreement between Guangxi United and the relevant financial
service provider for specific services to be rendered. In rare cases, the financial
service provider, Guangxi United and we will enter into a tripartite service
agreement.
 Pricing . We charge information collection service fees based on the number of
enterprises whose information is supplied to Guangxi United. The information
collection service fees shall be settled monthly. Guangxi United shall charge
financial service providers service fees based on the number of enterprises included
in the enterprise operation reports. Guangxi United generally pays us 95% of the
service fees it received from financial service providers, which, according to the
F&S Report, is consistent with the industry average range of 95% to 99%.
 Obligations . We guarantee the legality of information supplied to Guangxi United.
Guangxi United represents that it possesses and shall maintain all requisite licenses
and qualifications required to perform the collaboration agreement.
In 2022 and 2023, our revenue attributable to Guangxi United was RMB3.9 million and
RMB58.4 million, respectively. With a view to developing a sustainable business relationship,
we have invested in, and indirectly own as to, 15% of the equity interest of Guangxi United,
and nominated our executive Director, Mr. Y ang Zhengdao, to sit on the board of Guangxi
United. The remaining 85% of the equity interest of Guangxi United is owned by an
independent third party. Except for our indirect ownership in Guangxi United and the
directorship of Mr. Y ang Zhengdao, there has been no past or present relationships between the
other shareholders or directors of Guangxi United and us, our subsidiaries, Shareholders,
Directors, senior management or any of their respective associates, other than our business
collaboration with Guangxi United. Based on reasonable inquiry and publicly available
information, to the best knowledge of the Company, there has been no sharing of resources,
including without limitation, plant and equipment, manpower, administrative functions,
banking facilities or otherwise, between Guangxi United and us and our subsidiaries,
Shareholders, Directors, employees or any of their respective associates. During the Track
Record Period and up to the Latest Practicable Date, we did not provide any advance or
financial assistance to Guangxi United.
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As advised by the PRC Legal Advisor, according to the 2021 Administrative Measures,
the licensed credit reporting agencies are required to complete record filing with the provincial
branch of the PBOC in their place of registration, and subject to supervision by the relevant
competent government authorities. They are also required, among others, to formulate
protocols to conduct necessary review of the authorization from the enterprises reported, and
to specify, by agreement or in other forms, their respective rights, obligations and
responsibilities, among others, in obtaining relevant consent. We have adopted measures to
ensure that proper authorization from the relevant enterprises are obtained by the licensed
credit reporting agencies prior to their delivery of operation reports to financial service
providers, such as stipulating in our contracts with the licensed credit reporting agencies that
consent from enterprises is required prior to any service delivery. Pursuant to the 2021
Administrative Measures, entities providing credit information to credit reporting agencies are
referred to as information providers. In addition, the 2021 Administrative Measures stipulate
that (1) enterprise credit information shall only be collected for legitimate purposes, and (2) the
collection of credit information shall not infringe upon enterprises’ trade secrets. Both
requirements are applicable to information providers. Therefore, as advised by the PRC Legal
Advisor, we, as an information provider in our collaboration with licensed credit reporting
agencies, are legally obliged under the 2021 Administrative Measures to collect enterprise
credit information for legitimate purposes and our collection process does not infringe upon
such enterprises’ trade secrets during information collection.
When financial service providers need to find out certain operational and financial
conditions of its own financial product users, financial service providers will request their
users to download and install certain of our applications, primarily in recognition of our
transaction- and invoice-based analytics capabilities. The installation of our application and
use of our cloud solutions will require consent from the financial product users, and such
consent authorizes us to collect and process their data. Prior to any report delivery, the relevant
financial product user will need to provide consent to financial service providers for data
processing and generation of enterprise operation reports. As advised by our PRC Legal
Advisor, we believe our measures adopted in ensuring proper enterprise authorization for our
enterprise operation reporting services are effective and sufficient to discharge the aforesaid
legal obligation as prescribed by the 2021 Administrative Measures, on the basis of the
following reasons:
 To ensure that consent from enterprises is obtained prior to any service delivery, we
and relevant parties have adopted the following measures and work flow: (1) we
obtain necessary and proper authorization from enterprises before collecting their
invoice records and other transaction information and transmitting such information
to the licensed credit reporting agencies that we collaborate with; (2) we have
stipulated in our contracts with licensed credit reporting agencies that consent from
enterprises is required prior to any service delivery; (3) the licensed credit reporting
agencies will request the financial service providers to obtain authorization
documents from the relevant enterprises; (4) after obtaining the enterprise
authorization documents, the financial service providers will notify the licensed
credit reporting agencies through automatic transmission of filing numbers of the
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authorization documents, and such filing numbers will also be automatically
provided to us by the licensed credit reporting agencies; and (5) the financial service
providers will not be able to access the enterprise operation reports until licensed
credit reporting agencies and we have been furnished with the abovementioned
filing numbers.
 According to the Several Provisions on the Prohibition of Acts of Infringement upon
Trade Secrets (1998 Revision) (֛1998ࡌ
ࠈissued by the State Administration for Industry and Commerce of the PRC, acts
such as theft, inducement, coercion or other unjust means to acquire another party’s
trade secrets, and disclosure of or use of or permission for any third party to use
trade secrets so procured, are considered as infringement upon another party’s trade
secrets. On the basis that we will obtain the authorization of such enterprises before
delivering the enterprise data and invoice records to licensed credit reporting
agencies that we collaborate with, the PRC Legal Advisor is of the view that such
delivery of enterprise data and invoice records shall not be considered as any
infringement upon other enterprises’ trade secrets. Our PRC Legal Advisor further
advised that, since we collect enterprise data and invoice records with proper
authorization for the purpose of providing services to our customers, such data
collection is considered as with a legitimate purpose pursuant to PRC laws and
regulations.
 We had not received any inquiry, notice or penalty from any PRC government
authority, or any complaint from any user or customer, due to unauthorized data
usage or information collection for our enterprise operation reporting services.
As advised by our PRC Legal Advisor, relevant PRC laws and regulations do not
explicitly specify the legal responsibility of an information provider in the event that licensed
credit reporting agencies it collaborates with fail to obtain proper authorization from the
relevant enterprises before service delivery. Therefore, our PRC Legal Advisor is of the view
that, in the absence of any specified legal consequence and considering the effective and
sufficient measures adopted in ensuring proper enterprise authorization for our enterprise
operation reporting services, the likelihood that we are deemed jointly liable under the PRC
laws and regulations due to licensed credit reporting agencies’ failure to obtain proper
authorization or breach of 2021 Administrative Measures is remote.
We believe our business operations and financial performance had not been and will not
be adversely affected by the service delivery model adjustment. For the period from the
expiration of the Compliance Period, July 1, 2023, to April 30, 2024, the number of viewing
requests fulfilled for enterprise operation reports was 17.3 million, and the number of
enterprises included in the enterprise operation reports was 2.9 million, compared to 10.7
million and 1.6 million for the period from July 1, 2022 to April 30, 2023, respectively. In
addition, given the growth in demands for our services and our collaborating licensed credit
reporting agencies’ contractual obligation to pay us 95% to 99% of the service fees they
receive from the financial service providers, it is unlikely our financial performance will be
materially and adversely affected by the service delivery model adjustment.
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Our PRC Legal Advisor is of the view that (1) the adjusted service delivery model of our
enterprise operation reporting services complies with the currently effective laws and
regulations regarding credit reporting business; (2) our performance of the Legacy Contracts
under the pre-adjustment service delivery model within the Compliance Period does not violate
the 2021 Administrative Measures or other related laws and regulations, and such Legacy
Contracts are legal and valid; and (3) even if our provision of enterprise operation reporting
services during the Track Record Period pursuant to the pre-adjustment service delivery model
may be deemed to constitute operation of enterprise credit reporting business as a result of the
effectiveness of the 2021 Administrative Measures, the possibility is remote that any
administrative penalties may be imposed on us for our past provision of enterprise operation
reporting services without completing the record-filing procedure, on the basis of the following
reasons:
 We obtained the authorization from relevant enterprises and through financial
service providers.
 The 2021 Administrative Measures provide legal basis for us to collaborate with
licensed credit reporting agencies.
 The PBOC granted the 18-month compliance period, and we had completed the
adjustment of our enterprise operation reporting services pursuant to the adjusted
service delivery model during such period. We have been providing our services
pursuant to the adjusted service delivery model since June 30, 2023.
 As confirmed through consultation by us with the Nanning Central Branch of the
PBOC on July 26, 2022, with respect to our cooperation with Guangxi United under
the adjusted service delivery model, (1) such adjusted model complies with the 2021
Administrative Measures, (2) the performance of the Legacy Contracts under the
pre-adjusted service delivery model within the Compliance Period is permitted, and
(3) we shall complete the service delivery model adjustment within the compliance
period, and provision of our services under pre-adjusted service delivery method
will not incur penalties on us during the compliance period. Consultation by us with
the Business Administration Department of the PBOC (Beijing) on February 27,
2023 confirmed the aforementioned confirmation from the Nanning Central Branch
of the PBOC, and further confirmed that we are permitted to conduct enterprise
operation reporting services pursuant to such adjusted model across China without
jurisdiction limits. According to the Administration Measures for Record-filing of
Enterprise Credit Reporting Agencies (جenterprise
credit reporting agencies shall complete record filing with the provincial branch of
the PBOC in their places of registration and be subject to supervision and regulation
thereof, and as a result, our PRC Legal Advisor is of the view that the Business
Administration Department of the PBOC (Beijing) and Nanning Central Branch of
PBOC are competent authorities to provide their respective confirmations set out
above.
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 During the Track Record Period and up to the Latest Practicable Date, we had not
been required by any competent government authorities to complete the record-
filing procedure for enterprise credit reporting businesses as a result of our provision
of enterprise operation reporting services. Nor had there been investigations or
penalties imposed on us by competent government authorities in such respect.
During the provision of our enterprise operation reporting services, we procure enterprise
data from a third-party data provider, and data supplied to us primarily include enterprises’
industrial and commercial information, contact information, and beneficial ownership and
shareholding information. Under our agreement with such third-party data provider, we have
the right to analyze, integrate, process and use the data procured from such third-party data
provider in our products, and we shall not tamper with, disclose or illegally use the procured
data, or use the procured data beyond the scope of the agreement. To the extent required under
the Cybersecurity Law of the PRC, we must provide consent from enterprises when we request
data from this third-party data provider, who shall keep any information we provided during
the course of its services strictly confidential. Under the agreement, we are required to deposit
a certain sum of money into our account with the third-party data provider, and for each time
we request for enterprise data, we are charged a fee, the amount of which is dependent on the
specific type of information we request and the search result. Our agreement with this
third-party data provider has a term of three years, and may be extended by the third-party data
provider.
User Analytics Services
Leveraging enterprises’ invoice and transaction data from our cloud financial & tax
digitalization solutions, we launched our user analytics services in 2021, and we would analyze
enterprises’ transaction patterns and financing needs after receiving proper authorization from
them. We compare such enterprise profile against criteria specified by our customers, primarily
financial service providers, which typically include the number of enterprises’ invoice
issuances and transaction amount within a certain period of time. We would then compile and
deliver a list of eligible enterprises to our customers, who would then reach out to such eligible
enterprises for their financing needs. Our list only displays the names of enterprises or other
publicly available corporate information, and we would desensitize relevant corporate
information. Since the launch in 2021, the lists delivered to financial service providers
contained 0.7 million, 3.9 million and 10.8 million enterprises in 2021, 2022 and 2023,
respectively. We believe our services not only facilitate financial service providers with user
acquisition and expand user outreach for their financial products, but also benefit enterprises
with financing needs. We charge financial service providers based on the number of enterprises
on the list.
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Risk Analytics Services
Our risk analytics services enable financial service providers to optimize their risk control
modeling and strategies with respect to small and micro-sized businesses and enhances
financial service providers’ ability to independently monitor, detect and manage credit risks.
We devise and configure online risk management systems for financial service providers based
on their risk preferences. Specifically, we utilize machine learning technology to predict
default rates of financial product users based on their invoice records. The online risk
management systems comprise full-cycle risk management functions, including user selection,
product design, transaction structure design, risk strategy formulation, anti-fraud warnings,
credit ratings, and risk monitoring and alerts after financial product sales. During the Track
Record Period, we delivered three, seven and six projects with our risk analytics services in
2021, 2022 and 2023, respectively, to a total of three, seven and six customers in the same
periods, respectively, and generated revenue of RMB6.2 million, RMB6.9 million, and
RMB4.1 million in the same periods, respectively. The price charged for projects delivered
with our risk analytics services ranged from RMB0.1 million to RMB5.0 million per project
during the Track Record Period, depending on project complexity. Average customer spending
on our risk analytics services was RMB2.1 million, RMB1.0 million and RMB0.7 million in
2021, 2022 and 2023, respectively.
Moreover, we provide value-added asset verification services that enable financial service
providers to verify the authenticity of invoice information and other transaction vouchers
provided by financial product applicants, to facilitate financial service providers’ decision-
making and improve effective and timely risk monitoring. We charge usage-based or annual
subscription fee for our asset verification services. In 2021, 2022 and 2023, we generated
revenue of RMB7.9 million, RMB8.2 million, and RMB14.6 million, from our asset
verification services, respectively.
Procurement Optimization Services
During the provision of our tax invoice processing and verification services, we extract,
compile and categorize merchandise information from desensitized tax invoice data, sort out
merchandise catalog that enterprise customers routinely procure, and construct a merchandise
SKU library. Based on the massive volume of tax invoices processed through our solutions and
the unit price information recorded on such tax invoices, we are able to compute average
merchandise prices with our big data algorithm, which will serve as market price references for
our customers and empower better procurement decisions and cost savings. We launched our
procurement optimization services in 2022 and generated revenue of approximately RMB0.6
million in 2023.
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Customer Case Study
Background and pain points. Customer Y is a commercial bank in China founded in 2015.
Customer Y is committed to serving financing needs of small and micro-sized midsized
companies in China. During its provision of financial services, Customer Y discovered that (1)
SMBs in China typically have limited operation scale, poor anti-risk ability and sub-standard
financial management, and such weaknesses, if unidentified, would cause risks and damages
to Customer Y’s business and adversely affect its ability to achieve optimal balance among risk
control, operational efficiency and profitability; (2) information related to small and
micro-sized companies was usually incomplete and could not fully reflect their operation
status; and (3) Customer Y had limited means to identify or attract potential clients for its
financial products.
Solution. Utilizing our access to massive invoice data and tax records, we provided
customized enterprise operation reports based on Customer Y’s risk control preferences to
analyze the profitability, growth potentials and operation scales of Customer Y’s potential
clients, which served as basis for Customer Y to determine whether to sell financial products
to such potential clients and to identify high-quality potential clients and to market its financial
products accordingly. As of December 31, 2023, we had delivered enterprise operation reports
of more than 1.4 million enterprises for Customer Y .
ON-PREMISES FINANCIAL & TAX DIGITALIZATION SOLUTIONS
Our on-premises financial & tax digitalization solutions, delivered in our proprietary
software product, integrate a variety of our self-developed programs to perform financial and
tax management functions with industry- and customer-specific configuration installed on our
customers’ local devices and are compatible with e-invoices and digital invoices. Customers of
our on-premises solutions are usually enterprise conglomerates or institutional customers with
heightened data sensitivity, and require stringent IT governance and customized solutions.
They therefore prefer on-premises installed software to multi-tenant cloud software for its
enhanced self-governance attribute. Our on-premises solutions provide tax invoice compliance
management solutions, financial and tax management solutions, and supply chain collaboration
solutions that are similar to service offerings under our cloud financial & tax digitalization
solutions. See “—Cloud Financial & Tax Digitalization Solutions” for details.
Our on-premises financial & tax digitalization solutions enable customers that maintain
large-scale and geographically-dispersed operations to perform centralized management of
complexed tax invoice, financial and tax matters. We embed heterogeneous structure to
integrate customers’ various internal systems, such as their ERP systems and finance systems,
for coordinated management.
We provide software implementation and maintenance services for customers of
on-premises financial & tax digitalization solutions. In 2021, 2022 and 2023, our on-premises
financial & tax digitalization solutions served 917, 1,309 and 2,051 enterprise customers,
respectively, across more than 30 industries during such periods. From January 1, 2021 to
December 31, 2023, the number of our on-premises projects exceeded 500. Average customer
spending on our on-premises solutions was approximately RMB120.1 thousand, RMB71.4
thousand and RMB67.3 thousand in 2021, 2022 and 2023, respectively. During the Track
Record Period, the revenue generated from our on-premises financial & tax digitalization
solutions was RMB110.2 million, RMB93.5 million and RMB138.1 million in 2021, 2022 and
2023, respectively, accounting for 24.3%, 17.8% and 19.4% of our total revenue in the same
periods, respectively.
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Customer Case Study
Background and pain points . Customer Z is a global leading commercial bank and
provides comprehensive financial products and services for more than 8.6 million enterprise
clients and more than 680 million individual clients worldwide. Such huge customer base
brought about challenges associated with high-volume and high-frequency invoice issuances.
Moreover, since some local branches of Customer Z did not have the capability to process
e-invoice issuance requests from their clients, they had to submit invoice issuance requests to
provincial branches, and provincial branches would then issue and deliver invoices to the
requesting local branches that subsequently notified clients to pick up invoices. This lengthy
process not only incurred extra manpower and time cost but also resulted in poor client
experience.
Solution . We devised an on-premises solution that upgraded Customer Z’s tax
management system without altering its basic structure. Our solution synchronizes with
Customer Z’s internal business system and is available for use by its branches and local offices,
which covers approximately 1,300 tax identification numbers associated with Customer Z. Our
customized solution enabled staff of Customer Z to substantially reduce e-invoice processing
time and deliver e-invoices to its clients through multiple means, which improves the overall
client satisfaction with Customer Z’s service. With such centralized e-invoice and tax
management system, Customer Z effectively reduced its operational costs incurred in the
issuance, delivery and storage of paper invoices.
OTHER SERVICES
Our other services include primarily advertisement publishing services. We publish
advertisements on our WeChat official accounts and e-invoice review portal. We charge
customers performance fees based on the number of clicks on the advertisements or, to a lesser
extent, fixed fees for the duration of the service period.
RESEARCH AND DEVELOPMENT
Our R&D Capability and Strategies
We believe our R&D capabilities form the cornerstone of our competitiveness and
long-term growth. We have devoted significant amounts of resources to continuously advance
our product development capability, including recruiting and training high-caliber R&D and
technology talents with rich experience. As of December 31, 2023, we had assembled a
dedicated R&D team of 372 members, accounting for approximately 36.5% of our total
employees as of the same date. Our core product development personnel have an average work
experience of over 10 years in computing and software development related areas. In addition,
our R&D capabilities are also supported by our commitment and investment in R&D activities.
In 2021, 2022 and 2023, we incurred research and development expenses of RMB137.8
million, RMB144.3 million and RMB188.0 million, respectively, representing 30.4%, 27.4%
and 26.4% of our total revenue, respectively.
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Our strong R&D capabilities have enabled us to develop highly functional solutions and
achieve iterative product delivery. The following is a summary of our key R&D milestones
since our inception.
Y ear R&D Milestones
2015 We launched Baiwang Cloud platform.
2017 We launched our Open API Platform to enable various types of ERP
systems to integrate with our Baiwang Cloud platform.
2018 We launched our supply chain collaboration solutions and an initial version
of financial and tax management solutions.
2019 We launched our big data analytics platform and were certified as a High
and New Technology Enterprise in China.
2020 We launched our OFD template management and AI-driven risk
management platform.
2021 We launched our blockchain platform.
2022 We developed our tax management system, completed our financial and tax
management solution offerings, and launched procurement
optimizations services.
Product Development Process
Our R&D initiatives are guided by market demands, customer specifications as well as
evolving national policies and regulatory development. Our product development process can
be divided into two main stages, namely the initial development stage, and the subsequent stage
for ongoing product updates and optimization, which commences after the launch of the
product or service to help maintain and upgrade the functions of our products and services. We
have adopted the integrated product development (“IPD”) methodology for the initial
development and subsequent iteration of our solutions, which primarily comprises the
following steps.
 Step 1: Demand analysis . Our product manager and product owner (“PO”) teams
collect, compile and prioritize customer and market demands, government guidance
and analyze corresponding product functionalities. We then conceptualize such
demands into minimum deliverable units. We subsequently conduct research to
understand and analyze the associated challenges, financial profitability, technical
feasibility in developing the product candidates.
 Step 2: Product development . After a project is approved, our product development
team will devise detailed sprint planning, which sets out sprint design specifications,
project progress schedules and resource demands. In the product development stage,
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our product development team identifies system demands, designates design
requirements, defines system structure, formulate design evaluation reports
schemes, and sets out development and trial guidelines based on product
functionality and quality objectives.
 Step 3: Product testing . To ensure the quality of our products, our testing personnel
devise integrated testing plans, conduct tests on the product candidates, and devise
greyscale release scheme. Testing personnel are responsible for recording and
following up on bugs or issues spotted during the testing stage. Upon passing
internal testing, we deliver the products to our customers for trial testing, and if
customers raise reasonable correction or optimization requests, our product
development team will timely address such requests, and once the customer is
satisfied with our products, we will conduct product deployment tests.
 Step 4: Product launch and delivery . Product candidates that successfully pass the
testing procedures in Step 3 will be launched and available for customer use. After
product launches, we continuously collect customer feedback and market response,
which serve as the basis for further R&D initiative and iterative development.
 Step 5: Product iteration . After product launch, we collect customer feedback,
market response, product operation statistics to continuously integrate data and
analyze interaction behavior and drive product iteration and innovation with such
data analysis.
OUR TECHNOLOGY
Technology is the foundation of our company and a key component to effective solution
offerings. We have launched proprietary compliance and information security, big data
analytics and cloud technologies, assisted by the utilization of certain open source technology
services. As of the Latest Practicable Date, we have registered 16 invention patents relating to
our technologies.
Compliance and Information Security Technologies
Our compliance and information security technologies include OFD template
management technology, digital signature management technology, digital certificate
management technology and blockchain platform. These technologies provide a safe and
reliable environment for our customers to conduct their tax invoice and transaction
management through our solutions in compliance with relevant laws and regulations.
 OFD template management technology (OFD
ό၍ଣҦஔ). OFD is the file format
prescribed by PRC national standard. OFD is the designated format for invoice
issuance, delivery and storage and is also the preferred format for the storage,
exchange and filing of electronic documents, electronic licenses and electronic
archives according to the Measures for Accounting File Management (၍ଣ
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جand the Notice on Standardizing the Filing of Electronic Accounting V oucher
and Reimbursement (ٝissued by the
Archives Bureau of the Ministry of Finance. See “Regulatory
Overview—Regulations of Finance and Taxation Management—Electronic Invoice
Services.” Our OFD template management technology compiles, disassembles and
exports the built-in structure and data of OFD documents, and with such structural
data, enables OFD document generation, combination, conversion and verification.
Specifically, our technology supports the review of OFD document on mobile
devices, computers and other servers. Our OFD template management technology
therefore equips our services with comprehensive OFD document capability that
enables our customers to manage their financial and tax matters more conveniently
and in compliance with relevant taxation and accounting laws and regulations.
 Digital signature management technology (
ᅰοᖦΤ၍ଣҦஔ). Our digital
signature management technology enables e-invoices issued through our solutions to
comply with the reliability requirement set by the Electronic Signature Law ( ཥɿ
جand our technology satisfies state cryptography requirements to prevent
tampering and counterfeit and ensure signatory authenticity. Our digital signature
management technology utilizes various signature algorithms such as MD5 and
SM2, among others, and is mainly applied in privacy data encryption, OFD
document service and document integrity verification.
 Digital certificate management technology (
၍ଣҦஔ). Our digital
certificate management technology, utilizing state cryptography algorithms, applies
to e-invoice management to achieve functions of, among others, identity
verification, anti-counterfeiting, encryption, and automated processing. Our digital
certificate management technology, combined with our digital signature
technologies, can improve the completeness and authenticity of e-invoice data, and
enhance the reliability of our tax invoice compliance management solutions.
 Blockchain platform technology (
ਜ෯ᗡ̨̻Ҧஔ). Based on distributed ledger
technology and cryptography technology, our blockchain platform technology
enables collection, transmission, and circulation of e-invoices and digital invoices
and other transaction vouchers across multiple domains and institutions. Data
processed with our blockchain platform technology possesses the characteristics of
multi-point storage and multi-party consensus, so as to achieve data traceability and
prevent data loss and fabrication.
Big Data Analytics and AI
Our data assets are the backbone of our solutions and data analytics capabilities. During
the Track Record Period, we had invested in our data analytics capabilities to harness data from
massive transactions we facilitated each day. We process a massive amount of data in
connection with our operations on a daily basis, with a total storage capacity of approximately
720 terabytes stored in 75 physical machines as of December 31, 2023. We developed data
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computing platform based on third-party open source systems. Our data assets primarily
include basic enterprise profiles, enterprise invoice records, and enterprise merchandise
entries. We have built a proprietary and professional big data center for better management and
analytics of our data assets.
Our data center is based on open source technology and is further optimized by our
experienced engineers to enhance its function. Our data center effectively reduces service
response time, and the daily data processing volume exceeded 10TB. We have also integrated
third-party tools, such as Hive, ElasticSearch and NebulaGraph, onto our platform and
established an industry-leading big data integration system. Our data center serves as the
foundation of our AI capabilities, such as natural language processing (“NLP”) and knowledge
graph technologies.
Our data engineers model, analyze and mine our transaction data resources, and derive
insights into customer preferences, so as to provide better experience and more targeted
services for our customers. Specifically, we have developed NLP and knowledge graph
technologies to facilitate our data analytics. Based on non-structural enterprise information
from invoice and transaction records, our NLP technology, through bidirectional encoder
language representation model, character-level convolutional neural network and word-level
recursive neural network, analyzes enterprises’ business attributes. Our algorithm engineering
team explores areas of AI and machine learning on a continuous basis. For example, in order
to provide expedite e-invoice and digital invoice issuance services, we have developed
automatic filling and completion capabilities as to merchandise and enterprise information. For
our data-driven analytics services, we have also applied algorithm to detect enterprise
abnormality and eliminate interfering data for more accurate big data analysis.
Our Cloud Technologies and Infrastructure
We have established a hybrid cloud infrastructure that leverages computing power of
public cloud, hosted by a reputable cloud service provider in China, and furthers data privacy
with private cloud. With more than 100 physical servers and 1,000 cloud servers and the public
network speed reaching more than 200 Mbps at traffic peak, we have the computing power to
process large amounts of transactions simultaneously. Moreover, our operating system is
capable of processing more than 3,000 QPS (queries-per-second) for short connections and
approximately 500,000 QPS for persistent connections. This allows us to process large amounts
of data on a real-time basis and ensures high speed and stable performance on a large scale to
accommodate more enterprise customers and support the increased complexity and diversity of
our business operations.
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We also continuously refine our own operational efficiency and upgrade our solutions
based on cloud technologies, including cloud aggregation technology, auto scaling technology,
service mesh framework and distributed data storage technology.
 Cloud aggregation technology . The prevalent use of information security hardware
by enterprises in managing their invoice, financial and tax matters creates an
obstacle for digitalized transformation in these areas, as multiple information
security hardware installed in scattered geographical regions pose difficulty for the
exportation and compilation of invoice and tax information for large enterprises, in
particular, that operate in diverse locations. In response, we have applied cloud
aggregation technology that effectuates the digital utilization, concurrent connection
and multi-scenario application of various information security hardware, enabling
customers to simultaneously manage all information security hardware through our
solutions.
 Auto scaling technology . Our solutions utilize auto scaling technology to timely
scale up or down computing power and memory storage. When customer service
requests surge, we scale up our computing power to guarantee timely service
response and stable service provision, and when customer service requests are
reduced, we scale down computing power to save operating costs.
 Service mesh framework . Cloud architectures typically comprise hundreds of
services, all with their own instances that operate in a live environment, which
presents huge challenges for tracking and making changes to a certain service or
component without interfering the operation of other services or components. We
adopt service mesh framework that containerizes each service or component and
separately manages different services or components, so that we can constantly
refine our product and only need to make updates on a single infrastructure layer of
our platform without interfering the others.
 Distributed data storage technology . Distributed data storage technology utilizes
object storage, wide-column database, relational database and cache clusters
technologies to achieve the production, storage, retrieval and analysis of invoice
data. Specifically, we use object storage technology to store invoice data, wide-
column database to support invoice data lookup, relational database to store master
data, user data and invoice data, and cache cluster to effect distributed data sharing
and store metadata and certain temporary data.
PRICING
For our cloud financial & tax digitalization solutions, we charge customers (1) annual
subscription fees, (2) usage-based fees, (3) sales-based fees, and (4) solution delivery fees,
which comprise implementation service fees, hardware equipment fees and maintenance fees.
We typically enter into framework agreements with customer, the terms of which generally
range from one to five years. The framework agreements set forth the subscribed and purchased
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solutions and their respective payment terms. For subscription fees, revenue is recognized
ratably over the term of the framework agreements, and the subscription fees are typically
settled by customers annually. For usage-based fees, we typically charge customers based on
the number of invoices processed and/or processing requests fulfilled with our services. If
customers require customized solutions, we charge implementation service fees based on the
number of technical specialists staffed on a given project and the duration of the project. We
determine pricing of our cloud financial & tax digitalization solutions primarily based on
estimated costs and profit margins, and discounts may be granted considering specific customer
relationship and our marketing strategies.
Pricing of our data-driven analytics services primarily refers to market prices of
comparable products. For our digital precision marketing services, we charge financial service
providers sales-based fees based on the value of financial products that we facilitate in selling.
We normally settle service fees with financial service providers on a monthly basis. For our
enterprise operation reporting services delivered pursuant to the pre-adjustment service
delivery model, we charge our customers either on a usage-based fee model or on an annual
subscription model. Under the usage-based fee model, we charge customers based on the
number of enterprises included in the enterprise operation reports. The unit price charged per
enterprise on the enterprise operation reports ranged from RMB10.0 to RMB250.0 in 2021,
from RMB7.6 to RMB135.0 in 2022 and from RMB6.0 to RMB118.8 in 2023. Typically, we
confirm with customers on the number of service usages on a monthly basis and settle
payments on a monthly or quarterly basis. Under the annual subscription model, we offer
customers an annual subscription package for which the customer pays a fixed fee for a
predetermined number of enterprises to be included in the enterprise operation reports during
the subscription period. For enterprise operation reporting services delivered pursuant to the
adjusted service delivery model, we receive service fees from licensed credit reporting
agencies, equal to the product of a pre-determined ratio as agreed between us and the licensed
credit reporting agencies and the service fees received by licensed credit reporting agencies
from the relevant financial service providers. For our user analytics services, we charge
financial service providers based on the number of enterprises on the list of potential financial
product users. For our risk analytics services, we charge a project-based fee, based on the
complexity of, manpower involved in, and time incurred for the project.
For our on-premises financial & tax digitalization solutions, we charge our customers
software license fees to access and use our solutions, hardware equipment fees and a
project-based one-time implementation fee, which is determined upon project complexity,
manpower involved, the number of tax identification numbers owned by customers, and
customization requests raised by our customers. We also charge an annual maintenance service
fee of 10% of the relevant software license fee and hardware equipment fee after the one-year
warranty period expires. We determine pricing of our on-premises financial & tax digitalization
solutions primarily based on estimated cost and profit margin.
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SALES AND MARKETING
Sales Model
During the Track Record Period, we provided all of our products and services in China,
and we generated revenue primarily through direct sales of our products and services. Under
our direct sales mode, we rely on our in-house sales force to identify and interact with end
users of our cloud and on-premises financial & tax digitalization solutions and financial service
providers for our data-driven analytics services. During the Track Record Period, a small
portion of our revenue from cloud financial & tax digitalization solutions was attributable to
business collaborators, which helped market our solutions and identify and develop end users
for our cloud financial & tax digitalization solutions. Our business collaborators primarily
comprise Taobao and others. For details of our collaboration arrangement with Taobao and the
other business collaborators, see “—Sales and Marketing—Sales Model—Business
Collaborators.”
The following table sets forth our revenue breakdown by sales channels, both in absolute
amounts and as a percentage of our total revenue, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Revenue attributable to direct sales 423,382 93.3 491,648 93.5 676,070 94.9
Revenue attributable to business
collaborators
— Revenue attributable to Taobao 23,250 5.1 24,650 4.7 23,095 3.2
— Revenue attributable to other
business collaborators 7,131 1.6 9,467 1.8 13,831 1.9
Total 453,763 100.0 525,765 100.0 712,996 100.0
Direct Sales
We utilize direct sales to maintain a stable pricing system and proactively engage with
customers. As of December 31, 2023, we had direct sales force of 83 members, covering major
cities of China. Under our direct sales mode, we rely on our in-house direct sales force to
identify and interact with end users of our cloud and on-premises financial & tax digitalization
solutions and financial service providers for our data-driven analytics services, and when
carrying out our direct sales initiatives, we strategically put more emphasis on leading
companies in various geographical regions and industry verticals, including state-owned
enterprises and commercial banks. Our local sales representatives enables us to swiftly identify
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and capture market demand, which in turn allows us to improve customer satisfaction and
continually bring innovative products and services to market. During the Track Record Period,
we generated more than 90% of revenue through our direct sales model, and the number of
enterprise customers engaged through direct sales was approximately 3,200, 6,900 and 8,800
in 2021, 2022 and 2023, respectively.
Our service agreements with direct sales customers for our financial & tax digitalization
solutions typically include the following major terms.
 Term. The agreement generally ranges from one to five years.
 Service scope . The agreement generally specifies subscribed service modules,
maintenance services and hardware equipment purchases, as applicable. It also
specifies the number of employees and the amount of time required for the project.
 Payment arrangement . We designate different payment arrangement in our service
contracts based on service types. We set implementation service fees for both cloud
and on-premises financial & tax digitalization solutions factoring into labor and
time costs, which are typically paid in installment based on the actual project
development and delivery schedule. Recurring subscription fees for cloud financial
& tax digitalization solutions are settled annually according to specified payment
schedule. For on-premises financial & tax digitalization solutions, we charge
one-time software license fees. Hardware purchases, if any, shall be settled in a
one-time payment. Maintenance service fees are paid annually.
 Software installment and testing . We undertake to assist customers with software
installment, testing and configuration, as applicable. Both parties typically execute
inspection reports to confirm software inspection and delivery.
 Confidentiality . Both parties undertake not to transfer, appropriate or disclose data
of or relating to the other party without such parties’ written consent.
 Intellectual property rights . Intellectual property rights owned by each party at the
contract inception shall remain with the relevant party. Upon customer requests,
intellectual property rights derived from product customization may belong to our
customers, provided that such arrangement does not run counter to our intellectual
property rights and future intellectual property strategy.
 Termination . Either party can terminate the agreement upon the material breach by
the other party as stipulated in the agreements and seek damages.
Service agreements with direct sales customers of data-driven analytics services typically
include the following major terms.
 Term. The service agreement typically ranged from one to three years.
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 Service scope . The agreement generally specifies service modules that the respective
customer subscribes to.
 Payment arrangement . Fee and discount schedules are specified in the service
agreement. We typically settle with customers on a monthly basis. For our risk
analytics services, we charge a project-based fee.
 Undertakings . Both parties undertake to obtain and maintain valid licenses and
approvals as prescribed by the service agreement. We typically undertake to obtain
all relevant consent for data utilized or provided to customers and such data service
complies with applicable laws and regulations.
 Intellectual property . Intellectual property rights owned by each party at the contract
inception shall remain with the relevant contract party. Intellectual property rights
derived from the execution of the service agreements shall belong to our customers.
 Data security . For our enterprise operation reporting services, if the relevant
enterprise included in enterprise operation reports withdraws its consent for any
reasons, the performance of the service agreements shall terminate, and neither party
shall be responsible for such termination. We also undertake to adopt data security
measures and guarantee the timeliness and stability of data processing and
transmission. Our customers covenant not to use, transfer, process, copy, sell or
otherwise disclose contents or data involved in our services.
 Termination . Either party can terminate the agreement upon the material breach by
the other party as stipulated in the agreements and seek damages.
For our digital precision marketing services, we rely on our in-house sales force to
develop and maintain customer relationships with financial service providers, which are the
customers of our digital precision marketing services. However, we collaborate with marketing
agents to identify potential users for financial products launched by financial service providers.
We select our marketing agents based on various criteria, including, among others: (1) our
marketing agents are required to have a certain amount of minimum registered capital and
operational and business competency in relevant recognized industries such as information
services, enterprise services and financial product recommendation business; (2) our marketing
agents are required to have sufficient local sales and marketing resources with an expertized
sales team of at least 10 sales personnel; and (3) our marketing agents are are also required to
comply with applicable laws and regulations and should not be involved in any legal disputes.
The number of our marketing agents was 299, 511 and 666 as of December 31, 2021 and
2022 and 2023, respectively, which generally increased in line with our business growth.
The following table sets forth the movement of our marketing agents during the Track Record
Period.
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For the year ended December 31,
2021 2022 2023
At the beginning of the period 172 299 511
Addition of new marketing agents 127 212 155
Termination of marketing agents — — —
At the end of the period 299 511 666
The financial service providers designate application criteria for the financial products
launched by them; and we have the right to determine and limit the types of financial products
to be promoted by marketing agents. Based on the application criteria of the financial products
selected by us, marketing agents will identify potential product users by marketing such
financial products, usually on their self-operated platforms, such as their WeChat Official
Accounts and websites, and attracting potential financial product users to reach out to
marketing agents and discuss such users’ financial needs. The marketing agents then guide such
potential users to register on our platform. These potential users, upon registration, will
directly provide us with certain preliminary information, such as their legal names and tax
identification numbers, and grant us access to their operations and transaction records.
Leveraging our data analytics capability, we compare profile of financial product users
(including the aforementioned preliminary information and in most cases, the operations and
transactions records such as invoice data, authorized for our access by relevant financial
product users) against application criteria of financial products, and generate a list of financial
products that these users are eligible to apply for, and display the list to the relevant users.
Marketing agents may introduce the terms and characteristics of the relevant financial products
to the potential users. If required, marketing agents may also assist potential financial products
users to fill in financial product applications. During the financial product application process,
if marketing agents encounter contingencies or user inquiries that they are incapable of
handling, marketing agents will contact our staff for assistance, and we will provide timely
solutions, and if financial service providers are to be involved, we will contact financial service
providers and coordinate the response to marketing agents and potential financial product
users. We are the only point of contact of the financial service providers, customers of our
digital precision marketing services, during this process and receive service revenue directly
from them. Financial service providers typically do not collaborate directly with marketing
agents, as financial service providers maintain stringent internal control procedures and impose
qualification requirements for their service providers, such as operation history, registered
share capital and operation scale. Marketing agents typically cannot satisfy such requirements
from financial service providers. Financial service providers also prefer to collaborate with us,
as we have established our industry reputation as a financial and tax-related transaction
digitalization solution provider with strong data analytics capabilities that enable us to identify
businesses with financing needs but also detect associated lending risks. We pay marketing
agents, our suppliers, referral fees for their services. Therefore, we consider such service model
of our digital precision marketing services to be direct sales.
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We charge financial service providers service fees based on the value of financial
products we facilitate in selling, and we pay our marketing agents referral fees based on the
value of financial products we facilitate in selling with the assistance of these marketing
agents. See “—Data-driven Analytics Services—Digital Precision Marketing Services” for
details. For credit facility products, we charge service fees primarily based on the total amount
of credit facilities successfully granted by financial service providers to enterprises with
financing needs, while for loan products, we charge service fees primarily based on the total
amount of loans successfully granted by financial service providers and withdrawn by
enterprises with financing needs. During the Track Record Period, we incurred substantial
referral fees paid to marketing agents of RMB64.2 million, RMB153.6 million, and RMB193.4
million in 2021, 2022 and 2023, respectively, accounting for 27.0%, 49.3% and 44.9% of our
total cost of sales in the same periods, respectively. See “—Data-driven Analytics
Services—Digital Precision Marketing Services” for details on the role of marketing agents
during the provision of digital precision marketing services. Such high referral fees were
primarily due to intense market competition and the industry norm that marketing agents
generally do not provide referral services exclusively to any single digital precision marketing
service provider. Therefore, our referral fee ratio with marketing agents need to keep up with
the industry average fee rate to maintain our competitiveness and incentivize marketing agents
to collaborate with us. According to the F&S Report, the referral services provided by
marketing agents are generally labor-intensive, and marketing agents typically need to deploy
staff and/or collaborate with third-party agents to identify potential financial product users, and
designate staff to provide on-site support for potential financial product users, which results in
high labor costs for marketing agents and thus high average fee rate in favor of marketing
agents.
For credit facility products launched by financial service providers, our referral fee ratios
with marketing agents typically ranged from 0.3% to 0.69%, 0.1% to 0.72% and 0.36% to
0.80% in 2021, 2022 and 2023, respectively, which was consistent with the industry average
referral rate with marketing agents of 0.1% to 1% of the value of financial products marketing
agents assist in promoting in 2023, according to the F&S Report. For loan products launched
by financial service providers, our referral fee ratios with marketing agents typically ranged
from 0.05% to 1.18%, 0.17% to 1.6% and 0.20% to 1.28% in 2021, 2022 and 2023,
respectively, which was consistent with the industry average referral rate with marketing
agents of 0.1% to 2% of the value of financial products marketing agents assist in promoting
in 2023, according to the F&S Report. Such referral fee ratio with marketing agents is in line
with the industry average referral fee ratios incurred by other digital precision marketing
service providers, according to the F&S Report.
We determine our referral fee ratios with marketing agents based on the following
considerations: (1) the fee ratios for our service fees received from financial service providers
for the relevant financial products that we facilitate in selling, (2) referral fee ratios granted by
our industry competitors, and (3) the industry average referral fee ratio for a given financial
product. The referral fees are incurred as we satisfy our performance obligation during the
provision of digital precision marketing services, and are therefore recognized as cost of sales.
See “Financial Information—Key Components of Our Results of Operations—Cost of Sales.”
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Nearly all of our revenue from digital precision marketing services was attributable to fees
charged to financial service providers for sales of financial products facilitated by us to users
referred by our marketing agents during the Track Record Period.
Salient terms of our agreement with marketing agents include the following:
 Term. Our agreement with marketing agents typically has a term of one year,
automatically renewable for a successive one-year term.
 Obligations . Marketing agents are obligated to identify potential financial product
users, refer such users to our online platform and assist them to fill in the basic
application information on our platform. We have discretion on whether to refer
such potential users to financial service providers, and we will notify the marketing
agents of our decision within five business days of receiving basic application
information of such potential users.
 Undertakings . Marketing agents are required to undertake that the basic application
information supplied by them shall be true, accurate and complete, and marketing
agents shall indemnify us for any loss resulting from untrue information provided by
marketing agents. Marketing agents further undertake not to transfer, appropriate or
disclose user data or information relating to us that are obtained during the
performance of the collaboration agreement. With respect to users that have
successfully applied for financial products through our services, marketing agents
undertake not to recommend any other financial products or similar services of our
competitors during the term of the relevant financial products.
 Minimum performance target . We set minimum performance targets in terms of the
number of referred financial product users that successfully apply for financial
products and the value of financial products purchased by users referred by such
marketing agents. Should marketing agents fail to meet the designated performance
targets, we may elect to terminate our collaboration with them. During the Track
Record Period, despite that certain marketing agents failed to achieve their
respective performance targets, we did not terminate collaboration with them for
such failure, so as to maintain collaborative relationships with our marketing agents
to support our business needs.
 Referral fees and settlement . Marketing agents are entitled to a referral fee equal to
the product of (1) the value of financial products that we facilitate in selling with the
assistance of these marketing agents, multiplied by (2) a pre-negotiated referral fee
ratio. We settle referral fees with marketing agents within 15 business days of
receiving relevant service fees from financial service providers.
 Confidentiality . Marketing agents are not allowed to transfer, appropriate or disclose
user data or information relating to us that are obtained during the performance of
the collaboration agreement.
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 Termination . The agreement may be terminated upon mutual consent or material
breach as specified in the agreement.
During the Track Record and up to the Latest Practicable Date, there had not been any
other past or present relationships (including financing, trust or otherwise) between us and our
five largest marketing agents (in terms of the value of referral fees incurred by us) in each of
the period constituting the Track Record Period and their respective substantial shareholders,
directors or senior management, or any of their respective associates, save for the referral
services provided by such marketing agents.
Business Collaborators
For our cloud financial & tax digitalization solutions, we have worked with business
collaborators to increase sales by leveraging their platform or local resources and optimize our
marketing efficiency especially in the markets where our sales and marketing team may find
difficult to reach directly.
Taobao
We have strategically collaborated with Taobao, as one of its partnered financial & tax
digitalization solution providers. This collaboration allows us to leverage Taobao’s massive
e-merchant base and cost-effectively expand customer base for our financial & tax
digitalization solutions. Under our collaboration arrangements with Taobao, Taobao agreed to
grant us an access to the online invoice platform operated by it, through which we provide
financial & tax digitalization solutions to the e-merchants on Taobao that subscribe and pay for
our services. Specifically, Taobao presents several financial & tax digitalization service
providers, including us, for its e-merchants to choose from, if such e-merchants are in need of
third-party services for tax invoice management based on their order and transaction
information on Taobao. We are also responsible for addressing such e-merchants’ service
requests and providing after-sales services. We agree to pay Taobao a platform service fee as
commission, and we settle our fees with Taobao on a monthly basis. Revenue attributable to
Taobao accounted for approximately 5.1%, 4.7% and 3.2% of our total revenue in 2021, 2022
and 2023, respectively. See “Connected Transactions—Non-exempt Continuing Connected
Transactions—Taobao Cooperation Framework Agreement” for details.
Other business collaborators
In addition to Taobao, we collaborated with other business collaborators during the Track
Record Period to expand our customer base. These business collaborators primarily include
regional sales channels that specialize in software development and sales, and other
e-commerce platforms. During the Track Record Period, we collaborated with business
collaborators primarily under two models. Our business collaborators may purchase the
software license of our cloud solutions and resell them to end customers. Under this model, the
relationship between business collaborators and us is categorized as a seller-buyer relationship,
and we recognize revenue at the amounts billed to such business collaborators. Alternatively,
we acquire customers through business collaborators, directly sell our solutions to customers
and pay business collaborators commission fees, and we recognize revenue at the gross
amounts billed to end customers. The relationship between business collaborators and us under
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such model is categorized as a principal-agent relationship. Revenue attributable to these
business collaborators under the above collaboration models, in aggregate, accounted for
approximately 1.6%, 1.8% and 1.9% of our total revenue in 2021, 2022 and 2023, respectively.
According to the F&S Report, the engagement of and sales through business collaborators are
in line with the industry norms of the financial and tax-related transaction digitalization
market.
To the best of our Directors’ knowledge, as of the Latest Practicable Date, none of our
Directors, their associates or any of our shareholders (who owned or to the knowledge of our
Directors had owned more than 5% of our issued share capital) had any interest in any of our
business collaborators and none was controlled by our current or former employees, except for
Taobao and its affiliate. Among our other business collaborators, Y unnan Baiwangyun Digital
Technology Co., Ltd., Beijing Baiwang Cube Technology Co., Ltd., Shanghai Yiqin Software
Co., Ltd., Fujian Baiwangyun Technology Co., Ltd., and Ningbo Lanyuan Baiwang Cloud
Digital Technology Co., Ltd. are our equity investees. We do not offer any preferential terms
to the above-mentioned affiliated business collaborators. During the Track Record Period, we
did not provide any advance or financial assistance to our business collaborators.
Marketing
We rely on our in-house marketing team, business collaborators and third-party marketing
companies to market our solutions. In 2021, 2022 and 2023, our distribution and selling
expenses were RMB132.7 million, RMB98.9 million and RMB202.8 million, respectively,
representing 29.2%, 18.8% and 28.4% of our total revenue in the same periods, respectively.
Our in-house marketing and customer relationship team is responsible for developing and
maintaining customer relationships. We hold customer conferences, industry meetings and
policy release interpretation seminars, so as to maintain communication with customers and
promote our products and services. We also publish industry reports and case studies to share
our industry know-how and insights to attract more customers in various industries. Our
dedicated customer services have also brought us word-of-mouth referrals among key industry
players, which enhances our brand reputation and furthers our penetration in the relevant
industry sectors. We also engage business collaborators to market our products and services to
small and micro-sized businesses, which complements our in-house marketing efforts that
focus primarily on industry leading players and regional top players, so as to broaden and
diversify our customer base. See “—Sales Model—Business Collaborators.” In addition, we
engage third-party marketing companies to devise marketing campaigns and promote our
solution offerings.
OUR CUSTOMERS
Since our inception, we have accumulated a large and diversified enterprise customer
base with our high-quality product and service offerings. For each year during the Track
Record Period, revenue generated from our largest customer in 2021, 2022 and 2023 accounted
for 6.5%, 18.0% and 15.1%, respectively, of our total revenue in the same periods. For each
year during the Track Record Period, revenue generated from our five largest customers in each
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of 2021, 2022 and 2023 accounted for 21.6%, 34.5% and 35.4%, respectively, of our total
revenue in the same periods. We do not believe that we relied on any particular customer to
generate a significant portion of our revenue during the Track Record Period. The following
table shows the details of our five largest customers during the Track Record Period.
Customer
Revenue
amount
Percentage of
total revenue
Business
relationship
since Customer background
Solutions and
services sold
(RMB in
millions) (%)
For the year ended December 31, 2023
Customer A 107.7 15.1 2021 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Guangxi United* 58.4 8.2 2022 A domestic
technology-as-a-
service company
providing technology
development,
consultation and
services
Data-driven
analytics services
Customer B 51.4 7.2 2016 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Customer C 21.2 3.0 2021 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
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Customer
Revenue
amount
Percentage of
total revenue
Business
relationship
since Customer background
Solutions and
services sold
(RMB in
millions) (%)
Customer D 13.3 1.9 2021 A domestic
technology-as-a
service company
providing technology
development,
consultation and
services
Financial & tax
digitalization
solutions
Total 252.0 35.4 — — —
* Guangxi United is our associate company. See “—Data-driven Analytics Services—Risk Management
Services—Enterprise Operation Reporting Services.”
Customer
Revenue
amount
Percentage of
total revenue
Business
relationship
since Customer background
Solutions and
services sold
(RMB in
millions) (%)
For the year ended December 31, 2022
Customer A 94.5 18.0 2021 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Customer B 35.8 6.8 2016 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Customer E 21.2 4.0 2018 A domestic company
providing technology
development,
consultation and
services
Data-driven
analytics services
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Customer
Revenue
amount
Percentage of
total revenue
Business
relationship
since Customer background
Solutions and
services sold
(RMB in
millions) (%)
Customer F 17.2 3.3 2018 A domestic
technology-as-a-
service company
providing technology
development,
consultation and
services
Data-driven
analytics services
Customer G 12.5 2.4 2019 A domestic commercial
bank providing
public deposit
services, interbank
lending and other
banking and
financial businesses
Data-driven
analytics services
Total 181.2 34.5 — — —
For the year ended December 31, 2021
Customer B 29.6 6.5 2016 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Customer E 25.0 5.5 2018 A domestic company
providing technology
development,
consultation and
services
Data-driven
analytics services
Customer F 17.5 3.9 2018 A domestic
technology-as-a-
service company
providing technology
development,
consultation and
services
Data-driven
analytics services
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Customer
Revenue
amount
Percentage of
total revenue
Business
relationship
since Customer background
Solutions and
services sold
(RMB in
millions) (%)
Customer A 14.3 3.1 2021 A domestic private
bank providing
deposit services,
interbank lending
and other banking
and financial
businesses
Data-driven
analytics services
Customer H 12.0 2.6 2021 A domestic company
providing Financing
and IT consulting
services
Data-driven
analytics services
Total 98.4 21.6 — — —
Save as disclosed above, as of the Latest Practicable Date, none of our Directors, their
associates or any shareholders which, to the best knowledge of our Directors, owned more than
5% of our issued share capital as of the Latest Practicable Date, had any interest in any of our
top five customers.
Our Relationship with Customer A
We became acquainted with Customer A through our ordinary business development
activities, and Customer A became our top five customers shortly after commencing business
relationship with us, primarily because Customer A launched its financial products for SMB
financing in 2021, and has partnered with us to leverage our digital precision marketing
capability since then. During the Track Record Period, we had continued to deepen our
business relationship with Customer A, and revenue contribution from Customer A continued
to increase from RMB14.3 million in 2021 to RMB94.5 million in 2022 and further to
RMB107.7 million in 2023, in line with the increase in the value of financial product sales
facilitated by us for Customer A during the Track Record Period, which was primarily
attributable to the well-receptiveness of one financial product launched by Customer A.
Revenue from Customer A accounted for 15.1%, 55.5% and 51.2% of our revenue from digital
precision marketing services in 2021, 2022 and 2023, respectively. Therefore, we are subject
to revenue concentration risk with respect to our digital precision marketing services. See
“Risk Factors — Risks Relating to Our Business and Industry — We are subject to customer
concentration risk with respect to our digital precision marketing services, and if we are unable
to maintain business relationship with the relevant customer or develop business relationship
with new customers with comparable revenue contribution, our business, financial condition
and results of operations may be materially and adversely affected.”
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Our Directors are of the view that our revenue concentration in relation to Customer A
will not materially and adversely affect our operations and financial performance for the
following reasons:
 According to the F&S Report, the sales of financial products launched by financial
service providers in China’s transaction-based big data analytics for SMB financing
market often depend on the marketing capability of the big data analytics solution
providers to precisely identify potential financial product users with matching
financing needs. Our revenue concentration in relation to Customer A primarily
related to the facilitation of sales of one credit facility product. In 2021, 2022 and
2023, the value of sales of such financial product facilitated by us was RMB3.3
billion, RMB17.7 billion and RMB22.7 billion, respectively. During the same
periods, we were a valued business partner with Customer A. Therefore, we believe
our collaboration with Customer A is mutually beneficial to each other’s business,
as Customer A ’s sales of such financial product were dependent on our precision
marketing capabilities to promote such financial product to suitable financial
product users on a large scale, and we grew our digital precision marketing services
business through facilitating the sales of such financial product to potential financial
product users.
 According to the F&S Report, financial service providers in China’s transaction-
based big data analytics for SMB financing market have launched a substantial
number of credit facility products and loan products that give rise to huge potential
market demands for our digital precision marketing services. We have been actively
seeking collaboration with alternative financial service providers that offer
comparable financial products to sustain our business growth. On the other hand,
according to the F&S Report, potential users choose credit facility products and loan
products primarily based on interest rates, fee rates and terms of loans and/or credit
facilities, rather than the identity of financial service provider that launched the
relevant products. As a result, we believe we are able to discover financial products
with favorable terms that will be well accepted by potential financial product users
to maintain the sustainable growth of our digital marketing services, as
demonstrated by the continual increase in the number of financial products that we
facilitated in selling with our digital precision marketing services during the Track
Record Period from 27 in 2021 to 29 in 2022 and further to 41 in 2023.
CUSTOMER SERVICE
We strive to improve customer satisfaction by offering high-quality customer service. We
provide maintenance services for our customers to ensure the proper functioning of our
solutions. Our maintenance services include service updates and upgrades, user support and
training. We had an in-house team of 132 members to provide after-sales service as of
December 31, 2023. We provide user support and training through our 7/24 national hotline and
in-person services. Our customers have access to our call center services and are entitled to free
product upgrades during the term of their subscription, which is usually for a period of one
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year. As we upgrade and optimize our products on a continuous basis, we also provide a series
of after-sales services to ensure that our customers are sufficiently and adequately equipped
with knowledge about our products and services. To this end, we have instituted the following
after-sales services.
 Manuals and handbooks. Video tutorials, user manuals, and FAQs of our products
are available on our official website and through the backend of our platform.
 One-on-one after-sale guidance. We designate exclusive after-sales service team
member for certain key customers.
 Online training. We provide our customers with scheduled online training presented
by our R&D team ensuring that our customers are familiarized with the various
functions of our products in a timely manner. Such training includes operation
demonstration, real-time Q&A and operation coaching.
 Offline training. We provide scheduled offline training to our customers as well,
especially customers of our on-premises products and services, helping them fully
understand our products through guidance on product functions and backend
operation, collecting feedback from our customers and optimizing our products and
services on a continuous basis.
We record all user feedback and conduct user survey periodically. Our management team
evaluates user feedback and survey results on a regular basis and perform root-cause analysis
to identify the underlying reasons for any user dissatisfaction. Once such causes have been
identified, we devise improvement measures and execute accordingly. We also continuously
exercise quality control of the customer service provided by our customer service team to
ensure that our brand image is not tarnished by substandard services, and we use a customer
service automation system to track each customer inquiry until it is resolved. We also regularly
provide training programs to our customer service staff.
OUR SUPPLIERS
Our suppliers primarily include hardware and software providers, outsourcing service
providers, business collaborators, marketing agents and data providers. See “— Outsourcing”
for details regarding the outsourcing arrangements with our suppliers. We select our suppliers
based on the quality of their products and services, their operation scale, qualifications, prices
and our business needs. For each year during the Track Record Period, purchases from our top
five suppliers accounted for 27.5%, 41.4% and 33.7% of our total purchases in each of 2021,
2022 and 2023, respectively. For each year during the Track Record Period, purchases from our
largest supplier accounted for 8.5%, 21.9% and 12.2% of our total purchases in the same
periods, respectively. Our suppliers typically grant us a credit term of 30 to 90 days. As of the
Latest Practicable Date, all of our suppliers in relation to our business operations were based
in China. The following table sets forth certain information of our top five suppliers during the
Track Record Period.
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Supplier
Types of products/
services provided
Purchase
amount
Percentage
of total
purchase
Business
relationship
since Supplier background
(RMB in
millions) (%)
For the year ended December 31, 2023
Supplier A Marketing services 39.6 12.2% 2020 A domestic company
providing
information
transmission,
software and IT
services especially
for SMB financing
Shanghai Shimiao
Information
Technology Service
Co., Ltd.
Marketing services 18.9 5.8% 2021 A domestic company
providing financial
services
Alibaba Cloud
Computing Ltd.
IT services 18.4 5.7% 2016 Software and IT
services
Chongqing Qianliu
Technology Co. Ltd.
Marketing services 16.8 5.2% 2022 A domestic company
providing
information
transmission,
software and IT
services especially
for SMB financing
Sichuan Jiuhe
Rongchuang
Information
Technology Co.,
Ltd.
Marketing services 15.9 4.9% 2022 Software and IT
services
Total — 109.6 33.7% — —
For the year ended December 31, 2022
Supplier A Marketing services 58.4 21.9 2020 A domestic company
providing
information
transmission,
software and IT
services especially
for SMB financing
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Supplier
Types of products/
services provided
Purchase
amount
Percentage
of total
purchase
Business
relationship
since Supplier background
(RMB in
millions) (%)
Baiwang
Jinfu Technology
Co., Ltd.
(“Baiwang Jinfu”)
Technology services 17.2 6.5 2016 A domestic company
providing science
and technology
promotion and
application services
with respect to
information security
hardware
Shanghai Shimiao
Information
Technology Service
Co., Ltd.
Marketing services 15.6 5.8 2021 A domestic company
providing financial
services
Alibaba Cloud
Computing Ltd.
IT services 10.8 4.0 2016 Software and IT
services
Supplier B Marketing services 8.5 3.2 2020 A domestic technology
company providing
science and
technology
promotion and
application services
Total — 110.5 41.4 — —
For the year ended December 31, 2021
Supplier A Marketing services 14.9 8.5 2020 A domestic company
providing
information
transmission,
software and IT
services especially
for SMB financing
Baiwang Jinfu Technology services 11.3 6.5 2016 A domestic company
providing science
and technology
promotion and
application services
with respect to
information security
hardware
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Supplier
Types of products/
services provided
Purchase
amount
Percentage
of total
purchase
Business
relationship
since Supplier background
(RMB in
millions) (%)
Alibaba Cloud
Computing Ltd.
IT services 8.4 4.8 2016 Software and IT
services
Beijing Wanzhi
Qianhong
Technology Co., Ltd
Technology services 7.4 4.3 2018 A domestic technology
company providing
science and
technology
promotion and
application services
Supplier C Data services 5.8 3.4 2018 A domestic technology
company providing
science and
technology
promotion and
application services
Total — 47.8 27.5 — —
Baiwang Jinfu, a joint venture of Watertek, was one of our top five suppliers in 2021 and
2022, and our purchases from Baiwang Jinfu were RMB11.3 million, RMB17.2 million and
RMB6.2 million, respectively, accounting for 6.5%, 6.5% and 1.9% of our total purchases in
the same periods, respectively. During the Track Record Period, we primarily procured
technology and maintenance services relating to on-premises solutions from Baiwang Jinfu to
take advantage of its local service force. Our purchases from Baiwang Jinfu generally
increased in 2021 and 2022, which was consistent with our business growth. Our purchases
from Baiwang Jinfu decreased in 2023, because we established our local service force and
reduced reliance on Baiwang Jinfu’s services. Our transactions with Watertek and Baiwang
Jinfu were conducted in the ordinary course of business at arm’s length with reference to and
in consistence with market prices and terms of comparable products and services. We procured
IT services from Alibaba Cloud Computing Ltd., a fellow subsidiary of our substantial
Shareholder, and our purchases from Alibaba Cloud Computing Ltd. were RMB8.4 million,
RMB10.8 million and RMB18.4 million in 2021, 2022 and 2023, respectively. Such
transactions were conducted in the ordinary course of business at arms’ length with reference
to normal commercial terms. Save as disclosed above, as of the Latest Practicable Date, none
of our Directors, their associates or any shareholders which, to the best knowledge of our
Directors, owned more than 5% of our issued share capital as of the Latest Practicable Date,
had any interest in any of our top five suppliers.
In 2021, 2022 and 2023, Supplier C was also our customer for cloud financial & tax
digitalization solutions and on-premises financial & tax digitalization solutions, with revenue
contribution of RMB10.2 million, RMB3.1 million and RMB2.3 million, respectively. In 2022
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and 2023, Supplier A was also our customer for digital precision marketing services, with
revenue contribution of RMB0.6 million an RMB2.0 million in the same periods, respectively.
Negotiations of the terms of our sales to and purchase from Supplier C and Supplier A were
conducted on an individual basis and the sales and purchases were neither connected with nor
conditional upon each other. All of our sales to and purchases from Supplier C and Supplier
A were conducted in the ordinary course of business under normal commercial terms and at
arm’s length.
DATA PRIV ACY AND SECURITY
Type of Data and Scope of Usage
We collect, store, process and analyze certain personal information of the individuals
affiliated with our customers that use our various services. Prior to providing related services,
we will obtain their prior consent to providing certain personal information relevant to the
services offered. The following summary sets forth the types of personal information accessed
and collected through our various solution offerings.
 Tax invoice compliance management solutions. We collect contact, account and
device information of individuals affiliated with our customers for service provision
purposes. We do not provide such personal information to third parties.
 Financial and tax management solutions. We collect contact, account and device
information of individuals affiliated with our customers for service provision
purposes. We do not provide such personal information to third parties or use such
information for data mining or personalized recommendation.
 Supply chain collaboration solutions. Similar to aforementioned solutions, we
primarily collect contact, account and device information of individuals affiliated
with our customers for service provision purposes. Specifically for our contingent
workforce management services, we also collect contact, account and real-name
authentication information from individual service providers and will supply such
information to third parties for identity authentication purposes based on
authorization letters signed by such individuals. We will provide such individual
service providers’ name, personal identification numbers, contact and bank account
information to local tax authorities, payor banks and our enterprise customers, to
complete our contingent workforce management services.
 Data-driven analytics services. We collect the names, personal identification
numbers and contact information primarily for service provision purposes.
Non-paying users of our complimentary applications generally need to provide us with
the names of their companies and their tax identification numbers to use our applications, and
they do not need to provide any personal information to use our complimentary applications.
With the deepened implementation of digital invoice reform, we help our non-paying users
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connect to the Digital Invoice Service Platform with our upgraded complimentary applications.
When the non-paying users issue digital invoices using our complimentary applications for the
first time, they provide contact information, including normally the mobile phone numbers, of
their legal representatives and/or financial officers as required by the Web-based System.
In each of the above scenarios, the ownership of the personal information and data
remains with the individuals themselves, and we would obtain explicit consent from the
relevant individuals prior to the collection, usage and sharing of their personal information,
primarily through data collection authorization tool and authorization consent letters executed
by the relevant individuals. Under our privacy agreement, we are required to confirm the
scope of authorization prior to each information sharing. Upon any change to the scope of
authorization, we would re-confirm authorization with the users. We ordinarily review user
authorization for our data-driven analytics services. Furthermore, without prior consent from
customers, customer data, including personal information, invoice data and other transaction
information, obtained by us are not shared among our different business segments and entities.
Specifically, without prior consent from customers, personal information or data obtained from
customers of financial & tax digitalization solutions are not shared or used during the provision
of data-driven analytics services, and vice versa. During our provision of financial & tax
digitalization solutions, upon enterprise authorization, we transmit and store enterprise data
after encryption, and such data is not transmitted or shared within different departments or
entities of ours. We will transmit such data to the licensed credit reporting agencies we
collaborate with after obtaining authorization from enterprises, and such licensed credit
reporting agencies will produce enterprise operation reports based on these data. On the other
hand, financial service providers need to separately obtain proper authorization from
enterprises before they can access the enterprise operation reports. See “—Risk Management
Services—Enterprise Operation Reporting Services” for details. During the Track Record
Period and up to the Latest Practicable Date, there had not been any circumstances under which
we had disclosed data of our customers or data directly identifiable to a specific customer or
user without prior consent to any government authorities, nor had we engaged in cross-border
data transfer during our daily business operation.
We encrypt sensitive and confidential personal information when transmitting such
information, and de-sensitize when displaying such information to protect the security of
personal information. Personal information is stored on certain third-party cloud platform and
only for the period necessary for the purpose of providing our services. We will store personal
information until the user terminates their service agreement with us, or until the agreement is
terminated, whether due to expiration or account cancellation, unless otherwise stipulated by
PRC laws and regulations. Upon termination of service or account cancellation, we will delete
or anonymize personal information, unless the duration of retention of personal information is
otherwise stipulated by law.
In addition to personal information, we have access to invoice data and other transaction
information after obtaining relevant authorization and publicly available enterprise information
obtained from third parties. For our tax invoice compliance management solutions, we
primarily obtain invoice information and basic enterprise profile primarily from the enterprise
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customers themselves or publicly available information, and our collection practices are
specified in our privacy policy and authorization agreement with our customers. For our
data-driven analytics services, we also obtain enterprises’ tax information as authorized by
enterprises. If enterprises delete their user accounts registered with us, we will regard such
activity as withdrawal of their consent and cease acquiring their information. For our financial
and tax management solutions, we collect data relating to customer orders, invoices and
merchandise and store such data in the form of structural data, which refer to data that has a
standardized format for efficient access. For our reconciliation and billing management
services, we only collect and store invoice-related bills and data as authorized by our customers
and users. Data obtained from different solutions is stored and isolated on certain third-party
cloud platform.
We retain customers’ transaction and personal information within their authorized period,
which commences from the time of user authorization and does not terminate unless the user
de-registers or withdraws consent. For non-paying users of our products and solutions, we will
delete such users’ transaction and personal information within 15 days if such users de-register
for our services, withdraw consent or otherwise request us to delete their transaction and
personal information. For paying customers of our products and solutions, when our service
agreement terminates upon expiration or customer election, we will negotiate a timeframe to
complete transaction and personal data deletion, and shall complete data deletion within the
negotiated timeframe.
Infrastructure Stability and Data Security
We are committed to protecting security and privacy of our user information. We take
safety precautions in confidential information storage. Our IT network is configured with
multiple layers of protection to secure our databases and servers. To protect security
throughout the various stages of our daily operation and data analytics, all user data tagged and
processed and our testing data are stored on our firewall-protected physical servers and our
cloud storage system operated by prominent third-party cloud service providers. We back up
user data on a daily basis in various separated secured data back-up systems to minimize the
risk of user data loss or leakage. We also conduct frequent reviews of our back-up systems to
ensure that they function properly and are well maintained. We believe we maintain stable,
reliable, secure, and scalable technological infrastructure that is compatible to our growing
business. During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any material cybersecurity or data security incident.
Data Protection
We have placed great emphasis on protection of data privacy of enterprise customers and
their affiliated individuals. Pursuant to applicable PRC laws and regulations, our user
registration agreement, privacy policy and user data authorization agreements with our
customers have informed them of the purpose, scope, and method for information collection
and use, and we have been following the agreed purpose, scope and method. Our privacy policy
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is regularly updated in compliance with relevant laws and regulations on data protection and
privacy applicable to our business operations. We have not sold or illegally provided such user
information we have accumulated to any third parties.
We have also adopted a set of security safeguard measures to protect the data we have
accumulated and stored, including, but not limited to, encryption technology for data
transmission and storage, conducting data classification management, applying strict user data
access and usage management policies, and establishing an independent information security
management department. For details, see “—Internal Control and Risk
Management—Information System Risk Management.” We have formulated data security
policies to govern information transmission and communication mechanisms within our Group
and information access for our personnel at different levels. We implement internal approval
process to monitor and control employees’ information access. In addition, we implement the
following internal policies to ensure our data privacy:
 Software usage . The software on our internal platform has received and maintained
valid IT and safety certificates.
 Internal training . We provide regular trainings to our staff on internal policies and
procedures for data security, on software technical skills to prevent data leakage,
and on other aspects that are relevant to their day-to-day work.
 Data protection software . Our data protection software is updated timely and
efficiently to prevent data leakage and cyber-attack.
 Cyber security monitoring . We have established a comprehensive system to detect
and prevent data breaches, cyber threats, and other system vulnerabilities.
 Data encryption and penetration testing . Sensitive business information is routinely
encrypted and we conduct system-wide vulnerability scanning to continually
improve our data security measures.
Furthermore, we enter into confidentiality agreements with our employees who have
access to any above-described user information. The confidentiality agreements provide that,
among others, our employees are legally obligated not to share, distribute or sell the
confidential information, including the user information in possession, to any other parties,
including other employees who have no access to the information. Our employees are also
legally obligated to surrender all confidential information in possession while resigning, and
to retain their confidential obligations thereafter.
As a matter of internal control, we have formulated data security compliance management
measures and other policies to strengthen data security management and handle data security
emergencies. We have set up our data security management committee, which consists of our
chief operating officer, chief technology officer, and other relevant core personnel, and
formulated a contingency plan for cybersecurity emergency drills every year.
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We have also set up a strict access control and monitoring mechanism for which
information is accessed on an as-needed basis. A secure data domain has been activated to
supervise data access with respect to the financial and tax-related and big data databases.
Service agreements for our data-driven analytics services obligate us not to disclose
natural persons’ information to any third party without authorization, except for our
cooperative partners, who should strictly follow our requirements on data security. We are
committed to ensuring that the collection, analysis, collation, and processing of such
information comply with the provisions of the relevant laws and regulations and that the
personal information we obtain from natural persons is protected safely and securely. We are
also committed to fulfilling the obligation of security protection to safeguard the network and
system from interference, destruction, or unauthorized access, and to prevent network data
from being leaked, stolen, or tampered with.
During the Track Record Period and up to the Latest Practicable Date, we had not
experienced any material data or personal information leakage or loss, infringement of data or
personal information, or information security incident, nor had we been subject to or involved
in any investigations on cybersecurity, data and personal information protection by relevant
competent regulatory authorities, or had received any official examination, warning, interview,
or similar notice in such respect. During the Track Record Period and up to the Latest
Practicable Date, we had not been and were not involved in any penalty, litigation or dispute
related to data security and personal information protection which, individually or in
aggregate, have had or are reasonably likely to have a material adverse effect on us, our
financial performance and results of operations. Based on the foregoing, as advised by our PRC
Legal Advisor, we had complied with PRC laws and regulations on data security, personal
information protection and cybersecurity in all material respects during the Track Record
Period and up to the Latest Practicable Date.
OUTSOURCING
During the Track Record Period, we collaborated with third-party outsourcing companies
to carry out business operations in regions that our employees did not readily cover. In this
case, the responsibility of our outsourced service providers include providing maintenance
services for our on-premises solutions, providing service support in connection with our
contingent workforce management services, and facilitating project execution, R&D services,
feasibility research and customer services. Our outsourced service providers may provide
administrative and R&D support in carrying out their responsibilities. In this case, the
outsourced service providers are responsible for performing the relevant work according to our
specifications, and we are responsible for supervising their work performance and progress.
During the Track Record Period, our outsourcing expenses were RMB7.9 million,
RMB16.0 million and RMB16.5 million in 2021, 2022 and 2023, respectively, accounting for
1.7%, 3.0% and 2.3% of our total revenue in the same periods, respectively. Our outsourcing
expenses increased significantly from RMB7.9 million in 2021 to RMB16.0 million in 2022,
primarily due to (1) an increase of RMB4.3 million in outsourcing expenses categorized under
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our administrative expenses as a result of the increase in compensation incurred for outsourced
administrative activities and personnel, and (2) an increase of RMB3.8 million in other
outsourcing expenses, primarily because we increased the scale of outsourced operations, as a
result of the cost-effectiveness of outsourcing arrangement, especially for our on-premises
solutions and contingent workforce management services that require field support. During the
Track Record Period, none of the software products downloadable from our website was
developed or maintained by third-party developers.
SUSTAINABILITY OF OUR BUSINESS
Since our inception, we have achieved improvement in our results of operations and asset
position. Our revenue increased from RMB453.8 million in 2021 to RMB525.8 million in 2022
and further to RMB713.0 million in 2023, primarily attributable to our business growth,
especially with respect to our data-driven analytics services. However, we incurred net losses
of RMB448.4 million, RMB156.2 million and RMB359.3 million in 2021, 2022 and 2023,
respectively. Our gross profit margin decreased from 47.6% in 2021 to 40.8% in 2022,
primarily due to the margin erosion of digital precision marketing services. Our gross profit
margin decreased to 39.6% in 2023, primarily due to the combined effect of (1) the significant
increase in staff costs in 2023, as a result of the increase in our employee headcount; (2) the
increase in share-based payment expenses for our service personnel; and (3) the margin erosion
of digital precision marketing services, primarily due to the increase in sales of credit facility
products facilitated by us, which typically had a lower profit margin. Our net loss margin
fluctuated during the Track Record Period, which decreased from 98.8% in 2021 to 29.7% in
2022, mainly due to the decrease in fair value loss of financial liabilities at FVTPL, and
increased to 50.4% in 2023, primarily driven by the increases in our share-based payment
expenses and staff costs. Our adjusted net loss (non-IFRS measure) increased from RMB16.7
million in 2021 to RMB70.3 million in 2022, primarily due to the increase in our operating
expenses (net of the effect of share-based payment expenses), especially our research and
development expenses and administrative expenses. Our adjusted net loss (non-IFRS measure)
further increased to RMB83.4 million in 2023, primarily due to the increase in our operating
expenses (net of the effect of share-based payment expenses) as a result of the increase in our
staff costs, driven by the increase in our employee headcount.
SaaS products, such as our cloud financial & tax digitalization solutions, typically require
substantial initial investment in R&D, product development and customer acquisition in order
to garner market acceptance. The lag between profit making and initial investment is largely
due to the subscription-based revenue model of SaaS products, which generates stable and
recurring revenue flows after their customer base and market acceptance reach a certain scale.
SaaS service providers need to devote substantial resources to sales and marketing to amass a
vast customer base, from which they can continue to generate recurring subscription revenue
during customers’ lifetime. At the same time, SaaS service providers also need to roll out
products with compelling value propositions to a broad range of customers to ensure customer
stickiness, which require significant upfront investment in R&D and product development.
Such upfront investments may not generate expected return in time. As the business scale of
SaaS service providers grows, they can gradually turn into profit making position, as the
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sustainable recurring revenue growth outpaces operating costs and expenses, as a result of a
greater economy of scale and synergies in customer retention and product development. For
these reasons, similar to other SaaS solution providers, the breakeven period for service
providers in the relatively niche market of financial and tax-related transaction digitalization
in China may take over 10 years, according to the F&S Report. Furthermore, China’s financial
& tax-related transaction digitalization market is still at an early stage of development, and
most players in the market, including us, have not become profitable, according to the same
source.
We have also invested significant resources in utilizing our data assets and refining our
data analytics capabilities to develop our data-driven analytics services. Therefore, similar to
our financial & tax digitalization solutions, we have incurred substantial upfront research and
development expenses in improving our data-driven analytics services. Moreover, for our
digital precision marketing services, we primarily collaborated with marketing agents to
promote financial products launched by financial service providers and identify potential users
for their financial products, which has caused us to incur significant amount of referral fees.
To pave the way for long-term success in the fast-growing markets that we operate in, we
have been focusing on driving our revenue growth, expanding our business scale by adapting
our business and solutions based on regulatory updates applicable to the industries in which we
operate, growing our customer base and improving our operational efficiency, rather than
seeking short-term financial return or profitability. Going forward, we aim to achieve
profitability by (1) leveraging market opportunities and favorable government policies to grow
our financial & tax digitalization solutions, (2) retaining existing KA customers and expanding
our customer base, (3) increasing cross-sales and up-sales of our solutions and services,
(4) improving profit margin of digital precision marketing services, (5) optimizing operations
and increasing economies of scale and cost-efficiency, and (6) improving operating cash flow
position.
Leveraging Market Opportunities and Favorable Government Policies to Grow Our
Financial & Tax Digitalization Solutions
As China’s financial and tax-related transaction digitalization market continues to
develop, significant market opportunities continue to emerge in the market, especially in light
of the implementation of the digital invoice reform. See “Industry Overview—China’s
Financial and Tax-related Transaction Digitalization Market—Background of China’s
Financial and Tax-related Transaction Digitalization—History of Golden Tax Project in
China.” According to the F&S Report, the Fourth Phase of the Golden Tax Project is expected
to generate market opportunities of around RMB7.0 billion in 2025, which are expected to
increase gradually through the years from 2025 to 2028 and reach around RMB16.0 billion in
2028. We believe we are well-positioned to seize the upside market potential brought by the
digital invoice reform with (1) our first-mover advantage as a service provider for the SA T; (2)
technological strength accumulated through prior provision of financial & tax digitalization
solutions; and (3) customer resources accumulated through prior solution and service offerings.
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First-mover Advantage as a Service Provider for the SAT
We, together with another software and technology company, which is a Chinese
state-owned enterprise specializing in the provision of IT infrastructure services, such as those
in relation to operating system and database, were the joint bid-winner, joint developer and the
exclusive service providers for the SA T in relation to the system application development of
the Digital Invoice Service Platform. Therefore, we are well-versed in the operational
mechanisms of digital invoices and possess business development advantages. Keen to the
trend of the digital invoice reform, we have therefore front-loaded preparational work,
including the R&D and staff recruitment and training, in relation to the digital invoice reform
and achieved first-mover advantage.
Technological Strength Accumulated through Prior Provision of Financial & Tax
Digitalization Solutions
According to the F&S Report, the Digital Invoice Service Platform consists of two
systems: the Direct Connection System, also known as the Natural System ( ᆀΆ), and the
Web-based System. See “Industry Overview—China’s Financial and Tax-related Transaction
Digitalization Market—Background of China’s Financial and Tax-related Transaction
Digitalization—History of Golden Tax Project in China” for details. For large conglomerates
and qualified enterprises to be connected with the Direct Connection System who elect to use
our on-premises solutions, we help such customers to construct and deploy a digital invoice
management system, which contains a direct connection engine, to effectuate connection with
the Direct Connection System. Furthermore, as of December 31, 2023, our tax invoice
compliance management solutions and financial and tax management solutions had been
upgraded to become fully compatible with the use and management of digital invoices. See
“Business—Cloud Financial & Tax Digitalization Solutions.” Our tax invoice compliance
management solutions, offered to customers as cloud solutions and through its direct
connection engine, enable customers to connect with the Direct Connection System and use our
digital invoice services. If an enterprise customer elects to connect with the Web-based System,
our tax invoice compliance management solutions, utilizing a web connection engine, enable
such customer to connect with the Web-based System and use our digital invoice services.
We have accumulated substantial solution delivery and R&D experiences from prior
offerings of financial & tax digitalization solutions to customers of various industry verticals,
and have upgraded our financial & tax digitalization solutions to adapt to the digital invoice
regime. Our tax invoice compliance management solutions enable customer to connect with
either the Direct Connection System or the Web-based System depending on customers’ needs
and provide value-added digital invoice services through our cloud solutions. Moreover, during
the provision of our on-premises solutions for customers to connect with the Direct Connection
System, our deploying process involves various degrees of customization based on customer
needs, and our prior experiences in solution customization and on-premises deployment are
thus transferrable and allow us to better understand and meet customer demands.
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Customer Resources Accumulated through Prior Solution and Service Offerings
Our existing KA and mid-market customer base and customers of on-premises solutions
represent the rich customer resources that we can tap into during the digital invoice reform. As
of April 30, 2024, a total of 189 customers had entered into service contracts with us for system
upgrade and connection to the Direct Connection System with revenue contribution of around
RMB10 million as of April 30, 2024 based on our unaudited and unreviewed management
accounts of which 84 customers had previously purchased our cloud and on-premises financial
& tax digitalization solutions.
We believe our first-mover advantage as a service provider for the SA T to develop the
Digital Invoice Service Platform and successful system construction and connection
experiences will attract more businesses to use our financial & tax digitalization solutions for
their smooth transition into the digital invoice regime. As of April 30, 2024, 105 new customers
entered into service contracts with us for system upgrade and connection to the Direct
Connection System, which had not previously purchased our cloud or on-premises financial &
tax digitalization solutions.
Based on the above, we believe the digital invoice reform will bring us continuous
business opportunities. As of April 30, 2024, the contract value of our projects for system
upgrade and connection to the Direct Connection System was RMB106.1 million. We also
expect to generate from customers stable revenue stream of annual software subscription fees
from our cloud solutions and annual maintenance fees from our on-premises solutions after
their systems are connected to the Direct Connection System.
For our non-paying users, we have upgraded our complimentary applications for their
connection to the Web-based System through our applications. As of April 30, 2024, over
3.1 million of our non-paying users had connected to the Web-based System using our
upgraded complimentary applications. We believe increasingly more and more non-paying
users will elect to transition into the digital invoice regime using our complimentary
applications. We will continue to serve these non-paying users to enhance our data assets and
explore up-selling and other business opportunities.
We expect our service expansion in connection with the digital invoice reform will bring
us improved profitability. See “—Optimizing Operations and Increasing Economies of Scale
and Cost-Efficiency—Strategic Front-loading Preparational Work for the Digital Invoice
Reform” for details on the impact of digital invoice reform and our early preparational work
on future trend of our cost and profit margin.
Retaining Existing KA Customers and Expanding Our Customer Base
During the Track Record Period, the number of our KA customers increased from 205 in
2021 to 217 in 2022 and further increased to 366 in 2023. The dollar-based retention rate for
our KA customers of cloud financial & tax digitalization solutions was 119.7%, 104.4% and
146.7% in 2021, 2022 and 2023, respectively. As of December 31, 2023, 88 of our top 100 KA
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customers in terms of revenue contribution in 2021 remained with us. The number of our
mid-market customers increased from 12,163 in 2021 to 14,591 in 2022, and surged to 20,734
in 2023, as a result of our focus on expanding our customer outreach to mid-market customers.
On the other hand, in 2021, 2022 and 2023, we served 91, 101 and 134 customers with our
data-driven analytics services, respectively.
We have implemented and will continue to strengthen our direct sales team with strategic
focus on key industries and geographic regions.
Strategically Focusing on Key Industries
We believe that customers of our financial & tax digitalization solutions span across most
major industry verticals in China. We have strategically focused our direct sales efforts on
developing and retaining customers in key industries that we historically developed
competitive edges and that are identified by our management as having great market
opportunities, such as banking and insurance, lifestyle services, retail and manufacturing, and
logistics, and further enhanced our presence in existing industry verticals. Although our cloud
solutions are not industry-specific, industry-specific marketing strategies and product
customization are essential for our customer retention. Specifically, we intend to prioritize our
marketing efforts in the following industry verticals:
 Banking and insurance industries . We have accumulated extensive experiences
serving leading banking and insurance companies, including all six major state-
owned banks in China, 9 of the 12 national joint-stock commercial banks in China,
and more than 130 insurance companies among the top 176 insurance companies in
China ranked by the Research Institute of China Insurance in 2023. We are
well-positioned to retain and develop customers in the banking and insurance
industries, as demonstrated by our continuous relationship with the six major
state-owned banks during the Track Record Period (factoring into their substantial
costs to switch to other service providers); and the increase in the contract value
with customers operating in banking and insurance industries from RMB41.5
million in the four months ended April 30, 2023 to RMB49.6 million in the four
months ended April 30, 2024.
 Lifestyle services industry . We have accumulated substantial experiences in serving
companies in the lifestyle services industry, especially the hotel and catering
industries. Our customers included five hotel brands among the top 10 hotel brands
in terms of operation scale ranked by qcc.com, and six catering companies among
the top 20 influential catering companies ranked by the Red Eagle Awards. Our
solutions and services address pain points encountered by the lifestyle services
industry. For instance, hotels and restaurants typically have long operation hours,
which requires high sustainability of their internal financial and tax management
systems, and the scalability of our technology infrastructure enables us to offer
stable and reliable services to support their operations. The contract value with
customers in the lifestyle services industry increased from RMB3.5 million in the
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four months ended April 30, 2023 to RMB8.1 million in the four months ended
April 30, 2024. Going forward, we plan to further enlarge our market share in the
lifestyle services industry through strategic cooperation with leading industry
platforms. For instance, in the catering industry, through cooperation with certain
leading digitalized service platform and hotel system service provider, we served
more than 300 restaurants and 800 hotels, respectively.
 Retail and manufacturing industries . Four of the top five enterprises in the home
appliances industry ranked by Fortune China are our customers. Retail and
manufacturing companies are in huge demand for inventory and sales volume
monitoring capacity and automated reconciliation and payment settlement
capability. Accordingly, we devised our supply chain collaboration solutions and
achieved coverage of massive supply chain participants, of 33.7 million and 35.6
million seller-side enterprises and 90.2 million and 93.8 million buyer-side
enterprises as of December 31, 2023 and April 30, 2024, respectively, to enable our
customers in the retail and manufacturing industries to effectuate automatic supplier
monitoring, payment reconciliation and settlement and invoice management. In the
four months ended April 30, 2024, the contract value with customers in the home
appliances, high-tech and chemical industries was RMB3.3 million, as compared to
RMB1.7 million in the four months ended April 30, 2023.
 Logistics industry . According to Frost & Sullivan, we have served seven out of top
ten listed logistics companies with principal business operations in China ranked by
Oriental Fortune. We have innovated product function of logistics service fee
settlement to adapt to customer needs arising from their massive network of local
offices and branches. As the digital invoice reform deepens, such industry customers
will have further needs for tax management for their local offices and branches,
automatic risk detection, and automatic accounting entry collection. As of April 30,
2024, we completed system deployment with our financial and tax digitalization
solutions for three logistics enterprises with functions of tax data sharing and
logistics service fee settlement, connecting approximately 10,000 local offices of
these companies for unified tax invoice management. We are in the process of
system development for the other four major logistics companies served by us. In the
four months ended April 30, 2024, the contract value with customers in the logistics
industry was RMB3.0 million.
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The following table sets forth the revenue contribution by KA customers operating in the
key industries identified by us during the Track Record Period, both in absolute amount and
percentage of our total revenue from cloud financial & tax digitalization solutions.
Y ear ended December 31,
2021 2022 2023
Industry Verticals* RMB % RMB % RMB %
(RMB in thousands)
Banking and insurance
industries 16,598 10.6 18,355 11.6 25,153 11.5
Lifestyle services industry 26,666 17.0 17,092 10.8 39,097 17.8
Retail and manufacturing
industries 12,060 7.7 12,398 7.8 29,765 13.6
Logistics industry 7,746 5.0 8,492 5.4 5,678 2.6
Others
(1) 93,545 59.7 101,659 64.3 119,846 54.6
Total revenue from cloud
financial & tax
digitalization solutions 156,615 100.0 157,996 100.0 219,539 100.0
* Industry categorization of KA customers is derived from publicly available information about the
relevant KA customers.
(1) Includes revenue from KA customers not in the above-enumerated industries and revenue from
mid-market customers.
Setting Up Regional Sales Network
We plan to build and scale up our sales network in southwestern, central, northwestern
and northeastern China, and prioritize our outreach efforts in cities in each region that actively
roll out policy initiatives to implement the recent development of Golden Tax Project and the
digital invoice reform to establish a nationwide sales network. The following table sets forth
the number of our KA customers and their revenue contribution in each of the respective
regions for the periods indicated.
Regions* Number of KA Customers
Revenue Contribution
from KA Customers
2021 2022 2023 2021 2022 2023
(RMB in thousands)
Southwestern 14 14 27 4,519 4,073 6,655
Central 11 13 36 3,591 5,628 15,517
Northwestern 6 7 15 864 4,494 4,115
Northeastern 4 3 5 1,649 902 1,312
Subtotal 35 37 83 10,623 15,097 27,599
As a percentage of total
KA customers (%) 17.1 17.1 22.7 8.2 11.8 14.5
* The geographic regions of KA customers are determined by reference to the provinces in which they are
registered.
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See also “Future Plans and Use of Proceeds” for our plans to build and scale up sales
network in southwestern, central, northeastern and northwestern China.
Increasing Cross-sales and Up-sales of Our Solutions and Services
We have been able to expand our customer base and increase their spending on our
solutions and services, as demonstrated by the following data points.
 In 2021, 2022 and 2023, 118, 129 and 235 of our KA customers subscribed to more
than one solution among tax invoice compliance management solutions, financial
and tax management solutions and supply chain collaboration solutions, accounting
for 57.6%, 59.4% and 64.2% of the total number of our KA customers in the same
periods, respectively.
 In 2021, 2022 and 2023, 80, 100 and 165 of our KA customers subscribed to our
data-driven analytics services and/or on-premises solutions, accounting for 39.0%,
46.1% and 45.1% of the total number of our KA customers in the same periods,
respectively.
 In 2021, 2022 and 2023, more than 50% of our top 100 customers, in terms of
revenue contribution, subscribed to more than one solution or service among our
cloud financial & tax digitalization solutions, data-driven analytics services and
on-premises solutions.
Moreover, for our enterprise operation reporting services, we strategically lowered the
unit price charged for each enterprise included in the enterprise operating reports in order to
incentivize more customer subscription and service usage, and our favorable pricing package
has caused an increase in average revenue per customer of our enterprise operation reporting
services, which increased from RMB1.9 million in 2021 to RMB2.0 million in 2022 and further
to RMB2.3 million in 2023. User resources from our digital precision marketing services also
contributed to the growth of our enterprise operation reporting services. In 2022, the number
of enterprises included on our enterprise operation reports increased by 0.2 million, of which
49% were financial product users for our digital precision marketing services. In 2023, the
number of enterprises included on our enterprise operation reports increased by 1.1 million, of
which 15% were financial product users for our digital precision marketing services. The
following table sets forth the number of enterprises included on our enterprise operation
reports that were attributed to our digital precision marketing services during the Track Record
Period.
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The number of
financial product
users of our digital
precision marketing
services that were not
previously included
on our enterprise
operation reports (A)
Among (A),
the number of
enterprises included
on our enterprise
operation reports (B)
The total number of
viewing requests
fulfilled for (B)
2021 119,719 63,230 82,557
2022 193,828 114,451 182,565
2023 256,959 161,446 265,200
Further, with our risk analytics services, we devise and configure online risk management
systems for financial service providers based on their risk preferences. In 2023, we deepened
collaboration with one of the customers of our risk analytics services, and leveraging our risk
modelling and analysis capabilities, we helped the financial service provider devise application
criteria for its financial product, which was exclusively marketed by us. See “—Improving
Profit Margin of Digital Precision Marketing Services—Deepening Collaboration with
Financial Service Providers” for details.
Improving Profit Margin of Digital Precision Marketing Services
During the Track Record Period, we generated a substantial portion of our revenue from
digital precision marketing services, accounting for 20.9%, 32.4% and 29.5% of our total
revenue in 2021, 2022 and 2023, respectively. However, the gross profit margin of our digital
precision marketing services decreased from 30.7% in 2021 to 8.4% in 2022 and further to
7.0% in 2023, primarily because we incurred substantial referral fees to expand the business
scale of our digital precision marketing services and to continue to engage marketing agents.
We incurred referral fees for our digital precision marketing services of RMB64.2 million,
RMB153.6 million and RMB193.4 million in 2021, 2022 and 2023, respectively. Our average
referral fee ratio for credit facility products with marketing agents was 0.37%, 0.51% and
0.47% in 2021, 2022 and 2023, respectively. Our average referral fee ratio for loan products
with marketing agents was 0.71%, 0.78% and 0.77% in 2021, 2022 and 2023, respectively. The
number of our marketing agents was 299, 511 and 666 as of December 31, 2021, 2022 and
2023, respectively. The number of financial product users referred by our marketing agents that
ultimately submitted applications for financial products was 109.7 thousand, 160.9 thousand
and 182.9 thousand in 2021, 2022 and 2023, respectively.
To improve our profitability of digital precision marketing services, we have implemented
the following measures: (1) deepening collaboration with financial service providers,
(2) improving capability to directly reach potential financing product users, and (3) optimizing
the mix of financial products marketed by us.
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Deepening Collaboration with Financial Service Providers
According to Frost & Sullivan, SMBs in China generally face difficulty in obtaining loan
financings, and the majority of loan options available to them is collateral-secured loans, while
SMBs typically have little resources to provide collaterals that are acceptable for financial
service providers in China. Therefore, credit-based loan products are well accepted by SMBs;
however, credit-based lending poses difficulty for financial service providers to accurately
identify SMB users with the capability to repay loan obligations.
We have commenced collaboration with financial service providers that are customers of
our risk analytics services to co-design credit-based loan products. As their risk analytics
service provider, we are familiarized with their risk preference and risk control system, which
enables us to better advise them on characteristics of the loan products to be launched, such
as the total value, application criteria, terms and target users of the loan products. Specifically,
leveraging our expertise in tax invoices, we assist the financial service providers to devise
application criteria tailored to their target users, which typically includes the number of tax
invoice issuance within a certain period and the corresponding tax invoice amount, the
fluctuation in tax invoice issuance, and customer and geographical concentration as reflected
in tax invoices. The criteria is set to test on the financial and operational wellbeing of a loan
product user, which helps the financial service providers to lower default rate for such loan
products. Therefore, such tax invoice-based loan products are not only popular among SMB
loan product users for their lack of access to other loan product options, especially the
collateral-based loans, but also well accepted by financial service providers for their
effectiveness in achieving credit-based risk control.
Through the loan product co-designing, we usually obtain certain exclusive marketing
rights with respect to the co-designed loan products, and the maximum value of loan product
sales to be conducted by us as allowed by the financial service providers for such loan products
is likely to be higher than other loan products that we have no role in designing. Moreover,
such exclusive rights to market the loan products allow us to gain more bargaining power in
negotiating favorable referral fee ratios with marketing agents.
Furthermore, we are also more likely to successfully facilitate loan product sales for such
co-designed loan products. As we participate in devising the application criteria for the loan
products, we can more accurately determine whether a particular application will be approved
by the financial service providers, thus improving the success rate for application submitted
through us and increasing the value of loan product sales facilitated by us.
In 2023, a pilot loan product exclusively marketed by us demonstrated improved
profitability as compared to other financial products marketed by us. The sales value of such
pilot product facilitated by us was RMB477.6 million in 2023, and although the service fee
ratio granted to us by the financial service provider was 1.18%, slightly lower than our average
service fee ratio of 1.33% for loan products granted to us by the financial service providers in
2023, our referral fee ratio with marketing agents for the pilot product was 0.58%, as compared
to our average referral fee ratio for loan products with marketing agents of 0.77% in 2023.
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Based on our unaudited management accounts of 2023, we achieved profit margin of around
50% for such pilot product, calculated by the revenue from such pilot product subtracting the
relevant referral fees, both as recorded on our management accounts, divided by the revenue
from such pilot product and multiplied by 100%, based on the assumption that the cost of sales
incurred in facilitating such loan product sales were referral fees paid to marketing agents
engaged by us only. Pursuant to the same calculation method, our average profit margin for
loan products was 41.8% in 2023, and our average profit margin for loan products other than
the pilot product was 39.6% in the same year. We have accumulated valuable experience in
co-designing and marketing such pilot product. We are currently working with five other
financial service providers for the development of financial products to be exclusively
marketed by us. With one of such financial service providers, we won the bid to co-design
financial product in May 2024, and we are under ongoing discussion with the other four
financial service providers regarding our collaboration to co-design financial products.
Improving Capability to Directly Reach Potential Financial Product Users
We have innovated the method to reach potential financial product users without
involvement of marketing agents. We have launched an internal system to screen qualified
potential financial product users based on transaction and invoice data of such users. Our
internal system uses transaction and invoice data authorized for access by users of our financial
& tax digitalization solutions, conducts analysis of such users’ risk profile and potential
financing needs and compares analysis results to terms of various financial products marketing
by us. Once we determine potential financial product users are eligible to apply for certain
financial products, our telemarketing team would make phone calls to such potential users and
promote financial products. With the deepened implementation of digital invoice reform, we
help a substantial number of our non-paying users connect to the Digital Invoice Service
Platform with our upgraded complimentary applications. See “—Leveraging Market
Opportunities and Favorable Government Policies to Grow Our Financial & Tax Digitalization
Solutions” for details. We have obtained consent from these non-paying users to conduct
promotional activities for financial products launched by financial service providers with their
contact information. As of April 30, 2024, over 3.1 million of our non-paying users had
connected to the Web-based System through our upgraded complimentary applications, which
are potential telemarketing targets for our digital precision marketing services.
During the traditional marketing process through marketing agents, after marketing
agents identify potential users with financing needs, usually by paying on-site visits to
potential users, and collect and refer relevant application information of such users to us, and
we run preliminary analysis as consented by the users based on such information, we may find
such users are not qualified for financial product application. Such cumbersome process not
only drive up the referral fee ratios granted by us to marketing agents but also incur additional
transactional costs and burden for us without rendering actual financial product sales. With our
data assets and data analytics capabilities, we can precisely identify users with financing needs
that are eligible for financial product application, after obtaining necessary consent of our
users, and through our in-house or outsourced telemarketing team, we can reach such users
without involvement of marketing agents. After negotiation with the six financial service
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providers we have been working with for the development of financial products to be
exclusively marketed by us as discussed above, we currently plan to utilize our new system and
telemarketing promotional method to promote such financial products. We have given training
sessions to our existing telemarketing team of our cloud financial & tax digitalization solutions
to familiarize them with the telemarketing of financial products, and as of April 30, 2024, we
had built a telemarketing team for our digital precision marketing services of approximately
110 members.
Optimizing the Mix of Financial Products Marketed by Us
We have prioritized promoting financial products with higher profit profile. Although the
financial product users retain the ultimate discretion in choosing which products to apply for,
we may prioritize marketing financial products with higher profit profile for us. Specifically,
when we generate the list of financial products that users are eligible to apply for, we will
prioritize demonstration of those products with higher profit profile. In addition, as we
generally designate financial products to be marketed by marketing agents, we will also engage
more marketing agents to market financial products with higher profit profile. As a result of
the above measures, our average service fee ratio with financial service providers increased
from 0.54% in 2023 to 0.57% in the four months ended April 30, 2024. Considering the intense
market competition among industry participants in China’s big data analytics for SMB
financing market, we expect the service fee ratio with financial service providers to remain
relatively stable for the year of 2024.
Optimizing Operations and Increasing Economies of Scale and Cost-Efficiency
Our ability to manage and control costs and operating expenses is critical to the success
of our business and our profitability. We expect our future costs and operating expenses to
decrease as a percentage of our total revenue for the following reasons: (1) strategic
front-loading of preparational work for the digital invoice reform, (2) improvement of business
collaborator network efficiency and (3) adjustment of recruitment strategy. See “—Improving
Profit Margin of Digital Precision Marketing Services—Improving Capability to Directly
Reach Potential Financial Product Users” for measures adopted to reduce future referral fees.
With these measures, we saw an improvement in our cost efficiency. In 2023, our costs of sales,
net of share-based payment expenses, accounted for 58.6% of our total revenue in the same
year, as compared to 58.9% in 2022. In 2023, our operating expenses, net of share-based
payment expenses, accounted for 53.6% of our total revenue in the same year, as compared to
58.6% in 2022.
Strategic Front-loading Preparational Work for the Digital Invoice Reform
Since the launch of digital invoice reform in 2021, we have invested significant resources
in building up R&D and technology capabilities in response to the adoption of digital invoices,
and as of December 31, 2023, our tax invoice compliance management solutions and financial
and tax management solutions had been upgraded to become fully compatible with the use and
management of digital invoices, which are able to serve both existing customers of e-invoices
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and customers of digital invoices. Therefore, we do not expect to incur substantial R&D
expenses in connection with our service expansion for the digital invoice reform to serve
customers through our cloud solutions.
Foreseeing growing customer demand for on-premises solutions to connect with the
Direct Connection System, we expanded our operation and support team from 187 as of
December 31, 2022 to 326 as of December 31, 2023 up front to deliver our on-premises
solutions. As of April 30, 2024, we had delivered 22 projects to enable customers to connect
with the Direct Connection System and had been working on over 100 projects through our
on-premises solutions, through which our operations and support team had gained valuable
experiences and expertise. As a result of these upfront efforts, we do not need to further expand
our operations and support team in the near future and do not expect to incur substantial staff
costs in relation to our service expansion for the digital invoice reform to serve customers
through our on-premises solutions.
Moreover, as the digital invoice issuance process through the Direct Connection System
and the Web-based System can be completed without using the information security hardware,
we expect a substantial decrease in hardware costs going forward.
Improving the Efficiency of Business Collaborator Network
We have utilized the platform and local resources of our business collaborators to reach
markets where our direct sales and marketing team find difficult to reach. We plan to increase
revenue attributable to business collaborators by developing more platform-based business
collaborators and streamlining structure of our business collaborator network.
Through our collaboration with Taobao, we have gained experience collaborating with
large platforms to extend our user outreach. Going forward, we plan to develop more business
collaborators that are platform-based or specialized in industrial internet and e-commerce for
more cost-effective user acquisition.
We also plan to further streamline the structure of our business collaborator network by
designating provincial-level head of business collaborators, which are responsible for
developing other regional business collaborators. The multi-tiered business collaborator
network will feed sales leads to our direct sales team. For sales leads that are successfully
converted into customer resources by us, we will pay commission fees to the relevant business
collaborator. Therefore, even if our business collaborator network may expand as a natural
progression of our business growth, we do not expect to incur substantial upfront sales and
marketing expenses in connection with our business collaborator network, as our payment
obligations arise only when there are actual solution or service sales. Further, as business
collaborators may help with provision of certain on-site technology support services and
maintenance services for our users and customers, we could reduce the corresponding costs and
expenses if we were to provide such services by our in-house teams.
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Adjusting Recruitment Strategy
We incurred significant employee benefit expenses to recruit and retain skilled personnel,
which increased from RMB299.3 million in 2021 to RMB321.7 million in 2022, and further
increased to RMB427.5 million in 2023, primarily due to the expansion of our workforce. Our
employee benefit expenses, without factoring into share-based payment expenses, accounted
for 66.0%, 61.2% and 60.0% of our total revenue in 2021, 2022 and 2023, respectively. Going
forward, we do not expect to incur substantial employee benefit expenses for solution delivery
and R&D in connection with the digital invoice reform. See “—Strategic Front-loading
Preparation for the Digital Invoice Reform” for details.
To control our employee benefit expenses, we have also implemented recruitment strategy
to introduce high-quality talents in place of employees with low performance and efficiency.
For instance, we have been recruiting young talents with excellent academic credentials as
graduate trainees to replace more highly paid personnel who underperform. We implemented
this recruitment strategy in our sales, R&D and operations and support teams, and we achieved
cost cut of RMB3.4 million per month in the three months ended March 31, 2024.
Improving Operating Cash Flow Position
Our net cash used in operating activities was RMB14.0 million, RMB64.3 million and
RMB99.3 million in 2021, 2022 and 2023, respectively. Our net operating cash outflows were
primarily due to (1) our loss-making position during the relevant periods, and (2) changes in
working capital caused by increases in contract assets, and trade and other receivables, which
were in line with our business growth during the Track Record Period.
In the future, we expect to improve our net operating cash outflows position by taking
advantage of (1) our continuous revenue growth fueled by our growing customer base and
expanding product and service offerings, (2) our improved operating leverage as we expect our
revenue growth to exceed the increase in expenses gradually, (3) our budget control and
optimization of operating expenses, and (4) our improved working capital.
To improve and refine our management of working capital, we will continue to leverage
our brand awareness and service experience to negotiate more attractive contractual terms with
our customers and suppliers. In the future, we plan to develop relationships with more
customers of sound credit profile to collect our trade receivables in a more efficient manner and
have implemented relevant measures, such as using the cash collection performance of trade
receivables as one of the key performance indicators for our sales managers. To this end, we
will require our sales management department to review sales forecasts and expected
receivable conditions weekly, clarify reasons for non-payment and promptly follow-up on their
resolutions. We will also require the project delivery department to conduct inspections of
ongoing projects and actively negotiate solutions with customers with payment issues.
Depending on the nature of payment issues (i.e., customer relations or defects in products or
services), we will require the sales or project delivery department, as appropriate, to take
charge of resolving the matter. We will also evaluate projects that are considered high-value
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and/or high-risk, and require them to be handled by dedicated customer service team so that
we can focus on specific payment issues to mitigate risks and ensure customer payment. For
details of the aging analysis of our trade receivables during the Track Record Period, see
“Financial Information—Discussion of Major Items of Consolidated Statements of Financial
Position—Trade Receivables.” In addition, we expect to fund our operations with net proceeds
from this Global Offering and additional equity or debt financings. We do not foresee
difficulties in securing debt financing to support our operations when necessary, because we
currently do not have short-term or long-term loans, and have a relatively low gearing ratio.
Based on the foregoing, our Directors are of the view that our business is sustainable
despite the current loss-making position.
The foregoing forward-looking statements are based on numerous assumptions regarding
our present and future business strategies and the environment in which we will operate in the
future. These forward-looking statements involve known and unknown risks, uncertainties and
other factors, some of which are beyond our control, which may cause the actual results,
performance or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by these forward-looking
statements. See “Risk Factors—Risks Relating to Our Business and Industry—We had net loss,
net current liabilities and net cash used in operating activities during the Track Record Period,
and may continue to incur net loss, net current liabilities and net cash used in operating
activities in the foreseeable future, which can expose us to liquidity risks,” and “Risk
Factors—Risks Relating to the Global Offering—Forward-looking statements contained in this
prospectus are subject to risks and uncertainties.”
COMPETITION
The markets in which we operate are highly competitive. Our major competitors include
players in the markets of financial and tax-related transaction digitalization and the
transaction-based big data analytics for SMB financing. We believe the principal competitive
factors in our industries are functionality and effectiveness of the solutions and services, user
experience, technology and infrastructure capabilities, sales capabilities, industry knowledge,
pricing and brand recognition and reputation. In addition, new and enhanced technologies and
new market entrants may further increase competition in our industries. We believe that we are
well-positioned to compete effectively based on the foregoing factors. See “—Competitive
Strengths” for details. However, some of our current or potential competitors may be able to
develop products and services better accepted by enterprises or may be able to respond more
quickly and effectively than we can to new or changing opportunities, technologies, regulations
or customer requirements. See “Risk Factors—Risks Relating to Our Business and
Industry—We face competition from existing or new market players in the industries in which
we operate, and we may not compete effectively.” For more information of the competitive
landscape of our industries, see “Industry Overview.”
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We believe, however, that we are equipped with the ability to compete with other market
participants and that our ability to compete effectively depends upon many factors both within
and beyond our control, including:
 profound experience in digitalization of enterprise transactions;
 the popularity, price, utility, ease of use, performance and reliability of our solution
and service offerings compared to those of our competitors;
 our ability, compared to the ability of our competitors, to develop new product and
service offerings in response to customers’ pain points;
 our ability to scale up by attracting and retaining customers and our comprehensive
customer base coverage in terms of industry sectors and growth stages;
 the expansiveness and influence of our business collaborators and marketing agents;
 our ability to provide superior customer experience;
 our reputation and brand strength relative to our competitors;
 our ability to attract, retain and motivate talented employees;
 our ability to raise additional capital; and
 acquisitions or consolidation within our industry.
INTELLECTUAL PROPERTY
We regard our proprietary domain names, copyrights, trademarks, trade secrets, and other
intellectual property critical to our business operations. As of the Latest Practicable Date, we
had 18 patents registered in China, including 16 invention patents and two design patents, as
well as 58 pending invention patent applications. We also held 234 registered software
copyrights, 116 registered domain names and 138 registered trademarks, as of the Latest
Practicable Date. For details of our material intellectual property rights, see “Appendix IV
Statutory and General Information—2. Further Information about Our Business—B. Our
Intellectual Property Rights.”
We protect our intellectual property rights through a combination of copyright, trademark
and other intellectual property laws, as well as confidentiality and license agreements with,
among others, our employees, suppliers and customers. In general, our employees must enter
into a standard confidentiality agreement acknowledging that all inventions, trade secrets,
developments and other processes generated by them on our behalf are our property, and
assigning to us any ownership rights that they may claim in those works. Our other key
measures to protect our intellectual property include: (1) establishing a dedicated intellectual
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property legal taskforce to guide, manage, supervise and monitor our daily work regarding
intellectual properties, (2) timely registration, filing and application for ownership of our
intellectual properties, (3) actively tracking the registration and authorization status of
intellectual properties and take action in a timely manner if any potential conflicts with our
intellectual properties are identified, (4) separating physical areas for technology development
areas and business secrets protection areas which are only accessible with authorization under
strict visiting rules, and (5) clearly stating all rights and obligations regarding the ownership
and protection of intellectual properties in all commercial contracts we enter into.
Despite our precautions, however, third parties may obtain and use intellectual property
that we own or license without our consent. During the Track Record Period, we did not
identify any of such breaches of our intellectual property rights. However, unauthorized use of
our intellectual property by third parties and the expenses incurred in protecting our
intellectual property rights from such unauthorized use may adversely affect our business and
results of operations. See “Risk Factors—Risks Relating to Our Business and Industry—Our
intellectual property rights are critical to our success and infringement of our intellectual
property right by any third party may materially and adversely affect our business, reputation,
financial condition and results of operations.”
As of the Latest Practicable Date, we owned 116 registered domain names. We generally
renew our domain name registrations once every year, and as of the Latest Practicable Date,
all of our registered domain names remained in effect.
Our Directors confirmed that, during the Track Record Period and up to the Latest
Practicable Date, other than the pending intellectual property litigation disclosed in
“Business—Legal Proceedings and Compliance,” we were not involved in any intellectual
property infringement actions brought by third parties with a claim amount of over RMB1.0
million.
EMPLOYEES
As of December 31, 2023, we had 1,020 full-time employees, all located in China. The
following table sets forth the number of our employees by function as of December 31, 2023.
Function
Number of
Employees % of Total
Management and administration 72 7.0
R&D 372 36.5
Operations and support 326 32.0
Sales and marketing 250 24.5
Total 1,020 100.0
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Our success depends on our ability to attract, retain and motivate qualified personnel. As
part of our human resources strategy, we offer employees competitive salaries, performance-
based cash bonuses and other incentives. As a result, we have a strong track record in attracting
and retaining our core employees.
We recruit our employees through internal referrals and recommendations, as well as
online channels such as third-party employment websites. We provide robust training programs
for onboarding employees. We believe such programs are effective in familiarizing and
equipping our employees with the skill set and work ethics we require. We also provide regular
and specialized trainings both online and offline, tailored to the needs of our employees in
different departments.
As required under PRC labor laws, we enter into individual employment contracts with
our employees covering matters such as wages, bonuses, employee benefits, workplace safety,
confidentiality obligations, intellectual property ownership, non-compete provisions and
grounds for termination. Specifically, the non-compete provisions contained in our
employment contracts apply based on the importance of the employee positions and other
relevant factors. In compliance with PRC regulations, we participate in various employee
social security plans that are organized by applicable local municipal and provincial
governments, including housing, pension, medical, work-related injury and unemployment
benefit plans. We had made contributions to the employee benefit plans as required under the
relevant PRC laws and regulations during the Track Record Period and up to the Latest
Practicable Date. See “Risk Factors—Risks Related to Our Business and Industry—We face
certain legal and regulatory risks relating to labor-related laws and regulations.”
As of the Latest Practicable Date, our employees had not formed any employee union or
association. We believe we maintain a good working relationship with our employees and we
had not experienced any material labor dispute or any difficulty in recruiting or retaining staff
for our operations during the Track Record Period and up to the Latest Practicable Date.
INSURANCE
In line with general market practice, we do not maintain any business interruption
insurance or product liability insurance, which are not mandatory under PRC laws. We do not
maintain keyman insurance, insurance policies covering damages to our network
infrastructures or IT systems, nor any insurance policies for our properties. During the Track
Record Period, we did not make any material insurance claims in relation to our business. See
“Risk Factors—Risks Relating to Our Business and Industry—Our limited insurance coverage
could expose us to significant costs and business disruption” for further details.
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PROPERTIES
As of the Latest Practicable Date, we leased properties with a gross floor area of
approximately 10,059.11 square meters. All such properties have been used for non-property
activities as defined under Rule 5.01(2) of the Listing Rules and are primarily used as office
premises for our business operations, R&D facilities, warehouses and staff dormitories.
As of the Latest Practicable Date, we operated our businesses through 26 leased
properties in Beijing, Guangzhou, Shanghai, Nanjing, Shenzhen, Hangzhou, Qingdao, and
Chengdu, with a total gross floor area of approximately 10,059.11 square meters.
Our lease agreements in respect of the abovementioned 26 leased properties generally
have expiration dates ranging from July 31, 2024 to May 4, 2026. We plan to renew our leases
or negotiate new terms when the existing leases expire. All lessors are independent third
parties. We did not experience material difficulties in negotiating renewal of our leases with
our landlords during the Track Record Period and up to the Latest Practicable Date.
As of the Latest Practicable Date, none of the properties leased or owned by us had a
carrying amount of 15% or more of our consolidated total assets. Therefore, according to
Chapter 5 of the Listing Rules and section 6(2) of the Companies (Exemption of Companies
and Prospectuses from Compliance with Provisions) Notice (Cap. 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 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 our Group’s
interests in land or buildings.
Non-registration
Pursuant to the applicable PRC laws and regulations, property lease agreements must be
registered with the local branch of the Ministry of Housing and Urban-Rural Development of
the PRC (ண௅). The registration of such leases will require the
cooperation of our lessors. As of the Latest Practicable Date, we had not obtained lease
registration for all of our leased properties with a gross floor area of approximately 10,059.11
square meters in China, primarily due to the difficulty of procuring our lessors’ cooperation to
register such leases. We will take all practicable and reasonable steps to ensure that such leases
are registered. As advised by our PRC Legal Advisor, the lack of registration of the lease
agreements will not affect the validity of such lease agreements.
According to the relevant PRC laws and regulations, we may be ordered by the relevant
government authorities to register the relevant lease agreements within a prescribed period,
failing which we may be subject to a fine ranging from RMB1,000 to RMB10,000 for each
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non-registered lease. As of the Latest Practicable Date, we had not received any such request
or suffered any such fine from the relevant government authorities. We undertake to cooperate
fully to facilitate the registration of lease agreements once we receive any requirements from
relevant government authorities.
Title Defects
As of the Latest Practicable Date, nine of our leased properties, primarily used as office
premise, R&D facilities and staff dormitories, had title defects that may adversely affect our
ability to continue to use them in the future. The aggregate leased area of these defective
properties is approximately 782 square meters. The existence of title defects is mainly due to
the failure of certain lessors to provide property ownership certificates, sublease authorization
certificates or other relevant certificates regarding their legal right to lease such properties.
Should disputes arise due to title encumbrances to such properties or government action, we
may encounter difficulties in continuing to lease such properties and may be required to
relocate. We do not expect to incur significant time for identifying, or incur significant cost to
relocate our operations to, comparable alternative properties in proximity. Our Directors
believe that relocation will not have a material adverse effect on our business, results of
operations and financial condition.
As of the Latest Practicable Date, we were not aware of any challenge being made by a
third party or government authority on the titles of any of these leased properties that might
have a material adverse effect on our current occupation. In addition, as discussed above, our
Directors do not anticipate any material practical difficulty in or significant costs relating to
identifying comparable alternative premises for any of the defective premises above. There are
no rules or regulations requiring the lessee to obtain the ownership certificate or regulatory
punishment on the lessee for not doing so. Accordingly, our PRC Legal Advisor has advised
that we, as lessee, are not subject to any material administrative penalty for the lessors’ failure
to fulfill its obligation to rectify the aforementioned title defects in the leased properties.
Moreover, according to relevant PRC laws and regulations, the lessee has the right to claim
compensation if the lease agreement is invalid due to the lessor’s fault. In case where our
ability to continue leasing such properties is affected by a third-party objection, we may seek
indemnity from the lessor in accordance with relevant PRC laws and regulations. As a result,
our Directors believe that these title defects would not materially and adversely affect our
business, results of operations and financial condition.
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LICENSES, PERMITS AND APPROV ALS
The following table sets out a list of material licenses and permits currently held by us.
License/Permit Holder Granting authority Grant date Expiry date
Information Security Service
Qualification Certificate
(Cert No.:
CCRC-2021-ISV-SI-2325)
The Company China Cybersecurity Review
Technology and
Certification Center
May 20,
2022
May 19,
2025
V alue-Added
Telecommunications
Services License
The Company Ministry of Industry and
Information Technology
of the PRC
May 14,
2021
February 5,
2026
Information System Security
Level Protection Record
Certificate (Cert. No.:
11010824492-23003)
The Company Beijing Public Security
Bureau
April 6,
2023
*
Commercial Cryptography
Product Certification (Cert.
No.: GM001119920201967)
The Company Commercial Cryptography
Testing Center of State
Cryptography
Administration
July 1, 2020 December
29, 2024
Commercial Cryptography
Product Certification (Cert.
No.: GM001119920201942)
The Company Commercial Cryptography
Testing Center of State
Cryptography
Administration
July 1, 2020 December
27, 2024
Commercial Cryptography
Product Certification (Cert.
No.: GM00 1111020202201)
The Company Commercial Cryptography
Testing Center of State
Cryptography
Administration
September 8,
2020
September 7,
2025
Commercial Cryptography
Product Certification (Cert.
No.: GM00 1111020202144)
The Company Commercial Cryptography
Testing Center of State
Cryptography
Administration
September
25, 2020
September
24, 2025
Commercial Cryptography
Product Certification (Cert.
No.: GM00 1111020210003)
The Company Commercial Cryptography
Testing Center of State
Cryptography
Administration
January 5,
2021
January 4,
2026
* The Information System Security Level Protection Record Certificate does not bear an expiry date
because we are subject to annual review to renew such certificate.
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As advised by our PRC Legal Advisor, as of the Latest Practicable Date, we had obtained
all licenses, permits, approvals and certificates necessary for our business operations in all
material respects from the relevant government authorities in the PRC, and such licenses,
permits, approvals and certificates remained in full effect. We will apply for renewal of our
licenses and permits prior to their expiration, and we do not foresee any legal impediment for
the renewal of our certifications that are about to expire in December 2024.
A W ARDS AND RECOGNITION
Since our inception and up to the Latest Practicable Date, we had received numerous
awards and recognitions in connection with our business. Some of the significant awards and
recognitions we received are set forth below.
Awarding Y ear Award/Recognition Awarding Organization
2023 Beijing Top 100 Private Businesses
(2023 ϋ̏ԯ͏ᐄΆุ100੶)
Beijing Municipal
Federation of Industry
and Commerce
2023 Top 10 Fintech Innovation (Ҧ
Է)
New Finance Alliance
2023 First in user satisfaction for invoice
digitalization services (؂
ୋɓ)
CCW Research
2023 New-Generation Information
Technology Innovation Enterprise
for 2022-2023 (2022-2023 ϋอɓ
Ҧஔ௴อʮ̡)
CCID Consulting Co., Ltd.
2022 Financial and Tax Innovation Product
of the Y ear (ۜ)
2022 China Digital
Transformation and
Innovation Awards
2021 Innovation Enterprise Award for
Digital Transformation of 2021
(2021௴อΆุᆤ)
Internet Weekly of Chinese
Academy of Sciences,
Chinese Academy of
Social Sciences
2020 Top 500 New Economy Businesses
of China ( ʕ਷อ຾᏶Άุ500੶)
China Enterprise
Evaluation Association
2020 Frontier Enterprise of Science and
Technology Innovation of 2020
(2020Άุ)
People’ s Daily Online
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LEGAL PROCEEDINGS AND COMPLIANCE
From time to time, we may become involved in legal proceedings in the ordinary course
of our business. As of the Latest Practicable Date, we were involved in two pending litigations
that had a claim amount of over RMB1.0 million. One of the pending litigations related to the
appeal of a patent infringement case, in which the plaintiff alleged that we violated its
invention patent and sought damage of over RMB7 million. In September 2022, the Beijing
Intellectual Property Court dismissed the plaintiff’s complaint in favor of us. In October 2022,
the plaintiff appealed to the Supreme People’s Court, which had not issued a judgment as of
the Latest Practicable Date. The maximum monetary damage associated with this pending
patent infringement case is expected to be approximately RMB7 million, calculated based on
the maximum amount subject to the claims and potential legal expenses sought from us. The
disputed patent does not relate to any of our core products or projects during the Track Record
Period, and the related technology is only applied in our complimentary applications. We do
not foresee any material impact on our operations in the event that we are required to cease the
usage of such patent or become subject to the maximum monetary damages, because (1) as
advised by the PRC Legal Advisor, we will still be able to continue the operation of our
complimentary applications once the allegedly infringing elements and features are removed;
(2) the complimentary applications had not generated any revenue during the Track Record
Period and we do not expect them to generate revenue in the future; and (3) we have alternative
complimentary applications for the expansion of our non-paying user base. The other pending
litigation was filed by one of our equity investees in 2024, in which the plaintiff demanded us
to fulfill our obligation for a capital contribution of RMB1.05 million and compensate the
plaintiff for loss of interest. The maximum potential damage associated with this pending
dispute is expected to be approximately RMB1.05 million, calculated based on the maximum
amount subject to the claims and potential legal expenses sought from us. While we intend to
defend these lawsuits vigorously and believe that we have valid defenses, there can be no
assurance that a favorable outcome will be obtained. However, considering the nature of these
lawsuits and the amount of subject matters thereof, our Directors are of the view that the total
liabilities could be incurred resulting from the event of losing all of these lawsuits will not have
material adverse impact on our business, financial condition and results of operations. As of the
Latest Practicable Date, there had been no court rulings on this pending litigation. During the
Track Record Period and up to the Latest Practicable Date, neither we nor any of the Directors
had been involved in any actual or pending legal, arbitration or administrative proceedings,
including any bankruptcy or receivership proceedings, that we believe would have a material
adverse effect on our business, results of operations, financial condition or reputation.
We are subject to various regulatory requirements and guidelines issued by the regulatory
authorities in China. During the Track Record Period and as of the Latest Practicable Date, we
did not commit any material non-compliance of the laws and regulations, and we did not
experience any systemic non-compliance incident. As advised by our PRC Legal Advisor,
during the Track Record Period and up to the Latest Practicable Date, we had complied with
all applicable laws and regulations in all material respects.
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ENVIRONMENTAL, SOCIAL, AND CORPORATE GOVERNANCE POLICIES
We recognize the significance of integrating ESG considerations into our business
practices and operations. This policy reflects our commitment to environmental stewardship,
social responsibility, and strong corporate governance, aligning with the evolving expectations
of our stakeholders.
Governance Structure
The Board sets our strategic direction, ensuring alignment between our ESG strategy,
values, and core businesses. The ESG strategy is developed through evaluating, prioritizing,
and managing these issues and risks. The Board will adopt the following approach to manage
material ESG issues:
 Identify —The Board will engage internal and external stakeholders (including, but
not limited to, shareholders/investors, the management and employees, customers,
business partners, suppliers, regulatory authorities, and community/non-
governmental organizations) to identify material ESG issues and risks inherent in
our business operations. The Board believes that open dialogue with stakeholders
plays a crucial role in maintaining our business sustainability.
 Strategic Planning —The Board will set up risk management and internal control
systems, which are designed to meet our business needs and minimize our risk
exposure.
 Assess —Apart from assessing the performance of our ESG measures through
discussion with our stakeholders, the Board will engage an independent third party
to identify and assess our performance in respect of environmental protection and
climate change.
 Review —The Board will review the metrics and progress made against ESG-related
goals annually to guide us to achieve better ESG performance. Through our ESG
policy, a set of systematic risk management practices has been put in place to ensure
financial and operational functions, compliance control systems, material control,
asset management and risk management all operate effectively.
To enhance implementation, the Board has formed an ESG Committee (the “Committee”)
dedicated to ESG issues. Our executive Director and chief executive officer, Mr. Y ang
Zhengdao was appointed as the Chairperson of the Committee, who oversees the whole
organization to ensure effective oversight and management of ESG issues within the
organization. The members of the Committee comprise representatives from various
departments, including procurement, marketing, social responsibilities, employee benefit and
corporate governance to ensure a comprehensive representation of all aspects of our Group.
The Committee reports to the Board annually through meetings.
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Our independent non-executive Director, Mr. Ng Kwok Yin will conduct a thorough
analysis of potential risks that could impact the Group’s operations and management. This
analysis considers three key dimensions: environmental protection, social responsibility, and
corporate governance. Once these risks are identified, we assess their significance in relation
to their potential impact on sustainable operations and social values. The risks are then
categorized based on their level of impact, with the highest impact risks being prioritized.
Climate-Related Risks and Opportunities
As an enterprise digitalization solution provider, we face climate-related risks, including
extreme weather events, rising sea levels, and disruptions to telecommunications infrastructure
and power supply. Additionally, transitioning to sustainable practices brings regulatory and
customer-driven pressures. However, these risks also present opportunities for us to address
climate concerns, enhance resilience, and adapt to sustainable technologies. The climate risks
and opportunities identified by us are discussed below.
Physical Risks
As an enterprise digitalization solution provider, we face vulnerability to climate-related
physical risks, including increased severity of extreme weather events like cyclones and floods,
increased variability in weather patterns, and rising sea levels. While we rely on third-party
telecommunications network providers for transmission bandwidth and do not own or operate
data centers, disruptions in telecommunications infrastructure and power outages can still pose
risks to our business operations.
 Disruptions in telecommunications infrastructure —Extreme weather events such
as hurricanes, storms, or floods, can damage or disrupt the telecommunications
infrastructure, leading to service outages and interruptions in data transmission.
 Power Outages —Extreme weather events can cause widespread power outages,
affecting the availability and reliability of the telecommunications network and our
provision of services.
Transition Risks
In terms of transition risks, the global focus on climate change and sustainability brings
forth new regulations and policies that impact telecommunications providers and our
operations. As climate awareness and sustainability concerns grow, customers prioritize
working with environmentally responsible companies. Neglecting climate risks and
sustainability practices can result in reputational damage and customer loss. Transitioning to
sustainable technologies and practices, such as adopting renewable energy and energy-efficient
solutions, may be necessary to mitigate climate risks.
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 Policy and legal changes —Regulatory or policy changes can influence the
availability of services and operating costs for both telecommunications providers
and us, thereby affecting our capacity to meet customer demands.
 Market —Cost of energy can become more volatile as the demand for energy
increases, leading to potential price increases that could impact the operating costs
of server farms and data centers, and ultimately the prices charged by server custody
and/or cloud computing services provided to us.
 Reputation —Given the increasing customer consciousness regarding climate and
sustainability concerns, neglecting climate risks and insufficient sustainability
practices can lead to reputational damage and the loss of customers.
 Technology —Adoption of sustainable technologies and practices is crucial for
achieving a low-carbon transition. However, implementing and transitioning to
these sustainable measures may entail substantial costs and potential disruptions to
business models or structures during the implementation phase.
Mitigation of Physical and Transition Risks
To mitigate physical risks, we collaborate with multiple telecommunications providers,
reducing the likelihood of service disruptions resulting from extreme weather events. We have
established emergency procedures for disaster recovery and implemented backup systems for
seamless data transmission, ensuring uninterrupted business operations even in the face of
telecommunications infrastructure disruptions. These emergency procedures effectively
minimize downtime and facilitate the swift restoration of services during power outages or
infrastructure disturbances. We also prioritize energy efficiency when selecting service vendors
that have implemented sustainable practices and committed to reducing their carbon footprint.
To ensure compliance with evolving regulations and policies related to climate change
and sustainability, we stay abreast of the related new regulations and policies. The legal
department and listing coordination office are responsible for ensuring that we stay up to date
with the latest regulations and policies. We actively conduct research and explore sustainable
technologies and practices to minimize our carbon footprint. Close collaboration with
customers, telecommunications providers, and industry organizations allows us to collectively
address climate risks and develop sustainable solutions that align with customer demands and
regulatory requirements. By allocating resources to address climate concerns and demonstrate
environmental responsibility, we aim to ensure compliance, preserve our positive reputation,
and retain customer loyalty.
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Opportunities
In addition to developing mitigation measures for the identified climate risks, we have
actively explored opportunities arising from climate change to strengthen our resilience and
adapt to the transition towards a low-carbon economy. Furthermore, we have enhanced our
collaboration with telecommunication providers to establish emergency procedures and reduce
carbon emissions related to data storage and processing.
Environmental Policies
During the Track Record Period and up to the Latest Practicable Date, we were not
subject to any material fine, claim or administrative penalties arising from non-compliance
with applicable environmental laws and regulations. We have adopted the following
environmental policies to promote our substantially development:
Resources Management
 Strive to continuously improve our resource management, by responsibly manage
and utilize energy and water resources for the benefit of the business and society;
and
 Implement effective energy and water management measures.
Energy Efficiency and Emissions Management
 Reduce energy consumption so as to reduce carbon footprint;
 Encourage the adoption of energy-efficient machinery, system and equipment in the
procurement process;
 Avoid unnecessary vehicle use and encourage our employees to use public transport;
and
 Turn off the unnecessary electrical equipment and lights.
Waste Management
 Handle waste in accordance with national and local laws and regulations;
 Minimize the generation of all kinds of waste where applicable; and
 Reuse and recycle as much as possible.
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Significant Impacts on the Environment and Natural Resources
Due to our business nature as a technology-based company, we have not had significant
impacts on the environment. However, our operations consume mainly electricity and emit
greenhouse gas emissions. We keep track of our electricity consumption and greenhouse gas
emissions to actively review and explore areas for improvements. We also promote a culture
of environmental responsibility among our employees, encouraging them to actively
participate in safeguarding the environment. Although we have not generated a significant
amount of waste from our operations, we have the environmental policy for waste management
to avoid generation of all kinds of waste where applicable.
Environmental Metrics and Targets
Greenhouse Gas Emissions
The following table shows our greenhouse gas emissions for the three years ended
December 31, 2023.
Scope of Greenhouse
Gas Emissions Emission Sources Unit 2021 2022 2023
Scope 1 emission
(1) Combustion of petrol
for vehicle (2)
tCO2e 13.64 13.54 13.89
Scope 2 emission (3) Purchased electricity tCO 2e 142.71 149.68 161.39
Scope 3 emission (4) Paper waste disposal tCO 2e 0.30 0.33 0.35
Electricity used for
freshwater and
sewage treatment
tCO
2e 0.34 0.37 0.45
Business air travel (5) tCO2e N/A N/A 339.91
Total tCO2e 156.99 163.92 515.99
Intensity tCO2e/million
RMB revenue
0.35 0.31 0.74
(1) As pursuant to Appendix 2 of “How to Prepare an ESG Report” set out by Hong Kong Exchanges and
Clearing Limited, Scope 1 greenhouse gas emissions refer to direct emissions from equipment and
operations that are owned or controlled by us including petrol used by our vehicles.
(2) The gasoline consumption in the three years ended December 31, 2023 were estimated based on the
annual cost spent on fueling the vehicle, using the averaged highest retail gasoline prices provided by
the Beijing Municipal Commission of Development and Reform of the PRC from 2021 to 2023.
(3) As pursuant to Appendix 2 of “How to Prepare an ESG Report” set out by Hong Kong Exchanges and
Clearing Limited, Scope 2 greenhouse gas emissions refer to energy indirect emissions resulting from
the generation of purchased or acquired electricity, heating, cooling, and steam consumed within our
Group.
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(4) We rely on third-party cloud storage and external bandwidth to operate our business. The primary Scope
3 emissions of our Group, outside of paper waste disposal, freshwater and sewage treatment, and
business air travel, stem from the energy consumption of the data centers provided by our
telecommunications suppliers. Our main telecommunications supplier has accounted for indirect
greenhouse gas emissions from energy consumption of its data centers. Therefore, we have not
calculated the associated emissions to avoid double counting. For Scope 3 emissions from paper waste
disposal and freshwater and sewage treatment, relevant emissions are calculated as pursuant to
Appendix 2 of “How to Prepare an ESG Report” set out by Hong Kong Exchanges and Clearing Limited.
(5) CO
2 emissions from the Group’s business air travels were reported in accordance with the International
Civil Aviation Organization (ICAO) Carbon Emission Calculator. Due to the COVID-19 pandemic, there
was minimal instances of business air travel from 2020 to 2022 and our Group has not kept records of
business air travel. For 2023, the effects of COVID-19 pandemic have largely subsided and we have
resumed business air travel for meeting with business partners and clients.
Resources Consumption
We mainly consumed electricity and petrol for a rented car used for business purposes
during the three years ended December 31, 2023. The following table shows our total
consumption of gasoline and electricity for the three years ended December 31, 2023.
Unit 2021 2022 2023
Gasoline Consumption for Vehicle (1) Liter 5,110.01 5,072.01 5,204.46
Gasoline Consumption Intensity Liter/million
RMB
revenue
11.26 9.65 7.43
Electricity Consumption kWh 245,620 257,628 282,997
Electricity Consumption Intensity kWh/million
RMB
revenue
541.25 489.97 404.16
(1) The gasoline consumption in the three years ended December 31, 2023 were estimated based on the
annual cost spent on fueling the vehicle, using the averaged highest retail gasoline prices provided by
the Beijing Municipal Commission of Development and Reform of the PRC from 2021 to 2023.
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Industry Peer Comparison
The following table shows relevant data from selected industry peers of our Group for the
three years ended December 31, 2023.
Data Company Unit 2021 2022 2023
Scop e 1 + Scope 2
emissions
The Group tCO 2e 156.35 163.22 175.28
Kingdee International
Software Group
Company Limited
(“Kingdee”)
6,690.00 6,583.00 7,452.59
Bairong Inc.
(“Bairong”)
732.98 378.80 N/A
Scop e 1 + Scope 2
emissions intensity
The Group tCO
2e/million
RMB revenue
0.34 0.31 0.25
Kingdee 1.60 1.35 1.31
Bairong 0.4515 0.1844 N/A
Electricity
consumption
The Group kWh 245,620 257,628 282,997
Kingdee 10,155,040 10,855,098 12,427,601
Bairong 1,529,240 652,500 564,671
Electricity
consumption
intensity
The Group kWh/million
RMB revenue
541.25 489.97 404.16
Kingdee 2,428.71 2,226.09 2,188.32
Bairong 940 320 210
Water consumption The Group m
3 532.34 569.15 684.00
Kingdee 164,222 85,377 96,870
Bairong 1,037 1,049 828
Water consumption
intensity
The Group m
3/million
RMB revenue
1.17 1.08 0.98
Kingdee 39.28 17.51 17.06
Bairong 63.90 51.10 30.90
Based on available environmental data, we have significantly less total Scop e 1 + Scope
2 emissions, electricity consumption, and water consumption as compared to Kingdee and
Bairong, primarily due to our smaller scale of operations as compared to Kingdee and Bairong.
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Environmental Targets and Plans to Achieve Targets
We acknowledge the significance of safeguarding the environment and fostering
sustainability. With a focus on environmental responsibility and minimizing our environmental
footprint, we have established environmental targets that align with our overall business
strategy and objectives. These targets undergo regular review and updates to ensure ongoing
enhancements in our sustainability practices. Through the establishment of these targets, we
aim to demonstrate our dedication to environmental protection by proactively adopting
measures to mitigate our environmental impact.
Category Targets for the next 10 years Plans to achieve targets
GHG emissions Reduce total greenhouse gas
emission (Scope 1 and Scope 2)
intensity by 10% within
10 years, with the year ended
December 31, 2022 as the
base year.
 Actively improve energy efficiency to
reduce GHG emissions from gasoline
and purchased electricity consumption;
 Actively conduct research and explore
sustainable technologies and practices
to minimize our carbon footprint; and
 Closely collaborate with customers,
telecommunications providers and
industry organizations to develop
sustainable solutions.
Energy
efficiency
Reduce total purchased electricity
consumption intensity by 10%
within 10 years, with the year
ended December 31, 2022 as the
base year.
 Purchase energy-efficient equipment,
electronic appliances and devices
throughout the whole Group;
 Continuously monitor the energy
consumption of our offices; and
 Train and educate employees to turn off
unnecessary and idling equipment,
electronic appliances, and devices.
Social Responsibility Policies
Human Resources
We have adopted policies on compensation and dismissal, equal opportunities, diversity,
anti-discrimination, training and development and other benefits and welfare which include:
 Ensuring employees receive fair and compensation based on factors such as job
responsibilities, skills and market rates;
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 Ensuring clear procedures and guidelines for recruitment, handling terminations and
dismissals;
 Establishing an employee performance appraisal management system for evaluation
of the performance of our employees;
 Committed to providing equal opportunities for all individuals regardless of their
race, nationality, religion, physical condition, disability, gender, pregnancy, sexual
orientation, political status, age or any other discrimination prohibited by applicable
laws and regulations;
 Prohibiting discrimination, harassment, and retaliation in all aspects of employment;
 Promoting diversity and inclusion in the workplace to foster an inclusive culture;
 Providing training programs to raise awareness about discrimination, promote
inclusiveness, and prevent discriminatory behaviors;
 Providing a comprehensive benefits package to employees to ensure our
competitiveness in attracting high-caliber talent;
 Ensuring a safe and healthy workplace and provide necessary resources for
employee well-being; and
 Providing an appropriate channel and a feedback mechanism for employees to raise
internal grievances or complaints.
Our employee handbook effectively communicates our human resources management
system, salary management system, reward and punishment system, and code of conduct to our
employees.
Occupational Health and Safety
We strive to provide and maintain a safe and healthy working environment whilst
complying with all applicable laws and regulations. These include, but not limited to the
following:
 Law of the PRC on the Prevention and Treatment of Occupational Diseases
 Work Safety Law of the PRC
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In addition to compliance with laws and regulations, we have implemented occupational
health and safety guidelines in which our employees are required to strictly comply. Our
occupational health and safety policy is shown below:
 Ensure establishment of an occupational health and safety management system that
complies with applicable laws and regulations;
 Ensure establishment of a system for recording and handling accidents;
 Maintain a health and work safety compliance record;
 Provide a safe and healthy workplace and work systems for all employees; and
 Provide adequate resources for implementing the health and safety plan, employee
training and supervision.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material accidents involving personal injury or property damage, and we were
not subject to any material claims, lawsuits, penalties or disciplinary actions as a result of any
material accidents.
No child labor, forced, or compulsory labor was reported and/or identified within any of
our workplace during the Track Record Period and up to the Latest Practicable Date. If any
incidents of non-compliance are discovered within our operation sites, we shall immediately
suspend employment and carry out internal investigation.
Product Responsibility
We are committed to ensuring the quality of the products and services we offer, and we
have complied with all applicable laws and regulations regarding product responsibility.
In addition to compliance with laws and regulations, we have adopted measures as
follows:
 Deliver services that meet industrial standards and fulfill clients’ expectations;
 Provide clear and accurate information to clients regarding services, terms, and
pricing;
 Safeguard consumer data privacy complying with relevant laws and regulations;
 Establish a comprehensive system to detect and prevent data breaches, cyber threats
and other system vulnerabilities;
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 Implement robust security measures to protect user data from unauthorized access,
disclosure and alteration;
 Secure data back-up systems and disaster recovery plans to minimize the risk of user
data loss or leakage;
 Develop incident response plans and report cybersecurity incidents to relevant
authorities, and take appropriate measures to mitigate risk;
 Continuously perform R&D to deliver solutions that effectively address customers’
management and compliance requirement; and
 Establish mechanisms to address complaints and provide timely resolutions to
maintain good customer relations.
Supply Chain Management
We regularly assess the pricing, product quality standards, business condition, and
environmental and social corporate responsibility of new suppliers to ensure their product and
service quality. Suppliers are chosen based on their reputation, size, and strong governance,
along with relevant licenses and registrations, to ensure a focus on good ESG performance and
high-quality products. Priority is given to green procurement during supplier selection.
During the Track Record Period and up to the Latest Practicable Date, we engaged our
main telecommunications network provider, which is at the forefront of their dedication to
decarbonization. It focuses its work on pioneering green and low-carbon cloud computing. We
will monitor the environmental and social performance of all existing suppliers continuously
in order to ensure the quality of suppliers and their compliance with all environmental and
social related laws and regulations.
Anti-Corruption
We believe knowledge and compliance with laws and regulations are the foundation of
our business. We require that all employees conform to the Law Against Unfair Competition
of the PRC, Criminal Law of the PRC, and other laws, regulations, and regulatory documents
related to commercial bribery.
While we have internal controls and procedures in place to comply with anti-bribery and
anti-corruption laws, we cannot guarantee their effectiveness in preventing violations by our
employees or partners. If our employees or third-party business partners are found or alleged
to have violated anti-bribery or anti-corruption laws and regulations, we may face or be
involved in fines, lawsuits and damage to our reputation, which could have a material adverse
effect on our business, financial condition and results of operations.
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In particular, we have in place a set of comprehensive anti-corruption and anti-bribery
policies within our company (the “Anti-corruption Policy”) to promote and support the
compliance with applicable anti-corruption laws and regulations, providing guidance on
anti-corruption and anti-bribery practices, the whistleblowing channel, as well as the
responsibilities for implementing the policies. All our employees are required to understand
and comply with the Anti-corruption Policy, and we from time to time provide anti-corruption
training programs to our employees.
During the Track Record Period and up to the Latest Practicable Date, we had not aided,
abetted, assisted, or colluded with an individual who has committed, or conspired to commit
any unlawful activities. No non-compliance with relevant laws and regulations that have a
significant impact on us relating to corruption, bribery, fraud and money laundering had been
identified during the Track Record Period and up to the Latest Practicable Date.
OCCUPATIONAL HEALTH AND SAFETY
We are subject to the PRC laws and regulations in respect of employee health and safety.
We have in place safety guidelines with which our employees are required to strictly comply.
During the Track Record Period and up to the Latest Practicable Date, we did not experience
any material accidents involving personal injury or property damage, and we were not subject
to any material claims, lawsuits, penalties or disciplinary actions as a result of any material
accidents.
INTERNAL CONTROL AND RISK MANAGEMENT
We have established and currently maintain risk management and internal control systems
consisting of policies and procedures that we consider to be appropriate for our business
operations. We are dedicated to continually improving these systems. We have adopted and
implemented comprehensive risk management policies in various aspects of our business
operations. Our internal review department is responsible for supervising and reviewing our
internal control system. In preparation for the Listing, the Company has engaged an
independent third party consultant (the “Internal Control Consultant”) to perform a review over
selected areas of our internal controls, including our financial reporting. The Internal Control
Consultant performed procedures and put forward suggestions for improvement. We have
accepted the suggestions and further strengthened the design of our internal control process.
After our rectification, the Internal Control Consultant performed follow-up procedures, and no
irregularities remained in relation to the internal controls of our Company.
Financial Reporting Risk Management
We have adopted comprehensive accounting policies in connection with our financial
reporting risk management, such as financial management, budget management and financial
statement preparation, review and disclosure. Our finance department has been continually
tracking changes and evolutions in relevant laws and regulations, and evaluating the
compliance status of our accounting policies and management. We have procedures in place to
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carry out such accounting policies, and our finance department reviews our management
accounts in accordance with such procedures. In addition, we provide ongoing training to our
finance staff to ensure that these policies are well-observed and effectively implemented.
Information System Risk Management
Sufficient maintenance, storage and protection of our data and other related information
are critical to our success. We have implemented relevant internal procedures and controls to
ensure that our data is protected and that leakage and loss of such data are avoided.
We have implemented comprehensive internal policies on protecting data privacy and
security, and we have established a working group that is responsible for formulating data and
information security strategies, and decision-making in material data and information
incidents. We implement a robust internal authentication and authorization system to ensure
that our confidential and important data can only be accessed for authorized use and by
authorized personnel. We have clear and strict authorization and authentication procedures and
policies in place. Our employees only have access to data which is directly relevant and
necessary for their responsibilities and for limited purposes and are required to verify
authorization upon every access attempt.
We have established an all-round information system in reference to data security
requirements, national standards and industry best practices and intend to continually invest
heavily in data security and privacy protection. Our information system applies multiple layers
of safeguards, including both internal and external firewalls, to identify and protect us against
security attacks. We have completed various information security, privacy and compliance
certifications/validations, proving the security and reliability of our data protection
technologies.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material information leakage or loss of our data. See “Data Privacy and
Security” for more information about our information security procedures and policies.
Compliance and Intellectual Property Risk Management
We have designed and adopted strict internal procedures to ensure the compliance of our
business operations with the relevant rules and regulations, as well as the protection of our
intellectual property rights. Our legal department examines the contract terms and reviews all
relevant documents for our business operations, including licenses and permits obtained by the
counterparties or us to perform contractual obligations and all the necessary underlying due
diligence materials, before we enter into any contract or business arrangements. There was no
material and systemic non-compliance during the Track Record Period and as of the Latest
Practicable Date.
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We maintain internal procedures to ensure that we have obtained all material requisite
licenses, permits and approvals for our business operations, and conduct regular reviews to
monitor the status and effectiveness of those licenses and approvals. Our legal department is
also responsible for obtaining any requisite governmental pre-approvals or consent, including
preparing and submitting all necessary documents for filing with relevant government
authorities within the prescribed regulatory timelines. Our human resources and administrative
department, as well as some other departments, ensures all necessary application, renewals or
filings for trademark, copyright and patent registration have been timely made to the competent
authorities.
Human Resources Risk Management
We have established internal control and risk management policies covering various
aspects of human resource management such as recruitment, training, work ethics and legal
compliance. We maintain high standards in recruitment with strict procedures to ensure the
quality of new hires, provide specialized training tailored to the needs of our employees in
different departments and conduct periodic performance reviews for our employees.
In particular, we have in place a set of comprehensive Anti-corruption Policy to promote
and support the compliance with applicable anti-corruption laws and regulations, providing
guidance on anti-corruption and anti-bribery practices, the whistleblowing channel, as well as
the responsibilities for implementing the policies. All of our employees are required to
understand and comply with the Anti-corruption Policy, and we from time to time provide
anti-corruption trainings to our employees.
Investment Risk Management
Our project execution team organized by our general manager is responsible for
investment project sourcing, screening, execution and portfolio management. Our project
execution team sources investment projects in accordance with our investment strategy, and
our finance and legal departments, as well as certain other departments, conduct thorough
pre-investment due diligence to assess the risks, business synergies and potential return of the
investment projects.
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OVERVIEW
As of the Latest Practicable Date, Ms. Chen controlled 43.22% of the voting power at the
general meetings of our Company, comprising (1) 27.10% beneficially owned by her directly,
(2) 9.23% beneficially owned by Ningbo Xiu’an, which is controlled by Ms. Chen as its
general partner, and (3) 6.89% beneficially owned by Tianjin Duoying, which is controlled by
Ms. Chen as its general partner. Upon the Listing, Ms. Chen will control 41.44% of the voting
power at the general meetings of our Company, comprising (i) 25.98% beneficially owned by
her directly, (ii) 8.85% beneficially owned by Ningbo Xiu’an, and (iii) 6.61% beneficially
owned by Tianjin Duoying, assuming the Over-allotment Option is not exercised. Therefore,
Ms. Chen, Ningbo Xiu’an and Tianjin Duoying were our Controlling Shareholders as of the
Latest Practicable Date and will continue to be our Controlling Shareholders upon the Listing.
NO COMPETITION AND CLEAR DELINEATION OF BUSINESS
Our Controlling Shareholders have confirmed that as of the Latest Practicable Date, none
of them or any of their respective close associates had any interest in a business that competes
or is likely to compete, either directly or indirectly, with our business, which is subject to
disclosure pursuant to Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Management Independence
Our business is primarily managed and conducted by our Board and senior management.
Upon the completion of the Listing, our Board will comprise of four executive Directors, two
non-executive Directors and four independent non-executive Directors. Our Company has also
established the Board of Supervisors, comprising three Supervisors. See “Directors,
Supervisors and Senior Management” for more information.
Our Directors believe that our Board and senior management is able to manage our
business and function independently from our Controlling Shareholders based on the following
reasons:
(1) each of our Directors is aware of his/her fiduciary duties as a Director of our
Company which require, among other things, that he/she acts for the benefit and in
the best interests of our Company and does not allow any conflict between his/her
duties as a Director and his/her personal interest;
(2) 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 Directors shall abstain from voting at the relevant board
meetings of our Company in respect of such transactions and shall not be counted
in the quorum;
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(3) we have four independent non-executive Directors, who have extensive experience
in different areas and have been appointed to ensure that the decisions of our Board
are made after due consideration of independent and impartial opinions. Certain
matters of our Company must always be referred to the independent non-executive
Directors for review in accordance with the Listing Rules, the applicable laws and
our Articles of Associations and internal policies;
(4) our daily management and operations are carried out by a senior management team.
Except Ms. Chen herself, our senior management team members are independent
from our Controlling Shareholders, all of whom have substantial experience in the
industry in which our Company is engaged, and will therefore be able to make
business decisions that are in the best interest of our Group;
(5) we have established a Board of Supervisors comprising three Supervisors who are
independent from our Controlling Shareholders. Our Supervisors shall be
responsible for the supervision of performance of our Directors and the senior
management team, including monitoring any acts of a Director or senior
management member which may be detrimental to the interests of our Company;
and
(6) we have adopted a series of corporate governance measures to manage conflicts of
interest, if any, between our Group and our Controlling Shareholders which would
support our independent management. See “—Corporate Governance.”
Operational Independence
Independent Operations
We have established our own organizational structure comprised of individual
departments, each with specific areas of responsibilities. We have also established various
internal controls procedures to facilitate the effective operation of our business. Our Group is
not operationally dependent on our Controlling Shareholders. Our Company (through our
subsidiaries) holds or enjoys the benefit of all relevant licenses and owns all relevant
intellectual property and R&D facilities necessary to carry on our business. We have sufficient
capital, facilities, equipment and employees to operate our business independently from our
Controlling Shareholders. We also have independent access to our customers and suppliers.
Related Party Transactions and Connected Transactions
Apart from the interest in our Group, as of the Latest Practicable Date, Ms. Chen also
served as a non-executive director at Guomai Xin’an Technology Co., Ltd. (߅
ʮ̡) (“Guomai Xin’an”) and indirectly held equity interest in Guomai Xin’an as to
33.42%. During the Track Record Period, based on reasonable enquiry and publicly available
information, to the best knowledge of the Company, there had been no sharing of R&D
resources between Guomai Xin’an and our Group, Shareholders, Directors, employees or any
of the associates of our Group.
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During the Track Record Period, Guomai Xin’an entered into certain related party
transactions with our Group. Guomai Xin’an has provided us with the information security
solutions, consisting of electronic signature software and relevant hardware devices (including
cryptographs and servers), relying on its self-developed encryption-centered application
technology, since 2020. For the years ended December 31, 2021, 2022 and 2023, the amount
of our procurement of information security solutions from Guomai Xin’an was RMB0.82
million, RMB0.07 million and RMB0.04 million, respectively. The decrease in the amount of
our procurement of information security solutions from Guomai Xin’an during the Track
Record Period was primarily because of the decrease in demand for electronic signature
software and relevant hardware devices in light of the government’s promotion of the digital
invoice along with the implementation of the Golden Tax initiatives, where the new technology
no longer necessarily requires electronic signatures of vendors on the digital invoice.
In addition, leveraging its local operation team, Guomai Xin’an also assisted us in
Heilongjiang in coordination with the local tax authorities and the local transaction documents
processing to comply with the tax authorities’ administrative requirements for our contingent
workforce management business. The local transaction documents processing services
primarily consist of the application for and printing and delivery of paper invoices. For the
years ended December 31, 2021, 2022 and 2023, the amount of the service fee paid by our
Group for Guomai Xin’an’s services of local tax authorities coordination and transaction
documents processing was RMB2.20 million, RMB2.81 million and RMB6.93 million,
respectively. The increase in the amount of the service fee paid by our Group for Guomai
Xin’an’s services of local tax authorities coordination and transaction documents processing
during the Track Record Period was in line with the growth trend of our contingent workforce
management business in Heilongjiang, in light of the pricing model, where Guomai Xin’an
charged us the service fee equivalent of 25% of the revenue generated from our contingent
workforce management business assisted and supported by Guomai Xin’an. The fee rate was
determined based on arm’s length negotiations of both parties, having particularly considered
(a) the complexity of local tax related administrative requirements, arrangements and rules, and
(b) that Guomai Xin’an’s long-standing and favourable relationship with the local tax
authorities and familiarities with the local rules and requirements had played a significant role
in the stable early-phase development of our Group’s contingent workforce management
business in Heilongjiang.
In 2022, Guomai Xin’an also assisted us in providing local technical supports to a few
clients and such local technical supports were all one-off transactions completed by the end of
2022. The aggregate amount of the service fee paid by our Group for such local technical
supports in 2022 was RMB1.40 million.
Prior to the Track Record Period, in September 2019, we entered into a strategic
collaboration agreement with Guomai Xin’an for a term of one year, pursuant to which,
Guomai Xin’an irrevocably granted us the right to use its information security products
including Jinxi Digital Seal (ᖗཥɿΙ௝) and Hufu Joint Signature (ୌᑌΥᖦΤ), in
consideration of RMB1.25 million as a one-off license fee, and we agreed to preferentially use
such information security products in our tax-related businesses. When we identified technical
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issues in our use of such products, we inspected and discussed the issues with Guomai Xin’an
as part of our collaboration. The collaboration no longer proceeded after the strategic
collaboration agreement expired in September 2020. Except for the abovementioned license fee
paid by us, we did not incur any cost or expense in connection with the collaboration. Having
made all reasonable enquires and based on the confirmation from Guomai Xin’an, the
Company understands that Guomai Xin’an did not incur any cost or expense in connection with
the collaboration.
Our related party transactions with Guomai Xin’an were entered into on normal
commercial terms and in the ordinary and usual course of business of our Group. See
“Financial Information—Related Party Transactions” and Note 42 to the Accountants’ Report
in Appendix I to this prospectus for details. After the Listing, it is expected that Guomai Xin’an
will no longer provide our Group with the local supporting services (including local tax
authorities coordination, transaction documents processing and technical supports) and our
future procurements of information security solutions from Guomai Xin’an from time to time
will be de minimis connected transactions under Rule 14A.76 of the Listing Rules. The
termination of provision of the local supporting services to our Group by Guomai Xin’an will
not affect our capability to carry out our contingent workforce management business or have
any adverse impact on our Group’s business operations or financial performance.
Based on the above, our Directors believe that we are capable of carrying on our business
independently of our Controlling Shareholders and their close associates.
Financial Independence
We have an independent financial system. Our Group’s accounting and finance functions
are independent of our Controlling shareholders and their close associates. Our Group makes
financial decisions according to our own business needs. Our Group’s major finance operations
are handled by our financial management department, which operates independently from our
Controlling Shareholders and their close associates. We do not share any other functions or
resources with any of our Controlling Shareholders or their close associates.
During the Track Record Period, we primarily financed our business operations through
cash generated from our business activities and equity financing activities. As of the Latest
Practicable Date, we did not have any outstanding borrowings or guarantees from our
Controlling Shareholders or any of their respective close associates.
Based on the above our Directors believe that our Group is able to operate with financial
independence from our Controlling Shareholders and their close associates.
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CORPORATE GOVERNANCE
We have put in place sufficient corporate governance measures to manage the conflict of
interest and potential competition from our Controlling Shareholders and safeguard the interest
of our Shareholders, including:
(1) where a Shareholders’ meeting is to be held for considering proposed transactions
in which our Controlling Shareholders or any of their close associates has a material
interest, our Controlling Shareholders will not vote on the resolutions and shall not
be counted in the quorum in the voting;
(2) our Company has established internal control mechanism to identify connected
transactions. After the Listing, our Company will comply with the requirements in
connection with connected transactions under the Listing Rules;
(3) where our Directors reasonably request the advice of independent professionals,
such as independent financial advisors, the appointment of such independent
professional will be made at our Company’s expense;
(4) we have appointed Guotai Junan Capital Limited as our compliance advisor to
provide advice and guidance to us in respect of compliance with the applicable laws
and regulations, as well as the Listing Rules, including various requirements relating
to corporate governance;
(5) we have established the audit committee, remuneration and appraisal committee and
nomination committee with written terms of reference in compliance with the
Listing Rules and the Corporate Governance Code;
(6) our Controlling Shareholders will confirm the status of their non-competing interest
on an annual basis and to provide all information necessary, including all relevant
financial, operational and market information and any other necessary information
as required by our Company; and
(7) our Company will disclose decisions (with basis), if any, on matters reviewed by the
independent non-executive Directors either in its annual report or by way of
announcements.
Our Directors consider that the above corporate governance measures are sufficient to
manage any potential conflict of interests between our Controlling Shareholders and their
respective close associates and our Group and to protect the interests of our Shareholders, in
particular, the minority Shareholders.
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We have entered into certain transactions with entities that will, upon the Listing, become
connected persons of our Company. The transactions disclosed in this section will continue
after Listing and constitute our continuing connected transactions subject to reporting, annual
review and announcement requirements but exempt from independent Shareholders’ approval
requirement under Chapter 14A of the Listing Rules.
NON-EXEMPT CONTINUING CONNECTED TRANSACTIONS
Alibaba Cloud Services Framework Agreement
Principal Terms
On June 24, 2024, Alibaba Cloud Computing Ltd. (ʮ̡) (“Alibaba
Cloud”) and our Company entered into a cloud services framework agreement (the “Alibaba
Cloud Services Framework Agreement”), pursuant to which, among others, we agreed to
purchase cloud services from Alibaba Cloud.
The Alibaba Cloud Services Framework Agreement has an initial term from the Listing
Date to December 31, 2026, subject to renewal upon the mutual consent of both parties.
Connected Person
Alibaba Cloud is a fellow subsidiary of Alibaba, our substantial Shareholder, and hence
a connected person of our Company under Rule 14A.13(1) of the Listing Rules upon the
Listing. As such, the transactions contemplated under the Alibaba Cloud Services Framework
Agreement shall constitute connected transactions of our Company.
Reasons for the Transactions
Alibaba Cloud is a global leader in cloud computing and AI, providing services to its
customers in more than 200 countries and regions. The cloud services offered by Alibaba Cloud
has been used in our operations since 2016 and our long-time cooperation with Alibaba Cloud
has proved that it can provide us with reliable and secure cloud computing and data processing
capabilities as a part of its online solutions. Our Directors consider that it would be beneficial
to continue using the cloud services provided by Alibaba Cloud to satisfy our increasing
demand on cloud computing and data processing capabilities as a result of our business
development.
Pricing Policies
The prices of transactions contemplated under the Alibaba Cloud Services Framework
Agreement are based on the prices as set out in the price catalog as published by Alibaba Cloud
from time to time, which sets out the specific service scope and the corresponding prices,
applying discounts as agreed and set out in the business agreement. The prices offered by
Alibaba Cloud are comparable to the prices offered by other third-party cloud services
providers.
CONNECTED TRANSACTIONS
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Historical Amount and Annual Cap
For the years ended December 31, 2021, 2022 and 2023, the transaction amount in respect
of the purchase of the cloud services by us from Alibaba Cloud was RMB8.4 million, RMB10.8
million and RMB18.4 million, respectively.
The proposed annual cap for the transactions contemplated under the Alibaba Cloud
Services Framework Agreement for the years ended December 31, 2024, 2025 and 2026 is
RMB19.8 million, RMB20.8 million and RMB21.8 million, respectively.
In arriving at the above annual caps, our Directors have considered the following factors:
(1) the prices of cloud services as set out in the price catalog as published by Alibaba Cloud
and the discount offered by Alibaba Cloud and agreed by the parties; (2) the historical
transaction amounts; (3) the estimated increase in our demand for cloud services as a result of
the expected increase in the subscriptions for our cloud-based services by small and
micro-sized businesses customers, in light of the government’s promotion of the e-invoice and
the digital invoice to replace the paper invoice along with the implementation of the Golden
Tax initiatives and our enhanced cooperations with our business collaborators including
various leading platform operators such as Taobao (as defined below); and (4) the expected
migration of certain data and systems to other cloud service providers with a view to
diversifying sources of cloud services supply, which will partially offset the impacts from the
estimated increase in our demand for cloud services.
Listing Rules Implications
The transactions contemplated under the Alibaba Cloud Services Framework Agreement
are conducted in the ordinary and usual course of business on normal commercial terms or
better and our Directors expect that the highest applicable percentage ratio (other than the
profit ratio) under Chapter 14A of the Listing Rules in respect of such transactions will be more
than 0.1% but less than 5%. As such, upon the Listing, and in absence of the grant of a waiver
by the Stock Exchange, these transactions are subject to reporting, annual review and
announcement requirements but exempt from independent Shareholders’ approval requirement
under Chapter 14A of the Listing Rules.
Taobao Cooperation Framework Agreement
Principal Terms
On June 24, 2024, Taobao and our Company entered into a cooperation framework
agreement (the “Taobao Cooperation Framework Agreement”), pursuant to which, among
others, Taobao agreed to grant us an access to its online invoice platform under the brand name
of “Ali Invoice Platform” and have us serve as a tax service provider on the platform, through
which we are able to provide our financial & tax digitalization solutions, including professional
invoice services and essential invoice services, to the e-merchants on the e-commerce
marketplaces operated by Taobao (“Taobao Merchants”) which subscribe and pay for our
CONNECTED TRANSACTIONS
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services, and in return we agreed to pay Taobao for a platform service fee. Our professional
invoice services to Taobao Merchants include certain value-added functions such as unlimited
issuance, cancellation and bulk-issuance of invoices with supports from both our mobile phone
application and the website of Ali Invoice Platform and tax compliance risk detection, whereas
our essential invoice services to Taobao Merchants include the essential functions of issuance
and cancellation of invoices in a limited number per day with supports from the website of Ali
Invoice Platform only.
The Taobao Cooperation Framework Agreement has an initial term from the Listing Date
to December 31, 2026, subject to renewal upon the mutual consent of both parties.
Connected Persons
Taobao China is the controlling shareholder of Alibaba, our substantial Shareholder, and
Zhejiang Taobao is a fellow subsidiary of Alibaba, and hence Taobao are connected persons of
our Company under Rule 14A.13(1) of the Listing Rules upon the Listing. As such, the
provisions of platform services by Taobao contemplated under the Taobao Cooperation
Framework Agreement shall constitute connected transactions of our Company.
Reasons for the Transactions
Taobao are the operators of Taobao platform and Tmall platform, which together
constitute the world’s largest digital retail business in terms of GMV for the twelve months
ended March 31, 2024, according to Analysys. Through our cooperations with Taobao, we are
able to reach a large number of Taobao Merchants and provide them with our financial and tax
digitalization services, which has expanded and will continue to expand our customer base, in
light of the leading market position of Taobao in the e-commerce business. For the years ended
December 31, 2021, 2022 and 2023, approximately 9,300, 10,400 and 11,000 Taobao
Merchants subscribed and paid for our invoice services.
Pricing Polices
During the Track Record Period and for the three years ending December 31, 2026,
Taobao charged and will charge us 20% of the total subscription fee received from the Taobao
Merchants as the platform service fee, which is determined based on arm’s length negotiations
and comparable to the pricing policies under our similar cooperations with other business
collaborators. To assist us with the promotion of our professional invoice services, Taobao has
agreed to exclude the fee paid by the Taobao Merchants for the first-time subscription of our
Company’s professional invoice services when calculating the platform service fee.
CONNECTED TRANSACTIONS
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Historical Amount and Annual Cap
For the years ended December 31, 2021, 2022 and 2023, the platform service fee charged
by Taobao on us was RMB3.9 million, RMB4.4 million and RMB3.8 million, respectively.
For the years ended December 2024, 2025 and 2026, the proposed annual cap for the
platform service fee charged by Taobao on us is RMB5.6 million, RMB6.6 million and RMB7.2
million, respectively.
In arriving at the above annual caps, our Directors have considered the following factors:
(1) the current fixed rate for calculating the platform service fee; (2) the historical transaction
amounts and the growth trend for the three years ended December 31, 2022; and (3) the
estimated increase in demand for our cloud financial & tax digitalization solutions by Taobao
Merchants, in light of the government’s promotion of the e-invoice and the digital invoice to
replace the paper invoice along with the implementation of the Golden Tax initiatives.
Listing Rules Implications
The provisions of platform services by Taobao contemplated under the Taobao
Cooperation Framework Agreement are conducted in the ordinary and usual course of business
on normal commercial terms or better and our Directors expect that the highest applicable
percentage ratio (other than the profit ratio) under Chapter 14A of the Listing Rules in respect
of such transactions will be more than 0.1% but less than 5%. As such, upon the Listing, and
in absence of the grant of a waiver by the Stock Exchange, these transactions are subject to the
reporting, annual review and announcement requirements but exempt from the independent
Shareholders’ approval requirement under Chapter 14A of the Listing Rules.
APPLICATION FOR W AIVER
The transactions described under “—Non-exempt continuing connected transactions” in
this section above constitute our continuing connected transactions under the Listing Rules
which are subject to the reporting, annual review and announcement requirements of the
Listing Rules.
In respect of these continuing connected transactions, pursuant to Rule 14A.105 of the
Listing Rules, we have applied for, and the Stock Exchange has granted, a waiver exempting
us from strict compliance with the announcement requirement under Chapter 14A of the Listing
Rules in respect of the continuing connected transactions as disclosed in “—Non-exempt
continuing connected transactions” in this section above, subject to the condition that the
aggregate amounts of the continuing connected transactions for each financial year shall not
exceed the relevant amounts set forth in the respective annual caps (as stated above).
CONNECTED TRANSACTIONS
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DIRECTORS’ VIEW
Our Directors (including the independent non-executive Directors) are of the view that
(1) the non-exempt continuing connected transactions described above in this section have
been entered into and will be carried out in the ordinary and usual course of business of our
Group, on normal commercial terms or better, and are fair and reasonable and in the interests
of our Company and our Shareholders as a whole; and (2) the proposed annual caps for the
non-exempt continuing connected transactions disclosed above are fair and reasonable and are
in the interests of our Company and our Shareholders as a whole.
SOLE SPONSOR’S VIEW
Based on the documents and information provided by the Company and due diligence
conducted, the Sole Sponsor is of the view that (i) the non-exempt continuing connected
transactions described above in this section have been entered into and will be carried out in
the ordinary and usual course of business of our Group, on normal commercial terms or better,
and are fair and reasonable and in the interests of our Company and our Shareholders as a
whole; and (ii) the proposed annual caps for the non-exempt continuing connected transactions
disclosed above are fair and reasonable and are in the interests of our Company and our
Shareholders as a whole.
CONNECTED TRANSACTIONS
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OVERVIEW
Upon the Listing, our Board will consist of ten Directors, among which, four will be
executive Directors, two will be non-executive Directors and four will be independent
non-executive Directors. Our Board is responsible, and has general authority for, the
management and operation of our Group. Our Directors are appointed for a term of three years
and are eligible for re-election upon expiry of their term of office.
Our Board of Supervisors consists of three Supervisors, including one shareholder
representative Supervisor and two employee representative Supervisors. Supervisors serve for
a term of three years and shall be subject to re-election upon expiry of the term of office.
Our senior management is responsible for the day-to-day operations of our Company.
All of our Directors, Supervisors and senior management have met the qualification
requirements under the relevant PRC laws and regulations and the Listing Rules for their
respective positions.
BOARD OF DIRECTORS
The following table sets forth general information regarding the members of our Board:
Name Age Position
Date of first
appointment
as Director
Date of
joining our
Group
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
and/or Senior
management
Executive Directors
Ms. Chen Jie
(؏)
49 Chairlady of our
Board, general
manager and
executive Director
May 4, 2015 May 4, 2015 Responsible for the
overall strategic
planning, business
direction and
management of our
Group
None
Mr. Y ang
Zhengdao
(เ͍༸)
46 Executive Director and
chief executive
officer
October 6,
2017
May 26, 2017 Responsible for the
overall strategic
planing and execution
of our Group
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Name Age Position
Date of first
appointment
as Director
Date of
joining our
Group
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
and/or Senior
management
Mr. Zou Y an
(֧)
42 Executive Director and
chief marketing
officer
April 3, 2016 July 26, 2015 Responsible for the
overall sales
management of our
Group
None
Ms. Jin Xin
(㒥)
39 Executive Director and
chief operating
officer
May 8, 2021 November 19,
2018
Responsible for the
overall operational
management of our
Group
None
Non-executive Directors
Mr. Huang Miao
(ර↿)
53 Non-executive Director August 1, 2018 August 1, 2018 Responsible for
providing guidance on
overall strategic
planning, corporate
governance and
business direction of
our Group
None
Mr. Diao
Juanhuan
(࣫)
53 Non-executive Director November 13,
2019
November 13,
2019
Responsible for
providing guidance on
overall strategic
planning, corporate
governance and
business direction of
our Group
None
Independent Non-executive Directors
Mr. Tian Lixin
(ͭ͞อ)
49 Independent
Non-executive
Directors
May 8, 2021 May 8, 2021 Responsible for
providing independent
advice on the
operations and
management of our
Group
None
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Name Age Position
Date of first
appointment
as Director
Date of
joining our
Group
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
and/or Senior
management
Dr. Wu
Changhai
(ऎ)
51 Independent
Non-executive
Director
May 8, 2021 May 8, 2021 Responsible for
providing independent
advice on the
operations and
management of our
Group
None
Dr. Song Hua
(҂ശ)
55 Independent
Non-executive
Director
May 8, 2021 May 8, 2021 Responsible for
providing independent
advice on the
operations and
management of our
Group
None
Mr. Ng Kwok
Yin ( ю਷ሬ)
48 Independent
Non-executive
Director
December 25,
2021
December 25,
2021
Responsible for
providing independent
advice on the
operations and
management of our
Group
None
Executive Directors
Ms. Chen Jie (؏)aged 49, is our founder and was appointed as an executive Director,
general manager and chairlady of our Board in May 2015. Ms. Chen is primarily responsible
for the overall strategic planning, business direction and management of our Group. Ms. Chen
also serves as director of our certain subsidiaries, including the executive director of Beijing
Baiwang Jinkong Technology Co., Ltd. (ʮ̡).
Ms. Chen has more than 23 years of experience in IT industry. Prior to founding our
Company, from July 2012 to March 2014, Ms. Chen worked as the deputy general manager of
the information security department at Watertek, an embedded operating system solution
provider whose shares are listed on the Shenzhen Stock Exchange (stock code: 300324), where
she was primarily responsible for the daily management of information security business of the
company. Ms. Chen did not have any direct or indirect shareholding or equity or debt interest
in Watertek from July 2012 and up to the Latest Practicable Date. From April 2000 to May
2012, she successively worked at Beijing Watch Intelligent Technology Co., Ltd. ( ̏ԯ౥փ౽
ʮ̡) and Beijing Watchdata Co., Ltd. (ʮ̡) (formerly
known as Beijing Watchdata System Co., Ltd. (ʮ̡)), a data security
solution provider.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Ms. Chen obtained a master’s degree in strategy management from Beihang University
(ঘ˂ɽኪ) in the PRC in June 2010 and an executive master of business
administration degree from Cheung Kong Graduate School of Business (Ϫਠኪ৫)i nt h e
PRC in July 2018. Ms. Chen obtained an executive master of business administration degree
from Tsinghua University ( ૶ശɽኪ) in the PRC in January 2023.
Ms. Chen is a member of the 14th Beijing Municipal Committee of Chinese People’s
Political Consultative Conference (ࡰand a
member of the standing committee of Beijing Municipal Federation of Industry and Commerce
(ࡰ.)
Ms. Chen was awarded Beijing Model Worker ( ̏ԯ̹௶ਗᅼᇍ) by the People’s
Government of Beijing Municipality (ִ݁in April 2010 and Zhongguancun
High-end Leading Talent (ɛʑ) jointly by Beijing Municipal Science and
Technology Commission (ึ) and Administrative Commission of
Zhongguancun Science Park (ึ) in April 2019. Ms. Chen was also
ranked among China’s Top 25 Promising Businesswomen by Forbes China in February 2018.
Mr. Y ang Zhengdao ( เ͍༸), aged 46, joined our Group in May 2017 and was appointed
as an executive Director in October 2017 and the chief executive officer in August 2022. Mr.
Y ang is primarily responsible for the overall strategic planing and execution of our Group. Mr.
Y ang also serves as director at certain of our subsidiaries.
Mr. Y ang has more than 21 years of experience in IT industry. Prior to joining us, he
served in numerous positions at Microsoft Singapore Pte. Ltd., a subsidiary of Microsoft
Corporation whose shares are listed on Nasdaq (ticker: MSFT) from May 2014, including as
the chief big data architect. Prior to that, from April 2012, Mr. Y ang worked as an associate
director in the Advisory Practice Consulting (Technology Group) successively at
PricewaterhouseCoopers Consultants (Shenzhen) Limited Company, Beijing Branch ( ౷ശ͑༸
ፔ༔(ଉέ)ʮ̡̏ԯʱʮ̡) and PricewaterhouseCoopers Management Consulting
(Shanghai) Limited, Beijing Branch ( ౷ശ͑༸၍ଣፔ༔(ɪऎ)ʮ̡̏ԯʱʮ̡). Prior to
that, from November 2007 to July 2012, he successively served as a practice manager and a
managing principal consultant at Oracle (China) Software System Co., Ltd. ( ͠৶˖(ʕ਷)ழ΁
ʮ̡), a subsidiary of Oracle Corporation whose shares are listed on the New Y ork
Stock Exchange (ticker: ORCL). From July 2002 to December 2006, he served as a delivery
manager at Teradata (China) Co., Ltd., a subsidiary of Teradata Corporation whose shares are
listed on the New Y ork Stock Exchange (stock code: TDC).
Mr. Y ang obtained a bachelor’s degree in information science from Peking University
(̏ԯɽኪ) in the PRC in July 2000. He further obtained a master’s degree in computer
software and theory from University of Chinese Academy of Sciences (ኪ৫ɽኪ)i nt h e
PRC in July 2002.
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Mr. Zou Y an (֧)aged 42, joined our Group in July 2015 and was appointed as an
executive Director in April 2016 and the chief marketing officer in October 2022. Mr. Zou is
primarily responsible for the overall sales management of our Group. Mr. Zou also currently
serves as the director and manager at our certain subsidiaries.
Mr. Zou has more than 10 years of experiences in software information industry. Prior to
joining us, from April 2014 to July 2015, Mr. Zou served as a deputy general manager at
Beijing Weizhi Power Network Information Technology Co., Ltd. (Ҧ
ʮ̡), an IT company where he was primarily responsible for sales management of the
company. From July 2012 to March 2014, he served as the sales manager at Watertek where
he was responsible for sales management of information security products. Prior to that, from
October 2009 to June 2012, he served as a technical support engineer at Beijing Watchdata Co.,
Ltd. where he was responsible for sales of information security products for banking industry.
Mr. Zou also worked as a trainee application engineer at Invensys Netherland (now known as
Schneider Electronics), a multinational IT company.
Mr. Zou graduated from University of Electronic Science and Technology of China ( ཥ
Ҧɽኪ) in the PRC with a bachelor’s degree in automation in June 2005.
Ms. Jin Xin (㒥), aged 39, joined our Group in November 2018 as vice president and
was appointed as an executive Director in May 2021 and the chief operating officer in October
2022. She is primarily responsible for the overall operational management of our Group.
Ms. Jin has more than 12 years of experience in the financial services industry. Prior to
joining us, she worked at the credit card center of Industrial and Commercial Bank of China
Limited (ʮ̡), a state-owned bank concurrently listed on the Main
Board of the Stock Exchange (stock code: 1398) and the Shenzhen Stock Exchange (stock
code: 601398), from September 2009 to October 2018, where she was primarily responsible for
product development and operation of online platforms.
Ms. Jin graduated from Beijing Forestry University (ุɽኪ) in the PRC with a
bachelor’s degree in packaging engineering in July 2007. She further obtained a master’s
degree from Beihang University (ঘ˂ɽኪ) in the PRC in management science and
engineering in July 2009.
Non-executive Directors
Mr. Huang Miao ( ර↿), aged 53, was appointed as our non-executive Director in August
2018. Mr. Huang is primarily responsible for providing guidance on overall strategic planning,
corporate governance and business direction of our Group.
Mr. Huang has extensive experience in investment management. Mr. Huang has served as
a co-chairman of the board of directors and the chief executive officer of Shanghai Fosun
Capital Investment Management Co., Ltd. (ʮ̡) and a
director and general manager of Fosun Capital (Jiangsu) Investment Management Co., Ltd. ( ూ
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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--- page 325 ---
௴బ(Ϫᘽ)ʮ̡). Previously, Mr. Huang served as a vice president at Jiangsu
Jiuzhou Investment Investment Group V enture Investment Co., Ltd. (ҳ༟ණྠ௴ุҳ
ʮ̡), where he was primarily responsible for the overall management of sales
department of the company. From March 2010 to May 2012, he served as a senior investment
manager at Changzhou SAIF High-Tech V enture Capital Management Co., Ltd. ( ੬ψᒄబ৷อ
ʮ̡), a private equity firm where he focused on the venture capital
investment. From January 2008 to June 2010, Mr. Huang served at Shell (China) Limited ( ಠ
೐(ʕ਷)ʮ̡

 a subsidiary of Royal Dutch Shell Plc whose shares are listed on the New
Y ork Stock Exchange (ticker: RDS.A), with his last position being a sales director. Prior to
that, from May 1997 to January 2008, Mr. Huang also successively served as a sales engineer,
a regional sales manager and a marketing director at the Shanghai branch of Castrol (Shenzhen)
Company Limited ( ྗྼε(ଉέ)ʮ̡), a subsidiary of BP plc whose shares are
concurrently listed on the London Stock Exchange (ticker: BP), the Frankfurt Stock Exchange
(stock code: BPE) and the New Y ork Stock Exchange (ticker: BP).
Mr. Huang graduated from Nanjing University of Aeronautics and Astronautics (ԯঘ
ঘ˂ɽኪ) in the PRC with a bachelor’s degree in mechanical engineering in June 1993. He
further obtained an executive master of business administration degree from Peking University
(̏ԯɽኪ) in the PRC in January 2007.
Mr. Diao Juanhuan (࣫)aged 53, was appointed as our non-executive Director in
November 2019. Mr. Diao is primarily responsible for providing guidance on overall strategic
planning, corporate governance and business direction of our Group.
Mr. Diao has extensive experience in investment management. He has served as a partner
at Shenzhen Oriental Fortune Capital Co., Ltd. (ʮ̡) since
January 2008, a PRC venture capital investment firm where he was responsible for fund
management. He has also served as the general manager and a director at Shenzhen Aofan
Investment Co., Ltd. (ʮ̡) since April 2002, being responsible for
investment management.
From September 2019 to March 2021, Mr. Diao served as a director at Shanxi Y ongdong
Chemical Co., Ltd. (ʮ̡), a company whose shares are listed on
Shenzhen Stock Exchange (stock code: 002753). From December 1996 to December 1998, he
served as a general manager at the securities trade business department of Jun’an Securities
Co., Ltd. (ʮ̡) (currently known as Guotai Junan Securities Co., Ltd. ( ਷इё
ʮ̡), a company whose shares are listed on the Stock Exchange (stock code:
2611) and the Shanghai Stock Exchange (stock code: 601211)), being responsible for various
securities trade assignments and overseeing the operation of the branch.
Mr. Diao graduated from Shenzhen University ( ଉέɽኪ) in the PRC with a bachelor’s
degree in international trade in July 1995. He further obtained an executive master of business
administration degree from Cheung Kong Graduate School of Business (Ϫਠኪ৫)i nt h e
PRC in September 2011.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Independent Non-executive Directors
Mr. Tian Lixin ( ͭ͞อ), aged 49, was appointed as our independent non-executive
Director in May 2021. He is primarily responsible for providing independent advice to our
Board on the operations and management of our Group.
Mr. Tian has extensive experience in accounting and financial management. Mr. Tian has
served as an executive director at Sichuan Datong Gas Development Co. Ltd ( ̬ʇɽஷዷंක
ʮ̡) (currently known as Delong Composite Energy Group Co., Ltd. ( ᅃᎲคঐණ
ʮ̡), a company whose shares are listed on the Shenzhen Stock Exchange (stock
code: 000593)) since November 2018. He has also served as the finance director and vice
president at Delong Steel Co., Ltd. (ʮ̡) since 2013.
Mr. Tian graduated from Hebei University of Economics and Business (̏຾൱ɽኪ)i n
the PRC with an undergraduate diploma in accounting in July 2000. He also obtained an
executive master of business administration degree from Tsinghua University ( ૶ശɽኪ)i nt h e
PRC in June 2022.
Mr. Tian was accredited as a Senior Accountant by the Department of Personnel of Hebei
Province (ɛԫᝂ) in December 2008 and a Certified Tax Agent by Hebei Provincial
Title Reform Leading Group Office (܃in June 2007,
respectively.
Dr. Wu Changhai (ऎ), aged 51, was appointed as our independent non-executive
Director in May 2021 and is primarily responsible for providing independent advice to our
Board on the operations and management of our Group.
Dr. Wu has over 17 years of experience in research and teaching on economic law. He has
served at China University of Political Science and Law Capital Finance Institute (ج݁
Ӻ৫) since July 2007 with the current position being a professor and deputy
dean. From July 2004 to July 2007, Dr. Wu served as a researcher at WTO center, Beijing
Municipal Commerce Bureau ( ̏ԯ̹ਠਕ҅WTOʕː). He also temporarily acted as the
assistant to the director of the policy research department, Beijing Municipal Financial Work
Bureau (܃and the deputy director of the legal and compliance
department of China Xiong’an Group ( ʕ਷ඪτණྠ).
Dr. Wu has served as independent director at Gaona Aero Material Co., Ltd. ( ̏ԯ̹፻
ʮ̡), a company whose shares on listed on the Shenzhen Stock Exchange
(stock code: 300034) since April 2021).
Dr. Wu obtained a master’s degree in law from Renmin University of China ( ʕ਷ɛ͏ɽ
ኪ) in the PRC in July 2004 and a doctorate degree in law from University of International
Business and Economics (ɽኪ) in the PRC in July 2007.
Dr. Wu’s key social positions include the executive director of the International Economic
Law Research Association of China Law Society (Ӻึ੬ਕଣԫ),
arbitrator of China International Economic and Trade Arbitration Commission ( ʕ਷਷ყ຾᏶
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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ࡰmediator of Investor Services Center, China Securities Regulatory
Commission (ࡰand peer review expert of National
Social Science Fund (࢕.)
Dr. Song Hua ( ҂ശ), aged 55, was appointed as our independent non-executive Director
in May 2021 and is primarily responsible for providing independent advice to our Board on the
operations and management of our Group.
Dr. Song has over 26 years of experience in research and teaching on corporate
management. He has served at Renmin Business School ( ʕ਷ɛ͏ɽኪਠኪ৫) since July 1995
and is currently a deputy dean and professor of corporate management department.
Dr. Song obtained a master’s degree and a doctorate degree in trade economics from
Zhongnan University of Economics (ৌ຾ɽኪ) (now known as Zhongnan University of
Economics and Law (ɽኪ)) in the PRC in July 1992 and June 1995, respectively.
Dr. Song was awarded Baosteel Excellent Teachers Award (ᆤ) by Baosteel
Education Foundation (ึ) in November 2009. He has been a participant of New
Century Excellent Talents Program (ྌ) implemented by the Ministry of
Education, PRC ( ʕശɛ͏΍ձ਷઺ԃ௅) since December 2007. Dr. Song also holds positions
at academic organizations, such as the vice president of China Society of Logistics (ݴي
ڗ.)
Mr. Ng Kwok Yin ( ю਷ሬ), aged 48, was appointed as our independent non-executive
Director in December 2021 and is primarily responsible for providing independent advice to
our Board on the operations and management of our Group.
Mr. Ng has extensive experience in financial management. Mr. Ng has served as an
independent non-executive director at Concord Healthcare Group Co., Ltd. (ʕྗձᔼኪҦஔ
ʮ̡), a company whose shares are listed on the Main Board of the Stock
Exchange (stock code: 2453) since January 9, 2024. From November 2020 to September 2021,
Mr. Ng served as an director and the chief financial officer at Zhangmen Education Inc., a
company whose shares are listed on the New Y ork Stock Exchange (ticker: ZME). From August
2019 to July 2020, Mr. Ng served as the chief financial officer at Meten Edtechx Education
Group Ltd., a company listed on Nasdaq (ticker: METX). Prior to that, Mr. Ng served as the
chief financial officer of Ming Y ang Smart Energy Group Limited (΅Ϟ
ʮ̡), a company listed on Shanghai Stock Exchange (stock code: 601615) from November
2014 to August 2019. From October 1999 to August 2012, Mr. Ng served at KPMG with his
last position being a senior manager.
Mr. Ng received his bachelor’s degree in accounting from The Hong Kong University of
Science and Technology in Hong Kong in November 1999. He has been a member of the Hong
Kong Institute of Certified Public Accountants since January 2003 and was qualified to serve
as a board secretary of the companies whose shares listed on the Shanghai Stock Exchange in
April 2019.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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BOARD OF SUPERVISORS
The following table sets forth general information regarding the Supervisors of our
Company:
Name Age Position
Date of
joining our
Group
Date of
appointment
as a
Supervisor
Roles and
responsibilities
Relationship
with other
Directors,
Supervisors
and/or Senior
management
Mr. Li Y unfeng
(ࢤ)
46 Chairman of our Board
of Supervisors,
Supervisor and
director of human
resources department
May 4, 2015 December 1,
2015
Supervision of
performance of our
Directors and senior
management
None
Ms. Shi Haixia
(̦ऎᒳ)
48 Supervisor and senior
executive assistant
June 11, 2018 August 31,
2022
Supervision of
performance of our
Directors and senior
management
None
Mr. Luo
Wenhong
(ᖯ˖҃)
34 Supervisor October 29,
2019
May 8, 2021 Supervision of
performance of our
Directors and senior
management
None
Mr. Li Yunfeng (ࢤ)aged 46, joined our Group as the deputy director of human
resources and administration department in May 2015 and was appointed as a Supervisor and
the chairman of our Board of Supervisors in December 2015. Mr. Li is primarily responsible
for the overall management of our Board of Supervisors and the supervision of performance of
our Directors and senior management.
Prior to joining us, from April 2011 to April 2014, Mr. Li served as the design director
at Beijing Wsdong Internet Information Technology Co., Ltd. (ҦϞ
ப΂ʮ̡). From September 2008 to September 2010, he served as a senior designer at
Beijing Watchdata Co., Ltd. He also worked as an art engineer at Beijing Sijiawei Technology
Co., Ltd. (ʮ̡) from September 2000 to September 2005.
Mr. Li graduated from Y ancheng Institute of Technology (ʈኪ৫) in the PRC with
a college diploma in decoration and design in June 1999.
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Ms. Shi Haixia ( ̦ऎᒳ), aged 48, joined our Group as a senior executive assistant in
June 2018 and was appointed as a Supervisor in August 2022. Ms. Shi is primarily responsible
for the supervision of performance of our Directors and senior management.
Prior to joining us, from February 2000 to May 2018, Ms. Shi served as a salesperson at
Beijing Watchdata Co., Ltd. (ʮ̡).
Ms. Shi obtained a college diploma in professional English from The Capital United
University for Further Study (ேᑌΥᔖʈɽኪ) in the PRC through long distance learning in
January 2006.
Mr. Luo Wenhong ( ᖯ˖҃), aged 34, was appointed as a Supervisor in May 2021. Mr.
Luo is primarily responsible for the supervision of performance of our Directors and senior
management.
Mr. Luo has served as an investment manager at Shenzhen Capital Group Co., Ltd. ( ଉ
ʮ̡) since July 2015.
Mr. Luo graduated from Sun Y at-sen University ( ʕʆɽኪ) in the PRC with a bachelor’s
degree in information science in July 2012. He further obtained a master’s degree in applied
finance from Pepperdine University in the United States in June 2014.
SENIOR MANAGEMENT
Ms. Chen Jie (؏)see “—Directors—Executive Directors” for details.
Mr. Zou Y an (֧)see “—Directors—Executive Directors” for details.
Mr. Y ang Zhengdao ( เ͍༸), see “—Directors—Executive Directors” for details.
Ms. Jin Xin (㒥), see “—Directors—Executive Directors” for details.
Mr. Hou Shifei (࠭)aged 53, joined our Group as a vice president, chief financial
officer and board secretary in August 2021. He is primarily responsible for overall financial
and accounting affairs of our Group.
Mr. Hou has more than 32 years of experience in financial and capital market affairs.
Prior to joining us, from August 2011 to August 2021, Mr. Hou served as a director of the
investment bank department at China Securities Co., Ltd. (ʮ̡), a
company whose shares are concurrently listed on the Main Board of the Stock Exchange (stock
code: 6066) and the Shanghai Stock Exchange (stock code: 601066). From October 2009 to
July 2011, he served as a senior vice president of the investment bank department at Caitong
Securities Co., Ltd. (ʮ̡), a company whose shares are listed on the
Shanghai Stock Exchange (stock code: 601108). From March 2008 to September 2009, Mr.
Hou served as a senior investment banking associate at Bohai Securities Co., Ltd. ( ಲऎᗇՎ
ʮ̡). From July 2007 to March 2008, Mr. Hou served as a project auditor at Daxin
Certified Public Accountant LLP (ה(౷ஷΥྫ)). Prior to that, Mr. Hou
also worked at Shenyang Railway Bureau ( ᓨජ᚛༩҅) as an accountant.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Hou graduated from Beijing Jiaotong University ( ̏ԯʹஷɽኪ) in the PRC with an
undergraduate diploma in accounting in June 2005.
Mr. Hou was accredited as a Certified Public Accountant by the Chinese Institute of
Certified Public Accountants in November 2009 and was qualified as a Sponsor Representative
(ɛ) registered with the CSRC in October 2012.
Save as disclosed above, each of our Directors, Supervisors and senior management
members confirms with respect to himself or herself that he or she (1) had no other relationship
with any Directors, Supervisors senior management or substantial or Controlling Shareholders
of our Company as at the Latest Practicable Date; (2) did not hold any other directorships in
the three years prior to the Latest Practicable Date in any public companies of which the
securities are listed on any stock exchange in Hong Kong and/or overseas; and (3) there are no
other matters concerning our Directors’ and Supervisors’ appointment that need to be brought
to the attention of our Shareholders and the Stock Exchange or shall be disclosed pursuant to
Rules 13.51(2)(h) to (v) of the Listing Rules.
In addition, each of our Directors confirms with respect to himself or herself that (1) to
the best of his or her knowledge and belief, as of the Latest Practicable Date, he or she was
not interested in any business, which, competes or is likely to compete, directly or indirectly,
with our Group’s business, which is subject to disclosure pursuant to Rule 8.10 of the Listing
Rules; and (2) he or she (i) obtained the legal advice referred to under Rule 3.09D of the
Listing Rules on May 24, 2023, and (ii) understands his or her obligations as a director of a
listed issuer under the Listing Rules.
Each of the independent non-executive Directors confirms (1) his independence as
regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (2) he has
no past or present financial or other interest in the business of our Company or its subsidiaries
or any connection with any core connected person of our Company under the Listing Rules as
of the Latest Practicable Date, and (3) that there are no other factors that may affect his
independence at the time of his appointments.
JOINT COMPANY SECRETARIES
Mr. Zheng Tianhao (؀)aged 28, joined our Group in August 2017 and was
appointed as one of our joint company secretaries in May 2023, which will come into effect
upon the consummation of the Listing. Mr. Zheng served as an operating manager from August
2017 to February 2019 and has served as the securities affairs representative of our Board
office since then.
Mr. Zheng graduated from China University of Mining & Technology, Beijing ( ʕ਷ᘤุ
ɽኪ(̏ԯ)) in the PRC with a bachelor’s degree in computer science and technology in July
2017.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Mr. Chiu Ming King (ዽ), was appointed as one of our joint company secretaries in
May 2023, which will come into effect upon the consummation of the Listing.
Mr. Chiu is the Head of Company Secretarial Services (Client Portfolio Management),
Greater China of Vistra Corporate Services (HK) Limited. He has over 10 years of experience
in the company secretarial field. He is currently (1) the joint company secretary of Shanghai
Haohai Biological Technology Co., Ltd., a company listed on the Stock Exchange (stock code:
6826); (2) the joint company secretary of Kunming Dianchi Water Treatment Co., Ltd., a
company listed on the Stock Exchange (stock code: 3768); (3) the company secretary of Grace
Wine Holdings Limited, a company listed on the Stock Exchange (stock code: 8146); (4) the
joint company secretary of CanSino Biologics Inc., a company listed on the Stock Exchange
(stock code: 6185); (5) the company secretary of Sheng Y uan Holdings Limited, a company
listed on the Stock Exchange (stock code: 851); (6) the company secretary of Loco Hong Kong
Holdings Limited, a company listed on the Stock Exchange (stock code: 8162); (7) the
company secretary of JD Health International Inc., a company listed on the Stock Exchange
(stock code: 6618); (8) the company secretary of JD Logistics, Inc., a company listed on the
Stock Exchange (stock code: 2618); (9) the joint company secretary of China Construction
Bank Corporation, a company listed on the Stock Exchange (stock code: 939); (10) the joint
company secretary of ZTO Express (Cayman) Inc., a company listed on the Stock Exchange
(stock code: 2057); and (11) the company secretary of Horizon Construction Development
Limited, a company listed on the Stock Exchange (stock code: 9930).
Mr. Chiu was elected as an associate and a fellow of The Chartered Governance Institute
in the United Kingdom in 2003 and 2015, respectively, and admitted as an associate and a
fellow of The Hong Kong Chartered Governance Institute (“ HKCGI ”) in October 2003 and
September 2015, respectively. He is also a holder of the Practitioner’s Endorsement Certificate
issued by HKCGI. He has been a vice chairman of the Membership Committee, a chairman of
the Professional Services Panel and a council member of HKCGI.
Mr. Chiu obtained his bachelor of arts degree from University of Toronto in Canada in
June 1999 and received his master of arts degree in professional accounting and information
systems from City University of Hong Kong in November 2003.
BOARD COMMITTEES
Our Company has established three committees under our Board pursuant to the laws and
regulations of the PRC and corporate governance practice requirements under the Listing
Rules, including the audit committee, the remuneration and appraisal committee and the
nomination committee.
Audit Committee
We have established an audit committee in compliance with Rule 3.21 of the Listing
Rules and the Corporate Governance Code set out in Appendix C1 to the Listing Rules. The
primary duties of the audit committee are to review and supervise the financial reporting
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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process and internal controls system of our Group, review and approve connected transactions
and to advise our Board. The audit committee comprises three independent non-executive
Directors, namely Mr. Ng Kwok Yin, Mr. Tian Lixin and Dr. Song Hua. Mr. Ng Kwok Yin,
being the chairman of the committee, is appropriately qualified as required under Rules 3.10(2)
and 3.21 of the Listing Rules.
Remuneration and Appraisal Committee
We have established a remuneration and appraisal committee in compliance with Rule
3.25 of the Listing Rules and the Corporate Governance Code set out in Appendix C1 to the
Listing Rules. The primary duties of the remuneration and appraisal committee are to review
and make recommendations to our Board regarding the terms of remuneration packages,
bonuses and other compensation payable to our Directors and senior management. The
remuneration and appraisal committee comprises one executive Director and two independent
non-executive Directors, namely Dr. Wu Changhai, Mr. Y ang Zhengdao and Mr. Ng Kwok Yin.
Dr. Wu Changhai is the chairman of the committee.
Nomination Committee
We have established a nomination committee in compliance with the Code on Corporate
Governance set out in Appendix C1 to the Listing Rules. The primary duties of the nomination
committee are to make recommendations to our Board regarding the appointment of Directors
and Board succession. The nomination committee comprises one executive Director and two
independent non-executive Directors, namely Ms. Chen Jie, Dr. Song Hua and Mr. Tian Lixin.
Ms. Chen is the chairlady of the committee.
BOARD DIVERSITY POLICY
We have adopted a board diversity policy which sets out the approach to achieve diversity
of our Board. We recognize and embrace the benefits of having a diverse Board and see
increasing diversity at our Board level as an essential element in maintaining our competitive
advantage and enhancing our ability to attract, retain and motivate employees from the widest
possible pool of available talent. In reviewing and assessing suitable candidates to serve as a
Director, the nomination committee will consider a number of aspects, including but not
limited to gender, age, cultural and educational background, professional qualifications, skills,
knowledge and industry and regional experience. The nomination committee will discuss
periodically and when necessary, agree on the measurable objectives for achieving diversity on
our Board and recommend them to our Board for adoption.
Our Board has a balanced mix of knowledge, skills, experience. They obtained degrees
or diplomas in various majors including but not limited to business administration, law,
accounting, automation, engineering and international trade. We have four independent
non-executive Directors who have different industry backgrounds, including accounting, law,
economics, and corporate management. Besides, our Directors are of a wide range of age, from
38 years old to 54 years old. Furthermore, with regards to gender diversity on our Board, we
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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recognize the particular importance of gender diversity. Our Board currently consists of two
female Directors (including the chairlady of our Board and our general manager) and eight
male Directors, and we will continue to maintain and further enhance gender diversity of our
Board going forward.
Taking into account our business model and specific needs, we consider that the
composition of our Board in general satisfies our Board diversity policy.
REMUNERATION OF THE DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT
We offer our executive Directors, Supervisors and senior management members, who are
also employees of our Company, emolument in the form of salaries, remuneration, pension,
discretionary bonus and other welfares. Our non-executive Directors and independent
non-executive Directors receive emolument based on their responsibilities (including being
members or chairman of Board committees). We adopt a market and incentive-based employee
emolument structure and implement a multi-layered evaluation system which focuses on
performance and management goals.
The aggregate amount of emolument (including salaries, remuneration, pension,
discretionary bonus, share-based payment expenses and other welfares) paid to our Directors
and Supervisors for the years ended December 31, 2021, 2022 and 2023 was RMB98.0 million,
RMB8.4 million and RMB119.3 million, respectively. Under the arrangements currently in
force, we estimate that the aggregate emolument payable to the Directors and Supervisors
(excluding discretionary bonus or any other share incentive (if applicable)) by our Company
for the year ending December 31, 2024 will be approximately RMB14.1 million.
For the years ended December 31, 2021, 2022 and 2023, the aggregate amount of
emolument paid to the five highest paid individuals of our Group (including salaries,
remuneration, pension, discretionary bonus, the share-based compensation and other welfares),
excluding Directors and chief executives, was RMB34.3 million, RMB6.5 million and
RMB12.3 million, respectively.
During the Track Record Period, no remuneration was paid to, or receivable by, our
Directors, Supervisors or the five highest paid individuals of our Company as an inducement
to join or upon joining our Company or as a compensation for loss of office in the Track Record
Period. Further, none of our Directors or Supervisors had waived any emolument during the
same period.
Except as disclosed above, no other payments have been paid, or are payable, by our
Company or any of our subsidiaries to our Directors, Supervisors or the five highest paid
individuals of our Company during the Track Record Period.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISOR
We have appointed Guotai Junan Capital Limited as our compliance advisor pursuant to
Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23 of the Listing Rules, the compliance
advisor will advise us in the following circumstances:
(1) before publication of any regulatory announcement, circular or financial report;
(2) where a transaction, which might constitute a notifiable or connected transaction
under the Listing Rules, is contemplated, including share issues and share
repurchases;
(3) where we propose to use the net proceeds of the Global Offering in a manner
different from that detailed in this prospectus or where our business activities,
developments or results of operation deviate from any forecast, estimate or other
information in this prospectus; and
(4) where the Stock Exchange makes an inquiry of our Company regarding unusual
movements in the price or trading volume of the Shares or any other matters under
Rule 13.10 of the Listing Rules.
The term of the appointment will commence on the Listing Date and end on the date on
which we distribute the annual report of the first full financial year commencing after the
Listing.
CORPORATE GOVERNANCE PRACTICES
We consider that having Ms. Chen acting as both the chairlady of our Board and our
general manager will provide a strong and consistent leadership to us and allow for more
effective planning and management of our Group. Pursuant to C.2.1 of Appendix C1 to the
Listing Rules. The roles of chairperson and chief executive should be separate and should not
be performed by the same individual. However, in view of Ms. Chen’s extensive experience in
the industry, personal profile and critical role in our Group and its historical development, we
consider that it is beneficial to the business prospects of our Group that Ms. Chen continues
to act as both the chairlady of our Board and our general manager upon Listing. Save as
disclosed above, we are in compliance with all applicable code provisions as set out in the
Corporate Governance Code as contained in Appendix C1 to the Listing Rules.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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This section presents certain information regarding our share capital prior to and
following the completion of the Global Offering and the Conversion of Domestic Shares into
H Shares.
BEFORE THE GLOBAL OFFERING
As of the Latest Practicable Date and immediately prior to the Global Offering and the
Conversion of Domestic Shares into H Shares, the registered and issued share capital of our
Company was RMB216,644,754, comprising 216,644,754 Domestic Shares with a nominal
value of RMB1.00 each.
UPON COMPLETION OF THE GLOBAL OFFERING AND THE CONVERSION OF
DOMESTIC SHARES INTO H SHARES
Immediately following completion of the Global Offering and the Conversion of
Domestic Shares into H Shares, assuming that the Over-allotment Option is not exercised, the
registered and issued share capital of our Company will be as follows:
Description of Shares
Number of
Shares
Approximate
percentage of
the enlarged
issued share
capital after
the Global
Offering
Domestic Shares 135,064,706 59.79%
H Shares to be converted from Domestic Shares 81,580,048 36.11%
H Shares to be issued under the Global Offering 9,262,000 4.10%
Total 225,906,754 100.00%
Notes: See “History and Corporate Structure—Corporate Structure” in this prospectus for details of the
identities of our Shareholders whose Shares will remain as Domestic Shares and whose Shares will be
converted into H Shares upon Listing.
SHARE CAPITAL
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Immediately following completion of the Global Offering and the Conversion of
Domestic Shares into H Shares, assuming that the Over-allotment Option is fully exercised, our
registered and issued share capital will be as follows:
Description of Shares
Number of
Shares
Approximate
percentage of
the enlarged
issued share
capital after
the Global
Offering
Domestic Shares 135,064,706 59.42%
H Shares to be converted from Domestic Shares 81,580,048 35.89%
H Shares to be issued under the Global Offering 10,651,300 4.69%
Total 227,296,054 100.00%
Notes: See “History and Corporate Structure—Corporate Structure” in this prospectus for details of the
identities of our Shareholders whose Shares will remain as Domestic Shares and whose Shares will be
converted into H Shares upon Listing.
OUR SHARES
Upon completion of the Global Offering and the Conversion of Domestic Shares into
H Shares, the Shares will consist of Domestic Shares and H Shares. Domestic Shares and
H Shares are all ordinary Shares in the share capital of our Company. Apart from certain
qualified domestic institutional investors in the PRC, the qualified PRC investors under the
Shanghai-Hong Kong Stock Connect and the Shenzhen- Hong Kong Stock Connect and other
persons who are entitled to hold our H Shares pursuant to relevant PRC laws and regulations
or upon approvals of any competent authorities, H Shares generally cannot be subscribed for
by or traded between legal or natural PRC persons. Domestic Shares can only be subscribed
for by and traded between legal or natural PRC persons, qualified foreign institutional
investors and foreign strategic investors. H Shares may only be subscribed for and traded in
Hong Kong dollars. Domestic Shares, on the other hand, may only be subscribed for and
transferred in Renminbi. Domestic Shares and H Shares are regarded as one class of Shares
under our Articles of Association. Our Domestic Shares are not listed or traded on any stock
exchange.
SHARE CAPITAL
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RANKING
Save as described in this prospectus, Domestic Shares and H Shares shall rank pari passu
with each other in all other respects and, in particular, will rank equally for dividends or
distributions declared, paid or made. All dividends in respect of the H Shares are to be paid by
us in Hong Kong dollars whereas all dividends in respect of Domestic Shares are to be paid
by us in Renminbi. In addition to cash, dividends may be distributed in the form of Shares. For
holders of H Shares, dividends in the form of Shares will be distributed in the form of
additional H Shares. For holders of Domestic Shares, dividends in the form of Shares will be
distributed in the form of additional Domestic Shares.
CONVERSION OF DOMESTIC SHARES INTO H SHARES
According to stipulations made by the State Council’s securities regulatory authority and
the Articles of Association, our Domestic Shares may be converted into H Shares, and such
converted H Shares may be listed or traded on an overseas stock exchange, provided that prior
to the conversion and trading of such converted Shares, the requisite internal approval
processes have been duly completed and the approvals from the relevant PRC regulatory
authorities, including the CSRC, and the relevant overseas stock exchange have been obtained.
In addition, such conversion, trading and listing shall in all respects comply with the
regulations prescribed by the State Council’s securities regulatory authorities and the
regulations, requirements and procedures prescribed by the relevant overseas stock exchange.
The Conversion of Domestic Shares into H Shares will involve an aggregate of
81,580,048 Domestic Shares held by 50 existing Shareholders (the “Full Circulation
Participating Shareholders”), representing 36.11% of total issued Shares of the Company upon
completion of the Conversion of Domestic Shares into H Shares and the Global Offering
(assuming the Over-allotment Option is not exercised). Under the applicable PRC laws, foreign
investors shall not hold more than 50.0% of the equity interest in a PRC company engaged in
the provision of value-added telecommunication services. In order to comply with such foreign
ownership restriction requirement following the completion of the Global Offering and the
Conversion of Domestic Shares into H Shares, and to leave flexibility to any possible A share
listing in the future where the Domestic Shares can be listed on a domestic stock exchange, our
existing Shareholders have decided not to covert the entire Domestic Shares held by them into
H Shares.
SHARE CAPITAL
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Set out below is the shareholding of the Full Circulation Participating Shareholders
immediately before and after the completion of the Global Offering and the Conversion of
Domestic Shares into H Shares (assuming the Over-allotment Option is not exercised).
Name of Shareholders
Number of Domestic
Shares as of the Latest
Practicable Date and
immediately prior to
the Global Offering
and the Conversion of
Domestic Shares into
H Shares
Approximate
percentage of interest
in the total issued
share capital of our
Company as of the
Latest Practicable
Date and immediately
prior to the Global
Offering and the
Conversion of
Domestic Shares into
H Shares (%)
Number of
converted H
Shares
Approximate
percentage of
converted H Shares in
the total issued share
capital of our
Company immediately
after the Global
Offering and the
Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Number of remaining
Domestic Shares
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised)
Approximate
percentage of
remaining Domestic
Shares in the total
issued share capital of
our Company
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Alibaba (China) Technology Co., Ltd. (Ԣˋˋ
(ʕ਷)ʮ̡) 25,724,721 11.87 16,386,647 7.25 9,338,074 4.13
Watertek 21,463,466 9.91 6,439,040 2.85 15,024,426 6.65
Ningbo Xiu’an 20,000,000 9.23 6,000,000 2.66 14,000,000 6.20
Tianjin Duoying 14,922,174 6.89 4,476,652 1.98 10,445,522 4.62
Shanghai Dazhong Public Utilities (Group) Co.,
Ltd. ( ɪऎɽ଺ʮ͜ԫุ(ණྠ)ʮ̡) 7,000,000 3.23 4,459,000 1.97 2,541,000 1.12
Shenzhen Fortune Gutoubang No. 6 Investment
Enterprise (Limited Partnership) (ٰ
ҳԞʬ໮ҳ༟Άุ(Υྫ)) 6,255,607 2.89 3,984,822 1.76 2,270,785 1.01
Shanghai Guoxin V enture Capital Investment
Co., Ltd. (ʮ̡) 5,564,786 2.57 3,544,769 1.57 2,020,017 0.89
Hongzheng Junfang Investment Co., Ltd. (͍
ʮ̡) 4,687,500 2.16 2,985,938 1.32 1,701,562 0.75
Small and Medium-sized Enterprises
Development Fund (Shenzhen Nanshan
Limited Partnership) (ږ(ଉέ
Υྫ)) 4,170,404 1.92 2,656,547 1.18 1,513,857 0.67
Shenzhen Gongtong Jiayuan Management Co.,
Ltd. (
ʮ̡) 3,926,774 1.81 2,501,355 1.11 1,425,419 0.63
Shenzhen Capital Group Co., Ltd. ( ଉέ̹௴อ
ʮ̡) 3,909,754 1.80 2,490,513 1.10 1,419,241 0.63
Beijing Xingshi Investment Management Center
(Limited Partnership) (ྼҳ༟၍ଣʕː
(Υྫ)) 3,401,708 1.57 2,166,888 0.96 1,234,820 0.55
SHARE CAPITAL
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--- page 339 ---
Name of Shareholders
Number of Domestic
Shares as of the Latest
Practicable Date and
immediately prior to
the Global Offering
and the Conversion of
Domestic Shares into
H Shares
Approximate
percentage of interest
in the total issued
share capital of our
Company as of the
Latest Practicable
Date and immediately
prior to the Global
Offering and the
Conversion of
Domestic Shares into
H Shares (%)
Number of
converted H
Shares
Approximate
percentage of
converted H Shares in
the total issued share
capital of our
Company immediately
after the Global
Offering and the
Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Number of remaining
Domestic Shares
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised)
Approximate
percentage of
remaining Domestic
Shares in the total
issued share capital of
our Company
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Shanghai Fosun High Technology (Group) Co.,
Ltd. (Ҧ(ණྠ)ʮ̡) 3,094,045 1.43 1,970,907 0.87 1,123,138 0.50
Shanghai Fosun Weishi Fund (ઓྼɓಂ
ΥྫΆุ(Υྫ)) 3,094,043 1.43 1,970,905 0.87 1,123,138 0.50
Suqian Jiuzhao Fengya Equity Investment
Partnership (Limited Partnership) ( ੖ቋӯΊᔮ
ᛆҳ༟ΥྫΆุ(Υྫ)) 2,714,563 1.25 1,729,177 0.77 985,386 0.44
Dongguan Hongtu V enture Capital Fund
Partnership (Limited Partnership) (ɺ௴
ΥྫΆุ(Υྫ)) 2,345,852 1.08 1,494,308 0.66 851,544 0.38
Jiaxing Jiuzhao Hexuan Equity Investment
Partnership (Limited Partnership) ( ྗጳӯΊᚲ
ᛆҳ༟ΥྫΆุ(Υྫ)) 2,011,538 0.93 1,281,350 0.57 730,188 0.32
Tongxiang Zhongrun Enterprise Management
Co., Ltd. (ʮ̡) 2,007,008 0.93 1,278,464 0.57 728,544 0.32
Jinjiang Fangzhou No. 2 Equity Investment
Partnership (Limited Partnership) (Ϫ˙Ћɚ
ᛆҳ༟ΥྫΆุ(Υྫ)) 1,939,314 0.90 1,235,343 0.55 703,971 0.31
Wuxi Fosun V enture Capital Investment
Partnership (௴ุҳ༟ΥྫΆุ(ࠢ
Υྫ)) 1,923,077 0.89 1,225,000 0.54 698,077 0.31
Y ancheng Y annan Unicorn Investment Fund
Partnership (Limited Partnership) (ی
ΥྫΆุ(Υྫ)) 1,907,470 0.88 1,215,058 0.54 692,412 0.31
Suzhou Wanjia V enture Capital Partnership
(Limited Partnership) ( ᘽψຬԳ௴ุҳ༟Υྫ
Άุ(Υྫ)) 1,700,854 0.79 1,083,444 0.48 617,410 0.27
SHARE CAPITAL
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Name of Shareholders
Number of Domestic
Shares as of the Latest
Practicable Date and
immediately prior to
the Global Offering
and the Conversion of
Domestic Shares into
H Shares
Approximate
percentage of interest
in the total issued
share capital of our
Company as of the
Latest Practicable
Date and immediately
prior to the Global
Offering and the
Conversion of
Domestic Shares into
H Shares (%)
Number of
converted H
Shares
Approximate
percentage of
converted H Shares in
the total issued share
capital of our
Company immediately
after the Global
Offering and the
Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Number of remaining
Domestic Shares
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised)
Approximate
percentage of
remaining Domestic
Shares in the total
issued share capital of
our Company
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Shenzhen Hongtu Intelligent Equity Investment
Fund Partnership (Limited Partnership) ( ଉέ
ΥྫΆุ(Υྫ)) 1,563,902 0.72 996,206 0.44 567,696 0.25
Mr. Zhang Lianwen ( ੵஹ˖) 1,442,308 0.67 918,750 0.41 523,558 0.23
Mr. Guo Xixing ( ெɼጳ) 1,154,606 0.53 735,484 0.33 419,122 0.19
Yinhe Y uanhui Investment Co., Ltd. (๕ිҳ
ʮ̡) 1,150,000 0.53 732,550 0.32 417,450 0.18
Gongqingcheng Henghui Ruicheng Equity
Investment Management Partnership (Limited
Partnership) (ᛆҳ༟၍ଣΥ
ྫΆุ(Υྫ)) 1,100,000 0.51 700,700 0.31 399,300 0.18
Jinan Haiwang Equity Investment Partnership
(Limited partnership) (ᛆҳ༟Υྫ
Άุ(Υྫ)) 1,000,000 0.46 637,000 0.28 363,000 0.16
Beijing Cuihu Original Innovation No. 1 V enture
Capital Fund (Limited Partnership) ( ̏ԯၯಳ
ږ(Υྫ)) 800,000 0.37 509,600 0.23 290,400 0.13
Changzhou Tianning Hongya Industrial
Investment Partnership (Limited Partnership)
(੬ψ̹˂ྐྵ̾ԭྼุҳ༟ΥྫΆุ(Υྫ)) 769,230 0.36 490,000 0.22 279,230 0.12
Ms. Y an Xia ( ᕙᒳ) 769,230 0.36 490,000 0.22 279,230 0.12
Tianjin Jinxintong Technology Center (Limited
Partnership) (Ҧʕː(Υྫ)) 730,000 0.34 465,010 0.21 264,990 0.12
Qingdao Hongma Shengshi Private Equity
Investment Fund Partnership (Limited
Partnership) (ږ
ΥྫΆุ(Υྫ)) 421,052 0.19 268,210 0.12 152,842 0.07
SHARE CAPITAL
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Name of Shareholders
Number of Domestic
Shares as of the Latest
Practicable Date and
immediately prior to
the Global Offering
and the Conversion of
Domestic Shares into
H Shares
Approximate
percentage of interest
in the total issued
share capital of our
Company as of the
Latest Practicable
Date and immediately
prior to the Global
Offering and the
Conversion of
Domestic Shares into
H Shares (%)
Number of
converted H
Shares
Approximate
percentage of
converted H Shares in
the total issued share
capital of our
Company immediately
after the Global
Offering and the
Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Number of remaining
Domestic Shares
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised)
Approximate
percentage of
remaining Domestic
Shares in the total
issued share capital of
our Company
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Chongqing Liangjiang Zhongxin Jialiang
Financial Technology RMB Equity Investment
Fund Partnership (Limited Partnership) (ᅅ
Υ
ྫΆุ(Υྫ)) 400,000 0.18 254,800 0.11 145,200 0.06
Qingdao Ruibeita Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟Υ
ྫΆุ(Υྫ)) 346,153 0.16 220,499 0.10 125,654 0.06
Suzhou Muhua Equity Investment Partnership
(Limited Partnership) (ᛆҳ༟Υྫ
Άุ(Υྫ)) 340,171 0.16 216,689 0.10 123,482 0.05
Changzhou Xinxing No. 1 Investment
Partnership Enterprise (Limited Partnership)
(੬ψ̹อጳఠ໮ҳ༟ΥྫΆุ(Υྫ)) 340,171 0.16 216,689 0.10 123,482 0.05
Mr. Wen Xiaoming ( ˖ወჼ) 340,171 0.16 216,689 0.10 123,482 0.05
Suqian Jiuzhao Y unlian Equity Investment
Partnership (Limited Partnership) ( ੖ቋӯΊථ
ᛆҳ༟ΥྫΆุ(Υྫ)) 300,000 0.14 191,100 0.08 108,900 0.05
Ms. Zhu Liping ( ϡ஁റ
) 236,762 0.11 150,817 0.07 85,945 0.04
Pingxiang Jiuzhao Anyuan Equity Investment
Partnership (Limited Partnership) ( റඊ̹ӯΊ
ᛆҳ༟ΥྫΆุ(Υྫ)) 230,769 0.11 147,000 0.07 83,769 0.04
Suqian Qianshan Xinzhuo Equity Investment
Partnership (Limited Partnership) (ڦ
ᛆҳ༟ΥྫΆุ(Υྫ)) 200,000 0.09 127,400 0.06 72,600 0.03
Chuanjiang Investment Co., Ltd. (ࠢ
ʮ̡) 192,307 0.09 122,500 0.05 69,807 0.03
Mr. Huang Shanfan ( රഛᐿ) 110,580 0.05 70,439 0.03 40,141 0.02
Mr. Chen Xin (ؚ61,538 0.03 39,200 0.02 22,338 0.01
SHARE CAPITAL
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Name of Shareholders
Number of Domestic
Shares as of the Latest
Practicable Date and
immediately prior to
the Global Offering
and the Conversion of
Domestic Shares into
H Shares
Approximate
percentage of interest
in the total issued
share capital of our
Company as of the
Latest Practicable
Date and immediately
prior to the Global
Offering and the
Conversion of
Domestic Shares into
H Shares (%)
Number of
converted H
Shares
Approximate
percentage of
converted H Shares in
the total issued share
capital of our
Company immediately
after the Global
Offering and the
Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Number of remaining
Domestic Shares
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised)
Approximate
percentage of
remaining Domestic
Shares in the total
issued share capital of
our Company
immediately after the
Global Offering and
the Conversion of
Domestics Shares into
H Shares (assuming
the Over-allotment
Option is not
exercised) (%)
Mr. Ma Jingping ( ௦᎑̻) 57,692 0.03 36,750 0.02 20,942 0.01
Pingxiang Jiuzhao Hongxin Equity Investment
Partnership (Limited Partnership) ( റඊӯΊ̾
ᛆҳ༟ΥྫΆุ(Υྫ)) 40,820 0.02 26,002 0.01 14,818 0.007
Mr. Liu Ning ( ᄎྐྵ) 13,607 0.006 8,668 0.004 4,939 0.002
Ms. Y u Xiao ( ቱወ) 13,607 0.006 8,668 0.004 4,939 0.002
Mr. Shi Zhenyi (ᆇ) 10,205 0.005 6,501 0.003 3,704 0.002
Total 157,899,539 72.88 81,580,048 36.11 76,319,491 33.78
If any other of the Domestic Shares are to be converted, listed and traded as H Shares on
the Stock Exchange, such conversion, listing and trading will need the approval of the relevant
PRC regulatory authorities, including the CSRC, and the approval of the Stock Exchange. We
may apply for the listing of all or any portion of the Domestic Shares on the Stock Exchange
as H Shares to ensure that the conversion process can be completed promptly upon notice to
the Stock Exchange and delivery of Shares for entry on the H Share register. Approval of
Shareholders at a general meeting is not required for the listing and trading of the converted
Shares on an overseas stock exchange.
Listing Review and Approval by the CSRC
In accordance with the Guidelines for Applying “Full Circulation” for Domestic Unlisted
Shares of H-share Listed Companies (Hˏ) and
Trial Administrative Measures and relevant five guidelines announced by the CSRC, H-share
listed companies which apply for the conversion of domestic unlisted shares into H shares for
listing and circulation on the Stock Exchange shall conform to relevant regulations
promulgated by the CSRC, and authorize the company to file with the CSRC on their behalf.
SHARE CAPITAL
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Our Company applied for a “Full Circulation” with the CSRC on July 3, 2023, and
submitted the application reports, authorization documents of the Shareholders of Domestic
Shares for which an H-share “Full Circulation” was applied, commitment about the compliance
of share acquisition and other documents in accordance with the requirements of the CSRC.
Our Company has received the reply from the CSRC dated January 2, 2024, in relation to the
“Full Circulation,” pursuant to which, a total of 81,580,048 unlisted Domestic shares (with a
nominal value of RMB1.00 each) held by the Full Circulation Participating Shareholders were
approved to be converted into H Shares, and the relevant Shares may be listed on the Stock
Exchange upon completion of the conversion. This reply shall remain effective within 12
months from the date of approval.
Listing Approval by the Stock Exchange
We have applied to the Listing Committee of the Stock Exchange for the granting of
listing of, and permission to deal in, our H Shares to be issued pursuant to the Global Offering
(including any H Shares which may be issued pursuant to the exercise of the Over-allotment
Option) and the H Shares to be converted from 81,580,048 Domestic Shares, which is subject
to the approval by the Stock Exchange.
We will perform the following procedures for the Conversion of Domestic Shares into H
Shares after receiving the approval of the Stock Exchange: (1) giving instructions to our H
Share Registrar regarding the relevant share certificates of the converted H Shares; and (2)
enabling the converted H Shares to be accepted as eligible securities by HKSCC for deposit,
clearance and settlement in the CCASS. The Full Circulation Participating Shareholders may
only deal in the H Shares upon completion of the domestic procedures as disclosed in this
section.
Domestic Procedures
The Full Circulation Participating Shareholders may only deal in the H Shares upon
completion of the below procedures for the registration, deposit and transaction settlement in
relation to the conversion and listing:
i. We will appoint CSDC as the nominal holder to deposit the relevant securities at
China Securities Depository and Clearing (Hong Kong) Co., Ltd. (the “CSDC (Hong
Kong)”), which will then deposit the securities at HKSCC in its own name. CSDC,
as the nominal holder of the Full Circulation Participating Shareholders, shall
handle all custody, maintenance of detailed records, cross-border settlement and
corporate actions, etc. relating to the converted H Shares for the Full Circulation
Participating Shareholders;
ii. We will engage a domestic securities company (the “Domestic Securities
Company”) to provide services such as the transmission of sale orders and trading
messages in respect of the converted H Shares. The Domestic Securities Company
will engage a Hong Kong securities company (the “Hong Kong Securities
SHARE CAPITAL
– 333 –


--- page 344 ---
Company”) for the settlement of transactions. We will make an application to CSDC,
Shenzhen Branch for the maintenance of a detailed record of initial holding of the
converted H Shares. Meanwhile, we will submit applications for a domestic
transaction commission code and abbreviation, which shall be provided by CSDC,
Shenzhen Branch as authorized by Shenzhen Stock Exchange (the “SZSE”);
iii. The SZSE shall authorize Shenzhen Securities Communication Co., Ltd. to provide
services relating to transmission of trading orders and trading messages in respect
of the converted H Shares between the Domestic Securities Company and the Hong
Kong Securities Company, and the real-time market forwarding services of the
converted H Shares;
iv. According to the Notice of the State Administration of Foreign Exchange on Issues
Concerning the Foreign Exchange Administration of Overseas Listing (̮ි၍
ٝthe Full Circulation Participating
Shareholders shall complete the overseas shareholding registration with the local
foreign exchange administration bureau before they sell any converted H Shares.
After completing such overseas shareholding registration, the Full Circulation
Participating Shareholders shall open a specified bank account for the holding of
overseas shares by domestic investors at a domestic bank with relevant
qualifications and open a fund account for the H Share “Full Circulation” at the
Domestic Securities Company. The Domestic Securities Company shall open a
securities trading account for the H Share “Full Circulation” at the Hong Kong
Securities Company; and
v. The Full Circulation Participating Shareholders shall submit trading orders with
respect to the converted H Shares through the Domestic Securities Company. Such
trading orders of the Full Circulation Participating Shareholders will be submitted
to the Stock Exchange through the securities trading account opened by the
Domestic Securities Company at the Hong Kong Securities Company. Upon
completion of the transaction, settlements between each of the Hong Kong
Securities Company and CSDC (Hong Kong), CSDC (Hong Kong) and CSDC,
CSDC and the Domestic Securities Company, and the Domestic Securities Company
and the Full Circulation Participating Shareholders, will all be conducted separately.
As a result of the Conversion of Domestic Shares into H Shares, shareholding of the Full
Circulation Participating Shareholders in our Domestic Share capital shall be reduced by the
number of Domestic Shares converted, and the number of H Shares shall be increased by the
number of converted H Shares.
SHARE CAPITAL
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--- page 345 ---
TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
The PRC Company Law provides that in relation to the public offering of a company, the
shares issued prior to the public offering shall not be transferred within a period of one year
from the date on which the publicly offered shares are listed on any stock exchange.
Accordingly, Shares issued by our Company prior to the Listing Date shall be subject to this
statutory restriction and not be transferred within a period of one year from the Listing Date.
REGISTRATION OF SHARES NOT LISTED ON AN OVERSEAS STOCK EXCHANGE
According to the Notice of Centralized Registration and Deposit of Non-overseas Listed
Shares of Companies Listed on an Overseas Stock Exchange (ٰ
ٝissued by the CSRC, an overseas listed company is required
to register its domestic shares with the CSDC within 15 business days upon listing and provide
a written report to the CSRC regarding the centralized registration and deposit of the domestic
shares as well as the offering and listing of H shares.
CIRCUMSTANCES UNDER WHICH GENERAL MEETING IS REQUIRED
For details of circumstances under which our Shareholders’ general meeting is required,
please see “Appendix III—Summary of the Articles of Association—7. General provisions of
general meetings” in this Prospectus.
SHARE CAPITAL
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--- page 346 ---
To the best of our Directors’ knowledge and information, the following persons will,
immediately following the completion of the Global Offering and the Conversion of Domestic
Shares into H Shares, have interests or short positions in our Shares or underlying Shares which
would be required to be disclosed to our Company and the Stock Exchange pursuant to
Divisions 2 and 3 of Part XV of the SFO or will, directly or indirectly, be interested in 10%
or more of the nominal value of any class of share capital carrying rights to vote in all
circumstances at any general meeting of our Company:
As of the
Latest Practicable Date
Immediately following the completion of the Global Offering and
the Conversion of Domestic Shares into H Shares
(assuming the Over-allotment Option is not exercised)
Shareholder
Nature of
interest
Number of
Domestic
Shares
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
Number of
Shares
Description of
Shares (1)
Approximate
percentage of
shareholding in
our Domestic
Shares/
H Shares (as
appropriate) (1)
Approximate
percentage of
shareholding in
the total issued
share capital of
our Company
Ms. Chen Beneficial owner 58,700,000 27.10% 58,700,000 Domestic Shares 43.46% 25.98%
Interest in
controlled
corporation
(2)
34,922,174 16.12% 24,445,522
10,476,652
Domestic Shares
H Shares
18.10%
11.53%
10.82%
4.64%
Ningbo Xiu’an (2) Beneficial owner 20,000,000 9.23% 14,000,000
6,000,000
Domestic Shares
H Shares
10.37%
6.60%
6.20%
2.66%
Tianjin Duoying (2) Beneficial owner 14,922,174 6.89% 10,445,522
4,476,652
Domestic Shares
H Shares
7.73%
4.93%
4.62%
1.98%
Tianjin Piaoying Technology Center (Limited
Partnership) (Ҧʕː(Υྫ))
(“Tianjin Piaoying”) (2)
Interest in
controlled
corporation
14,922,174 6.89% 10,445,522
4,476,652
Domestic Shares
H Shares
7.73%
4.93%
4.62%
1.98%
Alibaba (China) Technology Co., Ltd. (Ԣˋˋ
(ʕ਷)ʮ̡) (“Alibaba”)
(3)
Beneficial owner 25,724,721 11.87% 9,338,074
16,386,647
Domestic Shares
H Shares
6.91%
18.04%
4.13%
7.25%
Alibaba Group Holding Limited (3) Interest in
controlled
corporation
25,724,721 11.87% 9,338,074
16,386,647
Domestic Shares
H Shares
6.91%
18.04%
4.13%
7.25%
Watertek
(4) Beneficial owner 21,463,466 9.91% 15,024,426
6,439,040
Domestic Shares
H Shares
11.12%
7.09%
6.65%
2.85%
Mr. Chen Jiangtao (“ ௓Ϫᏹ”)(4) Interest in
controlled
corporation
21,463,466 9.91% 15,024,426
6,439,040
Domestic Shares
H Shares
11.12%
7.09%
6.65%
2.85%
Fosun International Limited (ʮ
̡)
(5)
Interest in
controlled
corporation
11,512,873 5.31% 4,179,173
7,333,700
Domestic Shares
H Shares
3.09%
8.07%
1.85%
3.25%
Shenzhen Oriental Fortune Capital Investment
Management Co., Ltd. (˙బऎҳ༟၍
ʮ̡)
(6)
Interest in
controlled
corporation
10,426,011 4.81% 3,784,642
6,641,369
Domestic Shares
H Shares
2.80%
7.31%
1.68%
2.94%
SUBSTANTIAL SHAREHOLDERS
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--- page 347 ---
(1) For the avoidance of doubt, both Domestic Shares and H Shares are ordinary Shares in the share capital
of our Company, and are considered as one class of Shares.
(2) As of the Latest Practicable Date, Ms. Chen (i) acted as the general partner of Ningbo Xiu’an; and (ii)
acted as the general partner of Tianjin Duoying and Tianjin Piaoying, the latter of which was a limited
partner holding 43.16% of the partnership interest in Tianjin Duoying. Under the SFO, Ms. Chen is
deemed to be interested in the entire Shares held by Ningbo Xiu’an and Tianjin Duoying, and Tianjin
Piaoying is deemed to be interested in the entire Shares held by Tianjin Duoying.
(3) As of the Latest Practicable Date, Alibaba was an indirectly wholly-owned subsidiary of Alibaba Group
Holding Limited, a company incorporated in the Cayman Islands, with its American depositary shares,
each representing eight ordinary shares, listed on the New Y ork Stock Exchange (ticker: BABA), and
its ordinary shares listed on the Main Board of the Stock Exchange (stock code: 9988). Under the SFO,
Alibaba Group Holding Limited, and its intermediary subsidiary entities through which it holds interest
in Alibaba, are deemed to be interested in the entire Shares held by Alibaba.
(4) As of the Latest Practicable Date, Watertek, a company incorporated in the PRC with its shares listed
on the Shanghai Stock Exchange (stock code: 300324), was ultimately controlled by Mr. Chen Jiangtao.
Under the SFO, Mr. Chen Jiangtao is deemed to be interested in the entire Shares held by Watertek.
(5) As of the Latest Practicable Date, Shanghai Fosun High Technology (Group) Co., Ltd. (߅
Ҧ(ණྠ)ʮ̡), Shanghai Fosun Weishi Fund (ΥྫΆุ(Υ
ྫ)) and Wuxi Fosun V enture Capital Investment Partnership (௴ุҳ༟ΥྫΆุ(Υྫ))
were ultimately controlled by Fosun International Limited, a company incorporated in Hong Kong and
listed on the Stock Exchange (stock code: 656). As of the Latest Practicable Date, the general partner
of Beijing Xingshi Investment Management Center (Limited Partnership) (ྼҳ༟၍ଣʕː(ࠢ
Υྫ)) was Beijing Xingyuan Innovation Equity Investment Fund Management Co., Ltd. (ʩ௴
ʮ̡), an indirectly non-wholly-owned subsidiary of Fosun International
Limited. Under the SFO, Fosun International Limited is deemed to be interest in the entire Shares held
by Shanghai Fosun High Technology (Group) Co., Ltd., Shanghai Fosun Weishi Fund, Wuxi Fosun
V enture Capital Investment Partnership and Beijing Xingshi Investment Management Center (Limited
Partnership). See “Share Capital—Conversion of Domestic Shares into H Shares” for the respective
numbers of Domestic Shares and H Shares held by the relevant controlled corporations immediately
before and after the completion of the Global Offering and the Conversion of Domestic Shares into H
Shares.
(6) As of the Latest Practicable Date, Shenzhen Fortune Gutoubang No. 6 Investment Enterprise (Limited
Partnership) (ҳԞʬ໮ҳ༟Άุ(Υྫ)) and Small and Medium-sized Enterprises
Development Fund (Shenzhen Nanshan Limited Partnership) (ږ(Υྫ))
were ultimately controlled by Shenzhen Oriental Fortune Capital Investment Management Co., Ltd.
Under the SFO, Shenzhen Oriental Fortune Capital Investment Management Co., Ltd. is deemed to be
interested in the entire Shares held by Shenzhen Fortune Gutoubang No. 6 Investment Enterprise
(Limited Partnership) and Small and Medium-sized Enterprises Development Fund (Shenzhen Nanshan
Limited Partnership). See “Share Capital—Conversion of Domestic Shares into H Shares” for the
respective numbers of Domestic Shares and H Shares held by the relevant controlled corporations
immediately before and after the completion of the Global Offering and the Conversion of Domestic
Shares into H Shares.
Save as disclosed above and in “Appendix IV—Statutory and General Information” of
this prospectus, our Directors are not aware of any person who will, immediately following the
completion of the Global Offering and the Conversion of Domestic Shares into H Shares (and
the offering of any additional H Shares pursuant to the Over-allotment Option), have an interest
or short position in the Shares or underlying shares of the Company which would be required
to be disclosed to the Company and the Stock Exchange under Divisions 2 and 3 of Part XV
of the SFO or will, directly or indirectly, be interested in 10% or more of the nominal value
of any class of share capital carrying rights to vote in all circumstances at general meetings of
the Company or any other members of our Group.
SUBSTANTIAL SHAREHOLDERS
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--- page 348 ---
THE CORNERSTONE PLACING
We have entered into a cornerstone investment agreement (the “ Cornerstone Investment
Agreement ”) with the cornerstone investor set forth below (the “ Cornerstone Investor ”) who
has agreed to subscribe for such number of our Offer Shares (rounded down to the nearest
whole board lot of 100 Shares) which may be purchased at the Offer Price with an aggregate
amount of approximately HK$260.0 million) (exclusive of the brokerage, the SFC transaction
levy, the AFRC transaction levy and the Stock Exchange trading fee) (the “ Cornerstone
Placing ”).
Assuming an Offer Price of HK$36.00 (being the low-end of the indicative Offer Price
range set out in this prospectus), the total number of Offer Shares to be subscribed by the
Cornerstone Investor would be 7,222,200 H Shares, representing approximately (i) 77.98% of
the Offer Shares pursuant to the Global Offering, assuming that the Over-allotment Option is
not exercised, (ii) 3.20% of our total issued share capital upon completion of the Global
Offering and assuming that the Over-allotment Option is not exercised, and (iii) 3.18% of our
total issued share capital upon completion of the Global Offering and assuming full exercise
of the Over-allotment Option.
Assuming an Offer Price of HK$38.00 (being the mid-point of the indicative Offer Price
range set out in this prospectus), the total number of Offer Shares to be subscribed by the
Cornerstone Investor would be 6,842,100 H Shares, representing approximately (i) 73.87% of
the Offer Shares pursuant to the Global Offering, assuming that the Over-allotment Option is
not exercised, (ii) 3.03% of our total issued share capital upon completion of the Global
Offering and assuming that the Over-allotment Option is not exercised, and (iii) 3.01% of our
total issued share capital upon completion of the Global Offering and assuming full exercise
of the Over-allotment Option.
Assuming an Offer Price of HK$40.00 (being the high-end of the indicative Offer Price
range set out in this prospectus), the total number of Offer Shares to be subscribed by the
Cornerstone Investor would be 6,500,000 H Shares, representing approximately (i) 70.18% of
the Offer Shares pursuant to the Global Offering, assuming that the Over-allotment Option is
not exercised, (ii) 2.88% of our total issued share capital upon completion of the Global
Offering and assuming that the Over-allotment Option is not exercised, and (iii) 2.86% of our
total issued share capital upon completion of the Global Offering and assuming full exercise
of the Over-allotment Option.
The Cornerstone Investor will acquire the Offer Shares pursuant to, and as part of, the
International Offering. The Cornerstone Investor has agreed that the Overall Coordinators may
defer the delivery of all or any part of the Offer Shares it will subscribe to a date later than the
Listing Date. Such delayed delivery arrangement is in place to facilitate the over-allocation in
the International Offering. The Cornerstone Investor has agreed that the relevant Offer Shares
that it will subscribe for will be fully paid for before the Listing. There will be no delayed
delivery if there is no over-allocation in the International Offering. For details of the
Over-allotment Option and the stabilization action by the Stabilizing Manager, see “Structure
CORNERSTONE INVESTOR
– 338 –


--- page 349 ---
of the Global Offering—Over-allotment Option” and “Structure of the Global
Offering—Stabilization” in this prospectus. The Offer Shares to be subscribed for by the
Cornerstone Investor will rank pari passu in all respects with the other fully paid H Shares in
issue and will be counted towards the public float of our Company under Rule 8.08 of the
Listing Rules.
Immediately following the completion of the Global Offering, (i) the Cornerstone
Investor will not become our substantial Shareholder; and (ii) the Cornerstone Investor or its
close associates will not, by virtue of the cornerstone investment, have any Board
representation in our Company. Other than a guaranteed allocation of the relevant Offer Shares
at the Offer Price, the Cornerstone Investor does not have any preferential rights in the
Cornerstone Investment Agreement compared with other public Shareholders.
Our Company is of the view that (i) the Cornerstone Placing ensures a reasonable size of
solid commitment at the beginning of the marketing period and provides confidence to the
market, particularly the retail investors who may take comfort in knowing that our Company
is vouched for by the Cornerstone Investor who is willing to be subject to a six-months lock-up
period; and (ii) by leveraging on the Cornerstone Investor’ reputation, the Cornerstone Placing
would help raise the profile of the Listing and attract investors’ interest and stimulate demand.
To the best knowledge of our Company and after making reasonable enquiries:
(i) each of the Cornerstone Investor, the qualified domestic institutional investor
(“QDII,” through which the Cornerstone Investor will subscribe for the relevant
Offer Shares) and their ultimate beneficial owners is an independent third party;
(ii) the Cornerstone Investor is not accustomed to taking instructions from our
Company, our Directors, Supervisors, chief executive, Controlling Shareholders,
substantial Shareholders, other existing Shareholders or any of its subsidiaries or
their respective close associates in relation to the acquisition, disposal, voting or
other disposition of the Offer Shares;
(iii) the subscription made by the Cornerstone Investor was not financed directly or
indirectly by the Company, our Directors, Supervisors, chief executive, the
Controlling Shareholders, substantial Shareholders, other existing Shareholders or
any of its subsidiaries or their respective close associates; and
(iv) the Cornerstone Investor has confirmed that its subscription under the Cornerstone
Placing would be financed by its own internal financial resources and/or the
financial resources of its ultimate beneficial owner, and that it has sufficient funds
to settle its investment under the Cornerstone Placing.
CORNERSTONE INVESTOR
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There are no side agreements/arrangements between our Company and the Cornerstone
Investor or any benefit, direct or indirect, conferred on the Cornerstone Investor by virtue of
or in relation to the Listing, other than a guaranteed allocation of the relevant Offer Shares at
the Offer Price. The Cornerstone Investor has confirmed that all necessary approvals have been
obtained with respect to the cornerstone investment, it is not listed on any stock exchange and
no specific approval from any stock exchange or its shareholders is required for the cornerstone
investment.
The total number of Offer Shares to be subscribed by the Cornerstone Investor pursuant
to the Cornerstone Placing may be affected by reallocation of the Offer Shares between the
International Offering and the Hong Kong Public Offering in the event of over-subscription
under the Hong Kong Public Offering as described in “Structure of the Global Offering—The
Hong Kong Public Offering—Reallocation” in this prospectus. Details of the actual number of
Offer Shares to be allocated to the Cornerstone Investor will be disclosed in the allotment
results announcement to be issued by our Company.
OUR CORNERSTONE INVESTOR
The information about the Cornerstone Investor sets forth below has been provided by the
Cornerstone Investor.
Jiangsu Yuanli
Jiangsu Y uanli Industrial Investment Co., Ltd. (ʮ̡) (“Jiangsu
Y uanli”) has agreed to acquire such number of Offer Shares (rounded down to the nearest board
lot) that may be purchased with the HK dollars equivalent of HK$260.0 million (exclusive of
brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy) at the Offer Price.
Jiangsu Y uanli was incorporated on May 27, 2021, in Wuxi City, Jiangsu Province, the
PRC, and is a local state-owned capital equity investment platform. Jiangsu Y uanli is wholly
owned by Wuxi Huishan Science and Innovation Industry Group Co., Ltd. (௴ପุ
ʮ̡), which is in turn ultimately wholly owned by State-owned Assets
Administration Office of Wuxi City Huishan District (܃For
the purpose of this cornerstone investment, Jiangsu Y uanli has engaged Zhonghai Trust Co.,
Ltd. (ʮ̡), which is a QDII and the asset manager of Zhonghai Y uanli QDII
Single Fund Trust (ɢQDIIৄ), to subscribe for and hold such Offer Shares
on its behalf.
CORNERSTONE INVESTOR
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Based on the Offer Price of HK$36.00 (being the low end of the indicative Offer Price range)
Approximate percentage of
total number of
Offer Shares
Approximate percentage of
total issued share
capital immediately
following the
completion of the
Global Offering
Cornerstone Investor
Investment
amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot
of 100 Shares)
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Jiangsu Y uanli
HK$260
million 7,222,200 77.98% 67.81% 3.20% 3.18%
7,222,200 77.98% 67.81% 3.20% 3.18%
Note:
1. Exclusive of brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy.
CORNERSTONE INVESTOR
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Based on the Offer Price of HK$38.00 (being the mid-point of the indicative Offer Price
range)
Approximate percentage of
total number of
Offer Shares
Approximate percentage of
total issued share
capital immediately
following the
completion of the
Global Offering
Cornerstone Investor
Investment
amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot
of 100 Shares)
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Jiangsu Y uanli
HK$260
million 6,842,100 73.87% 64.24% 3.03% 3.01%
6,842,100 73.87% 64.24% 3.03% 3.01%
Note:
1. Exclusive of brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy.
CORNERSTONE INVESTOR
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Based on the Offer Price of HK$40.00 (being the high end of the indicative Offer Price
range)
Approximate percentage of
total number of
Offer Shares
Approximate percentage of
total issued share
capital immediately
following the
completion of the
Global Offering
Cornerstone Investor
Investment
amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot
of 100 Shares)
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Assuming
the Over-
allotment
Option
is not
exercised
Assuming
the Over-
allotment
Option is
exercised in
full
Jiangsu Y uanli
HK$260
million 6,500,000 70.18% 61.03% 2.88% 2.86%
6,500,000 70.18% 61.03% 2.88% 2.86%
Note:
1. Exclusive of brokerage, the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction
levy.
CONDITIONS PRECEDENT
The obligations of the Cornerstone Investor to acquire Offer Shares under the Cornerstone
Investment Agreement are subject to, among others, the following closing conditions:
(a) the Hong Kong Underwriting Agreement and the International Underwriting
Agreement entered into and having become effective and unconditional (in
accordance with their respective original terms or as subsequently waived or varied
by agreement of the parties thereto) by no later than the time and date as specified
in these underwriting agreements, and neither of the underwriting agreements
having been terminated;
(b) the Offer Price having been agreed upon between the Company and the Sponsor-OC
(for itself and on behalf of the Underwriters);
CORNERSTONE INVESTOR
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--- page 354 ---
(c) the Listing Committee having granted approvals for the listing of, and permission to
deal in, the H Shares (including the Offer Shares to be subscribed for by the
Cornerstone Investor) as well as other applicable waivers and consents and that such
approvals, waivers or consents have not been revoked prior to the commencement
of dealings in the H Shares on the Stock Exchange;
(d) no laws or regulations shall have been enacted or promulgated by any governmental
authority which prohibits the consummation of the transactions contemplated in the
Global Offering or the Cornerstone Investment Agreement, and there shall be no
orders or injunctions from a court of competent jurisdiction in effect precluding or
prohibiting consummation of such transactions; and
(e) the respective representations, warranties, undertakings and confirmations of the
Cornerstone Investor under the Cornerstone Investment Agreement are accurate and
true in all material respects and not misleading and that there is no material breach
of the Cornerstone Investment Agreement on the part of the Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTOR
The Cornerstone Investor has agreed that without the prior written consent of each of the
Company, the Overall Coordinators and the Sole Sponsor, it will not, whether directly or
indirectly, at any time during the period of six months following the Listing Date (the “Lock-up
Period”), dispose of any of the Offer Shares they have subscribed for pursuant to the
Cornerstone Investment Agreement (the “Relevant Shares”) or any interest in any company or
entity holding any of the Relevant Shares.
The Cornerstone Investor may transfer the Relevant Shares in certain limited
circumstances set out in Cornerstone Investment Agreement, such as a transfer to a wholly
-owned subsidiary that will be bound by the Cornerstone Investor’s obligations under the
Cornerstone Investment Agreement, and be subject to the restrictions on disposal of Relevant
Shares imposed on the Cornerstone Investor.
CORNERSTONE INVESTOR
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You should read the following discussion in conjunction with the consolidated
financial statements and the notes thereto included in the Accountants’ Report set out in
Appendix I to this prospectus which have been prepared in accordance with IFRSs and
the selected historical financial information and operating data included elsewhere in
this prospectus. Our historical results do not necessarily indicate results expected for any
future periods. The following discussion and analysis contains forward-looking
statements that involve risks and uncertainties. Our actual results may differ from those
anticipated in these forward-looking statements as a result of any number of factors,
including those set forth in “Forward-looking Statements” and “Risk Factors.” In
evaluating our business, you should carefully consider the information provided in “Risk
Factors” in this prospectus.
OVERVIEW
We are an enterprise digitalization solutions provider in China, focusing on offering SaaS
financial & tax digitalization and data-driven analytics services. We process a variety of
transaction documents, including, among others, invoices, receipts, bills, and other accounting
records, that accurately reflect key business transactions of enterprises. Empowered by insights
into voluminous transaction data and equipped with big data analytics capabilities, we facilitate
the automated and digitalized business decision-making by financial service providers and
other enterprise customers.
We have strategically developed our proprietary Baiwang Cloud platform, which is a
technology-integrated business platform encompassing technologies, such as digital certificate,
digital signature, open fixed-layout document (“OFD”), big data analytics, AI and blockchain.
Baiwang Cloud enables us to provide customers in an array of industry verticals with
modularized solutions, including: (1) financial & tax digitalization solutions, delivered in
cloud and/or on-premises applications and compatible with e-invoices and digital invoices,
consisting of tax invoice compliance management, financial and tax management and supply
chain collaboration solutions, and (2) data-driven analytics services, consisting of digital
precision marketing services and risk analytics services. During the Track Record Period, we
generated revenue primarily through charging (i) annual subscription fees, usage-based fees,
sales-based fees and solution delivery fees for cloud financial & tax digitalization solutions,
(ii) sales-based fees, annual subscription fees, usage-based fees and project-based fees for our
data-driven analytics services, and (iii) software license fees, one-time implementation fees,
annual maintenance fees and hardware equipment fees for on-premises financial & tax
digitalization solutions.
We experienced significant growth during the Track Record Period. In 2021, 2022 and
2023, our total revenue was RMB453.8 million, RMB525.8 million and RMB713.0 million,
respectively. Our gross profit was RMB216.2 million, RMB214.3 million and RMB282.0
million in 2021, 2022 and 2023, respectively. We recorded net loss of RMB448.4 million,
RMB156.2 million and RMB359.3 million in 2021, 2022 and 2023, respectively. We recorded
adjusted net loss (non-IFRS measure) of RMB16.7 million, RMB70.3 million and RMB83.4
million in 2021, 2022 and 2023, respectively. See “—Consolidated Statements of Profit or Loss
and Other Comprehensive Income—Non-IFRS Measure” for details.
FINANCIAL INFORMATION
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BASIS OF PRESENTATION
Our historical financial information has been prepared in accordance with International
Financial Reporting Standards. The historical financial information has been prepared on the
historical cost basis, except for certain financial instruments that are measured at fair values
at the end of each reporting period.
The preparation of historical financial information in conformity with IFRSs requires the
use of certain critical accounting estimates, as well as our management’s judgment in applying
our accounting policies. We have consistently applied the accounting policies which conform
with the International Accounting Standards (“IASs”), the IFRSs, amendments to IFRSs and
the related interpretations issued by the IASB that are effective for the accounting period
beginning on January 1, 2022 throughout the Track Record Period.
GENERAL FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our financial condition and results of operations have been, and will continue to be
affected by various general factors, including primarily the following.
Development of Our Industries
We derived our revenue primarily from provision of financial & tax digitalization and
data-driven analytics services in China during the Track Record Period. Our business, financial
condition and results of operations are affected by general factors driving the development of
the industries in which we operate. According to the F&S Report, the development of China’s
financial and tax-related transaction digitalization market is primarily driven by government-
initiated tax and tax invoice reforms, including the Business Tax to V alue-Added Tax reform
and the recent development of Golden Tax Project. Furthermore, the rapid development of
compliance and information security technologies enable enterprises to more readily adopt
financial & tax digitalization solutions that are reliable and secure. On the other hand, the
transaction-based big data analytics for SMB financing is expected to be driven by the growing
demand of financial service providers for multi-dimensional data resources. Our ability to
anticipate and respond to market development and adapt to the constantly evolving industries
will have a significant impact on our future performance.
Favorable Government Policies
Favorable government policies have significantly affected our industries and our business
model. As China’s financial and tax-related transaction digitalization market continues to
develop, significant market opportunities continue to emerge in the market, especially in light
of the implementation of the digital invoice reform. We have also capitalized on the market
demand created by policies promoting SMB financing to expand our data-driven analytics
services. Our ability to anticipate and respond to changes in government policies will have a
significant impact on our future performance.
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SPECIFIC FACTORS AFFECTING OUR RESULTS OF OPERATIONS
In addition to general industry and regulation factors, we believe the following
company-specific factors have had, and will continue to have, a significant impact on our
financial condition and results of operations.
Our Ability to Expand Customer Base and Increase Customer Retention and Spending
We generate revenue primarily from the provision of cloud and on-premises solutions for
enterprise customers, and therefore, our growth depends, to a large extent, on our ability to
attract customers. Leveraging our comprehensive solutions, strong brand reputation and
diversified product and service matrix, we have greatly expanded our customer base during the
Track Record Period.
In addition, our business growth depends, in part, on our ability to increase the average
customer spending on our solutions by pursuing cross- and up-selling opportunities. For
instance, the convenience and easy-to-use feature of our cloud financial & tax digitalization
solutions have attracted certain customers of our on-premises solutions, which have subscribed
to our cloud solutions to supplement their locally deployed software. Moreover, we have
fostered a strong and long-lasting bonds with our customers, demonstrated by a high level of
customer loyalty during the Track Record Period. As we continue to optimize our solution
offerings and upgrade and expand solution functions, we believe we are capable of driving
customer loyalty and spending and attracting new customers, thereby achieving sustainable
growth in the long term.
Our Ability to Optimize Solution Offerings and Mix
Our results of operations depend on our ability to address evolving market demands for
our solutions. During the Track Record Period, we generated the majority of revenue from our
cloud financial & tax digitalization solutions and data-driven analytics services, which in
general had a higher profit margin than our on-premises financial & tax digitalization
solutions. Furthermore, our cloud financial & tax digitalization solutions had a higher profit
margin than our data-driven analytics services during the Track Record Period, while the profit
margin of our data-driven analytics services fluctuated during the relevant periods, primarily
due to changes in various market factors, including the demands for SMB financing and the
risk appetite of financial service providers. Specifically, the profit margin of our digital
precision marketing services is affected by the referral fee ratio agreed with our marketing
agents, which is further affected by the change in financial product mix that we facilitate in
selling. In determining service fee ratios with us, the financial service providers typically
factor in the attributes and profitability of the underlying financial products. For instance,
service fee ratios for loan products are typically higher than those for credit facility products.
During the Track Record Period, our service fee ratios for credit facility products launched by
our financial service provider customers ranged from 0.3% to 1.94%, and our service fee ratios
for loan products ranged from 0.1% to 2.60%. A majority of our revenue of digital precision
marketing services is attributable to credit facility products. Furthermore, financial service
providers with user acquisition demands are usually willing to increase the service fee ratios
with us to expand user base for their products. Any significant change in our solution offerings
and mix will likely affect our profitability and results of operations.
FINANCIAL INFORMATION
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Our Ability to Enhance Our Technology Innovation
We operate in industries characterized by continuous advancement in technology. As a
result, our results of operations and long-term growth prospects will depend on our ability to
develop and adopt technology innovation, which is crucial in keeping our solutions competitive
in the market. It also requires unremitting and significant investment in R&D activities and
talented R&D personnel. We have developed the key technologies in-house to achieve a solid
technology foundation for enhanced solution functionality, such as the OFD template
management technology, digital signature management technology and digital certificate
management technology. We have dedicated significant resources toward our R&D efforts.
Going forward, we plan to continue to recruit and retain talented R&D personnel and
increase investments to curate a new technology platform. Such investments on our R&D
capability will increase our research and development expenses, which may impact our results
of operations and financial condition. We expect that our strategic focus on product
functionality and technological capability will continue to create entry barriers and enhance
our market leadership, which in turn will enable us to achieve sustainable business growth.
Our Ability to Control Cost and Expenses
Our ability to effectively control our cost and expenses while achieving expected business
growth is critical to our profitability. A significant component of our costs and expenses was
staff costs and share-based payment expenses.
During the Track Record Period, we granted share economic rights in our share incentive
platforms to our senior management and employees, and we incurred substantial share-based
payment expenses of RMB161.4 million, RMB10.5 million and RMB191.1 million in 2021,
2022 and 2023, respectively, accounting for 35.6%, 2.0% and 26.8% of our total revenue in the
same periods, respectively. Our share-based payment expenses contributed to our net loss
position during the Track Record Period. The following table sets forth a breakdown of our
share-based payment expenses by categorization in our consolidated statements of profit and
loss and other comprehensive income, both in absolute amount and as a percentage of total
share-based payments, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cost of sales 18,719 11.6 2,031 19.4 13,297 7.0
Research and development
expenses 14,428 8.9 4,775 45.6 30,322 15.9
Administrative expenses 82,744 51.3 2,288 21.9 80,234 42.0
Distribution and selling
expenses 45,527 28.2 1,375 13.1 67,211 35.1
Total 161,418 100.0 10,469 100.0 191,064 100.0
FINANCIAL INFORMATION
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We believe our future success highly relies on our ability to attract, hire, retain and
motivate seasoned employees. Specifically, the constant improvement of the overall quality of
our solutions demands sophisticated personnel with experiences in, among others, software
development and operation, tax and tax invoice compliance and management, and data
analytics and various industry verticals. We expect that our staff costs and share-based payment
expenses to continue to increase in line with our business expansion. Our ability to control such
costs and expenses may significantly affect our profitability. We have implemented a number
of internal procedures to ensure the effectiveness and efficiency of our hiring practice,
including review and approval procedures for staff recruitment, and additional staffing and the
corresponding budget will require the approval of the head of department and/or the CFO. As
we continue to grow our business, we expect to benefit from economies of scale and achieve
additional cost savings to improve our overall profitability.
In addition to staff costs and share-based payment expenses, we have incurred substantial
commission fees to market our solutions and our customers’ financial products. We have
developed an extensive business collaborator network to leverage their local or platform
resources to more effectively market our cloud financial & tax digitalization solutions and
marketing agents to further promote our digital precision marketing services. We strive to
control our referral fees and commission by relying more on our in-house sales network for our
financial & tax digitalization solutions and tapping into the massive base of our non-paying
users for our digital precision marketing services.
MATERIAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES
We have identified certain accounting policies that we believe are most significant to the
preparation of our consolidated financial statements. Our material accounting policy
information and estimates, which are important for understanding our results of operations and
financial condition, are set forth in Notes 4 and 5 to the Accountants’ Report in Appendix I to
this prospectus. Some of the accounting policies involve subjective assumptions and estimates,
as well as complex judgements relating to accounting items. In each case, the determination of
these items requires management judgment based on information and financial data that may
change in future periods. When reviewing our financial statements, you should consider (1) our
selection of critical accounting policies, (2) the judgment and other uncertainties affecting the
application of such policies, and (3) the sensitivity of reported results to changes in conditions
and assumptions.
Revenue Recognition
We recognize revenue when performance obligation is satisfied, i.e., when control of the
goods or services underlying the particular performance obligation is transferred to the
customer. A performance obligation represents a good or service (or a bundle of goods or
services) that is distinct or a series of distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognized over time by reference to the
progress towards complete satisfaction of the relevant performance obligation if one of the
following criteria is met: (1) the customer simultaneously receives and consumes the benefits
FINANCIAL INFORMATION
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provided by our performance as we perform; (2) our performance creates or enhances an asset
that the customer controls as we perform; or (3) our performance does not create an asset with
an alternative use to us and we have an enforceable right to payment for performance
completed to date. Otherwise, revenue is recognized at a point in time when the customer
obtains control of the distinct good or service. For further details of revenue recognition from
contracts with customers, and from specific major sources of revenue, see Note 4.4 to the
Accountants’ Report in Appendix I to this prospectus.
Equity-settled Share-based Payment Transactions
We have granted equity-settled share-based payment to our employees, as detailed in Note
36 to the Accountants’ Report in Appendix I to this prospectus. Equity-settled share-based
payments to employees are measured at the fair value of the equity instruments at the grant
date. The fair value of the equity-settled share-based payments determined at the grant date
without taking into consideration all non-market vesting conditions is expensed using graded
vesting method over the vesting period, based on our estimate of equity instruments that will
eventually vest, with a corresponding increase in equity (share-based payments reserves). At
the end of each reporting period, we revise our estimate of the number of equity instruments
expected to vest based on assessment of all relevant non-market vesting conditions. The impact
of the revision of the original estimates, if any, is recognized in profit or loss such that the
cumulative expense reflects the revised estimate, with a corresponding adjustment to
share-based payments reserves. For share options/other share incentives that vest immediately
at the date of grant, the fair value of the share options/other share incentives granted is
expensed immediately to profit or loss. See Note 4.11 to the Accountants’ Report in Appendix I
to this prospectus.
Financial Instruments
Financial assets and financial liabilities are recognized when an entity within our Group
becomes a party to the contractual provisions of the instrument. All ordinary purchases or sales
of financial assets are recognized and derecognized on a trade date basis. Financial assets and
financial liabilities are initially measured at fair value except for trade receivables arising from
contracts with customers which are initially measured in accordance with IFRS 15. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets or financial liabilities at fair value through profit or loss)
are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
financial assets or financial liabilities at fair value through profit or loss are recognized
immediately in profit or loss. A financial asset and a financial liability are offset and the net
amount presented in the consolidated statements of financial position when, and only when, we
currently have a legally enforceable right to set off the recognized amounts; and intends either
to settle on a net basis, or to realize the asset and settle the liability simultaneously.
FINANCIAL INFORMATION
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Financial Assets at FVTPL
Financial assets at fair value through profit or loss (“FVTPL”) are measured at fair value
at the end of each reporting period, with any fair value gains or losses recognized in profit or
loss. The net gain or loss recognized in profit or loss includes any dividend or interest earned
on the financial asset and is included in “other gains and losses.” We perform impairment
assessment under expected credit loss (“ECL”) model on financial assets (including trade
receivables, other receivables, amounts due from related parties, and bank balances) which are
subject to impairment assessment under IFRS 9. The amount of ECL is updated at each
reporting date to reflect changes in credit risk since initial recognition. Lifetime ECL
represents the ECL that will result from all possible default events over the expected life of the
relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime
ECL that is expected to result from default events that are possible within 12 months after the
reporting date. Assessment is done based on our historical credit loss experience, adjusted for
factors that are specific to the debtors, general economic conditions and an assessment of both
the current conditions at the reporting date as well as the forecast of future conditions.
We always recognize lifetime ECL for trade receivables and amounts due from related
parties of trade nature (excluding the prepayments to related parties, where applicable). The
ECL on these assets are assessed individually for debtors with significant balances.
For all other instruments, we measure the loss allowance equal to 12m ECL, unless when
there has been a significant increase in credit risk since initial recognition in which case, we
recognize lifetime ECL.
Financial Liabilities and Equity
Financial liabilities and equity instruments issued by an entity within our Group are
classified as either financial liabilities or as equity in accordance with the substance of the
contractual arrangements and the definitions of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual interest in the assets of an
entity after deducting all of its liabilities. Equity instruments issued by us are recorded as the
proceeds received, net of direct issue costs. Shares with preferential rights subject to
mandatory redemption in cash at the option exercisable by holders by agreed date are classified
as financial liabilities. Financial liabilities are classified as at FVTPL when the financial
liability is (1) contingent consideration of an acquirer in a business combination to which IFRS
3 applies, (2) held for trading or (3) it is designated as at FVTPL. A financial liability other
than a financial liability held for trading or contingent consideration of an acquirer in a
business combination may be designated as at FVTPL upon initial recognition if: (i) such
designation eliminates or significantly reduces a measurement or recognition inconsistency
that would otherwise arise; (ii) the financial liability forms part of a group of financial assets
or financial liabilities or both, which is managed and its performance is evaluated on a fair
value basis, in accordance with our documented risk management or investment strategy, and
FINANCIAL INFORMATION
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information about the grouping is provided internally on that basis; or (iii) it forms part of a
contract containing one or more embedded derivatives, and IFRS 9 permits the entire combined
contract to be designated as at FVTPL.
Provision for Expected Credit Losses on Trade Receivables and Contract Assets
The ECL rates for trade receivables are determined by provision matrix model using
historical loss rates adjusted for forward-looking estimates, based on days past due for
groupings of customers’ business segments. The ECL rates for contract assets are estimated by
taking into account of probabilities of default and loss given default sourced from public
market information adjusted for forward-looking estimates for groupings of various customers
based on their business segments.
For instance, if forecast economic conditions (i.e., gross domestic products) are expected
to deteriorate over the next year which can lead to an increased number of losses, the historical
loss rates of trade receivables and probabilities of default of contract assets will be adjusted.
The assessment of the correlation among historical loss rates, probabilities of default, loss
given default, forecast economic conditions and ECLs is a significant estimate. The amount of
ECLs is sensitive to changes in circumstances and forecast economic conditions. Our historical
credit loss experience and forecast of economic conditions may also not be representative of
customer’s actual loss in the future. The information about the ECLs on our trade receivables
and contract assets are disclosed in Note 40 to the Accountants’ Report in Appendix I to this
prospectus.
FINANCIAL INFORMATION
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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
The following table set forth a summary of our consolidated statements of profit or loss
for the year indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands, except for percentages)
Revenue 453,763 100.0 525,765 100.0 712,996 100.0
Cost of sales (237,600) (52.4) (311,475) (59.2) (430,965) (60.4)
Gross profit 216,163 47.6 214,290 40.8 282,031 39.6
Other income 2,700 0.6 9,875 1.9 4,035 0.6
Impairment losses under
ECL model, net of
reversal (1,751) (0.4) (1,217) (0.2) (5,823) (0.8)
Other gains and losses (1,301) (0.3) (2,330) (0.4) (1,375) (0.2)
Research and development
expenses (137,777) (30.4) (144,281) (27.4) (187,956) (26.4)
Administrative expenses (137,091) (30.2) (73,504) (14.0) (169,090) (23.7)
Listing expenses (6,366) (1.4) (16,307) (3.1) (24,107) (3.4)
Distribution and selling
expenses (132,725) (29.2) (98,876) (18.8) (202,821) (28.4)
Operating loss (198,148) (43.7) (112,350) (21.4) (305,106) (42.8)
Finance income 10,583 2.3 10,314 2.0 6,879 1.0
Finance costs (243) (0.1) (1,567) (0.3) (1,022) (0.1)
Fair value changes of
financial assets and
liabilities at FVTPL (265,523) (58.5) (53,491) (10.2) (55,895) (7.8)
Share of results of
associates and joint
ventures 4,958 1.1 1,069 0.2 (4,030) (0.6)
FINANCIAL INFORMATION
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Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands, except for percentages)
Loss before tax (448,373) (98.8) (156,025) (29.7) (359,174) (50.4)
Income tax expenses — — (199) (0.0) (116) (0.0)
Loss and total
comprehensive expense
for the year (448,373) (98.8) (156,224) (29.7) (359,290) (50.4)
Attributable to
— Owners of the
Company (446,938) (98.5) (153,501) (29.2) (357,980) (50.2)
— Non-controlling
interests (1,435) (0.3) (2,723) (0.5) (1,310) (0.2)
(448,373) (98.8) (156,224) (29.7) (359,290) (50.4)
Loss per share attributable
to owners of the
company
— Basic and diluted
(RMB) (3.19) — (1.10) — (2.56) –
Non-IFRS Measure
To supplement our consolidated financial statements, which are presented in accordance
with IFRSs, we also use adjusted net loss (non-IFRS measure) as an additional financial
measure, which may not be comparable to similar measures presented by other companies. We
believe this non-IFRS measure facilitates comparisons of operating performance from period
to period and company to company by eliminating potential impacts of certain items. We
believe this measure provides useful information to investors and others in understanding and
evaluating our consolidated results of operations in the same manner as they help our
management. However, our presentation of adjusted net loss (non-IFRS measure) may not be
comparable to similarly titled measures presented by other companies. The use of this
non-IFRS measure has limitations as an analytical tool, and you should not consider it in
isolation from, or as a substitute for an analysis of, our results of operations or financial
condition as reported under IFRSs.
FINANCIAL INFORMATION
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--- page 365 ---
We define adjusted net loss (non-IFRS measure) as net loss for the year, adjusted by
adding share-based payment expenses, listing expenses, and fair value changes of financial
liabilities at FVTPL relating to shares with preferential rights issued by us, which are non-cash
in nature. Share-based payments are non-cash expenses arising from granting share economic
rights in our share incentive platforms to senior management and employees. Listing expenses
were incurred in connection with the Global Offering. Fair value changes of financial liabilities
at FVTPL represent fair value changes relating to shares with preferential rights issued by us.
We do not expect to record any fair value changes in such instruments following the completion
of the Global Offering. See Note 33 to the Accountants’ Report in Appendix I to this prospectus
for details.
The following table reconciles our adjusted net loss (non-IFRS measure) for the periods
presented:
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Reconciliation of net loss to adjusted
net loss (non-IFRS measure):
Loss for the year (448,373) (156,224) (359,290)
Add
Share-based payment expenses 161,418 10,469 191,064
Listing expenses 6,366 16,307 24,107
Fair value changes of financial
liabilities at FVTPL
– shares with preferential rights 263,850 59,153 60,707
Adjusted net loss (non-IFRS measure) (16,739) (70,295) (83,412)
FINANCIAL INFORMATION
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--- page 366 ---
KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Revenue
During the Track Record Period, we generated revenue from (1) cloud financial & tax
digitalization solutions, (2) data-driven analytics services, (3) on-premises financial & tax
digitalization solutions, and (4) other services. The following table sets forth a breakdown of
our revenue by business lines, both in absolute amount and as a percentage of our total revenue,
for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 156,615 34.5 157,996 30.1 219,539 30.8
Data-driven analytics
services 178,597 39.4 263,519 50.1 352,425 49.4
— Digital precision
marketing services 94,603 20.9 170,229 32.4 210,187 29.5
— Risk management
services 83,994 18.5 93,290 17.7 142,238 19.9
On-premises financial & tax
digitalization solutions 110,168 24.3 93,491 17.8 138,132 19.4
Others (1) 8,383 1.8 10,759 2.0 2,900 0.4
Total 453,763 100.0 525,765 100.0 712,996 100.0
(1) Includes primarily advertisement publishing services.
Revenue Generated from Cloud Financial & Tax Digitalization Solutions
In 2021, 2022 and 2023, we derived revenue from our cloud financial & tax digitalization
solutions of RMB156.6 million, RMB158.0 million and RMB219.5 million, respectively,
accounting for 34.5%, 30.1% and 30.8% of our total revenue in the same periods, respectively.
Our cloud financial & tax compliance solutions comprise tax invoice compliance management
solutions, financial and tax management solutions and supply chain collaboration solutions,
which can be subscribed separately or in combination. We typically enter into framework
agreements with customers of our cloud financial & tax digitalization solutions, the terms of
which generally range from one to five years. The framework agreements set forth the
subscribed and purchased solutions and their respective payment terms.
FINANCIAL INFORMATION
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Tax invoice compliance management solutions . Our tax invoice compliance management
solutions provide customers with full-cycle tax invoice management functions, including tax
invoice processing and tax invoice compliance services. Revenue from tax invoice compliance
management solutions consisted primarily of subscription fees to access our solutions.
Revenue is recognized ratably over the term of the framework agreement, and subscription fees
are typically settled by customers annually.
Financial and tax management solutions . Our financial and tax management solutions
provide customers with enterprise spending management services, electronic accounting
archive services and tax filing management services. Revenue from financial and tax
management solutions typically consisted of subscription fees and usage-based fees. For
subscription fees, revenue is recognized ratably over the term of the framework agreement, and
the subscription fees are typically settled by customers annually. For usage-based fees, we
typically charge customers based on the number of invoices processed and/or processing
requests fulfilled.
Supply chain collaboration solutions . Our supply chain collaboration solutions provide
customers with reconciliation and billing management services and contingent workforce
management services. Revenue from supply chain collaboration solutions consisted of
subscription fees and volume-based fees. The subscription fee model applies to reconciliation
and billing management services, and customers have access to our services during the term of
the framework agreement. Subscription fees are typically settled by customers annually. The
volume-based fee model applies to contingent workforce management services, and we charge
customers based on the amount of remuneration settled with the individual service providers
using our services.
Solution delivery services . We generated revenue from providing solution delivery
services in relation to our cloud financial & tax digitalization solutions, which include (1)
implementation services charged based on a number of factors, including the number of
technical specialists staffed on a given project and the duration of the project, (2) hardware
equipment fees and (3) maintenance fees.
Revenue Generated from Data-driven analytics Services
In 2021, 2022 and 2023, we generated revenue from our data-driven analytics services of
RMB178.6 million, RMB263.5 million and RMB352.4 million, respectively, accounting for
39.4%, 50.1% and 49.4% of our total revenue in the same periods, respectively. Our
data-driven analytics services primarily comprise digital precision marketing services and risk
management services.
FINANCIAL INFORMATION
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Digital precision marketing services . In 2021, 2022 and 2023, we generated revenue from
our digital precision marketing services of RMB94.6 million, RMB170.2 million and
RMB210.2 million, respectively, accounting for 20.9%, 32.4% and 29.5% of our total revenue
in the same periods, respectively. For digital precision marketing services, we charge financial
service providers based on the value of financial products that we facilitate in selling.
Risk management services . Our risk management services primarily comprise enterprise
operation reporting services, user analytics services, risk analytics services, and procurement
optimization services. In 2021, 2022 and 2023, we generated revenue from our risk
management services of RMB84.0 million, RMB93.3 million and RMB142.2 million,
respectively, accounting for 18.5%, 17.7% and 19.9% of our total revenue in the same periods,
respectively. We generated a substantial portion of the revenue from our risk management
services from the provision of our enterprise operation reporting services during the Track
Record Period. For enterprise operation reporting services delivered pursuant to the pre-
adjustment service delivery model, we charge financial service providers primarily based on
the number of enterprises included in the enterprise operation reports. To a lesser extent, we
also provide annual subscription package under the pre-adjustment service delivery model, for
which financial service providers pay a fixed fee for a pre-determined number of enterprises
to be included the enterprise operation reports during the subscription period. For enterprise
operation reporting services delivered pursuant to the adjusted service delivery model, we
receive service fees from licensed credit reporting agencies, equal to the product of a
pre-determined ratio as agreed between us and the licensed credit reporting agencies and the
service fees received by licensed credit reporting agencies from the relevant financial service
providers. For user analytics services, we charge financial service providers based on the
number of enterprises on the list of potential financial product users. For our risk analytics
services, we primarily charge a project-based fee.
Revenue Generated from On-premises Financial & Tax Digitalization Solutions
In 2021, 2022 and 2023, we generated revenue from our on-premises financial & tax
digitalization solutions of RMB110.2 million, RMB93.5 million and RMB138.1 million,
respectively, accounting for 24.3%, 17.8% and 19.4% of our total revenue in the same periods,
respectively. We charge (1) software license fees for customers to access and use our solutions,
(2) implementation and maintenance service fees, and (3) hardware equipment purchase fees.
FINANCIAL INFORMATION
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--- page 369 ---
Revenue Generated from Other Services
Other services include primarily advertisement publishing services, which are charged
with performance fee based on the number of clicks on the advertisement published on our
WeChat official accounts and e-invoice review portal or, to a lesser extent, a fixed fee for the
duration of the service period. In 2021, 2022 and 2023, we generated revenue from our other
services of RMB8.4 million, RMB10.8 million and RMB2.9 million, respectively, accounting
for 1.8%, 2.0% and 0.4% of our total revenue in the same periods, respectively.
Cost of Sales
Our cost of sales primarily consisted of (1) referral fees, representing fees paid to our
marketing agents for digital precision marketing services, (2) staff costs, consisting of salaries
and other employee benefits for our product and operations personnel, (3) cloud service fees,
representing primarily costs associated with leased cloud infrastructure that supports the
operation of our cloud solutions, (4) hardware costs, (5) share-based payment expenses arising
from the grants of share economic rights in our share incentive platforms to our product and
operations personnel, and (6) other costs. Our cost of sales was RMB237.6 million, RMB311.5
million and RMB431.0 million in 2021, 2022 and 2023, respectively. The following table sets
forth a breakdown of our cost of sales by nature, both in absolute amount and as a percentage
of total cost of sales, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Referral fees 64,204 27.0 153,605 49.3 193,423 44.9
Staff costs 86,349 36.3 84,607 27.2 125,160 29.0
Cloud service fees 43,080 18.1 47,040 15.1 69,250 16.1
Share-based payment
expenses 18,719 7.9 2,031 0.6 13,297 3.1
Hardware costs 11,307 4.8 8,105 2.6 7,827 1.8
Others
(1) 13,941 5.9 16,087 5.2 22,008 5.1
Total 237,600 100.0 311,475 100.0 430,965 100.0
(1) Includes primarily depreciation and amortization in relation to intangible assets, property, plant and
equipment, right-of-use assets, and information security hardware, traveling expenses, and outsourcing
expenses.
FINANCIAL INFORMATION
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--- page 370 ---
During the Track Record Period, we incurred significant referral fees of RMB64.2
million, RMB153.6 million and RMB193.4 million in 2021, 2022 and 2023, respectively,
primarily due to the expansion of the business scale of our digital precision marketing services
and our continual engagement of marketing agents. The number of financial product users
referred by marketing agents that ultimately submitted applications for financial products was
109.7 thousand, 160.9 thousand and 182.9 thousand in 2021, 2022 and 2023, respectively.
Financial product users typically prefer credit facility products over loan products, primarily
because credit facility products can more flexibly meet financial product users’ financing needs
in terms of borrowing amounts and interest rates. Due to such market preference, a majority
of our revenue from digital precision marketing services was attributable to credit facility
products, and the value of credit facility products that we facilitated in selling continuously
increased during the Track Record Period and was RMB10.9 billion, RMB25.8 billion and
RMB39.4 billion in 2021, 2022 and 2023, respectively, accounting for 74.3%, 87.3% and
94.8% of the total value of financial products that we facilitated in selling in the same periods,
respectively. Our average referral fee ratio for credit facility products with marketing agents
was 0.37%, 0.51% and 0.47% in 2021, 2022 and 2023, respectively. Our average referral fee
ratio for loan products with marketing agents was 0.71%, 0.78% and 0.77% in 2021, 2022 and
2023, respectively.
Our hardware costs generally decreased, primarily because the continuous
implementation of the Golden Tax Project and the digital invoice reform gradually lowered
enterprise needs for information security hardware for invoice issuance purposes after the
adoption of digital invoices.
The following table sets forth a breakdown of our cost of sales by business lines, both in
absolute amount and as a percentage of total cost of sales, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 74,314 31.3 70,745 22.7 99,544 23.1
Data-driven analytics
services 87,777 36.9 175,156 56.2 227,838 52.9
On-premises financial & tax
digitalization solutions 74,430 31.3 62,898 20.2 100,999 23.4
Others 1,079 0.5 2,676 0.9 2,584 0.6
Total 237,600 100.0 311,475 100.0 430,965 100.0
FINANCIAL INFORMATION
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--- page 371 ---
Gross Profit and Gross Profit Margin
Our gross profit was RMB216.2 million, RMB214.3 million and RMB282.0 million in
2021, 2022 and 2023, respectively, representing a gross profit margin of 47.6%, 40.8% and
39.6% in the same periods, respectively. The following table sets forth a breakdown of our
gross profit and gross profit margin by business lines for the periods indicated.
Y ear ended December 31,
2021 2022 2023
Gross
profit
Gross
Profit
Margin
(%)
Gross
profit
Gross
Profit
Margin
(%)
Gross
profit
Gross
Profit
Margin
(%)
(RMB in thousands except for percentages)
Cloud financial & tax
digitalization solutions 82,301 52.5 87,251 55.2 119,995 54.7
Data-driven analytics services 90,820 50.9 88,363 33.5 124,587 35.4
— Digital precision
marketing services 29,073 30.7 14,377 8.4 14,742 7.0
— Risk management
services 61,747 73.5 73,986 79.3 109,845 77.2
On-premises financial & tax
digitalization solutions 35,738 32.4 30,593 32.7 37,133 26.9
Others 7,304 87.1 8,083 75.1 316 10.9
Total 216,163 47.6 214,290 40.8 282,031 39.6
The gross profit margin for digital precision marketing services decreased from 30.7% in
2021 to 8.4% in 2022 and further to 7.0% in 2023, primarily due to the increase in sales of
credit facility products facilitated by us, which typically had a lower profit margin.
FINANCIAL INFORMATION
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--- page 372 ---
Other Income
Our other income primarily consisted of tax refund in the form of additional deduction
from V A T payable allowed for by government authorities during the Track Record Period. We
recorded other income of RMB2.7 million, RMB9.9 million and RMB4.0 million in 2021, 2022
and 2023, respectively. The following table sets forth a breakdown of our other income, both
in absolute amount and as a percentage of total other income, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Tax refund 1,688 62.5 5,365 54.3 2,091 51.8
Government grants 1,010 37.4 4,206 42.6 1,944 48.2
Others 2 0.1 304 3.1 — —
Total 2,700 100.0 9,875 100.0 4,035 100.0
Impairment Losses under ECL model, Net of Reversal
Our impairment losses under ECL model, net of reversal, primarily related to our trade
receivables, other receivables and contract assets. Our impairment losses under ECL model, net
of reversal, were RMB1.8 million, RMB1.2 million and RMB5.8 million in 2021, 2022 and
2023, respectively.
Other Gains and Losses
Our other gains and losses primarily consisted of (1) gain on partial disposal of
investment in an associate, (2) loss on disposal of property, plant and equipment, and (3)
provisions in connection with certain ongoing litigations. We recorded other losses of RMB1.3
million, RMB2.3 million and RMB1.4 million in 2021, 2022 and 2023, respectively.
FINANCIAL INFORMATION
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--- page 373 ---
Research and Development Expenses
Our research and development expenses primarily consisted of (1) staff costs,
representing wages, salaries and other benefits for our R&D personnel, (2) share-based
payment expenses, arising from the grants of share economic rights in our share incentive
platforms to our R&D personnel, and (3) depreciation and amortization, representing the
depreciation of our R&D equipment and facilities and right-of-use assets representing office
premises of our R&D department and the amortization of the software used in our R&D
activities. Our research and development expenses, as a percentage of our total revenue, were
30.4%, 27.4% and 26.4% in 2021, 2022 and 2023, respectively. The following table sets forth
a breakdown of our research and development expenses, both in absolute amount and as a
percentage of total research and development expenses, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Staff costs 113,171 82.1 126,956 88.0 145,112 77.2
Share-based payment
expenses 14,428 10.5 4,775 3.3 30,322 16.1
Depreciation and
amortization 5,512 4.0 5,272 3.7 5,106 2.7
Others (1) 4,666 3.4 7,278 5.0 7,416 3.9
Total 137,777 100.0 144,281 100.0 187,956 100.0
(1) Includes primarily outsourcing expenses, rental expenses, office expenses, professional service fees, and
traveling expenses.
FINANCIAL INFORMATION
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--- page 374 ---
Administrative Expenses
Our administrative expenses primarily consisted of (1) share-based payment expenses,
arising from the grants of share economic rights in our share incentive platforms to our
administrative personnel, (2) staff costs, representing wages, salaries and other benefits for our
administrative personnel, (3) traveling and promotion expenses incurred by our administrative
personnel, (4) professional service fees for legal counsels and tax consultants, (5) rental
expenses, (6) office expenses, (7) outsourcing expenses, and (8) depreciation and amortization,
representing the depreciation of our equipment and facilities used by, and right-of-use assets
representing office premises of, our administrative department and the amortization of the
software used in our administrative activities. Our administrative expenses, as a percentage of
our total revenue, were 30.2%, 14.0% and 23.7% in 2021, 2022 and 2023, respectively. The
following table sets forth a breakdown of our administrative expenses, both in absolute amount
and as a percentage of total administrative expenses, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Share-based payment
expenses 82,744 60.4 2,288 3.1 80,234 47.5
Staff costs 35,362 25.8 42,873 58.3 59,182 35.0
Traveling and
promotion expenses 4,746 3.5 7,942 10.8 9,263 5.6
Professional service
fees 7,870 5.7 6,608 9.0 5,118 3.0
Rental expenses 1,859 1.4 3,965 5.4 5,154 3.0
Office expenses 1,938 1.4 2,899 3.9 3,600 2.1
Outsourcing expenses 201 0.1 4,475 6.1 3,100 1.8
Depreciation and
amortization 1,701 1.2 1,729 2.4 2,448 1.4
Others 670 0.5 725 1.0 991 0.6
Total 137,091 100.0 73,504 100.0 169,090 100.0
FINANCIAL INFORMATION
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--- page 375 ---
Distribution and Selling Expenses
Our distribution and selling expenses primarily consisted of (1) share-based payment
expenses, arising from the grants of share economic rights in our share incentive platforms to
our sales personnel, (2) staff costs, representing wages, salaries and other benefits for our
distribution and selling personnel, (3) traveling and marketing expenses, representing expenses
incurred by our sales personnel for distribution and selling activities, (4) commission fees paid
to business collaborators for marketing and promoting our cloud financial & tax digitalization
solutions, and (5) depreciation, representing the depreciation of our equipment and facilities
used by our sales department and right-of-use assets representing office premises of our sales
department. Our distribution and selling expenses as a percentage of our total revenue, was
29.2%, 18.8% and 28.4% in 2021, 2022 and 2023, respectively. The following table sets forth
a breakdown of our distribution and selling expenses, both in absolute amount and as a
percentage of total distribution and selling expenses, for the periods indicated.
Y ear ended December 31,
2021 2022 2023
RMB % RMB % RMB %
(RMB in thousands except for percentages)
Share-based payment
expenses 45,527 34.3 1,375 1.4 67,211 33.2
Staff costs 64,424 48.5 67,304 68.1 98,010 48.3
Traveling and
marketing expenses 11,406 8.6 13,562 13.7 19,331 9.5
Commission fees 6,568 4.9 9,055 9.2 8,559 4.2
Depreciation 3,385 2.6 3,696 3.7 3,889 1.9
Others
(1) 1,415 1.1 3,884 3.9 5,821 2.9
Total 132,725 100.0 98,876 100.0 202,821 100.0
(1) Includes primarily office and rental expenses, outsourcing expenses, and professional service fees.
Listing Expenses
Our listing expenses represented professional fees and related expenses incurred in
connection with this Global Offering. In 2021, 2022 and 2023, we incurred RMB6.4 million,
RMB16.3 million and RMB24.1 million in listing expenses, respectively.
FINANCIAL INFORMATION
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--- page 376 ---
Finance Income
Our finance income represented primarily interest income arising from bank deposits. We
recorded finance income of RMB10.6 million, RMB10.3 million and RMB6.9 million in 2021,
2022 and 2023, respectively.
Finance Costs
Our finance costs represented primarily interest expenses on lease liabilities. We recorded
finance costs of RMB0.2 million, RMB1.6 million and RMB1.0 million in 2021, 2022 and
2023, respectively.
Fair Value Changes of Financial Assets and Liabilities at FVTPL
Our financial assets at FVTPL were (1) wealth management products issued by banks, (2)
investments in associates with preferential rights, and (3) arrangement/right to receive
additional shares at nominal consideration. Our financial liabilities at FVTPL primarily
represented our shares with preferential rights issued to investors. We recorded fair value
losses of financial assets and liabilities at FVTPL of RMB265.5 million, RMB53.5 million and
RMB55.9 million in 2021, 2022 and 2023, respectively.
Share of Results of Associates and Joint Ventures
We recorded share of results of associates and joint ventures of RMB5.0 million, RMB1.1
million and RMB4.0 million in 2021, 2022 and 2023, respectively.
Income Tax Expenses
Pursuant to the EIT Law and related regulations, enterprises which operate in China are
generally subject to enterprise income tax at a rate of 25% on the taxable profit. Enterprises
recognized as a “High and New Technology Enterprise” (“HNTE”) are entitled to a preferential
tax rate of 15% for three years as long as the HNTE status is valid, and qualifying entities may
re-apply for an additional three years provided that their business operations continue to
qualify for the HNTE status. Baiwang Co., Ltd. was recognized as an HNTE in 2019 and in
2022 for a term of three years from 2019 to 2021 and from 2022 to 2025, respectively. As a
result, Baiwang Co., Ltd. was subject to the preferential tax rate of 15% during the Track
Record Period.
FINANCIAL INFORMATION
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--- page 377 ---
In addition, according to relevant laws and regulations promulgated by the State Council,
enterprises engaging in R&D activities are entitled to claim 150% of their research and
development expenses so incurred as tax deductible expenses when determining their
assessable profits for that year (“Super Deduction”). The SA T announced that enterprises
engaging in R&D activities shall be entitled to claim 175% of their research and development
expenses as Super Deduction from January 1, 2018 to December 31, 2020, which was further
extended to December 31, 2023. From October 1, 2022 to December 31, 2022, the Super
Deduction ratio has increased to 200%. We have made our best estimate for the Super
Deduction to be claimed in ascertaining assessable profits. For the risks relating to preferential
tax treatments, see “Risk Factors—Risks Relating to Our Business and Industry—Preferential
tax treatments and government grants currently available to us in the PRC could be
discontinued or reduced.”
We recorded income tax expenses of nil, RMB0.2 million and RMB0.1 million in 2021,
2022 and 2023, respectively. Our effective tax rate, representing income tax expense divided
by loss before taxation, was nil, 0.1% and 0.0% in 2021, 2022 and 2023, respectively, primarily
due to our loss before tax and the preferential tax treatment enjoyed by us. During the Track
Record Period and up to the Latest Practicable Date, we had paid all relevant taxes and there
were no matters in dispute or unresolved with the relevant tax authorities.
Loss for the Y ear
As a result of the foregoing, we recorded net loss of RMB448.4 million, RMB156.2
million and RMB359.3 million in 2021, 2022 and 2023, respectively.
PERIOD TO PERIOD COMPARISON OF RESULTS OF OPERATIONS
Y ear Ended December 31, 2023 Compared to Y ear Ended December 31, 2022
Revenue
Our revenue increased by 35.6% from RMB525.8 million in 2022 to RMB713.0 million
in 2023.
Cloud financial & tax digitalization solutions . Revenue generated from cloud financial &
tax digitalization solutions increased from RMB158.0 million in 2022 to RMB219.5 million in
2023, primarily due to the increase in the number of KA customers from 217 in 2022 to 366
in 2023 and the increase in the number of mid-market customers from 14,591 in 2022 to 20,734
in 2023, as a result of increasing market demand of our solutions.
Data-driven analytics services . Revenue generated from data-driven analytics services
increased by 33.7% from RMB263.5 million in 2022 to RMB352.4 million in 2023, primarily
because (1) revenue generated from digital precision marketing services increased by 23.5%,
primarily due to the increase in the value of financial products we facilitated in selling from
RMB29.6 billion in 2022 to RMB41.6 billion in 2023, and (2) revenue generated from risk
FINANCIAL INFORMATION
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management services increased by 52.5%, primarily as a result of the increase in the number
of enterprises included in our enterprise operation reports from 1.6 million in 2022 to 2.6
million in 2023, driven by increasing customer demand and the nationwide promotion of SMB
financing.
On-premises financial & tax digitalization solutions . Our revenue generated from
on-premises financial & tax digitalization solutions increased by 47.7% from RMB93.5 million
in 2022 to RMB138.1 million in 2023, primarily due to the increase in the number of customers
from 1,309 in 2022 to 2,051 in 2023 and the increase in solution deliveries.
Others . Our revenue generated from other services decreased by 73.0% from RMB10.8
million in 2022 to RMB2.9 million in 2023, primarily due to our strategic adjustment of
business focus on our other solutions.
Cost of sales
Our cost of sales increased by 38.4% from RMB311.5 million in 2022 to RMB431.0
million in 2023.
Cloud financial & tax digitalization solutions . Our cost of sales relating to cloud financial
& tax digitalization solutions increased by 40.7% from RMB70.7 million in 2022 to RMB99.5
million in 2023, primarily due to the increase in associated cloud service fees as a result of the
increase in our service usage and the increase in associated staff costs due to the increase in
staff headcount.
Data-driven analytics services . Our cost of sales relating to data-driven analytics services
increased by 30.1% from RMB175.2 million in 2022 to RMB227.8 million in 2023, primarily
due to the increase in our referral fees from RMB153.6 million in 2022 to RMB193.4 million
in 2023, which was consistent with the growth in the business scale of our digital precision
marketing services.
On-premises financial & tax digitalization solutions . Our cost of sales relating to
on-premises financial & tax digitalization solutions increased by 60.6% from RMB62.9 million
in 2022 to RMB101.0 million in 2023, primarily due to the increase in staff costs associated
with on-premises solutions.
Others . Our cost of sales relating to other services remained relatively stable at RMB2.7
million in 2022 and RMB2.6 million in 2023.
Gross profit and gross profit margin
Our gross profit increased by 31.6% from RMB214.3 million in 2022 to RMB282.0
million in 2023, and our gross profit margin slightly decreased from 40.8% in 2022 to 39.6%
in 2023.
FINANCIAL INFORMATION
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Cloud financial & tax digitalization solutions . Our gross profit margin for cloud financial
& tax digitalization solutions remained relatively stable at 55.2% in 2022 and 54.7% in 2023.
Data-driven analytics services . Our gross profit margin for data-driven analytics services
increased from 33.5% in 2022 to 35.4% in 2023, primarily due to the increase in revenue
contribution of our risk management services, which had a higher profit margin than other
data-driven analytics services. We also experienced a decrease in the gross profit margin of our
digital precision marketing services from 8.4% in 2022 to 7.0% in 2023, primarily because the
growth of referral fee outpaced that of revenue in the same period.
On-premises financial & tax digitalization solutions . Our gross profit margin for
on-premises financial & tax digitalization solutions decreased from 32.7% in 2022 to 26.9% in
2023, primarily because the increase in costs of sales outpaced our revenue growth for
on-premises solutions, due to the combined effects of (1) significant increases in staff costs and
share-based payment expenses incurred in connection with the recruitment of product and
operations personnel for the implementation of digital invoice reform, and (2) our downward
adjustment of solution pricing to incentivize purchases from large and mid-sized enterprises.
As a result, average revenue per customer decreased from RMB71.4 thousand in 2022 to
RMB67.3 thousand in 2023, while the number of customers increased from 1,309 in 2022 to
2,051 in 2023. See “Business—Sustainability of Our Business—Leveraging Market
Opportunities and Favorable Government Policies to Grow Our Financial & Tax Digitalization
Solutions” for details.
Others . Our gross profit margin for other services decreased from 75.1% in 2022 to 10.9%
in 2023, primarily due to the revenue decrease of our advertisement publishing services.
Other income
Our other income decreased from RMB9.9 million in 2022 to RMB4.0 million in 2023,
primarily due to (1) a decrease of RMB3.3 million in tax refund, as a result of the change of
the preferential V A T deduction policy in 2023, and (2) a decrease of RMB2.3 million in
government grant, as the grants from Chongqing Fuling Comprehensive Free Trade in relation
to our contribution to a local digital economy platform project were pending government
review in 2023.
Impairment losses under ECL model, net of reversal
Our impairment losses under ECL model, net of reversal, increased from RMB1.2 million
in 2022 to RMB5.8 million in 2023, primarily due to the increase in impairment losses related
to our contract assets and trade receivables.
Other gains and losses
Our other losses decreased by 41.0% from RMB2.3 million in 2022 to RMB1.4 million
in 2023, primarily because we made certain one-off provisions of litigations and one-time
donation in 2022.
FINANCIAL INFORMATION
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Research and development expenses
Our research and development expenses increased by 30.3% from RMB144.3 million in
2022 to RMB188.0 million in 2023, primarily due to (1) an increase of RMB25.5 million in
share-based payment expenses for our R&D personnel, and (2) an increase of RMB18.2 million
in staff costs, as a result of the increase in the headcount in our R&D department.
Administrative expenses
Our administrative expenses increased significantly from RMB73.5 million in 2022 to
RMB169.1 million in 2023, primarily due to (1) an increase of RMB77.9 million in share-based
payment expenses for our administrative and management personnel, and (2) an increase of
RMB16.3 million in staff costs, as a result of the increase in the headcount in our
administrative department.
Distribution and selling expenses
Our distribution and selling expenses increased significantly from RMB98.9 million in
2022 to RMB202.8 million in 2023, primarily due to (1) an increase of RMB65.8 million in
share-based payment expenses for our sales personnel, (2) an increase of RMB30.7 million in
staff costs, as a result of the increase in headcount in our sales and marketing department, and
(3) an increase of RMB5.8 million in travelling and marketing fees, due to our enhanced
marketing efforts to promote our solutions and services.
Finance income
Our finance income decreased from RMB10.3 million in 2022 to RMB6.9 million in
2023, primarily due to a decrease of RMB2.8 million in interest income from bank deposits.
Finance costs
Our finance costs decreased from RMB1.6 million in 2022 and RMB1.0 million in 2023,
due to a decrease of RMB0.5 million in interest expenses on lease liabilities.
Fair value changes of financial assets and liabilities at FVTPL
Our fair value losses of financial assets and liabilities at FVTPL increased from RMB53.5
million in 2022, to RMB55.9 million in 2023, primarily due to (1) an increase of RMB1.5
million in fair value loss in relation to our shares with preferential rights from RMB59.2
million in 2022 to RMB60.7 million in 2023, and (2) a change from fair value gain of RMB0.6
million in 2022 to a fair value loss of RMB8.7 million in 2023, in relation to our investments
in associates with preferential rights, as a result of downward adjustment of valuation of our
certain associate.
FINANCIAL INFORMATION
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Share of results of associates and joint ventures
Our share of profits of associates and joint ventures was RMB1.1 million in 2022, as
compared to our share of loss of associates and joint ventures of RMB4.0 million in 2023,
primarily due to the decrease in profit of our associates and joint ventures.
Income tax expenses
Our income tax expenses decreased from RMB0.2 million in 2022 to RMB0.1 million in
2023, primarily due to the decrease of deferred tax in relation to certain financial assets.
Loss for the year
As a result of the above, our net loss was RMB156.2 million and RMB359.3 million in
2022 and 2023, respectively, and our net loss margin increased from 29.7% in 2022 to 50.4%
in 2023.
Y ear Ended December 31, 2022 Compared to Y ear Ended December 31, 2021
Revenue
Our revenue increased by 15.9% from RMB453.8 million in 2021 to RMB525.8 million
in 2022.
Cloud financial & tax digitalization solutions . Revenue generated from cloud financial &
tax digitalization solutions remained relatively stable at RMB156.6 million and RMB158.0
million in 2021 and 2022, respectively.
Data-driven analytics services . Revenue generated from data-driven analytics services
increased by 47.5% from RMB178.6 million in 2021 to RMB263.5 million in 2022, primarily
because (1) revenue generated from digital precision marketing services increased by 79.9%
primarily due to the increase in the value of financial products we facilitated in selling from
RMB14.7 billion in 2021 to RMB29.6 billion in 2022, which was partially driven by the
increase in the number of financial service providers that engaged our services, and (2) revenue
generated from risk management services increased by 11.1%, primarily as a result of the
increase in the number of enterprises included in our enterprise operation reports from 1.3
million in 2021 to 1.6 million in 2022, driven by increasing customer demand and the
nationwide promotion of SMB financing.
FINANCIAL INFORMATION
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On-premises financial & tax digitalization solutions . Our revenue generated from
on-premises financial & tax digitalization solutions decreased by 15.2% from RMB110.2
million in 2021 to RMB93.5 million in 2022, primarily because (1) we downwardly adjusted
the price of our on-premises solutions to attract mid-market customers and retain existing
customers amid the COVID-19 pandemic, and (2) we experienced temporary delays in solution
delivery in 2022 due to the impact of the COVID-19 pandemic.
Others . Our revenue generated from other services increased by 28.6% from RMB8.4
million in 2021 to RMB10.8 million in 2022, primarily due to the increase in customer demand
for our advertisement publishing services.
Cost of sales
Our cost of sales increased by 31.1% from RMB237.6 million in 2021 to RMB311.5
million in 2022.
Cloud financial & tax digitalization solutions . Our cost of sales relating to cloud financial
& tax digitalization solutions decreased by 4.8% from RMB74.3 million in 2021 to RMB70.7
million in 2022, primarily because we recognized greater share-based payment expenses
incurred in connection with the share economic rights in our share incentive platforms newly
granted to our management overseeing our products and operations in 2021, which were vested
in the same year.
Data-driven analytics services . Our cost of sales relating to data-driven analytics services
increased significantly from RMB87.8 million in 2021 to RMB175.2 million in 2022, primarily
due to the increase in referral fees paid to our marketing agents in relation to our digital
precision marketing services. For credit facility products launched by financial service
providers, our referral fee ratios with marketing agents typically ranged from 0.3% to 0.69%
in 2021, as compared to 0.1% to 0.72% in 2022. For loan products launched by financial
service providers, our referral fee ratios with marketing agents typically ranged from 0.05% to
1.18% in 2021, as compared to 0.17% to 1.6% in 2022.
On-premises financial & tax digitalization solutions . Our cost of sales relating to
on-premises financial & tax digitalization solutions decreased by 15.5% from RMB74.4
million in 2021 to RMB62.9 million in 2022, generally in line with the revenue decrease of our
on-premises financial & tax digitalization solutions.
Others . Our cost of sales relating to other services increased from RMB1.1 million in
2021 to RMB2.7 million in 2022, primarily due to increases in staff costs associated with
advertisement publishing services.
FINANCIAL INFORMATION
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Gross profit and gross profit margin
Our gross profit remained relatively stable at RMB216.2 million in 2021 and RMB214.3
million in 2022, and our gross profit margin decreased from 47.6% in 2021 to 40.8% in 2022.
Cloud financial & tax digitalization solutions . Our gross profit margin for cloud financial
& tax digitalization solutions increased from 52.5% in 2021 to 55.2% in 2022, primarily due
to the impact of a decrease in share-based payment expenses in 2022.
Data-driven analytics services . Our gross profit margin for data-driven analytics services
decreased from 50.9% in 2021 to 33.5% in 2022, primarily due to a higher revenue contribution
of our digital precision marketing services in 2022. We experienced a decrease in the gross
profit margin of our digital precision marketing services in 2022, as the growth of referral fees
outpaced that of revenue in the same period, primarily due to an increase in our average fee
ratio with marketing agents. The value of credit facility products that we facilitated in selling
increased from RMB10.9 billion in 2021 to RMB25.8 billion in 2022, accounting for 74.3%
and 87.3% of the total value of financial products we facilitated in selling in 2021 and 2022,
respectively. This change in the product mix underlying our digital precision marketing
services drove up the increase of our referral fees, as the sales of credit facility products
typically had a lower profit margin. The average referral fee ratio with marketing agents for
such credit facility products increased from 0.37% in 2021 to 0.51% in 2022, which contributed
to the decrease in the gross profit margin of our digital precision marketing services in 2022.
Meanwhile, the average referral fee ratio with marketing agents for loan products we facilitated
in selling also increased from 0.71% in 2021 to 0.78% in 2022, and the value of loan products
that we facilitated in selling remained relatively stable at RMB3.8 billion in 2021 and RMB3.7
billion in 2022. The intensified market competition also drove the increase in our fee ratios
with marketing agents, in order for us to continue to deepen engagement with our marketing
agents.
On-premises financial & tax digitalization solutions . Our gross profit margin for
on-premises financial & tax digitalization solutions remained relatively stable at 32.4% in 2021
and 32.7% in 2022.
Others . Our gross profit margin for other services decreased from 87.1% in 2021 to 75.1%
in 2022, primarily because the increase in cost of sales of other services outpaced the increase
in revenue from other services.
Other income
Our other income increased significantly from RMB2.7 million in 2021 to RMB9.9
million in 2022, primarily due to (1) an increase of RMB3.7 million in tax refund, as a result
of the increase in our deductible input V A T, driven by increases in purchases of services,
hardware and other office equipment, and (2) an increase of RMB3.2 million in government
grants, representing an increase in grants from Chongqing Fuling Comprehensive Free Trade
Zone of RMB1.6 million in relation to our contribution to a local digital economy platform
project and an increase in RMB1.6 million for government subsidies from Beijing Municipal
Bureau of Economy and Information Technology.
FINANCIAL INFORMATION
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Impairment losses under ECL model, net of reversal
Our impairment losses under ECL model, net of reversal, were RMB1.8 million and
RMB1.2 million in 2021 and 2022, respectively.
Other gains and losses
Our other losses increased by 76.9% from RMB1.3 million in 2021 to RMB2.3 million
in 2022, primarily due to the decrease in gain on partial disposal of investment in an associate
of RMB1.6 million.
Research and development expenses
Our research and development expenses increased by 4.7% from RMB137.8 million in
2021 to RMB144.3 million in 2022, primarily due to an increase of RMB13.8 million in staff
costs, as a result of the increase in the headcount in our R&D department, partially offset by
a decrease of RMB9.7 million in share-based payment expenses for our R&D personnel.
Administrative expenses
Our administrative expenses decreased by 46.4% from RMB137.1 million in 2021 to
RMB73.5 million in 2022, primarily due to a decrease of RMB80.5 million in share-based
payment expenses for our administrative and management personnel, partially offset by an
increase of RMB7.5 million in staff costs, as a result of an increase in the overall compensation
level of our administrative department.
Distribution and selling expenses
Our distribution and selling expenses decreased by 25.5% from RMB132.7 million in
2021 to RMB98.9 million in 2022, primarily due to the decrease of RMB44.2 million in
share-based payment expenses for our sales personnel, partially offset by (1) an increase of
RMB2.9 million in staff costs, as a result of the increases in the headcount and the overall
compensation level in our sales and marketing department, and (2) an increase of RMB2.5
million in commission fees, primarily due to the increase in the number of our business
collaborators.
Finance income
Our finance income remained relatively stable at RMB10.6 million in 2021 and RMB10.3
million in 2022.
FINANCIAL INFORMATION
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Finance costs
Our finance costs increased significantly from RMB0.2 million in 2021 to RMB1.6
million in 2022, representing the increase in interest expense on lease liabilities, primarily due
to the renewal of our office lease.
Fair value changes of financial assets and liabilities at FVTPL
Our fair value losses of financial assets and liabilities at FVTPL decreased by 79.9% from
RMB265.5 million in 2021 to RMB53.5 million in 2022, primarily due to the decrease in fair
value loss in relation to our shares with preferential rights from RMB263.9 million in 2021 to
RMB59.2 million in 2022. Furthermore, we recorded fair value changes of financial assets at
FVTPL from fair value losses of RMB1.7 million in 2021 to fair value gains of RMB6.0
million in 2022 due to the increase in fair value of investment in associates with preferential
rights and wealth management products.
Share of results of associates and joint ventures
Our share of profit of associates and joint ventures decreased by 78.0% from RMB5.0
million to RMB1.1 million, primarily due to the decrease in profit of our associates and joint
ventures.
Income tax expenses
Our income tax expenses increased from nil in 2021 to RMB0.2 million in 2022, primarily
because an operating subsidiary incurred income tax expenses in 2022.
Loss for the year
As a result of the above, our net loss was RMB448.4 million and RMB156.2 million in
2021 and 2022, respectively, and our net loss margin decreased from 98.8% in 2021 to 29.7%
in 2022.
FINANCIAL INFORMATION
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DISCUSSION OF MAJOR ITEMS OF CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
The following table sets forth details of our summary consolidated statements of financial
position as of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Non-current assets
Property, plant and equipment 8,042 8,703 9,949
Right-of-use assets 36,408 24,609 15,103
Intangible assets 7,644 6,961 6,502
Investments in associates 75,171 87,027 88,378
Investments in joint ventures 9,739 10,845 2,792
Deposits paid for investment in an
associate 5,200 — —
Financial assets at FVTPL 19,440 39,487 32,434
Contract costs 36,471 38,088 38,181
Contract assets 1,239 161 257
Long-term bank deposits 103,027 106,427 —
Prepayments 671 — —
303,052 322,308 193,596
Current assets
Inventories 8,972 10,992 3,681
Contract costs 18,245 42,026 47,104
Contract assets 68,836 77,891 70,459
Trade and other receivables, deposits
and prepayments 78,332 85,188 104,428
Amounts due from related parties 19,260 3,631 17,336
Financial assets at FVTPL 218,856 400,900 268,230
Restricted bank deposits 515 103 2,177
Short-term bank deposits with
maturity over three months 104,785 80,472 109,827
Cash and cash equivalents 505,006 237,206 335,031
1,022,807 938,409 958,273
FINANCIAL INFORMATION
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As of December 31,
2021 2022 2023
(RMB in thousands)
Current liabilities
Lease liabilities 10,312 18,442 14,611
Trade and other payables 140,465 136,919 178,086
Tax liabilities — 31 60
Contract liabilities 130,631 165,476 122,744
Financial liabilities at FVTPL 216,650 2,151,922 2,212,629
Amounts due to related parties 14,020 11,052 24,043
512,078 2,483,842 2,552,173
Net current assets/(liabilities) 510,729 (1,545,433) (1,593,900)
Total assets less current liabilities 813,781 (1,223,125) (1,400,304)
Capital and reserves
Share capital 140,000 140,000 140,000
Reserves (1,226,267) (1,369,299) (1,536,215)
Deficits attributable to owners of the
Company (1,086,267) (1,229,299) (1,396,215)
Non-controlling interests (1,435) (4,158) (5,468)
Total deficits (1,087,702) (1,233,457) (1,401,683)
Non-current liabilities
Lease liabilities 25,364 7,354 1,379
Financial liabilities at FVTPL 1,876,119 2,830 —
Deferred tax liabilities — 148 —
1,901,483 10,332 1,379
Total deficits and non-current
liabilities 813,781 (1,223,125) (1,400,304)
FINANCIAL INFORMATION
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Property, Plant and Equipment
Our property, plant and equipment consisted of equipment, including office equipment,
electronic equipment, and special equipment, which was primarily information security
hardware, and leasehold improvement. We had property, plant and equipment of RMB8.0
million, RMB8.7 million and RMB9.9 million as of December 31, 2021, 2022 and 2023,
respectively. The following table sets forth the components of our property and equipment as
of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Equipment 7,789 7,326 8,453
Leasehold improvement 253 1,377 1,496
Total 8,042 8,703 9,949
Our property, plant and equipment increased from RMB8.0 million as of December 31,
2021 to RMB8.7 million as of December 31, 2022, primarily due to the increase in leasehold
improvement primarily as a result of our office renovation, partially offset by depreciation. Our
property, plant and equipment then increased to RMB9.9 million as of December 31, 2023,
primarily due to our purchase of electronic and special equipment, partially offset by
depreciation.
Right-of-use Assets
Our right-of-use assets primarily consisted of leased offices. Our right-of-use assets
decreased from RMB36.4 million as of December 31, 2021 to RMB24.6 million as of
December 31, 2022, primarily due to depreciation. Our right-of-use assets then decreased to
RMB15.1 million as of December 31, 2023, primarily due to depreciation.
Intangible Assets
Our intangible assets primarily consisted of software and patents. Our intangible assets
decreased from RMB7.6 million as of December 31, 2021 to RMB7.0 million as of December
31, 2022, and further decreased to RMB6.5 million primarily due to amortization.
FINANCIAL INFORMATION
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Investments in Associates
Our investments in associates comprised cost of investments in associates and share of
post-acquisition profit or loss. Our investments in associates increased from RMB75.2 million
as of December 31, 2021 to RMB87.0 million as of December 31, 2022, primarily due to our
investment in Beijing Baiwang Intelligent Finance and Taxation Technology Co., Ltd. and
Guangxi United Credit Reporting Co., Ltd. Our investments in associates remained relatively
stable at RMB88.4 million as of December 31, 2023.
Investments in Joint Ventures
Our investments in joint ventures comprised cost of investments in joint ventures and
share of post-acquisition profit or loss. Our investments in joint ventures increased from
RMB9.7 million as of December 31, 2021 to RMB10.8 million as of December 31, 2022,
primarily due to our share of profit in joint ventures. Our investments in joint ventures then
decreased to RMB2.8 million as of December 31, 2023, primarily due to our disposal of the
entire 40% interest in Baiwang Jinshui Technology Co., Ltd. in October 2023.
Deposits Paid for Investment in an Associate
Deposits paid for investment in an associate represented investment deposits of RMB5.2
million that we paid in September 2021 to acquire certain equity interests in Beijing Baiwang
Intelligent Finance and Taxation Technology Co., Ltd.
Prepayments
Our prepayments consisted of prepayments for the intangible assets and listing expenses
for professional fees and related expenses incurred in connection with this Global Offering.
Our prepayments of RMB0.7 million as of December 31, 2021 represented prepayments of
listing expenses incurred in connection with this Global Offering. We did not incur such
prepayments in 2022 and 2023.
Inventories
Our inventories consisted primarily of information security hardware, including physical
servers, for the implementation of our financial & tax digitalization solutions. We recorded
inventories of RMB9.0 million, RMB11.0 million and RMB3.7 million as of December 31,
2021, 2022 and 2023, respectively. The decrease in inventories in 2023 was primarily due to
a decrease of RMB6.0 million in goods in transit, as a result of delivery of inventories upon
projection completion, and our reduced purchase of information security hardware due to the
implementation of digital invoice reform.
FINANCIAL INFORMATION
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The following table sets forth the aging analysis of our inventories for the periods
indicated.
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Within 12 months 5,782 8,798 869
Over 12 months 3,190 2,194 2,812
Total 8,972 10,992 3,681
At the end of each reporting period, we assess the impairment of our inventories based
on the lower of the inventory cost and the net realizable value of such inventory, which is
determined with reference to market and policy factors. We also perform regular check on the
quantity and physical conditions of inventories and assess possible write-down for any
damaged inventories every six months. We consider our provision of impairment sufficient and
we do not believe we have any material recoverability issue for our inventories, as our
inventories are typically delivered together with the delivery of our on-premises financial &
tax digitalization solutions and during the Track Record Period, we had not encountered any
material impairment loss in relation to inventories. During the Track Record Period, we
recorded impairment losses in relation to our inventory of RMB0.9 million, RMB0.7 million
and RMB1.6 million, primarily due to implementation of digital invoice reform in 2023, which
has rendered some of the inventories obsolete.
As of April 30, 2024, approximately RMB0.2 million, or 5.1%, of our inventories as of
December 31, 2023 had been delivered. The relatively low inventory consumption rate was
primarily because there was a decrease in hardware sales as a result of the implementation of
digital invoice reform, and the relevant projects had not been completed as of April 30, 2024,
and related inventories would be recognized as cost of sales upon the completion and customer
acceptance of such projects.
FINANCIAL INFORMATION
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Trade Receivables
Our trade receivables arose from contracts with customers. Our trade receivables
increased from RMB28.4 million as of December 31, 2021 to RMB30.8 million as of December
31, 2022, generally in line with our business growth. Our trade receivables further increased
to RMB49.0 million as of December 31, 2023, primarily due to our business growth and the
recognition of contract assets in connection with certain customers of our data-driven analytics
services before the end of 2023. We typically grant a credit period between three to six months
from invoice date, which are agreed with each of our customers. The extension of credit period
to customers may be granted based on the type of customers, current creditworthiness,
financial condition and payment history of the relevant customers. The following table sets
forth our trade receivables, net of allowance for credit losses, as of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Trade receivables – contracts with
customers 31,476 34,988 54,132
Less: allowance for credit losses (3,051) (4,140) (5,115)
28,425 30,848 49,017
The following table sets forth an aging analysis of our trade receivables.
As of December 31,
2021 2022 2023
(RMB in thousands)
Within 30 days 8,206 8,103 12,011
31 to 180 days 12,537 12,488 24,408
181 to 365 days 5,645 6,977 5,783
Over one year 5,088 7,420 11,930
Total 31,476 34,988 54,132
FINANCIAL INFORMATION
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The following table sets forth provision rates for each type and aging bucket of our trade
receivables (including amounts due from related parties of trade nature) for the periods
indicated.
Y ear ended December 31,
2021 2022 2023
Trade receivables assessed on
individual basis 0.87% 0.66% 6.77%
Trade receivables assessed on
collective basis for different
aging buckets
Within 90 days 1.31% 1.26% 1.13%
91 to 180 days 3.32% 3.07% 4.87%
181 to 365 days 5.78% 5.54% 6.40%
Over one year 51.02% 46.90% 57.18%
We believe the provision rates for our trade receivables are sufficient. The provision rates
for trade receivables assessed on collective basis are determined by provision matrix model
using historical loss rates adjusted for forward-looking estimates, based on days past due for
groupings of customers’ business segments. The provision rate for trade receivables assessed
on individual basis increased significantly from 0.66% as of December 31, 2022 to 6.77% as
of December 31, 2023, because we upwardly adjusted the provision rate for certain customer
as the respective receivable is considered not recoverable as a result of the anticipated
discontinuation of business relationship with that customer.
We determine the provision rates for trade receivables assessed on collective basis by
referencing the historical loss rate of trade receivables of each aging bucket for the past three
years, adjusted for forward-looking estimates. The provision rates for trade receivables
assessed on collective basis aged within 90 days decreased during the Track Record Period,
primarily due to an increase in the three-year historical collection rate of such receivables,
resulting in downward adjustment. The provision rates for trade receivables assessed on
collective basis for other aging buckets decreased in 2022, primarily due to the decrease in the
actual loss rates of such receivables for the relevant aging buckets in the past three years,
leading up to a downward adjustment of the relevant provision rates. The provision rates for
trade receivables assessed on collective basis for other aging buckets increased in 2023,
primarily due to the increase in the actual loss rates of such receivables for the relevant aging
buckets in the past three years, leading to upward adjustment of the relevant provision rates.
FINANCIAL INFORMATION
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During the Track Record Period, trade receivables that were aged over 180 days were
RMB10.7 million, RMB14.4 million and RMB17.7 million as of December 31, 2021, 2022 and
2023, respectively, accounting for 34.1%, 41.1% and 32.7% of our total trade receivables as of
the same dates, respectively, exceeding the typical credit period we granted to customers of 90
to 180 days. Such overdue balance was primarily due to the lengthy internal approval and
settlement processes of certain customers, the temporary deteriorated operation status of
certain customers, and working capital strain as a result of the COVID-19 pandemic. As of
April 30, 2024, 87.1%, 73.1% and 23.3% of our trade receivables that were aged over 180 days
as of December 31, 2021, 2022 and 2023 were settled, respectively. See “—Contract Assets”
for detailed discussion on the recoverability of our trade receivables.
The following table sets forth the number of our trade receivables turnover days for the
periods indicated.
Y ear ended December 31,
2021 2022 2023
Trade receivables turnover days (1) 22.0 23.1 22.8
(1) Trade receivables turnover days was calculated based on the average of opening and closing balance of
trade receivables for the relevant period, divided by the revenue for the same period, and multiplied by
365 days for the years ended December 31, 2021, 2022 and 2023.
Our trade receivables turnover days remained relatively stable at 22.0 days, 23.1 days and
22.8 days in 2021, 2022 and 2023, respectively.
As of April 30, 2024, approximately RMB20.7 million, or 38.2%, of our trade receivables
as of December 31, 2023 had been settled. The relatively low rate of subsequent settlement was
primarily due to the lengthy process required for payment settlement by certain customers.
Other Receivables, Deposits and Prepayments
Our other receivables, deposits and prepayments primarily include (1) notes receivables,
(2) prepayments in relation to, among others, the purchase of goods and services, rent and
property management fees and listing expenses, (3) V A T recoverable, primarily representing (i)
prepayment of output V A T in relation to certain unrecognized revenue in the same year, and (ii)
the unutilized input V A T incurred as of the dates indicated, which can be applied to offset the
output V A T incurred in subsequent years, (4) deposits, in relation to our office leases and
property management fees, and (5) other receivables, including bid security, advance payment
to other parties, primarily in relation to our contingent workforce management services and
others.
FINANCIAL INFORMATION
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As of December 31,
2021 2022 2023
(RMB in thousands)
Notes receivables 301 589 102
Prepayments 4,488 7,351 14,122
V A T recoverable 21,880 17,840 17,655
Deposits refundable within one year 4,566 4,766 5,497
Other receivables
— bid security 1,826 2,305 3,097
— advance payment to other parties
(1) 15,090 19,909 11,794
— others (2) 1,998 1,755 3,360
Less: allowance for credit losses (242) (175) (216)
Total 49,907 54,340 55,411
(1) Includes third-party individual service providers of our customers.
(2) Includes primarily the amount to be collected on behalf of customers.
Our other receivables, deposits and prepayments increased from RMB49.9 million as of
December 31, 2021 to RMB54.3 million as of December 31, 2022, primarily due to an increase
of RMB4.8 million in advance payment to other parties, as a result of the increase in service
compensation payable by such customer through our contingent workforce management
services to its third-party individual service providers, partially offset by a decrease of RMB4.0
million in V A T recoverable, as we applied the unutilized input V A T incurred in 2021 to offset
the output V A T incurred in 2022.
Our other receivables, deposits and prepayments remained relatively stable at RMB55.4
million as of December 31, 2023.
As of April 30, 2024, approximately RMB11.6 million, or 98.2%, of advance payment to
other parties as of December 31, 2023 had been subsequently settled, and as of the same date,
approximately RMB22.5 million, or 40.5% of our other receivables, deposits and prepayments
as of December 31, 2023 had been settled. We typically obtained reimbursement of our advance
payment to other parties within 30 days following the pay-outs. Considering our historical
settlement practices with respect to the relevant customers in relation to our advance payment
to its individual service providers and the industry reputation of such customer, our Directors
do not foresee material impediment to recover our balance for advance payment to other
parties.
FINANCIAL INFORMATION
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Contract Assets
Contract assets primarily represented our right to receive consideration in exchange of
our goods and services that we had transferred to a customer that is not yet unconditional. Our
contract assets primarily arose from our cloud financial & tax digitalization solutions, digital
precision marketing services, risk management services and on-premises solutions. For cloud
financial & tax digitalization solutions charged by usage model, digital precision marketing
services and risk management services, contract assets arise from services that have been
provided but remain unbilled. Typically, we will record the amount of consumed services as
contract assets at the end of each month based on the amount and unit price of services
consumed. We will send the billing reports to the relevant customers at the end of each billing
cycle for their confirmation on the amount of consumed services as well as the corresponding
service fees, as stipulated in the service contracts with the relevant customers. Upon customer
confirmation, we will issue and send invoices to relevant customers, and the corresponding
portion of contract assets will be recognized as trade receivables. The billing cycle and average
timeframe from recognition of contract assets to subsequent cash settlement for each type of
our solutions and services are set forth below.
 Cloud financial & tax digitalization solutions . The billing cycle for customers of our
cloud financial & tax digitalization solutions charged by usage model is usually 12
months, and such customers typically maintain lengthy internal procedures for
verification and confirmation of billing reports and fee payments after receiving the
invoices. As a result, the timeframe from recognition of contract assets to
subsequent cash settlement is usually one to 18 months.
 Digital precision marketing services . The billing cycle is typically one month, and
the timeframe from recognition of contract assets to subsequent cash settlement is
usually one to three months, after taking into consideration of time required for
preparing billing reports, obtaining customer confirmation, issuing invoices and
receiving actual payment.
 Risk management services (especially the enterprise operation reporting services) .
The billing cycle is typically one month, and therefore, the timeframe from
recognition of contract assets to subsequent cash settlement is usually one to three
months, after taking into consideration of time required for preparing billing reports,
obtaining customer confirmation, issuing invoices and receiving actual payment.
For on-premises solutions, contract assets primarily consisted of amount due from
customers, and such amount is retained by the relevant customers until the lapse of warranty
period. The warranty period ranges from one year to three years. The timeframe from
recognition of contract assets to subsequent cash settlement for on-premises solutions is 12 to
42 months, primarily depending on the length of the warranty period.
FINANCIAL INFORMATION
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Our contract assets increased from RMB70.1 million as of December 31, 2021 to
RMB78.1 million as of December 31, 2022, generally in line with our business growth. Our
contract assets then decreased to RMB70.7 million as of December 31, 2023, primarily due to
recognition of contract assets in connection with certain customers of our data-driven analytics
services as trade receivables before the end of 2023. The following table sets forth our contract
assets and allowance for credit losses as of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Contract assets 70,419 78,591 74,764
Less: Allowance for credit losses (344) (539) (4,048)
70,075 78,052 70,716
The following table sets forth an aging analysis of our contract assets for the periods
indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Within 30 days 24,794 26,305 34,465
31 to 180 days 27,433 25,047 21,956
181 to 365 days 9,163 13,863 6,597
Over one year 9,029 13,376 11,746
Total 70,419 78,591 74,764
The following table sets forth the number of turnover days of our contract assets for the
periods indicated.
Y ear ended December 31,
2021 2022 2023
Contract assets turnover days (1) 54.7 51.7 39.3
(1) Contract assets turnover days was calculated based on the average of opening and closing balance of
contract assets for the relevant period, divided by the revenue for the same period, and multiplied by
365 days for the years ended December 31, 2021, 2022 and 2023.
FINANCIAL INFORMATION
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As of April 30, 2024, approximately RMB36.4 million, or 48.6%, of our contract assets
as of December 31, 2023 had been billed and accounted as trade receivables and subsequently
settled.
The following table sets forth the number of turnover days of our trade receivables and
contract assets for the periods indicated.
Y ear ended December 31,
2021 2022 2023
Trade receivables and contract assets
turnover days (1) 76.7 74.8 62.1
(1) The turnover days of trade receivables and contract assets was calculated based on the average of
opening and closing balance of trade receivables and contract assets for the relevant period, divided by
the revenue for the same period, and multiplied by 365 days for the years ended December 31, 2021,
2022 and 2023.
Our Directors considered that we do not have any material recoverability issue for our
trade receivables and contract assets and the allowance for expected credit losses was adequate
and reasonable for the following reasons.
 We estimate and assess the estimated credit loss (“ECL”) rates on trade receivables
with significant balances and contract assets with significant balances or credit
impairment individually, based on the probability of default and loss given default,
adjusted for forward-looking factors. The ECL rates for trade receivables assessed
on collective basis are determined by provision matrix model using historical loss
rates adjusted for forward-looking estimates, based on days past due for groupings
of customers’ business segments. The ECL rates for contract assets assessed on
collective basis are estimated by taking into account of probabilities of default and
loss given default sourced from public market information adjusted for forward-
looking estimates for groupings of various customers based on their business
segments.
For instance, if forecast economic conditions (i.e., gross domestic products) are
expected to deteriorate over the next year which can lead to an increased number of
losses, the historical loss rates of trade receivables and probabilities of default of
contract assets will be adjusted. At the end of each reporting period, the historical
observed default rates are updated and changes in the forward-looking estimates are
analyzed. The provision rates for our contract assets (including amounts due from
related parties) assessed on individual basis were 0.56%, 0.38% and 8.28% in 2021,
2022 and 2023, respectively, which decreased in 2022 due to the probability of
default and loss rate relevant to customers’ business segments, and increased in
2023, because we upwardly adjusted the provision rate for certain customers as the
respective contract assets are considered not recoverable as a result of (1) the
FINANCIAL INFORMATION
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--- page 398 ---
impairment with respect to such customers’ financial and operational conditions and
(2) anticipated discontinuation of business relationship with certain mid-market
customers, as we understood such customers switched their service providers in
2023. The provision rates for our contract assets (including amounts due from
related parties) on collective basis were 0.45%, 0.79% and 0.99% in 2021, 2022 and
2023, respectively, which continued to increase during the Track Record Period,
primarily due to the increases in probabilities of default and historical loss rates of
our contract assets. We applied the provision rates uniformly to each aging bucket
of our contract assets during the Track Record Period.
For our trade receivables, as of December 31, 2021, 2022 and 2023, we recorded
allowance for credit losses of RMB3.1 million, RMB4.1 million and RMB6.2
million, respectively, of which 88.4%, 92.1%, and 91.6% related to trade
receivables, including amounts due from related parties, aged 181 days or above as
of the same dates, respectively.
 In preparing the financial statements, we have engaged an independent valuer to
evaluate the provision for both our trade receivables and contract assets. The
independent valuer adopted simplified approach and used provision matrix model
and probability of default and loss, adjusted for forward-looking factors, to assess
the provision rates of our trade receivables and contract assets, which is in
accordance with HKFRS 9 and International V aluation Standards. Therefore, we
believe that the credit loss allowances with respect to our trade receivables and
contract assets are adequately provisioned, and we do not foresee material
recoverability issue with respect to our trade receivables and contract assets,
including those aged 181 days or above.
 To manage risk arising from trade receivables and contract assets, we have policies
in place to ensure that credit terms are made to counterparties with an appropriate
credit history and management performs ongoing credit evaluations of the
counterparties. Such credit evaluation includes assessment of credit quality of these
customers, which takes into account their financial position, past settlement records,
industry characteristics and other factors. Our credit control department also
oversees our trade receivables and contract assets and routinely communicates with
our customers to minimize credit risk, and our senior management regularly reviews
the overdue balances.
Specifically, during the course of providing cloud financial & tax digitalization
solutions, data-driven analytics services and on-premises solutions, we will review
the amount of services consumed by relevant customers and crosscheck and monitor
the accrued service fees as reflected in our billing systems. We also designate
specialized sales and operation and maintenance personnel to monitor project
progress and maintain close contact with our customers. Our finance department will
regularly verify the contract assets recognized as well as the corresponding revenue
FINANCIAL INFORMATION
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--- page 399 ---
amount and provide feedback to the relevant sales and operation personnel if any
issues are identified. During the Track Record, there were no material discrepancies
between our recognized contract assets and the amounts confirmed by customers.
Contract Costs
Contract costs primarily represented costs to fulfill contracts with our customers and
arose from our financial & tax digitalization solutions. Our contract costs increased from
RMB54.7 million as of December 31, 2021 to RMB80.1 million as of December 31, 2022,
primarily due to (1) the increase in the total number of service contracts with customers, driven
by our business growth, and (2) the increase in costs associated with our service contracts that
were not completed as of the end of 2022 due to the impact of the COVID-19 pandemic. Our
contract costs then increased to RMB85.3 million as of December 31, 2023, primarily due to
the increase in staff costs incurred for project delivery, driven by the increase in headcount of
our project delivery personnel.
Financial Assets at Fair Value through Profit or Loss
Our financial assets at FVTPL primarily consisted of wealth management products issued
by banks, investment in associates with preferential rights and arrangement/right to receive
additional shares at nominal consideration. Our wealth management products, including
structured deposit, are mainly short-term investments with expected rates of return ranging
from nil to 20.00%, depending on the market price of underlying financial instruments, and are
redeemable upon maturity with no other restrictions. Arrangement/right to receive additional
shares at nominal consideration represents our right to receive additional shares in Shanghai
Xinghan Information Technology Co., Ltd. and Beijing Baiwang Intelligent Finance and
Taxation Technology Co., Ltd. from one of its owners. We had financial assets at FVTPL of
RMB238.3 million, RMB440.4 million and RMB300.7 million as of December 31, 2021, 2022
and 2023, respectively. Fair value changes of wealth management products issued by banks are
valued using level 2 inputs, and fair value changes of investment in associates with preferential
rights and arrangement/right to receive additional shares at nominal consideration are valued
using level 3 inputs.
We may continue to invest in similar wealth management products in the future using our
surplus cash and acquire equity interests that we believe will further our business. Depending
on the materiality of the investment, our investment decisions shall be approved by our general
manager, our Board and/or our shareholders. Our general manager is mainly responsible for
making, implementing and supervising our equity investment decisions.
We believe we can make better use of our cash by making appropriate investments in
wealth management products of low-to-medium risk, which generate income without
interfering with our business operation or capital expenditures. Our investment decisions with
respect to financial products are made on a case-by-case basis and after due and careful
consideration of a number of factors, including, but not limited to, the market conditions, the
economic developments, the anticipated investment conditions, the investment cost, the
FINANCIAL INFORMATION
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--- page 400 ---
duration of the investment and the expected benefit and potential loss of the investment. We
have established a set of internal measures which allow us to achieve reasonable returns on our
investment while mitigating our exposure to high investment risks. Our finance department is
responsible for the analysis and research of investment in wealth management products based
on our cash positions. Investment decisions on wealth management products must be approved
by our chief financial officer. Redemption of wealth management products prior to their
maturity must be initiated by finance managers and approved by our chief financial officer.
These policies and measures were formulated by our senior management.
We believe that our internal policies regarding financial products and the related risk
management mechanism are adequate. We may continue to purchase financial products that
meet the above criteria as part of our treasury management where we believe it is prudent to
do so after the completion of the Global Offering. We will comply with requirements under
Chapter 14 of the Listing Rules and disclose the details of our investments or other notifiable
transactions to the extent necessary and as appropriate after the Global Offering.
Cash and Cash Equivalents
Our cash and cash equivalents decreased from RMB505.0 million as of December 31,
2021 to RMB237.2 million as of December 31, 2022, primarily as a result of our purchase of
wealth management products and the cash used in our operating activities. Our cash and cash
equivalents then increased to RMB335.0 million as of December 31, 2023, primarily due to the
redemption of certain wealth management products and bank deposits.
Trade Payables
Our trade payables primarily represented payables for hardware procurement, referral
fees payable to marketing agents, and commission fees payable to business collaborators. Our
trade payables decreased from RMB35.1 million as of December 31, 2021 to RMB30.9 million
as of December 31, 2022, as a result of our shortened payment settlement cycle with suppliers.
Our trade payables then increased to RMB40.9 million as of December 31, 2023, primarily in
relation to referral fees payable to our marketing agents. The following sets for an aging
analysis of our trade payables for the periods indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Within three months 27,506 26,082 29,480
Three to six months 3,675 2,111 3,710
Six months to one year 350 1,957 2,611
One to two years 3,593 340 4,621
Over two years 23 379 460
Total 35,147 30,869 40,882
FINANCIAL INFORMATION
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--- page 401 ---
Our trade payables turnover days decreased from 48.3 days in 2021 to 38.7 days in 2022
and further to 30.4 days in 2023, primarily due to our more frequent settlement with suppliers
for our trade payables. The credit period on trade payables is typically 30 to 90 days. The
following table sets forth the number of our trade payables turnover days for the periods
indicated.
Y ear ended December 31,
2021 2022 2023
Trade payables turnover days (1) 48.3 38.7 30.4
(1) Trade payables turnover days was calculated based on the average of opening and closing balance of
trade payables for the relevant period, divided by the cost of sales for the same period, and multiplied
by 365 days for the years ended December 31, 2021, 2022 and 2023.
As of April 30, 2024, approximately RMB30.4 million, or 74.3%, of our trade payables
as of December 31, 2023 had been settled.
Other Payables
Our other payables consisted of accrued staff costs, other tax payables, and others.
As of December 31,
2021 2022 2023
(RMB in thousands)
Accrued staff costs 53,448 53,276 70,237
Other tax payables 25,724 15,278 23,141
Others 26,146 37,496 43,826
Total 105,318 106,050 137,204
Our other payables remained relatively stable at RMB105.3 million as of December 31,
2021 and RMB106.1 million as of December 31, 2022. Our other payables increased to
RMB137.2 million as of December 31, 2023, primarily due to an increase of RMB17.0 million
in accrued staff costs as a result of the increase in staff headcount and an increase of RMB7.9
million in other tax payables as a result of the increase in our V A T payable along with our
revenue growth. As of April 30, 2024, approximately RMB47.2 million, or 34.4% of our other
payables as of December 31, 2023 had been settled.
Contract Liabilities
Our contract liabilities consisted primarily of non-refundable advance payments made by
customers of our financial and tax digitalization solutions and risk management services, while
the underlying services are yet to be provided. Our contract liabilities increased from
RMB130.6 million as of December 31, 2021 to RMB165.5 million as of December 31, 2022,
FINANCIAL INFORMATION
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--- page 402 ---
primarily due to our business growth, especially with respect to our risk management services,
and also the delay in contract delivery due to the COVID-19 pandemic. Our contract liabilities
then decreased to RMB122.7 million as of December 31, 2023, primarily due to the recognition
of such contract liabilities as revenue as we delivered customer projects.
As of April 30, 2024, approximately RMB49.9 million, or 40.6%, of our contract
liabilities as of December 31, 2023, had been recognized as revenue.
Financial Liabilities at Fair Value through Profit or Loss
Our financial liabilities were primarily related to our shares with preferential rights issued
in our equity financings. We had financial liabilities at FVTPL of RMB2,092.8 million,
RMB2,154.8 million and RMB2,212.6 million as of December 31, 2021, 2022 and 2023,
respectively. We applied the discounted cash flow method to determine the underlying equity
value of our Company and option pricing method and equity allocation model to determine the
fair value of our shares with preferential rights.
Fair V alue Measurements
We made judgments and estimates in determining the fair values of the financial
instruments that are recognized and measured at fair value in the financial statements. To
indicate the reliability of inputs in determining the fair values, we classified our financial
instruments into three levels prescribed under the accounting standards:
 Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity can access at the measurement date;
 Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
observable for the asset or liability, either directly or indirectly; and
 Level 3 inputs are unobservable inputs for the asset or liability.
There were no transfers between level 1, level 2 and level 3 during the Track Record
Period. The following table sets forth the fair value measurement hierarchy of our financial
assets and liabilities.
Level 1 Level 2 Level 3 Total
(RMB in thousands)
As of December 31, 2021
Assets:
Financial assets at FVTPL — 218,856 19,440 238,296
Liabilities:
Financial liabilities at FVTPL — — 2,092,769 2,092,769
FINANCIAL INFORMATION
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--- page 403 ---
Level 1 Level 2 Level 3 Total
(RMB in thousands)
As of December 31, 2022
Assets:
Financial assets at FVTPL — 400,900 39,487 440,387
Liabilities:
Financial liabilities at FVTPL — — 2,154,752 2,154,752
As of December 31, 2023
Assets:
Financial assets at FVTPL — 268,230 32,434 300,664
Liabilities:
Financial liabilities at FVTPL — — 2,212,629 2,212,629
For level 2 financial instruments, valuations are generally obtained from third-party
pricing services for identical or comparable assets, or through the use of valuation
methodologies using observable market inputs, or recent quoted market prices. V aluation
service providers typically gather, analyze and interpret information related to market
transactions and other key valuation model inputs from multiple sources, and through the use
of widely accepted internal valuation models, provide a theoretical quote on various securities.
For level 3 financial instruments, prices are determined using valuation methodologies such as
discounted cash flow models and other similar techniques. Determinations to classify fair value
measurement within level 3 of the valuation hierarchy are generally based on the significance
of the unobservable factors to the overall fair value measurement.
Our corporate finance team is responsible for determining the policies and procedures for
the fair value management of financial instruments. The corporate finance team reports directly
to the management. At each reporting date, the corporate finance team analyzes the movements
in the values of financial instruments and determines the major inputs applied in valuation. The
valuation is reviewed and approved by the management.
In relation to the valuation of the level 3 financial instruments, the Sole Sponsor has
reviewed and understood the classification policy of financial instruments into level 3 fair
value hierarchy. The Sole Sponsor has further conducted relevant due diligence work,
including but not limited to (1) discussion with the Company about the rationale of the
transactions and key basis and assumptions for the valuation; (2) review of valuation report of
the financial instruments; (3) discussion with the Reporting Accountants about their work
performed in connection with the valuation of the Company’s financial instruments; and (4)
discussion with the valuer as to their competence and previous experience in valuation of
similar financial instruments. Having considered the above, nothing has come to the Sole
Sponsor’s attention that would cause the Sole Sponsor to cast reasonable doubt on the relevant
valuation work performed for the Company’s level 3 financial instruments during the Track
Record Period.
FINANCIAL INFORMATION
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Details of the fair value measurements of financial assets, particularly the fair value
hierarchy, the valuation techniques and key inputs, including significant unobservable inputs,
the relationship of unobservable inputs to fair value are disclosed in Note 40 of the
Accountants’ Report in Appendix I to this prospectus.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity and Working Capital
Our primary use of cash is to fund our working capital requirements and other recurring
expenses. During the Track Record Period, we financed our capital expenditures and working
capital requirements primarily through cash generated from financing activities. Going
forward, we believe that our liquidity requirements will be satisfied with a combination of cash
flows generated from our operating activities, net proceeds from the Global Offering and other
funds raised from the capital markets from time to time. We monitor our cash flows and cash
balance and funding requirement on a regular basis. We strive to maintain optimal liquidity that
meets our working capital requirement. Our net current liabilities positions as of April 30,
2024, were primarily attributable to financial liabilities at FVTPL in relation to our shares with
preferential rights, partially offset by financial assets at FVTPL and cash and cash equivalents.
We do not expect to record any fair value changes in such instruments following the completion
of the Global Offering. See Note 33 to the Accountants’ Report in Appendix I to this prospectus
for details.
As of December 31, 2021, 2022 and 2023, we had cash and cash equivalents of
RMB505.0 million, RMB237.2 million and RMB335.0 million, respectively. We believe that
we have sufficient working capital for the next 12 months from the date of this prospectus after
considering (1) our cash and cash equivalents of RMB335.0 million as of December 31, 2023,
and our wealth management products of RMB268.2 million as of the same date, which may be
redeemed upon maturity with no other restriction to support our operations; (2) our good track
record in being able to raise money from reputable and influential institutional or corporate
investors to finance our business, as evidenced by several rounds of Pre-IPO Investments; (3)
the re-designation of our shares with preferential rights from liabilities to equity upon the
Listing, resulting in a net current asset position; (4) the credit line of RMB100 million granted
to us by a reputable bank in China; and (5) our operating requirements including, among others,
distribution and selling expenses, administrative expenses, research and development
expenses, capital expenditures, and taking into account of our efforts to control budgets and
optimize our operating expenses and refine our management of working capital, as discussed
in the section headed “Business—Sustainability of our Business—Optimizing Operations and
Increasing Economies of Scale and Cost-Efficiency” and “Business—Sustainability of our
Business—Improving Operating Cash Flow Position.” We will closely monitor the level of our
working capital, and diligently review future cash flow requirements and adjust our operation
and expansion plans, if necessary, to ensure that we maintain sufficient working capital to
support our business operations.
FINANCIAL INFORMATION
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Despite that we recorded net cash outflow in operating activities during the Track Record
Period, taking into account the financial resources available to us, including cash and cash
equivalents, bank deposits, current portion of wealth management products and the credit line
facility available to us, our Directors are of the view that we have sufficient working capital
to meet our present requirements and for the next 12 months from the date of this prospectus.
Based on the review of the Group’s financial information, financial documents and the relevant
due diligence documents, discussion with the Directors as well as the Reporting Accountants,
and the Directors’ confirmation above, the Sole Sponsor concurs with the Directors’ view
above.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated.
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Net cash used in operating activities (13,989) (64,276) (99,330)
Net cash (used in)/from investing
activities (189,776) (189,804) 216,810
Net cash from/(used in) financing
activities 435,669 (13,720) (19,655)
Net increase/(decrease) in cash and cash
equivalents 231,904 (267,800) 97,825
Cash and cash equivalents at the
beginning of the year 273,102 505,006 237,206
Cash and cash equivalents at the end of
the year 505,006 237,206 335,031
FINANCIAL INFORMATION
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Net cash used in operating activities
Net cash used in operating activities was RMB99.3 million in 2023, primarily due to our
loss before tax of RMB359.2 million, adjusted for (1) certain non-cash and non-operating
items, primarily including share-based payment expenses of RMB191.1 million, fair value
changes of financial assets and liabilities at FVTPL of RMB55.9 million, and depreciation of
right-of-use assets of RMB13.2 million, (2) changes in working capital that negatively affected
the cash flows, primarily including a decrease in contract liabilities of RMB42.7 million, an
increase in trade and other receivables, deposits and prepayments of RMB15.1 million, an
increase in amounts due from related parties of RMB15.0 million, and an increase in contract
costs of RMB5.2 million, partially offset by (3) changes in working capital that positively
affected the cashflows, primarily including an increase in trade and other payables of RMB41.2
million, an increase in amount due to related parties of RMB13.0 million, and a decrease in
inventories of RMB7.3 million.
Net cash used in operating activities was RMB64.3 million in 2022, primarily due to our
loss before tax of RMB156.0 million, adjusted for (1) certain non-cash and non-operating
items, primarily including fair value changes of financial assets and liabilities at FVTPL of
RMB53.5 million, depreciation of right-of-use assets of RMB12.5 million, share-based
payment expenses of RMB10.5 million, and interest income of RMB3.9 million, (2) changes
in working capital that negatively affected the cash flows, primarily including an increase in
contract costs of RMB25.4 million, an increase in contract assets of RMB8.2 million, and an
increase in trade and other receivables, deposits and prepayment of RMB5.6 million, partially
offset by (3) changes in working capital that positively affected the cash flows, primarily
including an increase in contract liabilities of RMB34.8 million and a decrease in amounts due
from related parties of RMB18.5 million.
Net cash used in operating activities was RMB14.0 million in 2021, primarily due to our
loss before tax of RMB448.4 million, adjusted for (1) certain non-cash and non-operating
items, primarily including fair value changes of financial assets and liabilities at FVTPL of
RMB265.5 million, share-based payment expenses of RMB161.4 million, depreciation of
right-of-use assets of RMB10.1 million and depreciation of property, plant and equipment of
RMB5.6 million, (2) changes in working capital that negatively affected the cash flows,
primarily including an increase in trade and other receivables, deposits and prepayments of
RMB21.1 million, an increase in amounts due from related parties of RMB16.3 million, and
a decrease in amounts due to related parties of RMB15.5 million, partially offset by (3) changes
in working capital that positively affected the cash flows, primarily including an increase in
trade and other payables of RMB33.3 million and an increase in contract liabilities of
RMB25.8 million.
FINANCIAL INFORMATION
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Net cash (used in)/from investing activities
Net cash from investing activities was RMB216.8 million in 2023, primarily attributable
to redemption of wealth management products of RMB830.0 million, withdrawal of term
deposits of RMB80.0 million, interest from of term deposits and wealth management products
of RMB59.2 million, and proceeds on disposal of a joint venture of RMB10.8 million, partially
offset by purchases of wealth management products of RMB747.0 million.
Net cash used in investing activities was RMB189.8 million in 2022, primarily
attributable to purchases of wealth management products of RMB1,400.0 million, placement of
term deposits of RMB80.0 million, payments for associates with preferential rights
investments and the arrangement/right to receive additional shares at nominal consideration of
RMB16.6 million, and investments in associates of RMB11.9 million, partially offset by
redemption of wealth management products of RMB1,210.0 million and withdrawal of term
deposits of RMB100.0 million.
Net cash used in investing activities was RMB189.8 million in 2021, primarily
attributable to purchases of wealth management products of RMB594.0 million, placement of
term deposits of RMB150.0 million, payments for associates with preferential rights
investments and the arrangement/rights to receive additional shares at nominal consideration
of RMB34.0 million, and investments in associates of RMB21.8 million, partially offset by
redemption of wealth management products of RMB584.0 million and withdrawal of term
deposits of RMB30.0 million.
Net cash from/(used in) financing activities
Net cash used in financing activities was RMB19.7 million in 2023, representing
repayments of lease liabilities of RMB14.5 million and prepayments of share issue costs of
RMB5.1 million.
Net cash used in financing activities was RMB13.7 million in 2022, representing
repayments of lease liabilities of RMB12.0 million and prepayments of share issue costs of
RMB1.7 million.
Net cash from financing activities was RMB435.7 million in 2021, primarily attributable
to proceeds from issue of shares with preferential rights of RMB443.5 million, partially offset
by repayments of lease liabilities of RMB7.2 million.
FINANCIAL INFORMATION
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Current Assets and Current Liabilities
The following table sets forth our current assets and liabilities as of the dates indicated.
As of December 31,
As of
April 30,
20242021 2022 2023
(RMB in thousands)
(unaudited)
Current assets
Inventories 8,972 10,992 3,681 4,085
Contract costs 18,245 42,026 47,104 56,247
Contract assets 68,836 77,891 70,459 70,027
Trade and other receivables,
deposits and prepayments 78,332 85,188 104,428 104,420
Amounts due from related
parties 19,260 3,631 17,336 20,586
Financial assets at FVTPL 218,856 400,900 268,230 417,776
Restricted bank deposits 515 103 2,177 3,406
Short-term bank deposits with
maturity over three months 104,785 80,472 109,827 —
Cash and cash equivalents 505,006 237,206 335,031 147,168
1,022,807 938,409 958,273 823,715
Current liabilities
Lease liabilities 10,312 18,442 14,611 8,554
Trade and other payables 140,465 136,919 178,086 162,926
Tax liabilities — 31 60 9
Contract liabilities 130,631 165,476 122,744 114,279
Financial liabilities at FVTPL 216,650 2,151,922 2,212,629 2,384,559
Amounts due to related parties 14,020 11,052 24,043 25,182
512,078 2,483,842 2,552,173 2,695,509
Net current assets/(liabilities) 510,729 (1,545,433) (1,593,900) (1,871,794)
FINANCIAL INFORMATION
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We had net current assets of RMB510.7 million as of December 31, 2021. Our net current
assets position as of December 31, 2021 was primarily attributable to our cash and cash
equivalents, financial assets at FVTPL, trade and other receivables, and short-term bank
deposits with maturity over three months, partially offset by financial liabilities at FVTPL,
contract liabilities and trade and other payables.
We recorded net current liabilities of RMB1,545.4 million as of December 31, 2022, as
compared to net current assets of RMB510.7 million as of December 31, 2021, primarily due
to the reclassification of financial liabilities at FVTPL in connection with our shares with
preferential rights from non-current to current liabilities.
We had net current liabilities of RMB1,545.4 million and RMB1,593.9 million as of
December 31, 2022 and 2023, respectively. Our net current liabilities position as of December
31, 2022 and 2023 was primarily attributable to financial liabilities at FVTPL in relation to our
shares with preferential rights, partially offset by financial assets at FVTPL.
Our net current liabilities increased from RMB1,593.9 million as of December 31, 2023
to RMB1,871.8 million as of April 30, 2024, primarily due to (1) an increase of RMB171.9
million in financial liabilities at FVTPL and (2) a decrease of RMB187.9 million in cash and
cash equivalents, as a result of the combined effect of cash expenditures for our operations and
subscription for certain equity interest in Xinfengwei.
We expect our net current liability position to be significantly improved, as our net
current liabilities position as of April 30, 2024 was primarily attributable to financial liabilities
at FVTPL in relation to our shares with preferential rights, which we do not expect to recognize
following the completion of the Global Offering. See Note 33 to the Accountants’ Report in
Appendix I to this prospectus for details.
CAPITAL EXPENDITURES AND COMMITMENTS
Capital Expenditures
Our capital expenditures during the Track Record Period, consisting primarily of
purchases of property, plant and equipment and intangible assets, were RMB4.8 million,
RMB4.5 million and RMB6.1 million, respectively, in 2021, 2022 and 2023, respectively. We
funded our capital expenditure requirements during the Track Record Period mainly from
capital injection from shareholders and cash on hand.
We plan to fund our planned capital expenditure by using capital injection from
shareholders, cash on hand and the proceeds from this Global Offering. See “Future Plans and
Use of Proceeds” for certain details of our expansion plan.
FINANCIAL INFORMATION
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Capital Commitments
Our capital commitments primarily related to our capital expenditure in acquisition of
equity interests in associates. The following table sets forth a summary of our capital
commitments as of the dates indicated.
As of December 31,
2021 2022 2023
(RMB in thousands)
Contracted but not provided for:
Capital expenditure in respect of
acquisition of equity interests in
associates 22,250 22,250 13,930
INDEBTEDNESS
Our indebtedness during the Track Record Period consisted primarily of financial
liabilities at FVTPL and lease liabilities. During the Track Record Period, we did not maintain
banking facilities, and we did not have unutilized banking facilities. Our financial liabilities at
FVTPL and lease liabilities as of December 31, 2021, 2022, and 2023 and April 30, 2024, being
the latest practicable date for the purpose of indebtedness statement, were as follows.
As of December 31, As of
April 30,
20242021 2022 2023
(RMB in thousands)
(unaudited)
Financial liabilities at FVTPL,
current 216,650 2,151,922 2,212,629 2,384,559
Financial liabilities at FVTPL,
non-current 1,876,119 2,830 — —
Subtotal 2,092,769 2,154,752 2,212,629 2,384,559
Lease liabilities, current 10,312 18,442 14,611 8,554
Lease liabilities, non-current 25,364 7,354 1,379 883
Subtotal 35,676 25,796 15,990 9,437
Total 2,128,445 2,180,548 2,228,619 2,393,996
As of April 30, 2024, the financial liabilities at FVTPL were unsecured and unguaranteed,
and the lease liabilities were secured by rental deposits and unguaranteed. Save as disclosed
above, we did not have any outstanding loan capital issued or agreed to be issued, debt
securities, mortgages, charges, debentures, bank overdrafts, loans or other similar
indebtedness, liabilities under acceptances or acceptance credits, hire purchase commitments
or other contingent liabilities as of April 30, 2024. Our Directors confirm that we had not
guaranteed the indebtedness of any independent third parties as of the Latest Practicable Date.
Our Directors further confirm that there has not been any material change in our indebtedness
since April 30, 2024.
FINANCIAL INFORMATION
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Our Directors confirm that as of the Latest Practicable Date, we did not have any
outstanding debt, and there was no breach of any covenant during the Track Record Period and
up to the Latest Practicable Date. Our Directors further confirm that our Group did not
experience any difficulty in obtaining bank loans and other borrowings, default in payment of
bank loans and other borrowings or breach of covenants during the Track Record Period and
up to the Latest Practicable Date.
CONTINGENT LIABILITIES
As of the Latest Practicable Date, we did not have any material contingent liabilities,
guarantees or any litigations or claims of material importance, pending or threatened against
any member of our Group.
LISTING EXPENSES
We expect to incur a total of approximately RMB96.3 million (HK$105.7 million) of
listing expenses in connection with the Global Offering, representing approximately 30.0% of
the proceeds from the Global Offering (assuming an Offer Price of HK$38.00, being the
mid-point of the indicative Offer Price range between HK$36.00 and HK$40.00, and assuming
that the Over-allotment Option is not exercised), including (1) sponsor fees and underwriting
commissions, SFC transaction levy, stock code donation fee, Stock Exchange trading fees,
initial listing application fee and AFRC transaction levy for all Offer Shares of approximately
RMB28.8 million (HK$31.6 million), and (2) non-underwriting expenses of approximately
RMB67.5 million (HK$74.1 million), which consist of (i) fees and expenses of legal advisors
and accountants of approximately RMB49.0 million (HK$53.8 million), and (ii) other fees and
expenses of approximately RMB18.5 million (HK$20.3 million). Approximately RMB46.8
million of the listing expenses were charged to our consolidated statements of profit or loss
during the Track Record Period. Out of our remaining listing expenses, approximately
RMB20.4 million is expected to be charged to our consolidated statements of profit or loss, and
approximately RMB29.1 million is expected to be deducted from equity. The listing expenses
above are the best estimate as of the Latest Practicable Date and for reference only. The actual
amount may differ from this estimate.
KEY FINANCIAL RATIOS
As of/for the year ended December 31,
2021 2022 2023
Profitability ratios
Gross profit margin (1) 47.6% 40.8% 39.6%
Net loss margin (2) 98.8% 29.7% 50.4%
Revenue growth rate (3) — 15.9% 35.6%
Liquidity ratios
Current ratio
(4) 2.0 0.4 0.4
Trade receivable turnover days (5) 22.0 days 23.1 days 22.8 days
Trade payable turnover days (6) 48.3 days 38.7 days 30.4 days
FINANCIAL INFORMATION
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(1) The calculation of gross profit margin is based on gross profit for the year divided by revenue for the respective
year.
(2) The calculation of net loss margin is based on loss for the year divided by revenue for the respective year.
(3) The calculation of revenue growth rate is based on revenue for the year divided by revenue for the previous
year minus one.
(4) The calculation of current ratio is based on current assets divided by current liabilities as of period end.
(5) The calculation of trade receivables turnover days is based on the average of opening and closing balance of
trade receivables for the relevant year, divided by the revenue for the same year, and multiplied by 365 days.
(6) The calculation of trade payables turnover days is based on the average of opening and closing balance of trade
payables for the relevant period, divided by the cost of sales for the same period, and multiplied by 365 days.
Analysis of Key Financial Ratios
Gross Profit Margin, Net Loss Margin and Revenue Growth Rate
See “—Period to Period Comparison of Results of Operations” for a discussion of the
factors affecting our gross profit margin, net loss margin and revenue growth rate during the
Track Record Period.
Current Ratio
Our current ratio decreased from 2.0 as of December 31, 2021 to 0.4 as of December 31,
2022, primarily due to the reclassification of financial liabilities at FVTPL in connection with
our shares with preferential rights from non-current to current liabilities. Our current ratio
remained stable at 0.4 as of December 31, 2023.
Trade Receivable Turnover Days and Trade Payable Turnover Days
See “Discussion of Major Items of Consolidated Statements of Financial Position—Trade
Receivables” and “—Trade Payables” for a discussion of the factors affecting our trade
receivable turnover days and trade payable turnover days during the Track Record Period.
FINANCIAL INFORMATION
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RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time during our ordinary
course of business and on terms comparable to the terms of transactions with other entities that
are not related parties. During the Track Record Period, we entered into a number of related
party transactions. For details of our related party transactions, see Note 42 to the Accountants’
Report in Appendix I to this prospectus. The following table sets forth our balance with related
parties as of the dates indicated.
As of/for the year ended December 31,
2021 2022 2023
(RMB in thousands)
Amounts due from related parties
Trade related 3,529 3,568 17,333
Non-trade related 15,731 63 3
Amounts due to related parties
Trade related 13,905 10,937 23,839
Non-trade related 115 115 204
During the Track Record Period, our non-trade related amount due from related parties
primarily consisted of amount due from Ms. Chen, our Controlling Shareholder, and Beijing
Baiwang Rongxin Technology Co., Ltd., controlled by Ms. Chen (“Baiwang Rongxin”). The
balance of RMB15.7 million as of December 31, 2021 was related to the working capital needs
of Beijing Zhongshui Yitong Technology Co., Ltd., controlled by Ms. Chen (“Zhongshui
Yitong”), primarily representing certain reimbursement expenses, service compensation and
employee remuneration expenses incurred by Zhongshui Yitong during the period from 2018
to 2020.
Zhongshui Yitong was founded in December 2013 and primarily engaged in the research
and development of tax-filing CD-ROM products for enterprises. As such products were
rendered obsolete by the development of internet and mobile technologies, Zhongshui Yitong
decided to terminate the relevant product and business development and deregister in
December 2020. Due to its de-registration, the obligation to repay such receivable was assumed
by Baiwang Rongxin. The balance was then considered recoverable by us as unsecured and
repayable on demand, with an agreed interest rate of 3.8%.
During the Track Record Period, based on reasonable inquiry and publicly available
information, to the best knowledge of the Company, there was not any sharing of resources,
including without limitation, plant and equipment, manpower, administrative functions,
banking facilities or otherwise, between Zhongshui Yitong or Baiwang Rongxin, and our
Group, Shareholders, Directors, employees or any of the associates of our Group.
FINANCIAL INFORMATION
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During the Track Record Period, we also had non-trade related amount due from other
related parties of RMB63,000 and RMB3,000 as of December 31, 2022 and 2023, respectively,
which were unsecured, interest-free and repayable on demand. Non-trade related balance from
other related parties was primarily originated from advances to some of our senior
management.
We expect to settle the non-trade related balance due to and due from related parties prior
to the Listing.
According to the General Lending Provision (ۆissued by the PBOC in 1996 (the
“General Lending Provisions”), only financial institutions are licensed to engage in business
of extending loans, and loans between enterprises other than financial institutions are
prohibited. The PBOC may impose penalties on illegal enterprise lenders in the amount
equivalent to one to five times the income arising from loan-advancing activities.
Notwithstanding the General Lending Provisions, the Supreme People’s Court has had new
interpretations concerning financing arrangements and lending transactions between non-
financial institutions in the Provisions of the Supreme People’s Court on Several Issues
concerning the Application of Law in the Trial of Private Lending Cases (׵
Ӻ) which came into effect on June 23, 2015 and was
latest amended in December 2020 (the “Private Lending Provisions”), pursuant to which the
Supreme People’s Court recognizes the validity and legality of financing arrangements and
lending transactions between non-financial institutions, so long as the private lending contract
which the enterprises entered into is for the need of production and business operation and does
not fall into certain situations stipulated in the PRC Civil Code and the Private Lending
Provisions. According to the Private Lending Provisions, relevant people’s courts shall uphold
the claim by the lender on the payment of the interests under the lending contract whereby the
annual interest rate agreed upon by the parties to the lending contract does not exceed four
times of the loan prime rate for one-year loan when the contract is concluded.
Our Directors confirmed that (1) such loans/advances made to Ms. Chen Jie and her
controlled entity or others were for business operation purposes and did not fall into the
situations which would lead to the invalidation of such loans/advances; (2) the annual interest
rate of the loans/advances made to Ms. Chen Jie and her controlled entity is within the scope
allowed by the Private Lending Provisions, and the loans/advances made to others did not
generate any interest income; (3) the Company had not received any notice of claim or was
subject to any investigation or penalty for the loans/advances made to Ms. Chen Jie and her
controlled entity or others during the Track Record Period and up to the Latest Practicable
Date.
Based on the Director confirmation and the abovementioned analysis, our PRC legal
Advisor is of the view that: (1) the loans/advances made to Ms. Chen Jie and her controlled
entity and others were valid under the current PRC laws and regulations and do not violate any
mandatory provision of applicable PRC laws and regulations; and (2) such loans/advances were
legally binding on the parties.
Our Directors believe that each of the related party transactions was conducted in the
ordinary course of business on an arm’s length basis. Our Directors are of the view that our
related party transactions during the Track Record Period would not distort our track record
results or make our historical results not reflective of our future performance.
FINANCIAL INFORMATION
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Our Transactions and Fund Flows with Watertek Group
Our transactions with Watertek Group primarily consist of (1) our procurement of
information security hardware and relevant technical support and after-sales client services
from Watertek Group, and (2) our sales of cloud and on-premises financial & tax digitalization
solutions to Watertek Group.
The following table sets forth the transaction amounts (which refer to the revenue or the
cost of sales (as the case may be) from the relevant transactions recognized on the accrual
basis, and for avoidance of doubt, without including any value-added taxes) between us and
Watertek Group during the Track Record Period:
For the years ended December 31,
2021 2022 2023
(RMB in thousands)
Procurement of information security
hardware and technical support and
after-sales client services 4,658.8 5,535.0 1,160.9
Sales of cloud and on-premises
financial & tax digitalization
solutions 60.9 63.0 113.7
The information security hardware we procured from Watertek Group primarily consists
of Tax Control Disks, tax chips, tax server assemblies and other ancillary devices. Tax Control
Disks shall be offered by providers such as Watertek Group at a price equal to or lower than
the guiding price published by the PRC authority. Tax server assemblies and tax chips are
typically adapted and developed by Watertek Group and acknowledged by the SA T for use by
enterprise in China for invoice issuance purpose. See “Industry Overview—China’s Financial
and Tax-related Transaction Digitalization Market—Background of China’s Financial and
Tax-related Transaction Digitalization” for more details of the functions of Tax Control Disks,
tax chips and tax server assemblies. The information security hardware was provided to our
clients as part of the one-stop offering package of our financial & tax digitalization solutions
comprising software products, hardware devices and services, in particular for our on-premises
solutions. For the years ended December 31, 2021, 2022 and 2023, we procured 323, 28 and
nine Tax Control Disks, 8,319, 7,423 and 3,733 tax chips, and 82, 124 and 14 tax server
assemblies from Watertek Group, respectively. Our purchase price of Tax Control Disks
provided by Watertek Group is comparable to the price of Tax Control Disks offered by other
providers other than Watertek Group as well as the price of Tax Control Disks offered by
Watertek Group to its other similar clients. Furthermore, our purchase price for tax server
assemblies and tax chips is comparable to the price offered by Watertek Group to its other
similar clients. To support our customers’ uses of such information security hardware,
Watertek Group directly provides our customers with the technical support and after-sales
client services. Watertek Group uses our cloud and on-premises financial & tax digitalization
solutions in its daily operation to digitalize, centralize and automate its e-invoice compliance
and tax management. Such cloud financial & tax solutions provided to the Watertek Group
FINANCIAL INFORMATION
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included, for each of 2021, 2022 and 2023, tax invoice compliance management solutions,
financial and tax management solutions, and also the solution delivery services in connection
with the offering of tax invoice compliance management solutions and financial and tax
management solutions for 2023. The on-premises financial & tax solutions which perform
financial and tax management functions on local devices were provided to Watertek Group in
2021 and 2023. The prices we offer to Watertek Group for such cloud and on-premises financial
& tax digitalization solutions are within the range of our usual prices offered to other customers
and comparable to the general market level. See “Business—Our Business” and
“Business—Pricing” for more details of our pricing.
Notwithstanding our long-standing cooperation with Watertek Group and that we consider
it as a valuable collaborator and investor, we do not consider our transactions with Watertek
Group to have a significant influence on our business operations or financial condition, as (1)
the transaction amounts with Watertek Group only account to an insignificant portion of our
total revenue and cost of sales, respectively, (2) no intellectual property that is material or
necessary to our business operations or R&D is procured or licensed from Watertek Group, and
(3) our demand for Tax Control Disks, tax chips and tax server assemblies is declining in light
of the government’s promotion of digital invoice along with the implementation of the Golden
Tax initiatives. For the years ended December 31, 2021, 2022 and 2023, the revenue from our
sales of cloud and on-premises financial & tax digitalization solutions to Watertek Group
accounted for 0.01%, 0.01% and 0.02% of our total revenue, respectively, and the cost of our
procurement of information security hardware and technical support and after-sales client
services from Watertek Group accounted for 1.96%, 1.78% and 0.27% of our total cost of sales,
respectively.
The following table sets forth our fund flows with Watertek Group during the Track
Record Period:
Y ear ended December 31,
2021 2022 2023
(RMB in thousands)
Fund outflows as a result of the
payment for the fees for procurement
information security hardware
and technical 5,076.1 6,060.4 1,636.1
Fund inflows as a result of the receipt
of the sales proceeds of cloud and
on-premises financial & tax
digitalization solutions 11.5 150.0 7.7
We do not have any relationship, side arrangements or projects with Watertek Group,
other than those disclosed above and in the section headed “History and Corporate Structure.”
FINANCIAL INFORMATION
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OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
transactions.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Our principal financial instruments comprise financial assets at FVTPL, trade and other
receivables, cash and cash equivalents, amount due from related parties, lease liabilities, trade
and other payables, amount due to related parties and financial liabilities at FVTPL. We are
exposed to a variety of financial risks, primarily including market risk, credit risk and liquidity
risk. Our overall risk management program focuses on the unpredictability of financial markets
and seeks to minimize potential adverse effects on our financial performance. Our senior
management is responsible for our risk management. We regularly monitor our exposure and
currently have not used any derivative financial instruments to hedge any of these financial
risks.
Market Risk
Interest Rate Risk
We are exposed to cash flow interest rate risk relating to our bank balances and cash with
market interest rate and market interest rate-indexed wealth management products. Our income
and operating cash flows are substantially independent of changes in market interest rates. We
are exposed to fair value interest risk relating to our term deposits, lease liabilities, wealth
management products and our shares with preferential rights. We manage our interest rate
exposures by assessing the potential impact arising from any interest rate movements based on
interest rate level and outlook. As of December 31, 2023, we have not used any interest rate
swaps to hedge our exposure to interest rate risk. For more details about our interest rate risk,
see Note 40 to the Accountants’ Report in Appendix I to this prospectus.
Price Risk
We are exposed to price risk relating to (1) wealth management products and associates
with preferential rights measured as financial assets at FVTPL, and (2) shares with preferential
rights and contingent consideration for acquiring an associate measured as financial liabilities
at FVTPL, because of changes in market prices, where changes are caused by factors specific
to the individual financial instruments or their issuers, or factors affecting all similar financial
instruments traded in the market. Our management considers the price risk on our investments
in the wealth management products is limited as the maturity periods of these investments are
short.
Credit Risk
We are exposed to credit risk relating to bank balances and cash, restricted bank deposits,
term deposits with maturity over three months, term deposits with maturity over one year, trade
and other receivables, as well as amounts due from related parties and contract assets. The
carrying amounts of each class of the above financial assets represent our maximum exposure
to credit risk in relation to financial assets.
FINANCIAL INFORMATION
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Our bank balances and cash, restricted bank deposits, term deposits with maturity over
three months and term deposits with maturity over one year are mainly deposited in
state-owned or reputable financial institutions in Mainland China. There has been no recent
history of default in relation to these financial institutions. We consider the instruments have
low credit risk because they have a low risk of default and the counterparty has a strong
capacity to meet its contractual cash flow obligations in the near term. The identified credit
losses are insignificant during the Track Record Period. We consider that there is no significant
credit risk and no material losses due to the default of the other parties.
To manage risk arising from trade receivables and amounts due from related parties of
trade nature, we have policies in place to ensure that credit terms are made to counterparties
with an appropriate credit history, and our management performs ongoing credit evaluations of
the counterparties. The credit period granted to the customers is typically between three to six
months from the invoice dates, and the credit quality of these customers is assessed, which
takes into account their financial position, past business dealings and other factors. In view of
the sound collection history of receivables due from them, to measure the expected credit
losses, trade receivables and amounts due from related parties of trade nature have been
grouped based on shared credit risk characteristics and aging. In addition, trade receivables and
amounts due from related parties of trade nature with significant balances or credit-impaired
are assessed for estimated credit loss individually.
For more details about our credit risks, including our maximum exposure, see Note 40 to
the Accountants’ Report in Appendix I to this prospectus.
DIVIDEND
During the Track Record Period, we did not declare any dividends. PRC laws require that
dividends be paid only out of net profits calculated according to PRC GAAP . PRC laws also
require foreign invested enterprises to set aside part of their net profit as statutory reserves,
which are not available for distribution as cash dividends. Distributions from our subsidiaries
may also be restricted if they incur debt or losses, or in accordance with any restrictive
covenants in bank credit facilities or other agreements that we or our subsidiaries may enter
into in the future. As a result, in view of our accumulated losses, we are not able to declare or
pay dividends under PRC laws, as advised by the PRC Legal Advisor.
Although the calculation of our distributable profits is in accordance with PRC GAAP or
IFRSs, whichever is lower, we do not expect such difference between distributable profits
calculated under PRC GAAP and IFRSs to be material or have any substantive impact on any
dividend to be declared. No dividend shall be declared or payable except out of our profits and
reserves lawfully available for distribution. As of the Latest Practicable Date, we did not set
any pre-determined dividend payout ratio after the Listing. The payment and amounts of
dividends (if any) depend on our results of operations, cash flows, financial position, statutory
and regulatory restrictions on the dividend paid by us, future prospects and other factors which
we consider relevant. The declaration, payment and amount of dividends will be subject to the
discretion of the Board in accordance with our Articles of Association, pursuant to which an
FINANCIAL INFORMATION
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annual profit distribution proposal shall be proposed and approved by the Board and then be
submitted to the Shareholders’ general meeting for consideration. We may distribute profits by
cash, Shares or a combination of cash and Shares. Our future declarations of dividends may or
may not reflect our historical declarations of dividends and will be determined by our
Shareholders.
DISTRIBUTABLE RESERVES
As of December 31, 2023, our Company had no distributable reserves. According to the
PRC Company Law, a PRC incorporated company is required to set aside at least 10% of its
after-tax profits each year, after making up previous year’s accumulated losses, if any, to
contribute to certain statutory reserve funds until the aggregate amount contributed to such
funds reached 50% of its registered capital. We may pay dividends out of after-tax profits after
making up for accumulated losses and contributing to statutory reserve funds as mentioned
above.
DISCLOSURE REQUIRED UNDER CHAPTER 13 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there are no
circumstances which, had we been required to comply with Rules 13.13 to 13.19 in Chapter 13
of the Listing Rules, would have given rise to a disclosure requirement under Rules 13.13 to
13.19 of the Listing Rules.
RECENT DEVELOPMENTS AND MATERIAL ADVERSE CHANGE
Subsequent to the Track Record Period and up to the Latest Practicable Date, there was
no material adverse change with respect to our business operations in all material respects. The
number of invoices issued with our cloud financial & tax digitalization solutions was 522.8
million in the four months ended April 30, 2024, as compared to 913.0 million in the four
months ended April 30, 2023. The number of viewing requests fulfilled for enterprise operation
reports was 7.3 million for the four months ended April 30, 2024, as compared to 4.7 million
in the four months ended April 30, 2023. The number of enterprises included in the enterprise
operation reports was 2.3 million in the four months ended April 30, 2024, as compared to 1.1
million in the four months ended April 30, 2023. After performing sufficient due diligence
work which our Directors consider appropriate and after due and careful consideration, our
Directors confirm that, save as disclosed in “Summary—Recent Developments and Material
Adverse Change—Operational and Financial Performance,” as of the date of this prospectus,
there has been no material adverse change in our financial and trading positions or prospects
since December 31, 2023, being the date on which our latest audited consolidated financial
statements were prepared, and there is no event since December 31, 2023 which would
materially affect the information in the Accountants’ Report set out in Appendix I to this
prospectus.
FINANCIAL INFORMATION
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COVID-19 OUTBREAK AND EFFECTS ON OUR BUSINESS
Since the COVID-19 outbreak, a series of precautionary and control measures have been
implemented worldwide to contain the virus. Government efforts to contain the spread of
COVID-19, including city “stay-at-home” advice, widespread business closures, travel
restrictions and emergency quarantines, have caused significant and unprecedented disruptions
to the global economy and normal business operations across sectors and countries.
However, the COVID-19 outbreak also temporarily affected our operations and financial
condition. During the regional resurgence of COVID-19, we had to temporarily close certain
of our offices. In addition, our ability to carry out effective sales and marketing activities were
also temporarily restrained by the pandemic. In response to the deteriorated financial
conditions of our customers as a result of the COVID-19 pandemic, we downwardly adjusted
the price of certain solutions in 2022, and have strengthened marketing efforts for our basic and
standardized cloud financial & tax digitalization solutions towards price-sensitive customers
with basic invoice processing needs, and we would constantly follow up with these customers
to up-sell our solutions. The COVID-19 pandemic did not adversely affect our solution pricing
in 2023.
In 2022, we experienced temporary delays in delivering our on-premises financial & tax
digitalization solutions primarily due to the impact of COVID-19. In addition, our dollar-based
retention rate for KA customers decreased in 2022, primarily due to delay in project delivery
as a result of the COVID-19 pandemic. Such decrease was also partially attributable to the
decrease in average customer spending in 2022, primarily due to the decrease in demand from
KA customers for digital invoice-related services as a result of the adverse impact of the
COVID-19 pandemic. Our contract liabilities increased from RMB130.6 million as of
December 31, 2021 to RMB165.5 million as of December 31, 2022, partially as a result of
delay in contract delivery. As our operations returned to normal since early 2023, we picked
up our solutions delivery pace and did not experience material delays in solution delivery, and
our contract liabilities decreased to RMB122.7 million as of December 31, 2023. Our contract
costs increased from RMB54.7 million as of December 31, 2021 to RMB80.1 million as of
December 31, 2022, partially due to the increase in costs associated with our service contracts
that were not completed as of the end of 2022 due to the impact of the COVID-19 pandemic.
As of the Latest Practicable Date, we did not experience material business disruptions or
operating difficulties due to the COVID-19 outbreak. We believe the COVID-19 outbreak has
not materially affected our business relationships with our business partners. Based on the
above, our Directors are of the view that the COVID-19 outbreak had not had any material
adverse impact on our operations and financial performance during the Track Record Period
and up to the Latest Practicable Date. We have seen an increase in demands for enterprise
digitalization solutions from customers, as offline business activities have been curtailed as a
result of the national and regional quarantine measures.
We adopted several precautionary measures to maintain a safe and hygienic working
environment, such as adopting COVID-19 disinfecting techniques for our offices, distributing
masks for employees, adopting flexible working schedules and locations, and implementing
internal reporting system.
FINANCIAL INFORMATION
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See “Risk Factors—Risks Relating to Our Business and Industry—Any catastrophe,
including outbreaks of health pandemics and other extraordinary events, could have a negative
impact on our business operations” for more details of the risks we are exposed to due to health
epidemics and other outbreaks.
UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED TOTAL TANGIBLE
ASSETS LESS LIABILITIES OF OUR GROUP
The following unaudited pro forma adjusted consolidated total tangible assets less
liabilities of our Group has been prepared in accordance with Rule 4.29 of the Listing Rules
and with reference to Accounting Guideline 7 “Preparation of Pro Forma Financial Information
for inclusion in Investment Circulars” issued by the HKICPA for illustrative purposes only, and
is set out here to illustrate the effect of the Global Offering on our consolidated tangible assets
as of December 31, 2023 as if it had taken place on that date.
Our unaudited pro forma adjusted consolidated total tangible assets less liabilities of our
Group has been prepared for illustrative purposes only and because of its hypothetical nature,
it may not give a true picture of our financial position had the Global Offering been completed
as of December 31, 2023 or any future date. It is prepared based on our consolidated net
tangible assets as of December 31, 2023 as set out in the Accountants’ Report in Appendix I
to this prospectus, and adjusted as described below.
Audited
consolidated total
tangible assets less
liabilities of our
Group attributable
to owners of our
Company as of
December 31,
2023 (1)
Estimated net
proceeds from
the Global
Offering (2)
Unaudited pro
forma adjusted
consolidated total
tangible assets less
liabilities of our
Group attributable
to owners of our
Company as of
December 31,
2023
Unaudited pro forma
adjusted consolidated
total tangible assets less
liabilities of our Group
attributable to owners
of our Company as of
December 31, 2023
per Share (3)
(RMB in thousands) RMB HK$ (4)
Based on the Offer
Price of
HK$36.00 per
Share (1,402,717) 255,347 (1,147,370) (7.69) (8.44)
Based on the Offer
Price of
HK$40.00 per
Share (1,402,717) 287,084 (1,115,633) (7.47) (8.20)
FINANCIAL INFORMATION
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(1) The unaudited pro forma statement of adjusted consolidated total tangible assets less liabilities of our
Group attributable to owners of our Company as of December 31, 2023 is based on the consolidated net
liabilities attributable to owners of our Company amounted to RMB1,396,215,000, with adjustments for
intangible assets of our Group as of December 31, 2023 of RMB6,502,000 extracted from the
Accountants’ Report set forth in Appendix I to the prospectus.
(2) The estimated net proceeds from the Global Offering are based on 9,262,000 new Shares to be issued
at the Offer Price of HK$36.00 and HK$40.00 per Offer Share, being the low end and high end of the
indicated Offer Price range and excluding listing expenses already charged to the consolidated
statements of profit or loss during the Track Record Period, respectively, after deduction of the
estimated underwriting fees and other related expenses expected to be incurred by us. The calculation
of such estimated net proceeds does not take into account (i) any Shares which may be allotted and
issued upon the exercise of the Over-allotment Option or (ii) any Shares which may be issued or
repurchased by the Company pursuant to the general mandates. For the purpose of the estimated net
proceeds from the Global Offering, the amount denominated in Hong Kong dollars has been converted
into Renminbi at an exchange rate of HK$1.0000 to RMB0.9114, which was the exchange rate
prevailing on June 19, 2024 with reference to the rate published by the People’s Bank of China. No
representation is made that Hong Kong dollar amounts have been, could have been or may be converted
to Renminbi, or vice versa, at that rate or at any other rates or at all.
(3) The number of shares used for the calculation of our unaudited pro forma adjusted consolidated total
tangible assets less liabilities attributable to our owners per Share is based on 149,262,000 Shares
outstanding immediately following completion of the Global Offering. It does not take into account (i)
any Shares which may be allotted and issued upon the exercise of the Over-allotment Option; (ii) any
Shares which may be issued or repurchased by us pursuant to the general mandates or (iii) cessation of
the preferential rights of shares with preferential rights.
(4) Our unaudited pro forma adjusted consolidated total tangible assets less liabilities attributable to our
owners per Share is converted from Renminbi to Hong Kong dollars at the rate of HK$1.0000 to
RMB0.9114, which was the exchange rate prevailing on June 19, 2024 with reference to the rate
published by the People’s Bank of China. No representation is made that the Renminbi amounts have
been, would have been or may be converted to Hong Kong dollars, or vice versa, at that rate or at any
other rates or at all.
(5) No adjustment has been made to our unaudited pro forma adjusted consolidated total tangible assets less
liabilities attributable to our owners as of December 31, 2023 to reflect any operating result or our other
transactions entered into subsequent to December 31, 2023. In particular, our unaudited pro forma
adjusted consolidated total tangible assets less liabilities attributable to our owners have not been
adjusted to illustrate the effect of the following:
Upon completion of the Global Offering, the cessation of the preferential rights of shares with
preferential rights would have resulted in a reclassification of such financial liabilities at carrying
amount of RMB2,212,629,000 as of December 31, 2023 (the “Shares Reclassification”) assuming no
further changes in fair values of shares with preferential rights existing on December 31, 2023 upon
Global Offering, to ordinary shares under equity.
The effect of Shares Reclassification would have increased the total number of Shares in issue
assumption stated in Note 3 by 76,644,754 Shares to a total of 225,906,754 Shares and would have
adjusted our unaudited pro forma adjusted consolidated total tangible assets less liabilities attributable
to our owners as of December 31, 2023 by RMB2,212,629,000 to RMB1,065,259,000 based on an Offer
Price of HK$36.00 per Offer Share and RMB1,096,996,000 based on an Offer Price of HK$40.00 per
Offer Share. Had the Shares Reclassification been taken into account, our unaudited pro forma adjusted
consolidated total tangible assets less liabilities attributable to our owners as of December 31, 2023 per
Share would be RMB4.72 (equivalent to HK$5.18) based on an Offer Price of HK$36.00 per Offer Share
and RMB4.86 (equivalent to HK$5.33) based on an Offer Price of HK$40.00 per Offer Share,
respectively.
For the purpose of our unaudited pro forma adjusted consolidated total tangible assets less liabilities
attributable to our owners per Share, the amount denominated in Renminbi has been converted into
Hong Kong dollars at the rate of HK$1.0000 to RMB0.9114, which was the exchange rate prevailing on
June 19, 2024 with reference to the rate published by the People’s Bank of China. No representation is
made that the Renminbi-denominated amounts have been, could have been or may be converted to Hong
Kong dollars, or vice versa, at that rate or any other rates or at all.
FINANCIAL INFORMATION
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FUTURE PLANS
See “Business—Growth Strategies” for a detailed description of our future plans.
USE OF PROCEEDS
We estimate that the net proceeds of the Global Offering, after deducting the estimated
underwriting commissions and other fees and expenses paid or payable by us in connection
with the Global Offering, will be approximately HK$246.3 million, assuming an Offer Price of
HK$38.00 per Share (being the mid-point of the indicative range of the Offer Price of
HK$36.00 to HK$40.00 per Share), and that the Over-allotment Option is not exercised.
We currently intend to use the net proceeds from the Global Offering for the purposes and
in the amounts as set out below:
For the year ending December 31,
2024 2025 2026 2027 2028 2029
(HK$ in millions)
Solution upgrade and
function enhancement 5.5 7.6 11.5 14.4 17.1 21.4
Research & development 5.2 6.4 6.8 13.7 19.7 20.7
Sales and marketing
initiatives 4.9 5.8 6.0 7.9 10.2 12.8
Selective acquisitions and
investments 1.9 3.3 3.8 4.7 6.5 8.0
Working capital and other
general purposes 1.0 1.5 2.5 3.5 5.3 6.7
Total 18.5 24.6 30.6 44.2 58.8 69.6
The basis and details of our estimated use of the net proceeds are set out as below.
 Approximately 31.5% of the net proceeds, or HK$77.5 million (RMB71.0 million),
will be used to upgrade and enhance the functions and features of our solutions and
further expand our solution portfolio. See “Business—Growth Strategies—Continue
to enrich solution functions and expand solution portfolio” for details.
FUTURE PLANS AND USE OF PROCEEDS
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(1) Approximately 15.1% of the net proceeds, or HK$37.3 million (RMB34.2
million), will be used primarily to enhance the function of our current solutions
and services to meet the evolving demand from customers. Specifically, we
intend to:
(i) utilize AI technologies to achieve the fully automated processing of
transaction documents and reduce enterprises’ compliance risks by
improving the multi-scenario tax invoice processing capability, in order
to meet customers’ demand as a result of the implementation of digital
invoice reform. We plan to recruit a total of 27 product development
specialists over the course of six years to implement our plan, with an
estimated average annual salary of approximately RMB0.3 million.
Approximately HK$8.1 million of the net proceeds from the Global
Offering will be used to provide salary and compensation for such
personnel. Approximately HK$6.0 million will be used to purchase
software and hardware equipment for such personnel’s use in office.
(ii) upgrade the digitalization modules for the filing and management of
digital transaction documents to improve automatic processing capability.
We plan to recruit a total of 16 product development specialists over the
course of six years to implement our plan, with an estimated average
annual salary of approximately RMB0.3 million. Approximately HK$4.8
million of the net proceeds from the Global Offering will be used to
provide salary and compensation for such personnel. Approximately
HK$3.4 million will be used to purchase software and hardware
equipment for such personnel’s use in office.
(iii) upgrade the reconciliation and automation modules in the supply chain
collaboration solutions to improve automation features, in order to
accommodate the implementation of the digital invoice reform. We plan
to recruit a total of 15 product development specialists over the course of
six years to implement our plan, with an estimated average annual salary
of approximately RMB0.3 million. Approximately HK$4.5 million of the
net proceeds from the Global Offering will be used to provide salary and
compensation for such personnel. Approximately HK$3.0 million will be
used to purchase software and hardware equipment for such personnel’s
use in office.
(iv) enhance the risk control capability of risk management services to lay the
foundation of our model-as-a-service business. We plan to standardize the
risk control functions of our risk management services based on different
financing models and scenarios and devise risk control models with wide
applicability that address customers’ risk control needs. We plan to recruit
a total of 15 product development specialists over the course of six years
to implement our plan, with an estimated average annual salary of
approximately RMB0.3 million. Approximately HK$4.5 million of the
FUTURE PLANS AND USE OF PROCEEDS
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net proceeds from the Global Offering will be used to provide salary and
compensation for such personnel. Approximately HK$3.0 million will be
used to purchase software and hardware equipment for such personnel’s
use in office.
(2) Approximately 16.3% of the net proceeds, or HK$40.2 million (RMB36.8
million) will be used to launch new solution offerings to satisfy customer
demands for diversified solutions and services. Specifically, we plan to:
(i) diversify the type of transaction documents that can be automatically
processed. We plan to recruit a total of 10 product development
specialists over the course of six years to implement our plan, with an
estimated average annual salary of approximately RMB0.5 million.
Approximately HK$5.0 million of the net proceeds from the Global
Offering will be used to provide salary and compensation for such
personnel. Approximately HK$4.2 million will be used to purchase
software and hardware equipment for such personnel’s use in office.
(ii) build a tax platform to host more financial & tax management solutions
tailored to the requirement of digital invoice reform. Compared with our
existing solutions, the service scope and management functions of the
financial & tax management solutions to be deployed through the tax
platform will evolve with the Golden Tax Project. For example, such
solutions could expand the scope of automatic tax calculation based on AI
technology and the gradual refinement of digital invoice data, and
upgrade and improve the filing interface as the SA T launches their pilot
reform to realize direct connection with electronic taxation bureaus. We
plan to recruit a total of 10 product development specialists over the
course of six years to implement our plan, with an estimated average
annual salary of approximately RMB0.5 million. Approximately HK$5.0
million of the net proceeds from the Global Offering will be used to
provide salary and compensation for such personnel. Approximately
HK$4.2 million will be used to purchase software and hardware
equipment for such personnel’s use in office.
(iii) build multi-industry collaboration platforms that form collaborative
processing engines for specific business and transaction documents. Our
current supply chain collaboration solutions are not designed to
accommodate industry-specific scenarios, including document templates,
matching algorithm and reconciliation and billing management.
Compared with our existing solutions, we intend to increase the network
collaboration functions of our multi-industry collaboration platform,
enhance the docking ability for third-party collaboration platforms, and
improve the connectivity of business network platforms within our
business ecosystem. We also plan to expand the applications of our
FUTURE PLANS AND USE OF PROCEEDS
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supply chain collaboration solutions to, among others, enable enterprises
to automatically initiate reconciliation functions, such as automatic
calculation of the rebate in accordance with billing period and automatic
invoicing. We currently plan to first apply such collaborative processing
platform to logistics and commerce industries. For the logistics industry,
our collaboration platforms will enable information sharing, collaborative
operation and real-time data tracking among participants to improve their
logistics efficiency and visibility and reduce costs. For the commerce
industry, leveraging our data analytics capabilities, we intend to integrate
and analyze supply chain-related financial and tax data to support
enterprise customers business projections and decision-making and
optimize their supply chain management and risk control. We plan to
recruit a total of 23 product development specialists over the course of six
years to implement our plan, with an estimated average annual salary of
approximately RMB0.5 million. Approximately HK$11.5 million of the
net proceeds from the Global Offering will be used to provide salary and
compensation for such personnel. Approximately HK$0.4 million will be
used to purchase software and hardware equipment for such personnel’s
use in office.
(iv) improve our big data technology to extend the application of data-driven
analytics services into financial products for industry-specific supply
chain participants and business partners of corporate conglomerates. We
plan to recruit a total of 13 product development specialists over the
course of six years to implement our plan, with an estimated average
annual salary of approximately RMB0.5 million. Approximately HK$6.5
million of the net proceeds from the Global Offering will be used to
provide salary and compensation for such personnel. Approximately
HK$3.4 million will be used to purchase software and hardware
equipment for such personnel’s use in office.
 Approximately 29.4% of the net proceeds, or HK$72.5 million (RMB66.4
million), will be used to enhance R&D capabilities. See “Business—Growth
Strategies—Invest in core technologies and drive product innovation on Baiwang
Cloud platform” for details.
(1) Approximately 19.5% of the net proceeds, or HK$48.0 million (RMB44.0
million), will be used to expand our internal R&D teams and enhance our R&D
efficiency. We intend to hire R&D talents that specialize in software and
product development, architect, algorithm, testing and maintenance. We intend
to recruit a total of 55 R&D specialists over the course of six years. We expect
such personnel to hold bachelor degrees or above with more than three years
of work experiences in the above mentioned areas. We expect annual salary and
compensation of these personnel to range from RMB0.2 million to RMB0.6
million.
FUTURE PLANS AND USE OF PROCEEDS
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(2) Approximately 3.6% of the net proceeds, or HK$8.8 million (RMB8.1 million),
will be used to optimize and develop our existing infrastructures. Specifically,
we intend to (i) purchase R&D equipment, such as cloud servers, network
equipment and mobile devises, to ensure the stable and smooth operation of
our R&D and testing activities; (ii) procure software and systems, such as
cloud database, ERP , finance, payment and other system software, to conduct
integration tests of our solutions and the relevant finance and tax systems; and
(iii) acquire or develop our software copyrights and patents to protect our
intellectual property rights, such as software copyrights for our financial and
tax management system, tax platform, and co-pilot system, which currently
only supports simple rule-based Q&A interaction relating to invoice issuance
and will be updated to achieve multi-scenario interactions, including voice-
directed invoice issuance.
(3) Approximately 6.4% of the net proceeds, or HK$15.7 million (RMB14.4
million), will be used to build and upgrade our middle platforms, which consist
of our business operation platform, data platform and technology platform.
Currently, our middle platforms have achieved preliminary data aggregation,
module integration for basic invoice issuance and integration of technical
framework and components. We intend to increase our overall investment in
the middle platforms, and develop and optimize solutions that utilize data
modeling and advanced cloud-native technologies, such as micro services and
service-oriented architecture. Our current business operation platform
abstracts and modularizes our core business capabilities, manages and
integrates common business processes across departments and business lines,
and supports new business requirements by shortening the research and
development cycle for new product and services. The development of such
business operation platform helps improve our R&D efficiency by enabling
R&D teams to directly build new business scenarios based on standardized
modules, reduce work related to code writing and testing, and control solution
invention and maintenance costs. Our current data platform aggregates data
sources from various business lines, processes and analyzes such data, and
delivers processed data across departments. The development of such data
platform helps improve our R&D efficiency by granting R&D teams direct
access to processed and reliable data, while enhancing their data analytics
capability through self-service analysis tools and algorithm libraries. Our
current technology platform offers technical framework and components
necessary for our daily operations. The development of such technology
platform helps improve our R&D efficiency by providing an unified technical
infrastructure that automates development processes with standardized tools.
We believe these upgrades would facilitate the centralization of all product
lines based on modules and functions with common features, so as to expand
the data scope of our data middle platforms and reduce intermediary data
retention.
FUTURE PLANS AND USE OF PROCEEDS
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 Approximately 19.3% of the net proceeds, or HK$47.5 million (RMB43.5 million),
will be used to develop our sales and marketing initiatives. We intend to build and
scale our sales network in southwestern, central, northeastern and northwestern
China to establish a nationwide customer network. We intend to recruit a total of
approximately 30 sales and marketing personnel over the course of six years to be
stationed in these regions, and invest resources to support their sales and marketing
activities. Such personnel shall possess three years of work experiences in
business-to-business sales, public relations, customer relationship management and
marketing. We expect annual salary and compensation for these personnel to range
from RMB0.2 million to RMB0.4 million. See “Business—Growth
Strategies—Expand customer base in more industry verticals and improve
monetization opportunities” for details.
 Approximately 11.5% of the net proceeds, or HK$28.2 million (RMB25.8 million),
will be used to collaborate with, and selectively pursue strategic investment and
acquisition opportunities that are complementary or synergistic with our businesses
to expand our existing product and service offerings, improve our technology
capabilities and enhance our value propositions to our customers. Specifically, we
will consider investing in or acquiring companies that develop cloud products for
financial and tax management to complement our cloud service matrix, and
companies that specialize in promoting financial and tax digitalization products
within their respective provincial territories to extend our sales and marketing
outreach. We may also make minority equity investments and increase shareholding
in our current equity investees. For our minority investees, we intend to exercise our
influence and safeguard our interest through directorship appointment and active
participation in shareholder and board meetings. When evaluating target companies,
we will take into consideration their (1) expected synergy with our business, (2)
technology and expertise, (3) operating history, (4) ability to bring in new business
opportunities and (5) financial performance. We expect the valuation of target
companies acquired or invested by us to range from RMB10 million to RMB20
million per target Company. Based on our industry intelligence and concurred by the
Industry Consultant, our Directors believe that we will be able to identify suitable
acquisition targets that satisfy our selection criteria. As advised by the Industry
Consultant, as of December 31, 2023, there were more than 50 companies that
developed cloud products for financial and tax management and several hundreds of
companies that specialize in promoting financial and tax digitalization products in
China. As of the date of this prospectus, we have not identified any investment target
or entered into any definitive investment agreement. See “Business—Growth
Strategies—Cultivate business ecosystem through strategic cooperation, investment,
mergers and acquisitions” for details.
 Approximately 8.3% of the net proceeds, or HK$20.5 million (RMB18.8 million),
for working capital and other general corporate purposes.
FUTURE PLANS AND USE OF PROCEEDS
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The above allocation of the proceeds will be adjusted on a pro rata basis in the event that
the Offer Price is fixed below or above the mid-point of the indicative price range. Any
additional proceeds received from the exercise of the Over-allotment Option will also be
allocated to the above purposes on a pro rata basis. In the event that the Over-allotment Option
is exercised in full, we will receive net proceeds of HK$295.9 million (after deducting the
estimated underwriting commissions and other fees and expenses payable by us in connection
with the Global Offering and assuming an Offer Price of HK$38.00 per Share, being the
mid-point of our indicative Offer Price range).
To the extent that the net proceeds are not immediately used in accordance with the
specified plans, we intend to deposit such proceeds into short-term interest-bearing accounts
at licensed commercial banks and/or other authorized financial institutions (as defined under
the Securities and Futures Ordinance or the applicable laws and regulations in other
jurisdictions).
FUTURE PLANS AND USE OF PROCEEDS
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HONG KONG UNDERWRITERS
Haitong International Securities Company Limited
CMB International Capital Limited
Fosun International Securities Limited
Huatai Financial Holdings (Hong Kong) Limited
BOCI Asia Limited
Shenwan Hongyuan Securities (H.K.) Limited
Futu Securities International (Hong Kong) Limited
Livermore Holdings Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering.
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a
conditional basis. The International Offering is expected to be fully underwritten by the
International Underwriters. If, for any reason, the Offer Price is not agreed between the
Sponsor-OC (for itself and on behalf of the Underwriters) and our Company, the Global
Offering will not proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 926,200 Hong
Kong Offer Shares and the International Offering of initially 8,335,800 International Offer
Shares, subject, in each case, to reallocation on the basis as described in the section headed
“Structure of the Global Offering” as well as to the Over-allotment Option (in the case of the
International Offering).
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering the Hong
Kong Offer Shares for subscription by the public in Hong Kong on the terms and conditions
set out in this prospectus and the Hong Kong Underwriting Agreement at the Offer Price.
UNDERWRITING
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Subject to (a) the Listing Committee granting approval for the listing of, and permission
to deal in, the H Shares to be offered pursuant to the Global Offering (including any additional
H Shares that may be issued pursuant to the exercise of the Over-allotment Option) and the H
Shares to be converted from Domestic Shares upon to Listing pursuant to the Conversion of
Domestic Shares to H Shares on the Main Board of the Stock Exchange and such approval not
subsequently having been revoked prior to the commencement of trading of the H Shares on
the Stock Exchange and (b) certain other conditions set out in the Hong Kong Underwriting
Agreement, the Hong Kong Underwriters have agreed severally but not jointly to procure
subscribers for, or themselves to subscribe for, their respective applicable proportions of the
Hong Kong Offer Shares being offered which are not taken up under the Hong Kong Public
Offering on the terms and conditions set out in this prospectus and the Hong Kong
Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional on and subject to, among other
things, the International Underwriting Agreement having been executed and becoming
unconditional and not having been terminated in accordance with its terms.
Grounds for Termination
If any of the events set out below occur at any time prior to 8:00 a.m. on the Listing Date,
the Sponsor-OC (for itself and on behalf of the Hong Kong Underwriters and the Capital
Market Intermediaries) may, in their sole and absolute discretion and upon giving notice in
writing to the Company, terminate the Hong Kong Underwriting Agreement with immediate
effect:
(a) there develops, occurs, exists or comes into effect:
(i) any new law or regulation or any change or development involving a
prospective change or any event or series of events or circumstances likely to
result in a change or a development involving a prospective change in existing
laws or regulations, or the interpretation or application thereof by any court or
any competent Governmental Authority in or affecting Hong Kong, the PRC,
the United States, the United Kingdom, and the European Union (as a whole)
(each a “ Relevant Jurisdiction ” and collectively, the “ Relevant
Jurisdictions ”); or
(ii) any change or development involving a prospective change, or any event or
series of events or circumstances likely to result in a change or prospective
change, in any local, national, regional or international financial, political,
military, industrial, economic, fiscal, legal, regulatory, currency, credit or
market conditions or sentiments, Taxation, equity securities or currency
exchange rate or controls or any monetary or trading settlement system, or
foreign investment regulations (including, without limitation, a devaluation of
the Hong Kong dollar, United States dollar or Renminbi against any foreign
currencies, a change in the system under which the value of the Hong Kong
UNDERWRITING
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dollar is linked to that of the United States dollar or the Renminbi is linked to
any foreign currency or currencies) or other financial markets (including,
without limitation, conditions and sentiments in stock and bond markets,
money and foreign exchange markets, the inter-bank markets and credit
markets) in or affecting any Relevant Jurisdictions, or affecting an investment
in the Offer Shares; or
(iii) any event or series of events, or circumstances in the nature of force majeure
(including, without limitation, any acts of government, declaration of a
regional, national or international emergency or war, calamity, crisis, economic
sanctions, strikes, labor disputes, other industrial actions, lock-outs, fire,
explosion, flooding, tsunami, earthquake, volcanic eruption, civil commotion,
riots, rebellion, public disorder, paralysis in government operations, acts of
war, epidemic, pandemic, outbreak or escalation, mutation or aggravation of
diseases, (including without limitation COVID-19, SARS, MERS, H5N1,
H1N1, swine or avian influenza or such related/mutated forms), accident or
interruption or delay in transportation) in or affecting any of the Relevant
Jurisdictions, or without limiting the foregoing, any local, national, regional or
international outbreak or escalation of hostilities (whether or not war is or has
been declared), act of God or act of terrorism (whether or not responsibility has
been claimed), or other state of emergency or calamity or crisis in or affecting
any of the Relevant Jurisdictions; or
(iv) any moratorium, suspension or limitation (including without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) on the trading in shares or securities generally on the Stock Exchange,
the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the New Y ork
Stock Exchange, the NASDAQ Global Market or the London Stock Exchange;
or
(v) any general moratorium on banking activities in or affecting any of the
Relevant Jurisdictions or any disruption in commercial banking or foreign
exchange trading or securities settlement or clearing services, procedures or
matters in or affecting any of the Relevant Jurisdictions; or
(vi) other than with the prior written consent of the Sponsor-OC, the issue or
requirement to issue by the Company of a supplement or amendment to the
Prospectus or other documents in connection with the offer and sale of the
Offer Shares pursuant to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance or the Listing Rules or upon any requirement or request
of the Stock Exchange and/or the SFC; or
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(vii) the commencement by any Governmental Authority or other regulatory body or
organization of any public action or investigation against a Group Company or
a Director in his/her capacity as such or announcing an intention to take any
such action; or
(viii) the imposition of sanctions or export controls on any Group Company or any
of the Controlling Shareholders, or the withdrawal of trading privileges which
existed on the date of this Agreement, in whatever form, directly or indirectly,
by, or for, any Relevant Jurisdiction; or
(ix) any valid demand by creditors for repayment of indebtedness of any member
of the Group or in respect of which any member of the Group is liable prior to
its stated maturity; or
(x) any non-compliance of the Prospectus (or any other documents used in
connection with the contemplated offering, allotment, issue, subscription or
sale of any of the Offer Shares) or any aspect of the Global Offering with the
Listing Rules or any other applicable Laws; or
(xi) any litigation, dispute, legal action or claim or regulatory or administrative
investigation or action being threatened, instigated or announced against any
member of the Group or any Controlling Shareholder or any Director as named
in the Prospectus; or
(xii) any contravention by the Company or any executive Director of the Listing
Rules or applicable Laws; or
(xiii) any change or prospective change, or a materialization of, any of the risks set
out in the section headed “Risk Factors” in the Prospectus,
which, in any such case individually or in the aggregate, in the sole and absolute
opinion of the Sole Sponsor and the Sponsor-OC (for itself and on behalf of the
Hong Kong Underwriters):
(A) has or will or may have a material adverse effect, whether directly or indirectly,
on the assets, liabilities, business, general affairs, management, prospects,
shareholders’ equity, profits, losses, results of operations, position or
condition, financial or otherwise, or performance of the Company or the Group
as a whole;
(B) has or will or may have a material adverse effect on the success of the Global
Offering or the level of applications under the Hong Kong Public Offering or
the level of indications of interest under the International Offering; or
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(C) makes or will make or may make it impracticable, inadvisable, inexpedient or
incapable for any material part of this Agreement, the Hong Kong Public
Offering or the Global Offering to be performed or implemented as envisaged
or to market the Global Offering or the delivery or distribution of the Offer
Shares on the terms and in the manner contemplated by the Offering
Documents; or
(D) has or will or may have the effect of making any material part of this
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 Sponsor and the Sponsor-OC (for itself and
on behalf of the Hong Kong Underwriters) that:
(i) any statement contained in any of the Offering Documents, the CSRC Filings
and/or 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) (the “ Global Offering Documents ”) was, when it was issued, or has
become untrue, incorrect, inaccurate in any material respect or misleading; or
that any estimate, forecast, expression of opinion, intention or expectation
contained in any such documents, was, when it was issued, or has become
unfair or misleading in any respect or based on untrue, dishonest or
unreasonable assumptions or given in bad faith; or
(ii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of the Hong Kong Prospectus,
constitute a material omission or misstatement in any Global Offering
Document; or
(iii) any breach of, or any event or circumstance rendering untrue or incorrect or
misleading in any respect, any of the warranties given by the Company or the
Controlling Shareholders in this Agreement or the International Underwriting
Agreement; or
(iv) any event, act or omission which gives rise or is likely to give rise to any
material liability of any of the Indemnifying Parties pursuant to the indemnities
in this Agreement; or
(v) any material breach of any of the obligations or undertakings imposed upon the
Company or any member of the Controlling Shareholders to this Agreement or
the International Underwriting Agreement; or
UNDERWRITING
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(vi) that the chairlady of the Board or the chief executive officer as named in the
Prospectus seeks to retire, or is removed from office or vacating her office; or
(vii) the chairlady of the Board or the chief executive officer as named in the
Prospectus is being charged with an indictable offence or prohibited by
operation of law or otherwise disqualified from taking part in the management
or taking directorship of a company; or
(viii) the Company withdraws the Prospectus or the Global Offering; or
(ix) that the approval by the Listing Committee of the listing of, and permission to
deal in, the H Shares in issue and to be issued pursuant to the Global Offering
(including pursuant to any exercise of the Over-allotment Option) 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, cancelled,
qualified (other than by customary conditions), revoked or withheld; or
(x) any expert (other than the Sole Sponsor) has withdrawn its consent to the issue
of the Prospectus with the inclusion of its reports, letters and/or legal opinions
(as the case may be) and references to its name included in the form and
context in which it respectively appears; or
(xi) any prohibition on the Company for whatever reason from offering, allotting,
issuing or selling any of the Offer Shares pursuant to the terms of the Global
Offering; or
(xii) a court order or valid petition is presented for the winding-up or liquidation of
the Company or the principal subsidiaries of the Company as referred to in the
Prospectus, or the Company or the principal subsidiaries of the Company as
referred to in the Prospectus make any composition or arrangement with its
creditors or enters into a scheme of arrangement or any resolution is passed for
the winding-up of the Company or the principal subsidiaries of the Company
as referred to in the Prospectus or a provisional liquidator, receiver or manager
is appointed over all or part of the assets or undertaking of the Company or the
principal subsidiaries of the Company as referred to in the Prospectus or
anything analogous thereto occurs in respect of the Company or the principal
subsidiaries of the Company as referred to in the Prospectus; or
(xiii) (A) the notice of acceptance of the CSRC Filings issued by the CSRC and/or
the results of the CSRC Filings published on the website of the CSRC is
rejected, withdrawn, revoked or invalidated; or (B) other than with the prior
written consent of the Sponsor-OC, the issue or requirement to issue by the
UNDERWRITING
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Company of a supplement or amendment to the CSRC Filings pursuant to the
CSRC Rules or upon any requirement or request of the CSRC; or (C) any
non-compliance of the CSRC Filings with the CSRC Rules or any other
applicable Laws; or
(xiv) that a material portion of the orders placed or confirmed in the bookbuilding
process, or investment commitments made by any cornerstone investors under
the Cornerstone Investment Agreement signed with such cornerstone investor,
has been withdrawn, terminated or cancelled.
Undertakings to the Stock Exchange pursuant to the Listing Rules
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, our Company has undertaken to the Stock
Exchange that it will not issue any further Shares, or securities convertible into equity
securities of our Company (whether or not of a class already listed) or enter into any agreement
to such an issue within six months from the Listing Date (whether or not such issue of Shares
or securities will be completed within six months from the Listing Date), except (a) pursuant
to the Global Offering and the Over-allotment Option or (b) under any of the circumstances
provided under Rule 10.08 of the Listing Rules.
Undertakings by the Controlling Shareholders
Pursuant to Rule 10.07(1) of the Listing Rules, each of the Controlling Shareholders has
irrevocably and unconditionally undertaken to the Stock Exchange and our Company that,
except in compliance with the requirements of the Listing Rules, she/it shall not and shall
procure that the relevant registered holder(s) will not, either directly or indirectly:
(a) in the period commencing on the date by reference to which disclosure of his/her
shareholding in our Company is made in this prospectus and ending on the date
which is six months from the Listing Date (the “First Six-Month Period”), dispose
of, nor enter into any agreement to dispose of or otherwise create any options, rights,
interests or encumbrances in respect of any of the securities of our Company in
respect of which she/it is shown in this prospectus to be the beneficial owner(s); or
(b) in the period of six months commencing on the date on which the First Six-Month
Period expires (the “Second Six-Month Period”), dispose of, nor enter into any
agreement to dispose of or otherwise create any options, rights, interests or
encumbrances in respect of any of the securities referred to in paragraph (a) above
if, immediately following such disposal or upon the exercise or enforcement of such
options, rights, interests or encumbrances, she/it would cease to be a controlling
shareholder (as defined in the Listing Rules) of our Company.
UNDERWRITING
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Pursuant to Note (3) to Rule 10.07(2) of the Listing Rules, each of the Controlling
Shareholders has irrevocably and unconditionally undertaken to the Stock Exchange and our
Company that, within the period commencing on the date by reference to which disclosure of
his/her shareholding in our Company is made in this prospectus and ending on the date which
is twelve months from the Listing Date, she/it shall and shall procure that the relevant
registered holder(s) will:
(a) when she/it pledges or charges any securities of our Company beneficially owned by
him/her in favor of an authorized institution (as defined in the Banking Ordinance
(Chapter 155 of the Laws of Hong Kong)) pursuant to Note (2) to Rule 10.07(2) of
the Listing Rules, immediately inform our Company of such pledge/charge together
with the number of the securities so pledged or charged; and
(b) when she/it receives any indication, either verbal or written, from the pledgee or
chargee that any of the pledged/charged securities will be disposed of, immediately
inform our Company of such indications.
Our Company will inform the Stock Exchange as soon as it has been informed of the
matters referred to in paragraph (a) and (b) above (if any) by any of the Controlling
Shareholders and subject to the then requirements of the Listing Rules disclose such matters
by way of an announcement which is published in accordance with Rule 2.07C of the Listing
Rules as soon as possible.
Undertakings pursuant to the Hong Kong Underwriting Agreement
Undertakings by our Company and the Controlling Shareholders in respect of our Company
Pursuant to the Hong Kong Underwriting Agreement, our Company has undertaken to
each of the Sole Sponsor, the Sponsor-OC, the Overall Coordinators, the Joint Global
Coordinators, the CMIs, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters that except pursuant to the Global Offering (including pursuant to the
Over-allotment Option), at any time after the date of the Hong Kong Underwriting Agreement
up to and including the date falling six months after the Listing Date (the “First Six Month
Period”), it will not, without the prior written consent of the Sole Sponsor and the Sponsor-OC
(for itself and on behalf of the Hong Kong Underwriters) and unless in compliance with the
requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, assign, 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 an Encumbrance over, or agree to transfer or dispose
of or create an Encumbrance over, either directly or indirectly, conditionally or
unconditionally, or repurchase, any legal or beneficial interest in the share capital or
any other securities of the Company or any interest in any of the foregoing
UNDERWRITING
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(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 share capital or other securities of the Company, as applicable), or
deposit any share capital or other securities of the Company, as applicable, with a
depositary in connection with the issue of depositary receipts; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of the H
Shares or any other securities of the Company, or any interest in any of the foregoing
(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 H Shares); or
(c) enter into any transaction with the same economic effect as any transaction specified
in (a) and (b) above; or
(d) offer to or agree to or announce any intention to effect any transaction specified in
(a), (b) and (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be
settled by delivery of H Shares or other equity securities of our Company in cash or
otherwise (whether or not the issue of such H Shares or other securities convertible into
equity securities will be completed within the First Six-Month Period).
At any time during the period of six months commencing on the date on which the First
Six-Month Period expires (the “Second Six-Month Period”), our Company shall not enter into
any of the transactions specified in (a), (b) or (c) above or offer to or agree to or announce any
intention to effect any such transaction such that any Controlling Shareholder, directly or
indirectly, would cease to be a “controlling shareholder” (within the meaning defined in the
Listing Rules) of our Company. In the event that, our Company enters into any of the
transactions specified in (a), (b) or (c) above or offers to or agrees to or announces any
intention to effect any such transaction during the Second Six-Month Period, our Company
shall take all reasonable steps to ensure that it will not create a disorderly or false market in
the securities of our Company.
The Controlling Shareholders have jointly and severally undertaken to each of the Sole
Sponsor, the Sponsor-OC, the Overall Coordinators, the Joint Global Coordinators, the Capital
Market Intermediaries, the Joint Bookrunners the Joint Lead Managers and the Hong Kong
Underwriters to procure our Company to comply with the above undertakings.
Our Company has agreed and undertaken that it will not, and each of the Controlling
Shareholders has further undertaken to procure that our Company will not, effect any purchase
of H Shares, or agree to do so, which may reduce the holdings of H Shares held by the public
(as defined in Rule 8.24 of the Listing Rules) below the minimum public float requirements
UNDERWRITING
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specified in the Listing Rules or any waiver granted and not revoked by the Stock Exchange
on or before the date falling one year after the Listing Date without first having obtained the
prior written consent of the Sponsor-OC (for itself and on behalf of the Hong Kong
Underwriters).
Undertakings by the Controlling Shareholders in respect of themselves
The Controlling Shareholders have jointly and severally undertaken to each of our
Company, the Sole Sponsor, the Sponsor-OC, the Overall Coordinators, the Joint Global
Coordinators, the Capital Market Intermediaries, the Joint Bookrunners, the Joint Lead
Managers and the Hong Kong Underwriters that, without the prior written consent of the
Sponsor-OC (for itself and on behalf of the Hong Kong Underwriters) and unless in compliance
with the requirements of the Listing Rules, each of them:
(a) will not, at any time during the First Six-Month Period:
(i) sell, offer to sell, contract or agree to allot, issue or sell, assign, mortgage,
charge, pledge, hypothecate, lend, grant or sell any option, warrant, contract or
right to purchase, grant or purchase 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 H Shares or other securities
of the 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 H Shares
or any such other securities, as applicable or any interest in any of the
foregoing), or deposit any H Shares or other securities of the Company with a
depositary 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 (legal or beneficial)
of any H Shares or other securities of the 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 H Shares or any such other securities, as applicable or
any interest in any of the foregoing), or
(iii) enter into any transaction with the same economic effect as any transaction
specified in (i) or (ii) above, or
(iv) offer to or agree to or announce any intention to effect any transaction
specified in (i), (ii) or (iii) above.
in each case, whether any of the transactions specified in (i), (ii) or (iii) above is to
be settled by delivery of H Shares or other securities of our Company, in cash or
otherwise (whether or not the transaction in relation to such H Shares or other
securities will be completed within the First Six-Month Period);
UNDERWRITING
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(b) will not, during the Second Six-Month Period, enter into any of the transactions
specified in (a)(i), (a)(ii) or (a)(iii) above or agree or contract to or announce any
intention to effect any such transaction if, immediately following such transaction,
it will cease to be a “controlling shareholder” (as the term is defined in the Listing
Rules) of our Company; and
(c) until the expiry of the Second Six-Month Period, in the event that she/it enters into
any of the transactions specified in (a)(i), (a)(ii) or (a)(iii) above or offers to or
agrees to or announces any intention to effect any such transaction, she/it will take
all reasonable steps to ensure that it will not create a disorderly or false market in
the securities of our Company.
Hong Kong Underwriters’ Interests in our Company
Save for their respective obligations under the Hong Kong Underwriting Agreement, as
of the Latest Practicable Date, none of the Hong Kong Underwriters was interested, legally or
beneficially, directly or indirectly, in any Shares or any securities of any member of the Group
or had any right or option (whether legally enforceable or not) to subscribe for or purchase, or
to nominate persons to subscribe for or purchase, any Shares or any securities of any member
of the Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the H Shares as a result of fulfilling their
respective obligations under the Hong Kong Underwriting Agreement.
International Offering
International Underwriting Agreement
In connection with the International Offering, our Company and the Controlling
Shareholders expect to enter into the International Underwriting Agreement with the
International Underwriters on or around the Price Determination Date. Under the International
Underwriting Agreement and subject to the Over-allotment Option, the International
Underwriters would, subject to certain conditions set out therein, agree severally but not jointly
to procure subscribers for, or themselves to subscribe for, their respective applicable
proportions of the International Offer Shares initially being offered pursuant to the
International Offering. It is expected that the International Underwriting Agreement may be
terminated on similar grounds as the Hong Kong Underwriting Agreement. Potential investors
should note that in the event that the International Underwriting Agreement is not entered into
or is terminated, the Global Offering will not proceed. See the section headed “Structure of the
Global Offering—International Offering” in this prospectus.
UNDERWRITING
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Over-allotment Option
Our Company is expected to grant to the International Underwriters the Over-allotment
Option, exercisable by the Sponsor-OC (for itself and on behalf of the International
Underwriters) at any time from the Listing Date until 30 days after the last day for lodging
applications under the Hong Kong Public Offering, pursuant to which our Company may be
required to issue up to an aggregate of 1,389,300 Shares, representing not more than 15% of
the number of Offer Shares initially available under the Global Offering, at the Offer Price, to
cover over-allocations (if any) in the International Offering. See the section headed “Structure
of the Global Offering—Over-allotment Option” in this prospectus.
Commissions and Expenses
The Underwriters and the Capital Market Intermediaries will receive a commission of
4.0% of the aggregate offering proceeds of the Global Offering (including the proceeds
pursuant to the exercise of the Over-allotment Option) (the “Gross Proceeds”). Furthermore,
our Company will also pay the Underwriters and the Capital Market Intermediaries an
additional incentive fee of 2.0% (the “Incentive Fee”) of the Gross Proceeds, the allocation of
which would be determined at our sole discretion. For the purpose of Listing Rules, assuming
full payment of the Incentive Fee, the ratio of the fixed fees and discretionary fees payable to
the Underwriters is therefore 61:39.
For unsubscribed Hong Kong Offer Shares reallocated to the International Offering, we
will pay the underwriting commission attributable to such reallocated Hong Kong Offer Shares
to the Overall Coordinators and the relevant International Underwriters (but not the Hong Kong
Underwriters). The underwriting commission was determined between the Company and the
Underwriters after arm’s length negotiations with reference to current market conditions.
The aggregate commissions and fees, together with Stock Exchange listing fees, AFRC
transaction levies, SFC transaction levies and Stock Exchange trading fees, legal and other
professional fees and printing and all other expenses relating to the Global Offering, which are
estimated to amount in aggregate to approximately HK$105.7 million (assuming (i) an Offer
Price of HK$38.00 per H Share (being the mid-point of the indicative Offer Price range stated
in this prospectus), (ii) the full payment of the Discretionary Fees, and (iii) the Over-allotment
Option is not exercised at all), all of which are payable and borne by us.
We have agreed to pay the Sole Sponsor a fee of US$800,000 for acting as a sponsor in
connection with the Listing.
UNDERWRITING
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Indemnity
Each of our Company and the Controlling Shareholders has agreed to indemnify the Hong
Kong Underwriters for certain losses which they may suffer or incur, including losses arising
from the performance of their obligations under the Hong Kong Underwriting Agreement and
any breach by any of our Company and the Controlling Shareholders of the Hong Kong
Underwriting Agreement.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering
(together, the “Syndicate Members”) and their affiliates may each individually undertake a
variety of activities (as further described below) which do not form part of the underwriting or
stabilizing process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
investing and other activities for their own account and for the account of others. In the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments of our Company
and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with the
Group’s loans and other debt.
In relation to the H Shares, the activities of the Syndicate Members and their affiliates
could include acting as agent for buyers and sellers of the H Shares, entering into transactions
with those buyers and sellers in a principal capacity, including as a lender to initial purchasers
of the H Shares (which financing may be secured by the H Shares) in the Global Offering,
proprietary trading in the H Shares, and entering into over the counter or listed derivative
transactions or listed or unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Such transactions may be carried out as bilateral agreements or trades
with selected counterparties. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares, which may have a
negative impact on the trading price of the H Shares. All such activities could occur in Hong
Kong and elsewhere in the world and may result in the Syndicate Members and their affiliates
holding long and/or short positions in the H Shares, in baskets of securities or indices including
the H Shares, in units of funds that may purchase the H Shares, or in derivatives related to any
of the foregoing.
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In relation to issues by Syndicate Members or their affiliates of any listed securities
having the H Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the rules of the stock exchange may require the issuer of those securities
(or one of its affiliates or agents) to act as a market maker or liquidity provider in the security,
and this will also result in hedging activity in the H Shares in most cases.
All such activities may occur both during and after the end of the stabilizing period
described in the section headed “Structure of the Global Offering”. Such activities may affect
the market price or value of the H Shares, the liquidity or trading volume in the H Shares and
the volatility of the price of the H Shares, and the extent to which this occurs from day to day
cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members (other than the Stabilizing Manager or its affiliates or any
person acting for it) must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares), whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time
to time, and expect to provide in the future, investment banking and other services to our
Company and each of its affiliates for which such Syndicate Members or their respective
affiliates have received or will receive customary fees and commissions.
In addition, the Syndicate Members or their respective affiliates may provide financing to
investors to finance their subscriptions of Offer Shares in the Global Offering.
UNDERWRITING
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. Haitong International Securities Company Limited and CMB
International Capital Limited are the Overall Coordinators of the Global Offering, and Haitong
International Securities Company Limited, CMB International Capital Limited and Fosun
International Securities Limited are the Joint Global Coordinators of the Global Offering.
The listing of the H Shares on the Stock Exchange is sponsored by the Sole Sponsor. The
Sole Sponsor has made an application on behalf of our Company to the Listing Committee of
the Stock Exchange for the listing of, and permission to deal in, the H Shares in issue and to
be issued as mentioned in this prospectus.
9,262,000 Offer Shares will initially be made available under the Global Offering
comprising:
(a) the Hong Kong Public Offering of initially 926,200 H Shares (subject to
reallocation) in Hong Kong as described in the sub-section “The Hong Kong Public
Offering” in this section below; and
(b) the International Offering of initially 8,335,800 H Shares (subject to reallocation
and the Over-allotment Option) outside the United States (including to professional
and institutional investors within Hong Kong) in offshore transactions in reliance on
Regulation S, as described in the sub-section headed “International Offering” this
section below.
Investors may either:
(i) apply for Hong Kong Offer Shares under the Hong Kong Public Offering; or
(ii) apply for or indicate an interest for International Offer Shares under the
International Offering,
but may not do both.
The Offer Shares will represent approximately 4.1% of the total Shares in issue
immediately following the completion of the Global Offering, assuming the Over-allotment
Option is not exercised. If the Over-allotment Option is exercised in full, the Offer Shares
(including H Shares issued pursuant to the full exercise of the Over-allotment Option) will
represent approximately 4.7% of the total Shares in issue immediately following the
completion of the Global Offering and the issue of Offer Shares pursuant to the Over-Allotment
Option.
References in this prospectus to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
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THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
Our Company is initially offering 926,200 H Shares (subject to reallocation) for
subscription by the public in Hong Kong at the Offer Price, representing 10.0% of the total
number of Offer Shares initially available under the Global Offering. The number of Offer
Shares initially offered under the Hong Kong Public Offering, subject to any reallocation of
Offer Shares between the International Offering and the Hong Kong Public Offering, will
represent approximately 1.0% of the total Shares in issue immediately following the
completion of the Global Offering (assuming the Over-allotment Option is not exercised).
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 set out in the
sub-section headed “Conditions of the Global Offering” in this section.
Allocation
Allocation of Offer Shares to investors under the Hong Kong Public Offering will be
based solely 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 applicants. Such allocation could, where appropriate, consist of balloting, which
could 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 Hong Kong Offer Shares available under
the Hong Kong Public Offering (after taking into account any reallocation referred to below)
will be divided equally into two pools (with any odd lots being allocated to pool A): pool A
and pool B. The Hong Kong Offer Shares in pool A will be allocated on an equitable basis to
applicants who have applied for Hong Kong Offer Shares with an aggregate price of HK$5
million (excluding the brokerage, the SFC transaction levy, the AFRC transaction levy and the
Stock Exchange trading fee payable) or less. The Hong Kong Offer Shares in pool B will be
allocated on an equitable basis to applicants who have applied for Hong Kong Offer Shares
with an aggregate price of more than HK$5 million (excluding the brokerage, the SFC
transaction levy, the AFRC transaction levy and the Stock Exchange trading fee payable) and
up to the total value in pool B.
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Investors should be aware that applications in pool A and applications in pool B may
receive different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the
pools are unsubscribed, such unsubscribed Hong Kong Offer Shares will be transferred to the
other pool to satisfy demand in that other pool and be allocated accordingly. For the purpose
of the immediately preceding paragraph only, the “price” for Hong Kong Offer Shares means
the price payable on application therefor (without regard to the Offer Price as finally
determined). Applicants can only receive an allocation of Hong Kong Offer Shares from either
pool A or pool B and not from both pools. Multiple or suspected multiple applications under
the Hong Kong Public Offering and any application for more than 463,100 Hong Kong Offer
Shares (being 50% of the Hong Kong Offer Shares initially available under the Hong Kong
Public Offering) is liable to be rejected.
Reallocation
The allocation of Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation under the Listing Rules. Paragraph 4.2 of
Practice Note 18 of the Listing Rules requires a clawback mechanism to be put in place, which
would have the effect of increasing the number of Hong Kong Offer Shares to certain
percentages of the total number of Offer Shares to be offered under the Global Offering if
certain prescribed total demand levels in the Hong Kong Public Offering are reached.
Assuming that the Over-allotment Option is not exercised, the allocation of the Offer
Shares shall be subject to reallocation on the following basis:
 926,200 Offer Shares are initially available in the Hong Kong Public Offering,
representing approximately 10.0% of the Offer Shares initially available under the
Global Offering;
 the final Offer Price shall be fixed at or above the indicative Offer Price range stated
in this Prospectus.
in the event that the International Offer Shares are fully subscribed or over-subscribed:
 if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 15 times or more but less than 50 times of the total number of
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then the Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the total number of Offer Shares available
under the Hong Kong Public Offering will be 2,778,600 Offer Shares, representing
30% of the total number of Offer Shares initially available under the Global
Offering;
 if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 50 times or more but less than 100 times of the total number of
Offer Shares initially available for subscription under the Hong Kong Public
Offering, then the Offer Shares will be reallocated to the Hong Kong Public Offering
from the International Offering, so that the total number of Offer Shares available
under the Hong Kong Public Offering will be 3,704,800 Offer Shares, representing
40% of the total number of Offer Shares initially available under the Global
Offering;
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 if the number of Offer Shares validly applied for under the Hong Kong Public
Offering represents 100 times or more of the total number of Offer Shares initially
available for subscription under the Hong Kong Public Offering, then the Offer
Shares will be reallocated to the Hong Kong Public Offering from the International
Offering, so that the total number of Offer Shares available under the Hong Kong
Public Offering will be 4,631,000 Offer Shares, representing 50% of the total
number of Offer Shares initially available under the Global Offering.
The Offer Shares to be offered in the Hong Kong Public Offering and the International
Offering may, in certain circumstances, be reallocated as between these offerings at the
discretion of the Sponsor-OC (for itself and on behalf of the Underwriters). Subject to the
foregoing paragraph, the Overall Coordinators may in their discretion reallocate Offer Shares
from the International Offering to the Hong Kong Public Offering to satisfy valid applications
under the Hong Kong Public Offering. In addition, if the Hong Kong Public Offering is not
fully subscribed for, the Sponsor-OC (for itself and on behalf of the Underwriters) has the
authority to reallocate all or any unsubscribed Hong Kong Offer Shares to the International
Offering, in such proportions as the Sponsor-OC deem appropriate.
In addition, the Sponsor-OC (for itself and on behalf of the Underwriters) may, at its
discretion, reallocate Offer Shares initially allocated for the International Offering to the Hong
Kong Public Offering to satisfy valid applications in pool A and pool B under the Hong Kong
Public Offering.
In the event that (i) the International Offer Shares are undersubscribed and the Hong Kong
Offer Shares are fully subscribed or oversubscribed irrespective of the number of times; or (ii)
the International Offer Shares are fully subscribed or oversubscribed and the Hong Kong Offer
Shares are fully subscribed or over-subscribed as to less than 15 times of the number of Hong
Kong Offer Shares initially available under the Hong Kong Public Offering provided that, in
accordance with Chapter 4.14 of the Guide for New Listing Applicants published by the Stock
Exchange, the Offer Price would be set at HK$36.00 (low-end of the indicative Offer Price
range), and certain Offer Shares may be reallocated to the Hong Kong Public Offering from the
International Offering, so that the total number of the Offer Shares available under the Hong
Kong Public Offering will be increased to 1,852,400 Offer Shares, representing twice of the
number of the Offer Shares initially available under the Hong Kong Public Offering (before
any exercise of the Over-allotment Option).
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and
the International Offering will be disclosed in the results announcement of the Global Offering,
which is expected to be published on Monday, July 8, 2024.
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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/it that he/she/it and any
person(s) for whose benefit he/her/it is making the application has 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
International Offer Shares under the International Offering. Such applicant’s application is
liable to be rejected if such undertaking and/or confirmation is/are breached and/or untrue (as
the case may be) or if he/she/it has been or will be placed or allocated International Offer
Shares under the International Offering.
Applicants under the Hong Kong Public Offering are required to pay, on application,
(subject to application channel) the maximum Offer Price of HK$40.0 per Offer Share in
addition to the brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock
Exchange trading fee payable on each Offer Share, amounting to a total of HK$4,040.35 for
one board lot of 100 H Shares. If the Offer Price, as finally determined in the manner described
in the sub-section headed “Pricing and Allocation” in this section below, is less than the
maximum Offer Price of HK$40.0 per H Share, appropriate refund payments (including the
brokerage, the SFC transaction levy, the AFRC transaction levy and the Stock Exchange
trading fee attributable to the surplus application monies) will be made to successful
applicants, without interest. Further details are set out in the section headed “How to Apply for
Hong Kong Offer Shares” in this prospectus.
THE INTERNATIONAL OFFERING
Number of Offer Shares initially offered
The International Offering will consist of an initial offering of 8,335,800 H Shares,
representing approximately 90.0% of the total number of Offer Shares initially available under
the Global Offering (subject to reallocation and the Over-allotment Option). The number of
Offer Shares initially offered under the International Offering, subject to any reallocation of
Offer Shares between the International Offering and the Hong Kong Public Offering, will
represent approximately 3.7% of the total Shares in issue immediately following the
completion of the Global Offering (assuming the Over-allotment Option is not exercised).
Allocation
The International Offering will include selective marketing of Offer Shares institutional
and professional investors and other investors anticipated to have a sizeable demand for such
Offer Shares in Hong Kong and other jurisdictions outside the United States in reliance on
Regulation S. 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. Allocation of Offer Shares
pursuant to the International Offering will be effected in accordance with the “book-building”
process described in sub-section headed “Pricing and Allocation” in this section and based on
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a number of factors, including the level and timing of demand, the 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 H Shares and/or hold or sell its H
Shares after the Listing. Such allocation is intended to result in a distribution of the H Shares
on a basis which would lead to the establishment of a solid professional and institutional
shareholder base to the benefit of the Group and the Shareholders as a whole.
The Sponsor-OC (for itself and on behalf of the Underwriters) may require any investor
who has been offered Offer Shares under the International Offering and who has made an
application under the Hong Kong Public Offering to provide sufficient information to the
Sponsor-OC so as to allow them to identify the relevant applications under the Hong Kong
Public Offering and to ensure that they are excluded from any allocation of Offer Shares under
the Hong Kong Public Offering.
Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International
Offering may change as a result of the clawback arrangement described in the subsection “The
Hong Kong Public Offering—Reallocation” in this section above, the exercise of 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, our Company is expected to grant the
Over-allotment Option to the International Underwriters, exercisable by the Sponsor-OC (for
itself and on behalf of the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Sponsor-OC (for itself and on behalf of the International Underwriters) at
any time from 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 an aggregate of
1,389,300 additional H Shares, representing not more than 15% of the total number of Offer
Shares initially available under the Global Offering, at the Offer Price under the International
Offering to, cover over-allocations (if any) in the International Offering.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued
pursuant thereto will represent approximately 0.6% of the total Shares in issue immediately
following the completion of the Global Offering and the issue of Offer Shares pursuant to the
Over-allotment Option. If the Over-allotment Option is exercised, an announcement will be
made.
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STABILIZATION
Stabilization is a practice used by underwriters in some markets to facilitate the
distribution of securities. To stabilize, the 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 laws and regulatory requirements, including those of Hong
Kong. In Hong Kong, the price at which stabilization is effected is not permitted to exceed the
offer price.
In connection with the Global Offering, the Stabilizing Manager (or its affiliates or any
person acting for it), on behalf of the Underwriters, may over-allocate or effect transactions
with a view to stabilizing or supporting the market price of the H Shares at a level higher than
that which might otherwise prevail for a limited period after the Listing Date. However, there
is no obligation on the Stabilizing Manager (or its affiliates or any person acting for it) to
conduct any such stabilizing action. Such stabilizing action, if taken, (a) will be conducted at
the absolute discretion of the Stabilizing Manager (or its affiliates or any person acting for it)
and in what the Stabilizing Manager reasonably regards as the best interest of our Company,
(b) may be discontinued at any time and (c) is required to be brought to an end within 30 days
of the last day for lodging applications under the Hong Kong Public Offering.
Stabilization action permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO includes (a) over-allocation for the purpose of preventing or
minimizing any reduction in the market price of the H Shares, (b) selling or agreeing to sell
the H Shares so as to establish a short position in them for the purpose of preventing or
minimizing any reduction in the market price of the H Shares, (c) purchasing, or agreeing to
purchase, the H Shares pursuant to the Over-allotment Option in order to close out any position
established under paragraph (a) or (b) above, (d) purchasing, or agreeing to purchase, any of
the H Shares for the sole purpose of preventing or minimizing any reduction in the market price
of the H Shares, (e) selling or agreeing to sell any H Shares in order to liquidate any position
established as a result of those purchases and (f) offering or attempting to do anything as
described in paragraph (b), (c), (d) or (e) above.
Specifically, prospective applicants for and investors in the Offer Shares should note that:
(a) the Stabilizing Manager (or its affiliates or any person acting for it) may, in
connection with the stabilizing action, maintain a long position in the H Shares;
(b) there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or its affiliates or any person acting for it) will maintain such
a long position;
(c) liquidation of any such long position by the Stabilizing Manager (or its affiliates or
any person acting for it) and selling in the open market may have an adverse impact
on the market price of the H Shares;
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(d) no stabilizing action can be taken to support the price of the H Shares for longer than
the stabilization period, which will begin on the Listing Date, and is expected to
expire on the 30th day after the last day for lodging applications under the Hong
Kong Public Offering. After this date, when no further stabilizing action may be
taken, demand for the H Shares, and therefore the price of the H Shares, could fall;
(e) the price of the H Shares cannot be assured to stay at or above the Offer Price by
the taking of any stabilizing action; and
(f) stabilizing bids or transactions effected in the course of the stabilizing action may
be made at any price at or below the Offer Price and can, therefore, be done at a
price below the price paid by applicants for, or investors in, the Offer Shares.
In order to effect stabilization actions, the Stabilizing Manager will arrange cover of up
to an aggregate of 1,389,300 H Shares, representing up to 15% of the initial Offer Shares,
through delayed delivery arrangements with investors who have been allocated Offer Shares in
the International Offering. The delayed delivery arrangements (if specifically agreed by an
investor) relate only to the delay in the delivery of the Offer Shares to such investor and the
Offer Price for the Offer Shares allocated to such investor will be paid on the Listing Date.
Both the size of such cover and the extent to which the Over-allotment Option can be exercised
will depend on whether arrangements can be made with investors such that a sufficient number
of H Shares can be delivered on a delayed basis. If no investor in the International Offering
agrees to the delayed delivery arrangements, no stabilizing actions will be undertaken by the
Stabilizing Manager and the Over-allotment Option will not be exercised.
Our Company will ensure or procure that an announcement in compliance with the
Securities and Futures (Price Stabilizing) Rules of the SFO will be made within seven days of
the expiration of the stabilization period.
Over-Allocation
Following any over-allocation of H Shares in connection with the Global Offering, the
Stabilizing Manager (or its affiliates or any person acting for it) may cover such over-
allocations by exercising the Over-allotment Option in full or in part, by using H Shares
purchased by the Stabilizing Manager (or its affiliates or any person acting for it) in the
secondary market at prices that do not exceed the Offer Price, or by a combination of these
methods.
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PRICING AND ALLOCATION
Pricing for the Offer Shares for the purpose of the various offerings under the Global
Offering will be fixed on the Price Determination Date, which is expected to be on or about
Friday, July 5, 2024 and, in any event, no later than 12:00 noon on Friday, July 5, 2024, by
agreement between the Sponsor-OC (for itself and on behalf of the Underwriters) and our
Company, and the number of Offer Shares to be allocated under the various offerings will be
determined shortly thereafter.
The Offer Price will not be more than HK$40.0 per H Share and is expected to be not less
than HK$36.00 per H Share, unless otherwise announced, as further explained below.
Applicants under the Hong Kong Public Offering required to pay, on application (subject to
application channel) the maximum Offer Price of HK$40.0 per H Share plus brokerage of
1.0%, SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and Stock
Exchange trading fee of 0.00565%, amounting to a total of HK$4,040.35 for one board lot of
100 H Shares. Prospective investors should be aware that the Offer Price to be determined
on the Price Determination Date may be, but is not expected to be, lower than the
minimum Offer Price stated in this prospectus.
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of Offer Shares under the
International Offering 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 about, the last day for lodging applications under the Hong Kong Public Offering.
The Sponsor-OC (on behalf of the Underwriters) may, where they deem appropriate,
based on the level of interest expressed by prospective investors during the book-building
process in respect of the International Offering, and with the consent of our Company, reduce
the number of Offer Shares offered and/or the Offer Price Range below that stated in this
prospectus at any time on or prior to the morning of the last day for lodging applications under
the Hong Kong Public Offering. In such a case, our Company 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, cause to be
published on the websites of our Company and the Stock Exchange at www.baiwang.com and
www.hkexnews.hk , respectively, notices of the reduction. Upon the issue of such a notice, the
revised number of Offer Shares and/or the Offer Price range will be final and conclusive and
the Offer Price, if agreed upon by the Sponsor-OC (for itself and on behalf of the Underwriters)
and our Company, will be fixed within such revised Offer Price range. Our Company will also,
as soon as practicable following the decision to make such change, issue a supplemental
prospectus updating investors of the change in the number of Offer Shares being offered under
the Global Offering and/or the Offer Price. The Global Offering must first be canceled and
subsequently relaunched on FINI pursuant to the supplemental prospectus.
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Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
and/or the Offer Price range may not be made until the last day for lodging applications under
the Hong Kong Public Offering. Such notice will also include confirmation or revision, as
appropriate, of the working capital statement and the Global Offering statistics as currently set
out in this prospectus, and any other financial information which may change as a result of any
such reduction. In the absence of any such notice so published, the number of Offer Shares will
not be reduced and/or the Offer Price, if agreed upon by the Sponsor-OC (for itself and on
behalf of the Underwriters) and our Company, will under no circumstances be set outside the
Offer Price range as stated in this prospectus.
The final Offer Price, the level of indications of interest in the International Offering, the
level of applications in the Hong Kong Public Offering, the basis of allocations of the Hong
Kong Offer Shares and the results of allocations in the Hong Kong Public Offering are
expected to be made available through a variety of channels in the manner described in the
section headed “How to Apply for Hong Kong Offer Shares—(B) Publication of Results”.
UNDERWRITING
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms and conditions of the Hong Kong Underwriting Agreement and is subject to,
among other things, the Sponsor-OC (for itself and on behalf of the Underwriters) and our
Company agreeing on the Offer Price.
Our Company expects to enter into the International Underwriting Agreement relating to
the International Offering on or around the Price Determination Date.
These underwriting arrangements, including the Underwriting Agreements, are
summarized in the section headed “Underwriting” in this prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for Offer Shares will be conditional on:
(a) the Listing Committee granting approval for the listing of, and permission to deal in,
the H Shares to be issued pursuant to the Global Offering (including any additional
H Shares that may be issued pursuant to the exercise of the Over-allotment Option)
on the Main Board of the Stock Exchange and such approval and permission not
subsequently having been withdrawn or revoked prior to the Listing Date;
(b) the Offer Price having been agreed between the Sponsor-OC (for itself and on behalf
of the Underwriters) and our Company;
(c) the execution and delivery of the International Underwriting Agreement on or about
the Price Determination Date; and
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(d) 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 and remaining 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 respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such
dates and times) and, in any event, not later than the date which is 30 days after the date
of this prospectus.
If, for any reason, the Offer Price is not agreed between the Sponsor-OC
(for itself and on behalf of the Underwriters) and our Company by 12:00 noon on Friday, July
5, 2024, the Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, among other things, the other offering becoming unconditional
and not having been terminated in accordance with its terms.
If the above conditions are not fulfilled or waived prior to the dates and times 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 the websites
of our Company and the Stock Exchange at www.baiwang.com and www.hkexnews.hk ,
respectively, on the next day following such lapse. In such a situation, all application monies
will be returned, without interest, on the terms set out in the section headed “How to Apply for
Hong Kong Offer Shares—(D) Dispatch/Collection of H Share Certificates and Refund of
Application Monies” in this prospectus. In the meantime, all application monies will be held
in separate bank account(s) with the receiving banks or other bank(s) in Hong Kong licensed
under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong).
H Share certificates for the Offer Shares will only become valid at 8:00 a.m. on Tuesday,
July 9, 2024, provided that the Global Offering has become unconditional in all respects at or
before that time.
DEALINGS IN THE H SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Tuesday, July 9, 2024, it is expected that dealings in the H Shares on
the Stock Exchange will commence at 9:00 a.m. on Tuesday, July 9, 2024.
The H Shares will be traded in board lots of 100 H Shares each and the stock code of the
H Shares will be 6657.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 455 ---
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 any printed copies of the Prospectus for use by
the public.
The 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.baiwang.com . If you require a printed copy of the
Prospectus, you may download and print from the website addresses above.
The contents of the electronic version of the 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 the Prospectus is available online at the website
addresses above.
(A) APPLICATIONS FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or any person(s) for whose benefit you
are applying:
 are 18 years of age or older;
 have a Hong Kong address (for the White Form eIPO service only) ; and
 are outside the United States (within the meaning of Regulation S) or are a person
described in paragraph (h)(3) of Rule 902 of Regulation S.
If you apply for Hong Kong Offer Shares online through the White Form eIPO service,
in addition to the above, you must also:
 have a valid Hong Kong identity card number; and
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 456 ---
 provide a valid e-mail address and a contact telephone number.
If an application is made by a person under a power of attorney, our Company, the Overall
Coordinators, as our Company’s agent, may accept it at their discretion, and on any conditions
they think fit, including requiring 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.
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.
Unless permitted by the Listing Rules, you cannot apply for any Hong Kong Offer Shares
if:
 you are an existing beneficial owner of Shares and/or a substantial shareholder of
any of our Company’s subsidiaries;
 you are a director, supervisor or chief executive of our Company and/or any of our
Company’s subsidiaries;
 you are a close associate of any of the above persons;
 a connected person of the Company or a person who will become a connected person
of the Company immediately upon the completion of the Global Offering; or
 you have been allocated or have applied for any International Offer Shares or
otherwise participate in the International Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 457 ---
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Friday, June 28, 2024
and end at 12:00 noon on Thursday, July 4, 2024 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
White Form
eIPO service
www.eipo.com.hk Applicants who
would like to
receive a physical
H Share certificate.
Hong Kong Offer
Shares successfully
applied for will be
allotted and issued
in your own name.
From 9:00 a.m. on
Friday, June 28,
2024 to 11:30 a.m.
on Thursday, July
4, 2024, Hong
Kong time.
The latest time for
completing full
payment of
application monies
will be 12:00 noon
on Thursday, July
4, 2024, Hong
Kong time.
HKSCC EIPO
channel
Y our broker or custodian
who is a HKSCC
Participant will submit
an EIPO application on
your behalf through
HKSCC’s FINI system
in accordance with
your instruction
Applicants who
would not like to
receive a physical
H Share certificate.
Hong Kong Offer
Shares successfully
applied for will be
allotted and issued
in the name of
HKSCC Nominees,
deposited directly
into CCASS and
credited to your
designated HKSCC
Participant’s stock
account.
Contact your broker
or custodian for
the earliest and
latest time for
giving such
instructions, as this
may vary by broker
or custodian.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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The White Form eIPO service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the
last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the White Form eIPO service, once you complete payment
in respect of any application instructions 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. If you are a person for whose benefit the electronic
application instructions are given, you shall be deemed to have declared that only one set of
electronic application instructions has been given for your benefit. If you are an agent for
another person, you shall be deemed to have declared that you have only given one set of
electronic application instructions for the benefit of the person for whom you are an agent and
that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the White Form eIPO
service 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 apply through the White Form eIPO service, you are deemed to have authorized
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.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of you
jointly and severally) are deemed to have instructed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong
Offer Shares on your behalf and to do on your behalf all the things stated in this prospectus
and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this prospectus.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 459 ---
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual/Joint Applicants For Corporate Applicants
▪ Full name(s) 2 as shown on your
identity document
▪ Identity document’s issuing country
or jurisdiction
▪ Identity document type, with order
of priority: i. HKID card; or ii.
National identification document; or
iii. Passport; and
▪ Identity document number
▪ Full name(s)
2 as shown on your
identity document
▪ Identity document’s issuing country
or jurisdiction
▪ Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration
certificate; or
iv. Other equivalent document; and
▪ Identity document number
Notes:
1. If you are applying through the White Form eIPO service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong address. Y ou are also required to declare that the
identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card.
2. The applicant’s full name as shown on their identity document must be used. If an applicant’s identity
document contains both an English and Chinese name, both English and Chinese names must be used.
Otherwise, either English or Chinese names will be accepted. The order of priority of the applicant’s
identity document type must be strictly followed and where an individual applicant has a valid HKID
card, the HKID number must be used when making an application to subscribe for shares in the Hong
Kong Public Offering. Similarly for corporate applicants, a LEI number must be used if an entity has
a LEI certificate.
3. If the applicant is a trustee, the client identification data (“CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint applicants on FINI is capped at 4
(1) in accordance with market practice.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii),
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other 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).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Overall Coordinators, as our agents, have discretion to consider
whether to accept it on any conditions we think fit, including evidence of the attorney’s
authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 100 H Shares
Permitted number of
Hong Kong Offer
Shares
: Hong Kong Offer Shares are available for application
in specified board lot sizes only. Please refer to the
amount payable associated with each specified
board lot size in the table below.
Hong Kong Offer
Shares for
application and
amount payable on
application/successful
allotment
: The maximum Offer Price is HK$40.00 per H Share.
If you are applying through the HKSCC EIPO
channel, you are required to prefund your
application based on the amount specified by your
broker or custodian, as determined based on the
applicable laws and regulations in Hong Kong.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 461 ---
By instructing your broker or custodian to apply for
the Hong Kong Offer Shares on your behalf
through the HKSCC EIPO channel, you (and, if you
are joint applicants, each of you jointly and
severally) are deemed to have instructed and
authorized HKSCC to cause HKSCC Nominees
(acting as nominee for the relevant HKSCC
Participants) to arrange payment of the final Offer
Price, brokerage, SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction
levy by debiting the relevant nominee bank account
at the Designated Bank for your broker or
custodian.
If you are applying through the White Form eIPO
service, you may refer to the table below for the
amount payable for the number of H Shares you
have selected. Y ou must pay the respective
maximum amount payable on application in full
upon application for Hong Kong Offer Shares.
1 Subject to change, if the Company’s Articles of Incorporation and applicable company law prescribe a
lower cap.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application (2)
HK$ HK$ HK$ HK$
100 4,040.35 1,500 60,605.10 8,000 323,227.20 90,000 3,636,306.00
200 8,080.68 2,000 80,806.80 9,000 363,630.60 100,000 4,040,340.00
300 12,121.02 2,500 101,008.50 10,000 404,034.00 150,000 6,060,510.00
400 16,161.35 3,000 121,210.20 20,000 808,068.00 200,000 8,080,680.00
500 20,201.70 3,500 141,411.90 30,000 1,212,102.00 250,000 10,100,850.00
600 24,242.05 4,000 161,613.60 40,000 1,616,136.00 300,000 12,121,020.00
700 28,282.38 4,500 181,815.30 50,000 2,020,170.00 350,000 14,141,190.00
800 32,322.72 5,000 202,017.00 60,000 2,424,204.00 400,000 16,161,360.00
900 36,363.05 6,000 242,420.40 70,000 2,828,238.00 463,100
(1) 18,710,814.55
1,000 40,403.40 7,000 282,823.80 80,000 3,232,272.00
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and
Accounting and Financial Reporting Council (“ AFRC ”) transaction levy. If your application is successful,
brokerage will be paid to the Exchange Participants (as defined in the Listing Rules) and the SFC transaction
levy, the Stock Exchange trading fee and AFRC transaction levy are paid to the Stock Exchange (in the case
of the SFC transaction levy and in the case of the AFRC transaction levy, collected by the Stock Exchange on
behalf of the SFC and the AFRC respectively).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 462 ---
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “—A. Applications for Hong Kong
Offer Shares—3. Information Required to Apply” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the White Form eIPO service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you
have made an application through the White Form eIPO service or HKSCC EIPO channel,
you or the person(s) for whose benefit you have made the application shall not apply for any
International Offer Shares.
6. Terms and Conditions of an Application
By applying for Hong Kong Offer Shares through the White Form eIPO service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us and/or the
Overall Coordinators, as our agents, 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, and (if you are applying through the HKSCC EIPO channel) to
deposit the allotted Hong Kong Offer Shares directly into CCASS for the credit of
your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the White Form
eIPO service (or as the case may be, the agreement you entered into with your
broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 463 ---
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Relevant Persons
(2), the H Share Registrar and HKSCC will not be
liable for any information and representations not in this prospectus and any
supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the H Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraph headed “—(G) Personal Data— 3.
Purposes and 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “—(B) Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed
“—(C) Circumstances In Which Y ou Will Not Be Allocated Hong Kong Offer
Shares” in this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons will breach any law inside and/or 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;
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 464 ---
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the Shares registered in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to allocate any Hong
Kong Offer Shares to you and that you may be prosecuted for making a false
declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xvii) 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;
(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 directly or indirectly or through the application channel of
the H Share Registrar 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 (1) 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 (2) you
have due authority to give electronic application instructions on behalf of that other
person as its agent.
2 As defined in the Prospectus, Relevant Persons would include the Sole Sponsor, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, any of their or the Company’s respective directors, officers, employees, partners, agents,
advisers and any other parties involved in the Global Offering.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 465 ---
(B) PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through White Form eIPO service or HKSCC EIPO channel:
Website The designated results of
allocation website at
www.iporesults.com.hk
(alternatively:
www.eipo.com.hk/
eIPOAllotment ) with a
“search by ID” function
24 hours, from 11:00 p.m.
Monday, July 8, 2024 to 12:00
midnight Sunday, July 14,
2024 (Hong Kong time)
The full list of (i) wholly or
partially successful applicants
using the White Form eIPO
service and HKSCC EIPO
channel, and (ii) the number of
Hong Kong Offer Shares
conditionally allotted to them,
among other things, will be
displayed on the “Allotment
Results” page of the White
Form eIPO service at
www.iporesults.com.hk
(alternatively:
www.eipo.com.hk/
eIPOAllotment ).
The Stock Exchange’s website at
www.hkexnews.hk and our
website at www.baiwang.com
which will provide links to the
above mentioned websites of
the H Share Registrar.
No later than 11:00 p.m. on
Monday, July 8, 2024 (Hong
Kong time).
Telephone +852 2862 8555 – the allocation
results telephone enquiry line
provided by the H Share
Registrar
between 9:00 a.m. and 6:00 p.m.,
from Tuesday, July 9, 2024 to
Friday, July 12, 2024 (Hong
Kong time) (except Saturday,
Sunday and public holiday in
Hong Kong)
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Friday, July 5, 2024 (Hong Kong time)
HOW TO APPLY FOR HONG KONG OFFER SHARES
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HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Friday, July 5, 2024 (Hong Kong time) on a 24-hour basis and should report any discrepancies
on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the International Offering, the level of applications in the Hong Kong Public
Offering and the basis of allocations of Hong Kong Offer Shares on the Stock Exchange’s
website at www.hkexnews.hk and our website at www.baiwang.com by no later than 11:00
p.m. on Monday, July 8, 2024 (Hong Kong time).
(C) CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the H 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 us of that
longer period within three weeks of the closing date of the application lists.
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “—A. Applications for Hong Kong Offer Shares—5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinators believe that by accepting your application, it or we
would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted H Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted H shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the International Offering. Hong Kong Offer
Shares applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are
not allocated to you due to the money settlement failure.
(D) DISPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Offer (except pursuant to applications made through the HKSCC EIPO
channel where the H 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.
H Share certificates will only become valid at 8:00 a.m. on Tuesday, July 9, 2024 (Hong
Kong time), provided that the International Offering has become unconditional and the right
of termination described in the section headed “Underwriting” has not been exercised.
Investors who trade H Shares prior to the receipt of H Share certificates or the H Share
certificates becoming valid do so entirely at their own risk.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 468 ---
The right is reserved to retain any H Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
White Form eIPO service HKSCC EIPO channel
Dispatch/collection of H Share certificate 3
For physical share
certificates of
equal or over
100,000 Offer
Shares issued
under your own
name
Collection in person at the H
Share Registrar, Computershare
Hong Kong Investor Services
Limited at Shops 1712- 1716,
17th Floor, Hopewell Centre,
183 Queen’s Road East, Wan
Chai, Hong Kong,
Time : 9:00 a.m. to 1:00 p.m. on
Tuesday, July 9, 2024
(Hong Kong time)
If you are an individual, you
must not authorise any other
person to collect for you. If
you are a corporate applicant,
your authorised representative
must bear a letter of
authorization from your
corporation stamped with your
corporation’s chop.
Both individuals and authorised
representatives must produce,
at the time of collection,
evidence of identity acceptable
to the H Share Registrar.
Note : If you do not collect your
H Share certificate(s)
personally within the time
above, it/they will be sent to
the address specified in your
application instructions by
ordinary post at your own risk
H Share certificate(s) will be
issued in the name of HKSCC
Nominees, deposited into
CCASS and credited to your
designated HKSCC
Participant’s stock account
No action by you is required
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 469 ---
White Form eIPO service HKSCC EIPO channel
For physical share
certificates of
less than
100,000 Offer
Shares issued
under your own
name
Y our H Share certificate(s) will
be sent to the address specified
in your application instructions
by ordinary post at your own
risk
Time : Monday, July 8, 2024
Refund mechanism for surplus application monies paid by you
Date Tuesday, July 9, 2024 Subject to the arrangement
between you and your broker
or custodian
Responsible party H Share Registrar Y our broker or custodian
Application
monies paid
through single
bank account
White Form e-Refund payment
instructions to your designated
bank account
Y our broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
Application monies paid
between you and it
Application
monies paid
between you
and it through
multiple bank
accounts
Refund cheque(s) will be
dispatched to the address as
specified in your application
instructions by ordinary post at
your own risk
3 Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or
an “extreme conditions” announcement issued after a super typhoon in force in Hong Kong in the morning on
the Monday, July 8, 2024 rendering it impossible for the relevant share certificates to be dispatched to HKSCC
in a timely manner, the Company shall procure the H Share Registrar to arrange for delivery of the supporting
documents and share certificates in accordance with the contingency arrangements as agreed between them.
Y ou may refer to “—E. Severe Weather Arrangements” in this section.
(E) SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Thursday, July 4, 2024 if, there is:
 a tropical cyclone warning signal number 8 or above;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 470 ---
 a black rainstorm warning; and/or
 Extreme Conditions ,
(collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday, July 4,
2024.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next business day which does not have Severe Weather Signals in force at any time between
9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at www.baiwang.com of the revised timetable.
If a Severe Weather Signal is hoisted on Monday, July 8, 2024, the H Share Registrar will
make appropriate arrangements for the delivery of the share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Tuesday, July 9,
2024.
If a Severe Weather Signal is hoisted on Tuesday, July 9, 2024:
▪ for physical H Share certificates of equal or over 100,000 Hong Kong Offer Shares
issued under your own name, you may collect your share certificates from the H
Share Registrar’s office after the Severe Weather Signal is lowered or cancelled (e.g.
in the afternoon of Tuesday, July 9, 2024 or on Wednesday, July 10, 2024).
If a Severe Weather Signal is hoisted on Monday, July 8, 2024:
▪ for physical H Share certificates of less than 100,000 Hong Kong Offer Shares
issued under your own name, dispatch will be made by ordinary post when the post
office re-opens after the Severe Weather Signal is lowered or cancelled (e.g. in the
afternoon of Monday, July 8, 2024 or on Tuesday, July 9, 2024).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 471 ---
(F) ADMISSION OF THE H SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the H
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 H Shares or any other
date HKSCC chooses. Settlement of transactions between Exchange Participants 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 HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the H Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
(G) PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the H Share Registrar, the receiving bank and the Relevant
Persons about you in the same way as it applies to personal data about applicants other than
HKSCC Nominees. This personal data may include client identifier(s) and your identification
information. By giving application instructions to HKSCC, you acknowledge that you have
read, understood and agree to all of the terms of the Personal Information Collection Statement
below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 472 ---
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the dispatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the H Share Registrar immediately of any inaccuracies in the personal data
supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund cheque and White Form e-Refund payment
instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this prospectus and announcing results of
allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the H
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the H Shares and identifying any
duplicate applications for the H Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the H Shares, such as dividends,
rights issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the H Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the H Shares and/or regulators and/or any other purposes to which
applicants and holders of the H Shares may from time to time agree.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 473 ---
4. Transfer of personal data
Personal data held by the Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but the Company and the
H Share Registrar 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:
 the Company’s appointed agents such as financial advisers, receiving bank and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar for the purposes of providing its services or
facilities or performing its functions in accordance with its rules or procedures and
operating FINI and CCASS (including where applicants for the Hong Kong Offer
Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the H
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, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the H Share Registrar will keep the personal data of the applicants and
holders of 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 dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. The Company and the H 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 the Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate information” in this
prospectus or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 474 ---
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 the 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).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 475 ---
The following is the text of a report set out on pages I-1 to I-94, received from the
Company’s reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF BAIW ANG CO., LTD. AND HAITONG INTERNATIONAL CAPITAL
LIMITED
Introduction
We report on the historical financial information of Baiwang Co., Ltd. (the “Company”)
and its subsidiaries (collectively referred to as the “Group”) set out on pages I-4 to I-94, which
comprises the consolidated statements of financial position of the Group as at December 31,
2021, 2022 and 2023, the statements of financial position of the Company as at December 31,
2021, 2022 and 2023, and the consolidated statements of profit or loss and other
comprehensive income, the consolidated statements of changes in equity and the consolidated
statements of cash flows of the Group for each of the three years ended December 31, 2023 (the
“Track Record Period”) and a summary of material accounting policy information and other
explanatory information (together, the “Historical Financial Information”). The Historical
Financial Information set out on pages I-4 to I-94 forms an integral part of this report, which
has been prepared for inclusion in the prospectus of the Company dated June 28, 2024 (the
“Prospectus”) in connection with the IPO of shares of the Company on the Main Board of The
Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical
Financial Information that gives a true and fair view in accordance with the basis of preparation
set out in Note 2 to the Historical Financial Information, and for such internal control as the
directors of the Company determine is necessary to enable the preparation of the Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ 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 (the “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.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 476 ---
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 accountants’ judgment, 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 accountants consider internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in Note 2 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 of the Company, 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
accountants’ report, a true and fair view of the Group’s financial position as at December 31,
2021, 2022 and 2023, of the Company’s financial position as at December 31, 2021, 2022 and
2023, and of the Group’s financial performance and cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2 to the Historical Financial
Information.
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange 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-3 have been made.
Dividends
We refer to Note 16 to the Historical Financial Information which states that no dividend
was declared or paid by the Company or its subsidiaries in respect of the Track Record Period.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
June 28, 2024
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 477 ---
HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The consolidated financial statements of the Group for the Track Record Period, on which
the Historical Financial Information is based, have been prepared in accordance with the
accounting policies which conform with International Financial Reporting Standards (the
“IFRSs”) issued by the International Accounting Standards Board (the “IASB”) and were
audited by us in accordance with Hong Kong Standards on Auditing issued by the HKICPA (the
“Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (the “RMB”) and all
values are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 478 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended December 31,
NOTES 2021 2022 2023
RMB’000 RMB’000 RMB’000
Revenue 7 453,763 525,765 712,996
Cost of sales 11 (237,600) (311,475) (430,965)
Gross profit 216,163 214,290 282,031
Other income 8 2,700 9,875 4,035
Impairment losses under expected
credit loss model, net of reversal 9 (1,751) (1,217) (5,823)
Other gains and losses 10 (1,301) (2,330) (1,375)
Research and development expenses 11 (137,777) (144,281) (187,956)
Administrative expenses 11 (137,091) (73,504) (169,090)
Listing expenses 11 (6,366) (16,307) (24,107)
Distribution and selling expenses 11 (132,725) (98,876) (202,821)
Operating loss (198,148) (112,350) (305,106)
Finance income 12 10,583 10,314 6,879
Finance costs 13 (243) (1,567) (1,022)
Fair value changes of financial assets
and liabilities at fair value through
profit or loss (the “FVTPL”) 14 (265,523) (53,491) (55,895)
Share of results of associates
and joint ventures 4,958 1,069 (4,030)
Loss before tax (448,373) (156,025) (359,174)
Income tax expenses 15 – (199) (116)
Loss and total comprehensive
expense for the year (448,373) (156,224) (359,290)
Attributable to:
Owners of the Company (446,938) (153,501) (357,980)
Non-controlling interests (1,435) (2,723) (1,310)
(448,373) (156,224) (359,290)
Loss per share attributable to
owners of the Company
– Basic and diluted (RMB) 17 (3.19) (1.10) (2.56)
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 479 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
NOTES 2021 2022 2023
RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment 20 8,042 8,703 9,949
Right-of-use assets 21 36,408 24,609 15,103
Intangible assets 22 7,644 6,961 6,502
Investments in associates 23 75,171 87,027 88,378
Investments in joint ventures 24 9,739 10,845 2,792
Deposits paid for investment in an
associate 23 5,200 – –
Financial assets at FVTPL 25 19,440 39,487 32,434
Contract costs 29 36,471 38,088 38,181
Contract assets 32 1,239 161 257
Long-term bank deposits 30 103,027 106,427 –
Prepayments 671 – –
303,052 322,308 193,596
Current assets
Inventories 27 8,972 10,992 3,681
Contract costs 29 18,245 42,026 47,104
Contract assets 32 68,836 77,891 70,459
Trade and other receivables, deposits
and prepayments 28 78,332 85,188 104,428
Amounts due from related parties 42 19,260 3,631 17,336
Financial assets at FVTPL 25 218,856 400,900 268,230
Restricted bank deposits 30 515 103 2,177
Short-term bank deposits with
maturity over three months 30 104,785 80,472 109,827
Cash and cash equivalents 30 505,006 237,206 335,031
1,022,807 938,409 958,273
Current liabilities
Lease liabilities 21 10,312 18,442 14,611
Trade and other payables 31 140,465 136,919 178,086
Tax liabilities – 31 60
Contract liabilities 32 130,631 165,476 122,744
Financial liabilities at FVTPL 33 216,650 2,151,922 2,212,629
Amounts due to related parties 42 14,020 11,052 24,043
512,078 2,483,842 2,552,173
Net current assets (liabilities) 510,729 (1,545,433) (1,593,900)
Total assets less current liabilities 813,781 (1,223,125) (1,400,304)
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 480 ---
As at December 31,
NOTES 2021 2022 2023
RMB’000 RMB’000 RMB’000
Capital and reserves
Share capital 34 140,000 140,000 140,000
Reserves (1,226,267) (1,369,299) (1,536,215)
Deficits attributable to owners of the
Company (1,086,267) (1,229,299) (1,396,215)
Non-controlling interests (1,435) (4,158) (5,468)
Total deficits (1,087,702) (1,233,457) (1,401,683)
Non-current liabilities
Lease liabilities 21 25,364 7,354 1,379
Financial liabilities at FVTPL 33 1,876,119 2,830 –
Deferred tax liabilities 26 – 148 –
1,901,483 10,332 1,379
Total deficits and
non-current liabilities 813,781 (1,223,125) (1,400,304)
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 481 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at December 31,
NOTES 2021 2022 2023
RMB’000 RMB’000 RMB’000
Non-current assets
Property, plant and equipment 20 8,039 8,675 9,602
Right-of-use assets 21 36,408 24,609 13,096
Intangible assets 22 7,638 6,957 6,499
Investment in subsidiaries 44 83,017 103,017 103,017
Investments in associates 23 74,144 74,169 75,029
Investments in joint ventures 24 9,739 10,845 –
Financial assets at FVTPL 25 19,440 19,443 18,431
Contract costs 29 36,471 38,088 38,181
Contract assets 32 1,239 161 257
Long-term bank deposits 30 103,027 106,427 –
Prepayments 671 – –
379,833 392,391 264,112
Current assets
Inventories 27 9,000 10,992 3,681
Contract costs 29 18,245 42,026 47,104
Contract assets 32 56,775 61,072 66,355
Trade and other receivables, deposits
and prepayments 28 47,723 61,036 74,358
Amounts due from related parties 42 189,826 97,934 138,147
Financial assets at FVTPL 25 218,856 400,900 268,230
Restricted bank deposits 30 515 103 2,177
Short-term bank deposits with
maturity over three months 30 84,535 80,472 109,827
Cash and cash equivalents 30 377,807 158,369 286,604
1,003,282 912,904 996,483
Current liabilities
Lease liabilities 21 10,312 18,442 13,752
Trade and other payables 31 94,184 101,419 137,892
Contract liabilities 32 122,571 156,899 118,403
Financial liabilities at FVTPL 33 216,650 2,151,922 2,212,629
Amounts due to related parties 42 59,643 39,621 72,044
503,360 2,468,303 2,554,720
Net current assets (liabilities) 499,922 (1,555,399) (1,558,237)
Total assets less current liabilities 879,755 (1,163,008) (1,294,125)
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 482 ---
As at December 31,
NOTES 2021 2022 2023
RMB’000 RMB’000 RMB’000
Capital and reserves
Share capital 34 140,000 140,000 140,000
Reserves 35 (1,161,728) (1,310,362) (1,434,399)
Total deficits (1,021,728) (1,170,362) (1,294,399)
Non-current liabilities
Lease liabilities 21 25,364 7,354 274
Financial liabilities at FVTPL 33 1,876,119 – –
1,901,483 7,354 274
Total deficits and non-current
liabilities 879,755 (1,163,008) (1,294,125)
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 483 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Share
capital
Capital
reserves
Share-based
payments
reserves
Accumulated
losses Subtotal
Non-
controlling
interests Total equity
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note 36)
As at January 1, 2021 140,000 337,438 8,343 (1,286,528) (800,747) – (800,747)
Loss and total comprehensive expense
for the year – – – (446,938) (446,938) (1,435) (448,373)
Recognition of share-based payment
expenses – 118,606 42,812 – 161,418 – 161,418
As at December 31, 2021 140,000 456,044 51,155 (1,733,466) (1,086,267) (1,435) (1,087,702)
Loss and total comprehensive expense
for the year – – – (153,501) (153,501) (2,723) (156,224)
Recognition of share-based payment
expenses – – 10,469 – 10,469 – 10,469
As at December 31, 2022 140,000 456,044 61,624 (1,886,967) (1,229,299) (4,158) (1,233,457)
Loss and total comprehensive expense
for the year – – – (357,980) (357,980) (1,310) (359,290)
Recognition of share-based payment
expenses – 114,126 76,938 – 191,064 – 191,064
Forfeiture of share-based payment
expenses – – (8,343) 8,34 3–––
As at December 31, 2023 140,000 570,170 130,219 (2,236,604) (1,396,215) (5,468) (1,401,683)
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 484 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
OPERA TING ACTIVITIES
Loss before tax (448,373) (156,025) (359,174)
Adjustments for:
Share of results of associates and joint
ventures (4,958) (1,069) 4,030
Share-based payment expenses 161,418 10,469 191,064
Depreciation of property, plant and
equipment 5,611 3,453 3,763
Amortization of intangible assets 952 1,019 1,521
Depreciation of right-of-use assets 10,139 12,463 13,198
Loss on disposal of property, plant and
equipment 6 30 31
Gain on early termination of a lease – – (4)
Finance costs 243 1,567 1,022
Impairment losses under expected credit loss
model, net of reversal 1,751 1,217 5,823
Interest income (6,063) (3,872) (3,400)
Gain on partial disposal of investment in an
associate (1,613) – –
Gain on disposal of a joint venture – – (137)
Fair value changes of financial assets and
liabilities at FVTPL 265,523 53,491 55,895
Operating cash flows before movements in
working capital (15,364) (77,257) (86,368)
Decrease (increase) in inventories 4,524 (1,991) 7,311
Increase in trade and other receivables,
deposits and prepayments (21,065) (5,598) (15,117)
(Increase) decrease in amounts due from
related parties (16,273) 18,538 (15,003)
(Decrease) increase in amounts due to
related parties (15,498) (2,968) 12,991
Increase in contract costs (4,662) (25,398) (5,171)
(Increase) decrease in contract assets (4,801) (8,172) 3,827
Increase (decrease) in contract liabilities 25,814 34,845 (42,732)
Increase in trade and other payables 33,336 3,745 41,167
Cash used in operations (13,989) (64,256) (99,095)
Income taxes paid – (20) (235)
NET CASH USED IN OPERA TING
ACTIVITIES (13,989) (64,276) (99,330)
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 485 ---
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
INVESTING ACTIVITIES
Purchases of property, plant and equipment (2,120) (4,144) (5,040)
Purchases of intangible assets (2,724) (336) (1,062)
Purchases of wealth management products (594,000) (1,400,000) (747,000)
Redemption of wealth management products 584,000 1,210,000 830,000
Placement of term deposits (150,000) (80,000) –
Withdrawal of term deposits 30,000 100,000 80,000
Deposits paid for investment in an associate (5,200) (5,000) –
Investments in associates (21,836) (11,922) (3,053)
Investments in joint ventures – – (4,951)
Proceeds on disposal of a joint venture – – 10,813
Payments for associates with preferential rights investments
and the arrangement/right to receive additional shares at
nominal consideration (34,015) (16,623) –
Interest of term deposits and wealth management products 5,668 17,809 59,177
Acquisition of a subsidiary 119 – –
Placement of restricted bank deposits (86) (103) (2,177)
Withdrawal of restricted bank deposits 418 515 103
NET CASH (USED IN) FROM INVESTING ACTIVITIES (189,776) (189,804) 216,810
FINANCING ACTIVITIES
Prepayments of share issued costs (671) (1,706) (5,139)
Issue of shares with preferential rights 443,507 – –
Repayments of lease liabilities (7,167) (12,014) (14,516)
NET CASH FROM (USED IN) FINANCING ACTIVITIES 435,669 (13,720) (19,655)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIV ALENTS 231,904 (267,800) 97,825
CASH AND CASH EQUIV ALENTS A T THE BEGINNING
OF THE YEAR 273,102 505,006 237,206
CASH AND CASH EQUIV ALENTS A T THE END OF
THE YEAR 505,006 237,206 335,031
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 486 ---
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
Baiwang Co., Ltd. was incorporated in Beijing, People’s Republic of China (the “PRC”) on May 4, 2015 as
a joint stock company with limited liability under the Company Law (PRC, 2013 Revision). The registered office and
principal place of business of the Company is 14/F & 15/F, Building 1, Division 1, No. 81 Beiqing Road, Haidian
District, Beijing, the PRC.
The Group is principally engaged in the provision of cloud-based software-as-a-service (the “SaaS”) solutions
and on-premises solutions for financial and tax compliance management, data-driven analytics services as well as
other enterprise needs, in the PRC. Ms. Chen Jie, Ningbo Xiu’an Enterprise Management Partnership (Limited
Partnership)τΆุ၍ଣΥྫΆุ(Υྫ) (“Ningbo Xiuan”) (formerly known as Ningbo Xiu’an Equity
Investment Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υྫ))) and Tianjin Duoying
Technology Center (Limited Partnership) (Ҧʕː(Υྫ)) (“Tianjin Duoying”) are controlling
shareholders of the Company.
The Historical Financial Information is presented in the currency of RMB, which is also the functional
currency of the Group.
2. BASIS OF PREPARATION OF HISTORICAL FINANCIAL INFORMATION
The Historical Financial Information had been prepared based on the accounting policies set out in Note 4
which conform with IFRSs. In addition, the Historical Financial Information includes applicable disclosures required
by the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”)
and by the Hong Kong Companies Ordinance (the “Companies Ordinance”).
As at December 31, 2023, the Group and the Company had net current liabilities of RMB1,593,900,000 and
RMB1,558,237,000 and net liabilities of RMB1,401,683,000 and RMB1,294,399,000, respectively. The net current
liabilities and net liabilities primarily arise from the shares with preferential rights (the “Shares with Preferential
Rights”) amounting to RMB2,212,629,000 as at December 31, 2023, of which the key terms are detailed in Note 33.
As disclosed in Note 33, in June 2023, the Company and the holders of the Shares with Preferential Rights have
entered into a supplemental agreement, and the directors of the Company (the “Directors”) are of the view that the
Company is not required to return the investment funds in relations to the Shares with Preferential Rights on or before
December 31, 2024 and as a result, the Shares with Preferential Rights are not expected to be redeemed within twelve
months since December 31, 2023. The Directors have represented to us that, based on past experience and recent
communication with the holders of the Shares with Preferential Rights and the controlling shareholder of the
Company, they believe these shareholders will continue to provide financial support to the Group beyond 2024 should
the listing process take longer time to complete than currently expected.
Based on the working capital forecast of the Group for the next twelve months, taking into account the
financial resources available to the Group, including bank deposits, cash and cash equivalents and wealth
management products issued by banks on hand amounting to RMB713,088,000 as at December 31, 2023 and the
annual operating cash outflow during the Track Record Period, and the expected continuous financial support from
the holders of shares with preferential rights as required/necessary, the Directors believe that the Group will have
sufficient cash resources to satisfy its future working capital in the next twelve months from the date of this report.
Accordingly, the Directors consider that it is appropriate that the Historical Financial Information is prepared on a
going concern basis.
3. APPLICATION OF IFRSs
For the purpose of preparing and presenting the Historical Financial Information, the Group has consistently
applied the accounting policies which conform with IFRSs that are effective for the accounting period beginning on
January 1, 2023 throughout the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 487 ---
New and amendments to IFRSs in issue but not yet effective
The Group has not early applied the following new and amendments to IFRSs that have been issued but are
not yet effective.
Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its
Associate or Joint V enture 1
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback 2
Amendments to IAS 1 Classification of Liabilities as Current or Non-current and
related amendments to Hong Kong Interpretation 5
(2020)
2
Amendments to IAS 1 Non-current Liabilities with Covenants 2
Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements 2
Amendments to IAS 21 Lack of Exchangeability 3
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and Measurement of
Financial Instruments 4
IFRS 18 Presentation and Disclosure in Financial Statements 5
1 Effective for annual periods beginning on or after a date to be determined
2 Effective for annual periods beginning on or after January 1, 2024
3 Effective for annual periods beginning on or after January 1, 2025
4 Effective for annual periods beginning on or after January 1, 2026
5 Effective for annual periods beginning on or after January 1, 2027
The Directors anticipate that the application of the new and amendments to IFRSs will have no material impact
on the consolidated financial statements in the foreseeable future.
4. MATERIAL ACCOUNTING POLICY INFORMATION
The Historical Financial Information has been prepared on the historical cost basis except for certain financial
instruments that are measured at fair values at the end of each reporting period, as disclosed in the accounting policies
set out below.
4.1 Basis of consolidation
The Historical Financial Information incorporates the financial statements of the Company and entities
controlled by the Group. Control is achieved when the Company:
 has power over the investee;
 is exposed, or has rights, to variable returns from its involvement with the investee; and
 has the ability to use its power to affect its returns.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above.
When the Group has less than a majority of the voting rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Group considers all relevant facts and circumstances in assessing whether or not the Group’s voting
rights in an investee are sufficient to give it power, including:
 the size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the
other vote holders;
 potential voting rights held by the Group, other vote holders or other parties;
 rights arising from other contractual arrangements; and
 any additional facts and circumstances that indicate that the Group has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting
patterns at previous shareholders’ meetings.
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 488 ---
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the
Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the Track Record Period are included in the consolidated statements of profit or loss and other comprehensive
income from the date the Group gains control until the date when the Group ceases to control the subsidiary.
Profit or loss and each item of other comprehensive income are attributed to the owners of the Company and
to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies.
All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Non-controlling interests in subsidiaries are presented separately from the Group’s equity therein, which
represent present ownership interests entitling their holders to a proportionate share of net assets of the relevant
subsidiaries upon liquidation.
Investments in subsidiaries are stated in the statements of financial position of the Company at cost less
identified impairment loss, if any.
4.2 Business combinations or asset acquisitions
Business combinations
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred
in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair
values of the assets transferred by the Group, liabilities incurred by the Group to the former owners of the
acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-
related costs are generally recognized in profit or loss as incurred.
Except for certain recognition exemptions, the identifiable assets acquired and liabilities assumed must
meet the definitions of an asset and a liability in the International Accounting Standard Committee’s
Framework for the Preparation and Presentation of Financial Statements (replaced by the Conceptual
Framework for Financial Reporting issued in September 2010).
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their
fair value, except that:
 deferred tax assets or liabilities, and assets or liabilities related to employee benefit arrangements
are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
 liabilities or equity instruments related to share-based payment arrangements of the acquiree or
share-based payment arrangements of the Group entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with IFRS 2 at the acquisition date;
 assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with
that standard; and
 lease liabilities are recognized and measured at the present value of the remaining lease payments
(as defined in IFRS 16) as if the acquired leases are new leases at the acquisition date, except for
leases for which (a) the lease term ends within 12 months of the acquisition date; or (b) the
underlying asset is of low value. Right-of-use assets are recognized and measured at the same
amount as the relevant lease liabilities, adjusted to reflect favorable or unfavorable terms of the
lease when compared with market terms.
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 489 ---
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities assumed as at
acquisition date. If, after re-assessment, the net amount of the identifiable assets acquired and liabilities
assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is
recognized immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
share of the relevant subsidiary’s net assets in the event of liquidation are initially measured at the
non-controlling interests’ proportionate share of the recognized amounts of the acquiree’s identifiable net
assets or at fair value. The choice of measurement basis is made on a transaction-by-transaction basis.
4.3 Investments in associates and joint ventures
An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee but is not control or joint control over those
policies.
A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights
to the net assets of the joint arrangement. Joint control is the contractually agreed sharing of control of an
arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties
sharing control.
For investments in associates or joint ventures in the form of ordinary shares and without any preferential
rights (and other shares that are substantively the same as ordinary shares), the results and assets and liabilities of
associates and joint ventures are incorporated in these Historical Financial Information using the equity method of
accounting. The financial statements of associates and joint ventures used for equity accounting purposes are
prepared using uniform accounting policies as those of the Group for like transactions and events in similar
circumstances. Under the equity method, an investment in an associate or a joint venture is initially recognized in
the consolidated statements of financial position at cost and adjusted thereafter to recognize the Group’s share of the
profit or loss and other comprehensive income of the associate. Changes in net assets of the associate other than profit
or loss and other comprehensive income are not accounted for unless such changes resulted in changes in ownership
interest held by the Group. When the Group’s share of result of an associate or joint venture exceeds the Group’s
interest in that associate or joint venture (which includes any long-term interests that, in substance, form part of the
Group’s net investment in the associate), the Group discontinues recognizing its share of further losses. Additional
losses are recognized only to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the associate or joint venture. Financial interests in associates that are not in the form of
ordinary shares or with preferential rights which change the substance of the ordinary shares are accounted for in
accordance with IFRS 9.
An investment in an associate or a joint venture in the form of ordinary shares and without any preferential
rights (and other shares that are substantively the same as ordinary shares) is accounted for using the equity method
from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment in an
associate or a joint venture, any excess of the cost of the investment over the Group’s share of the net fair value of
the identifiable assets and liabilities of the investee is recognized as goodwill, which is included within the carrying
amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities
over the cost of the investment, after reassessment, is recognized immediately in profit or loss in the period in which
the investment is acquired.
The Group assesses whether there is objective evidence that the interest in an associate or a joint venture may
be impaired. When any objective evidence exists, the entire carrying amount of the investment (including goodwill)
is tested for impairment in accordance with IAS 36 as a single asset by comparing its recoverable amount (higher
of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognized is not
allocated to any asset, including goodwill, that forms part of the carrying amount of the investment. Any reversal of
that impairment loss is recognized in accordance with IAS 36 to the extent that the recoverable amount of the
investment subsequently increases.
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 490 ---
When the Group reduces its ownership interest in an associate or a joint venture but the Group continues to
use the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had previously
been recognized in other comprehensive income relating to that reduction in ownership interest if that gain or loss
would be reclassified to profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the Group, profits and losses resulting
from the transactions with the associate or joint venture are recognized in the Historical Financial Information only
to the extent of interests in the associate or joint venture that are not related to the Group.
4.4 Revenue from contracts with customers
The Group recognizes revenue when performance obligation is satisfied, i.e. when “control” of the goods or
services underlying the particular performance obligation is transferred to the customer.
A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a
series of distinct goods or services that are substantially the same.
Control is transferred over time and revenue is recognized over time by reference to the progress towards
complete satisfaction of the relevant performance obligation if one of the following criteria is met:
 the customer simultaneously receives and consumes the benefits provided by the Group’s performance
as the Group performs;
 the Group’s performance creates or enhances an asset that the customer controls as the Group performs;
or
 the Group’s performance 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.
Otherwise, revenue is recognized at a point in time when the customer obtains control of the distinct good or
service.
A contract asset represents the Group’s right to consideration in exchange for goods or services that the Group
has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance with IFRS 9.
In contrast, a receivable represents the Group’s unconditional right to consideration, i.e. only the passage of time is
required before payment of that consideration is due.
A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the
Group has received consideration (or an amount of consideration is due) from the customer. Unearned revenue awards
to customers related to unsatisfied performance obligations at the end of the period, is included in contract liabilities
in the Group’s consolidated statements of financial position.
A contract asset and a contract liability relating to the same contract are accounted for and presented on a net
basis.
Contracts with multiple performance obligations (including allocation of transaction price)
For contracts that contain more than one performance obligation, the Group allocates the transaction
price to each performance obligation on a relative stand-alone selling price basis.
The stand-alone selling price of the distinct good or service underlying each performance obligation is
determined at contract inception. It represents the price at which the Group would sell a promised good or
service separately to a customer. If a stand-alone selling price is not directly observable, the Group estimates
it using appropriate techniques such that the transaction price ultimately allocated to any performance
obligation reflects the amount of consideration to which the Group expects to be entitled in exchange for
transferring the promised goods or services to the customer.
APPENDIX I ACCOUNTANTS’ REPORT
– I-16 –


--- page 491 ---
Over time revenue recognition: measurement of progress towards complete satisfaction of a performance
obligation
Output method
As a practical expedient, if the Group has a right to consideration in an amount that corresponds directly
with the value of the Group’s performance completed to date (for example, service contracts in which the
Group bills a fixed amount for each hour of service provided), the Group recognizes revenue in the amount
to which the Group has the right to invoice.
Principal versus agent
When another party is involved in providing goods or services to a customer, the Group determines
whether the nature of its promise is a performance obligation to provide the specified goods or services itself
(i.e. the Group is a principal) or to arrange for those goods or services to be provided by the other party (i.e.
the Group is an agent). The Group is a principal if it controls the specified good or service before that good
or service is transferred to a customer. The Group is an agent if its performance obligation is to arrange for
the provision of the specified good or service by another party. In this case, the Group does not control the
specified good or service provided by another party before that good or service is transferred to the customer.
When the Group acts as an agent, it recognizes revenue in the amount of any fee or commission to which it
expects to be entitled in exchange for arranging for the specified goods or services to be provided by the other
party. Except for supply chain collaboration solutions included in cloud financial and tax digitalization
solutions, the Group considers itself the principal and recognize revenue on a gross basis. For supply chain
collaboration solutions, the Group considers itself as an agent and recognize revenue on a net basis.
Recognition of revenue from specific major sources of revenue
The Group derives revenue from its cloud-based and on-premises solutions for financial and tax
digitalization solutions, data-driven analytics services and other enterprise needs.
Cloud financial and tax digitalization solutions
The Group provides tax invoice compliance management solutions and financial and tax management
solutions to its customers through its cloud-based platforms.
i. tax invoice compliance management solutions and financial and tax management solutions
The Group provides cloud-based financial and tax compliance management solutions in relation to the
value-added tax (the “V A T”) through its cloud-based platforms separately or in combination, with products and
services including SaaS subscription services, implementation services, supporting hardware devices and
software sales as well as associated maintenance and support services. The transaction price is the price after
discount if any, and is a fixed amount upon signing the contract. The products cannot be returned unless
significant problems are found, which rarely happens.
The SaaS subscription services grant customers the right to access the software functionality in a hosted
environment controlled by the Group during the contractual term where the customers do not take possession
of the software. The SaaS subscription services, together with the implementation services, if engaged, are
highly interdependent and interrelated with each other and represent multiple inputs to a combined output that
is transferred to the customers. Accordingly, the SaaS subscription services and the implementation services
are accounted for as a single performance obligation. Revenue from subscriptions services and implementation
services is recognized ratably beyond the initial contractual period when those future goods or services are
transferred over the expected customers’ life, primarily based on anticipated renewal period and the estimated
life of such services demand.
For the contracts that the customers pay by usage, the revenue is recognized based on the usage report
on monthly basis. The performance obligation of such services is satisfied over time as the customers
simultaneously receive and consume the benefits. For financial and tax management solutions contracts which
customers pay by usage, they are billed based on the number of service instances provided at fixed rate. The
Group has a right to invoice in an amount that corresponds directly with the value of the Group’s performance
completed to date. Revenue from the provision of financial and tax management solutions is recognized in an
amount to which the Group has a right to invoice.
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 492 ---
Supporting hardware devices and software purchased from third parties and sold in combination with
the solutions are accounted for as separate performance obligations because they have standalone functionality
and are capable of being distinct. The revenue is recognized at a point in time when the supporting hardware
devices and software are accepted by the customers.
The Group also provides maintenance and support services which mainly include on-demand user
support services. The customers pay on a fixed fee rate per period. These services are accounted for as separate
performance obligations because they are capable of being distinct. Revenue is recognized ratably over their
respective contractual terms.
The Group normally requests an upfront payment of about 10%-30% of the contract price. After the
solutions are implemented and accepted by the customers, the remaining contract price is to be settled by the
customers in installments over 5 to 90 days. About 5%-10% of the contract price is withheld by the customers
and will be released upon completion of the warranty period (normally 2-3 years after the customer
acceptance). The services to be provided during the warranty period is considered as an assurance-type
warranty in order to ensure the solution will function as needed and is accounted for in accordance with IAS
37 Provisions, Contingent Liabilities and Contingent Assets . The management of the Group has assessed the
effects of financing component is not significant at contract level and therefore revenue is not adjusted for the
effects of time value of money.
The transaction price is allocated among the performance obligations within one solution contract on a
stand-alone selling price basis.
ii. supply chain collaboration solutions
The Group provides supply chain collaboration solutions to its customers through its cloud-based
platforms. The performance obligation of such services is satisfied at a point in time when the solutions are
accepted by the customers.
Data-driven analytics services
The Group provides data analytics products and services through its cloud-based platforms, which
comprise digital marketing services, risk management services and enterprise operation reporting services,
primarily to licensed credit reporting agencies and licensed financial service providers.
The customers pay usage-based or sales-based fees, at fixed rate. The usage or sales volume reports are
confirmed by customers monthly and the revenue is recognized on such monthly basis.
On-premises financial and tax digitalization solutions
The Group sells its on-premises financial and tax digitalization solutions through customized
on-premises software products, supporting hardware devices and software purchased from third parties and the
associated maintenance and support services.
The customized on-premises software has standalone functionality and are capable of being distinct and
therefore is accounted for a separate performance obligation. The Group considers the grant of the licenses for
the on-premises software as providing the customers the right to use the Group’s intellectual property and the
performance obligation is satisfied at a point in time when the software products are accepted by the customers.
Supporting hardware devices and software and maintenance and support services are recognized the
same way as in provision the cloud-based financial and tax digitalization solutions.
Others
The Group provides advertisement publishing services, comprehensive tax, finance and accounting
training for enterprises and education institutions. Revenue related to these services is recognized ratably over
the contractual terms.
APPENDIX I ACCOUNTANTS’ REPORT
– I-18 –


--- page 493 ---
4.5 Contract costs
Costs to fulfill a contract
The Group incurs costs to fulfill a contract in its revenue generating activities. The Group first assesses
whether these costs qualify for recognition as an asset in terms of other relevant standards, failing which it
recognizes an asset for these costs only if they meet all of the following criteria:
(a) the costs relate directly to a contract or to an anticipated contract that the Group can specifically
identify;
(b) the costs generate or enhance resources of the Group that will be used in satisfying (or in
continuing to satisfy) performance obligations in the future; and
(c) the costs are expected to be recovered.
The asset so recognized is subsequently amortized to profit or loss on a systematic basis that is
consistent with the transfer to the customer of the goods or services to which the assets relate. The asset is
subject to impairment assessment.
4.6 Cost of sales
Cost of sales consists primarily of employee benefit expenses, information technology infrastructure and
communication charges, depreciation of property, plant and equipment, amortization of costs to fulfill contracts and
costs of hardware devices sold. Shipping charges to receive hardware devices from the suppliers are included in
inventories, and recognized as cost of revenue upon sale of the hardware devices to the customers.
4.7 Research and development expenses
Research expenditures are recognized as an expense as incurred. Costs incurred on development projects are
capitalized as intangible assets when recognition criteria are met, including (a) it is technically feasible to complete
the software so that it will be available for use; (b) management intends to complete the software and use or sell it;
(c) there is an ability to use or sell the software; (d) it can be demonstrated how the software will generate probable
future economic benefits; (e) adequate technical, financial and other resources to complete the development and to
use or sell the software are available; and (f) the expenditure attributable to the software during its development can
be reliably measured. Other development costs that do not meet those criteria are expensed as incurred. There were
no development costs meeting these criteria and capitalized as intangible assets as at December 31, 2021, 2022 and
2023.
4.8 Leases
Definition of a lease
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
For contracts entered into or modified on or after the date of initial application or arising from business
combinations, the Group assesses whether a contract is or contains a lease based on the definition under IFRS
16 at inception, modification date or acquisition date, as appropriate. Such contract will not be reassessed
unless the terms and conditions of the contract are subsequently changed.
The Group as a lessee
Allocation of consideration to components of a contract
For a contract that contains a lease component and one or more additional lease or non-lease
components, the Group allocates the consideration in the contract to each lease component on the basis of the
relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease
components.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 494 ---
Short-term leases
The Group applies the short-term lease recognition exemption to leases that have a lease term of 12
months or less from the commencement date and do not contain a purchase option. Lease payments on
short-term leases are recognized as expense on a straight-line basis over the lease term.
Right-of-use assets
The cost of right-of-use assets includes:
 the amount of the initial measurement of the lease liability;
 any lease payments made at or before the commencement date, less any lease incentives received;
 any initial direct costs incurred by the Group; and
 an estimate of costs to be incurred by the Group in dismantling and removing the underlying
assets, restoring the site on which it is located or restoring the underlying asset to the condition
required by the terms and conditions of the lease.
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over lease term.
The Group presents right-of-use assets as a separate line item on the consolidated statements of financial
position.
Refundable rental deposits
Refundable rental deposits paid are accounted for under IFRS 9 and initially measured at fair value.
Adjustments to fair value at initial recognition are considered as additional lease payments and included in the
cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, the Group recognizes and measures the lease liability at the
present value of lease payments that are unpaid at that date. In calculating the present value of lease payments,
the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in
the lease is not readily determinable.
The lease payments include:
 fixed payments (including in-substance fixed payments) less any lease incentives receivable; and
 payments of penalties for terminating a lease, if the lease term reflects the Group exercising an
option to terminate the lease.
After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.
The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use
assets) whenever:
 the lease term has changed or there is a change in the assessment of exercise of a purchase option,
in which case the related lease liability is remeasured by discounting the revised lease payments
using a revised discount rate at the date of reassessment.
 the lease payments change due to changes in market rental rates following a market rent review,
in which cases the related lease liability is remeasured by discounting the revised lease payments
using the initial discount rate.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 495 ---
The Group presents lease liabilities as a separate line item on the consolidated statements of financial
position.
Lease modifications
The Group accounts for a lease modification as a separate lease if:
 the modification increases the scope of the lease by adding the right to use one or more underlying
assets; and
 the consideration for the leases increases by an amount commensurate with the stand-alone price
for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the
circumstances of the particular contract.
For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease
liabilities, less any lease incentives receivable, based on the lease term of the modified lease by discounting
the revised lease payments using a revised discount rate at the effective date of the modification.
The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to
the relevant right-of-use assets.
4.9 Government grants
Government grants are not recognized until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group
recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government
grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets
are recognized as deferred income in the consolidated statements of financial position and transferred to profit or loss
on a systematic and rational basis over the useful lives of the related assets. The Group received no such government
grants during the Track Record Period.
Government grants related to income that are receivable as compensation for expenses or losses already
incurred or for the purpose of giving immediate financial support to the Group with no future related costs are
recognized in profit or loss in the period in which they become receivable. Such grants are presented under “other
income”.
4.10 Employee benefits
Pension obligations and other social welfare benefits
Full-time employees of the Group in the PRC participate in a government mandated defined contribution
plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare
benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries, including
consolidated affiliated entities of the Group make contributions to the government for these benefits based on
certain percentages of the employees’ salaries, up to a maximum amount specified by the local government.
The Group has no legal obligation for the benefits beyond the contributions made. The Group’s contributions
to the defined contribution plans are expensed as incurred and not reduced by being forfeited by those
employees who leave the plans prior to vesting fully in the contributions.
Bonus plan
The expected cost of bonuses is recognized as a liability when the Group has a present legal or
constructive obligation for payment of bonuses as a result of services rendered by employees and a reliable
estimate of the obligation can be made. Liabilities for bonuses are expected to be settled within one year and
are measured at the amounts expected to be paid when they are settled.
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Short-term employee benefits
Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be
paid as and when employees rendered the services. All short-term employee benefits are recognized as an
expense unless another IFRS requires or permits the inclusion of the benefit in the cost of an asset.
A liability is recognized for benefits accruing to employees (such as wages and salaries, annual leave
and sick leave) after deducting any amount already paid.
4.11 Share-based payments
Equity-settled share-based payment transactions
Equity-settled share-based payments to employees and others providing similar services are measured
at the fair value of the equity instruments at the grant date.
The fair value of the equity-settled share-based payments determined at the grant date without taking
into consideration all non-market vesting conditions is expensed using graded vesting method over the vesting
period, based on the Group’s estimate of equity instruments that will eventually vest, with a corresponding
increase in equity (share-based payments reserves). At the end of each reporting period, the Group revises its
estimate of the number of equity instruments expected to vest based on assessment of all relevant non-market
vesting conditions. The impact of the revision of the original estimates, if any, is recognized in profit or loss
such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share-based
payments reserves. For share options/other share incentives that vest immediately at the date of grant, the fair
value of the share options/other share incentives granted is expensed immediately to profit or loss.
When share options are exercised or other share incentives granted are vested, the amount previously
recognized in share-based payments reserves will be transferred to capital reserves. When the share options are
forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognized
in share-based payments reserves will be transferred to accumulated losses.
Share incentives granted to non-employees
Equity-settled share-based payment transactions with parties other than employees are measured at the
fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments granted, measured at the date the entity
obtains the goods or the counterparty renders the service. The fair values of the goods or services received are
recognized as expenses (unless the goods or services qualify for recognition as assets).
Modification to the terms and conditions of the share-based payment arrangement
When the terms and conditions of the share-based payment arrangement are modified, the Group
recognizes, as a minimum, the services received measured at the grant date fair value of the equity instruments
granted, unless those equity instruments do not vest because of failure to satisfy a vesting condition (other than
a market condition) that was specified at grant date. In addition, if the Group modifies the vesting conditions
(other than a market condition) in a manner that is beneficial to the employees, for example, by reducing the
vesting period, the Group takes the modified vesting conditions into consideration over the remaining vesting
period. The incremental fair value granted, if any, is the difference between the fair value of the modified
equity instruments and that of the original equity instruments, both estimated as at the date of modification.
If the modification occurs during the vesting period, the incremental fair value granted is included in
the measurement of the amount recognized for services received over the period from modification date until
the date when the modified equity instruments are vested, in addition to the amount based on the grant date
fair value of the original equity instruments, which is recognized over the remainder of the original vesting
period.
If the modification reduces the total fair value of the share-based arrangement, or is not otherwise
beneficial to the employee, the Group continues to account for the original equity instruments granted as if that
modification had not occurred.
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When a grant of share options/other share incentives is canceled during the vesting period, the Group
accounts for the cancellation as an acceleration of vesting, and therefore recognize immediately the amount
that otherwise would have been recognized for services received over the remainder of the vesting period.
However, if a new grant is substituted for the canceled one, and is designated as a replacement on the date that
it is granted, the Group accounts for the granting of replacement equity instruments in the same way as a
modification of the original grant of equity instruments.
4.12 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit during the Track Record Period. Taxable profit differs from
loss before tax because of income or expense that are taxable or deductible in other years and items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities in
the Historical Financial Information and the corresponding tax bases used in the computation of taxable profit.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. Such deferred tax assets and
liabilities are not recognized if the temporary difference arises from the initial recognition (other than in a business
combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit
and at the time of the transaction does not give rise to equal taxable and deductible temporary differences. In addition,
deferred tax liabilities are not recognized if the temporary difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in
subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and
it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments and interests are only recognized to the extent that
it is probable that there will be sufficient taxable profits against which to utilize the benefits of the temporary
differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to
be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which
the liability is settled or the asset is realized, based on tax rate (and tax laws) that have been enacted or substantively
enacted by the end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from
the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount
of its assets and liabilities.
For the purposes of measuring deferred tax for leasing transactions in which the Group recognizes the
right-of-use assets and the related lease liabilities, the Group first determines whether the tax deductions are
attributable to the right-of-use assets or the lease liabilities.
The Group has applied amendments to IAS 12. For leasing transactions in which the tax deductions are
attributable to the lease liabilities, the Group recognizes a deferred tax asset (to the extent that it is probable that
taxable profit will be available against which the deductible temporary difference can be utilized) and a deferred tax
liability for all deductible and taxable temporary differences associated with the right-of-use assets and the lease
liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the same
taxation authority.
Current and deferred tax are recognized in profit or loss.
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4.13 Property, plant and equipment
Property, plant and equipments are tangible assets that are held for use in the production or supply of goods
or services, or for administrative purposes. Property, plant and equipments are stated in the consolidated statements
of financial position at cost less subsequent accumulated depreciation and subsequent accumulated impairment
losses, if any.
Depreciation is recognized so as to write off the cost of assets less their residual values over their estimated
useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are
reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective
basis.
An item of property and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item
of property and equipment is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognized in profit or loss.
4.14 Intangible assets
Intangible assets with finite useful lives that are acquired separately are carried at costs less accumulated
amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is
recognised on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted
for on a prospective basis.
Expenditure on research activities is recognized as an expense in the period in which it is incurred.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use
or disposal. Gains and losses arising from derecognition of an intangible asset, measured as the difference between
the net disposal proceeds and the carrying amount of the asset, are recognized in profit or loss when the asset is
derecognized.
4.15 Impairment on property, plant and equipment, right-of-use assets, contract costs and intangible assets
At the end of each reporting period, the Group reviews the carrying amounts of its property, plant and
equipment, right-of-use assets, contract costs and intangible assets with finite useful lives to determine whether there
is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the relevant asset is estimated in order to determine the extent of the impairment loss, (if any).
The recoverable amount of property, plant and equipment, right-of-use assets, contract costs and intangible
assets are estimated individually. When it is not possible to estimate the recoverable amount individually, the Group
estimates the recoverable amount of the cash-generating unit (the “CGU”) to which the asset belongs.
In testing a CGU for impairment, corporate assets are allocated to the relevant CGU when a reasonable and
consistent basis of allocation can be established, or otherwise they are allocated to the smallest group of CGUs for
which a reasonable and consistent allocation basis can be established. The recoverable amount is determined for the
CGU or group of CGUs to which the corporate asset belongs, and is compared with the carrying amount of the
relevant CGU or group of CGUs.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset (or a CGU) for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or a CGU) is estimated to be less than its carrying amount, the carrying
amount of the asset (or a CGU) is reduced to its recoverable amount. In allocating the impairment loss, the
impairment loss is allocated first to reduce the carrying amount of any goodwill (if applicable) and then to the other
assets on a pro-rata basis based on the carrying amount of each asset in the unit. The carrying amount of an asset
is not reduced below the highest of its fair value less costs of disposal (if measurable), its value in use (if
determinable) and zero. The amount of the impairment loss that would otherwise have been allocated to the asset is
allocated pro rata to the other assets of the unit. An impairment loss is recognized immediately in profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
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Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to
the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognized for the asset (or a CGU) in prior
years. A reversal of an impairment loss is recognized immediately in profit or loss.
4.16 Inventories
Inventories consist primarily of goods shipped in transit and stock goods, and are stated at the lower of cost
and the net realizable value, using the first-in, first-out method. Net realizable value represents the estimated selling
price for inventories less all estimated costs of completion and costs necessary to make the sale. Costs necessary to
make the sale include incremental costs directly attributable to the sale and non-incremental costs which the Group
must incur to make the sale.
4.17 Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle that obligation, and a reliable estimate can be made of
the amount of the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of each reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of the time value of money is material).
Provisions for the expected cost of assurance-type warranty obligations under the relevant contracts with
customers for sales of on-premises solutions are recognized at the date of sale of the relevant products, at the
management’s best estimate of the expenditure required to settle the Group’s obligation.
4.18 Financial instruments
Financial assets and financial liabilities are recognized when a group entity becomes a party to the contractual
provisions of the instrument. All regular way purchases or sales of financial assets are recognized and derecognized
on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the time frame established by regulation or convention in the marketplace.
Financial assets and financial liabilities are initially measured at fair value except for trade receivables arising
from contracts with customers which are initially measured in accordance with IFRS 15 Revenue from Contracts with
Customers . Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial
liabilities (other than financial assets or financial liabilities at FVTPL) are added to or deducted from the fair value
of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit
or loss.
The effective interest method is a method of calculating the amortized cost of a financial asset or financial
liability and of allocating interest income and interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points paid or
received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts)
through the expected life of the financial asset and financial liability, or, where appropriate, a shorter period to the
net carrying amount on initial recognition.
Financial assets
Classification and subsequent measurement
Financial assets that meet the following conditions are subsequently measured at amortized cost:
 the financial asset is held within a business model whose objective is to collect contractual cash
flows; and
 the contractual terms give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
APPENDIX I ACCOUNTANTS’ REPORT
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All other financial assets are subsequently measured at FVTPL except that at initial recognition of a
financial asset the Group may irrevocably elect to present subsequent changes in fair value of an equity
investment in other comprehensive income if that equity investment is neither held for trading nor contingent
consideration recognized by an acquirer in a business combination to which IFRS 3 Business Combinations
applies.
Amortized cost and interest income
Interest income is recognized using the effective interest method for financial assets measured
subsequently at amortized cost and calculated by applying the effective interest rate to the gross carrying
amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see
below). For financial assets that have subsequently become credit-impaired, interest income is recognized by
applying the effective interest rate to the amortized cost of the financial asset from the next reporting period.
If the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer
credit-impaired, interest income is recognized by applying the effective interest rate to the gross carrying
amount of the financial asset from the beginning of each reporting period following the determination that the
asset is no longer credit-impaired.
Financial assets at FVTPL
Financial assets that do not meet the criteria for being measured at amortized cost or fair value through
other comprehensive income are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair
value gains or losses recognized in profit or loss. The net gain or loss recognized in profit or loss includes any
dividend or interest earned on the financial asset and is included in “fair value changes of financial assets at
FVTPL”.
Impairment of financial assets
The Group performs impairment assessment under expected credit loss (the “ECL”) model on financial
assets (including term deposits, trade receivables, other receivables, amounts due from related parties,
restricted bank deposits and bank balances and cash) and other items including contract assets which are
subject to impairment assessment under IFRS 9. The amount of ECL is updated at each reporting date to reflect
changes in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life
of the relevant instrument. In contrast, 12-month ECL (the “12m ECL”) represents the portion of lifetime ECL
that is expected to result from default events that are possible within 12 months after the reporting date.
Assessment is done based on the Group’s historical credit loss experience, adjusted for factors that are specific
to the debtors, general economic conditions and an assessment of both the current conditions at the reporting
date as well as the forecast of future conditions.
The Group recognizes lifetime ECL for trade receivables, contract assets and amounts due from related
parties of trade nature.
For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there
has been a significant increase in credit risk since initial recognition in which case, the Group recognizes
lifetime ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases
in the likelihood or risk of a default occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk of
a default occurring on the financial instrument as at the date of initial recognition. In making this assessment,
the Group considers both quantitative and qualitative information that is reasonable and supportable, including
historical experience and forward-looking information that is available without undue cost or effort.
APPENDIX I ACCOUNTANTS’ REPORT
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In particular, the following information is taken into account when assessing whether credit risk has
increased significantly:
 an actual or expected significant deterioration in the financial instrument’s external (if available)
or internal credit rating;
 significant deterioration in external market indicators of credit risk, e.g. a significant increase in
the credit spread, the credit default swap prices for the debtor;
 existing or forecast adverse changes in business, financial or economic conditions that are
expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
 an actual or expected significant deterioration in the operating results of the debtor;
 an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet its
debt obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has
increased significantly since initial recognition when contractual payments are more than 30 days past due,
unless the Group has reasonable and supportable information that demonstrates otherwise.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has been
a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of
identifying significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
For internal credit risk management, the Group considers an event of default occurs when information
developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors,
including the Group, in full (without taking into account any collaterals held by the Group).
Irrespective of the above, the Group considers that default has occurred when a financial asset is more
than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more
lagging default criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired includes observable data about the following events:
(a) significant financial difficulty of the issuer or the borrower;
(b) a breach of contract, such as a default or past due event;
(c) the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not
otherwise consider;
(d) it is becoming probable that the borrower will enter bankruptcy or other financial reorganization.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is in
severe financial difficulty and there is no realistic prospect of recovery, for example, when the counterparty
has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may
still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal
advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are
recognized in profit or loss.
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Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of
default and loss given default is based on historical data adjusted by forward-looking information. Estimation
of ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of
default occurring as the weights. The Group uses a practical expedient in estimating ECL on trade receivables
and amounts due from related parties of trade nature using a provision matrix taking into consideration
historical credit loss experience and forward-looking information that is available without undue cost or effort.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in
accordance with the contract and the cash flows that the Group expects to receive, discounted at the effective
interest rate determined at initial recognition.
For collective assessment, the Group takes into consideration the following characteristics when
formulating the grouping:
 Past-due status;
 Nature, size and industry of debtors; and
 External credit ratings where available.
The grouping is regularly reviewed by the Directors to ensure the constituents of each group continue
to share similar credit risk characteristics.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments.
Derecognition of financial assets
The Group derecognizes a financial asset only when the contractual rights to the cash flows from the
asset expire.
On derecognition of a financial asset measured at amortized cost, the difference between the asset’s
carrying amount and the sum of the consideration received and receivable is recognized in profit or loss.
Financial liabilities and equity
Classification as debt or equity
Financial liabilities and equity instruments are classified as either financial liabilities or as equity in
accordance with the substance of the contractual arrangements and the definitions of a financial liability and
an equity instrument.
Equity instrument
An equity instrument is any contract that evidences a residual interest in the assets of an entity after
deducting all of its liabilities. Equity instruments issued by the group entities are recognized at the proceeds
received, net of direct issue costs. The Shares with Preferential Rights subject to mandatory redemption in cash
at the option exercisable by holders by agreed date are classified as financial liabilities as set out in Note 33.
Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method
or at FVTPL.
Financial liabilities at amortized cost
Financial liabilities including trade and other payables and amounts due to related parties are
subsequently measured at amortized cost using the effective interest method.
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Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent consideration
of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading or (iii) it is designated
as at FVTPL.
A financial liability other than a financial liability held for trading or contingent consideration of an
acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
 such designation eliminates or significantly reduces a measurement or recognition inconsistency
that would otherwise arise; or
 the financial liability forms part of a group of financial assets or financial liabilities or both,
which is managed and its performance is evaluated on a fair value basis, in accordance with the
Group’s documented risk management or investment strategy, and information about the grouping
is provided internally on that basis; or
 it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits the
entire combined contract to be designated as at FVTPL.
For financial liabilities that are designated as at FVTPL, the amount of change in the fair value of the
financial liability that is attributable to changes in the credit risk of that liability is recognized in other
comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other
comprehensive income would create or enlarge an accounting mismatch in profit or loss. For financial
liabilities that contain embedded derivatives, the changes in fair value of the embedded derivatives are
excluded in determining the amount to be presented in other comprehensive income. Changes in fair value
attributable to a financial liability’s credit risk that are recognized in other comprehensive income are not
subsequently reclassified to profit or loss; instead, they are transferred to retained profits/accumulated losses
upon derecognition of the financial liability.
The Company designates its Shares with Preferential Rights in issuance as financial liabilities at
FVTPL, of which the terms are detailed in Note 33. Any directly attributable transaction costs are recognized
as finance costs in profit or loss. Fair value changes relating to market risk are recognized in profit or loss.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are
discharged, canceled or have expired. The difference between the carrying amount of the financial liability
derecognized and the consideration paid and payable is recognized in profit or loss.
Derivative financial instruments
Derivatives are initially recognized at fair value at the date when derivative contracts are entered into
and are subsequently remeasured to their fair value at the end of the reporting period. The resulting gain or
loss is recognized in profit or loss.
Embedded derivatives
Derivatives embedded in hybrid contracts that contain financial asset hosts within the scope of IFRS 9
are not separated. The entire hybrid contract is classified and subsequently measured in its entirety as either
amortized cost or fair value as appropriate.
Derivatives embedded in non-derivative host contracts that are not financial assets within the scope of
IFRS 9 are treated as separate derivatives when they meet the definition of a derivative, their risks and
characteristics are not closely related to those of the host contracts and the host contracts are not measured at
FVTPL.
Generally, multiple embedded derivatives in a single instrument that are separated from the host
contracts are treated as a single compound embedded derivative unless those derivatives relate to different risk
exposures and are readily separable and independent of each other.
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Offsetting a financial asset and a financial liability
A financial asset and a financial liability are offset and the net amount presented in the consolidated
statements of financial position when, and only when, the Group currently has a legally enforceable right to
set off the recognized amounts; and intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.
4.19 Cash and cash equivalents
For the purposes of the consolidated statements of cash flows, cash and cash equivalents consist of:
 cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject
to regulatory restrictions that result in such balances no longer meeting the definition of cash; and
 cash equivalents, which comprises of short-term (generally with original maturity of three months or
less), highly liquid investments that are readily convertible to a known amount of cash and which are
subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting
short-term cash commitments rather than for investment or other purposes.
5. CRITICAL ACCOUNTING JUDGMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 4, the Directors are required
to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and underlying assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in
the period of the revision and future periods if the revision affects both current and future periods.
Critical judgment in applying accounting policies
The following are the critical judgment, apart from those involving estimations (see below), that Directors
have made in the process of applying the Group’s accounting policies and that have the most significant effect on
the amounts recognized in the Historical Financial Information.
Identification of performance obligations in contracts with customers
Contracts with customers may include multiple performance obligations. Judgments are made by Directors to
determine whether performance obligations are distinct that should be accounted for separately, or not distinct within
the context of the contracts and accounted for together. The Directors consider a performance obligation as distinct
when the customers can benefit from the good or service either on its own or together with other resources that are
readily available to the customers and the Group’s promise to transfer the good or service to the customers is
separately identifiable from other promises in the contract.
Allocation of transaction price to each distinct performance obligation
When the performance obligations are assessed to be distinct from each other in contracts with customers, the
Group allocates the transaction price to each performance obligation based on their relative stand-alone selling prices.
The Directors generally determine relative standalone selling prices based on its standard price list, taking into
consideration of market conditions and our overall pricing strategy.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty
at the end of each reporting period, that may have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next twelve months.
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 505 ---
Recognition of share-based payment expenses
As set out in Note 36, the Group has granted share options and share economic rights to its employees. The
Directors have used the Binomial option-pricing model to determine the total fair value of the options granted to
employees, which is to be expensed over the vesting period. Significant estimate on assumptions, such as the
underlying equity value, risk-free interest rate, expected volatility and dividend yield, is required to be made by the
Directors in applying the Binomial option-pricing model. The fair value of share economic rights were based on the
value of the ordinary shares determined by using the discounted cash flow method with a DLOM. The Directors
estimate the expected percentage of grantees that will stay within the Group at the end of the vesting periods of the
options and share economic rights (the “Expected Retention Rate”) in order to determine the amount of share-based
payment expenses charged to the consolidated income statement. The Expected Retention Rate is assessed based on
historical pattern of retentions and management’s best estimates.
Provision for ECL on trade receivables and contract assets
As set out in Note 40, the financial assets carried at amortized cost are assessed for impairment.
The ECL rates for trade receivables assessed on collective basis are determined by provision matrix model
using historical loss rates adjusted for forward-looking estimates, based on days past due for groupings of customer
industries. The ECL rates for contract assets assessed on collective basis are estimated by taking into account of
probabilities of default and loss given default sourced from public market information adjusted for forward-looking
estimates for groupings of various customers based on their industries.
For instance, if forecast economic conditions (i.e., gross domestic products) are expected to deteriorate over
the next year which can lead to an increased number of losses, the historical loss rates of trade receivables and
probabilities of default of contract assets will be adjusted.
The assessment of the correlation among historical loss rates, probabilities of default, loss given default,
forecast economic conditions and ECLs is a significant estimate. The amount of ECLs is sensitive to changes in
circumstances and forecast economic conditions. The Group’s historical credit loss experience and forecast of
economic conditions may also not be representative of customer’s actual loss in the future. The information about
the ECLs on the Group’s trade receivables and contract assets are disclosed in Note 40.
Estimation of the fair value of certain financial assets
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses judgments to select a variety of methods and make assumptions that are mainly based
on market conditions existing at the end of each reporting period.
Fair value of Shares with Preferential Rights
The Group issued series of Shares with Preferential Rights during the Track Record Period as set out in Note
33. The Group recorded these financial instruments as financial liabilities at FVTPL for which no quoted prices in
an active market exist. The fair value of these Shares with Preferential Rights as at December 31, 2021, 2022 and
2023 is established by using valuation techniques, which include income approach and equity allocation based on the
Black-Scholes option pricing model involving various parameters and inputs. V aluation techniques adopted by an
independent qualified professional valuer are calibrated to ensure that outputs reflect market conditions. However,
it should be noted that some inputs, such as fair value of the ordinary shares of the Company, possibilities under
different scenarios, qualified initial public offering, redemption, liquidation, time to liquidation, expected volatility
value, discount rate and other inputs, require management estimates. The estimates and assumptions are reviewed
periodically by the Directors and adjusted if necessary. Should any of the estimates and assumptions changed, it may
lead to a change in the fair value of the financial liabilities at FVTPL. The fair value of the Shares with Preferential
Rights of the Group as at December 31, 2021, 2022 and 2023 are RMB2,092,769,000, RMB2,151,922,000 and
RMB2,212,629,000, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 506 ---
Deferred tax assets
Deferred tax assets relating to certain deductible temporary differences and tax losses are recognized when the
Directors considers it is probable that future taxable profits will be available against which the deductible temporary
differences or tax losses can be utilized. When the expectation is different from the original estimate, such differences
will impact the recognition of deferred tax assets and taxation charges in the period in which such estimate is
changed. The realizability of the deferred tax asset mainly depends on whether sufficient profits or taxable temporary
differences will be available in the future. In assessing the probability that taxable profit will be available, the Group
considered criteria, such as whether there was a history of operating losses, and whether tax planning opportunities
are available to the Group. In cases where the actual future taxable profits generated are less or more than expected,
or change in facts and circumstances which result in revision of future taxable profits estimation, a material reversal
or further recognition of deferred tax assets may arise, which would be recognized in profit or loss for the period in
which such a reversal or further recognition takes place. The Group does not recognize any deferred tax assets during
the Track Record Period.
Recognition of implementation services revenue
As detailed in Note 4.4, the Group recognizes the implementation services revenue ratably beyond the initial
contractual period when those future goods or services are transferred over the expected contract life, primarily based
on anticipated renewal period and the estimated life of such services demand which is generally 5 years. The Group
will revise the expected contract life where it is different from that of previously estimated. Periodic review could
result in a change in expected contract life and therefore the revenue recognition in future periods.
6. SEGMENT INFORMATION
The Group does not distinguish revenue, costs and expenses between markets or segments in its internal
reporting, and reports costs and expenses by nature as a whole.
While the Group offers cloud-based SaaS solutions and on-premises solutions for financial and tax
digitalization solutions, data-driven analytics services as well as other enterprise needs, the Group’s business operates
in one operating segment because most of the Group’s sales operate on the Group’s financial and tax digitalization
as well as data-driven analytics related know-hows and the corresponding products and/or services offered are
delivered through same pool of resources. In addition, most of the Group’s products and/or services for various
revenue types are deployed in a nearly identical way. Therefore, the Group’s chief operating decision maker, who has
been identified as the Chief Executive Officer (the “CEO”), reviews the consolidated results when making decisions
about allocating resources and assessing performance of the Group as a whole and hence, the Group has only one
reportable segment. As the Group’s non-current assets are all located in the PRC and all the Group’s revenue are
derived from the PRC, no geographical information is presented.
During the Track Record Period, except for the revenue from customer A amounting to RMB94,537,000 and
RMB107,658,000 for the years ended December 31, 2022 and 2023, respectively, there was no revenue derived from
transactions with other single external customer which amounting to 10% or more of the Group’s revenue.
7. REVENUE
Revenue is derived from the PRC and comprises the following:
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cloud financial and tax digitalization solutions 156,615 157,996 219,539
Data-driven analytics services 178,597 263,519 352,425
On-premises financial and tax digitalization
solutions 110,168 93,491 138,132
Others 8,383 10,759 2,900
453,763 525,765 712,996
APPENDIX I ACCOUNTANTS’ REPORT
– I-32 –


--- page 507 ---
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Timing of revenue recognition
– Over time 279,125 281,634 370,924
– At a point in time 174,638 244,131 342,072
453,763 525,765 712,996
Unsatisfied performance obligations
The following table shows the Group’s unsatisfied performance obligations resulting from fixed-price
contracts for contract terms of more than one year:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Unsatisfied performance obligations 42,325 48,352 60,380
Management expects that the Group’s unsatisfied performance obligations will be recognized as revenue:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Revenue to be recognized:
– Within one year 25,993 31,698 39,401
– between 1 and 2 years 12,308 14,140 17,181
– more than 2 years 4,024 2,514 3,798
42,325 48,352 60,380
All other contracts are for contract terms of one year or less. The Group applies the practical expedients under
IFRS 15 and does not disclose information about the transaction prices allocated to the remaining performance
obligations for the contract where the original expected duration is one year or less, and circumstances where the
Group has a right to invoice in an amount that corresponds directly with the value to the customer of the Group’s
performance completed to date, including contracts in which the Group bills a fixed amount for each number of
service instances provided.
APPENDIX I ACCOUNTANTS’ REPORT
– I-33 –


--- page 508 ---
8. OTHER INCOME
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Government grants 1,010 4,206 1,944
Tax refund (Note) 1,688 5,365 2,091
Others 2 304 –
2,700 9,875 4,035
Note: According to the circular “Announcement of Ministry of Finance, the General Administration of
Taxation and the General Administration of Customs on deepening policies related to V A T reformation”,
taxpayers who are engaged in production and consumer services industry are allowed to deduct a further
10% and 5% of their deductible input V A T against their V A T payable, both recorded for the period from
April 1, 2019 to December 31, 2022 and from January 1, 2023 to December 31, 2023, respectively.
9. IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET OF REVERSAL
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Impairment losses, net of reversal, recognized
(reversed) on:
– Trade receivables 1,525 1,089 2,100
– Other receivables 189 (67) 41
– Contract assets 37 195 3,682
1,751 1,217 5,823
10. OTHER GAINS AND LOSSES
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Gain on partial disposal of investment in an
associate (Note 23) 1,613 – –
Gain on disposal of a joint venture (Note 24) – – 137
Loss on disposal of property, plant and
equipment (6) (30) (31)
Provisions (1,686) (649) –
Others (1,222) (1,651) (1,481)
(1,301) (2,330) (1,375)
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 509 ---
11. EXPENSES BY NATURES
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Employee benefit expenses 299,306 321,740 427,464
Share-based payment expenses 161,418 10,469 191,064
Commission and channel expenses 6,568 9,055 8,559
Professional service fees 51,367 56,374 75,261
Referral fees 64,204 153,605 193,423
Outsourcing expenses 7,937 15,976 16,462
Traveling and marketing expenses 12,498 11,164 20,552
Exhibition and promotion charges 3,573 7,558 11,894
Costs of inventories sold 11,307 8,105 7,827
Rental and utilities expenses 3,129 4,675 6,885
Depreciation of property, plant and equipment 5,611 3,453 3,763
Depreciation of right-of-use assets 10,139 12,463 13,198
Amortization of intangible assets 952 1,019 1,521
Listing expenses 6,366 16,307 24,107
Others 7,184 12,480 12,959
Total 651,559 644,443 1,014,939
12. FINANCE INCOME
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Interest income
– Bank deposits 10,583 9,694 6,879
– Others – 620 –
10,583 10,314 6,879
13. FINANCE COSTS
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Interest expenses on lease liabilities (Note 21) 243 1,567 1,022
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 510 ---
14. FAIR V ALUE CHANGES OF FINANCIAL ASSETS AND LIABILITIES AT FVTPL
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Changes in fair values of financial assets at
FVTPL
Wealth management products
– Net unrealized gain 8,856 900 1,230
– Net realized gain 4,046 4,168 7,805
Investments in associates with preferential
rights (14,575) 607 (8,734)
Arrangement/right to receive additional shares
at nominal consideration – 318 1,681
Changes in fair values of financial liabilities at
FVTPL
Shares with Preferential Rights (Note 33) (263,850) (59,153) (60,707)
Contingent consideration for investment in an
associate – (331) 2,830
(265,523) (53,491) (55,895)
15. INCOME TAX EXPENSES
Under the Law of the PRC on Enterprise Income Tax (the “EIT”) and Implementation Regulation of the EIT
Law, the tax rate of the Company and its subsidiaries is 25%.
The Company has been accredited as a “High and New Technical Enterprise” by the Science and Technology
Bureau of Beijing and relevant authorities in October 2019 and October 2022 for a term of three years from 2019
to 2021 and from 2022 to 2025 respectively. In accordance with the “Notice of the State Tax Bureau of the Ministry
of Finance Regarding Certain Preferential Treatment Policies on Enterprise Income Tax”, High and New Technical
Enterprise is subject to income tax at a tax rate of 15%.
According to the relevant laws and regulations in the PRC, enterprises engaging in research and development
activities are entitled to claim 150% of their research and development expenses incurred as tax deductible expenses
when determining their assessable profits for that year (the “Super Deduction”). As announced by the State Taxation
Administration of the PRC in September 2018 and subsequent date, the Super Deduction claim was raised to 175%
of research and development expenses incurred from January 1, 2018, and such claim was further increased to 200%
for the period from October 1, 2022 to December 31, 2023.
The income tax expenses of the Group is analyzed as follows:
2021 2022 2023
RMB’000 RMB’000 RMB’000
PRC EIT
Current tax – 51 264
Deferred tax – 148 (148)
Total – 199 116
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 511 ---
The income tax expenses during the Track Record Period can be reconciled to the loss before tax per the
consolidated statements of profit or loss and other comprehensive income as follows:
2021 2022 2023
RMB’000 RMB’000 RMB’000
Loss before tax (448,373) (156,025) (359,174)
Tax at the PRC EIT rate of 25% (112,093) (39,006) (89,794)
Tax effect of share of results of associates and
joint ventures (1,240) (267) 1,008
Tax effect of expenses not deductible for tax
purpose (Note) 107,944 20,222 66,950
Effect of additional tax deduction for research
and development expenses (11,840) (14,931) (15,038)
Utilization of tax losses previously not
recognized (650) (6,958) (245)
Tax effect of tax losses and deductible temporary
differences not recognized 17,879 41,466 37,235
Effect of preferential tax rate – (327) –
Income tax expenses – 199 116
Note: The expenses not deductible for tax purpose primarily comprised the fair value losses of shares with
preferential rights, share-based payment expenses and business entertainment expenses that exceed the
deductible limit in accordance with the PRC tax law.
16. DIVIDENDS
No dividends were declared or paid by the Company and its subsidiaries during the Track Record Period.
17. LOSS PER SHARE
Basic loss per share is calculated by dividing the loss by the weighted-average number of ordinary shares
outstanding during the Track Record Period. As the Group incurred net losses for the years ended December 31, 2021,
2022 and 2023, the diluted potential ordinary shares were not included in the calculation of dilutive loss per share,
as their inclusion would be anti-dilutive. Accordingly, dilutive loss per share for the years ended December 31, 2021,
2022 and 2023 are the same as basic loss per share of the respective periods.
The following table sets forth the computation of the basic and diluted loss per share attributable to the owners
of the Company during the years ended December 31, 2021, 2022 and 2023:
Y ear ended December 31,
2021 2022 2023
’000 ’000 ’000
Loss attributable to owners of
the Company (RMB) (446,938) (153,501) (357,980)
Weighted average number of ordinary shares
outstanding 140,000 140,000 140,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 512 ---
18. DIRECTORS’, CHIEF EXECUTIVE’S AND SUPERVISORS’ EMOLUMENTS
(a) Details of the emoluments paid/payable to the Directors during the Track Record Period, disclosed pursuant
to the applicable Listing Rules and Hong Kong Companies Ordinance, are as follows:
Y ear ended December 31, 2021
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs,
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
A) EXECUTIVE
DIRECTORS
Ms. Chen Jie
(Controlling Shareholder
and Chairman)
(Note II) – 889 53 78 600 – 1,620
Mr. Zou Y an (Note VII) – 743 53 78 648 35,938 37,460
Mr. Y ang Zhengdao
(Note IV) – 992 53 78 864 35,938 37,925
Mr. Wu Jingrun (Note V) – 618 53 78 – 8,343 9,092
Ms. Jin Xin (Note XI) – 505 24 35 391 5,652 6,607
Subtotal – 3,747 236 347 2,503 85,871 92,704
B) NON-EXECUTIVE
DIRECTORS
Ms. Huang Haitao
(Note VI) ––––– ––
Ms. Huang Miao
(Note VIII) ––––– ––
Mr. Diao Juanhuan
(Note IX) ––––– ––
Mr. Luo Wenhong
(Note X) ––––– ––
Subtotal ––––– ––
C) INDEPENDENT
NON-EXECUTIVE
DIRECTORS
Mr. Tian Lixin
(Note XII) ––––– ––
Mr. Song Hua
(Note XII) ––––– ––
Mr. Wu Changhai
(Note XII) ––––– ––
M r .X uK e
(Note XII) ––––– ––
Mr. Ng Kwok Yin
(Note XIII) ––––– ––
Subtotal ––––– ––
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 513 ---
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs,
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
D) SUPERVISORS
Mr. Li Y unfeng
(Note XIV) – 520 53 78 126 837 1,614
Mr. Zhou Guodong
(Note XV) – 502 53 78 – 837 1,470
Ms. Chen Xi
(Note XVI) – 870 29 43 466 837 2,245
Mr. Luo Wenhong
(Note X) ––––– ––
Subtotal – 1,892 135 199 592 2,511 5,329
Total – 5,639 371 546 3,095 88,382 98,033
Y ear ended December 31, 2022
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
A) EXECUTIVE
DIRECTORS
Ms. Chen Jie
(Controlling Shareholder
and Chairman)
(Note II) – 891 35 104 691 – 1,721
Mr. Zou Y an (Note VII) – 745 35 104 576 – 1,460
Mr. Y ang Zhengdao
(Note IV) – 981 35 104 768 – 1,888
Ms. Jin Xin (Note XI) – 1,013 35 104 382 – 1,534
Subtotal – 3,630 140 416 2,417 – 6,603
B) NON-EXECUTIVE
DIRECTORS
Ms. Huang Haitao
(Note VI) ––––– ––
Ms. Huang Miao
(Note VIII) ––––– ––
Mr. Diao Juanhuan
(Note IX) ––––– ––
Subtotal ––––– ––
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 514 ---
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
C) INDEPENDENT
NON-EXECUTIVE
DIRECTORS
Mr. Tian Lixin
(Note XII) ––––– ––
Mr. Song Hua (Note XII) ––––– ––
Mr. Wu Changhai
(Note XII) ––––– ––
M r .X uK e (Note XII) ––––– ––
Mr. Ng Kwok Yin
(Note XIII) ––––– ––
Subtotal ––––– ––
D) SUPERVISORS
Mr. Li Y unfeng
(Note XIV) – 532 35 104 121 215 1,007
Mr. Zhou Guodong
(Note XV) – 136 11 33 – – 180
Mr. Luo Wenhong
(Note X) ––––– ––
Ms. Shi Haixia
(Note XVII) – 387 44 63 91 2 587
Subtotal – 1,055 90 200 212 217 1,774
Total – 4,685 230 616 2,629 217 8,377
Y ear ended December 31, 2023
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
A) EXECUTIVE
DIRECTORS
Ms. Chen Jie
(Controlling Shareholder
and Chairman)
(Note II) – 892 63 90 691 – 1,736
Mr. Zou Y an (Note VII) – 835 63 90 576 41,996 43,560
Mr. Y ang Zhengdao
(Note IV) – 977 63 90 768 68,243 70,141
Ms. Jin Xin (Note XI) – 1,016 63 90 480 – 1,649
Subtotal – 3,720 252 360 2,515 110,239 117,086
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 515 ---
Director’s
fee
Salaries
and wages
Pension
cost-
defined
contribution
plan
Other
social
security
costs
housing
benefits
and other
employee
benefits
Performance
bonus
Share-based
payment
expenses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Note I)
B) NON-EXECUTIVE
DIRECTORS
Ms. Huang Miao
(Note VIII) ––––– ––
Mr. Diao Juanhuan
(Note IX) ––––– ––
Subtotal ––––– ––
C) INDEPENDENT
NON-EXECUTIVE
DIRECTORS
Mr. Tian Lixin
(Note XII) ––––– ––
Mr. Song Hua (Note XII) ––––– ––
Mr. Wu Changhai
(Note XII) ––––– ––
Mr. Ng Kwok Yin
(Note XIII) ––––– ––
Subtotal ––––– ––
D) SUPERVISORS
Mr. Li Y unfeng
(Note XIV) – 532 63 90 113 642 1,440
Mr. Luo Wenhong
(Note X) ––––– ––
Ms. Shi Haixia
(Note XVII) – 413 58 82 40 222 815
Subtotal – 945 121 172 153 864 2,255
Total – 4,665 373 532 2,668 111,103 119,341
Notes:
I Bonuses are determined based on the Group’s performance and performance of the relevant individual within
the Group.
II Ms. Chen Jie was appointed as executive director of the Company commencing from May 4, 2015 to June 29,
2016 and from January 8, 2017 until now, and Ms. Chen Jie is also the chief executive of the Company.
III Mr. Zhang Jiangong was appointed as executive director of the Company on April 9, 2018 and resigned on
September 9, 2020.
IV Mr. Y ang Zhengdao was appointed as executive director of the Company on October 6, 2017.
V Mr. Wu Jingrun was appointed as executive director of the Company on October 6, 2017 and resigned on May
8, 2021.
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 516 ---
VI Ms. Huang Haitao was appointed as non-executive director of the Company on December 1, 2015 and resigned
on January 4, 2022.
VII Mr. Zou Y an was appointed as supervisor of the Company on March 1, 2018, resigned on June 30, 2020 and
was appointed as executive director of the Company on August 16, 2020.
VIII Ms. Huang Miao was appointed as non-executive director of the Company on August 1, 2018.
IX Mr. Diao Juanhuan was appointed as non-executive director of the Company on November 13, 2019.
X Mr. Luo Wenhong was appointed as non-executive director of the Company on November 13, 2019, resigned
on May 8, 2021 and was appointed as supervisor of the Company on May 8, 2021.
XI Ms. Jin Xin was appointed as executive director of the Company on July 20, 2021.
XII Mr. Tian Lixin, Mr. Song Hua, Mr. Wu Changhai and Mr. Xu Ke, were appointed as independent non-executive
director of the Company on July 20, 2021. Mr. Xu Ke resigned on October 31, 2022.
XIII Mr. Ng Kwok Yin was appointed as independent non-executive director of the Company on December 25,
2021.
XIV Mr. Li Y unfeng was appointed as supervisor of the Company on December 1, 2015.
XV Mr. Zhou Guodong was appointed as supervisor of the Company on December 1, 2015 and resigned on April 1,
2022.
XVI Ms. Chen Xi was appointed as supervisor of the Company on June 30, 2020 and resigned on May 8, 2021.
XVII Ms. Shi Haixia was appointed as supervisor of the Company on April 1, 2022.
The executive directors’ emoluments shown above were for their services in connection with the management
of the affairs of the Company and the Group. Also, Ms. Huang Haitao, Ms. Huang Miao, Mr. Diao Juanhuan, and Mr.
Luo Wenhong did not receive any remuneration from the Company or the Group for their services provided to the
Company and the Group. They were nominated by the Company’s shareholders and their remunerations were borne
by the Company’s shareholders.
(b) Benefits and interests of Directors and supervisors
Except for the emoluments disclosed above, there is no other benefits offered to the Directors or supervisors.
(c) Directors and supervisors’ termination benefits
No director or supervisor’s termination benefit subsisted at the end of the year or at any time during the Track
Record Period.
(d) Consideration provided to third parties for making available director or supervisor’ services
No consideration provided to third parties for making available director or supervisor’s services subsisted at
the end of the year or at any time during the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 517 ---
19. FIVE HIGHEST PAID EMPLOYEES
The five individuals whose emoluments were the highest in the Group during the Track Record Period include
4, 2, and 2 Directors or supervisors for the years ended December 31, 2021, 2022 and 2023, respectively, and their
emoluments are reflected in the analysis shown in Note 18. The emoluments paid/payable to the remaining
individuals during the Track Record Period are as follows:
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Salaries and wages 62 2,657 2,571
Pension cost – defined contribution plan 31 173 164
Other social security costs, housing benefits and other
employee benefits 45 246 233
Performance bonus – 1,240 1,566
Share-based payment expenses 34,151 2,166 7,727
Total 34,289 6,482 12,261
The emoluments fell within the following bands:
Number of individuals
Y ear ended December 31,
2021 2022 2023
Emoluments bands:
HKD1,500,001 to HKD2,000,000 – 1 –
HKD2,000,001 to HKD2,500,000 – 1 –
HKD3,500,001 to HKD4,000,000 – 1 1
HKD4,500,001 to HKD5,000,000 – – 2
HKD41,000,001 to HKD41,500,000 1 – –
Total 1 3 3
During the Track Record Period, none of the Directors, CEO and supervisors of the Company had waived any
emoluments and no emoluments had been paid by the Group to any of the Directors, CEO and supervisors or the five
highest paid individuals as an inducement to join or upon joining the Group or as compensation for loss of office.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 518 ---
20. PROPERTY, PLANT AND EQUIPMENT
The Group
Office Electronic Special Leasehold
equipment equipment equipment improvement Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
As at January 1, 2021 338 4,847 15,351 12,364 32,900
Additions 14 47 2,059 – 2,120
Acquired on acquisition of
a subsidiary – 10 – 28 38
Disposals – (69) – – (69)
As at December 31, 2021 352 4,835 17,410 12,392 34,989
Additions – 396 2,083 1,665 4,144
Disposals – (298) (75) – (373)
As at December 31, 2022 352 4,933 19,418 14,057 38,760
Additions – 1,098 3,025 917 5,040
Disposals – – (335) – (335)
As at December 31, 2023 352 6,031 22,108 14,974 43,465
DEPRECIA TION
As at January 1, 2021 99 4,084 7,411 9,805 21,399
Provided for the year 75 480 2,722 2,334 5,611
Eliminated upon disposals – (63) – – (63)
As at December 31, 2021 174 4,501 10,133 12,139 26,947
Provided for the year 72 157 2,683 541 3,453
Eliminated upon disposals – (281) (62) – (343)
As at December 31, 2022 246 4,377 12,754 12,680 30,057
Provided for the year 68 271 2,626 798 3,763
Eliminated upon disposals – – (304) – (304)
As at December 31, 2023 314 4,648 15,076 13,478 33,516
CARRYING V ALUES
As at December 31, 2021 178 334 7,277 253 8,042
As at December 31, 2022 106 556 6,664 1,377 8,703
As at December 31, 2023 38 1,383 7,032 1,496 9,949
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 519 ---
The Company
Office Electronic Special Leasehold
equipment equipment equipment improvement Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST
As at January 1, 2021 338 4,847 15,351 12,213 32,749
Additions 14 47 2,059 – 2,120
Disposals – (69) – – (69)
As at December 31, 2021 352 4,825 17,410 12,213 34,800
Additions – 396 2,083 1,638 4,117
Disposals – (298) (75) – (373)
As at December 31, 2022 352 4,923 19,418 13,851 38,544
Additions – 1,093 3,025 514 4,632
Disposals – – (335) – (335)
As at December 31, 2023 352 6,016 22,108 14,365 42,841
DEPRECIA TION
As at January 1, 2021 99 4,084 7,411 9,676 21,270
Provided for the year 75 472 2,722 2,285 5,554
Eliminated upon disposals – (63) – – (63)
As at December 31, 2021 174 4,493 10,133 11,961 26,761
Provided for the year 72 157 2,683 539 3,451
Eliminated upon disposals – (281) (62) – (343)
As at December 31, 2022 246 4,369 12,754 12,500 29,869
Provided for the year 68 265 2,626 715 3,674
Eliminated upon disposals – – (304) – (304)
As at December 31, 2023 314 4,634 15,076 13,215 33,239
CARRYING V ALUES
As at December 31, 2021 178 332 7,277 252 8,039
As at December 31, 2022 106 554 6,664 1,351 8,675
As at December 31, 2023 38 1,382 7,032 1,150 9,602
Property, plant and equipment are depreciated on a straight-line basis after taking into account their estimated
residual values with the following useful lives:
Office equipment 5 years
Electronic equipment 3 to 5 years
Special equipment 5 years
Leasehold improvement Shorter of lease terms or 3 years
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 520 ---
21. RIGHT-OF-USE ASSETS/LEASE LIABILITIES
The Group
(a) Right-of-use assets
The carrying amounts of the right-of-use assets and the movements during the Track Record Period are
as follows:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at the beginning
of the year 10,667 36,408 24,609
Additions 26,401 664 3,967
Lease modification 9,479 – –
Early termination of a lease – – (275)
Depreciation charge (Note 11) (10,139) (12,463) (13,198)
Carrying amount at the end of
the year 36,408 24,609 15,103
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Expense relating to
short-term leases 1,856 2,803 3,657
Total cash outflow for leases 9,023 14,817 18,173
The Group leases various offices which are negotiated for terms ranging from 1 to 5 years. Lease terms
are negotiated on an individual basis and contain different terms and conditions. In determining the lease term
and assessing the length of the non-cancellable period, the Group applies the definition of a contract and
determines the period for which the contract is enforceable.
Right-of-use assets are depreciated on a straight-line basis over the lease terms.
The lease agreements do not impose any covenants other than the security interests in the leased assets
that are held by the lessors. Leased assets may not be used as security for borrowing purposes.
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 521 ---
(b) Lease liabilities
The carrying amounts of the Group’s lease liabilities and the movements during the Track Record Period
are as follows:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at the beginning
of the year 6,882 35,676 25,796
New leases 26,239 567 3,967
Lease modification 9,479 – –
Early termination of a lease – – (279)
Accretion of interest recognized (Note 13) 243 1,567 1,022
Payments (7,167) (12,014) (14,516)
Carrying amount at the end of the year 35,676 25,796 15,990
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Lease liabilities payable
– within one year 10,312 18,442 14,611
– between 1 and 2 years 18,108 7,230 1,208
– between 2 and 5 years 7,256 124 171
Total 35,676 25,796 15,990
Analyzed as:
Non-current 25,364 7,354 1,379
Current 10,312 18,442 14,611
Total 35,676 25,796 15,990
The lease liabilities were measured at the present value of the lease payments that are not yet paid using
incremental borrowing rates. The following table shows the weighted average incremental borrowing rates
applied to lease liabilities:
For the year ended December 31,
2021 2022 2023
%%%
Incremental borrowing rate 5.66 5.66 5.66
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 522 ---
The Company
(a) Right-of-use assets
The carrying amounts of the right-of-use assets and the movements during the Track Record Period are
as follows:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at the beginning of the year 10,667 36,408 24,609
Additions 26,401 664 1,388
Lease modification 9,479 – –
Early termination of a lease – – (275)
Depreciation charge (10,139) (12,463) (12,626)
Carrying amount at the end of the year 36,408 24,609 13,096
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Expense relating to
short-term leases 798 1,642 2,384
Total cash outflow for leases 7,965 13,656 16,200
The Company leases various offices which are negotiated for terms ranging from 1 to 5 years. Lease
terms are negotiated on an individual basis and contain different terms and conditions. In determining the lease
term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and
determines the period for which the contract is enforceable.
Right-of-use assets are depreciated on a straight-line basis over the lease terms.
The lease agreements do not impose any covenants other than the security interests in the leased assets
that are held by the lessors. Leased assets may not be used as security for borrowing purposes.
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 523 ---
(b) Lease liabilities
The carrying amounts of the Company’s lease liabilities and the movements during the Track Record
Period are as follows:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Carrying amount at the beginning of the year 6,882 35,676 25,796
New leases 26,239 567 1,388
Lease modification 9,479 – –
Early termination of a lease – – (279)
Accretion of interest recognized 243 1,567 937
Payments (7,167) (12,014) (13,816)
Carrying amount at the end of the year 35,676 25,796 14,026
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Lease liabilities payable
– within one year 10,312 18,442 13,752
– between 1 and 2 years 18,108 7,230 274
– between 2 and 5 years 7,256 124 –
Total 35,676 25,796 14,026
Analyzed as:
Non-current 25,364 7,354 274
Current 10,312 18,442 13,752
Total 35,676 25,796 14,026
The lease liabilities were measured at the present value of the lease payments that are not yet paid using
incremental borrowing rates. The following table shows the weighted average incremental borrowing rates
applied to lease liabilities:
For the year ended December 31,
2021 2022 2023
%%%
Incremental borrowing rate 5.66 5.66 5.66
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 524 ---
22. INTANGIBLE ASSETS
The Group
Software Patents Total
RMB’000 RMB’000 RMB’000
COST
As at January 1, 2021 1,526 220 1,746
Additions 177 7,547 7,724
Acquired on acquisition of a subsidiary 7 – 7
Disposals (179) – (179)
As at December 31, 2021 1,531 7,767 9,298
Additions 336 – 336
As at December 31, 2022 1,867 7,767 9,634
Additions 1,062 – 1,062
As at December 31, 2023 2,929 7,767 10,696
AMORTIZA TION
As at January 1, 2021 874 7 881
Charge for the year 238 714 952
Eliminated upon disposals (179) – (179)
As at December 31, 2021 933 721 1,654
Charge for the year 197 822 1,019
As at December 31, 2022 1,130 1,543 2,673
Charge for the year 699 822 1,521
As at December 31, 2023 1,829 2,365 4,194
CARRYING V ALUES
As at December 31, 2021 598 7,046 7,644
As at December 31, 2022 737 6,224 6,961
As at December 31, 2023 1,100 5,402 6,502
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 525 ---
The Company
Software Patents Total
RMB’000 RMB’000 RMB’000
COST
As at January 1, 2021 1,526 220 1,746
Additions 177 7,547 7,724
Disposals (179) – (179)
As at December 31, 2021 1,524 7,767 9,291
Additions 336 – 336
As at December 31, 2022 1,860 7,767 9,627
Additions 1,062 – 1,062
As at December 31, 2023 2,922 7,767 10,689
AMORTIZA TION
As at January 1, 2021 874 7 881
Charge for the year 237 714 951
Eliminated upon disposals (179) – (179)
As at December 31, 2021 932 721 1,653
Charge for the year 195 822 1,017
As at December 31, 2022 1,127 1,543 2,670
Charge for the year 698 822 1,520
As at December 31, 2023 1,825 2,365 4,190
CARRYING V ALUES
As at December 31, 2021 592 7,046 7,638
As at December 31, 2022 733 6,224 6,957
As at December 31, 2023 1,097 5,402 6,499
The intangible assets above have finite useful lives which are amortized on a straight-line basis over the
following periods:
Software 5 years
Patents 5 to 10 years
23. INVESTMENTS IN ASSOCIATES
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cost of investments in associates 65,901 77,823 80,876
Share of post-acquisition profit or loss 9,270 9,204 7,502
75,171 87,027 88,378
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 526 ---
As at December 31, 2021, 2022 and 2023 and the date of this report, the associates of the Group, which were
accounted for using equity method, were as follows:
Company name
Place and date of
incorporation/
establishment and type
of legal entity
Principal activities and
place of operation
Percentage of ownership At the
date of
this report
as at December 31,
2021 2022 2023
Boya Zhongke (Beijing) Information
Technology Co., Ltd. (߅(̏ԯ)
ʮ̡) (“Boya Zhongke”)
(Note a)
PRC, November 2,
2016/Limited liability
company
Sales of finance
management software
in the PRC
40% 40% 40% 40%
Beijing Baiwang Cube Technology Co.,
Ltd. (ʮ̡)
(“Baiwang Cube”) (Note b)
PRC, August 26, 2020/
Limited liability
company
Software development
in the PRC
10% 10% 10% 10%
Third Block (Beijing) Digital Economy
Industrial Park Co., Ltd. ( ୋɧ൑ਜ(̏
ԯ)ʮ̡)
PRC, April 25, 2021/
Limited liability
company
Software development
in the PRC
20% 20% 20% 20%
Guizhou Baiwangyun Technology Co.,
Ltd. (ʮ̡)
PRC, July 5, 2021/
Limited liability
company
Software development
and maintenance
service in the PRC
40% 40% 40% 40%
Ningbo Lanyuan Baiwang Cloud Digital
Technology Co., Ltd.
(ʮ̡)
PRC, August 17, 2021/
Limited liability
company
Supply chain platform
in the PRC
40% 40% 40% 40%
China Funded Yirong (Beijing)
Technology Co., Ltd. (ፄ(̏ԯ)
ʮ̡) (“China Funded
Yirong”) (Note c)
PRC, November 24,
2021/Limited liability
company
Software development
in the PRC
15% 15% 15% 15%
Guangxi United Credit Reporting Co.,
Ltd. (ʮ̡) (“Guangxi
United”) (Note d)
PRC, December 3,
2018/Limited liability
company
Big data service in the
PRC
– 15% 15% 15%
Y unnan Baiwangyun Digital Technology
Co., Ltd. (ʮ
̡)
PRC, August 8, 2022/
Limited liability
company
Big data service
platform in the PRC
– 40% 40% 40%
Beijing Baiwang Intelligent Finance and
Taxation Technology Co., Ltd. ( ̏ԯϵ
ʮ̡) (“Baiwang
Intelligent”) (Note e)
PRC, August 31, 2022/
Limited liability
company
Development, operation
and maintenance of
tax information
system in the PRC
– 25% 25% 25%
Beijing Baiwang Cloud network
Technology Co., Ltd. ( ̏ԯϵૐථၣഖ
ʮ̡)
PRC, August 11, 2023/
Limited liability
company
Software development
and maintenance
service in the PRC
– – 35% 35%
Note a: In December 2019, the Group entered into a share transfer agreement with two third parties, pursuant
to which the Group acquired further 31% equity interest of Boya Zhongke for a consideration of
RMB63,520,000 (the “2020 Acquisition”). Following the completion of equity transfer registration
and together with the 15% equity interest previously held, the Group owned 46% equity interest of
Boya Zhongke as at December 31, 2020.
In July 2021, the share ownership of 6% equity in the 2020 Acquisition of which capital has yet been
paid by the Group was transferred to another investor at nil consideration and a gain of RMB1,613,000
was recognized by the Group in 2021.
APPENDIX I ACCOUNTANTS’ REPORT
– I-52 –


--- page 527 ---
Note b: The Group is able to exercise significant influence over Baiwang Cube because it has the right to
appoint the executive director of Baiwang Cube under the articles of association of Baiwang Cube.
Note c: The Group is able to exercise significant influence over China Funded Yirong because it has the power
to appoint one out of the five directors of China Funded Yirong under the articles of association of
China Funded Yirong.
Note d: The Group is able to exercise significant influence over Guangxi United because it has the power to
appoint one out of the five directors of Guangxi United under the articles of association of Guangxi
United.
Note e: In September 2021 and March 2022, the Group paid investment deposits of RMB5,200,000 and
RMB5,000,000, respectively to Baiwang Intelligent for investments in Baiwang Intelligent. The
investment arrangement was subsequently superseded, the deposits of RMB10,200,000 was netted
against the Group’s payable to Baiwang Intelligent and settled in August 2022.
A share transfer agreement (the “Agreement”) was entered into by the Group with third-party
individuals (the “Transferors”) in August 2022, pursuant to which the Group acquired 25% equity
interest of Baiwang Intelligent for a consideration of RMB12,695,000, and has the ability to exercise
significant influence over Baiwang Intelligent.
The Group also has the right to require additional shares of Baiwang Intelligent from one of the
Transferors based on the formula agreed in the Agreement for a consideration of RMB1 if Baiwang
Intelligent does not meet the specified sum of profit targets covering a three-year period from 2022
to 2024. The Group accounts for the arrangement/right to receive additional shares at nominal
consideration as a financial asset at FVTPL, as in Note 25.
Included in the investments in associates is goodwill of approximately RMB52,595,000,
RMB62,544,000, and RMB62,544,000, arising on acquisitions of associates as at December 31, 2021, 2022
and 2023, respectively.
Summarized financial information of material associate
Summarized financial information in respect of each of the Group’s material associate is set out below.
The summarized financial information below represents amounts shown in the associate’s financial statements
prepared in accordance with IFRSs.
All of these associates are accounted for using the equity method in these Historical Financial
Information.
Boya Zhongke
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Current assets 67,642 68,320 69,188
Non-current assets 4,124 2,087 1,897
Current liabilities 17,705 17,360 15,718
Non-current liabilities 947 335 14
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 528 ---
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Revenue 55,347 34,660 34,492
Profit (loss) and total comprehensive income
(expense) for the year 9,773 (402) (3,206)
Reconciliation of the above summarized financial information to the carrying amount of the interest in
the associate recognized in the Historical Financial Information:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Net assets attributable to owners of
Boya Zhongke 53,114 52,712 55,353
Proportion of the Group’s ownership in Boya
Zhongke 40% 40% 40%
The Group’s share of net assets of Boya
Zhongke 21,246 21,085 22,287
Goodwill 52,595 52,595 52,595
Other adjustment 250 410 –
Carrying amount of the Group’s interest in
Boya Zhongke 74,091 74,090 74,882
Aggregate information of associates that are not individually material
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
The Group’s share of loss and total
comprehensive expense from associates (470) (65) (411)
Aggregate carrying amount of
the Group’s interests in these associates 1,080 12,937 13,496
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cost of investments in associates 64,351 64,351 66,705
Share of post-acquisition profit or loss 9,793 9,818 8,324
74,144 74,169 75,029
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 529 ---
As at December 31, 2021, 2022 and 2023 and the date of this report, the associates of the Company,
which were accounted for using equity method, were as follows:
Company name
Place and date of
incorporation/
establishment and
type of legal entity
Principal activities
and place of
operation
Percentage of ownership At the
date of
this report
as at December 31,
2021 2022 2023
Boya Zhongke (Note a) PRC, November 2,
2016/Limited
liability company
Sales of finance
management
software in the PRC
40% 40% 40% 40%
Baiwang Cube (Note b) PRC, August 26,
2020/
Limited liability
company
Software development
in the PRC
10% 10% 10% 10%
Note a: In December 2019, the Company entered into a share transfer agreement with two third parties,
pursuant to which the Group acquired further 31% equity interest of Boya Zhongke for a consideration
of RMB63,520,000 (the “2020 Acquisition”). Following the completion of equity transfer registration
and together with the 15% equity interest previously held, the Group owned 46% equity interest of
Boya Zhongke as at December 31, 2020.
In July 2021, the share ownership of 6% equity in the 2020 Acquisition of which capital has yet been
paid by the Company was transferred to another investor together with the consideration payable of
RMB11,474,000 and a gain of RMB1,613,000 was recognized by the Group in 2021.
Note b: The Group is able to exercise significant influence over Baiwang Cube because it has the right to
appoint the executive director of Baiwang Cube under the articles of association of Baiwang Cube.
24. INVESTMENTS IN JOINT VENTURES
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cost of investments in joint ventures 4,000 4,000 4,951
Share of post-acquisition profit or loss 5,739 6,845 (2,159)
9,739 10,845 2,792
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 530 ---
As at December 31, 2021, 2022 and 2023 and the date of this report, the joint ventures of the Group, which
were accounted for using equity method, were as follows:
Company name
Place and date of
incorporation/
establishment and
type of legal entity
Principal activities and
place of operation
Percentage of ownership At the date
of this
report
as at December 31,
2021 2022 2023
Baiwang Jinshui Technology
Co., Ltd. (ࠢ
ʮ̡) (“Baiwang Jinshui”)
(Note)
PRC, May 6, 2016/
Limited liability
company
Sales of tax management
software in the PRC
40% 40% – –
Guizhou Y unshui Digital
Technology Co., Ltd. ( ൮ψථ
ʮ̡)
PRC, August 13, 2021/
Limited liability
company
Big data service platform
in the PRC
33% 33% 33% 33%
Baiwang Cloud (Chongqing)
Information Technology
Service Co., Ltd. ( ϵૐථ(ࠠ
ᅅ)ʮ̡)
PRC, March 30, 2023/
Limited liability
company
Software development in
the PRC
– – 40% 40%
Shanghai Baiwang Shuzhi
Technology Co., Ltd. ( ɪऎϵ
ʮ̡)
PRC, June 16, 2023/
Limited liability
company
Software development in
the PRC
– – 35% 35%
Henan Baiwang Cloud digital
technology Co., Ltd. (ϵ
ʮ̡)
PRC, January 5, 2023/
Limited liability
company
Software development in
the PRC
– – 40% 40%
Heilongjiang Baiwang Cloud
Technology Co., Ltd. ( ලᎲϪ
ʮ̡)
PRC, June 9, 2023/
Limited liability
company
Software development in
the PRC
– – 35% 35%
Guangdong Baiwang Information
Technology Co., Ltd. (ϵ
ʮ̡)
PRC, January 6, 2023/
Limited liability
company
Software development in
the PRC
– – 35% 35%
Fujian Baiwang Cloud
Technology Co., Ltd. (ϵ
ʮ̡)
PRC, May 8, 2023/
Limited liability
company
Software development in
the PRC
– – 35% 35%
Aggregate information of joint ventures that are not individually material
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
The Group’s share of profit (loss) and total
comprehensive income (expense) from the
joint ventures 1,406 1,106 (2,328)
Aggregate carrying amount of the Group’s interests
in the joint ventures 9,739 10,845 2,792
Note: In October 2023, the Group disposed of the entire 40% interest in Baiwang Jinshui to one of the original
shareholders for a consideration of RMB10,813,000. This transaction has resulted in the recognition of
a gain of RMB137,000.
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 531 ---
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Cost of investment in joint venture 4,000 4,000 –
Share of post-acquisition profit or loss 5,739 6,845 –
9,739 10,845 –
As at December 31, 2021, 2022 and 2023 and the date of this report, the joint ventures of the Company, which
were accounted for using equity method, were as follows:
Company name
Place and date of
incorporation/
establishment and
type of legal entity
Principal activities
and place of
operation
Percentage of ownership At the
date of
this report
as at December 31,
2021 2022 2023
Baiwang Jinshui PRC, May 6, 2016/
Limited liability
company
Sales of tax
management
software in the PRC
40% 40% – –
25. FINANCIAL ASSETS AT FVTPL
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Current:
Wealth management products issued by banks
(Note a) 218,856 400,900 268,230
Non-current:
Investments in associates with preferential rights
(Notes b and c) 19,440 36,496 27,762
Arrangement/right to receive additional shares at
nominal consideration (Notes c and d) – 2,991 4,672
Total 238,296 440,387 300,664
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Current:
Wealth management products issued by banks
(Note a) 218,856 400,900 268,230
Non-current:
Investments in associates with preferential rights
(Note b) 19,440 19,443 18,431
Total 238,296 420,343 286,661
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


--- page 532 ---
Note a: The Group’s wealth management products are mainly the financial products issued by banks, which
are short-term investments with expected rates of return ranging from 0% to 20%, depending on the
market price of underlying financial instruments, including structured deposits. The Group managed
and evaluated the performance of investments on a fair value basis in accordance with the Group’s risk
management and investment strategy. Details of fair value measurements are set out in Note 40.
Note b: The carrying amount of investments in associates with preferential rights represents the Group’s
investment in Beijing Daokou Jinke Technology Co., Ltd. (ʮ̡, “Daokou
Jinke”) and investment in Shanghai Xinghan Information Technology Co., Ltd. (ҦஔϞ
ʮ̡, “Shanghai Xinghan”).
On January 31, 2021, the Group acquired 26.34% redeemable shares with preferential rights in
Daokou Jinke at a consideration of RMB34,015,000, and can exercise significant influence over
Daokou Jinke. Upon occurrence of certain future events, the redeemable shares with preferential rights
shall be redeemed at request of the Company by Daokou Jinke and/or its controlling owner at the
higher of the Company’s total investment plus annual interest of 8% accrued over the Group’s
shareholding period as well as declared dividends payable to the Company, and independent valuation.
The Group accounts for the investment as a financial asset at FVTPL, with carrying amount of
RMB19,440,000 and RMB19,443,000 and RMB18,431,000 as at December 31, 2021, 2022 and 2023,
respectively.
Note c: In March 2022, the Group entered into an investment agreement with the existing shareholders of
Shanghai Xinghan, pursuant to which the Group acquired 19.3548% redeemable shares with
preferential rights of Shanghai Xinghan through a capital injection of RMB18,000,000 in Shanghai
Xinghan, and can exercise significant influence over Shanghai Xinghan. Upon occurrence of certain
future events, the redeemable shares with preferential rights shall be redeemed at the request of the
Group by Shanghai Xinghan and/or a third party designated by Shanghai Xinghan, at a consideration
of the Group’s injected capital plus annual compound interest of 8% accrued over the Group’s
shareholding period minus the dividend received by the Group. The Group accounts for the investment
as a financial asset at FVTPL, with carrying amount of RMB17,053,000 and RMB9,331,000 as at
December 31, 2022 and 2023, respectively. In part of the investment agreement, the Group also has
the right to receive additional shares, from one of Shanghai Xinghan’s founding shareholders at nil
consideration, based on the formula agreed in the investment agreement if Shanghai Xinghan does not
meet the specified sum of revenue targets covering a three-year period from 2022 to 2024. The Group
accounts for the said right as a financial asset at FVTPL, with carrying amount of nil and
RMB2,878,000 as at December 31, 2022 and 2023, respectively. RMB13,950,000 of the capital
injection into Shanghai Xinghan was paid when the investment agreement was signed. The remaining
consideration of RMB4,050,000 is payable if several specific conditions are met, which include
performance targets of revenue and net profit of 2024, and the Group accounts for such contingent
consideration payable as a financial liability at FVTPL, as set out in Note 33.
Note d: The carrying amount of arrangement/right to receive additional shares at nominal consideration
represents the Group’s right to receive additional shares in Baiwang Intelligent from one of Baiwang
Intelligent’s owners. In connection with the investment agreement, the Group also has the right to
require one of the controlling owners of Baiwang Intelligent to transfer additional shares of Baiwang
Intelligent based on the formula agreed in the investment agreement if Baiwang Intelligent does not meet
the specified sum of profit targets covering a three-year period from 2022 to 2024. The Group accounts
for the said right as a financial asset at FVTPL, with carrying amount of RMB2,991,000 and
RMB1,794,000 as at December 31, 2022 and 2023, respectively, as detailed in Note 23.
APPENDIX I ACCOUNTANTS’ REPORT
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26. DEFERRED TAXATION
The Group
For the purpose of presentation in the consolidated statements of financial position, certain deferred tax assets
and liabilities have been offset when applicable. The following is the analysis of the deferred tax balances for
financial reporting purposes:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Deferred tax liabilities – (148) –
The following are the major deferred tax assets (liabilities) recognized and movements thereon during the
years ended December 31, 2021, 2022 and 2023:
ECL
provisions
Fair value
adjustments
Right-of-use
assets
Lease
liabilities
Accelerated tax
depreciation
and
amortization Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 54 (100) (1,600) 1,409 237 –
Credit (charge) to profit
or loss – 100 (3,861) 3,761 – –
As at December 31, 2021 54 – (5,461) 5,170 237 –
(Charge) credit to profit
or loss (54) (148) 1,820 (1,532) (234) (148)
As at December 31, 2022 – (148) (3,641) 3,638 3 (148)
Credit (charge) to profit
or loss 11 148 1,175 (1,183) (3) 148
As at December 31, 2023 11 – (2,466) 2,455 – –
APPENDIX I ACCOUNTANTS’ REPORT
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The Company
The following are the major deferred tax assets (liabilities) recognized and movements thereon during the
years ended December 31, 2021, 2022 and 2023:
ECL
provisions
Fair value
adjustments
Right-of -use
assets
Lease
liabilities
Accelerated tax
depreciation
and
amortization Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 54 (100) (1,600) 1,409 237 –
Credit (charge) to profit
or loss – 100 (3,861) 3,761 – –
As at December 31, 2021 54 – (5,461) 5,170 237 –
(Charge) credit to profit
or loss (54) – 1,820 (1,532) (234) –
As at December 31, 2022 – – (3,641) 3,638 3 –
Credit (charge) to profit
or loss – – 1,677 (1,674) (3) –
As at December 31, 2023 – – (1,964) 1,964 – –
The Group
As at December 31, 2021, 2022 and 2023, the Group had estimated unused tax losses of approximately
RMB526,565,000, RMB597,296,000 and RMB702,833,000, respectively, which are available for offset against future
profits. No deferred tax asset has been recognized in respect of such tax loss due to the unpredictability of future
profit streams as at December 31, 2021, 2022 and 2023.
The unrecognized income tax losses which have fixed expiry date, will be expired in the following years:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
2022 29,482 – –
2023 46,475 45,451 –
2024 15,172 15,172 15,172
2025 22,826 956 956
2026 18,684 13,746 13,746
2027 – 23,816 22,836
2028 116,664 116,664 168,888
2029 189,932 189,932 189,932
2030 24,108 24,108 24,108
2031 63,222 63,222 63,222
2032 – 104,229 104,229
2033 – – 99,744
Total 526,565 597,296 702,833
Note: In accordance with the “Notice on Extending the Period of Loss Carryover for High tech Enterprises
and Technological Small and Medium sized Enterprises” (Cai Shui 2018 No. 76), as a High and New
Technical Enterprise, the Company has a deductible tax loss expiration period of 10 years.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 535 ---
As at December 31, 2021, 2022 and 2023, the Group had deductible temporary differences of approximately
RMB58,636,000, RMB84,323,000 and RMB73,353,000, respectively, and among these amounts, approximately
RMB22,229,000, RMB60,049,000 and RMB57,021,000, respectively, deductible temporary differences have not
been recognized as deferred tax assets as it is not probable that such deductible temporary differences would be
utilized in the foreseeable future.
The Company
As at December 31, 2021, 2022 and 2023, the Company had estimated unused tax losses of approximately
RMB393,926,000, RMB498,155,000 and RMB597,899,000, respectively, which are available for offset against future
profits. No deferred tax asset has been recognized in respect of such tax loss due to the unpredictability of future
profit streams as at December 31, 2021, 2022 and 2023.
The unrecognized income tax losses which have fixed expiry date, will be expired in the following years:
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
2028 116,664 116,664 116,664
2029 189,932 189,932 189,932
2030 24,108 24,108 24,108
2031 63,222 63,222 63,222
2032 – 104,229 104,229
2033 – – 99,744
Total 393,926 498,155 597,899
As at December 31, 2021, 2022 and 2023, the Company had deductible temporary differences of approximately
RMB56,902,000, RMB80,210,000 and RMB65,642,000, respectively, and among these amounts, approximately
RMB20,496,000, RMB55,937,000 and RMB51,316,000, respectively, deductible temporary differences have not
been recognized as deferred tax assets as it is not probable that such deductible temporary differences would be
utilized in the foreseeable future.
27. INVENTORIES
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Goods in transit 5,262 7,141 1,112
Goods available for sale 3,710 3,851 2,569
Total 8,972 10,992 3,681
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Goods in transit 5,262 7,141 1,112
Goods available for sale 3,738 3,851 2,569
Total 9,000 10,992 3,681
APPENDIX I ACCOUNTANTS’ REPORT
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28. TRADE AND OTHER RECEIV ABLES, DEPOSITS AND PREPAYMENTS
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade receivables – contracts with customers 31,476 34,988 54,132
Less: allowance for credit losses (3,051) (4,140) (5,115)
28,425 30,848 49,017
Notes receivables 301 589 102
Prepayments
– to suppliers 3,208 2,791 2,466
– to others 1,280 4,560 11,656
V alue-added tax recoverable 21,880 17,840 17,655
Deposits refundable within one year 4,566 4,766 5,497
Other receivables
– bid security 1,826 2,305 3,097
– advances to suppliers 15,090 19,909 11,794
– others 1,998 1,755 3,360
Less: allowance for credit losses (242) (175) (216)
49,907 54,340 55,411
Total 78,332 85,188 104,428
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade receivables – contracts with customers 29,564 34,117 42,210
Less: allowance for credit losses (3,026) (4,134) (5,035)
26,538 29,983 37,175
Notes receivables 301 589 102
Prepayments
– to suppliers 3,206 2,720 1,997
– to others 1,069 4,135 11,544
V alue-added tax recoverable 8,983 16,829 15,474
Deposits refundable within one year 4,342 4,479 4,608
Other receivables
– bid security 1,796 2,291 3,083
– others 1,730 136 380
Less: allowance for credit losses (242) (126) (5)
21,185 31,053 37,183
Total 47,723 61,036 74,358
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 537 ---
The Group
The following is an aging analysis of the Group’s trade receivables presented based on the date of revenue
recognition:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Within 30 days 8,206 8,103 12,011
31 to 180 days 12,537 12,488 24,408
181 to 365 days 5,645 6,977 5,783
Over 1 year 5,088 7,420 11,930
31,476 34,988 54,132
Out of the past due balances of RMB18,067,000, RMB26,885,000 and RMB27,310,000 as at December 31,
2021, 2022 and 2023, respectively, RMB13,720,000, RMB20,118,000 and RMB19,518,000, respectively, has been
past due 90 days or more and is not considered as in default by considering the background of the debtors and
historical payment arrangement. The Group does not hold any collateral over these balances or charge any interest
thereon.
The Company
The following is an aging analysis of the Company’s trade receivables presented based on the date of revenue
recognition:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Within 30 days 7,267 7,335 11,318
31 to 180 days 11,564 12,388 13,559
181 to 365 days 5,645 6,974 5,708
Over 1 year 5,088 7,420 11,625
29,564 34,117 42,210
Out of the past due balances of RMB17,235,000, RMB26,782,000 and RMB26,120,000 as at December 31,
2021, 2022 and 2023, respectively, RMB13,720,000, RMB20,087,000 and RMB19,127,000, respectively, has been
past due 90 days or more and is not considered as in default by considering the background of the debtors and
historical payment arrangement. The Company does not hold any collateral over these balances or charge any interest
thereon.
The Group ordinarily grants a credit period within 180 days from invoice date. The extension of credit period
to customers may be granted by considering the type of customers, current creditworthiness, financial condition and
payment history.
Details of impairment assessment of trade and other receivables are set out in Note 40.
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 538 ---
29. CONTRACT COSTS
The Group and the Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Costs to fulfill contracts
Current 18,245 42,026 47,104
Non-current 36,471 38,088 38,181
54,716 80,114 85,285
For the year ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Costs to fulfill contracts transferred to cost of
sales and services 27,827 17,910 40,680
The Group recognized an asset in relation to costs to fulfill contracts, which are mostly employee benefit
expenses. Contract costs are recognized as part of cost of sales and services in the consolidated statements of profit
or loss and other comprehensive income, in the period in which revenue is recognized. The Directors expect the
contract costs to be completely recovered. There was no impairment in relation to the balance of contract costs during
the Track Record Period.
30. BANK DEPOSITS/RESTRICTED BANK DEPOSITS/CASH AND CASH EQUIV ALENTS
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Long-term bank deposits 103,027 106,427 –
Restricted bank deposits 515 103 2,177
Short-term bank deposits with original maturity
over three months 104,785 80,472 109,827
Cash and cash equivalents 505,006 237,206 335,031
Total 713,333 424,208 447,035
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Long-term bank deposits 103,027 106,427 –
Restricted bank deposits 515 103 2,177
Short-term bank deposits with original maturity
over three months 84,535 80,472 109,827
Cash and cash equivalents 377,807 158,369 286,604
Total 565,884 345,371 398,608
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 539 ---
Bank deposits (long-term and short-term bank deposits)
The Group’s bank deposits have original maturities over three months and redeemable on maturity.
However, the deposit could be transferred to other parties unconditionally via the bank upon demand before
maturity with loss of interest according to the deposit contract. The term deposits carry interest rate ranging
from 2.90% to 4.00%, 2.90% to 4.00% and 3.40% per annum for the years ended December 31, 2021, 2022
and 2023, respectively.
Restricted bank deposits
Restricted bank deposits refer to the bank balance deposited into the restricted bank accounts for letters
of guarantees issued by the banks and the bank balance frozen due to pending litigation. The letters of
guarantees are provided to certain of the Group’s customers as performance bonds until the completion or
agreed progress of the Group’s revenue contracts with the customers. As at December 31, 2021, 2022 and 2023,
the annual interest rates for such balances were 0.30%, 0.25% and 0.20% per annum, respectively.
Cash and cash equivalents
Bank balances and cash of the Group and the Company comprise bank balances and cash on hand. Bank
balances carried interest at prevailing market rates based on daily bank deposit rate for the Track Record
Period. As at December 31, 2021, 2022 and 2023, the bank deposits carry interest rate ranging from 0.30% to
0.38%, 0.25% to 0.42% and 0.20% to 0.35% per annum, respectively.
31. TRADE AND OTHER PAYABLES
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade payables 35,147 30,869 40,882
Other payables:
Accrued staff costs 53,448 53,276 70,237
Other tax payables 25,724 15,278 23,141
Others 26,146 37,496 43,826
Subtotal 105,318 106,050 137,204
Total 140,465 136,919 178,086
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade payables 25,085 20,647 24,372
Other payables:
Accrued staff costs 41,798 45,817 60,538
Other tax payables 9,456 10,053 18,543
Others 17,845 24,902 34,439
Subtotal 69,099 80,772 113,520
Total 94,184 101,419 137,892
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 540 ---
The credit period on trade payables is 30-90 days. The following is an aging analysis of the Group’s and the
Company’s trade payables presented based on the date of purchase recognized at the end of each year:
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Within 3 months 27,506 26,082 29,480
3 to 6 months 3,675 2,111 3,710
6 to 12 months 350 1,957 2,611
1 to 2 years 3,593 340 4,621
Over 2 years 23 379 460
Total 35,147 30,869 40,882
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Within 3 months 17,499 16,261 14,647
3 to 6 months 3,623 1,892 2,872
6 to 12 months 349 1,802 1,918
1 to 2 years 3,591 313 4,520
Over 2 years 23 379 415
Total 25,085 20,647 24,372
32. CONTRACT ASSETS AND CONTRACT LIABILITIES
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Contract assets 70,419 78,591 74,764
Less: Allowance for credit losses (344) (539) (4,048)
70,075 78,052 70,716
Analyzed as:
Current 68,836 77,891 70,459
Non-current 1,239 161 257
Total 70,075 78,052 70,716
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Contract liabilities 130,631 165,476 122,744
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 541 ---
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Contract assets 58,298 61,668 70,623
Less: Allowance for credit losses (284) (435) (4,011)
58,014 61,233 66,612
Analyzed as:
Current 56,775 61,072 66,355
Non-current 1,239 161 257
Total 58,014 61,233 66,612
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Contract liabilities 122,571 156,899 118,403
Significant changes in contract assets and contract liabilities
Contract assets relate to the Group’s right to consideration in exchange for goods and services that the
Group has transferred to customers. The increase in 2022 is the result of the business growth of the Group’s
cloud-based financial & tax digitalization solutions and data-driven analytics services. The decrease in 2023
is the result of the decline of the Group’s data-driven analytics services.
Contract liabilities of the Group mainly arise from the non-refundable advance payments made by
customers while the underlying services are yet to be provided. The increase in 2022 is the result of the
business growth of the Group’s cloud-based financial & tax digitalization solutions and data-driven analytics
services. The decrease in 2023 is the result of an increase in the amount transferred from contract liabilities
to revenue in 2023 due to the increased delivery of on-premises financial& tax digitalization solutions projects
and data-driven analytics services.
Revenue recognized in relation to contract liabilities
The following table shows the Group’s revenue recognized during the Track Record Period related to
brought forward contract liabilities:
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Revenue recognized that was included in
the contract liability balance at the
beginning of the year 72,417 80,297 140,287
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 542 ---
33. FINANCIAL LIABILITIES AT FVTPL
Shares with Preferential Rights
Since the date of incorporation, the Company has completed several rounds of financing by issuing
Shares with Preferential Rights.
Date of
issuance
Total number
of unit capital
Consideration
per unit
capital
Total
Consideration
RMB RMB’000
Series Angel August 2016 4,687,500 16.0000 75,000
Series A September 2018 28,724,721 11.0584 317,650
Series A-CB September 2019 9,042,969 11.0583 100,000
Series B October 2019/
January 2020
18,245,519 19.1828 350,000
Series C January 2021 13,039,088 29.3970 383,310
Series C+ November 2021 2,904,957 29.3970 85,397
Total 76,644,754 1,311,357
The key terms of the Shares with Preferential Rights are:
(a) Redemption rights
The shareholders of Shares with Preferential Rights (the “Investors”) have the right to require the
Company, Ningbo Xiuan, Tianjin Duoying and Ms. Chen Jie (together, the “Founding Shareholder”)
jointly or separately to purchase the shares held by these shareholders, if (i) the Company has not
completed a qualified initial public offering on or prior to December 31, 2023 (December 31, 2022 for
Shenzhen Innovation Investment Group Co., Ltd. (ʮ̡), Shenzhen Laterite
Intelligent Equity Investment Fund Partnership (Limited Partnership) (Υ
ྫΆุ(Υྫ)) and Dongguan Laterite V enture Capital Fund Partnership (Limited Partnership) (؇
ΥྫΆุ(Υྫ)) of Series B investors), or (ii) the founders in breach of the
contractual covenants, including the control and ownership continuity, founders’ and the Company’s
financial integrity and legal compliance requirement and stipulated fund purposes. In addition, the
Company shall undertake joint and several guaranteed liabilities for the redemption obligation of the
Founding Shareholder.
The redemption price shall be the sum of issuance price paid by the respective investors plus
accrued interest at compound rate of 8% per annum.
(b) V oting rights
Each share with preferential rights has voting rights equivalent to the number of shares issued.
(c) Anti-dilution rights
If the Company issues new shares at a price lower than the price paid by the Investors on a per
paid-in capital basis, the Investors have a right to require the Company to issue new paid-in capital at
the lowest price allowed by the law to the Investors.
(d) Profit distribution rights
The Investors have the right to receive the profit distributions declared by the Company in
proportion of their shares, taking precedence over distributions that are paid on ordinary shares.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 543 ---
(e) Liquidation preference
In the event of any liquidation, dissolution or winding up of the Company, the Investors shall be
entitled to receive the liquidation preference amount, prior and in preference to any distribution of any
of the assets or surplus funds of the Company to the holders of ordinary shares. The liquidation price
shall be the higher of (i) share subscription consideration paid, plus accrued interest at compound rate
of 8% per annum, together with accumulated dividends declared but not distributed; and (ii) the product
of all the Company’s assets and funds legally available for distribution multiplied by the Investor’s
shareholding proportion of the total Shares with Preferential Rights.
(f) Cease of the preferential rights
The preferential rights will automatically cease upon the submission of application with the Stock
Exchange for the initial public offering (the “IPO”) and listing. The Shares with Preferential Rights will
become ordinary shares without any preferential rights.
As the Shares with Preferential Rights are subject to contingent redemption conditions under
certain stipulated events and the share numbers of redemption are variable due to the potential
adjustments under certain circumstances which are not “anti-dilutive” in nature, these shares with
special rights are initially recognized at fair value. The Group designated these Shares with Preferential
Rights as financial liabilities at FVTPL with fair value changes recognized in “fair value changes of
financial assets and liabilities at FVTPL” in profit or loss.
The Shares with Preferential Rights will be revalued prior to the cease of the preferential rights
with fair value changes, if any, recognized in “fair value changes of financial assets and liabilities at
FVTPL” in profit or loss.
In June 2023, the Company and the Investors have entered into a supplemental agreement pursuant to
which the redemption right of the Shares with Preferential Rights will cease to be exercisable upon submission
of the IPO and listing application to the Stock Exchange until the earlier of (1) the application is not accepted
or declined by the Stock Exchange or the Company withdraws the said application, or the Stock Exchange does
not approve the Company’s application; (2) the Company fails to submit relevant information with China
Securities Regulatory Commission or fails the hearing with the Listing Committee of the Stock Exchange
within eighteen months, or the Company’s listing sponsor withdraws its listing sponsor; (3) the Company is
unable to complete the listing proceedings within the validity period; or (4) the Stock Exchange is unable to
reach a definite decision on the Company’s application within two years.
The carrying amounts of the Shares with Preferential Rights are set out as below:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Series Angel 131,980 135,699 137,613
Series A 736,177 754,958 795,425
Series B 738,566 758,069 780,193
Series C 399,036 413,276 409,792
Series C+ 87,010 89,920 89,606
Total 2,092,769 2,151,922 2,212,629
Shares with Preferential Rights with maturity of less than one year are recorded as current liabilities:
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Current liabilities (Note) 216,650 2,151,922 2,212,629
Non-current liabilities 1,876,119 – –
Total 2,092,769 2,151,922 2,212,629
Note: The carrying amounts as at December 31, 2021 and 2022 represent certain Shares with
Preferential Rights contractually due for redemption by December 31, 2022. The Investors have
entered into an agreement in June 2023 which the preferential rights will automatically cease
upon the submission of application with the Stock Exchange for the IPO and listing.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 544 ---
The Group applied the income approach to determine the underlying equity value of the Group and
adopted equity allocation based on the Black-Scholes option pricing model to determine the fair value of the
Shares with Preferential Rights. The key assumptions in evaluating the fair value are as follows:
For the years ended December 31,
2021 2022 2023
Discount rate 18.00% 18.00% 16.50%
Risk-free interest rate 2.24%~2.37% 2.18% 1.89%~2.08%
Expected volatility value 46.10%~49.20% 50.08% 34.15%~38.38%
Discount for lack of marketability
(the “DLOM”) 10.00% 10.00% 5.00%
Probability under liquidation scenario 22.50% 22.50% 15.00%
Probability under redemption scenario 22.50% 22.50% 15.00%
Probability under listing scenario 55.00% 55.00% 70.00%
Discount rate was estimated by weighted average cost of capital as of each valuation date. The Group
estimated the risk-free interest rate based on the yield of the Chinese treasury bonds with a maturity life close
to period from the respective valuation dates to the expected listing dates, redemption dates and liquidation
dates. V olatility was estimated on each valuation date based on medium of historical volatilities of the
comparable companies in the same industry for a period from the respective valuation dates to expected listing
dates, redemption dates and liquidation dates. The DLOM was estimated based on the option-pricing method.
Contingent consideration for an investment in an associate
The Group has a contingent consideration of RMB4,050,000 over 19.3548% shares with preferential
rights of Shanghai Xinghan as set out in Note 25, which the Group accounts for as a non-current financial
liability at FVTPL. The fair value of RMB2,830,000 and nil at December 31, 2022 and 2023, respectively, was
valued by the Group with the assistance from an independent professional valuer with reference to the fair
value of Shanghai Xinghan’s ordinary shares.
34. SHARE CAPITAL
Authorized and issued
Number of
ordinary shares
Number of
ordinary share
with preferential
rights
Nominal value of
ordinary shares
’000 ’000 RMB’000
(Note 33)
As at January 1, 2021 140,000 60,701 200,701
Increase – 15,944 15,944
As at December 31, 2021, 2022
and 2023 140,000 76,645 216,645
Presented as:
Share capital
RMB’000
As at January 1, 2021, December 31, 2021, 2022 and 2023 140,000
APPENDIX I ACCOUNTANTS’ REPORT
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35. RESERVES
The movements of the reserves of the Company are as follows:
Capital
reserves
Share-based
payments
reserves
Accumulated
losses Total deficits
RMB’000 RMB’000 RMB’000 RMB’000
(Note 36)
As at January 1, 2021 337,438 8,343 (1,237,337) (891,556)
Loss and total comprehensive
expense for the year – – (431,590) (431,590)
Recognition of share-based payment
expenses 118,606 42,812 – 161,418
As at December 31, 2021 456,044 51,155 (1,668,927) (1,161,728)
Loss and total comprehensive
expense for the year – – (159,103) (159,103)
Recognition of share-based payment
expenses – 10,469 – 10,469
As at December 31, 2022 456,044 61,624 (1,828,030) (1,310,362)
Loss and total comprehensive
expense for the year – – (315,101) (315,101)
Recognition of share-based payment
expenses 114,126 76,938 – 191,064
Forfeiture of share-based payment
expenses – (8,343) 8,343 –
As at December 31, 2023 570,170 130,219 (2,134,788) (1,434,399)
Capital reserves
The balance mainly represents the difference between the fair values of the equity instruments of the
Company contributed by the shareholders to the employees and a consultant and the consideration paid by the
employees and a service provider.
36. SHARE–BASED PAYMENTS
Share–based payments plans
(a) 2017 and 2018 Share Incentive
On September 5, 2017, the Company’s shareholders’ meeting passed a resolution, according to which
40,000,000 ordinary shares of the Company were issued to Ms. Chen Jie, the Controlling Shareholder and
Chairman of the Company, at RMB1.23 per share. On October 6, 2017 and April 4, 2018, two other
shareholders of the Company transferred an aggregate of 20,000,000 ordinary shares of the Company to Tianjin
Duoying, a company controlled by Ms. Chen Jie, at RMB1.23 per share. On December 29, 2017, another
shareholder of the Company transferred 30,000,000 ordinary shares of the Company to Ningbo Xiuan, a
company controlled by Ms. Chen Jie, at RMB1.23 per share.
The Group recognized these shares transactions as equity–settled share–based payments with no vesting
conditions in recognition of Ms. Chen Jie’s contribution to the Group. The Group recognized the share–based
payment expenses of RMB263,400,000 and RMB66,750,000, being the difference between the total fair value
of the ordinary shares and the total subscription consideration, in 2017 and 2018 respectively.
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Since 2018, share–based compensation benefits are provided to certain directors, senior management
and employees via the Company’s share incentive schemes, which includes the grant of share options and share
economic rights (the “SERs”) through the limited partnerships, including Tianjin Duoying, Tianjin Shuitong
Technology Center (Limited Partnership) (Ҧʕː(Υྫ)), Tianjin Piaoying Technology Center
(Limited Partnership) (Ҧʕː(Υྫ)), Tianjin Piaowang Technology Center (Limited
Partnership) (Ҧʕː(Υྫ)), Tianjin Piaofu Technology Center (Limited Partnership) (ୃ
Ҧʕː(Υྫ)), and Ningbo Xiuan (hereinafter collectively referred to as the “LLPs”). As at
December 31, 2022, the LLPs held 16.4565% in total of the shares of the Company.
(b) 2018 and 2019 Share Economic Rights (the “2018 and 2019 SERs”)
SERs were granted to eligible employees from 2018 to 2020 through the LLPs. The value of SERs is
indexed to the equity value of the Company. The vesting of SERs is subject to the requisite service until the
completion of IPO. If eligible employees resign before the IPO, the controlling shareholder or parties
designated by the Company have the right to repurchase and the resigned employees have to sell the SERs
granted and vested at the subscription price. Therefore, the completion of the IPO constitutes a vesting
condition. Upon meeting the condition, the grantees may choose to dispose the vested SERs through the LLPs
and the LLPs shall dispose the shares of the Company underlying such vested SERs and transfer the proceeds
to the grantees. The Group does not bear the obligation to settle the SERs plan for employees, the SERs plan
was accounted as an equity transaction for share-based payments. The share-based payment expenses are not
recognized until the IPO becomes probable. The Directors were of the view that the IPO became probable in
December 2021 and hence no share-based payment expenses were recognized for the 2018 and 2019 SERs
canceled prior to December 31, 2020.
In 2020 and 2021, two employees resigned and Ms. Chen Jie and the Company decided to waive the
repurchase right of service period related vesting condition in recognition of their contribution to the Group,
which resulted in a modification with removal of the vesting condition. The share-based payment expenses of
RMB8,343,000 was recognized immediately upon the modification in each of 2020 and 2021.
In December 2020, except for the 2018 and 2019 SERs granted to these two employees, the Company
canceled the 2018 and 2019 SERs and accounted for the cancellation as an acceleration of vesting and
recognized immediately the amount that otherwise would have been recognized for services received.
RMB28,605,000 arising from the acceleration of vesting was recognized in 2020.
The movement of the 2018 and 2019 SERs during the Track Record Period is as follows:
Number of 2018
and 2019 SERs
Weighted-
average grant
date fair value
’000 RMB
As at January 1, 2021 2,200 11.92
Forfeited (800) 11.92
As at December 31, 2021 and 2022 1,400 11.92
Forfeited (700) 11.92
As at December 31, 2023 700 11.92
The 2018 and 2019 SERs were priced using the value of the ordinary shares determined by using the
discounted cash flow method with a DLOM. The key inputs used to evaluate the grant date fair value are as
follows:
2018 and 2019
SERs
Discount rate 19.00%-21.00%
DLOM 16.00%-21.00%
APPENDIX I ACCOUNTANTS’ REPORT
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(c) The 2020 SERs Scheme
In 2021 and 2022, pursuant to 2020 SERs Scheme, an aggregate of 13,780,000 SERs of the LLPs were
granted, representing 13,780,000 ordinary shares of par value of RMB1 each in the share capital of the
Company with the subscription price at RMB1.23 (the “2020 SERs I”) or RMB2.51 (the “2020 SERs II”) each
SER to eligible employees. The vesting is subject to the requisite service until the completion of the IPO of
which 25% of the SERs are to be vested upon the completion of the IPO, and 25% in each of the subsequent
three years. The SERs could not be sold during the period from date of grant to 3 years after the completion
of the IPO (the “Lock-up Period”), after which 50% of vested SERs can be sold by the SERs holders in each
of the subsequent two years. If the eligible employees resign during the Lock-up Period, the controlling
shareholder or parties designated by the Company have the right to repurchase and the resigned employees
have to sell the unvested SERs at the subscription price. The share-based payment expenses are not recognized
until the IPO becomes probable. In December 2021, the Directors were of a view that the IPO became probable
and share-based payment expenses of RMB34,469,000 were recognized in 2021.
In addition, in 2021, an aggregate of 6,700,000 SERs of the LLPs were granted, representing 6,700,000
ordinary shares of par value at RMB1 each in the share capital of the Company with the price of RMB1.23/2.51
(the “2020 SERs III”) for each SER. The 2020 SERs III were not subject to the IPO condition and were fully
vested upon the grant.
In 2023, pursuant to the 2020 SERs III, an aggregate of 5,450,000 SERs of the LLPs were granted to
two key management personnel and a consultant, representing 5,450,000 ordinary shares at par value of RMB1
each in the share capital of the Company with the price of RMB1.23/2.51 for each SER.
The share-based payment expenses of RMB118,606,000 and RMB114,126,000 were recognized in 2021
and 2023, respectively.
A summary of the 2020 SERs’ movement is as follows:
Number of
2020 SERs
Weighted-
average grant
date fair value
’000 RMB
As at December 31, 2021 17,745 16.47
Granted during the year 315 16.14
Forfeited (2,075) 15.76
As at December 31, 2022 15,985 16.56
Granted during the year 5,450 20.94
Forfeited (595) 15.97
As at December 31, 2023 20,840 17.72
The 2020 SERs were priced using the value of the ordinary shares determined by using the discounted
cash flow method with a DLOM. The key inputs used to evaluate the grant date fair value are as follows:
2020 SERs
Discount rate 18.00%
DLOM 11.00%-23.00%
In 2022, the Company made the following modifications to the 2020 SERs I and 2020 SERs II:
1) For 2020 SERs I, the SERs could not be sold from the date of grant to 1 year after the completion
of the IPO (the “Revised Lock-up Period”), after which 50%, 25% and 25% of vested SERs can
be sold in each of the subsequent three years. If the eligible employees resign during the Revised
Lock-up Period and first 2 years of after the Revised Lock-up Period, the controlling shareholder
or parties designated by the Company have the right to repurchase and the resigned employees
have to sell the unvested SERs at the subscription price (the “2022 SERs I”).
2) For 2020 SERs II, the SERs could not be sold from the date of grant to 1 year after the completion
of the IPO, after which 20%, 20%, 30% and 30% of vested SERs could be sold in each of the
subsequent four years. If the eligible employees resign during the Revised Lock-up Period and
first 2 years after the Revised Lock-up period, the controlling shareholder or parties designated
by the Company have the right to repurchase and the resigned employees have to sell the unvested
SERs at the subscription price (the “2022 SERs II”).
APPENDIX I ACCOUNTANTS’ REPORT
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(d) The 2022 SERs Scheme
In 2022, pursuant to the 2022 SERs II, an aggregate of 445,000 SERs were granted, representing
445,000 ordinary shares at par value of RMB1 each in the share capital of the Company with the price of
RMB2.51 each SER was granted to eligible employees.
In 2023, pursuant to the 2022 SERs I and 2022 SERs II, an aggregate of 7,355,000 SERs of the LLPs
were granted, representing 7,355,000 ordinary shares at par value of RMB1 each in the share capital of the
Company with the subscription price of RMB1.23 or RMB2.51 each SER to eligible employees.
The share-based payment expenses of RMB10,469,000 and RMB76,938,000 were recognized during the
year ended December 31, 2022 and 2023, respectively.
The following table discloses movements of the newly granted 2022 SERs.
Number of
2022 SERs
Weighted-
average grant
date fair value
’000 RMB
As at January 1, 2022 – –
Granted during the year 445 17.39
As at December 31, 2022 445 17.39
Granted during the year 7,355 17.80
Forfeited (210) 17.28
As at December 31, 2023 7,590 17.79
The 2022 SERs were priced using the value of the ordinary shares determined by using the discounted
cash flow method with a DLOM. The key inputs used to evaluate the grant date fair value are as follows:
2022 SERs
Discount rate 18.00%
DLOM 11.00%-21.00%
37. CONTINGENT LIABILITIES
As of the date of this report, the Company involved in one pending litigation. This pending litigation relates
to the appeal of a patent infringement case, in which the plaintiff alleged that the Company violated its invention
patent and sought damage of over RMB7 million. In September 2022, the Beijing Intellectual Property Court
dismissed the plaintiff’s complaint in favor of the Company. In October 2022, the plaintiff appealed to the Supreme
People’s Court, which has accepted the plaintiff’s application in February 2023. As of the date of this report, the
Supreme People’s Court has not issued a judgment. The Directors believe, based on legal advice, that there may be
some uncertainty in the outcome of this pending litigation and the possibility of overturning the first instance
judgment and determining that the Company has violated the plaintiff’s invention patent is relatively low.
38. CAPITAL COMMITMENTS
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Capital expenditure in respect of acquisition of
equity interests in associates 22,250 22,250 13,930
The capital commitment mainly represents the outstanding capital injection commitments in certain
investments in associates in accordance with the agreements entered with other shareholders, in proportion to the
existing shareholdings. Such commitments can be nullified by agreements with all the shareholders involved.
APPENDIX I ACCOUNTANTS’ REPORT
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39. CAPITAL RISK 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 shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Group monitors capital (including share capital and Share with Preferential Rights) by regularly reviewing
the capital structure. As a part of this review, the Group considers the cost of capital and the risks associated with
the capital. The Group may issue new shares or Shares with Preferential Rights.
40. FINANCIAL INSTRUMENTS
Financial instruments by categories
The Group
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Financial assets
Amortized cost 782,982 485,641 519,753
Financial assets at FVTPL 238,296 440,387 300,664
1,021,278 926,028 820,417
Financial liabilities
Amortized cost 64,067 55,911 81,045
Financial liabilities at FVTPL 2,092,769 2,154,752 2,212,629
2,156,836 2,210,663 2,293,674
The Company
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Financial assets
Amortized cost 789,725 479,587 573,143
Financial assets at FVTPL 238,296 420,343 286,661
1,028,021 899,930 859,804
Financial liabilities
Amortized cost 91,787 62,924 105,268
Financial liabilities at FVTPL 2,092,769 2,151,922 2,212,629
2,184,556 2,214,846 2,317,897
APPENDIX I ACCOUNTANTS’ REPORT
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Financial risk management
The Group’s activities expose it to a variety of financial risks, such as market risk (including interest
rate risk and other price risk), credit risk and liquidity risk. The Group’s overall risk management program
focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the
Group’s financial performance. Risk management is carried out by the Directors.
The Group’s and the Company’s major financial instruments include financial assets at FVTPL, trade
and other receivables, bank balances and cash, restricted bank deposits, term deposits, amounts due from
related parties, trade and other payables, amounts due to related parties and financial liabilities at FVTPL.
Details of the financial instruments are disclosed in respective notes. The policies on how to mitigate these
risks are set out below. The Directors manage and monitor these exposures to ensure appropriate measures are
implemented on a timely and effective manner.
(a) Market risk
Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Floating rate instruments expose the Group and the Company to
cash flow interest rate risk, whereas fixed rate instruments expose the Group and the Company to fair value
interest risk. The Group’s and the Company’s cash flow interest rate risk primarily arose from bank balances
and cash with market interest rate and market interest rate indexed wealth management products, details of
which have been disclosed in Note 30 and Note 25, respectively. The Group’s and the Company’s fair value
interest rate risk primarily arises from term deposits and lease liabilities, details of which have been disclosed
in Note 30 and Note 21 respectively.
The Group manages its interest rate exposures by assessing the potential impact arising from any interest
rate movements based on interest rate level and outlook.
The Directors consider that the impact to profit or loss for respective years are insignificant for a
reasonable change in the market interest rate. Accordingly, no sensitivity analysis is prepared.
Other price risk
The Group is exposed to price risk in respect of part of its market price indexed wealth management
products, investments in associates with preferential rights, Shares with Preferential Rights and contingent
consideration for acquiring an associate. The Group’s and the Company’s other price risk primarily arises from
wealth management products measured as financial assets at FVTPL and Shares with Preferential Rights,
details of which have been disclosed in Note 25 and Note 33, respectively. The Group has appointed a special
team to monitor the price risk.
The Group currently does not have a policy to hedge the other price risk. However, the management
closely monitors such risk by maintaining a portfolio of investments with different risks.
Sensitivity analyses for Shares with Preferential Rights fair value measurement categorized within Level
3 were disclosed in Note 40.
For sensitivity analysis purpose, the sensitivity rates are changed to 22%, 22% and 15% for the years
ended December 31, 2021, 2022 and 2023 due to change in market conditions.
The Group’s sensitivities to market price indexed wealth management products, investments in
associates with preferential rights, and contingent consideration for acquiring an associate at the end of the
reporting periods while all other variables were held constant are as follows:
2021 2022 2023
Reasonably possible change in equity price 22% 22% 15%
RMB’000 RMB’000 RMB’000
(Increase) decrease in post-tax loss and
total comprehensive expense for the year
as a result of decrease in equity price (52,573) (31,210) (4,049)
as a result of increase in equity price 52,573 31,210 4,049
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Credit risk and impairment assessment
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group’s credit risk is mainly associated with trade and other
receivables, bank balances and cash, restricted bank deposits, term deposits, amounts due from related parties
and contract assets.
The Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to
failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective
recognized financial assets as stated in the consolidated statements of financial position.
The tables below detail the credit risk exposures of the Group’s financial assets, which are subject to
ECL assessment:
Notes
12m or
Lifetime ECL
Gross carrying amount
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Financial assets at amortized cost
Bank balances and cash 30 12m ECL 505,006 237,206 335,031
Restricted bank deposits 30 12m ECL 515 103 2,177
Short-term bank deposits with maturity
over three months
30 12m ECL 104,785 80,472 109,827
Long-term bank deposits 30 12m ECL 103,027 106,427 –
Notes receivables 28 12m ECL 301 589 102
Trade receivables 28 Lifetime ECL
(not credit-
impaired)
29,910 33,379 52,206
Trade receivables 28 Lifetime ECL
(credit-
impaired)
1,566 1,609 1,926
Contract assets 32 Lifetime ECL
(not credit-
impaired)
70,419 78,591 71,302
Contract assets 32 Lifetime ECL
(credit-
impaired)
– – 3,462
Other receivables and deposits 28 12m ECL 23,411 28,675 23,685
Other receivables and deposits 28 Lifetime ECL
(credit-
impaired)
–– 6 3
Amounts due from related parties
– trade nature 42 Lifetime ECL
(not credit-
impaired)
2,023 1,433 64
– trade nature 42 Lifetime ECL
(credit-
impaired)
– – 1,125
– contract assets 42 Lifetime ECL
(not credit-
impaired)
1,389 1,550 17,442
– non-trade nature 42 12m ECL 15,731 63 3
The Group’s bank balances and cash, restricted bank deposits, and term deposits are mainly deposited
in state-owned or reputable financial institutions in PRC. There has been no recent history of default in relation
to these financial institutions. The Group considers the instruments have low credit risk because they have a
low risk of default and the counterparties have a strong capacity to meet its contractual cash flow obligations
in the near term. The identified credit losses are insignificant during the Track Record Period. The Group
considers that there is no significant credit risk and no material losses due to the default of the other parties.
APPENDIX I ACCOUNTANTS’ REPORT
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To manage risk arising from trade receivables, contract assets and amounts due from related parties of
trade nature, the Group has policies in place to ensure that credit terms are made to counterparties with an
appropriate credit history and management performs ongoing credit evaluations of the counterparties. The
Group ordinarily grants a credit period within 180 days from invoice date and the credit quality of these
customers is assessed, which takes into account their financial position, past experience and other factors. In
view of the sound collection history of receivables due from them, for measuring ECL, trade receivables,
contract assets and amounts due from related parties of trade nature have been grouped based on shared credit
risk characteristics and aging. In addition, trade receivables and amounts due from related parties of trade
nature with significant balances and contract assets with significant balances or credit-impaired are assessed
for ECL individually.
The Group has concentration of credit risk as 6.0%, 9.0% and 20.2% of the total trade receivables was
due from the Group’s largest debtor and 22.5%, 28.3% and 34.1% of the total trade receivables was due from
the Group’s five largest debtors as at December 31, 2021, 2022 and 2023, respectively. In order to manage the
credit risk, the management of the Group has delegated a team responsible for monitoring the credit approvals
and collection status.
Gross carrying
amount ECL rate Loss allowance
RMB’000 RMB’000
As at December 31, 2021
Trade receivables (including amounts
due from related parties)
Assessed individually 7,615 0.87% 66
Assessed on collective basis (by aging)
– 0-90 days 13,909 1.31% 182
– 91-180 days 3,158 3.32% 105
– 181-365 days 3,980 5.78% 230
– Over 1 year 4,837 51.02% 2,468
33,499 3,051
Contract assets (including amounts due
from related parties)
Assessed individually 19,349 0.56% 108
Assessed on collective basis 52,459 0.45% 236
71,808 344
105,307 3,395
APPENDIX I ACCOUNTANTS’ REPORT
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Gross carrying
amount ECL rate Loss allowance
RMB’000 RMB’000
As at December 31, 2022
Trade receivables (including amounts
due from related parties)
Assessed individually 8,887 0.66% 59
Assessed on collective basis (by aging)
– 0-90 days 9,716 1.26% 122
– 91-180 days 4,751 3.07% 146
– 181-365 days 5,598 5.54% 310
– Over 1 year 7,469 46.90% 3,503
36,421 4,140
Contract assets (including amounts due
from related parties)
Assessed individually 22,120 0.38% 83
Assessed on collective basis 58,021 0.79% 456
80,141 539
116,562 4,679
As at December 31, 2023
Trade receivables (including amounts
due from related parties)
Assessed individually 18,180 6.77% 1,231
Assessed on collective basis (by aging)
– 0-90 days 21,554 1.13% 243
– 91-180 days 4,212 4.87% 205
– 181-365 days 3,827 6.40% 245
– Over 1 year 7,548 57.18% 4,316
55,321 6,240
Contract assets (including amounts due
from related parties)
Assessed individually 45,388 8.28% 3,759
Assessed on collective basis 46,818 0.99% 462
92,206 4,221
147,527 10,461
APPENDIX I ACCOUNTANTS’ REPORT
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The following table shows the movement in lifetime ECL that has been recognized for trade receivables,
contract assets and amounts due from related parties of trade nature under the simplified approach.
Trade receivables
Lifetime ECL
(not credit-impaired)
Lifetime ECL
(credit-impaired) Total
RMB’000 RMB’000 RMB’000
As at January 1, 2021 981 545 1,526
Transfer to credit-impaired (1,021) 1,021 –
Impairment losses recognized 2,192 – 2,192
Impairment losses reversed (667) – (667)
As at December 31, 2021 1,485 1,566 3,051
Transfer to credit-impaired (43) 43 –
Impairment losses recognized 1,830 – 1,830
Impairment losses reversed (741) – (741)
As at December 31, 2022 2,531 1,609 4,140
Transfer to credit-impaired (1,442) 1,442 –
Impairment losses recognized 5,018 – 5,018
Impairment losses reversed (2,918) – (2,918)
As at December 31, 2023 3,189 3,051 6,240
Contract assets
Lifetime ECL
(not credit-impaired)
Lifetime ECL
(credit-impaired) Total
RMB’000 RMB’000 RMB’000
As at January 1, 2021 307 – 307
Impairment losses recognized 301 – 301
Impairment losses reversed (264) – (264)
As at December 31, 2021 344 – 344
Impairment losses recognized 455 – 455
Impairment losses reversed (260) – (260)
As at December 31, 2022 539 – 539
Transfer to credit-impaired (34) 34 –
Impairment losses recognized 737 3,428 4,165
Impairment losses reversed (483) – (483)
As at December 31, 2023 759 3,462 4,221
The management believes that there is no significant increase in credit risk of these amounts of notes
receivables, other receivables and deposits, and amounts due from related parties of non-trade nature since
initial recognition and the Group and the Company provided impairment based on 12m ECL. For the years
ended December 31, 2021, 2022 and 2023, the Group and the Company assessed the ECL for other receivables
and amounts due from related parties of non-trade nature are insignificant.
APPENDIX I ACCOUNTANTS’ REPORT
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For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when there
has been a significant increase in credit risk since initial recognition, on which the Group recognizes lifetime
ECL. The assessment of whether lifetime ECL should be recognized is based on significant increases in the
likelihood or risk of a default occurring since initial recognition.
(c) Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows.
Taking into account the financial resources available to the Group, including cash and cash equivalents
on hand, term deposits and operating cash flows, the Directors believe that the Group will have sufficient
financial resources to satisfy its future working capital in the next twelve months from the date of the report.
The following table details remaining contractual maturity of the Group’s financial liabilities and lease
liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities and lease
liabilities on the earliest date which the Group can be required to pay. The maturity dates are based on the
agreed repayment dates.
The table includes both interest and principal cash flows.
Weighted
average
interest rate
Carrying
amount
On demand
or less than
1 year
Between
1 and
2 years
Between
2 and
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Trade and other payables – 50,930 50,930 – – 50,930
Amounts due to related parties – 13,137 13,137 – – 13,137
Financial liabilities at FVTPL 8.00% 2,092,769 188,998 1,605,748 – 1,794,746
Lease liabilities 5.66% 35,676 11,557 18,994 7,456 38,007
2,192,512 264,622 1,624,742 7,456 1,896,820
As at December 31, 2022
Trade and other payables – 54,441 54,441 – – 54,441
Amounts due to related parties – 1,470 1,470 – – 1,470
Financial liabilities at FVTPL 8.00% 2,154,752 1,794,802 4,050 – 1,798,852
Lease liabilities 5.66% 25,796 19,342 7,430 124 26,896
2,236,459 1,870,055 11,480 124 1,881,659
As at December 31, 2023
Trade and other payables – 76,695 76,695 – – 76,695
Amounts due to related parties – 4,350 4,350 – – 4,350
Financial liabilities at FVTPL 8.00% 2,212,629 1,947,845 – – 1,947,845
Lease liabilities 5.66% 15,990 14,924 1,245 173 16,342
2,309,664 2,043,814 1,245 173 2,045,232
APPENDIX I ACCOUNTANTS’ REPORT
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Fair value measurement of financial instruments
Determination of fair value and fair value hierarchy
IFRS 13 Fair V alue Measurement defines fair value as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
When determining the fair value measurement for assets and liabilities required or permitted to be recorded
at fair value, the Group considers the principal or most advantageous market in which it would transact and
it considers assumptions that market participants would use when pricing the asset or liability.
Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial
instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is
significant to the fair value measurement. Accounting guidance establishes three levels of inputs that may be
used to measure fair value.
The level of fair value calculation is determined by the lowest level input that is significant in the overall
calculation. As such, the significance of the input should be considered from an overall perspective in the
calculation of fair value.
For Level 2 financial instruments, valuations are generally obtained from third party pricing services for
identical or comparable assets, or through the use of valuation methodologies using observable market inputs,
or recent quoted market prices. V aluation service providers typically gather, analyze and interpret information
related to market transactions and other key valuation model inputs from multiple sources, and through the use
of widely accepted internal valuation models, provide a theoretical quote on various securities.
For Level 3 financial instruments, prices are determined using valuation methodologies such as
discounted cash flow models and other similar techniques. Determinations to classify fair value measurement
within Level 3 of the valuation hierarchy are generally based on the significance of the unobservable factors
to the overall fair value measurement.
The following tables provide the fair value measurement hierarchy of the Group’s financial assets and
liabilities:
Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
As at December 31, 2021
Assets:
Financial assets at FVTPL – 218,856 19,440 238,296
Liabilities:
Financial liabilities at FVTPL – – 2,092,769 2,092,769
As at December 31, 2022
Assets:
Financial assets at FVTPL – 400,900 39,487 440,387
Liabilities:
Financial liabilities at FVTPL – – 2,154,752 2,154,752
As at December 31, 2023
Assets:
Financial assets at FVTPL – 268,230 32,434 300,664
Liabilities:
Financial liabilities at FVTPL – – 2,212,629 2,212,629
APPENDIX I ACCOUNTANTS’ REPORT
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The following summaries the fair values of major financial assets and liabilities to determine the
valuation techniques and inputs used:
Financial assets/
liabilities
Carrying
amount
2021
Carrying
amount
2022
Carrying
amount
2023
Fair value
hierarchy
Valuation
technique(s) and
key input(s)
Significant
unobservable
Relationship of
unobservable
inputs to fair
value
RMB’000 RMB’000 RMB’000
Wealth management products 218,856 400,900 268,230 Level 2 Discounted cash
flow
V olatility The higher the
volatility, the
higher the fair
value
Investments in associates with
preferential rights and the
arrangement/right to receive
additional shares at nominal
consideration
19,440 39,487 32,434 Level 3 Income approach Expected future
cash flow
The more the
cash flow, the
higher the fair
value
Combination of
Probability-
weighted
Return Method
and Option
Price Method
DLOM The lower the
DLOM, the
higher the fair
value
During the Track Record Period, fair value changes arose from the financial assets classified within
Level 2 and 3 as listed in the table above were insignificant. The Directors consider that any reasonable
changes in the significant unobservable inputs would not result in a significant change in the Group’s results.
Accordingly, no sensitivity analysis is presented.
The determination of the fair value for Shares with Preferential Rights and share-based payments are set
out in Note 33 and Note 36, respectively.
Fair value of the Shares with Preferential Rights is affected by changes in the Company’s equity value.
If the Company’s equity value had increased/decreased by 2% with all other variables held constant, the loss
before tax for the years ended December 31, 2021, 2022 and 2023 would have been approximately
RMB34,143,000, RMB34,569,000 and RMB38,525,000 higher/lower, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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For assets and liabilities that are measured at fair value on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on the
lowest level input that is significant to the fair value measurement as a whole) at each reporting end. During
the Track Record Period, there were no transfers among different levels of fair values measurement.
Wealth
management
products
Investments in
associates with
preferential rights
and the
arrangement/right
to receive
additional shares
at nominal
consideration
Shares with
Preferential
Rights
Contingent
consideration
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 200,666 – (1,360,212) –
Issue of shares (Note 33) – – (468,707) –
Purchase 594,000 – – –
Redemption (588,712) – – –
Investment in FVTPL – 34,015 – –
Changes in fair value 12,902 (14,575) (263,850) –
As at December 31, 2021 218,856 19,440 (2,092,769) –
Purchase 1,400,000 – – –
Redemption (1,223,024) – – –
Investment in FVTPL – 19,122 – (2,499)
Changes in fair value 5,068 925 (59,153) (331)
As at December 31, 2022 400,900 39,487 (2,151,922) (2,830)
Purchase 747,000 – – –
Redemption (888,705) – – –
Changes in fair value 9,035 (7,053) (60,707) 2,830
As at December 31, 2023 268,230 32,434 (2,212,629) –
Fair value of financial assets and financial liabilities that are not measured at fair value on a recurring
basis
For the financial assets and financial liabilities that are not measured at fair value on a recurring basis,
the Directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortized cost in the Historical Financial Information approximate their fair values at the end of each reporting
periods.
APPENDIX I ACCOUNTANTS’ REPORT
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41. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities arising from financing activities, including both cash
and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash
flows will be, classified in the consolidated statements of cash flows as cash flows from financing activities.
Shares with
Preferential
Rights
Prepayments
of share issued
costs Lease liabilities
Trade and
other payables
non-trade Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021 1,360,212 – 6,882 25,200 1,392,294
Financing cash flows 468,707 (671) (7,167) (25,200) 435,669
New lease entered/lease
modification – – 35,718 – 35,718
Finance costs – – 243 – 243
Changes in fair values of
financial liabilities at
FVTPL 263,850 – – – 263,850
As at December 31, 2021 2,092,769 (671) 35,676 – 2,127,774
Financing cash flows – (1,706) (12,014) – (13,720)
New lease entered – – 567 – 567
Finance costs – – 1,567 – 1,567
Changes in fair values of
financial liabilities at
FVTPL 59,153 – – – 59,153
As at December 31, 2022 2,151,922 (2,377) 25,796 – 2,175,341
Financing cash flows – (5,139) (14,516) – (19,655)
New lease entered and early
termination of a lease, net – – 3,688 – 3,688
Finance costs – – 1,022 – 1,022
Changes in fair values of
financial liabilities at
FVTPL 60,707 – – – 60,707
As at December 31, 2023 2,212,629 (7,516) 15,990 – 2,221,103
APPENDIX I ACCOUNTANTS’ REPORT
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42. RELATED PARTY TRANSACTIONS
Names and relationships with related parties
The following companies are significant related parties of the Group that had transactions and/or
balances with the Group during the Track Record Period.
Name of related parties Relationship with the Group
Ms. Chen Jie The Controlling Shareholder and Chairman
Mr. Chen Lin The brother of the Controlling Shareholder
Beijing Watertek Information Technology Co., Ltd.
(ʮ̡) and its
subsidiaries (“Watertek”) (Note 1)
Non-controlling shareholder
Heilongjiang Yizhangtong Business Service Co., Ltd.
(ʮ̡) and its
subsidiaries (“Yizhangtong”) (Note 1)
Controlled by Mr. Chen Lin
Baiwang Intelligent (Note 1) Associate
Guomai Xin’an Technology Co., Ltd.
(ʮ̡) (“Guomai Xin’an”)
(Note 1)
Significantly influenced by the Controlling
Shareholder
Beijing Bright Intelligent Information Technology
Co., Ltd. (ʮ̡) (“Bright
Intelligent”) (Note 1)
Controlled by a close family member of
Director
Fosun Holdings Limited and its subsidiaries (“Fosun”)
(Note 1)
Non-controlling shareholder with
significant influence
Baiwang Jinfu Technology Co., Ltd.
(ʮ̡)
(“Baiwang Jinfu”) (Notes 1 and 2)
Non-controlling shareholder with
significant influence
Daokou Jinke (Note 1) Associate
Boya Zhongke (Note 1) Associate
Baiwang Jinshui (Note 1) Joint venture
Guangxi United (Note 1) Associate
Shanghai Xinghan (Note 1) Associate
Beijing Wisedoing Network Information Technology
Co., Ltd. (ʮ̡)
(“Wisedoing”) (Note 1)
Controlled by Mr. Chen Lin
Y unnan Baiwangyun Digital Technology Co., Ltd.
(ʮ̡) (Note 1)
Associate
Note 1: The English name of the companies established in the PRC are for reference only and have not
been registered.
Note 2: Pursuant to Watertek’s declaration in January 2022, Watertek unconditionally and irrevocably
undertook not to exercise the right to appoint a director and ceased to exercise significant
influence over the Company. The Directors consider Baiwang Jinfu being a joint venture of
Watertek is no longer a related party of the Company from January 2022 onwards.
APPENDIX I ACCOUNTANTS’ REPORT
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Transactions with related parties
The Group have the following transactions and balances with related parties:
Name of related parties
Nature of
transactions
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Watertek Provision of services 61 – –
Fosun Provision of services 1,503 133 171
Daokou Jinke Provision of services 1,415 – –
Baiwang Jinshui Provision of services 811 715 812
Guangxi United Provision of services – 3,876 58,387
Ms. Chen Jie Interest income – 620 –
Others Provision of services 239 10 134
Total 4,029 5,354 59,504
Name of related parties
Nature of
transactions
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Watertek Purchases of services and
products
4,659 – –
Baiwang Jinfu Purchases of services and
products
11,346 – –
Yizhangtong Purchases of services 1,137 – –
Guomai Xin’an Purchases of services and
products
3,022 4,270 6,976
Bright Intelligent Purchases of services 509 – –
Boya Zhongke Purchases of services and
products
98 2,007 531
Shanghai Xinghan Purchases of services and
products
– – 653
Y unnan Baiwangyun
Digital Technology
Co., Ltd.
Purchases of services and
products
– – 588
Baiwang Intelligent Purchases of services – 4,616 –
Others Purchases of services 1,029 200 628
Total 21,800 11,093 9,376
In the opinion of the Directors, the related party transactions were carried out in the normal course of
business and at terms negotiated between the Group and the respective related parties.
APPENDIX I ACCOUNTANTS’ REPORT
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Balance with related parties
At the end of each reporting period, the Group have the following significant balances with related
parties:
Amounts due from related parties
As at December 31,
Nature of balances with related parties 2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade receivables 2,024 1,433 64
Other receivables 15,731 63 3
Prepayments 116 585 –
Contract assets 1,389 1,550 17,269
Subtotal 19,260 3,631 17,336
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note a) RMB’000 RMB’000 RMB’000
Guangxi United Trade – 861 17,321
Daokou Jinke Trade 1,172 1,125 –
Baiwang Intelligent Trade – 585 –
Baiwang Jinshui Trade 1,922 866 –
Watertek Trade 158 – –
Others Trade 277 131 12
Subtotal 3,529 3,568 17,333
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Ms. Chen Jie (Note b) Non-trade 15,731 – –
Others (Note c) Non-trade – 63 3
Subtotal 15,731 63 3
Total 19,260 3,631 17,336
The maximum amount outstanding during the years ended December 31, 2021, 2022 and 2023 in respect
of the amounts due from a director and companies controlled by a director are RMB15,731,000,
RMB16,351,000 and RMB3,000, respectively.
Notes:
a. Balances of trade nature are unsecured, interest-free, and aged within one year.
b. Balances of non-trade nature are unsecured, interest-bearing and repayable on demand.
c. Balances with other related parties are unsecured, interest-free and repayable on demand.
APPENDIX I ACCOUNTANTS’ REPORT
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Amounts due to related parties
As at December 31,
Nature of balances with related parties 2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade payables 13,021 1,355 4,146
Other payables 115 115 204
Contract liabilities 884 9,582 19,693
Total 14,020 11,052 24,043
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note a) RMB’000 RMB’000 RMB’000
Watertek Trade 340 – –
Baiwang Jinfu Trade 8,979 – –
Guomai Xin’an Trade 2,373 1,022 3,562
Baiwang Jinshui Trade 999 210 –
Boya Zhongke Trade 729 298 210
Guangxi United Trade – 8,765 19,356
Others Trade 485 642 711
Subtotal 13,905 10,937 23,839
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note b) RMB’000 RMB’000 RMB’000
Wisedoing Non-trade 112 112 112
Others Non-trade 3 3 92
Subtotal 115 115 204
Total 14,020 11,052 24,043
Notes:
a. Balances of trade nature are unsecured, interest-free and aged within one year.
b. Balances of non-trade nature are unsecured, interest-free and repayable on demand. The Directors are
of the view that the non-trade balance would be settled before the listing.
APPENDIX I ACCOUNTANTS’ REPORT
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At the end of each reporting period, the Company have the following significant balances with related parties:
Amounts due from related parties
As at December 31,
Nature of balances with related parties 2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade receivables 40,484 45,311 43,879
Other receivables 148,961 51,613 85,313
Prepayments 116 585 –
Contract assets 265 425 8,955
Total 189,826 97,934 138,147
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note a) RMB’000 RMB’000 RMB’000
Beijing Baiwang
Enterprise Service
Technology Co., Ltd.
(“Baiwang Enterprise
Service”)
Trade 36,977 36,977 36,977
Baiwang Jinshui Trade 1,922 866 –
Watertek Trade 158 – –
Chongqing Zhishui Y un
Technology Co., Ltd.
Trade 1,485 3,788 3,788
Guangxi United Trade – 861 8,943
Baiwang Intelligent Trade – 585 –
Baiwangyun Technology
(Beijing) Co., Ltd.
(“Baiwangyun
Technology”)
Trade – 3,114 3,114
Others Trade 323 130 12
Subtotal 40,865 46,321 52,834
APPENDIX I ACCOUNTANTS’ REPORT
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Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Beijing Baiwang Huiyan
Data Technology Co.,
Ltd. (“Baiwang
Huiyan”)
Non-trade 129,018 20,023 20,562
Ms. Chen Jie (Note b) Non-trade 15,731 – –
Baiwang Maoyi (Suzhou)
Software Co., Ltd.
Non-trade 4,164 4,342 4,519
Beijing Baiwang Jinkong
Technology Co., Ltd.
(“Baiwang Jinkong”)
Non-trade – 26,400 58,927
Baiwangyun Technology Non-trade – 788 –
Others (Note c) Non-trade 48 60 1,305
Subtotal 148,961 51,613 85,313
Total 189,826 97,934 138,147
The maximum amount outstanding during the years ended December 31, 2021, 2022 and 2023 in respect
of the amounts due from a director and companies controlled by a director are RMB15,731,000,
RMB16,351,000 and nil, respectively.
Notes:
a. Balances of trade nature are unsecured and interest-free.
b. Balances of the non-trade nature are unsecured, interest-bearing and repayable on demand.
c. Balances with other related parties are unsecured, interest-free and repayable on demand.
Amounts due to related parties
As at December 31,
Nature of balances with related parties 2021 2022 2023
RMB’000 RMB’000 RMB’000
Trade payables 13,021 1,355 4,985
Other payables 45,735 29,400 49,165
Contract liabilities 887 8,866 17,894
Total 59,643 39,621 72,044
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note a) RMB’000 RMB’000 RMB’000
Baiwang Huiyan Trade – – 842
Watertek Trade 340 – –
Baiwang Jinfu Trade 8,979 – –
Boya Zhongke Trade 729 298 210
Guomai Xin’an Trade 2,373 1,022 3,562
Yizhangtong Trade – – –
Baiwang Jinshui Trade 999 210 –
Guangxi United Trade – 8,049 17,556
Others Trade 488 642 709
Subtotal 13,908 10,221 22,879
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 566 ---
Name of related parties
Nature of
transactions
As at December 31,
2021 2022 2023
(Note b) RMB’000 RMB’000 RMB’000
Baiwang Enterprise
Service
Non-trade 30,797 29,229 30,345
Baiwang Jinkong Non-trade 13,500 – –
Baiwangyun Technology Non-trade 1,438 – 3,953
Henan Baiwang Enterprise
Service Digital
Technology Co., Ltd.
Non-trade – – 6,303
Hangzhou Baiwangyun
Technology Co., Ltd.
Non-trade – – 8,375
Others Non-trade – 171 189
Subtotal 45,735 29,400 49,165
Total 59,643 39,621 72,044
Notes:
a. Balances of trade nature are unsecured and interest-free.
b. Balances of non-trade nature are unsecured, interest-free and repayable on demand.
Key management personnel compensation
The remuneration of Directors and other members of key management personnel during the Track
Record Period was as follows:
Y ear ended December 31,
2021 2022 2023
RMB’000 RMB’000 RMB’000
Salaries and bonuses 14,287 10,120 10,154
Share-based payments 89,369 1,747 115,363
Welfare, medical and other benefits 1,405 977 1,069
Total 105,061 12,844 126,586
The remuneration of key management personnel is determined by reference to the performance of
individuals and market trends.
43. RETIREMENT BENEFIT PLANS
The employees of the Group in PRC are members of a state-managed retirement benefit plan operated by the
PRC government. The Group is required to contribute a specified percentage of payroll costs as determined by
respective local government authorities to the retirement benefit plan to fund the benefits. The only obligation of the
Group with respect to the retirement benefit plan is to make the specified contributions under the plan. The retirement
benefits cost charged to profit or loss for the years ended December 31, 2021, 2022 and 2023 amounted to
RMB23,120,000, RMB28,057,000, and RMB38,254,000, respectively.
44. PARTICULARS OF PRINCIPAL SUBSIDIARIES
The carrying amounts of the Company’s investment in subsidiaries ended December 31, 2021, 2022 and 2023
are RMB83,017,000, RMB103,017,000 and RMB103,017,000, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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During the Track Record Period and at the date of this report, the Company has direct and indirect interests
in the following principal subsidiaries:
Name of subsidiaries/
consolidated affiliated
entities
Place of
incorporation/
registration/
operations
Paid up
capital
Proportion of ownership interest
attributable to the Company At the
date of
this report
As at December 31, Principal
activities2021 2022 2023
RMB’000 %%%%
Baiwang Jinkong PRC 50,000 100 100 100 100 Investment holding
and technology
services
Baiwang Enterprise Service PRC 3,000 100 100 100 100 Software
maintenance
Baiwang Huiyan PRC 50,000 100 100 100 100 Supply chain
finance and
financial
technology cloud
Baiwangyun Technology PRC 400 100 100 100 100 Investment holding
and technology
services
Chongqing Zhishui Y un
Technology Co., Ltd. (ᅅ
ʮ̡)
PRC – 100 100 100 100 Software services
Yiwu Zhiling Financial
Training Co., Ltd.
(ʮ̡)
PRC – 100 N/A N/A N/A Financial training
services
Tianjin Baifu Technology
Center (Limited Partnership)
(Ҧʕː(Υ
ྫ)) (“Tianjin Baifu”) (Note
b)
PRC – 50 50 N/A N/A Investment holding
Baiwang Lutong New
Infrastructure (Beijing)
Technology Co., Ltd. ( ϵૐ
ܔ(̏ԯ)ʮ
̡) (“Lutong Xinjijian”)
(Note c)
PRC – 50 N/A N/A N/A Investment holding
Road Network (Beijing)
Transportation Cloud
Technology Co., Ltd. ( ༩ၣ
(̏ԯ)ʮ̡)
(Note d)
PRC – 25 N/A N/A N/A Software services
Baiwang Maoyi (Suzhou)
Software Co., Ltd. ( ϵૐ൱
֝(ᘽψ)ʮ̡)
(“Baiwang Maoyi”) (Note e)
PRC – 85 85 85 85 Software services
Anhui Zhishuiyun Information
Technology Co., Ltd. ( τᏏ
ʮ̡)
PRC – N/A N/A 100 100 Software services
Hangzhou Baiwangyun
Technology Co., Ltd. (ψ
ʮ̡)
PRC – N/A N/A 100 100 Software services
Henan Baiwang Enterprise
Service Digital Technology
Co., Ltd. (ᅰο
ʮ̡)
PRC 3,000 N/A N/A 100 100 Software services
APPENDIX I ACCOUNTANTS’ REPORT
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Notes:
a) The English translation of the names is for reference only. The official names of these companies are in
Chinese.
b) On October 27, 2020, Tianjin Baifu was established with a registered capital of RMB400,000 by Baiwang
Jinkong and Lutong (Beijing) Infrastructure Construction Development Co., Ltd ( ༩ஷ(̏ԯ)ண೯
ʮ̡) (“Lutong Beijing”), and each hold 50% shares of its registered capital. Baiwang Jinkong as the
general partner substantially controls Tianjin Baifu. Tianjin Baifu was deregistered on April 14, 2023.
c) On November 12, 2020, Lutong Xinjijian was established by Baiwang Jinkong, Lutong Beijing and Tianjin
Baifu with each owns 40%, 40% and 20% shares of its registered capital. Lutong Xinjijian was deregistered
on September 14, 2022.
d) On November 17, 2020, Road Network (Beijing) Transportation Cloud Technology Co., Ltd. ( ༩ၣ(̏ԯ)ʹஷ
ʮ̡) (“Jiaotongyun”) was established by Beijing Road Network Technology Co., Ltd. ( ̏ԯ༩ၣ
ʮ̡) (“Beijing Luwang”), Academy of communications Sciences (Beijing) Transportation
Technology Co., Ltd. (৫(̏ԯ)ʮ̡) (“ACS”) and Lutong Xinjijian with each owns 35%,
16% and 49% shares of its registered capital. Due to the concerted action agreement, Beijing Luwang and ACS
shall act in concert with Lutong Xinjijian. Jiaotongyun became the subsidiary of the Company accordingly.
Jiaotongyun was deregistered on August 25, 2022.
e) On June 4, 2021, the Group acquired 85% equity interest of Baiwang Maoyi at the consideration of RMB1 from
a third party.
All companies comprising the Group have adopted December 31, as their financial year end date. No audited
financial statements of the Group have been prepared for the years ended December 31, 2021, 2022 and 2023 since
there are no statutory audit requirements in the jurisdictions.
45. SUBSEQUENT EVENTS
In February 2024, the Group entered into a capital increase agreement to acquire 2.5% of equity interest with
preferential rights of Hangzhou Xinfengwei Network Technology Co., Ltd. The total consideration of RMB40 million
has been settled. The Group accounts for the investment as a financial asset at FVTPL.
46. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements of the Group, the Company or any of the subsidiaries have been prepared in
respect of any period subsequent to December 31, 2023.
APPENDIX I ACCOUNTANTS’ REPORT
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The information set out in this Appendix does not form part of the accountants’ report on
the historical financial information of the Group for each of the three years ended December
31, 2023 (the “Accountants’ Report”) prepared by Deloitte Touche Tohmatsu, Certified Public
Accountants, Hong Kong, the Company’ s Reporting Accountants, as set out in Appendix I to
this prospectus, and is included herein for information only. The unaudited pro forma financial
information should be read in conjunction with the section headed “Financial Information” in
this prospectus and the Accountants’ Report set out in Appendix I to this prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS OF THE GROUP ATTRIBUTABLE TO OWNERS OF THE
COMPANY
The following unaudited pro forma statement of adjusted consolidated total tangible
assets less liabilities of the Group attributable to owners of the Company prepared in
accordance with paragraph 4.29 of the Listing Rules is set out below to illustrate the effect of
the Global Offering on the audited consolidated total tangible assets less liabilities of the
Group attributable to owners of the Company as at December 31, 2023 as if the Global Offering
had taken place on that date.
The unaudited pro forma statement of adjusted consolidated total tangible assets less
liabilities of the Group attributable to owners of the Company has been prepared for illustrative
purposes only and, because of its hypothetical nature, it may not give a true picture of the
consolidated total tangible assets less liabilities of the Group attributable to owners of the
Company as at December 31, 2023 or any future dates.
The following unaudited pro forma statement of adjusted consolidated total tangible
assets less liabilities of the Group attributable to owners of the Company is prepared based on
the audited consolidated total tangible assets less liabilities of the Group attributable to owners
of the Company as at December 31, 2023 as derived from the Accountants’ Report, the text of
which is set out in Appendix I to this prospectus, and adjusted as described below:
Audited consolidated
total tangible assets less
liabilities of the Group
attributable to owners
of the Company as
at December 31, 2023
Estimated net proceeds
from the Global Offer
Unaudited pro forma
adjusted consolidated
total tangible assets
less liabilities of the
Group attributable to
owners of the
Company as
at December 31, 2023
Unaudited pro forma adjusted
consolidated total tangible assets
less liabilities of the Group
attributable to owners of the
Company as
at December 31, 2023 per Share
RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4)
Based on an Offer Price of
HK$36 per Share (1,402,717) 255,347 (1,147,370) (7.69) (8.44)
Based on an Offer Price of
HK$40 per Share (1,402,717) 287,084 (1,115,633) (7.47) (8.20)
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 570 ---
Notes:
1. The unaudited pro forma statement of adjusted consolidated total tangible assets less liabilities of the Group
attributable to owners of the Company as at December 31, 2023 is based on the consolidated net liabilities of
the Group attributable to owners of the Company amounted to RMB1,396,215,000, with adjustments for
intangible assets of the Group as at December 31, 2023 of RMB6,502,000 extracted from the Accountants’
Report set forth in Appendix I to the prospectus.
2. The estimated net proceeds from the Global Offering are based on 9,262,000 new Shares to be issued at the
Offer Price of HK$36 and HK$40 per Offer Share, being the low end and high end of the indicated Offer Price
range and excluding listing expenses already charged to the consolidated statements of profit or loss during
the Track Record Period, respectively, after deduction of the estimated underwriting fees and other related
expenses expected to be incurred by the Group. The calculation of such estimated net proceeds does not take
into account (i) any Shares which may be allotted and issued upon the exercise of the Over-allotment Option
or (ii) any Shares which may be issued or repurchased by the Company pursuant to the general mandates.
For the purpose of the estimated net proceeds from the Global Offering, the amount denominated in HK$ has
been converted into RMB at an exchange rate of HK$1 to RMB0.9114, which was the exchange rate prevailing
on June 19, 2024 with reference to the rate published by the People’s Bank of China. No representation is made
that HK$ amounts have been, could have been or may be converted to RMB, or vice versa, at that rate or at
any other rates or at all.
3. The number of shares used for the calculation of unaudited pro forma adjusted consolidated total tangible
assets less liabilities of the Group attributable to owners of the Company per Share is based on 149,262,000
Shares outstanding immediately following completion of the Global Offering. It does not take into account (i)
any Shares which may be allotted and issued upon the exercise of the Over-allotment Option; (ii) any Shares
which may be issued or repurchased by the Company pursuant to the general mandates or (iii) cessation of the
preferential rights of Shares with Preferential Right.
4. The unaudited pro forma adjusted consolidated total tangible assets less liabilities of the Group attributable to
owners of the Company per Share is converted from RMB to HK$ at the rate of HK$1 to RMB0.9114, which
was the exchange rate prevailing on June 19, 2024 with reference to the rate published by the People’s Bank
of China. No representation is made that the RMB amounts have been, would have been or may be converted
to HK$, or vice versa, at that rate or at any other rates or at all.
5. No adjustment has been made to the unaudited pro forma adjusted consolidated total tangible assets less
liabilities of the Group attributable to owners of the Company as at December 31, 2023 to reflect any operating
result or other transactions of the Group entered into subsequent to December 31, 2023. In particular, the
unaudited pro forma adjusted consolidated total tangible assets less liabilities of the Group attributable to
owners of the Company as shown on Page II-1 have not been adjusted to illustrate the effect of the following:
Upon completion of the Global Offering, the cessation of the preferential rights of Shares with Preferential
Rights would have resulted in a reclassification of such financial liabilities at carrying amount of
RMB2,212,629,000 as at December 31, 2023 (the “Shares Reclassification”) assuming no further changes in
fair values of Shares with Preferential Rights existing on December 31, 2023 upon Global Offering, to ordinary
shares under equity.
The effect of Shares Reclassification would have increased the total number of Shares in issue assumption
stated in Note 3 by 76,644,754 Shares to a total of 225,906,754 Shares and would have adjusted the unaudited
pro forma adjusted consolidated total tangible assets less liabilities of the Group attributable to owners of the
Company as at December 31, 2023 by RMB2,212,629,000 to RMB1,065,259,000 based on an Offer Price of
HK$36 per Offer Share and RMB1,096,996,000 based on an Offer Price of HK$40 per Offer Share. Had the
Shares Reclassification been taken into account, the unaudited pro forma adjusted consolidated total tangible
assets less liabilities of the Group attributable to owners of the Company as at December 31, 2023 per Share
would be RMB4.72 (equivalent to HK$5.18) based on an Offer Price of HK$36 per Offer Share and RMB4.86
(equivalent to HK$5.33) based on an Offer Price of HK$40 per Offer Share, respectively.
For the purpose of unaudited pro forma adjusted consolidated total tangible assets less liabilities of the Group
attributable to owners of the Company per Share, the amount denominated in RMB has been converted into
HK$ at the rate of HK$1 to RMB0.9114, which was the exchange rate prevailing on June 19, 2024 with
reference to the rate published by the People’s Bank of China. No representation is made that the RMB
denominated amounts have been, could have been or may be converted to HK$, or vice versa, at that rate or
any other rates or at all.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 571 ---
B. ASSURANCE REPORT FROM THE REPORTING ACCOUNTANTS ON
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following is the text of the independent reporting accountants’ assurance report
received from Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the
reporting accountants of the Company, in respect of the Group’ s unaudited pro forma financial
information prepared for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Baiwang Co., Ltd.
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of Baiwang Co., Ltd. (the “Company”) and its subsidiaries
(hereinafter collectively referred to as the “Group”) by the directors of the Company (the
“Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted consolidated net tangible assets as
at December 31, 2023 and related notes as set out on pages II-1 to II-2 of Appendix II to the
prospectus issued by the Company dated June 28, 2024 (the “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 Appendix II to the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to
illustrate the impact of the proposed initial listing of shares of the Company (the “Global
Offering”) on the Group’s financial position as at December 31, 2023 as if the proposed Global
Offering had taken place at December 31, 2023. As part of this process, information about the
Group’s financial position has been extracted by the Directors from the Group’s historical
financial information for each of the three years ended December 31, 2023, on which an
accountants’ report set out in Appendix I to the Prospectus has been published.
Directors’ Responsibilities for the Unaudited Pro Forma Financial 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 (the “HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 572 ---
Our Independence and Quality Control
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 behavior.
Our firm applies Hong Kong Standard on Quality Control 1 “Quality Control for Firms
that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related
Services Engagements” issued by the HKICPA and accordingly maintains a comprehensive
system of quality control including documented policies and procedures regarding compliance
with ethical requirements, professional standards and applicable legal and regulatory
requirements.
Reporting Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the unaudited pro forma financial information and to report our opinion to
you. We do not accept any responsibility for any reports previously given by us on any
financial information used in the compilation of the unaudited pro forma financial information
beyond that owed to those to whom 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 accountants plan and perform procedures to obtain reasonable assurance
about whether the Directors have compiled the unaudited pro forma financial information in
accordance with paragraph 4.29 of the Listing Rules and with reference to 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 an investment
circular is solely to illustrate the impact of a significant event or transaction on unadjusted
financial information of the Group as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not
provide any assurance that the actual outcome of the event or transaction at December 31, 2023
would have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 573 ---
A reasonable assurance engagement to report on whether the unaudited pro forma
financial information has been properly compiled on the basis of the applicable criteria
involves performing procedures to assess whether 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 transaction, and to
obtain sufficient appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the unaudited pro forma financial information reflects the proper application of
those adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction
in respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement 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 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.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
June 28, 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 574 ---
This appendix summarizes the principal provisions of the Company’s Articles of
Association approved on May 31, 2023, which shall take effect on the date of the H Shares
becoming listed on the Stock Exchange. As the primary purpose of this appendix is to provide
potential investors with an overview of the Company’s Articles of Association, it does not
necessarily contain all of the information that is important to potential investors.
1 SHARES AND REGISTERED CAPITAL
Shares of the Company adopt the form of share certificates.
The issue of the shares of the Company shall be based on the principle of fairness and
impartiality, and shall rank pari passu in all respects with the shares of the same class. Shares
of the same class issued at the same time shall be issued under the same condition and at the
same price; the same price shall be paid for each of the shares subscribed for by any entity or
individual.
The Company shall have ordinary shares at all times. The Company may issue other
classes of shares if necessary, upon approval by the examining and approving departments.
After completing the filing procedures with the securities regulatory authorities of the
State Council and the consent of The Stock Exchange of Hong Kong Limited ( the “SEHK”),
the Company may issue shares to qualified domestic investors and overseas investors. Upon the
approval of the plan for issuing overseas listed foreign shares and unlisted shares by the
securities regulatory authority of the State Council, the Board of Directors of the Company (the
“Board”) may arrange for the implementation of such plan by means of separate issues. The
Company’s plan for separate issues of overseas listed foreign shares and domestic unlisted
shares in accordance with the preceding paragraph may be implemented separately within 15
months from the date of filing with the securities regulatory authority of the State Council. If
the Company issues overseas listed foreign shares and unlisted shares separately within the
total amount of shares specified in the issue plan, such issues shall be fully subscribed for at
their respective prices; if the shares cannot be fully subscribed for once due to special
circumstances, the shares may, subject to the approval of the securities regulatory authority of
the State Council, be issued in several stages.
2 INCREASE AND DECREASE OF CAPITAL AND REPURCHASE OF SHARES
In accordance with the laws and regulations, the Company may, based on its operating
and development needs and the resolution of the general meeting, increase its capital by the
following methods:
(I) by public offering of shares;
(II) by non-public offering of shares;
(III) by placing or allotting new shares to existing shareholders;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-1 –


--- page 575 ---
(IV) by capitalizing its capital reserve;
(V) by any other methods which is permitted by the laws and administrative regulations.
The Company’s increase in capital by issuing new shares shall be handled in accordance
with the procedures provided for in the relevant laws, administrative regulations and Hong
Kong Listing Rules after having been approved in accordance with the Articles of Association.
The Company may reduce its registered capital. The Company shall reduce its registered
capital in accordance with the Company Law, Hong Kong Listing Rules and other relevant
provisions and the procedures stipulated in the Articles of Association. In case of decrease of
registered capital of the Company, a balance sheet and assets list shall be formulated. The
Company shall notify its creditors within 10 days from the date of passing of the resolution for
the decrease of registered capital and shall publish a notice in a newspaper within 30 days
thereof. The creditors shall, within 30 days since the date of receiving the notice or within 45
days since the date of the first public announcement for those who have not received a written
notice, be entitled to require the Company to pay off its debts in full or to provide a
corresponding guarantee for repayment.
Under the following circumstances, the Company may repurchase its shares in accordance
with the provisions of the relevant laws, administrative regulations, departmental rules, Hong
Kong Listing Rules and Articles of Association:
(I) to reduce the registered capital of the Company;
(II) to merge with other companies that hold the shares of the Company;
(III) to use the shares for Employee Stock Ownership Plan or as equity incentive;
(IV) the shareholders disagreeing with the merger or separation resolution made by the
general meeting ask the Company to acquire their shares;
(V) to use the shares in the conversion of the convertible corporate bonds issued by the
Company;
(VI) necessary to protect the company value and the shareholders’ equity;
(VII) any other circumstances required by the laws, administrative regulations,
departmental rules, regulation rules of the place where the Company’s shares are
listed, etc.
Except for the above situations, the Company shall not engage in the activity of trading
its shares.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-2 –


--- page 576 ---
The Company may proceed to buy back its shares in one of the following manners:
(I) by issuing repurchase offer to all the shareholders based on the same proportion;
(II) through public trading on stock exchange;
(III) through agreement outside the stock exchange;
(IV) other methods permitted by the laws, administrative statutes and regulatory
authorities.
The repurchase of shares of the Company through agreement outside the stock exchange
shall be approved in advance by the general meeting in accordance with the provisions of the
Articles of Association. With prior approval by shareholders at general meeting obtained in the
same manner, the Company may rescind or amend contracts concluded in the manner set forth
above or waive any of its rights under such contracts. The contract to repurchase shares
referred to above includes but not limited to such agreement for the commitment to fulfill the
obligations of share repurchase and acquisition of the rights to repurchase shares. The
Company shall not assign a contract for the repurchase of its own shares or any of its rights
thereunder. Where the Company has the right to purchase redeemable share, the purchase price
shall be limited to a maximum price if the purchases are not made through the market or by
tender; if purchases are by tender, tenders shall be made available to all shareholders on the
same terms.
3 SHARE TRANSFER
Unless otherwise specified in the laws, administrative regulations and by the securities
regulatory authorities in the place where the shares of the Company, the paid up shares of the
Company can be freely transferred in accordance with the laws and are not subject to any lien.
The shares of the Company may be donated, inherited and pledged in accordance with the
relevant laws, administrative regulations and the Articles of Association. The transfer of shares
shall be registered with the local stock registration institution entrusted by the Company.
4 FINANCIAL ASSISTANCE FOR THE PURCHASE OF COMPANY SHARES
The Company or its subsidiaries (including affiliates of the Company) shall not at any
time by way of gift, advance, guarantee, compensation or loans to provide any financial
assistance to purchasers or potential purchasers of the Company’s shares in any way. The
aforesaid purchasers include persons directly or indirectly undertaking obligations because of
the purchase of the Company’s shares. The Company or its subsidiaries (including affiliates of
the Company) shall not at any time or in any form provide any financial assistance to the
aforesaid obligors for the purpose of reducing or discharging their obligations.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-3 –


--- page 577 ---
The acts listed below are not prohibited by Article 34 of the Articles of Association,
subject to any prohibitions by the relevant laws, administrative regulations, departmental rules
and normative documents:
(I) the provision of financial assistance by the Company in good faith for the benefit of
the Company and the main purpose of the financial assistance is not to purchase
shares in the Company, or the financial assistance is an incidental part of a master
plan of the Company;
(II) the lawful distribution of the Company’s assets as dividends;
(III) the distribution of dividends in the form of shares;
(IV) a decrease of registered capital, a repurchase of shares, capital restructuring, etc. in
accordance with the Articles of Association;
(V) the provision of loans by the Company within its scope of business and in the
ordinary course of its business (provided that the net assets of the Company are not
thereby reduced or that, to the extent that the assets are thereby reduced, the
financial assistance was paid out of the Company’s distributable profits);
(VI) contributions made by the Company to the ESOP (provided that the net assets of the
Company are not thereby reduced or that, to the extent that the assets are thereby
reduced, the financial assistance was paid out of the Company’s distributable
profits).
5 SHARE CERTIFICATES AND REGISTER OF SHAREHOLDERS
The share certificates of the Company shall be in registered form. The share certificates
of the Company shall contain the particulars as required by the Company Law, and any other
items as required by any stock exchange on which the shares of the Company are listed.
The Company shall keep a register of members containing the following particulars or
register shareholders pursuant to the provisions of the laws, administrative regulations,
departmental rules and the Hong Kong Listing Rules:
(I) the name (title), address (domicile), occupation or nature of each shareholder;
(II) the class and number of shares held by each shareholder;
(III) the amount paid or payable on the shares held by each shareholder;
(IV) the serial numbers of the shares held by each shareholder;
(V) the date on which each shareholder was registered as a shareholder; and
(VI) the date on which each shareholder ceased to be a shareholder.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-4 –


--- page 578 ---
The register of shareholders shall be sufficient evidence of the shareholders’ shareholding
in Company, unless there is evidence to the contrary.
Transfer of shares shall be recorded in the register of members. The Company may, in
accordance with the understanding and agreement reached between the securities regulatory
agency under the State Council and the overseas securities regulatory agency, keep the register
of shareholders of overseas listed foreign shares outside China and appoint overseas agencies
to maintain such register. The original register of shareholders of overseas listed foreign shares
listed in Hong Kong shall be maintained at Hong Kong and must be accessible to shareholders.
Copies of the register of shareholders for overseas listed foreign shares shall be kept at
the Company’s legal address. Appointed overseas agencies shall from time to time maintain the
consistency of the original register of shareholders for overseas listed foreign shares and the
copies thereof. In case of any inconsistency between the original and copies of the register of
shareholders of overseas listed foreign shares, the original shall prevail.
6 SHAREHOLDERS
The shareholders of the Company are those who lawfully hold the shares of the Company
and have their names registered in the register of shareholders. The shareholders shall enjoy
the rights and assume the obligations according to the class and amount of the shares they hold;
the shareholders holding the same class of shares shall enjoy the same rights and assume the
same obligations.
Shareholders of ordinary shares of the Company shall enjoy the following rights:
(I) to receive dividend and other forms of distribution of interest in proportion to their
respective shareholdings;
(II) to legally request, convene, preside over, attend or dispatch shareholder’s agent to
attend the general meeting and exercise the corresponding speaking and voting
rights;
(III) to supervise the business operations of the Company and to make suggestions or
inquiries;
(IV) to transfer, bestow or pledge the shares they hold according to the laws,
administrative regulations and the Articles of Association;
(V) to access relevant information according to the provisions of the Articles of
Association, including:
1. a set of the Articles of Association upon payment of a fee covering the cost;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-5 –


--- page 579 ---
2. the rights to inspect and obtain photocopies of the following information upon
payment of a reasonable charge:
(1) all parts of the register of members (the list of all shareholders at the close
of trading on the record date of the Company’s latest periodic report);
(2) personal particulars of the directors, supervisors, general manager and
other senior management of the Company, including:
(a) current and previous names and aliases;
(b) main address (domicile);
(c) nationality;
(d) full-time and all other part-time jobs and titles;
(e) identity documents and numbers.
(3) status of the share capital of the Company;
(4) reports showing the aggregate par value, number of shares, and maximum
and minimum prices paid in respect of each class of shares repurchased
by the Company since the last fiscal year, as well as all the expenses paid
by the Company therefore;
(5) meeting minutes of general meetings (only available for shareholders’
inspection) and copies of the Company’s resolutions of general meetings,
Board meetings and meeting of Board of Supervisors;
(6) the latest audited financial statements and accounting reports of the
Board, auditors and Board of Supervisors;
(7) copies of the annual return for the latest period that has been filed with
China’s Administration for Market Regulation or other authorities;
(8) special resolutions of the Company.
3. bond record of the Company.
A shareholder requesting for inspection of information or access to aforesaid
materials shall provide the Company with written documents evidencing the class
and number of shares of the Company that such shareholder holds. The Company
shall provide such information and materials as requested by the shareholder after
confirming the identity of the shareholder;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-6 –


--- page 580 ---
(VI) to participate in the distribution of remaining assets of the Company in proportion
to the number of shares held in the event of the termination or liquidation of the
Company;
(VII) to request the Company to buy back his/her shares if a shareholder opposes the
merger or division of the Company at the general meeting;
(VIII) for shareholders individually or jointly holding more than 3% of the shares of the
Company, to raise temporary proposal and submit it to the convener in writing 10
days before the general meeting is held;
(IX) other rights conferred by the laws, administrative regulations, departmental rules,
regulation rules of the place where the Company’s shares are listed and the Articles
of Association.
The shareholders are entitled to request the people’s court to invalidate the resolution of
the general meeting and board meeting which violates the laws and administrative regulations.
The shareholders are entitled to request the people’s court to cancel the relevant
resolution within 60 days after the resolution is adopted if the convening procedure and voting
method of the general meeting or board meeting violates the laws, administrative regulations
or the Articles of Association, or the resolution content breaches the Articles of Association.
If a director and senior management personnel causes losses to the Company for violation
of the requirements of the laws, administrative regulations or the Articles of Association during
the performance of his/her duties, shareholders who hold more than 1%, individually or jointly,
of the Company’s shares for more than 180 days continuously, have the right to request the
Board of Supervisors to bring a suit to the people’s court; if the Board of Supervisors causes
losses to the Company for violation of the requirements of the laws, administrative regulations
or the Articles of Association during the performance of its duties, the aforesaid shareholders
can request the Board in written form to file a suit in the people’s court.
Upon receipt of the written request by the shareholders as stipulated in the preceding
paragraph, in case the Board of Supervisors and/or the Board refuses to file a litigation or fails
to file a litigation within 30 days from receipt of such request, or under urgent circumstances
that failure in filing a litigation immediately, the Company will suffer from irreparable
damages, the aforesaid shareholders shall have the right to file a litigation with a people’s court
directly in their own name for protection of the Company’s interests.
In the event that any person infringes the legal interests of the Company causing losses
to the Company, the shareholders specified in the first paragraph may file a litigation with a
people’s court in accordance with the provisions of the preceding two paragraphs.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-7 –


--- page 581 ---
In the event of violation of the laws, administrative regulations or the provisions under
the Articles of Association by director or senior management personnel in performing his/her
duties resulting damage to the shareholders’ interest, the shareholders may file a litigation with
a people’s court.
Shareholders of ordinary shares of the Company shall assume the following obligations:
(I) to abide by the laws, administrative regulations, departmental rules, regulatory rules
of the place where the Company’s shares are listed and the Articles of Association;
(II) to pay subscription moneys for the shares subscribed in accordance with the agreed
manner of payment;
(III) not to withdraw from the Company except for the circumstances set out in the
relevant laws, regulations and the Articles of Association;
(IV) not to abuse shareholder’s rights to damage the interests of the Company or other
shareholders; not to abuse the independent legal person status of the Company and
the limited liability of shareholders to damage the interests of the creditors of the
Company;
If any shareholder of the Company abuses the shareholder’s rights and causes loss
to the Company or other shareholders, he/she shall be liable for the compensation;
If any shareholder of the Company abuses the independent legal person status of the
Company and the limited liability of shareholders to evade debts and severely
damage the interests of the creditors of the Company, he/she shall bear joint liability
for the debts of the Company;
(V) to assume other obligations required by the laws, administrative regulations,
regulation rules of the place where the Company’s shares are listed and the Articles
of Association.
Shareholders shall not be liable for making any additional contribution to the share capital
other than according to the terms agreed by the subscriber of the shares at the time of
subscription.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 582 ---
7 GENERAL PROVISIONS OF GENERAL MEETINGS
The General Meeting of Shareholders acts as the organ of authority of the Company
which, according to the laws, exercises the following authorities:
(I) to decide the management policies and investment plans of the Company;
(II) to elect and replace directors and supervisors who are not staff representatives, and
to decide on matters relating to their remuneration;
(III) to review and approve the reports of the Board;
(IV) to review and approve the reports of the Board of Supervisors;
(V) to review and approve the annual financial budget plans and accounting plans of the
Company;
(VI) to review and approve the profit distribution plan and loss recovery plan of the
Company;
(VII) to make resolutions on the increase or reduction of the Company’s registered capital;
(VIII) to make resolutions on the issuance of corporate bonds or other securities and public
listing plans;
(IX) to make resolutions on matters such as the merger, division, dissolution, liquidation
or change in the organizational form of the Company;
(X) to amend the Articles of Association;
(XI) to make resolutions on the appointment or dismissal or non-renewal of engagement
of accounting firms by the Company;
(XII) to examine and approve the external guarantees of the Company that require the
approval by the general meetings;
(XIII) to consider the Company’s purchase or disposal of major assets within one year of
an aggregate value exceeding 30% of the latest audited total assets of the Company;
(XIV) to examine material transactions and connected transaction which should be
submitted to the general meeting for examination in accordance with the relevant
laws, administrative regulations, regulatory rules of the place where the Company’s
shares are listed and the Articles of Association;
(XV) to review and approve stock incentive plan;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 583 ---
(XVI) to consider proposals raised by shareholder(s), individually or collectively
representing over 3% of the Company’s voting shares;
(XVII) to review and approve the change of use of proceeds;
(XVIII) to consider other matters that should be decided by the general meeting according
to the laws, administrative regulations, departmental rules, Hong Kong Listing
Rules or the Articles of Association.
Under the condition of not breaching any laws and regulations and mandatory provisions
of the laws and regulations of the listing place, the general meeting may authorize or entrust
the Board to handle the matters as authorized or entrusted.
The general meetings shall be divided into the annual general meetings and the
extraordinary general meetings. The general meeting shall be convened by the Board. The
annual general meeting shall be convened once a year, and shall be held within six months after
the prior accounting year ends.
The Company shall convene an extraordinary general meeting within two months under
any of the following circumstances:
(I) when the number of directors is less than the number specified in the Company Law
or two-thirds of the number required by the Articles of Association;
(II) when the uncovered loss of the Company reaches one-third of the total paid-in share
capital of the Company;
(III) at the request of shareholders who individually or collectively hold more than 10%
of the Company’s issued voting shares;
(IV) when the Board considers it necessary;
(V) when the Board of Supervisors proposes such a meeting be held;
(VI) as proposed by more than two independent non-executive directors;
(VII) any other circumstances required by the laws, administrative regulations,
departmental rules, regulation rules of the place where the Company’s shares are
listed and the Articles of Association.
The number of shares held under the item (III) above shall be calculated from the date of
such shareholder’s written request.
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8 CONVENING OF THE GENERAL MEETING
The general meeting shall be convened by the Board, the chairman of which shall also act
as the chairman of the meeting; when the Chairman of the Board is unable or fails to perform
his duties, the Board can designate a director of the Company to convene the meeting on his/her
behalf and act as the chairman of the meeting; when the chairman of the meeting is not
designated, the shareholders present at the meeting can elect one person to serve as the
chairman; if the shareholders are unable to elect the chairman of the meeting for any reason,
the shareholder present who holds the greatest number of voting shares (including his/her
proxy) shall serve as the chairman of meeting
If the Board is unable to perform or does not perform the duty of convening a general
meeting, the Board of Supervisors of the Company shall convene and preside over the meeting;
if the Board of Supervisors does not convene and preside over the meeting, shareholders who
individually or collectively hold at least ten percent or more of the shares of the Company for
more than ninety consecutive days may convene and preside over the meeting themselves.
9 PROPOSALS AND NOTICES OF THE GENERAL MEETING
Where the Company convenes a general meeting, the Board, Board of Supervisors, and
shareholder(s) individually or jointly holding more than 3% shares of the Company may make
proposals to the Company.
The shareholders individually or jointly holding more than 3% of the shares of the
Company may raise temporary proposal and submit it to the convener in writing 10 days before
the general meeting is held. The convener shall, within 2 days after the receipt of the proposal,
issue a supplementary notice to inform the general meeting of the contents of the temporary
proposal.
In order to hold a general meeting, notices in writing shall be given 21 days prior to the
date of the meeting in case of an annual general meeting and 15 days prior to the date of the
meeting in case of an extraordinary general meeting.
10 VOTING AND RESOLUTIONS OF THE GENERAL MEETING
The resolutions of a general meeting are classified into ordinary resolutions and special
resolutions.
Ordinary resolutions of the general meeting shall be passed by more than half of the
voting rights held by the shareholders (including proxies) present at the meeting.
Special resolutions of the general meeting shall be passed by more than two-thirds of the
voting rights held by the shareholders (including proxies) present at the meeting.
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The following matters shall be resolved by way of ordinary resolution of the general
meeting:
(I) work reports of the Board and the Board of Supervisors;
(II) profit distribution proposals and proposals for making up losses formulated by the
Board;
(III) appointment, dismissal and remuneration of the members of the Board and the Board
of Supervisors and the method of payment of the remuneration;
(IV) annual financial budgets, final accounts, balance sheet, income statement and other
financial statements of the Company;
(V) annual report of the Company;
(VI) other matters required by the laws, administrative regulations, regulation rules of the
place where the Company’s shares are listed or the Articles of Association to be
passed by special resolutions.
The following matters shall be resolved by way of special resolution of the general
meeting:
(I) increase or reduction of the Company’s registered capital, issuance of any class of
shares, options and other similar types of securities;
(II) issuance of corporate bonds;
(III) division, merger, dissolution and liquidation or change of organizational form of the
Company;
(IV) amendment to the Articles of Association;
(V) purchase and disposal of material assets by the Company within one year, or a
guarantee amount exceeding 30% of the audited total assets in the most recent
period of the Company;
(VI) other matters required by the laws, administrative regulations, regulation rules of the
place where the Company’s shares are listed or the Articles of Association, and
matters which, according to an ordinary resolution of the general meeting, may have
a significant impact on the Company and shall be adopted by way of a special
resolution.
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Shareholders (including proxies) shall exercise their voting rights by the number of
voting shares they represent at the general meeting, and each share shall have one vote, unless
individual shareholders are required by the Hong Kong Listing Rules to waive their voting
rights on individual matters. Shareholders (including proxies) who have two or more votes are
not required to vote for or against all voting rights. The Company shares held by the Company
have no voting right, and those shares are not included in the total number of voting shares
present at the general meeting and shall not be deposited in CCASS. Any shareholder who is
required under the Hong Kong Listing Rules to waive his/her voting rights on a resolution or
is restricted from voting only for or against a resolution shall not be counted as a vote made
by that shareholder or his/her representative in contravention of such requirement or
restriction.
11 DIRECTORS
Directors are elected by the general meeting with a term of office of three years. Upon
expiration of the term, the directors may be re-elected and serve consecutive terms.
The director shall comply with the laws, administrative regulations, the regulatory rules
of the place where the Company’s shares are listed or the Articles of Association, and shall
have the following duties of fidelity to the Company:
(I) shall not abuse their duties and rights to receive bribes or other illegal income and
shall not misappropriate the property of the Company;
(II) shall not misappropriate the Company funds;
(III) shall not deposit Company funds in a bank account opened in his/her name or in the
name of others;
(IV) shall not use of Company funds to make loans to others or provide guarantee for
others without the consent of the general meeting of shareholders or the board of
directors and in violation of the provisions of the Articles of Association of the
Company;
(V) shall not enter into contracts or transactions with the Company in violation of the
provisions of the Articles of Association or without the consent of the general
meeting of shareholders;
(VI) shall not abuse his/her duties and powers to seize commercial opportunities of the
Company for himself/herself or others or engage in similar business of the same
kind with that of the Company for himself/herself or for others without the consent
of the general meeting of shareholders;
(VII) shall not accept commissions from transactions with the Company for his or her own
benefit;
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(VIII) shall not disclose the secrets of the Company arbitrarily;
(IX) shall not use his affiliation to harm the interests of the Company;
(X) Other duties of fidelity stipulated by laws, administrative regulations, departmental
rules and regulations, regulatory rules of the place where the Company’s shares are
listed or the Articles of Association.
Any income derived by a director in violation of the provisions of this Article shall belong
to the Company; if it causes losses to the Company, he/she shall be liable for compensation.
If a director fails to attend the board meeting in person (a director who participates in a
board meeting or vote by means of communication is considered to be present in person) or
entrust any other director to attend the meeting on his/her behalf for two consecutive times, it
shall be deemed that he/she cannot perform his/her duties, and the Board shall recommend the
general meeting to remove such director.
A director may resign before the end of his tenure. The director shall submit a written
resignation report to the board of director.
12 INDEPENDENT NON-EXECUTIVE DIRECTORS
The Company has independent directors (equivalent to independent non-executive
directors under the Hong Kong Listing Rules) and the issues including conditions of
appointment, nomination and election procedures, tenure of office, resignation and powers of
the independent directors are implemented in accordance with the relevant provisions of the
laws, administrative regulations, departmental rules and regulation rules of the place where the
shares of the Company are listed.
Independent directors shall faithfully perform their duties and safeguard the interests of
the Company, with particular attention to ensuring that the legitimate rights and interests of
public shareholders are not jeopardized, so as to ensure that the interests of all shareholders are
adequately represented. The functions and powers of the independent non-executive directors
and the related matters shall be subject to the relevant provisions of the laws, administrative
regulations, departmental rules and the regulation rules of the place where the Company’s
shares are listed.
13 THE BOARD
The Board is composed of 10 directors, including one chairman. At all times, the Board
should have at more than one-third independent directors, and the total number of independent
directors should not be less than three, at least one of whom should have appropriate
professional qualifications in line with regulatory requirements, or appropriate accounting or
related financial management expertise.
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The Board shall be accountable to the general meeting and exercise the following powers:
(I) to convene a shareholders’ general meeting and report to the meeting on the work
of the Board;
(II) to implement the resolutions of the general meeting;
(III) to decide on the business plan and investment scheme of the Company;
(IV) to formulate the annual financial budgetary plans and final accounting plans of the
Company;
(V) to formulate the profit distribution plan and loss recovery plan of the Company;
(VI) to formulate plans of increasing or decreasing the Company’s registered capital,
issuing corporate bonds or other securities and going public;
(VII) to formulate plans for substantial acquisition, repurchase of shares, or merger,
division, dissolution and change of corporate form of the Company;
(VIII) to examine and approve the guarantees of the Company that require the approval by
the general meetings;
(IX) to examine and approve the transactions under Article 129 of the Articles of
Association;
(X) to examine and approve the matters required to be passed by the Board as stipulated
in the Management Measures on Connected Transactions;
(XI) to determine the setup of the Company’s internal management structure;
(XII) to appoint or dismiss the general manager and secretary to the Board of the
Company; to appoint or dismiss senior management personnel such as financial
officer according to the nomination of the general manager, and to decide on matters
of remuneration, rewards and punishments;
(XIII) to formulate the basic management system of the Company;
(XIV) to formulate the proposals for any amendment to the Articles of Association;
(XV) to request the general meeting to engage or replace the accounting firm that provides
audit for the Company;
(XVI) to debrief the work report of the general manager of the Company and check the
works of the general manager;
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(XVII) to manage the information disclosure of the Company;
(XVIII) any other functions and powers granted by the laws, administrative regulations,
departmental rules, regulation rules of the place where the Company’s shares are
listed or the Articles of Association.
For matters resolved by the Board in the preceding paragraph, except for items (VI),
(VII), (VIII) and (XIV) which must be approved by a vote of at least two-thirds of the directors,
the remaining items may be approved by a vote of more than half of the directors.
For the disposal of fixed assets by the Board, in the event that the aggregate amount of
the expected value of the proposed disposal of fixed assets and the value of the disposed fixed
assets during the four months prior to this proposed disposal exceeds 33% of the value of fixed
assets shown in the latest balance sheet as considered at the general meeting, the Board shall
not dispose or agree to dispose of such fixed asset without obtaining approval at the general
meeting.
The chairman of the Board shall exercise the following powers:
(I) to preside over general meetings and convening and presiding over Board meetings;
(II) to procure and examining the implementation of resolutions of the Board;
(III) to sign share certificates, corporate bonds and other securities issued by the
Company;
(IV) to sign important documents of the Board;
(V) to exercise the special disposal power on the Company affairs in line with the
interests of the Company in accordance with the provisions of the laws and
regulations in case of an emergency of force majeure such as a major natural
disaster, and reporting to the Board or the general meeting of the Company
afterwards; and
(VI) to exercise other powers as set forth by the Board or in the laws, administrative
regulations and regulatory rules of the place where the Company’s shares are listed.
Board meetings are composed of regular meetings and extraordinary meetings. The Board
shall hold at least four meetings each year, approximately once a quarter, which shall be
convened by the Chairman and notified to all the directors and supervisors 14 days prior to the
meeting in writing. Regular Board meetings do not include obtaining Board approval by
circulating written resolutions. Written notice shall be given to all directors and supervisors
five days prior to the convening of an extraordinary Board meeting. In case of emergency and
it is necessary to convene an extraordinary Board meeting as soon as possible, the convening
of the meeting shall not be subject to the time limit as set out above.
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A Board meeting shall not be held unless more than half of the directors are present. A
resolution made by the Board must be approved by more than half of all the directors. When
the Board considers the external guarantee provided by the Company, consent by more than
two-thirds of directors is required. Each director shall have one vote for the resolutions of the
Board. In the event of a tie between for and against, the Board chairman is entitled to one
additional vote.
The directors shall attend the Board meeting in person. If a director is unable to attend
the meeting for some reason, he/she may entrust another director in writing to attend the
meeting on his/her behalf. The power of attorney shall specify the name, matters entrusted to,
scope of authorization and term of validity of the proxy, and shall be signed or sealed by the
principal. The director who attend the meeting on behalf of another director shall exercise the
rights of the directors within the scope of authorization. If a director fails to attend a Board
meeting or to appoint a proxy, he/she shall be deemed to have waived his/her right to vote at
that meeting.
14 SPECIAL COMMITTEES OF THE BOARD
The Board of the Company sets up special committees, such as the Audit Committee, the
Nomination Committee, the Remuneration and Appraisal Committee, and the Strategy
Committee. The special committees shall be accountable to the Board and shall perform their
duties in accordance with the Articles of Association and the authorization of the Board. Their
proposals shall be submitted to the Board for deliberation and decision.
15 GENERAL MANAGER AND OTHER SENIOR OFFICERS
The Company has one general manager and one board secretary. The general manager, the
deputy general manager, the board secretary, and the finance officer are senior officers of the
Company and shall be appointed or dismissed by the Board.
The general manager of the Company shall be liable to the Board and exercise the
following powers:
(I) to manage the production and operation management of the Company, organizing
execution of the Board’s resolutions, and reporting the relevant work to the Board;
(II) to organize the implementation of the annual business plan and investment scheme
of the Company;
(III) to prepare proposal for the internal management organization setting scheme of the
Company;
(IV) to prepare proposal for the basic management system of the Company;
(V) to develop the specific rules of the Company;
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(VI) to propose the appointment or termination of the deputy general manager or
financial officer of the Company to the Board;
(VII) to decide to appoint or remove the officers other than those subject to the decision
of the Board;
(VIII) to deal with transactions that are not stipulated in the Articles of Association and
whose approving standards need to be deliberated by the general meeting or the
Board; and
(IX) other powers granted by the Articles of Association or the Board.
The general manager may attend the Board meetings. The general manager who is not a
director has no right to vote at the Board meetings.
16 BOARD OF SUPERVISORS
The Company shall have a Board of Supervisors, which shall consist of three supervisors,
including one chairman. The appointment or dismissal of the chairman of the Board of
Supervisors shall be determined by two-thirds or more of the members of the Board of
Supervisors. The chairman of the Board of Supervisors shall convene and preside over the
meeting of the Board of Supervisors. When the chairman of the Board of Supervisors is unable
or fails to perform his or her duty, a supervisor jointly recommended by more than half of the
supervisors shall convene and preside over the meeting of the Board of Supervisors.
The directors, general manager and other senior officers of the Company shall not serve
concurrently as supervisors.
Meetings of the Board of Supervisors are composed of regular meetings and extraordinary
meetings. The Board of Supervisors shall hold at least one regular meeting every six months
and at least two meetings every year. The chairman of the Board of Supervisors shall be
responsible for convening meetings of the Board of Supervisors. The supervisors may propose
to convene an extraordinary meeting of the Board of Supervisors.
The Board of Supervisors shall be accountable to the general meeting and exercise the
following powers:
(I) to examine the Company’s financial affairs;
(II) to supervise the acts of the directors and senior officers, and proposing dismissal of
directors and senior officers who violate the laws, administrative regulations, the
Articles of Association, or resolutions of general meetings;
(III) when the actions of any directors or senior officers are found to damage the interests
of the Company, to urge them to make correction;
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(IV) to propose the convening of extraordinary general meetings and, in case the Board
does not perform the obligations to convene and preside over the general meetings
in accordance with Company Law and the Articles of Association, convening and
presiding over the general meetings;
(V) to submit proposals to the general meetings;
(VI) to liaise with directors or prosecute directors on behalf of the Company;
(VII) to conduct investigation if there is any unusual circumstances in the Company’s
operations; and if necessary, engaging an accounting firm, law firm, or other
professional institutions to assist in their work with expenses to be borne by the
Company;
(VIII) to verify financial information such as financial reports, business reports, profit
distribution plans, etc. that the Board intends to submit to the general meeting and,
if in doubt, appointing a registered accountant or practicing auditor in the name of
the Company to assist in reviewing such information; and
(IX) to exercise other powers prescribed in the Articles of Association of the Company.
17 QUALIFICATIONS AND DUTIES OF THE DIRECTORS, SUPERVISORS AND
SENIOR OFFICERS OF THE COMPANY
None of the following persons may serve as a director, supervisor, general manager or
other senior officer of the Company:
(I) persons without capacity or with limited capacity for civil acts;
(II) persons who were sentenced for crimes of corruption, bribery, encroachment or
embezzlement of property or disruption of the social and economic order, where five
years have not lapsed following the serving of the sentence, or persons who were
deprived of their political rights for committing a crime, where five years have not
lapsed following the serving of the sentence;
(III) persons who acted as directors, or factory managers or managers of companies or
enterprises which were bankrupt or liquidated due to poor performance and
management and who should bear personal liability for the bankruptcy or liquidation
of such companies or enterprises, where three years have not lapsed following the
date of completion of such bankruptcy or liquidation;
(IV) the legal representatives of companies or enterprises that had their business licenses
revoked as a result of violating the law, and where such representatives bear
personal liability therefore and three years have not lapsed following the date of
revocation of such business licenses;
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(V) persons with relatively heavy individual debts that have not been settled upon
maturity;
(VI) persons against whom a case has been established for investigation by the judicial
authorities as a result of suspected violation of the criminal law, and such case has
not been closed;
(VII) persons who may not act as leaders of enterprises by virtue of the laws and
administrative regulations;
(VIII) non-natural persons;
(IX) persons ruled by a relevant organization in charge to have violated securities-related
regulations, where such violation involved fraudulent or dishonest acts and five
years have not lapsed following the date of the ruling; and
(X) circumstances specified in the laws, administrative regulations, the listing rules of
the place where the Company’s shares are listed, and the relevant laws and
regulations of the place where the Company’s shares are listed.
Any election, designation or appointment of directors, supervisors, general manager or
other senior officers in violation of this provision shall be invalid. The Company shall dismiss
the director, supervisor, general manager or other senior officers if they are involved in the said
circumstances during their respective term of office.
The validity of an act of a director, general manager or other senior officer of the
Company on behalf of the Company towards a bona fide third party shall not be affected by
any irregularity in his current position, election or qualifications.
In addition to obligations imposed by the laws, administrative regulations or listing rules
of the place where the Company’s shares are listed, the Company’s directors, supervisors,
general manager and other senior officers shall owe the following obligations to each
shareholder in the exercise of the functions and powers granted to them by the Company:
(I) not to cause the Company to act beyond the scope of business as stipulated in its
business license;
(II) to act in good faith in the best interests of the Company;
(III) not to deprive the property of the Company in any form, including (but not limited
to) any opportunity favorable to the Company; and
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(IV) not to deprive the individual rights and interests of the shareholders, including (but
not limited to) any distribution rights and voting rights, but excluding any plan of
reorganization of the Company submitted to the general meeting for approval in
accordance with the Articles of Association.
The Company’s directors, supervisors, general manager and other senior officers shall, in
the exercise of their duties, abide by the principles of honesty and creditability and shall not
place themselves in a position where there is a possible conflict between their personal
interests and their duties. This principle shall include (but not limited to) the fulfillment of the
following obligations:
(I) to act in good faith in the best interests of the Company;
(II) to exercise powers within the scope of their functions and powers and not to act
beyond such powers;
(III) to personally exercise the discretion vested in him/her, not to allow himself/herself
to be manipulated by another person and, not to delegate the exercise of his/her
discretion to another party unless permitted by the laws and administrative
regulations or with the consent of the general meeting that has been informed;
(IV) to treat shareholders of the same class equally and to be impartial to shareholders of
different classes;
(V) not to conclude a contract or enter into a transaction or arrangement with the
Company except as otherwise provided in the Articles of Association or with the
consent of the general meeting that has been informed;
(VI) not to use Company property for his/her own benefit in any way without the consent
of the general meeting that has been informed;
(VII) not to use his/her functions and powers as a means for accepting bribes or other
forms of illegal income, and not to illegally appropriate Company assets in any way,
including (but not limited to) any opportunities that are favorable to the Company;
(VIII) not to accept commissions in connection with Company transactions without the
consent of the general meeting that has been informed;
(IX) to abide by the Articles of Association, perform his/her duties faithfully, protect the
interests of the Company and not to seek personal gain with his/her position,
functions and powers in the Company;
(X) not to compete with the Company in any way without the consent of the general
meeting that has been informed;
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(XI) not to embezzle the Company’s funds or lend the Company’s funds to others, not to
deposit the Company’s assets in accounts opened in his own or in another’s name,
and unless otherwise specified by the laws, regulations and the Articles of
Association, not to use the Company’s assets as security for the debts of the
Company’s shareholders or other persons; and
(XII) not to disclose confidential information relating to the Company that was acquired
by him/her during his/her office without the consent of the general meeting that has
been informed, and not to use such information except in the interests of the
Company; however, such information may be disclosed to the court or other
government authorities if:
1. required by law;
2. required for the public interest; or
3. required for the interest of such director, supervisor or other senior officer of
the Company.
The obligation of honesty and credibility of the Company’s directors, supervisors, general
manager and other senior officers does not necessarily cease with the termination of their
office. Their confidentiality obligation in relation to the Company’s trade secrets shall continue
after the termination of their office. The term for which other obligations shall continue shall
be decided upon in accordance with the principle of fairness, depending on the time lapse
between the termination and the occurrence of the matter as well as the circumstances and
conditions under which the relationship with the Company is terminated.
If a director, supervisor, general manager or other senior officer of the Company has
directly or indirectly been vested a material interest in a contract, transaction or arrangement
concluded or planned by the Company (except for his/her employment contract with the
Company), he/she shall disclose the nature and extent of his/her interest to the Board at the
earliest opportunity, whether or not the matter is normally subject to the approval of the Board.
Except as approved by the Stock Exchange, the director shall not vote on any contract or
arrangement or any other proposed resolution of the Board in which he/she has a material
interest through himself/herself or any of his/her close associates (as defined in the Listing
Rules); nor shall he/she be counted when determining whether a quorum is present at the
meeting, unless otherwise stipulated by the laws, administrative regulations, normative
documents, and securities regulatory authority at the place where the Company’s shares are
listed.
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Unless the interested director, supervisor, general manager or other senior officer of the
Company has disclosed such interest to the Board as required under the preceding paragraphs
of this Article and the matter has been approved by the Board at a meeting in which he/she was
not counted in the quorum and had refrained from voting, the Company shall have the right to
void the contract, transaction or arrangement, except where the other party is a bona fide party
acting without knowledge of the breach of obligation by the director, supervisor, general
manager or other senior officer concerned.
A director, supervisor, general manager and other senior officer of the Company shall be
deemed to have an interest in any contract, transaction or arrangement in which a connected
person of that director, supervisor, president and senior officer has an interest.
18 FINANCIAL AND ACCOUNTING SYSTEMS AND DISTRIBUTION OF PROFITS
The Company shall formulate its own financial and accounting systems in accordance
with the laws, administrative regulations and rules of the relevant authorities of the state. If the
securities regulatory authorities at the place where the Company’s shares are listed stipulate
otherwise, the relevant provisions shall prevail.
The company shall file, disclose and/or submit annual reports, interim reports,
preliminary results announcements and other documents to shareholders in accordance with the
laws and regulations of the place of listing, the listing rules and other regulatory documents of
the stock exchange where the company’s shares are listed.
The reserve fund of the Company shall be used to cover the Company’s losses, expand
its production and operation or to increase its registered capital. However, the capital reserve
fund shall not be used to cover the loss of the Company. The capital reserve fund consists of
the following:
(I) the premium from the issuance of shares in excess of their face value; and
(II) other income to be included in the capital reserve fund as stipulated by the
competent financial department of the State Council.
When the statutory reserve fund is converted into registered capital, the remaining
statutory reserve fund shall be no less than 25% of the registered capital of the Company before
the capital increase.
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19 EMPLOYMENT OF ACCOUNTING FIRMS
The Company shall employ an independent accounting firm that complies with relevant
state regulations to perform audit of the annual financial reports and other financial reports of
the Company.
Employing an accounting firm for the Company shall be decided by the general meeting.
The Board shall not appoint an accounting firm before a general meeting is held. The term of
office of an accounting firm employed by the Company shall be from the end of the current
annual general meeting of the Company until the end of the next annual general meeting.
An accounting firm employed by the Company shall have the following rights:
(I) the right of access at all times to the account books, records or vouchers of the
Company and the right to require the directors, general manager and other senior
officers of the Company to provide relevant information and explanations;
(II) the right to require the Company to take all reasonable measures to obtain from its
subsidiaries the information and explanations necessary for the accounting firm to
perform its duties; and
(III) the right to attend general meetings and to receive a notice or other information
concerning any meeting which any shareholder has a right to receive, and to make
speech at any general meeting on any matter which relates to it as the accounting
firm of the Company.
If the position of accounting firm becomes vacant, the Board may appoint an accounting
firm to fill such vacancy before a general meeting is held, provided that such appointment shall
be confirmed at the next general meeting. However, if there are other accounting firms holding
the position as an accounting firm of the Company while such vacancy still exists, such
accounting firms may continue to act.
20 NOTICE AND ANNOUNCEMENT
The Company’s notices (including but not limited to the notice of the general meetings,
the Board meetings and the meetings of the Board of Supervisors) may be given or provided
in the following means:
(I) by personal delivery;
(II) by fax;
(III) by post;
(IV) by email;
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(V) by announcement;
(VI) by publication in newspaper or other designated media;
(VII) by publishing them on the website of the Company and the website designated by
the stock exchange on which the Company’s shares are listed in accordance with the
laws, administrative regulations, departmental rules, normative documents, and the
Articles of Association; and
(VIII) by other means acceptable to the securities regulatory authorities at the place where
the Company’s shares are listed or stipulated in the Articles of Association.
Giving notices to shareholders with the registered address outside Hong Kong is not
prohibited in the Articles of Association.
If a notice of the Company is sent by way of announcement, once public announcement
is made, it is deemed that all relevant personnel have received the notice. If the securities
regulatory authorities at the place where the Company’s shares are listed stipulate otherwise,
the relevant provisions shall prevail.
Notwithstanding any requirement of the Articles of Association with regard to the
provision or notice form of any document, notice or other corporate communications, the
Company may choose to adopt the form of notice as stipulated under item 7 of paragraph 1 of
this article in substitution for the sending of written materials to the shareholders by way of
personal delivery or by way of prepaid post, provided that relevant regulations of securities
regulatory authority at the place where the Company’s shares are listed have been complied
with. The corporate communications refer to any documents issued or to be issued by the
Company for information or action of shareholders, including but not limited to annual reports
(including annual financial reports), interim reports (including interim financial reports),
reports of the Board (with its balance sheets and income statements), notices of general
meeting, circulars and other communication documents.
The Company issues announcements and information disclosure to shareholders through
the laws, administrative regulations or information disclosure newspapers and websites
designated by the relevant domestic regulatory authorities. If an announcement is to be made
to shareholders under the Articles of Association, such announcement shall also be published
in designated newspapers, websites and/or the website of the Company in accordance with the
method provided for in the Hong Kong Listing Rules. All notices or other documents required
to be lodged with the Stock Exchange under Chapter 13 of the Hong Kong Listing Rules shall
be in English or accompanied by a signed and certified English translation.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-25 –


--- page 599 ---
21 MERGER, DIVISION, CAPITAL INCREASE AND REDUCTION, DISSOLUTION
AND LIQUIDATION
Merger of the Company may take two forms: merger by absorption and merger by new
establishment.
In the case of a merger, parties to the merger shall execute a merger agreement, and shall
prepare the balance sheets and a schedule of assets. The Company shall notify its creditors
within a period of 10 days since the date on which the resolution to proceed with the merger
is passed, and publish announcements on the merger in newspaper within 30 days. The
creditors shall, within 30 days since the date of receiving a written notice or within 45 days
since the date of the first public announcement for those who have not received a written
notice, be entitled to require the Company to pay off its debts in full or to provide a
corresponding guarantee.
In case of decrease of registered capital of the Company, a balance sheet and assets list
shall be formulated. The Company shall notify its creditors within 10 days from the date of
passing of the resolution for the decrease of registered capital and shall publish a notice in a
newspaper within 30 days thereof. The creditors shall, within 30 days since the date of
receiving the notice or within 45 days since the date of the first public announcement for those
who have not received a written notice, be entitled to require the Company to pay off its debts
in full or to provide a corresponding guarantee.
Where the merger or division of the Company results in a change in its registered
particulars, such change shall be registered with the company registry according to law. Where
the Company is dissolved, it shall cancel its registration according to law. Where a new
company is established, its establishment shall be registered according to law.
The Company shall be dissolved if:
(I) business term specified in the Articles of Association expires or other dissolution
reasons as stipulated in the Articles of Association arise;
(II) the general meeting resolves to dissolve the Company;
(III) dissolution is required due to merger or division of the Company;
(IV) the Company is declared bankrupt according to law because it is unable to pay its
debts as they fall due;
(V) the Company is revoked of business license, ordered to close or canceled according
to law; or
(VI) there is severe difficulty in the operation and management of the Company, and the
continued existence of the Company will have material prejudice to the interests of
the shareholders and there is no other way to resolve, shareholders who hold an
aggregate of over 10% of the whole voting rights can make a petition to the People’s
Court to dissolve the Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-26 –


--- page 600 ---
The liquidation committee shall exercise the following functions and powers during
liquidation:
(I) to thoroughly examine the assets of the Company and preparing a balance sheet and
a schedule of assets respectively;
(II) to notify the creditors by a notice or public announcement;
(III) to handle the outstanding business of the Company in connection with liquidation;
(IV) to repay all outstanding tax payment and the tax payment which arise in the course
of the liquidation process;
(V) to clear up claims and debts;
(VI) to deal with the remaining assets after full payment of the Company’s debts; and
(VII) to participate in civil litigation on behalf of the Company.
The liquidation committee shall notify its creditors within a period of 10 days since the
date it is established, and publish relevant announcements on in newspaper at least three times
within 60 days. Creditors shall, within 30 days since the date of receiving the notice, or for
creditors who do not receive the notice, within 45 days since the date of the public
announcement, report their creditors’ rights to the liquidation committee.
After the liquidation committee has thoroughly examined the Company’s assets and
prepared a balance sheet and schedule of assets, it shall formulate a liquidation plan and submit
such plan to the general meeting or the people’s court for confirmation.
The remaining property of the Company after paying the liquidation expenses, wages
owed to employees of the Company, labor insurance fees and statutory compensation,
outstanding taxes and debts of the Company shall be distributed by the class of shares held by
shareholders and in proportion to the number of shares held by shareholders.
During the liquidation period, the Company still exists but shall not carry out any
business activities not related to liquidation. The property of the Company shall not be
distributed to the shareholders until all liabilities have been paid off in accordance with the
preceding paragraph.
Following the completion of liquidation, the liquidation committee shall formulate a
liquidation report, a revenue and expenditure statement and financial account books in respect
of the liquidation period and, after verification thereof by an accountant registered in the PRC,
submit the same to the general meeting or the relevant competent authorities for confirmation.
Within 30 days from the date of confirmation of the above-mentioned documents by the
general meeting or the relevant competent authorities, the liquidation committee shall deliver
the same to the company registry, apply for cancellation of the Company’s registration and
publicly announce the Company’s termination.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-27 –


--- page 601 ---
22 AMENDMENT TO THE ARTICLES OF ASSOCIATION
The Company shall amend the Articles of Association under any of the following
circumstances:
(I) after the Company Law, relevant laws and administrative regulations, or the Hong
Kong Listing Rules are amended, the provisions of the Articles of Association are
in conflict with the provisions of the amended laws or regulations;
(II) there has been a change to the Company, resulting in inconsistency with the contents
in the Articles of Association; and
(III) the general meeting decides to amend the Articles of Association.
Where any amendment to the Articles of Association, as approved by way of a resolution
at the general meeting, is subject to the approval of the relevant administrative authority, it
shall be submitted to the relevant administrative authorities for approval; where the Company’s
registered items are involved, change registration shall be made according to law.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-28 –


--- page 602 ---
1. FURTHER INFORMATION ABOUT OUR COMPANY
A. Incorporation
Our Company was incorporated as a joint stock company with limited liability in the PRC
in May 2015. Our registered address and principal place of business is at 14/F & 15/F, Building
No. 1, Division 1, No. 81 Beiqing Road, Haidian District, Beijing, PRC.
We have established a place of business in Hong Kong at Room 1901, 19/F Lee Garden
One, 33 Hysan Avenue, Causeway Bay, Hong Kong, 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 May 26, 2022 under the English corporate name of “Baiwang Co., Ltd.” and
Chinese corporate name of “ʮ̡”. Mr. Chiu Ming King (ዽ), our joint
company secretary, is the authorized representative of our Company for the acceptance of
service of process and notices on behalf of our Company in Hong Kong under Part 16 of the
Companies Ordinance. The address for service of process on our Company in Hong Kong is
the same as its principal place of business in Hong Kong as set out above.
As our Company was established in the PRC, we are subject to the relevant laws and
regulations of the PRC. An overview of the relevant aspects of laws and regulations of the PRC
is set out in the section headed “Regulatory Overview” in this prospectus. A summary of our
Articles of Association is set out in Appendix III to this prospectus.
B. Changes in the Share Capital of our Company
As of the date of our establishment as a joint stock company with limited liability, our
registered capital was RMB100,000,000 consisting of 100,000,000 issued Domestic Shares
with a nominal value of RMB1.00 each, which has been fully paid up by our promoters.
Immediately following the completion of the Global Offering and the Conversion of
Domestic Shares into H Shares, assuming that th e Over-allotment Option is not exercised, our
registered share capital will be increased to RMB225,906,754, divided into 135,064,706
Domestic Shares and 90,842,048 H Shares, fully paid up or credited as fully paid up,
representing approximately 59.79% and approximately 40.21% of our enlarged share capital,
respectively.
There has been no alteration in the share capital within two years immediately preceding
the date of this prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 603 ---
C. Resolutions Passed by Our Shareholders’ General Meeting in relation to the Global
Offering
At the extraordinary general meeting of the Shareholders held on May 31, 2023, the
following resolutions, among others, were duly passed:
(1) the issue by our Company of H Shares of nominal value of RMB1.00 each and such
H Shares be listed on the Stock Exchange;
(2) the proposed number of H Shares to be offered under the Global Offering and the
grant of the Over-allotment Option. The number of H Shares to be issued pursuant
to the exercise of the Over-allotment Option shall not exceed 15% of the total
number of H Shares to be offered initially pursuant to the Global Offering;
(3) subject to the completion of the Global Offering, the conditional adoption of the
revised Articles of Association, which shall become effective on the Listing Date;
and
(4) authorization of our Board and its authorized persons to handle all matters relating
to, among other things, the Global Offering.
D. Changes in Share Capital of our Subsidiaries
The list of our subsidiaries is set out in Note 44 to the Accountants’ Report, the text of
which is set out in Appendix I to this Prospectus.
Save as disclosed below and in the section headed “History and Corporate Structure—Our
Principal Subsidiary,” there has been no alteration in the share capital of any of our subsidiaries
within the two years preceding the date of this Prospectus.
(1) Beijing Baiwang Jinkong Technology Co, Ltd. (
ʮ̡)
On November 11, 2022, the registered capital of Beijing Baiwang Jinkong
Technology Co., Ltd. was increased from RMB50 million to RMB110 million.
(2) Baiwang Yunfan Management Consulting Co., Ltd. (ʮ̡)
On January 12, 2023, Baiwang Y unfan Management Consulting Co., Ltd. was
incorporated as a company with limited liability under the PRC laws, with a registered
capital of RMB50.0 million.
(3) Henan Baiwang Enterprise Service Digital Technology Co., Ltd. (
ᅰ
ʮ̡)
On February 27, 2023, Henan Baiwang Enterprise Service Digital Technology Co.,
Ltd. was incorporated as a company with limited liability under the PRC laws, with a
registered capital of RMB10.0 million.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 604 ---
(4) Anhui Zhishuiyun Technology Co., Ltd. (ʮ̡)
On March 22, 2023, Anhui Zhishuiyun Technology Co., Ltd. was incorporated as a
company with limited liability under the PRC laws, with a registered capital of RMB5.0
million.
(5) Hangzhou Baiwangyun Technology Co., Ltd. (
ʮ̡)
On April 13, 2023, Hangzhou Baiwangyun Technology Co., Ltd. was incorporated
as a company with limited liability under the PRC laws, with a registered capital of
RMB10.0 million.
(6) Hangzhou Baishangyun Technology Co., Ltd. (
ʮ̡)
On April 14, 2023, Hangzhou Baishangyun Technology Co., Ltd. was incorporated
as a company with limited liability under the PRC laws, with a registered capital of
RMB2.0 million.
E. Restriction on Share Repurchases
For details of the restrictions on share repurchases by our Company, see the section
headed “Appendix III—Summary of Articles of Association” in this prospectus.
2. FURTHER INFORMATION ABOUT OUR BUSINESS
A. Summary of Our Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within the two years immediately preceding the date of this
prospectus that are or may be material:
(1) the cornerstone investment agreement dated June 26, 2024 entered into among our
Company, Jiangsu Y uanli Industrial Investment Co., Ltd. (ʮ
̡), Zhonghai Trust Co., Ltd. (on behalf of “Zhonghai Y uanli QDII Single Fund
Trust”) (ʮ̡(ڌ“ɢQDIIৄ”)), Haitong
International Capital Limited and Haitong International Securities Company
Limited, pursuant to which Jiangsu Y uanli Industrial Investment Co., Ltd. agreed to
subscribe for the Offer Shares at the Offer Price through Zhonghai Trust Co., Ltd.
(on behalf of “Zhonghai Y uanli QDII Single Fund Trust”) in the aggregate amount
of HK$260.0 million; and
(2) the Hong Kong Underwriting Agreement.
B. Our Intellectual Property Rights
As of the Latest Practicable Date, our Company had registered, or has applied for the
registration of the following intellectual property rights which were material to our Group’s
business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 605 ---
Trademarks
As of the Latest Practicable Date, we had registered the following trademarks which we
considered to be material to our business:
No. Trade Mark Class Owner
Place of
Registration Registration No. Validity Period
1. 42 Our Company PRC 43413634 From July 7, 2021 to
July 6, 2031
2. 38 Our Company PRC 43387680 From July 7, 2021 to
July 6, 2031
3. 9 Our Company PRC 43386745 From October 28,
2021 to
October 27, 2031
4.
35 Our Company PRC 22721873 From February 21,
2018 to
February 20, 2028
5.
9, 35,
36, 42
Our Company Hong Kong 305852502 From January 7,
2022 to January 6,
2032
Patent
As of the Latest Practicable Date, we had registered the following patents which we
considered to be material to our business:
No. Owner Description Patent No. Types of Patents Application Date
Authorization
announcement
Date
1. Our Company A graphical user interface
of electronic invoice
reader for computers ( ͜
ཥɿ೯ୃቡᛘኜ
ࠦޢ)
202030633285.9 Design Patent October 16, 2020 June 29, 2021
2. Our Company A remote monitoring
method based on Cloud
Computing (ථ
ج)
201810175136.4 Invention Patent June 27, 2016 September 22,
2020
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 606 ---
No. Owner Description Patent No. Types of Patents Application Date
Authorization
announcement
Date
3. Our Company An enterprise tax risk
monitoring and analysis
system based on big
data (ٙ
ӻ
୕)
201910724074.2 Invention Patent August 7, 2019 September 22,
2020
4. Our Company A rotation method and
system for neutral nodes
in blockchain system ( ͜
ʕͭື
ʿӻ୕)
201911215789.1 Invention Patent December 2, 2019 October 30, 2020
5. Our Company A database security
guarantee system and
method based on big
data (ᅰኽ
ج)
201911405645.2 Invention Patent December 31,
2019
November 3,
2020
Domain Name
As of the Latest Practicable Date, we had registered the following domain name which we
considered to be material to our business:
No. Domain Name
Name of Registered
Proprietor Validity Period
1. http://www.baiwang.com/ Our Company From January 16, 2004
to January 16, 2025
Software copyright
As of the Latest Practicable Date, we had registered the following software copyright
which we considered to be material to our business:
No. Software Name Owner Registration No. Registration Date
1. Baiwang risk control SaaS cloud
platform V1.0 (છSaaS ථ̻
̨V1.0)
Our Company 2020SR1500349 September 14, 2020
2. Intelligent decision-making platform
V1.0 ( ౽ᅆӔഄ̨̻V1.0)
Our Company 2020SR1548838 November 6, 2020
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 607 ---
No. Software Name Owner Registration No. Registration Date
3. Baiwang supply chain collaboration
platform V2.0 ( ϵૐԶᏐᗡ՘Ν̻
̨V2.0)
Our Company 2021SR0274780 February 22, 2021
4. Baiwang green page electronic
invoice support platform V1.0 ( ϵ
ཥɿୃኽ˕ᅟ̨̻V1.0)
Our Company 2021SR0368655 March 10, 2021
5. Digital invoice center blockchain
platform V1.0 ( ᅰοʷୃኽʕːਜ
෯ᗡ̨̻V1.0)
Our Company 2021SR0929950 June 22, 2021
3. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUPERVISORS
A. Particulars of Directors’ and Supervisors’ Contracts
Each of our Directors and Supervisors has entered into a service contract with our
Company. Each service contract is for an initial term of three years. The service contracts may
be renewed in accordance with the Articles and the applicable laws, rules and regulations.
Save as disclosed above, none of the Directors or Supervisors has or is proposed to enter
into a service contract with any member of our Group, other than contracts expiring or
determinable by the relevant employer within one year without the payment of compensation
(other than statutory compensation).
B. Remuneration of Directors and Supervisors
See “Directors, Supervisors and Senior Management” and Note 18 to the Accountants’
Report in Appendix I to this prospectus for the remuneration or benefits in kind paid to our
Directors and Supervisors for each of the three years ended December 31, 2023.
During the Track Record Period, no fees were paid by our Group to any of the Directors
or the five highest paid individuals as an inducement to join us or as compensation for loss of
office.
C. Share Incentive Scheme
The following is a summary of the principal terms of the share incentive scheme (the
“Share Incentive Scheme”) adopted by us on January 31, 2021. Under the Share Incentive
Scheme, eligible participants are granted partnership interest (the “Restricted Shares”) in our
share incentive platforms as listed in the next paragraph. The Share Incentive Scheme does not
involve the grant of options by our Company to subscribe for new Shares.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 608 ---
As at the Latest Practicable Date, Tianjin Duoying and Ningbo Xiu’an subscribed for
14,922,174 Shares and 20,000,000 Shares, respectively, representing 6.89% and 9.23% of our
total issued share capital. As of the Latest Practicable Date, (i) Tianjin Shuitong, Tianjin
Piaoying, Tianjin Piaowang and Tianjin Piaofu, as the indirect shareholding platforms,
subscribed for 19.00%, 43.16%, 9.38% and 9.58% of the partnership interest in Tianjin
Duoying, respectively; and (ii) Tianjin Piaoxiang and Tianjin Piaohui, as the indirect
shareholding platforms, subscribed for 20.00% and 10.00% of the partnership interest in
Ningbo Xiu’an, respectively. For details of the share incentive platforms and the Restricted
Shares granted to our Directors, Supervisors, senior management, other connected persons of
our Company and other Grantees (as defined below) as at Latest Practicable Date, please refer
to “History and Corporate Structure—Share Incentive Platforms.”
Purpose
The purpose of the Share Incentive Scheme is to build an incentive mechanism for the
management, core employees and other personnel of our Group and foster shared interests
among them and our Shareholders, thereby promoting the growth of our Group’s long-term
performance.
Eligible participants
The eligible participants of the Share Incentive Scheme include our senior and middle
level management team, core technical and business personnel and other employees or external
consultants who have made contributions to our Group (the “Grantees”).
Type of awards
The Grantees are granted the Restricted Shares, being the limited partnership interest in
our Share Incentive Platforms, and are each registered as a limited partner of our share
incentive platforms upon grant of the Restricted Shares. Share Incentive Scheme provides for
awards of indirect interests in the share capital of our Company by allowing the Grantees to
be registered as limited partners of the share incentive platforms and indirectly receive
economic interest in the pro rata portion of the underlying Shares held by the share incentive
platforms.
Subscription Price
The price of subscription for the relevant limited partnership interest in the share
incentive platforms is RMB1.23 per underlying Share or RMB2.51 per underlying Share,
depending on the contribution and length of service of the participants.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 609 ---
Term
The Share Incentive Scheme shall be valid and effective commencing on the date of its
adoption until the date when all the Restricted Shares granted to the Grantees have been
disposed, repurchased or cancelled, or its tenth anniversary, whichever is earlier. No new
Restricted Share will be granted after the Listing.
Administration of the Share Incentive Scheme
The general manager of our Company has been authorized by the Board to act as the
administrator of the Share Incentive Scheme, and has the authority to, among others, determine
the eligible participants of the scheme and their respective number of Restricted Shares to be
granted, the circumstances where the Grantees may exit the scheme, and to approve the grant,
transfer and disposal of the Restricted Shares to the Grantees.
Lock-up on Restricted Shares
The Restricted Shares granted are subject to the lock-up in the following manner:
For the Grantees who joined our Group on or before December 31, 2020
Tranche Lock-up Period
50% of the Restricted Shares so granted from the date of grant to one year after the
Listing
25% of the Restricted Shares so granted from the date of grant to two years after the
Listing
25% of the Restricted Shares so granted from the date of grant to three years after
the Listing
For the Grantees who joined our Group after December 31, 2020
Tranche Lock-up Period
20% of the Restricted Shares so granted from the date of grant to one year after the
Listing
20% of the Restricted Shares so granted from the date of grant to two years after the
Listing
30% of the Restricted Shares so granted from the date of grant to three years after
the Listing
30% of the Restricted Shares so granted from the date of grant to four years after the
Listing
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 610 ---
After the lock-up period, the Grantees may realize the economic benefits attaching to the
Restricted Shares by requesting the relevant share incentive platform to sell the underlying
Shares in the open market and distribute the sale proceeds to the relevant Grantees in
accordance with the exit mechanism under the Share Incentive Scheme. In the event that the
corresponding Grantee departures from the Group or exits the Share Incentive Scheme before
the lock-up period expires, such Restricted Shares shall be repurchased by Ms. Chen or other
eligible participants designated by Ms. Chen or sold by the relevant share incentive platform
if so agreed by Ms. Chen.
4. DISCLOSURE OF INTERESTS
A. Disclosure of Interests of Directors and Supervisors
Save as disclosed below, immediately following the completion of the Global Offering
and the Conversion of Domestic Shares into H Shares (assuming that the Over-allotment
Option is not exercised), none of our Directors or Supervisors has any interest and/or short
position in the Shares, underlying Shares and debentures of our Company or our 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 interest or short position 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 Issuers as set out in Appendix C3 to
the Listing Rules to be notified to our Company, once the H Shares are listed on the Stock
Exchange.
As of the
Latest Practicable Date
Immediately following the completion of the Global Offering
and the Conversion of Domestic Shares into H Shares
(assuming the Over-allotment Option is not exercised)
Name of
Director
Our Company/
associated
corporation
Capacity/
nature of
interest
Number of
Domestic
Shares
Approximate
percentage of
shareholding
in the total
issued share
capital of our
Company
Number of
Shares
Description
of Shares
(1)
Approximate
percentage of
shareholding in
our Domestic
Shares/
H Shares (as
appropriate) (1)
Approximate
percentage of
shareholding
in the total
issued share
capital of our
Company
Ms. Chen (2) Our Company Beneficial
owner,
interest in
controlled
corporation
93,622,174 43.22% 83,145,522
10,476,652
Domestic
Shares
H Shares
61.56%
11.53%
36.81%
4.64%
Mr. Huang Miao
(ර↿)
Our Company Beneficial
owner
45,215 0.02% 45,215 Domestic
Shares
0.03% 0.02%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 611 ---
(1) For the avoidance of doubt, both Domestic Shares and H Shares are ordinary Shares in the share capital
of our Company, and are considered as one class of Shares.
(2) As of the Latest Practicable Date, Ms. Chen (i) acted as the general partner of Ningbo Xiu’an; and (ii)
acted as the general partner of Tianjin Duoying and Tianjin Piaoying, the latter of which was a limited
partner holding 43.16% of the partnership interest in Tianjin Duoying. Under the SFO, Ms. Chen is
deemed to be interested in the entire Shares held by Ningbo Xiu’an and Tianjin Duoying.
Save as disclosed in this prospectus, up to the Latest Practicable Date, none of the
Directors or Supervisors or their respective spouses and children under 18 years of age had
been granted by our Company or had exercised any rights to subscribe for shares or debentures
of our Company or any of its associated corporations.
B. Substantial Shareholders
Save as disclosed below and in the section headed “Substantial Shareholders” in this
prospectus, our Directors, Supervisors or chief executive are not aware of any other person, not
being a Director, Supervisor or chief executive of our Company, who has an interest or short
position in the Shares and underlying Shares of our Company, which following the completion
of the Global Offering and the Conversion of Domestic Shares into H Shares, would fall to be
disclosed to our Company under the provisions of Divisions 2 an 3 of Part XV of the SFO, or
who is, directly or indirectly, interested in 10% or more of the issued voting Shares of our
Company or any member of our Group.
Interests in other members of our Group
Name of our
subsidiary
Name of interested
party
Capacity/
Nature of interest
Approximate
percentage of
shareholding
Baiwang Tradelift
(Suzhou) Software
Co., Ltd. (֝
(ᘽψ)ʮ̡)
Shanghai Yiqin
Software Co., Ltd.
(ࠢ
ʮ̡)
Beneficial owner 15%
Hangzhou
Baishangyun
Technology
Co., Ltd. (ψϵਠ
ʮ̡)
China Industry and
Commerce Press
Co., Ltd. ( ʕ਷ʈਠ
ʮ̡)
Beneficial Owner 20%
Baiwang Y unfan
Management
Consulting
Co., Ltd. ( ϵૐථω
ʮ̡)
Beijing Hongfan
Enterprise
Consulting Co., Ltd.
(̏ԯ̾ωΆุፔ༔
ʮ̡)
Beneficial Owner 49%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 612 ---
C. Disclaimers
Save as disclosed in this prospectus:
(1) none of our Directors or Supervisors 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;
(2) none of our Directors or Supervisors is materially interested 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; and
(3) so far as is known to our Directors, none of our Directors, Supervisors, 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.
5. OTHER INFORMATION
A. Estate Duty
Our Directors have been advised that no material liability for estate duty under the PRC
laws is likely to fall on our Company or its subsidiaries.
B. Litigation
As of the Latest Practicable Date, no member of our Group was engaged in any
outstanding material litigation or arbitration which may have material and adverse effect on the
Global Offering and, so far as our Directors are aware, no litigation or claim of material
importance is pending or threatened by or against any member of our Group.
C. Sole Sponsor
The Sole Sponsor has made an application on our behalf to the Listing Committee for the
listing of, and permission to deal in, our H Shares. The Sole Sponsor satisfies the independence
criteria applicable to sponsors set out in Rule 3A.07 of the Listing Rules.
The Sole Sponsor will be paid by our Company a fee of US$800,000 to act as a sponsor
in connection with the Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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D. Compliance Advisor
Our Company has appointed Guotai Junan Capital Limited as the compliance advisor
upon the Listing in compliance with Rule 3A.19 of the Listing Rules.
E. Preliminary Expenses
We have not incurred any material preliminary expenses.
F. Promoters
See “History and Corporate Structure—Our Company—Incorporation of our Company”
for details of our promoters.
Save as disclosed in this prospectus, within the two years immediately preceding the date
of this prospectus, no cash, securities or other benefit has been paid, allotted or given nor is
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.
G. Qualification of Experts
The qualifications of the experts, as defined under the Listing Rules, who have given
opinions in this prospectus, are as follows:
Name Qualification
Haitong International Capital
Limited
Licensed corporation under the SFO for type 6
(advising on corporate finance) of the regulated
activities as defined under the SFO
Deloitte Touche Tohmatsu Certified public accountants and public interest
entity auditors
Tian Y uan Law Firm PRC Legal Advisor
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Independent industry consultant
H. Consents of Experts
Each of the experts named in “5. Other Information—G. Qualification of Experts” above
has given and has not withdrawn its 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.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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As of the Latest Practicable Date, none of the experts named above had any shareholding
interests in any member of our Group or the right (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe.
I. Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares are subject to Hong Kong stamp duty if such
sale, purchase and transfer is effected on the H Share register of members of our Company,
including in circumstances where such transaction is effect on the Stock Exchange. For further
information in relation to taxation, see “Regulatory Overview”.
J. Material and Adverse Change
Our Directors confirm that save as disclosed in “Summary—Recent Developments and
Material Adverse Change—Operational and Financial Performance” in the prospectus, there
has been no material and adverse change in the financial or trading position of our Group since
December 31, 2023.
K. Binding Effect
This prospectus shall have the effect, if an application is made in pursuant hereof, of
rendering all persons concerned bound by all the provisions (other than the penal provisions)
of sections 44A and 44B of the Hong Kong Companies (Winding Up and Miscellaneous
Provisions) Ordinance so far as applicable.
L. Related Party Transactions
Our Group entered into certain related party transactions within the two years
immediately preceding the date of this prospectus as mentioned in Note 42 to the Accountants’
Report in Appendix I to this prospectus.
M. Restriction on Share Repurchases
See Appendix III to this prospectus for details.
N. Miscellaneous
Save as disclosed in this prospectus:
(1) within the two years immediately preceding the date of this prospectus:
(i) save as disclosed in this prospectus, no share or loan capital of our Group 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;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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(ii) no share or loan capital of our Group is under option or is agreed conditionally
or unconditionally to be put under option;
(iii) save as disclosed in the section headed “Underwriting,” no commissions,
discounts, brokerages or other special terms have been granted or agreed to be
granted in connection with the issue or sale of any share of our Group; and
(iv) save as disclosed in the section headed “Underwriting,” no commission has
been paid or is payable for subscription, agreeing to subscribe, procuring
subscription or agreeing to procure subscription for any share in or debentures
of our Company;
(2) there are no founder, management or deferred shares or any debentures in our
Group;
(3) 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;
(4) our Company has no outstanding convertible debt securities or debentures;
(5) there is no arrangement under which future dividends are waived or agreed to be
waived;
(6) save as disclosed in the section headed “History and Corporate Structure”, none of
our equity and debt securities is listed or dealt with in any other stock exchange nor
is any listing or permission to deal being or proposed to be sought;
(7) all necessary arrangements have been made to enable the H shares to be admitted
into CCASS for clearing and settlement; and
(8) no company within our Group is presently listed on any stock exchange or traded on
any trading system.
O. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately, in reliance upon the exemption 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
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1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG
KONG
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(1) copies of material contracts referred to in “2. Further Information about Our
Business—A. Summary of Our Material Contracts” in Appendix IV; and
(2) the written consents referred to in “5. Other information—H. Consents of Experts”
in Appendix IV .
2. DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the website of our
Company at www.baiwang.com and on the website of the Stock Exchange at
www.hkexnews.hk up to and including the date which is 14 days from the date of this
document:
(1) the Articles of Association;
(2) the Accountants’ Report from Deloitte Touche Tohmatsu, the text of which is set out
in Appendix I;
(3) the audited consolidated financial statements of our Group for the three years ended
December 31, 2023;
(4) the report from Deloitte Touche Tohmatsu relating to the unaudited pro forma
financial information, the text of which is set out in Appendix II;
(5) the material contract referred to in “2. Further Information about Our
Business—A. Summary of Our Material Contract” in Appendix IV;
(6) the written consents referred to in “5. Other information—H. Consents of Experts”
in Appendix IV;
(7) the contracts referred to in “3. Further Information about Our Directors and
Supervisors—A. Particulars of Directors’ and Supervisors’ Contracts” in Appendix
IV;
(8) the legal opinions issued by Tian Y uan Law Firm, our PRC Legal Advisor, in respect
of certain general corporate matters and our Group’s business operations in the PRC;
(9) the PRC Company Law, the PRC Securities Law and the Trial Administrative
Measures of Overseas Securities Offering and Listing by Domestic Companies ( ྤ
جtogether with their unofficial English
translations; and
(10) the industry report issued by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
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