--- page 1 ---
Stock Code : 9660
(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
Horizon Robotics
GLOBAL OFFERING
Joint Sponsors, Joint Sponsor-Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and Joint Lead Manager
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunner and Joint Lead Manager
Joint Lead Managers


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IMPORTANT: If you are in any doubt about any of the contents of this Prospectus, you should seek independent professional advice.
Horizon Robotics
ή̻㝬 *
(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the
Global Offering
: 1,355,106,600 Offer Shares (subject to the
Over-allotment Option)
Number of Hong Kong Offer Shares : 135,511,200 Offer Shares (subject to
reallocation)
Number of International Offer Shares : 1,219,595,400 Offer Shares (subject to
reallocation and the Over-allotment
Option)
Maximum Offer Price : HK$3.99 per Offer Share, plus brokerage
of 1%, SFC transaction levy of 0.0027%,
Stock Exchange trading fee of 0.00565%
and AFRC transaction levy of 0.00015%
(payable in full on application in Hong
Kong dollars and subject to refund)
Nominal value : US$0.0000025 per Offer Share
Stock code : 9660
Joint Sponsors, Joint Sponsor-Overall Coordinators, Joint Global Coordinators,
Joint Bookrunners and Joint Lead Managers
Overall Coordinator, Joint Global Coordinator, Joint Bookrunner and
Joint Lead Manager
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunner and Joint Lead Manager
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 howsoever 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 the section headed “Appendix V — Documents Delivered to the Registrar of Companies and Available on Display”, has been registered
by the Registrar of Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 3 2 of the Laws of Hong Kong). The Securities and Futures
Commission and the Registrar of Companies in Hong Kong take no responsibility for the contents of this Prospectus or any other document referred to abo ve.
The final Offer Price is expected to be fixed by agreement between the Overall Coordinators (for themselves and on behalf of the Underwriters) and the C ompany on the Price Determination Date, which is expected
to be on or around Tuesday, October 22, 2024. The Offer Price will be not more than HK$3.99 per Offer Share and is currently expected to be not less than HK$ 3.73 per Offer Share unless otherwise announced.
If, for any reason, the final Offer Price is not agreed by 12:00 noon on Tuesday, October 22, 2024 between the Overall Coordinators (for themselves and o n behalf of the Underwriters) and the Company, the Global
Offering will not proceed and will lapse.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws of the United States and may not be off ered, sold, pledged, or transferred within the United States, except that
Offer Shares may be offered, sold or delivered to QIBs in reliance on an exemption from registration under the U.S. Securities Act provided by, and in ac cordance with the restrictions of, Rule 144A or another exemption from
the registration requirements of the U.S. Securities Act. The Offer Shares may be offered, sold or delivered outside of the United States in offshore t ransactions in accordance with Regulation S.
Applicants for Hong Kong Offer Shares may be required to pay, on application (subject to application channels), the Offer Price of HK$3.99 for each Hon g Kong Offer Share together with a brokerage fee of 1%,
a SFC transaction levy of 0.0027%, Stock Exchange trading fee of 0.00565% and AFRC transaction levy of 0.00015%.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this Prospectus, includin g the risk factors set out in the section headed “Risk Factors”.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall Coordinators (for themselves and on behalf of the Hong Kong Underwriters)
if certain grounds arise prior to 8:00 a.m. on the Listing Date. See “Underwriting — Underwriting Arrangements and Expenses — Hong Kong Public Offerin g — Grounds for Termination”.
Our Company will be controlled through weighted voting rights upon Listing. Prospective investors should be aware of the potential risks of investin g in a company with a WVR structure, in particular that the WVR
Beneficiaries, whose interests may not necessarily be aligned with those of our Shareholders as a whole, will be in a position to exert significant inf luence over the outcome of our Shareholders’ resolutions, irrespective
of how other Shareholders vote. For further information about the risks associated with the WVR structure, see “Risk Factors — Risks Related to the WVR Structure”. Prospective investors should make the decision
to in our Company only after due and careful consideration.
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 https://www.horizon.auto. If you require a pr inted copy of this prospectus, you may download
and print from the website addresses above.
* for identification purpose only
IMPORTANT
October 16, 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 “HKEXnews > New Listings > New Listing Information,”
and our website at https://www.horizon.auto . 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 use one of the following
application channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White Form
service /H1118/H1118/H1118/H1118/H1118
www.hkeipo.hk
Investors who would like
to receive a physical
Share certificate. Hong
Kong Offer Shares
successfully applied for
will be allotted and
issued in your own
name.
From 9:00 a.m. on
Wednesday, October 16,
2024 to 11:30 a.m. on
Monday, October 21,
2024, Hong Kong time.
The latest time for
completing full payment
of application monies
will be 12:00 noon on
Monday, October 21,
2024, Hong Kong time.
HKSCC EIPO
channel /H1118/H1118/H1118/H1118
Your 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.
Investors who would not
like to receive a physical
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.
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.
IMPORTANT
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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.
Your application through the HK eIPO White Form service or the HKSCC EIPO
channel must be for a minimum of 600 Hong Kong Offer Shares and in one of the
numbers set out in the table below. If you are applying through the HK eIPO White
Form service, you may refer to the table below for the amount payable for the number
of Shares you have selected. You must pay the respective maximum amount payable on
application in full upon application for Hong Kong Offer Shares. 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.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
600 2,418.14 18,000 72,544.31 300,000 1,209,071.75 9,000,000 36,272,152.36
1,200 4,836.29 21,000 84,635.02 450,000 1,813,607.62 10,500,000 42,317,511.08
1,800 7,254.43 24,000 96,725.74 600,000 2,418,143.49 12,000,000 48,362,869.80
2,400 9,672.57 27,000 108,816.46 750,000 3,022,679.37 13,500,000 54,408,228.53
3,000 12,090.72 30,000 120,907.17 900,000 3,627,215.24 15,000,000 60,453,587.26
3,600 14,508.86 45,000 181,360.76 1,050,000 4,231,751.11 30,000,000 120,907,174.50
4,200 16,927.01 60,000 241,814.35 1,200,000 4,836,286.98 45,000,000 181,360,761.76
4,800 19,345.15 75,000 302,267.94 1,350,000 5,440,822.86 60,000,000 241,814,349.00
5,400 21,763.29 90,000 362,721.53 1,500,000 6,045,358.73 67,755,600
(1) 273,071,271.75
6,000 24,181.44 105,000 423,175.11 3,000,000 12,090,717.46
9,000 36,272.15 120,000 483,628.70 4,500,000 18,136,076.18
12,000 48,362.87 135,000 544,082.28 6,000,000 24,181,434.90
15,000 60,453.59 150,000 604,535.88 7,500,000 30,226,793.63
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong
Offer Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for
applications made through the application channel of the HK eIPO White Form Service Provider)
while the SFC transaction levy, the Stock Exchange trading fee and the AFRC transaction levy will be
paid to the SFC, the Stock Exchange 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, we will issue an
announcement to be published on the websites of the Company at
https://www.horizon.auto and the Hong Kong Stock Exchange at www.hkexnews.hk .
Date(1)
Hong Kong Public Offering commences .................... .9:00 a.m. on Wednesday,
October 16, 2024
Latest time for completing electronic applications
under the HK eIPO White Form service
through the designated website www.hkeipo.hk (2) ............. 1 1:30 a.m. on Monday,
October 21, 2024
Application lists open (3) ................................... 1 1:45 a.m. on Monday,
October 21, 2024
Latest time for (a) completing payment for
HK eIPO White Form applications by
effecting internet banking transfer(s) or
PPS payment transfer(s) and (b) giving
electronic application instructions to HKSCC
(4) .............. 12:00 noon on Monday,
October 21, 2024
If you are instructing your broker or custodian who is a HKSCC Participant to submit
an EIPO application on your behalf through HKSCC’s FINI system to apply for the Hong Kong
Offer Shares, 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 Monday,
October 21, 2024
Expected Price Determination Date (5) .....................T uesday, October 22, 2024
(1) Announcement 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 allocation of the Hong Kong
Offer Shares on our website at https://www.horizon.auto
(6)
and the website of the Hong Kong Stock
Exchange at www.hkexnews.hk on or before ............1 1:00 p.m. on Wednesday,
October 23, 2024
EXPECTED TIMETABLE
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(2) 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 Hong Kong Stock Exchange at
https://www.horizon.auto
(6) and www.hkexnews.hk ,
respectively ...............................W ednesday, October 23, 2024
 from the “Allotment Results” page in
the designated results of allocations
website at www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result ) with a “search
by ID” function on a 24-hour basis from ............ 1 1:00 p.m. on Wednesday,
October 23, 2024 to
12:00 midnight on Tuesday,
October 29, 2024
 From the allocation results telephone
enquiry line by calling +852 3691 8488
between 9:00 a.m. and 6:00 p.m. from ........... Thursday, October 24, 2024
to Tuesday, October 29, 2024
(excluding Saturday, Sunday and
public holiday in Hong Kong)
Share certificates in respect of wholly or partially
successful applications to be dispatched or
deposited into CCASS on or before
(7)(9) ...............W ednesday, October 23, 2024
HK eIPO White Form e-Auto Refund payment
instructions/refund checks in respect of wholly
or partially successful applications (if applicable) or
wholly or partially unsuccessful applications to
be dispatched on or before
(8)(9) ....................... Thursday, October 24, 2024
Dealings in the Class B Ordinary Shares on the
Hong Kong Stock Exchange expected
to commence ....................................... a t 9:00 a.m. on Thursday,
October 24, 2024
EXPECTED TIMETABLE
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Notes:
(1) All times refer to Hong Kong local time, except as otherwise stated.
(2) You will not be permitted to submit your application through the designated website at www.hkeipo.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 at or before 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 tropical cyclone warning signal number 8 or above, a “black” rainstorm warning and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Monday, October
21, 2024, the application lists will not open or close on that day. See “How to Apply for Hong Kong Offer
Shares — E. Bad Weather Arrangements” in this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by instructing your broker or custodian to submit an EIPO
application on your behalf through HKSCC’s FINI system in accordance with your instruction should refer to
the section headed “How to Apply for Hong Kong Offer Shares — A. Application for Hong Kong Offer Shares
— 2. Application Channels” in this prospectus.
(5) The Price Determination Date is expected to be on or around Tuesday, October 22, 2024. If, for any reason,
we do not agree with the Overall Coordinators (on behalf of the Underwriters) on the pricing of the Offer
Shares by 12:00 noon on Tuesday, October 22, 2024, the Global Offering will not proceed and will lapse.
(6) None of the websites set out in this section or any of the information contained on the websites forms part of
this prospectus.
(7) 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 the section headed “Underwriting —
Underwriting Arrangements and Expenses — Hong Kong Public Offering — Grounds for Termination” in this
prospectus has not been exercised. Investors who trade Shares on the basis of publicly available allocation
details or prior to the receipt of Share certificates or the Share certificates becoming valid do so entirely at their
own risk.
(8) e-Auto Refund payment instructions/refund checks will be issued in respect of wholly or partially unsuccessful
applications pursuant to the Hong Kong Public Offering and also in respect of wholly or partially successful
applications in the event that the final Public Offer Price is less than the price payable per Offer Share on
application. Part of the applicant’s identification document number, or, if the application is made by joint
applicants, part of the identification document 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.
(9) Applicants who have applied through the HK eIPO White Form service for 1,000,000 or more Hong Kong
Offer Shares may collect any Share certificates in person from our Hong Kong Share Registrar, Tricor Investor
Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong from 9:00 a.m. to 1:00 p.m.
on Thursday, October 24, 2024 or such other date as notified by us as the date of dispatch/collection of Share
certificates/e-Auto Refund payment instructions/refund checks. Applicants being individuals who are eligible
for personal collection may not authorize any other person to collect on their behalf. If you are a corporate
applicant which is eligible for personal collection, your authorized representative must bear a letter of
authorization from your corporation stamped with your corporation’s chop. Both individuals and authorized
representatives must produce evidence of identity acceptable to our Hong Kong Share Registrar at the time of
collection.
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. Despatch/Collection of Share Certificates and
Refund of Application Monies” in this prospectus for details.
EXPECTED TIMETABLE
–v i–


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Applicants who have applied through the HK eIPO White Form 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-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form 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 in favor of the
applicant (or, in the case of joint applicants, the first-named applicant) by ordinary post at their own risk.
Share certificates and/or refund checks for applicants who have applied for less than 1,000,000 Hong Kong
Offer Shares and any uncollected Share certificates and/or refund checks will be dispatched by ordinary post,
at the applicants’ risk, to the addresses specified in the relevant applications.
Further information is set out in the sections headed “How to Apply for Hong Kong Offer Shares — D.
Despatch/Collection of Share Certificates and Refund of Application Monies” in this prospectus.
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 refer to 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 a case, we will make an announcement
as soon as practicable thereafter.
EXPECTED TIMETABLE
– vii –


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IMPORTANT NOTICE TO INVESTORS
This Prospectus is issued by us solely in connection with the Hong Kong Public
Offering and does not constitute an offer to sell or a solicitation of an offer to buy any
security other than the Hong Kong Offer Shares offered by this Prospectus pursuant to
the Hong Kong Public Offering. This Prospectus may not be used for the purpose of, and
does not constitute, an offer or a solicitation of an offer to subscribe for or buy, any
security 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 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 the 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. 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 Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, any of the Underwriters, any of our or their
respective directors, officers or representatives, or any other person or party involved in
the Global Offering.
Page
EXPECTED TIMETABLE ............................................ i v
CONTENTS ....................................................... viii
SUMMARY ....................................................... 1
DEFINITIONS ..................................................... 3 3
GLOSSARY OF TECHNICAL TERMS ................................. 4 7
FORW ARD-LOOKING STATEMENTS ................................. 5 1
RISK FACTORS ................................................... 5 3
W AIVERS AND EXEMPTION ........................................ 1 2 9
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL
OFFERING ...................................................... 1 4 4
CONTENTS
– viii –


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DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING ..... 1 4 9
CORPORATE INFORMATION ....................................... 1 6 0
INDUSTRY OVERVIEW ............................................. 1 6 3
REGULATORY OVERVIEW ......................................... 1 8 3
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE .......... 2 1 1
BUSINESS ........................................................ 2 4 2
DIRECTORS AND SENIOR MANAGEMENT ............................ 3 1 8
CORNERSTONE INVESTORS ........................................ 3 3 6
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS ........... 3 4 2
CONNECTED TRANSACTIONS ...................................... 3 4 6
SUBSTANTIAL SHAREHOLDERS ..................................... 3 5 1
SHARE CAPITAL .................................................. 3 5 8
FINANCIAL INFORMATION ......................................... 3 7 2
FUTURE PLANS AND USE OF PROCEEDS ............................. 4 6 4
UNDERWRITING .................................................. 4 6 9
STRUCTURE OF THE GLOBAL OFFERING ............................ 4 8 5
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 9 6
APPENDIX I ACCOUNTANT’S REPORT ............................ I - 1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . II-1
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W ............. III-1
APPENDIX IV STATUTORY AND GENERAL INFORMATION ............ I V - 1
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND A V AILABLE ON DISPLAY ........... V - 1
CONTENTS
–i x–


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This summary aims to give you an overview of the information contained in this
Prospectus. As this is a summary, it does not contain all the information that may be
important to you. You should read the entire Prospectus before you decide to invest in our
Class B Ordinary Shares. There are risks associated with any investment. Some of the
particular risks in investing in our Shares are set out in the section headed “Risk
Factors” in this Prospectus. You should read that section carefully before you decide to
invest in our Class B Ordinary Shares. V arious expressions used in this section are
defined in the sections headed “Definitions” and “Glossary of Technical Terms” in this
Prospectus.
OVERVIEW
We are a leading provider of advanced driver assistance systems (“ADAS”) and
autonomous driving (“AD”) solutions for passenger vehicles, empowered by our proprietary
software and hardware technologies. Our solutions combine algorithms, purpose-built software
and processing hardware, providing the core technologies for assisted and autonomous driving
that enhance the safety and experience of drivers and passengers. We are a key enabler for the
smart vehicle transformation and commercialization with our integrated solutions deployed on
mass scale. We are the first and have consistently been the largest Chinese company providing
integrated ADAS and AD solutions in terms of overall solution installation volume since the
mass deployment of our solutions in 2021, according to CIC. We ranked the fourth among all
global ADAS and AD solution providers in China by overall solution installation volume in
2023 and the first half of 2024, with a market share of 9.3% and 15.4%, respectively. We act
as a tier-two supplier and have a large, global customer base of industry-leading OEMs and
tier-one suppliers for vehicles manufactured in China. Our business has achieved significant
growth at scale over the past three years as we capitalize on the mega industry tailwind as a
market leader. As of June 30, 2024, a total of 25 OEMs selected our ADAS and AD solutions
for implementation in at least one of their vehicle models, by directly engaging with us or
through our tier-one supplier customers.
Smart vehicle transformation is a mega trend that has been reshaping the estimated
US$13.0 trillion global automotive, mobility and road freight industries in 2023. ADAS
capabilities are increasingly common in cars nowadays, thanks to the rapid technology
advancement and higher consumer demand in recent years. This is demonstrated by the ADAS
penetration rates of over 50% in both the global and Chinese markets in 2023, according to
CIC. Meanwhile, industry participants continue to make ongoing, inexhaustible efforts to
march towards broader adoption of AD with increasing level of automation. We believe the
demand for driving automation solutions will continue to grow significantly in the years to
come. According to CIC, the global ADAS and AD solutions market presents a RMB61.9
billion opportunity in 2023 and is expected to grow at a CAGR of 49.2% through 2030 to reach
RMB1,017.1 billion. Despite our rapid growth, we were loss-making during the Track Record
Period. See “Financial Information — Path to Profitability” for further details.
SUMMARY
–1–


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However, a few core challenges need to be addressed to realize mass adoption of smart
vehicles enabled by ADAS and AD. ADAS and AD systems are highly complex, requiring high
processing capacity, high reliability, low latency and low energy consumption, and need to be
produced at affordable costs. Therefore, ADAS and AD solutions require the co-design of
software and hardware to achieve the necessary system-level performance and reliability of
driving functions. Deployment of such solutions on vehicles also requires optimal energy
efficiency while guaranteeing application performance. In addition, mass adoption of ADAS
and AD needs an open platform approach where value chain participants can all join and
continuously leverage the enabling technologies to develop functions and features that suit
their needs while reducing time to market.
By architecting our solutions to address these fundamental challenges, we build the core
enabling technology for smart vehicle revolution. Our solutions enable the full spectrum of
driving automation functions for passenger vehicles from mainstream assisted driving to
advanced levels of autonomous driving. Built through nine years of development, testing and
iterative improvements, our integrated solutions have been successfully validated,
commercialized and deployed on mass scale. With our product maturity, technological
advantage and commercial success, we have established ourselves as a clear market leader. The
comprehensiveness and uniqueness of our solution matrix, as summarized below, allow us to
rapidly penetrate the market, achieve high customer stickiness and capture a significant portion
of the value chain.
We offer a comprehensive portfolio of ADAS and AD solutions, namely Horizon Mono,
Horizon Pilot and Horizon SuperDrive, to address different customer needs from mainstream
assisted driving (Level 2) to advanced level autonomous driving (Level 2+ in China for
regulatory compliance). According to CIC, as of the Latest Practicable Date, there is no
mass-produced passenger vehicle at autonomous driving Level 3 or above in China.
 Horizon Mono. Horizon Mono is our active safety ADAS solution designed to
improve daily driving safety and comfort. It enables basic functions such as
automatic emergency braking (AEB) and intelligent high beam (IHB) to improve
passenger and road-user safety, as well as comfort functions such as adaptive cruise
control (ACC) and traffic jam assist (TJA) to improve driving experience. We embed
Journey 2 or Journey 3 processing hardware in Horizon Mono currently.
 Horizon Pilot. Horizon Pilot is our highway navigate on autopilot (NOA) solution,
categorized as an AD solution, that provides safe and efficient driving experience.
In addition to enhanced active safety features, Horizon Pilot performs more
advanced tasks such as automatic ramp on/off, autonomous merge-in and exit during
traffic congestion, automated lane change, highway autopilot and more. These
functions improve driving and riding experience for end users, especially in
long-distance commute. At the same time, Horizon Pilot provides advanced parking
functions such as auto parking assist (APA) and automated valet parking assist
(VPA). We embed Journey 3 or Journey 5 processing hardware in Horizon Pilot
currently.
SUMMARY
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--- page 13 ---
 Horizon SuperDrive. Horizon SuperDrive is our cutting edge AD solution equipped
with our most advanced processing hardware. It is designed to achieve smooth and
human-like autonomous driving in all urban, highway and parking scenarios. It is
expected to tackle a comprehensive range of complex road conditions with more
assertive and interactive driving style, featuring smooth execution of obstacle
avoidance, gentle and human-like braking, dynamic speed control, smooth execution
of unprotected left turns, and more. We plan to embed Journey 6, our latest
processing hardware, in Horizon SuperDrive.
Our ADAS and AD solutions are built on a comprehensive stack of technologies,
including algorithms for driving functions, the underlying processing hardware, as well as
various tools to facilitate software development and customization.
 Algorithm. Our algorithms play an important role for our proprietary software-
hardware co-designed solution. They are purpose-built and optimized for a wide
spectrum of driving scenarios. Our full spectrum of algorithm capabilities range
from perception, environmental modeling, planning and control to driving
automation functions, fulfilling the development requirement for all levels of ADAS
and AD solutions.
 Brain Processing Unit (BPU) . BPU is our proprietary processing architecture
tailored for automotive applications, including ADAS and AD functions. We
incorporate our deep understanding of advanced software and algorithms into BPU
architecture to empower the processing hardware with outstanding performance,
high energy efficiency, low latency when running automotive algorithms.
 Horizon OpenExplorer . Horizon OpenExplorer is our flexible algorithm
development toolkit that encompasses a series of ready-to-use modules and
reference algorithms. With a user-friendly interface and abundant auxiliary tools,
OpenExplorer enables the users to accurately and efficiently deploy algorithms and
software on our processing hardware.
 Horizon TogetheROS . Horizon TogetheROS is a safe, simple and user-friendly
autonomous driving embedded middleware. TogetheROS provides standardized
automotive grade services and tools to help accelerate development, integration and
verification efforts to boost mass production readiness.
 Horizon Automotive Intelligence Development Instrument (AIDI) . Horizon AIDI
is our software development platform, designed to accomplish automatic iterative
improvements of models with enhanced efficiency. By offering various tools and
application interfaces, as well as streamlined workflow, AIDI helps software
developers optimize the entire software development process from deployment,
training, verification, evaluation, to iteration.
SUMMARY
–3–


--- page 14 ---
TECHNOLOGY
Algorithm Horizon TogetheROS
SOLUTIONS
BPU Horizon OpenExplorer Horizon AIDI
O
Horizon Mono Horizon Pilot Horizon SuperDrive
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We take a software and hardware co-optimization approach, which we believe is crucial
in ensuring optimal processing efficiency at affordable costs, hence the right technological path
towards an autonomous driving future. We also believe that by offering flexible collaboration
methods and open development tools, we enable our ecosystem partners to accelerate mass
adoption of autonomous driving solutions. Such key philosophies underpin our product design
and technology architecture, leading to these clear differentiating advantages of our solutions:
 System performance. Our software and hardware are developed and optimized
hand-in-hand to ensure optimum system performance when integrated.
 High efficiency at affordable costs. Our solutions are highly efficient due to our
co-optimization approach, delivering outstanding processing performance with low
power consumption and low latency, which are crucial for automotive-grade
deployment. In addition, our solutions are produced at affordable costs, laying the
foundation for mass scale adoption.
 Open platform. We make available a series of base models, toolchains, frameworks
and reference solutions to enable our customers and ecosystem partners to develop
their own software applications catering to specific needs, helping them
significantly shorten development cycles and reduce development costs.
Our distinguishing solutions and open platform approach have won us a growing and
loyal base of customers and ecosystem partners. We act as a tier-two supplier and work both
with OEMs directly and through tier-one suppliers to install our integrated ADAS and AD
solutions into mass-produced vehicles. Our integrated solutions have been selected by 27
OEMs (42 OEM brands) for implementation in over 285 car models, with price range from
approximately RMB86,800 to RMB429,800, as of the Latest Practicable Date. All top 10
Chinese OEMs have selected our solutions for mass production into their passenger vehicle
SUMMARY
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--- page 15 ---
models. We have accumulatively obtained design-wins for 44, 101, 210 and 275 car models,
net of terminated projects, as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively. We obtained more than 100 new design-wins of car models in 2023 alone. The
design-win refers to the selection process when our ADAS and AD solutions are adopted in a
specific vehicle model by an OEM or tier-one supplier customer. Design-win does not
guarantee that our customers will purchase our solutions in large quantities or at all and at a
price that will be profitable to us. Preliminary forecast in design-wins may be revised by
OEMs, and may not be representative of future production volumes associated with those
design-wins. Furthermore, OEMs may take a long time to develop the models relating to those
design-wins, or may even delay or cancel such models. As a result, obtaining a design-win is
not a guarantee of revenue. In addition, it is possible that OEMs may opt to independently
develop specific components for their ADAS and AD solutions. This could have an impact on
the selling prices of our solutions, as well as our revenue and profitability. For further
implication, please see “Risk Factors — We invest significant effort and resources seeking
OEM selection of our solutions, and there can be no assurance that these efforts will result in
the selection for production models, nor is there a guarantee that our OEM customers or OEM
end customers will purchase our solutions in any certain quantity or at any certain price even
after we obtain the design-win, or we will retain or grow our business relations with existing
OEM and tier-one suppliers and there may be significant delays between the time we obtain the
design-win until we realize revenue from the vehicle model. ” In 2021, 2022 and 2023 and for
the six months ended June 30, 2024, we had five, four, four and nil terminated projects,
respectively. The following table presents selected and publicly announced key OEMs and
tier-one suppliers who have adopted our solutions, as well as selected ecosystem partners.
These ecosystem partners collaborate with us to address challenges ranging from software
development to the integration of our solutions.
Selected Ecosystem Partners
Selected OEM / Brand Customers Selected Tier-one Supplier Customers
We have a highly flexible and scalable business model. Our customers can choose any
solution or any combination of components in our whole stack offerings from algorithms to
software and development tools and to processing hardware. Such flexibility has helped us
continuously acquire new customers and expand market share. In addition, our business model
is highly scalable. We typically scale deployment of our solutions with mass production of our
SUMMARY
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--- page 16 ---
OEM customers’ nominated vehicles. In addition, OEM customers who have found success
with our solutions in one of their vehicle models would typically expand collaboration with us
to more vehicle models. Furthermore, we have the opportunity to sell more advanced solutions
and additional components from our offerings to our customers. These help us build a stable
pipeline of contracts in the years to come. See “Business — Our Products and Services.” We
also provide licenses and services, other automotive solutions and non-automotive solutions to
our customers.
Our flexible and scalable business model has led to significant growth of our business in
the Track Record Period and lays the foundation for our continued success in the future. Our
revenue increased by RMB439.0 million, or 94.1%, from RMB466.7 million in 2021 to
RMB905.7 million in 2022, and further increased by RMB645.9 million, or 71.3%, to
RMB1,551.6 million in 2023. Our revenue increased by RMB563.1 million, or 151.6%, from
RMB371.5 million for the six months ended June 30, 2023 to RMB934.6 million for the six
months ended June 30, 2024. Our gross profit increased from RMB331.0 million in 2021 to
RMB627.7 million in 2022, and further to RMB1,094.3 million in 2023. Our gross profit
increased from RMB226.6 million for the six months ended June 30, 2023 to RMB738.7
million for the six months ended June 30, 2024. We had high and stable gross profit margin of
70.9%, 69.3% and 70.5% in 2021, 2022 and 2023, respectively. Our gross profit margin
increased from 61.0% for the six months ended June 30, 2023 to 79.0% for the six months
ended June 30, 2024. We have been historically loss-making, and expects to be loss-making
going forward. See “Risk Factors — Risks Related to Our Financial Prospects — We have a
history of losses and operating cash outflow as well as net current liabilities and negative
equity during the Track Record Period, and there is no assurance that we will become or
subsequently remain profitable.”
We record revenue from sale and delivery of our ADAS and AD solutions (“Solution
Delivery Model”) and/or providing licensing and related services (“Licensing and Service
Model”) to our customers. Under the Solution Delivery Model, we generate revenue from the
sale and delivery of our solutions, which combine our self-developed processing hardware with
proprietary algorithms and software, to OEMs and tier-one suppliers. The price of each product
solution depends on the complexity and amount of algorithm and software involved, as well as
the type and quantity of processing hardware integrated. Within product solutions, we allow
our customers to choose any solution or any combination of components in our whole stack
offerings from algorithms, software, processing hardware to development toolkit, with multiple
adaptable components usually provided as a package, and customers are charged the package
price instead of on a standalone basis. With respect to Licensing and Service model, we
generate licensing revenue from our licensing algorithms, software and development toolkit to
customers, enabling them to develop their own applications catering to specific needs. We
typically charge licensing fees in a pre-determined fixed amount based on the complexity,
advancement and variety of algorithms, software and development toolkits involved. In less
common cases, we charge recurring royalties referenced to the quantity of mass-produced
vehicles based on similar factors. We maintain a large pool of codes of algorithms and software
of our ADAS and AD solutions that we can license under an open platform or white box
approach. Our customers have the flexibility to select algorithm and/or software of their needs
SUMMARY
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--- page 17 ---
and integrate such intellectual properties into their products to achieve desired ADAS and AD
functions. In addition to licensing, we also provide design and technical services to customers
for a fee, helping our customers achieve customized ADAS and AD functions. Our service fees
are generally set with reference to expertise and number of engineers involved, duration,
complexity of work and functionalities developed. See “Business — Licensing and Services”
for further details and “Industry Overview — Overview of the ADAS and AD Solutions Market
— Open Platform and Close Platform” for features of the open platform approach.
OUR COMPETITIVE STRENGTHS
We believe that the following strengths have contributed to our success and differentiated
us from our competitors:
 Established Market Leader with Significant Commercial Success and Substantial
Barriers;
 Localized Expertise in China Ensuring Our Leading Position Today and in the
Future;
 Large, Blue-chip Customer Base with High Stickiness;
 Integrated Solutions with Co-optimized Software and Hardware;
 Open Technology Platform to Foster Thriving Ecosystem;
 Highly Flexible and Scalable Business Model; and
 Visionary and Experienced Management Team, and Talents with Competitive
Mindset.
For details, see “Business – Our Competitive Strengths.”
OUR GROWTH STRATEGIES
We plan to execute the following strategies to drive our future growth:
 Continue to Invest in Technology and Expand Our Solutions Portfolio to Capitalize
on the Industry Tailwind;
 Win Additional Mass Production Contracts with Existing and New Customers;
 Continue to Enrich Our Ecosystem;
 Attract Top Talents and Expand Our Team; and
 Continue to Enable Global Partners.
For details, see “Business – Our Growth Strategies.”
SUMMARY
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--- page 18 ---
TECHNOLOGIES AND INNOV ATIONS
Our software-hardware co-optimization approach differentiates us from our competitors.
We possess a unique combination of technical capabilities: we not only have proprietary
software and algorithm capabilities, including an ADAS and AD algorithm framework,
algorithm trend analysis, and a reservoir of effective algorithms, but also possess the ability to
design architecture and optimize it for processing hardware. Additionally, we have automotive
engineering capabilities and deep industry experience in mass production. This enables us to
resolve the challenges and incorporate the requirements of ADAS and AD solutions into mass
production, providing tailored services to our customers, helping them achieve optimized
product performance and enhance their competitiveness. All of our technology pillars setting
forth below are self-developed. For details, please refer “Business – Our Technologies –
Software-Hardware Co-optimization Approach.”
We are the first in China and one of the first globally to design and develop ADAS and
AD solutions and automotive processing hardware. We are also the first in China and one of
the first globally to successfully integrate our ADAS and AD solutions into mass-produced
vehicles. Our processing hardware is one of the first globally to meet ASIL-B level under ISO
26262. We are global first to launch an 8-megapixel monocular vision-only ADAS solution.
We launched our ADAS solution Horizon Mono in 2019, which started revenue
generation in 2021 and mass production in the second quarter of 2021. We launched our
highway NOA solution Horizon Pilot in 2021, which started revenue generation in 2022 and
mass production in the second quarter of 2022. In April 2024, we launched our AD solution
Horizon SuperDrive. We expect Horizon SuperDrive to start revenue generation in 2024 from
algorithms and software licensing and initiate mass production in 2026, subject to market
conditions.
Our solutions are highly competitive, and the following table sets forth selected
performance indicators and functional positioning and advantages for each of our current
solution offerings:
Horizon Mono Horizon Pilot Horizon SuperDrive
Positioning /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Active safety ADAS Highway NOA Urban NOA for all
scenarios
Launch time (1) /H1118/H1118/H1118/H1118/H11182019 2021 2024
Beginning of revenue
generation /H1118/H1118/H1118/H1118/H1118/H1118/H1118
2021 2022 2024*
Initial mass
production /H1118/H1118/H1118/H1118/H1118/H1118/H1118
2021 2022 2026*
Typical sensor set /H1118/H1118/H1118/H1118Up to 8MP front view
camera
Cameras and radars (2) Cameras, radars and
LiDAR (3)
SUMMARY
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--- page 19 ---
Horizon Mono Horizon Pilot Horizon SuperDrive
Selective functions and
highlights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainstream ADAS
functions, including
AEB, IHB, ACC,
LCC, ICA, TJA and
more
Enhanced active safety
and comfort
functions, including
automatic ramp
on/off, autonomous
merge in and exit
during traffic
congestion,
automated lane
change, highway
auto-pilot, APA, VPA
and more
Smooth and human-like
AD functions in all
urban, highway and
parking scenarios
Global first to launch
an 8MP monocular
vision-only ADAS
solution
Supported safety
recognition /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Euro-NCAP five star
C-NCAP five star
Euro-NCAP five star
C-NCAP five star
To be authenticated
Ecosystem synergy /H1118/H1118/H1118OpenExplorer,
TogetheROS, and
AIDI
OpenExplorer,
TogetheROS, and
AIDI
OpenExplorer,
TogetheROS, and
AIDI
Miles per
intervention
(9) /H1118/H1118/H1118/H1118/H1118
N/A(4) 200 km in the average
traffic flow
N/A(5)
Image processing
capacity (frame per
seconds) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
174
(6) 1,283 (7) N/A(5)
Pixel capacity of
vehicle camera /H1118/H1118/H1118/H1118
Up to 8MP (8) 8MP(7) N/A(5)
Power consumption /H1118/H11182.5w(8) 30w(7) N/A(5)
Notes:
* Expected timing, which is subject to change with actual development and production progress.
(1) Refers to the initial release time, which does not indicate the completion of start of production (SOP) or mass
production.
(2) Typical sensor set of Horizon Pilot includes 11 camera(s) including front camera(s) of 8.3MP, side camera(s)
of 2.5MP, surround camera(s) of 2.9MP, rear camera(s) of 2.5MP; and five millimeter wave radars and 12
ultrasonic radars.
(3) Typical sensor set of Horizon SuperDrive is expected to include 11 camera(s) of 8.3MP, 3.0MP and 2.5MP,
three millimeter wave radars, 12 ultrasonic radars and one LiDAR.
(4) According to CIC, it is not common to use miles per intervention (MPI) to evaluate ADAS solution. As an
alternative of safety demonstration, Horizon Mono has a false activation rate of less than one time in 200,000
kilometers driven.
(5) No data available as of the Latest Practicable Date, as Horizon SuperDrive was launched in April 2024 and
is still under testing.
(6) Tested under scenario created to evaluate performance with industry-standard application models as of launch
year representing the parameter of one Journey 3 processing hardware embedded.
(7) Representing the parameter of one Journey 5 processing hardware embedded.
SUMMARY
–9–


--- page 20 ---
(8) Representing the parameter of one Journey 3 processing hardware embedded.
(9) Mile per intervention or MPI, is a performance metric used to measure the distance a vehicle can travel
autonomously before requiring human intervention or driver takeover. According to CIC, the industry level of
mile per intervention ranges from 50 km to 250 km in average traffic flow as of December 31, 2023.
CUSTOMERS AND SUPPLIERS
We act as a tier-two supplier in the industry supply chain and generate the vast majority
of our revenue from the sale of ADAS and AD solutions as well as the corresponding licensing
and services to OEMs and tier-one automotive suppliers.
During the Track Record Period, we derived a majority of our revenues from our
automotive solutions. In 2021, 2022 and 2023 and for the six months ended June 30, 2024, the
aggregate revenue generated from our five largest customers were RMB283.1 million,
RMB482.1 million, RMB1,067.0 million and RMB727.0 million, representing 60.7%, 53.2%,
68.8% and 77.9% of our revenue, respectively. Revenues generated from our largest customer
in the same periods were RMB115.2 million, RMB145.3 million, RMB627.3 million, and
RMB351.6 million, representing 24.7%, 16.0%, 40.4% and 37.6% of our revenue, respectively.
We generated a substantial amount of RMB627.3 million and RMB351.6 million, representing
40.4% and 37.6% of our revenue, from CARIZON in 2023 and for the six months ended
June 30, 2024, respectively. Our five largest customers in each year/period during the Track
Record Period included OEM and tier-one supplier customers for our automotive solutions and
a distributor for our non-automotive solutions. Saving for V olkswagen Group and SAIC, both
Shareholders of the Company, to the best of our knowledge, during the Track Record Period
and up to the Latest Practicable Date, our five largest customers were independent third parties.
Saving for CARIZON and SAIC, none of our Directors, their associates or any of our
Shareholders (who or which to the knowledge of the Directors owned more than 5% of our
issued share capital) had any interest in any of our five largest customers.
In 2021, 2022 and 2023 and for the six months ended June 30, 2024, the aggregate
purchase amounts from our five largest suppliers were RMB251.6 million, RMB890.2 million,
RMB1,177.9 million and RMB392.4 million, representing 52.0%, 61.8%, 50.2% and 40.8% of
our total purchase amount, respectively. The purchase amounts from our largest supplier in the
same periods were RMB100.7 million, RMB226.3 million, RMB458.5 million and RMB115.5
million, representing 20.8%, 15.7%, 19.5% and 12.0% of our total purchase amount,
respectively. Our five largest suppliers in each year/period during the Track Record Period
included manufacturers, assembly and testing service providers, and IP vendors and EDA
vendors, among others, during the Track Record Period, we relied on Supplier A and Supplier
C for the manufacturing, assembling and testing of our processing hardware. During the Track
Record Period, we did not experience any significant fluctuation in prices set by our suppliers
or material breach of contract on the part of our suppliers. As of the Latest Practicable Date,
none of our Directors, their associates or any of our shareholders (who or which to the
knowledge of the Directors owned more than 5% of our issued share capital) had any interest
in any of our five largest suppliers.
SUMMARY
–1 0–


--- page 21 ---
OUR PARTNERSHIP WITH VOLKSW AGEN GROUP
We strategically partner with affiliates of V olkswagen Group (“V olkswagen”) through the
joint venture Carizon (Beijing) Technology Co., Ltd (“CARIZON”), which was established in
2023, to capture the future opportunities of customized driving automation solutions in China.
CARIZON engages in the business of research and development, manufacture of autonomous
driving application software and self-driving systems, and it also provides aftersales services,
training, consulting, testing and technical services of its products. In the short term, its primary
customer will be V olkswagen Group, and its products will be applied towards vehicles
V olkswagen sells in China. V olkswagen holds 60% and we hold 40% of the equity interest in
CARIZON, respectively. In 2023 and for the six months ended June 30, 2024, we generated
revenue of RMB627.3 million and RMB351.6 million, accounting for 40.4% and 37.6% of total
revenue, respectively, from automotive solutions provided to CARIZON. For further details,
please refer to “Business — Our Partnership with V olkswagen Group — CARIZON — Our
Joint Venture with V olkswagen Group.” Pursuant to a convertible loan agreement dated
November 17, 2022, CARIAD Estonia AS (“CARIAD”) as lender agreed to provide the loan
in the amount of US$800,000,000 to the Company. On October 11, 2024, an amendment
agreement was entered into between the Company and CARIAD to amend arrangement with
respect to the conversion mechanism of the convertible loan (among others). For more details,
please see the section headed “Risk Factors — Risks Related to the Global Offering and Our
Shares — You may experience dilution upon conversion under the Convertible Loan
Agreement” and “History, Reorganization and Corporate Structure — Pre-IPO Investments —
Convertible Loan” of this prospectus.
WEIGHTED VOTING RIGHTS STRUCTURE
The Company has a weighted voting rights structure. Under our weighted voting rights
structure, our share capital comprises Class A Ordinary Shares and Class B Ordinary Shares.
Each Class A Ordinary Share entitles the holder to exercise ten votes, and each Class B
Ordinary Share entitles the holder to exercise one vote, respectively, on any matters subject to
the vote at general meetings of the Company, subject to Rule 8A.24 of the Listing Rules that
requires the Reserved Matters to be voted on a one vote per share basis.
The table below sets out the beneficial interests entitled to, and voting rights to be held
by, the WVR Beneficiaries through their controlled entities upon the completion of the Global
Offering (assuming the Over-allotment Option is not exercised):
Number of
Class A
Ordinary
Shares held
Approximate
percentage of
beneficial
interests in the
issued share
capital
Approximate
percentage of
voting rights (1)
Dr. Yu(2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,733,612,127 13.30% 53.92%
Dr. Huang (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118390,777,143 3.00% 12.16%
Notes:
(1) On the basis that each Class B Ordinary Share entitles the Shareholder to one vote per Share and each
Class A Ordinary Share entitles the Shareholder to ten votes per Share.
(2) For details of the shareholding structure of our WVR Beneficiaries, please refer to note 2 and note 3 in
the section headed “History, Reorganization and Corporate Structure — Capitalization.”
SUMMARY
–1 1–


--- page 22 ---
Our Company is adopting the WVR structure to enable the WVR Beneficiaries to exercise
voting control over our Company. This will enable our Company to benefit from the continuing
vision and leadership of the WVR Beneficiaries who will control our Company with a view to
its long-term prospects and strategy. Taking into account the WVR Beneficiaries’ contribution
to the Group, such arrangement is in the best interests of the Company and its Shareholders as
a whole.
Prospective investors are advised to be aware of the potential risks of investing in
companies with weighted voting rights structures, in particular that interests of the WVR
Beneficiaries may not necessarily always be aligned with those of our Shareholders as a whole,
and that the WVR Beneficiaries will be in a position to exercise their higher voting power to
influence the affairs of our Company and the outcome of Shareholders’ resolutions,
irrespective of how other Shareholders vote.
Prospective investors should make the decision to invest in the Company only after due
and careful consideration. For further information about the risks associated with the WVR
structure adopted by the Company, see “Risk Factors — Risks Related to the WVR Structure.”
Save for the weighted voting rights attached to Class A Ordinary Shares, the rights attached to
both classes of Shares are identical. For further information about the rights, preferences,
privileges and restrictions of the Class A Ordinary Shares and Class B Ordinary Shares, please
see “Summary of the Constitution of our Company and Cayman Islands Company Law — 2
Articles of Association” in Appendix III to this Prospectus for further details.
OUR CONTROLLING SHAREHOLDERS
Immediately following the completion of the Global Offering (assuming the Over-
allotment Option is not exercised), 1,733,612,127 Class A Ordinary Shares, representing
approximately (i) 53.92% of the voting rights in our issued share capital in general meetings
(except for resolutions with respect to the Reserved Matters), and (ii) 12.16% of the voting
rights in our issued share capital in general meetings for resolutions with respect to the
Reserved Matters, will be held by Everest Robotics Limited, which is held by Bigsur Robotics
Limited as to 99% and Horizon Robotics, Inc. as to 1%. Horizon Robotics, Inc. is wholly
owned by Dr. Yu. Bigsur Robotics Limited is wholly owned by Trident Trust Company (HK)
Limited as the trustee of Rock Street Trust, the family trust established by Dr. Yu (as settlor)
for the benefit of Dr. Yu and his family. Accordingly, Dr. Yu, Everest Robotics Limited and
Horizon Robotics, Inc. together will constitute a group of Controlling Shareholders of our
Company after the Listing.
PRE-IPO INVESTMENTS
We have undertaken several rounds of Pre-IPO Investments. For details of the background
of our major Pre-IPO Investors and the principal terms of the Pre-IPO Investments, see
“History, Reorganization and Corporate Structure — Pre-IPO Investments.”
SUMMARY
–1 2–


--- page 23 ---
DILUTIVE EFFECT UNDER THE PRE-IPO EQUITY INCENTIVE PLAN
As of the date of this Prospectus, all Class B Ordinary Shares granted under the 2018
Share Incentive Plan have been issued to employee shareholding platforms set up by our
Company with independent professional trustee companies. Accordingly, there will not be any
dilution effect on the shareholdings of our Shareholders nor any impact on the earnings per
share arising from the full vesting or exercise of the outstanding options and share awards after
Listing.
SUMMARY OF HISTORICAL FINANCIAL INFORMATION
Summary of Consolidated Statements of Profit or Loss
The following table sets forth our consolidated statements of profit or loss for the periods
indicated.
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Revenue from contracts with customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466,720 905,676 1,551,607 371,491 934,599
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(135,734) (277,963) (457,297) (144,879) (195,861)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,986 627,713 1,094,310 226,612 738,738
Research and development expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,143,642) (1,879,888) (2,366,255) (1,048,991) (1,419,656)
Administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(319,003) (373,909) (443,366) (214,997) (243,144)
Selling and marketing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(211,390) (298,500) (327,249) (142,728) (198,421)
Net impairment (losses)/gains on financial assets /H1118/H1118/H1118/H1118/H1118(5,098) (13,039) (20,793) (7,164) (53,237)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,483 43,662 66,222 13,227 34,109
Other (losses)/gains, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,669) (238,055) (33,391) (63,274) 36,193
Operating loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,335,333) (2,132,016) (2,030,522) (1,237,315) (1,105,418)
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,239 104,528 167,473 87,268 214,552
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,592) (7,548) (8,651) (4,585) (3,789)
Finance income, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,647 96,980 158,822 82,683 210,763
Share of results of investments accounted for using the
equity method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,530) (34,298) (112,074) (16,803) (181,633)
Fair value changes of preferred shares and other financial
liabilities through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(763,984) (6,655,367) (4,760,354) (713,566) (4,012,726)
Loss before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,090,200) (8,724,701) (6,744,128) (1,885,001) (5,089,014)
Income tax benefit (expense) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,650 4,273 5,075 (3,490) (9,091)
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Loss is attributable to:
Owners of the Company /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,061,293) (8,719,410) (6,739,021) (1,888,475) (5,098,088)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,257) (1,018) (32) (16) (17)
SUMMARY
–1 3–


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Non-IFRS Measures
To supplement our consolidated statements of profit or loss which are presented in
accordance with IFRS, we use adjusted operating loss (Non-IFRS measure) and adjusted net
loss (Non-IFRS measure) as non-IFRS measures, which are not required by, or presented in
accordance with IFRS. See “Financial Information — Non-IFRS Measures” for details. We
define adjusted operating loss (Non-IFRS measure) as operating loss for the periods adjusted
by adding back (i) share-based payments, which are non-cash in nature, and (ii) listing
expenses, which relate to the Global Offering. We define adjusted net loss (Non-IFRS measure)
as loss for the periods adjusted by adding back (i) share-based payments, which are non-cash
in nature, (ii) listing expenses, which relate to the Global Offering, and (iii) fair value changes
on preferred shares and other financial liabilities, which are non-cash items. All preferred
shares and other financial liabilities will be reclassified to equity upon conversion, and no
longer measured at fair value going forward once converted. Our adjusted operating loss
(Non-IFRS measure) and adjusted net loss (Non-IFRS measure) as a percentage of revenue
significantly narrowed during the Track Record Period.
We believe that Non-IFRS measures facilitate the comparisons of operating performance
and provide useful information to investors and others in understanding and evaluating our
operating performance in the same manner as it helps our management. However, our
presentation of Non-IFRS measures for the periods may not be comparable to similarly titled
measures presented by other companies. The use of Non-IFRS measures has limitations as an
analytical tool, and investors should not consider it in isolation from, or as a substitute for
analysis of, our results of operations or financial condition as reported under IFRS Accounting
Standards.
The following tables reconcile Non-IFRS measures for the periods presented with the
nearest measures prepared in accordance with IFRS Accounting Standards:
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Reconciliation for adjusted operating
loss (Non-IFRS measure):
Operating loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,335,333) (2,132,016) (2,030,522) (1,237,315) (1,105,418)
Add back:
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118196,369 173,698 341,751 178,931 240,600
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,780 – 40,838
Adjusted operating loss
(Non-IFRS measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,138,964) (1,958,318) (1,686,991) (1,058,384) (823,980)
SUMMARY
–1 4–


--- page 25 ---
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Reconciliation for adjusted net loss
(Non-IFRS measure):
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Add back:
Share-based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118196,369 173,698 341,751 178,931 240,600
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,780 – 40,838
Fair value changes of preferred shares
and other financial liabilities /H1118/H1118/H1118/H1118/H1118763,984 6,655,367 4,760,354 713,566 4,012,726
Adjusted net loss
(Non-IFRS measure) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,103,197) (1,891,363) (1,635,168) (995,994) (803,941)
Our adjusted net loss (Non-IFRS measure) amounted to RMB1,103.2 million,
RMB1,891.4 million, RMB1,635.2 million, RMB996.0 million and RMB803.9 million in 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively. The loss
position was primarily due to our continuous investment in research and development. The
narrowed adjusted net loss (Non-IFRS measure) in 2023 and for the six months ended June 30,
2024 was primarily resulted from the significant increase in revenue by 71.3% from RMB905.7
million in 2022 to RMB1,551.6 million in 2023 and by 151.6% from RMB371.5 million for the
six months ended June 30, 2023 to RMB934.6 million for the six months ended June 30, 2024,
respectively.
The following table sets forth a breakdown of our revenue by revenue source during the
periods indicated, both in absolute amounts and as percentages of total revenue.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(unaudited)
(in thousands, except for percentages)
Automotive solutions
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118208,083 44.6 319,312 35.3 506,386 32.7 192,298 51.8 222,264 23.8
License and services /H1118/H1118/H1118/H1118/H1118202,081 43.3 481,826 53.2 963,978 62.1 152,706 41.1 690,830 73.9
Subtotal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118410,164 87.9 801,138 88.5 1,470,364 94.8 345,004 92.9 913,094 97.7
Non-Automotive solutions /H1118/H1118/H1118/H111856,556 12.1 104,538 11.5 81,243 5.2 26,487 7.1 21,505 2.3
Total Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466,720 100.0 905,676 100.0 1,551,607 100.0 371,491 100.0 934,599 100.0
SUMMARY
–1 5–


--- page 26 ---
Our revenue increased significantly from RMB466.7 million in 2021, to RMB905.7
million in 2022, and further to RMB1,551.6 million in 2023. Our revenue increased from
RMB371.5 million for the six months ended June 30, 2023 to RMB934.6 million for the six
months ended June 30, 2024. Revenue generated from our automotive solutions contributed a
vast majority of our total revenue, accounting for 87.9%, 88.5%, 94.8%, 92.9% and 97.7% of
total revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively. The significant increase in revenue from automotive solutions during the Track
Record Period was primarily attributable to (i) rapid development and robust growth in the
downstream smart vehicles market that drives the demand for our automotive solutions, (ii)
expansion of our customer base as well as increased spendings from existing customers for
product solutions, (iii) increased penetration from AD solutions that leads to higher dollar
content per vehicle and (iv) increasing demand from OEMs and tier-one suppliers for license
of algorithms, various development tools and technical services to design and tailor their
ADAS and AD solutions. Our revenue generated from license and services increased
significantly during the Track Record Period, primarily driven by strong growth in the demand
for licenses of various algorithms, development tools and software for ADAS and AD solutions
and related services. For instance, we licensed various rights to use our algorithms and
software related to ADAS and AD solutions in 2023 to CARIZON, a joint venture we
established with an affiliate of V olkswagen Group. As a result, in 2023 and the six months
ended June 30, 2024, we recorded revenue from CARIZON of RMB627.3 million and
RMB351.6 million, respectively, after the elimination of unrealized profits and losses from the
transactions with CARIZON.
Our cost of sales increased significantly from RMB135.7 million in 2021, to RMB278.0
million in 2022, and further to RMB457.3 million in 2023, which is generally in line with our
revenue growth. Our cost of sales increased from RMB144.9 million for the six months ended
June 30, 2023 to RMB195.9 million for the six months ended June 30, 2024. Cost of sales from
our automotive solutions contributed a majority of total cost of sales, representing 60.1%,
64.7%, 84.6%, 84.6% and 91.0% of total cost of sales in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively. In terms of cost of sales by nature, cost
of inventories sold, primarily bill of materials for processing hardware and peripheral devices,
was our largest cost component.
SUMMARY
–1 6–


--- page 27 ---
The following table sets forth our gross profit and gross profit margin by revenue source
for the periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
RMB % RMB % RMB % RMB % RMB %
(unaudited)
(in thousands, except for percentages)
Automotive
solutions
Product
solutions /H1118142,589 68.5 198,306 62.1 226,226 44.7 97,036 50.5 92,745 41.7
License and
services /H1118185,976 92.0 423,113 87.8 857,486 89.0 125,472 82.2 642,188 93.0
Subtotal /H1118/H1118/H1118328,565 80.1 621,419 77.6 1,083,712 73.7 222,508 64.5 734,933 80.5
Non-
Automotive
solutions /H1118/H11182,421 4.3 6,294 6.0 10,598 13.0 4,104 15.5 3,805 17.7
Total /H1118/H1118/H1118/H1118/H1118/H1118330,986 70.9 627,713 69.3 1,094,310 70.5 226,612 61.0 738,738 79.0
Our gross profit increased significantly from RMB331.0 million in 2021, to RMB627.7
million in 2022, and further to RMB1,094.3 million in 2023, which was in line with our
revenue growth during the Track Record Period. Our gross profit increased significantly from
RMB226.6 million for the six months ended June 30, 2023 to RMB738.7 million for the six
months ended June 30, 2024. Our gross profit margin remained relatively stable at 70.9%,
69.3% and 70.5% in 2021, 2022 and 2023, respectively. Our gross profit margin increased from
61.0% for the six months ended June 30, 2023 to 79.0% for the six months ended June 30,
2024. Our gross profit margin during the Track Record Period was affected by our revenue mix.
For instance, during the Track Record Period, we recorded an increase in revenue contribution
from license and services, which had higher gross profit margin compared to our product
solutions due to lower cost of inventories sold for license as well as relatively lower fulfillment
costs for our design and technical services rendered to customers due to economies of scale and
enhanced expertise. Such an increase was partially offset by a decrease in gross profit margin
from product solutions as we incurred higher procurement costs of bill of materials for
processing hardware from 2021 to 2023 and adopted a more competitive pricing strategy on our
early generation of product solutions to boost market share.
SUMMARY
–1 7–


--- page 28 ---
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred
research and development expenses of RMB1,143.6 million, RMB1,879.9 million,
RMB2,366.3 million, RMB1,049.0 million and RMB1,419.7 million, respectively. Our
research and development expenses increased in absolute amounts during the Track Record
Period, because we allocated significant resources in order to enhance our research and
development capabilities to support the development of algorithms, software and processing
hardware. The increased research and development expenses during the Track Record Period
was mainly driven by an increase in employee benefit expenses paid to our research and
development personnel. Employee benefit expenses remained the single largest component of
our research and development expenses during the Track Record Period, representing 65.7%,
62.5%, 60.7%, 65.5% and 59.0% of total research and development expenses in 2021, 2022 and
2023 and for the six months ended June 30, 2023 and 2024, respectively. Our research and
development expenses as a percentage of total revenue decreased from 245.0% in 2021, to
207.6% in 2022 and further to 152.5% in 2023. Our research and development expenses as a
percentage of total revenue decreased from 282.4% for the six months ended June 30, 2023 to
151.9% for the six months ended June 30, 2024. The decrease in research and development
expenses as a percentage of total revenue during the Track Record Period was primarily due
to (i) targeted research and development approach on open platform and flexible business
model that allows us to leverage the capabilities of our ecosystem partners to undertake part
of the research and development based on our technology pillars; (ii) significant economies of
scale as our solutions are mass-produced across different car models for existing and new
customers; and (iii) accumulated experience over the years of research and development, which
enables us to conduct research and development more efficiently. We expect our research and
development expenses to remain a substantial portion of our operating expenses to support our
business expansion in the future, but we anticipate that our research and development expenses
as a percentage of revenue will continue to decrease.
Our administrative expenses amounted to RMB319.0 million, RMB373.9 million,
RMB443.4 million, RMB215.0 million and RMB243.1 million in 2021, 2022 and 2023 and for
the six months ended June 30, 2023 and 2024, representing 68.3%, 41.3%, 28.6%, 57.9% and
26.0% of total revenue for the same periods, respectively. Our selling and marketing expenses
amounted to RMB211.4 million, RMB298.5 million, RMB327.2 million, RMB142.7 million
and RMB198.4 million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, representing 45.3%, 33.0%, 21.1%, 38.4% and 21.2% of total revenue for the same
periods, respectively. Other than the decrease in employee benefit expenses for administrative
personnel from the six months ended June 30, 2023 to the same period in 2024 due to a
decrease in share-based payments, the absolute amounts of our administrative expenses and
selling and marketing expenses increased during the Track Record Period, which was primarily
attributable to our growing employee benefit expenses resulting from an increase in the number
of staffs to support our business growth. The decrease in administrative expenses and selling
and marketing expenses as a percentage of total revenue during the Track Record Period was
primarily due to the revenue increase and economies of scale driven by our business expansion.
SUMMARY
–1 8–


--- page 29 ---
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, we had
operating losses for the periods of RMB1,335.3 million, RMB2,132.0 million, RMB2,030.5
million, RMB1,237.3 million and RMB1,105.4 million, respectively, and net losses for the
periods of RMB2,063.6 million, RMB8,720.4 million, RMB6,739.1 million, RMB1,888.5
million and RMB5,098.1 million, respectively. Our net loss positions was primarily due to our
significant research and development expenses during the Track Record Period to enhance our
key technology pillars as well as the fair value changes of preferred shares and other financial
liabilities.
For details, see “Financial Information — Discussion of Results of Operations.”
SUMMARY OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The table below sets forth selected information from our consolidated statements of
financial position as of the dates indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Total non-current assets /H1118/H1118/H1118/H1118/H1118683,445 1,091,548 2,335,798 2,209,015
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,913,442 8,803,680 13,538,075 12,743,749
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,596,887 9,895,228 15,873,873 14,952,764
Total non-current liabilities /H1118/H111884,836 182,343 287,144 380,461
Total current liabilities /H1118/H1118/H1118/H1118/H111818,905,972 27,151,422 40,252,113 44,387,363
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,990,808 27,333,765 40,539,257 44,767,824
Net current liabilities /H1118/H1118/H1118/H1118/H1118(8,992,530) (18,347,742) (26,714,038) (31,643,614)
Net liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,393,921) (17,438,537) (24,665,384) (29,815,060)
Non-controlling interests /H1118/H1118/H1118250 (75) (107) 861
We recorded net current liabilities of RMB8,992.5 million, RMB18,347.7 million,
RMB26,714.0 million and RMB31,643.6 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. Our net current liabilities increased during the Track Record
Period primarily attributable to our increased preferred shares and other financial liabilities at
FVPL. The increased of preferred shares and other financial liabilities at FVPL from
RMB18,341.2 million as of December 31, 2021 to RMB39,239.6 million as of December 31,
2023, and further to RMB43,782.7 million as of June 30, 2024 was primarily attributable to the
changes in the valuations of our Company.
SUMMARY
–1 9–


--- page 30 ---
We also recorded net liabilities of RMB8,393.9 million, RMB17,438.5 million,
RMB24,665.4 million and RMB29,815.1 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. Our net liabilities were primarily attributable to the preferred
shares and other financial liabilities at FVPL of RMB18,341.2 million, RMB26,451.3 million,
RMB39,239.6 million and RMB43,782.7 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. The fluctuations across periods for net liabilities were primarily
due to the loss for the periods incurred, which was RMB2,063.6 million in 2021, RMB8,720.4
million in 2022, RMB6,739.1 million in 2023 and RMB5,098.1 million for the six months
ended June 30, 2024. The increases in net liabilities during the Track Record Period were also
attributable to effects of changes in credit risk for financial liabilities designated as fair value
through profit or loss, foreign currency translation and share-based payments. For details, see
the Accountant’s Report set out in Appendix I to this Prospectus for a detailed description of
our statements of changes in equity. We expect to achieve a net assets position upon the Global
Offering, as the preferred shares will be reclassified from financial liabilities to equity as a
result of the automatic conversion into ordinary shares. For details, see “Financial information
— Discussion of Selected Items from Our Consolidated Statements of Financial Position —
Current Assets and Liabilities.”
SUMMARY OF CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table sets forth our cash flows for the periods indicated.
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Net cash used in operating activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,111,016) (1,557,285) (1,744,508) (1,165,996) (725,954)
Net cash generated from/(used in) investing activities /H1118/H1118/H1118(1,384,168) (214,506) (667,286) 20,486 (526,129)
Net cash generated from/(used in) financing activities /H1118/H11186,299,413 212,412 7,218,868 (18,334) 284,734
Net increase/(decrease) in cash and cash equivalents /H1118/H1118/H11183,804,229 (1,559,379) 4,807,074 (1,163,844) (967,349)
Cash and cash equivalents at the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,296,055 8,050,034 6,608,657 6,608,657 11,359,641
Effects of exchange rate changes on cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(50,250) 118,002 (56,090) (4,675) 60,157
Cash and cash equivalents at the end of the period /H1118/H11188,050,034 6,608,657 11,359,641 5,440,138 10,452,449
We had net operating cash outflow of RMB1,111.0 million, RMB1,557.3 million,
RMB1,744.5 million, RMB1,166.0 million and RMB726.0 million in 2021, 2022 and 2023 and
for the six months ended June 30, 2023 and 2024, respectively, which was primarily due to our
losses before income tax as we incurred significant research and development expenses.
SUMMARY
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KEY OPERATING DATA
The following tables set forth our key operating data as of the dates or for the periods
indicated.
As of December 31, As of June 30,
2021 2022 2023 2023 2024
OEM customer base (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 20 23 20 25
Cumulative number of OEM
customers (2), of which: 9 12 12 12 12
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845666
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 9 10 10 10
Cumulative number of tier-one supplier
customers (3), of which: 76 98 124 113 133
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868 89 108 100 117
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 40 61 54 64
Cumulative number of design-wins for
car models, net of terminated
projects
(4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844 101 210 151 275
Cumulative number of car models for
which we achieved SOP (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 56 109 71 131
OEM customers who contributed revenue
for the year/period: 69995
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812444
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868875
Tier-one supplier customers who
contributed revenue for the
year/period: 61 60 68 52 46
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853 52 48 35 35
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 28 43 33 24
Notes:
(1) OEM customer base includes OEMs who select our product solutions directly and those who select our
product solutions through tier-one supplier customers. Amongst these OEM customer base, we
recognize OEMs who directly engage us for businesses as our OEM customers. Nonetheless, the number
of OEM customer base is a key operating metric in guiding our operations as OEMs typically have the
ultimately discretion in selecting providers of ADAS and AD solutions.
(2) Represents the number of our OEM customers that directly select our product solutions and contributed
revenue as of the dates indicated; and “product solutions” and “license and services” lines represent the
number of OEM customers that we cooperated with and contributed revenue under the corresponding
model as of the dates indicated. An OEM customer may procure our solutions through both models, for
better solution performance or other reasons.
SUMMARY
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(3) Represents the number of our tier-one supplier customers as of the dates indicated; and “product
solutions” and “license and services” lines represent the number of tier-one supplier customer that we
cooperated with under the corresponding model as of the dates indicated. A tier-one supplier customer
may procure our solutions through both models, for better solution performance or other reasons.
(4) We obtained 16, 56, 145 and 199 design-wins for new energy vehicles (NEVs, comprising battery
electric vehicles, plug-in hybrid electric vehicles and fuel cell electric vehicles) accumulatively, and 28,
45, 65 and 76 design-wins for non-NEVs accumulatively, as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. We target all passenger vehicles, irrespective of whether they are NEVs or
non-NEVs, that can be equipped with ADAS and AD solutions.
(5) SOP refers to start of production, which indicates a project has progressed from contract stage to mass
production stage.
For the Y ear Ended
December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands, except as indicated otherwise)
Revenue from OEM customers (1), of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111888 48,074 221,182 74,945 94,109
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,709 258,585 747,572 52,793 424,397
Revenue from tier-one supplier (1) customers,
of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118158,887 266,964 283,442 115,929 127,508
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,348 178,803 209,197 94,530 260,874
Average OEM customer value (2)(3) , of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111888 24,037 55,295 18,736 23,527
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,785 32,323 93,447 7,542 84,879
Average tier-one supplier customer value (3)(4) ,
of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,998 5,134 5,905 3,312 3,643
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,823 6,386 4,865 2,865 10,870
Delivery volume of processing hardware
for the period (million units) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.0 1.5 2.1 0.7 1.0
Automotive product solutions average selling
price (5) (RMB/unit) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118208 213 239 256 231
Number of license and services contracts with
revenue recorded for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853 66 83 59 41
Notes:
(1) Revenue derived from OEM and tier-one supplier customers includes revenue derived from such
customers from mass-produced projects. During the Track Record Period, we also generated revenue
from (i) pre-mass-produced projects of OEM and tier-one supplier customers, (ii) projects with
customers who are neither OEMs nor tier-one suppliers but primarily focus on the automotive industry
(such as ecosystem partners, see “Business — Our Customers — Our Ecosystem Partners”), and (iii)
projects with customers who are neither OEMs nor tier-one suppliers and whose primary focus is not
automotive industry.
SUMMARY
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(2) Average OEM customer value refers to revenue generated from OEM customers during the year/period
divided by the number of OEM customers that directly engage us and contributed revenue during the
respective year/period. A total of one, two, four, four and four OEM customers directly engage us and
contributed revenue for product solutions and a total of six, eight, eight, seven and five OEM customers
directly engage us and contributed revenue for license and services in 2021, 2022 and 2023 and for the
six months ended June 30, 2023 and 2024, respectively.
(3) The contract amount of license and services as well as the corresponding revenue recognized during the
year/period vary significantly, depending on multiple factors such as, among others, the complexity and
variety of license and service provided, the specific demands of customers, the number of personnel and
amount of required and length of services. Similarly, the contract amount of our automotive product
solutions as well as the corresponding revenue recognized during the year/period also vary significantly
depending on OEMs’ and tier-one suppliers’ own production schedule as well as downstream demand
of the underlying vehicle models. This wide variation causes the average customer value to fluctuate
significantly from period to period because average customer value is heavily influenced by outliers or
extreme values, making the results anomalous. Therefore, the calculation is presented here for indication
only.
(4) Average tier-one supplier customer value refers to revenue generated from tier-one supplier customers
during the year/period divided by the number of tier-one supplier customers that directly engage us and
contributed revenue during the respective year/period. A total of 53, 52, 48, 35 and 35 tier-one supplier
customers directly engage us and contributed revenue for product solutions and a total of 15, 28, 43, 33
and 24 tier-one supplier customers directly engage us and contributed revenue for license and services
in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively.
(5) Automotive product solutions average selling price for the period equals revenues derived from product
solutions divided by the delivery volume of processing hardware integrated with algorithms and
software during the respective period.
For the analysis and trends of the operating data, please see “Financial Information —
Key Operating Data” for details.
KEY FINANCIAL RATIO
The following table sets forth our key financial ratios as of the dates or for the periods
indicated.
For the Y ear Ended/As of December 31,
For the
Six Months
Ended/As of
June 30,
2021 2022 2023 2024
Revenue growth /H1118/H1118/H1118/H1118/H1118/H1118N/A(1) 94.1% 71.3% 151.6%
Gross profit growth /H1118/H1118/H1118/H1118N/A(1) 89.6% 74.3% 226.0%
Gross margin /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111870.9% 69.3% 70.5% 79.0%
Net loss margin /H1118/H1118/H1118/H1118/H1118/H1118(442.1%) (962.9%) (434.3%) (545.5%)
Adjusted net loss margin
(non-IFRS measure) /H1118/H1118 (236.4%) (208.8%) (105.4%) (86.0%)
Return on assets /H1118/H1118/H1118/H1118/H1118/H1118(19.5%) (88.1%) (42.5%) (34.1%)
Current ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111852.4% 32.4% 33.6% 28.7%
Quick ratio /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111851.8% 31.1% 31.7% 27.1%
SUMMARY
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Note:
(1) Labeled as “N/A” as the financial information for the year ended December 31, 2020 was not within the
Track Record Period.
PATH TO PROFITABILITY
Despite our rapid growth, we were loss-making during the Track Record Period. In 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred losses for
the period of RMB2,063.6 million, RMB8,720.4 million, RMB6,739.1 million, RMB1,888.5
million and RMB5,098.1 million, respectively, and adjusted net loss (Non-IFRS measure) of
RMB1,103.2 million, RMB1,891.4 million, RMB1,635.2 million, RMB996.0 million and
RMB803.9 million, respectively. Our revenue increased significantly during the Track Record
Period and amounted to RMB466.7 million, RMB905.7 million, RMB1,551.6 million,
RMB371.5 million and RMB934.6 million in 2021, 2022 and 2023 and for the six months
ended June 30, 2023 and 2024, respectively. Our adjusted net loss (Non-IFRS measure) as a
percentage of revenue significantly narrowed during the Track Record Period. In the coming
years, we plan to break-even and realize profitability by implementing business initiatives of
expanding revenue scale, maintaining gross margin profile, enhancing operating leverage and
improving operations of CARIZON. Our losses during the Track Record Period were primarily
due to:
 Substantial upfront investment required;
 Economies of scale are still materializing;
 Share of results of investments accounted for using the equity method; and
 Fair value change of preferred shares and other financial liabilities.
Expanding Our Revenue Scale
We are a company under rapid growth. Our revenue increased significantly during the
Track Record Period and amounted to RMB466.7 million, RMB905.7 million, RMB1,551.6
million, RMB371.5 million and RMB934.6 million in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively, representing year-over-year/period-over-
period revenue growth rates of 94.1% in 2022, 71.3% in 2023, and 151.6% for the six months
ended June 30, 2024, respectively. We expect that our revenue will grow further due to the
following factors:
 Leverage positive industry tailwind. Benefiting from the consumer acceptance and
preferences for smart vehicles, enhanced driving safety standards and robust
technology development, the smart vehicle markets in China and globally are
expected to maintain significant growth momentum in the future. Looking ahead,
SUMMARY
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benefiting from our industry leading position, unique software-hardware co-
optimization approach, research and development capabilities, comprehensive
product portfolio and open platform with thriving ecosystem, we are poised to
maintain this momentum and continue our revenue growth trajectory.
 Capitalize on robust backlogs. We have secured robust backlogs of orders for
vehicles not yet mass-produced. As of June 30, 2024, vehicle models that have yet
to achieve mass production represented more than 50% of all vehicle models of
which we have obtained design-wins. As of the Latest Practicable Date, among our
total design-wins, over 135 car models were under development process towards
mass production, representing our backlogs of potential orders for vehicles not yet
mass-produced. Future commercialization of vehicle models that have yet to achieve
mass production can further support our future revenue growth in the years to come.
Even before a car model reaching mass production, we usually generate revenue
from development and engineering services, licenses or potential delivery of product
solutions.
 Attract new customers. We plan to further grow the size of our customer base,
leveraging our current flexible business model and industry-leading open platform.
 Expand collaboration with existing customers. Our future growth is dependent on
our ability to maintain and deepen relationships with our existing customers. By
committing to expand and deepen such relationships, we can scale deployments of
our solution in tandem with our customers’ increasing production volumes of
vehicles equipped with our solutions. Moreover, OEMs who have found success
with our solutions in one of their vehicle models would typically expand
collaboration with us to more vehicle models. Furthermore, we have the opportunity
to offer more advanced solutions and more components from our offerings to our
customers.
 Expand to new geographies. We aim to extend our reach beyond markets in China
and bring our solutions to enable global partners. We intend to enhance our
international presence through partnering with global OEMs and tier-one suppliers
to explore global markets, particularly in Japan, South Korea and Europe.
 Introduce new solutions with higher price meeting the surging demand for smart
vehicles. We plan to introduce new solutions with more advanced technologies. We
believe more advanced driving automation technologies allow us to charge a higher
price, which can further boost our revenue growth.
SUMMARY
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Maintaining Our Gross Margin Profile
Our future profitability also depends on our ability to sustain the current level of margin
profile and introduce new solutions with high margin profile. Specifically, we expect to
optimize our gross margin profiles by implementing (i) continuous innovation, (ii) supply
chain management and improvement and (iii) business mix optimization.
Enhancing Operating Leverage
During the Track Record Period, we incurred significant operating expenses, including
research and development expenses, administrative expenses and selling and marketing
expenses, to develop, manage and promote our automotive solutions. In the future, we will
continue optimizing our research and development as well as sales and administrative functions
to support our long-term business growth.
Improving Operations of CARIZON
We strategically partner with V olkswagen Group, a global industry giant through
CARIZON, to capture the future opportunities of customized driving automation solutions in
China. CARIZON was established in November 2023 and is still in ramping up stage with no
revenue generated yet. We have picked up CARIZON’s losses as share of losses of investments
accounted for using the equity method since its establishment. As CARIZON is still ramping
up, we expect to continue to pick up such share of losses. Benefiting from synergies with
V olkswagen Group (CARIZON’s largest shareholder and customer), CARIZON has a clear
go-to-market strategy of providing tailored products and services towards vehicles V olkswagen
Group sells in China and can effectively drive revenue growth by fulfilling orders from
V olkswagen Group. Therefore, we believe CARIZON will be able to continuously deploy its
products to mass-produced vehicles, especially the ones of V olkswagen Group. In addition, we,
as a shareholder of CARIZON, will also actively participate in its business operation by
bringing agile research and development process and local insights.
We believe the implementation of the aforesaid approaches can positively affect our
profitability. Specifically, expanding revenue scale has the potential of boosting profit while
increasing profit margins, particularly when accompanied by our efforts to maintain profit
margin profiles through continuous innovation, supply chain management and improvement
and business mix optimization. Furthermore, enhancing operating leverage through continuous
optimization of our research and development as well as sales and administrative functions
further refines our operating expenses to support long-term business growth. As a result of such
efforts, we witnessed an increase in revenue and gross profit as well as a decrease in operating
expenses as a percentage of total revenue during the Track Record Period. We will further
implement initiatives to boost the operating performance and efficiency of CARIZON to
minimize the impact of share of losses of CARIZON on our businesses. We believe these
efforts can collectively influence our performance and financial position, reinforcing our
competitive advantage in the market, which may further drive delivery volumes and attract
more design-wins and OEM customers to drive sustainable growth.
SUMMARY
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During the Track Record Period, we had funded our cash requirements primarily with
capital contribution from shareholders and financing through the Pre-IPO Investments. See
“History, Reorganization and Corporate Structure – Pre-IPO Investments.” We had net
operating cash outflow of RMB1,111.0 million, RMB1,557.3 million, RMB1,744.5 million,
RMB1,166.0 million and RMB726.0 million in 2021, 2022 and 2023, and for the six months
ended June 30, 2023 and 2024, respectively, cash at banks of RMB9,352.7 million,
RMB7,821.6 million, RMB12,077.5 million and RMB11,187.4 million as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively, and cash and cash equivalents of
RMB8,050.0 million, RMB6,608.7 million, RMB11,359.6 million and RMB10,452.4 million
as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Our total cash
balance is sufficient to cover our cash needs for operating activities and provides adequate
liquidity for our expansion and growth strategies. As such, we believe that we possess
sufficient working capital to finance our operations, after taking into account the financial
resources available to us.
Based on the foregoing, our Directors believe that our business is sustainable. For more
details, see also “Financial Information — Path to Profitability.”
RISK FACTORS
Our business and the Global Offering involve certain risks as set out in “Risk Factors” in
this Prospectus. You should read that section in its entirety carefully before you decide to invest
in our Shares. Some of the major risks we face include:
 We operate in a competitive market subject to an evolving landscape. If we fail to
meet evolving customer needs or the pace of industry innovation by improving our
existing solutions and introducing new solutions in a timely and cost-effective
manner, our competitive position would be impacted and our business, results of
operations and financial condition may be materially adversely affected;
 We have been and intend to continue investing significantly in research and
development, and to the extent our research and development efforts are
unsuccessful, our competitive position would be negatively impacted and our
business, results of operations and financial condition would be adversely affected;
 We cannot ensure that there will be sufficient future market adoption of ADAS and
AD solutions to drive our growth, nor can we ensure that industry developments as
well as market acceptance of ADAS and AD solutions will develop in our favor. If
the markets toward smart vehicles and ADAS and AD solutions falter, or if these
trends do not grow as rapidly or as positively as expected, our business, results of
operations and financial condition may be adversely affected;
 The interruption of requisite services from third-party partners may expose us to
supply chain risk that could harm our business;
SUMMARY
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 We depend on a limited number of third-party business partners for certain essential
materials, equipment and services;
 We face risks related to heightened regulatory and public scrutiny on our third-party
service providers. If such parties, their associates and/or network members are
subject to regulatory or public scrutiny, such as investigations and negative
publicity, our reputation, business and results of operations may be adversely
affected.
 Our customer concentration has been high and we currently generate a significant
share of our revenue from a limited number of customers. There still exists a risk of
customer concentration, and our revenue could be adversely affected if we lose or
are prevented from selling to any of our top customers;
 We are subject to the risks associated with sanctions and export controls laws and
regulations, international trade policies, and developing domestic and foreign laws
and regulations on smart vehicles and related technologies, and our business,
financial condition and results of operations could be adversely affected; and
 We have a history of losses and operating cash outflow as well as net current
liabilities and negative equity during the Track Record Period, and there is no
assurance that we will become or subsequently remain profitable.
WORKING CAPITAL SUFFICIENCY
Our Directors are of the opinion that, taking into account the financial resources available
to us , including (i) cash and cash equivalents, (ii) available equity financing and bank facilities
and (iii) the estimated net proceeds from the Global Offering, we have sufficient working
capital for our present requirement and for at least the next 12 months from the date of this
Prospectus.
After making reasonable inquiries of our management about our working capital, nothing
has come to the Joint Sponsors’ attention that would reasonably cause the Joint Sponsors to cast
doubt on the Directors’ view.
GLOBAL OFFERING STATISTICS
All statistics in the following table are based on the assumptions that (i) the Global
Offering has been completed and 1,355,106,600 Class B Ordinary Shares are issued pursuant
to the Global Offering (excluding any Class B Ordinary Shares which may be issued pursuant
to the exercise of the Over-allotment Option), (ii) 2,124,389,270 Class A Ordinary Shares in
issue, and (iii) 9,550,370,212 Class B Ordinary Shares in issue (including the Class B Ordinary
Shares on conversion of the Preferred Shares and Class A Ordinary Shares before Listing),
without taking into account any Class B Ordinary Shares that may be issued pursuant to the
Post-IPO Share Incentive Plan.
SUMMARY
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Based on the Offer
Price of HK$3.73
per Offer Share
Based on the Offer
Price of HK$3.99
per Offer Share
Market capitalization of our Shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
HK$48,601.4
million
HK$51,989.2
million
Unaudited pro forma adjusted net tangible
assets per Share (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118HK$1.02 HK$1.04
Notes:
(i) The calculation of market capitalization is based on 13,029,866,082 Class B Ordinary Shares expected
to be in issue immediately after completion of the Global Offering (assuming the Over-allotment Option
is not exercised).
(ii) The unaudited pro forma adjusted net tangible asset attributable to the equity holder of our Company
per Share is based on the consolidated statement of financial position as of June 30, 2024 after certain
pro forma adjustments without taking into account the conversion of convertible loan issued to CARIAD
Estonia AS. For further details, see “Appendix II — Unaudited Pro Forma Financial Information.”
DIVIDENDS
We have never declared or paid regular cash dividends on our Shares. Any declaration and
payment as well as the amount of dividends will be subject to our Articles and the Cayman
Companies Act. We currently do not have any dividend policy to guide our dividends
declaration or payments. Our board of directors has the discretion to pay interim dividends and
to recommend to Shareholders to pay final dividends, and will depend on a number of factors,
including our earnings, capital requirements, overall financial condition and contractual
restrictions. We may by ordinary resolution resolve to declare dividends in any currency and
authorize payment of the dividends out of the funds of the Company that are lawfully available,
provided that (i) no dividends shall exceed the amount recommended by our Board and (ii) no
dividends shall be paid except out of the realized or unrealized profits of the Company, out of
the share premium account or as otherwise permitted by law. As advised by our Cayman Islands
legal advisors, we are a holding company incorporated under the laws of the Cayman Islands,
pursuant to which, the financial position of net liabilities does not prohibit us from declaring
and paying dividends to our Shareholders. Dividends may still be declared and paid out of our
share premium account notwithstanding our profitability, provided that our memorandum and
articles of association do not prohibit such payment and our Company is able to pay its debts
as they fall due in the ordinary course of business immediately after such payment.
If we pay dividends in the future, in order for us to distribute dividends to our
Shareholders, we will rely to some extent on any dividends distributed by our PRC
subsidiaries. Any dividend distributions from our PRC subsidiaries to us will be subject to PRC
withholding tax. In addition, regulations in the PRC currently permit payment of dividends of
a PRC company only out of accumulated distributable after-tax profits as determined in
accordance with its articles of association and the accounting standards and regulations in
China. See “Financial Information — Dividends.”
SUMMARY
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LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we had not 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 and compliance.
According to our PRC Legal Adviser, the business operations we engaged in had been
carried out in compliance with applicable PRC laws and regulations in all material respects
during the Track Record Period and up to the Latest Practicable Date.
FUTURE PLANS AND USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$4,972.1 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming no Over-allotment Option is
exercised and an Offer Price of HK$3.86 per Offer Share, being the mid-point of the indicative
Offer Price range stated in the Prospectus, resulting in the gross proceeds of HK$5,230.7
million and listing expenses of HK$258.7 million.
We intend to use the net proceeds for the following purposes, subject to changes in light
of our evolving business needs and changing market conditions:
 Approximately 70%, or approximately HK$3,480.4 million, of the net proceeds will
be allocated over the next five years for research and development purposes;
 Approximately 10%, or approximately HK$497.2 million, of the net proceeds will
be allocated for sales and marketing related expenses;
 Approximately 10%, or approximately HK$497.2 million, of the net proceeds will
be allocated for future strategic investment into our joint ventures, particularly
CARIZON, thus broadening and strengthening our technology capabilities; and
 Approximately 10%, or approximately HK$497.2 million, will be allocated for
general corporate purposes and working capital needs.
For details, please see “Future Plans and Use of Proceeds.”
SUMMARY
–3 0–


--- page 41 ---
LISTING EXPENSES
The total listing expenses payable by our Company are estimated to be approximately
HK$258.7 million (or approximately RMB235.5 million) assuming the Over-allotment Option
is not exercised and based on an Offer Price of HK$3.86 (being the mid-point of our Offer Price
range of HK$3.73 to HK$3.99 per Offer Share), accounting for approximately 4.94% of gross
IPO proceeds. Among such estimated total listing expenses, (i) underwriting-related expenses,
including underwriting commission, are expected to be approximately HK$171.4 million, and
(ii) non-underwriting-related expenses of approximately HK$87.2 million, comprising (a) fees
and expenses of legal advisers and Reporting Accountant of approximately HK$46.0 million
and (b) other fees and expenses of approximately HK$41.2 million.
Among the total listing expenses payable of HK$258.7 million, HK$78.9 million is
expected to be expensed through the statement of profit or loss and the remaining amount of
HK$179.8 million is directly attributable to the issue of shares and deducted from equity. As
of June 30, 2024, we incurred listing expenses of HK$46.8 million expensed through the
statement of profit or loss and expected HK$32.1 million to be charged to the statement of
profit or loss after the Track Record Period.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in (a) the Class B Ordinary Shares in issue (including the Class B Ordinary Shares on
conversion of the Preferred Shares and the Class A Ordinary Shares before Listing) and to be
issued pursuant to the Global Offering (including any Class B Ordinary Shares which may be
issued pursuant to the exercise of the Over-allotment Option), (b) the Class B Ordinary Shares
that may be issued upon conversion of the Class A Ordinary Shares on a one-to-one basis, (c)
the Class B Ordinary Shares which may be issued under the Post-IPO Share Incentive Plan, and
(d) the Class B Ordinary Shares which may be issued under the convertible loan issued to
CARIAD Estonia AS taking into account the 9.9% threshold as disclosed in the section headed
“History, Reorganization and Corporate Structure — Convertible Loan”, assuming the
exchange rates as disclosed in the section headed “Information about this Prospectus and the
Global Offering — Exchange Rate Conversion” being adopted and the conversion price setting
at the low-end of the indicative Offer Price range. We satisfy the market capitalization/revenue
test under Rule 8.05(3) and Rule 8A.06 of the Listing Rules with reference to (i) our revenue
for the year ended December 31, 2023, which exceeds HK$1 billion, and (ii) our expected
market capitalization at the time of Listing, which exceeds HK$40 billion based on the low-end
of the indicative Offer Price range.
SUMMARY
–3 1–


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RECENT DEVELOPMENTS
As of September 30, 2024, we have obtained 290 design-wins of car model and 152 car
models achieved SOP accumulatively. As of August 31, 2024, we had cash and cash equivalent
of RMB7,374.7 million and unutilized banking facilities of RMB579.1 million.
We expect a significant increase in loss for the year ending December 31, 2024
primarily due to (i) our continuous investment in research and development. We have recorded
increased research and development expenses for the eight months ended August 31, 2024,
compared to the same period in 2023; (ii) fluctuations in fair value changes of our preferred
shares and convertible loans as a result of changes in our valuation and (iii) share of net losses
of investments accounted for using the equity method driven by expected net loss of
CARIZON, our joint venture initiative with V olkswagen Group. As CARIZON was established
on November 20, 2023 and is still in ramp-up stage with no revenue, we expect to continuously
pick up share of losses of investments in CARIZON for the year ending December 31, 2024.
Impact of COVID-19
The outbreak of COVID-19 pandemic had caused temporary disruption to our operations
since December 2020 and adversely affected OEMs, as our business activities including
research and development, manufacturing and sales generally slowed down due to temporarily
restrictive measures implemented, as well as the global supply shortage of auto parts such as
raw materials and components. In addition, due to COVID-19 and related restrictive measures,
some of our customers have delayed their launch of new car models. According to CIC, the
COVID-19 pandemic has led to disruptions in the auto-part supply-chain, such as production
halts, decreased output and extended delivery, among other issues. As the market demand for
auto-parts remained strong, such disruptions resulted in varying degrees of auto-parts shortages
globally, including the automotive semiconductors. As a result, the global average price of
automotive semiconductors hiked approximately 10.4% in 2022. Starting from the second half
of 2023, the impact of automotive semiconductor shortages on the global automotive industry
and our operations have started to subside, and the global supply of automotive semiconductors
is gradually returning to normal, as evidenced by the growth rate of global average price of
automotive semiconductors decelerating to approximately 5.0% in 2023, which is expected to
turn negative in 2024, according to CIC. Given that restrictions related to COVID-19 have been
substantially lifted and business activities are normalizing globally, our Directors are of the
view that COVID-19 did not have any material adverse impact on our business during the
Track Record Period and up to the Latest Practicable Date.
No Material Adverse Change
Our Directors confirm that, up to the date of Prospectus, there has been no material
adverse change in our financial, operational or trading position since June 30, 2024, being the
date on which the latest audited consolidated financial information of our Group was prepared
in Appendix I in this Prospectus, and there had been no event since June 30, 2024 that would
materially affect the information shown in the Accountant’s Report set out in Appendix I to this
Prospectus.
SUMMARY
–3 2–


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In this Prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain other terms are explained in the section headed
“Glossary of Technical Terms” in this Prospectus.
“2018 Share Incentive Plan” The 2018 Share Incentive Plan adopted by the Company
in 2015 and amended on November 16, 2018, the
principal terms of which are set out in the section headed
“Statutory and General Information — D. Share Incentive
Plans” in Appendix IV to this Prospectus
“Accountant’s Report” the accountant’s report of our Company, the text of which
is set out in Appendix I to this Prospectus
“affiliate(s)” with respect to any specified person, 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 (ʿৌ
ਕිజ҅)
“Articles” or “Articles of
Association”
the articles of association of our Company with effect
upon the Listing Date (as amended from time to time), a
summary of which is set out in Appendix III to this
Prospectus
“associate(s)” has the meaning ascribed thereto under the Listing Rules
“Audit Committee” the audit committee of the Board
“Beijing Horizon Robotics” Beijing Horizon Robotics Technology Research and
Development Co., Ltd. (ࠢ
ʮ̡), a limited liability company incorporated under the
laws of the PRC on July 14, 2015, and a wholly-owned
subsidiary of the Company
“Board”, “Board of Directors”
or “our Board”
the board of Directors of the Company
“Business Day” a day on which banks in Hong Kong are generally open
for normal business to the public and which is not a
Saturday, Sunday or public holiday in Hong Kong
DEFINITIONS
–3 3–


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“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the
Global Offering and has the meaning ascribed thereto
under the Listing Rules
“CARIZON” Carizon (Beijing) Technology Co., Ltd ( ბြ೻(̏ԯ)߅
ʮ̡), the joint venture established by the
Company through its wholly-owned subsidiary Horizon
Together Holding Ltd. and CARIAD Estonia AS in the
PRC on November 20, 2023
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“China” or “the PRC” the People’s Republic of China, unless the context
requires otherwise, excluding, for the purposes of this
Prospectus only, the regions of Hong Kong, Macau and
Taiwan of the People’s Republic of China
“CIC” China Insights Industry Consultancy Limited ( ӧᗆБุ
ʮ̡), an independent professional market
research and consulting company
“Circular 37” the Notice of the SAFE on Issues Concerning Foreign
Exchange Administration of the Overseas Investment and
Financing and the Round-Tripping Investment Made by
Domestic Residents through Special-Purpose Companies
(ʮ̡ྤ̮
)
“Class A Ordinary Shares” Class A ordinary shares in the share capital of the
Company with a par value of US$0.0000025 each,
conferring weighted voting rights in the Company such
that a holder of a Class A ordinary share is entitled to ten
votes per share on all matters subject to the vote at
general meetings of the Company, subject to the
requirements under Rule 8A.24 of the Hong Kong Listing
Rules that the Reserved Matters shall be voted on a one
vote per share basis
DEFINITIONS
–3 4–


--- page 45 ---
“Class B Ordinary Shares” Class B ordinary shares in the share capital of the
Company with a par value of US$0.0000025 each,
conferring a holder of a Class B ordinary share one vote
per share on all matters subject to the vote at general
meetings of the Company
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“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
“Companies Act” or “Cayman
Companies Act”
the Companies Act (As Revised) of the Cayman Islands
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
“Company”, “our Company”, or
“the Company”
Horizon Robotics, an exempted company with limited
liability incorporated under the laws of the Cayman
Islands on July 21, 2015
“Compliance Adviser” Somerley Capital Limited
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholders” has the meaning ascribed to it under the Listing Rules and
refers to Dr. Yu, Everest Robotics Limited and Horizon
Robotics, Inc., details of which are set out in the section
headed “Relationship with the Controlling Shareholders”
“core connected person(s)” has the meaning ascribed thereto under the Listing Rules
“Corporate Governance Code” the Corporate Governance Code set out in Appendix C1
to the Listing Rules
“Corporate Governance
Committee”
the corporate governance committee of the Board
DEFINITIONS
–3 5–


--- page 46 ---
“CSRC” China Securities Regulatory Commission ( ʕ਷ᗇՎ္ຖ
ึ)
“Director(s)” the director(s) of our Company
“Dr. Yu” Dr. Kai Yu ( Я௱), the chairman, an executive Director
and the chief executive officer of our Company, and a
Controlling Shareholder
“Dr. Huang” Dr. Chang Huang ( ර࿫), an executive Director and the
chief technology officer of our Company
“EIT” enterprise income tax
“EIT Law” the PRC Enterprise Income Tax Law ( ʕശɛ͏΍ձ਷
)
“ESG” Environmental, Social and Governance
“Exchange Participant” a person (a) who, in accordance with the Hong Kong
Listing Rules, may trade on or through the Hong Kong
Stock Exchange; and (b) whose name is entered in a list,
register or roll kept by the Hong Kong Stock Exchange as
a person who may trade on or through the Hong Kong
Stock Exchange
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“FINI” “Fast Interface for New Issuance”, the online platform
operated by HKSCC that is mandatory for admission to
trading and, where applicable, the collection and
processing of specified information on subscription in
and settlement for the Listing
“Global Offering” the Hong Kong Public Offering and the International
Offering
DEFINITIONS
–3 6–


--- page 47 ---
“Group”, “our Group”, “our”,
“we” or “us”
our Company and its subsidiaries, or any one of them as
the context may require, and where the context requires,
the businesses operated by our Company and/or its
subsidiaries and their predecessors (if any)
“HK eIPO White Form ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name by submitting applications
online through the designated website at www.hkeipo.hk
“HK eIPO White Form Service
Provider”
the HK eIPO White Form service provider designated
by our Company as specified on the designated website at
www.hkeipo.hk
“HK$” or “Hong Kong Dollars”
or “HK Dollars” and
“HK cents”
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 EIPO channel” the arrangement in HKSCC Operational Procedures for
instructions to be given electronically to HKSCC by
participants via FINI for applications to be made on their
behalf for new issue shares and for the payment of
application moneys, and for those instructions to be acted
upon
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“HKSCC Operational
Procedures”
the operational procedures of the HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of the systems established,
operated and/or otherwise provided by or through
HKSCC (including FINI and CCASS) as from time to
time in force
“HKSCC Participant(s)” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
DEFINITIONS
–3 7–


--- page 48 ---
“HKSCC Rules” the General Rules of HKSCC and as may be amended or
modified from time to time and where the context so
permits, shall include the Operational Procedures of
HKSCC
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Offer Shares” 135,511,200 Class B Ordinary Shares (subject to
reallocation as described in the section headed “Structure
of the Global Offering”) initially offered by our Company
for subscription at the Offer Price pursuant to the Hong
Kong Public Offering
“Hong Kong Public Offering” the offering of the Hong Kong Offer Shares for
subscription by the public in Hong Kong at the Offer
Price (plus brokerage, SFC transaction levy, AFRC
transaction levy and Stock Exchange trading fee), on and
subject to the terms and conditions described in
“Structure of the Global Offering — The Hong Kong
Public Offering”
“Hong Kong Share Registrar” Tricor Investor Services Limited
“Hong Kong Stock Exchange”
or “Stock Exchange”
The Stock Exchange of Hong Kong Limited, a wholly-
owned subsidiary of Hong Kong Exchanges and Clearing
Limited
“Hong Kong Takeovers Code”
or “Takeovers Code”
the Codes on Takeovers and Mergers and Share Buy-
backs issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Hong Kong Underwriters” the underwriters of the Hong Kong Public Offering listed
in the section headed “Underwriting — Hong Kong
Underwriters”
“Hong Kong Underwriting
Agreement”
the underwriting agreement dated Tuesday, October 15,
2024, relating to the Hong Kong Public Offering entered
into by, among others, our Company, the Overall
Coordinators and the Hong Kong Underwriters, as further
described in the section headed “Underwriting —
Underwriting Arrangements and Expenses — Hong Kong
Public Offering — Hong Kong Underwriting Agreement”
DEFINITIONS
–3 8–


--- page 49 ---
“Horizon Anting” Shanghai Anting Horizon Zhineng Transportation
Technology Co., Ltd. (ή̻ᇞ౽ঐʹஷҦஔϞ
ʮ̡), a limited liability company incorporated under
the laws of the PRC on March 24, 2017, and a wholly-
owned subsidiary of the Company
“Horizon Hangzhou” Horizon Journey (Hangzhou) Technology Co., Ltd. ( ή̻
೻(ψ)ʮ̡), a limited liability company
incorporated under the laws of the PRC on June 4, 2020,
and a wholly-owned subsidiary of the Company
“Horizon Hong Kong” Horizon Robotics Holdings Limited, a limited liability
company incorporated under the laws of Hong Kong on
August 6, 2015, and a wholly-owned subsidiary of the
Company
“Horizon Information” Beijing Horizon Information Technology Co., Ltd. ( ̏ԯ
ʮ̡), a limited liability company
incorporated under the laws of the PRC on December 28,
2015, and a wholly-owned subsidiary of the Company
“Horizon Nanjing” Nanjing Horizon Robotics Technology Co., Ltd. (ԯή
ʮ̡), a limited liability company
incorporated under the laws of the PRC on July 27, 2016,
and a wholly-owned subsidiary of the Company
“Horizon Shanghai” Horizon Journey (Shanghai) Technology Co., Ltd. ( ή̻
೻(ɪऎ)ʮ̡), a limited liability company
incorporated under the laws of the PRC on March 26,
2018, and a wholly-owned subsidiary of the Company
“Horizon Shenzhen” Shenzhen Horizon Robotics Technology Co., Ltd. ( ଉέ
ʮ̡), a limited liability company
incorporated under the laws of the PRC on July 2, 2015,
and a wholly-owned subsidiary of the Company
“Horizon Technology” Nanjing Horizon Information Technology Co., Ltd. (ԯ
ʮ̡), a limited liability company
incorporated under the laws of the PRC on March 30,
2017, and a wholly-owned subsidiary of the Company
“IFRSs” the IFRS Accounting Standards, which include standards,
amendments and interpretations promulgated by
International Accounting Standards Board
DEFINITIONS
–3 9–


--- page 50 ---
“IIT Law” the Individual Income Tax Law of the PRC ( ʕശɛ͏
)
“Independent Third Party(ies)” any person(s) or entity(ies) who is not a connected person
of the Company within the meaning of the Listing Rules
“International Offer Shares” 1,219,595,400 Class B Ordinary Shares offered by our
Company pursuant to the International Offering (subject
to reallocation as described in the section headed
“Structure of the Global Offering”) together with any
additional Class B Ordinary Shares which may be allotted
and issued by our Company pursuant to the exercise of
the Over-allotment Option
“International Offering” the conditional placing of the International Offer Shares
by the International Underwriters at the Offer Price
outside the United States in offshore transactions in
reliance on Regulation S and in the United States to QIBs
only in reliance on Rule 144A or any other available
exemption from the registration requirements under the
U.S. Securities Act, in each case on and subject to the
terms and conditions of the International Underwriting
Agreement, as further described in the section headed
“Underwriting — International Offering”
“International Underwriters” the group of international underwriters who are expected
to enter into the International Underwriting Agreement to
underwrite the International Offering
“International Underwriting
Agreement”
the underwriting agreement relating to the International
Offering expected to be entered into on or about Tuesday,
October 22, 2024 by our Company and the International
Underwriters, as further described in the section headed
“Underwriting — International Offering”
“Joint Bookrunners” the joint bookrunners as named in the section headed
“Directors and Parties Involved in the Global Offering”
“Joint Global Coordinators” the joint global coordinators as named in the section
headed “Directors and Parties Involved in the Global
Offering”
“Joint Lead Managers” the joint lead managers as named in the section headed
“Directors and Parties Involved in the Global Offering”
DEFINITIONS
–4 0–


--- page 51 ---
“Joint Sponsors” the joint sponsors as named in the section headed
“Directors and Parties Involved in the Global Offering”
“Latest Practicable Date” October 8, 2024, being the latest practicable date for the
purpose of ascertaining certain information contained in
this Prospectus prior to its publication
“Listing” the listing of our Class B Ordinary Shares on the Main
Board
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or about Thursday, October
24, 2024, on which the Class B Ordinary Shares are to be
listed and on which dealings in the Class B Ordinary
Shares are to be first 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,
supplemented or otherwise modified from time to time)
“M&A Rules” the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (Իᒅ
)
“Main Board” the stock exchange (excluding the option market)
operated by the Stock Exchange which is independent
from and operated in parallel with the GEM of the Hong
Kong Stock Exchange
“Memorandum” or
“Memorandum of Association”
the memorandum of association of our Company,
conditionally adopted on October 8, 2024, with effect
from the Listing Date, as amended from time to time, a
summary of which is set out in Appendix III to this
Prospectus
“Memorandum and Articles” the Memorandum and the Articles
“MOFCOM” or “Ministry of
Commerce”
the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷
ਠਕ௅) (formerly known as the Ministry of Foreign
Trade and Economic Cooperation of the PRC ( ʕശɛ͏
௅))
DEFINITIONS
–4 1–


--- page 52 ---
“Ms. Tao” Ms. Feiwen Tao ( ௗ౵ත), an executive Director and the
chief operating officer of our Company
“Nanjing Development” Nanjing Horizon Technology Development Co., Ltd. (ی
ʮ̡), a limited liability company
incorporated under the laws of the PRC on April 24,
2018, and a wholly-owned subsidiary of the Company
“Nanjing Qingdihui” Nanjing Qingdihui Robotics Technology Co., Ltd. (ԯ
ʮ̡), a limited liability company
incorporated under the laws of the PRC on March 20,
2018, and a non wholly-owned subsidiary of the
Company
“NDRC” the National Development and Reform Commission ( ʕ
ึ)
“Nomination Committee” the nomination committee of the Board
“NPC” the National People’s Congress of the PRC ( ʕശɛ͏΍
ɽึ)
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage of 1%, SFC transaction levy of 0.0027%, Hong
Kong Stock Exchange trading fee of 0.00565% and
AFRC transaction levy of 0.00015%), expressed in Hong
Kong dollars, at which Hong Kong Offer Shares are to be
subscribed for pursuant to the Hong Kong Public
Offering and International Offer Shares are to be offered
pursuant to the International Offering, to be determined
as described in “Structure of the Global Offering —
Pricing and Allocation”
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares, together, where relevant, with any additional
Class B Ordinary Shares to be issued by our Company
pursuant to the exercise of the Over-allotment Option
“Overall Coordinators” the overall coordinators as named in the section headed
“Directors and Parties involved in the Global Offering”
DEFINITIONS
–4 2–


--- page 53 ---
“Over-allotment Option” the option expected to be granted by our Company to the
International Underwriters, exercisable by the Overall
Coordinators and the Joint Global Coordinators on behalf
of the International Underwriters, to require our
Company to allot and issue additional Class B Ordinary
Shares to the International Underwriters to, among other
things, cover over-allocations in the International
Offering, if any, details of which are described in
“Structure of the Global Offering — Over-allotment
Option”
“Overseas Listing Trial
Measures”
The Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies
and five supporting guidelines ( ྤʫΆุྤ̮೯БᗇՎ
ˏ) promulgated by
the CSRC on February 17, 2023 and became effective on
March 31, 2023
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“Post-IPO Share Incentive Plan” the share incentive plan adopted by the Company on
October 8 and taking effect on the Listing Date, the
principal terms of which are set out in the section headed
“Statutory and General Information — D. Share Incentive
Plans” in Appendix IV to this Prospectus
“PRC Company Law” the Company Law of the People’s Republic of China ( ʕ
جas amended, supplemented or
otherwise modified from time to time
“PRC Legal Adviser” King & Wood Mallesons, our legal adviser on PRC laws
in connection with the Global Offering
“Pre-IPO Investment(s)” the investment(s) in our Company undertaken by the
Pre-IPO Investors prior to this initial public offering,
details of which are set out in “History, Reorganization
and Corporate Structure”
“Pre-IPO Investor(s)” Holder(s) of Shares pursuant to the Pre-IPO Investments,
details of which are set out in the section headed
“History, Reorganization and Corporate Structure”
“Preferred Shares” preferred shares(s) in the share capital of the Company
DEFINITIONS
–4 3–


--- page 54 ---
“Price Determination Agreement” the agreement to be entered into between our Company
and the Overall Coordinators (for themselves and on
behalf of the Underwriters) on the Price Determination
Date to record the Offer Price
“Price Determination Date” the date, expected to be on or about Tuesday, October 22,
2024 on which the Offer Price is determined, or such later
time as the Overall Coordinators (for themselves and on
behalf of the Underwriters) and our Company may agree,
but in any event no later than 12:00 noon on Tuesday,
October 22, 2024
“Prospectus” this prospectus being issued in connection with the Hong
Kong Public Offering
“QIB(s)” qualified institutional buyers within the meaning of Rule
144A
“Regulation S” Regulation S under the U.S. Securities Act
“Remuneration Committee” the remuneration committee of the Board
“Renminbi” or “RMB” the lawful currency of the PRC
“Reorganization” the reorganization conducted by the Group described in
the section headed “History, Reorganization and
Corporate Structure — Reorganization” in this
Prospectus
“Reserved Matters” those matters resolutions with respect to which each
Share is entitled to one vote at general meetings of the
Company pursuant to Rule 8A.24 of the Hong Kong
Listing Rules, being: (i) any amendment to the
Memorandum and Articles, (ii) the variation of the rights
attached to any class of Shares, (iii) the appointment or
removal of an independent non-executive Director, (iv)
the appointment or removal of the Company’s auditors,
and (v) the voluntary winding-up of the Company
“Rule 144A” Rule 144A under the U.S. Securities Act
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
DEFINITIONS
–4 4–


--- page 55 ---
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“SAT” the State Taxation Administration of the PRC ( ʕശɛ͏
೼ਕᐼ҅)
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
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 and/or preferred shares in the share capital of
our Company of US$0.0000025 each
“Share Incentive Plans” individually and collectively, the 2018 Share Incentive
Plan and the Post-IPO Share Incentive Plan
“Shareholder(s)” holder(s) of our Share(s)
“Stabilizing Manager” Goldman Sachs (Asia) L.L.C.
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“subsidiary(ies)” has the meaning ascribed thereto under the Listing Rules
“substantial shareholder(s)” has the meaning ascribed thereto under the Listing Rules
“Track Record Period” the period comprising three financial years ended
December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024
“treasury shares” has the meaning ascribed thereto under the Listing Rules
“U.S. persons” U.S. persons as defined in Regulation S
“U.S. Securities Act” United States Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
DEFINITIONS
–4 5–


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“Underwriting Agreements” the Hong Kong Underwriting Agreement and/or the
International Underwriting Agreement, as the context
may require
“United States”, “USA” or
“U.S.”
the United States of America, its territories and
possessions, any State of the United States, and the
District of Columbia
“USD”, “US$” or “U.S. dollars” United States dollar, the lawful currency of the United
States
“V AT” value-added tax
“WVR Beneficiary(ies)” has the meaning ascribed to it under the Hong Kong
Listing Rules and unless the context otherwise requires,
refers to Dr. Yu and Dr. Huang, being the holders of the
Class A Ordinary Shares upon Listing
“WVR structure” has the meaning ascribed to it under the Hong Kong
Listing Rules
“%” per cent
DEFINITIONS
–4 6–


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This glossary contains explanations of certain technical terms used in this
Prospectus. As such, these terms and their meanings may not correspond to standard
industry meanings or usage of these terms.
“ACC” adaptive cruise control, a type of ADAS for road vehicles
that automatically adjusts the vehicle speed to maintain a
safe distance from vehicles ahead
“AD” autonomous driving. By utilizing various sensors,
cameras, and advanced software algorithms, AD aims to
enable vehicles to perceive their environment, make
decisions, and control their movements without human
intervention
“ADAS” advanced driver assistance system. ADAS is designed to
assist drivers in the operation and safety of vehicles, by
utilizing various sensors, cameras, and software
algorithms to provide additional functionalities and
enhance the driving experience
“AEB” automatic emergency braking, a system which can
automatically detect a potential forward collision and
activate the vehicle braking system to decelerate a
vehicle with the purpose of avoiding or mitigating a
collision
“APA” auto parking assist, an autonomous car maneuvering
system that moves a vehicle from a traffic lane into a
parking spot to perform parallel, perpendicular, or angle
parking
“API” application programming interface, a type of software
interface offering a service to other pieces of software
“AUTOSAR” AUTomotive Open System ARchitecture, a global
partnership of leading companies in the automotive and
software industry to develop and establish the
standardized software framework
“BEV” bird’s-eye view, an elevated view of an object or location
from a very steep viewing angle, creating a perspective as
if the observer were a bird in flight looking downwards
GLOSSARY OF TECHNICAL TERMS
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“BEV Transformer” one of the novel models in autonomous driving
“CAGR” compound annual growth rate, measures an investments’
average annual growth over a given period
“C-NCAP” China New Car Assessment Program, a vehicle safety
assessment program specific to China. C-NCAP evaluates
the safety performance of vehicles sold in the Chinese
market and provides safety ratings based on various crash
tests and assessment criteria
“CPCA” China Passenger Car Association
“design-win” large-scale adoption of the product or solution in vehicle
models
“ECU” electronic control unit
“EDA” electronic design automation
“E-NCAP” European New Car Assessment Program, a vehicle safety
assessment program specific to Europe. E-NCAP
evaluates the safety performance of vehicles sold in the
European market and provides safety ratings based on
various crash tests and assessment criteria
“FAE” field application engineer
“FPS” frame per second
“ICA” intelligent cruise assist
“IHB” intelligent high beam
“LCC” lane centering control
“Level 0”, “Level 1”, “Level 2”,
“Level 3”, “Level 4” and
“Level 5”
the levels of autonomous driving, also known as
taxonomy of driving automation for vehicles, categorize
the extent to which a vehicle is capable of operating
without human intervention, which levels are defined by
State Administration for Market Regulation, China
National Standardization Administration, see “Industry
Overview” for further details
GLOSSARY OF TECHNICAL TERMS
–4 8–


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“Level 2+” a commonly used term in the industry to describe system
that requires constant human supervision and can offer
functions surpassing Level 2 but not fully reaching
Level 3
“LiDAR” light detection and ranging
“LKA” lane-keeping assist
“MP” or “megapixels” a unit of measurement equivalent to 1,000,000 pixels
“NEV” new energy vehicle, comprising battery electric vehicles,
plug-in hybrid electric vehicles and fuel cell electric
vehicles
“NOA” navigate on autopilot, the autonomous navigation
capabilities that allow the vehicle to automatically
navigate and follow a designated route without the need
for constant input from human drivers
“OEM” original equipment manufacturer
“PCM” process control monitor
“PMIC” power management integrated circuits
“SALI” statutory automobile liability insurance
“Smart vehicles” a new generation of vehicles that can perceive its own
status, understand its surrounding environment, make
prompt decisions and react in due time
“SOP” start of production, the start of series production of
vehicles or vehicle parts
“TJA” traffic jam assist
“tier-one” or “tier-one supplier” the highest level of suppliers that directly provide
components, systems, or modules to OEMs
“top 10 Chinese OEMs” top 10 Chinese OEMs in terms of sales volume in 2023,
according to CIC
“TSR” traffic sign recognition
GLOSSARY OF TECHNICAL TERMS
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“VPA” valet parking assist
“Watt” a unit used to measure how much power something uses
or produces, and one watt is equivalent to one joule of
energy transferred or used per second
GLOSSARY OF TECHNICAL TERMS
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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.
We have included in this Prospectus forward-looking statements. Statements that are not
historical facts, including but not limited to statements about our intentions, beliefs,
expectations or predictions for the future, are forward-looking statements. When used in this
Prospectus, the words “aim”, “anticipate”, “believe”, “could”, “expect”, “going forward”,
“intend”, “ought to”, “project”, “seek”, “should”, “will”, “would”, “vision”, “aspire”, “target”,
“schedule”, and the negative of these words and other similar expressions, as they relate to us
or our management, are intended to identify forward-looking statements. Such statements
reflect the current views of our management with respect to future events, operations, liquidity
and capital resources, some of which may not materialize or may change. These statements are
subject to certain risks, uncertainties and assumptions, including the risk factors as described
in this Prospectus, some of which are beyond our control and may cause our actual results,
performance or achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking statements.
You are strongly cautioned that reliance on any forward-looking statements involves known
and unknown risks and uncertainties. The risks and uncertainties facing us which could affect
the accuracy of forward-looking statements include, but are not limited to, the following:
 our operations and business prospects;
 our ability to maintain relationship with, and the actions and developments
affecting, our suppliers and customers;
 future developments, trends and conditions in the industries and markets in which
we operate or plan to operate;
 general economic, political and business conditions in the markets in which we
operate;
 changes to the regulatory environment in the industries and markets in which we
operate;
 our ability to maintain the market leading positions;
 the actions and developments of our competitors;
 the ability of third parties to perform in accordance with contractual terms and
specifications;
 our ability to retain senior management and key personnel and recruit qualified staff;
FORW ARD-LOOKING STATEMENTS
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 our business strategies and plans to achieve these strategies;
 the effectiveness of our quality control systems;
 change or volatility in interest rates, foreign exchange rates, equity prices, trading
volumes, commodity prices and overall market trends, including those pertaining to
the PRC and the industry and markets in which we operate; and
 capital market developments.
By their nature, certain disclosures relating to these and other risks are only estimates and
should one or more of these uncertainties or risks, among others, materialize, actual results
may vary materially from those estimated, anticipated or projected, as well as from historical
results. Specifically but without limitation, sales could decrease, costs could increase, capital
costs could increase, capital investment could be delayed and anticipated improvements in
performance might not be fully realized.
Subject to the requirements of applicable laws, rules and regulations, we do not have any
or undertake no obligation to update or otherwise revise the forward-looking statements in this
Prospectus, whether as a result of new information, future events or otherwise. As a result of
these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this Prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this Prospectus are qualified by reference to the cautionary
statements in this section as well as the risks and uncertainties discussed in the section headed
“Risk Factors.”
In this Prospectus, statements of or references to our intentions or those of our Directors
were made as of the date of this Prospectus. Any such information may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
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An investment in the Offer Shares involves significant risks. You should carefully
consider all of the information in this Prospectus, including the risks and uncertainties
described below, before deciding to invest in the Offer Shares. The following is a
description of what we consider to be our material risks. Any of the following risks could
have a material adverse effect on our business, financial condition, results of operations
and growth prospects. In any such event, the market price of the Offer Shares could
decline, and you may lose all or part of your investment. Additional risks and
uncertainties not presently known to us, or not expressed or implied below, or that we
deem immaterial, could also harm our business, financial condition and results of
operations.
These factors are contingencies that may or may not occur , and we are not in a
position to express a view on the likelihood of any such contingency occurring. The
information given is as of the Latest Practicable Date unless otherwise stated, will not
be updated after the date hereof, and is subject to the cautionary statements in the section
headed “Forward-Looking Statements” in this Prospectus.
RISKS RELATED TO OUR BUSINESS AND INDUSTRY
We operate in a competitive market subject to an evolving landscape. Our business is
characterized by rapid changes as well as new and disruptive technologies. If we fail to
meet evolving customer needs or the pace of industry innovation by improving our
existing solutions and introducing new solutions in a timely and cost-effective manner, our
competitive position would be impacted and our business, results of operations and
financial condition may be materially adversely affected.
We primarily compete in the ADAS and AD solutions market in China, which are
characterized by high competition and constant changes, including rapid technological
evolution, frequent introductions of new solutions, continual shifts in customer demands and
periodic emergence of new industry standards and practices. We also intend to expand our
global presence by following the footprints of our customers into regions such as Japan, South
Korea and Europe. The competitive landscape of these markets is subject to ongoing evolution
as it is heavily affected by the general economic, political, regulatory and social conditions of
such market and the competitive advancements in technology. Despite high barriers to entry,
there will be evolving uncertainties over the competitive nature of these markets as new
entrants may establish themselves. We also face fierce competition from other technologically
advanced ADAS and AD solutions providers and high-profile OEMs whose activities directly
affect and shape the pace of competition. Although OEMs who engage in self-development of
ADAS and AD solutions do not sell their product solutions to third-parties, and therefore do
not compete with us directly, their R&D efforts may affect the competitive landscape of the
market we operate in. Instead of direct competition, we consider OEMs’ R&D efforts essential
to further the development of the ADAS/AD technology. More software and hardware
companies, as well as automotive enterprises, are joining in the research and development and
RISK FACTORS
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product advancements. Therefore, it is essential for us to maintain a leading position in product
technology to adapt to and lead the changes in the industry landscape. This represents both
indirect competition and an opportunity for us, as we can provide the technological foundation
to empower these players. However, we cannot assure you that we can maintain the leading
position in the ADAS and AD solution market. According to CIC, over the past five years, at
least five domestic companies have indicated that they are engaged in the research and
development of products focused on ADAS and AD functionalities, or have stated that they
have made some progress in specific areas related to these technologies. Under this global
competitive environment, China’s passenger vehicle market is particularly competitive, and the
demand for vehicles equipped with ADAS and AD solutions may be volatile. Factors affecting
competition include, among others, technological innovation, product quality and safety,
product pricing, sales efficiency, manufacturing efficiency, quality of services and branding.
Increasing competition may lead to, among other things, lower vehicle unit sales and decreased
pricing on vehicles sold. Our future success will depend on our ability to develop superior
solutions and to maintain our leading competitive position with respect to our technological
advances over our existing and any new competitors. Although we believe that we are one of
a few providers of ADAS and AD solutions with unique software and hardware co-optimizing
capabilities that are essential to compete effectively in the ADAS and AD solutions industry,
there are significant challenges to stay competitive and we face competition from other
competitors, some of which have greater resources than we do.
The market opportunities that we are pursuing are at an early stage of development, and
it is difficult to predict customer demand or penetration rates for our solutions. Our technology
targeting ADAS and AD solutions requires significant investment and considerable time-to-
market, and may not be commercially successful on a large scale in the short term, or at all.
Although we have managed to accumulate demand and recognition for our solutions to a
certain degree due to our investment in research and development, our future growth depends
in part on the overall development trend of the ADAS and AD solutions and auto industry
acceptance of our technology. Our business is characterized by rapid changes as well as new
and disruptive technologies. Competitors might introduce innovative solutions or adopt
disruptive technologies that could further increase competition. The rapid pace of
technological innovation poses a significant risk to our business. As disruptive technologies
continue to emerge, they have the potential to reshape customer behaviors and preferences.
This evolution may render our existing technology solutions obsolete, potentially diminishing
our competitive edge. If we fail to adapt to these changes or invest in the necessary research
and development to keep up with industry advancements, we may lose market share and face
challenges in meeting customer expectations. Consequently, our financial performance and
growth prospects could be adversely affected.
RISK FACTORS
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Our business and future operating results will depend on our ability to upgrade existing
ADAS and AD solutions and underlying technology pillars, and introduce new ones that
incorporate the latest technological advancements to satisfy evolving demands, including
customer, regulatory, safety, and sensory requirements. Our success will depend, in part, on our
ability to respond to these changes and invest in research and technology accordingly in a
cost-effective and timely manner. We need to develop expertise across different industry
sectors and constantly anticipate the emergence of new technologies and assess their market
acceptance.
We must continue to accurately forecast customer demand in ADAS and AD solutions in
order to design and develop technology pillars that can meet customer needs. In fast-paced
industries subject to rapid technological change, our algorithms must be continually updated to
remain competitive in the market to continually deliver effective solutions to our customers.
We must continually refine our technology pillars underlying our ADAS and AD solutions,
which include, namely, algorithm, BPU, OpenExplorer, TogetheROS, AIDI and other software
to provide our customers with effective and flexible solutions that allow them to develop and
upgrade algorithms and applications which enhance the competitiveness of their automobile
products. If our solutions do not meet the evolving and increasing level of demands from our
customers, our customers may not incorporate our solutions into their own products, which will
reduce the demands for our solutions unless we invest additional resources to cater to such
customers’ specific demands. To this end, we must cooperate effectively on new designs with
OEMs and tier-one suppliers, respond effectively to technological changes or product
announcements by our competitors, develop and deliver next-generation solutions, and adjust
to changing market conditions and regulatory standards quickly and cost-effectively. We must
continue to make considerable investments in research and development, which may take
several years to ramp up, if at all, while improving our business capabilities in areas such as
intellectual property, licensing, and customer service. We cannot assure you that our strategic
direction will result in innovative solutions that provide value to our customers. For details, see
“— We have been and intend to continue investing significantly in research and development,
and to the extent our research and development efforts are unsuccessful, our competitive
position would be negatively impacted and our business, results of operations and financial
condition would be adversely affected.” If we are unable to effectively develop our technology
pillars, launch new solutions, or keep pace with rapid technological and industry changes, our
competitive position would be impacted and our business, results of operations and financial
condition could be materially adversely affected.
We have been and intend to continue investing significantly in research and development,
and to the extent our research and development efforts are unsuccessful, our competitive
position would be negatively impacted and our business, results of operations and
financial condition would be adversely affected.
We have been investing heavily in our research and development efforts. Our research and
development expenses were RMB1,143.6 million, RMB1,879.9 million, RMB2,366.3 million,
RMB1,049.0 million and RMB1,419.7 million in 2021, 2022 and 2023 and for the six months
ended June 30, 2023 and 2024, respectively, representing 245.0%, 207.6%, 152.5%, 282.4%
RISK FACTORS
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and 151.9% of our revenues in each of those periods, respectively. The industries in which we
operate are subject to rapid technological changes and are evolving quickly in terms of
technological innovation. We need to invest significant resources, including financial
resources, in research and development to make technological advances in order to expand our
offerings and make our solutions innovative and competitive in the market. As a result, we
expect that our research and development expenses will remain high.
However, our expenditures on research and development may not generate corresponding
benefits. We have been focusing on research and development efforts that emphasize the deep
integration and efficiency optimization of software, algorithms, and hardware consistently,
while taking into full consideration the industry’s understanding of algorithms, as well as the
usability and convenience of our development toolkits. However, we cannot guarantee that all
of our efforts on research and development can deliver benefits that we anticipate. Research
and development activities are inherently uncertain, and we may not be able to obtain and
retain sufficient resources including qualified research and development personnel. It is
possible that our research and development efforts on software-hardware co-optimization
approach may not work. Even if we succeed in our research and development efforts and
generate the results we expect, such results may not arrive in a timely manner as anticipated
and we may still encounter practical difficulties in commercializing our research and
development results. The market may not accept the software-hardware co-optimization
approach at the degree we expect, which may materially and adversely affect our business,
prospects, financial condition and results of operations. Given the fast pace with which
autonomous driving related technology has been and will continue to be developed, we may not
be able to timely upgrade our technology pillars in an efficient and cost-effective manner, or
at all. Despite our research and development expenditures, new technologies in the ADAS and
AD solutions industry could render our solutions that we develop or expect to develop in the
future obsolete or commercially nonviable, thereby limiting our ability to recover related
product development costs, which could result in a decline in our revenues, profitability and
market share.
We cannot ensure that there will be sufficient future market adoption of ADAS and AD
solutions to drive our growth, nor can we ensure that industry developments as well as
market acceptance of ADAS and AD solutions will develop in our favor. If the markets
toward smart vehicles and ADAS and AD solutions falter, or if these trends do not grow
as rapidly or as positively as expected, our business, results of operations and financial
condition may be adversely affected.
Currently, ADAS are becoming standard in the latest vehicle models and there are
increasing focus on high-level AD solutions from OEMs and consumers alike. However, there
is considerable uncertainty over the size and rate at which these markets will grow. Although
we have successfully grown demand for our solutions thus far, this is dependent on the trend
toward smart vehicles and ADAS and AD solutions as a growing segment of the automotive
industry. Therefore, our growth is highly dependent upon the worldwide adoption by
consumers of ADAS and AD solutions as well as the ability of OEMs to maintain and increase
consumer acceptance of ADAS and AD solutions. However, this interest in our industry is
dependent on general economic development, particularly in advanced industrialized
economies.
RISK FACTORS
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Within the automotive industry, our long-term growth opportunity will come from the
increasing emphasis on autonomous driving, which will require technological innovations of
increasing complexity in algorithms, software and hardware capabilities, and which are not
guaranteed developments for our industry or for our business. We cannot assure you that full
autonomous driving will ever be commercialized or that our industry or technology can move
from current levels of partial or conditional automation to full automation as predicted. Various
functions and capabilities are in different stages of development and their reliability must
continue to improve in order to meet the higher standards required for autonomous driving
solutions. We are also affected by industry trends such as consumer demand and market
acceptance for full autonomous driving, which has furthered interest in our ADAS and AD
solutions and aided our growth to date, but there is no assurance that full autonomous driving
will receive full market acceptance even if technologically feasible. Market acceptance of
ADAS and AD solutions may also be adversely affected by safety incidents involving ADAS
and AD solutions, even if the incidents do not involve our solutions. If the market that we
operate in does not grow as we expect, our revenue may decline or fail to grow.
We have also seen an increased demand for our technology and the growth of our business
that correlates with driver awareness and acceptance of the safety features our ADAS and AD
solutions provide. This acceptance and awareness are primarily due to the influence of
regulators and safety organizations that provide both mandates and incentives to OEMs to
include active safety technology in their vehicle models. However, should there be a slowing
of the increasing requirements for active safety technology, our growth might be limited and
our business, results of operations and financial condition may be adversely affected.
Conversely, if regulatory requirements of the smart vehicle sector tighten to impose a chilling
effect on the industry, we may be adversely affected if there is a diminished demand for our
solutions. External economy-wide and industry trends may impact our prospects by
diminishing demand for industry and our solutions, negatively affecting our business
operations, results of operations and financial condition.
We may not be able to successfully expand our market share given the intense
competition, and even if we can, an expansion of market share may not lead to
profitability.
The ADAS and AD solutions market in China, where we operate, is highly competitive.
For details, see “— We operate in a competitive market subject to an evolving landscape. If we
fail to meet evolving customer needs or the pace of industry innovation by improving our
existing solutions and introducing new solutions in a timely and cost-effective manner, our
competitive position would be impacted and our business, results of operations and financial
condition may be materially adversely affected.” We compete with many other players in the
industry whose businesses include the design and development of software, algorithms and
hardware related to ADAS and AD. We face increasingly intense competition with other
leading players in various aspects of our business, including solution coverage, product design,
processing capabilities as well as consumer experience. See “Industry Overview.” Competing
against players with more advanced technologies, products, and solutions may hinder our
ability to successfully expand our market share. Additionally, we might face competition from
RISK FACTORS
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--- page 68 ---
new entrants offering lower prices, which could impact our profitability. As a result of the
foregoing, our competitors may be more competitive, including having better financial
resources and/or being able to offer products at lower prices or with more favorable payment
terms. If we cannot compete effectively with existing or future competitors, our business,
results of operations and financial condition could be materially and adversely affected.
Furthermore, even if we are able to compete effectively, the expansion of market share may
come at the expense of our profitability, which may adversely affect our business, results of
operations and financial condition.
The interruption of requisite services from third-party partners may expose us to supply
chain risk that could harm our business.
A large number of suppliers provide materials, equipment and services that are used in our
ADAS and AD solutions and other aspects of our business. Where possible, we seek to have
several sources of supply. However, for certain materials, equipment, and services, especially
with respect to the manufacturing of our processing hardware, we rely on a single or a limited
number of partners. For details, see “— We depend on a limited number of third-party business
partners for certain essential materials, equipment and services.” Delays and other problems
experienced by our partners could negatively affect our business operations.
Our major suppliers are primarily manufacturers, assembly and testing service providers,
and IP vendors and EDA vendors. Charges from our largest supplier for the years ended
December 31, 2021, 2022 and 2023 and for the six months ended June 30, 2024 accounted for
20.8%, 15.7%, 19.5% and 12.0%, respectively, of our total purchase amount in each
year/period during those respective periods. Charges from our five largest suppliers for the
years ended December 31, 2021, 2022 and 2023 and for the six months ended June 30, 2024
accounted for 52.0%, 61.8%, 50.2% and 40.8%, respectively, of our total purchase amount in
each year/period during those respective periods. For details, see “Business — Our Suppliers
— Top Five Suppliers.” The stability of operations and business strategies of our suppliers are
beyond our control, and we cannot assure you that we will be able to secure a stable
relationship with such suppliers. Finding and qualifying alternate or additional suppliers and
vendors is often a lengthy process and can lead to production delays, interruptions to our
services, or additional costs, and such alternatives are sometimes not available at all. The
inability of suppliers or vendors to deliver necessary production materials, equipment, or
services can disrupt our provision of required solutions and make it more difficult for us to
implement our business strategy.
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As our business grows, we must continue to scale and adapt our supply chain or it could
have an adverse impact on our business. Therefore, we face several significant risks which
could have an adverse effect on our ability to meet customer demand, scale our supply chain
and/or negatively impact our business operations, gross margin, revenue and/or financial
results, including:
 any accidents and natural disasters faced by our suppliers at their facilities;
 bankruptcy or challenges of financial solvency faced by our suppliers;
 a failure by our suppliers to procure raw materials or to provide or allocate adequate,
or any, manufacturing or test capacity for our processing hardware;
 a failure by our suppliers to develop, obtain or successfully implement technologies;
 a lack of direct control over delivery schedules or quantity and quality of our
processing hardware; and
 delays in processing hardware shipments, shortages, a decrease in processing
hardware quality and/or higher expenses in the event our manufacturing partners
prioritize our competitors’ orders over our orders or otherwise.
Moreover, we face uncertainty in the continuation of these relationships if our suppliers
ever choose to not partner with us and instead form collaborations with our competitors. The
foregoing possibilities could reduce our ability to successfully execute our business strategy
and create competitive, appealing and user-friendly solutions for our customers. In particular,
our solutions may become less attractive in the market if we lose partner relations that have
improved their user experience and functionalities. It may be necessary in the future to
renegotiate agreements relating to various aspects of these collaborations or business
partnerships. The uncertainty of our business relations and the possibility of competitive
conditions leading to unfavorable outcomes may have a material adverse impact on our
business operations, results of operations, and financial condition.
Although we strive to diversify our supplier network and localize our overall supply
chain, finding alternate or additional suppliers is often a lengthy process and can lead to
production delays, interruptions to our services, or additional costs, and such alternatives are
sometimes not available at all. The inability of suppliers to deliver necessary production
materials, equipment, or services can disrupt the production processes of our solutions and
make it more difficult for us to implement our business strategy. Our suppliers may
periodically extend lead times, face capacity constraints, limit supplies, increase prices,
experience quality issues, or encounter cybersecurity or other issues that can interrupt or
increase the cost of our supply and services. Production of our solutions can be disrupted by
the unavailability of resources. The unavailability or reduced availability of materials or
resources would require us to reduce production or incur additional costs, which would harm
our business, results of operations and financial condition.
RISK FACTORS
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Moreover, given that we use several materials and services and rely on several suppliers
and vendors, but do not directly control the procurement or employment practices of such
suppliers and vendors, we could be subject to financial or reputational risks as a result of our
suppliers’ and vendors’ conduct. To the extent we are unable to manage these risks, our ability
to timely supply competitive solutions will be harmed, our costs will increase, and our
business, results of operations and financial condition would be adversely affected.
We depend on a limited number of third-party business partners for certain essential
materials, equipment and services.
We do not manufacture the processing hardware ourselves, and we do not own or operate
the relevant manufacturing facility. Instead, we are dependent on a limited number of partners
for their services, which reduces our control over quality, manufacturing yield, development,
enhancement and delivery schedules. In particular, we depend on an industry-leading
multinational semiconductor manufacturer (“Supplier A”), to manufacture our processing
hardware. For details on the background and transaction amount of Supplier A, see “Business
— Our Suppliers.” Because of the complex technology involved in our processing hardware,
any transition from Supplier A to a new manufacturer or, if there were a disaster or other
business disruption at any of Supplier A’s facilities involved in manufacturing our processing
hardware, introducing new manufacturers would take a significant period of time to complete
and would likely result in our having insufficient inventory and adversely affect our business,
results of operations and financial condition. Despite the fact that we have strategically
increased our inventory level of processing hardware, we are still vulnerable to the risk that
Supplier A may be unable to meet our future demand for processing hardware or cease
operations altogether. We do not enter into any long-term agreement with Supplier A, which,
according to CIC, is Supplier A’s customary practice. Moreover, we are vulnerable to the risk
that Supplier A may raise costs resulting from the global semiconductor shortage, especially
when our contractual relations with Supplier A are made on a purchase order basis and do not
lock in rates for the long term while both we and Supplier A remain free to terminate the
arrangement at any time.
Similarly, we also rely on certain other key third-party business partners for
manufacturing our processing hardware. For instance, we rely on an assembly and testing
service provider (“Supplier C”) to assemble and test interim processing hardware manufactured
by Supplier A. For details on the background and transaction amount of Supplier C, see
“Business — Our Suppliers.” Supplier C helps us to complete processing hardware as a typical
outsourced assembly and testing vendor and delivers the completed products to us. In addition,
we depend on the use of electronic design automation (“EDA”) tools to validate our processing
hardware’s design and rely on our EDA partners for provision of required EDA services to
support us in designing processing hardware. If any of our partners cannot perform its
respective obligations in the manner, quality and timeline as agreed, we may not be able to, on
a timely basis, find a suitable alternative on commercially acceptable terms. Any inability to
acquire sufficient quantities of high-quality supplies and other components in a timely manner
from these third-party partners could have a negative impact on our business operations and
financial condition.
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In addition to manufacturing our processing hardware, we have established partnership
relationships with various third-party hardware and software partners to further enhance the
capabilities of our ADAS and AD solutions. These partners generally include software and
algorithm developers, tier-one suppliers, and peripheral hardware manufacturers. However, our
partners may change their cooperation model at any time and any potential loss of these
relations may adversely affect our business. Our software and algorithm partners develop
application software using our technology pillars in areas of their expertise, and if we cannot
effectively provide technologies for their development use, the availability of software
offerings of our solutions in areas outside our technical expertise could decline and the
openness of our solutions may correspondingly diminish. Our tier-one suppliers customize and
optimize their products on a system-wide level to develop controllers and other modules
meeting automotive-grade standards of safety, reliability and quality. Collaboration with these
tier-one suppliers helps our ADAS and AD solutions reach more OEMs through the established
business network of these tier-one suppliers, and without their collaboration, the commercial
reach of our solutions and our ability to meet automotive-grade standards would diminish.
Peripheral hardware manufacturers collaborate with us to provide hardware that is compatible
with our solutions, and without their collaboration, we would be unable to provide effective
reference designs to our customers incorporating important peripheral hardware components.
Furthermore, our ability to receive required services or supplies could also be adversely
affected by international trade, export control, and sanctions policies and measures, geopolitics
and trade protection measures, including imposition of trade restrictions and sanctions. See “—
We are subject to the risks associated with sanctions and export controls laws and regulations,
international trade policies, and developing domestic and foreign laws and regulations on smart
vehicles and related technologies, and our business, financial condition and results of
operations could be adversely affected.”
We face risks related to heightened regulatory and public scrutiny on our third-party
service providers. If such parties, their associates and/or network members are subject to
regulatory or public scrutiny, such as investigations and negative publicity, our
reputation, business and results of operations may be adversely affected.
We engage third-party service providers for certain professional services, such as audit,
legal, tax, and consultancy services. Our third-party service providers, their associates and/or
network firms may, from time to time, be subject to heightened regulatory and public scrutiny,
which includes investigations by regulatory agencies, complaints to regulatory agencies,
negative media coverage and malicious allegations. If any of our third-party service providers
or their associates and/or network members is subject to regulatory penalties, sanctions or
suspension or is found in violation of any applicable rules and regulations, their ability to
provide services to us could be adversely affected, which, in turn, may adversely affect our
reputation, adversely affect or disrupt our business operations, financial reporting and/ or legal
and tax compliance, cause us to incur additional service costs, and subject us to public scrutiny.
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For example, a network firm of our Reporting Accountant has recently been the subject
of investigations by the PRC authorities in respect of its audit work for a PRC company
unrelated to our Group, as a result of which the PRC authorities imposed fines, sanctions and
a six-month business suspension, as well as local office closure on the network firm. Our
Reporting Accountant is also being investigated by the Accounting and Financial Reporting
Council (the “AFRC”) in Hong Kong for audit work for a related entity of the same PRC
company, according to the press statement issued by the AFRC. As of the Latest Practicable
Date, the investigation is still in progress. We are monitoring this development to assess its
potential impact. We may have to take specific measures, including, if deemed necessary,
engaging a new auditor. If we are not able to find a suitable alternative on a timely basis, our
future auditing and financial reporting process may be delayed.
Our customer concentration has been high and we currently generate a significant share
of our revenue from a limited number of customers. There still exists a risk of customer
concentration, and our revenue could be adversely affected if we lose or are prevented
from selling to any of our top customers.
Our operating results in the foreseeable future will continue to depend on contracts with
a limited number of OEMs and tier-one suppliers, as well as the ability of these customers to
sell products that incorporate our solutions. Revenue generated from our largest customer for
the years ended December 31, 2021, 2022 and 2023 and for the six months ended June 30, 2024
accounted for 24.7%, 16.0%, 40.4% and 37.6%, respectively, of our total revenue in each
year/period during those respective periods. Revenue generated from our five largest customers
for the years ended December 31, 2021, 2022 and 2023 and for the six months ended June 30,
2024 accounted for 60.7%, 53.2%, 68.8% and 77.9%, respectively, of our total revenue in each
year/period during those respective periods. Further, the amount of revenue attributable to any
single major customer, including CARIZON who was our largest customer in 2023 and for the
six months ended June 30, 2024, may fluctuate in any given period. If any of our major
customers scale back or terminate their business relationships with us, or if we are unable to
negotiate favorable contractual terms with them, or we are unable to secure new customers at
all or on favorable or comparable terms, our business, financial condition and results of
operations may be materially and adversely affected. For details, see “Business — Our
Customers — Top Five Customers.” Although we have entered into framework procurement
agreements with many of our customers, such agreements typically do not obligate them to
purchase our solutions in any certain quantity. There still exists a risk that any loss of sales
from our current customers could adversely affect our revenue. In the future, these customers
may decide to purchase fewer solutions than they did in the past, not to incorporate our
solutions into their business, delay their purchases of our solutions, purchase solutions from
our competitors, or to alter their purchasing patterns in some other way, particularly because:
 our customers may cancel, change or delay solutions purchase commitments with
little or no notice to us and without penalty;
 OEM customers cannot guarantee their volume of purchase as they are subject to
market acceptance of their products, which is also beyond their control to a large
extent;
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 although the business of ADAS and AD solutions bears high barriers to entry, some
of our customers may develop their own solutions;
 our customers may purchase solutions from our competitors, particularly if there are
delays or shortages in our supply chain or of our solutions;
 our partners may also discontinue sales or lose market share in the markets for which
they purchase our solutions; and
 the number of our OEM customers may decrease due to market consolidation in the
vehicle industry.
The occurrence of any of the foregoing factors may adversely affect our business, results
of operations, and financial condition.
Many of our OEM and tier-one supplier customers are large, multinational corporations
with substantial negotiating power relative to us and, in some instances, may have internal
solutions that are competitive to ours. These large, multinational corporations also have
significant development resources, which may allow them to acquire or develop independently,
or in partnership with others, competitive technologies. Meeting the technical requirements of
any of these companies and being selected by them for supplying ADAS and AD solutions will
require a substantial investment of our time and resources. We cannot assure you that our
ADAS and AD solutions will be selected by these or other companies or that we will generate
meaningful revenue from the sales of our solutions to these key potential customers. If our
solutions are not selected by these large corporations or if these corporations develop or
acquire competitive technology, our business, financial condition and results of operations
could be adversely affected.
Our business could also be adversely affected if our customers are not able to settle
accounts regularly or make payments on schedule. We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of certain of our customers to make
required payments. In the future, we may have to record additional provisions or write-offs
and/or defer revenue on certain sales transactions, which could negatively impact our financial
results, and we may not be able to acquire credit insurance on the credit we extend to these
customers or in amounts that we deem sufficient. Thus, as we generate a significant share of
our revenue from a limited number of customers, any loss or fluctuation in their business may
adversely affect our results of operations and financial condition.
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Technology companies, OEMs and tier-one suppliers have been self-developing, and may
start to self-develop ADAS and AD solutions, or technologies that are similar to ours,
which may reduce their demand for our solutions.
A growing number of established and new technology companies, OEMs and tier-one
suppliers have entered, or are reported to have plans to enter the market for ADAS and AD
solutions. Some of them have significantly greater or better-established resources than we do
to devote to the design, development, manufacturing, distribution, promotion, sale, and support
of ADAS and AD solution products. OEMs that have purchased our solutions in the past may
decide to design in-house solutions to replace our solutions that they currently implement. In
addition, our tier-one supplier customers may be developing or may in the future develop
competing solutions. Any of such self-development efforts of our customers, especially when
successful, may reduce their demand of our solutions and negatively impact our operational
and financial results.
We are subject to the risks associated with sanctions and export controls laws and
regulations, international trade policies, and developing domestic and foreign laws and
regulations on smart vehicles and related technologies, and our business, financial
condition and results of operations could be adversely affected.
Our operations may be negatively affected by trade policies, sanctions, export controls
and other regulations administered by the government authorities in the countries in and with
which we operate, including, but not limited to, regulation of economic and labor conditions,
increased duties, taxes and other costs. Margins on sales of our solutions in certain countries
and on sales of solutions that include components obtained from certain foreign suppliers could
be materially and adversely affected by international trade regulations, including duties, tariffs
and antidumping penalties. In addition to trade policy measures, the United States and certain
other governments have imposed and may adopt additional sanctions, export controls and other
regulatory measures that directly or indirectly affect China-based technology companies. These
types of laws and regulations may be subject to frequent changes, and their implementation,
interpretation and enforcement involve substantial uncertainties, which may be heightened by
potential national security concerns or other factors that are out of our control. Similar or more
expansive restrictions may be imposed by different jurisdictions in the future. We will need to
maintain heightened internal control and risk management policies to ensure sound compliance
with such restrictions, which requires significant resources and efforts. Furthermore, such
potential restrictions may materially and adversely affect our and our technology partners’
abilities to acquire technologies, systems, devices or components that may be critical to
business operations. Any of these developments could affect us, our customers and/or suppliers
or economic conditions generally, any of which could adversely affect our business and
financial condition.
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In respect of tariffs, on May 14, 2024, the Office of the United State Trade Representative
announced a plan to raise the tariff rate applicable to U.S. imports of electric vehicles from
China from 25% to 100%, and the Biden administration has said that they expect these higher
tariff rates on electric vehicle imports to become applicable at some point in 2024. Separately,
from August 21, 2024, the European Commission imposed higher tariffs on imports of electric
vehicles made in China. These new tariffs, which will apply across the European Union, range
from 17.0% to 36.3%, depending on the OEM that produced the vehicle. These new tariffs are
applicable to electric vehicles, not the ADAS and AD solutions that we sell; accordingly, these
new U.S. and EU tariffs are not applicable to our sales. However, these tariffs may adversely
impact the sales of some of our OEM customers in Europe and deter our customers from
pursuing sales in the United States, and if their production is reduced due to decreased demand
from these markets, they may reduce their purchases of our solutions. See “Regulatory
Overview — Tariff” for more details.
In addition to tariffs, certain foreign jurisdictions, in particular the United States, the
European Union and the United Kingdom, impose economic sanctions against countries and
specific entities and individuals as part of their national security policies. These economic
sanctions include those implemented by the U.S. Department of the Treasury’s Office of
Foreign Assets Control, or OFAC sanctions. In particular, in response to Russia’s conflict with
Ukraine, these jurisdictions have imposed far-reaching sanctions and export controls
restrictions on Russia, many Russian entities and individuals, and entities in other countries
that do business with Russia. As a result of these sanctions, sales to Russia, other business in
Russia, and business with sanctioned entities or individuals are subject to heightened
regulatory risks. These measures, as well as other economic and trade sanctions measures
maintained by the United States, the European Union, and other jurisdictions, may prohibit or
restrict our ability to conduct activities or dealings in or with certain targeted countries and
territories or involving certain targeted persons, or otherwise affect our business. Although we
take steps to comply with applicable laws and regulations, any failure by us to comply with
applicable sanctions or export controls rules may expose us to negative legal, business and
reputational consequences (including civil or criminal penalties), the loss of access to
controlled technologies, and government investigations. The United States, the European
Union, the United Kingdom or other jurisdictions could implement sanctions that restrict
certain of our operations and adversely affect our business, results of operations, and financial
condition, and these measures could materially and adversely affect our business and prospects.
See “Regulatory Overview — Sanctions Laws and Regulations” for more details.
Likewise, potential national security and foreign policy concerns may prompt
governments to impose trade or other restrictions, which could make it more difficult to sell
our solutions in, or restrict our access to, certain markets. In this regard, various trade, export
controls, and economic sanctions laws and regulations may affect our businesses. For instance,
in recent years, the United States has expanded sanctions and export controls restrictions on
China through the Export Administration Regulations (the “EAR”), administered by the Bureau
of Industry and Security of the U.S. Department of Commerce (the “BIS”). In addition to the
United States, Japan, the Netherlands and various other governments are also imposing
controls, licensing requirements and restrictions applicable to exports to China. These types of
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restrictions could impact our ability to supply customers of affected countries, territories and
entities and could restrict our ability to obtain components and technologies we incorporate in
or use to develop our solutions. Moreover, in August 2022, the U.S. enacted the Creating
Helpful Incentives to Produce Semiconductors and Science Act of 2022. Such act aims to
strengthen U.S. domestic semiconductor manufacturing, design and research, fortify the
economy and national security, and to help the U.S. compete economically against China.
With respect to U.S. export controls, in October 2022, BIS issued an interim final rule
(the “BIS October 2022 IFR”) aimed at restricting China’s ability to obtain advanced
computing integrated circuits, develop and maintain supercomputers, and manufacture
advanced semiconductors. In October 2023, BIS issued another interim final rule (the “BIS
October 2023 IFR”) that updated and expanded U.S. export controls imposed by the BIS
October 2022 IFR (collectively, and together with the BIS’s April 2024 interim final rule
making technical corrections and clarifications to the BIS October 2023 IFR, the “BIS 2022/23
IFRs”). Among other measures, the BIS 2022/23 IFRs add to the Commerce Control List
(which is a list of commodities, software, and technologies that are subject to the EAR’s more
restrictive controls) certain advanced and high-performance computing integrated circuits and
computer commodities that contain these integrated circuits, and impose new or expanded
license requirements for items subject to the EAR destined for an end-use in the development
or production of supercomputers, certain types of advanced node integrated circuits and
advanced, or semiconductor manufacturing equipment in certain jurisdictions, including China.
In addition to the restrictions introduced by the BIS 2022/23 IFRs, BIS maintains lists of
persons that are subject to enhanced export control restrictions. One such list, the Entity List,
includes a list of foreign persons on which certain trade restrictions are imposed, including
business, research institutions, government and private organizations, individuals and other
types of legal persons. The United States in recent years has placed an increasing number of
entities, including a number of entities in China, on the Entity List and other restricted or
prohibited parties lists. Given the sudden and unpredictable nature of these determinations, it
is difficult to predict developments in this area and we have no ability to influence such
determinations.
We believe that the EAR, including the BIS 2022/23 IFRs, have not meaningfully
impacted our ability to obtain the semiconductors and other technology that we incorporate
into our ADAS and AD solutions or that we otherwise use in our business, or our ability to
make sales to either our current customers or prospective customers that we expect to sell to
as we expand our business. See “Regulatory Overview — U.S. Export Control Laws and
Regulations” and “Business — U.S. Export Control Laws and Regulations” for more details.
However, as the Entity List and other sanctions and export controls laws and regulations,
including the EAR’s de minimis rule and the FRPR, continue to expand and evolve, future
sanctions and export controls may materially affect or target some of our significant customers
or suppliers, raw materials or key components or technologies necessary for our operations, in
which event our business may be affected if we fail to promptly secure alternative customers
or sources of supply on terms acceptable to us. These export controls could adversely affect us
and/or our supply chain, business partners, or customers, and our business, financial condition,
and results of operations may be significantly affected by the continued international trade and
political tensions.
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If new sanctions and export controls measures, including changes to the EAR’s de
minimis rule and FDPR, were to include a complete or more restrictive ban on products sales
to certain entities, it could impact not only our ability to continue supplying our solutions to
affected customers, but could also negatively affect our customers’ demand for our solutions,
and could even lead to changes in supply chains of ADAS and AD solutions, to the extent they
involve the use of items subject to the EAR or other applicable regulations. As our solutions
become more technologically advanced, there is also a greater likelihood of sanctions and
export controls regulations restricting our ability to obtain the components or technologies
necessary to produce them or otherwise to export or transfer our products and solutions. Even
if our ADAS and AD solutions are not directly targeted by these types of sanctions and export
controls, we may nonetheless face higher costs and expenses in our supply chain due to new
sanctions and export controls measures as our customers and business partners may be
negatively affected by sanctions and export controls measures directed at China.
The U.S. government has recently increased regulatory scrutiny on Chinese technology in
the U.S. automotive sector, citing national security and economic concerns. For example, on
February 29, 2024, the U.S. Department of Commerce commenced a study on the risks that
“connected vehicles” could pose to the United States and on March 1, 2024 published an
advance notice proposed rulemaking (“ANPRM”) that requested comments on issues related to
inputs (including software and hardware) from certain countries, including China, to the U.S.
information and communications technology and services supply chain for connected vehicles
in the United States. Further to the ANPRM, on September 26, 2024, BIS published a proposed
rule that would prohibit the importation into the United States of certain hardware related to
vehicle connectivity systems (“VCS”) from China or Russia. The proposed rule would also
prohibit the importation into or sale within the United States of completed connected vehicles
that incorporate certain software related to VCS or automated driving systems and would
prohibit manufacturers that are owned by, controlled by or subject to the jurisdiction of China
or Russia from selling in the United States completed connected vehicles that contain such
VCS hardware or covered software. The prohibitions on VCS hardware and covered software
would apply if such hardware or software is designed, developed, manufactured, or supplied
by persons owned by, controlled by, or subject to the jurisdiction of China or Russia. The
prohibitions would take effect in stages beginning with vehicles that are model year 2027, and
be implemented completely for vehicle model year 2030. Comments on the proposed rules are
due on October 28, 2024, and a final rule is expected to be published after the consideration
of those comments. Although we do not sell our products to customers in the United States or
to customers who incorporate them into products for sale to the United States and have no
intention to do so, the proposed rule or similar regulations could limit the potential market for
our solutions, specifically for end users in the United States market. Other countries could also
consider and adopt similar technology restrictions. Accordingly, we may be adversely affected
by new sanctions and export controls or other trade-related measures and our business,
financial condition and results of operations may suffer as a result.
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Moreover, in response to Russia’s conflict with Ukraine, the United States, the European
Union, and various other jurisdictions have imposed far-reaching sanctions and export controls
restrictions on Russia and many Russian entities and individuals such that sales to or other
business in Russia or with such restricted entities or individuals are subject to heightened
regulatory risks. These measures, as well as other economic and trade sanctions measures
maintained by the United States, the European Union, and other jurisdictions, may prohibit or
restrict our ability to, directly or indirectly, conduct activities or dealings in or with certain
targeted countries and territories or involving certain targeted persons, or otherwise affect our
business. New measures imposed by the United States, the European Union, or others could
restrict certain of our operations and adversely affect our business, results of operations, and
financial condition. Although we take steps to comply with applicable laws and regulations,
our failure to successfully comply with applicable sanctions or export controls rules may
expose us to negative legal and business consequences, including civil or criminal penalties,
the loss of access to controlled technologies, and government investigations.
We have a limited operating history, which makes it difficult to forecast our future results
of operations, and our historical growth may not be indicative of our future performance.
We commenced operations in 2015. As a result of our limited operating history, our ability
to accurately forecast our future results of operations is subject to a number of uncertainties
such as our ability to plan for and model future growth. We have experienced rapid growth
since the inception of our operations. However, our historical results may not provide a
meaningful basis for evaluating our business, results of operations, financial condition and
prospects, and we may encounter unforeseen expenses, difficulties, complications, delays and
other known and unknown factors, and may not be able to achieve promising results in future
periods. In future periods, our revenue growth may slow down or even decline for a number
of reasons, including slowing demand for our solutions and technologies, intensified
competition, material changes in technology, declining growth rate of our total addressable
market, or our failure to continue to take advantage of growth opportunities. If our assumptions
regarding risks and our future revenue growth turn out to be incorrect or if we do not respond
effectively to uncertainties and challenges, our operating and financial results could differ from
our forecast, and our results of operations and financial condition could be materially and
adversely affected.
As we continue to grow, we may not be able to effectively manage our growth and expand
our operations, which could negatively impact our operation performance, financial
condition and results of operations.
We have experienced significant growth in the past years. We act as a tier-two supplier
in the industry value chain and generate the vast majority of our revenue from the sale of
ADAS and AD solutions to OEMs and tier-one suppliers as well as related license and services.
We primarily make money from sale and delivery of our ADAS and AD solutions (“Solution
Delivery Model”) and/or providing licensing and related services (“Licensing and Service
Model”) to our customers. For details, see “Business — Our Products and Services.”
Benefiting from our monetization strategy, our revenues increased significantly from
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RMB466.7 million in 2021 to RMB905.7 million in 2022, and further to RMB1,551.6 million
in 2023. Our revenue increased from RMB371.5 million for the six months ended June 30,
2023 to RMB934.6 million for the six months ended June 30, 2024. As of December 31, 2023,
Horizon Mono has been the choice of more than 200 OEM car models and Horizon Pilot has
been the choice of more than 25 OEM car models. We plan to further grow our business by,
among other things, investing in technology, winning additional mass production contracts
with existing and new customers, strengthening our brand recognition, and expanding our
solutions to enable global partners. Our future operating results will depend to a large extent
on our ability to manage our expansion and growth successfully.
Risks that we face in undertaking this expansion include, among others:
 managing a larger organization with a greater number of employees in different
divisions;
 managing our supply chain to support fast business growth;
 controlling expenses and investments in anticipation of expanded operations;
 establishing or expanding research and development, sales and service facilities;
 implementing and enhancing administrative structure systems and processes;
 executing our strategies and business initiatives successfully;
 addressing new markets and potentially unforeseen challenges as they arise;
 improving our operational, financial and management controls, compliance
programs and reporting systems; and
 addressing new markets and potentially unforeseen challenges as they arise.
To effectively manage the expected growth of our operations, we will also be required to
refine our operational, financial and management controls and reporting systems and
procedures. Our current and planned staffing, systems, policies, procedures and controls may
not be adequate to support our future operations. If we fail to efficiently manage the expansion
of our business, our costs and expenses may increase faster than we planned and we may not
respond timely to competitive challenges or otherwise successfully execute our business
strategies. Our solutions mix may continue to change in the future, affecting our revenue mix,
and this may have an adverse impact on our profit margin. Our growth requires significant
financial resources and will place significant demands on our management. If we fail to
effectively manage the growth of our business and operations, our reputation, overall
prospects, and results of operations could be negatively impacted.
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We may be subject to risks associated with ADAS and AD technologies. The ADAS and AD
technologies used on passenger vehicles are highly complex and may contain defects or
otherwise fail to perform in line with expectations, which could reduce the market
adoption of our ADAS and AD solutions, damage our reputation with current or
prospective customers, expose us to product liability, quality and other claims
domestically or globally and adversely affect our results of operations.
ADAS and AD solutions and related products and services are sold to tier-one suppliers
and OEMs to be installed on vehicles. Those solutions are highly technical and very complex
and require high standards to manufacture and will likely in the future experience defects,
errors or reliability issues at various stages of development. We may be unable to timely release
new solutions, manufacture existing solutions, correct problems that have arisen or correct
such problems to our customers’ satisfaction. Additionally, undetected errors, defects or
security vulnerabilities, especially as new solutions are introduced or as new versions are
released, could result in serious injury or even death to the end users and/or passengers of
vehicles equipped with ADAS and AD solutions or those in the surrounding area, litigation
against the underlying ADAS and AD solutions providers, negative publicity and other
consequences. These risks are particularly prevalent in the ADAS and AD solutions industry.
ADAS and AD solutions are subject to risks and from time to time there have been
accidents associated with such technologies. Some errors or defects in our solutions may only
be discovered after they have been tested, commercialized and deployed by customers, in
which case we may incur significant additional development costs and product recall, repair,
replacement costs or compensation. The safety of ADAS and AD solutions depends in part on
driver interaction, and drivers may not be accustomed to using such technologies. To the extent
accidents associated with our ADAS and AD solutions occur, we could be subject to liability,
claims, government scrutiny and further regulation. Our reputation or brand may be damaged
as a result of these problems and customers may be reluctant to buy our solutions, which could
adversely affect our ability to retain existing customers and attract new customers and could
adversely affect our financial results. Although we attempt to remedy any issues we observe in
our ADAS and AD solutions as effectively and rapidly as possible, such efforts may not be
timely, may hamper production or may not be to the satisfaction of our customers. Furthermore,
accidents or defects caused by third parties’ ADAS and AD solutions may negatively affect
public perception, or result in regulatory restrictions, with respect to autonomous driving
technology.
Furthermore, any defects in or significant malfunctioning of our ADAS and AD solutions
may weaken customer confidence in ADAS and AD solutions. As the markets for ADAS and
AD solutions are evolving, the loss of customer confidence in ADAS and AD solutions could
have a material adverse impact on the future of such markets in general and our business
prospects in particular.
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Our ADAS and AD solutions may be affected by regulatory restrictions. For example, our
research and development activities on ADAS and AD solutions are subject to regulatory
restrictions on autonomous driving. See “Regulatory Overview — Regulations on Autonomous
Driving” for more details. Any tightening of regulatory restrictions could have a material
adverse impact on our development of ADAS and AD solutions.
In addition, the success of our ADAS and AD solutions depends on our successful
development of algorithms, and processing efficiencies of our processing hardware, and there
is no assurance that we can effectively develop our algorithms or improve efficiencies of our
processing hardware to maintain our competitiveness. Failure to deliver constant algorithm
innovation may adversely affect our business, financial condition and results of operations. In
addition, the performance level of advanced and sophisticated algorithms is often limited by
processing efficiencies, capacity and power efficiency of the processing hardware that runs the
algorithms. Such constraint is exacerbated in the domain of autonomous driving technology, as
smart vehicles require continuous, accurate, and real-time situational awareness by processing
a massive amount of multi-modal inputs. As such, our business and financial condition depend
on our ability to effectively improve the processing efficiencies and capacity of our processing
hardware to meet the future development of our algorithms for ADAS and AD solutions.
Our research and development as well as business operations are dependent on our
executives and key employees. If we are unable to attract, retain and motivate these
executives and employees, we may not be able to improve our solutions, obtain new
business opportunities and successfully execute our business strategies.
The market for high-caliber workers and leaders in our industry is extremely competitive.
To execute our business strategies successfully, we must attract, retain and motivate our
executives and key employees. In particular, hiring qualified executives, scientists, engineers,
technical staff and research and development personnel is costly and critical to our business.
Competition for personnel results in increased costs in the form of cash and stock-based
compensation. Nonetheless, we must recruit and develop diverse talent to remain competitive
in our industry. Effective succession planning is also important to our long-term success.
Failure to ensure effective transfer of knowledge and smooth transitions involving key
employees could hinder our strategic planning and execution. If we are less successful in our
recruiting efforts, or if we cannot retain key employees or their knowledge, our ability to
develop and deliver successful solutions may be adversely affected.
The interpretation and application of employment-related laws to our workforce practices
may result in increased operating costs and less flexibility in how we meet our workforce
needs. Changes in immigration and work permit laws and regulations or the administration or
interpretation of such laws or regulations could impair our ability to attract and retain highly
qualified employees. If we do not continue to anticipate and address the needs of our
employees sufficiently and/or in a timely manner, their productivity could be impacted, or we
could fail to retain them, which could have a material adverse impact on our future business
operations, results of operations and financial condition.
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The data privacy and data security laws, including those in China, are subject to rapid
and evolving changes, imposing significant compliance requirements on us, and any
failure or perceived failure to comply with such laws, or other concerns about our
practices or policies with respect to the processing of data, could materially and adversely
affect our business, financial condition, reputation and results of operations.
As our customers are OEMs and tier-one suppliers rather than individual consumers, we
do not collect personal information from third parties for our research and development
purposes. In the course of our research and development, we process data in compliance with
the applicable legal requirements and cooperate with qualified partners responsible for
desensitizing data and anonymizing personal information to ensure the data security.
Nonetheless, our operations subject us to laws and regulations on data privacy and security.
Failure to comply with the increasing number of data protection laws in the PRC as well as data
security and privacy laws in jurisdictions where we intend to operate as well as concerns from
our customers, employees and third parties with whom we conduct business, even if
unfounded, could damage our reputation and operating results. If we were to expand our
business globally, we would increasingly become subject to various laws, regulations and
standards, such as the General Data Protection Regulation, or GDPR, as well as contractual
obligations relating to data privacy and security in the jurisdictions in which we were to
operate. The regulatory and legal frameworks regarding data privacy and security issues in
many jurisdictions are constantly evolving and developing and can be subject to significant
changes from time to time, including in ways that may result in conflicting requirements among
various jurisdictions. Interpretation and implementation standards and enforcement practices
are similarly in a state of flux and are likely to remain uncertain for the foreseeable future. As
a result, we may not be able to comprehensively assess the scope and extent of our compliance
responsibility at a global level, and may fail to fully comply with the applicable data privacy
and security laws, regulations and standards. Moreover, these laws, regulations and standards
may be interpreted and applied differently over time and from jurisdiction to jurisdiction, and
it is possible that they will be interpreted and applied in ways that may be inconsistent with
our existing practices. We will need to maintain heightened internal control and risk
management policies to ensure sound compliance with such evolving policies, which requires
significant resources and efforts. The theft, loss, or misuse of data to run our business or by
our partners could result in significantly increased security costs, damage to our reputation,
regulatory proceedings, litigation, fines, investigations, remediation efforts, indemnification
expenditures, disruption of our business activities or other increased costs related to defending
legal claims.
In recent years, government authorities across the world have been increasingly focusing
on privacy and data protection. Particularly in China, the substantial base of our business
operations, the PRC government has enacted a series of laws and regulations on the protection
of data and personal information. For instance, the PRC Cybersecurity Law ( ʕശɛ͏΍ձ
) came into effect on June 1, 2017, the Standing Committee of the National
People’s Congress of China promulgated the PRC Data Security Law ( ʕശɛ͏΍ձ਷ᅰኽ
) which came into effect on September 1, 2021, the Provisions on Management of
Automotive Data Security (Trial)֛(༊Б)came into effect on
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October 1, 2021, the PRC Personal Information Protection Law (ࢹڦ
) came into effect on November 1, 2021, the Measures on Data Export Security
Assessment () came into effect on September 1, 2022. For details,
please see the section of “Regulatory Overview — Laws and Regulations on Information
Security and Data Privacy.”
We may be subject to laws and regulations regarding privacy and data protection in China
and other areas and jurisdictions, if applicable. In addition, as our customers expand their
footprints globally, they may leverage our solutions in other countries or territories outside
China and are thus required to comply with laws and regulations regarding privacy and data
protection in such jurisdictions. As a result, we may be required to upgrade our solutions to
help them comply with such laws and regulations. Up to the Latest Practicable Date, we had
not been subject to any inspection, action, compulsory administrative measure or penalty from
the PRC authorities or any other relevant regulatory bodies in relation to our compliance with
privacy and data protection laws and regulations.
We have adopted various measures to ensure legal compliance. See “Business — Data
Security and Privacy” for more information. However, the laws and regulations regarding
privacy and data protection in China, as well as in other jurisdictions, are generally complex
and evolving, with uncertainty as to the interpretation and application thereof. As such, we
cannot assure you that our privacy and data protection measures are, and will be, always
considered sufficient under applicable laws and regulations.
In addition to government regulation, privacy advocates and industry groups have and
may in the future propose self-regulatory standards from time to time. These and other industry
standards may legally or contractually apply to us, or we may elect to comply with such
standards. We expect that there will continue to be new proposed laws and regulations
concerning data privacy and security, and we cannot yet determine the impact such future laws,
regulations and standards may have on our business. New laws, amendments to or re-
interpretations of existing laws, regulations, standards and other obligations may require us to
incur additional costs and restrict our business operations. If so, in addition to the possibility
of fines, lawsuits, regulatory investigations, public censure, other claims and penalties, and
significant costs for remediation and damage to our reputation, we could be materially and
adversely affected if legislation or regulations are expanded to require changes in our data
processing practices and policies or if governing jurisdictions interpret or implement their
legislation or regulations in ways that negatively impact our business, financial condition and
results of operations. Any inability to adequately address data privacy or security-related
concerns, even if unfounded, or to comply with applicable laws, regulations, standards and
other obligations relating to data privacy and security, could require significant resources and
efforts, which have a material effect on our business, financial condition and results of
operations.
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While we strive to comply with our published privacy policy as well as all applicable data
privacy and security laws and regulations, and contractual obligations in respect of all data
(including personal data), there is no assurance that we are able to comply with these laws,
regulations and contractual obligations in all respects. Any failure or perceived failure by us,
our customers or business partners to comply may result in investigations, proceedings or
actions against us, including fines and penalties or enforcement orders (including orders to
cease processing activities) being levied on us by government agencies or proceedings or
actions against us by our business partners, customers or end users, including class action
litigation in certain jurisdictions, and could damage our reputation and discourage current and
future business partners and/or customers from using our solutions.
If we cannot timely upgrade our enabling software, namely our OpenExplorer,
TogetheROS and AIDI, our customers’ satisfaction with our solutions may decline, which
could adversely affect our future business operations, results of operations and financial
condition.
We provide a comprehensive set of software tools to facilitate our customers and
ecosystem partners in developing and customizing their applications. For instance,
OpenExplorer provides ready-to-use modules, algorithms and interface to ensure that user
algorithms are accurately and efficiently deployed on our processing hardware. TogetheROS is
a set of safe, simple and user-friendly autonomous driving embedded middleware, which
provides standardized automotive grade services and tools for accelerating mass production
readiness. AIDI is our software development platform, designed to accomplish automatic
iterative improvements of models with enhanced efficiency. For details, see “Business — Our
Technologies.” We must keep updating our software to lower our customers’ algorithm
development barrier and accelerating the large scale adoption of autonomous driving. If we fail
to provide our customers with convenient and user-friendly development tools and platform,
our value proposition and customer stickiness may decline, which may lead to reduced
customer engagements and satisfaction, thus adversely affecting our business operations,
results of operations, and financial condition.
If the flexibility and user-friendliness of our software does not meet customers’
preferences, or if we are not successful in maintaining and expanding the compatibility of
our solutions with third-party solutions, our business, financial condition, and results of
operations could be adversely impacted.
Our software provides a flexible and user-friendly option that allows for customization
but we cannot guarantee that this openness will be well received by all customers in the market.
Despite our confidence in its advantages, our flexible and user-friendly approach may capture
a smaller share of its total addressable market than expected. We cannot assure you of market
preferences and if for some reason our flexible and user-friendly models are less well received
than blackbox solutions provided by our competitors, we may capture a lower market share
than expected, and our business, results of operations and financial condition may suffer.
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In addition, our ADAS and AD solutions may be integrated with a variety of hardware and
software platforms and software applications, and we need to modify and enhance our
solutions’ compatibility to adapt to changes in hardware and software technologies in a timely
and cost-effective manner. Failure to ensure compatibility of our solutions may negatively
affect our competitive edge, and our business results of operations and financial condition
would be harmed. The competitive position of our solutions, including but not limited to our
open-ended software, depend, in part, on their ability to operate with the automotive solutions
of third parties, including that of our customers. We intend to facilitate the compatibility of our
solutions with various third-party hardware, software, and systems by maintaining and
expanding our business and technical relationships. However, we nonetheless depend on the
compatibility of our solutions with software and vehicles that we do not control. In the future,
our customers and ecosystem partners may choose not to support the operation of their
hardware, software, or vehicles with our solutions, or our solutions may not support the
capabilities needed to operate with such hardware, software, or vehicles. As a result, our
business, financial condition, and results of operations could be adversely impacted.
We invest significant effort and resources seeking OEM selection of our solutions, and
there can be no assurance that these efforts will result in the selection for production
models, nor is there a guarantee that our OEM customers or OEM end customers will
purchase our solutions in any certain quantity or at any certain price even after we obtain
the design-win, or we will retain or grow our business relations with existing OEM and
tier-one suppliers and there may be significant delays between the time we obtain the
design-win until we realize revenue from the vehicle model.
We invest significant effort and resources from our initial contact with an OEM until the
OEM chooses our ADAS and AD solutions and incorporate such into specific vehicle models.
This selection process, known as a “design-win,” involves substantial resource expenditure
with no guaranteed success. Once a design-win is achieved, it becomes difficult for unselected
products or technologies to replace the chosen one until a new OEM quotation request is
issued. Moreover, the winning solution provider often gains an advantage in future OEM
collaborations due to the established relationship, making it harder for competitors to win other
production model designs. If we fail to retain existing OEM and tier-one suppliers or if we fail
to win a significant number of design-wins in the future, we could expend our resources
without success, face greater difficulty in obtaining future design-wins, and our business
operations, results of operations and financial condition may be materially adversely affected.
Nevertheless, even with a design-win, there’s no guarantee that our customers will
purchase our solutions in large quantities or at all and at a price that will be profitable to us.
When achieving a design-win, it is common for us to get nomination letters through tier-one
suppliers from OEMs. However, these nomination letters are not legally binding, and the
forecasts contained within the nomination letters cannot guarantee accuracy. As a result,
obtaining a design-win is not a guarantee of revenue. Moreover, pricing estimates are made at
the time of a request for quotation by an OEM, so that worsening market or other conditions
between the time of a request for quotation and an order for our solutions may require us to
sell our solutions for a lower price than we initially expected. We may also face pricing
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pressures from our customers as a result of their restructuring, consolidation, and cost-cutting
initiatives or as a result of increased competition. We may adjust our selling prices dynamically
based on the customer profile and the sales forecast for their vehicles. If we are unable to
operate efficiently or introduce solutions with additional features and functionality at higher
price points to offset price reductions, our business, financial condition and results of
operations could be adversely affected. In addition, it is possible that OEMs may opt to
independently develop specific components for their ADAS and AD solutions. This could have
an impact on the selling prices of our solutions, as well as our revenue and profitability, then
our business, results of operations, and financial condition would be adversely affected.
Furthermore, our solutions are technologically complex, incorporated with many
technological innovations, and are typically subject to significant safety testing, and OEMs are
generally required to make significant commitments of resources to test and validate our
solutions before including them in any particular vehicle model. The average industry duration
of the development cycles of ADAS and AD solutions is one to three years after a design-win
depending on the OEMs and the complexity of the solutions. These development cycles result
in substantial investments from early engagement stage to final integration into vehicles. We
typically charge our customers for such expenses. However, there is no guarantee that we will
be able to recover the significant investment incurred. An OEM may choose to cancel or
postpone production of the vehicle model. Our ADAS and AD solutions control various vehicle
functions, including engine, steering and braking, and those functions have interactions with
safety and navigation. Accordingly, those functions must be integrated effectively with the
other systems of the vehicle developed by the OEMs and other suppliers, and we may be unable
to achieve the requisite level of interoperability in a vehicle model for our solutions to be
implemented even after a design-win.
In connection with the design-wins, we typically receive preliminary estimates from
OEMs of their anticipated production volumes for the models relating to those nomination
letters. Those estimates may be revised significantly by the OEMs, potentially multiple times,
and may not be representative of future production volumes associated with those letters of
nomination, which could be significantly higher or lower than estimated. For example, if
OEMs decreased their vehicle production projections, we had to adjust our forecasts
accordingly. Furthermore, long development cycles or vehicle model cancellations or
postponements would adversely affect our business, results of operations and financial
condition. In addition, certain customers increased their orders for our solutions to combat the
negative effect of the global auto-part shortage. If such customers accrued significant excess
inventory while the actual production volumes were lower than expected, such customers will
utilize excess inventory on hand before placing new orders, which may significantly affect our
estimates of future production volumes. Therefore, any predictions or internal budgets on our
future revenue and expenses based on such estimates may not be accurate and our results of
operations could differ materially from our expectations. Any downward adjustment in our
estimates could materially affect our actual revenues. Furthermore, long development cycles or
vehicle model cancellations or postponements would adversely affect our prediction or
expectations of our future revenue and operations, and our business, results of operations, and
financial condition.
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If we are not able to timely and effectively support our customers, including OEMs and
tier-one suppliers, during their design-win and mass production processes, our customers’
satisfaction with our solutions may decline, which could materially adversely affect our
future business operations, results of operations, and financial condition.
Our solutions play an integral role in the design and mass production processes of our
customers, which primarily include OEMs and tier-one suppliers. Our integrated solutions have
been selected by 27 OEMs (42 OEM brands) for implementation in over 285 car models as of
the Latest Practicable Date. After design-win and upon selection of our solutions for
implementation in mass production, tier-one suppliers build a module based on our reference
design that incorporates the referenced hardware, our processing hardware, and the algorithms
selected by the OEMs. This module is then integrated into new cars by the OEM. If we are not
able to address the needs of our OEMs and tier-one suppliers throughout this design and
production process in a timely basis, any failure on our part could negatively affect their
processes. Any resulting decline in their satisfaction could adversely affect their commercial
engagement and business relations with us. Our ongoing success depends on our ability to
adequately communicate and deliver our solutions and technologies to support OEM and
tier-one suppliers’ design and mass production processes in a timely and effective fashion. If
we are not able to communicate with our customers or adequately support their mass
production processes, customers may lose confidence in our solutions and experience declining
satisfaction with our business. Any corresponding decline in customer engagement may
adversely affect our business operations, results of operations, and financial condition.
The implementation and validation processes of our solutions could be lengthy and
unpredictable, and are subject to risks of contract cancellation, postponement, supply
chain shortages, or unsuccessful solution implementation.
Prospective OEM customers generally must make significant commitments of capital and
resources to test and validate our solutions before implementing them in any particular model
vehicle. Our ADAS and AD solutions and technologies are technologically complex and
designed for applications in settings with high safety standards. Due to the complexity
involved in the ADAS and AD solutions, the implementation and validation processes of ADAS
and AD solutions with new OEM customers are lengthy and would take long term even after
we were chosen by such OEMs as the ADAS and AD solution provider. The lengthy
implementation and validation process of the solutions usually takes up to one to two years,
depending on the specifications of the OEM customers and testing requirements. As such, we
must typically invest significant resources before generating any revenues, which presents a
risk to our ability to forecast our results of operations and manage our business operations.
In addition to the large upfront investment required prior to commercialization, OEM
customers may cancel or postpone implementation of our solutions due to an internal strategy
shift or other reasons beyond our control. For example, shortages in supply chain procurement
may be a short-term issue that delays OEMs’ manufacturing and business operations,
postponing the implementation of our solutions and adversely affecting our business. Typically,
we may charge customers certain design or licensing fees upfront, but due to the technological
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complexity of our industry, the implementation of our solutions into OEMs’ car models may
not be smooth despite reference designs and extensive communication due to the complexity
of our solutions, thus requiring higher costs and more investments of financial and human
resources further along the process. Further, vehicle models in which our solutions are
implemented may experience unfavorable sales volumes, which could lead to reduced demand
for our solutions. Any of the foregoing factors may have a material adverse effect on our
business operations, results of operations, and financial condition.
If we do not maintain sufficient inventory or if we do not adequately manage our
inventory, we could lose sales or experience excess inventory levels, which could
negatively affect our financial condition and results of operations.
Our inventory primarily consists of our processing hardware. Changing consumer
demands and uncertainty surrounding new vehicle model launches could expose us to
inventory risk. Demand in ADAS and AD solution markets, particularly for automotive vehicle
models containing our solutions and technologies, could change unexpectedly, and it is
possible we may not be able to time our purchases of inventory to coincide with OEM
requirements. We cannot assure you that we can accurately predict OEMs’ demand to avoid
under-stocking our processing hardware and other solutions, which could cause us to lose sales,
adversely affecting our business operations, results of operations, and financial condition.
To ensure adequate inventory supply, we must forecast inventory needs and expenses,
place orders sufficiently in advance with our suppliers and business partners and stock
inventory based on our estimates of future demand for particular solutions. Fluctuations in the
adoption of our solutions may affect our ability to forecast our future results of operations. Our
ability to accurately forecast demand for our solutions could be affected by many factors,
including the rapidly changing nature of the market in which we operate, the uncertainty
surrounding the market acceptance and commercialization of ADAS and AD solutions, the
emergence of new markets, an increase or decrease in customer demand for our solutions or for
solutions of our competitors, health epidemics and outbreaks, and any associated work
stoppages or interruptions, unanticipated changes in general market conditions and the
weakening of economic conditions or consumer confidence in future economic conditions. As
our solutions become or continue to be commercialized, we may face challenges in meeting the
demands of our customers at a satisfactory rate, which would negatively affect our revenue. If
we fail to accurately forecast customer demand, we may experience excess inventory levels or
a shortage of solutions available for sale.
Inventory levels in excess of customer demand may result in inventory write-downs or
write-offs and the sale of excess inventory at discounted prices, which would adversely affect
our business operations and financial conditions. Conversely, if we underestimate customer
demand for our solutions, we may not be able to deliver solutions to meet our requirements,
and this could result in damage to our brand and customer relationships and adversely affect
our revenue and results of operations.
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The sales results of our solutions will partially depend on the sales results of our
customers, which, in turn, may depend on effective integration by our customers and the
overall user experience of the vehicle models integrated with our solutions.
The sales results of our solutions will depend on the sales result of our customers, which,
in turn, may depend on whether our customers effectively integrate our solutions into their
vehicle models. Our solutions are technologically complex, incorporate many technological
innovations, and are typically subject to significant safety testing, and OEMs also generally
must devote significant resources to test and validate our solutions before integrating them in
any particular vehicle model. The integration cycles of our solutions with new OEMs are
expected to be approximately one to three years after a design-win, depending on the OEM and
the complexity of the solution and service involved. These integration cycles result in our
investment of resources prior to realizing any revenue from a vehicle model. Our ADAS and
AD solutions control various vehicle functions, including engine, transmission, safety,
steering, navigation and braking, and therefore must be integrated effectively with the other
systems of the vehicle developed by the OEMs and tier-one suppliers, and we may be unable
to achieve the requisite level of interoperability in a vehicle model for our solutions to be
implemented even after a design-win. In addition, the sales results of a vehicle model depend
on overall user experience, including, among others, human machine interface, vehicle space,
vehicle interior and operability, which are all beyond our control. Despite the effective
integration, the vehicle models integrated with our solutions may generate poor sales results
due to poor overall user experience of the vehicle models, which, in turn, affect the sales results
of our solutions.
Increases in costs of materials and other components that we use in our solutions would
adversely affect our business, results of operations and financial condition.
Significant changes in the markets in which we purchase materials, components, and
supplies for the production of our solutions may adversely affect our profitability. Our
contractual relationship with Supplier A, the manufacturer of our processing hardware, and
with other suppliers, does not provide us with long-term pricing or quantity guarantees. We
currently depend on Supplier A to manufacture all our processing hardware and Supplier C to
assemble a substantial majority of our processing hardware. Because of the complex
proprietary nature of our processing hardware, any transition from Supplier A and Supplier C
to a new manufacturer or assembler or, if there were a disaster or other business disruption at
any of Supplier A and Supplier C’s facilities involved in manufacturing and assembling our
processing hardware, introducing new facilities would take a significant amount of time to
complete and could disrupt our supply chain, which may materially and adversely affect our
business, results of operations and financial condition. Further, we are vulnerable to the risk
that Supplier A and Supplier C may be unable to meet demand for our processing hardware or
cease operations altogether. As a result of inflationary pressures, we have experienced and may
continue to experience increases in the cost of our inventories sold. We are seeking to adjust
the prices charged to our customers to offset these cost increases, but anticipate that, despite
such price increases, our gross profit margin may be negatively affected, at least in the short
term, as a result of these cost increases. Competitive and market pressures limit our ability to
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recover increases in costs through increases in prices we charge to our customers, and, even
where we are able to achieve price increases that would offset such increased costs, in some
cases there may be a delay before we are able to do so. The inability to pass on price increases
to our customers when raw material or component prices increase rapidly or are significantly
higher than historic levels would adversely affect our business, results of operations, and
financial condition.
Both Supplier A and Supplier C are headquartered Taiwan, and our ability to receive
sufficient supplies of our processing hardware could be adversely affected by events such as
natural disasters in Taiwan, including earthquakes, drought and typhoons, and geopolitical
challenges. Our ability to receive sufficient supplies of our processing hardware could also be
adversely affected by international trade policies, geopolitics and trade protection measures,
including imposition of trade restrictions and sanctions. These factors may also adversely
affect the global supply of processing hardware and cause additional constraints on global
automotive production.
Changes in the market or our solutions may affect our pricing models and adversely affect
our operating results.
Our pricing models face challenges from evolving market changes. As the market for our
solutions grows, as our competitors introduce new solutions that compete with ours or reduce
their prices, or as we enter into new verticals or international markets, we may be unable to
attract new customers or retain existing customers based on our historical pricing models.
Given our limited operating history and limited experience with our historical pricing models,
we may not be able to accurately predict customer renewal or retention. In addition, regardless
of the pricing model used, certain users may demand higher price discounts. As a result, we
may be required to reduce our prices, offer shorter contract durations or offer alternative
pricing models, which could adversely affect our revenue, gross margin, profitability, financial
position and cash flow.
In addition, the price of our solutions depends on the bundle included in the specific
solutions, and our prices vary significantly across our solutions. Our solutions have different
margin profiles, which vary between solutions depending on the amount, number and type of
components that we deliver. If we adjust our business mix or fail to maintain our gross margin
and operating margin for our solutions, our business, results of operations and financial
condition would be adversely affected.
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Any failure by us or our business partners to comply with applicable anti-money
laundering, anti-terrorism, anti-bribery, export controls, economic and trade sanctions
regulations and similar laws could lead to significant penalties and damages to our
reputations, adversely affecting our operating performance, financial condition and
results of operations.
Any failure by us or our business partners who work with us to comply with applicable
anti-money laundering (“AML”), anti-terrorism, anti-bribery, export controls, or economic and
trade sanctions laws and regulations could lead to significant penalties and damage to our
reputation. We and our business partners who work with us are often required to comply with
certain AML requirements set out by regulators in the jurisdictions where we and our business
partners operate. We are also subject to various AML, anti-terrorism, anti-bribery, export
controls and economic and trade sanctions laws and regulations that prohibit, among other
things, any involvement in transferring the proceeds of criminal activities and the import and
export of controlled products and technologies. To comply effectively with such laws and
regulations, we and our business partners must establish sound internal control policies and
procedures with respect to AML, anti-terrorism, anti-bribery, export controls, economic and
trade sanctions, which can require significant resources and expenditures.
The policies and procedures we and our business partners have adopted may not be
effectively implemented in protecting our solutions from being exploited for money
laundering, terrorist financing, bribery and corruption, terrorism, economic and trade sanctions
and other illegal purposes. If we fail to comply with AML, anti-terrorism, anti-bribery, export
controls and economic and trade sanction laws and regulations, we could be subject to fines,
enforcement actions, regulatory sanctions, additional compliance requirements, increased
regulatory scrutiny of our business, or other penalties levied by government authorities, and
damages to our reputation, all of which may adversely affect our business, results of operations
and financial condition. Similarly, if any of our subsidiaries, employees, business partners or
other persons engage in fraudulent, corrupt or other unfair business practices or otherwise
violate applicable laws, regulations or internal control policies, we could become subject to
one or more enforcement actions or otherwise be found to be in violation of such laws, which
may result in penalties, fines or sanctions and in turn adversely affect our reputation, business,
financial condition and results of operations.
We may be unable to successfully expand globally with our customers and the expansion
of our international operations with our customers may expose us to additional
regulatory, economic and political risks, the failure to handle which may adversely affect
our business, results of operations and financial condition.
We aim to expand our global presence with our customers. However, we may not succeed
in this endeavor and our success will depend on our ability to expand our sales capabilities and
business relationships with our OEM and tier-one suppliers. For example, given the high
regulatory and market access challenges in specific markets, such as the United States, we may
not actively explore these markets in the short term, which could limit our ability to
successfully achieve this objective. In addition, we face a high level of competition in our
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industry and we cannot be certain that the pace of growth will meet expectations. Our
expansion strategy also requires significant cash investments and management resources and
there is no guarantee that our business can generate additional sales of our solutions to support
our expansion. As we expand, we will face risks in doing business internationally that could
adversely affect our business, including:
 difficulties and costs in understanding and complying with local laws, regulations
and customs in foreign jurisdictions, including laws and regulations related to the
automotive industry and data security, and laws related to labor and labor unions;
 the difficulty of managing and staffing international operations and the increased
operations, travel, and network costs associated with numerous international
locations;
 challenges of gaining acceptance for our solutions by customers in different
markets;
 our ability to effectively price our solutions in competitive international markets;
 global or regional health crises;
 tariffs and other non-tariff trade barriers, such as quotas and local content rules;
 the complexities of complying with current and future export controls and economic
sanctions administered by the U.S. Department of Commerce’s Bureau of Industry
and Security and the U.S. Department of the Treasury’s Office of Foreign Assets
Control and other relevant sanctions authorities;
 protectionist or national security policies that restrict our ability to develop, import
or export certain technologies; and
 more limited protection for intellectual property rights in some countries.
Our failure to manage any of these risks successfully could harm our international
operations, and adversely affect our business, operating results and financial condition.
If we are unable to protect or promote our brand and reputation, our business may be
materially adversely affected. Negative publicity or rumors about us, our solutions, our
management, directors, employees, shareholders, customers, business partners or their
affiliates or our industry in general may adversely affect our reputation and business.
We must maintain and enhance our brand identity while increasing market awareness of
the reputation of our business and solutions. The successful promotion of our brand will
depend on our efforts to achieve widespread acceptance of our solutions, attract and retain
customers, maintain our current market leadership, and successfully differentiate our offerings
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from those of competitors. These efforts require substantial expenditures, and we anticipate
expenses will increase as our market becomes more competitive and as we expand into new
markets. Furthermore, these investments in brand promotion and thought leadership may not
yield increased revenue. To the extent they do, the resulting revenue still may not be enough
to offset the increased expenses we incur.
In addition, adverse publicity, with or without merits, relating to events or activities
attributed to us, our management, directors, employees, shareholders, business partners or their
affiliates, industry, or solutions or services similar to ours, may tarnish our reputation and
reduce the value of our brand. For instance, unfounded and adversarial statements or opinions
could be misleading and could harm our business and reputation. Given the delicate and
complex nature of the industry that we operate in, we are vulnerable to such statements or
opinions. If we fail to respond to such statements or opinions in a proper manner, our business
reputation, financial condition and results of operations may be adversely affected. Moreover,
our brand value depends on our ability to provide safe solutions that meet automobile-grade
standards in our markets. Damage to our reputation and loss of brand equity may reduce
demand for our solutions, have an adverse effect on our future financial results, or reduce the
trading price of our Shares. Damage may also require additional resources to rebuild our
reputation and restore the value of the brands. If we are unable to successfully enhance and
protect our reputation, our business operations, results of operations, and financial condition
could be materially and adversely affected.
We, our directors, management, employees and shareholders and their affiliates may be
subject to lawsuits, contract disputes, employment-related controversies, and other legal
and administrative proceedings or fines, which could have a material adverse effect on
our business, results of operations, financial condition and reputation.
As of the Latest Practicable Date, we are not a party to any material legal or
administrative proceedings. However, we may in the future be subject to or involved in
lawsuits, contract disputes, employment-related controversies, and other legal and
administrative proceedings or fines relating to our business operations inside and outside
China. Lawsuits and other administrative or legal proceedings that may arise during our
operations can involve substantial costs, including the costs associated with investigation,
litigation and possible settlement, judgment, penalty or fine. Lawsuits and other legal and
administrative proceedings may be costly and time consuming and may require a commitment
of management and personnel resources that will be diverted from our normal business
operations. There may also be negative publicity associated with litigation that could decrease
consumer acceptance of our solutions, regardless of whether the allegations are valid or
whether we are ultimately found liable. If any of these happens, our business, financial
condition, results of operations or liquidity could be materially and adversely affected. In
addition, our directors, management, shareholders and employees and their affiliates may from
time to time be subject to litigation, regulatory investigations, proceedings and/or negative
publicity or otherwise face potential liability and expense in relation to commercial, labor,
employment, securities or other matters, which could adversely affect our reputation and
results of operations.
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We or certain of our directors or officers may be a target for lawsuits, including putative
class action lawsuits brought by shareholders and lawsuits against our directors and officers as
a result of their position in other public companies. We cannot assure you that we or our
directors or officers will be able to prevail in their defense or reverse any unfavorable judgment
on appeal, and we and our directors or officers may decide to settle lawsuits on unfavorable
terms. Any adverse outcome of these cases, including any plaintiffs’ appeal of the judgment in
these cases, could result in payments of substantial monetary damages or fines, or changes to
our business practices, and thus materially and adversely affect our business, financial
condition, results of operations, cash flows and reputation. Moreover, even if we or our
directors or officers eventually prevail in these matters, we could incur significant legal fees
or suffer significant reputational harm. For instance, Dr. Ya-Qin Zhang, our independent
non-executive Director, has been named as a defendant in a pending class action filed by
certain investors against a public company in the United States District Court for the Eastern
District of New York, in his capacity as a former director of such public company. The plaintiff
alleged that they purchased such public company’s american depositary shares at artificially
inflated prices, and thus were seeking to recover compensable damage caused by the
defendants’ violation of the federal securities laws and to follow remedies under the Securities
Exchange Act of 1934. As of the Latest Practicable Date, to our best knowledge, the case is still
pending. The litigation process may utilize a significant portion of resources and divert
management’s attention from the day-to-day operations of our Company, all of which could
harm our business. We also may be subject to claims for indemnification related to these
matters, and we cannot predict the impact that indemnification claims may have on our
business or financial performance.
We are subject to anti-corruption, anti-money laundering, anti-bribery and other relevant
laws and regulations in the jurisdictions where we operate. We may be subject to investigations
and proceedings by governmental authorities for alleged infringements of these laws if our
compliance processes or internal control systems are not conducted or are not operating
properly. These proceedings may result in fines or other liabilities and could have a material
adverse effect on our reputation, business, financial conditions and results of operations. If any
of our subsidiaries, employees or other persons engage in fraudulent, corrupt or other unfair
business practices or otherwise violate applicable laws, regulations or internal controls, we
could become subject to one or more enforcement actions or otherwise be found to be in
violation of such laws, which may result in penalties, fines and sanctions and in turn adversely
affect our reputation, business, financial condition and results of operations. Given the
uncertainty, complexity and scope of many of these litigation matters, their outcome generally
cannot be predicted with a reasonable degree of certainty. Therefore, our provision for such
matters may be inadequate. Moreover, even if we eventually prevail in these matters, we could
incur significant legal fees or suffer significant reputational harm, which could have a material
and adverse effect on our prospects and future growth, including our ability to attract new
business partners and customers, expand our relationships with industry groups and recruit and
retain employees and agents.
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Failure to deal effectively with fraudulent or illegal activities or misconduct by our
employees would harm our business.
Illegal, fraudulent, corrupt or collusive activities or misconduct, whether actual or
perceived, by our employees, could subject us to liabilities or negative publicity. There can be
no assurance that our policies and internal controls with regard to the review and approval of
payment accounts, sales and marketing activities, interactions with business partners and
government officials and other relevant matter will prevent fraud or illegal activities or
misconduct by our employees or that similar incidents will not occur in the future. Any illegal,
fraudulent, corrupt or collusive activity, misconduct, or perception of conflicts of interest and
rumors could severely damage our brand and reputation, even if they are baseless or
satisfactorily addressed, which could drive our clients away from us, and materially and
adversely affect our business, financial condition and results of operations.
Non-compliance with regulatory standards and requirements of any third parties with
which we conduct business could disrupt our business, harm our reputation and adversely
affect our financial condition and results of operations.
Third parties with which we conduct business, such as suppliers and other business
partners, may be subject to regulatory penalties or punishments because of their failure to
comply with relevant regulatory requirements or may be infringing upon other parties’ legal
rights, which may, directly or indirectly, disrupt our business. We conduct review of legal
formalities and certifications before entering into contractual relationships with third parties,
and will take measures to reduce the risks that we may be exposed to in case of any
non-compliance by third parties. However, we cannot be certain whether such third party has
violated any regulatory requirements or infringed or will not violate or infringe any other
parties’ legal rights. For example, the data that we obtain from our collaborating business
partners may be defective, and we may not be able to identify all instances of intellectual
property infringement, and we may be held liable and pay damages for such infringement. As
a result, our business, financial condition and results of operations could be materially and
adversely affected.
We cannot rule out the possibility of incurring liabilities or suffering losses due to any
non-compliance by third parties. We cannot assure you that we will be able to identify
irregularities or non-compliance in the business practices of third parties we conduct business
with, or that such irregularities or non-compliance will be corrected in a prompt and proper
manner. Any legal liabilities and regulatory actions affecting third parties involved in our
business may affect our business activities and reputations, and may in turn affect our business,
reputation, results of operations and financial condition.
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Commercialization of our new solutions may give rise to potential internal competition
between our own solutions in the future and adversely affect our business.
We are currently developing our new solutions. However, in practice, OEMs would make
choices between different ADAS and AD solutions by weighing their respective pros and cons
in various aspects, including but not limited to the availability of advanced features, risks,
adaptability and costs, among others, and the needs and requirements vary significantly for
different vehicle models and driving scenarios. Therefore, our new and existing solutions may
compete against each other in a broad sense. Moreover, the functions and driving scenarios of
our solutions might be further expanded in the future due to growing awareness of their
benefits as well as technological advancements. While we try to minimize the risk of internal
competition among our different solutions by developing different functions and designing
different prices to target distinct needs, there may be some overlap and there can be no
assurance that our promotion of new solutions will not adversely affect our sales of existing
solutions. To the extent sales of certain of our solutions result in decreased sales of other of
our solutions, our overall growth may be constrained and our business, financial condition and
results of operations may be adversely affected.
If we fail to plan for the next generation of autonomous driving technology and solutions
ahead of time, our business, results of operations and financial condition may be
adversely affected.
As the industry advances towards more advanced autonomous driving technologies, such
as conditional automation technologies, there’s a tangible risk that the existing market for our
current solutions could diminish swiftly. Our competitive edge hinges on our ability to not only
keep pace with but also anticipate future technological advancements. Failure to proactively
develop and integrate next-generation autonomous driving technologies into our solution and
service lineup could result in a substantial loss of market share and revenue. This scenario
underscores the critical need for strategic foresight in planning and developing future
technologies. We cannot guarantee that the market environment will remain unchanged, nor can
we assure that we will successfully plan for the next generation of driving automation
technology and solutions in advance. Nevertheless, we operate in an industry that prizes
backward compatibility. The introduction of next-generation technologies doesn’t necessarily
obsolete existing systems but could significantly diminish the demand for our new solutions
offerings, which may adversely affect our business, financial condition and results of
operations.
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Any investments or future acquisitions may have a material adverse effect on our
business, reputation, financial condition and results of operations.
We have made investments in recent years in other companies. We expect to continue to
evaluate and consider a wide array of investment and acquisition opportunities that we believe
can extend and solidify our leading market position as part of our overall business strategy. We
may be engaged in discussions or negotiations with respect to one or more of these types of
transactions. These transactions involve significant challenges and risks, including:
 difficulties in integrating the acquired personnel, operations, solutions into our
operations;
 potential issues with technology, internal controls and financial reporting of the
companies we acquire or invest in;
 disruptions of our ongoing business, distractions of the attention of our management
and employees and increase of our expenses;
 loss of skilled professionals and established client relationships of the businesses we
invest in or acquire;
 for investments over which we do not obtain management and operational control,
lack of influence over the controlling partner or shareholder, which may prevent us
from achieving our strategic goals in such investments;
 new regulatory requirements and compliance risks that we become subject to as a
result of investments or acquisitions in new industries or otherwise;
 actual or alleged misconduct or noncompliance by any company we acquire or
invest in (or by its affiliates) that occurred prior to our acquisition or investment,
which may lead to negative publicity, government inquiry or investigations against
such company or against us;
 unforeseen or hidden liabilities or costs that may adversely affect us following our
acquisition of such targets;
 compliance matters including the anti-monopoly and competition laws, rules and
regulations of the PRC and other countries in connection with any proposed
investments and acquisitions;
 the risk that any of our pending or other future proposed investments or acquisitions
does not close;
 the costs of identifying and consummating investments and acquisitions;
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 the use of substantial amounts of cash and potentially dilutive issuances of equity
securities;
 the occurrence of significant amortization expenses for other intangible assets; and
 uncertainties in achieving the expected benefits of synergies and growth
opportunities in connection with these acquisitions and investments.
Any such negative developments described above could disrupt our existing business and
have a material adverse effect on our business, reputation, financial condition and results of
operations.
We face risks related to changes in global and regional macroeconomic conditions, natural
disasters, geographical tensions, regional conflicts, health epidemics and other outbreaks
of contagious diseases.
Uncertainties about global economic conditions, regulatory changes, geographic tensions
and other factors, including fluctuation of interest rates, inflation level, unemployment, labor
and healthcare costs, access to credit, consumer confidence and other macroeconomic factors
may pose risks and materially and adversely affect demand for our solutions. The escalated
Palestinian-Israeli conflict, the conflict in Ukraine and the imposition of broad economic
sanctions on Russia could raise energy prices and disrupt global markets. Unrest, terrorist
threats and the potential for war in the Middle East and elsewhere may increase market
volatility across the globe. The relationship between China and other countries with respect to
trade policies, treaties, government regulations and tariffs, among other matters, may affect the
macroeconomic environment, both domestically and internationally, and potentially leave an
impact on the market we operate in.
In addition, natural disasters such as floods, earthquakes, sandstorms, snowstorms, fire or
drought, the outbreak of a widespread health epidemic or any severe epidemic disease such as
SARS, Ebola, Zika or the COVID-19, acts of war, terrorism or other force majeure events
beyond our control may disrupt our research and development, manufacturing and
commercialization activities and business operations, all of which could adversely affect our
business, results of operations, financial condition and prospects.
We face exposure to foreign currency exchange rate fluctuations, and such fluctuations
could adversely affect our financing arrangements, business operations, results of
operations, and financial condition.
As we expand globally with our customers, we become increasingly exposed to the effects
of fluctuations in currency exchange rates, especially its potential impact on our financing
arrangements. The value of the Renminbi against the U.S. dollar and other currencies has
fluctuated significantly in the past, and may in the future continue to do so, affected by, among
other things, changes in political and economic conditions and the foreign exchange policy
adopted by the PRC government. We recorded other comprehensive income from currency
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translation differences of RMB270.2 million in 2021, and other comprehensive loss from
current translation differences of RMB898.2 million, RMB371.9 million, RMB931.7 million
and RMB208.0 million in 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively, due to the fluctuations of U.S. dollar/RMB exchange rate when translating results
and financial positions of the Company and its subsidiaries outside mainland China from their
functional currency U.S. dollar into our presentation currency RMB. We recorded net foreign
exchange gains of RMB11.1 million and RMB11.1 million in 2021 and for the six months
ended June 30, 2024, respectively, and net foreign exchange losses of RMB264.7 million,
RMB40.3 million and RMB63.2 million in 2022, 2023 and for the six months ended June 30,
2023, respectively, due to the fluctuation of U.S. dollar/RMB exchange rate when translating
monetary assets and liabilities denominated in foreign currencies in terms of the functional
currency of the Company and its subsidiaries. For details, see Note 8 to the Accountant’s
Report set out in Appendix I to this Prospectus. We are a holding company and we may rely
on dividends paid by our subsidiaries in China for our cash needs. We face translation exposure
to fluctuations in currency exchange rates, which could hinder our ability to predict our future
results and earnings and affect our operating results. To the extent that we need to convert any
foreign currencies we receive from this Global Offering into Renminbi for our operations,
appreciation of the Renminbi against such foreign currencies would have an adverse effect on
the Renminbi amount we would receive. We cannot assure you that the Renminbi will not
appreciate or depreciate significantly in value against the foreign currencies in the future. If we
decide to convert our Renminbi into foreign currencies for making payments toward our
financing, for dividends on our Offer Shares, or for other business purposes, appreciation of
the foreign currency against the Renminbi would have a negative effect on the foreign currency
amount, adversely affecting our financial position. Therefore, any significant fluctuation of
Renminbi against the foreign currency could adversely affect our business, results of
operations and financial condition, and the value of any dividends payable in foreign
currencies.
Unfavorable economic conditions and consumer acceptance impacting China’s or global
automotive industry could have a material adverse impact on our business operations,
results of operations and financial condition.
Our business depends on, and is directly affected by, China’s or global automobile
industries. We primarily operate our business in China, with a view to expand into global
market such as Japan, South Korea and Europe with our customers. Accordingly, economic
conditions in such regions can have a large impact on the production volume of new vehicles,
and, accordingly, have an impact on our business operations and financial conditions.
Automotive production and sales are highly cyclical and depend on general economic
conditions, consumer acceptance and other factors, including consumer spending and
preferences, changes in interest rate levels and credit availability, consumer confidence, fuel
costs, fuel availability, environmental impact, governmental incentives and regulatory
requirements, and political volatility, especially in energy-producing countries and growth
markets. In addition, automotive production and sales can be affected by our OEM customers’
ability to continue operating in response to challenging economic conditions, such as the
financial crisis that began in 2007 and the financial downturn caused by global or regional
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health crises, and in response to labor relations issues, regulatory requirements, trade
agreements and other factors. Globally, OEMs and their suppliers continue to experience
significant difficulties from weakened economies and tightened credit markets, and many are
still recovering from the financial crisis. The volume of global automotive production has
fluctuated, sometimes significantly, from year to year, and such fluctuations give rise to
fluctuations in the demand for our solutions. Any significant adverse change in any of these
factors, including, but not limited to, general economic conditions and the resulting bankruptcy
of an OEM customer or the closure of an OEM manufacturing facility, may reduce automotive
sales and production by our OEM customers, and could have a material adverse effect on our
business operations and financial condition.
A severe or prolonged downturn in regional or global economy could materially and
adversely affect our business, results of operations and financial condition.
Geopolitical, economic and market conditions, including factors such as the liquidity of
the global financial markets, the level and volatility of debt and equity prices, interest rates,
currency and commodities prices, investor sentiment, inflation and the availability and cost of
capital and credit have been affecting, and will continue to affect the countries where we
operate. There is considerable uncertainty over the long-term effects of the expansionary
monetary and fiscal policies adopted by the central banks and financial authorities of some of
the world’s leading economies. There have been concerns over unrest and terrorist threats in
the Middle East, Europe and Africa and over the conflicts involving Ukraine and Syria. The
slow economic recoveries around the world and the high inflation, high interest environment
have contributed to higher global volatility. These developments may adversely impact global
liquidity, heighten market volatility and increase U.S. dollar funding costs resulting in
tightened global financial conditions and fears of a recession. It is unclear whether these
challenges and uncertainties will be contained or resolved, and what effects they may have on
the global political and economic conditions in the long term. Any severe or prolonged
slowdown in the global or PRC economy may materially and adversely affect our business,
results of operations and financial condition.
Changes in international relationships and trade policies may adversely impact our
business, financial condition and results of operations.
Government policies restricting international trade and investment, such as capital
controls, economic or trade sanctions, export controls, tariffs or foreign investment filings and
approvals, may affect the demand for our solutions, impact the competitive position of our
solutions, or prevent us from being able to sell solutions in certain countries and territories. If
any legislation or regulations are implemented (including those imposing economic or trade
sanctions, export control restrictions or outbound investments restrictions), or if existing trade
agreements are renegotiated or reinterpreted, such changes could adversely affect our business,
financial condition, and results of operations.
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We are susceptible to constantly changing international relations, trade policies and
tariffs. The overall international relationships between China and other foreign countries and
regions may affect the business prospects of us, our business partners, suppliers and customers.
Any tensions between China and relevant foreign countries or regions may cause a decline in
the demand for our future solutions and adversely affect our business, financial condition,
results of operations, cash flow and prospects. Rising tensions in these relationships could
reduce levels of trade, investments, technological exchanges and other economic activities
between China and other countries and regions, which would have an adverse effect on global
economic conditions, the stability of global financial markets, and international trade and
investment policies.
The United States has implemented and has proposed additional restrictions, some of
which may impact Chinese companies. For example, on June 21, 2024, the U.S. Department
of the Treasury issued a proposed rulemaking for controls on certain outbound investments in
certain companies, including those in China, and comments on the proposed rules were due on
August 4, 2024. Such proposed rules, if implemented, may prohibit certain U.S. investments
in entities engaged in certain activities relating to semiconductors and microelectronics,
quantum information technologies, and artificial intelligence in mainland China, Hong Kong
and Macau. As part of the comment process and other discussions of these proposed rules,
some commenters have sought to expand the range of technologies that the rules would be
applicable to, and there is a possibility that any rules ultimately adopted will be widened to
cover a broader range of technologies and apply to a wider range of investments. The United
States government has also restricted transactions by any United States person in publicly
traded securities, or any securities that are derivative of, or are designed to provide investment
exposure to such securities of certain companies designated by the U.S. government from time
to time as Chinese Military-Industrial Complex (“CMIC”) companies. Similarly, on June 10,
2021, the Standing Committee of National People’s Congress enacted the Countering Foreign
Sanctions Law (), which became effective on the same day,
under which the competent department of the State Council may place any individual or
organization that is directly or indirectly involved in making, determining, or implementing
discriminatory restrictive measures specified in the law on a Countermeasure List ( ˀՓ૶ఊ).
These various sanctions, counter-sanctions and other restrictions that may be taken by
different countries could affect our business, including by limiting our ability to do business
with suppliers and customers or restricting our access to capital. Also, it may become
increasingly difficult for us to navigate compliance with the laws of multiple countries that are
in tension with each other and may impose inconsistent legal obligations. Any of these
developments could negatively affect our business or financial condition. Although we do not
believe that we would be affected by the aforesaid regulations and governmental orders in any
material respect, future sanctions or restrictions on investments by the different governments
could apply to us, our customers or our suppliers, which could affect our access to capital or
negatively impact the value of our securities.
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Disruptions and unauthorized access such as cyberattacks on our IT systems or those of
third-party service providers could have a material adverse effect on our business
operations, results of operations, reputation and financial condition.
Our solutions and technologies may provide us with access to sensitive and/or
confidential data or information, which pose a tempting target for malicious actors who may
seek to carry out cyberattacks against us or our suppliers or service providers. Actual or
perceived breaches of our or our service providers’ security measures or any failure to maintain
reliability, security and integrity of our solutions and technical platform, including third-party
cloud platform and information technology, or IT, services upon which we rely, may expose us
to significant consequences. We have implemented internal rules and procedures related to our
IT system as well as data security and privacy policy to ensure that security requirements are
met in our operations. However, we can provide no assurance that our IT systems or those of
third-party service providers are fully protected against third-party intrusions, viruses, hacker
attacks, ransomware attacks and other cyberattacks, information or data theft or other similar
threats. Additionally, software authorized or licensed by third parties which is incorporated into
our technologies may present certain risks related to cybersecurity, such as the general lack of
support for such software which could result in vulnerabilities that could compromise the
security of our systems. See “— Risks Related to Our Intellectual Property — We utilize
open-source software, which may pose particular risks to our business” for further details
describing the risks associated with our use of open-source software.
Therefore, our systems, servers and equipment, and those of our service providers, may
be subject to such incidents, which may lead to damages to our IT systems, material disruption
to our business, or theft, rendering inaccessible, improper disclosure or misappropriation of our
or our customers’ business information, trade secrets, sensitive data and other confidential or
proprietary information. Any such event could have a material adverse effect on our business
even if we recover using our backup information. Consequences may include legal and
financial exposure, loss of business and customers, loss or unauthorized disclosure of trade
secrets or other proprietary information or personal information, and could give rise to
litigation (including class-action litigation and litigation and indemnity claims against us by
our customers based on our customer agreements and other commercial arrangements),
regulatory actions and fines, consumer protection actions, other related costs (including in
connection with our investigation and remediation efforts) and significant harm to our
reputation. This may hinder our ability to retain existing customers and business partners and
attract new partners and customers. To the extent we experience a cyberattack or security
breach, we may be unsuccessful in implementing remediation plans to address exposure and
future harm. Also, we do not maintain insurance coverage relating to cybersecurity incidents,
and so any expenses or costs incurred as a result of, or related to, any cyberattacks or security
breaches, which could be significant, would be at our own expense. Any such actual or
perceived disruptions, access, breaches, uncertainties or events could materially and adversely
affect our business operations, results of operations, and financial condition.
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We face certain risks relating to the properties that we lease, which may disrupt our
operations and relocation costs.
As of the Latest Practicable Date, we primarily leased 17 properties in Beijing, Shanghai,
Nanjing, Shenzhen, Hangzhou, Tianjin, Chengdu, Dezhou, Xi’an and Suzhou in China with an
aggregate gross floor area of approximately 37,813.41 square meters, which are mainly used
as our headquarters and office space. Any limitations on the leased properties, or lessors’ title
to such properties, may impact our use of the offices, or in extreme cases, result in relocation,
which may in turn adversely affect our business operations.
Pursuant to applicable PRC laws and regulations, all lease agreements are required to be
registered with the local land and real estate administration bureau. As of the Latest Practicable
Date, 16 of our leased properties in China had not been registered with the relevant PRC
government authorities. Although failure to do so does not in itself invalidate the leases, we
may be subject to fines if we fail to rectify within the prescribed time period after receiving
notices from the relevant PRC government authorities. The penalty ranges from RMB1,000 to
RMB10,000 for each unregistered lease, at the discretion of the relevant authority. In the event
that any fine is imposed on us for our failure to register our lease agreements, we may not be
able to recover such losses from the lessors. As of the Latest Practicable Date, we were not
aware of any notice or allegation of penalty from PRC government authorities for our failure
on the registration of lease agreements.
In addition, as of the Latest Practicable Date, the actual land use of six of our leased
properties was office or research and development, which is inconsistent with its approved land
use as specified in its land use right certificate. If the owner of this property is required by
government authorities to rectify such land use, we may have to relocate and bear relocation
costs and other additional expenses. As of the Latest Practicable Date, one of our leased
properties is located on allocated state-owned land, for which the property owner failed to
provide the approval documents from the relevant competent authorities for the leasing of such
allocated state-owned land. We would not be subject to any penalty therefrom, but we may not
be able to continue leasing such property. If we cannot find alternative premise in time, our
business, financial condition and results of operations may be adversely affected. As of the
Latest Practicable Date, we were not aware of any such rectification request by government
authorities. The lease agreements relating to such leased properties have provided that the
lessor shall ensure that the tenant is permitted to normally use the leased property or the lessor
shall bear liability if the tenant fails to normally use the leased property. As advised by our PRC
Legal Adviser, under relevant PRC laws and regulations, it is primarily the lessor’s
responsibility to ensure that the actual use is consistent with the approved use and to obtain
approval of lease of properties located on allocated state-owned land from the relevant
competent authorities, and we will not be subject to any administrative punishment or penalties
as the tenants due to the lessors’ failure to fulfill such responsibility. Furthermore, in
accordance with the lease agreements, if we are unable to continue using such leased
properties, we shall have the right to ask the lessor to compensate for the losses we suffer as
a result thereof. The relocation of which will not lead to business disruption or undue
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burdensome, since we believe we are able to seek alternative leased properties in other areas
(if necessary) without material adverse effects on the business operations and the relocation
costs are not expected to be significant.
Our risk management and internal control systems may not be adequate or effective in all
respects, 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 — Risk Management and Internal Control.” 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 solutions in the future, the diversification of our solution and 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, results of operations and financial condition could be materially and adversely
affected.
We may identify weaknesses and deficiencies in our internal control over financial
reporting. In addition, if we fail to maintain the adequacy of our internal control over financial
reporting, as these standards are modified, supplemented or amended from time to time, we
could suffer material misstatements in our financial statements and fail to meet our reporting
obligations, which would likely cause investors to lose confidence in our reported financial
information. This could in turn limit our access to capital markets, harm our results of
operations and lead to a decline in the trading price of our Offer Shares. Additionally,
ineffective internal control over financial reporting could expose us to increased risk of fraud
or misuse of corporate assets and subject us to potential delisting from the stock exchange on
which we list, regulatory investigations and civil or criminal sanctions. We may also be
required to restate our financial statements from prior periods.
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To address any ESG risks, we may incur additional costs, which may materially and
adversely affect our financial performance.
To identify, manage, and mitigate ESG risks, we may incur additional costs and expenses
which could impact our financial performance. Given the nature of our business, we do not
produce any material generation of emissions and wastes and no heavy pollutions. Nonetheless,
we monitor environmental and climate-related risks that may impact on our business, strategy
and financial performance and evaluate the magnitude of the resulting impact over the short-,
medium- and long-term horizons. We monitor a wide range of indicators such as power
consumption, emission of greenhouse gas, water consumption and waste generation to manage
our environmental and climate-related risks arising from our operations and are committed to
providing adequate support to our employees to nurture a friendly and inspirational corporate
culture. This commitment may entail incurring substantial additional costs and would
potentially impact our profitability. See “Business — Environmental, Social and Governance.”
In addition, the increasing ESG-related regulatory requirements, including various ESG
disclosure mandates in the jurisdictions where we operate, may lead to rising compliance costs
and cost of sales may rise. Failure to adapt to new regulations or meet evolving industry
expectations and standards could result in consumers choosing products from other companies,
which may materially and adversely affect our results of operations and financial conditions.
If we fail to maintain our existing distribution channel for our non-automotive solutions,
our business, financial condition and results of operations could be adversely affected.
During the Track Record Period, we generated a minor portion of revenue from
non-automotive solutions of RMB56.6 million, RMB104.5 million, RMB81.2 million,
RMB26.5 million and RMB21.5 million accounting for 12.1%, 11.5%, 5.2%, 7.1% and 2.3%
of our total revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively. The revenue from our distributors for non-automotive solutions only
account for an immaterial portion of our total revenue, and we expect the percentage of total
revenue contribution from them to continue to decline. Our ability to maintain and grow our
non-automotive solutions will depend on our ability to maintain an effective distribution
channel that ensures the timely delivery of our solutions to relevant customers. However, we
have relatively limited control over our distributors, who may fail to distribute our products in
the manner we contemplate. If price controls or other factors substantially reduce the margins
our distributors can obtain through the resale of our solutions to customers, they may terminate
their relationship with us. Although non-automotive solutions are not our core priorities, given
the revenue contribution, any decrease in sales from, or loss of, one or more of our distributors
without a corresponding increase in sales from our automotive solutions or for any other
reasons would harm our business, operating results, financial condition, and cash flows.
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We may not have sufficient insurance coverage to cover our business risks.
Our ADAS and AD solutions are used for vehicle driving, which presents the risk of
significant injury, including fatalities. We may be subject to claims if a vehicle using one of
our solutions is involved in an accident and persons are injured or purport to be injured or if
property is damaged. Any insurance that we carry may not be sufficient or it may not apply to
all situations. If we experience such an event or multiple events, our insurance premiums could
increase significantly or insurance may not be available to us at all. Further, if insurance is not
available on commercially reasonable terms, or at all, we might need to self-insure. In addition,
lawmakers or governmental agencies could pass laws or adopt regulations that limit the use of
ADAS and AD technology or increase liability associated with its use. Any of these events
could adversely affect our brand, relationships with users, operating results, or financial
condition.
Higher labor costs and inflation may adversely affect our business, results of operations,
financial condition and prospects.
Inflation in mainland China and globally have risen in recent years. Rising inflation may
be reflected in the prices of raw materials from our suppliers. Factors such as changes in
minimum wage laws, labor market dynamics, or increased competition for skilled labor in the
industry may lead to higher labor expenses. Such increases could exert upward pressure on the
fees that we paid to our employees or other third-party service providers. Our ability to manage
and mitigate the impact of rising labor costs through operational efficiencies, process
improvements, or technological innovations will also significantly influence our
competitiveness and financial performance. However, there is no guarantee that we will
succeed in effectively managing the impact of rising labor costs. Moreover, higher cost for
labor and raw materials might necessitate adjustments in service pricing, potentially making
our solutions less competitive in the market. Attempts to pass on increased labor costs to
customers through higher service fees could result in reduced demand or market share loss.
RISKS RELATED TO OUR INTELLECTUAL PROPERTY
We may not be able to adequately protect or enforce our intellectual property rights
throughout the world, and our efforts to do so may be costly.
We rely on proprietary technology, and we are dependent on our ability to protect such
technology. If we are not able to adequately protect or enforce the intellectual property rights
relating to our ADAS and AD solutions and other technologies, competitors could be able to
access and use them, and our operations and financial condition could be adversely affected.
We currently attempt to protect our technology through a combination of patent, copyright,
trademark and trade secret laws, employee and third-party nondisclosure agreements and
similar means. Despite our efforts, other parties may unintentionally or willfully disclose,
obtain or use our technologies or systems. Software piracy has also been, and is expected to
be, a persistent problem for the software industry. Despite the precautions we have taken,
unauthorized third parties, including our competitors, may be able to copy certain portions of
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our software solutions or reverse engineer or obtain and use information that we regard as
proprietary. Our competitors may also be able to independently develop similar or superior
products, software or solutions without copying our proprietary software or other technology
or design around our patents. Further, we may not have adequate intellectual property rights in
certain proprietary technology in jurisdictions that are important to the business or that one day
may become important to the business where we do not currently own any issued or applied-for
patents. In addition, the laws of some foreign countries do not protect our intellectual property
rights as fully as do the laws of other countries, and our ability to protect our intellectual
property rights will differ per jurisdiction. Last but not least, we did not adopt an aggressive
or offensive global intellectual property strategy to enforce our intellectual property rights,
which may expose us to greater risk of infringement by third parties.
In addition, any litigation initiated by us concerning the infringement by third parties of
our intellectual property rights is likely to be expensive and time consuming and could lead to
the invalidation of, or render unenforceable, our intellectual property rights, or could otherwise
have negative consequences for us. We may be a party to claims and litigation as a result of
alleged infringement by third parties of our intellectual property rights. Even when we sue
other parties for such infringement, that suit may have adverse consequences for our business.
Any such suit may be time consuming and expensive to resolve and may divert our
management’s time and attention from our business. Furthermore, it could result in a court or
governmental agency invalidating, narrowing the scope of, or rendering unenforceable our
patents or other intellectual property rights upon which the suit is based, which may seriously
harm our business. Additionally, monitoring unauthorized use and disclosures of our
proprietary technology, intellectual property and confidential information can be difficult and
expensive. We cannot be sure that the steps we have taken will prevent misappropriation,
infringement and violation of our intellectual property or proprietary rights. If we are unable
to adequately protect, establish, maintain or enforce our intellectual property or other
proprietary rights, our business, financial condition and results of operations may be adversely
affected.
We may become subject to litigation brought by third parties claiming infringement by us
of their intellectual property rights.
The industry in which our business operates is characterized by a large number of patents,
some of which may be of questionable scope, validity or enforceability. As a result, there is a
significant amount of uncertainty in the industry regarding patent protection and infringement,
and we cannot be certain that the conduct of our business does not and will not infringe,
misappropriate or otherwise violate intellectual property or proprietary rights of third parties.
In recent years, there has been significant litigation globally involving patents and other
intellectual property rights. We could become subject to claims and litigation alleging
infringement by us of third-party patents, copyrights or trade secrets. For example, in the event
that we recruit employees from other technology companies, including certain potential
competitors, and these employees used or alleged to have used certain know-how, technology
or contents, or the participation by such employees in our research and development, we may
become subject to claims that such employees have improperly used or disclosed trade secrets
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or other proprietary information. These claims and any resulting lawsuits, if resolved adversely
to us, could subject us to significant liability for damages, impose temporary or permanent
injunctions against our solutions or business operations, or invalidate or render unenforceable
our intellectual property rights. An adverse judgment could also result in loss of reputation or
may force us to take costly remediation actions, such as redesigning our solutions. In addition,
because patent applications can take many years until the patents issue, there may be
applications now pending of which we are unaware, which may later result in issued patents
that our solutions may infringe. If any of our solutions infringes a valid and enforceable patent,
or if we wish to avoid potential intellectual property litigation on any alleged infringement of
our solutions, we could be prevented from selling, or elect not to sell, our solutions unless we
obtain a license, which may be unavailable or be available only at commercially unreasonable,
unfavorable or otherwise unacceptable terms. Alternatively, we could be forced to pay
substantial royalties or to redesign one or more of our solutions to avoid any infringement or
allegations thereof. Additionally, we may face liability to our customers, business partners or
third parties for indemnification or other remedies in the event that they are sued for
infringement in connection with their use of our solutions.
We also may not be successful in any attempt to redesign our solutions to avoid any
alleged infringement. A successful claim of infringement against us, or our failure or inability
to develop and implement non-infringing technology, or license the infringed technology, on
acceptable terms and on a timely basis, could materially adversely affect our business and
results of operations. Furthermore, such lawsuits, regardless of their success, could likely be
time consuming and expensive to resolve and may divert management’s time and attention
from our business, which could seriously harm our business. Also, such lawsuits, regardless of
their success, could seriously harm our reputation with our OEMs and tier-one suppliers and
in smart vehicle industry at large.
Further, while we believe that we have secured proper licenses for all third-party
intellectual property that we have used in the development of our solutions, third parties may
assert infringement claims against us, including the sometimes aggressive and opportunistic
actions of non-practicing entities whose business model is to obtain patent-licensing revenues
from operating companies such as us. Any such assertion, regardless of merit, may be time
consuming and expensive to resolve and result in litigation or may require us to obtain a license
for the intellectual property rights of third parties. Such licenses may not be available or they
may not be available on commercially reasonable terms. In addition, as we continue to develop
software solutions and expand our portfolio using new technology and innovation, our
exposure to threats of infringement may increase.
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Our patent applications may not be issued as patents, which may have a material adverse
effect on our ability to prevent others from commercially exploiting solutions similar to
ours.
We cannot be certain that we are the first inventor of the subject matter for which we have
filed a particular patent application, or if we are the first party to file such a patent application.
If another party has filed a patent application covering the same subject matter as we have
developed, and such application has priority against our patent application, we may not be
entitled to the protection sought by our patent application, including preventing third parties
from commercializing the same or similar technologies. Further, the scope of protection of
patent claims may be limited or narrowed if the examining authority determines there is cause
to do so, such as if claims included in the patent application cover subject matter that is
ineligible for patent protection or is obvious, or are deemed to lack sufficient detail to enable
practicing the invention or in the event of the existence of prior art. As a result, we cannot be
certain that the patent applications that we file will result in issued patents, or that our issued
patents will be broad enough to protect our technology or otherwise afford protection against
competitors with similar technology. In addition, the issuance of a patent is not conclusive as
to its inventorship, scope, validity or enforceability. Our competitors may challenge or seek to
invalidate our issued patents, or design around our issued patents, which may adversely affect
our business, prospects, financial condition or operating results. Also, the costs associated with
enforcing patents, confidentiality and invention agreements, or other intellectual property
rights may make aggressive enforcement impracticable.
Changes in patent law could diminish the value of patents in general, thereby impairing
our ability to protect our solutions.
The scope of patent protection in various jurisdictions is uncertain. Changes in either the
patent laws or their interpretation in China or other countries may diminish our ability to
protect our inventions, obtain, maintain, defend, and enforce our intellectual property rights
and, more generally, could affect the value of our intellectual property or narrow the scope of
our patent rights. We cannot predict whether the patent applications we are currently pursuing
and may pursue in the future will issue as patents in any particular jurisdiction or whether the
claims of any future granted patents will provide sufficient protection from competitors. The
coverage claimed in a patent application can be significantly reduced before the patent is
issued, and its scope can be reinterpreted after issuance.
Even if patent applications that we own currently or in the future issue as patents, they
may not issue in a form that will provide us with any meaningful protection, prevent
competitors or other third parties from competing with us, or otherwise provide us with any
competitive advantage. As a result, the issuance, scope, validity, enforceability and commercial
value of our patent rights are highly uncertain.
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We depend on licenses for certain technologies from third parties for which we pay
royalties.
We integrate certain technologies developed and owned by third parties into our solutions
for the development of our processing hardware through license and technology transfer
agreements. We pay royalties for the intellectual property of such technologies as provided by
third parties. Under these agreements, we are obligated to pay royalties for each unit of our
solutions that we sell which incorporates such third-party technology. If we are unable to renew
their contractual terms on a favorable basis, we may incur additional costs that may affect the
cost structure and pricing considerations of our solutions. If we are unable to maintain our
contractual relationships with the third-party licensors on which we depend, we may not be
able to find replacement technology to integrate into our solutions on a timely basis or for a
similar royalty fee. In these events, our cost structure and pricing considerations may be
impacted, and our business, results of operations and financial condition may be materially and
adversely affected.
We may be subject to claims for remuneration or royalties for assigned service invention
rights by our employees that result in litigation, which would adversely affect our
business, results of operations and financial condition.
We face a potential risk of litigation from claims by our employees seeking remuneration
or royalties for their service inventions that have been assigned to the Company. Such claims,
if they arise, could lead to costly and time-consuming legal disputes, diverting management
attention and resources from our core operations. This could negatively impact our business
and financial condition.
Moreover, adverse outcomes in these litigations could result in significant financial
liabilities and harm our reputation, affecting our relationships with both current and potential
employees and customers. This scenario represents a substantial risk to our operational and
financial stability.
Confidentiality agreements and non-compete covenants with employees and other third
parties may not adequately prevent the disclosure of trade secrets and other proprietary
information.
We have devoted substantial resources to the development of our technology and
know-how. Although we enter into employment agreements with confidentiality, non-compete
covenants and intellectual property ownership clauses with our employees, we cannot assure
you that these agreements will not be breached, that we will have adequate remedies for any
breach in time or at all, or that our proprietary technology, know-how or other intellectual
property will not otherwise become known to third parties. Similarly, if we recruit employees
who breached confidentiality, non-compete covenants with their prior employers, we may
become subject to claims that such employees have improperly used or disclosed trade secrets
or other proprietary information in violation of their confidentiality, non-compete covenants in
a way that benefits us. In addition, others may independently discover trade secrets and
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proprietary information, limiting our ability to assert any proprietary rights against such
parties. Costly and time-consuming litigation could be necessary to enforce and determine the
scope of our proprietary rights, and failure to obtain or maintain trade secret protection could
adversely affect our competitive position.
We utilize open-source software, which may pose particular risks to our business.
We use open-source software in our solutions and anticipate using open-source software
in the future. Some open-source software licenses require those who distribute open-source
software as part of, combined with or linked to their own proprietary software, or those who
distribute proprietary software derived from open-source software, to publicly disclose all or
part of the source code to such proprietary software, to permit modifications of such
proprietary software or to make available any modifications or derivative works of the
open-source code on unfavorable terms or at no cost. This could result in our proprietary
software being made available in the source code form and/or licensed to others under
open-source licenses, which could allow our competitors or other third parties to use and
modify our proprietary software freely without spending the development effort. This could
lead to a loss of the competitive advantage of our proprietary technologies and, as a result,
sales of our solutions. There is a risk that open-source software licenses may be construed in
a manner that imposes unanticipated conditions on our ability to provide solutions or retain
ownership of our proprietary intellectual property, particularly given that the terms of many
open-source licenses to which we are subject have not been interpreted by courts of law.
Additionally, we could face claims from third parties claiming ownership of, or demanding
release of, the derivative works that we developed using such open-source software, which
could include our proprietary source code, or otherwise seeking to enforce the terms of, or
alleging breach of, the applicable open-source license. These claims could result in costly
litigation and could require us to make our proprietary software source code freely available,
purchase a costly license, or cease offering the implicated solutions unless and until we can
re-engineer them to avoid using or being based on any open-source software or otherwise avoid
breach of the applicable open-source software licenses or potential infringement. This
re-engineering process could require us to expend significant additional research and
development resources, and we cannot guarantee that we will be successful.
Additionally, the use of certain open-source software can lead to greater security and
operational risks than use of third-party commercial software, as open-source licensors
generally do not provide warranties or controls on the origin of software. There is typically no
support available for open-source software, and we cannot ensure that the authors of such
open-source software will implement or push updates to address security risks or will not
abandon further development and maintenance. To the extent that our solutions depend upon
the successful operation of the open-source software they use, any undetected errors or defects
in this open-source software could prevent the deployment or impair the functionality of our
solutions, delay the introduction of new solutions, result in a failure of our solutions, and harm
our reputation. Moreover, undetected errors or defects in open-source software could render it
vulnerable to data breaches or cyberattacks and make our systems more vulnerable to such
attacks and breaches. We have processes to help alleviate these risks, including a review
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process for screening requests from our developers for the use of open-source software, but we
cannot be sure that all open-source software is identified or submitted for approval prior to use
in connection with our software or solutions. Any of these risks could be difficult to eliminate
or manage, and, if not addressed, could adversely affect our ownership of proprietary
technology, the security of our systems and vehicles using them, or our business, results of
operations, and financial condition.
In addition to patented technology, we rely on our unpatented proprietary technology,
trade secrets, processes and know-how as well as our copyrights.
We rely on proprietary information (such as trade secrets, know-how and confidential
information) to protect intellectual property that may not be patentable, or that we believe is
best protected by means that do not require public disclosure. We generally seek to protect this
proprietary information by entering into confidentiality agreements, or consulting, services or
employment agreements that contain non-disclosure and non-use provisions with our
employees, consultants, contractors, scientific advisers and third parties. However, we may fail
to enter into the necessary agreements, and even if entered into, these agreements may be
breached or may otherwise fail to prevent disclosure, third-party infringement or
misappropriation of our proprietary information, may be limited as to their term and may not
provide an adequate remedy in the event of unauthorized disclosure or use of proprietary
information. We have limited control over the protection of trade secrets used by our
third-party manufacturers and partners and could lose future trade secret protection if any
unauthorized disclosure of such information occurs. In addition, our proprietary information
may otherwise become known or be independently developed by our competitors or other third
parties. To the extent that our employees, consultants, contractors, scientific advisers and other
third parties use intellectual property owned by others in their work for us, disputes may arise
as to the rights in related or resulting know-how and inventions. Costly and time-consuming
litigation could be necessary to enforce and determine the scope of our proprietary rights, and
failure to obtain or maintain protection for our proprietary information could adversely affect
our competitive business position. Furthermore, laws regarding trade secret rights in certain
markets where we operate may afford little or no protection to our trade secrets.
With respect to intellectual property rights in software, we selectively register copyrights
in certain circumstances. While international conventions and international treaties may
provide meaningful protection against unauthorized copying of software, the laws of some
foreign jurisdictions may not protect proprietary rights to the same extent as the international
conventions or international treaties. The absence of internationally harmonized intellectual
property laws makes it more difficult to ensure consistent protection of our proprietary rights.
We also rely on physical and electronic security measures to protect our proprietary
information, but we cannot provide assurance that these security measures will not be breached
or provide adequate protection for our property. There is a risk that third parties may obtain and
improperly utilize our proprietary information to our competitive disadvantage. We may not be
able to detect or prevent the unauthorized use of such information or take appropriate and
timely steps to enforce our intellectual property rights.
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RISKS RELATED TO OUR FINANCIAL PROSPECTS
We have a history of losses and operating cash outflow as well as net current liabilities
and negative equity during the Track Record Period, and there is no assurance that we
will become or subsequently remain profitable.
Since our inception, we have incurred operating losses and net losses. In 2021, 2022 and
2023 and for the six months ended June 30, 2023 and 2024, we had operating losses for the
periods of RMB1,335.3 million, RMB2,132.0 million, RMB2,030.5 million, RMB1,237.3
million and RMB1,105.4 million, respectively, and net losses for the periods of RMB2,063.6
million, RMB8,720.4 million, RMB6,739.1 million, RMB1,888.5 million and RMB5,098.1
million, respectively. Our net loss positions was primarily due to our significant research and
development expenses during the Track Record Period to enhance our key technology pillars
as well as the fair value changes of preferred shares and other financial liabilities. For details
on our fair value changes of preferred shares and other financial instrument, see “— Fair value
changes of preferred shares and other financial liabilities and related valuation uncertainty may
materially affect our results of operations and financial condition.” We recorded net cash
outflow from operating activities of RMB1,111.0 million, RMB1,557.3 million, RMB1,744.5
million, RMB1,166.0 million and RMB726.0 million in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively. We expect to incur operating losses and
net losses as well as net cash outflow from operating activities in the near future.
We anticipate that our cost of sales and operating expenses will further increase in the
foreseeable future as we continue to grow our business, expand globally with our customers,
invest and innovate our key technology pillars, and further broaden our solutions offerings. Our
ability to achieve profitability and generate positive operating cash flow in the future depends
on many factors, such as our abilities to:
 design, develop, manufacture and commercialize our solutions and platforms with
our OEM and tier-one supplier customers;
 maintain and expand our customer bases;
 predict and respond to pricing pressures;
 respond to competition in our industry;
 respond to evolving regulatory developments; and
 support our growing operations and for being a public reporting company.
If our revenue does not grow sufficiently, or if increases in our research and development
expenses and other operating expenses are not followed by commensurate increases in revenue,
our business, results of operations and financial condition may be adversely affected.
Additionally, we might not be able to reduce our research and development expenses or our
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operating expenses, many of which are fixed, if our revenue does not grow at a sufficient rate.
Therefore, we cannot assure you that we will achieve profitability or generate positive
operating cash flow in the future.
We recorded net current liabilities of RMB8,992.5 million, RMB18,347.7 million,
RMB26,714.0 million and RMB31,643.6 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. Moreover, we had net liabilities of RMB8,393.9 million,
RMB17,438.5 million, RMB24,665.4 million and RMB29,815.1 million as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively, primarily due to our preferred shares and
other financial liabilities at FVPL. We expect to achieve a net assets position upon the Global
Offering, as the preferred shares will be reclassified from financial liabilities to equity as a
result of the automatic conversion into ordinary shares. Our net deficit position exposes us to
liquidity risk. We may have a net deficit position in the near future, which may limit our
working capital for the purpose of operations or capital for our expansion plans and materially
and adversely affect our business, results of operations and financial condition.
We need to make significant capital and operating expenditures, and we may need to raise
additional capital in the future, which may not be available on terms acceptable to us, or
at all. If we cannot raise additional funds on attractive terms when we need them, our
operations and prospects could be negatively affected.
The development of our solutions will require us to make regular capital and operating
expenditures to maintain our level of service. Changing competitive conditions or the
emergence of any significant advances in ADAS and AD solutions could require us to invest
significant capital in order to remain competitive. As of June 30, 2024, our total shareholders’
deficit was RMB29,815.1 million and we generated net loss in 2021, 2022 and 2023 and for
the six months ended June 30, 2024. We expect our capital and operating expenditure
requirements will primarily relate to research and development expenses to maintain and
upgrade our ADAS and AD solutions to serve our customers and remain competitive. In 2023,
75.4% of our operating expenses were for research and development activities. If we are unable
to fund any such investment or otherwise fail to invest in our research and operations, our
business, results of operations or financial condition could be adversely affected. Our capital
and operating expense requirements will depend on many factors, including, but not limited to:
 technological advancements;
 market acceptance of our solutions and technologies, and the overall level of sales
of our solutions and technologies;
 research and development expenses;
 our relationships with OEMs and tier-one suppliers;
 our ability to control costs;
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 sales and marketing expenses;
 enhancements to our platform and systems and any capital improvements to our
facilities;
 potential acquisitions of businesses and solution/service lines; and
 general economic conditions, including the effects of international conflicts and
their impact on the automotive industry in particular
Furthermore, if our capital requirements are materially different from those currently
planned, we may need additional capital sooner than anticipated. If additional funds are raised
through the issuance of equity or convertible debt securities, the percentage ownership of our
shareholders at that point in time will be reduced. Additional financing may not be available
on favorable terms, on a timely basis, or at all. If adequate funds are not available or are not
available on acceptable terms, we may be unable to continue our operations as planned,
develop or enhance our solutions, expand our sales and marketing programs, take advantage of
future opportunities or respond to competitive pressures.
Share-based payments may have a material and adverse effect on our financial
performance and cause shareholding dilution to our Shareholders.
The share incentive plan was established for the benefit of our directors, senior
management and core employees as remuneration for their services provided to us and to
incentivize and reward the eligible persons who have contributed to the success of our
Company. For the principal terms of the employee incentive scheme, see “Appendix IV —
Statutory and General Information — D. Share Incentive Plans”. In 2021, 2022 and 2023 and
for the six months ended June 30, 2023 and 2024, we recorded an aggregate of RMB196.4
million, RMB173.7 million, RMB341.8 million, RMB178.9 million and RMB236.6 million
respectively, in share-based payments.
To further incentivize our employees, we may incur additional share-based payment
expenses in the future. We believe such share-based awards are important to our ability to
attract, retain and motivate our key individuals, and we may continue to grant share-based
awards in the future. Expenses incurred with respect to such share-based payments may also
increase our operating expenses and therefore have a negative effect on our financial
performance. Issuance of additional Shares with respect to such share-based payments may
dilute the shareholding of our Shareholders and could result in a decline in the value of our
Shares.
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We may be subject to inventory obsolescence risk.
Our business expansion requires us to manage a large volume of inventory effectively.
Our inventories primarily consisted of processing hardware that are in final testing stage or are
in the early stage of manufacturing. Our inventories increased from RMB113.9 million as of
December 31, 2021, to RMB363.5 million as of December 31, 2022, and further to RMB790.9
million as of December 31, 2023. Our inventories subsequently decreased to RMB703.1
million as of June 30, 2024. Our inventory turnover days increased from 192 days in 2021 to
313 days in 2022, to 461 days in 2023, and to 694 days for the six months ended June 30, 2024.
The increase in inventory turnover days during the Track Record Period was primarily because
we build up inventory levels to (i) address the demands from downstream OEMs and (ii)
proactively manage the potential supply chain shortage risk for auto parts of the automotive
industry. The increase in inventory turnover days to 694 days for the six months ended June
30, 2024 was mainly driven by relatively high average opening and closing balance of the
inventories for the six months ended June 30, 2024. Such inventory balance cannot decrease
significantly within six months because of the lengthy production lead-time as well as time
required before consuming finished goods. The increase in inventory turnover days for the six
months ended June 30, 2024 was also attributable to slower occurrence of cost of sales during
the first half of the year. According to CIC, the first half, in particular the first quarter, of each
year is usually not a peak season for vehicle sales due to seasonal influence, which affects the
delivery volume of product solutions as well as related cost of sales. These factors are reflected
in the revenue mix change for the six months ended June 30, 2024 compared to the year ended
December 31, 2023. An increase in revenue from licenses and services as a percentage of total
revenue in the first half of 2024 is resulting in a higher gross profit margin and a
proportionately lower cost of sales, leading to an increase in inventory turnover days for the
six months ended June 30, 2024. However, we cannot guarantee that our inventories can be
fully utilized, as the optimal usage period of inventories before being installed on end products
typically does not exceed three years. According to CIC, such inventories usually have a life
cycle ranging from approximately seven to 15 years. After exceeding the optimal usage period,
typically within three years, inventories may need additional inspections and re-evaluations to
maintain such life cycle. As our business expands, our inventory obsolescence risk may also
increase commensurately with the increase in our inventories and our inventory turnover days.
Our results of operations may be affected from period to period due to the seasonality of
our business and fluctuations in our operating costs
Our results of operations may be affected from period to period due to many factors,
including seasonal factors that may affect the demand for our product solutions as impacted by
the market trends of the automotive industry. Our customers usually experience a slow
season/off-season in their own sales volumes during and following the Chinese New Year
holidays in the first half of the year, and thus can have an impact on our results of operations
in the first quarter. Sales of our product solutions tend to increase in the second half of the year,
which is generally in line with the overall automotive industry in China. Our results of
operations could also suffer if we do not achieve revenue consistent with our expectations for
this seasonal demand because many of our expenses are based on anticipated levels of annual
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revenue. Due to the foregoing factors, our financial condition and results of operations for
future periods may continue to fluctuate and our historical periodical results may not be
comparable to future periods. Moreover, due to our relatively limited operating history, the
seasonal trends that we have experienced in the past may not apply to, or be indicative of, our
future operating results. As a result, the trading price of our shares may fluctuate from time to
time due to seasonality.
Fair value changes of preferred shares and other financial liabilities and related valuation
uncertainty may materially affect our results of operations and financial condition.
We recorded RMB764.0 million, RMB6,655.4 million, RMB4,760.4 million, RMB713.6
million and RMB4,012.7 million in fair value changes of preferred shares and other financial
liabilities in the consolidated statements of profit or loss for the year ended December 31,
2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively. We
have completed several rounds of financing by issuing preferred shares and convertible loan to
investors. For details, see Note 28(a) to the Accountant’s Report set out in Appendix I to this
Prospectus. Upon the completion of this Global Offering, all of such preferred shares will be
automatically converted into Class B ordinary shares. Upon maturity, all the principal amount
and accrued interest of the convertible loan shall be automatically and mandatorily converted
into Class B ordinary shares. All preferred shares and other financial liabilities will be
reclassified to equity upon conversion, and no longer measured at fair value going forward
once converted. Additionally, the foregoing investors have the right to require us to redeem
such preferred shares if this Global Offering is not consummated on or prior to certain date or
upon the occurrence of some specified events. For the identity and background of the foregoing
investors, see “History, Reorganization and Corporate Structure — Information on the Pre-IPO
Investors.” For conversion mechanics and further details of the convertible loan, see “History,
Reorganization and Corporate Structure — Convertible Loan.”
The preferred shares were recorded on a fair value basis. We applied the discount cash
flow method to determine our underlying equity value and adopted equity allocation model to
determine the fair value of the preferred shares. The key valuation assumptions include,
discount rate, risk-free interest rate, discounts for lack of marketability and volatility. Any
change in the assumptions may lead to different valuation results and, in turn, changes in the
fair value of these financial instruments issued to investors. We estimated the fair value of
convertible loan using the binominal option pricing model with key assumptions, including
risk-free interest rate and bond yield. To the extent we need to revalue the preferred shares and
other financial liabilities prior to the closing of the Global Offering, any change in fair value
of preferred shares and other financial liabilities and related valuation uncertainty could
materially affect our results of operations and financial condition.
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Failure to fulfill our obligations in respect of contract liabilities could adversely affect our
liquidity and financial condition.
Our contract liabilities mainly represent cash collections in advance of fulfilling
performance obligations. Our contract liabilities amounted to RMB5.5 million, RMB63.1
million, RMB24.9 million and RMB12.1 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024. See “Financial Information — Discussion of Selected Items from our
Consolidated Statements of Financial Position — Liabilities — Contract Liabilities.” There is
no assurance that we will be able to fulfill our obligations in respect of contract liabilities as
the fulfillment of our performance obligations is subject to various factors that are beyond our
control. If we are not able to fulfill our obligations with respect to our contract liabilities, the
amount of contract liabilities will not be recognized as revenue, and we may have to refund the
advance payment made by our customers. As a result, our liquidity and financial condition may
be adversely affected.
We are subject to credit risk related to delay in payment and defaults of customers or
related parties, which would adversely affect our liquidity and financial condition.
We are exposed to credit risk related to delay in payment and defaults of our various
customers or related parties. As of December 31, 2021, 2022 and 2023 and June 30, 2024, our
trade and note receivables (including long term trade receivables) amounted to RMB169.4
million, RMB420.7 million, RMB541.1 million, and RMB709.9 million, respectively, and our
prepayments and other assets (excluding long term trade receivables) amounted to RMB315.3
million, RMB269.3 million, RMB222.4 million and RMB259.3 million, respectively. We may
not be able to collect all such trade and notes receivables and prepayments and other assets due
to a variety of factors that are beyond our control, including long payment cycle of certain of
our suppliers, adverse operating condition or financial condition of customers, and customers’
inability to pay caused by their end users’ delay in payment. If our customers or related parties
delay or default in their payments to us, we may have to make impairment provisions and
write-off the relevant receivables and hence our liquidity and financial condition would be
adversely affected.
Fluctuations in changes in fair value of our financial assets at fair value through profit or
loss would affect our financial results.
We have invested in, and intend to continue to selectively invest in, businesses, assets and
technologies that complement our existing business and may make other financial investments.
We recorded financial assets at fair value through profit or loss of RMB46.3 million, RMB68.8
million, RMB80.8 million and RMB85.6 million as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. These financial assets at fair value through profit or loss included
our investments in unlisted companies and commitment derivative. The fair value changes in
our financial assets measured at fair value through profit or loss may negatively affect our
financial performance. The fair value of financial instruments that are not traded in an active
market is determined by using valuation techniques. These valuation techniques maximize the
use of observable market data where it is available and rely as little as possible on entity
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specific estimates. The valuations of our investments require the use of unobservable inputs,
judgments and estimates, such as risk-fee rate, expected volatility, discount rate for lack of
marketability and market multiples. Any change in the estimates and assumptions may lead to
a change in the fair value of the financial assets, which in turn could negatively affect our
financial conditions and results.
We are subject to certain risks relating to our joint ventures or associates.
We have invested in associated companies and joint ventures and may continue to do so
in the future. The performance of such associates and joint ventures has affected, and will
continue to affect, our results of operations and financial position. We recorded RMB27.1
million, RMB64.0 million, RMB1,107.7 million and RMB853.5 million in investments in
associates and joint ventures as of December 31, 2021, 2022 and 2023 and as of June 30, 2024,
respectively. For details, see Note 13 of the Accountant’s Report included in Appendix I to this
Prospectus. 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 the associates
or joint ventures reported profits under the equity method of accounting. Furthermore, our
ability to promptly sell one or more of our interests in our associates or joint ventures in
response to changing economic, financial and investment conditions is limited. 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 the associates or 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. We also cannot predict the length of time needed to find
a purchaser and to complete the relevant transaction. 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 our associates. The success of an associate or a joint
venture depends on a number of factors, some of which are beyond our control. As a result, we
may not be able to realize the anticipated economic and other benefits from such associates and
joint ventures, such as receiving dividends from them.
In particular, we face certain risks in relation to CARIZON, a joint venture we established
with affiliate of V olkswagen Group, including, among others, that CARIZON is loss making,
and CARIZON’s development priorities may not align with ours, we may not be successful in
realizing the benefits of our investment or recouping our investment, we may invest additional
amounts, and our shareholding percentage may be diluted, which could have a material and
adverse effect on our business and financial results. For details, see “Business — Our
Partnership with V olkswagen Group — CARIZON — Our Joint Venture with V olkswagen
Group.”
CARIZON experienced losses during the Track Record Period, and as we account for
CARIZON using the equity method of accounting, such losses have had an adverse impact on
our results of operations and financial results. We may record additional share of net loss if
CARIZON continues to be loss making in the future. As we may continue to invest in
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CARIZON and CARIZON could potentially be loss making, we cannot assure you that we will
no longer record additional share of net loss. Our additional investments to CARIZON, if
made, may include equity investments and/or financial assistance which may have an adverse
impact on our liquidity abilities.
We do not control CARIZON, and we cannot assure you that CARIZON’s development
priorities will align with ours. In the event that CARIZON is unable to achieve its business
strategies or if any dispute arises with V olkswagen Group with respect to CARIZON and its
operations or strategic directions, we may not be able to recoup our investment in CARIZON
and may lose our entire investment. Since the customized driving automation solutions
industry is challenging and rapidly evolving and the joint venture between V olkswagen Group
and us is subject to a number of conditions and uncertainties, we cannot assure you that we will
be able to implement the development plan as set out in accordance with the current joint
venture agreement. We may enter into amendments to the current joint venture agreement with
V olkswagen Group from time to time to reflect the fast-changing market and industry
conditions. We may invest additional capital in CARIZON, and we cannot assure you that we
will be successful in realizing the benefits of our investment or recouping our investment. If
V olkswagen Group or we fail to perform our respective obligations under the joint venture
agreement in a timely manner, or at all, CARIZON would experience delays in establishing and
developing its own products and solutions. In addition, the joint venture may not succeed and
may be terminated due to failure to establish a sustainable business, geopolitical tensions, or
become a target of sanctions. As a result, our business prospects, financial conditions and
results of operations may be materially and adversely affected.
Furthermore, our shareholding percentage in CARIZON may be diluted, and our
influence over CARIZON may be reduced. In the event CARIZON is in need of additional
capital resources and a proposed capital injection plan is declined by us, CARIZON will likely
need to seek capital from alternative sources, which may result in the dilution of our equity
interest in CARIZON, reduction of our influence over CARIZON through board representation
or else CARIZON could cease operations, each of which could have adverse consequences for
us. If CARIZON is unable to obtain sufficient capital from alternative sources, its daily
operation and business could be materially and adversely affected, and we may lose our entire
investment.
If facts and circumstances involving our relationship with D-GUA Brother LP were to
change, it could lead to a reduction in our interest in D-Robotics or, if there is a loss of
control, deconsolidation of D-Robotics in our consolidated financial statements.
To streamline our non-automotive solutions businesses, D-Robotics was incorporated in
September 2023 as one of our subsidiaries. In June 2024, in order to maintain the voting power
in D-Robotics by the Company’s founders, D-Robotics adopted the WVR structure in which
D-Robotics issued class B ordinary shares to Horizon Together Holding Ltd. (“Horizon
Together”), a wholly owned subsidiary of our Company. For details of the WVR structure, see
“Connected Transactions — Connected Persons.” Based on an acting-in-concert agreement
between Horizon Together and D-GUA Brother LP, the employee stock ownership platform of
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D-Robotics, together with a power of attorney granted from the Company’s founders to
Horizon Together on the matter of appointment of the board members of D-Robotics, the Group
continues to control D-Robotics as it is exposed to and has the rights to the variable return from
D-Robotics through its holding of 69.84% issued share capital, and the ability to affect
D-Robotics’ return through its controlling of 72.23% of the voting rights in D-Robotics and
right to appoint the majority of the board members of D-Robotics. See “Financial Information
— Indebtedness — Preferred Shares and Other Financial Liabilities at Fair Value through
Profit or Loss.”
Changes in facts and circumstances relating to the acting-in-concert agreement between
Horizon Together and D-GUA Brother LP, or our relationship with D-GUA Brother LP
generally, could result in a reduction of our interest in D-Robotics. For example, D-GUA
Brother LP may fail to abide by the acting-in-concert agreement, for which we may have
limited or no recourse. Furthermore, acting-in-concert agreement may be terminated and
D-GUA Brother may make business decisions, take risks, or otherwise act in a manner that
does not align with our interests or our direction for the business development of D-Robotics,
which could materially and adversely affect our control over D-Robotics. Such changes in facts
and circumstances would lead to re-assessment on whether we continue to control D-Robotics
and/or the extent of our controlling interest under IFRS. If facts and circumstances were to
change to an extent such that there is a loss of control by us over D-Robotics, then that would
lead to deconsolidation of D-Robotics in our consolidated financial statements, which would
adversely affect our business, financial condition and results of operations.
RISKS RELATED TO DOING BUSINESS IN CHINA
Changes in economic, political and social conditions, could have a material adverse effect
on our business and prospects.
Substantially all of our revenue is derived from our businesses in the PRC during the
Track Record Period. Accordingly, our financial condition, results of operations and prospects
are, to a material extent, subject to economic, political, and legal developments in the PRC. If
the macroeconomic condition in China experiences significant adverse changes, demand for
our solutions and our ability to maintain our operations may suffer, which will consequently
have a material adverse effect on our financial condition, results of operations and our future
prospects.
China’s economy has experienced significant growth over the past decades since the
implementation of 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.
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We may be subject to the approval, filing or other requirements of the CSRC or other
PRC governmental authorities in connection with capital raising activities.
On July 6, 2021, the relevant PRC government authorities issued the Opinions on Strictly
Cracking Down Illegal Securities Activities in Accordance with the Law (੽ᘌ͂Ꮨ
จԈ). These opinions emphasized the need to strengthen the administration
over illegal securities activities and the supervision on overseas listings by China-based
companies and proposed to take effective measures, such as promoting the construction of
relevant regulatory systems to deal with the risks and incidents faced by China-based
overseas-listed companies. See “Regulatory Overview — Laws and Regulations on Overseas
Listing” for details.
On February 17, 2023, the CSRC promulgated the Overseas Listing Trial Measures,
which have become effective on March 31, 2023. The Overseas Listing Trial Measures require,
among others, that PRC domestic companies that seek to initially offer and list securities in
overseas markets, either directly or indirectly, file the required documents with the CSRC
within three business days after its application for overseas listing is submitted. See
“Regulatory Overview — Laws and Regulations on Overseas Listing.” We will file with CSRC
within a specific time limit as required by the Overseas Listing Trial Measures. However, we
cannot assure you that we could complete such filing in a timely manner or at all, the failure
of which may restrict our ability to complete the proposed Listing.
On February 24, 2023, the CSRC and other relevant government authorities published the
Provisions on Strengthening Confidentiality and Archives Administration of Overseas
Securities Offering and Listing by Domestic Companies (̋੶ྤʫΆุྤ̮೯БᗇՎձ
) (the “Archives Rules”), which came into effect on
March 31, 2023. The Archives Rules require that, in relation to the overseas securities offering
and listing activities of domestic enterprises, either in direct or indirect form, such domestic
enterprises, as well as securities companies and securities service institutions providing
relevant securities services, are required to strictly comply with relevant requirements on
confidentiality and archives management, establish a sound confidentiality and archives
system, and take necessary measures to implement their confidentiality and archives
management responsibilities. The interpretation and implementation of the Archives Rules may
keep evolving, failure to comply with which may materially affect our business, results of
operations or financial conditions.
Furthermore, we cannot assure you that new rules or regulations promulgated in the future
will not impose additional requirements or restrictions on us, our shareholders or our financing
activities. We or our shareholders may not be able to comply with such additional requirements
in a timely manner. In addition, we or our shareholders may be subject to sanctions by the
CSRC or other PRC regulatory authorities for failure to seek CSRC filing or other government
authorization or approval for this listing or any subsequent change in shareholding structure,
it is uncertain whether we can or how long it will take us or our shareholders to obtain such
approval or complete such administrative procedures and these regulatory authorities may
impose fines and penalties on us or our shareholders, limit our operating activities in the PRC,
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limit our ability to pay dividends outside the PRC, delay or restrict the repatriation of the
proceeds from the Global Offering into the PRC or take other actions to restrict our financing
activities, which could have a material adverse effect on our business.
If we fail to obtain and maintain the requisite licenses, permits, registrations and filings
applicable to our business according to evolving legal requirements, our business, results
of operations, financial condition and prospects may be adversely affected.
Under PRC laws and regulations, we are required to obtain or complete a number of
licenses, approvals, registrations, filings and other permissions for our operation. As a
fast-growing company that is continuously exploring new approaches to conduct our business
and capture growth opportunities, we may become subject to additional license, approval and
other requirements as we develop and expand our business scope and engage in different
business activities. We may fail to meet such requirements timely or at all, in which case we
may be subject to administrative penalties and our ability to expand our business and sustain
our growth may be materially affected.
In addition, certain licenses, permits or registrations we hold are subject to periodic
renewal. If we fail to maintain or renew one or more of our licenses and certificates when their
current term expires, or obtain such renewals on a timely manner, our operations could be
disrupted. Furthermore, due to the evolving interpretation and implementation of existing laws
and the adoption of additional laws and regulations, the licenses, permits, registrations or
filings we hold may be deemed insufficient by the PRC government, which may restrain our
ability to expand our business scope and may subject us to fines or other regulatory actions.
If any of these risks materializes, our business, results of operations, financial condition and
prospects may be adversely affected.
We are subject to regulatory requirements in labor-related laws and regulations of the
PRC. Failure to make adequate contributions to various employee benefit plans as
required by PRC regulations may subject us to penalties.
Pursuant to the PRC Labor Contract Law, or the Labor Contract Law, that became
effective in January 2008 and was amended in December 2012 and its implementing rules that
became effective in September 2008, employers are subject to stricter requirements in terms of
signing labor contracts, minimum wages, paying remuneration, determining the term of
employees’ probation and unilaterally terminating labor contracts. We believe our current
practice complies with the Labor Contract Law and its amendments. However, the relevant
governmental authorities may take a different view and impose fines on us.
In accordance with relevant PRC laws and regulations, an employer shall pay basic
pension insurance, basic medical insurance, work related injury insurance, unemployment
insurance, maternity insurance and housing provident fund (collectively, the “Employee
Benefits”) for its employees in accordance with the rates and bases provided under relevant
regulations and shall withhold the Employee Benefits that should be assumed by its employees.
During the Track Record Period, we used third-party service providers to pay the Employee
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Benefits for some of our employees. Under the agreements between the third-party service
providers and us, the third-party service providers have the obligations to pay the Employee
Benefits for our relevant employees. As of the Latest Practicable Date, none of the third-party
service providers that we cooperate with had failed to pay, or delayed in paying, any of the
Employee Benefits for our employees. As of the Latest Practicable Date, we had not received
any notice or inquiry from the relevant governmental authorities due to the abovementioned
practice of making contributions to the Employee Benefits, and we obtained compliance
certificates with respect to contributions to the Employee Benefits.
As advised by our PRC Legal Adviser, considering, among others, the facts stated above,
based on the compliance certificates we have obtained, as well as the fact that we have not
received any notice or inquiry from relevant government authorities, the risk of us being
imposed to late fees or fines or subject to compulsory enforcement is relatively low. As such,
such matters would not have a material and adverse impact on our business, financial condition
and results of operations.
As the interpretation and implementation of labor-related laws and regulations are still
evolving, our employment practice could inadvertently violate labor-related laws and
regulations in China, which may subject us to labor disputes or government investigations. If
we are deemed to have violated relevant labor laws and regulations, we could be required to
provide additional compensation to our employees and our business, financial condition and
results of operations could be materially and adversely affected.
Failure to respond to changes in the regulatory environment in the region where we
operate could have a material adverse effect on our business, results of operations and
financial condition.
Our business and operations are primarily conducted in China and are governed by
applicable PRC laws, rules and regulations. The PRC legal system is based on written statutes
and their interpretation by the Supreme People’s Court. Prior court decisions may be cited for
reference, but have limited weight as precedents. In the late 1970s, the PRC government began
to promulgate a comprehensive system of laws and regulations governing economic matters in
general. The overall effect of legislation over the past several decades has significantly
increased the protections afforded to various forms of foreign or private-sector investment in
China. Our PRC subsidiaries are subject to various PRC laws and regulations generally
applicable to companies in China. However, since these laws and regulations are relatively
new, and the PRC legal system and regulatory environment continue to rapidly evolve, the
interpretations and enforcement of many laws, regulations and rules may be subject to changes,
which may affect our business.
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Y ou may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing actions in China against us or our management named in the
document based on foreign laws.
Substantially all of our business and operations are located in the PRC. In addition,
almost all of our Directors, supervisors and officers reside in China and substantially all of
their assets are located in China. It may be difficult for investors to effect service of process
upon those persons residing in China or to enforce against us or them in China any judgments
obtained from non-PRC courts. The PRC does not have treaties providing for the reciprocal
recognition and enforcement of judgments of courts of most other jurisdictions. As a result,
recognition and enforcement in the PRC of judgments of a court in any of these jurisdictions
outside China may be difficult or even impossible.
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 Reciprocal
Recognition and Enforcement of Judgments in Civil and Commercial Matters (ج
τ
ર) (the “Arrangement”). Under the Arrangement, a party with an enforceable final court
judgment rendered by any designated people’s court of China or any designated Hong Kong
court requiring payment of money in a civil and commercial case according to a written choice
of court agreement, may apply for recognition and enforcement of the judgment in the relevant
people’s court of China or Hong Kong court. A written choice of court agreement is defined
as any agreement in writing entered into between parties after the effective date of the
Arrangement in which a Hong Kong court or a PRC court is expressly designated as the court
having sole jurisdiction for the dispute. Therefore, it may not be possible to enforce a judgment
rendered by a Hong Kong court in China if the parties in the dispute did not agree to enter into
a choice of court agreement in writing. As a result, it may be difficult or impossible for
investors to effect service of process against certain of our assets or Directors in China in order
to seek recognition and enforcement of foreign judgments in China.
On January 18, 2019, the Supreme People’s Court of the PRC and Hong Kong entered into
an agreement regarding the scope of judgments which may be enforced between China and
Hong Kong (τર)
(the “New Arrangement”). The New Arrangement will broaden the scope of judgments that
may be enforced between China and Hong Kong under the Arrangement. Whereas a choice of
jurisdiction needs to be agreed in writing in the form of an agreement between the parties for
the selected jurisdiction to have exclusive jurisdiction over a matter under the Arrangement, the
New Arrangement provides that the court where the judgment was sought could apply
jurisdiction in accordance with the certain rules without the parties’ agreement. The New
Arrangement will replace the Arrangement when the former becomes effective. The New
Arrangement became effective on January 29, 2024 both in China and in Hong Kong. Under
the New Arrangement, any party concerned may apply to the relevant PRC court or Hong Kong
court for recognition and enforcement of the effective judgments in civil and commercial cases
subject to the conditions set forth in the New Arrangement. Although the New Arrangement has
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been signed, the outcome and effectiveness of any action brought under the New Arrangement
may still be uncertain. We cannot assure you that an effective judgment that complies with the
New Arrangement can be recognized and enforced in a PRC court.
We may rely on dividends and other distributions on equity paid by our PRC subsidiaries
to fund any cash and financing requirements we may have, and any limitation on the
ability of our PRC subsidiaries to make payments to us could have a material and adverse
effect on our ability to conduct our business.
We are a Cayman Islands holding company, and we may rely principally on dividends and
other distributions on equity from our PRC subsidiaries for our cash requirements, including
for services of any debt we may incur. Our PRC subsidiaries’ ability to distribute dividends is
based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries
to pay dividends to their respective shareholders only out of their accumulated profits, if any,
determined in accordance with PRC accounting standards and regulations. In addition, each of
our PRC subsidiaries are required to set aside at least 10% of its after-tax profits each year, if
any, to fund a statutory reserve until such reserve reaches 50% of each of their registered
capitals. These reserves are not distributable as cash dividends. If our PRC subsidiaries incur
debt on their own behalf in the future, the instruments governing the debt may restrict their
ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC
subsidiaries to distribute dividends or other payments to their respective shareholders could
materially and adversely limit our ability to grow, make investments or acquisitions that could
be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.
If the preferential tax treatments granted by the PRC government become unavailable,
our results of operations and financial condition may be adversely affected.
Our PRC subsidiaries are subject to the PRC corporate income tax at a standard rate of
25% on their taxable income, but certain of our PRC subsidiaries were accredited as “High and
New Technology Enterprises,” and are entitled to a preferential income tax rate of 15%. We
cannot assure you that the PRC policies on preferential tax treatments will not change or that
the current preferential tax treatments we enjoy or will be entitled to enjoy will not be
canceled. Moreover, we cannot assure you that our PRC subsidiaries will be able to renew the
same preferential tax treatments upon expiration. If any such change, cancelation or
discontinuation of preferential tax treatment occurs, the relevant PRC subsidiaries will be
subject to the PRC enterprise income tax, or EIT, at a rate of 25% on taxable income. As a
result, the increase in our tax charge could materially and adversely affect our results of
operations.
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We are subject to PRC regulation of loans to and direct investment in PRC entities by
offshore holding companies and governmental regulations of currency conversion when
we use the proceeds of this Global Offering to make loans or additional capital
contributions to our PRC subsidiaries.
We are an offshore holding company conducting our operations in China through our PRC
subsidiaries. We may make loans to our PRC subsidiaries subject to the approval from
governmental authorities and limitation of amount, or we may make additional capital
contributions to our PRC subsidiaries in China. Any loans to our PRC subsidiaries in China,
which are treated as foreign-invested enterprises under PRC law, are subject to PRC
regulations and foreign exchange loan registrations. For example, loans by us to our PRC
subsidiaries in China to finance their activities cannot exceed statutory limits and must be
registered with the local counterpart of SAFE. In addition, a foreign invested enterprise shall
use its capital pursuant to the principle of authenticity and self-use within its business scope.
The capital of a foreign invested enterprise shall not be used for the following purposes (i)
directly or indirectly used for payment beyond the business scope of the enterprises or the
payment prohibited by relevant laws and regulations; (ii) directly or indirectly used for
investment in securities investments other than banks’ principal-secured products unless
otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated
enterprises, except where it is expressly permitted in the business license; and (iv) paying the
expenses related to the purchase of real estate that is not for self-use (except for the
foreign-invested real estate enterprises). See “Regulatory Overview — Laws and Regulations
on Foreign Exchange” for details on foreign exchange related regulations.
In light of the various requirements imposed by PRC regulations on loans to and direct
investment in PRC entities by offshore holding companies, we cannot assure you that we will
be able to complete the necessary government registrations or obtain the necessary government
approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiaries or
future capital contributions by us to our wholly foreign-owned subsidiaries in China. As a
result, uncertainties exist as to our ability to provide prompt financial support to our PRC
subsidiaries when needed. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds we expect to receive from this Global Offering and to capitalize
or otherwise fund our PRC operations may be negatively affected, which could materially and
adversely affect our liquidity and our ability to fund and expand our business.
Governmental regulation of currency conversion may limit our ability to utilize our
revenue effectively and affect the value of your investment.
The conversion of Renminbi is subject to applicable laws and regulations in the PRC. We
receive most of our payments from customers in Renminbi and may need to convert Renminbi
into foreign currencies for the payment of dividends, if any, to holders of our Shares. Under
the Chinese existing foreign exchange regulations, following the completion of the Global
Offering, we will be able to pay dividends in foreign currencies without prior approval from
SAFE or its local branches by complying with certain procedural requirements. However, we
may not be able to pay dividends in foreign currencies to our Shareholders if access to foreign
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currencies for current account transactions is restricted in the future. Foreign exchange
transactions under our capital account continue to be subject to foreign exchange controls and
require the approval of the SAFE or its local branches. These limitations could affect our
ability to obtain foreign exchange through equity financing, or to obtain foreign exchange for
capital expenditures.
Most of our revenue and costs are denominated in Renminbi. Any significant revaluation
of the Renminbi may materially and adversely affect our results of operations, cash flows and
financial condition. The exchange rate of the Renminbi against the U.S. dollar and other
foreign currencies fluctuates and is affected by, among other things, the policies of the Chinese
government and changes in China and in international political and economic conditions. Since
1994, the conversion of the Renminbi into foreign currencies, including U.S. dollars, has been
based on rates set by the People’s Bank of China, which are set daily based on the previous
business day’s interbank foreign exchange market rates and current exchange rates on the
world financial markets. It is difficult to predict how market forces or government policies may
impact the exchange rate between the Renminbi and the Hong Kong dollar, the U.S. dollar or
other currencies in the future.
Changing international circumstances could result in appreciation of the Renminbi
against the U.S. dollar, the Hong Kong dollar or other foreign currencies. If the Renminbi
appreciates against other currencies significantly, and as we need to convert and remit the
proceeds from the Global Offering and future financing into the Renminbi for our operations,
appreciation of the Renminbi against the relevant foreign currencies would reduce the
Renminbi amount we would receive from the conversion. On the other hand, because the
dividends on our Shares, if any, will be paid in Hong Kong dollars, any devaluation of the
Renminbi against the Hong Kong dollar could reduce the amount of any cash dividends on our
Shares in Hong Kong dollar terms. In addition, there are limited instruments available for us
to reduce our exposure to foreign currency risk at reasonable costs. Any of the foregoing
factors may materially and adversely affect our businesses, results of operations, financial
condition and prospects.
PRC regulations establish related procedures for some acquisitions of Chinese companies
by foreign investors, which could make it complicated for us to pursue growth through
acquisitions in China.
Among other things, the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (), or the M&A
Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, established
specific procedures and requirements for merger and acquisition activities by foreign investors.
Such regulation requires, among other things, that MOFCOM be notified in advance of any
change of control transaction in which a foreign investor takes control of a PRC domestic
enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that
have or may have impact on the national economic security, or (iii) such transaction will lead
to a change in control of a domestic enterprise which holds a famous trademark or PRC
time-honored brand. Moreover, the Anti-Monopoly Law ()
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promulgated by the Standing Committee of the NPC which became effective in 2008 and last
amended in 2022 requires that transactions which are deemed concentrations and involve
parties with specified turnover thresholds must be cleared by the relevant anti-monopoly
authority before they can be completed. We may pursue potential strategic acquisitions that are
complementary to our business and operations. Complying with the requirements of these
regulations to complete such transactions could be costly, and any required approval processes,
including obtaining approval or clearance from the competent governmental authority, may
delay or inhibit our ability to complete such transactions, which could affect our ability to
expand our business or maintain our market share.
PRC regulations relating to the establishment of offshore special purpose companies by
PRC residents may subject our PRC resident beneficial owners or our PRC subsidiaries
to liability or penalties, limit our ability to inject capital into our PRC subsidiaries, limit
our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us,
or may otherwise adversely affect us.
In July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign
Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip
Investment Through Special Purpose Vehicles (ٙ
), or SAFE Circular 37, to replace the
Notice on Relevant Issues Concerning Foreign Exchange Administration for Domestic
Residents’ Financing and Roundtrip Investment Through Offshore Special Purpose Vehicles, or
SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37.
SAFE Circular 37 requires PRC residents (including PRC individuals and PRC corporate
entities) to register with SAFE or its local branches in connection with their direct or indirect
offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC
residents and may be applicable to any offshore acquisitions that we make in the future.
SAFE Circular 37 requires registration with, and approval from, Chinese government
authorities in connection with direct or indirect control of an offshore entity by PRC residents.
The term “control” under SAFE Circular 37 is broadly defined as the operation rights,
beneficiary rights or decision-making rights acquired by PRC residents in the offshore special
purpose vehicles, or SPVs, by means of acquisition, trust, proxy, voting rights, repurchase,
convertible bonds or other arrangements. In addition, any PRC resident who is a direct or
indirect shareholder of an SPV is required to update its filed registration with the local branch
of SAFE with respect to that SPV , to reflect any material change. On February 13, 2015, the
SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange
Administration Policy on Direct Investment (ટҳ
), or SAFE Notice 13, which became effective on June 1, 2015. Under
SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct
investments and outbound overseas direct investments, including those required under SAFE
Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will
directly examine the applications and accept registrations under the supervision of SAFE.
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These regulations may have a significant impact on our present and future structuring and
investment. We cannot assure you that any PRC shareholders of our Company or any PRC
company into which we invest will be able to comply with those requirements. Any failure or
inability by such individuals or entities to comply with SAFE regulations may subject us to
fines or legal sanctions, such as restrictions on our cross-border investment activities or our
PRC subsidiaries’ ability to distribute dividends to, or obtain foreign exchange-denominated
loans from, our Company or prevent us from making distributions or paying dividends. As a
result, our business operations and our ability to make distributions to you could be materially
and adversely affected.
Furthermore, with the promulgation of new laws, regulations and standards concerning
foreign exchange regulations in the future, we are required to comply with these laws,
regulations and standards concerning offshore or cross-border transactions, otherwise we may
be subject to fines or other penalties, which could materially and adversely affect our business,
results of operations and financial condition. This may restrict our ability to implement our
acquisition strategy and could adversely affect our business and prospects.
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.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign
Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of
Overseas Publicly Listed Company (ᛆዧ
), replacing earlier rules promulgated in 2007. Pursuant to
these rules, 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. In addition, SAFE Circular 37 stipulates that PRC
residents who participate in a share incentive plan of an overseas non-publicly listed special
purpose company may register with SAFE or its local branches before they obtain the incentive
shares or exercise the share options. We and our 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 or will be granted incentive shares or options are or will be subject to these
regulations. Failure to complete the SAFE registrations may subject them to fines and legal
sanctions, and there may be additional restrictions on their ability to exercise their stock
options or remit proceeds gained from sale of their stock into the PRC. We also face regulatory
uncertainties that could restrict our ability to adopt additional incentive plans for our directors,
executive officers and employees under PRC law. See “Regulatory Overview — Laws and
Regulations on Stock Incentive Plans.”
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If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes,
such classification could result in unfavorable tax consequences to us and our non-PRC
shareholders.
Under the PRC Enterprise Income Tax Law and its implementation rules, an enterprise
established outside the PRC with its “de facto management body” within the PRC is considered
a “resident enterprise” and will be subject to the enterprise income tax on its global income at
the rate of 25%. The implementation rules define the term “de facto management body” as the
body that exercises full and substantial control and overall management over the business,
productions, personnel, accounts and properties of an enterprise. The State Administration of
Taxation, or SAT, issued the Notice Regarding the Determination of Chinese-Controlled
Offshore Incorporated Enterprises as People’s Republic of China Tax Resident Enterprises on
the Basis of De Facto Management Bodies (ΆุԱኽྼყ၍ଣዚ࿴
), known as SAT Circular 82, on April 22, 2009 and
most recently amended on December 29, 2017. SAT Circular 82 provides certain specific
criteria for determining whether the “de facto management body” of a PRC-controlled
enterprise that is incorporated offshore is located in China. Although this circular only applies
to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those
controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the
SAT’s general position on how the “de facto management body” text should be applied in
determining the tax resident status of all offshore enterprises. According to SAT Circular 82,
an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group
will be regarded as a PRC tax resident by virtue of having its “de facto management body” in
China, and will be subject to PRC enterprise income tax on its global income only if all of the
following conditions are met (i) the primary location of the day-to-day operational
management is in the PRC; (ii) decisions relating to the enterprise’s financial and human
resource matters are made or are subject to approval by organizations or personnel in the PRC;
(iii) the enterprise’s primary assets, accounting books and records, company seals, and board
and shareholder resolutions are located or maintained in the PRC; and (iv) at least 50% of
voting board members or senior executives habitually reside in the PRC.
We believe our Company is not a PRC resident enterprise for PRC tax purposes. However,
the tax resident status of an enterprise is subject to determination by the PRC tax authorities
and uncertainties remain with respect to the interpretation of the term “de facto management
body.” If the PRC tax authorities determine that our Company or any of our offshore
subsidiaries is a PRC resident enterprise for enterprise income tax purposes, our Company or
the relevant offshore subsidiaries will be subject to PRC enterprise income on its worldwide
income at the rate of 25%. Furthermore, if we are treated as a PRC tax resident enterprise, we
will be required to withhold a 10% tax from dividends we pay to our shareholders that are
non-resident enterprises. In addition, non-resident enterprise shareholders may be subject to
PRC tax at a rate of 10% on gains realized on the sale or other disposition of Offer Shares, if
such gain is treated as derived from a PRC source. Furthermore, if we are deemed a PRC
resident enterprise, dividends paid to our non-PRC individual shareholders and any gain
realized on the transfer of Offer Shares by such shareholders may be subject to PRC tax at a
rate of 20% (which, in the case of dividends, may be withheld at source by us). These rates may
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be reduced by an applicable tax treaty, but it is unclear whether our non-PRC shareholders
would, in practice, be able to obtain the benefits of any tax treaties between their country of
tax residence and the PRC in the event that we are treated as a PRC resident enterprise. Any
such tax may reduce the returns on your investment in the Offer Shares.
Changes in government policies that are favorable for smart vehicles could materially and
adversely affect our business, financial conditions and results of operations.
Our growth depends in part on government spending and favorable government policies
in respect of the industries in which we operate. For details on such policies, see “Regulatory
Overview — Regulations on Autonomous Driving.” However, such policies may be subject to
changes that are beyond our control. There can be no assurance that government policies will
continue. Uncertainties and changes in such policies may have a material adverse impact on our
business, financial condition and results of operations.
We face uncertainty with respect to indirect transfers of equity interests in PRC resident
enterprises by their non-PRC resident companies.
On February 3, 2015, the SAT issued the Public Notice Regarding Certain Corporate
Income Tax Matters on Indirect Transfer of Properties by Non-Tax Resident Enterprises ( ᗫ
ʮѓ), or SAT Bulletin 7, which came
into effect on February 3, 2015. SAT Bulletin 7 has introduced safe harbors for internal group
restructurings and the purchase and sale of equity through a public securities market. SAT
Bulletin 7 also brings challenges to both foreign transferor and transferee (or other person who
is obligated to pay for the transfer) of taxable assets.
On October 17, 2017, the SAT issued the Announcement of the State Administration of
Taxation on Issues Concerning the Withholding of Non-resident Enterprise Income Tax at
Source (ʮѓ), or SAT Bulletin 37, which
came into effect on December 1, 2017. The SAT Bulletin 37 further clarifies the practice and
procedure of the withholding of non-resident enterprise income tax.
We face uncertainties as to the reporting and other implications of future transactions
where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our
offshore subsidiaries and investments. As a result, we may be required to expend valuable
resources to comply with SAT Bulletin 7 and/or SAT Bulletin 37 or to request the relevant
transferors from whom we purchase taxable assets to comply with these circulars, or to
establish that our Company should not be taxed under these circulars, which may have a
material adverse effect on our financial condition and results of operations.
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RISKS RELATED TO THE WVR STRUCTURE
The concentration of our Share’s voting power limited our Shareholders’ ability to
influence corporate matters.
Our Company is controlled through weighted voting rights. The WVR Beneficiaries are
Dr. Yu and Dr. Huang. Immediately upon the completion of Global Offering, Dr. Yu and
Dr. Huang will beneficially own 2,124,389,270 Class A Ordinary Shares together, representing
approximately 66.08% of the voting rights in our Company (assuming the Over-allotment
Option is not exercised) with respect to shareholder resolutions relating to matters other than
the Reserved Matters. Dr. Yu and Dr. Huang therefore have significant influence over matters
such as decisions regarding mergers and consolidations, election of directors, and other
significant corporate actions. For further details about our shareholding structure, see the
section headed “Share Capital — Weighted V oting Rights Structure” of this Prospectus. This
concentrated control limits or severely restricts our Shareholders’ ability to influence corporate
matters and, as a result, we may take actions that our Shareholders do not view as beneficial.
As a result, the market price of our Class B Ordinary Shares could be adversely affected.
Holders of our Class A Ordinary Shares may exert substantial influence over us and may
not act in the best interests of our other Shareholders.
Our WVR Beneficiaries are in a position to exert significant influence over the affairs of
our Company and will be able to influence the outcome of any shareholders’ resolutions,
irrespective of how other shareholders vote. The interests of the holders of our Class A
Ordinary Shares may not necessarily be aligned with the interests of our Shareholders as a
whole, and this concentration of voting power may also have the effect of delaying, deferring
or preventing a change in control of our Company. This concentrated control could discourage
others from pursuing any potential merger, takeover, or other change of control transactions
that holders of Class A Ordinary Shares may view as beneficial, and may also discourage,
delay, or prevent a change of control of our Company, which could have the effect of
depriving our other Shareholders of the opportunity to receive a premium for their Shares as
part of a sale of our Company and may reduce the price of our Class B Ordinary Shares.
RISKS RELATED TO THE GLOBAL OFFERING AND OUR SHARES
There has been no prior public market for our Shares and the liquidity and market price
of our Shares may be volatile.
Prior to the Global Offering, there has been no public market for our Shares. There can
be no guarantee that an active trading market for our Shares will develop or be sustained after
the completion of the Global Offering. The Offer Price of our Shares is the result of
negotiations between our Company and the Overall Coordinators (for themselves and on behalf
of the Underwriters), which may not be indicative of the price at which our Shares will be
traded following the completion of the Global Offering. The market price of our Shares may
drop below the Offer Price at any time after completion of the Global Offering.
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The price and trading volume of our Shares may be volatile, which could result in
substantial losses for investors purchasing our Shares in the Global Offering.
Factors such as fluctuations in our revenue, earnings, cash flows, new investments,
regulatory development, additions or departures of key personnel, or actions taken by
competitors could cause the market price of our Shares or trading volume of our Shares to
change substantially and unexpectedly. In addition, stock prices have been subject to
significant volatility in recent years. Such volatility has not always been directly related to the
performance of the specific companies whose shares are traded. Such volatility, as well as
general economic conditions, may materially and adversely affect the prices of shares, and as
a result investors in our Shares may incur substantial losses.
Y ou may experience dilution upon conversion under the Convertible Loan Agreement.
Pursuant to a convertible loan agreement dated November 17, 2022, CARIAD Estonia AS
(“CARIAD”) as lender agreed to provide the loan in the amount of US$800,000,000 to the
Company. On October 11, 2024, an amendment agreement (together with the original
convertible loan agreement, the “Convertible Loan Agreement”) was entered into between the
Company and CARIAD to amend arrangement with respect to the conversion mechanism of the
convertible loan (among others). Under the Convertible Loan Agreement, upon maturity on
December 7, 2026 of the loan, all the principal amount and accrued interest (the “Accrued
Amount”) shall be automatically and mandatorily converted into Class B Ordinary Shares at
the final Offer Price. Upon conversion of the Accrued Amount at maturity in full (without any
amount outstanding), the total beneficial interests of CARIAD in the Company must not exceed
9.9% (unless otherwise agreed between the Company and CARIAD), and after repaying part
of the Accrued Amount through the issuance of converted Shares up to this 9.9% threshold
based on the final Offer Price (the “Conversion Amount”), the remaining Accrued Amount, if
any, will be repaid by the Company in cash.
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in, among other things, the Class B Ordinary Shares which may be issued under the
convertible loan issued to CARIAD taking into account the 9.9% threshold as disclosed in the
section headed “History, Reorganization and Corporate Structure – Convertible Loan”,
assuming the exchange rates as disclosed in the section headed “Information about this
Prospectus and the Global Offering – Exchange Rate Conversion” being adopted and the
conversion price setting at the low-end of the indicative Offer Price range.
Taking into account the aforesaid 9.9% threshold, CARIAD is expected to be allotted and
issued in aggregate 1,132,347,445 Class B Ordinary Shares upon conversion under the
Convertible Loan Agreement, representing approximately 9.9% of the enlarged issued Share
capital immediately following the completion of the Global Offering. For more details, please
see the section headed “History, Reorganization and Corporate Structure – Pre-IPO
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Investments – Convertible Loan” of this prospectus. To the extent the convertible loan under
the Convertible Loan Agreement is converted, the shareholding percentages of the existing
Shareholders in the Company would be diluted, and the market price of the Shares could be
negatively affected.
Subscribers and purchasers of our Shares under the Global Offering will experience
immediate dilution and may experience further dilution if we issue additional Shares in
the future.
The Offer Price of our Shares is higher than our net tangible assets value per Share
immediately prior to the Global Offering. Therefore, subscribers and purchasers of our Shares
under the Global Offering will experience an immediate dilution in pro forma net tangible
assets value per Share. In order to expand our business, we may consider offering and issuing
additional Shares in the future or to raise additional funds in the future to finance our business
expansion, for existing operations or new acquisitions. If additional funds are raised through
the issuance of new equity or equity-linked securities of our Company, other than on a pro rata
basis to existing Shareholders, then (i) the percentage ownership of the existing Shareholders
may be reduced, and they may experience subsequent dilution and reduction in their earnings
per share, (ii) such newly issued securities may have rights, preferences or privileges superior
to those of the Shares of the existing Shareholders and/or (iii) subscribers and purchasers of
our Shares may experience dilution in the net tangible assets value per Share if we issue
additional Shares in the future at a price which is lower than our net tangible assets value per
Share.
Future sale or major divestment of Shares by any of our substantial Shareholders could
adversely affect the prevailing market price of our Shares.
The Shares held by certain Shareholders are subject to certain lock-up periods, the details
of which are set out in the section headed “Underwriting” of this Prospectus. However, we
cannot give any assurance that after the restrictions of the lock-up periods expire, these
Shareholders will not dispose of any Shares. Sale of substantial amounts of our Shares in the
public market, or the perception that these sales may occur, may materially and adversely affect
the prevailing market price of our Shares.
The market price of the Shares when trading begins could be lower than the Offer Price.
The Offer Price will be determined on the Price Determination Date. However, the Shares
will not commence trading on the Stock Exchange until they are delivered, which is expected
to be a few Business Days after the expected Price Determination Date. Investors may not be
able to sell or otherwise deal in the Shares during that period. As a result, holders of the Shares
are subject to the risk that the price of the Shares when trading begins could be lower than the
Offer Price as a result of adverse market conditions or other adverse developments that may
occur during that period.
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Investors should not place undue reliance on facts, forecasts, estimates and other statistics
in this Prospectus relating to the economy and our industry obtained from official or
other resources.
Facts, forecasts, estimates and other statistics in this Prospectus relating to the economy
and the industry in which we operate our business on have been collected from materials from
official government sources. While we have exercised reasonable care in compiling and
reproducing such information and statistics derived from government publications, we cannot
assure you nor make any representation as to the accuracy or completeness of such information.
The information and statistics from official government sources have not been independently
verified by the Group, our Directors, the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Capital Market
Intermediaries, the Underwriters or any other party involved in the Global Offering, and no
representation is given as to its accuracy.
Neither we or any of our respective affiliates or advisers, nor the Underwriters or any of
its affiliates or advisers, have independently verified the accuracy or completeness of such
information directly or indirectly derived from official government sources. In particular, due
to possibly flawed or ineffective collection methods or discrepancies between published
information and market practice, such information and statistics may be inaccurate or may not
be comparable to information and statistics produced with respect to other countries. Statistics,
industry data and other information relating to the economy and the industry derived from the
official government sources used in this Prospectus may not be consistent with other
information available from other sources and therefore, investors should not unduly rely upon
such facts, forecasts, estimates and statistics while making investment decisions.
If securities or industry analysts do not publish research reports about our business, or
if they adversely change their recommendations regarding our Shares, the market price
and trading volume of our Shares may decline.
The trading market for our Shares will be influenced by the research and reports that
industry or securities analysts publish about us or our business. If one or more of the analysts
who cover us downgrade our Shares, the price of our Shares would likely decline. If one or
more of these analysts cease coverage of our Company or fail to regularly publish reports on
us, we could lose visibility in the financial markets, which in turn could cause our stock price
or trading volume to decline.
We have no experience of operating as a public company.
We have no experience conducting our operations as a public company. After we become
a public company, we may face enhanced administrative and compliance requirements, which
may result in substantial costs.
In addition, since we are becoming a public company, our management team will need to
develop the expertise necessary to comply with the numerous regulatory and other
requirements applicable to public companies, including requirements relating to corporate
RISK FACTORS
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governance, listing standards and securities and investor relationships issues. As a public
company, our management will have to evaluate our internal controls system with new
thresholds of materiality, and to implement necessary changes to our internal controls system.
We cannot guarantee that we will be able to do so in a timely and effective manner. Failure to
effectively manage these new demands could adversely impact our operational efficiency and
financial health, affecting our business and market perception.
We may not be able to pay any dividends to our Shareholders.
We cannot guarantee when and in what form dividends will be paid on our Offer Shares
following the Global Offering. The declaration of dividends is proposed by the Board and is
based on, and limited by, various factors, such as our business and financial performance,
capital and regulatory requirements and general business and operation 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.
Investors may experience difficulties in enforcing Shareholder rights.
Our Company is an exempted company incorporated in the Cayman Islands with limited
liability, and the laws of the Cayman Islands differ in some respects from those of Hong Kong
or other jurisdictions where investors may be located. The corporate affairs of our Company
are governed by the Memorandum and the Articles, as amended from time to time, the
Companies Act and the common law of the Cayman Islands. The rights of Shareholders to take
legal action against our Company and/or our Directors, actions by minority Shareholders and
the fiduciary duties of our Directors to our Company under Cayman Islands laws are to a large
extent governed by the common law of the Cayman Islands. The common law of the Cayman
Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands
as well as from English common law, which has persuasive, but not binding, authority on a
court in the Cayman Islands. The rights of the Shareholders and the fiduciary duties of our
Directors under Cayman Islands laws may not be as clearly established as they would be under
statutes or judicial precedents in Hong Kong or other jurisdictions where investors reside. In
particular, the Cayman Islands has a less developed body of securities laws. As a result of all
of the above, Shareholders may have more difficulty in exercising their rights in the face of
actions taken by the management of our Company, Directors or major Shareholders than they
would as shareholders of a Hong Kong company or company incorporated in other
jurisdictions.
We have significant discretions as to how we 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” in this Prospectus. However, our
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management will have discretion as to the actual application of our net proceeds. You are
entrusting your funds to our management, upon whose judgment you must depend, for the
specific uses we will make of the net proceeds from this Global Offering.
Y ou should read the entire Prospectus carefully and should not place any reliance on any
information contained in press articles or other media regarding the Global Offering.
There may have been, prior to the publication of this Prospectus, and there may be,
subsequent to the date of this Prospectus but prior to the completion of the Global Offering,
press and media coverage regarding us and the Global Offering, such as the profit estimate
information. You should rely solely upon the information contained in this Prospectus and any
formal announcements made by us in Hong Kong in making your investment decision
regarding the Global Offering. We do not accept any responsibility for the accuracy or
completeness of any information reported by the press or other media, nor the fairness or
appropriateness of any estimates, views or opinions expressed by the press or other media
regarding the Global Offering or us. We make no representation as to the appropriateness,
accuracy, completeness or reliability of any such information or publication.
Accordingly, prospective investors should not rely on any such information, reports or
publications in making their decisions whether to invest in the Global Offering. Prospective
investors in the Global Offering are reminded that, in making their decisions as to whether to
purchase our Offer Shares, they should rely only on the financial, operational and other
information included in this Prospectus. By applying to purchase our Offer Shares in the
Global Offering, you will be deemed to have agreed that you will not rely on any information
other than that contained in this Prospectus.
Forward-looking information contained in this Prospectus is subject to risks and
uncertainties.
This Prospectus contains certain statements and information that are forward-looking and
uses forward-looking terminology such as “anticipate,” “believe,” “could,” “going forward,”
“intend,” “plan,” “project,” “seek,” “expect,” “may,” “ought to,” “should,” “would” or “will”
and similar expressions. You are cautioned that reliance on any forward-looking statement
involves risks and uncertainties and that any or all of those assumptions could prove to be
inaccurate and as a result, the forward-looking statements based on those assumptions could
also be incorrect. In light of these and other risks and uncertainties, the inclusion of
forward-looking statements in this Prospectus should not be regarded as representations or
warranties by us that our plans and objectives will be achieved and these forward-looking
statements should be considered in light of various important factors, including those set forth
in this section. Subject to the requirements of the Listing Rules, we do not intend publicly to
update or otherwise revise the forward-looking statements in this Prospectus, whether as a
result of new information, future events or otherwise. Accordingly, 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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In preparation of the Listing, the Company has sought the following waivers from strict
compliance with the relevant provisions of the Listing Rules and exemption from the
Companies (Winding Up and Miscellaneous Provisions) Ordinance:
W AIVER IN RELATION TO MANAGEMENT PRESENCE IN HONG KONG
According to Rule 8.12 of the Listing Rules, except as otherwise permitted by the Stock
Exchange at its discretion, 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 an applicant’s executive directors must be ordinarily resident in Hong Kong.
Our headquarters are based, and substantially all of the business operations of our Group,
are managed and conducted in the PRC. Our executive Directors ordinarily reside in the PRC
and they play very important roles in our Company’s business operations. It is in our best
interests for them to be based in places where our Group has significant operations. We
consider it practically difficult and commercially unreasonable for us to arrange for two
executive Directors to ordinarily reside in Hong Kong, either by means of relocation of our
existing executive Directors or appointment of additional executive Directors. Therefore, our
Company does not have, or does not contemplate in the foreseeable future that we will have
sufficient management presence in Hong Kong for the purpose of satisfying the requirements
under Rule 8.12 of the Listing Rules.
Accordingly, the Company has applied for, and the Stock Exchange has granted the
Company, a waiver from strict compliance with the requirements under Rule 8.12 of the Listing
Rules, provided that the Company will implement the following arrangements:
(i) We have appointed Ms. Tao and Ms. Ka Man So as our authorized representatives
(the “Authorized Representatives”) pursuant to Rule 3.05 of the Listing Rules. The
Authorized Representatives will act as our Company’s principal channel of
communication with the Hong Kong Stock Exchange. The Authorized
Representatives will be readily contactable by phone, facsimile and email to
promptly deal with inquiries from the Hong Kong Stock Exchange, and will also be
available to meet with the Hong Kong Stock Exchange to discuss any matter within
a reasonable period of time upon request of the Hong Kong Stock Exchange;
(ii) When the Hong Kong Stock Exchange wishes to contact our Directors on any
matter, each of the Authorized Representatives will have all necessary means to
contact all of our Directors (including our independent non-executive Directors) and
senior management team promptly at all times. Our Company will also inform the
Hong Kong Stock Exchange promptly in respect of any changes in the authorized
representatives. We have provided the Hong Kong Stock Exchange with the contact
details (i.e. mobile phone number, office phone number and email address) of all
Directors to facilitate communication with the Hong Kong Stock Exchange. Our
Directors will also provide the phone number of the place of his/her accommodation
to the Authorized Representatives in the event that any Director expects to travel or
otherwise be out of office;
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(iii) All Directors who do not ordinarily reside in Hong Kong possess or can apply for
valid travel documents to visit Hong Kong and can meet with the Hong Kong Stock
Exchange within a reasonable period of time;
(iv) We have appointed Somerley Capital Limited as our Compliance Adviser upon the
Listing pursuant to Rules 3A.19 and 8A.33 of the Listing Rules commencing on the
Listing Date. The Compliance Adviser will have access at all times to our
Authorized Representatives, Directors, and members of our senior management,
who will act as the additional channel of communication with the Hong Kong Stock
Exchange when the Authorized Representatives are not available. The contact
details of the Compliance Adviser has been provided to the Hong Kong Stock
Exchange and the Company will inform the Hong Kong Stock Exchange promptly
in respect of any change in the Compliance Adviser; and
(v) The Company has designated staff members as the communication officer at the
Company’s headquarters after the Listing who will be responsible for maintaining
day-to-day communication with the Authorized Representatives, and the Company’s
professional advisers in Hong Kong, including our legal advisers in Hong Kong and
the Compliance Adviser, to keep abreast of any correspondences and/or inquiries
from the Hong Kong Stock Exchange and report to the executive Directors to further
facilitate communication between the Hong Kong Stock Exchange and the
Company.
W AIVER IN RELATION TO JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, we must appoint a company
secretary who, by virtue of his/her academic or professional qualifications or relevant
experience, is, in the opinion of the Hong Kong Stock Exchange, capable of discharging the
functions of the company secretary. Note 1 to Rule 3.28 of the Listing Rules provides that the
Hong Kong Stock Exchange considers the following academic or professional qualifications to
be acceptable:
(i) a member of The Hong Kong Chartered Governance Institute;
(ii) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(iii) 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 provides that in assessing “relevant experience,”
the Stock Exchange will consider the individual’s:
(i) length of employment with the issuer and other issuers and the roles he/she played;
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(ii) 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;
(iii) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(iv) professional qualifications in other jurisdictions.
Our Company has appointed Ms. Qi Zhao (“Ms. Zhao”), as one of our joint company
secretaries. Ms. Zhao has sufficient experience in regulatory compliance matters of our
Company but presently does not possess any of the qualifications under Rules 3.28 and 8.17
of the Listing Rules, and may not be able to solely fulfill the requirements of the Listing Rules.
Therefore, we have appointed Ms. Ka Man So (“Ms. So”), who is associate member of both
The Hong Kong Chartered Governance Institute and The Chartered Governance Institute in the
United Kingdom, who fully meets the requirements stipulated under Rules 3.28 and 8.17 of the
Listing Rules to act as the other joint company secretary. Ms. So will provide assistance to Ms.
Zhao for an initial period of three years from the Listing Date to enable Ms. Zhao to acquire
the “relevant experience” under Note 2 to Rule 3.28 of the Listing Rules so as to fully comply
with the requirements set forth under Rules 3.28 and 8.17 of the Listing Rules.
Since Ms. Zhao does not possess the formal qualifications required of a company
secretary under Rule 3.28 of the Listing Rules, we have applied to the Hong Kong Stock
Exchange for, and the Hong Kong Stock Exchange has granted, a waiver from strict compliance
with the requirements under Rules 3.28 and 8.17 of the Listing Rules such that Ms. So may be
appointed as a joint company secretary of our Company. Pursuant to paragraph 13 of Chapter
3.10 under the Guide for New Listing Applicants published by the Stock Exchange, the waiver
will be for a fixed period of time (the “Waiver Period”) and on the following conditions: (i)
the proposed company secretary must be assisted by a person who possesses the qualifications
or experience as required under Rule 3.28 of the Listing Rules and is appointed as a joint
company secretary throughout the Waiver Period; and (ii) the waiver can be revoked if there
are material breaches of the Listing Rules by the issuer. The waiver is valid for an initial period
of three years from the Listing Date, and is granted on the condition that Ms. So will work
closely with Ms. Zhao to jointly discharge the duties and responsibilities as company secretary
and assist Ms. Zhao in acquiring the relevant experience as required under Rules 3.28 and 8.17
of the Listing Rules. Ms. So will also assist Ms. Zhao in organizing Board meetings and
Shareholders’ meetings of our Company as well as other matters of our Company which are
incidental to the duties of a company secretary. Ms. So is expected to work closely with Ms.
Zhao and will maintain regular contact with Ms. Zhao, the Directors and the senior
management of our Company. The waiver will be revoked immediately if Ms. So ceases to
provide assistance to Ms. Zhao as a joint company secretary for the three-year period after the
Listing or where there are material breaches of the Listing Rules by our Company. In addition,
Ms. Zhao will comply with the annual professional training requirement under Rule 3.29 of the
Listing Rules and will enhance her knowledge of the Listing Rules during the three-year period
from the Listing. Ms. Zhao will also be assisted by (a) Compliance Adviser of our Company,
particularly in relation to compliance with the Listing Rules; and (b) the Hong Kong legal
advisers of our Company, on matters concerning our Company’s ongoing compliance with the
Listing Rules and the applicable laws and regulations.
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Before the expiration of the initial three-year period, the qualifications of Ms. Zhao will
be re-evaluated to determine whether the requirements as stipulated in Rules 3.28 and 8.17 of
the Listing Rules can be satisfied. We will liaise with the Hong Kong Stock Exchange to enable
it to assess whether Ms. Zhao, having benefited from the assistance of Ms. So for the preceding
three years, will have acquired the skills necessary to carry out the duties of company secretary
and the relevant experience within the meaning of Note 2 to Rule 3.28 of the Listing Rules so
that a further waiver will not be necessary.
W AIVER AND EXEMPTION IN RELATION TO THE 2018 SHARE INCENTIVE PLAN
Rule 17.02(1)(b) of the Listing Rules requires a listing applicant to, inter alia, disclose in
this Prospectus full details of all outstanding options and awards and their potential dilution
effect on the shareholdings upon listing as well as the impact on the earnings per share arising
from the issue of shares in respect of such outstanding options.
Paragraph 27 of Appendix D1A to the Listing Rules requires a listing applicant to
disclose, inter alia, particulars of any capital of any member of the group which is under option,
or agreed conditionally or unconditionally to be put under option, including the consideration
for which the option was or will be granted and the price and duration of the option, and the
name and address of the grantee, or an appropriate negative statement, provided that where
options have been granted or agreed to be granted to all the members or debenture holders or
to any class thereof, or to employees under a share option scheme, it shall be sufficient, so far
as the names and addresses are concerned, to record that fact without giving the names and
addresses of the grantees.
Under section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the prospectus must state the matters specified in Part I of the Third Schedule.
Under paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the number, description and amount of any shares in or
debentures of the company which any person has, or is entitled to be given, an option to
subscribe for, together with the particulars of the option, that is to say, (a) the period during
which it is exercisable; (b) the price to be paid for shares or debentures subscribed for under
it; (c) the consideration (if any) given or to be given for it or for the right to it; and (d) the
names and addresses of the persons to whom it or the right to it was given or, if given to
existing shareholders or debenture holders as such, the relevant shares or debentures must be
specified in the prospectus.
As of the date of this Prospectus, our Company had granted outstanding options under the
2018 Share Incentive Plan to 537 grantees (the “Grantee(s)”) to subscribe for an aggregate of
395,046,975 Class B Ordinary Shares, among which options representing 11,000,000 Class B
Ordinary Shares were granted to Mr. Yufeng Zhang, a former Director, and options
representing 384,046,975 Class B Ordinary Shares were granted to 536 other employees or
former employees of the Group, who are not Directors, members of senior management,
consultants or connected persons of the Company.
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As of the date of this Prospectus, our Company had granted outstanding share awards
under the 2018 Share Incentive Plan to 2,527 participants (the “Awardee(s)”) for an aggregate
of 1,049,903,241 Class B Ordinary Shares, among which share awards representing
131,774,806 Class B Ordinary Shares were granted to five Directors, namely, Dr. Yu, Dr.
Huang, Ms. Tao, Dr. Liming Chen and Dr. Ya-Qin Zhang, and two former Directors, namely,
Mr. Yufeng Zhang and Mr. Feng Zhou, and share awards representing 918,128,435 Class B
Ordinary Shares were granted to 2,520 other employees or former employees of the Group,
who are not Directors, members of senior management, consultants or connected persons of the
Company.
The Class B Ordinary Shares underlying the outstanding options and share awards
represent approximately 3.03% and 8.06%, respectively, of the total number of Shares in issue
immediately after completion of the Global Offering assuming the Over-allotment Option is
not exercised.
No options or share awards under the 2018 Share Incentive Plan will be further granted
after the Listing. For more details of the 2018 Share Incentive Plan, see “Statutory and General
information — D. Share Incentive Plans — 1. 2018 Share Incentive Plan” in Appendix IV to
this Prospectus.
We have applied to (i) the Stock Exchange for a waiver from strict compliance with the
requirements under Rule 17.02(1)(b) of and paragraph 27 of Appendix D1A to the Listing
Rules; and (ii) the SFC for an exemption from strict compliance with paragraph 10(d) of Part
I of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance pursuant to section 342A of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in connection with the disclosure of certain details relating to the 2018
Share Incentive Plan and the Grantees on the ground that full compliance with such disclosure
requirements would be unduly burdensome for our Company and the waiver and the exemption
would not prejudice the interest of the investing public for the following reasons:
(a) given that 537 Grantees are involved, our Directors consider that it would be unduly
burdensome to disclose full details of all the Options granted by us in this
Prospectus, which would involve a substantial number of pages of content to be
inserted into this Prospectus, significantly increasing the cost and timing for
information compilation and Prospectus preparation;
(b) the key information of the 2018 Share Incentive Plan will be disclosed in this
Prospectus, including (i) a summary of the terms of the 2018 Share Incentive Plan;
(ii) the aggregate number of the Class B Ordinary Shares subject to the Options and
the percentage of our Class B Ordinary Shares of which such number represents;
(iii) the potential dilution effect on shareholdings and the impact on earnings per
Class B Ordinary Share upon full exercise of the Options immediately following
completion of the Global Offering; (iv) the details of the Options granted under the
W AIVERS AND EXEMPTION
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2018 Share Incentive Plan by the range of underlying Class B Ordinary Shares,
including exercise prices, grant dates, vesting periods and the percentage of our
Company’s total issued share capital represented upon completion of the Global
Offering;
(c) the grant and exercise in full of the Options under the 2018 Share Incentive Plan will
not cause any material adverse impact to the financial position of our Group; and
(d) the lack of full compliance with the disclosure requirements set out above will not
prevent potential investors from making an informed assessment of the activities,
assets and liabilities, financial position, management and prospects of our Group
and will not prejudice the interests of any potential investors.
In light of the above, our Directors believe that the grant of the waiver and exemption
sought under this application and the non-disclosure of the required information will not hinder
potential investors from making an informed assessment of the activities, assets and liabilities,
financial position, management and prospects of our Group and will not prejudice the interest
of the public investors.
The Stock Exchange has granted to us a waiver from strict compliance with the disclosure
requirements under Rule 17.02(1)(b) of the Listing Rules and paragraph 27 of Appendix D1A
to the Listing Rules with respect to the options and share awards granted under the 2018 Share
Incentive Plan subject to the conditions that:
(a) the grant of a certificate of exemption from strict compliance with the relevant
Companies (Winding Up and Miscellaneous Provisions) Ordinance requirements by
the SFC;
(b) on an individual basis, full details of all the options granted by the Company under
the 2018 Share Incentive Plan to (i) each of the Directors, senior management and
connected persons of the Company and (ii) Grantees who had been granted options
to subscribe for an aggregate number of 11,000,000 or more Class B Ordinary
Shares, including all the particulars required under Rule 17.02(1)(b) of the Listing
Rules, paragraph 27 of Appendix D1A to the Listing Rules and paragraph 10 of Part
I of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, be disclosed in this Prospectus;
W AIVERS AND EXEMPTION
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(c) in respect of the options granted by our Company under the 2018 Share Incentive
Plan to the remaining Grantees other than those referred to in sub-paragraph (b)
above (the “ Other Grantees ”), the following details will be disclosed in this
Prospectus, on an aggregate basis, and categorized into lots based on numbers of
Class B Ordinary Shares underlying each individual Grantee, being (i) less than
2,500,000 Class B Ordinary Shares; (ii) 2,500,000 to 4,999,999 Class B Ordinary
Shares; (iii) 5,000,000 to 7,499,999 Class B Ordinary Shares; and (iv) 7,500,000 to
10,999,999 Class B Ordinary Shares, and for each lots of Class B Ordinary Shares:
(i) the number of the Other Grantees and the number of Class B Ordinary Shares
underlying the options, (ii) the considerations paid for the grant of options, (iii)
vesting period, exercise period and the exercise prices of the options granted, (iv)
the range of grant dates, (v) the range of vesting periods, (vi) the percentage of our
Company’s total issued share capital represented by such lots upon completion of
the Global Offering;
(d) on an individual basis, full details of the outstanding share awards granted to each
of the Directors, senior management and connected persons (if any) of the Company
which include all the particulars required under Rule 17.02(1)(b) of the Listing
Rules are disclosed in the Prospectus on an individual basis. In addition, with
respect to the share awards granted to persons other than connected persons,
disclosure are made in the Prospectus on an aggregate basis, and details including
the aggregate number of such Awardees and the number of Class B Ordinary Shares
subject to the share awards, the consideration paid for the grant of the share awards,
the grant dates and vesting period of the share awards granted, the percentage of our
Company’s total issued share capital represented by such lots upon completion of
the Global Offering, will be disclosed in the Prospectus;
(e) the aggregate number of Class B Ordinary Shares underlying the outstanding options
and share awards granted and the percentage of our Company’s total issued share
capital represented by such number of Class B Ordinary Shares as of the date of this
Prospectus will be disclosed in this Prospectus;
(f) as of the date of this Prospectus, all Class B Ordinary Shares granted under the 2018
Share Incentive Plan have been issued to employee shareholding platforms set up by
our Company with independent professional trustee companies. Accordingly, there
will not be any dilution effect on the shareholdings of our Shareholders nor any
impact on the earnings per share arising from the full vesting or the exercise of the
outstanding options and share awards after Listing, details of which will be
disclosed in the section headed “Statutory and General Information — D. Share
Incentive Plans — 1. 2018 Share Incentive Plan” in Appendix IV to this Prospectus;
(g) a summary of the principal terms of the 2018 Share Incentive Plan will be disclosed
in the section headed “Statutory and General Information — D. Share Incentive
Plans — 1. 2018 Share Incentive Plan” in Appendix IV to this Prospectus;
(h) the particulars of this waiver are set out in this Prospectus; and
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(i) a full list of all the Grantees who had been granted options to subscribe for and
Awardees who had been granted share awards for the Class B Ordinary Shares under
the 2018 Share Incentive Plan, containing all details as required under Rule
17.02(1)(b) of and paragraph 27 of Appendix D1A to the Listing Rules and
paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance be made available for public inspection in
accordance with “Documents Delivered to the Registrar of Companies and Available
on Display” in Appendix V to this Prospectus.
The SFC has granted us a certificate of exemption under section 342A of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance exempting our Company from strict
compliance with paragraph 10(d) of Part I of the Third Schedule to the Companies (Winding
Up and Miscellaneous Provisions) Ordinance, subject to the conditions that:
(a) on an individual basis, full details of all the options granted by our Company under
the 2018 Share Incentive Plan to (i) each of our Directors, senior management and
connected persons of our Company and (ii) Grantees who had been granted options
to subscribe for an aggregate number of 11,000,000 or more Class B Ordinary
Shares, are disclosed in this Prospectus, such details to include all the particulars
required under paragraph 10 of Part I of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance;
(b) in respect of the options granted by our Company under the 2018 Share Incentive
Plan to the Other Grantees, the following details be fully disclosed in this
Prospectus, on an aggregate basis, and categorized into lots based on numbers of
Class B Ordinary Shares underlying each individual Grantee, being (i) less than
2,500,000 Class B Ordinary Shares; (ii) 2,500,000 to 4,999,999 Class B Ordinary
Shares; (iii) 5,000,000 to 7,499,999 Class B Ordinary Shares; and (iv) 7,500,000 to
10,999,999 Class B Ordinary Shares, and for each lots of Class B Ordinary Shares:
(i) aggregate number of Grantees and the number of Class B Ordinary Shares subject
to the options; (ii) the consideration paid for the grant of the options; and (iii) the
exercise period and the exercise price for the options;
(c) a full list of all the grantees (including the persons referred to in sub-paragraphs (a)
and (b) above) who have been granted options to subscribe for Class B Ordinary
Shares under the 2018 Share Incentive Plan, containing all details as required under
paragraph 10 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, be made available for public inspection in
accordance with “Documents Delivered to the Registrar of Companies and Available
on Display” in Appendix V to this Prospectus;
(d) the particulars of the exemption be set out in this Prospectus; and
(e) this Prospectus is issued on or before October 16, 2024.
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Further details of the 2018 Share Incentive Plan are set out in the section headed
“Statutory and General Information — D. Share Incentive Plans — 1. 2018 Share Incentive
Plan” in Appendix IV to this Prospectus.
W AIVER IN RELATION TO CONNECTED TRANSACTIONS
We have entered into certain transactions which will constitute continuing connected
transactions of our Company under the Listing Rules following the Listing. We have applied
to the Stock Exchange for, and the Stock Exchange has granted, a waiver from strict
compliance with the announcement requirements as set out in Chapter 14A of the Listing Rules
for such continuing connected transactions. For further details, please refer to the section
headed “Connected Transactions” in this Prospectus.
W AIVER IN RELATION TO POST-TRACK RECORD PERIOD ACQUISITION
Rules 4.04(2) and 4.04(4) of the Listing Rules require that the new applicant include in
its accountants’ report the results and balance sheet of any business or subsidiary acquired,
agreed or proposed to be acquired, since the date to which its latest audited accounts have been
made up, in respect of each of the three financial years immediately preceding the issue of this
Prospectus.
Pursuant to note (4) of Rule 4.04(4) of the Listing Rules, the Stock Exchange may
consider an application for a waiver of Rules 4.04(2) and 4.04(4) of the Listing Rules taking
into account the following factors:
(a) that all the percentage ratios (as defined under Rule 14.04(9) of the Listing Rules)
are less than 5% by reference to the most recent audited financial year of the new
applicant’s trading record period;
(b) if the acquisition will be financed by the proceeds raised from a public offer, the new
applicant has obtained a certificate of exemption from the SFC in respect of the
relevant requirements under paragraphs 32 and 33 of the Third Schedule to the
Companies (Winding Up and Miscellaneous Provisions) Ordinance; and
(c) (i) where a new applicant’s principal activities involve the acquisition of equity
securities (the Stock Exchange may require further information where
securities acquired are unlisted), the new applicant is not able to exercise any
control, and does not have any significant influence over the underlying
company or business to which Rule 4.04(2) and 4.04(4) of the Listing Rules
relate, and has disclosed in its listing document the reasons for the acquisition
and a confirmation that the counterparties and their respective ultimate
beneficial owners are independent of the new applicant and its connected
persons. In this regard, “control” means the ability to exercise or control the
exercise of 30% (or any amount specified in the Hong Kong Code on
Takeovers and Mergers as the level for triggering a mandatory general offer)
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or more of the voting power at general meeting, or being in a position to
control the composition of a majority of the board of directors of the
underlying company or business; or
(ii) with respect to an acquisition of a business (including acquisition of an
associated company and any equity interest in a company other than in the
circumstances covered under sub-paragraph (a) above) or a subsidiary by a
new applicant, the historical financial information of such business or
subsidiary is unavailable, and it would be unduly burdensome for the new
applicant to obtain or prepare such financial information; and the new
applicant has disclosed in its listing document information required for the
announcement for a discloseable transaction under Rules 14.58 and 14.60 of
the Listing Rules on each acquisition. In this regard, “unduly burdensome” will
be assessed based on each new applicant’s specific facts and circumstances
(e.g. why the financial information of the acquisition target is not available and
whether the new applicant or its controlling shareholder has sufficient control
or influence over the seller to gain access to the acquisition target’s books and
records for the purpose of complying with the disclosure requirements under
Rules 4.04(2) and 4.04(4) of the Listing Rules).
Background of the Investment
In May 2024, we entered into a joint venture agreement in relation to our further
investment in one of our associated companies (“ Target Company ”) established in the PRC,
which is principally engaged in design, development, manufacturing, and sales of integrated
hardware and software system solutions for ADAS and AD. Pursuant to the joint venture
agreement, shares controlled by our Group will be increased from 30.58% to 47.03% in the
registered share capital of the Target Company at a consideration of RMB109,240,000, which
was settled with our internal resources in August 2024, based on arms’ length negotiations (the
“Investment ”). The Target Company will be accounted as our joint venture after the
completion of the Investment and the remaining shares of the Target Company will be held by
an affiliate of one of our tier-one customers as to 50% and an investment fund as to 2.97%, both
of which are our Independent Third Parties.
According to the unaudited management accounts of the Target Company, (i) its total
assets was approximately RMB214.0 million and RMB149.5 million as at December 31, 2022
and 2023, respectively, (ii) its revenue was approximately RMB0.6 million and RMB10.6
million for the years ended December 31, 2022 and 2023, respectively, and (iii) its net loss was
approximately RMB110.0 million and RMB97.1 million for the years ended December 31,
2022 and 2023, respectively.
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Reasons and Benefits of the Investment
For the purpose of our business expansion, we had been acquiring minority interests in
several investee companies during and subsequent to the Track Record Period. The Company
believes that the Investment will create further strategic synergy between the Group and our
business partners and will also support the Group’s long-term business development.
Our Directors considered that the Investment is on normal commercial terms, fair and
reasonable and in the interest of our Company and the Shareholders as a whole.
Conditions to the waiver granted by the Stock Exchange
We have applied to the Stock Exchange for, and the Stock Exchange has granted a waiver
from strict compliance with Rules 4.04(2) and 4.04(4) of the Listing Rules in respect of the
Investment on the following grounds:
(a) Immateriality
Under Rule 14.04(9) of the Listing Rules, all the applicable percentage ratios under Rule
14.07 of the Listing Rules in relation to the Investment are below 5% by reference to the most
recent audited financial year of the Track Record Period. We consider the Investment to be
immaterial in the context of our Company’s operations as a whole and therefore a waiver from
strict compliance with Rules 4.04(2) and 4.04(4) of the Listing Rules will not affect potential
investors’ assessment of our business and future prospects when considering an investment in
our Company.
(b) Acquisition of minority interests only and absence of control
We will not be able to control a majority of the board of directors nor the daily
management of the Target Company and therefore it will not be treated as our subsidiary upon
completion of the Investment. As a result, its financial information will not be consolidated
into our Group.
(c) Impracticality and undue burden
As we will not control the Target Company and it will not be consolidated into our
financial information, we are unable to provide our reporting accountant with full access to its
financial record, provide them opportunities to fully familiarize with the Target Company’s
accounting policies or to gather and compile the necessary financial information and
supporting documents to prepare the financial information required under the Listing Rules. As
such, it would be impracticable and unduly burdensome for us to disclose the financial
information of the Target Company in strict compliance with Rules 4.04(2) and 4.04(4) of the
Listing Rules.
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(d) Alternative disclosure in this Prospectus
We have provided alternative information in this Prospectus in connection with the
Investment required for the announcement for a discloseable transaction under Chapter 14 of
the Listing Rules including, among other things, (i) the reasons for the Investment, (ii)
description of the principal business of the Target Company, (iii) descriptions of the remaining
shareholders of the Target Company and a confirmation that the remaining shareholders of the
Target Company are Independent Third Parties, (iv) the consideration for the Investment and
how it was satisfied, and (v) basis on which the consideration for the Investment was
determined.
For the avoidance of doubt, the identity of the Target Company was not disclosed because
(i) disclosure of its identity is commercially sensitive and may jeopardize our business
relationship with the Target Company and its remaining shareholders, and (ii) given the
competitive nature of the industry in which the Company operates, it is significant for us to
avoid disclosing the identity of the Target Company with a view to preventing our competitors
anticipating our business plans.
W AIVER FROM STRICT COMPLIANCE WITH RULE 10.04 OF AND CONSENT
UNDER PARAGRAPH 5(2) OF APPENDIX F1 TO THE LISTING RULES IN RESPECT
OF SUBSCRIPTIONS OF OFFER SHARES BY AN EXISTING SHAREHOLDER AS
CORNERSTONE INVESTOR
Rule 10.04 of the Listing Rules provides that a person who is an existing shareholder of
the issuer may only subscribe for or purchase any securities for which listing is sought which
are being marketed by or on behalf of a new applicant either in his or its own name or through
nominees if the conditions in Rules 10.03(1) and (2) of the Listing Rules are fulfilled. The
conditions in Rules 10.03(1) and (2) of the Listing Rules are that (a) no securities are offered
to the existing shareholders on a preferential basis and no preferential treatment is given to
them in the allocation of the securities; and (b) the minimum prescribed percentage of public
shareholders required by Rule 8.08(1) of the Listing Rules is achieved.
Paragraph 5(2) of Appendix F1 to the Listing Rules provides that, unless with the prior
written consent of the Stock Exchange, no allocations will be permitted to directors or existing
shareholders of the applicant or their close associates, whether in their own names or through
nominees unless the conditions set out in Rules 10.03 and 10.04 of the Listing Rules are
fulfilled.
Chapter 4.15 of the Guide for New Listing Applicants provides that the Stock Exchange
will consider giving consent and granting waiver from Rule 10.04 of the Listing Rules to an
applicant’s existing shareholders or their close associates to participate in an initial public
offering if any actual or perceived preferential treatment arising from their ability to influence
the applicant during the allocation process can be addressed.
W AIVERS AND EXEMPTION
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As further described in the section headed “Cornerstone Investors”, JSC International
Investment Fund SPC (acting for and on behalf of Ning Bo Yong Ning Gao Xin SP) (thereafter
“Ning Bo Y ong Ning Gao Xin SP ”) is an existing Shareholder and has entered into a
cornerstone investment agreement with the Company. For further details of the cornerstone
investment, please refer to the section headed “Cornerstone Investors”. Ning Bo Yong Ning
Gao Xin SP is also a close associate of JSC International Investment Fund SPC acting for and
on behalf of Shan Xin SP (“ Shan Xin SP ”), an existing shareholder of the Company. Please
refer to the section headed “History, Reorganization and Corporate Structure — Capitalization”
for further details.
The information about Ning Bo Yong Ning Gao Xin SP has been set out in the section
headed “Cornerstone Investors”. Further, the general partner of Ning Bo Yong Ning Gao Xin
SP is ultimately controlled by Beijing Financial Holdings Group Limited (ණྠ
ʮ̡), which is the largest shareholder of CSC Financial Co., Ltd.
(ʮ̡), a company listed on the Hong Kong Stock Exchange (stock
code: 06066.HK) and the Shanghai Stock Exchange (stock code: 601066.SH), which is an
affiliate of China Securities (International) Corporate Finance Company Limited, one of the
Joint Sponsors and the underwriters. Ning Bo Yong Ning Gao Xin SP and China Securities
(International) Corporate Finance Company Limited are not members of the same group of
companies.
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 10.04 of, and consent under
paragraph 5(2) of Appendix F1 to, the Listing Rules to allow Ning Bo Yong Ning Gao Xin SP
to participate in the Global Offering as a cornerstone investor, subject to the following
conditions:
(i) Ning Bo Yong Ning Gao Xin SP, together with Shan Xin SP, is interested in less than
5% of the Company’s voting rights before the Listing;
(ii) neither Ning Bo Yong Ning Gao Xin SP nor Shan Xin SP is and will be a core
connected person of the Company or a close associate of any such core connected
person;
(iii) each of Ning Bo Yong Ning Gao Xin SP and Shan Xin SP (a) is only a minority
financial investor of the Company and does not participate in the day-to-day
operations or management of the Company; and (b) does not have the power to
appoint Directors or any other special rights in the Company which may influence
the allocation process;
(iv) the allocation to Ning Bo Yong Ning Gao Xin SP will not affect the Company’s
ability to satisfy the minimum public float requirement under Rule 8.08(1) of the
Listing Rules;
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(v) the Joint Sponsors confirm to the Stock Exchange in writing that based on (i) their
discussions with our Company and the Overall Coordinators; and (ii) the
confirmations provided to the Stock Exchange by our Company and the Overall
Coordinators, and to the best of their knowledge and belief, no preferential treatment
has been, nor will be, given to Ning Bo Yong Ning Gao Xin SP or its close associates
by virtue of their relationship with our Company in any allocation in the placing
tranche, other than the preferential treatment of assured entitlement under a
cornerstone investment following the principles set out in Chapter 4.15 of the Guide
for New Listing Applicants, and details of the allocation will be disclosed in the
Company’s prospectus and/or allotment results announcement;
(vi) the Company and the Overall Coordinators confirm to the Stock Exchange in writing
that no preferential treatment has been, nor will be, given to Ning Bo Yong Ning Gao
Xin SP or its close associates by virtue of their relationship with the Company in any
allocation in the placing tranche, other than the assured entitlement for a cornerstone
investor following the principles set out in Chapter 4.15 of the Guide for New
Listing Applicants; and
(vii) our Company confirms that the cornerstone investment agreement does not contain
any material term which is more favourable to Ning Bo Yong Ning Gao Xin SP than
those in other cornerstone investment agreements.
W AIVER IN RELATION TO CLA WBACK MECHANISM
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 offered in the Global Offering
if certain prescribed total demand levels are reached.
Subject to the Stock Exchange granting the waiver described below, the Hong Kong
Public Offering and the International Offering will initially account for 10.0% and 90.0% of
the Global Offering, respectively, subject to the clawback mechanism described below. We
have applied for, and the Stock Exchange has granted to us, a waiver from strict compliance
with the requirements of Paragraph 4.2 of Practice Note 18 to the Listing Rules such that the
allocation of the Offer Shares in the Hong Kong Public Offering will be adjusted as follows:
(a) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 13 times or more but less than 46 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of 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 203,266,200 Offer Shares,
representing approximately 15.0% of the Offer Shares initially available under the
Global Offering (assuming the Over-allotment Option is not exercised);
W AIVERS AND EXEMPTION
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(b) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 46 times or more but less than 92 times the number of the Offer
Shares initially available for subscription under the Hong Kong Public Offering,
then the number of Offer Shares to be reallocated to the Hong Kong Public Offering
from the International Offering will be increased so that the total number of the
Offer Shares available under the Hong Kong Public Offering will be 271,021,800
Offer Shares, representing approximately 20.0% of the Offer Shares initially
available under the Global Offering (assuming the Over-allotment Option is not
exercised); and
(c) if the number of the Offer Shares validly applied for under the Hong Kong Public
Offering represents 92 times or more the number of the Offer Shares initially
available for subscription under the Hong Kong Public Offering, then the number of
Offer Shares to be reallocated to the Hong Kong Public Offering from the
International Offering will be increased, so that the total number of the Offer Shares
available under the Hong Kong Public Offering will be 542,043,000 Offer Shares,
representing approximately 40.0% of the Offer Shares initially available under the
Global Offering (assuming Over-allotment Option is not exercised).
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate. In addition, the Overall Coordinators would have discretion to
allocate Offer Shares from the International Offering to the Hong Kong Public Offering to
satisfy valid applications under the Hong Kong Public Offering. On the other hand, if the Hong
Kong Public Offering is not fully subscribed, the unsubscribed Offer Shares under the Hong
Kong Public Offering may be reallocated to the International Offering. See “Structure of the
Global Offering — The Hong Kong Public Offering — Reallocation” for further details.
W AIVERS AND EXEMPTION
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This Prospectus, for which our Directors (including any proposed director who is named
as such in this Prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Listing Rules, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules
(Chapter 571V of the Laws of Hong Kong) and the Listing Rules for the purpose of giving
information to the public with regard to our Group. Our Directors (including any proposed
Director who is named as such in this Prospectus), 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.
CSRC FILING
The Company has completed the PRC filing procedures with CSRC for the listing of our
Class B Ordinary Shares on the Stock Exchange and the Global Offering.
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 initially 135,511,200 Offer Shares and the International Offering of initially
1,219,595,400 Offer Shares (subject, in each case, to reallocation on the basis as set out in
“Structure of the Global Offering”).
The Hong Kong Offer 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. 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 Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Underwriters, any of our or their affiliates or any of their respective directors, officers,
employees, advisers, agents or representatives, or any other persons or parties 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 of any subsequent time.
For details of the structure of the Global Offering, including its conditions and the
arrangements relating to the Over-allotment Option and stabilization, see “Structure of the
Global Offering.”
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for the Hong Kong Offer Shares are set out in the section
headed “How to Apply for Hong Kong Offer Shares.”
RESTRICTIONS ON OFFER AND SALE OF THE SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering
will be required to, or be deemed by his/her acquisition of the Hong Kong Offer Shares to,
confirm that he/she is aware of the restrictions on offers and sales of the Hong Kong Offer
Shares described in this Prospectus.
No action has been taken to permit a public offering of the Offer Shares in any
jurisdiction other than Hong Kong, or the distribution of this Prospectus in any jurisdiction
other than Hong Kong. Accordingly, without limitation to the following, this Prospectus may
not be used for the purpose of, and does not constitute, an offer or invitation in any jurisdiction
or in any circumstances in which such an offer or invitation is not 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 and sales 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 pursuant to registration with or authorization by the relevant securities regulatory
authorities or an exemption therefrom. In particular, the Hong Kong Offer Shares have not been
publicly offered or sold, directly or indirectly, in the PRC or the United States.
OVER-ALLOTMENT AND STABILIZATION
Details of the arrangement relating to the Over-allotment Option and stabilization are set
out in the section headed “Structure of the Global Offering.”
UNDERWRITING
The listing of our Class B Ordinary Shares on the Stock Exchange is sponsored by the
Joint Sponsors and the Global Offering is managed by the Joint Global Coordinators and the
Overall Coordinators. The Hong Kong Public Offering is fully underwritten by the Hong Kong
Underwriters under the terms of the Hong Kong Underwriting Agreement and is subject to the
Joint Global Coordinators and the Overall Coordinators (on behalf of the Underwriters) and us
agreeing on the Offer Price on or before the Price Determination Date. An International
Underwriting Agreement relating to the International Offering is expected to be entered into on
or around Tuesday, October 22, 2024, subject to the Offer Price being agreed. The International
Offering will be fully underwritten by the International Underwriters under the terms of the
International Underwriting Agreement to be entered into. If, for any reason, the Offer Price is
not agreed among the Joint Global Coordinators and the Overall Coordinators (for themselves
and on behalf of the Underwriters) and us on or before the Price Determination Date, the
Global Offering will not proceed and will lapse. For full information about the Underwriters
and the underwriting arrangements, see “Underwriting.”
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for the granting of the listing of, and permission
to deal in (a) the Class B Ordinary Shares in issue (including the Class B Ordinary Shares on
conversion of the Preferred Shares and the Class A Ordinary Shares before Listing) and to be
issued pursuant to the Global Offering (including Class B Ordinary Shares which may be
issued pursuant to the exercise of the Over-allotment Option), (b) the Class B Ordinary Shares
that may be issued upon conversion of the Class A Ordinary Shares on a one to one basis, (c)
the Class B Ordinary Shares which may be issued under the Post-IPO Share Incentive Plan, and
(d) the Class B Ordinary Shares which may be issued under the convertible loan issued to
CARIAD Estonia AS taking into account the 9.9% threshold as disclosed in the section headed
“History, Reorganization and Corporate Structure — Convertible Loan”, assuming the
exchange rates as disclosed in the section headed “Information about this Prospectus and the
Global Offering — Exchange Rate Conversion” being adopted and the conversion price setting
at the low-end of the indicative Offer Price range. We satisfy the market capitalization/revenue
test under Rule 8.05(3) and Rule 8A.06 of the Listing Rules with reference to (i) our revenue
for the year ended December 31, 2023, which exceeds HK$1 billion, and (ii) our expected
market capitalization at the time of Listing, which exceeds HK$40 billion based on the low-end
of the indicative Offer Price range.
Under section 44B(l) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, if the permission for the Class B Ordinary 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.
COMMENCEMENT OF DEALINGS IN THE CLASS B ORDINARY SHARES
Dealings in the Class B Ordinary Shares on the Stock Exchange are expected to
commence at 9:00 a.m. on Thursday, October 24, 2024. The Shares will be traded in board lots
of 600 Class B Ordinary Shares each. The stock code of the Class B Ordinary Shares will be
9660.
No part of our Share or loan capital is listed on or dealt in on any other stock exchange
and no such listing or permission to list is being or proposed to be sought on the Stock
Exchange or any other stock exchange as of the date of this Prospectus. All the Class B
Ordinary Shares will be registered on our Hong Kong Share Register in order to enable them
to be traded on the Stock Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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ADMISSION OF THE CLASS B ORDINARY SHARES INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the Class B Ordinary
Shares on the Stock Exchange and our compliance with the stock admission requirements of
HKSCC, the Class B Ordinary Shares will be accepted as eligible securities by HKSCC for
deposit, clearance and settlement in CCASS with effect from the Listing Date or any other date
as determined by HKSCC. Settlement of transactions between Exchange Participants (as
defined in the Listing Rules) is required to take place in CCASS on the second settlement day
after any trading day. All activities under CCASS are subject to the HKSCC Rules and HKSCC
Operational Procedures in effect from time to time. Investors should seek the advice of their
stockbroker or other professional adviser for details of the settlement arrangements as such
arrangements may affect their rights and interests. All necessary arrangements have been made
enabling the Shares to be admitted into CCASS.
HONG KONG REGISTER OF MEMBERS AND HONG KONG STAMP DUTY
Our Company’s principal register of members will be maintained by our principal share
registrar and transfer office, Maples Fund Services (Cayman) Limited, in the Cayman Islands.
All of the Class B Ordinary Shares issued pursuant to the Global Offering will be registered
on our Company’s Hong Kong Share Register to be maintained in Hong Kong by our Hong
Kong Share Registrar, Tricor Investor Services Limited. Dealings in the Class B Ordinary
Shares registered in our Company’s Hong Kong Share Register will be subject to Hong Kong
stamp duty. Unless determined otherwise by our Company, dividends payable in Hong Kong
dollars in respect of the Class B Ordinary Shares will be paid to the Shareholders listed on the
Hong Kong Share Register of our Company, by ordinary post, at the Shareholders’ risk, to the
registered address of each Shareholder.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional
advisers as to the taxation implications of subscribing for, purchasing, holding or disposing of,
and/or dealing in the Class B Ordinary Shares or exercising rights attached to them. None of
us, the Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries and the
Underwriters, any of their respective directors, officers, employees, agents or representatives
or any other person or party involved in the Global Offering accepts responsibility for any tax
effects on, or liabilities of, any person resulting from the subscription, purchase, holding,
disposition of, or dealing in, or the exercise of any rights in relation to, the Shares.
EXCHANGE RATE CONVERSION
Solely for your convenience, this Prospectus contains translations among certain
Renminbi amounts into Hong Kong dollars and of Renminbi amounts into U.S. dollars at
specified rates.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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Unless indicated otherwise, the translation of Renminbi into Hong Kong dollars and of
Renminbi into U.S. dollars, and vice versa, in this Prospectus was made at the following rates:
RMB0.91042 to HK$1.00; RMB7.07090 to US$1.00; and HK$7.76664 to US$1.00. No
representation is made that any amounts in Renminbi, Hong Kong dollars or U.S. dollars can
be or could have been at the relevant dates converted at the above rates or any other rates or
at all.
LANGUAGE
Translated English names of Chinese laws and regulations, governmental authorities,
departments, entities (including subsidiaries of our Group), institutions, natural persons,
facilities, certificates, titles and the like included in this Prospectus and for which no official
English translation exists are unofficial translations for identification purposes only. In the
event of any inconsistency, the Chinese name shall prevail.
ROUNDING
Certain amounts and percentage figures included in this Prospectus have been subject to
rounding adjustments, or have been rounded to one or two decimal places. Accordingly, figures
shown as totals in certain tables may not be an arithmetic aggregation of the figure preceding
them. Any discrepancies in any table, chart or elsewhere between totals and sums of amounts
listed therein are due to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIRECTORS
Name Address Nationality
Executive Directors
Kai Yu ( Я௱) Suite 7, Shangyuanjunting
Olympic Village Street
Chaoyang District
Beijing
PRC
Chinese
Chang Huang ( ර࿫) Building 51
No. 11 Anxiang Road
Konggang Street
Shunyi District
Beijing
PRC
Chinese
Feiwen Tao ( ௗ౵ත) Unit 2, Building 4
Tianyuexishan, No. 9 East Fengxiu
Road
Haidian District
Beijing
PRC
Chinese
Liming Chen (׼No. 67, Lane 377
Zhuxin Road
Minhang District
Shanghai
PRC
Chinese
Non-executive Directors
Liang Li ( ҽԄ) GRD/F, HSE 10, Bel-Air Rise
18 Bel-Air Ave
Cyber Port
Hong Kong
Chinese
Qin Liu (ٿSuite 905-6, 9th Floor
ICBC Tower
Three Garden Road
Hong Kong
Chinese
(Hong Kong)
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Name Address Nationality
André Stoffels Rheinstr. 20
80803 München
Germany
German
Juehui Zhang ( ੵᙂᅆ) No. 277, Lane 1288
Changxing East Road, Dongjing Town
Songjiang District
Shanghai
PRC
Chinese
Independent non-executive Directors
Jun Pu (ࠏSuite 21-1203
No. 172 Beiyuan Road
Chaoyang District
Beijing
PRC
Chinese
Yingqiu Wu (߇ڎRoom 1424
No. 34 North Third Ring West Road
Haidian District
Beijing
PRC
Chinese
Katherine Rong XIN No. 18, Lane 1118
Mingyue Road
Shanghai
PRC
American
Ya-Qin Zhang ( ੵԭා) Ziyuhuafu
Chaoyang District
Beijing
PRC
American
As of the Latest Practicable Date, Mr. Xin Zhang (ؚwas our Director appointed by
one of our investors. He will resign from directorship, effective before Listing. Please see
“Directors and Senior Management” for further details of our Directors as of the Latest
Practicable Date and upon Listing.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors and Joint Sponsor-Overall
Coordinators
Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
Overall Coordinators Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Joint Global Coordinators Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Deutsche Bank AG, Hong Kong Branch
Level 60, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre,
111 Connaught Road Central,
Hong Kong
Joint Bookrunners Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Deutsche Bank AG, Hong Kong Branch
Level 60, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre, 111 Connaught Road
Central, Hong Kong
BOCOM International Securities Limited
9th Floor, Man Yee Building
68 Des V oeux Road Central
Hong Kong
Joint Lead Managers Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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Deutsche Bank AG, Hong Kong Branch
Level 60, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre, 111 Connaught Road
Central, Hong Kong
BOCOM International Securities Limited
9th Floor, Man Yee Building
68 Des V oeux Road Central
Hong Kong
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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CEB International Capital Corporation
Limited
35/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
DBS Asia Capital Limited
73/F, The Center
99 Queen’s Road Central
Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road, Wan Chai
Hong Kong
SDICS International Securities
(Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road Central
Hong Kong
Celestial Securities Limited
22/F & 28/F, Manhattan Place
23 Wang Tai Road, Kowloon Bay
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F, Tower II Cheung Sha
Wan Plaza
833 Cheung Sha Wan Road, Kowloon
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 166 ---
Capital Market Intermediaries Goldman Sachs (Asia) L.L.C.
68/F, Cheung Kong Center
2 Queen’s Road Central
Hong Kong
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon, Hong Kong
China Securities (International)
Corporate Finance Company Limited
18/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
CLSA Limited
18/F, One Pacific Place
88 Queensway
Hong Kong
Deutsche Bank AG, Hong Kong Branch
Level 60, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
The Hongkong and Shanghai Banking
Corporation Limited
1 Queen’s Road Central
Hong Kong
CMB International Capital Limited
45/F, Champion Tower
3 Garden Road, Central
Hong Kong
China Galaxy International Securities
(Hong Kong) Co., Limited
20/F Wing On Centre, 111 Connaught Road
Central, Hong Kong
BOCOM International Securities Limited
9th Floor, Man Yee Building
68 Des V oeux Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 167 ---
CCB International Capital Limited
12/F, CCB Tower
3 Connaught Road Central
Central
Hong Kong
ICBC International Securities Limited
37/F, ICBC Tower
3 Garden Road
Hong Kong
Futu Securities International
(Hong Kong) Limited
34/F, United Centre
No. 95 Queensway, Admiralty
Hong Kong
CEB International Capital Corporation
Limited
35/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
DBS Asia Capital Limited
73/F, The Center
99 Queen’s Road Central
Central
Hong Kong
GF Securities (Hong Kong) Brokerage
Limited
27/F, GF Tower
81 Lockhart Road, Wan Chai
Hong Kong
SDICS International Securities
(Hong Kong) Limited
39/F, One Exchange Square
Central
Hong Kong
ABCI Securities Company Limited
10/F, Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 168 ---
BOCI Asia Limited
26/F, Bank of China Tower
1 Garden Road Central
Hong Kong
Celestial Securities Limited
22/F & 28/F, Manhattan Place
23 Wang Tai Road, Kowloon Bay
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F, Tower II
Cheung Sha Wan Plaza
833 Cheung Sha Wan Road, Kowloon
Hong Kong
Legal advisers to our Company As to Hong Kong and United States laws:
Davis Polk & Wardwell
10/F
The Hong Kong Club Building
3A Chater Road
Central
Hong Kong
As to PRC laws:
King & Wood Mallesons
18th Floor, East Tower
World Financial Center
1 Dongsanhuan Zhonglu
Chaoyang District,
Beijing PRC
As to Cayman Islands laws:
Maples and Calder (Hong Kong) LLP
26th Floor, Central Plaza
18 Harbor Road
Wanchai
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 169 ---
Legal advisers to the Joint Sponsors
and the Underwriters
As to Hong Kong and United States laws:
Cleary Gottlieb Steen & Hamilton
(Hong Kong)
37/F, Hysan Place
500 Hennessy Road
Causeway Bay
Hong Kong
As to PRC laws:
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road
Chaoyang District
Beijing
PRC
Auditor and Reporting Accountant PricewaterhouseCoopers
Certified Public Accountants
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central
Hong Kong
Industry Consultant China Insights Industry
Consultancy Limited
10F, Block B, Jing’an International Center
88 Puji Road
Jing’an District
Shanghai
PRC
Compliance Adviser Somerley Capital Limited
20/F, China Building
29 Queen’s Road Central
Hong Kong
Receiving Bank Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 170 ---
Registered Office Maples Corporate Services Limited
PO Box 309
Ugland House
Grand Cayman
KY1-1104
Cayman Islands
Head Office and Principal Place
of Business in the PRC
Block A, Building No. 2
No. 9, Fenghao East Road
Haidian District
Beijing
PRC
No. 1868, Yunjuan South Road
Lin-gang Special Area
China (Shanghai) Pilot Free Trade Zone
Shanghai
PRC
Principal Place of Business in
Hong Kong
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Company’s Website https://www.horizon.auto
(the information contained on this website
does not form part of this Prospectus)
Joint Company Secretaries Ms. Qi Zhao ( Ⴛփ)
Block A, Building No. 2
No. 9, Fenghao East Road
Haidian District
Beijing
PRC
Ms. Ka Man So ( ᘽྗઽ)
(fellow of both The Hong Kong Chartered
Governance Institute and The Chartered
Governance Institute)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
CORPORATE INFORMATION
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Authorized Representatives Ms. Feiwen Tao ( ௗ౵ත)
Tianyuexishan
No. 9 East Fengxiu Road
Haidian District
Beijing
PRC
Ms. Ka Man So ( ᘽྗઽ)
5/F, Manulife Place
348 Kwun Tong Road
Kowloon
Hong Kong
Audit Committee Dr. Jun Pu (ࠏ)Chairman)
Dr. Katherine Rong XIN
Dr. Ya-Qin Zhang ( ੵԭා)
Remuneration Committee Dr. Ya-Qin Zhang ( ੵԭා) (Chairman)
Dr. Katherine Rong XIN
Dr. Kai Yu ( Я௱)
Nomination Committee Mr. Yingqiu Wu (߇ڎ)Chairman)
Dr. Katherine Rong XIN
Dr. Kai Yu ( Я௱)
Corporate Governance Committee Dr. Ya-Qin Zhang ( ੵԭා) (Chairman)
Dr. Jun Pu (ࠏ)
Mr. Yingqiu Wu (߇ڎ)
Principal Share Registrar Maples Fund Services (Cayman) Limited
P.O. Box 1093, Boundary Hall
Cricket Square
Grand Cayman
KY1-1102
Cayman Islands
Hong Kong Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
CORPORATE INFORMATION
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--- page 172 ---
Principal Banks Standard Chartered Bank (China)
Limited, Beijing Branch
11/F, Standard Chartered Tower
World Finance Centre
No. 1, East Third Ring Middle Road
Chaoyang District
Beijing
PRC
China Minsheng Bank, Beijing
Zhongguancun Branch
No. 5 Haidian Street
Haidian District
Beijing
PRC
China Merchants Bank Co., Ltd.,
Beijing Haidian huangzhuang Branch
No. 6 Danling Street
Haidian District
Beijing
PRC
CORPORATE INFORMATION
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--- page 173 ---
The information presented in this section, including certain facts, statistics and
data, is derived from the market research report prepared by CIC, which was
commissioned by us, and from various official government publications and other
publicly available publications, unless otherwise indicated. We believe that these sources
are appropriate for such information, and we have taken reasonable care in extracting
and reproducing such information. The information derived from official government
publications has not been independently verified by our Company, the Joint Sponsors,
any of our or their respective directors, officers or representatives or any other person
involved in the Listing and no representation is given as to its accuracy.
OVERVIEW OF THE SMART VEHICLE MARKET
Technological advancements are reshaping the automotive industry. The robust
development in algorithms, software, and processing hardware is accelerating the adoption of
assisted and autonomous driving solutions in smart vehicles. These innovations are
revolutionizing the way people travel by offering enhanced safety, efficiency and overall
experience.
Definition of Smart Vehicle: A New Generation of Vehicle Powered by Technologies
Smart vehicles represent a new generation of vehicles that can perceive their own status,
understand their surrounding environment, make prompt decisions and react in due time.
Smart vehicles adopt driving automation technologies that encompass capabilities of
perception, prediction, path-planning and decision-making to improve road safety and enhance
experience for both drivers and passengers.
Levels of Autonomous Driving
According to the Taxonomy of Driving Automation for Vehicles GB/T 40429-2021
ӛԓቷትІਗʷʱॴ, automation functions can be categorized into:
 Level 0 , Emergency Assistance : A system at this level cannot continuously perform
the vehicle’s lateral (steering) or longitudinal (acceleration/brake) movement
control for dynamic driving tasks but has the capability to continuously perform
some detection and response to objects and events within dynamic driving tasks.
 Level 1 , Partial Driver Assistance : A system at this level continuously performs the
vehicle’s lateral or longitudinal movement control for dynamic driving tasks within
its designed operational conditions and has the capability for some detection and
response to objects and events that are relevant to the driving task. The driver and
the system jointly perform all driving tasks, with the driver supervising the behavior
of the driving automation system throughout the journey and performing appropriate
responses or actions as necessary.
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 Level 2 , Combined Driver Assistance : A system at this level continuously performs
both the vehicle’s lateral and longitudinal movement control for dynamic driving
tasks within its designed operational conditions and has the capability for some
detection and response to objects and events that are relevant to the driving task. The
driver and the system jointly perform all driving tasks, with the driver supervising
the behavior of the driving automation system throughout the journey and
performing appropriate responses or actions as necessary such as during the system
malfunctions, chaotic lane markings and vehicles or pedestrians disorder.
The level 2+ is commonly used in the industry to describe system that require
constant human supervision and can offer functions surpassing Level 2 but not fully
reaching Level 3.
 Level 3 , Conditionally Automated Driving : A system at this level continuously
performs all dynamic driving tasks within its designed operational conditions. The
driver needs to take over driving and become the driver when the system requests
intervention, malfunctions, or in other specific situations, such as: (i) the system is
unable to recognize or incorrectly recognizes lane markings, causing deviations
from the intended driving path; (ii) the sensors are obstructed or encounter
interference from rain, snow, and serve weather conditions, degrading the system’s
perception capabilities; and (iii) road potholes, mud, and other road conditions that
may cause the vehicle to become uncontrollable.
 Level 4 , Highly Automated Driving : A system at this level continuously performs all
dynamic driving tasks and executes minimal risk maneuver in response to system
failure within its designed operational conditions. When the system requests
intervention, the user is not required to respond, as the system is capable of
automatically reaching a minimal risk condition.
 Level 5 , Fully Automated Driving : A system at this level continuously performs all
dynamic driving tasks and executes minimal risk maneuver in response to system
failure under all roadway and environmental conditions that can be managed by the
vehicle. In environments where the vehicle can operate, there are no limitations on
the designed operational conditions and geographical range (excluding restrictions
due to commercial and regulatory factors, and more), and the user is not required to
respond to intervention requests.
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The Technological Development of ADAS to AD is Expected to Lead the Smart Vehicle
Evolution
There are mainly two categories of driving automation: ADAS and AD.
 ADAS, or Advanced Driver Assistance System , refers to technologies and features
that assist the human driver in various driving tasks, such as lane departure warning,
lane centering, adaptive cruise control, automatic emergency braking and more.
ADAS is designed to provide assistance to the human driver and enhance safety,
while the human driver needs to remain engaged at all times. ADAS features can
enhance driving convenience and safety. The level of technologies required by
ADAS are lower than AD, and ADAS generally requires simpler sensor set
consisting of cameras and/or radar. The processing capacity and software
requirements for the ADAS solution are also relatively low. According to CIC,
ADAS typically provides functionalities at Level 2 and below;
 AD, or Autonomous Driving , refers to technologies and features with higher levels
of automation compared to ADAS, which ultimately aims to achieve full automation
where the vehicle can operate without human intervention. In recent years, NOA
feature has emerged to enable conditional automation, including suggesting and
making lane changes, navigating interchanges and taking exits especially on
highways. As AD technologies continue to advance from conditional automation to
high automation and full automation, smart vehicles are expected to become capable
of handling more complex urban driving scenarios and navigating through diverse
and challenging road conditions. AD can achieve all the functionalities of ADAS
while offering a richer combination of driving features. It can control vehicles in a
manner similar to an experienced human driver, providing a more complete, smooth,
and comfortable driving experience. Under suitable driving conditions, AD can
operate with minimal human intervention. The technological requirements for AD
are higher compared to ADAS, typically requiring more advanced sensor set,
processing capacity, software, and algorithms. At the current stage, AD can achieve
the functionalities and driving experience of Conditional Automation level, such as
NOA on highways and in urban scenarios. The goal of AD is to achieve full
automation, where pedal and steering wheel may not be installed, and the vehicle
can drive to anywhere in any conditions as an experienced human driver can do.
According to CIC, AD typically provides functionalities at Level 2+ and higher level
of functionalities.
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ADAS AD
Smart vehicle to provide assisted
driving features while the driver
is responsible for driving and
supervising
• Adaptive Cruise Control
• Automatic Emergency Braking
• Lane-Keeping Assist
• Traffic Jam Assist
• Intelligent High Beam
• Intelligent Cruise Assist
…
Smart vehicle to drive under all
conditions without intervention
from human
Smart vehicle to drive under
limited conditions with driver
intervening when necessary
• Pedal/steering wheel may not be installed
• Driverless and automated under all
conditions
…
• NOA on highway scenarios
◦ Automatic ramp on/off
◦ Congested traffic merge-in and exit
◦ Highway auto-pilot
…
• NOA on urban scenarios
◦ Assertive interaction at crossroads
◦ Dynamic speed adjustment reflecting
traffic signs and surrounding traffic
flow
◦ Urban auto-pilot
…
• Auto Parking Assist/Valet Parking Assist
Who Is
“Driving”
The Car
Key Features &
Functions
Driver Assistance Conditional Automation Full Automation
Source: Interviews with market participants, third-party industry reports, white papers, industry publications, news
and government statistics and CIC research
In recent years, ADAS has been in mass production and rapidly becomes a standard
feature in the latest vehicle models. According to CIC, the penetration rates of ADAS
technologies in the global and China passenger vehicle markets were both over 50% in 2023.
Concurrently, there is ongoing progress towards more advanced AD solutions, thanks to
the technological development, favorable government policies as well as increasing consumer
enthusiasm for the driving automation features for safer and more efficient driving experiences.
AD adoption is at the tipping point of even wider acceptance as the NOA feature marks a key
milestone in the evolution towards full automation, which has been increasingly accepted by
OEMs and consumers. Smart vehicles with NOA feature can maneuver through intricate road
conditions with minimum human intervention, substantially minimizing effort required for
driving. Major OEMs, particularly leading NEV manufacturers, have been emphasizing the
NOA feature as one of the key selling points for their latest vehicle models. As a result, AD
solutions that enable advanced features such as NOA are expected to benefit significantly and
undergo substantial growth in the near future.
In the mid- to long-term, as AD technologies continue to iterate and evolve, together with
favorable government policies, it is expected that higher-level AD solutions will be
commercialized and increasingly adopted by mass-produced vehicles in the future. High-level
AD solutions will reshape the way people travel, bringing transformational changes to the
mobility industry. New business models such as Robotaxi operation are expected to emerge,
generating significant market opportunities.
The number of smart vehicles on the road has grown rapidly on a global scale. Out of a
total of 60.3 million new passenger vehicles sold worldwide in 2023, approximately 39.5
million were smart vehicles with driving automation functions installed, representing a
penetration rate of 65.6%. The sales volume of smart vehicles is expected to further increase
to 55.9 million and 81.5 million by 2026 and 2030, respectively, representing penetration rates
of 80.3% and 96.7%. Moreover, AD solutions are expected to gradually become mainstream,
accounting for over 60% of the driving automation solutions by 2030, according to CIC.
INDUSTRY OVERVIEW
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China is the world’s largest new passenger vehicle market with 21.7 million new
passenger vehicles sold in 2023, among which 12.4 million were smart vehicles, representing
penetration rate of 57.1%. According to CIC, smart vehicles sales volume in China is expected
to reach 20.4 million and 29.8 million in 2026 and 2030, respectively, representing penetration
rates of 81.2% and 99.7%. Chinese OEMs, especially NEV OEMs, are at the forefront of
adopting AD solutions into their vehicles. As a result, it is expected that nearly half of the
driving automation solutions deployed in passenger vehicles in China would be AD solutions
by 2027, and the percentage will further increase to over 80% by 2030, well ahead of the global
AD adoption curve. According to CIC, Chinese OEMs generally update their car models in
every three to four years and introduce new generations in every five to six years.
Sales Volume of Smart Vehicles, Global, 2019A-2030E (Million Units)
AD as % of
ADAS + AD
ADAS + AD
Penetration 32.0% 45.5% 52.3% 60.5% 65.6% 68.2% 73.6% 80.3% 85.5% 92.6% 95.4% 96.7%
1.8% 2.0% 3.5% 4.8% 6.9% 9.7% 14.2% 21.5% 30.2% 40.5% 52.2% 65.7%
20.4
24.4
29.9
34.8
39.5
43.1
48.9
55.9
62.4
71.0
76.6
81.5
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
2019-2023 CAGR 2023-2030E CAGR
ADAS + AD 18.0% 10.9%
AD 65.2% 53.0%
Source: SALI data released by China Banking and Insurance Regulatory Commission, CIC
Sales Volume of Smart Vehicles, China, 2019A-2030E (Million Units)
18.5% 28.8% 40.0% 48.8% 57.1% 64.0% 71.0% 81.2% 83.2% 88.5% 93.7% 99.7%
1.2% 2.7% 5.5% 8.0% 12.4% 16.4% 23.2% 31.6% 43.6% 56.8% 69.2% 80.4%AD as % of
ADAS + AD
ADAS + AD
Penetration
3.8
5.5
8.1
10.0
12.4
14.6
17.0
20.4
21.8
24.2
26.8
29.8
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
2019-2023 CAGR 2023-2030E CAGR
ADAS + AD 34.2% 13.4%
AD 141.1% 48.1%
Source: SALI data released by China Banking and Insurance Regulatory Commission, CIC
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The major players in the smart vehicle market in China include Chinese OEMs, foreign
OEMs and sino-foreign joint ventures. Chinese OEMs have been gaining share in the smart
vehicles market in China over the past few years. According to CIC, market share of Chinese
OEMs increased from 19.8% in 2019 to 39.8% in 2023, and is expected to exceed 60% in 2029.
Chinese OEMs’ advancements in technologies, particularly in ADAS and AD features have
made these domestic brands highly competitive. In addition, improvements in local
manufacturing capabilities and supply chain support have also led to rapid progress in product
quality and cost-effectiveness for domestic brands.
Chinese OEMs are more inclined to select domestic suppliers in order to better cater to
the demand and preference of the Chinese customers. In contrast, sino-foreign joint ventures
and foreign OEMs typically make decisions on supplier selection at their global headquarters.
As Chinese OEMs continue to gain market share in the smart vehicles market, the domestic
suppliers for the automotive components and solutions are also expected to gain shares and
achieve greater growth.
Market Share of Chinese OEMs in China’s Smart Vehicle Market, 2019A-2030E (%)
19.8%
23.4%
30.0%
36.2%
39.8%
45.4%
50.7%
55.0% 57.5% 59.8% 61.4% 62.4%
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E
Source: SALI data released by China Banking and Insurance Regulatory Commission, CPCA, CIC
Key Drivers for the Smart Vehicle Market
 Consumer acceptance and preference for autonomous features which bring enhanced
safety and efficiency in driving : According to CIC, a global survey conducted by a
global tier-one supplier in 2022 indicated that 89% of respondents in China, 75% in
Japan, 57% in the United States and 50% in Germany consider driving automation as a
useful development in passenger vehicles. In China, it is estimated that the commuters in
China’s top tier cities spend an average of over 80 minutes every day on the road. Smart
vehicles with autonomous features can free up time and boost productivity for drivers and
passengers during these long commutes. This value proposition is expected to further
incentivize OEMs to increase the installation of AD features into their vehicle models in
the future.
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 Enhanced standards for driving safety : According to CIC, research conducted across
different countries in the past decade has concluded that over 90% of traffic accidents are
caused by human errors. To reduce the human errors and save lives, governments and
OEMs have been continuously pushing for adoption of new technologies to achieve
higher safety standards. For example, smart collision avoidance features have been
included in the rating standards of C-NCAP and E-NCAP. The adoption of more advanced
driving automation technologies in smart vehicles is expected to further enhance driving
safety.
 Robust technological development to empower more advanced autonomous features
with cost-efficiency : Significant advancements have been made in driving automation
technologies. The fundamental driving force is the development in processing capacity
and efficiency that has underpinned the development of other related technologies, such
as information transfer and storage, algorithms and a variety of more sophisticated
software applications. As these technologies continue to iterate and become more
advanced overtime, smart vehicles are able to support features that deliver greater safety,
comfort and convenience for consumers, thus further accelerate smart vehicle penetration.
On the other hand, ADAS and AD solutions are becoming more cost efficient with
continued progress in technology development and product commercialization.
 Ongoing investment and favorable policies : The growing number of, and the ongoing
investment into research and development of smart vehicle are conducive to both the
technology development and the commercialization of driving automation solutions.
Supportive government policies globally for testing and deployment of smart vehicles and
related facilities have further accelerated market growth. Please refer to “— Key Trends
for the Smart Vehicles Market in Major Economies” for more details on the government
policies in global major economies.
Key Trends for the Smart Vehicles Market in Major Economies
China
There are significant demands in China for driving automation solutions to enhance
driving safety and mobility experiences. China is featured with notably high population density
and traffic density in major cities. As of December 31, 2023, China’s 15 largest cities had an
average population of over 10.0 million, and there were 94 cities nationwide with car
ownership surpassing one million, according to CIC. Moreover, road network in China is
becoming increasingly complex due to newly constructed tunnels and overpasses, creating
additional challenges for the drivers to navigate through. Therefore, Chinese consumers have
a high level of acceptance and a strong preference for autonomous functions. According to
CIC, based on surveys conducted among consumers in 2022, driving automation functions rank
as the second most important factor when they consider a NEV purchase, after cost-efficiency.
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In addition, Chinese government has also strongly supported the development of smart
vehicles and driving automation technologies. In 2020, eleven departments from the central
government jointly issued a policy paper for the development and innovation of smart vehicles,
outlining a blueprint for supporting smart vehicle development over the next 30 years by
published the Smart Vehicle Innovation and Development Strategy in February 2020. In
November 2023, four ministries in China jointly released a new pilot program namely The
Notice of Implementing the Pilot Program of Access and On-road Traffic of Intelligent
Connected Vehicles for smart vehicles, greenlighting pilot open-road program for vehicles with
high-level AD solutions and paving the way for the commercialization of advanced AD
technologies. These pilot programs expanded the access and on-road testing scope of smart
vehicles, which facilitated the testing of AD technologies in China. The pilot programs are also
initiating access and on-road testing of smart vehicles with high-level AD solutions, as well as
enhancing and refining regulations to elevate the performance and safety levels of autonomous
driving vehicle products. Thanks to the supportive policies, as of June 30, 2024, seven OEMs
received testing licenses for Level 3 autonomous driving under urban conditions, and ten
received testing licenses for highway conditions, according to CIC. Among them, five out of
the seven and six out of the ten are the Company’s customers of Horizon Pilot. The Company
is capable of providing AD algorithms, software and processing hardware to facilitate the road
testing activities of its customers, which help the testing vehicles to monitor environment and
make decisions, like overtaking slower vehicles, without driver input in certain conditions.
As a result, China is the world’s largest smart vehicles market, with sales volume of smart
vehicles of 12.4 million in 2023. China also has the highest AD penetration rate in the world,
with around 1.5 million passenger vehicle sales equipped with AD solutions in 2023.
Overseas
Countries worldwide have also shown strong interest and made significant progress in the
adoption of driving automation technologies. In the European market, car manufacturers and
tier-one suppliers are collaborating with autonomous driving solution providers to collectively
advance the application of driving automation technologies. In 2022, Germany introduced
passenger vehicles with advanced automation technologies that require no human intervention
in certain driving scenarios. In Japan, the conditional automation technologies were introduced
in 2021 by Honda. In 2023, the Japanese government revealed plans to set up autonomous
vehicle lanes on public roads in 2024, and if realized, the lanes would be the first for
self-driving vehicles on a public road in Japan. In the United States, driving automation
technologies have also received wide attention.
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Favorable policies to promote the development of smart vehicles have been introduced
globally. In Europe, the European Union has already made it mandatory for new vehicles to be
equipped with automatic emergency braking (AEB) systems. At the same time, it is also
enhancing the legal framework to support the application of more advanced AD technologies
for conditional automation. In May 2018, the European Commission released the On The Road
to Automated Mobility, proposing a vision goal to achieve a fully automated driving society by
2030. The new Vehicle General Safety Regulation started to apply in July 2022, introducing a
range of mandatory advanced driver assistant systems to improve road safety and establishing
the legal framework for the approval of automated and fully driverless vehicles in the EU. In
the United States, the U.S. Department of Transportation has issued guidelines and principles
to support the development and deployment of autonomous vehicles, including Automated
Vehicles 4.0, and the Automated Vehicles Comprehensive Plan. In Japan, the Ministry of
Economy, Trade and Industry (METI) and the Ministry of Land, Infrastructure, Transport and
Tourism (MLIT) jointly launched the Project on Research, Development, Demonstration and
Deployment (RDD&D) of Automated Driving toward Level 4 and Its Enhanced Mobility
Services in 2021. Further in 2022, the Act Partially Amending the Road Traffic Act was
enacted, which included provisions for establishing a permission system for driverless
automated driving. These provisions on automated driving took effect in April 2023. In South
Korea, the South Korean government announced the Future Vehicle Industry Development
Strategy in October 2019, which outlines the commitment to take the leap towards a leading
country in the future car industry by 2030. In 2022, The Ministry of Land, Infrastructure and
Transport of South Korea unveiled the Mobility Innovation Roadmap to establish South
Korea’s leadership in the mobility sector and to promote innovative services. The favorable
support of policies and regulations around the world is expected to continuously facilitate and
accelerate the adoption of smart vehicles. The following graphics set forth the sales volume and
forecasted sales volume of smart vehicles, as well as ADAS and AD penetration rates, in Japan,
South Korea and Europe for the periods indicated:
Sales Volume of Smart Vehicles, 2019A-2030E (Million Units)
2.0 2.4
5.0
ADAS + AD
Penetration 46.2% 64.7% 99.0% 43.7% 62.4% 97.0% 63.7% 96.5% 100.0%
2019 2023 2030E
Japan
0.7 0.9
2.2
2019 2023 2030E
South Korea
10.1 11.5
16.9
2019 2023 2030E
Europe
Note: Europe includes European Union countries, European Free Trade Association countries and UK.
Source: the International Organization of Motor V ehicle Manufacturers, interviews with market participants, white
papers, industry publications, news and CIC research
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OVERVIEW OF THE ADAS AND AD SOLUTIONS MARKET
Definition and Value Chain of ADAS and AD Solutions: ADAS and AD Solutions Are Key
Parts of the Value Chain and Act as Brains for the Smart Vehicles
In the traditional automotive industry, OEMs typically rely on an organized supply chain
with multiple tiers of suppliers providing various components and integrated systems needed.
This is also the case with the value chain of ADAS and AD solutions, with multiple levels of
suppliers providing components and integration services to OEMs who then deploy the ADAS
and AD solutions to the vehicle models. Due to stringent standards for safety and quality
assurance, OEMs typically require a lengthy verification and testing process for supplier
selection. As a result, layers of suppliers for OEMs are generally stable, and tend to be
concentrated towards the top players who are more experienced and reputable within the
industry.
The chart below illustrates the value chain of ADAS and AD solutions. The upstream
suppliers mainly include hardware manufacturers who provide manufacturing, packaging and
testing services. ADAS and AD solutions play a critical role in enabling a variety of driving
automation functions and they effectively act as brains for the smart vehicles. The solutions
consist of algorithms, software and processing hardware that support the development and
deployment process. In addition to the ADAS and AD solutions, peripheral components like
sensor and others also play important roles allowing the smart vehicles to perceive their
surrounding environment. There are also mapping service companies that provide high-
definition maps.
Tier-one suppliers are responsible for modular design and system integration, including
the design of mechanical, electrical and cooling systems, as well as integrating the algorithm,
software and processing hardware with peripheral components.
Recently, due to the high technical requirements for the design and development of
driving automation functions, some OEMs also cooperate directly with key components and
solution providers including ADAS and AD solution providers to develop customized driving
automation functions, so as to achieve faster time-to-market and provide consumers with better
driving experience.
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Upstream Suppliers
• Algorithm
 Processing architecture
 Development toolchain
 Middleware
 Other software applications
…
Algorithm and Software
 Processing hardware
Hardware
Key Components and Solution Providers
Automobile Manufacturing
OEMs
Tier-one Suppliers
 Mechanical systems
 Electrical systems
 Cooling systems
…
Manufacturing
Assembly
Testing
ADAS and AD Solutions
Peripheral Components
Sensors
 Camera
 Radar
 LiDAR
 Ultrasonic sensor
…
Others
 Printed circuit boards
 Mechanical components
 HD map/SD map
 Satellite-based navigation
…
Modular
Design
 Integration of ADAS and AD
solutions and peripheral
components
 System hardware
manufacturing
 Verification and validation
…
System
Integration
Source: Interviews with expert participants, government statistics, listed companies’ public filings, white papers,
news disclosures, and CIC analysis.
Significant Growth Potential for Global and China ADAS and AD Solutions Market
The market size of ADAS and AD solutions represents the value of both the hardware and
software related to the solutions. It is expected to grow significantly, mainly driven by
(1) the increasing sales of smart vehicles with ADAS and AD solutions as mentioned above;
and (2) higher value created by AD solutions which demand larger processing capacity to
support more advanced features under all driving scenarios, as well as to provide system
redundancy.
According to CIC, the dollar content per vehicle for AD solutions is over ten times higher
than that of ADAS solutions for a smart vehicle. Moreover, as the AD solutions continue to
evolve and upgrade, the dollar content per vehicle for AD solutions is expected to further
increase in the future. As a result, the market size of AD solutions is expected to experience
significant growth at scale in the coming years.
According to CIC, it is estimated that the global market size of ADAS and AD solutions
will grow from RMB61.9 billion in 2023 to RMB1,017.1 billion in 2030, representing a CAGR
of 49.2%.
In China, the total market size of ADAS and AD solutions amounted to RMB24.5 billion
in 2023. It is estimated that the total market size will grow at a CAGR of 49.4% in China to
RMB407.0 billion in 2030.
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Market Size for ADAS and AD Solutions, Global, 2019A-2030E (RMB Billion)
2029E 2030E
2019-2023 CAGR 2023-2030E CAGR
ADAS + AD
AD
25.7%
62.9%
49.2%
62.8%
2028E2027E2026E2025E2024E20232022202120202019
744.4
1,017.2
520.8
342.8
222.4
125.3
78.261.949.240.630.024.7
20.1 23.8 27.7 28.8 28.9 29.5 31.1 31.4 30.3 28.8 24.5 19.0
4.7 6.2 12.9 20.4 33.0 48.7 94.2
191.0
312.4
492.0
719.9
998.2
ADAS Solutions AD Solutions
Source: Interviews with expert participants, government statistics, listed companies’ public filings, news
disclosures, and CIC analysis.
Note: Not including peripheral components such as camera, radar and LiDAR.
Market Size for ADAS and AD Solutions, China, 2019A-2030E (RMB Billion)
2029E 2030E
2019-2023 CAGR 2023-2030E CAGR
ADAS + AD
AD
57.8%
144.2%
49.4%
58.5%
2028E2027E2026E2025E2024E20232022202120202019
301.0
407.0
210.8
144.6
97.8
55.8
33.224.516.111.56.63.9
3.5 5.1 7.0 7.8 8.4 9.3 9.6 9.9 8.4 7.0 5.4 3.8
0.5 1.5 4.5 8.3 16.0 23.9 46.2
87.9
136.2
203.9
295.6
403.2
ADAS Solutions AD Solutions
Source: Interviews with expert participants, government statistics, listed companies’ public filings, news
disclosures, and CIC analysis.
Note: Not including peripheral components such as camera, radar and LiDAR.
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Key Trends for the ADAS and AD Solutions Market
 Popularization of ADAS and AD solutions : ADAS solutions with active safety features
have been prevailing in mass production and becoming standard features in the latest
vehicle models. According to CIC, the penetration rates of ADAS solutions in the global
and China passenger vehicle markets were both over 50% in 2023. Concurrently, growing
consumer demands and advancing technologies for safer and more efficient experiences
are driving industry towards more advanced AD solutions. The penetration rate of ADAS
and AD solutions is expected to increase to 96.7% by 2030 globally, among which AD
solutions will account for over 60% of the total ADAS and AD solutions.
 Increasing demand for energy efficiency driven by centralized architecture and
complex algorithm : A more centralized electrical structure can improve hardware
integration and co-optimization among components. This approach decreases the number
of required control units, emphasizing the importance of processing solutions and their
underlying software, which in turn require increased processing capacity and efficiency.
On the other hand, the increasing complexity of algorithms for advanced driving
scenarios also underscores the vital role of processing and energy efficiency. As smart
vehicles are now managing a greater volume of real-time information from sensors such
as cameras, radars, and LiDARs, ADAS and AD solutions must prioritize minimizing
energy consumption while delivering optimal performance.
 Higher value created by AD solutions : As mentioned above, AD solutions are expected
to upgrade to provide more advanced features to tackle complex driving scenarios such
as urban traffic and offer safer and more efficient driving experience. In addition, as AD
solutions evolve into full automation, system redundancy is important to ensure the
availability of backup solutions in case of system failure, so as to enhance safety
performance. As a result, higher processing capacity, more advanced software and more
system redundancy will lead to higher dollar content per vehicle for AD solutions.
 Open platform for customization and partnership : According to CIC, OEMs often
prefer to work with open-platform solutions in order to maintain flexibility in product
designs. Specifically, leveraging open and flexible solutions and services, OEMs are able
to develop differentiated and customized products to conveniently and efficiently meet
various needs from the consumers. In light of the continuous technological breakthroughs
taking place across the value chain, a widely connected and collaborative ecosystem is
conducive to the overall industry, where participants can easily collaborate.
 Direct interaction and collaboration between ADAS and AD solutions providers and
OEMs: The automotive supply chain is also evolving, with the key participants along the
value chain being more connected and interrelated. Instead of going through tier-one
suppliers in the traditional value chain, OEMs nowadays start to collaborate directly with
ADAS and AD solutions providers, as they see ADAS and AD functions becoming critical
to their product offering. Through direct collaboration with ADAS and AD solutions
providers, OEMs are able to develop customized driving automation functions more
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efficiently, achieving faster time-to-market and providing consumers with better driving
experience. In addition, OEMs can obtain more comprehensive understanding of ADAS
and AD solutions, which will help them maintain and iterate their products more easily.
Open Platform and Close Platform
The open platform approach (also called white-box approach) is different from the close
platform approach (also called black-box approach) in the following aspects:
 Commercial Flexibility : The open platform approach allows for selective choice
among various software, hardware, technology pillars and packaged solutions in
accordance with a customer’s specific commercial needs and technological
capabilities. In contrast, the black-box approach provides limited packaged
solutions, restricting the customer’s ability to make own developments or hybrid
according to their own needs.
 Technical Flexibility : The open platform approach helps customers gain a better
understanding of the internal mechanism of ADAS and AD system. The open
platform approach allows customers to engage in secondary development of
algorithms, software and even processing hardware to a certain extent. In contrast,
the black-box approach typically keeps the internal mechanism of the ADAS and AD
system opaque to users, limiting customers’ further development.
 Time to Market Flexibility : The open platform approach allows solution providers
and OEMs to engage in collaborative development, thereby shortening the duration
from research and development to mass production. In contrast, the black-box
approach requires OEMs to conduct testing and optimization on a completed
solution, resulting in a longer time to market as compared to open platform
approach.
Competitive Landscape
The major market participants in the ADAS and AD solutions market include:
(i) suppliers focusing on ADAS and AD solutions for automotive industry, who have deep
technical expertise in driving automation, (ii) general processing hardware suppliers that
manufacture processing hardware for various industries, and (iii) a small number of OEMs that
develop in-house solutions. In addition, a growing number of technology companies have
entered, or are reported to have plans to enter, the market for ADAS and AD solutions. For
details, see “Risk Factors — Risks Related to Our Business and Industry — Technology
companies, OEMs and tier-one suppliers have been self-developing, and may start to
self-develop, ADAS and AD solutions, or technologies that are similar to ours, which may
reduce their demand for our solutions.” Nonetheless, the overall ADAS and AD solutions
market should not include companies that adopt the all-by-itself business model who develop
these functions in-house, as such all-by-itself companies do not procure ADAS and AD
solutions from the market.
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The ADAS and AD solutions market in China is concentrated, with a few top suppliers
holding the majority of the market share. Most of them are global suppliers with years of
industry experience and extensive customer base.
We are the only China-based company among the top five ADAS and AD solutions
providers in China. We were the second-largest and the largest ADAS solutions provider to
Chinese OEMs in China by solution installation volume in 2023 and the first half of 2024 with
a market share of 21.3% and 35.9%, respectively, according to CIC. We were also the
fourth-largest and the largest ADAS and AD solutions provider in China by overall solution
installation volume in 2023 and the first half of 2024, with a market share of 9.3% and 15.4%,
respectively.
Top 5 ADAS Solutions Providers to Chinese OEMs in China,
by Solution Installation Volume
1 in 2023 and the first half of 2024
Ranking Provider
ADAS Solution
Installation
Volume,
the first half
of 2024
Market Share,
the first half
of 2024
ADAS Solution
Installation
Volume,
2023
Market Share,
2023
Market Share,
2022
Market Share
Change
(2023 vs. 2022)
(Millions) (%) (Millions) (%)
1 /H1118/H1118/H1118/H1118/H1118Horizon Robotics 0.71 35.9% 0.85 21.3% 3.7% +17.6%
2 /H1118/H1118/H1118/H1118/H1118Company A 2 0.53 26.9% 1.07 26.6% 26.1% +0.6%
3 /H1118/H1118/H1118/H1118/H1118Company C 4 0.35 17.7% 0.70 17.4% 13.3% +4.1%
4 /H1118/H1118/H1118/H1118/H1118Company B 3 0.11 5.7% 0.73 18.3% 39.1% -20.9%
5 /H1118/H1118/H1118/H1118/H1118Company D 5 0.04 2.3% 0.15 3.6% 5.2% -1.5%
Source: China Banking and Insurance Regulatory Commission; CIC
Top 5 ADAS and AD Solutions Providers in China,
by Solution Installation Volume 1 in 2023 and the first half of 2024 6
Ranking Provider
ADAS and
AD Solution
Installation
Volume,
the first half
of 2024
Market Share,
the first half of
2024
ADAS and
AD Solution
Installation
Volume,
2023
Market Share,
2023
Market Share,
2022
Market Share
Change
(2023 vs. 2022)
(Millions) (%) (Millions) (%)
1 /H1118/H1118/H1118/H1118/H1118Company A 2 1.68 28.7% 3.44 29.2% 29.5% -0.2%
2 /H1118/H1118/H1118/H1118/H1118Company C 4 1.18 20.1% 2.35 19.9% 21.4% -1.4%
3 /H1118/H1118/H1118/H1118/H1118Company B 3 1.00 17.0% 2.82 24.0% 24.2% -0.2%
4 /H1118/H1118/H1118/H1118/H1118Horizon Robotics 0.90 15.4% 1.09 9.3% 2.2% +7.0%
5 /H1118/H1118/H1118/H1118/H1118Company D 5 0.28 4.8% 0.60 5.1% 7.6% -2.5%
Source: China Banking and Insurance Regulatory Commission; CIC
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Notes:
1 ADAS and/or AD solution installation volume refers to the number of ADAS and/or AD solutions that are
installed on the passenger vehicles and sold to end customers within a time period. The vehicle sales
information is collected by CIC, based on SALI data released by China Banking and Insurance Regulatory
Commission, as all new passenger vehicles sold in China are subject to SALI payment. According to CIC, the
definition of industry ranking by solution installation volume as provided above is in line with common
industry practice. However, the installation volume of ADAS and/or AD solutions may not always match the
processing hardware deliveries reported by solution providers. This discrepancy can be attributed to several
factors: (1) OEMs often maintain inventories of processing hardware based on their own management policies
and strategies; (2) there may be a time delay between the delivery of processing hardware to OEMs and the
actual sale of passenger vehicles to end customers; and (3) some passenger vehicles may be equipped with
multiple units of processing hardware.
2 Founded in 1999 and headquartered in Israel, Company A is a provider of ADAS and AD technologies and
solutions. It was listed on the Nasdaq in 2022.
3 Founded in 1984 and headquartered in the United States, Company B provides processing hardware and
programmable logic devices to customers in automotive and general industrials sectors. Company B was
acquired by a Nasdaq listed company in February 2022.
4 Founded in 2002 and headquartered in Japan, Company C is a solutions provider for a broad range of industries
including automotive, industrial, electronics, and more. It was listed on the Tokyo Stock Exchange in 2003.
5 Founded in 1930 and headquartered in the United States, Company D is a hardware company that manufactures
integrated circuits and processing hardware. It was listed on the NYSE in 1953 and was transferred to the
Nasdaq in 2012.
6 Ranking and market share calculation excluding OEMs which produce ADAS and AD solutions in house.
Competitive Analysis of ADAS and AD Solutions Market
The below chart illustrates the competitive analysis between the Company and its key
competitors on the various performance aspects.
Competitive Analysis of The Automotive Product Solutions Market
Automotive Focus1 Solution Coverage2 Openness3 System Processing
Efficiency4
Service &
Responsiveness5
System Cost
Effectiveness6
The Company
Company A
Technology
Capability7
Company B
Company C
LowHigh
Company D
Source: Interviews with expert participants, government statistics, listed companies’ public filings, news
disclosures, and CIC analysis.
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Notes:
1 Measured by the end-customer focus. Market players who are dedicated to automotive customers are generally
able to deliver more tailored products and solutions for automotive use.
2 Measured by the range of products and services provided by the market players related to both ADAS and AD
solutions.
3 Measured by the openness of the solutions architecture provided by the market players, including the
flexibilities for third parties to develop and design customized solutions.
4 Measured by the amount of information such as images and frames that can be identified and processed within
a period of time.
5 Measured by the customer service quality and response time to customers’ requests in China.
6 Measured by the processing power per unit cost, efficiency and performance.
7 Measured by MPI (miles per intervention), which is a performance metric used to measure the distance a
vehicle can travel autonomously before requiring human intervention or driver takeover. High MPI is only
achievable with higher-level AD solutions. Generally ADAS solutions still require drivers’ attention on the
vehicle.
Barriers to Entry and Key Success Factors
 Stringent quality standards : The ADAS and AD solutions, as the brain of a smart
vehicle, are a critical component that needs to meet the highest standards of safety and
quality assurance. Meeting these standards requires passing rigorous review and approval
processes which often take years. Automotive-grade components need to be able to
withstand harsh weather such as extreme temperatures from -40 to 150 degrees Celsius,
environments from humid to dry and adverse road conditions including extremely bumpy
roads. Such stringent quality standards cast high barriers for new entrants.
 Expertise in both software and hardware : The development of processing hardware
requires advanced engineering and years of dedicated research, which is difficult for new
entrants to replicate or surpass in the short term. In addition, since algorithms are
optimized under a certain set of specifications and criteria, and as each application on
processing hardware is unique, solution providers taking a software-hardware co-
optimization approach is better positioned to yield the best results. Therefore, new
entrants would need to devote a significant amount of resources to both hardware and
software development simultaneously. Lastly, since software upgrades are more frequent,
being a software expert enables solution providers to have better visibility of an
algorithm’s development trend. OEMs are inclined to partner with companies that have
expertise in both software and hardware instead of one-dimensional players.
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 First mover advantage : First movers in the industry have accumulated extensive
industry experience and market know-how used to train and improve their algorithms as
well as guide hardware design. OEMs and tier-one suppliers each have distinct
preferences, design needs, and a thorough design, verification and testing process.
Therefore, by establishing partnerships early on, first movers would become deeply
involved in the product designs, enabling first-movers to shape the underlying
specifications and thereby creating an entry barrier against potential competitors.
Moreover, first movers have the opportunity to establish an open-sourced platform that
allows OEMs and tier-one suppliers to develop customized products and solutions within
their own ecosystem, resulting in high switching costs and customer stickiness. Lastly,
first movers could benefit from economies of scale, thus offering cost-efficient solutions
to customers.
 Accumulation of industry know-how, local expertise and service capabilities :
Companies need to accumulate deep industry know-how to launch successful ADAS and
AD solutions with the highest degree of performance and reliability. Companies that have
achieved mass production enjoy significant competitive advantages, as they have access
to valuable real-world insights that allow them to iterate and improve their products more
efficiently. Achieving mass production requires significant financial resources, human
capital and time. In addition, companies that have adjusted their products to challenging
road conditions in countries such as China can easily deploy their products into other
countries with less complex road conditions. Therefore, it is challenging for new entrants
with limited industry know-how to compete with industry incumbents who have already
accumulated in-depth knowledge.
Price Trends of Automotive Semiconductors
The COVID-19 pandemic has led to disruptions in the auto-part supply-chain, such as
production halts, decreased output and extended delivery, among other issues. As the market
demand for auto-parts remained strong during the pandemic, such disruptions resulted in
varying degrees of auto-parts shortages globally, including the automotive semiconductors. As
a result, the global average price of automotive semiconductors hiked approximately 10.4% in
2022. Starting from the second half of 2023, the impact of automotive semiconductor shortages
on the global automotive industry has started to subside, and the global supply of automotive
semiconductors is gradually returning to normal, as evidenced by the growth rate of global
average price of automotive semiconductors decelerating to approximately 5.0% in 2023,
which rate is expected to turn negative in 2024, according to CIC. In the future, assuming the
supply and demand of automotive semiconductors returns to normal post-pandemic, the price
of automotive semiconductors is expected to follow a decreasing trend due to technological
advancements and economic of scale.
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The following chart illustrates the actual and forecasted price trends of automotive
semiconductors over the period indicated. The price trend is based on the price of automotive
semiconductors in 2019, which is set as 100.
The price index of Global Automotive semiconductors, 2019A-2030E
0
50
100
150
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Source: World Semiconductor Trade Statistics, CIC
SOURCE OF THE INDUSTRY INFORMATION
CIC was commissioned to conduct research and analysis of, and produce a report on, the
global and China’s ADAS and AD solution industry and related economic data at a fee of
approximately US$100,000. The commissioned report has been prepared by CIC independently
without the influence from the Company or other interested parties. CIC offers industry
consulting services, commercial due diligence and strategic consulting. With a consultant team
actively tracking the latest market trends in various industries such as automotive, consumer
goods and services, agriculture, chemicals, marketing and advertising, culture and
entertainment, energy and industry, finance and services, healthcare, TMT and transportation,
CIC possesses the most relevant and insightful market intelligence in these sectors. Except as
otherwise noted, all of the data and forecasts contained in this section are derived from the CIC
Report. We have also referred to certain information in the “Summary,” “Risk Factors,”
“Business” and “Financial Information” sections to provide a more comprehensive
presentation of the industry in which we operate.
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CIC employed both primary and secondary research methods using a variety of resources.
Primary research included interviews with key industry experts and leading participants, while
secondary research involved analyzing data from publicly available sources, such as the
National Bureau of Statistics and General Administration of Customs of the PRC. The market
projections in the CIC Report are based on the following key assumptions during the forecast
period: (i) that the overall global social, economic, and political environment is expected to
maintain a stable trend over the next decade; (ii) that related key industry drivers are likely to
continue driving growth in global and China’s ADAS and AD solution industry during the
forecast period; and (iii) that there is no extreme force majeure or set of industry regulations
in which the market situation may be affected either dramatically or fundamentally.
Our Directors confirm that, to the best of their knowledge, after making reasonable
inquiries, there is no material and adverse change in the market information since the date of
the CIC Report, which may qualify, contradict or have an impact on the information in this
section.
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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 AUTONOMOUS DRIVING
On March 12, 2021, the National People’s Congress of the PRC approved the Outline of
the 14th Five–Year Plan (2021–2025) for National Economic and Social Development and
Long–Range Objectives for 2035 (ʞϋ஝ྌ
ձ2035), which clarifies that the PRC should foster advanced manufacturing
clusters and promote the innovation and development of industries.
On December 20, 2020, the Ministry of Transport of the PRC (the “MOT”) promulgated
the Guiding Opinions on Promoting the Development and Application of Road Transport
Autonomous Driving Technologies (ձᏐ͜
ኬจԈ), which clarified the development goal. Specifically, by 2025, the research on
the basic theory of autonomous driving has made positive progress, and key technologies such
as road infrastructure intelligence, vehicle-road collaboration and product research and
development and test verification have made important breakthroughs; a number of basic and
key standards for autonomous driving have been issued; a number of national autonomous
driving test bases and pilot application demonstration projects have been built to realize large–
scale application in some scenarios and promote the industrialization of autonomous driving
technology.
On July 30, 2021, the Ministry of Industry and Information Technology of the PRC (the
“MIIT”) promulgated the Opinions on Strengthening the Administration of the Access of
Intelligent Connected Vehicle Manufacturers and Products (̋੶౽ঐၣ
จԈ). The foregoing opinions provide that enterprises
should strengthen data security management ability and network security guarantee ability, as
well as strengthen management ability and ensure product production consistency. Moreover,
enterprises should strengthen product management: (a) Enterprises should strictly perform the
obligation of informing. Where the enterprise produces automobile products with driving
assistance and autonomous driving functions, it shall clearly inform the vehicle functions and
performance limits, driver responsibilities, human–computer interaction equipment indication
information, function activation and exit methods and conditions, and more; (b) Enterprises
should strengthen the safety management of combined driving assistance products; (c)
Enterprises should strengthen the safety management of autonomous driving function products;
(d) Enterprises ensure reliable space–time information services.
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On August 1, 2022, the Regulations on the Administration of Intelligent Connected
Vehicles in Shenzhen Special Economic Zone ( ଉέ຾᏶तਜ౽ঐၣᑌӛԓ၍ଣૢԷ)
came into effect. Pursuant to the foregoing regulations, intelligent connected vehicles can be
sold after being listed in the national automobile product catalog or the Shenzhen intelligent
connected vehicle product catalog, and getting access by the industry and information
technology authorities; intelligent connected vehicles can be driven on the road after
registration with the traffic management department of the public security authority; with the
permission of the transportation department, intelligent connected vehicles can engage in road
transport business.
The Regulations on Promoting the Innovative Application of Driverless Intelligent
Connected Vehicle in Pudong New Area (ආೌቷትɛ౽ঐၣᑌӛԓ௴อ
) (the “Pudong Regulations”) came into force on February 1, 2023. In the next
month, the Implementation Rules for the Regulations on Promoting the Innovative Application
of Driverless Intelligent Connected Vehicle in Pudong New Area (ආೌቷ
) (the “Pudong Implementation Rules”) was
released. Pudong Regulations and Pudong Implementation Rules apply to the innovative
application activities such as road testing, demonstration application, demonstration operation,
and commercial operation of driverless intelligent connected vehicles. To further implement
Pudong regulations, the Technical Solutions on Intelligent Connected Vehicle without (Safe)
Driver Test ( ɪऎ̹ೌቷት(τΌ)) (the “Technical
Solutions”), which was released on February 7, 2023, clarify the overall requirements, failed
identification and safety response requirements, minimum risk strategy requirements,
human–computer interaction requirements and test methods that intelligent connected vehicles
applying to carry out automatic driving function tests without (safe) drivers should meet after
passing the automatic driving test with (safe) driver. The Technical Solutions only apply to the
autonomous driving function tests without (safe) drivers which has not yet been involved in the
Company’s business. The Company has taken, and will continue to take reasonable measures
to ensure compliance with applicable laws and regulations.
On July 27, 2021, the Rules for the Administration of the Road Testing and Demonstrative
Application of Intelligent Connected Vehicles (for Trial Implementation) ( ౽ঐၣᑌӛԓ༸
༩಻༊ၾͪᇍᏐ͜၍ଣ஝ᇍ(༊Б)) (the “Road Testing Rule”) was promulgated by the MIIT,
the Ministry of Public Security and the Ministry of Transport and came into effect on
September 1, 2021. It stipulates, among others, the conditions of the subjects for road testing
and demonstration application, the conditions and management of the road testing and
demonstration application, and the handling of traffic violations and accidents.
On November 17, 2023, the Notice of the MIIT, the Ministry of Public Security, the
Ministry of Housing and Urban–rural Development (the “MOHURD”) and MOT of the PRC
on Launching the Pilot Program of Market Access and Road Passage for Intelligent Connected
Vehicles (౽ঐၣᑌӛ
) (the “Notice on Pilot Program for ICVs”) came into
effect. Pursuant to the foregoing notice, through the pilot program, efforts shall be made to
guide intelligent connected vehicles manufacturers and users to strengthen their capacity
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building, and, on the premise of ensuring safety, promote the improvement of the functions and
performance of intelligent connected vehicles products and the iterative optimization of the
industrial ecology so as to promote the high–quality development of the industry of intelligent
connected vehicles.
The Road Testing Rule, and the Notice on Pilot Program for ICVs are applicable to
autonomous driving functions (referring to conditionally automated driving, highly automated
driving and fully automated driving) of intelligent connected vehicles. Conditionally
automated driving (referred to autonomous driving Level 3) is defined as a situation in which
all dynamic driving tasks are accomplished under the operational design conditions of the
system, with the driver assuming the role of providing appropriate intervention in response to
the dynamic driving task takeover request of the system.
According to CIC, as of the Latest Practicable Date, there is no mass-produced passenger
vehicle at autonomous driving Level 3 or above in China. The solutions that we currently sell
to OEMs and installed in passenger vehicles by OEMs requires drivers to concentrate on
driving, supervise the behavior of the driving automation system throughout the journey and
perform appropriate driving tasks. Meanwhile, under relevant regulatory requirements such as
Opinions of the MIIT on strengthening the access management of intelligent connected vehicle
manufacturers and products (ɝ၍
จԈ), OEMs shall clearly inform drivers of the functions and limitations of the vehicle,
and the liability of driver, and take technical measures to ensure that drivers are always
performing the driving tasks. Therefore, vehicles currently stalled with our solution shall be
driven by the driver rather than the autonomous driving system, and thus do not fall under the
legal concept of autonomous driving Level 3 (i.e. conditionally automated driving) under
relevant autonomous regulations. Based on the above, as advised by our PRC Legal Adviser,
as of the Latest Practicable Date, the Road Testing Rule and the Notice on Pilot Program for
ICVs are not applicable to us. Notwithstanding, we have taken, and will continue to take
reasonable measures to ensure compliance with applicable laws and regulations.
According to the Implementation Guidelines on the Pilot Program for Market Access of
ICVs (), an attachment to the Notice on Pilot
Program for ICVs, we may face potential liabilities depending on different circumstances in the
event of car accidents.
(i) where a road traffic accident occurs in a vehicle with its automated driving function
system unactivated, or that a road traffic accident occurs in a vehicle without
automated driving function system, the relevant liability shall be borne in
accordance with the existing provisions and the Road Traffic Safety Law of the PRC
(, promulgated by the SCNPC on October 28,
2003 and amended on December 29, 2007, April 22, 2011 and April 29, 2021, and
came into effect on the same day) shall apply. According to Article 76 of the Road
Traffic Safety Law of the PRC, where motor vehicles are involved in traffic
accidents which cause casualties and property losses, the insurance company shall
make compensation within the limit of the compulsory third party liability insurance
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for motor vehicles; if the said insurance is insufficient, the part not covered shall be
compensated according to relevant liability principles between the drivers of motor
vehicles, drivers of non-motor vehicle and/or pedestrians. Under such circumstance,
as all our solutions do not fall into the category of automated driving function
defined by Notice on Pilot Program for ICVs, as of the Latest Practicable Date, we
are not a party to the traffic accident and shall not assume traffic liability for such
accident, and hence we have no loss contingency under such circumstance.
(ii) where any personal injury or property loss is caused by a road traffic accident when
the automated driving function system is activated, the insurance company shall
make compensation within the insurance liability limit; any insufficient part shall be
ascertained the liability of all parties concerned for compensation in accordance
with Article 76 of the Road Traffic Safety Law of the PRC. Where the intelligent
connected vehicle users are required to bear liability for compensation according to
the law, the compensation liability shall be borne by the pilot users. Where the pilot
automobile manufacturers, autopilot system developers, infrastructure and
equipment providers, safety personnel and other relevant parties have fault for the
occurrence of traffic accidents, the pilot users may pursue recovery for the
compensation according to the law. If a crime has been committed, the liable persons
shall be prosecuted for criminal liability in accordance with the PRC laws.
Under aforementioned circumstances, if our solutions fall within the scope of automated
driving function defined by the Notice on Pilot Program for ICVs in the future, we may bear
relevant legal liability as autopilot system developers if there is a fault with respect to the
occurrence of a traffic accident. We will assess relevant loss contingencies and make provision
or disclosures as appropriate.
As confirmed by our PRC Legal Adviser, laws and regulations in the PRC in relation to
autonomous driving functions in the event of driving accidents are relatively new, not
sufficient enough yet and are in the process of evolving together with the development of the
whole industry. We have always been cautious about importance to the product safety
responsibility. We have taken, and will continue to take reasonable measures, to ensure our
continued compliance with applicable laws and regulations. From the perspective of future
legal development in relation to autonomous driving functions in the event of driving
accidents, further improvement of laws and regulations will help the better development of the
whole market and the whole industry and will be beneficial to our future business.
Meanwhile, China Electronics Standardization Association, China Electronics
Standardization Institute and other institutions published the White Paper on Performance
Evaluation Standardization of Autonomous Driving Processing Hardwares in September 2023,
which introduced that with the rapid development of the autonomous driving industry and the
urgent demand for the industry standardization, leading domestic and foreign institutions
should work together to improve the evaluation and standardization system. On December 29,
2023, the MIIT issued the Guide to the Building of the National Standard System for
Automotive Processing Hardwares, which stated that more than 30 key standards by 2025, and
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more than 70 relevant standards by 2030 for automotive processing hardwares will be
formulated. These guides will provide guidance and requirements for processing hardware
industry in the future, promote the development and product application, cultivate an
independent innovation environment, improve the overall technical level and international
competitiveness, and build a scientific, efficient and sustainable automotive processing
hardware industry ecosystem. The formulation of such standards is not expected to have a
material adverse effect on the Group’s business operations and financial performance resulting.
LA WS AND REGULATIONS ON FOREIGN INVESTMENT
Pursuant to Provisions on Merger and Acquisition of Domestic Enterprises by Foreign
Investors () (the “Merger and Acquisition
Provisions”, which was promulgated on June 22, 2009), merger and acquisition of domestic
enterprises by foreign investors referred to in the Merger and Acquisition Provisions shall
mean acquisition of equity of shareholders of non–foreign investment enterprises in China or
subscription to additional capital of domestic companies by foreign investors to convert such
domestic companies into foreign investment enterprises; or incorporation of foreign investment
enterprises by foreign investors to acquire and operate assets of domestic enterprises by such
foreign investment enterprises by agreement, or acquisition of assets of domestic enterprises
by foreign investors by agreement and investment of such assets to establish foreign
investment enterprises for operation of such assets. In the case of merger or acquisition of a
domestic enterprise by a foreign investment enterprise incorporated by a foreign investor in
China, the relevant provisions on merger and division of foreign investment enterprises and the
relevant provisions on domestic investments of foreign investment enterprises shall apply;
where there is no provision therein, the Merger and Acquisition Provisions shall apply by
reference.
On October 28, 2015, the MOFCOM promulgated Interim Provisions on Investment
Inside China by Foreign Investment Enterprises ().
According to the foregoing provisions, where a foreign investment enterprise purchases share
ownership from investors of the target company, and the business scope of the target company
falls within the field of Encouraged or Permitted Categories of Investment, the target company
shall submit to the original company registration organ all the materials prescribed by Article
6, and shall, in accordance with relevant provisions of the “Rules on Company Registration”,
apply to the original company registration organ for alteration of registration.
Pursuant to the Foreign Investment Law of the PRC (),
the Regulation for Implementing the Foreign Investment Law of the PRC ( ʕശɛ͏΍ձ਷
ૢԷ) and Measures on Reporting of Foreign Investment Information ( ̮
), which became effective on January 1, 2020, the State Council
establishes a foreign investment information report system. Foreign investors or
foreign–funded enterprises shall submit investment information to the competent department
for commerce concerned through the enterprise registration system and the enterprise credit
information publicity system. The contents and scope of foreign investment information report
shall be determined under the principle of necessity; it is not allowed to require the submission
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again of any investment information that can be obtained by interdepartmental information
sharing. For foreign investment enterprises investing in China and establishing an enterprise
(including multi–level investment), upon completion of registration filing and submission of
annual report information to the market regulatory authorities, the relevant information shall
be forwarded by the market regulatory authorities to the commerce administrative authorities,
and these enterprises are not required to submit separately.
LA WS AND REGULATIONS ON FOREIGN EXCHANGE
The Administrative Regulations on Foreign Exchange ( ʕശɛ͏΍ձ਷̮ි၍ଣૢԷ
(2008ࠈࡌ)) was promulgated by the State Council in January 1996 and last amended and
effective in August 2008. Under these regulations, Renminbi is freely convertible for payments
of current account items, such as distribution of dividends, interest payments, and trade and
service–related foreign exchange transactions, and such payments can be made in foreign
currencies without prior approval by the SAFE. In contrast, approval by or registration with
appropriate government authorities is required where Renminbi is converted into a foreign
currency and remitted out of China to pay capital account items, such as direct investments,
repayment of foreign currency–denominated loans, repatriation of investments, and
investments in securities outside of China.
Pursuant to the Circular of Further Improving and Adjusting Foreign Exchange
Administration Policies on Foreign Direct Investment (ආɓӉҷආձሜ
) promulgated by the SAFE on November 19, 2012,
effective on December 17, 2012, and last amended on December 30, 2019, the opening of
various special purpose foreign exchange accounts, such as pre–establishment expenses
accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of
Renminbi proceeds by foreign investors in China, and remittance of foreign exchange profits
and dividends by a foreign–invested enterprise to its foreign shareholders no longer require the
approval or verification of the SAFE, and multiple capital accounts for the same entity may be
opened in different provinces.
In 2013, the SAFE promulgated the Circular on Promulgation of the Provisions on
Foreign Exchange Control on Direct Investments in China by Foreign Investors and Supporting
Documents (Ι೯<֛>˖΁
), which was last amended on December 30, 2019, which specified that the
administration by the SAFE or its local branches on direct investment by foreign investors in
China must be conducted by way of registration and banks must process foreign exchange
business relating to direct investment in China based on the registration information provided
by the SAFE and its local branches.
On July 4, 2014, the Circular of the SAFE on Foreign Exchange Administration of Overseas
Investments and Financing and Round–Trip Investments by Domestic Residents via Special
Purpose Vehicles (೻ҳ༟
) came into effect. Pursuant to such circular, domestic residents
shall apply to the SAFE to register foreign exchange for overseas investments before
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contributing money to special purpose vehicles using legitimate domestic and overseas assets
or rights and interests. In the event of any alteration in the basic information, such as
shareholders, name and operating duration of the individual domestic residents, or key
information, such as increases or decreases in capital, or equity transfers, swaps,
consolidations, or splits, the registered overseas special purpose vehicles shall timely submit
a change in the registration of the foreign exchange for overseas investments with the foreign
exchange bureaus.
Pursuant to the Circular of the SAFE on Further Simplifying and Improving Policies for
Foreign Exchange Administration for Direct Investment (ආɓӉᔊʷձ
), which was promulgated on February 13, 2015 and
became effective on June 1, 2015, two administrative approval items, foreign exchange
registration approval under domestic direct investment and foreign exchange registration
approval under overseas direct investment, have been canceled. According to these new
requirements, the banks will directly verify and handle the registration of foreign exchange
under domestic and overseas direct investment, while the SAFE and its branches shall conduct
through banks indirect regulation over registration of foreign exchange for direct investment.
The SAFE promulgated the Notice of the SAFE on Reforming the Administration of
Foreign Exchange Settlement of Capital of Foreign–Invested Enterprises (̮ි၍ଣ҅ᗫ
) (the “SAFE Circular 19”) on March
30, 2015, which was last amended and effective on March 23, 2023. Pursuant to the SAFE
Circular 19, foreign–invested enterprises are allowed, within the scope of business, to settle
their foreign exchange capital in their capital accounts, for which the relevant foreign exchange
authority has confirmed monetary capital contribution rights and interests (or for which the
bank has registered the injection of the monetary capital contribution into the accounts), on a
discretionary basis according to the actual needs of their business operations. The SAFE
promulgated the Notice of the SAFE on Reforming and Standardizing the Foreign Exchange
Settlement Management Policy of Capital Account (ձ஝ᇍ༟͉ධ
) (the “SAFE Circular 16”), which took effect in June 2016. The
SAFE Circular 19 and the SAFE Circular 16 prohibit foreign–invested enterprises from using
Renminbi converted from their foreign exchange capital for expenditures beyond their business
scopes, providing entrusted loans, or repaying loans between non–financial enterprises.
On January 26, 2017, the SAFE promulgated the Circular on Further Improving Reform
of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification
(), which
stipulates several capital control measures with respect to the outbound remittance of profit
from PRC domestic entities to offshore entities, including the following: (i) under the genuine
transaction principle, banks must check board resolutions regarding profit distribution, the
original tax filing records, and the audited financial statements; and (ii) PRC domestic entities
must hold income to account for prior years’ losses before remitting the profits. Furthermore,
according to the circular, PRC domestic entities must make detailed explanations of the sources
of capital and utilization arrangements, and provide board resolutions, contracts, and other
proof when completing the registration procedures in connection with an outbound investment.
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Pursuant to the Circular of the SAFE on Further Promoting Cross–border Trade and
Investment Facilitation ()
(the “SAFE Circular 28”), which was promulgated and became effective on October 23, 2019,
where a non–investment–oriented foreign investor makes equity investment in China through
transfer of capital in original currency, the invested shall register for acceptance of domestic
reinvestments as required and open a foreign exchange capital account to receive the
transferred money, with no need to register for the recognition of contribution in cash; where
a non–investment–oriented foreign investor makes equity investment in China with the money
from the settlement of foreign exchange capital, the invested shall register for acceptance of
domestic reinvestments as required and open an account pending payment after foreign
exchange settlement under the capital account to receive the money.
LA WS AND REGULATIONS ON FOREIGN DEBTS
A loan made by foreign investors as shareholders in a foreign–invested enterprise is
considered to be foreign debt in mainland China and is regulated by various laws and
regulations, including the Foreign Exchange Administrative Regulation ( ʕശɛ͏΍ձ਷̮
ි၍ଣૢԷ(2008ࠈࡌ)), the Interim Provisions on the Management of Foreign Debts ( ̮
) took effect on March 1, 2003, and was last amended on September 1, 2022
and the Administrative Measures for Registration of Foreign Debts ()
promulgated by SAFE on April 28, 2013 and amended by the Notice of the SAFE on
Abolishing and Amending the Normative Documents Related to the Reform of the Registered
Capital Registration System (޴ࠧ
) on May 4, 2015. Under these rules, a shareholder loan in the form of
foreign debt made to a Chinese entity does not require the prior approval of SAFE. However,
such foreign debt must be registered with and recorded by local banks. The SAFE Circular 28
provides that a non–financial enterprise in the pilot areas may register a permitted amount of
foreign debts, which is as twice of the non–financial enterprise’s net assets, at the local foreign
exchange bureau. Such non–financial enterprise may borrow foreign debts within the permitted
amount and directly handle the relevant procedures in banks without registration of each
foreign debt. However, the non–financial enterprise shall report its international income and
expenditure regularly.
LA WS AND REGULATIONS ON OUTBOUND DIRECT INVESTMENT
On December 26, 2017, the NDRC promulgated the Administrative Measures for the
Outbound Investment of Enterprises () (the “NDRC Order No.
11”), which took effect on March 1, 2018. According to NDRC Order No. 11, non–sensitive
overseas investment projects are required to make record filings with the local branch of the
NDRC. On September 6, 2014, MOFCOM promulgated the Administrative Measures on
Overseas Investments (ج2014) ), which took effect on October 6, 2014.
According to such regulations, overseas investments of mainland China enterprises that
involve non–sensitive countries and regions and non–sensitive industries must make record
filings with a local branch of MOFCOM. The Notice of the SAFE on Further Improving and
Adjusting Foreign Exchange Administration Policies for Direct Investment (̮ි၍ଣ҅
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) was issued by SAFE on November
19, 2012 and amended on May 4, 2015, October 10, 2018 and December 30, 2019 respectively,
under which mainland China enterprises must register for overseas direct investment with local
banks. The shareholders or beneficial owners who are mainland China entities are required to
be in compliance with the related overseas investment regulations. If they fail to complete the
filings or registrations required by overseas direct investment regulations, the relevant
authority may order them to suspend or cease the implementation of such investment and make
corrections within a specified time.
LA WS AND REGULATIONS ON INFORMATION SECURITY AND DATA PRIV ACY
On May 28, 2020, the National People’s Congress of the PRC approved the Civil Code
of the PRC (Պ) (the “Civil Code”), which has come into effect on
January 1, 2021. Pursuant to the Civil Code, the personal information of a natural person shall
be protected by the law. Any organization or individual that need to obtain personal
information of others shall obtain such information legally and ensure the security of such
information, and shall not illegally collect, use, process or transmit personal information of
others, or illegally purchase, sell, provide or make public personal information of others.
On November 7, 2016, the Standing Committee of National People’s Congress (the
“SCNPC”) promulgated the Cyber Security Law (), which
became effective on June 1, 2017. The Cyber Security Law requires network operators to
perform certain functions related to cybersecurity protection and strengthen the network
information management. For instance, under the Cyber Security Law, when collecting and
using personal information, in accordance with the Cyber Security Law, network operator shall
abide by the “lawful, justifiable and necessary” principles. Network operator shall collect and
use personal information by announcing rules for collection and use, expressly notify the
purpose, methods and scope of such collection and use, and obtain the consent of the person
whose personal information is to be collected. Network operator shall not disclose, tamper with
or destroy personal information that it has collected, or disclose such information to others
without prior consent of the person whose personal information has been collected, unless such
information has been processed to prevent specific person from being identified and such
information from being restored.
On June 10, 2021, the SCNPC promulgated the Data Security Law of PRC ( ʕശɛ͏
), which became effective on September 1, 2021. It stipulates that each
organization or individual collecting data shall adopt legal and proper methods, and shall not
steal or obtain data by other illegal methods, and the data processing activities shall comply
with laws and regulations, respect social mores and ethics, comply with commercial ethics and
professional ethics, be honest and trustworthy, perform obligations to protect data security, and
undertake social responsibility. Besides, it is necessary to establish and improve a
whole–process data security management system in accordance with the provisions of laws and
regulations, organize and carry out data security education and training, and adopt
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corresponding technical measures and other necessary measures to ensure data security. The
use of the Internet and other information networks to carry out data processing activities shall
perform the above–mentioned data security protection obligations on the basis of the network
security level protection system.
On August 20, 2021, the SCNPC issued the PRC Personal Information Protection Law
() (the “PIPL”), which integrates the scattered rules with
respect to personal information rights and privacy protection. The PIPL aims at protecting the
personal information rights and interests, regulating the processing of personal information,
ensuring the orderly and free flow of personal information in accordance with the law, and
promoting the reasonable use of personal information. Personal information, as defined in the
PIPL, refers to information related to identified or identifiable natural persons and recorded by
electronic or other means, but excluding the anonymized information. The PIPL provides the
circumstances under which a personal information processor could process personal
information, which include but not limited to, where the consent of the individual concerned
is obtained and where it is necessary for the conclusion or performance of a contract to which
the individual is a contractual party. It also stipulates certain specific rules with respect to the
obligations of a personal information processor, such as to inform the purpose and method of
processing to the individuals, and the obligation of the third party who has access to the
personal information by way of co–processing or delegation.
On September 15, 2021, the MIIT issued the Notice of the MIIT on Strengthening the
Cybersecurity and Data Security of the Internet of Vehicles (̋੶ԓᑌ
), according to which, all intelligent networked
automobile manufacturer and Internet of vehicles service platform operators shall establish a
network security and data security management system, strengthen the security protection,
monitor and prevent network security risks and threats, strengthen the security protection
capacity of network facilities and network systems of the Internet of vehicles, ensure the
communication security of the Internet of vehicles, carry out the security monitoring and early
warning of the Internet of vehicles, and do a good job in the security emergency disposal of
the Internet of vehicles, do a good job in the classification and filing of Internet of vehicles
network security protection, and more.
To regulate automobile data processing activities, Several Provisions on the Management
of Automobile Data Security (for Trial Implementation) (֛(༊
Б)) was issued on August 16, 2021 and became effective on October 1, 2021. Pursuant to
the foregoing provisions, “automobile data” includes personal information data and important
data involved in the process of automobile design, production, sales, use, operation and
maintenance, among others. Automobile data processors that conduct important data
processing activities shall conduct risk assessments and submit risk assessment reports to the
cyberspace administrations and relevant departments of the provinces, autonomous regions,
and municipalities directly under the central government. And important data shall be legally
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stored within the territory of the PRC; where it is truly necessary to provide such data to an
overseas recipient for business needs, the security assessment organized by the national
cyberspace administration in conjunction with the relevant departments of the State Council
shall be passed.
On October 8, 2021, the National Information Security Standardization Technical
Committee published Security Guidelines for Processing Vehicle Collected Data ( ӛԓમණ
). This Guidelines specifies the safety requirements for processing
activities such as transmission, storage and exit of vehicle collected data.
On November 14, 2021, the Cyberspace Administration of China (the “CAC”)
promulgated the Network Data Security Management Regulations (the “Draft Regulations”)
(ၣഖᅰኽτΌ၍ଣૢԷ(ᅄӋจԈᇃ)), which further expands the scope of the application
for security review, establishes the data classification and protection system, and defines the
relevant rules for cross–border data management. The Draft Regulations provide that data
processors conducting the following activities shall apply for cybersecurity review: (i) merger,
reorganization or spin–off of Internet platform operators that have acquired a large number of
data resources related to national security, economic development or public interests affects or
may affect national security; (ii) listing abroad of data processors processing over one million
users’ personal information; (iii) listing in Hong Kong which affects or may affect national
security; (iv) other data processing activities that affect or may affect national security. As of
the Latest Practicable Date, the Draft Regulations had not been formally enacted or taken
effect. On December 28, 2021, the CAC, together with other relevant administrative
departments, jointly promulgated the Cybersecurity Review Measures (፬
) which took effect on February 15, 2022. According to the Cybersecurity Review
Measures, an internet platform operator who possesses personal information of more than one
million users shall apply for a cybersecurity review before listing abroad ( ਷̮ɪ̹), and the
relevant governmental authorities may initiate a cybersecurity review if they consider relevant
network products or services or data processing activities may affect national security. As
advised by our PRC Legal Adviser, the term of “listing abroad” under the Cybersecurity
Review Measures does not apply to listing in Hong Kong, and thus we are not required to
proactively submit an application for cybersecurity review for our Listing in Hong Kong. As
of the Latest Practicable Date, we had not been notified of being classified as a critical
information infrastructure operator (“CIIO”), we had not received any notice, warning from
any PRC government authorities, and have not been subject to any investigation, sanctions or
penalties made by any PRC government authorities regarding national security risks caused by
our business operations or the Listing. Given that the interpretation of activities that “affect or
may affect national security” under the current PRC laws and regulations requires further
clarification from the competent authorities, and the identification of CIIO and the scope of
network products or services and data processing activities that affect or may affect national
security are subject to further clarification and interpretation by the competent authorities, we
cannot guarantee whether we will be subject to the cybersecurity review or if new rules or
regulations promulgated in the future will impose additional compliance requirements on us.
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Furthermore, on July 7, 2022, the CAC promulgated the Measures on Security
Assessment of Cross–border Data Transfer (), which became
effective on September 1, 2022. Such data export measures requires 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 abroad. The security assessment requirement also applies to any transfer of
important data outside of China. Furthermore, on August 31, 2022, the CAC promulgated the
Guidelines for filing the Outbound Data Transfer Security Assessment (Version 1) ( ᅰኽ̈
یܸ(و)), which provides that acts of outbound data transfer include (i)
overseas transmission and storage by data processors of data generated during mainland China
domestic operations; (ii) the access to, use, download or export of the data collected and
generated by data processors and stored in mainland China by overseas institutions,
organizations or individuals; and (iii) other acts as specified by the CAC.
On March 22, 2024, the CAC issued Provisions on Facilitating and Regulating
Cross-border Data Flows (). In accordance with these
provisions, data handlers who provide data abroad, and meet any of the following conditions,
are required to declare the security assessment of cross-border data transfer to the national
cyberspace administration authority through the provincial-level cyberspace administration
authority where the data handlers are located: (i) critical information infrastructure operators
providing personal information or important data abroad; (ii) data handlers other than critical
information infrastructure operator providing important data abroad or cumulatively providing
abroad personal information (without any sensitive personal information) of more than one
million individuals, or sensitive personal information of more than 10,000 individuals since
January 1 of the current year.
As of the Latest Practicable Date, our PRC Legal Adviser does not foresee any national
security risk and/or cross-border data transfer risks raised by the Group’s business operations
and/or our proposed listing in Hong Kong, on the basis that: (i) we have taken necessary
organizational management and technical measures, fulfilled our main legal obligations under
the data security-related regulations, and will continue to adopt relevant improvement
measures to constantly ensure the state of effective protection and lawful utilization of data by
us; (ii) we had not received any notice or warning from any PRC government authorities, and
have not been subject to any investigation, sanctions or penalties made by any PRC
government authorities regarding national security risks caused by our business operations or
the Listing; (iii) during the Track Record Period and up to the Latest Practicable Date, as set
forth in the Measures on Security Assessment of Cross-border Data Transfer and the Provisions
on Facilitating and Regulating Cross-border Data Flows above, we are not involved in any
obligations to perform cross-border data transfer security assessments.
As of the Latest Practicable Date, our PRC Legal Adviser is of the view that, the
Cybersecurity Review Measures, the draft Network Data Security Management Regulations
(if implemented in its current form), and the Measures on Security Assessment of Cross-border
Data Transfer, will not have material adverse effects on our business operations or the Listing,
based on the facts that, during the Track Record Period and as of the Latest Practicable Date,
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(i) we had not been notified of being classified as a CIIO, and had not received any inquiry,
notice, warning, or sanction regarding cybersecurity review; (ii) the term “ listing abroad ”
under the Cybersecurity Review Measures does not apply to listing in Hong Kong, hence we
are not subjected to initiating a submission for cybersecurity review or conducting other
additional mandatory obligations for our proposed listing in Hong Kong in accordance with the
Cybersecurity Review Measures; (iii) the main regulatory requirements under the Draft Cyber
Data Security Regulations have already been provided in existing PRC laws and regulations on
cybersecurity and data security, which we have complied with in all material aspects as of the
Latest Practicable Date, with the remaining newly proposed rules under the Draft Data Security
Regulations mostly being procedural and administrational requirements, such as filing records
and submitting reports to relevant authorities under certain stipulated circumstances, which
would not constitute a substantial obstacle for us to comply with; and (iv) during the Track
Record Period and up to the Latest Practicable Date, we were not obligated to conduct any
cross-border data transfer security assessments or to obtain any additional governmental
approval provided by the Measures on Security Assessment of Cross-border Data Transfer and
the Provisions on Facilitating and Regulating Cross-border Data Flows.
On December 8, 2022, the MIIT promulgated the Notice on Promulgation of the
Administrative Measures on Data Security in the Field of Industry and Information Technology
(for Trial Implementation) (Ι೯<ج
(༊Б)>). Pursuant to the foregoing notice, the data handlers in the field of industry
and information technology shall regularly sort out data, identify important data and core data
in accordance with the relevant standards and specifications, and form the specific catalogs for
their respective entities.
LA WS AND REGULATIONS ON ENVIRONMENTAL PROTECTION
Regulations on Environment Protection
The Environmental Protection Law of the PRC (), (last
amended on April 24, 2014 and became effective on January 1, 2015), outlines the authorities
and duties of various environmental protection regulatory agencies. The Ministry of
Environmental Protection is authorized to issue national standards for environmental quality
and emissions, and to monitor the environmental protection scheme of the PRC. Meanwhile,
local environment protection authorities may formulate local standards which are more
rigorous than the national standards, in which case, the concerned enterprises must comply
with both the national standards and the local standards.
According to the Administrative Regulations on the Environmental Protection of
Construction Project (ᚐ၍ଣૢԷ) (the “Construction Environmental
Protection Rule”), promulgated by the State Council on November 29, 1998 and amended on
July 16, 2017, and other relevant environmental laws and regulations, enterprises which plan
to construct projects shall provide the assessment reports, assessment form, or registration
form on the environmental impact of such projects with relevant environmental protection
administrative authority for approval or filing. Enterprises may entrust a technical entity to
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conduct an environmental impact assessment of its construction projects and prepare
environmental impact reports and environmental impact statements on construction projects. If
a construction entity has the technical capability of environmental impact assessment, it may
carry out the above activities itself.
According to the Environmental Impact Assessment Law of the PRC ( ʕശɛ͏΍ձ਷
), promulgated by the SCNPC on October 28, 2002 and amended on July 2,
2016 and December 29, 2018 respectively, for any construction projects that have an impact
on the environment, an entity is required to produce either a report, or a statement, or a
registration form of such environmental impacts depending on the seriousness of effect that
may be exerted on the environment.
Regulations on Fire Safety
The Fire Prevention Law of the PRC () (the “Fire Prevention
Law”) was adopted on April 29, 1998 and last amended and took effect on April 29, 2021.
According to the Fire Prevention Law, for special construction projects stipulated by the
housing and urban–rural development authority of the State Council, the developer shall
submit the fire safety design documents to the housing and urban–rural development authority
for examination, while for construction projects other than those stipulated as special
development projects, the developer shall, at the time of applying for the construction permit
or approval for work commencement report, provide the fire safety design drawings and
technical materials which satisfy the construction needs. According to Interim Regulations on
Administration of Examination and Acceptance of Fire Control Design of Construction
Projects (), which was promulgated by the
MOHURD on April 1, 2020 and came into effect on June 1, 2020 and last amended on August
21, 2023, and came into effect on October 30, 2023, an examination system for fire prevention
design and acceptance only applies to special construction projects, and for other projects, a
record–filing and spot check system would be applied.
In addition, the Fire Prevention Law requires that before any public venues that allows
the gathering of people are put into business operation, as required according to applicable
requirements, the developer or the users shall apply to competent authorities to conduct a fire
safety inspection of the premises to obtain the Fire Safety Inspection Certificates.
LA WS AND REGULATIONS ON CONSTRUCTION PROJECTS
Pursuant to the PRC Urban and Rural Planning Law ()
promulgated by the SCNPC on October 28, 2007 and amended on April 24, 2015 and April 23,
2019, a construction work planning permit must be obtained from the competent urban and
rural planning government authority for the construction of any structure, fixture, road,
pipeline, or other engineering project within an urban or rural planning area. After obtaining
a construction work planning permit, subject to certain exceptions, a construction enterprise
must apply for a construction work commencement permit from the construction authority
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under the local people’s government at the county level or above pursuant to the Administrative
Provisions on Construction Permit of Construction Projects ()
promulgated by the MOHURD on March 30, 2021.
Pursuant to the Administrative Measures for Reporting Details Regarding Acceptance
Examination upon Completion of Buildings and Municipal Infrastructure (݁
) promulgated by the Ministry of Construction on April
7, 2000 and amended on October 19, 2009, and the Provisions on Acceptance Examination
upon Completion of Buildings and Municipal Infrastructure promulgated and implemented by
the MOHURD () on December 2, 2013, upon
the completion of a construction project, the construction enterprise must submit an application
to the competent government department at or above county level where the project is located
for examination upon completion of building and for filing purpose, and to obtain the filing
form for acceptance and examination upon completion of construction project.
LA WS AND REGULATIONS ON TAX
Enterprise Income Tax
According to the Corporate Income Tax Law of the PRC (੻೼
) (the “Corporate Income Tax Law”) (last amended and became effective on December 29,
2018), and the Implementation Regulations for the Corporate Income Tax Law of the PRC
(ૢԷ) (the “Implementation Regulations for the
Corporate Income Tax Law”) (last amended and became effective on April 23, 2019), all the
domestic enterprises in China (including foreign–invested enterprises) shall be subject to
enterprise income tax at the uniform tax rate of 25%, except for the high–tech enterprises
provided by the state, which will be subject to enterprise income tax at the reduced rate of 15%,
or the qualified small low–profit enterprises, which will enjoy the reduced enterprise income
tax rate of 20%.
Value–added Tax
Pursuant to the Provisional Regulations on Value–added Tax of the PRC ( ʕശɛ͏΍
೼ᅲБૢԷ) (last amended and became effective on November 19, 2017) and the
Detailed Rules for the Implementation of the Interim Regulation of the PRC on Value Added
Tax (2011 Revision) (ۆ2011ࠈࡌ)), which was
promulgated on December 25, 1993, amended on October 28, 2011 and became effective on
November 1, 2011, all entities or individuals in the PRC engaging in the sale of goods,
provision of processing services, repairs and replacement services and the importation of goods
are required to pay value–added tax (the “V AT”). V AT payable is calculated as “output V AT”
minus “input V AT”. The rate of V AT is usually 17%, and in certain limited circumstances is
11% or 6%, subject to the situation involved.
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In accordance with Notice of the Ministry of Finance and the SAT on the Adjustment to
V AT Rates (), which became effective on
May 1, 2018, the deduction rates of 17% or 11% applicable to the taxpayers who have V AT
taxable sales activities or imported goods are adjusted to 16% or 10%.
According to Announcement on Policies for Deepening the V AT Reform (௅e೼
ʮѓ) (Announcement No. 39 of 2019 of
the Ministry of Finance, the SAT and the General Administration of Customs, became effective
on April 1, 2019), for general V AT payers’ sales activities or imports that are subject to V AT
at an existing applicable rate of 16% or 10%, the applicable V AT rate is adjusted to 13% or 9%
respectively.
Dividend Withholding Tax
Enterprise Income Tax Law () and the relevant
implementing regulations provide that an income tax rate of 10% will normally be applicable
to dividends declared to non–PRC resident investors which do not have an establishment or
place of business in the PRC, or which have such establishment or place of business but the
relevant income is not effectively connected with the establishment or place of business, to the
extent such dividends are derived from sources within the PRC.
Pursuant to an Arrangement Between the Mainland of China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with Respect to Taxes on Incomes (ᅄ
τર) (the “Double Tax Avoidance Arrangement”), and other applicable
PRC laws, if a Hong Kong resident enterprise is determined by the competent PRC tax
authority to have satisfied the relevant conditions and requirements under such Double Tax
Avoidance Arrangement and other applicable laws, the 10% withholding tax on the dividends
the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to
5%. However, based on the Circular on Certain Issues with Respect to the Enforcement of
Dividend Provisions in Tax Treaties (ٙ
), or SAT Circular 81, issued on February 20, 2009 by the SAT, if the relevant PRC tax
authorities determine, in their discretions, that a company benefits from such reduced income
tax rate due to a structure or arrangement that is primarily tax–driven, such PRC tax authorities
may adjust the preferential tax treatment. According to the Circular on Several Questions
regarding the “Beneficial Owner” in Tax Treaties (ʕ“Ϟ
ɛ”ʮѓ), which was issued on February 3, 2018 by the SAT and effective on
April 1, 2018, when determining the applicant’s status of the “beneficial owner” regarding tax
treatments in connection with dividends, interests or royalties in the tax treaties, several factors
apply, including without limitation: (i) whether the applicant is obligated to pay more than 50%
of his or her income in twelve months to residents in third country or region, (ii) whether the
business operated by the applicant constitutes the actual business activities, and (iii) whether
the counterparty country or region to the tax treaties levies any tax or grant tax exemption on
relevant incomes or levies tax at an extremely low rate, will be taken into account, and it will
be analyzed according to the actual circumstances of the specific cases. This circular further
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provides that relevant information proving the status of “beneficial owner” shall be retained in
the case of entitlement to dividends, interest and treaty benefits of royalty clause according to
the Administrative Measures for Entitlement to Treaty Benefits for Non–resident Taxpayers
(೯б<ج>ʮѓ), which was
promulgated by the SAT on October 14, 2019 and became effective on January 1, 2020.
LA WS AND REGULATIONS ON IMPORT AND EXPORT OF GOODS
Pursuant to the Regulations of the PRC on the Administration of Import and Export of
Goods (ආ̈ɹ၍ଣૢԷ) promulgated by the State Council on
December 10, 2001 which came into effect on January 1, 2002 and last amended on March 10,
2024, and came into effect on May 1, 2024, the import and export of goods are generally
allowed by the mainland China government, but the prohibitions or restrictions explicitly
stipulated in the laws or administrative regulations shall still be complied with during the
conduct of import and export of goods by individuals or entities. According to the Foreign
Trade Law of the PRC () promulgated by the SCNPC, on May
12, 1994, which came into effect on July 1, 1994 and lately amended with immediate effect on
December 30, 2022, unless otherwise provided by laws and regulations, the mainland China
government allows free export and import of goods and technologies, and protects the
intellectual property rights associated with international trade. The authorities have canceled
the requirements to file records and register formalities for foreign trade operators engaging in
the import or export of goods or technology with the MOFCOM or the agency entrusted from
December 30, 2022.
LA WS AND REGULATIONS ON EMPLOYMENT AND SOCIAL WELFARE
Labor Law and Labor Contracts
Pursuant to the PRC Labor Law () (last amended and became
effective on December 29, 2018), the PRC Labor Contract Law ( ʕശɛ͏΍ձ਷௶ਗΥΝ
) (last amended on December 28, 2012 and became effective on July 1, 2013) and the
Implementation Regulations for the Labor Contract Law of the PRC ( ʕശɛ͏΍ձ਷௶ਗ
ૢԷ) (promulgated and became effective on September 18, 2008), an employer
unit shall establish and improve its rules and regulations in accordance with the law in order
to ensure that workers enjoy labor rights and perform labor obligations. A written labor
contract is required when an employment relationship is established between an employer and
an employee. A labor contract shall include the following clauses: term of labor contract;
working hours and rest periods and off days; labor remuneration; social security; labor
protection, working conditions and occupational hazard prevention and protection; and any
other matters to be included in a labor contract as stipulated by the laws and regulations.
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Social Insurance
According to the Social Insurance Law of the PRC ()
(last amended and became effective on December 29, 2018), the Provisional Regulations for
the Collection and Payment of Social Insurance Premiums (ᎈ൬ᅄᖮᅲБૢԷ)
(last amended and became effective on March 24, 2019), the Unemployment Insurance
Regulations (ᎈૢԷ) effective in 1999 and the Regulations on Work–related Injury
Insurance (ᎈૢԷ) (last amended on December 20, 2010 and became effective on
January 1, 2011), the state shall establish social security systems such as basic pension
insurance, basic medical insurance, work injury insurance, unemployment insurance, family
planning insurance, and more, to protect the rights of citizens for obtaining material assistance
from the state and the society pursuant to the law in the circumstances of old age, illness, work
injury, unemployment, family planning, and more. Employers must pay a number of social
security funds for their employees, including basic endowment insurance, medical insurance,
work injury insurance, unemployment insurance, family planning insurance. Employers which
failed to complete social security registration shall be ordered by the social security
administrative authorities to make correction within a stipulated period; where correction is not
made within the stipulated period, the employer shall be subject to a fine ranging from one to
three times the amount of the social security premiums payable, and the person(s)–in–charge
who is/are directly accountable and other directly accountable personnel shall be subject to a
fine ranging from RMB500 to RMB3,000.
Housing Provident Fund
Pursuant to Regulations on Management of Housing Provident Fund (၍ଣ
ૢԷ) (last amended and became effective on March 24, 2019), an employer shall go to the
housing provident fund management center to undertake registration of payment and deposit of
the housing provident fund and, upon verification by the housing provident fund management
center, go to a commissioned bank to go through the formalities of opening housing provident
fund accounts on behalf of its employees.
Where, in violation of the provisions of the Regulations, an employer fails to undertake
payment 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; where failing to do so at the expiration of the time limit, a fine of not
less than RMB10,000 nor more than RMB50,000 shall be imposed.
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Work Safety
Under relevant construction safety laws and regulations, including the PRC Work Safety
Law (), which was promulgated by the SCNPC on June 29,
2002, amended on August 27, 2009, August 31, 2014, June 10, 2021 and became effective on
September 1, 2021, producers and business operators shall establish, improve and implement
the responsibility system for work safety of all employees of the entity, and strengthen the
development of standards for work safety, increase the input and guarantee of funds, materials,
technologies, and personnel in terms of work safety, improve the conditions for work safety.
Producers and business operators shall provide their employees with education and training on
work safety to ensure that the employees acquire the necessary knowledge about work safety,
are familiar with the relevant rules for work safety and safe operating procedures, master the
safety operating skills for the posts, understand the emergency handling measures for accidents
and are aware of their rights and obligations in respect of work safety. No employee who fails
to pass the examination after receiving education and training on work safety may be assigned
to posts.
LA WS AND REGULATIONS ON STOCK INCENTIVE PLANS
In February 2012, the SAFE promulgated the Notice on Foreign Exchange Administration
of PRC Residents Participating in Stock Incentive Plans of Offshore Listed Companies
(),
replacing the previous rules issued by the SAFE in March 2007. Under this notice and other
relevant rules, PRC residents who participate in a stock incentive plan in an overseas listed
company are required to register with the SAFE or its local branches and complete certain other
procedures, subject to certain exceptions.
Participants of a stock incentive plan who are PRC residents must retain a qualified PRC
agent, which could be a PRC subsidiary of the overseas listed company or another qualified
entity selected by the PRC subsidiary, to conduct the SAFE registration and other procedures
with respect to the stock incentive plan on behalf of its participants. The participants must also
retain an overseas entrusted institution to handle matters in connection with their exercise of
stock options, the purchase and sale of corresponding stocks or interests, and fund transfers.
In addition, the PRC agent is required to amend the SAFE registration with respect to the stock
incentive plan if there is any material change to the stock incentive plan, the PRC agent, or the
overseas entrusted institution or other material changes. The PRC agents must, on behalf of the
PRC residents who have the right to exercise the employee share options, apply to the SAFE
or its local branches for an annual quota for the payment of foreign currencies in connection
with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds
received by the PRC residents from the sale of shares under the stock incentive plans granted
and dividends distributed by the overseas listed companies must be remitted into the bank
accounts in China opened by the PRC agent before distribution to such PRC residents. In
addition, the SAFE Circular 37 provides that PRC residents who participate in a stock incentive
plan of an overseas unlisted special purpose company may register with the SAFE or its local
branches before exercising rights.
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LA WS AND REGULATIONS ON INTELLECTUAL PROPERTY RIGHTS
Copyright
Pursuant to the Copyright Law of the PRC (), promulgated
on September 7, 1990, last amended on November 11, 2020 and became effective on June 1,
2021, works of PRC citizens, legal persons or other organizations shall, regardless of whether
they have been published be entitled to the copyright pursuant to this law. The rights a
copyright owner has included but not limited to the following rights of the person and property
rights: the right of publication, right of authorship, right of modification, right of integrity,
right of reproduction, distribution right, rental right, right of information network
dissemination, translation right and right of compilation. Under the Copyright Law, the term
of protection for copyrighted software is 50 years.
The Regulation on the Protection of the Right to Communicate Works to the Public over
Information Networks (ᚐૢԷ), which was last amended on January
30, 2013 and became effective on March 1, 2013, provides specific rules on fair use, statutory
license, and a safe harbor for use of copyrights and copyright management technology and
specifies the liabilities of various entities for violations, including copyright holders, libraries
and Internet service providers.
Trademarks
Pursuant to the Trademark Law of the PRC (), promulgated
on August 23, 1982, last amended on April 23, 2019 and became effective on November 1,
2019, and the Regulation on Implementation of Trademark Law of the PRC ( ʕശɛ͏΍ձ
ૢԷ), promulgated by the State Council on August 3, 2002, amended on April
29, 2014 and became effective on May 1, 2014, any trademark which is registered with the
approval of the Trademark Office is a registered trademark, including commodity trademark,
service trademark, collective trademark, certification trademark, and the trademark registrant
has the exclusive right to use a registered trademark and such right is protected by law. A
registered trademark is valid for a period of ten years commencing from the date on which the
registration is approved. Use of a trademark that is identical with or similar to a registered
trademark, for the same kind of or similar commodities, without authorization of the trademark
registrant, constitutes infringement of the exclusive right to use a registered trademark.
Patents
Pursuant to the Patent Law of the PRC () (the “Patent Law”),
promulgated on March 12, 1984, last amended on October 17, 2020 and became effective on
June 1, 2021, and the Rules for the Implementation of Patent Law of the PRC ( ʕശɛ͏΍
), last amended on December 11, 2023 and became effective on
January 20, 2024, after the grant of the patent right for inventions and utility models, except
otherwise regulated under the Patent Law, no entity or individual may, without the
authorization of the patent owner, exploit such patent, that is no manufacture, use, offer to sell,
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sell or import the patented product, or use the patented process and use, offer to sell, sell or
import products directly obtained from such patented process, for production or business
purpose. After the patent right is granted for a design, no unit or individual shall, without the
authorization of the patent owner, exploit such patent, that is to manufacture, offer to sell, sell,
or import any product containing such patented design for production or business purposes.
Where infringement has been established, the infringer shall, in accordance with the relevant
regulations, be ordered to cease the infringement activities, take corrective actions, and
compensate for losses.
Domain Names
Pursuant to the Measures for the Administration of Internet Domain Names ( ʝᑌၣਹ
) promulgated by the MIIT on August 24, 2017 and became effective on
November 1, 2017, domain name registrations are handled through domain name service
agencies established under relevant regulations, and the applicant becomes a domain name
holder upon successful registration.
Pursuant to the Notice from the MIIT on Regulating the Use of Domain Names in Internet
Information Services (),
promulgated on November 27, 2017 and became effective on January 1, 2018, Internet access
service providers shall verify the identity of each Internet information service provider, and
shall not provide services to any Internet information service provider who fails to provide real
identity information.
Trade Secret
According to the PRC Anti–Unfair Competition Law (ن
), promulgated by the SCNPC in September 1993, as amended on November 4, 2017 and
April 23, 2019 respectively, the term “trade secrets” refers to technical and business
information that is unknown to the public, has utility, may create business interests or profits
for its legal owners or holders, and is maintained as a secret by its legal owners or holders.
Under the PRC Anti–Unfair Competition Law, business persons are prohibited from infringing
others’ trade secrets by: (i) obtaining the trade secrets from the legal owners or holders by any
unfair methods such as theft, bribery, fraud, coercion, electronic intrusion, or any other illicit
means; (ii) disclosing, using or permitting others to use the trade secrets obtained illegally
under item above; (iii) disclosing, using or permitting others to use the trade secrets, in
violation of any contractual agreements or any requirements of the legal owners or holders to
keep such trade secrets in confidence; or (iv) instigate, induce or assist others to violate
confidentiality obligation or to violate a rights holder’s requirements on keeping
confidentiality of commercial secrets, so as to disclose, use or allow others to use the
commercial secrets of the rights holder. If a third party knows or should have known of the
above–mentioned illegal conduct but nevertheless obtains, uses or discloses trade secrets of
others, the third party may be deemed to have committed a misappropriation of the others’ trade
secrets. The parties whose trade secrets are being misappropriated may petition for
administrative corrections, and regulatory authorities may stop any illegal activities and fine
infringing parties.
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LA WS AND REGULATIONS ON OVERSEAS LISTING
On July 6, 2021, the Opinions on Lawfully and Strictly Cracking Down Illegal Securities
Activities (จԈ) was promulgated, among which, it
emphasizes the need to strengthen the administration over illegal securities activities and the
supervision on overseas listings by China–based companies, and proposed to take effective
measures, such as promoting the construction of relevant regulatory systems to deal with the
risks and incidents faced by China–based overseas–listed companies, and provided that the
special provisions of the State Council on overseas offering and listing by those companies
limited by shares will be revised and therefore the duties of domestic industry competent
authorities and regulatory authorities will be clarified.
The CSRC promulgated the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊Б፬
) (the “Overseas Listing Trial Measures”) and five relevant guidelines on February 17,
2023, which took effect on March 31, 2023. The Overseas Listing Trial Measures
comprehensively reformed the regulatory regime for overseas offering and listing of PRC
domestic companies’ securities, either directly or indirectly, into a filing–based system.
According to the Overseas Listing Trial Measures, the 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 listing or offering is explicitly prohibited, if
any of the following applies: (i) such securities offering or listing is explicitly prohibited by
provisions in PRC laws, administrative regulations or relevant state rules; (ii) the proposed
securities offering or listing may endanger national security as reviewed and determined by
competent authorities under the State Council in accordance with laws; (iii) the domestic
company intending to be listed or offer securities in overseas markets, or its controlling
shareholder(s) and the actual controller, have committed crimes such as corruption, bribery,
embezzlement, misappropriation of property or undermining the order of the socialist market
economy during the latest three years; (iv) the domestic company intending to be listed or offer
securities in overseas markets is currently under investigations for suspicion of criminal
offenses or major violations of laws and regulations, and no conclusion has yet been made
thereof; or (v) 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, filing application with the CSRC shall be submitted within three business days
thereafter. Subsequent securities offering of an issuer in the same overseas market where it has
previously offered and listed securities shall be filed with the CSRC within three business days
after the offering is completed. Subsequent securities offering and listing of an issuer in other
overseas markets shall be filed as initial public offering.
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Moreover, upon the occurrence of any of the material events specified below after an
issuer has offered and listed securities in an overseas market, the issuer shall submit a report
thereof to CSRC within three working days after the occurrence and public disclosure of the
event: (i) change of control; (ii) investigations or sanctions imposed by overseas securities
regulatory agencies or other relevant competent authorities; (iii) change of listing status or
transfer of listing segment; (iv) 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 3
working days after occurrence of the changes.
On February 24, 2023, the CSRC and other relevant government authorities promulgated
the Provisions on Strengthening the Confidentiality and Archives Administration of Overseas
Securities Issuance and Listing by Domestic Enterprises (̋੶ྤʫΆุྤ̮೯БᗇՎձ
) (the “Provision on Confidentiality”), which took
effect on March 31, 2023. Pursuant to the Provision on Confidentiality, where a domestic
enterprise provides or publicly discloses to the relevant securities companies, securities service
institutions, overseas regulatory authorities and other entities and individuals, or provides or
publicly discloses through its overseas listing subjects, documents and materials involving
state secrets and working secrets of state organs, it shall report the same to the competent
department with the examination and approval authority for approval in accordance with the
law, and submit the same to the secrecy administration department of the same level for filing.
Domestic enterprises providing accounting archives or copies thereof to entities and
individuals concerned such as securities companies, securities service institutions and overseas
regulatory authorities shall perform the corresponding procedures pursuant to the relevant
provisions of the state.
LA WS AND REGULATIONS ON RECOGNITION AND ENFORCEMENT OF
JUDGEMENTS
On January 29, 2024, the Arrangements for Reciprocal Recognition and Enforcement of
Judgments in Civil and Commercial Cases between Courts of the Mainland and Hong Kong
Special Administrative Region (ࣩ
τર) (the “New Arrangement”), issued by the Supreme People’s Court of the PRC,
came into effect. The New Arrangement will broaden the scope of judgments that may be
enforced between China and Hong Kong under the Arrangement. Whereas a choice of
jurisdiction needs to be agreed in writing in the form of an agreement between the parties for
the selected jurisdiction to have exclusive jurisdiction over a matter under the Arrangement, the
New Arrangement provides that the court where the judgment was sought could apply
jurisdiction in accordance with the certain rules without the parties’ agreement.
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U.S. EXPORT CONTROL LA WS AND REGULATIONS
The United States maintains a system of export controls restrictions through the Export
Administration Regulations (the “EAR”), which are administered by the Bureau of Industry
and Security of the U.S. Department of Commerce (the “BIS”). The restrictions imposed under
the EAR purport to apply globally, and their application varies depending on various factors,
including the nature of the item being exported, re-exported or transferred, the countries and
entities involved, and the intended end-uses of the regulated item.
Items that are subject to U.S. export controls under the EAR include:
 All items in the United States;
 All U.S.-origin items, wherever located;
 Each of:
(i) Non-U.S.-made commodities that incorporate controlled U.S.-origin
commodities or are “bundled” with controlled U.S.-origin software above de
minimis thresholds;
(ii) Non-U.S.-made software that incorporates controlled U.S.-origin software
above de minimis thresholds; or
(iii) Non-U.S.-made technology that is commingled with controlled U.S.-origin
technology above de minimis thresholds;
This is referred to as the EAR’s “ de minimis rule”; and
 Certain non-U.S. produced products that are “direct products” of specified
technology or software or are produced by plants or major plant components that are
themselves direct products of specified technology or software (collectively, the
EAR’s foreign direct product rules, or “FDPR”).
In October 2022, BIS issued an interim final rule (the “BIS October 2022 IFR”) aimed at
restricting China’s ability to obtain advanced computing integrated circuits, develop and
maintain supercomputers, and manufacture advanced semiconductors. In October 2023, BIS
issued another interim final rule (the “BIS October 2023 IFR”) that updated and expanded U.S.
export controls imposed by the BIS October 2022 IFR (the BIS October 2022 IFR and the BIS
October 2023 IFR collectively, and together with the BIS’s April 2024 interim final rule
making technical corrections and clarifications to the BIS October 2023 IFR, the “BIS 2022/23
IFRs”). Among other measures, the BIS 2022/23 IFRs add to the Commerce Control List
(which is a list of commodities, software, and technologies that are subject to the EAR’s more
restrictive controls) certain advanced and high-performance computing integrated circuits and
computer commodities that contain these integrated circuits, and impose new or expanded
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license requirements for items subject to the EAR destined for end-use in the development or
production of supercomputers, certain types of advanced node integrated circuits and
advanced, or semiconductor manufacturing equipment in, certain jurisdictions, including
China.
In addition to the restrictions introduced by the BIS 2022/23 IFRs, BIS maintains lists of
persons that are subject to enhanced export control restrictions. One such list, the Entity List,
includes a list of foreign persons on which certain trade restrictions are imposed, including
business, research institutions, government and private organizations, individuals and other
types of legal persons. The United States in recent years has placed an increasing number of
entities, including a number of entities in China, on the Entity List and other restricted or
prohibited parties lists. Given the sudden and unpredictable nature of these determinations, it
is difficult to predict developments in this area and we have no ability to influence such
determinations.
As of the Latest Practicable Date, the restrictions imposed by the EAR, including the BIS
2022/23 IFRs, have not negatively impacted our operations or financial performance.
Furthermore, for the reasons outlined in the paragraph below (but subject to the factors
referenced therein), as of the Latest Practicable Date, our Directors are of the view that the
restrictions imposed by the EAR have not and are not expected to impact our business activities
or expansions plans.
We have evaluated the application of the EAR to our operations, with support from U.S.
export control counsel. We understand, after consultations with U.S. export control counsel and
taking into account their view, that because the semiconductors incorporated into our solutions
are not produced in or exported from the United States, these semiconductor items would not
be subject to U.S. export controls under the EAR when being exported, reexported, or
transferred entirely outside the United States, except in limited circumstances that could trigger
the EAR’s de minimis rule or an FDPR:
 EAR’s de minimis rule: As outlined in more detail above, under the de minimis rule,
the EAR can apply to non-U.S.-made items that incorporate, are bundled with, or
comingled with certain controlled U.S.-origin items above certain de minimis
thresholds.
 FDPR: Under the FDPR, the EAR can apply to certain non-U.S. origin items that are
the “direct product” of certain specified technology or software or produced by
plants or major components of plants that are direct products of these specified
technology or software.
The semiconductors incorporated into our solutions may fall within certain aspects of
both the de minimis rule and the FDPR, but the resulting EAR restrictions potentially apply
only if our solutions are being sold to Russia, Belarus, or the U.S.-sanctioned jurisdictions of
Cuba, Iran, North Korea, Syria, and the Russian-occupied Crimea, Donetsk, and Luhansk
regions of Ukraine or for certain prohibited end uses (such as supercomputing) or certain
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prohibited end users. Because we do not sell our solutions incorporating our semiconductors
to any of these countries or territories or to or for these prohibited end uses or end users, the
EAR, including the BIS 2022/23 IFRs, have not negatively impacted our operations or
financial performance as of the Latest Practicable Date.
As part of our management of the risks associated with our EAR compliance —
specifically, the potential application of the EAR’s de minimis rule to these non-U.S. produced
semiconductors — we consider these rules in the design, manufacture, procurement and sales
of these items to try to ensure that more restrictive application of the EAR’s de minimis rule
or the FDPR will not be applicable to any export, reexport, or transfer (in-country) of our
solutions incorporating such semiconductors. However, because sanctions and export controls
laws and regulations continue to expand and evolve, future sanctions and export controls may
materially and adversely affect or target some of our significant suppliers or customers, raw
materials or key components or technologies necessary for our operations, including the
semiconductors incorporated in our solutions. If any of these risks were to materialize, our
business could be adversely affected if we fail to promptly secure alternative sources of supply
on terms acceptable to us. See “Risk Factors — Risks related to our business and industry —
We are subject to the risks associated with sanctions and export controls laws and regulations,
international trade policies, and developing domestic and foreign laws and regulations on smart
vehicles and related technologies, and our business, financial condition and results of
operations could be adversely affected” for further details.
Based on the reasons set forth above and the due diligence conducted by the Joint
Sponsors, nothing has come to the attention of the Joint Sponsors that would reasonably cause
the Joint Sponsors to disagree with the Directors’ view as set out above in any material
respects.
The U.S. government has recently increased regulatory scrutiny on Chinese technology in
the U.S. automotive sector, citing national security and economic concerns. For example, on
February 29, 2024, the U.S. Department of Commerce commenced a study on the risks that
“connected vehicles” could pose to the United States and on March 1, 2024 published an
advance notice proposed rulemaking (“ANPRM”) that requested comments on issues related to
inputs (including software and hardware) from certain countries, including China, to the U.S.
information and communications technology and services supply chain for connected vehicles
in the United States. Further to the ANPRM, on September 26, 2024, BIS published a proposed
rule that would prohibit the importation into the United States of certain hardware related to
vehicle connectivity systems (“VCS”) from the People’s Republic of China or Russia. The
proposed rule would also prohibit the importation into or sale within the United States of
completed connected vehicles that incorporate certain software related to VCS or automated
driving systems and would prohibit manufacturers that are owned by, controlled by, or subject
to the jurisdiction of China or Russia from selling in the United States completed connected
vehicles that contain such VCS hardware or covered software. The prohibitions on VCS
hardware and covered software would apply if such hardware or software is designed,
developed, manufactured, or supplied by persons owned by, controlled by, or subject to the
jurisdiction of China or Russia. The prohibitions would take effect in stages beginning with
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vehicles that are model year 2027, and be implemented completely for vehicle model year
2030. Comments on the proposed rules are due on October 28, 2024, and a final rule is
expected to be published after the consideration of those comments. We do not sell our
products to customers in the United States or to customers who incorporate them into products
for sale to the United States and have no intention to do so.
Given that we did not export our product solutions or sell to customers who integrate
these products into vehicles for sale in the United States during the Track Record Period, our
Directors are of the view that the impact of the proposed rules prohibiting the importation of
certain vehicles into the U.S. is minimal on our operations.
TARIFF
On May 14, 2024, the Office of the United State Trade Representative announced a plan
to raise the tariff rate applicable to U.S. imports of electric vehicles from China from 25% to
100%, and these higher tariff rates on electric vehicle imports is expected to become effective
in 2024. Separately, from August 21, 2024, the European Commission imposed higher tariffs
on imports of electric vehicles made in China. These new tariffs, which will apply across the
European Union, range from 17.0% to 36.3%, depending on the OEM that produced the
vehicle. These new tariffs are applicable to electric vehicles, not the ADAS and AD solutions
that we sell; accordingly, these new U.S. and EU tariffs are not applicable to our sales.
However, these tariffs may adversely impact the sales of some of our OEM customers in
Europe and deter our customers from pursuing sales in the United States, and if their
production is reduced due to decreased demand from these markets, they may reduce their
purchases of our solutions. Revenue from overseas contributed 2.6%, 1.6%, 1.3% and 0.6% of
our total revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2024,
respectively. As to the knowledge of the Company, none of our OEM customers exported
passenger vehicles with our solutions to the U.S. or the EU during the Track Record Period and
up to the Latest Practicable Date. As of the Latest Practicable Date, we have no plans to expand
into the U.S. market. We intend to enhance our international presence through partnering with
global OEMs and tier-one suppliers to explore global markets, particularly in Japan, South
Korea and Europe. Currently, EU tariffs primarily affect vehicles manufactured in China by
Chinese OEMs and subsequently exported to the EU. We are exploring business collaboration
opportunities with global OEMs and tier-one suppliers, and if we successfully enter the supply
chain of OEMs in Europe who manufacture their products in the EU, we expect the impact of
EU tariffs to be limited. Additionally, our Chinese OEM clients may choose to manufacture
vehicles locally in the EU, which we believe would also mitigate the negative impact of EU
tariffs on our business, if our Chinese OEMs customers export the passenger vehicles equipped
with our solutions to Europe going forward. As of the Latest Practicable Date, considering that:
(i) none of our OEM customers export vehicles for sale in the United States and only a small
number of them with European sales are affected by the new EU tariffs, (ii) according to CIC,
the sales volume of the affected OEM customers in Europe is relatively limited compared to
their total sales and none of our OEM customers have sales in the United States, and (iii) OEM
customers’ purchases of our solutions are generally based on their overall demand rather than
that for any specific market, our Directors are of the view that these new U.S. and EU tariffs
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have not had a material adverse impact on us, and based on currently available information, are
unlikely to have a material adverse effect on our future business activities and expansion plans.
Based on the reasons set forth above, nothing has come to the attention of the Joint Sponsors
that would reasonably cause the Joint Sponsors to disagree with the Directors’ view as set out
above in any material respects.
As of the Latest Practicable Date, the U.S. tariff rates on passenger vehicles imported
from China (excluding electric vehicles) are the standard 2.5%, which is the general dutiable
rate applied to non-U.S. manufactured vehicles. While the U.S. tariff rates on China imported
electric vehicles is expected to raise from the current 25% to 100% in 2024. As of the Latest
Practicable Date, EU tariff rates on passenger vehicles imported from China are 10%,
regardless of the specific vehicle type. The 10% rate is the standard import tariff the EU applies
to imported automobiles. The new EU tariffs on imports of electric vehicles made in China
from July 2024 are imposed in addition to such 10% standard tariff applied to imported
vehicles.
SANCTIONS LA WS AND REGULATIONS
Certain foreign jurisdictions, in particular the United States, the European Union and the
United Kingdom, impose economic sanctions against countries and specific entities and
individuals as part of their national security policies. These economic sanctions include those
implemented by the U.S. Department of the Treasury’s Office of Foreign Assets Control, or
OFAC sanctions. In particular, in response to Russia’s conflict with Ukraine, these jurisdictions
have imposed far-reaching sanctions and export controls restrictions on Russia, many Russian
entities and individuals, and entities in other countries that do business with Russia. As a result
of these sanctions, sales to Russia, other business in Russia, and business with sanctioned
entities or individuals are subject to heighted regulatory risks. These measures, as well as other
economic and trade sanctions measures maintained by the United States, the European Union,
and other jurisdictions, may prohibit or restrict our ability to conduct activities or dealings in
or with certain targeted countries and territories or involving certain targeted persons, or
otherwise affect our business. Although we take steps to comply with applicable laws and
regulations, any failure by us to comply with applicable sanctions or export controls rules may
expose us to negative legal, business and reputational consequences (including civil or criminal
penalties), the loss of access to controlled technologies, and government investigations. Given
that our current and planned sales do not involve sanctioned territories or entities and we
maintain sanctions compliance policies and procedures, our Directors are of the view that
current economic sanctions have not had a material adverse impact on our Company and are
not expect to have a material adverse effect on our future business and expansion plans. Based
on the reasons set forth above and the due diligence conducted by the Joint Sponsors, nothing
has come to the attention of the Joint Sponsors that would reasonably cause the Joint Sponsors
to disagree with the Directors’ view as set out above in any material respects. However, the
United States, the European Union, the United Kingdom or other jurisdictions could implement
sanctions that restrict certain of our operations and adversely affect our business, results of
operations, and financial condition, and these measures could materially and adversely affect
our business and prospects.
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OVERVIEW
Tracing back to 2015, our Group was founded by Dr. Yu, Dr. Huang and Ms. Tao together
with a group of scientists and entrepreneurs. Since our establishment, we have successfully
launched and delivered solutions providing the core technologies for assisted and autonomous
driving to a large, global customer base of industry-leading OEMs and tier-one suppliers for
vehicles manufactured in China. Over the years and along with several rounds of Pre-IPO
Investments since 2015, we have also formed strategic partnerships with global industry giants,
which further reinforced our position in the industry. After nearly a decade of development, we
have become a leading provider of ADAS and AD solutions for passenger vehicles, empowered
by our proprietary software and hardware technologies.
Milestones
The following is a summary of our key business development milestones since the
incorporation of our Company:
Time Milestone
2015 Our Company was incorporated in the Cayman Islands on July 21, 2015.
2016 We launched the first-generation BPU (Brain Processing Unit).
2017 We launched the first-generation processing hardware – Journey.
2020 We launched the initial mass production of Horizon Mono with Journey
2 in the car model of a renowned automotive company.
2021 We launched the initial mass production of Horizon Mono with Journey
3 in Li Auto’s Li ONE.
The delivery of processing hardware reached 1 million.
2022 We launched the initial mass production of Horizon Pilot with Journey 3
in Roewe RX5.
We launched the initial mass production of Horizon Pilot with Journey 5
in Li Auto’s Li L8 Pro.
2023 The delivery of processing hardware reached 4 million.
We established our strategic cooperation with an affiliate of V olkswagen
Group through CARIZON.
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Time Milestone
We initiated collaboration with top OEMs on intent for mass-production
of ADAS and AD solutions with Journey 6 at Guangzhou International
Automobile Exhibition.
2024 The delivery of processing hardware reached 5 million.
OUR MAJOR SUBSIDIARIES
Set forth below are details for each of our major subsidiaries which made a material
contribution to our results of operations during the Track Record Period. All of them were
wholly-owned by our Company as of the Latest Practicable Date.
Name of Subsidiary Date of Establishment Principal Business
Horizon Shenzhen July 2, 2015 Sales of software products
and provision of related
services
Beijing Horizon Robotics July 14, 2015 Sales of software products
and provision of related
services
Horizon Hong Kong August 6, 2015 Investment holding company
Horizon Information December 28, 2015 Development of software
products and provision of
related services
Horizon Anting March 24, 2017 Development of software
products and provision of
related services
Horizon Technology March 30, 2017 Development of software
products and provision of
related services
Horizon Shanghai March 26, 2018 Research and development
For shareholding changes of our major subsidiaries with respect to the Reorganization and
during the two years immediately preceding the date of this Prospectus, please refer to “—
Reorganization” in this section and “Statutory and General Information — A. Further
Information about Our Group — 3. Changes in the Share Capital of Our Subsidiaries” in
Appendix IV to this Prospectus, respectively. Save as disclosed above and several increases of
share capital in Horizon Shenzhen, Horizon Technology and Horizon Shanghai by our
Company, there were no shareholding changes in our major subsidiaries during the Track
Record Period and up to the Latest Practicable Date.
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OUR MAJOR JOINT VENTURE
On November 20, 2023, CARIZON was established in the PRC with limited liability as
one of our joint ventures. CARIZON is primarily engaged in the business of research and
development, manufacture of autonomous driving application software and self-driving
systems, and it also provides aftersales services, training, consulting, testing and technical
services of its products. For details, please refer to the section headed “Business — Our
Partnership with V olkswagen Group — CARIZON — Our Joint Venture with V olkswagen
Group” below.
MAJOR SHAREHOLDING CHANGES OF OUR COMPANY
Our Company was incorporated as an exempted company with limited liability in the
Cayman Islands on July 21, 2015, with an authorized share capital of US$50,000.00 divided
into 500,000,000 Shares with a par value of US$0.0001 each.
We adopted the WVR structure in October 2015 with each Class A Ordinary Share
entitling the holder to exercise ten votes and each Class B Ordinary Share and Preferred Shares
entitling the holder to exercise one vote on any resolutions tabled at our Company’s general
meetings. Dr. Yu held 59,400,000 Class A Ordinary Shares through his then controlled entity,
10,100,000 and 3,375,000 Class A Ordinary Shares of which were subsequently transferred to
the controlled entities of Dr. Huang and Ms. Tao, respectively, in early 2016. Upon completion
of the aforesaid share transfers, Dr. Yu, Dr. Huang and Ms. Tao were beneficially interested in
the share capital of the Company as to approximately 50.19%, 11.04% and 3.69%, respectively,
representing the voting rights of the Company as to 65.70%, 14.45% and 4.83% on matters
subject to the vote at general meetings of the Company, respectively.
After a series of share transfers, subdivisions, repurchases and reclassification, as of
January 1, 2021, our authorized share capital was US$50,000.00 divided into 20,000,000,000
Shares with a par value of US$0.0000025 each. Dr. Yu, Dr. Huang and Ms. Tao were
beneficially interested in the share capital of the Company as to approximately 22.78%, 4.97%
and 1.65%, respectively, representing the voting rights of the Company as to approximately
62.25%, 13.58% and 4.51% on matters subject to the vote at general meetings of the Company,
respectively.
Through their then controlled entities and during the Track Record Period, Dr. Yu
transferred 40,000,000 Class A Ordinary Shares to Ms. Tao in 2021 and Dr. Yu, Dr. Huang and
Ms. Tao also transferred a total of 38,442,999, 4,492,151 and 1,715,013 Class B Ordinary
Shares, respectively, to our Pre-IPO Investors. As of the Latest Practicable Date, Dr. Yu, Dr.
Huang and Ms. Tao were beneficially interested in the share capital of the Company as to
14.85%, 3.35% and 1.45%, respectively, representing the voting rights of the Company as to
53.46%, 12.05% and 5.23% on matters subject to the vote at general meetings of the Company,
respectively.
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For estate planning purpose, in March 2024, all the Shares controlled by Dr. Yu, Dr.
Huang and Ms. Tao were transferred to Everest Robotics Limited, String Theory Robotics
Limited and HOPE Robotics Holdings Inc., respectively, all being shareholding vehicles under
the family trusts of Dr. Yu, Dr. Huang and Ms. Tao. For details, see note 1 to note 3 in “—
Capitalization” in this section.
Starting from September 2015, we conducted several rounds of pre-IPO financing and all
share transfers among Pre-IPO Investors were completed on May 10, 2024. For details, please
refer to “— Pre-IPO Investments” in this section. In addition, please see “Statutory and
General Information — A. Further Information about our Group — 2. Changes in the Share
Capital of our Company” in Appendix IV to this Prospectus for details of changes in the share
capital of our Company during the two years immediately preceding the date of this Prospectus.
On October 8, 2024, our Shareholders resolved that, among others, subject to the Global
Offering becoming unconditional and other than Class A Ordinary Shares held by the
controlled entities of Dr. Yu and Dr. Huang, all of the other Class A Ordinary Shares and all
of the Preferred Shares are reclassified and re-designated as Class B Ordinary Shares. Each
Class A Ordinary Shares entitles the holder to exercise ten votes, and each Class B Ordinary
Share entitles the holder to exercise one vote, respectively, on any matters subject to the vote
at general meetings of the Company, subject to Rule 8A.24 of the Listing Rules that requires
the Reserved Matters to be voted on a one vote per share basis. For details, please see
“Statutory and General Information — A. Further Information about our Group — 4.
Resolutions of our Shareholders” in Appendix IV to this Prospectus.
REORGANIZATION
Considering our offshore corporate structure established in 2015, Beijing Horizon
Robotics, Horizon Shanghai, Nanjing Qingdihui and Nanjing Development were controlled by
the Company through contractual arrangements before we commenced the Reorganization in
January 2021 to allow for more flexibility in potential business expansion, including such
business with PRC restrictions on foreign ownership. The following diagram illustrates our
shareholding structure before the Reorganization:
Horizon Hong Kong
(Hong Kong)
Horizon Technology
Beijing Horizon Robotics(1)Nanjing Qingdihui(4)Nanjing Development(3)
Company
(Cayman Islands)
100%
100% 100%
Offshore
Onshore
Other subsidiariesHorizon Information
Horizon Shanghai(2)
denotes legal and beneficial ownership
denotes contractual arrangements for
subsidiaries with substantive operation
100%
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Notes:
(1) Beijing Horizon Robotics was controlled by Horizon Information through contractual arrangements
under which Beijing Horizon Robotics was held as to approximately 80.55% by Dr. Yu, approximately
14.25% by Dr. Huang, approximately 4.99% by Ms. Tao and approximately 0.21% by Mr. Ming Yang,
all of whom were registered shareholders of Horizon Information in Beijing Horizon Robotics. Mr. Ming
Yang is our former employee and an Independent Third Party.
(2) Horizon Shanghai was controlled by Horizon Information through contractual arrangements under
which Horizon Shanghai was held as to 50% by Dr. Yu, 45% by Dr. Huang and 5% by Beijing Horizon
Robotics, all of which were registered shareholders of Horizon Information in Horizon Shanghai.
(3) Nanjing Development was controlled by Horizon Technology through contractual arrangements under
which Nanjing Development was held as to approximately 61.11% by Nanjing Qingdihui, approximately
22.22% by Nanjing Xingang Industrial Innovation Research Institution Co., Ltd. (޼
ʮ̡, “Nanjing Xingang”) and approximately 16.67% by Horizon Nanjing. Nanjing Qingdihui,
one of our then consolidated affiliated entities, and Horizon Nanjing, one of our subsidiaries, are
registered shareholders of Horizon Technology in Nanjing Development while Nanjing Xingang was the
beneficial owner of its shares in Nanjing Development.
(4) Nanjing Qingdihui was controlled by Horizon Technology through contractual arrangements under
which Nanjing Qingdihui was held as to approximately 24.19% by Dr. Yu, approximately 24.18% by Ms.
Tao, approximately 24.18% by Dr. Jing Lu ( ጅ౺), an Independent Third Party, approximately 24.17%
by Dr. Huang and approximately 3.28% by Dr. Bo Zhang ( ੵཌྷ), an Independent Third Party. Dr. Yu,
Ms. Tao and Dr. Jing Lu were registered shareholders of Horizon Technology in Nanjing Development
while Dr. Bo Zhang was the beneficial owner of his shares in Nanjing Qingdihui.
Having evaluated the Group’s latest business plan, particularly on restricted business, and
considered the benefits of the direct equity ownership under applicable laws and regulations in
preparation of a listing in Hong Kong, we conducted the following major steps for the
Reorganization during the Track Record Period:
Beijing Horizon Robotics
In December 2021, Ms. Tao and Mr. Ming Yang ( เთ) transferred all of their equity
interests in Beijing Horizon Robotics to Bright Sapphire Limited, an Independent Third Party,
at a consideration of RMB1.05 million and RMB45,000, respectively, based on the then
paid-up registered capital of Beijing Horizon Robotics, which were fully paid up in February
2022. After the completion of the aforementioned share transfers, Beijing Horizon Robotics
was held by Dr. Yu, Dr. Huang and Bright Sapphire Limited as to approximately 80.55%,
14.25% and 5.20%, respectively.
In January 2022, Dr. Yu, Dr. Huang and Bright Sapphire Limited transferred all of their
equity interests in Beijing Horizon Robotics to Horizon Information based on the then paid-up
registered capital of Beijing Horizon Robotics, which were fully paid up in February 2022.
After the completion of the aforementioned share transfers, Beijing Horizon Robotics was
wholly-owned by Horizon Information and the contractual arrangements among Beijing
Horizon Robotics, its registered shareholders before the Reorganization and Horizon
Information, were terminated in January 2022.
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Horizon Shanghai
In March 2021, Dr. Yu and Ms. Tao transferred all of their equity interests in Horizon
Shanghai to Beijing Horizon Robotics, at a consideration of RMB40 million and RMB36
million, respectively, based on the then paid-up registered capital of Horizon Shanghai, which
were fully paid up. After the completion of the aforementioned share transfers, Horizon
Shanghai was wholly-owned by Beijing Horizon Robotics and the contractual arrangements
among Horizon Shanghai, its registered shareholders before the Reorganization and Horizon
Information, were terminated in April 2021.
Nanjing Development
In May 2021, Horizon Technology, Nanjing Development and Horizon Nanjing entered
into the termination agreement with respect to their contractual arrangements. After the
termination, Nanjing Development was held as to approximately 61.11% by Nanjing
Qingdihui, approximately 22.22% by Nanjing Xingang and approximately 16.67% by Nanjing
Robotics.
Nanjing Qingdihui
In January 2021, Dr. Yu, Dr. Huang, Ms. Tao, and Dr. Jing Lu ( ጅ౺), an Independent
Third Party, transferred all of their equity interests in Nanjing Qingdihui to Beijing Horizon
Robotics, at a consideration of RMB3.9907 million, RMB3.9887 million, RMB3.9897 million
and RMB3.9897 million, respectively, based on the then paid-up registered capital of Nanjing
Qingdihui, which were fully paid up in February 2021. After the completion of the
aforementioned share transfers, Nanjing Qingdihui was owned by Beijing Horizon Robotics as
to 96.72% and Dr. Bo Zhang ( ੵཌྷ), an Independent Third Party, as to 3.28%, and the
contractual arrangements among Nanjing Qingdihui, its registered shareholders before the
Reorganization and Beijing Horizon Robotics, were terminated in May 2021.
After completion of above equity transfers and termination of relevant contractual
arrangements, equity interests of our Company in Beijing Horizon Robotics, Horizon
Shanghai, Nanjing Development and Nanjing Qingdihui were indirectly held by our Company.
Our PRC Legal Adviser has confirmed that all the equity transfers of our PRC subsidiaries
as described above have been legally completed, and our Group has obtained all necessary
regulatory approvals and permits and completed all necessary filings in respect of such
transfers that our Group had to obtain from PRC regulatory authorities.
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ACQUISITION, MERGER AND DISPOSAL
Throughout the Track Record Period and up to the Latest Practicable Date, we did not
conduct any material acquisitions, mergers or disposals.
THE 2018 SHARE INCENTIVE PLAN
To attract, retain and incentivize selected employees, directors, and consultants of the
Company and to further promote the success of the Company’s business, we adopted the 2018
Share Incentive Plan. As of the date of this Prospectus, awards (including vested and unvested
options and share awards) representing an aggregate of 1,444,950,216 Class B Ordinary Shares
were granted. All Class B Ordinary Shares granted under the 2018 Share Incentive Plan have
been issued to our employee shareholding platforms, namely Pirates Gold Holding Limited,
Pirates Silver Holding Limited and Pirates Bronze Holding Limited. Pirates Gold Holding
Limited is held by The Pirates Trust with Trident Trust Company (HK) Limited, an independent
professional trust company, as its trustee and the Company as its settlor. Beneficiaries of The
Pirates Trust include certain Directors. Pirates Silver Holding Limited and Pirates Bronze
Holding Limited are held by Pirates X Trust with GIL Trust Limited, an independent
professional trust company, as its trustee and the Company as its settlor. All beneficiaries of
Pirates X Trust are our employees who are Independent Third Parties. No awards will be
granted upon and after Listing. For details, please see “Statutory and General Information —
D. Share Incentive Plans — 1. 2018 Share Incentive Plan” in Appendix IV to this Prospectus.
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PRE-IPO INVESTMENTS
Overview
We have received several rounds of Pre-IPO Investments since our incorporation, which are summarized as below.
Round
Date of initial share
purchase agreement
Date of the last
payment of
considerations
Total number of
Shares issued
Cost per
Share (1) Total funds raised
Approximate post-
money valuation
Discount to the
Offer Price (2)
1. Series Seed-1 September 18, 2015 November 7, 2015 820,000,000 US$0.01530625 US$12,551,125 US$60,000,000 96.92%
2. Series Seed-2 September 18, 2015 October 27, 2015 80,000,000 US$0.030000 US$2,400,000 US$121,212,121 93.96%
3. Series A May 17, 2016 June 15, 2016 614,300,320 US$0.06397875 US$39,493,750 US$297,993,750 87.13%
4. Series A1 September 7, 2017 December 4, 2020 547,100,600 US$0.0917825 US$50,214,253 US$500,214,253 81.53%
5. Series A3 November 28, 2017 October 31, 2018 404,327,650 US$0.10092 US$40,804,747 US$590,804,747 79.69%
6. Series A5 December 18, 2017 December 19, 2017 97,570,490 US$0.10249 US$10,000,000 US$610,000,000 79.38%
7. Series B1 July 30, 2018 September 11, 2020 1,244,898,062 US$0.25202 US$313,739,202 US$1,813,739,202 49.29%
8. Series B2 September 17, 2018 May 11, 2020 247,532,056 US$0.30243 US$74,861,112 US$2,188,600,314 39.15%
9. Series B3 November 30, 2018 May 11, 2020 105,904,158 US$0.3777 US$40,000,000 US$2,840,000,000 24.00%
10. Series C October 29, 2020 July 25, 2022 3,353,574,611 US$0.4677 US$1,568,459,999 US$5,068,459,999 5.89%
11. Series D November 17, 2022 December 28, 2023 283,197,279 US$0.7415 US$210,000,000 US$8,710,000,000 —
Notes:
(1) As adjusted to reflect subsequent share subdivisions.
(2) The discount to the Offer Price is calculated based on the assumption that the Offer Price is HK$3.86 per Share, being the mid-point of the indicativ e Offer Price range and
the exchange rates as disclosed in the section headed “Information about this Prospectus and the Global Offering — Exchange Rate Conversion”.
(3) From 2016 to 2020, 307,121,360 Class B Ordinary Shares were issued to our Pre-IPO Investors at considerations as agreed between the Company and the relevant Pre-IPO
Investors based on arms’ length negotiations. As of the Latest Practicable Date, 263,717,320 Class B Ordinary Shares were repurchased by the Company . The series A2 preferred
shares, series A4 preferred shares and series B4 preferred shares were issued to the relevant Pre-IPO Investors between 2017 and 2018 pursuant to the r elevant investment
agreements, which were converted to series A1 preferred shares, series A3 preferred shares and series B3 preferred shares, respectively, before the Track Record Period.
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Principal Terms of the Pre-IPO Investments
Total amount of
consideration from the
Pre-IPO Investments:
US$2,362,524,188
Basis of determining the
consideration paid:
The consideration for the Pre-IPO Investments were determined
based on arms’ length negotiations between our Company and
the Pre-IPO Investors after taking into consideration the timing
of the investments and the status of our business.
Use of proceeds from the
Pre-IPO Investments:
All of the proceeds from the Pre-IPO Investments were utilized
for the development and operation of our business. As of the
Latest Practicable Date, approximately 75% of the funds raised
from the Pre-IPO Investments had been utilized.
Lock-up requirement: Sophisticated investors (including 5Y Capital and Hillhouse)
(which satisfy the criteria in Chapter 2.2 of the Guide for New
Listing Applicants) are expected to retain at least an aggregate
of 50% of their investment at the time of Listing for a period of
at least six months following the Listing, in accordance with
paragraph 6 under Chapter 2.2 of the Guide for New Listing
Applicants.
The WVR Beneficiaries and certain of our Pre-IPO Investors, in
aggregate holding a total of approximately 22% in the issued
share capital of the Company as of the date of this Prospectus,
have undertaken to our Company to retain all of their beneficial
interests in the Company for at least 12 months following the
Listing, subject to certain customary conditions.
For details of lock-up arrangements in respect of all of our
Pre-IPO Investors, please refer to the subsection headed
“Underwriting — Lock-up Arrangements — Undertakings by all
of our Shareholders as of the date of this Prospectus pursuant to
Lock-up Undertakings”.
Strategic benefits of the
Pre-IPO Investors
brought to our
Company:
At the time of the Pre-IPO Investments, our Directors were of
the view that our Company would benefit from the additional
capital provided by the Pre-IPO Investors’ investments in our
Company and their industry experience.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Special Rights of Pre-IPO Investors
The Pre-IPO Investors have been granted certain special rights in relation to our
Company, including but not limited to redemption rights, information rights, registration
rights, rights of first refusal and director appointment rights. The redemption rights have been
suspended immediately prior to the first filing of the listing application and all other special
rights will be terminated upon Listing.
Convertible Loan
Pursuant to a convertible loan agreement dated November 17, 2022, CARIAD Estonia AS
(“CARIAD”) as lender agreed to provide the loan in the amount of US$800,000,000 to the
Company. On October 11, 2024, an amendment agreement (together with the original
convertible loan agreement, the “Convertible Loan Agreement”) was entered into between the
Company and CARIAD to amend the arrangement with respect to the conversion mechanism
of the convertible loan (among others). Terms in the amendment agreement superseded the
convertible loan agreement dated November 17, 2022.
Based on the indicative Offer Price range, a summary of the principal terms and
conditions of the Convertible Loan Agreement are set out below:
Date of
agreement:
November 17, 2022 and October 11, 2024
Principal amount: US$924,855,491.33
Amount of
consideration
paid:
US$800,000,000
Basis of
consideration:
The consideration represents 86.5% of the principal amount, which was
determined based on arms’ length negotiations between the Company and
CARIAD.
Payment date of
consideration:
December 7, 2023
Issuance date: December 7, 2023
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Interest and
interest
payment date:
The interest shall accrue on the outstanding principal amount which shall
be calculated on and from December 7, 2023 at a annual rate of interest
equal to (i) 2.67% per annum for the period starting on December 7, 2023
and ending on December 7, 2025, and (ii) 5.67% per annum for the period
starting on December 7, 2025 and ending on the date of conversion or
repayment (as applicable) of the loan in accordance with the Convertible
Loan Agreement.
Interest shall accrue and be computed daily on the basis of a year of 365
days for the actual number of days elapsed from and including December
7, 2023 to the maturity date.
The interest shall become due on the maturity date.
Maturity date: December 7, 2026, unless extended pursuant to the terms and conditions of
the Convertible Loan Agreement.
Conversion
mechanism:
Upon maturity of the loan, all of the principal amount and accrued interest
(the “Accrued Amount”) shall be repaid in full by way of (i) automatic and
mandatory conversion into Class B Ordinary Shares at the final Offer
Price, subject to a 9.9% shareholding threshold of CARIAD in the
Company’s then issued share capital, and (ii) cash, if there is any
remaining Accrued Amount after conversion of the loan. The
aforementioned 9.9% shareholding threshold can be removed only if
agreed by the Company and CARIAD. The Company will comply with
relevant requirements under the Listing Rules, including but not limited to
public float requirement under Rule 8.08 of the Listing Rules, at the time
of conversion.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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We set forth below details of the conversion mechanism based on the
low-end, mid-point and high-end of the indicative Offer Price range taking
into account the 9.9% shareholding threshold:Offer Price
Number of
Class B Ordinary
Shares to be issued
to CARIAD
Total
beneficial
interests of
CARIAD in
the
Company
upon
conversion
Total voting
rights of
CARIAD
in the
Company
upon
conversion (1)
Accrued
Amount to be
repaid by
conversion
Remaining
Accrued
Amount
payable
in cash
Low-end HK$3.73 1,132,347,445 9.90% 4.21% US$544
million
US$483
million
Mid-point HK$3.86 1,132,347,445 9.90% 4.21% US$563
million
US$464
million
High-end HK$3.99 1,132,347,445 9.90% 4.21% US$582
million
US$445
million
Note:
(1) On the basis that each Class B Ordinary Share entitles the Shareholder to one vote per
Share and each Class A Ordinary Share entitles the Shareholder to ten votes per Share.
We set forth below details of the conversion mechanism based on the
low-end, mid-point and high-end of the indicative Offer Price range
without taking into account the 9.9% shareholding threshold:Offer Price
Number of
Class B Ordinary
Shares to be issued
to CARIAD
Total
beneficial
interests of
CARIAD in
the
Company
upon
conversion
Total voting
rights of
CARIAD
in the
Company
upon
conversion (1)
Accrued Amount to be repaid
by conversion
Low-end HK$3.73 2,138,206,806 15.87% 7.02% US$1,027 million
Mid-point HK$3.86 2,066,194,660 15.47% 6.83% US$1,027 million
High-end HK$3.99 1,998,875,035 15.09% 6.64% US$1,027 million
Note:
(1) On the basis that each Class B Ordinary Share entitles the Shareholder to one vote per
Share and each Class A Ordinary Share entitles the Shareholder to ten votes per Share.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Conversion price: Offer Price
Redemption
rights:
CARIAD shall have the right to require the Company to redeem the
outstanding principal amount of the Convertible Loan Agreement, or any
portion thereof, together with all accrued and unpaid interest upon the
occurrence of customary events of default under the Convertible Loan
Agreement, including but not limited to material breach of representations
and warranties given by the Company, bankruptcy or insolvency of the
Company and non-performance of payment obligations or delivery of
Shares.
Use of Proceeds
under the
Convertible
Loan
Agreement:
All of the proceeds from the Convertible Loan Agreement will be utilized
for operating the business of the development and manufacturing of
processing hardware based on processing algorithms, the development of
relevant software and hardware, and the provision of cloud services,
capital expenditures and general working capital needs of the Group in
accordance with and subject to the loan proceeds utilization plan under the
Convertible Loan Agreement. As of the Latest Practicable Date, less than
5% of the proceeds from the Convertible Loan Agreement had been
utilized.
Strategic benefits
of CARIAD
brought to our
Company:
Our Directors were of the view that our Company could benefit from the
additional capital under the Convertible Loan Agreement. In addition, we
will benefit from the expertise and commitment of CARIAD and the loan
demonstrates its confidence in the operations of and cooperation with our
Group.
Special Rights of CARIAD
The special rights granted to CARIAD mainly include customary negative covenants and
information rights. All special rights granted to CARIAD under the Convertible Loan
Agreement will be terminated upon Listing.
Voting Arrangements
On May 24, 2024, Dr. Yu entered into a deed of undertaking in favour of CARIAD
pursuant to which he has irrevocably undertaken that: if, at any time after the Listing and for
so long as the Company is listed on the Stock Exchange, (i) CARIAD nominates, in accordance
with the Articles, by itself or together with any other Shareholder, a candidate to stand for
election as a Director or such candidate offers himself or herself for re-election as a Director
at any general meeting of the Company (the “CARIAD Nominee”), or (ii) Dr. André Stoffels
(together with the CARIAD Nominee, the “CARIAD Director”) offers himself for re-election
as a Director at any general meeting of the Company, Dr. Yu shall, in his capacity as a
Shareholder, to the extent permitted under the applicable laws and regulations (including the
Listing Rules) and the Memorandum and Articles, vote, appoint a proxy to vote and/or procure
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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the registered holder(s) or trustee(s) (as the case may be) to take such actions as are necessary
to vote all of the Shares which are held personally by Dr. Yu, by his controlled corporations
and by trustee(s) of any family trust established by Dr. Yu (as settlor) for the benefit of Dr. Yu
and his family from time to time, in favor of any resolution which is proposed at such general
meeting of the Company (or any adjournment of such meeting) to appoint or re-elect such
CARIAD Director as a Director, provided that (a) the CARIAD Director fulfills the
qualification and experience requirements of a director of the Company under the applicable
laws and regulations and the Memorandum and Articles, and (b) no other Director immediately
after the conclusion of such general meeting is a CARIAD Director.
The deed of undertaking shall be effective for so long as CARIAD and/or its affiliate(s)
(a) holds not less than 3% of the Shares in the Company in issue from time to time, or (b)
remains as a shareholder of CARIZON and the Company, directly and/or indirectly, holds not
less than 25% of the shares in CARIZON in issue.
Nothing in the deed of undertaking is intended to, and Dr. Yu and CARIAD are not, acting
in concert with each other in relation to the Company for the purposes of the Takeovers Code.
Joint Sponsors’ Confirmations
Based on the documents provided by our Company relating to the Pre-IPO Investments,
on the basis that (i) the Listing Date, being the first day of trading of the Shares on the Stock
Exchange, will take place no earlier than 120 clear days after completion of the Pre-IPO
Investments; (ii) the redemption rights granted to the Pre-IPO Investors were suspended prior
to the first submission of the listing application by our Company to the Stock Exchange; and
(iii) all special rights granted to the Pre-IPO Investors shall be terminated upon Listing, the
Joint Sponsors confirm that the Pre-IPO Investments are in compliance with Chapter 4.2 of the
Guide for New Listing Applicants issued by the Stock Exchange.
Public Float
Upon the completion of the Global Offering, assuming the Over-allotment Option is not
exercised:
(1) The Shares held by the controlled entities of Dr. Yu, Dr. Huang and Ms. Tao, all
being our executive Directors and core connected persons, will not be counted
towards the public float;
(2) Beneficiaries of The Pirates Trust include certain Directors and Trident Trust
Company (HK) Limited, the trustee of The Pirates Trust, constitutes a close
associate of our Directors. Therefore, the Class B Ordinary Shares held by Pirates
Gold Holding Limited, one of our employee shareholding platforms, will not be
accounted towards the public float; and
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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(3) Morningside China TMT Fund IV , L.P. and Morningside China TMT Fund IV
Co-Investment, L.P. are controlled by their general partner, Morningside China TMT
GP IV , L.P.. Morningside China TMT GP IV , L.P. is controlled by its general partner,
TMT General Partner Ltd.. Mr. Qin Liu, our non-executive Director, is entitled to
exercise or control the exercise of one-third of the voting power of all issued shares
in TMT General Partner Ltd. at its general meeting. Each of Evolution Special
Opportunity Fund I, L.P., Evolution Fund I Co-investment, L.P., 5Y Capital Growth
Fund I, L.P. and 5Y Capital Growth Fund I Co-Investment, L.P. are controlled by
their general partner 5Y Capital GP Limited. Mr. Qin Liu is entitled to exercise or
control the exercise of one-half of the voting power of all issued shares in 5Y Capital
GP Limited at its general meeting. Therefore, each of Morningside China TMT Fund
IV , L.P., Morningside China TMT Fund IV Co-Investment, L.P., Evolution Special
Opportunity Fund I, L.P., Evolution Fund I Co-Investment, L.P., 5Y Capital Growth
Fund I, L.P. and 5Y Capital Growth Fund I Co-Investment, L.P. will be a close
associate of Mr. Qin Liu and a core connected person as defined under the Listing
Rules, the Class B Ordinary Shares to be held by which will not be counted towards
the public float.
Save as disclosed above, upon the completion of the Global Offering, assuming the
Over-allotment Option is not exercised, all other Shareholders will be counted towards the
public float, representing approximately 73.23% of the issued share capital of the Company.
Information on the Pre-IPO Investors
Set forth below are details for each of our major Pre-IPO Investors. To the best knowledge
of our Company and save as disclosed below, all of our major Pre-IPO Investors are
Independent Third Parties upon Listing.
SAIC
SAIC QIJUN I Holdings Limited is a limited liability incorporated in the British Virgin
Islands and is wholly-owned by Shanghai Qimeng Management Partnership (Limited
Partnership) ( ɪऎ☃ຑΆุ၍ଣΥྫΆุ(Υྫ)). Shanghai Qimeng Management
Partnership (Limited Partnership) is owned as to approximately 0.05% by its general partner
Shangqi Capital (☃ҳ༟၍ଣΥྫΆุ(Υྫ)), which is ultimately controlled by Ji
Feng ( ඹౘ), an Independent Third Party, and approximately 99.95% by its limited partner
SAIC (Changzhou) Innovation and Development Investment Fund Co., Ltd. ( ɪӛ(੬ψ)௴อ
ʮ̡), which is ultimately controlled by SAIC Motor Corporation Limited
(ʮ̡) (“SAIC Motor”), a joint stock limited company incorporated in
the PRC whose shares are listed and traded on the Shanghai Stock Exchange (stock code:
600104.SH). SAIC Motor is a leading automobile group in the PRC which is principally
engaged in the research and development, manufacture and sale of automobiles and automobile
components, automobile finance business and the provision of mobility service.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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5Y Capital
Each of Morningside China TMT Fund IV , L.P., Morningside China TMT Fund IV
Co-Investment, L.P., Evolution Special Opportunity Fund I, L.P., Evolution Fund I Co-
Investment, L.P., 5Y Capital Growth Fund I, L.P. and 5Y Capital Growth Fund I Co-
Investment, L.P. is an investment entity of 5Y Capital, all being exempted limited partnerships
established in the Cayman Islands. Morningside China TMT Fund IV , L.P. and Morningside
China TMT Fund IV Co-Investment, L.P. are controlled by their general partner, Morningside
China TMT GP IV , L.P.. Morningside China TMT GP IV , L.P. is controlled by its general
partner, TMT General Partner Ltd.. Each of Qin Liu, Jianming Shi and Morningside Venture
(VII) Investments Limited is entitled to exercise or control the exercise of one-third of the
voting power of all issued shares in TMT General Partner Ltd. at its general meeting.
Morningside Venture (VII) Investments Limited is indirectly wholly-owned by the Landmark
Trust Switzerland SA as trustee of a discretionary trust established by Mdm. Tan Ching Fen
Chan for the benefit of certain members of her family and other charitable objects. Each of
Evolution Special Opportunity Fund I, L.P., Evolution Fund I Co-investment, L.P., 5Y Capital
Growth Fund I, L.P. and 5Y Capital Growth Fund I Co-Investment, L.P. are controlled by their
general partner 5Y Capital GP Limited. Each of Qin Liu and Jianming Shi is entitled to exercise
or control the exercise of one-half of the voting power of all issued shares in 5Y Capital GP
Limited at its general meeting. 5Y Capital is a venture capital firm which specializes in
fostering the growth of outstanding companies in the technology, life sciences, and consumer
innovation sectors. The unwavering commitment of 5Y Capital is to serve as the premier,
enduring, and most impactful investor for top-tier entrepreneurs. In addition to our Company,
5Y Capital has invested in other technology companies such as Xiaomi Corporation (stock
code: 1810.HK), Kuaishou Technology (stock code: 1024.HK), XPeng Inc. (stock code:
9868.HK) and Kingsoft Office (stock code: 688111.SH), etc. Qin Liu is one of our
non-executive Directors.
Hillhouse
HRRB Holdings Limited is an exempted company incorporated in the British Virgin
Islands with its ownership controlled by Hillhouse Fund II, L.P., which is managed and
controlled by Hillhouse Investment Management, Ltd. (“Hillhouse Investment”), an exempted
company incorporated under the laws of the Cayman Islands. Founded in 2005, Hillhouse
Investment is dedicated to investing in high-quality businesses for the long term. With nearly
two decades of experience, Hillhouse collaborates with industry-defining enterprises, aiming
to establish alignment with sustainable, forward-thinking companies across healthcare,
business services, consumer, and industrial sectors. Hillhouse is a diversified alternative
investment platform with strategies across equities, credit, and real assets. The firm manages
capital for global institutions, including non-profit foundations, endowments, and pensions.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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HongShan
Each of HSG Venture V Holdco I, Ltd. and HSG Growth VI Holdco E, Ltd. is an
exempted company with limited liability incorporated in the Cayman Islands. HSG Venture V
Holdco I, Ltd. is a wholly-owned subsidiary of HongShan Capital Venture Fund V , L.P. The
general partner of HongShan Capital Venture Fund V , L.P., is HSG Venture V Management,
L.P. HSG Growth VI Holdco E, Ltd. is a wholly-owned subsidiary of HongShan Capital
Growth Fund VI, L.P. The general partner of HongShan Capital Growth Fund VI, L.P. is HSG
Growth VI Management L.P. The general partner of HSG Venture V Management, L.P. and
HSG Growth VI Management L.P. is HSG Holding Limited, a wholly-owned subsidiary of SNP
China Enterprises Limited. Neil Nanpeng Shen, an Independent Third Party, is the sole
shareholder of SNP China Enterprises Limited. Each of HongShan Capital Venture Fund V , L.P.
and HongShan Capital Growth Fund VI, L.P. is an investment fund whose primary purpose is
to make equity investments in private companies. As of March 31, 2024, HSG Venture V
Holdco I, Ltd. and HSG Growth VI Holdco E, Ltd. had assets under management of US$295
million and US$1,757 million, respectively.
CARIAD
CARIAD Estonia AS is a public limited company incorporated under the laws of Estonia.
Established in 2020, CARIAD Estonia AS is an automotive software and technology company
which is part of the CARIAD Group which bundles together V olkswagen Group’s software
competencies and further expands them, building upon a heritage of bringing automotive
innovation to everyone. CARIAD Estonia AS is indirectly wholly-owned by V olkswagen
Group. V olkswagen Group is one of the first and most successful international partners in
China’s automobile industry, growing with it for about four decades.
EQT
Zoic Bidco Limited is a limited liability exempted company formed under the laws of the
Cayman Islands, and is majority owned by Zoic Topco Limited, a limited liability exempted
company formed under the laws of the Cayman Islands. Zoic Topco Limited is in turn
wholly-owned by BPEA Fund VII Limited, a limited liability exempted company formed under
the laws of the Cayman Islands and advised by EQT Partners Asia Pte. Ltd., which is an
indirect subsidiary of EQT AB, which is listed on Nasdaq Stockholm. EQT AB is a
purpose-driven global investment organization that operates across multiple geographies,
sectors and strategies.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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SK hynix
SK hynix Ventures Hong Kong Limited is an investment company with limited liability
incorporated in Hong Kong and is a wholly-owned subsidiary of SK Hynix Inc., a South
Korea-based company mainly engaged in the production and sale of memory hardware whose
shares are listed and traded on the Korea Exchange (stock code: 000660.KRX).
YF Capital
Each of YF Horizon Limited and YF Marvel Mission Limited is an investment entity of
YF Capital and is a company with limited liability incorporated in the British Virgin Islands.
YF Horizon Limited is mainly owned by Yunfeng Fund III, L.P., Yunfeng Fund III Parallel
Fund, L.P. and Yunfeng Fund III Associate, L.P., whose general partner is Yunfeng Investment
III, Ltd., a Cayman Islands exempted limited company. YF Marvel Mission Limited is solely
owned by Yunfeng Fund IV , L.P., whose general partner is Yunfeng Investment IV , Ltd., a
Cayman Islands exempted limited company. Each of Yunfeng Investment III, Ltd. and Yunfeng
Investment IV , Ltd. is solely owned by Mr. Yu Feng ( ໬ቜ), founder of Yunfeng Capital Limited
(“Yunfeng Capital”) (ږYunfeng Capital is a leading private equity firm founded in
China in 2010. Yunfeng Capital has formed deep sector expertise and industry insights in its
focused sectors, including technology and business services.
JICT
JICT Oriental Holdings Limited is a company with limited liability incorporated in the
British Virgin Islands and is wholly-owned by JICT Continent Limited, which is in turn
wholly-owned by JIC Technology Investment Ltd. (ʮ̡), a joint stock
limited company established in the PRC, which is affiliated with China Jianyin Investment
Limited (ப΂ʮ̡), a wholly state-owned enterprise with a registered
capital of RMB20.69225 billion.
CATL
Contemporary Amperex Technology (Hong Kong) Limited (ʮ
̡) is a company with limited liability in Hong Kong which is wholly-owned by Contemporary
Amperex Technology Co., Limited (ʮ̡), a company listed on
the Shenzhen Stock Exchange (stock code: 300750.SZ) principally engaged in the research and
development, production and sales of new energy vehicle power battery systems and energy
storage systems, and its main products include power battery systems, energy storage systems
and lithium battery materials.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 239 ---
Baillie Gifford
Scottish Mortgage Investment Trust PLC is an actively managed, low-cost investment
trust listed on the London Stock Exchange (stock code: SMT) with total assets under
management of GBP £14.28 billion as of March 31, 2024, which aims to maximize total returns
by investing in a high conviction, global portfolio of public and private growth companies over
the long term. Scottish Mortgage Investment Trust PLC is managed by Baillie Gifford, an
independent investment partnership founded in Edinburgh, Scotland in 1908 with over
GBP£225 billion of assets under management at the end of 2023.
BYD
Golden Link Worldwide Limited is a company with limited liability incorporated in the
British Virgin Islands, which is ultimately owned by BYD Company Limited (ࠢ
ʮ̡), a joint stock company incorporated in the PRC with limited liability whose H shares
are listed on the Hong Kong Stock Exchange (stock code: 01211.HK (HKD counter);
81211.HK (RMB counter)) and A shares are listed on the Shenzhen Stock Exchange (stock
code: 002594.SZ). BYD Company Limited is principally engaged in the automobile business
which mainly includes new energy vehicles, handset components and assembly services, as
well as rechargeable battery and photovoltaic business, and is actively developing the urban
rail transportation business segment with its technological superiority.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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--- page 240 ---
CAPITALIZATION
The following table sets out our shareholding structure as of the date of this Prospectus and immediately upon the completion of the Global
Offering assuming the Over-allotment Option is not exercised:
As of the date of
this Prospectus
Upon Completion of the
Global Offering (assuming the
Over-allotment Option is
not exercised
Shareholders
Class A
Ordinary
Shares
Class B
Ordinary Shares
Series Seed-1
Preferred
Shares
Series Seed-2
Preferred
Shares
Series A
Preferred
Shares
Series A1
Preferred
Shares
Series A3
Preferred
Shares
Series A5
Preferred
Shares
Series B1
Preferred
Shares
Series B2
Preferred
Shares
Series B3
Preferred
Shares
Series C
Preferred
Shares
Series D
Preferred
Shares
Aggregate
number of
Shares as of
the date of
this
Prospectus
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Everest Robotics Limited (2) /H1118/H1118/H1118/H1118/H1118/H1118/H11181,733,612,127 – ––––––––––– 1,733,612,127 14.85% 53.46% 13.30% 53.92%
String Theory Robotics Limited (3) /H1118/H1118/H1118/H1118/H1118390,777,143 – ––––––––––– 390,777,143 3.35% 12.05% 3.00% 12.16%
HOPE Robotics Holdings Inc. (4) /H1118/H1118/H1118/H1118/H1118169,543,255 – ––––––––––– 169,543,255 1.45% 5.23% 1.30% 0.53%
Walnut Robotics, Inc. (5) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,000,000 – ––––––––––– 12,000,000 0.10% 0.37% 0.09% 0.04%
SAIC QIJUN I Holdings Limited (16) /H1118/H1118/H1118/H1118 – – – – 104,201,250 – – – 907,623,220 – – – 13,485,585 1,025,310,055 8.78% 3.16% 7.87% 3.19%
Morningside China TMT Fund IV , L.P. (16) /H1118/H1118 – – 254,545,440 – 38,889,560 32,743,960 29,769,270 – 55,911,870 –––– 4 1 1,860,100 3.53% 1.27% 3.16% 1.28%
Evolution Special Opportunity Fund I, L.P. (16) /H1118 – – – – 57,568,037 –––––– 74,369,811 – 131,937,848 1.13% 0.41% 1.01% 0.41%
Morningside China TMT Fund IV Co-Investment,
L.P.(16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 25,454,560 – 3,888,960 3,274,400 2,976,930 – 5,591,190 –––– 41,186,040 0.35% 0.13% 0.32% 0.13%
5Y Capital Growth Fund I, L.P. (16) /H1118/H1118/H1118/H1118 – –––––––– 38,891,420 – – – 38,891,420 0.33% 0.12% 0.30% 0.12%
Evolution Fund I Co-investment, L.P. (16) /H1118/H1118/H1118 – – – – 8,635,207 –––––– 1 1,155,471 – 19,790,678 0.17% 0.06% 0.15% 0.06%
5Y Capital Growth Fund I Co-Investment,
L.P.(16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––– 3,871,035 – – – 3,871,035 0.03% 0.01% 0.03% 0.01%
HRRB Holdings Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118– 37,417,312 200,000,000 – 30,556,080 27,238,320 24,772,100 – 29,759,550 – – 28,600,307 – 378,343,669 3.24% 1.17% 2.90% 1.18%
HSG Venture V Holdco I, Ltd. (16) /H1118/H1118/H1118/H1118/H1118 – – 200,000,00 0–––––––––– 200,000,000 1.71% 0.62% 1.53% 0.62%
HSG Growth VI Holdco E, Ltd. (16) /H1118/H1118/H1118/H1118 – – – 38,182,302 22,844,138 –––––– 14,966,925 – 75,993,365 0.65% 0.23% 0.58% 0.24%
JSC International Investment Fund SPC
(acting for and on behalf of Ning Bo Yong
Ning Gao Xin SP) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 18,417,001 99,042,441 9,788,287 – – 13,650,133 25,503,014 127,247,729 – 293,648,605 2.52% 0.91% 2.25% 0.91%
CARIAD Estonia AS
(16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– ––––––––––– 269,711,694 269,711,694 2.31% 0.83% 2.07% 0.84%
Intel Capital Corporation /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – – 159,176,759 ––––––– 159,176,759 1.36% 0.49% 1.22% 0.50%
Zoic Bidco Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 213,813,203 – 213,813,203 1.83% 0.66% 1.64% 0.67%
SK hynix Ventures Hong Kong Limited (16) /H1118/H1118 – ––––––– 198,396,960 –––– 198,396,960 1.70% 0.61% 1.52% 0.62%
YF Horizon Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 89,287,686 – 89,287,686 0.76% 0.28% 0.69% 0.28%
YF Marvel Mission Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 89,287,684 – 89,287,684 0.76% 0.28% 0.69% 0.28%
Grace Future Development Limited (16) /H1118/H1118/H1118 – –––––––– 35,948,127 67,163,124 – – 103,111,251 0.88% 0.32% 0.79% 0.32%
Bright Rhythm Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– ––––– 15,266,107 –––––– 15,266,107 0.13% 0.05% 0.12% 0.05%
JICT Oriental Holdings Limited (16) /H1118/H1118/H1118/H1118 – ––––– 165,918,705 –––––– 165,918,705 1.42% 0.51% 1.27% 0.52%
IDG Breyer Capital Fund L.P. /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 128,287,922 – 128,287,922 1.10% 0.40% 0.98% 0.40%
CTG Evergreen Investment U Limited /H1118/H1118/H1118/H1118 – 18,174,122 ––––––––– 106,478,976 – 124,653,098 1.07% 0.38% 0.96% 0.39%
Chaos Investment Co., Ltd. /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 26,050,315 – – 97,570,490 ––––– 123,620,805 1.06% 0.38% 0.95% 0.38%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 230 –


--- page 241 ---
As of the date of
this Prospectus
Upon Completion of the
Global Offering (assuming the
Over-allotment Option is
not exercised
Shareholders
Class A
Ordinary
Shares
Class B
Ordinary Shares
Series Seed-1
Preferred
Shares
Series Seed-2
Preferred
Shares
Series A
Preferred
Shares
Series A1
Preferred
Shares
Series A3
Preferred
Shares
Series A5
Preferred
Shares
Series B1
Preferred
Shares
Series B2
Preferred
Shares
Series B3
Preferred
Shares
Series C
Preferred
Shares
Series D
Preferred
Shares
Aggregate
number of
Shares as of
the date of
this
Prospectus
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Wu Capital Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 94,030,017 –––––––– 94,030,017 0.81% 0.29% 0.72% 0.29%
Contemporary Amperex Technology (Hong Kong)
Limited (16) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 39,714,05 9–––––––– 74,834,622 – 114,548,681 0.98% 0.35% 0.88% 0.36%
Harvest Magnificent Holdings Limited /H1118/H1118/H1118/H1118 – – – – – 108,953,240 ––––––– 108,953,240 0.93% 0.34% 0.84% 0.34%
Harvest Profound Holdings Limited /H1118/H1118/H1118/H1118/H1118 – – – – – 108,844,280 ––––––– 108,844,280 0.93% 0.34% 0.84% 0.34%
Hermitage Galaxy Fund SPC on behalf of and for
the account of Hermitage Fund Seven SP /H1118/H1118 – – 18,591,680 – – 108,960 24,489,796 – – 21,381,227 – 42,762,642 – 107,334,305 0.92% 0.33% 0.82% 0.33%
CPE Investment (Hong Kong) 2018 Limited /H1118/H1118 – –––––––––– 57,965,168 – 57,965,168 0.50% 0.18% 0.44% 0.18%
Scottish Mortgage Investment Trust Plc (16) /H1118/H1118 – –––––––––– 106,906,601 – 106,906,601 0.92% 0.33% 0.82% 0.33%
Kunshan Likai Investment Center (LP) /H1118/H1118/H1118/H1118 – ––––– 99,088,390 –––––– 99,088,390 0.85% 0.31% 0.76% 0.31%
Everbay Investment Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 62,697,087 –––––––– 62,697,087 0.54% 0.19% 0.48% 0.20%
Vertex Ventures China III, L.P. /H1118/H1118/H1118/H1118/H1118/H1118– – – – 93,153,960 –––––––– 93,153,960 0.80% 0.29% 0.71% 0.29%
Forward Investment Corporation I (6) /H1118/H1118/H1118/H1118 – –––––––––– 53,453,301 – 53,453,301 0.46% 0.16% 0.41% 0.17%
Forward Investment Corporation Limited (6) /H1118/H1118 – ––––––– 39,679,392 –––– 39,679,392 0.34% 0.12% 0.30% 0.12%
Future Industry Investment Fund II (7) /H1118/H1118/H1118/H1118 – –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Metropolitan Industrial Investment Fund (7) /H1118/H1118 – –––––––––– 25,657,585 – 25,657,585 0.22% 0.08% 0.20% 0.08%
Treasure Elements Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 85,525,282 – 85,525,282 0.73% 0.26% 0.66% 0.27%
AMF-2 Holdings Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 74,834,622 – 74,834,622 0.64% 0.23% 0.57% 0.23%
Neumann Capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 12,998,950 –––––– 58,983,374 – 71,982,324 0.62% 0.22% 0.55% 0.22%
LCHR-I Holdings Limited (8) /H1118/H1118/H1118/H1118/H1118/H1118– – 41,408,32 0–––––––––– 41,408,320 0.35% 0.13% 0.32% 0.13%
LCHR-II Holdings Limited (8) /H1118/H1118/H1118/H1118/H1118/H1118– – – – 9,166,840 7,718,240 ––––––– 16,885,080 0.14% 0.05% 0.13% 0.05%
LCHR-III Holdings Limited (8) /H1118/H1118/H1118/H1118/H1118/H1118– ––––––– 7,935,880 –––– 7,935,880 0.07% 0.02% 0.06% 0.02%
Oceanpine Vanguard Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––– 66,131,014 – – – 66,131,014 0.57% 0.20% 0.51% 0.21%
Hansong Enterprises Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,962 – 64,143,962 0.55% 0.20% 0.49% 0.20%
Best Prosperity Investment I Limited /H1118/H1118/H1118/H1118 – –––––––––– 64,143,962 – 64,143,962 0.55% 0.20% 0.49% 0.20%
CloudAlpha Master Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Huangpu River Capital SPC /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Duckling Fund, L.P. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Day Wise Holdings Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Raumier Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Chery CEBI Auto Industry Technology Fund L.P. /H1118 – –––––––––– 64,143,961 – 64,143,961 0.55% 0.20% 0.49% 0.20%
Yuefan International Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 59,867,697 – 59,867,697 0.51% 0.18% 0.46% 0.19%
CMBCC Investment Fund SPC /H1118/H1118/H1118/H1118/H1118/H1118– –––––––– 59,392,714 – – – 59,392,714 0.51% 0.18% 0.46% 0.18%
Beijing Chunlin Equity Investment Center
(Limited Partnership) (9) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 29,933,849 – 29,933,849 0.26% 0.09% 0.23% 0.09%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 231 –


--- page 242 ---
As of the date of
this Prospectus
Upon Completion of the
Global Offering (assuming the
Over-allotment Option is
not exercised
Shareholders
Class A
Ordinary
Shares
Class B
Ordinary Shares
Series Seed-1
Preferred
Shares
Series Seed-2
Preferred
Shares
Series A
Preferred
Shares
Series A1
Preferred
Shares
Series A3
Preferred
Shares
Series A5
Preferred
Shares
Series B1
Preferred
Shares
Series B2
Preferred
Shares
Series B3
Preferred
Shares
Series C
Preferred
Shares
Series D
Preferred
Shares
Aggregate
number of
Shares as of
the date of
this
Prospectus
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Aggregate
ownership
percentage
Voting power
in our
Company (1)
China Securities (International) Finance Company
Limited (9) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 27,795,716 – 27,795,716 0.24% 0.09% 0.21% 0.09%
CICC Ehealthcare Investment Fund, L.P. /H1118/H1118/H1118 – –––––––––– 55,056,900 – 55,056,900 0.47% 0.17% 0.42% 0.17%
Tropical Terrain Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 53,453,301 – 53,453,301 0.46% 0.16% 0.41% 0.17%
Middle Way Edu Capital Fund I LP /H1118/H1118/H1118/H1118/H1118 – –––––––––– 53,453,301 – 53,453,301 0.46% 0.16% 0.41% 0.17%
Vertex Growth Fund II Pte. Ltd. (10) /H1118/H1118/H1118/H1118 – –––––––––– 29,364,861 – 29,364,861 0.25% 0.09% 0.23% 0.09%
Vertex Growth Fund Pte. Ltd. (10) /H1118/H1118/H1118/H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Peyrepertuse Investment Limited /H1118/H1118/H1118/H1118/H1118 – ––––– 32,258,065 – – – 13,238,020 – – 45,496,085 0.39% 0.14% 0.35% 0.14%
Senstar Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 42,762,641 – 42,762,641 0.37% 0.13% 0.33% 0.13%
Prospect Bridge Innovation Limited /H1118/H1118/H1118/H1118/H1118 – –––––––––– 42,762,641 – 42,762,641 0.37% 0.13% 0.33% 0.13%
Idea Laden Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 42,762,641 – 42,762,641 0.37% 0.13% 0.33% 0.13%
Hidden Hill SPV VI /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 42,762,641 – 42,762,641 0.37% 0.13% 0.33% 0.13%
Apoletto Asia Ltd /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 40,404,040 ––––––––––– 40,404,040 0.35% 0.12% 0.31% 0.13%
Oakwise Innovation Fund SPC – New Technology
VS P /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,000,000 ––––––––– 32,071,981 – 35,071,981 0.30% 0.11% 0.27% 0.11%
Pluto Connection Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Hel Ved Turbo Investment V /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Shanghai Artificial Intelligence Industry Equity
Investment Fund Partnership (Limited
Partnership) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Beijing Shouxin Jinyuan Management Consulting
Centre (Limited Partnership) /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Blackstone Aqua Master Sub-Fund, a sub-fund of
Blackstone Global Master Fund ICA V /H1118/H1118/H1118 – –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Jiaxing Blossom Zhijia Investment Partnership
(Limited Partnership) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Cathay Fortune Holdings Limited /H1118/H1118/H1118/H1118/H1118 – –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
Hangzhou Lianliruixin Venture Investment L.P. /H1118 – –––––––––– 32,071,981 – 32,071,981 0.27% 0.10% 0.25% 0.10%
JSC International Investment Fund SPC acting for
and on behalf of Shan Xin SP
(11) /H1118/H1118/H1118/H1118 – –––––––––– 27,795,717 – 27,795,717 0.24% 0.09% 0.21% 0.09%
Zhu Que Asset Management (HK) Limited /H1118/H1118/H1118 – –––––––––– 26,726,651 – 26,726,651 0.23% 0.08% 0.21% 0.08%
Golden Camellia HK Limited /H1118/H1118/H1118/H1118/H1118/H1118– 26,476,041 ––––––––––– 26,476,041 0.23% 0.08% 0.20% 0.08%
Cayman BingShang Limited Partnership /H1118/H1118/H1118 – – 26,476,03 9–––––––––– 26,476,039 0.23% 0.08% 0.20% 0.08%
Dongfeng Bocom Yuanjing Motor Industry Equity
Investment Fund (Wuhan) Partnership (Limited
Partnership) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 6,904,952 19,571,087 ––––––––– 26,476,039 0.23% 0.08% 0.20% 0.08%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 232 –


--- page 243 ---
As of the date of
this Prospectus
Upon Completion of the
Global Offering (assuming the
Over-allotment Option is
not exercised
Shareholders
Class A
Ordinary
Shares
Class B
Ordinary Shares
Series Seed-1
Preferred
Shares
Series Seed-2
Preferred
Shares
Series A
Preferred
Shares
Series A1
Preferred
Shares
Series A3
Preferred
Shares
Series A5
Preferred
Shares
Series B1
Preferred
Shares
Series B2
Preferred
Shares
Series B3
Preferred
Shares
Series C
Preferred
Shares
Series D
Preferred
Shares
Aggregate
number of
Shares as of
the date of
this
Prospectus
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Dongfeng Asset Management Co., Ltd. /H1118/H1118/H1118/H1118 – – 6,904,950 19,571,089 ––––––––– 26,476,039 0.23% 0.08% 0.20% 0.08%
CEF Smart Holdings Limited /H1118/H1118/H1118/H1118/H1118/H1118– – – – 26,050,315 –––––––– 26,050,315 0.22% 0.08% 0.20% 0.08%
SG R.FO Investment (BVI) Company
Limited (12) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 14,111,673 – 14,111,673 0.12% 0.04% 0.11% 0.04%
SG Royal FO Investment 1 Pte. Ltd. (12) /H1118/H1118/H1118 – –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Xingyu Automotive Lighting (Hong Kong) Co.,
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 23,091,826 – 23,091,826 0.20% 0.07% 0.18% 0.07%
Zibo Minsheng Ouming Equity Investment
Partnership (Limited Partnership) (13) /H1118/H1118/H1118 – –––––––––– 13,363,326 – 13,363,326 0.11% 0.04% 0.10% 0.04%
Zibo Huaide Equity Investment Partnership
(Limited Partnership) (13) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 8,017,996 – 8,017,996 0.07% 0.02% 0.06% 0.02%
Rich Horizon Investments Limited /H1118/H1118/H1118/H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Sunrise Lead Technologies Holdings Limited /H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
ORIX Asia Capital Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Wealth Pointer Global Limited /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Bohai Securities Investment Co., Ltd. /H1118/H1118/H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Glory Assets Allocation II, L.P. /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Qingdao Xinding Kenge I Equity Investment
Partnership (Limited Partnership) /H1118/H1118/H1118/H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Shixiang Founders Capital VIII Limited /H1118/H1118/H1118 – –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Photon Ventures II Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
Yiwu WEIHAOCHUANGXIN Phase I Equity
Investment Partnership /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 21,381,321 – 21,381,321 0.18% 0.07% 0.16% 0.07%
CCBT GQ Investment Fund L.P. /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 17,105,057 – 17,105,057 0.15% 0.05% 0.13% 0.05%
KTBN No. 16 Venture Fund /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 14,966,925 – 14,966,925 0.13% 0.05% 0.11% 0.05%
Golden Link Worldwide Limited (16) /H1118/H1118/H1118/H1118 – –––––––––– 12,828,793 – 12,828,793 0.11% 0.04% 0.10% 0.04%
Cassini Partners, L.P. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 2,206,943 –––––– 9,668,405 – 11,875,348 0.10% 0.04% 0.09% 0.04%
Guangdong Xingyao II Equity Investment
Partnership (Limited Partnership) /H1118/H1118/H1118/H1118/H1118 – –––––––––– 1 1,759,727 – 11,759,727 0.10% 0.04% 0.09% 0.04%
Jiaxing Heyi Investment Partnership (Limited
Partnership) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Sunny Optical Technology (Group) Company
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Alpha Win IV PE LPF /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Auto Hub Investment Limited /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Ecovacs Robotics Holdings Limited /H1118/H1118/H1118/H1118/H1118 – –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
– 233 –


--- page 244 ---
As of the date of
this Prospectus
Upon Completion of the
Global Offering (assuming the
Over-allotment Option is
not exercised
Shareholders
Class A
Ordinary
Shares
Class B
Ordinary Shares
Series Seed-1
Preferred
Shares
Series Seed-2
Preferred
Shares
Series A
Preferred
Shares
Series A1
Preferred
Shares
Series A3
Preferred
Shares
Series A5
Preferred
Shares
Series B1
Preferred
Shares
Series B2
Preferred
Shares
Series B3
Preferred
Shares
Series C
Preferred
Shares
Series D
Preferred
Shares
Aggregate
number of
Shares as of
the date of
this
Prospectus
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Aggregate
ownership
percentage
Voting power
in our
Company (1)
Asset Profit Investment Limited /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 10,690,661 – 10,690,661 0.09% 0.03% 0.08% 0.03%
Pingyang Dingyuan Tianhong Equity Investment
Fund Partnership (Limited Partnership) /H1118/H1118/H1118 – –––––––––– 9,621,595 – 9,621,595 0.08% 0.03% 0.07% 0.03%
Favor Star Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – 1,344,918 –––––– 5,969,031 – 7,313,949 0.06% 0.02% 0.06% 0.02%
Startech Growth Fund VCC for the account of
Startech Growth Fund 1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 7,269,649 – 7,269,649 0.06% 0.02% 0.06% 0.02%
Oceanwide Sigma Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––– 6,613,110 – – – 6,613,110 0.06% 0.02% 0.05% 0.02%
New Horizon Global Limited /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 6,414,397 – 6,414,397 0.05% 0.02% 0.05% 0.02%
Qingshun Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 6,414,397 – 6,414,397 0.05% 0.02% 0.05% 0.02%
Fareast Land Development Co., Ltd. /H1118/H1118/H1118/H1118 – –––––––––– 5,872,973 – 5,872,973 0.05% 0.02% 0.05% 0.02%
Daol Asset Management Co., Ltd. (14) /H1118/H1118/H1118/H1118 – –––––––––– 3,720,350 – 3,720,350 0.03% 0.01% 0.03% 0.01%
Daol Investment Securities Co., Ltd. (14) /H1118/H1118/H1118 – –––––––––– 1,860,175 – 1,860,175 0.02% 0.01% 0.01% 0.01%
Automotive Intelligent and Connectivity Alliance
(Beijing) Technology Co. Ltd. /H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 4,276,265 – 4,276,265 0.04% 0.01% 0.03% 0.01%
Future Innovation Fund LP /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 2,675,522 1,600,742 –––––––– 4,276,264 0.04% 0.01% 0.03% 0.01%
Neumann Galaxy Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– –––––––––– 2,351,945 – 2,351,945 0.02% 0.01% 0.02% 0.01%
Silver Tone Enterprises Limited /H1118/H1118/H1118/H1118/H1118/H1118– –––––––– 1,653,276 – – – 1,653,276 0.01% 0.01% 0.01% 0.01%
Pirates Gold Holding Limited (15) /H1118/H1118/H1118/H1118/H1118 – 546,317,561 ––––––––––– 546,317,561 4.68% 1.68% 4.19% 1.70%
Pirates Silver Holding Limited (15) /H1118/H1118/H1118/H1118/H1118 – 744,884,919 ––––––––––– 744,884,919 6.38% 2.30% 5.72% 2.32%
Pirates Bronze Holding Limited (15) /H1118/H1118/H1118/H1118 – 153,747,736 ––––––––––– 153,747,736 1.32% 0.47% 1.18% 0.48%
Public shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,355,106,600 –––––––––––––– 1 0 . 4 0 % 4.22%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,305,932,525 2,925,528,331 820,000,000 80,000,000 614,300,320 547,100,600 404,327,650 97,570,490 1,244,898,062 247,532,056 105,904,158 3, 353,574,611 283,197,279 11,674,759,482 100.00% 100.00% 100.00% 100.00%
Notes:
1. On the basis that each Class B Ordinary Share and Preferred Shares entitles the Shareholder to one vote per Share and each Class A Ordinary Share entit les the Shareholder
to ten votes per Share.
2. As of the Latest Practicable Date, 1,733,612,127 Class A Ordinary Shares were held by Everest Robotics Limited, which is held by Bigsur Robotics Lim ited as to 99% and
Horizon Robotics, Inc. as to 1%. Horizon Robotics, Inc. is wholly-owned by Dr. Yu. Bigsur Robotics Limited is wholly-owned by the trustee of Rock Stree t Trust, the family
trust established by Dr. Yu (as settlor) for the benefit of Dr. Yu and his family.
3. As of the Latest Practicable Date, 390,777,143 Class A Ordinary Shares were held by String Theory Robotics Limited, which is held by Gravitational W ave Technology Limited
as to 99% and Grace Robotics, Inc. as to 1%. Grace Robotics, Inc. is wholly-owned by Dr. Huang. Gravitational Wave Technology Limited is wholly-owned b y the trustee of
Gravitational Wave Trust, the family trust established by Dr. Huang (as settlor) for the benefit of Dr. Huang and his family.
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4. As of the Latest Practicable Date, 169,543,255 Class A Ordinary Shares were held by HOPE Robotics Holdings Inc., which is held by Venus Robotics Limi ted as to 99% and
Kai Robotics, Inc. as to 1%. Kai Robotics, Inc. is wholly-owned by Ms. Tao. Venus Robotics Limited is wholly-owned by the trustee of TAO Trust, the famil y trust established
by Ms. Tao (as settlor) for the benefit of Ms. Tao and her family. The Class A Ordinary Shares held by HOPE Robotics Holdings Inc. will be converted into Cl ass B Ordinary
Shares upon completion of the Global Offering.
5. Walnut Robotics, Inc. is wholly-owned by Mr. Ming Yang, our former employee and an Independent Third Party. Pursuant to a proxy agreement entered in to among Dr. Yu,
Mr. Ming Yang and Walnut Robotics, Inc. in 2018, the voting rights of the Class A Ordinary Shares held by Walnut Robotics, Inc. have been delegated to Dr. Yu. The proxy
agreement will be terminated upon Listing and the Class A Ordinary Shares held by Walnut Robotics, Inc. will be converted into Class B Ordinary Shares u pon completion of
the Global Offering.
6. Each of Forward Investment Corporation Limited and Forward Investment Corporation I is an affiliate of GAC Automobile Group Co., Ltd. (ʮ̡), a
company listed on the Hong Kong Stock Exchange (stock code: 02238.HK) and the Shanghai Stock Exchange (stock code: 601238.SH), and SBCVC ( ழვʕ਷༟͉).
7. Each of Future Industry Investment Fund II (ɚಂ(Υྫ)) and Metropolitan Industrial Investment Fund (ږ(Υྫ))
is limited partnerships formed under the laws of the PRC and the general partner and manager of both entities are CS Capital Co., Ltd. (ʮ̡).
8. Each of LCHR-I Holdings Limited, LCHR-II Holdings Limited and LCHR-III Holdings Limited is ultimately controlled by Linear Capital.
9. Each of China Securities (International) Finance Company Limited (ҳ(਷ყ)ʮ̡) and Beijing Chunlin Equity Investment Center (Limited Partnership) ( ̏ԯ
ᛆҳ༟ʕː(Υྫ)) is ultimately controlled by CSC Financial Co., Ltd. (ʮ̡), a company listed on the Hong Kong Stock Exchange (stock
code: 06066.HK) and the Shanghai Stock Exchange (stock code: 601066.SH), which is an affiliate of China Securities (International) Corporate Finan ce Company Limited, one
of the Joint Sponsors and the underwriters.
10. Each of Vertex Growth Fund Pte. Ltd. and Vertex Growth Fund II Pte. Ltd. is ultimately controlled by the general partner, Vertex Growth Special Ltd. and Vertex Growth II
Special Ltd., respectively.
11. JSC International Investment Fund SPC acting for and on behalf of Shan Xin SP is indirectly held by Jade Spring Shanxin (Beijing) International Equ ity Investment Fund ( ዽ
ڦ(̏ԯ)ΥྫΆุ(Υྫ)), of which (i) China Securities Investment Co., Ltd. (ʮ̡) is the limited partner and (ii) Jade Spring
Shancheng Management Consulting (Beijing) Co., Ltd. (ഛ༐၍ଣፔ༔(̏ԯ)ʮ̡) is the general partner, which is ultimately controlled by Beijing Financial Holdings
Group Limited (ʮ̡). China Securities Investment Co., Ltd. is a wholly-owned subsidiary of CSC Financial Co., Ltd. (ʮ̡).
Beijing Financial Holdings Group Limited (ʮ̡) is the largest shareholder of CSC Financial Co., Ltd. (ʮ̡), a company listed
on the Hong Kong Stock Exchange (stock code: 06066.HK) and the Shanghai Stock Exchange (stock code: 601066.SH), which is an affiliate of China Securit ies (International)
Corporate Finance Company Limited, one of the Joint Sponsors and the underwriters.
12. Each of SG Royal FO Investment 1 Pte. Ltd. and SG R.FO Investment (BVI) Company Limited is ultimately controlled by SG.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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13. Each of Zibo Minsheng Ouming Equity Investment Partnership (Limited Partnership)(ᛆҳ༟ΥྫΆุ(Υྫ)) and Zibo Huaide Equity Investment
Partnership (Limited Partnership) (ΥྫΆุ(Υྫ)) is ultimately controlled by Minsheng Securities Co., Ltd. (ʮ̡).
14. Each of Daol Asset Management Co., Ltd., and Daol Investment Securities Co., Ltd. is ultimately controlled by Daol Investment & Securities Co., Lt d. (formerly known as KTB
Investment & Securities Co., Ltd.).
15. All being our employee shareholding platforms. For details, see “— The 2018 Share Incentive Plan” in this section.
16. For details, see “— Pre–IPO Investments — Information on the Pre-IPO Investors” in this section.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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CORPORATE STRUCTURE
Corporate structure before the Global Offering
The following diagram illustrates the simplified corporate and shareholding structure of our Company immediately prior to the completion of
the Global Offering:
Offshore
Onshore
Horizon Hong Kong
(Hong Kong)
Horizon InformationHorizon AntingHorizon Technology
100% 100% 100%
CARIZON(6)
40%
Beijing Horizon Robotics
100%
Horizon Shenzhen Horizon Shanghai
100% 100%
100%
Horizon Together Holding Ltd.
(Cayman Islands)
100%
Dr. Huang(2)
Ms. Tao(3) CARIAD 5Y Capital Hillhouse Other Pre-IPO
InvestorsDr. Yu(1)
14.85% 3.35% 1.45% 2.31% 5.55% 3.24% 2.36%
HongShan
45.63%
Walnut
Robotics, Inc.(5)
0.10%
Employee
Shareholding
Platforms(4)
12.38%
SAIC
8.78%
Company
(Cayman Islands)
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Notes:
(1) Dr. Yu, through his family trust and controlled entities, will hold 1,733,612,127 Class A Ordinary Shares, representing approximately 14.85% be neficial interests in the issued
share capital of our Company. Please also see note 2 in the subsection headed “— Capitalization” above for details.
(2) Dr. Huang, through his family trust and controlled entities, will hold 390,777,143 Class A Ordinary Shares, representing approximately 3.35% be neficial interests in the issued
share capital of our Company. Please also see note 3 in the subsection headed “— Capitalization” above for details.
(3) Please refer to note 4 in the section headed “— Capitalization” above for details.
(4) Please refer to note 16 in the section headed “— Capitalization” above for details.
(5) Please refer to note 5 in the section headed “— Capitalization” above for details.
(6) As of the Latest Practicable Date, the remaining 60% equity interests of CARIZON is held by CARIAD Estonia AS, one of our Pre-IPO Investors, details of which are set forth
in the subsection headed “Pre-IPO Investments — Information on the Pre-IPO Investors” above.
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Corporate structure immediately following the Global Offering
The following diagram illustrates the simplified corporate and shareholding structure of our Company immediately following the completion
of the Global Offering assuming the Over-allotment Option is not exercised:
Ms. Tao(3) Walnut Robotics, Inc.(5)
13.30% 3.00% 1.30% 0.09% 4.97% 2.90% 2.12%7.87% 40.88%11.09% 10.40%
Dr. Huang(2) 5Y Capital Hillhouse Other Pre-IPO
InvestorsDr. Yu(1) HongShanSAICEmployee Shareholding
Platforms(4)
Other public
shareholdersCARIAD
2.07%
Offshore
Onshore
Horizon Hong Kong
(Hong Kong)
Horizon InformationHorizon AntingHorizon Technology
100% 100% 100%
Beijing Horizon Robotics
100%
Horizon Shenzhen Horizon Shanghai
100% 100%
100%
Company
(Cayman Islands)
CARIZON(6)
40%
Horizon Together Holding Ltd.
(Cayman Islands)
100%
Note: For notes (1) to (6), please see “— Corporate structure before the Global Offering” above.
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PRC REGULATORY REQUIREMENTS
According to the M&A Rules jointly issued by MOFCOM, the State-owned Assets
Supervision and Administration Commission of the State Council, the SAT, the CSRC, the
State Administration of Industry and Commerce of the PRC (which has now been merged into
the SAMR) and the SAFE on August 8, 2006, effective on September 8, 2006, and amended
on June 22, 2009, a foreign investor is required to obtain necessary approvals when it (i)
acquires the equity of a domestic enterprise so as to convert the domestic enterprise into a
foreign-invested enterprise; (ii) subscribes the increased capital of a domestic enterprise so as
to convert the domestic enterprise into a foreign-invested enterprise; (iii) establishes a
foreign-invested enterprise through which it purchases the assets of a domestic enterprise and
operates these assets; or (iv) purchases the assets of a domestic enterprise through relevant
agreements and then invests such assets to establish a foreign-invested enterprise. The M&A
Rules, among other things, further purport to require that an offshore special vehicle, or a
special purpose vehicle, formed for overseas listing purposes and controlled directly or
indirectly by PRC companies or individuals, to obtain the approval of the CSRC prior to the
listing and trading of such special purpose vehicle’s securities on an overseas stock exchange,
in the event that the special purpose vehicle acquires shares of or equity interests in the PRC
companies in exchange for the shares of offshore companies.
As advised by our PRC Legal Adviser, unless new laws and regulations are enacted or
MOFCOM and CSRC publish new provisions or interpretations on the M&A Rules in the
future, prior CSRC or MOFCOM approval for the Global Offering is not required under the
M&A Rules.
SAFE REGISTRATION IN THE PRC
Pursuant to SAFE Circular 37, promulgated by SAFE and effective on July 14, 2014,
replacing SAFE Circular 75, (i) a PRC resident must register with the local SAFE branch in
connection with their contribution of offshore or domestic assets or equity interests in an
overseas SPV that is directly established or indirectly controlled by the PRC resident for the
purpose of conducting overseas investment or financing, and (ii) following the initial
registration, the PRC resident is also required to register with the local SAFE branch for any
major change in respect of the Overseas SPV , including, among other things, a change of the
Overseas SPV’s PRC resident shareholder(s), the name of the Overseas SPV , terms of
operation, or any increase or reduction of the Overseas SPV’s capital, share transfer or swap,
and merger or division.
Pursuant to SAFE Circular 37, failure to comply with these registration procedures may
result in penalties. In addition, due to such failure to comply with the registration procedures,
the PRC subsidiaries of that Overseas SPV may be prohibited from distributing their profits
and dividends to their offshore parent company or from carrying out other subsequent
cross-border foreign exchange activities, and the Overseas SPV and its offshore subsidiary may
be restricted in their ability to contribute additional capital to their PRC subsidiaries.
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Pursuant to the Circular of the SAFE on Further Simplification and Improvement in
Foreign Exchange Administration on Direct Investment (ટҳ༟̮
, “SAFE Circular 13”), promulgated by SAFE and effective on June 1,
2015, the power to accept foreign exchange registration was delegated from local SAFE to
qualified banks.
As advised by our PRC Legal Adviser, Dr. Yu, Dr. Huang and Ms. Tao have completed
the required initial registration under SAFE Circular 37 and SAFE Circular 13.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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OVERVIEW
We are a leading provider of advanced driver assistance systems (“ADAS”) and
autonomous driving (“AD”) solutions for passenger vehicles, empowered by our proprietary
software and hardware technologies. Our solutions combine algorithms, purpose-built software
and processing hardware, providing the core technologies for assisted and autonomous driving
that enhance the safety and experience of drivers and passengers. We are a key enabler for the
smart vehicle transformation and commercialization with our integrated solutions deployed on
mass scale. We are the first and have consistently been the largest Chinese company providing
integrated ADAS and AD solutions in terms of overall solution installation volume since the
mass deployment of our solutions in 2021, according to CIC. We ranked the fourth among all
global ADAS and AD solution providers in China by overall solution installation volume in
2023 and the first half of 2024, with a market share of 9.3% and 15.4%, respectively. We act
as a tier-two supplier and have a large, global customer base of industry-leading OEMs and
tier-one suppliers for vehicles manufactured in China. Our business has achieved significant
growth at scale over the past three years as we capitalize on the mega industry tailwind as a
market leader. As of June 30, 2024, a total of 25 OEMs selected our ADAS and AD solutions
for implementation in one of their vehicle models, by directly engaging with us or through our
tier-one supplier customers.
Smart vehicle transformation is a mega trend that has been reshaping the estimated
US$13.0 trillion global automotive, mobility and road freight industries in 2023. ADAS
capabilities are increasingly common in cars nowadays, thanks to the rapid technology
advancement and higher consumer demand in recent years. This is demonstrated by the ADAS
penetration rates of over 50% in both the global and Chinese markets in 2023, according to
CIC. Meanwhile, industry participants continue to make ongoing, inexhaustible efforts to
march towards broader adoption of AD with increasing level of automation. We believe the
demand for driving automation solutions will continue to grow significantly in the years to
come. According to CIC, the global ADAS and AD solutions market presents a RMB61.9
billion opportunity in 2023 and is expected to grow at a CAGR of 49.2% through 2030 to reach
RMB1,017.1 billion.
However, a few core challenges need to be addressed to realize mass adoption of smart
vehicles enabled by ADAS and AD. ADAS and AD systems are highly complex, requiring high
processing capacity, high reliability, low latency and low energy consumption, and need to be
produced at affordable costs. Therefore, ADAS and AD solutions require the co-design of
software and hardware to achieve the necessary system-level performance and reliability of
driving functions. Deployment of such solutions on vehicles also requires optimal energy
efficiency while guaranteeing application performance. In addition, mass adoption of ADAS
and AD needs an open platform approach where value chain participants can all join and
continuously leverage the enabling technologies to develop functions and features that suit
their needs while reducing time to market.
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By architecting our solutions to address these fundamental challenges, we build the core
enabling technology for smart vehicle revolution. Our solutions enable the full spectrum of
driving automation functions for passenger vehicles from mainstream assisted driving to
advanced levels of autonomous driving. Built through nine years of development, testing and
iterative improvements, our integrated solutions have been successfully validated,
commercialized and deployed on mass scale. With our product maturity, technological
advantage and commercial success, we have established ourselves as a clear market leader. The
comprehensiveness and uniqueness of our solution matrix, as summarized below, allow us to
rapidly penetrate the market, achieve high customer stickiness and capture a significant portion
of the value chain.
We offer a comprehensive portfolio of ADAS and AD solutions, namely Horizon Mono,
Horizon Pilot and Horizon SuperDrive, to address different customer needs from mainstream
assisted driving (Level 2) to advanced level autonomous driving (Level 2+ in China for
regulatory compliance. According to CIC, in terms of level of autonomous driving, as of the
Latest Practicable Date, there is no mass-produced passenger vehicle at autonomous driving
Level 3 or above in China.
 Horizon Mono. Horizon Mono is our active safety ADAS solution designed to
improve daily driving safety and comfort. It enables basic functions such as
automatic emergency braking (AEB) and intelligent high beam (IHB) to improve
passenger and road-user safety, as well as comfort functions such as adaptive cruise
control (ACC) and traffic jam assist (TJA) to improve driving experience. We embed
Journey 2 or Journey 3 processing hardware in Horizon Mono currently.
 Horizon Pilot. Horizon Pilot is our highway navigate on autopilot (NOA) solution,
categorized as an AD solution, that provides safe and efficient driving experience.
In addition to enhanced active safety features, Horizon Pilot performs more
advanced tasks such as automatic ramp on/off, autonomous merge-in and exit during
traffic congestion, automated lane change, highway auto-pilot and more. These
functions improve driving and riding experience for end users, especially in
long-distance commute. At the same time, Horizon Pilot provides advanced parking
functions such as auto parking assist (APA) and automated valet parking assist
(VPA). We embed Journey 3 or Journey 5 processing hardware in Horizon Pilot
currently.
 Horizon SuperDrive. Horizon SuperDrive is our AD solution equipped with our
most advanced processing hardware. It is designed to achieve smooth and
human-like autonomous driving in all urban, highway and parking scenarios. It is
expected to tackle a comprehensive range of complex road conditions with more
assertive and interactive driving style, featuring smooth execution of obstacle
avoidance, gentle and human-like braking, dynamic speed control, smooth execution
of unprotected left turns, and more. We plan to embed Journey 6, our latest
processing hardware in Horizon SuperDrive.
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Our ADAS and AD solutions are built on a comprehensive stack of technologies,
including algorithms for driving functions, the underlying processing hardware, as well as
various tools to facilitate software development and customization.
 Algorithm. Our algorithms play an important role for our proprietary software-
hardware co-designed solution. They are purpose-built and optimized for a wide
spectrum of driving scenarios. Our full spectrum of algorithm capabilities range
from perception, environmental modeling, planning and control to driving
automation functions, fulfilling the development requirement for all levels of ADAS
and AD solutions.
 Brain Processing Unit (BPU) . BPU is our proprietary processing architecture
tailored for automotive applications, including ADAS and AD functions. We
incorporate our deep understanding of advanced software and algorithms into BPU
architecture to empower the processing hardware with outstanding performance,
high energy efficiency, low latency when running automotive algorithms.
 Horizon OpenExplorer . Horizon OpenExplorer is our flexible algorithm
development toolkit that encompasses a series of ready-to-use modules and
reference algorithms. With a user-friendly interface and abundant auxiliary tools,
OpenExplorer enables the users to accurately and efficiently deploy algorithms and
software on our processing hardware.
 Horizon TogetheROS. Horizon TogetheROS is a safe, simple and user-friendly
autonomous driving embedded middleware. TogetheROS provides standardized
automotive grade services and tools to help accelerate development, integration and
verification efforts to boost mass production readiness.
 Horizon Automotive Intelligence Development Instrument (AIDI) . Horizon AIDI
is our software development platform, designed to accomplish automatic iterative
improvements of models with enhanced efficiency. By offering various tools and
application interfaces, as well as streamlined workflow, AIDI helps software
developers optimize the entire software development process from deployment,
training, verification, evaluation, to iteration.
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TECHNOLOGY
Algorithm Horizon TogetheROS
SOLUTIONS
BPU Horizon OpenExplorer Horizon AIDI
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Horizon Mono Horizon Pilot Horizon SuperDrive
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We take a software and hardware co-optimization approach, which we believe is crucial
in ensuring optimal processing efficiency at affordable costs, hence the right technological path
towards an autonomous driving future. We also believe that by offering flexible collaboration
methods and open development tools, we enable our ecosystem partners to accelerate mass
adoption of autonomous driving solutions. Such key philosophies underpin our product design
and technology architecture, leading to these clear differentiating advantages of our solutions:
 System performance. Our software and hardware are developed and optimized
hand-in-hand to ensure optimum system performance when integrated.
 High efficiency at affordable costs. Our solutions are highly efficient due to our
co-optimization approach, delivering outstanding processing performance with low
power consumption and low latency, which are crucial for automotive-grade
deployment. In addition, our solutions are produced at affordable costs, laying the
foundation for mass scale adoption.
 Open platform. We make available a series of base models, toolchains, frameworks
and reference solutions to enable our customers and ecosystem partners to develop
their own software applications catering to specific needs, helping them
significantly shorten development cycles and reduce development costs.
Our distinguishing solutions and open platform approach have won us a growing and
loyal base of customers and ecosystem partners. We act as a tier-two supplier and work both
with OEMs directly and through tier-one suppliers to install our integrated ADAS and AD
solutions into mass-produced vehicles. Our integrated solutions have been selected by 27
OEMs (42 OEM brands) for implementation in over 285 car models, with price range from
approximately RMB86,800 to RMB429,800, as of the Latest Practicable Date. We had 152
cumulative number of car models for which we achieved SOP as of the Latest Practicable Date.
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All top 10 Chinese OEMs have selected our solutions for mass production into their passenger
vehicle models. We have accumulatively obtained design-wins for 44, 101, 210 and 275 car
models, net of terminated projects, as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively. We obtained more than 100 new design-wins of car models in 2023 alone.
Design-win does not guarantee sales order. In 2021, 2022 and 2023 and for the six months
ended June 30, 2024, we had five, four, four and nil terminated projects, respectively. The
following table presents selected and publicly announced key OEMs and tier-one suppliers who
have adopted our solutions, as well as chosen ecosystem partners. These ecosystem partners
collaborate with us to address challenges ranging from software development to the integration
of our solutions.
Selected Ecosystem Partners
Selected OEM / Brand Customers Selected Tier-one Supplier Customers
We have a highly flexible and scalable business model. Our customers can choose any
solution or any combination of components in our whole stack offerings from algorithms to
software and development tools and to processing hardware. Such flexibility has helped us
continuously acquire new customers and expand market share. In addition, our business model
is highly scalable. We typically scale deployment of our solutions with mass production of our
OEM customers’ nominated vehicles. In addition, OEM customers who have found success
with our solutions in one of their vehicle models would typically expand collaboration with us
to more vehicle models. Furthermore, we have the opportunity to sell more advanced solutions
and additional components from our offerings to our customers. These help us build a stable
pipeline of contracts in the years to come.
Our flexible and scalable business model has led to significant growth of our business in
the Track Record Period and lays the foundation for our continued success in the future. Our
revenue increased by RMB439.0 million, or 94.1%, from RMB466.7 million in 2021 to
RMB905.7 million in 2022, and further increased by RMB645.9 million, or 71.3%, to
RMB1,551.6 million in 2023. Our revenue increased by RMB563.1 million, or 151.6%, from
RMB371.5 million for the six months ended June 30, 2023 to RMB934.6 million for the six
months ended June 30, 2024. Our gross profit increased from RMB331.0 million in 2021 to
RMB627.7 million in 2022, and further to RMB1,094.3 million in 2023. Our gross profit
increased from RMB226.6 million for the six months ended June 30, 2023 to RMB738.7
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million for the six months ended June 30, 2024. We had high and stable gross profit margin of
70.9%, 69.3% and 70.5% in 2021, 2022 and 2023, respectively. Our gross profit margin
increased from 61.0% for the six months ended June 30, 2023 to 79.0% for the six months
ended June 30, 2024.
OUR MARKET OPPORTUNITIES
The ongoing smart vehicle transformation is highly disruptive. As an early form of this
ongoing technology-driven transformation, ADAS functions have gained traction among OEMs
and are quickly becoming standard features of new car models nowadays. Recognizing such
trend, OEMs around the world have begun to ramp up their adoption of ADAS solutions as the
key competitive edge to compete in the global automotive industry. Meanwhile, it is expected
that wide adoption of AD technology could be realized as early as 2025, which is set to
revolutionize the global automotive, mobility and road freight industries, with a combined
estimated market size of US$20.0 trillion in 2030. The penetration of AD is expected to reach
10.5% and 16.4% globally and in China in 2025, respectively, according to CIC. AD solutions
are expected to upgrade to provide more advanced features to tackle complex driving scenarios.
As a result, more processing capacity and more advanced algorithms are critical for the
evolution of the AD solutions in the future, which will lead to higher dollar content per vehicle
for AD solutions. The size of the global ADAS and AD solutions market has reached RMB61.9
billion in 2023 and is expected to grow to RMB1,017.1 billion by 2030, representing a CAGR
of 49.2% from 2023 to 2030, according to CIC.
As the largest automotive market in the world in terms of sales volume, China has also
become the world’s largest ADAS market and largest AD market in 2023, driven by an
increasing focus on vehicle safety, a growing preference for enhanced driving and riding
experience, and an increasing amount of investment and support. By 2030, the penetration rate
of smart vehicles with ADAS or AD solutions is projected to reach 99.7% in China, according
to CIC. China presents unique traffic conditions that add to the complexity of AD, hence
demanding more sophisticated AD solutions. Consumers in China have shown great acceptance
and enthusiasm for smart vehicles and are willing to pay a premium for features that improve
driving safety and experience. These factors could drive OEMs to adopt more ADAS and AD
solutions in China to tailor their automobile products to the Chinese consumers and market.
The size of China’s ADAS and AD solutions market has reached RMB24.5 billion in 2023 and
is expected to grow to RMB407.0 billion by 2030, representing a CAGR of 49.4% from 2023
to 2030, according to CIC.
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OUR COMPETITIVE STRENGTHS
Established Market Leader with Significant Commercial Success and Substantial
Barriers
We are a leading provider of ADAS and AD solutions for passenger vehicles, empowered
by our proprietary software and hardware technologies. Our highly competitive ADAS and AD
solutions with market-proven performance have become the go-to choices for many OEMs and
tier-one suppliers. Such rapidly expanding commercialization has solidified our leading market
position and established our branding that can drive and accelerate our growth in the future.
The automotive industry holds strict quality standards to safeguard driver and passenger safety.
Therefore, OEMs typically go through rigorous validation process to onboard suppliers to
ensure product reliability, performance and adherence to top industry standards. As a result, it
takes significant time and efforts to go through these challenges and prove a trust-worthy
supplier. With our established reputation and track record of consistently delivering high-
quality solutions, we managed to win the trust and confidence from OEMs, further solidifying
their leading position.
Leveraging our leadership position, we are expanding market share and winning more
contracts. For example, in 2023 alone we obtained more than 100 new design-wins of car
models. Capitalizing on our market position and reputation, we have successfully built our
fortress and are well positioned to further benefit from it in the future. Such substantial barriers
built upon our market position and reputation will keep propelling our business growth and
widening our leadership.
Localized Expertise in China Ensuring Our Leading Position Today and in the Future
Our localized expertise in China is a core competitive advantage and serves as the
bedrock of our future growth. According to CIC, China is the largest automotive market in the
world in terms of sales volume in 2023. In the same year, China has the world’s largest ADAS
and AD market, driven by an increasing focus on vehicle safety, a growing preference for
enhanced driving and riding experience, and an increasing amount of investment and support.
The size of China’s ADAS and AD solutions market has reached RMB24.5 billion in 2023 and
is expected to grow to RMB407.0 billion by 2030, representing a CAGR of 49.4% from 2023
to 2030, according to CIC. Our commitment to understanding and addressing the unique
challenges and opportunities in China ensures that we not only thrive in the present but also
maintain a competitive edge in the future.
Our localized expertise sets us apart from our competitors and ensures the
competitiveness of our solutions in the ADAS and AD market in China. Our extensive research
and development efforts, coupled with years of local business operations, have equipped us
with insightful knowledge and practicable experience in designing our ADAS and AD solutions
to address China’s unique and challenging road conditions. We have a proven record of
developing ADAS and AD solutions that are suited for deployment in China, as manifested by
the fact that all top 10 Chinese OEMs have selected our solutions for mass production into their
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passenger vehicle models. In addition, with a dedicated team of professionals with valuable
insights in China’s automotive industry landscape, we are committed to providing exceptional
on-the-ground customer support in China, differentiating from other ADAS and AD solution
providers, particularly certain global competitors who lack local insights. Moreover, our
in-depth understanding of the business and regulatory environment in China enables us to
effectively navigate through complex regulatory landscape.
Large, Blue-chip Customer Base with High Stickiness
We have maintained a large base of blue-chip customers that are established leaders in the
automotive industry. All top 10 Chinese OEMs have selected our solutions for mass production
into their passenger vehicle models. Additionally, we have formed joint ventures with global
industry giants such as V olkswagen Group, evidencing our position as a trusted partner in
assisted and autonomous driving for passenger vehicles. In addition to OEMs, we have also
formed strategic partnerships with global leading tier-one supplier customers such as Aptiv,
Bosch, Continental, Denso and ZF. These customers and partners of ours represent the most
advanced technology and largest scale production and are the most influential forces in leading
the global smart vehicle transformation, keeping us at the leading edge of market evolution and
reinforcing our role as a leading provider of ADAS and AD solutions for passenger vehicles.
We form a long-term relationship with our customers by deeply integrating our ADAS and
AD solutions into their systems and partnering with them in the development of specific
features to meet their needs. We believe such integration and collaboration ensure a symbiotic
partnership that fosters loyalty and mutual success. As a result, our customers are inclined to
maintain these relationships, given that the substantial interdependence renders the prospect of
switching challenging and unlikely due to costs of system redesign and loss of customized
functions.
Integrated Solutions with Co-optimized Software and Hardware
We provide integrated ADAS and AD solutions encompassing algorithms, processing
hardware and a suite of development tools. In solution design and development, we specialize
in a software-hardware co-optimization approach. With our strong capabilities in both software
and hardware, we are able to design hardware that better meets the evolving demands of
software and algorithms in the automotive industry. Simultaneously, our sophisticated software
and advanced algorithms can fully utilize the potential of our processing hardware to achieve
optimal system-level performance. Leveraging such co-optimization, we are able to provide
our customers with software-hardware integrated solutions which operate at optimal efficiency,
high performance and minimal system latency.
The development, verification and testing of our solutions require years of dedicated
research and engineering, strong algorithmic capabilities as well as deep industry know-how
in hardware engineering and system integration. Our sophisticated algorithms are tailored for
a wide range of complex driving scenarios and have received recognitions and awards from
reputable journals and competitions in the industry for their outstanding efficiency and
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performance. To better support our customers in the cascading process of production
development, we also encompass strong system design and engineering capabilities, which are
further strengthened by our rich mass-production experiences.
Our unique combination of software, hardware and engineering capabilities represents a
significant competitive advantage, establishing higher barriers to entry.
Open Technology Platform to Foster Thriving Ecosystem
Openness is our philosophy, as we want to empower automotive industry participants with
an open platform that can facilitate their innovation and product development, and thus
accelerating the adoption of ADAS and AD in mass production. To serve that purpose, we
provide an open platform to allow OEMs and third-party developers to develop ADAS and AD
features tailored to specific needs, using our algorithms and processing hardware as the base.
Our open technology platform consists of a comprehensive suite of development tools,
including but not limited to OpenExplorer, TogetheROS and AIDI. Please see “— Our
Technologies” for details.
Our open, flexible and easy-to-use tools obviate the need for users to build complex
ADAS and AD software and systems from the ground up, thus largely lowering the barriers and
improving the efficiency of product development. The users include not only our customers,
but also upstream and downstream ecosystem partners with synergistic capabilities, such as
domain control hardware and module companies. Together with these partners, we collaborate
on system-level planning and go-to-market strategies to drive economies of scale in
standardized products. In addition, as more customers and ecosystem partners adopt our
solutions and technologies, we are able to collect feedbacks and iterate our solutions more
rapidly, hence creating a Matthew effect, forming a virtuous cycle to maintain our product
leadership.
Highly Flexible and Scalable Business Model
Our business model is characterized by its flexibility. We allow customers to choose any
solution or any combination of components in our whole stack offerings from algorithms to
software and development tools and to processing hardware, showcasing our ability to meet
diverse and tailored customer demand.
Benefiting from such flexibility, we are able to continually attract new customers to our
platform and expand our market share. Our design-wins in 2023 were more than three times of
that in 2021, and the installation volume of our solutions increased by fourfold from 2022 to
2023. According to CIC, our market share in ADAS and AD solutions increased by
approximately seven percentage points from 2022 to 2023 in terms of ADAS and AD solution
installation volume in China.
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Moreover, our business model also exhibits high scalability. As our customers ramp up
production scale, our business scales in tandem with our customers’ increasing production
volumes of vehicles equipped with our solutions. For instance, Li Auto significantly increased
production of its L series vehicle model, equipped with our solutions.
Furthermore, following initial success with our solutions, our customers tend to adopt
more categories of our solutions for additional vehicle models. This is primarily driven by the
exceptional value we created for our customers and the considerable costs associated with
switching to other suppliers and the platform design approach favored by mainstream OEMs,
which incentivizes OEMs to apply the same solutions to all vehicle models with the same
platform design. Additionally, we have the opportunity to sell more advanced solutions. For
example, BYD has a wide range of demands for the advancing driving automation from its
passenger vehicle consumers. We can help meet such requirements with our diverse solution
portfolio, highly collaborative and scalable business model. Through our first cooperation with
BYD, we gained in-depth understanding of their customized requirements across all stages of
development, production and after-sales processes, and delivered highly satisfactory services
to BYD. BYD has established a strategic and synergistic partnership with us. Our collaboration
with BYD currently covers various driving automation solutions targeted for different
scenarios on multiple vehicle platforms. During the Track Record Period, the number of our
design-wins with BYD has significantly increased.
In addition, our standard solutions portfolio and toolkits can serve the variety of demand
from different OEMs for different vehicle models. This enables us to rapidly scale our
production without spending extra development resources and efficiently cater to new
customer demand to further grow our business.
Visionary and Experienced Management Team, and Talents with Competitive Mindset
Our founding and executive team consists of visionary and experienced leaders in the
industry with a combination of technical expertise, commercial acumen and organizational
management skills. Our founders have published hundreds of research papers which have
received thousands of citations. They were instrumental in initiating one of China’s first
autonomous driving project in 2013. They also have unique strategic insights and strong
managerial skills to lead our operations to achieve financial success, as demonstrated by our
business performance during the Track Record Period.
Benefiting from the wealth of experience brought by our founding and executive team, we
are able to establish a proven track record of successful product development and
commercialization. Their ability to navigate evolving operating environment and execute
strategic initiatives has been pivotal in driving our growth. Furthermore, we can attract many
R&D talents to continue pushing the boundaries in product innovation to advance the
autonomous driving industry.
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Integral to our success is our competitive mindset, characterized by pillars of innovation,
meritocracy, transparency, and excellence. This mindset fosters an environment where
creativity flourishes, ideas are valued, and high standards are upheld. It enables us to remain
agile, innovative, and competitive, ensuring that we stay at the forefront of technological and
commercial leadership.
OUR GROWTH STRATEGIES
Continue to Invest in Technology and Expand Our Solutions Portfolio to Capitalize on the
Industry Tailwind
According to CIC, the industry will witness significantly growing customer demands for
ADAS and AD solutions in terms of both volume and solution complexity. We plan to continue
our investments in technology to capture such growth and meet customer needs. We are
expanding our solutions portfolio, including developing more advanced AD solutions based on
our next generation of hardware. Such hardware embodies an optimized architecture,
augmented performance capabilities, higher safety standard and enhanced compatibility with
more categories of sensors. We also intend to continue to invest in advanced algorithms and AD
software applications that are co-designed and co-optimized with our new generation of
hardware to further optimize system level performance. These advanced solutions are designed
to achieve automation in comprehensive range of complex road conditions with high level of
sophistication, providing drivers and passengers with a safer, more efficient and more
comfortable experience.
Win Additional Mass Production Contracts with Existing and New Customers
We plan to deepen collaboration with our existing customers and implement our solutions
on additional vehicle models of theirs. By becoming an essential partner for our OEM
customers’ global platforms, we not only strengthen our current relationships with them but
also increase our prospects of winning further mass production contracts. We believe this
approach ensures that our solutions become embedded within our OEM partners’ products. At
the same time, we can grow alongside with our OEM customers, aligning ourselves closely
with their expansion plans and reinforcing our role as a trusted partner. We also plan to grow
the size of our customer base through new design-wins from new customer, leveraging our
current industry-leading position and technology know-how.
Continue to Enrich Our Ecosystem
Building an ecosystem around our open, scalable and efficient platform has been a core
part of our strategy. OEMs are increasingly favoring highly open, flexible and compatible
platforms such as ours that facilitate them to customize and build products that best suit their
design preferences. To that end, we will continue to enhance and broaden our development
portfolio, such as OpenExplorer, TogetheROS and AIDI, and services to better support our
customers and partners, enabling them to design, develop and mass produce their customized
products in a faster and more cost-efficient manner.
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Attract Top Talents and Expand Our Team
We intend to continue our efforts in attracting top technology talents from well-known
institutions and industry peers worldwide to augment our capabilities in both software
development and hardware design. We also intend to enhance our field engineering team in
order to improve our customer service capabilities and strengthen our relationships with
various ecosystem participants. To further expand our business scale, capture market
opportunities and maintain business relationships, we plan to expand and strengthen our sales
and marketing team to ensure satisfaction of our existing customers, while exploring the
opportunities to obtain additional mass production contracts from more OEMs and tier-one
suppliers.
We will continue to allocate significant resources to the development of more advanced
solutions to enable higher level autonomous driving. Our R&D personnel constitute 73.1% of
our total employee base as of June 30, 2024, underscoring our commitment to innovation.
Continue to Enable Global Partners
We aim to enable global OEM and tier-ones to become more competitive in China and
globally. We believe our success with Chinese OEMs is replicable to global OEMs with our
highly flexible and scalable model. Many global OEMs, including our partner V olkswagen
Group, are enhancing their ADAS and AD capabilities in China and globally. We can facilitate
the upgrades of their models and expedite their research and development efforts. Such
collaborative approach will strengthen our partnership and brings us industry visibility on a
global scale.
We also plan to trailblaze the global markets by building partnerships with global industry
leaders. Japan, South Korea and Europe will be our focus markets for our global expansion.
After initial market research and exploration, we have made meaningful progress by
establishing strategic and commercial partnership with global industry leaders in these
markets. For example, we have entered into long-term collaborations and strategic partnerships
with leading global tier-one suppliers such as Aptiv, Bosch, Continental, Denso and ZF. We and
Aptiv reached a strategic cooperation in developing fully integrated hardware and software
solutions tailored for OEMs of passenger vehicles in China. Such solutions were integrated in
vehicle models mass produced in 2024. We are collaborating with Bosch on mass production
of vehicle models embedded with our next generation processing hardware. We and
Continental are co-developing through a joint venture next generation driving and parking
integrated domain controller which will support advanced level autonomous driving (Level 2+)
with higher-level of automated parking assist functionality. We are collaborating with Denso
on mass production of vehicle models embedded with our next generation processing hardware.
We and ZF reached a strategic cooperation in developing ZF’s high-performance computing
platform solution. The first ZF solution designed with our assistance is expected to be available
in the market in 2024. While our current long-term collaborations and strategic partnerships
with these leading global tier-one suppliers primarily target the Chinese market, we are of the
view that such collaborations and partnerships will provide us with valuable insights into the
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needs and expectations of global tier-one suppliers and global OEMs. This, in turn, will
enhance our understanding of global market trends, industry demand and best practices in
foreign regions where these global tier-one suppliers have significant influence, including
Japan, South Korea and Europe. Therefore, we believe these partnerships pave the way for our
market expansion in global regions and we will continue to explore such partnership
opportunities with global industry leaders.
OUR PRODUCTS AND SERVICES
Overview
We offer a comprehensive portfolio of ADAS and AD solutions, namely Horizon Mono,
Horizon Pilot, and Horizon SuperDrive, to address different customer needs from mainstream
assisted driving to advanced levels of autonomous driving. Built through nine years of
development, testing and iteration, our Horizon Mono and Horizon Pilot solutions have been
successfully validated, commercialized and deployed on mass scale, and we are working with
a handful of OEMs who plan to implement our Horizon SuperDrive solution. We strive to
constantly improve our solution offerings for the best experience of our customers and end
customers.
We act as a tier-two supplier in the industry supply chain and generate the vast majority
of our revenue from the sale of ADAS and AD solutions to OEMs and tier-one automotive
suppliers as well as the corresponding licensing and services. Our customers under the product
solutions segment are primarily OEMs and tier-one suppliers. We record revenue primarily
from sale and delivery of our ADAS and AD solutions (“Solution Delivery Model”) and/or
providing licensing and related services (“Licensing and Service Model”) to our customers.
Under Solution Delivery Model, we generate revenue from the sale and delivery of our
solutions, which combine our self-developed processing hardware with proprietary algorithms
and software, to OEMs and tier-one suppliers. The price of each product solution depends on
the complexity and amount of algorithm and software involved, as well as the type and quantity
of processing hardware integrated. Within product solutions, we allow our customers to choose
any solution or any combination of components in our whole stack offerings from algorithms,
software, processing hardware to development toolkit, with multiple adaptable components
usually provided as a package, and customers are charged the package price instead of on a
standalone basis.
With respect to Licensing and Service model, we generate revenue from licensing
algorithms and software and delivering relevant codes and design manual to customers for
licensing fee, enabling them to develop their own ADAS and AD applications. We typically
charge licensing fees in a pre-determined fixed amount based on the complexity, advancement
and variety of algorithms, software and development toolkits involved. In less common cases,
we charge recurring royalties referenced to the quantity of mass-produced vehicles based on
similar factors. We maintain a large pool of codes of algorithms and software of our ADAS and
AD solutions that we can license under an open platform or white box approach. Our customers
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have the flexibility to select algorithm and/or software of their needs and integrate such
intellectual properties into their products to achieve desired ADAS and AD functions. In
addition to licensing, we also provide design and technical services to customers for a fee,
helping our customers achieve customized ADAS and AD functions. Our service fees are
generally set with reference to expertise and number of engineers involved, duration,
complexity of work and functionalities developed. See “— Licensing and Services” for further
details and “Industry Overview — Overview of the ADAS and AD Solutions Market — Open
Platform and Close Platform” for features of the open platform approach.
We build our solutions with the philosophy of software and hardware co-optimization.
Such key philosophy underpins our product design and technology, differentiating our
solutions in terms of performance, efficiency and openness. Our software serves as the
foundation of our solutions, of which algorithms, BPU, OpenExplorer, TogetheROS and AIDI
each plays an important role and works seamlessly to empower our solutions. We adopt a
highly flexible and scalable business model. We allow our customers to choose any solution or
any combination of components in our whole stack offerings from algorithms to application
software and development tools and to processing hardware. Such business model has also
helped us continuously acquire new customers and expand market share.
We frequently and consistently interact with OEMs regarding their solution needs and
generally receive visibility, typically a few years in advance, regarding the functions of
solutions as well as budget and number of vehicle models expected to incorporate our
solutions. We price our solutions based on specific customer needs and solution value. When
we provide solutions to various customers, including both OEMs and tier-one suppliers, we
remain flexible in combination of offerings. Our customers often prefer to work with
open-platform and to choose flexible combinations like those we offer. More specifically,
OEMs often seek to develop new products in tandem with solution providers, with an intention
to build highly differentiated and customized products based on our flexible offerings, while
minimizing the risks of unsuccessful deployment and commercialization. As of the Latest
Practicable Date, all of the top 10 Chinese OEMs have selected our solutions for mass
production into their passenger vehicle models. The following chart sets forth our business
collaboration flow of ADAS and AD solutions with our customers, suppliers and ecosystem
partners.
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OEMs
ADAS and AD Solutions Provider as A Tier-two Supplier
Tier-one Suppliers
Payments(1)Product solutions &
License and services(2)
PaymentsADAS and AD
systems integration
Manufacturers(3) Assembly and testing
service providers(4)
IP and EDA
vendors IT vendors
transport the completed interim processing hardware products(4)
Place orders &
Payments(3)
Completed processing
hardware products
(4) Payments(5) Third-
party IPs
(6) Payments(7)
Data storage
facilities and
cloud services
(8)
Payments(9)
fund flowsproducts and services flows
Payments(1)
Customers
Suppliers
Product solutions &
License and services
(2)
Notes:
(1) Our customers procure our product solutions, the price of which depends on the type of algorithm and software
involved, as well as the type and number of processing hardware integrated, or pay service fees, based on type
of services and the amount of personnel or resources involved.
(2) We sell and deliver our product solutions, which combine our self-developed processing hardware with
proprietary algorithm and software, or license our algorithm, software and development toolkits to our
customers, enabling them to develop their own applications catering to specific needs. Our customers,
including tier-one suppliers and OEMs, may choose to purchase an entire solution from us, or licensing in our
software or algorithm to develop products of their own. Generally, OEMs purchase our solutions for
deployment on their passenger vehicles, and tier-one suppliers purchase our solutions to integrate with their
products for further deliveries to OEMs.
(3) We engage Supplier A, an industry leading semiconductor manufacturer, as the manufacturer of our processing
hardware for our product solutions. We place actual orders according to our business needs. We make
prepayments to Supplier A prior to shipment.
(4) Upon completion of the manufacturing process, Supplier A then typically transports the completed interim
products to Supplier C, our assembly and testing provider. Supplier C completes the manufacturing of
processing hardware as a typical outsourced assembly and testing vendor and delivers the completed products
to us.
(5) Supplier C issues bills based on their assembly and testing progress, and we make payment accordingly.
(6) We in-license certain third-party IPs such as interface, hardware functioning block and electronic design
automation tools from IP and EDA vendors.
(7) Depending on the particular in-license, we either pay pre-determined license fees for in-licensed IP and EDA
or services fees along with in-licensing arrangement, or royalties on a price-per-unit basis for every processing
hardware.
(8) We procure data storage facilities and cloud services from notable IT vendors in the industry. Data storage
facility providers supply us secure and stable data storage environment. Cloud service suppliers provide
pre-built functionalities and services that we can integrate into our development needs.
(9) Depending on the services we used, we pay IT service fee to IT vendors.
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Automotive Solutions
We offer ADAS and AD solutions that perceive and process surrounding inputs, and
deliver strong processing capabilities and efficiency. Our ADAS and AD solutions combine a
series of software and hardware to improve driving experience, keeping drivers and passengers
safe and making trips more comfortable and more enjoyable.
Horizon Mono
Horizon Mono is our active safety ADAS solution designed to improve daily driving
safety and comfort. Globally, we were the first to launch an 8-megapixel monocular
vision-only ADAS solution, and is still the only provider of this offering among Chinese
providers, according to CIC. Horizon Mono can identify various objects, such as pedestrians,
vehicles, roads and traffic signs. It provides active safety functions such as automatic
emergency braking (AEB) and intelligent high beam (IHB) to improve passenger and road-user
safety, as well as comfort functions such as adaptive cruise control (ACC), lane centering
control (LCC), intelligent cruise assist (ICA) and traffic jam assist (TJA) to improve driving
experience. According to CIC, we are the largest Chinese ADAS solution provider with a
market share of 21.3% in 2023, in terms of ADAS installation volume to Chinese OEMs in
China.
Horizon Mono is supported by our proprietary software portfolio and processing
hardware. The number and choice of processing hardware may differ based on specific
customer needs. Horizon Mono can work with third-party sensors to provide front view
perception and support the qualifications of E-NCAP (2023) and C-NCAP (2024) five star
ratings, representing industry-leading safety capabilities as of December 31, 2023, according
to CIC. In addition, Horizon Mono can reach a successful rate of 90% for common traffic sign
recognition in China, 95% for speed limit traffic sign in the EU and 98% for speed limit traffic
sign in pan-European countries, Southeast Asia and South America. Moreover, up to the speed
of 130 kph, Horizon Mono can support ACC for comfortable speed adjustments in response to
real-time traffic conditions. Horizon Mono also supports detection of unconventional vehicles
such as three-wheeled electric vehicles, elderly mobility scooters and delivery vehicles that are
prone to tipping over or rolling over. Horizon Mono can also integrate 360-degree fisheye
perception for APA. Our Journey 2 or Journey 3 processing hardwares are currently embedded
in Horizon Mono.
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The following table sets forth the structure and selected functions for Horizon Mono:
Solution
ADAS Algorithm
and Software
Processing Hardware
A Typical Sensor Configuration*
Vision Sensors
Radar (Optional)
Horizon Mono
Illustration of Selected Functions
Automatic Emergency Braking
Adaptive Cruise Control
* Solution may be configured to customer’s choice of third-party sensor sets
The first series production of Horizon Mono was launched in 2020 and various upgrades
have been made since then. Built on our proprietary processing hardware and third-party
sensors, Horizon Mono is capable of providing mainstream ADAS functions. With these
functions, Horizon Mono can reduce the stress and fatigue level of drivers, improve their
awareness of the surroundings and promote safer driving practice, as well as increase driving
confidence. In addition, with our deep local knowledge and insight, Horizon Mono is designed
to better suit the unique road scenarios in China. Moreover, our Horizon Mono solution can
evolve with the upgrades of our processing hardware. It may be configured to different sensor
portfolios to meet the diverse needs of our customers. As of December 31, 2023, Horizon Mono
has been the choice of more than 200 OEM car models, including many of the industry’s
best-selling models.
Horizon Pilot
Horizon Pilot is our highway navigate on autopilot (NOA) solution, categorized as an AD
solution, that provides safe and efficient driving experience. In addition to enhanced active
safety features, Horizon Pilot performs more advanced tasks such as automatic ramp on/off,
autonomous merge in and exit during traffic congestion, automated lane change, highway
auto-pilot and more. These functions improve driving and riding experience for end users,
especially in long-distance commute. At the same time, Horizon Pilot provides advanced
parking functions such as auto parking assist (APA) and valet parking assist (VPA).
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Horizon Pilot solution is designed to empower vehicles with functions which support
qualifications of Euro-NCAP (2023) and C-NCAP (2024) five star standard. In addition,
Horizon Pilot can reach more than 200 km safety MPI in the average traffic flow and realize
high performance MPI in complex traffic conditions. MPI, or miles per intervention, is a
performance metric used to measure the distance a vehicle can travel autonomously before
requiring human intervention or driver takeover. According to CIC, such MPIs represent
industry-leading NOA capability. Moreover, Horizon Pilot is capable of covering highways
nationwide in China.
The following table sets forth the architecture and representative features of Horizon
Pilot:
Solution
ADAS/AD Algorithm
and Software
Processing Hardware
A Typical Sensor Configuration*
Vision Sensors
Radars
Horizon Pilot
Illustration of Selected Functions
Automatic Ramp on/off Automated Lane Change
Auto Parking Assist Valet Parking Assist
* Solution may be configured to customer’s choice of third-party sensor sets
As of December 31, 2023, Horizon Pilot has been the choice of more than 25 car models.
For example, the Li Auto flagship six-seat family SUV Li L9 Pro is equipped with our Horizon
Pilot solution. By utilizing our processing hardware and third-party sensors, this solution is
capable of achieving a vision-centric 360-degree perception capability, allowing for more
precise and timely detection of the surrounding traffic environment and participants. With
Horizon Pilot, the Li Auto Li L9 Pro can deliver smoother performance in advanced driver
assistance functions and offers a wide range of features such as high-speed point-to-point
navigation assistance, automatic lane change, automatic ramp on/off, intelligent cruise control,
and auto parking assist. Horizon Pilot helps the Li Auto Li L9, Li L8 and Li L7 series to
establish their positions as leading smart vehicles in the current Chinese market in terms of
sales volume.
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Horizon SuperDrive
Horizon SuperDrive is our autonomous driving (AD) solution expected to be empowered
by our most advanced processing hardware. Horizon SuperDrive theoretically supports
advanced-level autonomous driving with capabilities of up to Level 4 functions. It is designed
to be capable of perceiving surrounding environment and making decisions without driver
input, and achieve smooth and human-like autonomous driving functions in all urban, highway
and parking scenarios, which supports higher level of driving automation subject to local
regulations. It is expected to tackle a comprehensive range of complex road conditions with
high level of sophistication, providing drivers and passengers with a safer, more efficient and
more comfortable driving and riding experience. We believe Horizon SuperDrive stands at the
forefront of driving innovation, skillfully handling advanced automation tasks in compliance
with regulatory standards. It adeptly performs specific driving functions autonomously, such as
easing through traffic jams, and offers a driving approach that is both confident and engaging.
The technology embedded in Horizon SuperDrive is designed to navigate intricate urban
landscapes and adverse conditions like heavy rain in metropolitan areas during rush hours
without requiring driver intervention for extended periods. This ensures a refined, efficient,
and secure driving experience for all occupants.
As of the Latest Practicable Date, we are working with a handful of OEMs who plan to
implement our Horizon SuperDrive solution. We aim to keep expanding the operating domain
of Horizon SuperDrive and improving its driving performance, featured with more smooth and
effortless driving style and more human-like and assertive interactions with road participants.
For instance, in congestion scenarios, vehicles empowered by Horizon SuperDrive can
seamlessly maneuver between lanes and cut in efficiently to overtake other vehicles based on
precise perception and prediction of surrounding vehicles’ behavior. At a busy intersection,
Horizon SuperDrive can enable interactions with other road participants in an assertive manner
to take unprotected left and right turns safely. Other features include smooth execution of
obstacle avoidance, gentle and human-like braking, dynamic speed control, swift reactions to
surrounding environment, enhanced APA and VPA functionalities, and more.
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The following table sets forth the key features and selected functions for Horizon
SuperDrive:
Solution
 Illustration of Selected Functions
Horizon SuperDrive
AD Algorithm
and Software
Processing Hardware
Lane Change Cut-in Assertive Interaction at Roundabout
Unprotected Left Turn Smooth Obstacle Bypass
A Typical Sensor Configuration*
Vision Sensors
Radars
LiDAR
* Solution may be configured to customer’s choice of third-party sensor sets
Horizon SuperDrive AD system uses a BEV transformer-based end-to-end perception
architecture for more accurate physical world representation, especially improving response to
urban challenges like occlusions-awareness. It combines dynamic, static and occupancy
networks into one, enabling a comprehensive perception system that enhances the vehicle’s
understanding of its environment and reducing processing loads and boosting efficiency. Its
BEV framework supports adaptive multi-scale perception and optimizes resource distribution
across different ranges, improving near and distant object perception and meeting diverse
specifications. Instead of using rule-based planning methodology, Horizon SuperDrive is
designed to imitate human driving behavior, which ensures interpretability and usability. With
enhanced capabilities in interactive prediction and planning, Horizon SuperDrive empowers
the vehicles with human-like decision making to deftly tackle complex traffic situations.
Other Automotive Solutions
In addition to our ADAS and AD solutions, we also provide an automotive in-cabin
solution for the passenger vehicle to better understand and interact with drivers and passengers
based on inputs, making journeys more comfortable and entertaining. Our in-cabin solution can
perceive multi-modal inputs, such as verbal commands. Based on these inputs, it interacts with
humans to satisfy users’ needs of safety, comfort, and entertainment. In terms of safety, our
in-cabin solution can alert drivers to take rests when necessary. With respect to comfort
functions, our in-cabin solution can help users to control windows, lights and air-conditioner,
making vehicle control easier and journeys more enjoyable.
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Revenue Contribution of Automotive Solutions
During the Track Record Period, we generated revenue from automotive solutions of
RMB410.2 million, RMB801.1 million, RMB1,470.4 million, RMB345.0 million and
RMB913.1 million, accounting for 87.9%, 88.5%, 94.8%, 92.9% and 97.7% of our total
revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively.
Our revenue from automotive solutions is comprised of revenue from product solutions
and license and services. During the Track Record Period, revenue generated from product
solutions amounted to RMB208.1 million, RMB319.3 million, RMB506.4 million, RMB192.3
million and RMB222.3 million in 2021, 2022 and 2023 and for the six months ended June 30,
2023 and 2024, respectively, accounting for 44.6%, 35.3%, 32.7%, 51.8% and 23.8% of our
total revenue for the same periods, respectively. During the Track Record Period, revenue
generated from license and services amounted to RMB202.1 million, RMB481.8 million,
RMB964.0 million, RMB152.7 million and RMB690.8 million in 2021, 2022 and 2023 and for
the six months ended June 30, 2023 and 2024, respectively, accounting for 43.3%, 53.2%,
62.1%, 41.1% and 73.9% of our total revenue for the same periods, respectively.
The following table sets forth certain operating data breakdown by type of automotive
product solutions derived from our operating systems. As our solution offerings evolved during
the Track Record Period, we categorized all ADAS-related product solutions revenue and
delivery volume of processing hardware to Horizon Mono, all AD-related product solutions
revenue and delivery volume of processing hardware to Horizon Pilot and the remaining into
“others”, based on sales contracts and/or internal sales records from our operating systems,
instead of customers’ final installation of our solutions. We launched Horizon SuperDrive in
April 2024, which did not generate any revenue during the Track Record Period and up to the
Latest Practicable Date. Typically, our customers will inform us regarding the desired
end-application, namely, ADAS or AD-related products, when entering into agreements with
us. However, there remains the possibility that some customers may make adjustments in
accordance with their actual needs, and such customers are not obligated to inform us of any
application change. Our customers have the ultimate decision on when and how to install our
solutions into their passenger vehicles and/or products. For example, theoretically an OEM can
combine multiple processing hardware embedded in the Horizon Mono solutions and integrate
with AD algorithms and software to realize the functions of Horizon Pilot. Under such
circumstance, we record multiple sets of Horizon Mono sales rather than one set of Horizon
Pilot sale, unless the customer informs us the change. Moreover, tier-one suppliers may further
process the ordered solutions into their own products tailored to OEMs’ specific needs, the
ultimate application of which can be different from their initial orders.
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For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
Horizon
Mono
Horizon
Pilot Others (1)
Horizon
Mono
Horizon
Pilot Others (1)
Horizon
Mono
Horizon
Pilot Others (1)
Horizon
Mono
Horizon
Pilot Others (1)
Horizon
Mono
Horizon
Pilot Others (1)
Automotive product solutions
revenue (2) (RMB in thousands) /H1118104,514 1,214 102,355 181,857 46,061 91,394 263,318 182,659 60,409 91,358 81,270 19,670 108,198 100,015 14,051
Percentages of automotive product
solutions revenue /H1118/H1118/H1118/H1118/H111850.2% 0.6% 49.2% 57.0% 14.4% 28.6% 52.0% 36.1% 11.9% 47.5% 42.3% 10.2% 48.7% 45.0% 6.3%
Percentages of total revenue /H1118/H111822.4% 0.3% 21.9% 20.1% 5.1% 10.1% 17.0% 11.8% 3.9% 24.6% 21.9% 5.3% 11.6% 10.7% 1.5%
Delivery volume of processing
hardware (thousand units) /H1118/H1118/H1118566 3 432 1,081 98 322 1,673 274 176 602 108 41 763 157 43
Average selling price (3) /H1118/H1118/H1118/H1118185 355 N/A (4) 168 468 N/A (4) 157 666 N/A (4) 152 754 N/A (4) 142 636 N/A (4)
Notes:
(1) “Others” includes product solutions unrelated to provision of ADAS and/or AD solutions, including, among
others, automotive in-cabin solutions, sales of raw processing hardware without algorithms and software
specifically tailored for the application of our ADAS and AD solutions and other miscellaneous items.
(2) Revenue generated from automotive product solutions during the Track Record Period is derived from our
operating systems and presented as operating data rather than financial data, which is not audited by our
Reporting Accountant.
(3) Average selling price of Horizon Mono and Horizon Pilot for the period equals the revenue by type of
automotive product solutions divided by the delivery volume of processing hardware of the corresponding
automotive product solutions during the respective period.
(4) Labeled as “N/A” as “others” encompasses various miscellaneous items, none of which are our core business
focuses, rendering the calculated average selling price fluctuates significantly from period to period and not
meaningful in reflecting the nature of “others.”
Our revenue of automotive product solutions derived from Horizon Pilot amounted to
RMB1.2 million, RMB46.1 million, RMB182.7 million, RMB81.3 million and RMB100.0
million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively. This increase is attributable to increased demand for AD solutions. See “Financial
Information — Discussion of Results of Operations” for details. Additionally, the average
selling price for Horizon Pilot, which equals the revenue by Horizon Pilot divided by the
delivery volume of processing hardware of Horizon Pilot during the respective period,
increased from RMB355 per unit of processing hardware in 2021, to RMB468 per unit of
processing hardware in 2022, and further to RMB666 per unit of processing hardware in 2023
as we continue to refine our AD solutions and introduce advanced features with better system
performance and higher efficiency. The average selling price for Horizon Pilot decreased from
RMB754 per unit of processing hardware for the six months ended June 30, 2023 to RMB636
per unit of processing hardware for the six months ended June 30, 2024 as we strategically
lowered the pricing of Horizon Pilot during the first half of 2024 to gain additional market
share in the AD solutions market.
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Our revenue of automotive product solutions derived from Horizon Mono amounted to
RMB104.5 million, RMB181.9 million, RMB263.3 million, RMB91.4 million and RMB108.2
million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively. Such growth is attributable to increased demand for ADAS solutions. See
“Financial Information — Discussion of Results of Operations” for details. The average selling
price for Horizon Mono, which equals the revenue by Horizon Mono divided by the delivery
volume of processing hardware of Horizon Mono during the respective period, decreased from
RMB185 per unit of processing hardware in 2021, to RMB168 per unit of processing hardware
in 2022, and further to RMB157 per unit of processing hardware in 2023 and from RMB152
per unit of processing hardware for the six months ended June 30, 2023 to RMB142 per unit
of processing hardware for the six months ended June 30, 2024, as we strategically lowered the
pricing for our Horizon Mono to gain additional market share in the ADAS solutions market.
Our market share among ADAS solutions providers to Chinese OEMs in China, by installation
volume, increased from 21.3% in 2023 to 35.9% in the first half of 2024, according to CIC.
The remaining revenues, which are categorized as “others”, refer to revenue from
automotive product solutions that are not core to our businesses, which is evidenced by their
decreasing percentage of total revenue of 21.9%, 10.1%, 3.9%, 5.3% and 1.5% in 2021, 2022
and 2023 and for the six months ended June 30, 2023 and 2024, respectively. The relatively
large revenue contribution from others in 2021 was primarily attributable to revenue generated
from automotive in-cabin solutions. Such automotive in-cabin solutions address various
human-machine-interaction scenarios by capturing in-cabin sensory information to better
understand and interact with drivers and passengers. As we increasingly focus on ADAS and
AD solutions, the revenue contribution from automotive in-cabin solutions decreased
accordingly. For seasonality factors affecting our results of operations for product solutions,
see “Financial Information — Seasonality.”
Non-Automotive Solutions
We also offer non-automotive solutions for our customers, such as OEMs of home
appliances and distributors. Our non-automotive solutions enable device manufacturers to
design and manufacture devices and appliances, such as lawn mowers, fitness mirrors, and air
purifiers, emphasizing on scenarios and applications in home services and with enhanced levels
of intelligence, leading to better user experience. Our non-automotive solutions enjoy
significant synergies with our automotive solutions, and are underpinned by our technological
capabilities in software, algorithms and hardware. Nonetheless, despite sharing similar
components in processing hardware such as BPU, the algorithms and software underpinning
our non-automotive solutions are different from that of our automotive solutions, which are
more consumer-oriented with a focus on performance and application in home service and
other recreation scenarios, without the fulfillment of automotive-grade requirements. Our
non-automotive solutions include perception algorithms that enable devices to recognize and
interact with its surrounding environment and plan routes, as well as processing hardware that
provides efficient and effective support. During the Track Record Period, we generated revenue
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from non-automotive solutions of RMB56.6 million, RMB104.5 million, RMB81.2 million,
RMB26.5 million and RMB21.5 million accounting for 12.1%, 11.5%, 5.2%, 7.1% and 2.3%
of our total revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively.
Licensing and Services
In addition to sale and delivery of our automotive product solutions, we license
algorithms and software to customers and deliver relevant codes and design manual for
licensing fee and royalties, and provide design and technical services to customers for service
fee. The following set forth salient terms of typical licensing and service agreements with our
customers:
 Fee basis : we charge our customer licensing and service fees, as applicable, based
on (i) for licensing, the complexity, advancement and variety of algorithms, software
and development toolkits involved and in some projects, we charge royalties
referenced to the quantity of mass-produced vehicles; and (ii) for service, expertise
and number of engineers involved, duration, complexity of work and functionalities
developed. License fees are pre-determined fixed amount payments for the right to
use our intellectual properties, while royalties are recurring payments based on the
ongoing use of our intellectual properties.
 Duration : for customers licensing in our technologies we generally set a ten-year
period with renewal arrangements; and for customers seeking our technical
development services, we generally set a duration ranging from one to three years.
 Scope of services : with respect to services, we provide customized technical
assistance and training to our customers, such as providing technical documentation,
deploying technical personnel and participating in technical consultation meetings,
helping them develop ADAS and AD functions of their needs.
 Intellectual property clauses : for licensing, we license our algorithms and software
on a non-exclusive basis and keep the intellectual property rights. By delivering our
algorithm and software codes alongside the design manual, we enable them to utilize
our technologies. We take a open platform approach, and allow the licensee to make
improvements to the licensed technology through research and development,
provided that it does not infringe upon our intellectual rights; for service, our
technical services to the customers based on the existing background intellectual
property rights will not be regarded as a transfer of such intellectual property rights
and the customers shall be only entitled to the non-exclusive right to utilize such
intellectual property rights within the scope of the contract. See “Industry Overview
— Overview of the ADAS and AD Solutions Market — Open Platform and Close
Platform” for features of the open platform approach.
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 Payment terms : we collect milestone payments from our customers, and key
milestones typically include signing of agreement, delivery of intellectual property
or technical information, and start of production (if applicable).
 Termination : agreements may be terminated upon one party’s material breach of
obligations, upon fulfillment of parties’ obligations, or upon mutual consent.
After signing a licensing agreement, we typically engage in a process of organizing and
processing various codes of algorithms and software based on the specific needs of the
customer. This involves the packaging of codes, referring to the process of organizing and
bundling code into a structured format for distribution, reuse, or deployment, and we tailor the
package to exclude irrelevant codes. After packaging the specified codes, we deliver it to
customers through predetermined secured and encrypted channels. Upon receiving the codes,
customers conduct their own acceptance procedures, ensuring completeness, consistency and
effectiveness of packaging in accordance with their needs. Subsequently, customers typically
provide feedback, confirming receipt and acceptance of the relevant codes. This feedback
serves as the basis for addressing the fulfillment of performance obligations and confirming
revenue recognition at the corresponding points in time. Our customers will then implement the
package of codes received into their own solutions and/or vehicle models throughout the term
of the licensing agreement, which commonly spans over a period of up to ten years. We
generally include an automatic renewal clause under the same fee rate in our licensing
agreement, which allows extension of term for one year per extension, subject to termination
procedure upon mutual consent.
We continuously develop, upgrade and introduce new algorithms and software to the
market to stay at the forefront of the industry. Therefore, although the right to use our licenses
may last for years and the licensed codes are usually not restricted to any particular car models
under our open platform approach, our customers may license additional and more advanced
intellectual properties from us. Technology development and iteration in our industry are rapid,
and our customers may need to regularly procure new licenses for algorithms and software to
stay competitive in the dynamic market. This provides us with opportunities to license our
intellectual property and offer technology services to them incrementally. For instance, one of
our top customers initially requested licenses for ADAS solutions’ algorithms and software,
and later procured more sophisticated AD solutions’ algorithms and software from us to elevate
its autonomous driving functionalities. The growth and sustainability of our licensing revenue
stream depends on our ability to (i) introduce our algorithms, software and development
toolkits to new customers, (ii) cross sell additional intellectual properties to our existing
customers and (iii) continuously develop and introduce new technology to existing and new
customers. We will continue to leverage our existing intellectual property library and develop
new IPs to gain new license contracts with both existing and new customers.
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The following table sets forth our largest licensing project and largest service project in terms of revenue contribution in each year/period
during the Track Record Period.
Customer Background
Contract Value
(inclusive of V AT) Contract Duration
Selected Functions
Realized/Services
Provided Payment Terms Delivery Time Revenue Gross Profit
For the year ended December 31, 2021
Customer 21L1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118a Chinese OEM
headquartered in
Chongqing
RMB61.3 million 10 years ACC, LCC, ICA, TJA,
among other
functions based on
front view
perceptions
By milestone, including
upfront payment,
delivery payment and
balance payment
2021 and 2022 RMB52.0 million
in 2021, RMB5.8
million in 2022
RMB52.0 million
in 2021, RMB5.3
million in 2022
Customer 21S1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118a Chinese OEM
headquartered in Shanghai
RMB29.7 million Long term (without
specific termination
date)
Assist the customer in
its development and
adoption of
perception solutions
By milestone, including
upfront payment,
payment of delivery
and SOP payment
2021, 2022 and
2023
RMB22.3 million
in 2021, RMB1.8
million in 2022
and RMB3.9
million in 2023
RMB20.6 million
in 2021, RMB1.7
million in 2022
and RMB3.9
million in 2023
For the year ended December 31, 2022
Customer 22L1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118a Chinese OEM
headquartered in Shanghai
RMB50 million Long term (without
specific termination
date)
Front view, side view
and surround view
perceptions
algorithms as well as
ADAS and NOA
related algorithms
and software
By milestone, including
upfront payment,
payment of delivery
and SOP payment
2022 RMB47.2 million
in 2022
RMB46.4 million
in 2022
Customer 22S1 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118a Chinese tier-one supplier
headquartered in Beijing
RMB79.5 million Until all rights and
obligations have
been performed
Assist the customer in
developing ADAS
functions
Upon completion of
acceptance
procedures
2022 RMB75.0 million
in 2022
RMB68.3 million
in 2022
For the year ended December 31, 2023
CARIZON
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118see “Our Partnership with
V olkswagen Group –
CARIZON – Our Joint
Venture with V olkswagen
Group”
RMB1,017.0
million
Long term (without
specific termination
date)
Enhanced highway
NOA and urban
NOA
By milestone, including
payment of delivery,
balance payment and
upon completion of
acceptance
procedures
2023 and 2024 RMB271.9 million
in 2023 and
RMB327.2
million for the
six months ended
June 30, 2024
RMB271.7 million
in 2023 and
RMB327.0
million for the
six months ended
June 30, 2024
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Customer Background
Contract Value
(inclusive of V AT) Contract Duration
Selected Functions
Realized/Services
Provided Payment Terms Delivery Time Revenue Gross Profit
CARIZON (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118see “Our Partnership with
V olkswagen Group –
CARIZON – Our Joint
Venture with V olkswagen
Group”
RMB184.4 million Until all rights and
obligations have
been performed
Assist the customer in
developing localized
ADAS solutions
tailored for the
China market
Upon completion of
acceptance
procedures
2023 RMB174.0 million
in 2023
RMB120.2 million
in 2023
For the six months ended June 30, 2024
CARIZON
(1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118see “Our Partnership with
V olkswagen Group –
CARIZON – Our Joint
Venture with V olkswagen
Group”
RMB1,017.0
million
Long term (without
specific termination
date)
Enhanced highway
NOA and urban
NOA
By milestone, including
payment of delivery,
balance payment and
upon completion of
acceptance
procedures
2023 and 2024 RMB271.9 million
in 2023 and
RMB327.2
million for the
six months ended
June 30, 2024
RMB271.7 million
in 2023 and
RMB327.0
million for the
six months ended
June 30, 2024
CARIAD (China) Co., Ltd. /H1118/H1118/H1118/H1118an affiliate of V olkswagen
Group and CARIAD
Estonia AS, which is one
of our Pre-IPO investors,
headquartered in Beijing
RMB28.58 million Long term (without
specific termination
date)
Assist the customer in
technical evaluation
of NOA solution
tailored for China
market
Upon the completion
and full delivery of
services
2024 RMB22.9 million
for the six
months ended
June 30, 2024
RMB17.2 million
for the six
months ended
June 30, 2024
Note:
(1) During the Track Record Period, in addition to the projects as disclosed, we also entered into one other project with CARIZON. Revenue recognized f rom such project amounted
to RMB181.4 million and RMB19.9 million in 2023 and for the six months ended June 30, 2024, respectively. Gross profit recognized from such project amo unted to RMB181.4
million and RMB19.9 million in 2023 and for the six months ended June 30, 2024, respectively.
See “Financial Information — Material Accounting Policy Information and Estimates — Revenue Recognition — Automotive Solutions —
License and Services” for details regarding revenue recognition of our license and services.
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OUR TECHNOLOGIES
Software-Hardware Co-optimization Approach
We specialize in a software-hardware co-optimization approach in our solution design and
development. With our strong capabilities in both software and hardware, we are able to design
hardware that better meets the evolving demands of software and algorithms in the automotive
industry. Simultaneously, our advanced algorithms and sophisticated software can fully utilize
the potential of our processing hardware to achieve optimal system-level performance.
Leveraging such co-optimization, we are able to provide our customers with products and
solutions at optimal efficiency, high performance and minimal system latency.
Our software-hardware co-optimization approach differentiates us from our competitors.
We possess a unique combination of technical capabilities: we not only have top-notch
software and algorithm capabilities, including an ADAS and AD algorithm framework,
algorithm trend analysis, and a reservoir of effective algorithms, but also possess the ability to
design architecture and optimize it for processing hardware. Additionally, we have automotive
engineering capabilities and deep industry experience in mass production. This enables us to
resolve the challenges and incorporate the requirements of ADAS and AD solutions into mass
production, providing tailored services to our customers, helping them achieve optimized
product performance and enhance their competitiveness. All of our technology pillars set forth
below are self-developed.
Algorithm
Algorithms play a pivotal role in software-hardware co-optimization approach. Our
commitment to developing industry-leading products is underpinned by the robust support of
our software suite, with a particular focus on algorithms. Guided by our insight into the
evolving trends of the industry, we dedicate significant investment in the development of
algorithms to enhance our solutions and benefit our customers. Additionally, our algorithms
can also be directly monetized as our flexible business model allows customers to procure
algorithms as independent modules or in conjunction with other components in our technology
stack. The following diagram sets forth modules of our end-to-end autonomous driving
framework:
Perception Planning & Control Driving Functions
Environmental Modeling
Various automation functions for
higher level of safety and comfort
Accurate detection and recognition
of road conditions
Dynamic trajectory planning and
motion control with high adaptability
Precise reproduction of
the environment
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Our full stack of algorithm capabilities are sufficient to cover requirements from various
levels of ADAS and AD development, including cutting-edge processing algorithms such as
perception, environment modeling, planning and control, user function of driving application.
The perception algorithm stack supports accurate detection and recognition of hundreds of
different types of traffic elements, road users and various obstacles across different countries
and regions. The environment modeling combines position, speed, shape and other information
of various objects, road elements and obstacles in the environment, as well as the relationship
between them. Through environment modeling, the autonomous driving system can understand
the situation around the vehicle in real time, and the planning and control algorithm stack is
designed to support a multitude of functions in diverse scenarios, including highways, urban
areas, and parking lots, demonstrating the ability to manage intricate traffic dynamics and
challenging road conditions effectively. Various user functions of the driving application are
built based on the standard ability, such as ACC, LKA, APA, NOA, AEB and more.
The prevailing architectures for autonomous driving algorithms utilize BEV Transformer,
and end-to-end perception to prediction. While these techniques offer superior accuracy, they
often struggle to meet the desired latency on the embedded computing platforms. To address
this challenge, we have curated a team of algorithm specialists who have a deep understanding
of both algorithms and processing architectures. This blend of cross-disciplinary expertise
empowers them to devise model structures that not only align perfectly with our hardware
setup but also facilitate the swift deployment of these highly accurate algorithms.
Our expertise in algorithms has also received recognitions and awards from reputable
journals and industry competitions. With our long-term insight and deep understanding of
ADAS and AD technology development, we believe our algorithms are well-positioned to help
us stay ahead of the curve and to design holistic automotive ADAS and AD solutions.
BPU
BPU, or Brain Processing Unit, is our proprietary processing structure tailored for
automotive applications, including ADAS and AD functions. We developed BPU with our deep
understanding of software development, algorithmic trends, and processing architecture to
deliver outstanding results in terms of energy efficiency, performance and cost. With a focus
on software-hardware co-design and co-optimization, our BPU combines performance
efficiency, programming flexibility and ease of use. Our BPU also features versatile and
customizable base elements, enabling customers to keep pace with the algorithmic innovations.
We are capable of commercializing our BPU as an independent module, including through IP
licensing.
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We developed BPU to address the constraints by traditional processing structure, as the
performance level of advanced and sophisticated algorithms is often limited by processing
capacity and power efficiency of the processing hardware that run the algorithms. Such
constraint is exacerbated in the domain of ADAS and AD technologies, as smart vehicles
require continuous, accurate, and real-time situational awareness by processing a massive
amount of multi-modal inputs. ADAS and AD functions of smart vehicles also require
simultaneous processing of different types of information, such as object extraction, detection
and segmentation, among others. These constraints and requirements call for a high
performance processing platform with sufficiently strong processing capabilities, high power
efficiency, cost efficiency and low latency. To address such needs, BPU was designed and
developed specifically for the improvement of algorithm performance. BPU co-optimizes and
exploits the synergy of software (such as the compiler) and hardware (such as the architecture
of processing structure), with the goal to maximize performance and minimize latency.
Technology Highlights. In particular, BPU has enabled us to achieve the following
technological breakthroughs:
 BPU enables processing hardware to deliver high performance at low latency, which
enables vehicles to accurately perceive, plan, and make decisions in real-time, with
the ultimate goal of improving the overall vehicle safety and riding experience;
 BPU also incorporates multiple proprietary architectures, including memory-in-
compute and high-bandwidth data bridge, which further reduce processing power
consumption and latency, contributing significant advantage in product metrics.
These metrics, such as FPS per Watt, are key to our customers’ design and sourcing
decisions;
 BPU enables multiple hardware units to operate concurrently, which leads to better
utilization of such units; and
 BPU also contributes to high level of software parallelism, which leads to more
efficient processing hardware memory utilization while minimizing power
consumption.
We launched our next generation Journey 6 processing hardware in April 2024, based on
our latest BPU architecture Nash. The Journey 6 processing hardware is expected to provide
ideal support for the industry’s latest mainstream architectures of algorithms including BEV
Transformer. Full-stack processing tasks for complete ADAS and AD functions including
perception, planning and decision-making and control are all expected to be realized with a
single Journey 6 processing hardware. It delivers both improved performance and better power
efficiency, as compared to our previous generations of processing hardware. As of the Latest
Practicable Date, Journey 6 has not been installed on any of the mass-produced passenger
vehicles of our customers.
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Horizon OpenExplorer
OpenExplorer is a flexible development toolkit featuring a wide collection of sample
algorithms, models, development framework and toolchains. It ensures accurate and efficient
algorithm deployment on Journey series processing hardware, which creates synergies with our
processing hardware and provides us with more sales opportunities. Leveraging software-
hardware co- optimizations, the toolkit enhances the performance of advanced algorithms and
greatly reduces the engineering efforts to adapt and finetune algorithms for mass production.
In OpenExplorer, we offer reference algorithms to help accelerate the development and
optimization of mass production solutions for our customers and partners, lowering the barriers
to developing proprietary algorithms and creating significant customer value. The toolkit also
includes optimized network architecture examples for modern hardware, providing a base for
tuning and designing efficient algorithms. It also offers best practices in key areas like BEV
fusion, object detection, and free-space segmentation, aiding the development of production-
ready models. Our standardized tools, born from extensive debugging and tuning experience,
enable users to complete independent optimization and effective production engineering.
During the Track Record Period, we have attracted a variety of customers who leverage
our OpenExplorer development toolkit to develop algorithms that run on our processing
hardware.
Horizon TogetheROS
TogetheROS is a safe, simple and user-friendly autonomous driving embedded
middleware. Aiming to address the common industry challenges of inefficient and tedious
integration as well as testing of autonomous driving applications for mass production,
TogetheROS provides standardized automotive grade services and tools for accelerating mass
production readiness. Combining support for development, integration and verification, its key
features include (i) a modular application development framework tailored for volume
production, supporting application configuration and optimization, (ii) advanced visualization
and analysis tools for performance enhancement, (iii) multi-layered framework and
standardized interface protocols that simplify system integration and (iv) recommended
development checkpoints to facilitate the integration of third-party products and services at
optimal stages of development. Additionally, TogetheROS is open-source and compatible with
leading commercial and open-source systems, offering developers the flexibility to adapt and
customize according to their specific requirements.
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Horizon AIDI
AIDI is our software development platform, designed to accomplish automatic model
iterations with enhanced efficiency. AIDI offers ready-to-use software building blocks that
obviate the need for users to construct complex systems from the ground up, and allow them
to concentrate on developing their proprietary models. As the automotive industry evolves
towards a more algorithm and software-centric approach, AIDI creates value by providing a
comprehensive and effective portfolio of tools tailored to meet the demands of industry
stakeholders.
In summary, AIDI facilitates software developers by providing various tools and
application programming interfaces (APIs), including for example (i) automatic recognition,
segmentation and classification, and more, (ii) graphical user interface (GUI) for task
management and (iii) development platform for algorithm training and compilation, software
deployment and verification, as well as performance evaluation and analysis. These tools are
seamlessly integrated within AIDI, making it a practical and all-encompassing solution for
development needs.
RESEARCH AND DEVELOPMENT
R&D Philosophy and Process
Since our inception, we have been dedicated to developing industry-leading solutions,
recognizing that comprehensive support from research and development is essential to achieve
this goal. We understand that leading solutions require holistic support in software, algorithms,
and hardware. In the design of our solutions, we emphasize the deep integration and efficiency
optimization of software, algorithms, and hardware consistently, while taking into full
consideration the industry’s understanding of algorithms, as well as the usability and
convenience of our development tools.
Our commitment to R&D covers from the foundational architecture to the end solutions.
We dedicate ourselves to developing key technical aspects, fostering interconnectedness across
various stacks right from the initial design phase, to achieve a synchronized state for our
solutions. Since our establishment, we have accumulated comprehensive expertise in
partnerships, industry insights, large-scale production capabilities, technical talents, and
supply chain management within the industry. Leveraging our industry position and
collaborating with ecosystem partners, we can strategically position ourselves three to five
years ahead of industry development. This allows us to make targeted research and
development investments, coupled with significant generational upgrades, including
algorithms and backend hardware structure.
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R&D Focus
ADAS solutions : We are committed to utilizing the latest technology to enhance our
ADAS and AD solutions. This includes adapting to a wider range of peripheral hardware
available in the market to improve the performance of our solutions, achieving continuous
optimization of the cost structure of ADAS and AD solution offerings, and meeting additional
safety regulatory requirements. For instance, in terms of safety ratings, our ADAS solutions
have supported the qualifications of E-NCAP (2023) and C-NCAP (2024) five-star ratings. As
of December 31, 2023, according to CIC, this achievement demonstrates the industry-leading
safety capabilities of our solutions. Moving forward, we remain committed to continuous
optimization and improvement of our ADAS solutions to meet evolving customer needs and
industry standards.
AD solutions : We are actively developing and commercializing AD solutions to
effectively address the demands of various scenarios, including urban, highway, parking,
human-vehicle interaction, co-driving, and more. In April 2024, we launched our latest AD
solution, Horizon SuperDrive, which is designed to achieve smooth and human-like
autonomous driving functions in all urban, highway and parking scenarios. It is expected to
tackle a comprehensive range of complex road conditions with high level of sophistication,
providing drivers and passengers with a safer, more efficient and more comfortable driving and
riding experience. In addition, we have initiated collaborations with several top OEMs and
tier-one suppliers, with the mass-production of the first vehicle model with Horizon
SuperDrive expected in 2026. As of the Latest Practicable Date, we have initiated
collaborations for Horizon SuperDrive with seven OEMs and three tier-one suppliers in
multiple vehicle models. In the coming years, we will primarily focus on commercializing our
Horizon SuperDrive through expanding collaborations with OEMs on integrating Horizon
SuperDrive into more vehicle models and assisting OEMs in mass productions of these vehicle
models. We remain committed to continuous optimization and improvement of Horizon
SuperDrive as part of our ongoing efforts to meet evolving market demands.
Technology pillars : We are committed to the development and continuous improvement
of our technology pillars, which include algorithms, BPU, OpenExplorer, TogetheROS, and
AIDI. This is achieved through efforts such as retaining, expanding, and strengthening our
R&D team and acquiring necessary intellectual properties and other intangible assets. We have
introduced an end-to-end perception autonomous driving architecture in Horizon SuperDrive.
This architecture combines dynamic, static, and occupancy networks into one, enabling a
comprehensive perception system that enhances the vehicle’s understanding of its
environment. Furthermore, we also released the latest BPU architecture, Nash, which provides
more efficient support for multiple driving scenarios, improving the overall performance and
capabilities of our autonomous driving systems. We remain dedicated to continuous
optimization and advancement of our underlying technology pillars in light of the launch of
Horizon SuperDrive. These ongoing efforts aim to further enhance our solutions and ensure
they meet the evolving demands of the market.
For further details on our R&D roadmap, see “Future Plans and Use of Proceeds.”
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Our R&D Team
We believe our strong research and development capabilities are a core competitive
strength and have led to our leading position in the industry. As of June 30, 2024, we have
1,696 full time-equivalent research and development employees, representing 73.1% of our
total employees. Our research and development expenses were RMB1,143.6 million,
RMB1,879.9 million, RMB2,366.3 million, RMB1,049.0 million and RMB1,419.7 million in
2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively.
Our research and development efforts focus on projects to improve our ADAS and AD
solutions, as well as enhance our technological capacity. Our future R&D plans are primarily
focused on (i) development and commercialization of new generation of autonomous driving
technology; (ii) continuously improving our existing ADAS and AD solutions; (iii)
development of our next generation processing hardware and (iv) development and upgrades
of our technology pillars, including algorithms, BPU, OpenExplorer, TogetheROS, and AIDI.
We also focus on building and maintaining a large pool of talented researchers to drive
our research and development efforts. Our R&D team is led by multiple industry veterans with
profound experience, including former scientist and architect of leading technology companies
in China. The publications of our R&D team members received more than 100,000 citations in
aggregate. Our core R&D team members have extensive industry experience, either graduated
from top academic institutions globally or have global working experience in leading
technology and industrial companies. As of June 30, 2024, 73.5% of our research and
development employees have post-graduate qualifications. We provide rigorous training to new
recruits to familiarize them with our platforms and our research and development team. Our
R&D team is led by our co-founders Dr. Yu and Dr. Huang, both of whom have profound
technology background and broad industry recognition.
INNOV ATIONS
We launched our ADAS solution Horizon Mono in 2019, which started revenue
generation in 2021 and mass production in second quarter of 2021. We launched our highway
NOA solution Horizon Pilot (categorized as an AD solution) in 2021, which started revenue
generation in 2022 and mass production in the second quarter of 2022. In April 2024, we
launched our AD solution Horizon SuperDrive. We expect Horizon SuperDrive to start revenue
generation in 2024 from algorithms and software licensing and initiate mass production in
2026, subject to market conditions.
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Our solutions are highly competitive, and the following table sets forth selected
performance indicators and functional positioning and advantages for each of our current
solution offerings:
Horizon Mono Horizon Pilot Horizon SuperDrive
Positioning /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Active safety ADAS Highway NOA Urban NOA for all
scenarios
Launch time (1) /H1118/H1118/H1118/H1118/H1118/H11182019 2021 2024
Beginning of revenue
generation /H1118/H1118/H1118/H1118/H1118/H1118/H1118
2021 2022 2024*
Initial mass
production /H1118/H1118/H1118/H1118/H1118/H1118/H1118
2021 2022 2026*
Typical sensor set /H1118/H1118/H1118/H1118Up to 8MP front view
camera
Cameras and radars (2) Cameras, radars and
LiDAR (3)
Selective functions and
highlights /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Mainstream ADAS
functions, including
AEB, IHB, ACC,
LCC, ICA, TJA and
more
Enhanced active safety
and comfort
functions, including
automatic ramp
on/off, autonomous
merge in and exit
during traffic
congestion,
automated lane
change, highway
auto-pilot, APA, VPA
and more
Smooth and human-like
AD functions in all
urban, highway and
parking scenarios
Global first to launch
an 8MP monocular
vision-only ADAS
solution
Supported safety
recognition /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Euro-NCAP five star
C-NCAP five star
Euro-NCAP five star
C-NCAP five star
To be authenticated
Ecosystem synergy /H1118/H1118/H1118OpenExplorer,
TogetheROS, and
AIDI
OpenExplorer,
TogetheROS, and
AIDI
OpenExplorer,
TogetheROS, and
AIDI
Miles per
intervention
(9) /H1118/H1118/H1118/H1118/H1118
N/A(4) 200 km in the average
traffic flow
N/A(5)
Image processing
capacity (frame per
seconds) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
174
(6) 1,283 (7) N/A(5)
Pixel capacity of
vehicle camera /H1118/H1118/H1118/H1118
Up to 8MP (8) 8MP(7) N/A(5)
Power consumption /H1118/H11182.5w(8) 30w(7) N/A(5)
Notes:
* Expected timing, which is subject to change with actual development and production progress.
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(1) Refers to the initial release time, which does not indicate the completion of start of production (SOP) or mass
production.
(2) Typical sensor set of Horizon Pilot includes 11 camera(s), including front camera(s) of 8.3MP, side camera(s)
of 2.5MP, surround camera(s) of 2.9MP, rear camera(s) of 2.5MP; and five millimeter wave radars and 12
ultrasonic radars.
(3) Typical sensor set of Horizon SuperDrive is expected to include 11 camera(s) of 8.3MP, 3.0MP and 2.5MP,
three millimeter wave radars, 12 ultrasonic radars and one LiDAR.
(4) According to CIC, it is not common to use miles per intervention (MPI) to evaluate ADAS solution. As an
alternative of safety demonstration, Horizon Mono has a false activation rate of less than one time in 200,000
kilometers driven.
(5) No data available as of the Latest Practicable Date, as Horizon SuperDrive was launched in April 2024 and
is still under testing.
(6) Tested under scenario created to evaluate performance with industry-standard application models as of launch
year representing the parameter of one Journey 3 processing hardware embedded.
(7) Representing the parameter of one Journey 5 processing hardware embedded.
(8) Representing the parameter of one Journey 3 processing hardware embedded.
(9) Mile per intervention or MPI, is a performance metric used to measure the distance a vehicle can travel
autonomously before requiring human intervention or driver takeover. According to CIC, the industry level of
mile per intervention ranges from 50 km to 250 km in average traffic flow as of December 31, 2023.
INTELLECTUAL PROPERTY
Since our inception, we have internally developed a variety of intellectual property rights.
As of June 30, 2024, we have 673 granted patents, including 585 invention related patents, as
well as 616 trademarks both in China and overseas. We also own more than 100 copyrights,
including both software and design copyrights, as of June 30, 2024. Of the 673 granted patents,
we own 266 algorithms related patents, 203 software related patents, 109 processing hardware
related patents and 95 other patents. We also own one domain name in China for our website,
as of June 30, 2024. In addition, we co-owned seven patent applications with third parties in
China, as of June 30, 2024. Considering the supplemental nature of such patent applications,
none of such patent applications may cause a material adverse impact on our operations, if the
application is unsuccessful or there appears any disputes between the co-owner and us. See
“Appendix IV — Statutory and General Information — B. Further Information About Our
Business — 2. Intellectual Property Rights of Our Group” for details of our material
intellectual property rights. We have not experienced any material disputes or claims for
infringement of intellectual property rights with third parties during the Track Record Period
and up to the Latest Practicable Date.
We believe these intellectual property rights are critical for us to reinforce our substantial
barriers and we intend to continue to develop more advanced algorithms and processing
hardware with stronger processing power and efficiency, which are expected to bring long-term
benefits to participants of our ecosystem. See “Risk Factors — Risks Related to Our
Intellectual Property — We may not be able to adequately protect or enforce our intellectual
property rights throughout the world, and our efforts to do so may be costly.” for additional
detail describing the protection of our intellectual property rights.
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During the Track Record Period and up to the Latest Practicable Date, we did not have
any material disputes or any other pending legal proceedings regarding intellectual property
rights with third parties.
SALES AND MARKETING
Sales
Our sales personnel are teamed up by geological regions, and each team is led by a
regional manager with key accounts coverage duties under its territory. As of the Latest
Practicable Date, our sales team has covered most reputable Chinese OEMs, including all of
the top 10 Chinese OEMs in terms of sales volume in China, according to CIC.
We adopt an account-solution-fulfillment co-responsible triangular model for sales.
Account representative (AR) is responsible for customer relations, key accounts coverage and
business development for our potential customers. Solution representative (SR) is responsible
for identifying customer needs and tailoring solutions for our customers. Fulfillment
representative (FR) is responsible for the overall external and internal coordination. To meet
the needs of our strategic OEM customers, we establish a dedicated and systemized sales team
consisting of AR, SR and FR with a close and stable team structure. Our sales team operates
differently from the typical project-based approach: the triangular team structure allows for
seamless coordination with various roles and levels within the customer’s organization. With
such full process coverage, we are able to establish and maintain comprehensive and
multi-dimensional customer relationships. Furthermore, most members of our sales team are
based locally at the customer’s location to ensure tailored service and timely response.
Many of our customers are undergoing critical strategic shift to align with the rapidly
involving industry landscape. This requires us to go beyond simple sale of solutions to engage
in deep collaboration with customers in strategy, technological roadmap, and even
organizational management. We strive to establish comprehensive and all-encompassing
partnerships with our customers, where we can achieve full alignment at the strategic level with
our customers before implementing the solutions through specific vehicles. By establishing and
maintaining such strategic relationships with our customers, we will be able to sell our
solutions effectively and efficiently.
Marketing
We enhance the awareness of our brand and promote our new and existing platforms
through both offline and online channels. We participate in various offline events, such as
industry conferences, product launches and industry salons to showcase our technological
advancements and develop relationships with industry participants. We attend auto trade shows
and industry forums to actively market and promote our solutions to new OEMs and tier-one
company partners. We use this strategy to expand our presence in the automotive industry,
particularly for international partners.
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Distributors for Non-automotive Solutions
During the Track Record Period, we generated a minor portion of revenue from
non-automotive solutions of RMB56.6 million, RMB104.5 million, RMB81.2 million,
RMB26.5 million and RMB21.5 million, accounting for 12.1%, 11.5%, 5.2%, 7.1% and 2.3%
of our total revenue in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively. The number of distributors of non-automotive solutions were six, six, five
and five in 2021, 2022 and 2023 and for the six months ended June 30, 2024, respectively, with
only one termination in December 2022. The revenue from our distributors for non-automotive
solutions only account for an immaterial portion of our total revenue and we expect the
percentage of total revenue contribution from them to continue to decline.
We engage independent third-party distributors in China to sell our non-automotive
solutions, which is consistent with the industry norm. We believe our distributors help us
effectively execute our marketing strategies specifically tailored to each geographical location.
We and our distributors constitute a seller and buyer relationship. Accordingly, we recognize
revenue when our solutions are delivered to and accepted by the distributors. To the best of
knowledge of the Company, a majority of the revenues of such distributors are from offline
channel.
We selected our distributors based on their business qualifications and distribution
capabilities, such as distribution network coverage, quality, number of personnel, cash flow
conditions, creditworthiness, logistics, compliance standard and past performance, and its
capacities in customer management. We consider various factors in renewing agreements with
distributors, including their qualifications, sales and marketing capabilities, sales network,
financial resources, customer resources and synergies with our brands. In addition, we
proactively manage our distributors to comply with the requirements of relevant laws and
regulations. We require our distributors to have adequate storage conditions and facilities, a
sufficient number of quality management personnel, and adequate sales channels resources. We
adopt and implement a suite of distributor management rules to ensure distributors are in
compliance with the legal requirements. These rules include a variety of operational guidelines,
including pricing, inventory management and payment requirements. We also regularly review
the performance of our distributors to evaluate their eligibility. We require our distributors to
provide sales demand forecasts six months in advance, and place orders three months in
advance. We will then arrange production based on the actual needs of our customers. As of
the Latest Practicable Date, we were not aware of any potential abuses or improper use of our
name by our distributors which could adversely affect our reputation, business operation or
financial condition. During the Track Record Period and as of the Latest Practicable Date, our
product return rate from distributors was nil.
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We typically enter into a framework distribution agreement with our distributors with
regard to our sales of our solutions. The key terms of the agreements primarily include:
 Duration : generally two years, subject to renewal by mutual agreement;
 Geographical region : within the agreed areas;
 Risk allocation : all significant risks, including inventory risks, are transferred to our
distributors upon delivery and acceptance, and we retain no ownership control over
the products sold to our distributors;
 Credit terms : we generally offer a 20-30 day credit terms upon delivery and
acceptance to our distributors;
 Product returns and warranty : we do not allow our distributors to return our
solutions without cause (causes generally only include defects) and provide
warranty of one-year term;
 Product supply : we should respond to the proper demand of distributors within
reasonable time with sufficient product supply; and
 Pricing : a fixed price provided in each purchase order under the framework
distribution agreement.
OUR CUSTOMERS
Our customers are mostly OEMs and tier-ones, both of which purchase ADAS and AD
solutions and/or in license algorithms and software from us. We have a highly flexible business
model, and our customers may choose to purchase an entire solution from us, or a portion of
our solutions such as software or algorithm to develop products of their own. Generally OEMs
purchase our solutions for deployment on their passenger vehicles, and tier-ones purchase our
solutions to integrate with their products for further deliveries.
We are committed to establishing strategic partnerships with our customers. Through our
constant dialogue, we understand their overall driving automation strategies, technology
roadmaps and product plans. Based on this understanding, we provide customized solutions
tailored to their needs. Our field application engineer (FAE) team collaborate closely with our
marketing team to provide comprehensive and one-stop shop services to our customers.
In the initial stages of a project, we match our product solutions to specific vehicle
platforms and configurations based on the customer’s requirements. We assign specialists to
present the solution proposals in detail. If the customer is satisfied with our proposals, it
provides us with more detailed project information and cost requirements. In response, we
provide formal project assessments, solution responses, and quotations. Subsequently, we
communicate with the customer to finalize the solution, price, and sign the contract. It typically
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takes two to four months from obtaining design-win to contract signing, depending on the
progress of terms negotiation and our customers’ internal procedure requirements. After the
contract is signed, we proceed with comprehensive development per agreement. Due to the
unique nature of ADAS and AD solutions, ongoing communication and adjustments with the
customer are necessary during the development and production phases, including adapting and
optimizing the solution based on identified issues. This process culminates in mass production
acceptance, and the process from contract signing to mass production typically takes another
eight to 36 months, depending on the complexity of solutions and the development cycle of
customer. Mass production is not the end of our project collaboration, and we maintain
continuous communication with the customer to continuously optimize the solution based on
end-user feedback and requirements. We will normally provide at least one year warranty to our
customers. The following flow chart sets forth a typical process of a project with our
customers.
Product Plan and
Concept Design
Engineering
Design
Engineering
Validation
Production
Preparation
Mass
Production
Continuous
Communication
Throughout the process, we maintain strong direct relationships and strong channels of
communication with our customers. According to CIC, the duration from the start of a
collaboration to mass production usually takes one to two years and will depend on the
specifications of the OEM customers and the testing requirements. We have established
business relationships with a large number of OEMs and tier-one companies in the automotive
industry. As of the Latest Practicable Date, our ADAS and AD solutions have been selected by
27 OEMs (or 42 OEM brands) for implementation in over 285 car models. We have been
particularly successful in the Chinese market and all of the top 10 Chinese OEMs in terms of
sales volume in China are our customers.
For example, we work closely with Li Auto for them to integrate our solutions through
concept inception, solution design and development, verification and validation,
implementation and mass production. We first engaged Li Auto in 2019. Through resource
sharing and open collaboration, Li Auto and we have shortened the verification cycle and
achieved remarkable efficiency in development and delivery. Our Horizon Mono solution
empowered by Journey 3 processing hardware debuted and achieved mass production on the
Li Auto One in just eight months. In addition, our Horizon Pilot solution empowered by
Journey 5 processing hardware debuted and successfully reached delivery on the Li Auto Li L
series — Pro and Air models in a mere seven months. Since our initial collaboration, we have
deeply engaged with Li Auto and built a sticky and lasting relationship with them. As a result,
we scaled deployment of our solutions with mass production of Li Auto’s vehicles, and they
trusted us to equip our solutions into more of their vehicle models, many of which were proven
to be very successful best-sellers. In October 2023, Li Auto granted us “Li Auto Top Award”
to recognize as one of its most important global partners. We believe such award demonstrated
our significant contribution to Li Auto as a leader in China’s new energy vehicle market.
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Our popularity and success among China OEMs have attracted the attention of
international giants, such as V olkswagen, which enlarged our customer base to the global
market. V olkswagen has invested in the Company and we have strategically established a joint
venture with them to capture the future opportunities of customized driving automation
solutions in China. See “— Our Partnership with V olkswagen Group” for further details.
Some of our OEMs and tier-one suppliers look to establish their in-house teams and
develop similar technologies of ours. However, their development efforts in many ways may
benefit our businesses for the following reasons:
 Partner but not Competitor : As a tier-two supplier, we can provide modular services
to our customers, including OEMs and tier-one suppliers, based on our flexible
business model and open technology platform. This allows our customers to
establish algorithm self-development capabilities and enhance their product
differentiation competitiveness. In many occasions, working with us to develop their
own products will facilitate the process and reduce their overall development costs.
 IP Licensing : OEMs and tier-one suppliers may engage in the development of
certain algorithms and software. Our business model allows us to support our
customers’ R&D through IP licensing, for which we may charge licensing fees
and/or service fees.
 Hardware Support : OEMs and tier-one suppliers may develop entire or a portion of
ADAS and/or AD systems of their own. We can provide processing hardware and
system-level reference designs or simply sell our processing hardware to them for
their integration to support their development efforts, and we may charge solution
delivery fees, licensing, and/or service fees accordingly.
 Continuous Upgrades : We are continuously developing more advanced next-
generation solutions. As ADAS and AD systems continue to iterate and update, our
customers will have a growing demand for our more advanced solutions. With such
ongoing needs, we will have the opportunities to expand our sales. During the Track
Record Period, OEMs purchased our solutions generally expanded their purchase
rather than terminated their relationships with us.
According to CIC, the likelihood of OEM or tier-one suppliers establishing their in-house
team to develop similar technologies depends on their sales volume and scale of car models.
As of the Latest Practicable Date, according to CIC, there are only very limited OEMs choose
to develop full-stack system of their own.
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Our Ecosystem Partners
In addition to OEMs and tier-one suppliers, we maintain relationships with a variety of
ecosystem partners within the industry value chain. Our ecosystem partners include companies
upstream and downstream that have complementary capabilities we need, such as domain
control hardware and module companies. Together with these partners, we collaborate on
system-level planning and go-to-market strategies to drive economies of scale in standardized
products, thereby enhancing solution performance and reducing costs, and creating a positive
cycle that accelerates our competitiveness. In many customer projects, we may collaborate with
our ecosystem partners through various ways to jointly provide more competitive solutions and
services to our end-customer OEMs. For example, we collaborate with a leading global
provider of automotive cameras and vision sensors by configuring and adapting our vision
perception algorithms to their certain sensor products and incorporating these sensors as part
of our certified reference design of ADAS/AD system. A recent example of this is the
adaptation and incorporation of their 17MP ultra-high-resolution camera into our front view
perception solution. By doing so, we can share synergy in go-to-market efforts and help
promote each other’s product to end customers. As another example, in the collaboration with
an operating system technology provider to develop autonomous driving system for OEM
customer, we provide certain knowhow to facilitate their software and system development
based on our processing hardware. Furthermore, we collaborate with capable software
companies to expand our capacity and customer reach. We believe our ecosystem partners will
gradually become familiar with and accustomed to our development platform, technical tools
and processing hardware, resulting in user stickiness and dependency. We may not generate
revenue directly from ecosystem partners. However, we believe that the habits of ecosystem
partners to our offerings serve as the tentacles and leverage of our go-to-market efforts, which
enlarges our customer base and deepens our moat. On the other hand, our ecosystem partners
can generate revenue or enhance their product capabilities by leveraging our solutions,
resulting in a win-win outcome.
Top Five Customers
During the Track Record Period, we derived a majority of our revenues from our
automotive solutions. In 2021, 2022 and 2023 and for the six months ended June 30, 2024, the
aggregate revenue generated from our five largest customers were RMB283.1 million,
RMB482.1 million, RMB1,067.0 million and RMB727.0 million, representing 60.7%, 53.2%,
68.8% and 77.9% of our revenue, respectively. Revenues generated from our largest customer
in the same periods were RMB115.2 million, RMB145.3 million, RMB627.3 million, and
RMB351.6 million, representing 24.7%, 16.0%, 40.4% and 37.6% of our revenue, respectively.
We generated a substantial amount of RMB627.3 million and RMB351.6 million, representing
40.4% and 37.6% of our revenue, from CARIZON in 2023 and for the six months ended
June 30, 2024, respectively. Our five largest customers in each year/period during the Track
Record Period included OEM and tier-one supplier customers for our automotive solutions and
a distributor for our non-automotive solutions. Saving for V olkswagen Group and SAIC, both
Shareholders of the Company, to the best of our knowledge, during the Track Record Period
and up to the Latest Practicable Date, our five largest customers were independent third parties.
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Save for CARIZON, CARIAD Estonia AS and SAIC, none of our Directors, their associates
or any of our Shareholders (who or which to the knowledge of the Directors owned more than
5% of our issued share capital) had any interest in any of our five largest customers. Save for
CARIZON and CARIAD (China) Co., Ltd., both of which are affiliated with V olkswagen
Group and to the best of our knowledge, during the Track Record Period and up to the Latest
Practicable Date, each of our top five customers are independent from each other.
Rank Customers
Type of
Products
Purchased Background
Approximate
Y ears of
Business
Relationship Revenue
%o fO u r
Total
Revenue
(RMB in
millions) %
For the year ended December 31, 2021
1 /H1118/H1118Customer A Automotive
Solutions
a leading OEM incorporated in the Cayman
Island in 2017, listed on both the Nasdaq
and the Stock Exchange and headquartered
in Beijing.
five years 115.2 24.7
2 /H1118/H1118Customer B Automotive
Solutions
a software company in the automotive
industry, established in Chongqing with a
registered share capital of approximately
RMB99.0 million, and being subsidiary of a
state-owned automotive company listed on
the Shenzhen Stock Exchange.
three years 52.0 11.1
3 /H1118/H1118Customer C Automotive
Solutions
an automotive electronics solutions provider,
established in Hong Kong in 2001 and
listed on the Stock Exchange.
four years 45.0 9.6
4 /H1118/H1118Customer D Automotive
Solutions
a technology company established in Zhejiang
province in 2017, with a registered share
capital of RMB1,500.0 million.
five years 42.5 9.1
5 /H1118/H1118Customer E Automotive
Solutions
a technology company established in Jiangsu
province in 2020, with a registered share
capital of RMB16,000.0 million.
four years 28.4 6.1
For the year ended December 31, 2022
1 /H1118/H1118Customer A Automotive
Solutions
a leading OEM incorporated in the Cayman
Island in 2017, listed on both the Nasdaq
and the Stock Exchange and headquartered
in Beijing.
five years 145.3 16.0
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Rank Customers
Type of
Products
Purchased Background
Approximate
Y ears of
Business
Relationship Revenue
%o fO u r
Total
Revenue
(RMB in
millions) %
2 /H1118/H1118SAIC Automotive
Solutions
an automobile manufacturer listed on the
Shanghai Stock Exchange, established in
Shanghai in 1984, with a registered share
capital of approximately RMB11,683.5
million.
five years 101.8 11.2
3 /H1118/H1118Customer F Automotive
Solutions
a technology company, listed on the Shenzhen
Stock Exchange and established in Beijing
in 2002, with a registered share capital of
approximately RMB2,377.8 million.
three years 87.8 9.7
4 /H1118/H1118CARIAD (China)
Co., Ltd.
Automotive
Solutions
an affiliate of V olkswagen Group and
CARIAD Estonia AS, which is one of our
Pre-IPO investors, headquartered in Beijing
with a registered share capital of RMB680.0
million.
two years 75.0 8.3
5 /H1118/H1118Customer G Non-
automotive
Solutions
an electronic component and technical service
provider, established in Shanghai in 2005,
with a registered share capital of
RMB10 million.
four years 72.2 8.0
For the year ended December 31, 2023
1 /H1118/H1118CARIZON Automotive
Solutions
see “Our Partnership with V olkswagen Group
— CARIZON — Our Joint Venture with
V olkswagen Group”.
one year 627.3 40.4
2 /H1118/H1118Customer A Automotive
Solutions
a leading OEM incorporated in the Cayman
Island in 2017, listed on both the Nasdaq
and the Stock Exchange and headquartered
in Beijing.
five years 193.7 12.5
3 /H1118/H1118Customer D Automotive
Solutions
a technology company established in Zhejiang
province in 2017, with a registered share
capital of RMB1,500.0 million.
five years 107.0 6.9
4 /H1118/H1118SAIC Automotive
Solutions
an automobile manufacturer listed on the
Shanghai Stock Exchange, established in
Shanghai in 1984, with a registered share
capital of approximately RMB11,683.5
million.
five years 82.4 5.3
5 /H1118/H1118Customer C Automotive
Solutions
an automotive electronics solutions provider,
established in Hong Kong in 2021 and
listed on the Stock Exchange.
four years 56.5 3.6
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Rank Customers
Type of
Products
Purchased Background
Approximate
Y ears of
Business
Relationship Revenue
%o fO u r
Total
Revenue
(RMB in
millions) %
For the six months ended June 30, 2024
1 /H1118/H1118CARIZON Automotive
Solutions
see “Our Partnership with V olkswagen Group
— CARIZON — Our Joint Venture with
V olkswagen Group”.
one year 351.6 37.6
2 /H1118/H1118Customer F Automotive
Solutions
a technology company, listed on the Shenzhen
Stock Exchange, and established in Beijing
in 2002, with a registered share capital of
approximately RMB2,377.8 million.
three years 213.6 22.9
3 /H1118/H1118Customer A Automotive
Solutions
a leading OEM incorporated in the Cayman
Island in 2017, listed on both the Nasdaq
and the Stock Exchange and headquartered
in Beijing.
five year 97.7 10.5
4 /H1118/H1118Customer D Automotive
Solutions
a technology company established in Zhejiang
province in 2017, with a registered share
capital of RMB1,500.0 million.
five years 33.5 3.6
5 /H1118/H1118Customer H Automotive
Solutions
an automotive manufacturing company
headquartered in Guangdong province and
incorporated in 1995, with a registered
share capital of RMB2,911.1 million.
three years 30.6 3.3
OUR SUPPLIERS
Manufacturers
We engage an industry-leading multinational semiconductor manufacturer (“Supplier A”)
as the manufacturer of our processing hardware. We then engage another manufacturer
(“Supplier C”) to perform assembly and testing services for our processing hardware. We first
established business relationship with Supplier A in 2016, and have been in close collaboration
with them throughout the design and manufacturing process. Consistent with market practice,
we do not maintain any long-term contract or framework agreement with Supplier A. We place
actual orders for different processing hardware with Supplier A, where we set out key
commercial terms such as price, quantity and product technology. We place actual orders
according to our business needs. Once a purchase order is confirmed, Supplier A starts the
manufacturing process and then ships the products in due course. We make prepayments to
Supplier A prior to shipment. We currently depend on Supplier A to manufacture all of our
processing hardware. See “Risk Factors — Risks Related to Our Business and Industry — We
depend on a limited number of third-party business partners for certain essential materials,
equipment and services” for details.
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Supplier A then typically transports the completed interim products to our assembly and
testing provider Supplier C. Supplier C completes the manufacturing of processing hardware
as a typical outsourced assembly and testing vendor and delivers the completed products to us.
With initial engineering sample, we perform additional testing to ensure proper functioning and
compatibility with the relevant algorithms. The manufacturing process by Supplier A typically
takes three to four months, depending on the design and process complexity, and the
assembling and testing process by Supplier C generally takes another two to three months.
The following sets forth the salient terms of our arrangements with Suppliers A and C:
 Renewal and Termination : consistent with market practice, we do not maintain any
long-term contract or framework agreement with Supplier A. We enter into five-year
framework contract, subject to renewal, with Supplier C, and place purchase orders
in accordance with business needs. Our agreement with Supplier C can be
terminated or rescinded if (i) there is a failure to perform and such party fails to
remedy the situation without justification within 30 days after written notice by the
other party, or (ii) if a party goes bankrupt, ceases operations, has its business
license revoked, or becomes a bank blacklisted entity or upon other similar material
adverse events;
 Payment Terms : we make prepayments to Supplier A prior to shipment. We make
payments to Supplier C within 30 days upon recipient of invoice, which is issued to
us based on Supplier C’s assembly and testing progress;
 Intellectual Property : we are entitled for all intellectual property rights of our
products and maintain the ownership and intellectual property rights of the design
plans and related materials that we provide to Supplier A and Supplier C, and are
responsible for maintaining good title to such rights we provide to suppliers. Our
suppliers are only entitled to use underlying intellectual properties for the purpose
of manufacturing, assembling and testing the processing hardware we have
requested. Suppliers are contractually bound not to infringe our intellectual property
rights. In the event of termination or expiration of the relevant agreements, our
suppliers and we are contractually bound to immediately cease using, return and/or
destroy intellectual properties of the other party in their possession; and
 Period of Warranty : for Supplier A, one year from delivery date. For supplier C, it
offers two years warranty from the day after the acceptance date for automobile-
grade finished products.
The Company is not aware of any material breach or infringement of intellectual property
rights by Supplier A and Supplier C during the Track Record Period and up to the Latest
Practicable Date.
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Our Directors are of the view that, after consultation with CIC and enquiries with the
Company’s departments that are responsible for suppliers management, our procurement of
semiconductors and the outsourcing of manufacturing and assembling services from Supplier
A and Supplier C are in line with industry practices. According to CIC, there are alternative
manufacturers and assembly and testing provider with the technical knowledge to produce
products and service as currently supplied by Supplier A and Supplier C with certain variations
in prices and specifications to achieve similar functions and product and provide services under
reasonable commercial terms. The semiconductors we are currently using are produced for the
mass market, which means that alternative suppliers have the capacity to manufacture similar
products.
IP and EDA Vendors
We in-license certain third party IPs such as interface, hardware functioning blocks and
electronic design automation tools from IP and EDA vendors. The hardware functioning blocks
are pre-verified foundational elements in the design of processing hardware, such as central
processing, micro-controller, memory and security which can be used in shortening our
processing hardware design cycle and reducing development costs. The EDA services and tools
primarily assist the design and manufacture of our processing hardware.
We enter into licensing and service agreements with our IP and EDA Vendors and place
orders in response to price quotations solicited. The key terms of our agreements with them
include:
 Duration : generally one to three years subject to renewal by mutual agreement;
 Payment Terms : depending on the particular in-license, we either pay pre-
determined license fees for in-licensed IP and EDA or services fees along with
in-licensing arrangement, or royalties on a price-per-unit basis for every processing
hardware; and
 Product Returns and Warranty : the IP and EDA Vendors generally provide warranty
(post-delivery service) for 90 days after closing of project, and the nature of the
product does not allow us to return the product.
IT Vendors
We procure data storage facilities and cloud services from notable industry suppliers.
Data storage facility providers supply us secure and stable data storage environment. Cloud
service suppliers provide pre-built functionalities and services that we can integrate into our
development needs.
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We typically enter into framework agreements with our IT Vendors. The key terms of our
agreements with them include:
 Duration : generally one year subject to renewal by mutual agreement;
 Credit Terms : our IT Vendors require pre-payments for prepaid products, and charge
us based on the actual usage for postpaid products;
 Service Termination : early termination with mutual consent or termination upon
maturity; and
 Payment Terms : we pay one-off purchase or service fee, or subscription fee by
period (sometimes refer to actual usage).
Top Five Suppliers
In 2021, 2022 and 2023 and for the six months ended June 30, 2024, the aggregate
purchase amounts from our five largest suppliers were RMB251.6 million, RMB890.2 million,
RMB1,177.9 million and RMB392.4 million, representing 52.0%, 61.8%, 50.2% and 40.8% of
our total purchase amount, respectively. The purchase amounts from our largest supplier in the
same periods were RMB100.7 million, RMB226.3 million, RMB458.5 million and RMB115.5
million, representing 20.8%, 15.7%, 19.5% and 12.0% of our total purchase amount,
respectively. Our five largest suppliers in each year/period during the Track Record Period
included manufacturers, assembly and testing service providers, and IP vendors and EDA
vendors. During the Track Record Period, we relied on Supplier A and Supplier C for the
manufacturing, assembling and testing of our processing hardware. During the Track Record
Period, we did not experience any significant fluctuation in prices set by our suppliers or
material breach of contract on the part of our suppliers. As of the Latest Practicable Date, none
of our Directors, their associates or any of our shareholders (who or which to the knowledge
of the Directors owned more than 5% of our issued share capital) had any interest in any of our
five largest suppliers. To the best of our knowledge, during the Track Record Period and up to
the Latest Practicable Date, each of our top five suppliers are independent from each other.
In 2021, 2022 and 2023 and for the six months ended June 30, 2024, we procured
RMB108.5 million, RMB349.9 million, RMB548.6 million and RMB20.3 million of
semiconductors and assembly and testing services from Supplier A and Supplier C,
respectively, which were recorded as inventories, representing 22.4%, 24.3%, 23.4% and 2.1%
of our total purchase amount, respectively. The procurement amount and the proportion of the
total purchase amounts from Supplier A and Supplier C in any of the years from 2021 to 2023
were higher than that in the six months ended June 30, 2024 on an annualized basis, primarily
as a result of (i) our decision to proactively build up strategic inventories to ensure sufficient
supply of processing hardware to meet the downstream demands during the industry’s supply
chain shortage from 2021 to 2022, and (ii) the alleviation of the global supply shortage of auto
parts from the second half of 2023. As of August 31, 2024 approximately 46% of such
procurement is utilized, in terms of dollar value, and no significant impairment provision was
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recorded with respect to such semiconductors during the Track Record Period or is expected
to be recorded in the short term. According to CIC, such inventories usually have a life cycle
ranging from approximately seven to 15 years. We do not expect our solutions or inventory to
have any material risks of becoming obsolete in the short term, as (i) all of our product
solutions are in their product life cycle with visible market demands, (ii) our ADAS and AD
solutions cover various levels of autonomous driving, from mainstream assisted driving to
advanced level autonomous driving, to address different consumer needs, and we expect our
existing ADAS and AD solutions to be continuously implemented in mass-produced passenger
vehicles with different levels of functions as we continue to achieve design-wins and SOPs,
(iii) the phase-out of processing hardware as newer technologies emerge is gradual rather than
imminent, and (iv) many of the passenger vehicles equipped with our solutions are at the
beginning of their life cycle or still have a long life cycle of more than three years. In addition,
as the penetration rates of both ADAS and AD solutions in China are expected to grow in the
years to come, driven by rapid technology advancement, growing consumer demand and
OEMs’ launch of new models, we expect our ADAS and AD solutions to be adopted in more
passenger vehicle models. Therefore, our processing hardware inventory will continue to be
consumed to support delivery of our solutions.
Rank Suppliers
Type of
Products/
Services
Provided Background
Approximate
Y ears of
Business
Relationship Credit Terms
Purchase
Amount
%o fO u r
Total
Purchase
(RMB in
millions) %
For the year ended December 31, 2021
1/H1118/H1118/H1118/H1118Supplier A manufacturer a multinational semiconductor contract
manufacturing and design company.
eight years 100% prepayment
before shipment
100.7 20.8
2/H1118/H1118/H1118/H1118Supplier B supplier of
materials
an electronic component distributor
established in Shanghai in 2002,
with a registered share capital of
US$25.00 million.
five years 100% prepayment
before shipment
66.4 13.7
3/H1118/H1118/H1118/H1118Supplier C assembly and
testing
service
a provider of semiconductor
manufacturing services.
five years 30 days upon the
invoice
45.7 9.4
4/H1118/H1118/H1118/H1118Supplier D outsource
service
an intelligent operating system
products and technologies provider
established in Jiangsu province, with
a registered share capital of
RMB80.00 million.
six years 30 days upon the
invoice
20.7 4.3
5/H1118/H1118/H1118/H1118Supplier E server and
equipment
a technology company that provides IT
products and services established in
Beijing in 2018, with a registered
share capital of RMB11.00 million.
five years 30 days upon the
invoice
18.0 3.7
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Rank Suppliers
Type of
Products/
Services
Provided Background
Approximate
Y ears of
Business
Relationship Credit Terms
Purchase
Amount
%o fO u r
Total
Purchase
(RMB in
millions) %
For the year ended December 31, 2022
1/H1118/H1118/H1118/H1118Supplier H IP/EDA
vendor
an electronic design automation
company established in the United
States in 1987 and listed on the
Nasdaq.
five years 45 to 90 days
upon the
invoice
226.3 15.7
2/H1118/H1118/H1118/H1118Supplier A manufacturer a multinational semiconductor contract
manufacturing and design company.
eight years 100% prepayment
before shipment
214.5 14.9
3/H1118/H1118/H1118/H1118Supplier F IP vendor a processing hardware design and
service provider established in
Shenzhen in 2016, with a registered
share capital of approximately
US$66.10 million.
seven years 30 days upon the
invoice
156.2 10.8
4/H1118/H1118/H1118/H1118Supplier D outsource
service
an intelligent operating system
products and technologies provider
established in Jiangsu province, with
a registered share capital of
RMB80.00 million.
six years 30 days upon the
invoice
152.0 10.6
5/H1118/H1118/H1118/H1118Supplier C assembly and
testing
service
a provider of semiconductor
manufacturing services.
five years 30 days upon the
invoice
141.3 9.8
For the year ended December 31, 2023
1/H1118/H1118/H1118/H1118Supplier A manufacturer a multinational semiconductor contract
manufacturing and design company.
eight years 100% prepayment
before shipment
458.5 19.5
2/H1118/H1118/H1118/H1118Supplier B supplier of
materials
an electronic component distributor
established in Shanghai in 2002,
with a registered share capital of
US$25.00 million.
five years 100% prepayment
before shipment
232.9 9.9
3 /H1118/H1118/H1118Supplier C assembly and
testing
service
a provider of semiconductor
manufacturing services.
five years 30 days upon the
invoice
200.7 8.6
4 /H1118/H1118/H1118Supplier G construction a building construction services
provider established in Beijing in
1980, with a registered share capital
of RMB10,000 million.
five years 20 days upon the
invoice
149.9 6.4
5/H1118/H1118/H1118/H1118Supplier H IP/EDA
vendor
an electronic design automation
company established in the United
States in 1987 and listed on the
Nasdaq.
five years 45 to 90 days
upon the
invoice
136.0 5.8
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Rank Suppliers
Type of
Products/
Services
Provided Background
Approximate
Y ears of
Business
Relationship Credit Terms
Purchase
Amount
%o fO u r
Total
Purchase
(RMB in
millions) %
For the six months ended June 30, 2024
1 /H1118/H1118/H1118Supplier F IP vendor a processing hardware design and
service provider established in
Shenzhen in 2016, with a registered
share capital of approximately
US$66.10 million.
seven years 30 days upon the
invoice
115.5 12.0
2/H1118/H1118/H1118/H1118Supplier G construction a building construction services
provider established in Beijing in
1980, with a registered share capital
of RMB10,000 million.
five years 20 days upon the
invoice
86.8 9.0
3 /H1118/H1118/H1118Supplier J cloud and
software
service
a subsidiary of multinational
technology company specializing in
Internet-related services.
three years monthly basis
with 30 days
upon the
invoice
77.7 8.1
4/H1118/H1118/H1118/H1118Supplier D outsource
service
an intelligent operating system
products and technologies provider
established in Jiangsu province, with
a registered share capital of
RMB80.00 million.
six years 30 days upon the
invoice
72.5 7.5
5/H1118/H1118/H1118/H1118Supplier B supplier of
materials
an electronic component distributor
established in Shanghai in 2002,
with a registered share capital of
US$25.00 million.
five years 100% prepayment
before shipment
39.8 4.1
Supply Chain Management
We utilize a supply chain management framework to manage our overall product
development, procurement and production processes. Starting from the product research and
development phase, we establish detailed supplier onboarding procedures. We primarily
consider price, quality, technology capabilities, delivery speed and qualifications before
onboarding a supplier. We also conduct periodic supplier review, quarterly, annually, or at key
project milestones, to assess their performance. In addition, we also implement measures for
anomaly management to continuously monitor the final product quality. See “Quality
Assurance — Quality Assurance Procedures” for further details.
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We believe that we have effectively managed our supply chain during the Track Record
Period and up to the Latest Practicable Date. During the Track Record Period, we did not
encounter any material supply chain issues, enabling us to continuously deliver ADAS and AD
solutions to our customers. Even during the industry’s supply chain shortage, especially from
2021 to 2022, we managed to fulfill deliveries to our customers, which is benefited from our
strategy to further accumulate and store a secure supply of inventory to counteract the cyclical
nature of the automotive industry. According to CIC, the COVID-19 pandemic has led to
disruptions in the auto-part supply-chain, such as production halts, decreased output and
extended delivery, among other issues. As the market demand for auto-parts remained strong,
such disruptions resulted in varying degrees of auto-parts shortages globally, including the
automotive semiconductors. As a result, our procurement prices of automotive semiconductors
hiked approximately 19.5%, 14.5% and 10.5% in 2021, 2022 and 2023, respectively. Such
increase made the procurement prices of automotive semiconductors higher during the
COVID-19 and led to increased cost of sales. However, we were still able to maintain our gross
profit margin at 70.9%, 69.3%, 70.5% and 79.0% in 2021, 2022, 2023 and for the six months
ended June 30, 2024. Starting from the second half of 2023, the impact of automotive
semiconductor shortages on the global automotive industry has started to subside, and the
global supply of automotive semiconductors is gradually returning to normal, as evidenced by
the growth rate of global average price of automotive semiconductors decelerating to
approximately 5.0% in 2023, which is expected to turn negative in 2024, according to CIC. For
the six months ended June 30, 2024, our procurement prices of automotive semiconductors
decreased by 12.7% compared to 2023. From 2021 to 2023, our procurement prices for
automotive semiconductors increased at a higher rate than the global average price growth rate
for automotive semiconductors. According to CIC, this was because we engage top-tier
industry suppliers who demand a premium over the industry average due to their qualifications,
advanced processes and high product quality.
In order to mitigate the risk of supply chain shortage and ensure our delivery of our own
products to our customers in time, we proactively built up our strategic inventories, with our
inventory turnover days increasing from 192 days in 2021 to 313 days in 2022. Our inventory
turnover days further grew to 461 days in 2023. This was due to global auto-part shortage
started to alleviate until the second half of 2023. Given the lengthy production lead time as well
as the time required before consuming finished goods, the impact of the supply chain shortage
alleviation was not apparent in 2023. In addition, as we continue to scale our business at rapid
pace, to meet the growing order volume of our product solutions for the coming year and taken
into account the lengthy development cycle of a vehicle model, it is essential for us to
preemptively stock up our inventories to ensure sufficient product supply in the next year. The
increase in inventory turnover days to 694 days for the six months ended June 30, 2024 was
mainly driven by relatively high average opening and closing balance of the inventories for the
six months ended June 30, 2024. Such inventory balance cannot decrease significantly within
six months because of the lengthy production lead-time as well as time required before
consuming finished goods. The increase in inventory turnover days for the six months ended
June 30, 2024 was also attributable to slower occurrence of cost of sales during the first half
of the year. According to CIC, the first half, in particular the first quarter, of each year is
usually not a peak season for vehicle sales due to seasonal influence, which affects the delivery
BUSINESS
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volume of product solutions as well as related cost of sales. These factors are reflected in the
revenue mix change for the six months ended June 30, 2024 compared to the year ended
December 31, 2023. An increase in revenue from licenses and services as a percentage of total
revenue in the first half of 2024 is resulting in a higher gross profit margin and a
proportionately lower cost of sales, leading to an increase in inventory turnover days for the
six months ended June 30, 2024. Nonetheless, with the gradual phasing out of the global
auto-part supply shortage, we do not expect our inventory levels to increase significantly going
forward. As of the Latest Practicable Date, we maintain strong collaborative relationships with
various suppliers in the field, journeying with them together to drive industry growth.
OUR PARTNERSHIP WITH VOLKSW AGEN GROUP
CARIZON — Our Joint Venture with Volkswagen Group
We strategically partner with affiliates of V olkswagen Group (“V olkswagen”) through the
joint venture Carizon (Beijing) Technology Co., Ltd (“CARIZON”), which was established in
2023, to capture the future opportunities of customized driving automation solutions in China.
V olkswagen is a German multinational conglomerate manufacturer of passenger and
commercial vehicles, motorcycles, engines and turbomachinery and is headquartered in
Wolfsburg, Germany and listed in Frankfurt Stock Exchange (ETR:VOW). China is one of
V olkswagen Group’s most important business regions globally. The collaboration with us is a
cornerstone of V olkswagen Group’s strategic transformation and the strengthening of its core
business in China. CARIZON will develop cutting-edge technologies, including a complete
software and hardware stack, enabling V olkswagen Group to continuously provide customized
products and services to Chinese consumers at a faster pace. This collaboration will accelerate
V olkswagen Group’s development in the field of autonomous driving, driving business
transformation and upgrades in China. V olkswagen Group will provide business
recommendations to its joint venture OEM enterprises in China in respect of situations agreed
in the agreement. By establishing CARIZON, V olkswagen Group will enhance its ADAS and
AD functions in passenger vehicles for its Chinese consumers, and we will bring our solutions
and technologies to the consumers of leading global automotive companies. This collaboration
is a win-win cooperation that creates long-term value for both V olkswagen Group and us.
CARIZON engages in the business of research and development, manufacture of autonomous
driving application software and self-driving systems, and it also provides aftersales services,
training, consulting, testing and technical services of its products (the “CARIZON Business”).
In the short term, its primary customer will be V olkswagen Group, and its products will be
applied towards vehicles V olkswagen sells in China. CARIZON does not exclude V olkswagen
Group to purchase ADAS and AD solutions from independent third parties, however, upon
meeting certain technical and performance standards, CARIZON will procure our processing
hardware on an exclusive basis. Considering aforementioned strategical positioning of
CARIZON for V olkswagen Group, we believe CARIZON is well positioned to capture a
significant amount of V olkswagen’s order in China. As of the Latest Practicable Date,
CARIZON has obtained design-win by V olkswagen Group, which is expected to achieve SOP
in 2025. V olkswagen holds 60% and we hold 40% of the equity interest in CARIZON,
respectively. The total registered capital of CARIZON is RMB6,757.0 million, and we have
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committed to contributing RMB2,703.0 million by installment prior to December 14, 2025,
representing 40% of the total registered capital of CARIZON. As of June 30, 2024, we have
contributed RMB1,351.0 million as registered capital of CARIZON. There is no term limitation
of CARIZON. Neither V olkswagen or we may transfer our equity interests without the other
party’s prior written consent, subject to customary right of first offer, right of first refusal and
transfer among affiliates conditions.
In January 2022, V olkswagen Group got in touch with us to explore the possibilities to
invest in our Company and conduct business cooperations. Throughout 2022, we held multiple
rounds of discussions regarding the investment amount, method, and scope of cooperations. In
November 2022, we entered into the convertible loan agreement, which was subsequently
amended on October 11, 2024, and share purchase agreement for V olkswagen Group to invest
in the Company and the joint venture agreement for V olkswagen Group and us to establish
CARIZON. In November 2023, after the fulfillment of certain preconditions, CARIZON was
officially established. In December 2023, V olkswagen Group and we completed the first
injection of capital into CARIZON, and V olkswagen Group’s investment in our Company was
completed. On December 7, 2023, the Company issued 269,711,694 series D preferred shares
to CARIAD, an affiliate of V olkswagen Group, during its series D financing, for a
consideration amounting to US$200 million. As of the date of this Prospectus, CARIAD held
approximately 2.31% in the issued shares of the Company. As of the Latest Practicable Date,
CARIZON is actively conducting R&D and progressing the CARIZON Business. Pursuant to
our agreement with affiliates of V olkswagen, we will license our ADAS and AD solutions for
a fee to CARIZON and provide technical support to CARIZON for its R&D and manufacturing
of its products; and CARIAD will provide technical support to CARIZON in product roadmap,
sales facilitation, sales channel management and marketing. Besides shared responsibilities of
licenses application, V olkswagen Group is responsible for providing technical support to
CARIZON’s requests for its products, road mapping, facilitating sales, sales channel
management, whereas we are responsible for supplying and selling our solutions to CARIZON,
and providing relevant technical services to CARIZON. In addition, we are responsible for
providing our experience, expertise and know-how on relevant technical support in research
and development and manufacturing of CARIZON’s products. Each of V olkswagen Group and
us can nominate two out of the four directors of CARIZON, and V olkswagen has the right to
nominate the chairman of CARIZON’s board. CARIZON’s adoption of board resolutions
requires the affirmative vote of a simple majority of the directors present at the board meeting
with a quorum and the chairman has a casting vote in the case of an equality of votes, except
that certain protective rights (such as formulating the annual budget and accounting plans,
incurrence of material loans or indebtedness, providing guarantee, material capital investment,
purchase and sale of material assets, and more) will be subject to the unanimous affirmative
vote of all directors presented at the board meeting with a quorum, and the chairman does not
have a casting vote under such circumstances. Due to recent changes in PRC Company Law,
the articles of association of CARIZON will be amended to remove the casting vote of the
chairman and to replace this with an escalation mechanism to the shareholders to decide by
simple majority vote in the event of an equality of votes at board meetings on matters that were
previously subject to the casting vote of the chairman. We license IPs to CARIZON for license
fees and royalties, and CARIZON has an option exercisable after January 1, 2027, subject to
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the terms and conditions of our agreement, to buy out the royalties with one-time payment,
which is determined with reference to the net present values of future royalties. By licensing
such IPs from us, CARIZON can develop its own autonomous driving applications, which will
eventually be integrated into vehicle models of V olkswagen Group. We retain IP rights of the
licensed IPs, and CARIZON can copy, modify and use the licensed IPs for their developments
pursuant to the terms of our agreements. CARIZON is entitled to retain the rights of foreground
IPs upon improvement being made or developed. CARIZON may distribute its after-tax profits
in proportion to respective paid-up of registered capital to shareholders, following the
contribution of statutory surplus reserve fund, loss made-up of previous years and upon
approval of its shareholders. Furthermore, if any dispute arises, relevant parties shall attempt
in the first instance to resolve through friendly consultation. If such dispute cannot be resolved
within 60 days following a party serving written notice on the other party to such dispute
requesting the commencement of friendly consultation, then any party may refer the dispute to
Hong Kong International Arbitration Centre (HKIAC) under its rules. In the future, we will
continue to license additional intellectual properties to CARIZON to support their ongoing
development needs. We have also provided technical and manufacturing know-how services to
CARIZON to fulfill its the technical and commercial requirements of an ADAS Level 2+
solution.
The following sets forth the major terms of our material intellectual right arrangements
with CARIZON:
 Non-exclusive License : We still retain ownership of all intellectual property rights
related to the licensed technology and have the right to continue granting licenses
to other entities, without involving the transfer of our core technology.
 License Territory : Mainland China. CARIZON is only permitted to use the licensed
technology within the geographical scope of mainland China for its own purposes
and for subsequent research and development, manufacturing, and commercial
activities. The software and processing hardware products developed and produced
by CARIZON based on the licensed technology will primarily be sold to
V olkswagen Group’s vehicle assembly plants in China and will be incorporated into
their mass-produced vehicle models. If CARIAD or entities outside of V olkswagen
Group participate in joint development activities, CARIZON will generally only be
able to engage in sublicensing arrangements. Furthermore, when delivering the
licensed technology, the receiving party may only use the licensed technology as
provided without gaining access to internal algorithms, logic, or structural designs,
unless (i) required by law or government authorities (such as to achieve approval for
sale); or (ii) to conduct performing checks and carry out software integration, in a
way consistent with how members of V olkswagen Group customarily work with
tier-one suppliers (in such cases, only on an on-premise or remote screen sharing
basis, and the key source code remains in the Company’s own information
technology domain).
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 Duration : Indefinite duration, CARIZON has the right to use the licensed
intellectual right perpetually, without the license automatically expiring at a specific
point in time, but we reserve the right to terminate the license in the event of a
material intentional breach of the intellectual right arrangements by CARIZON.
 Payment : We will issue the invoice to CARIZON for payment relates to each of our
IPs and CARIZON shall make all payments upon receipt of the invoice. Typical
payment milestones include (i) delivery of an IP, (ii) completion of validation
process and (iii) balance payment.
 Consideration : CARIZON is required to pay fair consideration for the license to us.
 Protection Measures : We have agreed with CARIZON on multiple intellectual
property protection measures, including the following:
/L50537CARIZON is required to implement adequate security measures, including: (i)
storing the licensed technology on secure computers and servers with password
protection; (ii) controlling access permissions for personnel and maintaining
access records to track unauthorized access and disclosure; (iii) complying
with various applicable IT security policies when handling the licensed
technology and in the event of any unauthorized access or disclosure,
CARIZON is required to immediately notify us.
/L50537CARIZON and its downstream users are required to comply with various usage
restrictions when using the licensed technology. These restrictions include
prohibitions on reverse engineering, reverse assembling, and the use of
infectious open-source licenses to prevent the need to publicly disclose source
code of the licensed technology due to the application of such infectious
open-source licenses. CARIZON is also required to store the source code of the
licensed technology within mainland China.
/L50537CARIZON is strictly limited in its ability to sublicense to third parties and can
only sublicense intellectual properties to third parties to the extent required and
primarily in a black box mode with the purpose to conduct research for the
development, manufacture, and commercialization of products within
mainland China.
/L50537CARIZON will be held responsible for any breaches by itself or its
sublicensees under situations agreed under the intellectual right license
agreement and will bear the consequences of such breaches.
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We license algorithms and software related to ADAS and AD solutions to CARIZON and
provide related technical services for licensing and service fees. In 2023 and for the six months
ended June 30, 2024, we recorded revenue from CARIZON of RMB627.3 million and
RMB351.6 million, respectively, after the elimination of unrealized profits and losses from the
transactions with CARIZON. We delivered algorithms and software for different ADAS and
AD functions to CARIZON in 2023 and for the six months ended June 30, 2024, respectively.
As we recognize licensing revenue at a point in time when the customer obtains control,
revenues of such licensing to CARIZON were recorded both in 2023 and for the six months
ended June 30, 2024 when the underlying licenses are made available to CARIZON and when
CARIZON is able to use and benefit from the licenses. CARIZON’s revenue contribution to us
is not one-off in nature and its future revenue contribution will depend on its project
development progress and sales, which is also linked to downstream consumer demand of the
passenger vehicles of its customers. The majority of our revenue from CARIZON is derived
from licensing algorithms and software to CARIZON for their development needs, with a
smaller portion generated from providing technical services to them. In 2023 and for the six
months ended June 30, 2024, CARIZON did not record any revenue during its eight-month
operation period and had net loss of approximately RMB200-250 million and RMB400-450
million, respectively (unaudited numbers based on its management account).
Convertible Loan
In November 2022 and on October 11, 2024, we strategically entered into a convertible
loan agreement and an amendment agreement with an affiliate of V olkswagen. Pursuant to
which and subject to the terms therein, V olkswagen has agreed to provide us a convertible loan
in the amount of US$800 million for a term of three years since the utilization date with tiered
annual interest rates from 2.67% to 5.67%. For conversion mechanics and further details of the
convertible loan, please see “History, Reorganization and Corporate Structure — Convertible
Loan.”
QUALITY ASSURANCE
Quality Assurance Procedures
We follow thorough quality assurance procedures to monitor the quality, product safety
and conformity of our solutions during the entire development, manufacturing, delivery and
services processes. We have dedicated quality assurance procedures and protocols to deliver
outstanding solutions to our customers.
Our quality assurance starts with stringent onboarding procedure. For manufacturers, we
engage well-known industry-leading suppliers and require them to be IATF16949 (or
equivalent) qualified. For IP and EDA suppliers, we consider their technological capacity and
problem-solving ability in fulfilling the requirements of the IPs needed. For IT service
providers, we require their services to be reliable and easy-to-use. We aim to maintain
long-term and stable relationships with our suppliers fostering win-win partnerships.
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We train our staff, including technical engineers and production engineers, to follow
quality assurance and technical review protocol as documented in our quality assurance
manuals. Our quality assurance personnel are responsible for ensuring compliance with
internal quality assurance procedures as prescribed in our written manuals. Our Journey 2,
Journey 3 and Journey 5 series processing hardware are all qualified for AEC Q100 Grade 2,
a robust and well-recognized stress test in the automotive industry. The efficiency and
effectiveness of our quality management system is reviewed on a regular basis.
Our key suppliers who communicate with us throughout their processes and
independently engage in internal quality assurance procedures to ensure the quality of their
outputs. Our SQE and R&D teams control quality and products, and our R&D team evaluates
the level of technical expertise and innovation of the suppliers. We conduct formal evaluations
and audits of our suppliers and manufacturing sites to ensure that they meet our quality
assurance procedures and requirements.
We have designated supplier quality engineering (SQE) functions, integrating supply
chain quality control capabilities, to ensure raw material quality, process quality and outgoing
quality. Our software development is based on integrated product development (IPD),
combining the Automotive Software Process Improvement and Capability Determination
(ASPICE) framework. A number of our staff have received external training for ASPICE
practices and obtained ASPICE assessors certification.
Certifications
We have established a full suite of functional safety (FuSa) processes meeting the highest
level of ISO26262 process (ASIL-D). We have also obtained ISO9001, ISO14001, ISO27001,
ISO21434 ML3 and ISO21448 certifications. We also serve as the committee member and
participated in the setting of several international standards such as ISO26262. Our processing
hardware Journey 5 is the first automotive processing hardware in China and one of the first
globally to meet the ASIL-B level under ISO26262 standard.
DATA SECURITY AND PRIV ACY
As our customers are OEMs and tier-one companies rather than individual consumers, we
do not collect personal information from third parties for our research and development
purposes. In the course of our research and development, we process data in compliance with
the applicable legal requirements and cooperate with qualified partners responsible for
desensitizing data and anonymizing personal information to ensure the data security. See “Risk
Factors — Risks Related to Our Business and Industry — The data privacy and data security
laws, including those in China, are subject to rapid and evolving changes, imposing significant
compliance requirements on us, and any failure or perceived failure to comply with such laws,
or other concerns about our practices or policies with respect to the processing of data, could
materially and adversely affect our business, financial condition, reputation and results of
operations.” for further detail describing the data privacy risks associated with our operations.
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We have also established an information technology security program in order to
implement data security requirements and best practices and we intend to continuously invest
heavily in data security and privacy protection. Our information technology security program
applies multiple layers of safeguards. We strive to adopt encryption technologies throughout
the data lifecycle to safeguard privacy and enhance data security. We implement internal
policies governing the authentication and authorization of access to our systems to ensure
confidential and certain categories of data can only be accessed by authorized staff. Our
employees only have access to data which is relevant and necessary for their responsibilities,
for limited purposes, and are expected to verify authorization upon access. We have also
implemented internal rules and procedures relating to the design and implementation of R&D
projects and code auditing, to ensure that the designed security requirements are met in our
R&D activities and code quality and security. We implement access control and account
authority control for all data. We provide data security training to these employees and require
them to report any information security breach.
During the Track Record Period and up to the Latest Practicable Date, we have not
received any claim from any third party against us on the ground of infringement of such
party’s right to data and privacy protection as provided by any applicable laws and regulations
in the PRC or other jurisdictions.
COMPETITION
The global smart vehicle industry is rapidly evolving with frequent updates to ADAS and
AD technologies. We compete with other players in the industry whose businesses include the
design and development of software, algorithms and hardware related to ADAS and AD. We
face increasingly intense competition with other leading players in various aspects of our
business, including solution coverage, product design, processing capabilities as well as
consumer experience. See “Industry Overview.” According to CIC, during the Track Record
Period, Chinese OEMs gained notable market share in the China passenger vehicle market, and
all of the top 10 Chinese OEMs are our customers. According to CIC, we are the largest
Chinese ADAS solution provider with a market share of 21.3% in 2023, in terms of ADAS
installation volume to Chinese OEMs in China.
EMPLOYEES
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we employed an aggregate
of 1,454, 1,986, 2,066 and 2,319 full-time employees, respectively. The following table sets
forth a breakdown of the number of our employees as of June 30, 2024 by work function.
Research and Development /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,696
Sales and Marketing /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118462
General and Administrative /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118161
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,319
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Substantially most of our employees are based in the PRC. Our success depends on our
ability to attract, retain and motivate qualified personnel, and we believe that our high-quality
talent pool is one of our core strengths. We adopt high standards and strict procedures in our
recruitment, including campus recruitment, online recruitment, internal referral and
recruitment through executive search, to satisfy our demands for different types of talents. We
recruit employees based on their educational background, relevant experience in similar
positions and professional qualifications, as well as our expansion strategy and job vacancies.
We offer competitive compensation for our employees. In addition, we regularly evaluate the
performance of our employees and reward those who perform well with higher compensation
or promotion.
We provide regular and specialized training tailored to the needs of our employees in
different departments. Our employees can also improve their skills through our development
of technologies and mutual learning among colleagues. New employees will receive pre-job
training and general training.
As required by PRC laws and regulations, we participate in various employee social
security schemes organized by municipal and provincial government, including pension,
maternity insurance, unemployment insurance, work-related injury insurance, health insurance
and housing provident fund. We are required under PRC laws and regulations to make
contributions to employee social security schemes at specified percentages of the salaries,
bonuses and certain allowances of our employees, up to a maximum amount specified by the
local government from time to time.
We believe our leadership in the industry is the key factor in the retention of talent, as our
employees are attracted and motivated by the exposure of working with us. However, we also
enter into standard contracts and agreements regarding confidentiality, noncompetition,
intellectual property, employment and commercial ethics with our executive officers and
full-time employees. These contracts typically include a noncompetition provision effective
during and up to two years after their employment with us and a confidentiality provision
effective during and after their employment with us.
We believe that we maintain a good working relationship with our employees, and we
have not experienced any significant labor disputes or any difficulty in recruiting staff for our
operations during the Track Record Period and up to the Latest Practicable Date.
INSURANCE
Pursuant to PRC regulations, we provide social insurance including pension insurance,
unemployment insurance, work-related injury insurance, maternity insurance and medical
insurance for our employees based in China. We also purchase supplemental commercial
medical insurance for our employees.
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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 key man life insurance, insurance policies covering damages to our network or
information technology systems or any insurance policies for our properties. See the section
headed “Risk Factors — Risks Related to Our Business and Industry — We may not have
sufficient insurance coverage to cover our business risks” in this Prospectus. During the Track
Record Period, we did not make any material insurance claim in relation to our business.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
Overview
We are committed to fostering sustainable practices, promoting social responsibility, and
maintaining strong governance standards, reflecting our dedication to Environmental, Social,
and Governance (“ESG”) principles. We will establish a set of ESG policies (“ESG Policy”)
in accordance with the standards of Appendix C2 to the Listing Rules, which outlined, among
others, (i) the appropriate risk governance on ESG matters, including climate-related risks and
opportunities, (ii) ESG strategy formation procedures, (iii) ESG risk management and
monitoring, (iv) the identification of key performance indicator (“KPI”) and (v) the relevant
measurements and mitigating measures.
Our ESG Policy will set out different parties’ respective responsibilities and authority in
managing ESG matters. Our Board will have overall responsibility for overseeing and
determining our environmental, social, and climate-related risks and opportunities impacting
us, establishing and adopting the ESG Policy and our targets, and reviewing our performance
annually against the ESG targets and revising the ESG strategies as appropriate if significant
variance from the target is identified.
Our Board will establish an ESG working group to support our Board in implementing the
agreed ESG Policy, targets and strategies; conducting materiality assessments of ESG related
risks; collecting ESG data from different parties while preparing for the ESG report; and
continuous monitoring of the implementation of measures to address our Group’s ESG-related
risks. The ESG working group has to report to our Board on an annual basis on our ESG
performance and the effectiveness of the ESG systems.
During the Track Record Period and up to the Latest Practicable Date, we had not been
subject to any material claim or penalty or accident in relation to health, work safety, social and
environmental protection, as advised by our PRC Legal Advisors we had been in compliance
with the relevant PRC laws and regulations in all material aspects.
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Potential Impacts of ESG-related Risks
Given the nature of our business, we do not produce any material generation of emissions
and wastes and cause severe pollution. Nonetheless, we monitor environmental and climate-
related risks that may impact on our business, strategy and financial performance as our key
agenda. Supervised by our Board, we actively identify and monitor the ESG-related risks and
opportunities over the short, medium and long term, and we seek to incorporate such
climate-related issues into our businesses, strategy and financial planning.
We regularly check and analyze the carbon emissions caused by our own business
operations, and continuously explore solutions to reduce carbon emissions. As an ADAS and
AD solutions provider, we will only produce scope 2 emissions under the Listing Rules. Based
on the tracking and review of emission indicators, we actively explored actions to reduce
carbon emissions and disposal. Non-hazardous waste is handled by the property in compliance.
During the Track Record Period, we have not incurred significant capital expenditure or
compliance costs related to climate and environmental protection.
Strategies for Addressing ESG-related Risks
We are adopting various strategies and measures to identify, assess, manage and mitigate
ESG and climate-related risks, including but not limited to:
 Reviewing and evaluating ESG reports of comparable companies in the industry so
as to ensure timely identification of general ESG-related risks;
 Discussing with the management from time to time and holding regular meetings so
as to ensure that all material ESG areas are identified and reported;
 Discussing key ESG principles and practices with key stakeholders to ensure that
important aspects are covered;
 Formulating specific ESG risk early warning system and management approaches,
which quantify the performance indicators so as to identify and consider ESG risks
and opportunities and separate ESG risks and opportunities from other business risks
and opportunities; and
 Setting short-term and long-term targets for environmental key performance
indicators, including emissions, pollution and other impacts on the environment, so
as to reduce emissions and consumption of natural resources.
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In addition, we will take comprehensive measures to mitigate, adapt and build resilience
to the impact of the environment on our business, strategies and financial performance, as
summarized below.
Important Areas Key Measures
Solid waste management  Requiring proper handling and
disposal of solid waste
 Carrying out hazardous waste storage
in accordance with relevant standards,
establishing a system for standardized
management of hazardous waste, and
delivering to qualified third party for
proper disposal
Energy and resources saving  Establishing a “Green Office
Management System”
 Replacing with energy-saving
equipment in offices
Metrics and Targets
The ESG working group sets targets for each material KPI at the beginning of each
financial year in accordance with the disclosure requirements of Appendix C2 to the Listing
Rules and other relevant rules and regulations upon listing. The relevant targets on material
KPIs will be reviewed by the Board on an annual basis to ensure that they remain appropriate
to the needs of our Group. In setting targets for the KPIs, we have taken into account their
respective historical levels and have considered our future business expansion thoroughly and
prudently with a view of balancing business growth and environmental protection to achieve
sustainable development.
Our Board has overall responsibility for overseeing and determining our environmental,
social, and climate-related risks and opportunities impacting us, establishing and adopting the
ESG Policy and targets of us, and reviewing our performance annually against the ESG targets
and revising the ESG strategies as appropriate if significant variance from the target is
identified. We will carry out a corporate risk assessment at least once a year which covers
current and potential risks that we face, including but not limited to ESG risks and strategic
risks from disruptive forces (such as climate change). The decisions on the reduction, transfer,
acceptance or control of the risks are affected by various factors. We will incorporate
climate-related issues, including the analysis on physical and transition risks, into risk
assessment process and risk appetite setting. We will consider the risks and opportunities in
strategic and financial planning process if such risks and opportunities are deemed to be
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material. After reviewing the environmental, social and climate-related risks and our
performance in response to such risks each year, we may revise and alter our ESG strategies
and corporate governance policies as appropriate.
We monitor the following indicators to assess and manage our environmental and
climate-related risks arising from our business operations.
Indicators For Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2024
Greenhouse gases Total greenhouse gas
emission (tons of CO2e) 978.7 1,642.4 2,250.0 1,380.5
Total greenhouse gas
emission per unit of
revenue (tons of
CO2e/RMB in million) 2.1 1.8 1.5 1.5
Year-over-year/period-over-
period change of total
greenhouse gas emission
per unit of revenue NA (13.5%) (20.0%) (38.6%)
Power consumption Total electricity consumption
(MWh) 1,623.4 2,797.6 3,783.8 2,321.3
Total electricity consumption
per unit of revenue
(MWh/RMB in million) 3.5 3.1 2.4 2.5
Year-over-year/period-over-
period change of total
electricity consumption per
unit of revenue N/A (11.2%) (21.1%) (38.7%)
Water consumption Total water consumption
(tons) 5,756.4 12,657.3 17,529.4 6,701.8
Total water consumption
per unit of revenue
(tons/RMB in million) 12.3 14.0 11.3 7.2
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Indicators For Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2024
Year-over-year/period-over-
period change of total
water consumption per
unit of revenue N/A 13.3% (19.2%) (36.3%)
Waste generation Amount of non-hazardous
waste (tons) 76.3 89.2 137.0 57.8
Amount of hazardous waste
(tons) 0.9 –
(1) 1.0 – (2)
Total amount of waste: 77.2 89.2 138.0 57.8
Total amount of waste per
unit of revenue (tons/RMB
in million) 0.2 0.1 0.1 0.1
Year-over-year/period-over-
period change of total
amount of waste per unit
of revenue N/A (40.4%) (9.7%) (58.1%)
Notes:
(1) The original data is 0.01, since only one decimal place is retained, it is written “–”.
(2) Our hazardous waste mainly includes toner cartridges, ink cartridges and discarded electronic devices, of
which toner cartridges and ink cartridges are recycled by qualified suppliers at the end of the service cycle,
and discarded electronic devices is recycled by qualified suppliers when needed.
During the Track Record Period, our power consumption, water consumption, and waste
generation have increased, which aligns with our business development. We identify the range
of greenhouse gas emissions that we mainly generate as Scope 1 and Scope 2 emissions
according to the Greenhouse Gas Accounting System — Enterprise Accounting and Reporting
Standard. Scope 1 emissions refer to direct greenhouse gas emissions primarily from the
consumption of direct energy in our operations, namely the fuel consumed by our company-
owned vehicles. Scope 2 emissions refer to indirect greenhouse gas emissions primarily from
the consumption of electricity at our office spaces. During the Track Record Period, the total
amount of GHG emission (Scope 1 and Scope 2) were 978.7 tons, 1,642.4 tons, 2,250.0 tons
and 1,380.5 tons of CO2 equivalent, respectively. Based on the resource consumption data in
2023, we plan to reduce electricity density of 2.4 MWh per million revenue and water density
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of 11.30 tons per million revenue by approximately 5% by 2027. Based on the 2023 GHG
emission density data (Scope 1 and Scope 2) of 1.45 tons of CO2 equivalent per million
revenue, we plan to reduce GHG emission density (Scope 1 and Scope 2) by approximately 5%
by 2027.
Corporate Social Responsibility
We have been committed to corporate responsibility projects, especially education. In line
with this commitment, our CEO and Chairman, Dr. Yu, has donated RMB11.0 million to
establish the Horizon Fund with a leading education institution in the PRC. This special fund
aims to contribute to the enhancement of education and support scientific research and talent
development in related fields.
Building upon our dedication to education, we have initiated the Horizon University
Developer Program. This program has a broad vision of reaching thousands of universities
globally and cultivating millions of university-level developers. Central to this program is the
Horizon Development Kit, which serves as a comprehensive teaching resource for software and
hardware programs in universities.
Through the Horizon University Developer Program, we seek to foster collaboration
between universities and our organization. Specific collaborations include co-building
curriculum systems, conducting research collaborations, fostering innovation and
entrepreneurship, as well as partnering in competitions and events. By working together, we
aim to create a vibrant ecosystem that nurtures talent, promotes innovation, and empowers
students to excel in the fields of science and technology.
Employment and Care
We have entered into employment contracts with our employees in accordance with the
applicable PRC laws and regulations such as the Labor Law of the People’s Republic of China
and the Labor Contract Law of the People’s Republic of China, and formulated the Employee
Manual, the Labor and Employment Management Regulations and other internal policies. We
hire employees based on their merits, following the principles of lawfulness, fairness, equality,
voluntariness, consensus, honesty and credibility. We prohibit any use of child labor in any of
our operations.
We believe that having a balanced lifestyle is crucial to achieving a good mindset at work.
Therefore, we encourage employees to maintain good mental and physical health by
participating in sports and recreational activities.
We nurtured a friendly and inspirational corporate culture that we believe is attractive to
the talented scientists who are keen to our success, and we invest heavily in training and
retaining them. We provide adequate resources to help them succeed, including easy access to
our rich internal resources for training and studying, our invaluable industry-related insights
and opportunities to work in an inclusive community with our similar-minded scientists.
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Benefits and Welfare
We strive to offer competitive salaries to attract and retain employees, and we provide
attractive benefits and care to employees, including wedding and birth benefits, festival care
and community activities, as well as gym, mother and baby room, lounge and other complete
functional rooms.
We will also focus on embracing diversity within our organization and equal and
respectful treatment of all of our employees in their hiring, training, wellness and professional
and personal development. While maximizing equal career opportunity for everyone, we will
also continue to promote work-life balance and create a pleasant workplace for all of our
employees.
Workplace Safety
We have adopted and maintained a series of rules, standard operating procedures, and
measures to maintain our employees’ healthy and safe environment to ensure our operations
comply with applicable workplace safety regulations in jurisdictions where we operate. We
implement safety guidelines to set out information about potential safety hazards. Also, we
have policies in place and have adopted relevant measures to ensure the hygiene of our work
environment and the health of our employees. As we do not operate any production facilities,
we are not subject to significant health, work safety, social or environmental risks. To ensure
compliance with applicable laws and regulations, our human resources department would, if
necessary and after consultation with our legal advisers, adjust our human resources policies
to accommodate material changes to relevant labor and safety laws and regulations.
Development and Training
To further support professional development, staff training management is divided into
on-the-job training and onboarding training. The onboarding training for employees includes
explaining professional knowledge and company culture and values. At the beginning of the
year, our human resources department collects the training requirements of all departments and
conducts on-the-job training according to the common needs or pain points. At the same time,
we also provide relevant leadership training for managers at different levels to help managers
improve their team management skills and continue to move towards better management
positions.
Anti-corruption and Anti-bribery
In addition, we have implemented a set of policies to ensure our operations comply with
applicable anti-bribery and anti-corruption regulations in jurisdictions where we operate. The
policies explain potential bribery and corruption conduct and our anti-bribery and anti-
corruption measures. Improper payments prohibited by the policy include bribes, kickbacks,
excessive gifts or facilitation payment, or any other payment made or offered to obtain an
undue business advantage. Our compliance department is responsible for investigating the
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reported incidents and taking appropriate measures as necessary. We conduct background
check procedures before hiring any third party and ensure that the hiring procedure is
implemented fully in accordance with the anti-bribery and anti-corruption policies. We also
have regular trainings for employees regarding anti-bribery and anti-corruption policies to
facilitate better implementation.
Supply Chain Management
Our suppliers mainly include manufacturers and assembly and testing service providers
and IP, EDA, IT vendors. We utilize a supply chain management framework to manage our
overall product development, procurement, and production processes. We have a supplier
management policy, based on which we evaluate our suppliers carefully according to their
historical quality performance and ask them to provide certificate including ISO14001
certification, ISO45001 certification, Registration, Evaluation, Authorization, and Restriction
of Chemicals (REACH) and Restriction of Hazardous Substances (RoHS) by the EU.
In addition, we also encourage our suppliers to comply with relevant environmental and
social regulations. Since we are not engaged in manufacturing of products and we do not
directly perform the delivery of goods, we do not purchase any cartons or other packaging
materials to package the products we sold under the distribution method. We commit to
reducing our environmental footprint. We adhere to the principles of simplicity, high efficiency
and convenient use for customers, and expect to collaborate with our suppliers to package the
products in a more environment friendly manner. We have also included anti-corruption clauses
in our agreements with our suppliers to prevent collusion and corruption.
Product Quality and Safety
We inform our customers that certificates have been obtained from professional testing
institutions that conducted efficacy tests and safety assessments on our products. Through these
results, we communicate to our customers about the reliability and efficacies of our products.
We have established a full-suite of functional safety (FuSa) processes meeting the highest level
of ISO26262 process (ASIL-D). We have also obtained ISO9001, ISO14001, ISO27001,
ISO21434 ML3 and ISO21448 certifications. We also serve as the committee member and
participated in the setting of several international standards such as ISO26262.
During the Track Record Period and up to the Latest Practicable Date, we had not been
subject to any material claim or penalty in relation to any product safety issues, including
accidents, injuries and fatalities involving end users or passengers of vehicles equipped with
our ADAS and AD solutions, false advertising incidents or any material defects or
malfunctioning of our ADAS and AD solutions and we had been in compliance with the
relevant laws and regulations in China in all material aspects.
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PROPERTIES
Our principal executive offices are located in Beijing and Shanghai, China, respectively.
According to section 6(2) of the Companies (Exemption of Companies and Prospectuses from
Compliance with Provisions) Notice, 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 interests in land or buildings, for the reason that, as of the Latest Practicable
Date, none of the properties leased by us had a carrying amount of 15% or more of our
consolidated total assets.
We currently do not own any properties. As of the Latest Practicable Date, we own one
land use right with a total area of approximately 15.6 thousand sq.m., which shall be used for
the purpose of “scientific research and design (R&D headquarters industry project category)”
according to the relevant land grant contract which we entered into with local government
authority in Shanghai. We had fully paid the considerations for the land use right and obtained
the real estate right ownership certificate. We mortgaged the aforesaid land use right for a loan
from Shanghai Pudong Development Bank Co., Ltd. in the new branch of Shanghai Pilot Free
Trade Zone and has registered the mortgage. As of the Latest Practicable Date, we primarily
leased 17 properties in China with an aggregate gross floor area of 37.8 thousand sq. m. as our
office space. We believe that there is sufficient supply of properties in mainland China and we
do not rely on the existing leases for our business operations. We believe that our current
facilities are adequate to meet our current needs.
U.S. EXPORT CONTROL LA WS AND REGULATIONS
The United States maintains a system of export controls restrictions through the Export
Administration Regulations (the “EAR”), which are administered by the Bureau of Industry
and Security of the U.S. Department of Commerce (the “BIS”). The restrictions imposed under
the EAR purport to apply globally, and their application varies depending on various factors,
including the nature of the item being exported, re-exported or transferred, the countries and
entities involved, and the intended end-uses of the regulated item. Items that are subject to U.S.
export controls under the EAR include:
 All items in the United States;
 All U.S.-origin items, wherever located;
 Each of:
(i) Non-U.S.-made commodities that incorporate controlled U.S.-origin
commodities or are “bundled” with controlled U.S.-origin software above de
minimis thresholds;
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(ii) Non-U.S.-made software that incorporates controlled U.S.-origin software
above de minimis thresholds; or
(iii) Non-U.S.-made technology that is commingled with controlled U.S.-origin
technology above de minimis thresholds;
This is referred to as the EAR’s “ de minimis rule”; and
 Certain non-U.S. produced products that are “direct products” of specified
technology or software or are produced by plants or major plant components that are
themselves direct products of specified technology or software (collectively, the
EAR’s foreign direct product rules, or “FDPR”).
In October 2022, BIS issued an interim final rule (the “BIS October 2022 IFR”) aimed at
restricting China’s ability to obtain advanced computing integrated circuits, develop and
maintain supercomputers, and manufacture advanced semiconductors. In October 2023, BIS
issued another interim final rule (the “BIS October 2023 IFR”) that updated and expanded U.S.
export controls imposed by the BIS October 2022 IFR (the BIS October 2022 IFR and the BIS
October 2023 IFR collectively, and together with the BIS’s April 2024 interim final rule
making technical corrections and clarifications to the BIS October 2023 IFR, the “BIS 2022/23
IFRs”). Among other measures, the BIS 2022/23 IFRs add to the Commerce Control List
(which is a list of commodities, software, and technologies that are subject to the EAR’s more
restrictive controls) certain advanced and high-performance computing integrated circuits and
computer commodities that contain these integrated circuits, and impose new or expanded
license requirements for items subject to the EAR destined for end-use in the development or
production of supercomputers, certain types of advanced node integrated circuits and
advanced, or semiconductor manufacturing equipment in, certain jurisdictions, including
China.
In addition to the restrictions introduced by the BIS 2022/23 IFRs, BIS maintains lists of
persons that are subject to enhanced export control restrictions. One such list, the Entity List,
includes a list of foreign persons on which certain trade restrictions are imposed, including
business, research institutions, government and private organizations, individuals and other
types of legal persons. The United States in recent years has placed an increasing number of
entities, including a number of entities in China, on the Entity List and other restricted or
prohibited parties lists. Given the sudden and unpredictable nature of these determinations, it
is difficult to predict developments in this area and we have no ability to influence such
determinations.
As of the Latest Practicable Date, the restrictions imposed by the EAR, including the BIS
2022/23 IFRs, have not negatively impacted our operations or financial performance.
Furthermore, for the reasons outlined in the paragraph below (but subject to the factors
referenced therein), as of the Latest Practicable Date, our Directors is of the view that the
restrictions imposed by the EAR have not and are not expected to impact our business activities
or expansions plans.
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We have evaluated the application of the EAR to our operations, with support from U.S.
export control counsel. We understand, after consultations with U.S. export control counsel and
taking into account their view, that because the semiconductors incorporated into our solutions
are not produced in or exported from the United States, these semiconductor items would not
be subject to U.S. export controls under the EAR when being exported, reexported, or
transferred entirely outside the United States, except in limited circumstances that could trigger
the EAR’s de minimis rule or an FDPR:
 EAR’s de minimis rule: As outlined in more detail above, under the de minimis rule,
the EAR can apply to non-U.S.-made items that incorporate, are bundled with, or
comingled with certain controlled U.S.-origin items above certain de minimis
thresholds.
 FDPR: Under the FDPR, the EAR can apply to certain non-U.S. origin items that are
the “direct product” of certain specified technology or software or produced by
plants or major components of plants that are direct products of these specified
technology or software.
The semiconductors incorporated into our solutions may fall within certain aspects of
both the de minimis rule and the FDPR, but the resulting EAR restrictions potentially apply
only if our solutions are being sold to Russia, Belarus, or the U.S.-sanctioned jurisdictions of
Cuba, Iran, North Korea, Syria, and the Russian-occupied Crimea, Donetsk, and Luhansk
regions of Ukraine or for certain prohibited end uses (such as supercomputing) or certain
prohibited end users. Because we do not sell our solutions incorporating our semiconductors
to any of these countries or territories or to or for these prohibited end uses or end users, the
EAR, including the BIS 2022/23 IFRs, have not negatively impacted our operations or
financial performance as of the Latest Practicable Date.
As part of our management of the risks associated with our EAR compliance —
specifically, the potential application of the EAR’s de minimis rule to these non-U.S. produced
semiconductors — we consider these rules in the design, manufacture, procurement and sales
of these items to try to ensure that more restrictive application of the EAR’s de minimis rule
or the FDPR will not be applicable to any export, reexport, or transfer (in-country) of our
solutions incorporating such semiconductors. However, because sanctions and export controls
laws and regulations continue to expand and evolve, future sanctions and export controls may
materially and adversely affect or target some of our significant suppliers or customers, raw
materials or key components or technologies necessary for our operations, including the
semiconductors incorporated in our solutions. If any of these risks were to materialize, our
business could be adversely affected if we fail to promptly secure alternative sources of supply
on terms acceptable to us. See “Risk Factors — Risks related to our business and industry —
We are subject to the risks associated with sanctions and export controls laws and regulations,
international trade policies, and developing domestic and foreign laws and regulations on smart
vehicles and related technologies, and our business, financial condition and results of
operations could be adversely affected” for further details.
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Based on the reasons set forth above and the due diligence conducted by the Joint
Sponsors, nothing has come to the attention of the Joint Sponsors that would reasonably cause
the Joint Sponsors to disagree with the Directors’ view as set out above in any material
respects.
LEGAL PROCEEDINGS AND COMPLIANCE
During the Track Record Period and up to the Latest Practicable Date, we had not 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 and compliance.
According to our PRC Legal Adviser, the business operations we engaged in had been
carried out in compliance with applicable PRC laws and regulations in all material respects
during the Track Record Period and up to the Latest Practicable Date.
LICENSES AND PERMITS
The following table sets forth the details of the material licenses and permits necessary
for the business operations in which we engaged in China.
License/Permit
Entity Holding the
License/Permit Grant Date
Expiration
Date
High and New Technology
Enterprises Certificate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shanghai 2023.12.12 2026.12.11
High and New Technology
Enterprises Certificate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Information 2023.11.30 2026.11.29
High and New Technology
Enterprises Certificate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shenzhen 2022.12.19 2025.12.18
High and New Technology
Enterprises Certificate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beijing Horizon
Robotics 2022.10.18 2025.10.17
High and New Technology
Enterprises Certificate (1) /H1118/H1118/H1118/H1118/H1118/H1118Horizon Nanjing 2021.11.30 2024.11.29
Quality management system
certification: ISO9001:2015 /H1118/H1118/H1118/H1118
Beijing Horizon
Robotics 2024.08.24 2027.08.23
Quality management system
certification: GB/T19001-
2016/ISO9001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shanghai 2022.12.07 2025.11.06
Quality management system
certification: GB/T19001-
2016/ISO9001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shenzhen 2022.12.08 2025.11.04
Quality management system
certification: GB/T19001-
2016/ISO9001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Nanjing 2022.12.02 2025.11.06
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License/Permit
Entity Holding the
License/Permit Grant Date
Expiration
Date
Quality management system
certification: GB/T19001-
2016/ISO9001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Information 2023.02.10 2026.02.09
Environmental management
system certification:
ISO14001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beijing Horizon
Robotics 2024.09.22 2027.09.21
Environmental management
system certification:
GB/T24001-
2016/ISO14001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Information 2023.02.10 2026.02.09
Environmental management
system certification:
GB/T24001-
2016/ISO14001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Nanjing 2022.12.02 2025.12.01
Environmental management
system certification:
GB/T24001-
2016/ISO14001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shanghai 2022.12.07 2025.12.06
Environmental management
system certification:
GB/T24001-
2016/ISO14001:2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Horizon Shenzhen 2022.12.08 2025.12.07
IT Product Information Security
Certification /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Beijing Horizon
Robotics 2022.11.23 2025.11.22
Note:
(1) We submitted our renewal request in July 2024 before the license expiration date and we expect to
obtain renewal in the fourth quarter of 2024 without any material difficulties.
During the Track Record Period and up to the Latest Practicable Date, we had obtained
all material licenses, permits, approvals and certificates necessary to conduct our actual
business operations from the relevant government authorities in the PRC, and such licenses,
permits, approvals and certificates remained in full effect.
RISK MANAGEMENT AND INTERNAL CONTROL
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 continuously improving these systems. We have adopted and
implemented risk management policies in various aspects of our business operations. Our
Board of Directors is responsible for the establishment and updating of our internal control
systems, while our senior management monitors the daily implementation of the internal
control procedures and measures with respect to each subsidiary and functional department.
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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. We also have procedures in place to 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. We also engage external legal counsel to review and update our internal policies and
ensure continuous compliance with all applicable laws and regulations.
During the Track Record Period and up to the Latest Practicable Date, we have not
become aware of any material information leakage or loss of our data. Our IT systems had not
experienced any material third-party intrusions, viruses, hacker attacks, ransomware attacks
and other cyberattacks, information or data theft or other similar threats during the Track
Record Period and up to the Latest Practicable Date. See “Data Security and Privacy” in this
section 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 noncompliance during the Track Record Period and as of the Latest
Practicable Date.
We have in place detailed internal procedures to ensure that our in-house legal department
reviews our solutions and services, including upgrades to existing solutions, for regulatory
compliance before they are made available to the general public. 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 and ensuring all necessary application,
renewals or filings for trademark, copyright and patent registration have been timely made to
the competent authorities.
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Internal Control Risk Management and Measure
We have designed and adopted strict internal procedures to ensure the compliance of our
business operations with the relevant rules and regulations. We maintain internal procedures to
ensure that we have obtained all material requisite licenses, permits and approvals for our
business operation, and conduct regular reviews to monitor the status and effectiveness of those
licenses and approvals. We obtain requisite governmental approvals or consents, including
preparing and submitting all necessary documents for filing with relevant government
authorities within the prescribed regulatory timelines.
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 and provide specialized training tailored to the needs of our employees in
different departments. We also conduct periodic performance reviews for our employees, and
their remuneration is performance-based. We monitor the implementation of internal risk
management policies on a regular basis to identify, manage and mitigate internal risks in
relation to the potential noncompliance with our code of conduct, work ethics, and violations
of our internal policies or illegal acts at all levels of our Group.
Investment Risk Management
Our investment department is responsible for investment project sourcing, screening,
execution and portfolio management. The department sources investment projects in
accordance with our investment strategy, and conducts thorough pre-investment due diligence
to assess the risks, business synergies and potential return of the investment projects.
Audit Committee Experience and Qualification and Board Oversight
We will establish an audit committee to monitor the implementation of our risk
management policies across our Company on an ongoing basis to ensure that our internal
control system is effective in identifying, managing, and mitigating risks involved in our
business operations. The audit committee will consist of three members, namely Dr. Jun Pu
(chairman), Dr. Katherine Rong XIN and Dr. Ya-Qin Zhang, all being independent
non-executive Directors. For the professional qualifications and experiences of the members of
our audit committee, see “Directors and Senior Management — Board Committees.”
We also maintain an internal audit department that is responsible for reviewing the
effectiveness of internal controls and reporting to the audit committee on any issues identified.
Our internal audit department holds regular meetings with the management to discuss any
internal control issues we face and the corresponding measures to implement toward resolving
such issues.
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A W ARDS AND RECOGNITIONS
Award/Recognition Award Authority Award Y ear
China Auto Parts Award of the Year
in Mass Production /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Auto Business Review 2022
China Auto Parts Award in
Prospective Category /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Auto Business Review 2021
China Auto Parts Award in
Mass Production /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Auto Business Review 2020
Innovation Awards in the Vehicle
Intelligence and Self-driving
Technology Category /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Consumer Electronics Show
(CES) 2019
One of the 50 Smartest Companies,
TR50 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118MIT Technology Review 2019
China Auto Parts Annual
Contribution Award /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Auto Business Review 2019
Most Innovative Company of the
Year in China /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Forbes China 2018
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BOARD OF DIRECTORS
Upon Listing, the Board will consist of twelve Directors, including four executive
Directors, four non-executive Directors and four independent non-executive Directors. The
following table provides certain information about our Directors:
The following table sets forth the key information about our Directors:
Name Age Position/Title
Time of
Joining our
Group
Date of
Appointment as a
Director Responsibilities
Dr. Kai Yu
(Я௱)
47 Chairman of the Board,
executive Director
and chief executive
officer
July 2015 July 21, 2015 In charge of our
overall strategic
and business
development
Dr. Chang Huang
(ර࿫)
43 Executive Director and
chief technology
officer
July 2015 November 1, 2017 In charge of our
overall R&D
work
Ms. Feiwen Tao
(ௗ౵ත)
38 Executive Director and
chief operating
officer
July 2015 September 7, 2017 In charge of our
operations and
management
(including
financial
matters)
Dr. Liming Chen
(׼)
61 Executive Director and
president
September
2021
March 18, 2024 In charge of our
overall
management,
with a strategic
focus on supply
chain and
quality
assurance
Mr. Liang Li
(ҽԄ)
52 Non-executive Director November
2017
November 2017 Provide strategic
advice on the
development of
the Company
DIRECTORS AND SENIOR MANAGEMENT
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Name Age Position/Title
Time of
Joining our
Group
Date of
Appointment as a
Director Responsibilities
Mr. Qin Liu
(ٿ)
51 Non-executive Director October 2015 October 2015 Provide strategic
advice on the
development of
the Company
Dr. André
Stoffels
55 Non-executive Director December
2023
December 2023 Provide strategic
advice on the
development of
the Company
Dr. Juehui Zhang
(ੵᙂᅆ)
61 Non-executive Director January 2022 January 2022 Provide strategic
advice on the
development of
the Company
Dr. Jun Pu
(ࠏ)
47 Independent
non–executive
Director
Listing Date October 8, 2024 Provide
independent
opinion and
judgment to the
Board
Mr. Yingqiu Wu
(߇ڎ)
63 Independent
non–executive
Director
Listing Date October 8, 2024 Provide
independent
opinion and
judgment to the
Board
Dr. Katherine
Rong XIN
60 Independent
non–executive
Director
Listing Date October 8, 2024 Provide
independent
opinion and
judgment to the
Board
Dr. Ya-Qin
Zhang
(ੵԭා)
58 Independent
non–executive
Director
January 2020 January 2020 Provide
independent
opinion and
judgment to the
Board
Note: As of the Latest Practicable Date, Mr. Xin Zhang (ؚwas our Director appointed by one of our investors.
He will resign from directorship effective before Listing.
DIRECTORS AND SENIOR MANAGEMENT
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Executive Directors
Dr. Kai Yu ( Я௱), aged 47, is our founder, chairman of the Board, an executive Director
and chief executive officer. Dr. Yu is in charge of our overall strategic and business
development. Dr. Yu was appointed as a Director in July 2015 and re-designated as an
executive Director in March 2024.
Dr. Yu is a globally recognized scientist, and has approximately 25 years of research and
development experience in computer engineering. Dr. Yu has published more than 100 research
papers with over 30,000 citations. Before founding the Company, Dr. Yu was the deputy head
of Baidu Research (Ӻ৫) from April 2012 to June 2015. He was instrumental in
initiating China’s one of the first autonomous driving project at Baidu in 2013. Prior to joining
Baidu, Dr. Yu played various key R&D roles in Germany and the United States for 12 years,
including senior research scientist at the Neural Computation Department of Siemens
Corporate Technology, head of the Media Analytics Department at NEC Laboratories America.
He was also an adjunct faculty at the Computer Science Department of Stanford University
during the period.
Dr. Yu obtained his bachelor’s degree and master’s degree in electronic engineering from
Nanjing University (ԯɽኪ) in July 1998 and June 2000, respectively, and his Ph.D. degree
in computer science from University of Munich in Germany in July 2004.
Dr. Chang Huang ( ර࿫), aged 43, is our co-founder, an executive Director and chief
technology officer. Dr. Huang is in charge of our overall R&D work. Dr. Huang was appointed
as a Director in November 2017 and re-designated as an executive Director in March 2024.
Dr. Huang is one of the top researchers in computer engineering. As a renowned expert
in both industry and academia, he has over 20,000 academic citations and owns more than 80
patents internationally. Dr. Huang served as the chief R&D architect at Baidu Inc. (NASDAQ:
BIDU; stock code: 9888.HK) from November 2014 to August 2015, the principal architect of
Baidu USA LLC from July 2012 to November 2014, a researcher of NEC Laboratories America
from November 2010 to July 2012, and a postdoctoral researcher at the University of Southern
California in the United States from November 2007 to July 2010.
Dr. Huang received his bachelor’s, master’s and Ph.D. degrees in computer science and
technology from Tsinghua University ( ૶ശɽኪ) in July 2003, July 2005 and July 2007,
respectively.
Ms. Feiwen Tao ( ௗ౵ත), aged 38, is our co-founder, an executive Director and chief
operating officer. Ms. Tao is in charge of our operations and management (including financial
matters). Ms. Tao was appointed as a Director in September 2017 and re-designated as an
executive Director in March 2024. Since joining the Group, Ms. Tao has been spearheading the
Group’s financial, human resources, legal, marketing and administrative functions. In
particular, she has been responsible for our capital market management and daily financial
operations since our establishment.
DIRECTORS AND SENIOR MANAGEMENT
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Ms. Tao has extensive experiences in leading international technology companies. Prior
to founding the Company, Ms. Tao worked at Baidu USA LLC before working at the
headquarter of Baidu Inc. (NASDAQ: BIDU; stock code: 9888.HK) in the PRC from May 2012
to February 2016. She worked in the sales & operations team at Google’s headquarters from
February 2011 to May 2012. She served as a senior analyst at Foote, Cone and Belding Limited
from January 2009 to February 2011.
Ms. Tao received her bachelor’s degree in economics from Nanjing University (ԯɽኪ)
in June 2007 and her master’s degree in science and integrated marketing communications
from Northwestern University in the United States in December 2008.
Dr. Liming Chen (׼)aged 61, is our executive Director appointed in March 2024
and the president of our Company. Dr. Chen is in charge of our overall management, with a
strategic focus on supply chain and quality assurance.
Dr. Chen is a widely respected technologist and industry leader in the automotive industry
and renowned business leader in strategy development, management system and sustainable
business growth with about 30 years’ experiences. Prior to joining the Company, Dr. Chen held
various senior positions within the Bosch Group (the “Bosch”), a leading global supplier of
technology and services with a concentration in areas of automotive technology, industrial
technology, consumer goods, and building technology, including application manager from
August 2004 to May 2007, engineering director from June 2007 to December 2010, vice
president from January 2011 to June 2012 and senior vice president and regional president of
Bosch Group’s chassis systems control division in China from 2012 to 2021, and was
responsible for its P&L and overall management. At Bosch, Dr. Chen demonstrated outstanding
technical foresight and innovation capabilities and led the development of the new generation
of vehicle traction control systems (TCS), which is still used in Bosch’s latest ESP10 system.
He led the establishment of one of the largest foreign-invested automotive R&D centers and
R&D teams in China. Under Dr. Chen’s leadership and via measures of new business strategies,
re-organization, deep localization of product development and manufacturing, Bosch’s sales
performance in China achieved significant growth and became market leader for eight
consecutive years in China.
Dr. Chen received his bachelor’s and master’s degrees in aeronautical powerdevice
control from Nanjing University of Aeronautics and Astronautics (ঘ˂ɽኪ)
(formerly known as Nanjing College of Aeronautics (ኪ৫)) in July 1983 and June
1986, respectively, and his Ph.D. degree in mechanical engineering from Wayne State
University in the United States in May 1995. Dr. Chen has been a member of Global
Automotive Executive Council (ଡ଼ᔌ) since October 2017.
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Non-executive Directors
Mr. Liang Li ( ҽԄ), aged 52, was appointed as a Director in November 2017 and was
re-designated as our non-executive Director in March 2024. He is primarily responsible for
providing strategic advice on the development of the Company.
Mr. Li has served as a partner at Hillhouse Investment since November 2005. From
November 2001 to November 2005, Mr. Li worked as the vice-general manager and
subsequently the general manager at State Research Internet and Data (Beijing) Co., Ltd. ( ̏
ʮ̡). Prior to joining State Research Internet and Data (Beijing)
Co., Ltd., Mr. Li worked at State Research Information and Technology Co., Ltd. (߅ࢹڦ޼
ʮ̡) and Development Research Centre of the State Council (Ӻʕː).
Mr. Li received his bachelor’s degree in automation in July 1994 and his master’s degree
in systems engineering in June 1997 from Tsinghua University ( ૶ശɽኪ).
Mr. Qin Liu (ٿ)former name: Ya Liu ( ᄎඩ)), aged 51, was appointed as a Director
in October 2015 and was re-designated as our non-executive Director in March 2024. He is
primarily responsible for providing strategic advice on the development of the Company.
Mr. Liu co-founded and has been serving as a managing partner of 5Y Capital (formerly
known as Morningside Venture Capital Limited) since June 2007. Before co-founding 5Y
Capital, Mr. Liu served various roles including the business development director for
investment at Morningside IT Management Services (Shanghai) Co. Ltd. (Ҧፔ༔
(ɪऎ)ʮ̡) from July 2000 to November 2008. Mr. Liu has been a director of JOYY Inc.
(NASDAQ: YY) since June 2008, and he currently serves as a member of the corporate
governance and nominating committee and the investment committee of JOYY Inc.. Mr. Liu
became a director of Xiaomi Corporation (stock code: 1810.HK) in May 2010, and he currently
serves as a non-executive director and a member of the audit committee of Xiaomi
Corporation. Since December 2014, Liu Qin has been a director of Agora, Inc. (NASDAQ:
API), and he currently serves as a member of the audit committee, the nominating and
corporate governance committee and the compensation committee of Agora Inc. Mr. Liu served
as a non-executive director of XPeng Inc. (NYSE: XPEV , stock code: 9868.HK) from
September 2019 to June 2023.
Mr. Liu received his bachelor’s degree in industrial electrical automation from University
of Science and Technology Beijing (Ҧɽኪ) in July 1993, and his master’s degree in
business administration from China Europe International Business School ( ʕᆄ਷ყʈਠኪ৫)
in April 2000.
Dr. André Stoffels , aged 55, was appointed as a Director in December 2023 and was
re-designated as our non-executive Director in March 2024. He is primarily responsible for
providing strategic advice on the development of the Company.
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--- page 333 ---
From September 2023 to present, Dr. Stoffels has been the chief financial officer at
CARIAD SE, prior to which he held various senior positions within V olkswagen Group
including the executive first vice president (finance) in FAW-V olkswagen Co. Ltd. from April
2019 to July 2023, a management position in finance, China, compliance and integrity
department at AUDI AG from October 2018 to March 2019, the chief financial officer at Ducati
Motor Holding spa from September 2015 to September 2018, the chief financial officer in
V olkswagen Group España Distribución from May 2012 to August 2015, and the head of
strategic corporate planning at AUDI AG from June 2004 to April 2012.
Dr. Stoffels received his diploma in engineering (general engineering) from École
Centrale in France and his diploma in engineering (electrical engineering) from RWTH Aachen
University in Germany in June 1994 and December 1995, respectively. Dr. Stoffels received his
Ph.D. degree in mechanical engineering from Technical University Darmstadt in Germany in
May 2001.
Dr. Juehui Zhang ( ੵᙂᅆ), aged 61, was appointed as a Director in January 2022 and
was re-designated as our non-executive Director in March 2024. He is primarily responsible for
providing strategic advice on the development of the Company.
Dr. Zhang has been the deputy chief engineer at SAIC Motor from October 2019 to
present, prior to which he successively served as deputy general manager of SAIC Motor’s fuel
cell division, deputy director of the engineering research institute, deputy general manager of
the new energy vehicle division, deputy director of the technology center, director of the new
energy and technology management department, chief engineer of the passenger vehicle
division, deputy director of the technology center, and executive deputy director of the
technology center from June 2006 to September 2019. From August 1986 to June 2006, Dr.
Zhang successively served as product engineering designer, head of the technical coordination
department and head of product engineering of Shanghai V olkswagen Automotive Co., Ltd. ( ɪ
ʮ̡). Dr. Zhang has been a director of Z-ONE Technology Co., Ltd. (߅
ʮ̡) since December 2021 and a supervisor of Shanghai Hydrogen Propulsion
Technology Co. Ltd. (ʮ̡) since December 2021.
Dr. Zhang received his bachelor’s degree in mechanical engineering in July 1986 and his
Ph.D. degree in vehicle engineering from Tongji University ( Ν᏶ɽኪ) in March 2010.
Independent Non-executive Directors
Dr. Jun Pu (ࠏ)aged 47, was appointed as an independent non-executive Director on
October 8, 2024. He is primarily responsible for providing independent opinion and judgment
to the Board.
DIRECTORS AND SENIOR MANAGEMENT
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Dr. Pu has been an accounting professor since December 2016 at University of
International Business and Economics (ɽኪ), a researcher of the Beijing
Enterprises’ Global Management Research Centre ( ̏ԯΆุ਷ყʷ຾ᐄਿή) and the
Research Centre for the Internationalization of Chinese Enterprises (Ӻ
ʕː) since 2005 at University of International Business and Economics (ɽኪ).
Dr. Pu has been an independent non-executive director and the chairman of the audit
committee of the board of directors of China Quanjude (Group) Co., Ltd. ( ʕ਷Όၳᅃ(ණྠ)
ʮ̡, stock code: 002186.SZ) since January 2019, an independent non-executive
director and the chairman of the audit committee of the board of directors of New Journey
Health Technology Group Co., Ltd. (ʮ̡, stock code:
002219.SZ) since March 2021, an independent non-executive director and the chairman of the
audit committee of the board of directors of China Science Publishing & Media Ltd (߅
ʮ̡, stock code: 601858.SH) since January 2022, and an independent
non-executive director and a member of the audit committee of the board of directors of
Ecovacs Robotics Co., Ltd. (ʮ̡, stock code: 603486.SH) since May
2022. Dr. Pu served as an independent non-executive director of Beijing Baination Pictures
Co., Ltd. (ʮ̡, stock code: 300291.SZ) from November 2016 to
March 2023.
Dr. Pu received his bachelor’s degree in economics in July 1999, master’s degree in
management in June 2002 and Ph.D. degree in economics in June 2005 from University of
International Business and Economics (ɽኪ).
Mr. Yingqiu Wu (߇ڎ)aged 63, was appointed as an independent non-executive
Director on October 8, 2024. He is primarily responsible for providing independent opinion
and judgment to the Board.
Mr. Wu has been the chairman and chief executive officer of Huanqiu Automobile Group
(ካଢӛԓණྠ) since September 2010. He was an adjunct professor at the school of journalism
at Lanzhou university ( ᚆψɽኪ). Mr. Wu served as the senior vice president and the chairman
of the media committee of Yiche Media Group (ԓෂదණྠ) from February 2008 to
December 2010. From December 1987 to February 2008, Mr. Wu worked at China Automotive
News (ٟwith the last position as deputy editor.
Mr. Wu received his bachelor’s degree in literature from Lanzhou University ( ᚆψɽኪ)
in 1983.
Dr. Katherine Rong XIN , aged 60, was appointed as an independent non-executive
Director on October 8, 2024. She is primarily responsible for providing independent opinion
and judgment to the Board.
DIRECTORS AND SENIOR MANAGEMENT
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Dr. XIN has been a professor of management since September 2001 and associate dean
since 2011 at the China Europe International Business School ( ʕᆄ਷ყʈਠኪ৫). She
worked as a professor and associate professor in various renowned universities from 1999 to
2009. Dr. XIN served as an independent director in Shanghai Blossom Hill Hotel Management
Co. Ltd., (ʮ̡), a company mainly engaged in boutique hotel
management in China under the brand of Blossom Hill (ගੀ), from March 2012 to April
2017.
Dr. XIN has been an independent non-executive director of Fosun Tourism Group (݋
༷˖ʷණྠ, stock code: 1992.HK) since November 2018, an independent non-executive
director of EuroEyes International Eye Clinic Limited (ʮ̡, stock code:
1846.HK) since April 2021, an independent non-executive director of Kingdee International
Software Group Company Limited (ʮ̡, stock code: 268.HK) since
December 2021, an independent non-executive director of Landsea Green Life Service
Company Limited (ʮ̡, stock code: 1965.HK) since April 2022, and a
director of Contemporary Amperex Technology Co., Limited (ʮ
̡, stock code: 300750.SZ) since November 2022. Dr. XIN served as an independent
non-executive director of Besunyen Holdings Company Limited (ʮ̡, stock
code: 926.HK) from July 2010 to December 2012.
Dr. XIN was awarded the Chinese Most Cited Researchers by Elsevier, a global provider
of scientific, technical, and medical information, for nine consecutive years from 2014 to 2022.
Dr. XIN received her bachelor’s degree in English from Auhui University ( τᏏɽኪ)i n
July 1984. She received her master’s degree in applied linguistics from Graduate University of
Chinese Academy of Sciences (Ӻ͛৫) in July 1986, and her master’s degree in
business administration from California State University in the United States in June 1991. She
received her Ph.D. degree in business administration from the University of California in the
United States in June 1995.
Dr. Y a-Qin Zhang ( ੵԭා), aged 58, has been our independent Director taking
non-executive role since January 2020 and was re-designated as our independent non-executive
Director in March 2024. He is primarily responsible for providing independent opinion and
judgment to the Board.
Dr. Zhang was the president of Baidu Inc. (NASDAQ: BIDU, stock code: 9888.HK) from
2014 to 2019. Prior to Baidu, Dr. Zhang had been an executive at Microsoft for 16 years with
different key positions, including managing director of Microsoft Research Asia, chairman of
Microsoft China, and corporate vice president and chairman of Microsoft Asia R&D.
DIRECTORS AND SENIOR MANAGEMENT
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Dr. Zhang was elected as a fellow of the Chinese Academy of Engineering (CAE), the
American Academy of Arts and Sciences (AAA&S), the Australian Academy of Technology
and Engineering (ATSE), the National Academy of Inventors (NAI), and the Euro-Asia
Academy of Sciences. He is a fellow of IEEE and CAAI. He is one of the top scientists and
technologists in computer engineering, with over 500 papers authored, 60 U.S. patents granted,
and 11 books published. His original research has become the basis for start-up ventures, new
products, and international standards.
Dr. Zhang has been an independent non-executive director of AsiaInfo Technologies
Limited (ʮ̡, stock code: 1675.HK) since December 2018. He has been a
non-executive director of WPP (NYSE: WPP, LSE: WPP) since January 2021 and Chinasoft
International Limited (ʮ̡, stock code: 354.HK) since December 2008.
Dr. Zhang received his bachelor’s degree in radio electronics and master’s degree in
telecommunication and electrical systems from the University of Science and Technology of
China (Ҧɽኪ) in July 1983 and January 1986, respectively. In February 1990,
Dr. Zhang received his Ph.D. degree in electrical engineering from George Washington
University, Washington D.C.
In 2019, Dr. Zhang has been named as a defendant in a class action filed by certain
investors against NIO Inc., a company listed on the New York Stock Exchange (symbol: NIO)
and the Stock Exchange (stock code: 09866.HK) in the United States District Court for the
Eastern District of New York, in his capacity as its former director. The plaintiffs alleged that
they purchased NIO Inc.’s american depositary shares at artificially inflated prices and thus,
were seeking to recover compensable damage caused by the defendants’ violation of the federal
securities laws and to follow remedies under the Securities Exchange Act of 1934. As of the
Latest Practicable Date and to our best knowledge, the case is still pending.
Based on available information and taking into account that (i) the case is still pending
as of the Latest Practicable Date and the court has not ruled on the substance of the plaintiffs’
claims, (ii) such class action is not uncommon among companies listed in the United States and
being named as a defendant in the capacity of a former director in a class action does not form
a basis for doubting Dr. Zhang’s integrity or suitability to discharge his duties as a director of
a listed company in Hong Kong, and (iii) there was no evidence showing Dr. Zhang’s personal
involvement in conducting or directing to conduct any alleged unlawful actions in a manner
that would raise concerns as to his character, experience, integrity and ability to discharge his
duties as a director, including fiduciary duties and duties to exercise skill, care and diligence
to a standard that commensurates with his position as a director of a listed company in Hong
Kong, the Directors are of the view that this class action would not affect the suitability of Dr.
Zhang as a Director of the Company under Rules 3.08 and 3.09 of the Listing Rules.
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--- page 337 ---
SENIOR MANAGEMENT
The following table sets forth the key information about our senior management.
Name Age Position/Title
Time of
Joining our
Group
Date of
Appointment as a
senior management Responsibilities
Dr. Kai Yu
(Я௱)
47 Chairman of the Board,
executive Director
and chief executive
officer
July 2015 July 2015 In charge of our
overall strategic
and business
development
Dr. Chang
Huang ( ර࿫)
43 Executive Director and
chief technology
officer
July 2015 July 2015 In charge of our
overall R&D
work
Ms. Feiwen Tao
(ௗ౵ත)
38 Executive Director and
chief operating
officer
July 2015 July 2015 In charge of our
operations and
management
(including
financial matters)
Dr. Liming Chen
(׼)
61 Executive Director and
president
September
2021
September 2021 In charge of our
overall
management,
with a strategic
focus on supply
chain and quality
assurance
For the biographical details of Dr. Yu, Dr. Huang, Ms. Tao and Dr. Liming Chen, see “—
Board of Directors — Executive Directors.”
GENERAL
Save as disclosed above, none of the Directors or members of senior management of our
Company has been a director of any public company the securities of which are listed on any
securities market in Hong Kong or overseas in the three years immediately preceding the date
of this Prospectus.
Save as disclosed above, none of the Directors or members of the senior management of
our Company is related to any other Directors and members of the senior management of our
Company.
DIRECTORS AND SENIOR MANAGEMENT
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--- page 338 ---
Save as disclosed above, to the best knowledge, information and belief of our Directors
having made all reasonable inquiries, there was no other matter with respect to the appointment
of our Directors that needs to be brought to the attention of the Shareholders and there was no
information relating to our Directors that is required to be disclosed pursuant to Rule
13.51(2)(h) to (v) of the Listing Rules as of the Latest Practicable Date.
JOINT COMPANY SECRETARIES
Ms. Qi Zhao ( Ⴛփ) is our joint company secretary. Ms. Zhao joined the Company in
December 2015 and now serves as the head of compliance of legal and compliance department,
responsible for regulatory compliance matters of the Company. Ms. Zhao received her
bachelor’s degree in English from Shanghai Jiao Tong University ( ɪऎʹஷɽኪ) in July 2010
and her master’s degree in law from Fudan University ( ూ͇ɽኪ) in June 2013.
Ms. Ka Man So ( ᘽྗઽ) is a director of the corporate services division of Tricor
Services Limited and has been providing professional corporate services to Hong Kong listed
companies as well as multi-national, private and offshore companies. Ms. So has over 20 years
of experience in the corporate secretarial and compliance service field. Ms. So is currently
acting as the company secretary or joint company secretary of a few listed companies on the
Stock Exchange.
Ms. So received her bachelor’s degree of arts in accountancy from The Hong Kong
Polytechnic University in November 1996. Ms. So is a Chartered Secretary, a Chartered
Governance Professional and a fellow of both The Hong Kong Chartered Governance Institute
and The Chartered Governance Institute in the United Kingdom.
BOARD COMMITTEES
Our Board delegates certain responsibilities to various committees. In accordance with
the relevant PRC laws and regulations and the Corporate Governance Code, our Company has
formed four Board committees, namely the Audit Committee, the Nomination Committee, the
Remuneration Committee and the Corporate Governance Committee.
Audit Committee
We have established an Audit Committee with written terms of reference in compliance
with Rule 3.21 of the Listing Rules and paragraph D.3 of the Corporate Governance Code. The
Audit Committee consists of three Directors, namely Dr. Jun Pu, Dr. Katherine Rong XIN and
Dr. Ya-Qin Zhang. Dr. Jun Pu has the appropriate professional qualifications or accounting or
related financial management expertise as required under Rules 3.10(2) and 3.21 of the Listing
Rules. Dr. Jun Pu serves as the chairman of the Audit Committee. The primary duties of the
Audit Committee include, but not limited to, the following:
 proposing the appointment or change of external auditors to our Board, and
monitoring the independence of external auditors and evaluating their performance;
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 examining the financial information of our Company and reviewing financial reports
and statements of our Company;
 examining the financial reporting system, the risk management and internal control
system of our Company, overseeing their rationality, efficiency and implementation
and making recommendations to our Board; and
 dealing with other matters that are authorized by our Board.
Remuneration Committee
We have established a Remuneration Committee with written terms of reference in
compliance with paragraph E.1 of the Corporate Governance Code. The Remuneration
Committee consists of three Directors, namely Dr. Ya-Qin Zhang, Dr. Katherine Rong XIN and
Dr. Kai Yu. Dr. Ya-Qin Zhang serves as the chairman of the Remuneration Committee. The
primary duties of the Remuneration Committee include, but not limited to, the following:
 making recommendations to the Board on the Company’s policy and structure for all
Directors’ and senior managements’ remuneration and on the establishment of a
formal and transparent procedure for developing remuneration policy;
 monitoring the implementation of remuneration system of our Company;
 making recommendations on the remuneration packages of our Directors and senior
management; and
 dealing with other matters that are authorized by our Board.
Nomination Committee
We have established a Nomination Committee with written terms of reference in
compliance with paragraph B.3 of the Corporate Governance Code. The Nomination
Committee consists of three Directors, namely Mr. Yingqiu Wu, Dr. Katherine Rong XIN and
Dr. Kai Yu. Mr. Yingqiu Wu serves as the chairman of the Nomination Committee. The primary
duties of the Nomination Committee include, but not limited to, the following:
 conducting extensive search and providing to our Board suitable candidates for our
Directors, chief executive officer and other members of the senior management;
 reviewing the structure, size and composition of our Board at least annually and
making recommendations on any proposed changes to our Board;
 researching and developing standards and procedures for the election of our Board
members, chief executive officer and members of the senior management, and
making recommendations to our Board; and
 dealing with other matters that are authorized by our Board.
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Corporate Governance Committee
We have established a Corporate Governance Committee in compliance with Chapter 8A
of the Listing Rules. The Corporate Governance Committee comprises three independent
non-executive Directors, namely Dr. Ya-Qin Zhang, Dr. Jun Pu and Mr. Yingqiu Wu. Dr.
Ya-Qin Zhang is the chairman of the Corporate Governance Committee. The primary duties of
the corporate governance committee are, among other things, to ensure that the Company is
operated and managed for the benefit of all Shareholders and to ensure the Company’s
compliance with the Listing Rules and safeguards relating to the weighted voting right
structures of the Company. For details of their experience in corporate governance related
matters, see the biographies of the independent non-executive Directors in the section headed
“— Independent Non-executive Directors” above.
In accordance with Rule 8A.30 of the Listing Rules and the Corporate Governance Code,
the work of our corporate governance committee as set out in its terms of reference includes:
(a) to develop and review the Company’s policies and practices on corporate
governance and make recommendations to the Board;
(b) to review and monitor the training and continuous professional development of
Directors and senior management;
(c) to review and monitor the Company’s policies and practices on compliance with
legal and regulatory requirements;
(d) to develop, review and monitor the code of conduct and compliance manual (if any)
applicable to employees and directors;
(e) to review the Company’s compliance with the Corporate Governance Code and
disclosure in the Corporate Governance Report;
(f) to review and monitor whether the Company is operated and managed for the benefit
of all its Shareholders;
(g) to confirm, on an annual basis, that the beneficiaries of weighted voting rights have
been members of the Board throughout the year and that no matters under Rule
8A.17 of the Listing Rules have occurred during the relevant financial year;
(h) to confirm, on an annual basis, whether or not the beneficiaries of weighted voting
rights have complied with Rules 8A.14, 8A.15, 8A.18 and 8A.24 of the Listing
Rules throughout the year;
DIRECTORS AND SENIOR MANAGEMENT
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(i) to review and monitor the management of conflicts of interests and make a
recommendation to the Board on any matter where there is a potential conflict of
interest between the Company, a subsidiary of the Company and/or Shareholders of
the Company (considered as a group) on one hand and any beneficiary of weighted
voting rights on the other;
(j) to review and monitor all risks related to the Company’s weighted voting rights
structure, including connected transactions between the Company and/or a
subsidiary of the Company on one hand and any beneficiary of weighted voting
rights on the other and make a recommendation to the Board on any such
transaction;
(k) to make a recommendation to the Board as to the appointment or removal of the
Compliance Adviser;
(l) to seek to ensure effective and on-going communication between the Company and
its Shareholders, particularly with regards to the requirements of Rule 8A.35 of the
Listing Rules;
(m) to report on the work of the corporate governance committee on at least a half-yearly
and annual basis covering all areas of its terms of reference; and
(n) to disclose, on a comply or explain basis, its recommendations to the Board in
respect of the matters in sub-paragraphs (i) to (l) above in the report referred to in
sub-paragraph (m) above.
Pursuant to Rule 8A.32 of the Listing Rules, the Corporate Governance Report prepared
by the Company for inclusion in our interim and annual reports after Listing will include a
summary of the work of the corporate governance committee for the relevant period.
ROLE OF OUR INDEPENDENT NON-EXECUTIVE DIRECTORS
Pursuant to Rule 8A.26 of the Listing Rules, the role of the independent non-executive
directors of a listed company with WVR structure must include, but is not limited to, the
functions described in Code Provisions C.1.2, C.1.6 and C.1.7 of part 2 of the Corporate
Governance Code as set out in Appendix C1 to the Listing Rules. The functions of the
independent non-executive Directors include:
 participating in Board meetings to bring an independent judgment to bear on issues
of strategy, policy, performance, accountability, resources, key appointments and
standards of conduct;
 taking the lead where potential conflicts of interests arise;
DIRECTORS AND SENIOR MANAGEMENT
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 serving on the audit, compensation, nomination and corporate governance
committees, if invited;
 scrutinizing the Company’s performance in achieving agreed corporate goals and
objectives, and monitoring performance reporting;
 giving the Board and any committees on which they serve the benefit of their skills,
expertise and varied backgrounds and qualifications through regular attendance and
active participation;
 making a positive contribution to the development of the Company’s strategy and
policies through independent, constructive and informed comments; and
 attending general meetings and developing a balanced understanding of the views of
our Shareholders.
CONFIRMATION FROM OUR DIRECTORS
Rule 8.10 of the Listing Rules
Each of our Directors confirms that as of the Latest Practicable Date, save as disclosed
above he or she did not have any interest in a business which competes or is likely to compete,
either directly or indirectly, with our Company’s business which would require disclosure
under Rule 8.10 of the Listing Rules.
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Listing Rules in March 2024, and (ii) understands his or her
obligations as a director of a listed issuer under the Listing Rules.
Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors has confirmed (i) his/her independence
as regards each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) he/she
has no past or present financial or other interest in the business of the Company or its
subsidiaries or any connection with any core connected person of the Company under the
Listing Rules as of the Latest Practicable Date, and (iii) that there are no other factors that may
affect his/her independence at the time of his/her appointments.
DIRECTORS AND SENIOR MANAGEMENT
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COMPENSATION OF DIRECTORS
Our Directors receive compensation in the form of fees, salaries, allowances,
discretionary bonuses, share-based compensation, retirement benefit scheme contributions and
other benefits in kind.
For the years ended December 31, 2021, 2022 and 2023 and the six months ended
June 30, 2024, the aggregate amount of remuneration paid or payable to our Directors
amounted to RMB70.2 million, RMB28.6 million, RMB17.0 million and RMB13.4 million,
respectively.
Under the current compensation arrangement, we estimate the total compensation before
taxation to be accrued to our Directors for the year ended December 31, 2024 to be
approximately RMB14.5 million.
The total emoluments for the remaining individuals among the five highest paid
individuals amounted to RMB13.8 million, RMB30.7 million, RMB174.1 million and
RMB72.4 million for the years ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024, respectively.
During the Track Record Period, no remuneration was paid by our Company to, or
receivable by, our Directors or the five highest paid individuals as an inducement to join or
upon joining our Company or as compensation for loss of office in connection with the
management positions of our Company or any of our subsidiaries.
During the Track Record Period, none of our Directors waived any remuneration. Save as
disclosed above, no other payments have been paid, or are payable, by our Company or any of
our subsidiaries to our Directors or the five highest paid individuals during the Track Record
Period.
CORPORATE GOVERNANCE
Pursuant to Code Provision C.2.1 of part 2 of the Corporate Governance Code as set out
in Appendix C1 of the Listing Rules, companies listed on the Stock Exchange are expected to
comply with, but may choose to deviate from the requirement that the responsibilities between
the chairman and the chief executive officer should be separate and should not be performed
by the same individual. We do not have a separate chairman and chief executive officer and Dr.
Yu currently performs these two roles. The Board believes that vesting the roles of both
chairman and chief executive officer in the same person has the benefit of ensuring consistent
leadership within the Group and enables more effective and efficient overall strategic planning
for the Group. The Board considers that the balance of power and authority for the present
arrangement will not be impaired and this structure will enable the Company to make and
implement decisions promptly and effectively.
DIRECTORS AND SENIOR MANAGEMENT
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BOARD DIVERSITY POLICY
In order to enhance the effectiveness of our Board and to maintain the high standard of
corporate governance, we have adopted the board diversity policy which sets out the objective
and approach to achieve and maintain diversity of our Board. Pursuant to the board diversity
policy, we seek to achieve board diversity through the consideration of a number of factors
when selecting the candidates to our Board, including but not limited to gender, skills, age,
professional experience, knowledge, cultural and educational background, and length of
service. The ultimate decision of the appointment will be based on merit and the contribution
which the selected candidates will bring to our Board.
Our Directors have a balanced mix of knowledge and skills, including overall
management and strategic development, accounting and corporate governance in addition to
industry experience. We have four independent non-executive Directors with different industry
backgrounds, representing one-third of the members of our Board. Our Company has evaluated
the structure, size and composition of our Board, and is of the opinion that the structure of our
Board is reasonable, and the experience and skills of the Directors in various aspects and fields
can enable our Company to maintain a high standard of operations.
Besides, we particularly recognize the importance of gender diversity. We have taken, and
will continue to take, steps to promote gender diversity at all levels of our Company, including
but without limitation to our Board and senior management levels. Going forward, we will
continue to work to enhance gender diversity of our Board when selecting and recommending
suitable candidates for Board appointments. Our Company also intends to promote gender
diversity at the mid to senior level so that our Company can maintain a balanced gender ratio
at different levels. Taking into account our existing business model and specific needs as well
as the different background of our Directors, the composition of our Board satisfies our board
diversity policy.
Our Nomination Committee is responsible for ensuring the diversity of our Board
members. After the Listing, our Nomination Committee will examine the board diversity policy
from time to time to ensure its continued effectiveness and we will disclose in our corporate
governance report about the implementation of the board diversity policy on an annual basis.
DIRECTORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISER
We have appointed Somerley Capital Limited as our Compliance Adviser pursuant to Rule
8A.33 of the Listing Rules. Our Compliance Adviser will provide us with guidance and advice
as to compliance with the Listing Rules and applicable Hong Kong laws.
Pursuant to Rules 3A.23 and 8A.34 of the Listing Rules, our Compliance Adviser will
advise our Company, among others, in the following circumstances:
(a) before the publication of any regulatory announcement, circular or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds from the Global Offering in a manner different
from that detailed in this Prospectus or where our business activities, developments
or results deviate from any forecast, estimate or other information in this Prospectus;
(d) where the Stock Exchange makes an inquiry to our Company regarding unusual
movements in the price or trading volume of its listed securities or any other matters
in accordance with Rule 13.10 of the Listing Rules;
(e) the WVR Structure;
(f) transactions in which any beneficiary of weighted voting rights in the Company has
an interest; and
(g) where there is a potential conflict of interest between the Company, its subsidiary
and/or Shareholders (considered as a group) on one hand and any beneficiary of
weighted voting rights in the Company on the other.
The term of appointment of the Compliance Adviser shall commence on the Listing Date.
Pursuant to Rule 8A.33 of the Listing Rules, the Company is required to engage a compliance
adviser on a permanent basis.
DIRECTORS AND SENIOR MANAGEMENT
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THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the
cornerstone investors set out below (each a “ Cornerstone Investor ”, and together the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to,
subject to certain conditions, subscribe at the Offer Price for a certain number of Offer Shares
that may be purchased for an aggregate amount of approximately US$219.8 million
(approximately HK$1,707.1 million) (the “ Cornerstone Placing ”). The calculations in this
section, which are based on the exchange rate as disclosed in the section headed “Information
about this Prospectus and the Global Offering”, are for illustration purpose.
Assuming an Offer Price of HK$3.73, being the low-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 457,660,800 Offer Shares, representing approximately (i) 33.8% of the
Class B Ordinary Shares offered pursuant to the Global offering (assuming that the
Over-allotment Option is not exercised), (ii) 3.5% of our total issued share capital immediately
upon completion of the Global Offering (assuming the Over-allotment Option is not exercised);
and (iii) 3.5% of our total issued share capital immediately upon completion of the Global
Offering and the full exercise of the Over-allotment Option.
Assuming an Offer Price of HK$3.86, being the mid-point of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 442,247,400 Offer Shares, representing approximately (i) 32.6% of the
Class B Ordinary Shares offered pursuant to the Global offering (assuming that the
Over-allotment Option is not exercised), (ii) 3.4% of our total issued share capital immediately
upon completion of the Global Offering (assuming the Over-allotment Option is not exercised);
and (iii) 3.3% of our total issued share capital immediately upon completion of the Global
Offering and the full exercise of the Over-allotment Option.
Assuming an Offer Price of HK$3.99, being the high-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 427,838,400 Offer Shares, representing approximately (i) 31.6% of the
Class B Ordinary Shares offered pursuant to the Global offering (assuming that the
Over-allotment Option is not exercised), (ii) 3.3% of our total issued share capital immediately
upon completion of the Global Offering (assuming the Over-allotment Option is not exercised);
and (iii) 3.2% of our total issued share capital immediately upon completion of the Global
Offering and the full exercise of the Over-allotment Option.
Our Company is of the view that the Cornerstone Placing will help to raise the profile of
our Company and to signify that such investors have confidence in our business and prospect.
Our Company became acquainted with each of the Cornerstone Investors in its ordinary course
of business or previous financing.
CORNERSTONE INVESTORS
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To the best knowledge of our Company, each of the Cornerstone Investors (i) is an
Independent Third Party; (ii) none of the Cornerstone Investors is accustomed to taking
instructions from our Company, the Directors, chief executive, our Controlling Shareholders,
substantial shareholders, existing Shareholders (save for Ning Bo Yong Ning Gao Xin SP as
defined below) or any of their respective subsidiaries or their respective close associates in
relation to the acquisition, disposal, voting or other disposition of the Offer Shares; (iii) none
of the subscription of the relevant Offer Shares by any of the Cornerstone Investors is financed
by our Company, the Directors, chief executive, our Controlling Shareholders, substantial
shareholders, existing Shareholders (save for Ning Bo Yong Ning Gao Xin SP as defined
below) or any of their respective subsidiaries or their respective close associates; (iv) each
Cornerstone Investor will be utilizing their internal resources as their source of funding for the
subscription of the Offer Shares; and (v) no approval from other stock exchange is required for
each Cornerstone Investor’s investment in our Company as described in this section.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investors will not subscribe for any Offer Shares under the Global Offering (other than
pursuant to the Cornerstone Investment Agreements). The Offer Shares to be subscribed by the
Cornerstone Investors will rank pari passu in all respect with the fully paid 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, none of the Cornerstone
Investors will become a substantial shareholder of the Company, and the Cornerstone Investors
will not have any Board representation in our Company. Other than a guaranteed allocation of
the relevant Offer Shares at the final Offer Price, the Cornerstone Investors do not have any
preferential rights in the Cornerstone Investment Agreements compared with other public
Shareholders. There are no side arrangements between our Company and the Cornerstone
Investors or any benefit, direct or indirect, conferred on the Cornerstone Investors by virtue of
or in relation to the Cornerstone Placing.
The total number of Offer Shares to be subscribed by the Cornerstone Investors 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 the paragraph headed “Structure of the Global Offering — The Hong Kong
Public Offering — Reallocation” in this Prospectus. The number of Offer Shares to be acquired
by each Cornerstone Investor may be reduced on a pro rata basis in accordance with the terms
of the Cornerstone Investment Agreement to satisfy the short fall, after taking into account the
requirements under Appendix F1 to the Listing Rules as well as the discretion of the Joint
Global Coordinators and the Overall Coordinators (for themselves and on behalf of the
International Underwriters) to exercise the Over-allotment Option.
There will be no delayed delivery or deferred settlement of Offer Shares to be subscribed
by the Cornerstone Investors and the consideration will be settled by the Cornerstone Investors
before the Listing Date. The Offer Shares to be subscribed by the Cornerstone Investors may
be affected by reallocation 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
CORNERSTONE INVESTORS
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--- page 348 ---
— Reallocation”. Details of the actual number of Offer Shares to be allocated to the
Cornerstone Investors will be disclosed in the allotment results announcement to be issued by
us on or around October 23, 2024.
Ning Bo Yong Ning Gao Xin SP, an existing Shareholder of our Company and a close
associate of JSC International Investment Fund SPC acting for and on behalf of Shan Xin SP,
which is an existing Shareholder of our Company, has been granted a waiver from strict
compliance with the requirements under Rules 9.09(b) and 10.04 of, and a consent under
paragraph 5(2) of Appendix F1 to, the Listing Rules (as applicable) by the Stock Exchange and
Paragraph 12 in Chapter 4.15 of the Guide for New Listing Applicants published by the Stock
Exchange. For further details, please see the section headed “Waivers and Exemption”.
OUR CORNERSTONE INVESTORS
Set out below in the aggregate number of Offer Shares, and the corresponding percentages
to the Offer Shares and our Company’s total issued share capital under the Cornerstone
Placing:
Based on the Offer Price of HK$3.73 (being the low-end of the Offer Price range)
Approximately % of Total
Number of Offer Shares
Approximately % of Class B
Ordinary Shares in issue
immediately following the
Completion of the Global
Offering
Approximately % of total Shares
in issue immediately following the
Completion of Global Offering
Name
Investment
Amount
Number of
Offer Shares
(rounded down
to nearest
whole board lot
of 600 Class B
Ordinary
Shares)
Assuming the
Over-allotment
Option is not
Exercised
Assuming the
Over-allotment
Option is fully
Exercised
Assuming the
Over-allotment
Option is not
Exercised
Assuming the
Over-allotment
Option is fully
Exercised
Assuming the
Over-allotment
Option is not
Exercised
Assuming the
Over-allotment
Option is fully
Exercised
USD in millions
Alisoft China Holding
Limited /H1118/H1118/H1118/H1118/H1118/H111850.0 104,110,200 7.7% 6.7% 1.0% 0.9% 0.80% 0.8%
Baidu (Hong Kong)
Limited /H1118/H1118/H1118/H1118/H1118/H111850.0 104,110,200 7.7% 6.7% 1.0% 0.9% 0.8% 0.8%
PARTICIPATIONS 1 /H1118/H1118 9.9 20,609,400 1.5% 1.3% 0.2% 0.2% 0.2% 0.2%
JSC International
Investment Fund SPC
(acting for and on
behalf of Ning Bo
Yong Ning Gao Xin
SP) /H1118/H1118/H1118/H1118/H1118/H1118/H1118109.9 228,830,400 16.9% 14.7% 2.1% 2.1% 1.8% 1.7%
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118219.8 457,660,800 33.8% 29.4% 4.2% 4.1% 3.5% 3.5%
CORNERSTONE INVESTORS
– 338 –


--- page 349 ---
Based on the Offer Price of HK$3.86 (being the mid-point of the Offer Price range)
Approximately % of Total
Number of Offer Shares
Approximately % of Class B
Ordinary Shares in issue
immediately following the
Completion of the Global
Offering
Approximately % of total
Shares in issue immediately
following the Completion of
Global Offering
Name
Investment
Amount
Number of
Offer Shares
(rounded
down to
nearest whole
board lot of
600 Class B
Ordinary
Shares)
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
USD in
millions
Alisoft China
Holding Limited /H1118/H1118 50.0 100,603,800 7.4% 6.5% 0.9% 0.9% 0.8% 0.8%
Baidu (Hong Kong)
Limited /H1118/H1118/H1118/H1118/H111850.0 100,603,800 7.4% 6.5% 0.9% 0.9% 0.8% 0.8%
PARTICIPATIONS 1 /H1118 9.9 19,915,200 1.5% 1.3% 0.2% 0.2% 0.2% 0.2%
JSC International
Investment Fund
SPC (acting for
and on behalf of
Ning Bo Yong
Ning Gao Xin SP) 109.9 221,123,400 16.3% 14.2% 2.0% 2.0% 1.7% 1.7%
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118219.8 442,247,400 32.6% 28.4% 4.1% 4.0% 3.4% 3.3%
Based on the Offer Price of HK$3.99 (being the high-end of the Offer Price range)
Approximately % of Total
Number of Offer Shares
Approximately % of Class B
Ordinary Shares in issue
immediately following the
Completion of the Global
Offering
Approximately % of total
Shares in issue immediately
following the Completion of
Global Offering
Name
Investment
Amount
Number of
Offer Shares
(rounded
down to
nearest whole
board lot of
600 Class B
Ordinary
Shares)
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
Assuming the
Over-
allotment
Option is not
Exercised
Assuming the
Over-
allotment
Option is fully
Exercised
USD in
millions
Alisoft China
Holding Limited /H1118/H1118 50.0 97,326,000 7.2% 6.2% 0.9% 0.9% 0.7% 0.7%
Baidu (Hong Kong)
Limited /H1118/H1118/H1118/H1118/H111850.0 97,326,000 7.2% 6.2% 0.9% 0.9% 0.7% 0.7%
PARTICIPATIONS 1 /H1118 9.9 19,266,600 1.4% 1.2% 0.2% 0.2% 0.1% 0.1%
JSC International
Investment Fund
SPC (acting for
and on behalf of
Ning Bo Yong
Ning Gao Xin SP) 109.9 213,919,200 15.8% 13.7% 2.0% 1.9% 1.6% 1.6%
Total/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118219.8 427,838,400 31.6% 27.5% 3.9% 3.9% 3.3% 3.2%
CORNERSTONE INVESTORS
– 339 –


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The following information about the Cornerstone Investors was provided to our Company
by the Cornerstone Investors in relation to the Cornerstone Placing.
Alisoft China
Alisoft China Holding Limited (“ Alisoft China ”) is a limited liability company
incorporated in Hong Kong and an indirect wholly-owned subsidiary of Alibaba Group Holding
Limited (“ Alibaba Group ”). Alisoft China is the holding company of certain PRC subsidiaries
of Alibaba Group primarily involved in the operation of cloud computing business. Alibaba
Group is 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 core businesses are comprised of e-commerce and
cloud computing.
Baidu (Hong Kong) Limited
Baidu (Hong Kong) Limited is a limited liability company incorporated in Hong Kong.
Baidu (Hong Kong) Limited is indirectly wholly-owned by Baidu, Inc., a company listed on
Nasdaq (symbol:BIDU) and the Stock Exchange (stock code: 09888). Baidu, Inc. is a leading
AI company with a strong Internet foundation.
PARTICIPATIONS 1
PARTICIPA TIONS 1 is a simplified limited company established in December 2022 in
France which is primary engaged in investment activities. PARTICIPA TIONS 1 is ultimately
controlled by Merit France SAS, an investment holding company ultimately controlled by a
family office from France with various assets in logistics and real estate across Europe and
other regions.
Ning Bo Y ong Ning Gao Xin SP
JSC International Investment Fund SPC (acting for and on behalf of Ning Bo Y ong Ning
Gao Xin SP) is indirectly held by JSC Gaoxin (Beijing) International V enture Capital Fund ( ዽ
ڃ(̏ԯ)ΥྫΆุ(Υྫ)), of which (i) Ningbo Y ongning
Gaoxin Private Equity Investment Partnership (Limited Partnership) (ᛆҳ༟
ΥྫΆุ(Υྫ)) is the limited partner, which is mainly beneficially owned by Ningbo
Gaoxin Technology Industry Development District Management Committee (৷อҦஔପ
ึ) and the State-Owned Assets Supervision & Administration Commission
of Ningbo Municipal Government (ึ), and (ii) Jade
Spring Shancheng Management Consulting (Beijing) Co., Ltd. (ഛ༐၍ଣፔ༔(̏ԯ)ࠢ
ʮ̡) is the general partner, which is ultimately controlled by Beijing Financial Holdings
Group Limited (ʮ̡).
CORNERSTONE INVESTORS
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CLOSING CONDITIONS
The obligation of each Cornerstone Investor to subscribe for the Offer Shares under the
respective Cornerstone Investment Agreement is subject to, among other things, the following
closing conditions:
(i) the Underwriting Agreements being 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 the Underwriting Agreements, and neither of the Underwriting
Agreements having been terminated;
(ii) the Offer Price having been agreed according to the Underwriting Agreements and
price determination agreement to be signed among the parties thereto in connection
with the Global Offering;
(iii) the Listing Committee having granted the listing of, and permission to deal in, the
Class B Ordinary Shares (including the investors’ Shares as well as other applicable
waivers and approvals) and such approval, permission or waiver having not been
revoked prior to the commencement of dealings in the Class B Ordinary Shares on
the Stock Exchange;
(iv) no laws 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 Agreements and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(v) the respective representations, warranties, undertakings and confirmations of the
relevant Cornerstone Investor under the relevant Cornerstone Investment Agreement
are and will be accurate and true in all respects and not misleading and that there is
no material breach of the Cornerstone Investment Agreement on the part of the
relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, whether directly or
indirectly, at any time during the period of six months from and including the Listing Date (the
“Lock-up Period ”), dispose of any of the Offer Shares they have purchased pursuant to the
relevant Cornerstone Investment Agreements, save for certain limited circumstances, such as
transfers to any of its wholly-owned subsidiaries who will be bound by the same obligations
of such Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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--- page 352 ---
OUR CONTROLLING SHAREHOLDERS
Immediately following the completion of the Global Offering (assuming the Over-
allotment Option is not exercised), 1,733,612,127 Class A Ordinary Shares, representing
approximately (i) 53.92% of the voting rights in our issued share capital in general meetings
(except for resolutions with respect to the Reserved Matters), and (ii) 12.16% of the voting
rights in our issued share capital in general meetings for resolutions with respect to the
Reserved Matters, will be held by Everest Robotics Limited, which is held by Bigsur Robotics
Limited as to 99% and Horizon Robotics, Inc. as to 1%. Horizon Robotics, Inc. is
wholly-owned by Dr. Yu. Bigsur Robotics Limited is wholly-owned by Trident Trust Company
(HK) Limited as the trustee of Rock Street Trust, the family trust established by Dr. Yu (as
settlor) for the benefit of Dr. Yu and his family. Accordingly, Dr. Yu, Everest Robotics Limited
and Horizon Robotics, Inc. together will constitute as a group of Controlling Shareholders of
our Company after the Listing.
Rock Street Trust is a family trust arrangement formed for the benefit of Dr. Yu and his
family, instead of an entity with legal rights or authority to directly or indirectly exercise the
voting rights of the Company. Trident Trust Company (HK) Limited is a professional trust
administrator for Rock Street Trust and is independent from Dr. Yu. Bigsur Robotics Limited
is a company established by Trident Trust Company (HK) Limited to act as its nominee to hold
the interests of our Company involved under the Rock Street Trust. This is a trust structure
commonly adopted by professional trust administrators such as Trident Trust Company (HK)
Limited. Dr. Yu is not a director of Bigsur Robotics Limited and he will not be involved in the
daily operation of Bigsur Robotics Limited. Instead, according to the articles of association of
Bigsur Robotics Limited, the right to appoint or remove a director is vested with Trident Trust
Company (HK) Limited and its directors, which are independent from Dr. Yu. Therefore,
notwithstanding the presence of family trust arrangement under the Rock Street Trust, Dr. Yu
does not have any actual control over Bigsur Robotics Limited, and each of Trident Trust
Company (HK) Limited and Bigsur Robotics Limited is solely used for administrative purposes
with a view to facilitating the management of Rock Street Trust. As a result, none of Bigsur
Robotics Limited, Trident Trust Company (HK) Limited or Rock Street Trust constitutes a
controlling shareholder of our Company.
RULE 8.10 OF THE LISTING RULES
As of the Latest Practicable Date, none of our Controlling Shareholders or Directors had
any interest in any business which competes or is likely to compete, either directly or
indirectly, with our Company’s business which would require disclosure under Rule 8.10 of the
Listing Rules.
INDEPENDENCE OF OUR BUSINESS
Having considered the following factors, our Directors are satisfied that we are able to
carry out our business independently from our Controlling Shareholders and their respective
close associates upon and after the Listing.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 342 –


--- page 353 ---
Operational Independence
Our Company has full rights to make all decisions on, and to carry out, our own business
operations independently. We hold our own operation resources including but not limited to
suppliers and customers, as well as our own registered patents which can be used for our
research and development. We have a team of senior management to operate the business
independently from our Controlling Shareholders and their respective close associates. We also
have access to third parties independently from, and not connected with, our Controlling
Shareholders for sources of suppliers, customers and business partners.
Based on the above, our Directors believe that we are operationally independent from our
Controlling Shareholders and their respective close associates.
Management Independence
Our management and operational decisions are made by the Board in a collective manner.
The Board comprises twelve Directors, including four executive Directors, four non-executive
Directors and four independent non-executive Directors.
Our Directors have relevant experience to ensure the proper functioning of the Board. We
further believe that our Directors and members of the senior management are able to perform
their roles in our Company in managing our business independently from our Controlling
Shareholders and their respective close associates for the following reasons:
(a) all members of the Board and senior management other than Dr. Yu are independent
from the Controlling Shareholders and their respective close associates. They have
substantial experience in the industry as further described in the section headed
“Directors and Senior Management”, which will enable them to discharge their
duties independently from the Controlling Shareholders;
(b) our independent non-executive Directors have extensive experience in different
areas. We believe that they will be able to exercise their independent judgment and
will be able to provide impartial opinions in the decision-making process of our
Board to protect the interests of our Shareholders;
(c) each of our Directors is aware of his or her fiduciary duties as a director, which
requires, among other things, that he or she acts for our Company’s best interests
and he or she must not allow any conflict between his or her duties as a Director and
his or her personal interests; and
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 343 –


--- page 354 ---
(d) where a Board meeting or Shareholders’ meeting is held to consider a proposed
transaction in which our Directors or Controlling Shareholders or any of their
respective close associates have a material interest, the relevant Directors or our
Controlling Shareholders and their respective close associates shall abstain from
voting on the relevant resolutions and shall not be counted towards the quorum for
the voting.
Financial Independence
We have a financial department independent from our Controlling Shareholders and their
respective close associates. We have also established an independent financial system to make
the decisions based on our own business needs. In addition, we are capable of obtaining
financing from third parties without relying on any guarantee or security provided by our
Controlling Shareholders and their respective close associates. During the Track Record Period
and as of the Latest Practicable Date, we had received the Pre-IPO Investment from third party
investors independently. For details of the Pre-IPO Investment, see “History, Reorganization
and Corporate Structure.” As of the Latest Practicable Date, there were no loans, advances and
balances due to or from our Controlling Shareholders or their respective close associates, nor
were there any pledges and guarantees provided by and to our Controlling Shareholders or their
respective close associates.
CORPORATE GOVERNANCE MEASURES
In light of this, the Company has established a corporate governance committee pursuant
to Rule 8A.30 which has adopted terms of reference consistent with Code Provision A.2.1 in
Part 2 of Appendix C1 to, and Rule 8A.30 of, the Listing Rules effective upon Listing. The
members of the corporate governance committee are independent non-executive Directors with
experience in overseeing corporate governance related functions of private and listed
companies. The primary duties of the corporate governance committee are to ensure that the
Company is operated and managed for the benefit of all shareholders and to ensure the
Company’s compliance with the Listing Rules and safeguards relating to its WVR structure.
We will also adopt the following corporate governance measures to avoid potential
conflict of interests between our Group and our Controlling Shareholders:
 where a Shareholders’ meeting is to be held for considering proposed transactions
in which our Controlling Shareholders or any of their respective 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;
 our Group has established internal control mechanisms to identify connected
transactions. Upon the Listing, if any transaction is proposed between our Group and
our Controlling Shareholders and their respective associates, we will comply with
the requirements of the Articles of Association and the Listing Rules, including,
where appropriate, the reporting, annual review by the independent non-executive
Directors, announcement and independent shareholders’ approval;
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 344 –


--- page 355 ---
 our Board consists of a balanced composition of executive Directors and
independent non-executive Directors, with independent non-executive Directors
representing one-third of our Board to ensure that our Board is able to effectively
exercise independent judgment in its decision-making process and provide
independent advice to our Shareholders. Our independent non-executive Directors
individually and collectively possess the requisite knowledge and experience to
perform their duties. They will review whether there is any conflict of interests
between our Group and our Controlling Shareholders and provide impartial and
professional advice to protect the interests of our minority Shareholders;
 where our Directors reasonably request the advice of independent professionals,
such as financial advisers, the appointment of such independent professionals will
be made at our Company’s expenses; and
 we have appointed Somerley Capital Limited as our Compliance Adviser, who will
provide advice and guidance to us in respect of compliance with the applicable laws
and the Listing Rules including various requirements relating to directors’ duties and
corporate governance, and inform us on a timely basis of any amendment or
supplement to the Listing Rules or applicable laws and regulations in Hong Kong.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage conflicts of interest that may arise between our
Company and our Controlling Shareholders, and to protect our minority Shareholders’ interests
after the Listing.
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS
– 345 –


--- page 356 ---
OVERVIEW
We have entered into certain agreements with one of our connected persons. Following
the Listing, the transactions contemplated under such agreements will constitute our continuing
connected transactions under the Listing Rules.
CONNECTED PERSONS
To streamline our non-automotive solutions businesses, D-Robotics was incorporated in
September 2023 as one of our subsidiaries. In June 2024 and after the completion of its series
A financing, in order to maintain the voting power in D-Robotics held by the Founders,
D-Robotics adopted the WVR structure with each class A ordinary share entitling the holder to
exercise ten votes and each class B ordinary share and preferred share entitling the holder to
exercise one vote on any resolutions tabled at D-Robotics’ general meetings. Following the
financing of D-Robotics, the Company continues to control D-Robotics. For details, see the
section headed “Financial Information — Indebtedness — Preferred Shares and Other
Financial Liabilities at Fair Value through Profit or Loss”.
Following the Listing, each of Dr. Yu, Dr. Huang and Ms. Tao will, through his or her
controlled entities, hold the voting rights of D-Robotics, one of our non wholly-owned
subsidiaries primarily involved in the development and commercialization of our non-
automotive solutions, (i) as to approximately 14.05%, 0.87% and 0.38% in its issued share
capital in general meetings for resolutions with respect to the reserved Matters, respectively,
and (ii) as to approximately 59.11%, 3.67% and 1.59% in its issued share capital in general
meetings except for resolutions with respect to the reserved Matters, respectively. Following
the Listing, D-Robotics and its subsidiaries will be our connected subsidiaries as well as
connected persons under the Listing Rules.
D-Robotics Group (as defined below) is primarily engaged in development and
commercialization of product solutions of home appliances. After the establishment of
D-Robotics Group in 2023, the revenue and profit of D-Robotics Group accounted for no more
than 1% of the Group for the year ended December 31, 2023 and the six months ended June 30,
2024, respectively. In addition, the net assets of D-Robotics Group accounted for no more than
1% of the Group as of December 31, 2023 and June 30, 2024, respectively.
PARTIALLY-EXEMPT CONTINUING CONNECTED TRANSACTIONS
Product Solutions Sales Framework Agreement
Principal Terms
On October 10, 2024, the Company (for itself and on behalf of its subsidiaries other than
D-Robotics Group (as defined below)) entered into a product solutions sales framework
agreement with D-Robotics (for itself and on behalf of its subsidiaries), pursuant to which
D-Robotics and its subsidiaries (“ D-Robotics Group ”) agree to purchase product solutions for
CONNECTED TRANSACTIONS
– 346 –


--- page 357 ---
the development of their non-automotive businesses from our Group (other than D-Robotics
Group) for a term commencing on the Listing Date and ending on December 31, 2026, which
may be renewed as the parties may mutually agree, subject to compliance with the
requirements under Chapter 14A of the Listing Rules and all other applicable laws and
regulations (the “ Product Solutions Sales Framework Agreement ”).
Subject to the terms as provided in the Product Solutions Sales Framework Agreement,
we will enter into specific agreements with D-Robotics Group to set out the specific terms and
conditions for the product solutions provided by our Group.
Historical Amounts, Annual Caps and Basis for Annual Caps
There were no transaction fees incurred in connection with the sales and purchase of
product solutions between the Group (other than D-Robotics Group) and D-Robotics Group
during the Track Record Period. The proposed annual caps of the transaction fees contemplated
under the Product Solutions Sales Framework Agreement are approximately RMB37.1 million,
RMB38.0 million and RMB38.6 million for the years ended December 31, 2024, 2025 and
2026, respectively.
The business operated by D-Robotics Group was managed by our Group as one of our
business departments since its establishment. To streamline our non-automotive solutions
businesses, D-Robotics was incorporated in September 2023 as one of our subsidiaries.
Therefore, no transaction fees were incurred during the Track Record Period, which leads to
the substantial increase between the historical amount of fees and the proposed annual caps
between the Group (other than D-Robotics Group) and D-Robotics Group.
In arriving the proposed annual caps of the transaction fees above, the Board has
considered the following factors:
(i) the fees charged by our Group for similar product solutions from customers who are
Independent Third Parties;
(ii) the number and types of product solutions provided to the business operated by
D-Robotics Group during the Track Record Period;
(iii) the foreseeable business growth of D-Robotics Group; and
(iv) the upgraded product solutions to be developed by our Group and purchased by
D-Robotics Group.
CONNECTED TRANSACTIONS
– 347 –


--- page 358 ---
Reason for the Transactions
D-Robotics was incorporated in September 2023 as one of our subsidiaries, and the
business operated by D-Robotics Group was managed by our Group as one of our business
departments prior to its incorporation. Since the commencement of its business, we have been
working with D-Robotics Group to facilitate its development in order to grow our non-
automotive businesses. The Group (other than D-Robotics Group) has a comprehensive
understanding of the business and operational requirements of D-Robotics Group, and has
established a long-term and stable business relationship with D-Robotics Group during its
development. We believe it is in the best interests of the Group and our Shareholders as a whole
to continue to provide product solutions to D-Robotics Group after the Listing.
Pricing Basis
The fees charged for the product solutions under the Product Solutions Sales Framework
Agreement are determined on an arm’s length basis between our Group (other than D-Robotics
Group) and D-Robotics Group with reference to factors including (i) costs incurred by the
Group (other than D-Robotics Group) for the development and commercialization of product
solutions, including but not limited to R&D, costs of manufacture and administration, and (ii)
the fees charged by our Group for similar product solutions from customers who are
Independent Third Parties. To ensure fees to be charged by the Group (other than D-Robotics
Group) are on normal commercial terms, are fair and reasonable and in the interests of our
Shareholders as a whole, for each transactions under the Product Solutions Sales Framework
Agreement, the Group will take into account fee quotes offered to Independent Third Parties
for product solutions of the same or similar type at least on an annual basis and/or before
entering into any definitive agreements to ensure the terms offered to D-Robotics Group are
similar to or better than the terms offered to Independent Third Parties in similar
circumstances.
R&D Services Framework Agreement
Principal Terms
On October 10, 2024, the Company (for itself and on behalf of its subsidiaries other than
D-Robotics Group) entered into an R&D services framework agreement with D-Robotics (for
itself and on behalf of its subsidiaries), pursuant to which the Group agrees to provide R&D
services, including but not limited to shared processing resource which will provide
D-Robotics Group with necessary processing tools to better conduct its R&D, to facilitate
D-Robotics Group’s development for a term commencing on the Listing Date and ending on
December 31, 2024 (the “ R&D Services Framework Agreement ”).
Subject to the terms as provided in the R&D Services Framework Agreement, we will
enter into specific agreements with D-Robotics Group to set out the specific terms and
conditions for the R&D services provided by our Group.
CONNECTED TRANSACTIONS
– 348 –


--- page 359 ---
Historical Amounts, Annual Cap and Basis for Annual Cap
There were no transaction fees incurred in connection with the R&D services provided by
the Group (other than D-Robotics Group) to D-Robotics Group during the Track Record
Period. The proposed annual cap of the transaction fees contemplated under the R&D Services
Framework Agreement is approximately RMB2.5 million for the year ended December 31,
2024.
As mentioned in the section headed “— Partially-exempt Continuing Connected
Transactions — Product Solutions Sales Framework Agreement — Historical Amounts, Annual
Caps and Basis For Annual Caps” above, no transaction fees were incurred between the Group
(other than D-Robotics Group) and D-Robotics Group during the Track Record Period given
that D-Robotics Group was then managed as one of our business departments or a subsidiary
that is in a ramp up stage, which leads to the substantial increase between the historical amount
of fees and the proposed annual cap for the year ended December 31, 2024. We will cease to
provide relevant services to D-Robotics Group at the end of 2024 as we expect D-Robotics
Group will be able to carry on its R&D independently at that time.
In arriving the proposed annual cap of the transaction fees above, the Board has
considered the following factors:
(i) the market rate for similar R&D services;
(ii) the demand for relevant R&D services from the business operated by D-Robotics
Group during the Track Record Period; and
(iii) D-Robotics Group’s growing R&D capability.
Reason for the Transactions
As one of our business departments and a subsidiary that is in a ramp up stage, we have
been working with D-Robotics Group to facilitate its development and will continue the
provision of R&D services for a period after its incorporation. We believe it is in the best
interests of the Group and our Shareholders as a whole to continue to provide relevant R&D
services to D-Robotics Group for a period after the Listing.
Pricing Basis
The fees charged for the R&D services under the R&D Services Framework Agreement
are determined on an arm’s length basis between our Group (other than D-Robotics Group) and
D-Robotics Group with reference to factors including (i) costs incurred by the Group (other
than D-Robotics Group) for the R&D services provided, and (ii) the market rate for similar
R&D services. To ensure fees to be charged by the Group (other than D-Robotics Group) are
on normal commercial terms, fair and reasonable, and in the interests of our Shareholders as
a whole, for each transactions under the R&D Services Framework Agreement, the Group will
CONNECTED TRANSACTIONS
– 349 –


--- page 360 ---
take into account fee quotes offered to Independent Third Parties for R&D services of the same
or similar type before entering into any definitive agreements to ensure the terms offered to
D-Robotics Group are similar to or better than the terms offered to Independent Third Parties
in similar circumstances.
Listing Rules Implications
In respect of the continuing connected transactions as described above, the highest
applicable percentage ratio calculated for the purpose of Chapter 14A of the Listing Rules is
expected to be above 0.1% but will not exceed 5% on an annual basis for continuing connected
transactions under each of the Product Solutions Sales Framework Agreement and the R&D
Services Framework Agreement. Accordingly, the continuing connected transactions under the
Product Solutions Sales Framework Agreement and the R&D Services Framework Agreement
are exempt from the independent shareholders’ approval requirement under Chapter 14A of the
Listing Rules but will be subject to the annual reporting, annual review and announcement
requirements under Chapter 14A of the Listing Rules.
APPLICATION FOR AND CONDITIONS FOR W AIVER
In relation to the Product Solutions Sales Framework Agreement and the R&D Services
Framework Agreement, we have applied for, and the Stock Exchange has granted to us, a
waiver from strict compliance with the announcement requirement under Chapter 14A of the
Listing Rules pursuant to Rule 14A.105 of the Listing Rules, subject to the condition that the
aggregate value of such continuing connected transactions for the years ended December 31,
2024, 2025 and 2026 shall not exceed relevant annual amounts stated above.
DIRECTORS’ VIEW
Our Directors, including the independent non-executive Directors, are of the view that all
the continuing connected transactions described above have been and shall be entered into: (i)
in the ordinary and usual course of our business, (ii) on normal commercial terms or better, and
(iii) that the respective terms and the proposed annual caps thereof are fair and reasonable and
in the interests of our Company and our Shareholders as a whole.
JOINT SPONSORS’ VIEW
Based on the documentation, information and data provided by the Company and
participation in the due diligence and discussion with the Company, the Joint Sponsors are of
the view that: (i) the aforesaid continuing connected transactions for which waivers have been
sought have been and will be entered into in the ordinary and usual course of business of the
Company on normal commercial terms or better, that are fair and reasonable, and are in the
interests of the Company and its Shareholders as a whole, and (ii) the proposed annual caps of
the continuing connected transactions are fair and reasonable and in the interests of the
Company and its Shareholders as a whole.
CONNECTED TRANSACTIONS
– 350 –


--- page 361 ---
So far as our Directors are aware, each of following persons will have an interest and/or
short position (as applicable) in the Shares or underlying Shares of the Company which would
fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions
2 and 3 of Part XV of the SFO, or will, directly or indirectly, be interested in 10% or more of
any class of share capital carrying rights to vote in all circumstances at any general meeting
of the Company:
Name of substantial
shareholder
Capacity/Nature
of Interest Number of Shares
Approximate
percentage of
shareholding in
respective class of
Share of our
Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in the
issued share capital
of our Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in
respective class of
Share of our
Company upon
completion of the
Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Approximate
percentage of
shareholding in the
issued share capital
of our Company
upon completion of
the Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Class A Ordinary Shares
Dr. Yu
Dr. Yu Interest in controlled
corporations,
founder and
beneficiary of a
trust
(1)
1,733,612,127 75.18% 14.85% 81.61% 13.30%
Trident Trust Company
(HK) Limited
Trustee (1) 1,733,612,127 75.18% 14.85% 81.61% 13.30%
Bigsur Robotics Limited Interest in controlled
corporations (1)
1,733,612,127 75.18% 14.85% 81.61% 13.30%
Horizon Robotics, Inc. Interest in controlled
corporations (1)
1,733,612,127 75.18% 14.85% 81.61% 13.30%
Everest Robotics Limited Beneficial owner (1) 1,733,612,127 75.18% 14.85% 81.61% 13.30%
Dr. Huang
Dr. Huang Interest in controlled
corporations,
founder and
beneficiary of a
trust
(2)
390,777,143 16.95% 3.35% 18.39% 3.00%
Trident Trust Company
(HK) Limited
Trustee (2) 390,777,143 16.95% 3.35% 18.39% 3.00%
SUBSTANTIAL SHAREHOLDERS
– 351 –


--- page 362 ---
Name of substantial
shareholder
Capacity/Nature
of Interest Number of Shares
Approximate
percentage of
shareholding in
respective class of
Share of our
Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in the
issued share capital
of our Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in
respective class of
Share of our
Company upon
completion of the
Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Approximate
percentage of
shareholding in the
issued share capital
of our Company
upon completion of
the Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Gravitational Wave
Technology Limited
Interest in controlled
corporations (2)
390,777,143 16.95% 3.35% 18.39% 3.00%
Grace Robotics, Inc. Interest in controlled
corporations (2)
390,777,143 16.95% 3.35% 18.39% 3.00%
String Theory Robotics
Limited
Beneficial owner (2) 390,777,143 16.95% 3.35% 18.39% 3.00%
Ms. Tao
Ms. Tao Interest in controlled
corporations,
founder and
beneficiary of a
trust
(3)
169,543,255 7.35% 1.45% – –
Trident Trust Company
(HK) Limited
Trustee (3) 169,543,255 7.35% 1.45% – –
Kai Robotics, Inc. Interest in controlled
corporations (3)
169,543,255 7.35% 1.45% – –
Venus Robotics Limited Interest in controlled
corporations (3)
169,543,255 7.35% 1.45% – –
HOPE Robotics Holdings
Inc.
Beneficial owner (3) 169,543,255 7.35% 1.45% – –
Class B Ordinary Shares
CARIAD Estonia AS
Ferdinand Porsche
Familien-Privatstiftung
Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
Ferdinand Porsche
Familien-Holding
GmbH
Interest in controlled
corporations
(4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
SUBSTANTIAL SHAREHOLDERS
– 352 –


--- page 363 ---
Name of substantial
shareholder
Capacity/Nature
of Interest Number of Shares
Approximate
percentage of
shareholding in
respective class of
Share of our
Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in the
issued share capital
of our Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in
respective class of
Share of our
Company upon
completion of the
Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Approximate
percentage of
shareholding in the
issued share capital
of our Company
upon completion of
the Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Ferdinand Alexander
Porsche GmbH
Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
Familie Porsche
Beteiligung GmbH
Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
Porsche Automobil
Holding SE
Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
V olkswagen AG Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
V olkswagen Group
Beteiligungen GmbH
Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
CARIAD SE Interest in controlled
corporations (4)
269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
CARIAD Estonia AS Beneficial owner (4) 269,711,694 (5) 2.88% 2.31% 2.47% 2.07%
2,066,194,660 (6) – – 18.95% 15.86%
SAIC QIJUN I Holdings Limited
SAIC Motor Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
SAIC Investment Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
SAIC Changzhou Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
Ji Feng Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
Shanghai Qiyuan Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
SUBSTANTIAL SHAREHOLDERS
– 353 –


--- page 364 ---
Name of substantial
shareholder
Capacity/Nature
of Interest Number of Shares
Approximate
percentage of
shareholding in
respective class of
Share of our
Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in the
issued share capital
of our Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in
respective class of
Share of our
Company upon
completion of the
Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Approximate
percentage of
shareholding in the
issued share capital
of our Company
upon completion of
the Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Shangqi Capital Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
Shanghai Qimeng Interest in controlled
corporations (7)
1,025,310,055 10.94% 8.78% 9.40% 7.87%
SAIC QIJUN I Holdings
Limited
Beneficial owner (7) 1,025,310,055 10.94% 8.78% 9.40% 7.87%
5Y Shareholders
Jianming Shi Interest in controlled
corporations (8)
647,537,121 6.91% 5.55% 5.94% 4.97%
Qin Liu Interest in controlled
corporations (8)
647,537,121 6.91% 5.55% 5.94% 4.97%
5Y Capital GP Limited Interest in controlled
corporations (8)
194,490,981 2.08% 1.67% 1.78% 1.49%
Morningside Venture
(VII) Investments
Limited
Interest in controlled
corporations
(8)
453,046,140 4.84% 3.88% 4.15% 3.48%
Landmark Trust
Switzerland SA
Interest in controlled
corporations (8)
453,046,140 4.84% 3.88% 4.15% 3.48%
TMT General Partner
Ltd.
Interest in controlled
corporations (8)
453,046,140 4.84% 3.88% 4.15% 3.48%
Morningside China TMT
GP IV , L.P.
Interest in controlled
corporations (8)
453,046,140 4.84% 3.88% 4.15% 3.48%
Morningside China TMT
Fund IV , L.P.
Beneficial owner (8) 411,860,100 4.40% 3.53% 3.78% 3.16%
SUBSTANTIAL SHAREHOLDERS
– 354 –


--- page 365 ---
Name of substantial
shareholder
Capacity/Nature
of Interest Number of Shares
Approximate
percentage of
shareholding in
respective class of
Share of our
Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in the
issued share capital
of our Company as
of the Latest
Practicable Date (11)
Approximate
percentage of
shareholding in
respective class of
Share of our
Company upon
completion of the
Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Approximate
percentage of
shareholding in the
issued share capital
of our Company
upon completion of
the Global Offering
(assuming the
Over-allotment
Option is not
exercised)
Morningside China TMT
Fund IV
Co-Investment, L.P.
Beneficial owner
(8) 41,186,040 0.44% 0.35% 0.38% 0.32%
Evolution Special
Opportunity Fund I,
L.P.
Beneficial owner
(8) 131,937,848 1.41% 1.13% 1.21% 1.01%
Evolution Fund I Co-
investment, L.P.
Beneficial owner (8) 19,790,678 0.21% 0.17% 0.18% 0.15%
5Y Capital Growth Fund
I, L.P.
Beneficial owner (8) 38,891,420 0.42% 0.33% 0.36% 0.30%
5Y Capital Growth Fund
I Co-Investment, L.P.
Beneficial owner (8) 3,871,035 0.04% 0.03% 0.04% 0.03%
Employee Shareholding Platforms
Pirates Gold Holding
Limited
Beneficial owner 546,317,561 5.83% 4.68% 5.01% 4.19%
Trident Trust Company
(HK) Limited
Trustee (9) 546,317,561 5.83% 4.68% 5.01% 4.19%
Pirates Silver Holding
Limited
Beneficial owner (10) 744,884,919 7.95% 6.38% 6.83% 5.72%
Pirates Bronze Holding
Limited
Beneficial owner (10) 153,747,736 1.64% 1.32% 1.41% 1.18%
GIL Trust Limited Trustee (10) 898,632,655 9.59% 7.70% 8.24% 6.90%
SUBSTANTIAL SHAREHOLDERS
– 355 –


--- page 366 ---
Notes:
(1) The entire interest of 1,733,612,127 Class A Ordinary Shares is held by Everest Robotics Limited, which is
held by Bigsur Robotics Limited as to 99% and Horizon Robotics, Inc. as to 1%. Horizon Robotics, Inc. is
wholly-owned by Dr. Yu. Bigsur Robotics Limited is wholly-owned by Trident Trust Company (HK) Limited
as trustee of Rock Street Trust, the family trust established by Dr. Yu (as settlor) for the benefit of Dr. Yu and
his family. Each of Horizon Robotics, Inc., Bigsur Robotics Limited, Trident Trust Company (HK) Limited and
Dr. Yu is deemed to be interested in the Class A Ordinary Shares held by Everest Robotics Limited under the
SFO.
(2) The entire interest of 390,777,143 Class A Ordinary Shares is held by String Theory Robotics Limited, which
is held by Gravitational Wave Technology Limited as to 99% and Grace Robotics, Inc. as to 1%. Grace
Robotics, Inc. is wholly-owned by Dr. Huang. Gravitational Wave Technology Limited is wholly-owned by
Trident Trust Company (HK) Limited as trustee of Gravitational Wave Trust, the family trust established by
Dr. Huang (as settlor) for the benefit of Dr. Huang and his family. Each of Grace Robotics, Inc., Gravitational
Wave Technology Limited, Trident Trust Company (HK) Limited and Dr. Huang is deemed to be interested in
the Class A Ordinary Shares held by String Theory Robotics Limited under the SFO.
(3) The entire interest of 169,543,255 Class A Ordinary Shares is held by HOPE Robotics Holdings Inc., which
is held by Venus Robotics Limited as to 99% and Kai Robotics, Inc. as to 1%. Kai Robotics, Inc. is
wholly-owned by Ms. Tao. Venus Robotics Limited is wholly-owned by Trident Trust Company (HK) Limited
as trustee of TAO Trust, the family trust established by Ms. Tao (as settlor) for the benefit of Ms. Tao and her
family. Each of Kai Robotics, Inc., Venus Robotics Limited, Trident Trust Company (HK) Limited and Ms. Tao
is deemed to be interested in the Class A Ordinary Shares held by HOPE Robotics Holdings Inc. under the SFO.
(4) CARIAD Estonia AS is wholly-owned by CARIAD SE, which is in turn wholly-owned by V olkswagen Group
Beteiligungen GmbH (formerly known as Porsche Siebte Vermögensverwaltung GmbH) (“VGB”), a
wholly-owned subsidiary of V olkswagen AG, a company listed on a number of stock exchanges including the
Frankfurt Stock Exchange (ticker symbol: VOW and VOW3). Porsche Automobil Holding SE (“PSE”) holds
approximately 53.35% voting interest in V olkswagen AG, and Familie Porsche Beteiligung GmbH (“FPB”)
holds approximately 55.46% voting interest in PSE. FPB is wholly-owned by Ferdinand Alexander Porsche
GmbH (“FAPD”), which is in turn wholly-owned by Ferdinand Porsche Familien-Holding GmbH (“FPFH”).
Ferdinand Porsche Familien-Privatstiftung (“PoPS”), a private foundation established in Austria, holds 90% of
FPFH.
By virtue of the SFO, each of CARIAD SE, VGB, V olkswagen AG, PSE, FPB, FAPD, FPFH and PoPS is
deemed to have an interest in the Class B Ordinary Shares directly held by CARIAD Estonia AS and the Class
B Ordinary Shares to be issued to CARIAD Estonia AS, as the lender of a convertible loan which, upon
maturity, shall be automatically and mandatorily converted into Class B Ordinary Shares. For further details
of the convertible loan and the conversion mechanism, please refer to “History, Reorganization and Corporate
Structure”.
(5) This refers to the number of Class B Ordinary Shares as of the Latest Practicable Date.
(6) This refers to the number of Class B Ordinary Shares to be issued to CARIAD Estonia AS upon conversion
of the convertible loan at maturity at the mid-point of the indicative Offer Price range and without taking into
account the 9.9% shareholding threshold.
(7) SAIC QIJUN I Holdings Limited is wholly-owned by Shanghai Qimeng Management Partnership (Limited
Partnership) ( ɪऎ☃ຑΆุ၍ଣΥྫΆุ(Υྫ)) (“Shanghai Qimeng”), of which the general partner is
Shangqi Capital (☃ҳ༟၍ଣΥྫΆุ(Υྫ)), whose general partner is Shanghai Qiyuan Business
Consulting Co., Limited (ʮ̡) (“Shanghai Qiyuan”), which is ultimately controlled by
Ji Feng ( ඹౘ) (“Mr. Feng”).
Shanghai Qimeng is owned as to approximately 99.95% by its limited partner SAIC (Changzhou) Innovation
and Development Investment Fund Co., Ltd. ( ɪӛ(੬ψ)ʮ̡) (“SAIC Changzhou”),
which is held as to 99.5% by Shanghai Automobile Group Investment Management Co., Ltd. ( ɪऎӛԓණྠ
ʮ̡) (“SAIC Investment”), which is wholly-owned by SAIC Motor.
SUBSTANTIAL SHAREHOLDERS
– 356 –


--- page 367 ---
Therefore, each of Shanghai Qimeng, Shangqi Capital, Shanghai Qiyuan, Mr. Feng, SAIC Changzhou, SAIC
Investment and SAIC Motor is deemed to be interested in the 1,025,310,055 Class B Ordinary Shares directly
held by SAIC QIJUN I Holdings Limited under the SFO.
(8) Morningside China TMT Fund IV , L.P. and Morningside China TMT Fund IV Co-Investment, L.P. are
controlled by their general partner, Morningside China TMT GP IV , L.P.. Morningside China TMT GP IV , L.P.
is controlled by its general partner, TMT General Partner Ltd. Consequently, TMT General Partner Ltd. is
deemed to be interest in the Shares in which Morningside China TMT Fund IV , L.P. and Morningside China
TMT Fund IV Co-Investment, L.P. have an interest.
Each of Qin Liu, Jianming Shi and Morningside Venture (VII) Investments Limited is entitled to exercise or
control the exercise of one-third of the voting power of all issued shares in TMT General Partner Ltd. at its
general meeting and is therefore deemed to be interested in the Shares in which TMT General Partner Ltd. is
interested. Morningside Venture (VII) Investments Limited is indirectly wholly-owned by the Landmark Trust
Switzerland SA as trustee of a discretionary trust established by Mdm. Tan Ching Fen Chan for the benefit of
certain members of her family and other charitable objects.
Each of Evolution Special Opportunity Fund I, L.P., Evolution Fund I Co-investment, L.P., 5Y Capital Growth
Fund I, L.P. and 5Y Capital Growth Fund I Co-Investment, L.P. is controlled by their general partner 5Y
Capital GP Limited. Consequently, 5Y Capital GP Limited is deemed to be interest in the Shares in which
Evolution Special Opportunity Fund I, L.P., Evolution Fund I Co-investment, L.P., 5Y Capital Growth Fund
I, L.P. and 5Y Capital Growth Fund I Co-Investment, L.P. have an interest.
Each of Qin Liu and Jianming Shi is entitled to exercise or control the exercise of one-half of the voting power
of all issued shares in 5Y Capital GP Limited at its general meeting and is therefore deemed to be interested
in the Shares in which 5Y Capital GP Limited is interested.
(9) Pirates Gold Holding Limited is held by The Pirates Trust with Trident Trust Company (HK) Limited, an
independent professional trust company, as its trustee. As such, Trident Trust Company (HK) Limited is
deemed to be interested in the 546,317,561 Class B Ordinary Shares held by Pirates Gold Holding Limited
under the SFO.
(10) Pirates Silver Holding Limited and Pirates Bronze Holding Limited are held by Pirates X Trust with GIL Trust
Limited, an independent professional trust company, as its trustee. As such, GIL Trust Limited is deemed to
be interested in the 744,884,919 and 153,747,736 Class B Ordinary Shares held by Pirates Silver Holding
Limited and Pirates Bronze Holding Limited, respectively, under the SFO.
(11) Assuming conversion of the Preferred Shares into Class B Ordinary Shares.
Save as disclosed above and the section headed “Statutory and General Information — C.
Further Information about our Directors and Substantial Shareholders” in Appendix IV to this
Prospectus, our Directors are not aware of any person who will, immediately following
completion of the Global Offering (assuming that the Over-allotment Option is not exercised),
have any interest and/or short position in the Shares or underlying Shares of our Company
which will be required to be disclosed to our Company and the Stock Exchange pursuant to the
provisions of Divisions 2 and 3 of Part XV of the SFO, or, who are, directly or indirectly
interested in 10% or more of the nominal value of any class of share capital carrying rights to
vote in all circumstances at general meeting of the Company or any other members of the
Group.
SUBSTANTIAL SHAREHOLDERS
– 357 –


--- page 368 ---
AUTHORIZED AND ISSUED SHARE CAPITAL
The following is a description of the authorized and issued share capital of the Company
immediately prior to and upon the completion of the Global Offering assuming the
Over-allotment Option is not exercised.
Share capital as of the date of this Prospectus
(i) Authorized share capital
Number Description of Shares
Aggregate
Nominal
Value(1)
2,350,582,688 Class A Ordinary Share with a nominal value of
US$0.0000025 each in issue
US$5,876.457
9,271,123,237 Class B Ordinary Share with a nominal value of
US$0.0000025 each in issue
US$23,177.81
8,378,294,075 Preferred Shares with a nominal value of
US$0.0000025 each in issue
US$20,945.74
20,000,000,000 Total US$50,000.00
Note:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
SHARE CAPITAL
– 358 –


--- page 369 ---
(ii) Issued and to be issued, fully paid or credited to be fully paid
Number Description of Shares
Aggregate
Nominal
Value(1)
2,305,932,525 Class A Ordinary Share with a nominal value of
US$0.0000025 each in issue
US$5,764.83
1,570,421,731 Class B Ordinary Share with a nominal value of
US$0.0000025 each in issue
US$3,926.05
7,798,405,226 Preferred Shares with a nominal value of
US$0.0000025 each in issue
US$19,496.01
11,674,759,482 Total US$29,186.90
Note:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
Share capital immediately following the completion of the Global Offering
(i) Authorized share capital
Number Description of Shares
Aggregate
Nominal
Value(1)
2,124,389,270 Class A Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$5,310.97
17,875,610,730 Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$44,689.03
20,000,000,000 Total US$50,000.00
Note:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
SHARE CAPITAL
– 359 –


--- page 370 ---
(ii) Issued and to be issued, fully paid or credited to be fully paid (assuming the
Over-allotment Option is not exercised)
Number Description of Shares
Aggregate
Nominal
Value(1)
2,124,389,270 Class A Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$5,310.97
1,570,421,731 Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$3,926.05
181,543,255 Class B Ordinary Shares to be converted from Class
A Ordinary Shares
US$453.86
7,798,405,226 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued on conversion of
Preferred Shares
US$19,496.01
1,355,106,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Global
Offering
US$3,387.77
13,029,866,082 Total US$32,574.67
Note:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
SHARE CAPITAL
– 360 –


--- page 371 ---
(iii) Issued and to be issued, fully paid or credited to be fully paid (assuming the
Over-allotment Option is fully exercised)
Number Description of Shares
Aggregate
Nominal
Value(1)
2,124,389,270 Class A Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$5,310.97
1,570,421,731 Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$3,926.05
181,543,255 Class B Ordinary Shares to be converted from Class
A Ordinary Shares
US$453.86
7,798,405,226 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued on conversion of
Preferred Shares
US$19,496.01
1,355,106,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Global
Offering
US$3,387.77
203,265,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Over-
allotment Option
US$508.16
13,233,131,682 Total US$33,082.83
Note:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
SHARE CAPITAL
– 361 –


--- page 372 ---
Share capital immediately following the completion of the Global Offering and the
conversion of the convertible loan issued to CARIAD
(i) Issued and to be issued, fully paid or credited to be fully paid (assuming the
Over-allotment Option is not exercised)
Number Description of Shares
Aggregate
Nominal
Value(1)
2,124,389,270 Class A Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$5,310.97
1,570,421,731 Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$3,926.05
181,543,255 Class B Ordinary Shares to be converted from Class
A Ordinary Shares
US$453.86
7,798,405,226 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued on conversion of
Preferred Shares
US$19,496.01
1,132,347,445
(2) Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$2,830.87
1,355,106,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Global
Offering
US$3,387.77
14,162,213,527 Total US$35,405.53
Notes:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
(2) Taking into account the 9.9% threshold as disclosed in the section headed “History, Reorganization and
Corporate Structure — Convertible Loan” and assuming the exchange rates as disclosed in the section headed
“Information about this Prospectus and the Global Offering — Exchange Rate Conversion” being adopted and
the conversion price setting at the low-end of the indicative Offer Price range.
SHARE CAPITAL
– 362 –


--- page 373 ---
(ii) Issued and to be issued, fully paid or credited to be fully paid (assuming the
Over-allotment Option is fully exercised)
Number Description of Shares
Aggregate
Nominal
Value(1)
2,124,389,270 Class A Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$5,310.97
1,570,421,731 Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$3,926.05
181,543,255 Class B Ordinary Shares to be converted from Class
A Ordinary Shares
US$453.86
7,798,405,226 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued on conversion of
Preferred Shares
US$19,496.01
1,132,347,445
(2) Class B Ordinary Shares with a nominal value of
US$0.0000025 each in issue
US$2,830.87
1,355,106,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Global
Offering
US$3,387.77
203,265,600 Class B Ordinary Shares with a nominal value of
US$0.0000025 to be issued pursuant to the Over-
allotment Option
US$508.16
14,365,479,127 Total US$35,913.70
Notes:
(1) The figures are subject to rounding adjustments and any discrepancies between totals and sums of amounts
listed herein are due to rounding adjustments.
(2) Taking into account the 9.9% threshold as disclosed in the section headed “History, Reorganization and
Corporate Structure — Convertible Loan” and assuming the exchange rates as disclosed in the section headed
“Information about this Prospectus and the Global Offering — Exchange Rate Conversion” being adopted and
the conversion price setting at the low-end of the indicative Offer Price range.
SHARE CAPITAL
– 363 –


--- page 374 ---
WEIGHTED VOTING RIGHTS STRUCTURE
The Company has a weighted voting rights structure. Under our weighted voting rights
structure, our share capital comprises Class A Ordinary Shares and Class B Ordinary Shares.
Each Class A Ordinary Share entitles the holder to exercise ten votes, and each Class B
Ordinary Share entitles the holder to exercise one vote, respectively, on any matters subject to
the vote at general meetings of the Company, subject to Rule 8A.24 of the Listing Rules that
requires the Reserved Matters to be voted on a one vote per share basis.
The Reserved Matters are:
(i) any amendment to the Memorandum and Articles;
(ii) the variation of the rights attached to any class of Shares;
(iii) the appointment, election or removal of any independent non-executive Director;
(iv) the appointment or removal of the Company’s auditors; and
(v) the voluntary liquidation or winding-up of the Company.
In addition, Shareholders, including holders of Class B Ordinary Shares, holding not less
than one-tenth of the paid up capital of the Company that carries the right of voting at general
meetings (on a one share one vote basis) are entitled to convene an extraordinary general
meeting of the Company and add resolutions to the meeting agenda.
See “Summary of the Constitution of our Company and Cayman Islands Company Law
— 2 Articles of Association” in Appendix III to this Prospectus for further details.
Class A Ordinary Shares may be converted into Class B Ordinary Shares on a one to one
basis. Upon the conversion of all the issued and outstanding Class A Ordinary Shares into Class
B Ordinary Shares, the Company will issue 2,124,389,270 Class B Ordinary Shares,
representing approximately 19.48% of the total number of issued Class B Ordinary Shares
immediately following the Listing (assuming the Over-allotment Option is not exercised).
The weighted voting rights attached to our Class A Ordinary Shares will cease when the
WVR Beneficiaries cease to have beneficial ownership of any of our Class A Ordinary Shares,
in accordance with Rule 8A.22 of the Listing Rules. This may occur:
(i) upon the occurrence of any of the circumstances set out in Rule 8A.17 of the Listing
Rule, in particular where the WVR Beneficiaries are: (1) deceased; (2) no longer a
member of our Board; (3) deemed by the Stock Exchange to be incapacitated for the
purpose of performing his duties as a director; or (4) deemed by the Stock Exchange
to no longer meet the requirements of a director set out in the Listing Rules;
SHARE CAPITAL
– 364 –


--- page 375 ---
(ii) when the holders of Class A Ordinary Shares have transferred to another person the
beneficial ownership of, or economic interest in, the Class A Ordinary Shares or the
control over the voting rights attached to them, other than in the circumstances
permitted by Rule 8A.18 of the Listing Rule;
(iii) where a vehicle holding Class A Ordinary Shares on behalf of a WVR Beneficiary
no longer complies with Rule 8A.18(2) of the Listing Rule; or
(iv) when all of the Class A Ordinary Shares have been converted to Class B Ordinary
Shares.
Shareholding Structure of the WVR Beneficiaries
The table below sets out the beneficial interests entitled to and voting rights to be held
by the WVR Beneficiaries upon the completion of the Global Offering (assuming the
Over-allotment Option is not exercised):
Number of
Class A
Ordinary
Shares held
Approximate
percentage of
beneficial
interests in the
issued share
capital
Approximate
percentage of
voting rights (1)
Dr. Yu(2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,733,612,127 13.30% 53.92%
Dr. Huang (2) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118390,777,143 3.00% 12.16%
Notes:
(1) On the basis that each Class B Ordinary Share entitles the Shareholder to one vote per Share and each Class
A Ordinary Share entitles the Shareholder to ten votes per Share.
(2) For details of the shareholding structure of our WVR Beneficiaries, please refer to note 2 and note 3 in the
section headed “History, Reorganization and Corporate Structure — Capitalization.”
The Company confirms that the holding arrangement through which the WVR
Beneficiaries hold the Class A Ordinary Shares as described above meets the requirements in
Rule 8A.18 of the Listing Rules and the holding arrangement is permitted under the
“Consultation Conclusion s — a listing regime for companies from emerging and innovative
sectors” issued by the Stock Exchange in April 2018, namely: (a) a partnership of which the
WVR Beneficiary is a partner and the terms of which must expressly specify that the voting
rights attached to any and all of the Class A Ordinary Shares held by such partnership are solely
dictated by the WVR Beneficiary; (b) a trust of which the WVR Beneficiary is a beneficiary
and that meets the following conditions: (i) the WVR Beneficiary must in substance retain an
element of control of the trust and any immediate holding companies of, or, if not permitted
in the relevant tax jurisdiction, retain a beneficial interest in any and all of the Class A Ordinary
Shares held by such trust; and (ii) the purpose of the trust must be for estate planning and/or
tax planning purposes; or (c) a private company or other vehicle wholly owned and wholly
controlled by the WVR Beneficiary or by a trust referred to in paragraph (b) above.
SHARE CAPITAL
– 365 –


--- page 376 ---
To ensure that there will not be any circumvention of Rule 8A.18(1), each of the
Company, Dr. Yu and Dr. Huang undertakes that so long there is any weighted voting rights
attached to the Shares held by Everest Robotics Limited and String Theory Robotics Limited,
respectively, Dr. Yu and Dr. Huang will not transfer any beneficial ownership of or economic
interest in Everest Robotics Limited and String Theory Robotics Limited or the control over
the voting rights attached to the Shares held by Everest Robotics Limited and String Theory
Robotics Limited to another person. In the event that there is any change in the beneficial
ownership of or economic interest in the Shares held by Everest Robotics Limited and String
Theory Robotics Limited or the control over the voting rights attached to the Shares held by
Everest Robotics Limited and String Theory Robotics Limited, and/or change in beneficiary,
and settlor of Everest Robotics Limited and String Theory Robotics Limited as trustee for the
family trust established by Dr. Yu and Dr. Huang, respectively, to another person, resulting in
change of beneficial ownership of, or economic interest in, the Shares held under the trust or
the control over the voting rights attached to the Shares held under the trust, the Company,
Dr. Yu and/or Dr. Huang will notify the Stock Exchange pursuant to Rule 8A.19 of the Listing
Rules and comply with the relevant statutory obligations including obligations of disclosure of
interests under the SFO, and the weighted voting rights attached to the Class A Ordinary Shares
held by Everest Robotics Limited and String Theory Robotics Limited shall cease upon such
transfer accordingly. The Company will also comply with Rule 8A.30 of the Listing Rules to
confirm, on an annual basis, that the WVR Beneficiary has complied with Rule 8A.18 of the
Listing Rules.
Contribution of the WVR Beneficiaries
Since the inception of our principal business, we are led by an executive team with
combination of technical expertise, commercial acumen and organizational management skills.
Our executive team is headed by the WVR Beneficiaries, namely Dr. Yu and Dr. Huang.
Dr. Yu is the chairman, an executive Director and the chief executive officer of our
Company, responsible for the overall strategic development of the Company. Dr. Yu has
profound industry insight and deep understanding and knowledge of assisted driving and
autonomous driving technologies and solutions, which laid the foundation for the Company’s
technological layout. He had played important roles in designing and developing the
Company’s key technologies, solutions and strategic plans. With Dr. Yu, we have successfully
developed and deployed our ADAS and AD solutions and achieved industry-leading positions.
In addition, Dr. Yu has led the Company in building strong business connections relationships
with ecosystem partners along the industry value chain, which is invaluable to our success.
Dr. Huang is an executive Director and the chief technology officer of our Company in
charge of our research and development. With deep knowledge, expertise and practical
experiences in assisted driving and autonomous driving technologies and solutions, Dr. Huang
was an indispensable part of the mastermind behind the Company’s innovation and
commercialization success. He led the research and development team to develop the
Company’s technical strategy and research and development direction, as well as innovative
structure and matrix of our software, algorithm and processing hardware. In addition,
SHARE CAPITAL
– 366 –


--- page 377 ---
Dr. Huang contributed to the successful launch of the Company’s first-generation processing
hardware, as well as China’s first automotive processing hardware. Dr. Huang also led and
coordinated the Company’s software and hardware teams to formulate our software-hardware
co-optimization strategy and guided corresponding research and development direction.
Moreover, Dr. Huang led the Company to complete the tape out and mass production of a series
of the Company’s processing hardwares. Under his leadership, the Company’s processing
hardware design effectively matched industry developments and captured the needs of
algorithms and applications, which leads to industry-leading processing efficiency and
performance.
Our Company is adopting the WVR structure to enable the WVR Beneficiaries to exercise
voting control over our Company. This will enable our Company to benefit from the continuing
vision and leadership of the WVR Beneficiaries who will control our Company with a view to
its long-term prospects and strategy. Taking into account the WVR Beneficiaries’ contribution
to the Group, it is in the best interests of the Company and its Shareholders as a whole.
Prospective investors are advised to be aware of the potential risks of investing in
companies with weighted voting rights structures, in particular that interests of the WVR
Beneficiaries may not necessarily always be aligned with those of our Shareholders as a whole,
and that the WVR Beneficiaries will be in a position to exercise their higher voting power to
influence the affairs of our Company and the outcome of Shareholders’ resolutions,
irrespective of how other Shareholders vote.
Prospective investors should make the decision to invest in the Company only after due
and careful consideration. For further information about the risks associated with the WVR
structure adopted by the Company, see “Risk Factors — Risks Related to the WVR Structure.”
Save for the weighted voting rights attached to Class A Ordinary Shares, the rights attached to
both classes of Shares are identical. For further information about the rights, preferences,
privileges and restrictions of the Class A Ordinary Shares and Class B Ordinary Shares, please
see “Summary of the Constitution of our Company and Cayman Islands Company Law — 2
Articles of Association” in Appendix III to this Prospectus for further details.
RANKING
The Offer Shares will rank pari passu in all respects with all Class B Ordinary Shares
currently in issue or to be issued as mentioned in this Prospectus, and will qualify and rank
equally for all dividends or other distributions declared, made or paid on the Shares on a record
date which falls after the date of this Prospectus.
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UNDERTAKINGS BY THE WVR BENEFICIARIES
Pursuant to Rule 8A.43 of the Listing Rules, each WVR Beneficiary is required to give
a legally enforceable undertaking to the Company that he will comply with the relevant
requirements as set out in Rule 8A.43, which is intended to be for the benefit of and
enforceable by the Shareholders. On May 25, 2024, each of Dr. Yu and Dr. Huang made an
undertaking to the Company (the “Undertaking”), that for so long as he is a WVR Beneficiary:
(a) he shall comply with (and, if the shares to which the weighted voting rights that he
is beneficially interested in are attached are held through a limited partnership, trust,
private company, or other vehicle, use his best endeavors to procure that such
limited partnership, trust, private company or other vehicle complies with) all
applicable requirements under Rules 8A.09, 8A.14, 8A.15, 8A.17. 8A.18 and 8A.24
of the Listing Rules from time to time in force (the “Requirements”); and
(b) he shall use his best endeavors to procure that the Company complies with all
applicable Requirements.
For the avoidance of doubt, the Requirements are subject to Rule 2.04 of the Listing
Rules. The WVR Beneficiaries acknowledged and agreed that the Shareholders rely on the
Undertaking in acquiring and holding their Shares. The WVR Beneficiaries acknowledged and
agreed that the Undertaking is intended to confer a benefit on the Company and all
Shareholders and may be enforced by the Company and/or any Shareholder against the WVR
Beneficiaries.
The Undertaking shall automatically terminate upon the earlier of (i) the date of delisting
of the Company from the Stock Exchange, and (ii) the date on which the relevant WVR
Beneficiary ceases to be a beneficiary of weighted voting rights in the Company. For the
avoidance of doubt, the termination of the Undertaking shall not affect any rights, remedies,
obligations or liabilities of the Company and/or any Shareholder and/or the WVR Beneficiary
himself that have accrued up to the date of termination, including the right to claim damages
and/or apply for any injunction in respect of any breach of the Undertaking which existed at
or before the date of termination.
The Undertaking shall be governed by the laws of Hong Kong and all matters, claims or
disputes arising out of the Undertaking shall be subject to the exclusive jurisdiction of the
courts of Hong Kong.
ALTERATION OF SHARE CAPITAL
Pursuant to the Cayman Companies Act and the terms of the Memorandum and Articles,
our Company may by ordinary resolution (a) increase its share capital by new Shares of such
amount as it thinks expedient; (b) consolidate and divide all or any of its share capital into
Shares of a larger amount than its existing Shares; (c) subdivide its Shares, or any of them, into
Shares of an amount smaller than that fixed by the Memorandum, provided that in the
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subdivision the proportion between the amount paid and the amount, if any, unpaid on each
reduced Share shall be the same as it was in case of the Share from which the reduced Share
is derived; and (d) cancel any Shares that, at the date of the passing of the resolution, have not
been taken or agreed to be taken by any person and diminish the amount of its share capital
by the amount of the Shares so cancelled. In addition, our Company may by special resolution
reduce its share capital or any capital redemption reserve subject to the Cayman Companies
Act.
See “Summary of the Constitution of Our Company and Cayman Islands Company Law
— 2 Articles of Association” in Appendix III to this Prospectus for further details.
CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING
ARE REQUIRED
Our Company may by ordinary resolution (i) increase its share capital by the creation of
new shares; (ii) consolidate and divide all or any of its share capital into shares of a larger
amount than its existing shares; (iii) cancel any shares which at the date of the passing of the
resolution have not been taken or agreed to be taken by any person; and (iv) sub-divide its
shares or any of them into shares of smaller amount. In addition, our Company may by special
resolution reduce its share capital or any capital redemption reserve subject to any conditions
prescribed by the Cayman Companies Act. See the section headed “Summary of the
Constitution of Our Company and Cayman Islands Company Law — 2 Articles of Association
— 2.5 Alteration of capital” in Appendix III to this Prospectus for further details. If at any time
the share capital of our Company is divided into different classes of shares, all or any of the
rights attached to any class of shares for the time being issued (unless otherwise provided for
in the terms of issue of the shares of that class) may, subject to the provisions of the Cayman
Companies Act, be varied or abrogated only with (in addition to a special resolution to amend
the Memorandum or the Articles) the consent in writing of the holders of not less than
three-fourths in nominal value of the issued shares of that class or with the sanction of a
resolution passed at a separate meeting of the holders of the shares of that class by members
holding shares representing three-fourths in nominal value of the shares Present (as defined in
the Articles) and voting at such meeting. See the section headed “Summary of the Constitution
of Our Company and Cayman Islands Company Law — 2 Articles of Association — 2.4
Variation of rights of existing shares or classes of shares” in Appendix III to this Prospectus
for further details.
SHARE INCENTIVE PLANS
The Company has adopted the 2018 Share Incentive Plan and the Post-IPO Share
Incentive Plan. See “Statutory and General Information — D. Share Incentive Plans” in
Appendix IV to this Prospectus for further details.
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GENERAL MANDATE TO (I) ISSUE SHARES AND (II) SELL AND/OR TRANSFER
TREASURY SHARES
Subject to the Global Offering becoming unconditional, our Directors were granted a
general mandate to (i) allot, issue and deal with any Class B Ordinary Shares or securities
convertible into Class B Ordinary Shares, and (ii) sell and/or transfer Class B Ordinary Shares
out of treasury that are held as treasury shares of not more than the sum of:
 20% of the total number of Shares in issue immediately following completion of the
Global Offering (excluding (i) the additional Class B Ordinary Shares which may be
issued pursuant to the exercise of the Over-allotment Option, (ii) the Class B
Ordinary Shares to be issued pursuant to the Post-IPO Share Incentive Plan, (iii) the
Class B Ordinary Shares that are issuable upon conversion of the Class A Ordinary
Shares, and (iv) treasury shares, if any); and
 the aggregate nominal value of Shares repurchased by the Company under the
authority referred to in the paragraph headed “ — General Mandate to Repurchase
Shares” in this section.
This general mandate to issue Class B Ordinary Shares and sell and/or transfer treasury
shares will expire at the earliest of:
 the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions; or
 the expiration of the period within which our Company’s next annual general
meeting is required by the Memorandum of Association and Articles of Association
or any other applicable laws to be held; or
 the date on which it is varied or revoked by an ordinary resolution of our
Shareholders in general meeting.
GENERAL MANDATE TO REPURCHASE SHARES
Subject the Global Offering becoming unconditional, our Directors have been granted a
general unconditional mandate, to exercise all the powers of our Company to repurchase our
own securities with nominal value of up to 10% of the total number of Shares in issue
immediately following the completion of the Global Offering (excluding (i) the additional
Class B Ordinary Shares which may be issued pursuant to the exercise of the Over-allotment
Option, (ii) the Class B Ordinary Shares to be issued pursuant to the Post-IPO Share Incentive
Plan, (iii) the Class B Ordinary Shares that are issuable upon conversion of the Class A
Ordinary Shares, and (iv) treasury shares, if any).
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The repurchase mandate only relates to repurchases made on the Stock Exchange, or on
any other stock exchange on which our Shares are listed (and which are recognized by the SFC
and the Stock Exchange for this purpose), and which are in accordance with the Listing Rules.
A summary of the relevant Listing Rules is set out in “Statutory and General Information —
A. Further Information about our Group — 5. Repurchases of Our Own Securities” in
Appendix IV .
This general mandate to repurchase Shares will expire at the earliest of:
 the conclusion of the next annual general meeting of our Company unless otherwise
renewed by an ordinary resolution of our Shareholders in a general meeting, either
unconditionally or subject to conditions; or
 the expiration of the period within which our Company’s next annual general
meeting is required by the Articles of Association or any other applicable laws to be
held; or
 the date on which it is varied or revoked by an ordinary resolution of our
Shareholders passed in a general meeting.
See “Statutory and General Information — A. Further Information about Our Group —
4. Resolutions of Our Shareholders” in Appendix IV to this Prospectus for further details of the
repurchase mandate.
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You should read the following discussion and analysis in conjunction with our
consolidated financial statements and the accompanying notes included in the
Accountant’ s Report set forth in Appendix I to this Prospectus. Our consolidated financial
statements have been prepared in accordance with IFRSs, which may differ in material
aspects from generally accepted accounting principles in other jurisdictions. You should
read the entire Accountant’ s Report and not merely rely on the information contained in
this section.
The following discussion and analysis contain forward-looking statements that
reflect the current views with respect to future events and financial performance. These
statements are based on assumptions and analysis made by us in light of our experience
and perception of historical trends, current conditions and expected future developments,
as well as other factors that we believe are appropriate under the circumstances.
However , whether the actual outcome and developments will meet our expectations and
predictions depends on a number of risks and uncertainties over which we do not have
control. In evaluating our business, you should carefully consider all of the information
provided in this Prospectus.
For the purpose of this section, unless the context otherwise requires, references to
2021, 2022 and 2023 refer to our financial year ended December 31 of such year . Unless
the context otherwise requires, financial information described in this section is
described on a consolidated basis.
OVERVIEW
We are a leading provider of ADAS and AD solutions for passenger vehicles, empowered
by our proprietary software and hardware technologies. Our solutions combine algorithms,
purpose-built software and processing hardware, providing the core technologies for assisted
and autonomous driving that enhance the safety and experience of drivers and passengers. We
are a key enabler for the smart vehicle transformation and commercialization with our
integrated solutions deployed on mass scale. We are the first and have consistently been the
largest Chinese company providing integrated ADAS and AD solutions in terms of overall
solution installation volume since the mass deployment of our solutions in 2021, according to
CIC. We ranked the fourth among all global ADAS and AD solution providers in China by
overall solution installation volume in 2023 and the first half of 2024, with a market share of
9.3% and 15.4%, respectively. We act as a tier-two supplier and have a large, global customer
base of industry-leading OEMs and tier-one suppliers for vehicles manufactured in China. Our
business has achieved significant growth at scale over the past three years as we capitalize on
the mega industry tailwind as a market leader. As of June 30, 2024, a total of 25 OEMs selected
our ADAS and AD solutions for implementation in one of their vehicle models, by directly
engaging with us or through our tier-one supplier customers.
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Smart vehicle transformation is a mega trend that has been reshaping the estimated
US$13.0 trillion global automotive, mobility and road freight industries in 2023. ADAS
capabilities are increasingly common in cars nowadays, thanks to the rapid technology
advancement and higher consumer demand in recent years. This is demonstrated by the ADAS
penetration rates of over 50% in both global and Chinese markets in 2023, according to CIC.
Meanwhile, industry participants continue to make ongoing, inexhaustible efforts to march
towards broader adoption of AD with increasing level of automation. We believe the demand
for driving automation solutions will continue to grow significantly in the years to come.
According to CIC, the global ADAS and AD solutions market presents a RMB61.9 billion
opportunity in 2023 and is expected to grow at a CAGR of 49.2% through 2030 to reach
RMB1,017.1 billion.
However, a few core challenges need to be addressed to realize mass adoption of smart
vehicles enabled by ADAS and AD. ADAS and AD systems are highly complex, requiring high
processing capacity, high reliability, low latency and low energy consumption, and need to be
produced at affordable costs. Therefore, ADAS and AD solutions require the co-design of
software and hardware to achieve the necessary system-level performance and reliability of
driving functions. Deployment of such solutions on vehicles also requires optimal energy
efficiency while guaranteeing application performance. In addition, mass adoption of ADAS
and AD needs an open platform approach where value chain participants can all join and
continuously leverage the enabling technologies to develop functions and features that suit
their needs while reducing time to market.
By architecting our solutions to address these fundamental challenges, we build the core
enabling technology for smart vehicle revolution. Our solutions enable the full spectrum of
driving automation functions for passenger vehicles from mainstream assisted driving to
advanced levels of autonomous driving. Built through nine years of development, testing and
iterative improvements, our integrated solutions have been successfully validated,
commercialized and deployed on mass scale. With our product maturity, technological
advantage and commercial success, we have established ourselves as a clear market leader. The
comprehensiveness and uniqueness of our solution matrix, as summarized below, allow us to
rapidly penetrate the market, achieve high customer stickiness and capture a significant portion
of the value chain.
We provide the entire technology stack for our solutions, including algorithms that
support the ADAS and AD solutions, the underlying processing hardware on which the
algorithms operate, as well as the development toolkits to accelerate the development, iteration
and deployment of our solutions.
We take a software and hardware co-optimization approach, which we believe is crucial
in ensuring optimal processing efficiency at affordable costs, hence the right technological path
towards an autonomous driving future. We also believe that an open platform approach
empowering ecosystem partners can accelerate mass adoption of autonomous driving solutions.
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We have a highly flexible and scalable business model. Our customers can choose any
solution or any combination of components in our whole stack offerings from algorithms to
software and development tools and to processing hardware. Such flexibility has helped us
continuously acquire new customers and expand market share. In addition, our business model
is highly scalable. We typically scale deployment of our solutions with mass production of our
OEM customers’ nominated vehicles. In addition, OEM customers who have found success
with our solutions in one of their vehicle models would typically expand collaboration with us
to more vehicle models. Furthermore, we have the opportunity to sell more advanced solutions
and additional components from our offerings to our customers. These help us build a stable
pipeline of contracts in the years to come.
Our flexible and scalable business model has led to significant growth of our business in
the Track Record Period and lays the foundation for our continued success in the future. Our
revenue increased by RMB439.0 million, or 94.1%, from RMB466.7 million in 2021 to
RMB905.7 million in 2022, and further increased by RMB645.9 million, or 71.3%, to
RMB1,551.6 million in 2023. Our revenue increased by RMB563.1 million, or 151.6%, from
RMB371.5 million for the six months ended June 30, 2023 to RMB934.6 million for the six
months ended June 30, 2024. Our gross profit increased from RMB331.0 million in 2021 to
RMB627.7 million in 2022, and further to RMB1,094.3 million in 2023. Our gross profit
increased from RMB226.6 million for the six months ended June 30, 2023 to RMB738.7
million for the six months ended June 30, 2024. We had high and stable gross profit margin of
70.9%, 69.3% and 70.5% in 2021, 2022 and 2023, respectively. Our gross profit margin
increased from 61.0% for the six months ended June 30, 2023 to 79.0% for the six months
ended June 30, 2024.
BASIS OF PREPARATION
The historical financial information of our Group has been prepared in accordance with
all applicable International Financial Reporting Standards (“IFRS Accounting Standards”)
issued by the International Accounting Standards Board (“IASB”). The historical financial
information has been prepared under the historical cost convention, as modified by the
revaluation of convertible redeemable preferred shares, other financial liabilities at fair value
through profit or loss, and financial assets at fair value through profit or loss (“FVPL”).
The preparation of the historical financial information in conformity with IFRS requires
the use of certain material accounting policy information and estimates. It also requires
management to exercise its judgment in the process of applying our Group’s accounting
policies. The areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the historical financial information, are disclosed
in Note 4 of the Accountant’s Report included in Appendix I to this Prospectus.
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KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
General Factors
Our business and operating results are affected by general factors affecting the smart
vehicles and the ADAS and AD solutions market, which include:
General Demand for Automotive V ehicles
Our business performance is affected by vehicles sales and production volumes by OEMs.
Economic conditions in China and globally can have a large impact on the demand and
production of new vehicles, thereby affecting our revenue. In addition, a number of other
factors such as, the growth of the automotive industry generally, the per capita disposable
income of consumers, growth in consumer spending, the supply chain dynamics for auto parts
and the competitive environment in automotive industry, would all affect the demand for and
production of automotive vehicles, which could affect our revenue growth.
Penetration of Smart V ehicles
Our results of operations largely depend on penetration rate of smart vehicles in China
and around the world. According to CIC, the penetration rates of ADAS technologies in China
and global passenger vehicle markets were both over 50% in 2023. The driving automation
technologies are undergoing a ground-breaking evolution as the industry transitions from
driver assistance to high automation and beyond, which requires increasingly advanced
solutions. This has driven, and is expected to continue to drive, the demand for our ADAS and
AD solutions as a critical enabler of smart vehicles. Out of a total of 60.3 million new
passenger vehicles sold globally in 2023, approximately 39.5 million were smart vehicles with
ADAS and AD functions installed with a penetration rate of 65.6%. The sales volume of smart
vehicles is expected to further increase to 55.9 million and 81.5 million by 2026 and 2030,
respectively, representing penetration rates of 80.3% and 96.7%. We believe the increasing
penetration of smart vehicles presents enormous market opportunities for our ADAS and AD
solutions, which is expected to have a positive impact on our business scale, results of
operations and financial condition.
 Growing Consumer Demands . Consumer demand for more powerful and smart vehicles
is growing rapidly. According to CIC, a global survey conducted by a global tier-one
supplier in 2022 indicated that 89% of respondents in China, 75% in Japan, 57% in the
United States and 50% in Germany see driving automation as a useful development in
passenger vehicles. Smart vehicles integrate growing number of software components to
enable smart functions, such as ADAS and AD solutions. As a result, consumers’ demand
for smart vehicles equipped with ADAS and AD solutions will significantly impact our
financial performance.
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 Increasing Adoption of ADAS and AD Solutions by OEMs . OEMs are increasingly
willing to integrate more advanced ADAS and AD solutions into their passenger car
models so as to achieve a competitive edge in the automotive markets. Their continued
commitment to introduce more advanced driving automation technologies to consumers
will affect our results of operations and financial condition. Nevertheless, the actual
technology advancement, the effective time-to-market and the affordability of the
underlying ADAS and AD solutions will all influence the level and pace of adoption of
our ADAS and AD solutions by OEMs.
Seasonality
Our results of operations, in particular regards to product solutions, may be affected from
period to period due to many factors, including seasonal factors that may affect the demand for
our product solutions as impacted by the market trends of the automotive industry. Our
customers usually experience a slow season/off-season in their sales volumes during and
following the Chinese New Year holidays in the first half of the year, and thus can have an
impact on our results of operations in the first quarter. Sales of our product solutions tend to
increase in the second half of the year, which is generally in line with the overall automotive
industry in China. Such fluctuations are seasonal in nature and you are cautioned not to place
undue reliance of them as indicators for our results of operations for the full year.
Company Specific Factors
We believe there are several important factors that have affected and are expected to
continue to affect our results of operations:
Ability to Launch Advanced Solutions and Technologies
Our ability to launch advanced solutions is fundamental to our business success. We
expect to continue to upgrade our existing solutions and introduce new solutions to stay
competitive. Furthermore, we need to focus on upgrading every pillar of our existing
technologies, namely our algorithms, BPU, OpenExplorer, TogetheROS and AIDI, and develop
new technologies to satisfy evolving needs and preferences of customers. Moreover, with
continuous innovations of technologies, we can better help our customers smoothly and
efficiently implement, operate and upgrade our solutions into their vehicles. Our ability to
bring more value to our customers through continued innovations in solutions and technologies
affects our customers’ decisions to choose us, which in turn affects our results of operations
and financial condition.
Ability to Win New Customers and Expand Relations with Our Existing Customers
Our ability to attract new customers affects our business scale, results of operations and
financial condition. To obtain design-wins with new customers, we invest significant efforts
and resources from the time of our initial contact with a customer until the point when such
customer chooses our solutions for incorporation into one or more of its specific vehicle
models. Our ability to sustain and expand these efforts plays a critical role in growing our
customer base, which is expected to have an impact on our business scale, results of operations
and financial condition.
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Maintaining and deepening our collaboration and trust with existing customers,
particularly OEMs, is critical to our business success. By deepening such relationship, we can
scale deployment of our solutions with mass production of our OEM customers’ vehicles.
OEMs who have found success with our solutions in one of their vehicle models would
typically expand collaboration with us to more vehicle models. Further, we can provide more
advanced solutions and more components from our offerings to our OEM customers. Retaining
and expanding these customer relationships directly affect our results of operations and
financial condition.
Our Business Mix
Revenue mix from different revenue sources affect our profitability. For instance, due to
the varying business nature, our license and services and product solutions have different gross
profit margin profiles. Therefore, the change in revenue mix of our product solutions and
license and services would affect our results of operations and financial condition.
In addition, we provided non-automotive solutions to our customers during the Track
Record Period, the gross profit margin of which was generally lower than that of our
automotive solutions. Any change in revenue mix from our different business segments will
also affect our financial performance.
Ability to Optimize Cost Structure and Improve Operational Efficiency
While we value and encourage spending on innovation, our ability to achieve and
maintain profitability is dependent in part on our ability to control costs. During the Track
Record Period, our cost of sales primarily consisted of cost of inventories sold. Our ability to
effectively control such costs as we expand our operations has affected and will continue to
affect our financial results. We aim to deepen our collaborations with suppliers to enhance the
stability and affordability of supply and optimize our cost structure.
In addition, our operating efficiency is affected by our ability to control operating
expenses. Research and development expenses were the largest component of our operating
expenses during the Track Record Period. Our ability to ensure research and development
efficiency and maintain research and development expenses at a reasonable level comparable
to our revenue scale is critical to our results of operations and financial condition. In addition,
controlling administrative expenses and selling and marketing expenses is also important to our
success. As we further increase our revenue, we expect to benefit from economies of scale and
further improve our operational efficiency.
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Ability to Identify and Manage Strategic Partnerships
We may evaluate and consider a wide array of potential partnerships to generate more
business opportunities and expand our revenue. Such partnerships may require additional
funding and may bring profits or incur losses in the future. For instance, investments in joint
ventures and associates, such as our investment in CARIZON, has affected and will continue
to affect our cash flows from investing activities. Moreover, operating losses of such joint
ventures and associates are recorded as share of net losses of investments accounted for using
the equity method in our financial statements. The collaboration with and the operating
performance of our joint ventures and associates may affect our financial condition and results
of operations.
MATERIAL ACCOUNTING POLICY INFORMATION AND ESTIMATES
Some of our accounting policies require us to apply estimates as well as complex
judgments related to accounting items. The estimates we use and the judgments we make in
applying our accounting policies have a significant impact on our financial position and
operational results. Our management continuously evaluates such estimates, assumptions and
judgments based on historical experience and other factors, including expectations of future
events that may have a financial impact on the entity and that are believed to be reasonable
under the circumstances. There has not been any material deviation between our management’s
estimates or assumptions and actual results, and we have not made any material changes to
these estimates or assumptions during the Track Record Period. We do not expect any material
changes in these estimates and assumptions in the foreseeable future.
Set forth below are accounting policies that we believe are of critical importance to us or
involve the most significant estimates, assumptions and judgments used in the preparation of
our financial statements. Our material accounting policy information, estimates and judgments,
which are important for understanding our financial condition and results of operations, are set
forth in further detail in Note 4 to the Accountant’s Report included in Appendix I to this
Prospectus.
Revenue Recognition
We recognize revenue when (or as) a performance obligation is satisfied (i.e., when
control of the goods or services underlying the particular performance obligation is transferred
to the customer). 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:
 provides all of the benefits received and consumed simultaneously by the customers;
 creates and enhances an asset that the customer controls as we perform; or
 does not create an asset with an alternative use to us and we have an enforceable
right to payment for performance completed to date.
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If control of the goods and services transfers over time, revenue is recognized over the
period of the contract by reference to the progress towards complete satisfaction of that
performance obligation. Otherwise, revenue is recognized at a point in time when the customer
obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such
arrangements, at the contract inception date, we allocate revenue to each performance
obligation based on its relative stand-alone selling price. We determine stand-alone selling
prices based on the prices charged to customers if it is directly observable. If the stand-alone
selling price is not directly observable, the contractually stated price is believed to best reflect
the relative stand-alone selling price of performance obligations in a contract considering ours
customary business practices. Assumptions and estimations have been made in estimating the
relative selling price of each distinct performance obligation, and changes in judgments on
these assumptions and estimates may impact the revenue recognition.
When either party to a contract has performed, we present the contract in the statement
of financial position as a contract asset or a contract liability, depending on the relationship
between the entity’s performance and the customer’s payment.
A contract asset is our right to consideration in exchange for goods and services that we
have transferred to a customer. A receivable is recorded when we have an unconditional right
to consideration. A right to consideration is unconditional if only the passage of time is
required before payment of that consideration is due.
If a customer pays consideration or we have a right to an amount of consideration that is
unconditional, before we transfer a good or service to the customer, we present the contract
liability when the payment is made, or a receivable is recorded (whichever is earlier). A
contract liability is our obligation to transfer goods or services to a customer for which we have
received consideration (or an amount of consideration is due) from the customer.
Revenue is recorded net of value-added taxes. Revenues presented in the consolidated
statements of loss comprises revenues from product solutions sales, license arrangements and
provision of design and technical services to customers in automotive business, and provision
of non-automotive solutions.
Automotive Solutions — Product Solutions
We sell automotive product solutions, which combine our self-developed processing
hardware with proprietary algorithms and software.
Revenue from automotive product solutions sales is recognized upon the acceptance of
promised product solutions from customers in an amount that reflects the consideration we
expect to receive in exchange for those product solutions. Revenue is recognized net of
discounts and any taxes collected from customers.
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We generally offer assurance-type warranties to customers and such warranties are not
considered a distinct performance obligation to customers. We account for the warranty in
accordance with IAS 37, and the estimated warranty cost was not material during the Track
Record Period.
Automotive Solutions — License and Services
We license our customers with a right to use our algorithms and software. Licenses are
at times sold along with training services and post-contract service (“PCS”). The training
services and the PCS each is considered as a distinct performance obligation and they are not
material during the Track Record Period. The licenses granted by us are right to use licenses.
Therefore, revenue from license arrangements is recognized at a point in time when the
packages of algorithms, or the software, is made available to the customer and the customer is
able to use and benefit from the license. Revenue from training services is recognized over the
training period. PCS revenue is recognized ratably over the service period. We also provide
customers design and technical services to help them integrate our solutions into their vehicles
and design specific features based on their needs.
For contracts pursuant to which we have an enforceable right to payment for performance
completed to date, or when the customer simultaneously receives and consumes the benefits
provided by our performance as we perform, design and technical services revenue is
recognized over a period of time based on the progress towards complete satisfaction in the
contracts using input method, which is determined as the proportion of the costs incurred for
the work performed to date relative to the estimated total costs to complete the contract, to the
extent that the amount can be measured reliably and its recovery is considered probable. For
other design and technical services contracts, revenue is recognized upon customers’
acceptance of the service outcome.
Non-automotive Solutions
We also offer non-automotive product solutions that combine our processing hardware
and algorithms. Related revenues are recognized upon the acceptance of promised product
solutions by customers.
Practical Expedients and Exemptions
The effect of a significant financing component has not been adjusted for in contracts
where we expect, at contract inception date, that the period between when we transfer a
promised good or service to the customer and when the customer pays for that good or service
will be one year or less. We elected to expense the incremental costs of obtaining a contract
with a customer as incurred when the expected amortization period is one year or less.
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Principles of Consolidation and Equity Accounting
Subsidiary
Subsidiaries are all entities over which we have control. We control an entity where we
are exposed to, or have rights to, variable returns from our involvement with the entity and
have the ability to affect those returns through our power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to us. They are
deconsolidated from the date that control ceases.
Inter-company transactions, balances and unrealized gains on transactions between Group
companies are eliminated. Unrealized losses are also eliminated unless the transaction provides
evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by us.
Non-controlling interests in the results and equity of subsidiaries are shown separately in
the consolidated statement of profit or loss, statement of comprehensive income, statement of
changes in equity and balance sheet, respectively.
Associates
Associates are all entities over which we have significant influence but not control or
joint control. This is generally the case where we hold between 20% and 50% of the voting
rights or have board seats. Investments in associates are accounted for using the equity method
of accounting, after initially being recognized at cost.
Joint V entures
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as
either joint operations or joint ventures. The classification depends on the contractual rights
and obligations of each investor, rather than the legal structure of the joint arrangement. We
have assessed the nature of our joint arrangement and determined it to be joint ventures.
Interests in joint ventures are accounted for using the equity method, after initially being
recognized at cost in the consolidated balance sheet.
Equity Method
Under the equity method of accounting, the investments are initially recognized at cost
and adjusted thereafter to recognize our share of the post-acquisition profits or losses of the
investee in profit or loss, and our share of movements in other comprehensive income of the
investee in other comprehensive income. Dividends received or receivable from associates and
joint ventures are recognized as a reduction in the carrying amount of the investment.
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Where our share of losses in an equity-accounted investment equals or exceeds our
interest in the entity, including any other unsecured long-term receivables, we do not recognize
further losses, unless we have incurred obligations or made payments on behalf of the other
entity.
Unrealized gains on transactions between us and our associates and joint ventures are
eliminated to the extent of our interest in these entities. Unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Accounting
policies of equity-accounted investees have been changed where necessary to ensure
consistency with the policies adopted by us. The carrying amount of equity-accounted
investments is tested for impairment in accordance with the policy described in Note 13 of the
Accountant’s Report included in Appendix I to this Prospectus.
Preferred Shares
Preferred shares issued by us are redeemable upon occurrence of certain future events and
at the option of the holders. They can be converted into our ordinary shares at any time at the
option of the holders or automatically converted into ordinary shares upon the completion of
this Global Offering.
We do not bifurcate any embedded derivatives from the host instruments and designates
the entire preferred shares instruments as financial liabilities at fair value through profit or loss
with the changes in the fair value recorded in the consolidated statements of profit and loss and
the component of fair value changes relating to our own credit risk is recognized in other
comprehensive income. Amounts recorded in other comprehensive income related to credit risk
are not subject to recycling in profit or loss but are transferred to retaining earnings when
realized. Any directly attributable transaction costs are expensed as incurred.
Convertible Loan
Our convertible loan shall be automatically and mandatorily converted into the relevant
equity interests upon the maturity of the loan. The lender has rights to ask us to repay all
outstanding and unpaid principal amount when some default event occurs. Therefore, we do not
have the unconditional right to avoid delivering cash to settle the loan.
We did not bifurcate any embedded derivatives from the host instruments and designates
the entire convertible loan as financial liabilities at fair value through profit or loss with the
changes in the fair value recorded in the consolidated statements of profit and loss and the
component of fair value changes relating to our own credit risk is recognized in other
comprehensive income.
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Impairment of Non-Financial Assets
Non-financial assets are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognized for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and
value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the
cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets
other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at the end of each reporting period.
As of December 31, 2021, 2022 and 2023 and June 30, 2024, our non-financial assets
mainly include leased office buildings, land use right, office building under construction,
computer and electronic equipment, and licensed technologies and software. These non-
financial assets are mainly used in or will be used in our Group’s research and development
activities and daily operations and do not generate independent cashflows by themselves. Our
Group operates the business as a whole, focusing on research and development of proprietary
software and hardware and providing automotive solutions for passenger vehicles and
non-automotive solutions, and does not maintain manufacturing facilities or develop
manufacturing capacity by ourselves. There is significant vertical integration of the design,
research and development, supply chain management, sales, supporting and other daily
operation functions across the whole Group for optimizations, therefore, our Group is
determined as one single cash generating unit (“CGU”) for impairment testing purpose. As
these non-financial assets are centralized managed at the Group level and cannot generate cash
flow independently, they are considered at Group level for impairment testing. As the fair value
less cost of disposal exceeds the carrying amount of the CGU with sufficient headroom at each
period end of the Track Record Period, no impairment of these non-financial assets is
considered necessary.
Material Estimates and Judgment
Fair V alue of Financial Assets at FVPL
The fair value of financial instruments that are not traded in an active market is
determined using valuation techniques. Our Group uses its judgment to select a variety of
methods and makes assumptions that are mainly based on market conditions existing at the end
of each reporting period. For details of the key assumptions used and the impact of changes to
these assumptions, see Note 3.3 of the Accountant’s Report included in Appendix I to this
Prospectus.
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Fair V alue of Financial Liabilities at FVPL
Preferred shares and other financial liabilities at FVPL are not traded in an active market
and the respective fair value is determined by using valuation techniques. The discounted cash
flow method was used to determine our total equity value, the option-pricing method, equity
allocation model and forward pricing model were adopted to determine the fair value of the
financial instruments. Key assumptions such as discount rate, risk-free interest rate, discount
rate for lack of marketability, or DLOM, and volatility based on our best estimates are
disclosed in Note 28 of the Accountant’s Report included in Appendix I to this Prospectus.
Credit Loss Allowances for Receivables
The expected credit loss of trade and note receivables and other receivables are based on
assumptions about risk of default and expected loss rates. We use judgment in making these
assumptions and selecting the inputs to calculate the loss allowances, based on our past history,
existing market conditions as well as forward looking estimates at the end of each reporting
period. Details of the key assumptions and inputs used are disclosed in Note 3.1 of the
Accountant’s Report included in Appendix I to this Prospectus.
Share-based Payment Expenses
We granted options and Restricted Share Units (“RSUs”) to employees and directors. The
fair value of the options is determined using the binomial option pricing model at the grant
date, and is expected to be expensed over the respective vesting periods. Significant
assumptions, including, underlying equity value, risk-free interest rate, expected volatility,
dividend yield, and terms, are made by the directors and a third-party valuer.
The fair value of RSUs at the grant date was determined by reference to the fair value of
the underlying ordinary shares on the dates of grant. The discounted cash flow method was
used to determine our total equity value and the equity allocation model was adopted to
determine the fair value of the ordinary shares. Key assumptions, such as discount rate,
risk-free interest rate, DLOM and volatility are disclosed in Note 28 of the Accountant’s Report
included in Appendix I to this Prospectus.
Current and Deferred Income Tax
We recognize deferred tax assets based on estimates that is probable to generate sufficient
taxable profits in the foreseeable future against which the deductible losses will be utilized.
The recognition of deferred tax assets mainly involved management’s judgments and
estimations about the timing and the amount of taxable profits of the companies who had tax
losses.
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PATH TO PROFITABILITY
Despite our rapid growth, we were loss-making during the Track Record Period. In 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred losses for
the period of RMB2,063.6 million, RMB8,720.4 million, RMB6,739.1 million, RMB1,888.5
million and RMB5,098.1 million, respectively, and adjusted net loss (Non-IFRS measure) of
RMB1,103.2 million, RMB1,891.4 million, RMB1,635.2 million, RMB996.0 million and
RMB803.9 million, respectively. Our revenue increased significantly during the Track Record
Period and amounted to RMB466.7 million, RMB905.7 million, RMB1,551.6 million,
RMB371.5 million and RMB934.6 million in 2021, 2022 and 2023 and for the six months
ended June 30, 2023 and 2024, respectively. Our adjusted net loss (Non-IFRS measure) as a
percentage of revenue significantly narrowed during the Track Record Period. In the coming
years, we plan to break-even and realize profitability by implementing business initiatives of
expanding revenue scale, maintaining gross margin profile, enhancing operating leverage and
improving operations of CARIZON. Our losses during the Track Record Period were primarily
due to:
 Substantial upfront investment required . The ADAS and AD solutions market is
highly competitive and complex, which requires substantial upfront investment into,
among other things, technology advancement, talent acquisition, customer
engagement and regulatory compliance. Considerable resources are necessary to
fund the extensive research and development efforts aimed at creating algorithms,
purpose-built software and processing hardware in order to obtain customer and
consumer acceptance of ADAS and AD solutions. Furthermore, to
maintain a leading edge in technology advancement, we need to recruit top-tier
talents. Competitive benefits packages and incentives are necessary to attract and
retain skilled professionals who can drive our technology innovation and evolution.
Moreover, customer engagement in the ADAS and AD solutions is inherently
challenging. For instance, in order to invest in our relationship with OEM
customers, significant efforts are essential from early engagement cycle to final
seamless integration of our algorithms, software, and processing hardware into their
vehicle models. Last but not least, compliance with the evolving industry
regulations and standards is often challenging and costly, which entails resources
towards obtaining various regulatory requirements, conducting rigorous safety
testing and ensuring ongoing regulatory compliance. As such, all these factors lead
to substantial upfront investment, which results in our loss positions during the
Track Record Period.
 Economies of scale are still materializing. We are currently growing rapidly.
Notably, our market share increased significantly from 3.7% in 2022 to 21.3% in
2023 among ADAS solutions providers to Chinese OEMs in terms of installation
volume. However, despite the rapid growth, we have yet to produce at a volume high
enough to fully leverage our economies of scale. As our business expands, we
benefit from economies of scale and our operating expenses as a percentage of total
revenue decreased from approximately 358.7% in 2021, to 281.8% in 2022, and
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further to 202.2% in 2023. Our operating expenses as a percentage of total revenue
decreased from 378.7% for the six months ended June 30, 2023 to 199.1% for the
six months ended June 30, 2024. Despite such positive movements, technology
development and market penetration in the ADAS and AD solutions market can take
time. While economies of scale can offer significant cost advantages, realizing such
benefit is a gradual process, particularly for us who incur substantial upfront
investment and operate in a dynamic and rapidly evolving industry.
 Share of results of investments accounted for using the equity method. In 2021, 2022
and 2023 and for the six months ended June 30, 2023 and 2024, we recorded share
of net losses of investments accounted for using the equity method of RMB2.5
million, RMB34.3 million, RMB112.1 million, RMB16.8 million and RMB181.6
million, respectively. The substantial increase in share of net losses of investments
accounted for using the equity method in 2023 and for the six months ended June
30, 2024 was primarily resulted from our shared loss in CARIZON.
 Fair value changes of preferred shares and other financial liabilities. We recorded
RMB764.0 million, RMB6,655.4 million, RMB4,760.4 million, RMB713.6 million
and RMB4,012.7 million in fair value changes of preferred shares and other
financial liabilities in the consolidated statements of profit or loss for the year ended
December 31, 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively. Fair value changes on preferred shares and other financial
liabilities arise primarily from the changes in the carrying amount of our preferred
shares and the convertible loan. These fair value changes are non-cash in nature.
Upon the completion of this Global Offering, all of such preferred shares will be
automatically converted into Class B ordinary shares. Upon maturity, all the
principal amount and accrued interest of the convertible loan shall be automatically
and mandatorily converted into Class B ordinary shares.
Expanding Our Revenue Scale
We are a company under rapid growth. Our revenue increased significantly during the
Track Record Period and amounted to RMB466.7 million, RMB905.7 million, RMB1,551.6
million, RMB371.5 million and RMB934.6 million in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively, representing year-over-year/period-over-
period revenue growth rates of 94.1% in 2022, 71.3% in 2023 and 151.6% for the six months
ended June 30, 2024, respectively. We expect that our revenue will grow further due to the
following factors:
 Leverage positive industry tailwind. Benefiting from the consumer acceptance and
preferences for smart vehicles, enhanced driving safety standards and robust
technology development, the smart vehicle markets in China and globally are
expected to maintain significant growth momentum in the future. According to CIC,
the sales volume of smart vehicles with ADAS and/or AD functions installed
reached 39.5 million in 2023 and is expected to further increase to 55.9 million and
81.5 million by 2026 and 2030, respectively, representing penetration rates of
65.6%, 80.3% and 96.7%. In addition, according to CIC, smart vehicles sales
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volume in China reached 12.4 million in 2023 and is expected to reach 20.4 million
and 29.8 million in 2026 and 2030, respectively, representing penetration rates of
57.1%, 81.2% and 99.7%. Accordingly, the market for ADAS and AD solutions is
expected to grow rapidly as well. For details, see “Industry Overview — Overview
of the Smart Vehicle Market” and “Industry Overview — Overview of the ADAS
and AD Solutions Market.” The ADAS and AD solutions market in China is
concentrated, with a few top suppliers holding the majority of the market share. The
major market participants in the ADAS and AD solutions market include (i)
suppliers focusing on ADAS and AD solutions for automotive industry, (ii) general
processing hardware suppliers industries, and (iii) a small number of OEMs that
develop in-house solutions. See “Overview of the ADAS and AD Solutions Market
— Competitive Landscape.” We were the largest Chinese ADAS solutions provider
to Chinese OEMs in domestic market by installation volume in 2023, according to
CIC. Notably, our market share increased significantly from 3.7% in 2022 to 21.3%
in 2023. While the market competition in the ADAS and AD solutions market in
China is expected to intensify, with a growing number of market participants
entering the market, we believe we are well positioned to capture the market
potential, maintain our competitive advantage, sustain our high gross profit margin
and achieve sustainable growth leveraging our industry leading position, unique
software-hardware co-optimization approach, research and development
capabilities, comprehensive product portfolio and open platform with thriving
ecosystem.
/H18537Leading industry position . Developing safe and reliable ADAS and AD
solutions is a complex and capital-intensive endeavor, entailing years of heavy
investments from product design to mass production. We have deepened our
moat and maintained our role as a leading provider of ADAS and AD solutions
for passenger vehicles with sophisticated engineering capabilities in mass
production through multi-year product development cycle, substantial annual
research and development investment, and large base of blue-chip customers
that are established leaders in the automotive industry.
/H18537Unique software-hardware co-optimization approach. We have a unique
software-hardware co-optimization approach that enables us to design
hardware that better meets the evolving demands of software and algorithms in
the automotive industry. Simultaneously, our advanced algorithms and
sophisticated software can fully utilize the potential of our processing
hardware. Such co-optimization approach differentiates us from our competitor
as we can enhance our customers’ competitiveness by helping them achieve
optimized system level performance, as evidenced by our large customer base.
/H18537Industry renown research and development capabilities . We have assembled an
industry-renown research and development team, led by globally recognized
scientists, focusing on front-tier R&D. As of June 30, 2024, 73.5% of our
research and development employees have post-graduate qualifications.
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Moreover, we have also cultivated a deep bench of talents to constantly stay at
the frontier of algorithm advancement and AD product development, enabling
us to consistently introduce highly competitive and industry-leading products
and keep attracting talents.
/H18537Comprehensive product portfolio. We offer a comprehensive portfolio of
ADAS and AD solutions, underpinned by our proprietary, technologically
advanced software and hardware stack. Our ADAS and AD solutions address
different customer needs from mainstream assisted driving to advanced level
autonomous driving.
/H18537Open platform with thriving ecosystem . We have adopted an open technology
platform approach, providing abundant development toolkits and a highly
flexible business model. Our open platform approach empowers our customers
and ecosystem partners to develop their own software applications catering to
their specific needs. This approach fosters deep collaborations with our
customers throughout their product development phases, from product plan and
concept design to mass production and beyond, which cultivates a healthy
ecosystem of more than 100 customers and ecosystem partners and improves
customer loyalty.
See “— Maintaining Our Gross Margin Profile” for more details on initiatives to
maintain our competitive advantage and achieve a relatively high gross profit
margin. Looking ahead, benefiting from our industry leading position, unique
software-hardware co-optimization approach, research and development
capabilities, comprehensive product portfolio and open platform with thriving
ecosystem, we are poised to maintain this momentum and continue our revenue
growth trajectory.
 Capitalize on robust backlogs. The OEM customer base and the number of
design-wins are key indicators of revenue generation potentials because these
metrics reflect the market acceptance and demand for ADAS and AD solutions. We
have the largest OEM customer base in China among solution providers and we have
accumulatively obtained design-wins for 44, 101, 210 and 275 car models, net of
terminated projects, as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively. In 2021, 2022 and 2023, and for the six months ended June 30, 2024,
only five, four, four and nil projects were terminated, respectively. Due to deep
collaborations required with our customers across multiple phases of vehicle
production cycles over a long period of time, it is costly for our customers to switch
to other ADAS and AD solution providers. Our integrated solutions have been
selected by 27 OEMs (42 OEM brands) for implementation in over 285 passenger
car models as of the Latest Practicable Date. We had 152 cumulative number of car
models for which we achieved SOP as of the Latest Practicable Date. As a result of
our wide OEM coverage, we have secured robust backlogs of orders for vehicles not
yet mass-produced. As of June 30, 2024, vehicle models that have yet to achieve
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mass production represent more than 50% of all vehicle models of which we have
obtained design-wins. As of the Latest Practicable Date, among our total design-
wins, over 135 car models were under development process towards mass
production, representing our backlogs of potential orders for vehicles not yet
mass-produced. Future commercialization of vehicle models that have yet to achieve
mass production can further support our future revenue growth in the years to come.
Even before a car model reaching mass production, we usually generate revenue
from development and engineering services, licenses or potential delivery of product
solutions. Of the 44 car models for which we obtained design-wins as of December
31, 2021, 42 car models were mass produced during the Track Record Period, and
the remaining two also generated revenue during the same period. Similarly, of 101
car models for which we obtained design-wins as of December 31, 2022, 82 car
models were mass produced during the Track Record Period, and the remaining 19
car models also generated revenue during the same period.
 Attract new customers . We plan to further grow the size of our customer base,
leveraging our current flexible business model and industry-leading open platform.
Customers can choose any solution or any combination of components in our whole
stack offerings, providing flexibility to our customers to select the solutions that
best suit their needs, which, in turn, can help us continuously acquire new customers
and expand market share. In addition, by purposefully designing our platform to
allow industry participants to develop tailor-made ADAS and AD features, we can
attract a broader range of new customers who are willing to use our open platform
to benefit their own businesses. With more OEMs and third-party developers
working on our platform, we can broaden our industry penetration, leading to
adoption of our ADAS and AD solutions by new customers. Moreover, we will
continuously focus on research and development to introduce more innovative and
cutting-edge technologies to the market, thereby enhancing our reputation and
attracting new customers. Furthermore, we intend to further intensify our sales and
marketing efforts to boost our market recognition. For instance, we plan to
strengthen our marketing activities through funding industry exhibitions, product
launch events, test-driving activities and market research or surveys. We have
formed strategic partnerships with global OEMs, prioritizing collaboration
opportunities in China. This enables us to explore domestic expansion possibilities
and enhance our reputation. Moreover, we are actively collaborating with renowned
global tier-one suppliers, including Aptiv, Bosch, Continental, Denso, and ZF, which
expands our revenue sources and creates marketing effects. As a result of the
foregoing, our OEM customer base increased during the Track Record Period,
amounting to 14, 20, 23 and 25 as of December 31, 2021, 2022 and 2023 and June
30, 2024, respectively.
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 Expand collaboration with existing customers. Our future growth is dependent on
our ability to maintain and deepen relationships with our existing customers. By
committing to expand and deepen such relationships, we can scale deployment of
our solutions in tandem with our customers’ increasing production volumes of
vehicles equipped with our solutions. Moreover, OEMs who have found success
with our solutions in one of their vehicle models would typically expand
collaboration with us to more vehicle models. Furthermore, by constantly updating
our solutions offerings and introducing more advanced features, we have the
opportunity to offer more advanced solutions and more components from our
offerings to our customers. Realizing such opportunities, our sales team regularly
communicate with OEMs to explore future collaborations on more vehicle models
and establishing comprehensive and multifaceted partnerships with our customers.
For example, through our first cooperation with BYD, we gained in-depth
understanding of their customized requirements across all stages of development,
production and after-sales processes, and delivered highly satisfactory services to
BYD. As a result of the foregoing, BYD has established a strategic and synergistic
partnership with us. Our collaboration with BYD currently covers various driving
automation solutions targeted for different scenarios on multiple vehicle platforms.
During the Track Record Period, the number of our design-wins with BYD has
significantly increased. Going forward, we plan to continue to enhance our existing
sales and marketing efforts by (i) expanding the sales team, (ii) leveraging digital
analysis tools to track client interactions, preferences, and service histories, (iii)
enhancing client communication with regular check-ins and improve feedback
systems, and (iv) continuously monitoring and analyzing client data for better
solution and service delivery.
 Expand to new geographies. We aim to extend our reach beyond markets in China
and bring our solutions to enable global partners. Currently, substantially all of our
revenues are derived in China. We intend to enhance our international presence
through partnering with global OEMs and tier one suppliers to explore global
markets, particularly in Japan, South Korea and Europe. As the demand for
advanced driving automation grows worldwide, we can capitalize on such
opportunities by expanding our presence globally with our customers. We believe
our strategic partnership with Chinese OEMs can turn into huge revenue growth
potential due to their increasing international presence. In addition, we intend to
establish strategic and commercial partnerships with other global industry leaders to
enhance market presence on a global scale and pave the way for collaborative
innovation. We intend to strengthen our partnerships with global OEMs operating in
China in order to form long-term and mutually beneficial relationships, paving way
for future collaboration opportunities on their foreign operations. We will also
collaborate with global tier-one companies in our target markets to enhance our
global recognition. We and Aptiv reached a strategic cooperation in developing fully
integrated hardware and software solutions tailored for OEMs of passenger vehicles
in China. Such solutions were integrated in vehicle models mass produced in 2024.
We are collaborating with Bosch on mass production of vehicle models embedded
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with our next generation processing hardware. We and Continental are co-
developing through a joint venture next generation driving and parking integrated
domain controller which will support advanced level autonomous driving (Level 2+)
with higher-level of automated parking assist functionality. We are collaborating
with Denso on mass production of vehicle models embedded with our next
generation processing hardware. We and ZF reached a strategic cooperation in
developing ZF’s high-performance computing platform solution. The first ZF
solution designed with our assistance is expected to be available in the market in
2024. While our current long-term collaborations and strategic partnerships with
these leading global tier-one suppliers primarily target the Chinese market, we are
of the view that such collaborations and partnerships will provide us with valuable
insights into the needs and expectations of global tier-one suppliers and global
OEMs. This, in turn, will enhance our understanding of global market trends,
industry demand and best practices in foreign regions where these global tier-one
suppliers have significant influence, including Japan, South Korea and Europe.
Furthermore, we also plan to (i) establish a sales and customer service team with
global vision and overseas experience and (ii) fund targeted initiatives for overseas
customer engagement, such as, among others, setting up overseas offices,
conducting customer visits, exploring global partnership opportunities and
organizing localized marketing events. For details, see “Business — Our Growth
Strategies — Continue to Enable Global Partners” and “Future Plans and Use of
Proceeds.”
 Introduce new solutions with higher price meeting the surging demand for smart
vehicles. We will continue to introduce new solutions with more advanced
technologies. We are expanding our solutions portfolio, including developing more
advanced AD solutions based on our next generation of hardware. We also intend to
continue to invest in advanced algorithms and AD software applications that are
co-designed and co-optimized with our new generation of hardware to further
optimize processing efficiency, enhance performance and minimize latency. We
launched the initial mass production of Horizon Mono in 2020 embedded with
Journey 2 processing hardware. We subsequently launched the initial mass
production of Horizon Mono in 2021 with Journey 3 processing hardware. Horizon
Mono is capable of providing mainstream ADAS functions. In 2022, we launched
the initial mass production of Horizon Pilot with Journey 3 processing hardware and
with Journey 5 processing hardware. Horizon Pilot is capable of performing more
advanced tasks such as automatic ramp on/off, autonomous merge-in and exit during
traffic congestion, automated lane change, highway autopilot and more. As a result
of such advanced features and functions, we are able to charge a higher premium for
our Horizon Pilot as compared to Horizon Mono. We launched Horizon SuperDrive
in April 2024. Horizon SuperDrive is expected to provide smooth and human-like
autonomous driving functions in all urban, highway and parking scenarios. As of the
Latest Practicable Date, we have initiated collaborations for Horizon SuperDrive
with seven OEMs and three tier-one suppliers in multiple vehicle models. In the
coming years, we will primarily focus on commercializing our Horizon SuperDrive
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through expanding collaborations with OEMs on integrating Horizon SuperDrive
into more vehicle models and assisting OEMs in mass productions of these vehicle
models. We also plan to continuously develop Horizon SuperDrive based on new
generation processing hardware to better meet the demands in all scenarios,
including urban, highway, parking, human-vehicle interaction and co-driving
scenarios and more. Our goal is to provide our customers with a safer, more
efficient, and more comfortable driving experience, providing all scenarios
coverage, comprehensive functions and consistent and friendly user experience. We
believe more advanced driving automation technologies allow us to charge a higher
price. Customers and consumers who prioritize innovation are willing to pay a
higher price for a more enjoyable mobility experience. We believe such pricing
increase for our ADAS and AD solutions can boost our revenue growth.
Maintaining Our Gross Margin Profile
Our future profitability depends on our ability to sustain the current level of margin
profile and introduce new solutions with high margin profile. Our gross profit margin
amounted to 70.9%, 69.3%, 70.5%, 61.0% and 79.0% in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively. We expect to maintain our gross margin
profile by implementing the following:
 Continuous innovation. Sustaining our profitability necessitates a proactive
approach to continuously introducing new solutions with a relatively high margin
profile. As such, we will continue to allocate resources to research and development
initiatives aimed at fostering innovation and developing technologies. By doing so,
we can justify premium pricing, stay ahead of the competition, and maintain our
profitability in the long run.
 Supply chain management and improvement. We will optimize supply chain to drive
cost reduction. For instance, we will continue to enhance our relationships with
supplier by fostering long-term partnerships and diversify our current supplier pool
for stable and affordable supplies. We also intend to focus on initiatives that enable
us to achieve better compatibility with various vehicle models and enhanced module
integration and peripheral device diversification to optimize costs at system level.
Additionally, we will enhance our inventory and supply chain management practices
to ensure that we can always maintain a reasonably adequate stock level that is
suited for our long-term profitability.
 Business mix optimization. We will further optimize our business mix to maintain
our gross profit margin. We will continuously focus on automotive solutions to
maintain our gross profit margin. With respect to automotive product solutions, we
expect to continuously introduce new product solutions featuring advanced
technologies and launch more AD solutions, which generally have higher value and
gross profit margin than our ADAS solutions. As the penetration rate for AD
solutions increases, we expect our business mix to include more high-margin AD
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solutions. We will also constantly update our existing AD solutions to offer
improved system performance and higher efficiency and introduce new AD solutions
with more advanced features and functions to uphold our premium pricing. We
believe such strategy will justify premium pricing, thereby increasing the gross
profit margin of automotive product solutions. Additionally, with respect to
automotive license and services, we will further commercialize our license and
services by diversifying our software and development toolkits portfolio to keep the
revenue mix from license and services at an optimal level, thereby maintaining our
overall gross profit margin. We will also sustain our high gross profit margins of
license and services through continuous research and development efforts to roll out
new licenses of algorithms, software and development toolkits to the market.
Enhancing Operating Leverage
During the Track Record Period, we incurred significant operating expenses, including
research and development expenses, administrative expenses and selling and marketing
expenses, to develop, manage and promote our automotive solutions. In the future, we will
continue optimizing our research and development as well as sales and administrative functions
to support our long-term business growth.
 Research and development. During the Track Record Period, we allocated
significant resources on research and development, focusing on possessing
comprehensive research and development capabilities to support the development of
algorithms, purpose-built software and processing hardware. Our research and
development expenses were RMB1,143.6 million, RMB1,879.9 million,
RMB2,366.3 million, RMB1,049.0 million and RMB1,419.7 million in 2021, 2022
and 2023 and for the six months ended June 30, 2023 and 2024, respectively. We
believe our current resources allocation strategy for research and development has
already brought enormous benefits. For instance, the long planning cycles of
automotive industry demands us to make considerable upfront investments in
research and development, which may take several years to ramp up. Nonetheless,
due to our targeted research and development approach on open platform and
flexible business model, we can leverage the capabilities of our ecosystem partners
to undertake part of the research and development based on our technology pillars.
Such upfront investments can support our future product pipeline and sustain our
technological advantage at lower additional costs. In addition, we have witnessed
significant economies of scale as our solutions are mass-produced across different
car models for existing and new customers and have accumulated experience over
the years of research and development which enables us to conduct research and
development more efficiently. As a result of the foregoing, our research and
development expenses as a percentage of total revenue decreased from 245.0% in
2021, to 207.6% in 2022 and further to 152.5% in 2023. Our research and
development expenses as a percentage of total revenue decreased from 282.4% for
the six months ended June 30, 2023 to 151.9% for the six months ended June 30,
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2024. We expect our research and development expenses to remain a substantial
portion of our operating expenses to support our business expansion in the future,
but our research and development expenses as a percentage of revenue to keep
decreasing.
 Administrative expenses. Our administrative expenses amounted to RMB319.0
million, RMB373.9 million, RMB443.4 million, RMB215.0 million and RMB243.1
million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively. Our administrative expenses as a percentage of total revenue
decreased from 68.3% in 2021, to 41.3% in 2022 and further to 28.6% in 2023. Our
administrative expenses as a percentage of total revenue decreased from 57.9% for
the six months ended June 30, 2023 to 26.0% for the six months ended June 30,
2024. Such decrease was primarily due to the revenue increase and economies of
scale driven by our business expansion. We will continue to actively monitor our
administrative expenses and promote operational efficiency. We expect our
administrative expenses in the absolute amount to increase alongside our business
expansion in the future, but our administrative expenses as a percentage of revenue
to keep decreasing.
 Selling and marketing expenses. Our selling and marketing expenses amounted to
RMB211.4 million, RMB298.5 million, RMB327.2 million, RMB142.7 million and
RMB198.4 million in 2021, 2022 and 2023 and for the six months ended June 30,
2023 and 2024, respectively. Our selling and marketing expenses as a percentage of
total revenue decreased from 45.3% in 2021, to 33.0% in 2022 and further to 21.1%
in 2023. Our selling and marketing expenses as a percentage of total revenue
decreased from 38.4% for the six months ended June 30, 2023 to 21.2% for the six
months ended June 30, 2024. Such decrease was primarily due to the significant
revenue increase, economies of scale and strong connections with our customers. We
expect our selling and marketing expenses in the absolute amount to increase
alongside our business expansion in the future, but our selling and marketing
expenses as a percentage of revenue to keep decreasing. Going forward, we will
further leverage our strong direct relationships and strong channels of
communication with our customers in order to win additional contracts, and target
customers more cost-effectively.
Improving Operations of CARIZON
We strategically partner with V olkswagen Group, a global industry giant through
CARIZON, to capture the future opportunities of customized driving automation solutions in
China. CARIZON was established in November 2023 and is still in ramping up stage with no
revenue generated yet. We have picked up CARIZON’s losses as share of losses of investments
accounted for using the equity method since its establishment. As CARIZON is still ramping
up, we expect to continue to pick up such share of losses. Benefiting from synergies with
V olkswagen Group (CARIZON’s largest shareholder and customer), CARIZON has a clear
go-to-market strategy of providing tailored products and services towards vehicles V olkswagen
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Group sells in China and can effectively drive revenue growth by fulfilling orders from
V olkswagen Group. Therefore, we believe CARIZON will be able to continuously deploy its
products to mass-produced vehicles, especially the ones of V olkswagen Group. In addition, we,
as a shareholder of CARIZON, will also actively participate in its business operation by
bringing agile research and development process and local insights. We aim to enhance our
economic benefits as a shareholder of CARIZON, while preserving business synergies and
long-term upside from our investment.
We believe the implementation of the aforesaid approaches can positively affect our
profitability. Specifically, expanding revenue scale has the potential of boosting profit while
increasing profit margins, particularly when accompanied by our efforts to maintain profit
margin profiles through continuous innovation, supply chain management and improvement
and business mix optimization. Furthermore, enhancing operating leverage through continuous
optimization of our research and development as well as sales and administrative functions
further refines our operating expenses to support long-term business growth. As a result of such
efforts, we witnessed an increase in revenue and gross profit as well as a decrease in operating
expenses as a percentage of total revenue during the Track Record Period. We will further
implement initiatives to boost the operating performance and efficiency of CARIZON to
minimize the impact of share of losses of CARIZON on our businesses. We believe these
efforts can collectively influence our performance and financial position, reinforcing our
competitive advantage in the market, which may further drive delivery volumes and attract
more design-wins and OEM customers to drive sustainable growth.
During the Track Record Period, we had funded our cash requirements primarily with
capital contribution from shareholders and financing through the Pre-IPO Investments. See
“History, Reorganization and Corporate Structure – Pre-IPO Investments.” We had net
operating cash outflow of RMB1,111.0 million, RMB1,557.3 million, RMB1,744.5 million,
RMB1,166.0 million and RMB726.0 million in 2021, 2022 and 2023 and for the six months
ended June 30, 2023 and 2024, respectively, cash at banks of RMB9,352.7 million,
RMB7,821.6 million, RMB12,077.5 million and RMB11,187.4 million as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively, and cash and cash equivalents of
RMB8,050.0 million, RMB6,608.7 million, RMB11,359.6 million and RMB10,452.4 million
as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. Our total cash
balance is sufficient to cover our cash needs for operating activities and provides adequate
liquidity for our expansion and growth strategies. As such, we believe that we possess
sufficient working capital to finance our operations, after taking into account the financial
resources available to us.
Based on the foregoing, our Directors believe that our business is sustainable. Based on
the due diligence conducted, nothing has come to the attention of the Joint Sponsors that would
reasonably cause them to disagree with the Directors’ view as set out above in any material
respects.
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DESCRIPTION OF SELECTED ITEMS OF OUR CONSOLIDATED STATEMENTS OF
PROFIT OR LOSS
The following table sets forth selected items of our consolidated statements of profit or
loss for the periods indicated, derived from our consolidated statements of profit or loss set out
in the Accountant’s Report included in Appendix I to this Prospectus. Our historical results
presented below are not necessarily indicative of the results that may be expected for any future
period.
For the Y ear Ended December 31, For the Six months Ended June 30,
2021 2022 2023 2023 2024
RMB RMB RMB RMB RMB
(unaudited)
(in thousands)
Revenue from contracts
with customers /H1118/H1118/H1118/H1118/H1118466,720 905,676 1,551,607 371,491 934,599
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118(135,734) (277,963) (457,297) (144,879) (195,861)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,986 627,713 1,094,310 226,612 738,738
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,143,642) (1,879,888) (2,366,255) (1,048,991) (1,419,656)
Administrative expenses /H1118/H1118 (319,003) (373,909) (443,366) (214,997) (243,144)
Selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(211,390) (298,500) (327,249) (142,728) (198,421)
Net impairment
(losses)/gains on
financial assets /H1118/H1118/H1118/H1118/H1118(5,098) (13,039) (20,793) (7,164) (53,237)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H111814,483 43,662 66,222 13,227 34,109
Other (losses)/gains, net /H1118/H1118 (1,669) (238,055) (33,391) (63,274) 36,193
Operating loss /H1118/H1118/H1118/H1118/H1118/H1118(1,335,333) (2,132,016) (2,030,522) (1,237,315) (1,105,418)
Finance income /H1118/H1118/H1118/H1118/H1118/H111828,239 104,528 167,473 87,268 214,552
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,592) (7,548) (8,651) (4,585) (3,789)
Finance income, net /H1118/H1118/H1118/H111811,647 96,980 158,822 82,683 210,763
Share of results of
investments accounted
for using the equity
method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,530) (34,298) (112,074) (16,803) (181,633)
Fair value changes of
preferred shares and
other financial liabilities
through profit or loss /H1118/H1118 (763,984) (6,655,367) (4,760,354) (713,566) (4,012,726)
Loss before income tax /H1118/H1118 (2,090,200) (8,724,701) (6,744,128) (1,885,001) (5,089,014)
Income tax benefit
(expense) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,650 4,273 5,075 (3,490) (9,091)
Loss for the year/period /H1118 (2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Loss is attributable to:
Owners of the Company (2,061,293) (8,719,410) (6,739,021) (1,888,475) (5,098,088)
Non-controlling interests (2,257) (1,018) (32) (16) (17)
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NON-IFRS MEASURES
To supplement our consolidated statements of profit or loss which are presented in
accordance with IFRS, we use adjusted operating loss (Non-IFRS measure) and adjusted net
loss (Non-IFRS measure) as non-IFRS measures, which are not required by, or presented in
accordance with, IFRS. Our adjusted operating loss (Non-IFRS measure) and adjusted net loss
(Non-IFRS measure) as a percentage of revenue significantly narrowed during the Track
Record Period.
We define adjusted operating loss (Non-IFRS measure) as operating loss for the periods
adjusted by adding back (i) share-based payments, which are non-cash in nature, and (ii) listing
expenses, which relate to the Global Offering. We define adjusted net loss (Non-IFRS measure)
as loss for the periods adjusted by adding back (i) share-based payments, which are non-cash
in nature, (ii) listing expenses, which relate to the Global Offering, and (iii) fair value changes
on preferred shares and other financial liabilities, which are non-cash items. All preferred
shares and other financial liabilities will be reclassified to equity upon conversion, and no
longer measured at fair value going forward once converted. We believe that Non-IFRS
measures facilitate the comparisons of operating performance and provide useful information
to investors and others in understanding and evaluating our operating performance in the same
manner as it helps our management. However, our presentation of Non-IFRS measures for the
periods may not be comparable to similarly titled measures presented by other companies. The
use of Non-IFRS measures has limitations as an analytical tool, and investors should not
consider it in isolation from, or as a substitute for analysis of, our results of operations or
financial condition as reported under IFRS Accounting Standards.
The following tables reconcile Non-IFRS measures for the periods presented with the
nearest measures prepared in accordance with IFRS Accounting Standards.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Reconciliation for adjusted
operating loss (Non-IFRS
measure):
Operating loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,335,333) (2,132,016) (2,030,522) (1,237,315) (1,105,418)
Add back:
Share-based payments
(1) /H1118/H1118/H1118 196,369 173,698 341,751 178,931 240,600
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118– – 1,780 – 40,838
Adjusted operating loss
(Non-IFRS measure) /H1118/H1118/H1118/H1118(1,138,964) (1,958,318) (1,686,991) (1,058,384) (823,980)
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For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Reconciliation for adjusted net
loss (Non-IFRS measure):
Loss for the year/period /H1118/H1118/H1118 (2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Add back:
Share-based payments (1) /H1118/H1118/H1118 196,369 173,698 341,751 178,931 240,600
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118– – 1,780 – 40,838
Fair value changes of
preferred shares and other
financial liabilities
(2) /H1118/H1118/H1118/H1118763,984 6,655,367 4,760,354 713,566 4,012,726
Adjusted net loss
(Non-IFRS measure) /H1118/H1118/H1118/H1118(1,103,197) (1,891,363) (1,635,168) (995,994) (803,941)
Notes :
(1) Share-based payments relate to (i) the share awards we offered to our employees and directors under the
2018 Share Incentive Plan and (ii) the excess of the transaction price over the fair value of the Class
A ordinary shares, with reference to a third-party valuation report, which was considered compensatory
in nature in exchange for service of the founders, and therefore was recognized as share-based payment
expense and credited to share premium. For details, see Note 24 (b), Note 26(a) and Note 26(b) of the
Accountant’s Report included in Appendix I to this Prospectus.
(2) Fair value changes on preferred shares and other financial liabilities arise primarily from the changes
in the carrying amount of our preferred shares and convertible loan in connection with our financing
activities. These fair value changes are non-cash in nature. All preferred shares and other financial
liabilities will be reclassified to equity upon conversion, and no longer measured at fair value going
forward once converted.
DESCRIPTION OF SELECTED COMPONENTS OF CONSOLIDATED STATEMENTS
OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Revenue
We generate our revenues through two main business segments, namely (i) automotive
solutions which comprise product solutions and license and services, and (ii) non-automotive
solutions. Our revenue primarily derives from our automotive solutions, which reflect our
strategic focus. We also generate a small portion of our revenue from non-automotive
solutions.
FINANCIAL INFORMATION
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The following table sets forth a breakdown of our revenue by revenue source during the
periods indicated, both in absolute amounts and as percentages of total revenue.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(unaudited)
(in thousands, except for percentages)
Automotive solutions
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118208,083 44.6 319,312 35.3 506,386 32.7 192,298 51.8 222,264 23.8
License and services /H1118/H1118/H1118/H1118/H1118202,081 43.3 481,826 53.2 963,978 62.1 152,706 41.1 690,830 73.9
Subtotal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118410,164 87.9 801,138 88.5 1,470,364 94.8 345,004 92.9 913,094 97.7
Non-Automotive solutions /H1118/H1118/H1118/H111856,556 12.1 104,538 11.5 81,243 5.2 26,487 7.1 21,505 2.3
Total Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466,720 100.0 905,676 100.0 1,551,607 100.0 371,491 100.0 934,599 100.0
Automotive Solutions
Our revenue is primarily generated from automotive solutions, comprising product
solutions and license and services.
Product Solutions
During the Track Record Period, revenue generated from product solutions amounted to
RMB208.1 million, RMB319.3 million, RMB506.4 million, RMB192.3 million and RMB222.3
million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively, accounting for 44.6%, 35.3%, 32.7%, 51.8% and 23.8% of our total revenue for
the same periods, respectively. We generate revenue from the sale and delivery of our product
solutions, which combine our self-developed processing hardware with proprietary algorithms
and software, to OEMs and tier-one suppliers. The price of each product solution depends on
the type of algorithm and software involved, as well as the type and number of processing
hardware integrated.
License and Services
During the Track Record Period, revenue generated from license and services amounted
to RMB202.1 million, RMB481.8 million, RMB964.0 million, RMB152.7 million and
RMB690.8 million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively, accounting for 43.3%, 53.2%, 62.1%, 41.1% and 73.9% of our total revenue
for the same periods, respectively. See “Business — Our Products and Services — Licensing
and Services” for details of our license and services businesses.
FINANCIAL INFORMATION
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The following table sets forth a breakdown of our revenue from license and services
during the periods indicated, both in absolute amounts and as percentages of total revenue.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
License /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118132,916 28.5 237,580 26.2 536,692 34.6 36,715 9.9 582,724 62.4
Services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869,165 14.8 244,246 27.0 427,286 27.5 115,991 31.2 108,106 11.5
202,081 43.3 481,826 53.2 963,978 62.1 152,706 41.1 690,830 73.9
Our revenue generated from license and services increased significantly during the Track
Record Period, primarily driven by strong growth in the demand for licenses of various
algorithms, development tools and software for ADAS and AD solutions and related services.
In particular, the significant growth in revenue from license in 2023 and for the six months
ended June 30, 2024 was driven by licenses granted to CARIZON during such periods. Our
revenue from services decreased from RMB116.0 million for the six months ended June 30,
2023 to RMB108.1 million for the six months ended June 30, 2024, primarily due to a decrease
in the number of design and technical service contracts with revenue recognized in the first half
of 2024 compared to the same period in 2023, in accordance with our customers’ R&D project
plans.
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, six, eight,
eight, seven and five OEM customers and 15, 28, 43, 33 and 24 tier-one supplier customers
directly engaged with us for license and services contributed license and service revenues,
respectively. In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
a total of 53, 66, 83, 59 and 41 contracts generated license and services revenue, respectively.
The contract amount of the aforesaid contracts varied significantly, ranging from
approximately RMB6,000 to approximately RMB1.4 billion per contract, depending on
multiple factors such as, among others, the nature of license and service provided, the specific
demands of customers, our resources required and lengths of services.
As of June 30, 2024, the outstanding amount of trade and note receivables from license
and services business due from third parties amounted to RMB379.4 million. As of August 31,
2024, RMB52.2 million, representing 13.7% of such receivables had been subsequently settled.
As of June 30, 2024, 77.8% of the outstanding trade and note receivables from license and
services business due from third parties aged up to six months, 9.6% of the outstanding trade
and note receivables from license and services business due from third parties aged from six
months to one year and 12.6% of the outstanding trade and note receivables from license and
services business due from third parties aged over one year.
FINANCIAL INFORMATION
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As of June 30, 2024, the outstanding amount of trade and note receivables from license
and services businesses due from related parties amounted to RMB63.8 million. As of
August 31, 2024, RMB18.3 million, representing 28.7% of such receivables from had been
subsequently settled. The relatively low subsequent settlement for trade and note receivables
due from related parties was mainly because the majority of these receivables had not become
due as of the Latest Practicable Date. We will diligently monitor and collect the outstanding
trade and note receivables as they come due.
For typical license agreements where we charge licensing fees, we generally require our
customers to pay most of the licensing fees within two months from the date of delivery and
acceptance of licensed algorithms and software. Should there be a separate arrangement on
payment of ending balance, we may collect the remaining amount in installments based on
customers’ business milestones, such as SOP and mass productions. Nonetheless, we generally
require the customer to settle remaining balance within two years of acceptance of licensed
algorithms and software. For license agreements where we charge royalties, we generally grant
a credit term of one month from the date of V AT invoice issuance to customers.
For typical services agreements where we collect service fees by milestones, we generally
grant a credit term of no more than one month for down payments and a credit term of up to
two months from the date of V AT invoice issuance to customers for subsequent payments. We
typically issue V AT invoices based on customers’ business milestones, such as, among others,
off-tooling sample, SOP and mass productions.
Non-automotive Solutions
Our non-automotive solutions enable device manufacturers to design and manufacture
devices and appliances, such as lawn mowers, with enhanced levels of intelligence, leading to
better user experience. As non-automotive solutions are not our strategic focus, revenue from
non-automotive solutions as a percentage of total revenue decreased from 12.1% in 2021, to
11.5% in 2022, and further to 5.2% in 2023. Our revenue from non-automotive solutions as a
percentage of total revenue decreased from 7.1% for the six months ended June 30, 2023 to
2.3% for the six months ended June 30, 2024.
FINANCIAL INFORMATION
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Cost of Sales
Our cost of sales consists of the costs directly related to providing our solutions to our
customers. The following table sets forth a breakdown of our cost of sales, both in absolute
amounts and as percentages of total cost of sales by revenue source during the periods
indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Automotive solutions
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111865,494 48.2 121,006 43.5 280,160 61.3 95,262 65.8 129,519 66.1
License /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,775 1.3 4,722 1.7 3,147 0.7 2,076 1.4 19,294 9.9
Services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,330 10.6 53,991 19.5 103,345 22.6 25,158 17.4 29,348 15.0
Subtotal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881,599 60.1 179,719 64.7 386,652 84.6 122,496 84.6 178,161 91.0
Non-Automotive
solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111854,135 39.9 98,244 35.3 70,645 15.4 22,383 15.4 17,700 9.0
Total cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,734 100.0 277,963 100.0 457,297 100.0 144,879 100.0 195,861 100.0
Our cost of sales primarily consists of costs related to automotive solutions. In 2021, 2022
and 2023 and for the six months ended June 30, 2023 and 2024, our cost of sales was
RMB135.7 million, RMB278.0 million, RMB457.3 million, RMB144.9 million and RMB195.9
million, respectively. Our cost of sales for product solutions constituted the largest component
of our total cost of sales during the Track Record Period, amounting to RMB65.5 million,
RMB121.0 million, RMB280.2 million, RMB95.3 million and RMB129.5 million in 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively. Our cost
of sales for non-automotive solutions as a percentage to total cost of sales decreased
substantially from 39.9% in 2021 to 15.4% in 2023 and from 15.4% for the six months ended
June 30, 2023 to 9.0% for the six months ended June 30, 2024, in line with our strategic focus
to prioritize automotive solutions.
The following table sets forth a breakdown of our cost of sales by nature both in absolute
amounts and as percentages of total cost of sales.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Cost of inventories sold /H1118/H1118/H1118/H1118/H1118/H1118122,883 90.5 240,279 86.4 392,101 85.7 129,694 89.5 180,019 91.9
Employee benefit
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,851 9.5 37,684 13.6 65,196 14.3 15,185 10.5 15,842 8.1
Total cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,734 100.0 277,963 100.0 457,297 100.0 144,879 100.0 195,861 100.0
FINANCIAL INFORMATION
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In terms of cost of sales by nature, cost of inventories sold, primarily bill of materials for
processing hardware and peripheral devices, was our largest cost component. Our cost of
inventories sold as a percentage of total cost of sales decreased from 90.5% in 2021 to 85.7%
in 2023 primarily due to a relatively faster increase in employee benefit expenses associated
with provision of license and services during the Track Record Period. Our cost of inventories
sold as a percentage of total cost of sales increased from 89.5% for the six months ended June
30, 2023 to 91.9% for the six months ended June 30, 2024, primarily due to the combined effect
of (i) increased delivery volume of processing hardware and (ii) increased revenue contribution
from licenses granted to our customers, particularly CARIZON, which generally do not incur
high employee benefit expenses.
Gross Profit and Gross Profit Margin
Gross profit is equal to our revenue less cost of sales. Our gross profit as a percentage of
our revenue is our gross profit margin. Our gross profit increased significantly from RMB331.0
million in 2021 to RMB627.7 million in 2022, and further to RMB1,094.3 million in 2023,
which is in line with our revenue growth during the Track Record Period. Our gross profit
increased from RMB226.6 million for the six months ended June 30, 2023 to RMB738.7
million for the six months ended June 30, 2024. Our gross profit margin remained relatively
stable at 70.9%, 69.3% and 70.5% in 2021, 2022 and 2023, respectively. Our gross profit
margin increased from 61.0% for the six months ended June 30, 2023 to 79.0% for the six
months ended June 30, 2024. The following table sets forth our gross profit and gross profit
margin by revenue source for the periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Automotive solutions
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118142,589 68.5 198,306 62.1 226,226 44.7 97,036 50.5 92,745 41.7
License /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,141 98.7 232,858 98.0 533,545 99.4 34,639 94.3 563,430 96.7
Services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111854,835 79.3 190,255 77.9 323,941 75.8 90,833 78.3 78,758 72.9
Subtotal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118328,565 80.1 621,419 77.6 1,083,712 73.7 222,508 64.5 734,933 80.5
Non-Automotive solutions /H1118/H1118/H1118/H1118/H11182,421 4.3 6,294 6.0 10,598 13.0 4,104 15.5 3,805 17.7
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,986 70.9 627,713 69.3 1,094,310 70.5 226,612 61.0 738,738 79.0
FINANCIAL INFORMATION
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--- page 414 ---
Our gross profit and gross profit margin have been and will continue to be affected by a
number of factors, including the revenue mix of our product solutions and license and services,
our pricing strategies, the mix of automotive and non-automotive solutions, cost of inventories
sold and employee benefit expenses, as well as seasonality, among other factors. Our license
and services typically have higher gross profit margin compared to our product solutions
because our license and services incur lower cost of inventories sold as compared to our
product solutions. Our overall gross profit margin varies from period to period depending on
the evolving mix from different revenue sources.
Our gross profit margin differs for our automotive and non-automotive solutions during
the Track Record Period. The higher gross profit margin for our automotive solutions is
attributable to our higher pricing power for automotive solutions due to, among other things,
differences in solutions application scenarios, different standards required and differences in
complexity of the underlying technology.
Research and Development Expenses
Research and development expenses consist of (i) employee benefit expenses, including
salaries, benefits, and share-based payments of research and development personnel; (ii)
depreciation and amortization of property, plant and equipment, intangible assets and
right-of-use assets utilized in research and development activities; (iii) technical service fees
relating to research and development activities; (iv) outsourcing fees, primarily related to fees
incurred for outsourced personnel on research and development activities; and (v) other
expenses, including, among others, traveling expenses, utilities and property management fees.
The following table sets forth a breakdown of our research and development expenses during
the periods indicated, both in absolute amounts and as percentages of total research and
development expenses.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
RMB % RMB % RMB % RMB % RMB %
(unaudited)
(in thousands, except for percentages)
Research and
development
expenses
Employee benefit
expenses /H1118/H1118/H1118/H1118/H1118751,150 65.7 1,175,565 62.5 1,435,620 60.7 686,864 65.5 837,101 59.0
Depreciation and
amortization /H1118/H1118/H1118/H1118138,525 12.1 275,500 14.7 337,581 14.2 161,463 15.4 212,250 15.0
Technical service
fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118101,475 8.9 176,315 9.4 253,225 10.7 83,427 8.0 214,564 15.1
Outsourcing fees /H1118/H111844,985 3.9 164,293 8.7 150,821 6.4 81,732 7.8 91,591 6.5
Other expenses /H1118/H1118/H1118107,507 9.4 88,215 4.7 189,008 8.0 35,505 3.3 64,150 4.4
Total research and
development
expenses /H1118/H1118/H1118/H1118/H11181,143,642 100.0 1,879,888 100.0 2,366,255 100.0 1,048,991 100.0 1,419,656 100.0
FINANCIAL INFORMATION
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--- page 415 ---
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred
research and development expenses of RMB1,143.6 million, RMB1,879.9 million,
RMB2,366.3 million, RMB1,049.0 million and RMB1,419.7 million, respectively. Employee
benefit expenses remained the single largest component of our research and development
expenses during the Track Record Period, accounting for 65.7%, 62.5%, 60.7%, 65.5% and
59.0% of total research and development expenses in 2021, 2022 and 2023 and for the six
months ended June 30, 2023 and 2024, respectively.
We believe that continuous investment in research and development is vital to our future
growth. We will continue to invest in research and development, including recruiting additional
technology talents, acquiring necessary licenses, facilities and equipment, and developing new
processing hardware with stronger processing capacity and higher power efficiency to support
the development of our automotive solutions. As such, we expect our research and development
expenses to increase in absolute amount in the foreseeable future.
Administrative Expenses
Our administrative expenses consist of (i) employee benefit expenses, including salaries,
benefits, and share-based payments of administrative personnel; (ii) professional service and
other consulting fees in relation to legal, finance and tax and other related matters; (iii)
traveling expenses in relation to our administrative personnel; (iv) tax related surcharge; and
(v) others, including, among others, depreciation and amortization, utilities, and property
management fees. The following table sets forth a breakdown of our administrative expenses,
both in absolute amounts and as percentages of total administrative expenses for the periods
indicated.
For the Y ear Ended December 31, For the Six months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Administrative expenses
Employee benefit
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118187,756 58.9 205,582 55.0 302,245 68.2 166,971 77.7 138,719 57.1
Professional service and other
consulting fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111883,560 26.1 99,393 26.5 65,526 14.8 22,588 10.5 73,054 30.0
Traveling expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823,449 7.4 18,957 5.1 19,669 4.4 6,888 3.2 8,493 3.5
Tax related surcharges /H1118/H1118/H1118/H1118/H1118/H1118/H11182,936 0.9 9,243 2.5 19,714 4.4 3,197 1.5 3,119 1.3
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,302 6.7 40,734 10.9 36,212 8.2 15,353 7.1 19,759 8.1
Total administrative expenses /H1118/H1118/H1118319,003 100.0 373,909 100.0 443,366 100.0 214,997 100.0 243,144 100.0
FINANCIAL INFORMATION
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--- page 416 ---
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred
administrative expenses of RMB319.0 million, RMB373.9 million, RMB443.4 million,
RMB215.0 million and RMB243.1 million, respectively. Employee benefit expenses remained
the single largest component of our administrative expenses during the Track Record Period,
accounting for 58.9%, 55.0%, 68.2%, 77.7% and 57.1% of total administrative expenses in
2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively.
We expect our administrative expenses to increase in the foreseeable future as we expand
our operations. However, we expect that our administrative expenses as a percentage of total
revenue to decrease as we improve our operational efficiency and benefit from economies of
scale.
Selling and Marketing Expenses
Our selling and marketing expenses consist of (i) employee benefit expenses, including
salaries, benefits, and share-based payments of sales personnel; (ii) marketing business
development, conferences and traveling expenses incurred by sales personnel; (iii) outsourcing
fees in relation to outsourced personnel and professional service fees in connection with sales
and marketing activities; and (iv) others, including, among others, depreciation and
amortization, utilities and property management fees. The following table sets forth a
breakdown of our selling and marketing expenses for the periods indicated, both in absolute
amounts and as percentages of total selling and marketing expenses.
For the Y ear Ended December 31, For the Six months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Selling and marketing expenses
Employee benefit
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115,786 54.8 183,809 61.6 210,996 64.5 98,988 69.4 126,502 63.8
Marketing conferences and traveling
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111854,778 25.9 53,162 17.8 59,014 18.0 17,914 12.6 36,781 18.5
Outsourcing fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,468 9.7 47,516 15.9 35,967 11.0 16,854 11.8 24,294 12.2
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,358 9.6 14,013 4.7 21,272 6.5 8,972 6.2 10,844 5.5
Total selling and marketing
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118211,390 100.0 298,500 100.0 327,249 100.0 142,728 100.0 198,421 100.0
FINANCIAL INFORMATION
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--- page 417 ---
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, we incurred
selling and marketing expenses of RMB211.4 million, RMB298.5 million, RMB327.2 million,
RMB142.7 million and RMB198.4 million, respectively. Employee benefit expenses remained
the single largest component of our selling and marketing expenses during the Track Record
Period, accounting for 54.8%, 61.6%, 64.5%, 69.4% and 63.8% of total selling and marketing
expenses in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively.
We plan to continue to spend on sales and marketing to promote our brand, deepen our
relationships with our existing customers and attract new customers. As a result, we expect our
selling and marketing expenses to increase in absolute amount in the foreseeable future.
Meanwhile, we expect our selling and marketing expenses to decrease as a percentage of our
total revenue as we benefit from our enhanced brand awareness, established customer base and
economies of scale.
Net Impairment (Losses)/Gains on Financial Assets
Our impairment (losses)/gains on financial assets consist of impairment (losses)/gains
recognized from (i) trade and note receivables; and (ii) other receivables. During the Track
Record Period, we recognized net impairment losses on financial assets of RMB5.1 million,
RMB13.0 million, RMB20.8 million, RMB7.2 million and RMB53.2 million in 2021, 2022 and
2023 and for the six months ended June 30, 2023 and 2024, respectively. For details, see Note
3.1(b) of the Accountant’s Report included in Appendix I to this Prospectus.
Other Income
Our other income primarily represents (i) financial subsidies; and (ii) tax refund in
connection with V AT refunds and V AT additional deduction pursuant to government policies to
support businesses. The following table sets forth a breakdown of our other income for the
periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Other income
Financial subsidies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,810 74.6 30,503 69.9 50,238 75.9 8,474 64.1 20,669 60.6
Tax refund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,673 25.4 13,159 30.1 15,984 24.1 4,753 35.9 13,440 39.4
Total other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,483 100.0 43,662 100.0 66,222 100.0 13,227 100.0 34,109 100.0
FINANCIAL INFORMATION
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--- page 418 ---
Other (Losses)/Gains, Net
Our other (losses)/gains, net consist of (i) fair value changes of financial assets at fair
value through profit or loss, reflecting the valuation of unlisted companies that we invested in
which we hold minor interest and the valuation of wealth management products we purchased;
(ii) net foreign exchange differences resulted from changes in foreign exchange rates; (iii)
donations; (iv) (losses)/gains on disposal of subsidiaries; and (v) others. The following table
sets forth a breakdown of our other (losses)/gains, net for the periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Fair value changes of financial
assets at fair value through profit
or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,286) 316.7 29,715 (12.5) 8,852 (26.5) 121 (0.2) 21,782 60.2
Net foreign exchange differences /H1118/H111811,080 (663.9) (264,660) 111.2 (40,334) 120.8 (63,158) 99.8 11,149 30.8
Donations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,415) 264.5 — — (672) 2.0 — — — —
(Losses)/gains on disposal of
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,142) 188.3 — — 623 (1.9) — — — —
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894 (5.6) (3,110) 1.3 (1,860) 5.6 (237) 0.4 3,262 9.0
Total other (losses)/gains, net /H1118/H1118/H1118(1,669) 100.0 (238,055) 100.0 (33,391) 100.0 (63,274) 100.0 36,193 100.0
Finance Income
Our finance income consists primarily of interest income from financial assets held for
cash management purposes, such as interests on demand deposits and term deposits. In 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, we had finance income
of RMB28.2 million, RMB104.5 million, RMB167.5 million, RMB87.3 million and RMB214.6
million, respectively.
FINANCIAL INFORMATION
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--- page 419 ---
Finance Costs
Our finance costs consist of (i) interest for lease liabilities; and (ii) finance charges paid
for issuance of preferred shares to investors in relation to our financing activities. See Note 10
of the Accountant’s Report included in Appendix I to this Prospectus. The following table sets
forth a breakdown of our finance costs for the periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
R M B%R M B%R M B%R M B%R M B%
(unaudited)
(in thousands, except for percentages)
Finance costs
Interest for lease liabilities /H1118/H1118/H1118/H1118/H1118(4,711) 28.4 (7,548) 100.0 (8,651) 100.0 (4,585) 100.0 (3,789) 100.0
Finance charges paid for issuance of
preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(11,881) 71.6 — — — — — — — —
Total finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,592) 100.0 (7,548) 100.0 (8,651) 100.0 (4,585) 100.0 (3,789) 100.0
Share of Results of Investments Accounted for Using the Equity Method
We recorded share of net losses of investments accounted for using the equity method in
the amount of RMB2.5 million, RMB34.3 million, RMB112.1 million, RMB16.8 million and
RMB181.6 million in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and
2024, respectively, primarily reflecting losses of our joint ventures and associates. See Note 13
of the Accountant’s Report included in Appendix I to this Prospectus.
Fair Value Changes of Preferred Shares and Other Financial Liabilities
We recorded RMB764.0 million, RMB6,655.4 million, RMB4,760.4 million, RMB713.6
million and RMB4,012.7 million in fair value changes of preferred shares and other financial
liabilities in the consolidated statements of profit or loss in 2021, 2022 and 2023 and for the
six months ended June 30, 2023 and 2024, respectively, primarily representing changes in fair
value of preferred shares and convertible loan. See Note 28 of the Accountant’s Report
included in Appendix I to this Prospectus.
Income Tax Benefits/(Expenses)
We recorded RMB26.7 million, RMB4.3 million and RMB5.1 million income tax benefits
in 2021, 2022 and 2023, respectively, representing tax losses carried forward expected to be
realized in the future. We recorded RMB3.5 million income tax expenses for the six months
ended June 30, 2023, and RMB9.1 million income tax expenses for the six months ended
June 30, 2024, primarily due to withholding income tax on interest income from deposits in
financial institution located in various different tax jurisdictions.
FINANCIAL INFORMATION
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--- page 420 ---
Loss for the Y ear/Period
As a result of foregoing, we recorded RMB2,063.6 million, RMB8,720.4 million,
RMB6,739.1 million, RMB1,888.5 million and RMB5,098.1 million in loss for the year/period
in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively.
TAXATION
Cayman Islands
We are incorporated in the Cayman Islands. Under the current laws of the Cayman
Islands, we are not subject to tax on income or capital gain. Additionally, upon payments of
dividends by us in the Cayman Islands to our shareholders, no Cayman Islands withholding tax
will be imposed.
Hong Kong
Our subsidiaries in Hong Kong, including Horizon Hong Kong, our wholly owned
subsidiary, are subject to Hong Kong profits tax on their activities conducted in Hong Kong at
rate of 8.25% on assessable profits up to HK$2 million, and 16.5% on any part of assessable
profits over HK$2 million. The payments of dividends by our Hong Kong subsidiaries to their
shareholders are not subject to any Hong Kong withholding tax.
PRC
Our subsidiaries in China are companies incorporated under PRC law and, as such, are
subject to PRC enterprise income tax on their taxable income in accordance with the relevant
PRC income tax laws. Pursuant to the PRC Enterprise Income Tax Law, or PRC EIT Law,
which became effective on January 1, 2008, a uniform 25% enterprise income tax rate is
generally applicable to both foreign-invested enterprises and domestic enterprises, except
where a special preferential rate applies.
Five of our major subsidiaries were entitled to a preferential corporate income tax rate of
15%. During the Track Record Period, these subsidiaries have obtained their High and New
Technology Enterprises (“HNTE”) status, and hence they are entitled to a preferential tax rate
of 15% for a three-year period. This status is subject to a requirement that they reapply for
HNTE status every three years. We will apply for the renewal of the HNTE status for all of
these subsidiaries, and we believe it is more likely than not that each of these subsidiaries will
continue to qualify as a HNTE after the three-year period. Therefore, deferred tax of these
entities were calculated at a rate of 15% starting from the year when they were accredited as
HNTEs.
We are subject to V AT on the solutions provided. We are also subject to surcharges on
V AT payments in accordance with PRC law.
FINANCIAL INFORMATION
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--- page 421 ---
If our holding company in the Cayman Islands or any of our subsidiaries outside China
were deemed to be a “resident enterprise” under the PRC EIT Law, it would be subject to
enterprise income tax on its worldwide income at a rate of 25%. See “Risk Factors — Risks
Related to Doing Business in China — If we are classified as a PRC resident enterprise for PRC
enterprise income tax purposes, such classification could result in unfavorable tax
consequences to us and our non-PRC shareholders.”
DISCUSSION OF RESULTS OF OPERATIONS
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Revenue
Our revenue increased by RMB563.1 million, or 151.6%, from RMB371.5 million for the
six months ended June 30, 2023 to RMB934.6 million for the six months ended June 30, 2024,
primarily due to the growth in sales of our automotive solutions, which is the result of the
expansion of our customer base as well as increased contributions from our existing customers.
Automotive Solutions
 Product solutions. Our revenue from sales of product solutions increased by 15.6%
from RMB192.3 million for the six months ended June 30, 2023 to RMB222.3
million for the six months ended June 30, 2024, primarily due to an increase in
delivery volume of processing hardware from approximately 0.7 million units for
the six months ended June 30, 2023 to approximately 1.0 million units for the six
months ended June 30, 2024. We witnessed growth in delivery volume as a result of
(i) rapid development and robust growth in the downstream smart vehicles market
that drives the increase in demand for product solutions and (ii) a well-established
customer base of tier-one suppliers and OEMs that allows us to boost the sales of
product solutions. In particular, leveraging such strong customer base, we are able
to (i) scale deployment of our solutions with mass production of our OEM
customers’ vehicles, (ii) integrate our product solutions with more vehicle models
from our OEM customers, and (iii) sell more advanced solutions and more
components from our offerings to our OEM customers. Furthermore, we also
attracted new customers to adopt our product solutions, which further drives revenue
growth. Our automotive product solutions average selling price decreased from
RMB256 per unit of processing hardware for the six months ended June 30, 2023 to
RMB231 per unit of processing hardware for the six months ended June 30, 2024,
primarily due to our strategic decision to offer more competitive prices of existing
product solutions to certain existing customers during the first half of 2024.
 License and services. Our revenue generated from license and services increased by
352.4% from RMB152.7 million for the six months ended June 30, 2023 to
RMB690.8 million for the six months ended June 30, 2024, primarily driven by
(i) significant growth in the smart vehicle industry, which is expected to drive
FINANCIAL INFORMATION
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increasing demand for license and services related to automotive solutions and (ii)
increasing demand from OEMs and tier-one suppliers for license of algorithms,
various development tools and technical services to design and tailor their ADAS
and AD solutions. In particular, we generated RMB351.0 million revenue from
licenses and services to CARIZON, our joint venture initiative with V olkswagen
Group, representing over 50% of our revenue from license and services. The
relatively large revenue contribution was primarily due to (i) our entry into
intellectual property licensing agreements with CARIZON in 2023, with delivery of
some licenses in the first half of 2024, leading to recognition of revenue during the
same period, and (ii) realization of economic benefit for downstream transaction for
license with CARIZON. Our revenue from services decreased from RMB116.0
million for the six months ended June 30, 2023 to RMB108.1 million for the six
months ended June 30, 2024, primarily due to a decrease in the number of design
and technical service contracts with revenue recognized in the six months ended
June 30, 2024 compared to the same period in 2023, in accordance with our
customers’ R&D project plans.
Non-automotive Solutions
Due to our strategic focus on automotive solutions, our revenue from non-automotive
solutions decreased by 18.9% from RMB26.5 million for the six months ended June 30, 2023
to RMB21.5 million for the six months ended June 30, 2024.
Cost of Sales
Our total cost of sales increased by 35.2% from RMB144.9 million for the six months
ended June 30, 2023 to RMB195.9 million for the six months ended June 30, 2024, primarily
due to (i) an increase of cost of sales for product solutions by 35.9% from RMB95.3 million
for the six months ended June 30, 2023 to RMB129.5 million for the six months ended June
30, 2024 and (ii) an increase of cost of sales for license and services by 78.7% from RMB27.2
million for the six months ended June 30, 2023 to RMB48.6 million for the six months ended
June 30, 2024, partially offset by a decrease of cost of sales for non-automotive solutions from
RMB22.4 million for the six months ended June 30, 2023 to RMB17.7 million for the six
months ended June 30, 2024.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit increased from RMB226.6 million for the
six months ended June 30, 2023 to RMB738.7 million for the six months ended June 30, 2024.
Our gross profit margin increased from 61.0% for the six months ended June 30, 2023 to 79.0%
for the six months ended June 30, 2024, resulting from the changes in mix of our revenue
sources and their respective gross profit margins.
FINANCIAL INFORMATION
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Automotive Solutions
 Product solutions. Our gross profit margin from product solutions decreased from
50.5% for the six months ended June 30, 2023 to 41.7% for the six months ended
June 30, 2024, primarily due to higher cost of inventories sold in the first half of
2024 as compared to the same period in 2023. As a result, despite an increase in
revenue, our gross profit from product solutions decreased from RMB97.0 million
for the six months ended June 30, 2023 to RMB92.7 million for the six months
ended June 30, 2024. Since a significant portion of the cost of inventories sold in the
first half of each year was primarily sourced in the preceding year, the 10.5% higher
procurement prices of automotive semiconductors in 2023, in contrast to 2022, led
to higher corresponding costs for the six months ended June 30, 2024 as compared
to the same period in 2023. Bill of materials cost for processing hardwares
accounted for 92.8% and 98.2% to the total cost of automotive product solutions
sold for the six months ended June 30, 2024 and the six months ended June 30, 2023,
respectively. For details, see “– Year Ended December 31, 2023 Compared to Year
Ended December 31, 2022 – Gross Profit and Gross Profit Margin – Automotive
Solutions.” According to CIC, the increase in procurement prices of automotive
semiconductors is in line with the market trend. In addition, we also strategically
lowered the pricing for our existing automotive product solutions in order to gain
additional market share in the ADAS and AD solutions market. As a result, the
average selling price for our automotive product solutions decreased from RMB256
per unit of processing hardware for the six months ended June 30, 2023 to RMB231
per unit of processing hardware for the six months ended June 30, 2024. Despite
such decrease, our revenue generated from automotive product solutions increased
from RMB192.3 million for the six months ended June 30, 2023 to RMB222.3
million for the six months ended June 30, 2024. See “Business – Our Products and
Services – Automotive Solutions – Revenue Contribution of Automotive Solutions”
for details. Nonetheless, despite the temporary decrease in average selling price for
our product solutions, we will consistently update our existing automotive product
solutions to offer improved system performance and higher efficiency and introduce
new automotive product solutions with more advanced features and functions to
justify our premium pricing. See “— Path to Profitability — Maintaining our Gross
Margin Profile.”
 License and services. Our gross profit margin from license and services increased
from 82.2% for the six months ended June 30, 2023 to 93.0% for the six months
ended June 30, 2024, primarily due to increasing revenue contribution of license
granted, which generally had a higher gross profit margin than services, as a
percentage of total revenue from 9.9% for the six months ended June 30, 2023 to
62.4% for the six months ended June 30, 2024. Specifically, our licenses granted to
CARIZON had a high gross profit margin during the first half of 2024 because the
fulfillment of related contractual obligations requires low inventories and employee
benefit expenses during the period.
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Non-automotive Solutions
Our gross profit margin for non-automotive solutions increased from 15.5% for the six
months ended June 30, 2023, to 17.7% for the six months ended June 30, 2024, mainly due to
higher gross profit margin resulted from improved operation management and enhanced
expertise.
Research and Development Expenses
Our research and development expenses increased by 35.3% from RMB1,049.0 million
for the six months ended June 30, 2023 to RMB1,419.7 million for the six months ended June
30, 2024, primarily due to an increase in employee benefit expenses paid to our research and
development personnel, depreciation and amortization, technical service fee and other
expenses. As our revenue continues to grow and we increasingly focus on research and
development efficiency, our research and development expenses as a percentage of revenue
decreased from 282.4% for the six months ended June 30, 2023 to 151.9% for the six months
ended June 30, 2024.
Administrative Expenses
Our administrative expenses increased by 13.1% from RMB215.0 million for the six
months ended June 30, 2023 to RMB243.1 million for the six months ended June 30, 2024,
primarily due to an increase in professional service and other consulting fees including the
listing expenses, offset by a decrease in employee benefit expenses as a result of a decrease in
share-based payment expenses to administrative personnel as we awarded more share-based
payments to administrative personnel during the first half of 2023. As our revenue continues
to grow and we increasingly focus on administrative efficiency, our administrative expenses as
a percentage of total revenue decreased from 57.9% for the six months ended June 30, 2023
to 26.0% for the six months ended June 30, 2024.
Selling and Marketing Expenses
Our selling and marketing expenses increased by 39.0% from RMB142.7 million for the
six months ended June 30, 2023 to RMB198.4 million for the six months ended June 30, 2024,
which was primarily due to an increase in personnel hired to promote our new and existing
automotive solutions and marketing and travel expenses. As our revenue continues to grow and
we increasingly focus on sales and marketing efficiency, our selling and marketing expenses
as a percentage of total revenue decreased from 38.4% for the six months ended June 30, 2023
to 21.2% for the six months ended June 30, 2024.
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Net Impairment (Losses)/Gains on Financial Assets
Our net impairment losses on financial assets increased by 643.1% from RMB7.2 million
for the six months ended June 30, 2023 to RMB53.2 million for the six months ended June 30,
2024, primarily due to an increase in loss allowance for trade receivables with growing aging
of certain customers in accordance with expected credit loss model, as well as loss allowance
of certain trade receivables.
Other Income
Our other income significantly increased by 157.9% from RMB13.2 million for the six
months ended June 30, 2023 to RMB34.1 million for the six months ended June 30, 2024,
primarily due to an increase of financial subsidies from RMB8.5 million for the six months
ended June 30, 2023 to RMB20.7 million for the six months ended June 30, 2024 as well as
an increase in extra V AT input deductibles we enjoyed based on government policies to support
businesses.
Other (Losses)/Gains, Net
We recorded other losses, net of RMB63.3 million for the six months ended June 30, 2023
and other gains, net of RMB36.2 million for the six months ended June 30, 2024. Such changes
were primarily driven by a decrease of net foreign exchange losses of RMB63.2 million for the
six months ended June 30, 2023 to net foreign exchange gains of RMB11.1 million for the six
months ended June 30, 2024 resulting from changes in foreign exchange rate as well as our
management control of foreign exchange risks and increased fair value changes of financial
assets of FVTPL from RMB0.1 million for the six months ended June 30, 2023 to RMB21.8
million for the six months ended June 30, 2024.
Operating Loss
As a result of the foregoing, we recorded operating losses of RMB1,237.3 million and
RMB1,105.4 million for the six months ended June 30, 2023 and 2024, respectively.
Net Finance Income
Our net finance income increased by 154.9% from RMB82.7 million for the six months
ended June 30, 2023 to RMB210.8 million for the six months ended June 30, 2024, driven by
an increase in interest income from financial assets held for cash management purposes.
Share of Results of Investments Accounted for Using the Equity Method
Our share of net losses of investments accounted for using the equity method significantly
increased from RMB16.8 million for the six months ended June 30, 2023 to RMB181.6 million
for the six months ended June 30, 2024, mainly due to net loss of CARIZON, our joint venture
initiative with V olkswagen Group.
FINANCIAL INFORMATION
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Fair V alue Changes of Preferred Shares and Other Financial Liabilities
Our fair value changes of preferred shares and other financial liabilities significantly
increased from RMB713.6 million for the six months ended June 30, 2023 to RMB4,012.7
million for the six months ended June 30, 2024, primary due to changes in the valuation of our
Company.
Income Tax Benefits/(Expenses)
We recorded RMB3.5 million and RMB9.1 million in income tax expenses for the six
months ended June 30, 2023 and 2024, respectively, primarily due to withholding income tax
on interest income from deposits in financial institution located in various different tax
jurisdictions.
Loss for the Period
As a result of the foregoing, we recorded loss for the periods of RMB1,888.5 million and
RMB5,098.1 million for the six months ended June 30, 2023 and 2024, respectively.
Y ear Ended December 31, 2023 Compared to Y ear Ended December 31, 2022
Revenue
Our revenue increased significantly by 71.3% from RMB905.7 million in 2022 to
RMB1,551.6 million in 2023, primarily due to the expansion of our customer base as well as
increased spending from our existing customers.
Automotive Solutions
 Product solutions. Our revenue from sales of product solutions increased by 58.6%
from RMB319.3 million in 2022 to RMB506.4 million in 2023, primarily due to an
increase in delivery volume of processing hardware from approximately 1.5 million
units in 2022 to approximately 2.1 million units in 2023. Apart from an increase in
delivery volume, we also witnessed an increase in automotive product solutions
average selling price from RMB213 per unit of processing hardware in 2022 to
RMB239 per unit of processing hardware in 2023. Despite the deceleration in the
global average price of automotive semiconductors of approximately 5.0% in 2023,
we nonetheless witnessed robust increase in automotive product solutions average
selling price. This growth was primarily driven by an increase in revenue
contribution from AD solutions, namely Horizon Pilot, which had a higher average
selling price than ADAS solutions, namely Horizon Mono. We witnessed growth in
both delivery volume and automotive product solutions average selling price as a
result of (i) rapid development and robust growth in the downstream smart vehicles
market that drives the increase in demand for product solutions, (ii) increased
penetration from AD solutions that leads to higher dollar content per vehicle and
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(iii) a well-established customer base of tier-one suppliers and OEMs that allows us
to boost the sales of product solutions. In particular, leveraging such strong
customer base, we are able to (i) scale deployment of our solutions with mass
production of our OEM customers’ vehicles, (ii) integrate our product solutions with
more vehicle models from our OEM customers, and (iii) sell more advanced
solutions and more components from our offerings to our OEM customers.
Furthermore, we also attracted new customers to adopt our product solutions, which
further drives revenue growth.
 License and services. Our revenue generated from license and services increased by
100.1% from RMB481.8 million in 2022 to RMB964.0 million in 2023, primarily
driven by (i) significant growth in the smart vehicle industry, which is expected to
drive increasing demand for license and services related to automotive solutions and
(ii) increasing demand from OEMs and tier-one suppliers for license of algorithms,
various development tools and technical services to design and tailor their ADAS
and AD solutions. As a result, we witnessed an increase in the number and value of
contracts with customers. In 2023, we attracted a number of new customers who
contributed license and services revenue. The number of license and services
contract with revenue recorded during the year increased from 66 in 2022 to 83 in
2023.
Non-automotive Solutions
Due to our strategic focus on automotive solutions, our revenue from non-automotive
solutions decreased from RMB104.5 million in 2022 to RMB81.2 million in 2023, which is
driven by a decrease in revenue from distributors.
Cost of Sales
Our total cost of sales increased by 64.5% from RMB278.0 million in 2022 to RMB457.3
million in 2023, primarily due to (i) an increase of cost of sales for product solutions by
131.5% from RMB121.0 million in 2022 to RMB280.2 million in 2023 and (ii) an increase of
cost of sales for license and services by 81.4% from RMB58.7 million in 2022 to RMB106.5
million in 2023, partially offset by a decrease in cost of sales from non-automotive solutions
from RMB98.2 million in 2022 to RMB70.6 million in 2023.
Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit increased from RMB627.7 million in 2022
to RMB1,094.3 million in 2023.
Our gross profit margin remained relatively stable at 69.3% in 2022 and 70.5% in 2023,
resulting from the changes in mix of our revenue sources and their respective gross profit
margins.
FINANCIAL INFORMATION
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Automotive Solutions
 Product solutions. Our gross profit margin from product solutions decreased from
62.1% in 2022 to 44.7% in 2023, primarily due to the 10.5% higher procurement
prices of automotive semiconductors acquired in 2023 compared to 2022, and hence
the higher cost of inventories sold in 2023 compared to 2022. Bill of materials cost
for processing hardwares accounted for 97% in the total cost of automotive product
solutions sold in 2023 and 2022, respectively. We incurred higher purchase price in
procurements as a result of the global supply shortage of auto parts. According to
CIC, the increase in procurement prices of automotive semiconductors is in line with
the market trend. In addition, we also lowered the pricing for our Horizon Mono in
order to gain market share in the ADAS solutions market. As a result, despite the
overall increase in the automotive product solutions average selling price, the
average selling price for Horizon Mono decreased from RMB168 per unit of
processing hardware in 2022 to RMB157 per unit of processing hardware in 2023.
Nonetheless, due to such strategy, our revenue generated from sales of Horizon
Mono increased from RMB181.9 million in 2022 to RMB263.3 million in 2023.
According to CIC, ADAS and AD solution providers can and may strategically
choose to lower their pricing to gain market share as product matures and production
volume scales. See “Business – Our Products and Services – Automotive Solutions
– Revenue Contribution of Automotive Solutions” for details.
 License and services. Our gross profit margin from license and services remained
relative stable at 87.8% and 89.0% in 2022 and 2023, respectively. The slight
fluctuations in gross profit margin was primarily resulted from relatively lower
fulfillment costs for our license and services rendered to customers due to
economies of scale and enhanced expertise. Furthermore, the increase overall gross
profit margin of license and services was also driven by increasing revenue
contribution of license granted, which generally had a higher gross profit margin
than services, as a percentage of total revenue from 26.2% in 2022 to 34.6% in 2023.
Non-automotive Solutions
Our gross profit margin for non-automotive solutions increased from 6.0% in 2022 to
13.0% in 2023 mainly due to higher gross profit margin of non-automotive product solution as
a result of our enhanced expertise.
Research and Development Expenses
Our research and development expenses increased by 25.9% from RMB1,879.9 million in
2022 to RMB2,366.3 million in 2023, which was primarily due to an increase in employee
benefit expenses paid to our research and development personnel. As our revenue continues to
grow and we increasingly focus on research and development efficiency, our research and
development expenses as a percentage of revenue decreased from 207.6% in 2022 to 152.5%
in 2023.
FINANCIAL INFORMATION
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Administrative Expenses
Our administrative expenses increased by 18.6% from RMB373.9 million in 2022 to
RMB443.4 million in 2023, primarily due to an increase in employee benefit expenses paid to
employees performing administrative functions. As our revenue continues to grow and we
increasingly focus on administrative efficiency, our administrative expenses as a percentage of
total revenue decreased from 41.3% in 2022 to 28.6% in 2023.
Selling and Marketing Expenses
Our selling and marketing expenses increased by 9.6% from RMB298.5 million in 2022
to RMB327.2 million in 2023, which was primarily due to an increase in personnel hired to
promote our new and existing automotive solutions. As our revenue continues to grow and we
increasingly focus on sales and marketing efficiency, our selling and marketing expenses as a
percentage of total revenue decreased from 33.0% in 2022 to 21.1% in 2023.
Net Impairment Losses on Financial Assets
Our net impairment losses on financial assets increased by 59.5% from RMB13.0 million
in 2022 to RMB20.8 million in 2023, primarily due to our business expansion that leads a
corresponding increase in loss allowance for our trade receivables.
Other Income
Our other income increased by 51.7% from RMB43.7 million in 2022 to RMB66.2
million in 2023, primarily due to an increase of financial subsidies from RMB30.5 million in
2022 to RMB50.2 million in 2023 as well as an increase in tax refund resulting from V AT
refund based on government policies to support businesses.
Other Losses, Net
Our other losses, net decreased from RMB238.1 million in 2022 to RMB33.4 million in
2023, primarily because our net foreign exchange losses decreased from RMB264.7 million in
2022 to RMB40.3 million in 2023, reflecting the changes in foreign exchange rate as well as
our management and control of foreign exchange risks.
Operating Loss
As a result of the foregoing, we recorded operating losses of RMB2,132.0 million and
RMB2,030.5 million in 2022 and 2023.
FINANCIAL INFORMATION
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Net Finance Income
Our net finance income increased by 63.8% from RMB97.0 million in 2022 to RMB158.8
million in 2023, driven by an increase in interest income from financial assets held for cash
management purposes.
Share of Results of Investments Accounted for Using the Equity Method
Our share of net losses of investments accounted for using the equity method increased
by 226.8% from RMB34.3 million in 2022 to RMB112.1 million in 2023, mainly due to net
loss of CARIZON, our joint venture initiative with V olkswagen Group.
Fair V alue Changes of Preferred Shares and Other Financial Liabilities
Our fair value changes of preferred shares and other financial liabilities decreased by
28.5% from RMB6,655.4 million in 2022 to RMB4,760.4 million in 2023, due to changes in
the valuation of our Company.
Income Tax Benefits
Our income tax benefits increased by 18.8% from RMB4.3 million in 2022 to RMB5.1
million in 2023 as we accumulated tax losses carried forward to be realized.
Loss for the Y ear
As a result of the foregoing, we recorded loss for the year of RMB8,720.4 million and
RMB6,739.1 million in 2022 and 2023.
Y ear Ended December 31, 2022 Compared to Y ear Ended December 31, 2021
Revenue
Our revenue increased by 94.1% from RMB466.7 million in 2021 to RMB905.7 million
in 2022, primarily due to the expansion of our customer base as well as increased spendings
from our existing customers.
Automotive Solutions
 Product solutions. Our revenue from the sales of product solutions increased by
53.5% from RMB208.1 million in 2021 to RMB319.3 million in 2022, primarily due
to an increase in delivery volume from approximately 1.0 million units in 2021 to
approximately 1.5 million units in 2022. Apart from an increase in delivery volume,
we also witnessed an increase in automotive product solutions average selling price
from RMB208 per unit of processing hardware in 2021 to RMB213 per unit of
processing hardware in 2022. According to CIC, the increase in automotive product
FINANCIAL INFORMATION
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solutions average selling price is generally in line with the industry norm. We
witnessed growth in both delivery volume and automotive product solutions average
selling price as a result of (i) rapid development and robust growth in the
downstream smart vehicles market that drives the increase in demand for product
solutions, (ii) increased penetration from AD solutions that leads to higher dollar
content per vehicle and (iii) a well-established customer base of tier-one suppliers
and OEMs that allows us to boost the sales of product solutions. In particular,
leveraging such strong customer base, we are able to (i) scale deployment of our
solutions with mass production of our OEM customers’ vehicles, (ii) integrate our
product solutions with more vehicle models from our OEM customers, and (iii) sell
more advanced solutions and more components from our offerings to our OEM
customers. Furthermore, we also attract new customers to adopt our product
solutions, which further drives revenue growth.
 License and services. Our license and services revenue increased significantly by
138.4% from RMB202.1 million in 2021 to RMB481.8 million in 2022, primarily
driven by (i) significant growth in the smart vehicle industry, which is expected to
drive increasing demand for license and services related to automotive solutions and
(ii) increasing demand from OEMs and tier-one suppliers for license of algorithms,
various development tools and technical services to design and tailor their ADAS
and AD solutions. As a result, we witnessed an increase in the number of contracts
with customers. We attracted a number of new customers who contributed license
and services revenue. We also generated additional license and services revenue
from existing customers. The number of license and services contract with revenue
recorded during the year increased from 53 in 2021 to 66 in 2022.
Non-automotive Solutions
Our revenue from non-automotive solutions amounted to RMB56.6 million and
RMB104.5 million in 2021 and 2022, respectively, driven by an increase in revenue from
distributors.
Cost of Sales
Our cost of sales increased by 104.8% from RMB135.7 million in 2021 to RMB278.0
million in 2022, primarily due to (i) an increase of cost of sales for product solutions by 84.8%
from RMB65.5 million in 2021 to RMB121.0 million in 2022, (ii) an increase of cost of sales
for license and services by 264.6% from RMB16.1 million in 2021 to RMB58.7 million in 2022
and (iii) an in increase in cost of sales from non-automotive solutions by 81.5% from RMB54.1
million in 2021 to RMB98.2 million in 2022.
FINANCIAL INFORMATION
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Gross Profit and Gross Profit Margin
As a result of the foregoing, our gross profit increased significantly from RMB331.0
million in 2021 to RMB627.7 million in 2022.
Our gross profit margin remained relatively stable at 70.9% in 2021 and 69.3% in 2022,
resulting from the changes in mix of our revenue sources and their respective gross profit
margins.
Automotive Solutions
 Product solutions . Our gross profit margin from product solutions decreased from
68.5% in 2021 to 62.1% in 2022, primarily due to the 14.5% higher procurement
prices of automotive semiconductors acquired in 2022 compared to 2021 as a result
of the global auto-part supply shortage in 2021 and 2022, and hence higher cost of
inventories sold for product solutions in 2022 compared to 2021. Bill of materials
cost for processing hardwares accounted for 97% and 94% of the total cost of
automotive product solutions sold in 2022 and 2021, respectively. According to CIC,
the increase in procurement prices of automotive semiconductors is in line with the
market trend. In addition, we also strategically lowered the pricing for our Horizon
Mono in order to gain market share in the ADAS solutions market. As a result,
despite the overall increase in the automotive product solutions average selling
price, the average selling price for Horizon Mono decreased from RMB185 per unit
of processing hardware in 2021 to RMB168 per unit of processing hardware in 2022.
Nonetheless, due to such strategy, our revenue generated from sales of Horizon
Mono increased from RMB104.5 million in 2021 to RMB181.9 million in 2022.
According to CIC, ADAS and AD solution providers can and may strategically
choose to lower their pricing to gain market share as product matures and production
volume scales. See “Business – Our Products and Services – Automotive Solutions
– Revenue Contribution of Automotive Solutions” for details.
 License and services. Our gross profit margin from license and services decreased
from 92.0% in 2021 to 87.8% in 2022 as a result of relatively higher costs incurred
to provide customized services for our customers in 2022. Our gross profit margin
for services decreased from 79.3% in 2021 to 77.9% in 2022. Furthermore, the
decrease overall gross profit margin from license and services was also driven by
increasing revenue contribution of services provided, which generally had a lower
gross profit margin than license granted, as a percentage of total revenue from
14.8% in 2021 to 27.0% in 2022.
FINANCIAL INFORMATION
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Non-automotive Solutions
Our gross profit margin for non-automotive solutions increased from 4.3% in 2021 to
6.0% in 2022 mainly due to a decrease in average cost of sales of our non-automotive product
solutions.
Research and Development Expenses
Our research and development expenses increased by 64.4% from RMB1,143.6 million in
2021 to RMB1,879.9 million in 2022, primarily due to an increase in employee benefit
expenses paid to our research and development personnel. As our revenue continues to grow
and we increasingly focus on research and development efficiency, our research and
development expenses as a percentage of revenue decreased from 245.0% in 2021 to 207.6%
in 2022.
Administrative Expenses
Our administrative expenses increased by 17.2% from RMB319.0 million in 2021 to
RMB373.9 million in 2022, which was primarily due to an increase in employee benefit
expenses paid to employees performing administrative functions to support our business. As
our revenue continues to grow and we increasingly focus on administrative efficiency, our
administrative expenses as a percentage of revenue decreased from 68.3% in 2021 to 41.3% in
2022.
Selling and Marketing Expenses
Our selling and marketing expenses increased by 41.2% from RMB211.4 million in 2021
to RMB298.5 million in 2022, which was primarily due to an increase in personnel hired to
promote our new and existing solutions to customers. As our revenue continues to grow and
we increasingly focus on sales and marketing efficiency, our selling and marketing expenses
as a percentage of revenue decreased from 45.3% in 2021 to 33.0% in 2022.
Net Impairment Losses on Financial Assets
Our net impairment losses on financial assets increased by 155.8% from RMB5.1 million
in 2021 to RMB13.0 million in 2022, primarily due to our business expansion that leads a
corresponding increase in loss allowance for our trade receivables.
Other Income
Our other income increased significantly from RMB14.5 million in 2021 to RMB43.7
million in 2022, primarily due to an increase in financial subsidies from RMB10.8 million in
2021 to RMB30.5 million in 2022 as well as an increase in tax refund attributable to V AT
refund based on government policies to support businesses.
FINANCIAL INFORMATION
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Other Losses, Net
We incurred other losses, net, of RMB1.7 million in 2021 and RMB238.1 million in 2022,
primarily because we recorded net foreign exchange losses of RMB264.7 million in 2022
primarily for the monetary assets and liabilities denominated in RMB held by the Company and
its subsidiaries outside mainland China whose functional currency U.S. dollar fluctuated
significantly in 2022.
Operating Loss
As a result of the foregoing, we recorded operating loss of RMB1,335.3 million and
RMB2,132.0 million in 2021 and 2022, respectively.
Net Finance Income
In 2021 and 2022, we had net finance income of RMB11.6 million and RMB97.0 million,
respectively, driven by an increase in interest income from financial assets held for cash
management purposes.
Share of Results of Investments Accounted for Using the Equity Method
Our share of net losses of investments accounted for using the equity method increased
by 1,255.7% from RMB2.5 million in 2021 to RMB34.3 million in 2022, driven by the loss of
associates and joint ventures that we invested in.
Fair V alue Changes of Preferred Shares and Other Financial Liabilities
Our fair value changes of preferred shares and other financial liabilities increased by
771.1% from RMB764.0 million in 2021 to RMB6,655.4 million in 2022 due to changes in the
valuation of our Company.
Income Tax Benefits
Our income tax benefits decreased from RMB26.7 million in 2021 to RMB4.3 million in
2022 as we utilized part of our accumulative tax losses carried forward in 2022.
Loss for the Y ear
As a result of the foregoing, we recorded loss for the year of RMB2,063.6 million and
RMB8,720.4 million in 2021 and 2022.
FINANCIAL INFORMATION
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DISCUSSION OF SELECTED ITEMS FROM OUR CONSOLIDATED STATEMENTS
OF FINANCIAL POSITION
The following table sets forth selected items from our consolidated statements of
financial position as of the dates indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
ASSETS
Non-current assets
Property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118123,866 220,945 433,261 578,432
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170,984 258,357 217,369 191,268
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,944 88,916 99,967 100,648
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118197,440 319,075 302,906 283,532
Investments accounted for
using the equity method /H1118/H1118/H111827,082 64,034 1,107,659 853,495
Financial assets at fair value
through profit or loss /H1118/H1118/H1118/H1118/H111846,338 68,838 80,825 85,639
Restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,512 8,564 8,098 8,116
Prepayments and other non-
current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,279 62,819 85,713 107,885
Total non-current assets /H1118/H1118/H1118683,445 1,091,548 2,335,798 2,209,015
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118113,912 363,532 790,898 703,099
Prepayments and other
current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118282,992 206,452 136,729 173,735
Trade and note receivables /H1118/H1118169,355 420,672 541,091 687,601
Term deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,284,293 1,204,365 — —
Restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,856 2 709,716 726,865
Cash and cash equivalents /H1118/H1118/H11188,050,034 6,608,657 11,359,641 10,452,449
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H11189,913,442 8,803,680 13,538,075 12,743,749
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,596,887 9,895,228 15,873,873 14,952,764
LIABILITIES
Non-current liabilities
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,266 154,176 112,346 88,963
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118— 12,515 112,844 243,895
Other non-current liabilities /H1118/H11187,570 15,652 61,954 47,603
Total non-current liabilities /H1118 84,836 182,343 287,144 380,461
FINANCIAL INFORMATION
– 425 –


--- page 436 ---
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Current liabilities
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,040 3,822 11,164 13,648
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,546 63,079 24,875 12,143
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,248 50,615 52,010 43,944
Employee benefit obligations /H1118 242,418 304,333 384,042 250,657
Accruals and other payables /H1118 270,525 278,245 540,444 284,312
Preferred shares and other
financial liabilities at fair
value through profit or
loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195 26,451,328 39,239,578 43,782,659
Total current liabilities /H1118/H1118/H1118/H111818,905,972 27,151,422 40,252,113 44,387,363
Total net current liabilities /H1118(8,992,530) (18,347,742) (26,714,038) (31,643,614)
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,990,808 27,333,765 40,539,257 44,767,824
Assets
Property, Plant and Equipment
Our property, plant and equipment primarily consist of computer and electronic
equipment, leasehold improvements, vehicles and vehicle devices, office furniture and
equipment, and construction in progress. The following table sets forth the breakdown of our
property, plant and equipment as of the dates indicated.
As of December 31, As of June 30,
2021 2022 2023 2024
(RMB in thousands)
Property, plant and
equipment
Computers and electronic
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881,365 119,852 178,673 220,268
Leasehold improvements /H1118 18,472 30,010 19,132 15,431
Vehicles and vehicle
devices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,664 24,966 34,385 50,251
Office furniture and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,488 4,418 3,773 3,226
Construction in progress /H1118 4,877 41,699 197,298 289,256
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118123,866 220,945 433,261 578,432
FINANCIAL INFORMATION
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--- page 437 ---
Our property, plant and equipment increased from RMB123.9 million as of December 31,
2021 to RMB220.9 million as of December 31, 2022, to RMB433.3 million as of December 31,
2023, and further to RMB578.4 million as of June 30, 2024, primarily due to procurement of
computers and electronic equipment as we expand our operations, purchases of vehicles and
vehicles devices for research and development purposes and addition of construction in
progress attributable to the construction of a new office building.
Right-of-use Assets
Our right-of-use assets mainly represent our lease of office premises, land use right and
automobile leases. Our right-of-use assets increased from RMB171.0 million as of December
31, 2021 to RMB258.4 million as of December 31, 2022, primarily attributable to an increase
in our lease of office premises. Our right-of-use assets further decreased to RMB217.4 million
as of December 31, 2023 and to RMB191.3 million as of June 30, 2024, primarily attributable
to depreciation of existing leases without significant lease addition.
Deferred Tax Assets
We recognize deferred tax assets based on estimates that is probable to generate sufficient
taxable profits in the foreseeable future against which the deductible losses will be utilized.
Our deferred tax assets are offset when there is a legally enforceable right to offset current
income tax recoverable against current income tax liabilities and when the deferred income tax
assets and liabilities relate to income tax levied by the same taxation authority on either the
same taxable entity or different taxable entities where there is an intention to settle the balances
on a net basis. Our deferred tax assets increased from RMB79.9 million as of December 31,
2021 to RMB88.9 million as of December 31, 2022, and further to RMB100.0 million as of
December 31, 2023, primarily attributable to accumulative tax losses to be utilized. Our
deferred tax assets further increased to RMB100.6 million as of June 30, 2024.
Intangible Assets
Our intangible assets consist primarily of licensed technology and computer software.
Our intangible assets were RMB197.4 million, RMB319.1 million, RMB302.9 million and
RMB283.5 million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively.
We typically procure intangible assets at the beginning stage of the development cycle for each
generation of our automotive solutions. Throughout the Track Record Period, the change in the
carrying value of our intangible assets was affected by the procurement and amortization of our
licensed technologies.
Investments Accounted for Using the Equity Method
Our investments accounted for using the equity method represent investments related to
our associates and joint ventures. Our investments accounted for using the equity method were
RMB27.1 million, RMB64.0 million, RMB1,107.7 million and RMB853.5 million,
respectively, as of December 31, 2021, 2022 and 2023 and June 30, 2024. The substantial
change in 2023 was primarily driven by the formation of a joint venture, CARIZON, with
V olkswagen Group. See Note 13 of the Accountant’s Report in Appendix I to the Prospectus.
FINANCIAL INFORMATION
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--- page 438 ---
We strategically partner with affiliates of V olkswagen through joint venture CARIZON,
which was established in 2023. CARIZON engages in the business of research and
development, manufacture of autonomous driving application software and self-driving
systems, and it also provides aftersales services, training, consulting, testing and technical
services of its products. In the short term, its primary customer will be V olkswagen Group, and
its products will be applied towards vehicles V olkswagen sells in China. V olkswagen holds
60% and we hold 40% of the equity interest in CARIZON, respectively. As decisions about
activities significantly affecting CARIZON’s returns require the unanimous consent of
CARIAD and us, CARIZON is jointly controlled by both parties and therefore CARIZON was
accounted for as investments accounted for using the equity method in our financial statements
during the Track Record Period.
The following table sets forth the carrying amount movement of CARIZON in 2023 and
for the six months ended June 30, 2024, respectively.
Y ear Ended
December 31,
Six Months
Ended June 30,
2023 2024
(RMB in thousands)
Carrying amount at the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 965,901
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,351,000 2,790
Share of net loss of CARIZON /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(88,395) (169,141)
Elimination of unrealized profits and losses from
downstream transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(296,704) (105,458)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,393
Carrying amount at the end of the year/period /H1118/H1118/H1118/H1118965,901 699,485
The decrease in the carrying amount of our investments in CARIZON was primarily
attributable to the combined effect of our contribution into CARIZON’s registered capital,
share of net loss of CARIZON based on our percentage ownership and elimination of
unrealized profits and losses from downstream transactions. As the recoverable amount is
higher than the carrying amount of the investment in CARIZON as of December 31, 2023 and
June 30, 2024, no impairment is recognized in 2023 and for the six months ended June 30,
2024.
FINANCIAL INFORMATION
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--- page 439 ---
Financial Assets at Fair V alue through Profit or Loss
Our non-current financial assets at fair value through profit or loss consist of our
investments in equity securities of unlisted companies in which we hold minority interest. Our
non-current financial assets at fair value through profit or loss increased from RMB46.3
million as of December 31, 2021 to RMB68.8 million as of December 31, 2022 to RMB80.8
million as of December 31, 2023, and further to RMB85.6 million as of June 30, 2024. The
changes were primarily due to changes in valuation of unlisted companies that we invested in.
See Note 3.3 of the Accountant’s Report in Appendix I to the Prospectus.
We have been in the past, and expect to continue, prudently evaluating and considering
a wide array of potential investments in emerging businesses that are complementary to our
business to implement our long-term growth strategy and develop our solutions. We have
dedicated personnel in place who are responsible for identifying, reviewing and pursuing
strategic investments, including investments in unlisted companies. These personnel have
extensive experience in corporate finance and mergers and acquisitions in the technology and
automotive industries. We select our investment targets based on the underlying industry, the
target’s technology capabilities, the target’s business and financial performance and the
synergy between the target and us. We undertake prudent evaluation and approval process in
making investment decisions. Upon identifying suitable targets, preliminary due diligence will
be conducted by a project team involving multiple departments. The due diligence findings will
be submitted for preapproval by our management team. Upon our management team’s
preapproval, we will organize a project working group and engage third-party professionals to
conduct comprehensive due diligence, negotiate with the target company and evaluate risks
associated with the investment. Any external investments exceeding US$5.0 million is subject
to approval by the board of directors. The maximum exposure at the end of the reporting period
is the carrying amount of these investments. We have managers in charge of purchasing,
monitoring and adjusting our investments, evaluating the risk associated and our liquidity,
preparing analysis and reporting to the management team periodically. We adopt a strict and
prudent internal control mechanism for our investments in financial assets. We closely monitor
the operational and financial performance of unlisted companies that we invest in. Pursuant to
our investment strategy, our management team is responsible for managing our investments in
financial assets with the aim to minimize the financial risks.
We will comply with relevant 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 Listing.
FINANCIAL INFORMATION
– 429 –


--- page 440 ---
Prepayments and Other Assets
The following table sets forth the breakdown of our prepayments, other current assets and
other assets as of the dates indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Prepayments and other
assets
Non-current:
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,359 17,067 16,856 17,590
Prepayments for property,
plant and equipment /H1118/H1118/H1118/H111816,151 6,266 12,826 10,445
Prepayments for intangible
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118142 4,027 2,824 4,286
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,627 2,058 1,544 1,392
Prepayments for
construction in progress /H1118 — 33,401 61 13,423
Prepaid bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118— — 51,602 38,417
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118— — — 24,755
Less: loss allowance /H1118/H1118/H1118/H1118/H1118— — — (2,423)
Prepayments and other non-
current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,279 62,819 85,713 107,885
Current:
Prepayments for suppliers /H1118 221,118 154,152 65,284 64,629
Prepaid bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118— — 26,370 26,370
Input V AT to be deducted /H1118 61,449 32,169 23,345 73,424
Amounts due from a
related party /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118— — 18,383 1,572
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118348 6,843 2,356 1,350
Rental and other
refundable deposits /H1118/H1118/H1118/H1118/H111880 399 1,332 2,840
Deferred listing expense /H1118/H1118/H1118— — — 3,667
Commitment derivative /H1118/H1118/H1118— 13,017 — —
Less: loss allowance /H1118/H1118/H1118/H1118/H1118(3) (128) (341) (117)
Prepayments and other
current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118282,992 206,452 136,729 173,735
Total prepayments and
other assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118315,271 269,271 222,442 281,620
FINANCIAL INFORMATION
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--- page 441 ---
Our non-current portion of prepayments and other assets include (i) rental deposits, (ii)
prepayments for property, plant and equipment, (iii) prepayments for intangible assets, (iv)
other receivables, (v) prepayments for construction in progress, (vi) prepaid bonuses paid to
recruit certain top-talents to encourage their retention and these bonuses are linked to certain
specified service period and (vii) trade receivables. Our non-current portion of prepayments
and other assets increased from RMB32.3 million as of December 31, 2021 to RMB62.8
million as of December 31, 2022 primarily driven by our prepayments for construction in
progress for our office building in Shanghai. Our non-current portion of prepayments and other
assets increased to RMB85.7 million as of December 31, 2023, primarily driven by an increase
in prepaid bonuses, partially offset by decreases in prepayment for construction in progress. It
further increased to RMB107.9 million as of June 30, 2024, primarily driven by an increase in
non-current trade receivables relating to certain contracts where miscellaneous final payments
were linked to certain long-term performance milestones of customers such as SOPs but no
later than a mutually agreed time.
Our current portion of prepayments and other assets include (i) prepayments for suppliers,
(ii) prepaid bonuses paid to recruit certain top-talents to encourage their retention and these
bonuses are linked to certain specified service period, (iii) input V AT to be deducted, (iv)
amounts due from a related party, (v) other receivables, (vi) rental and other deposits and (vii)
commitment derivative representing our commitment to issue convertible loan to CARIAD at
a predetermined loan amount commencing from sign-off of corresponding agreements till we
received the loan amount. The commitment is accounted for as a derivative and recorded as a
financial asset at fair value through profit or loss. Our current portion of prepayments and other
assets amounted to RMB283.0 million, RMB206.5 million, RMB136.7 million and RMB173.7
million as of December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. The decrease
in the current portion of our prepayments and other assets from 2021 to 2023 was primarily due
to (i) a decrease in prepayment for suppliers as we made relatively large amounts of
prepayments in 2021 and 2022 for supply chain management purposes, (ii) a decrease in input
V AT to be deducted reflecting temporary government refunds on input V AT tax in the midst of
COVID-19 pandemic eligible for certain businesses, partially offset by an increase in amounts
due from a related party reflecting our support for CARIZON during its establishment phase,
the amount of which is expected to be settled prior to the Global Offering. In addition, our
commitment derivative decreased from RMB13.0 million as of December 31, 2022 to nil and
nil as of December 31, 2023 and June 30, 2024 due to the derecognition of commitment
derivative upon the issuance of convertible loan in 2023. The current portion of our
prepayments and other assets subsequently increased to RMB173.7 million as of June 30, 2024,
primarily due to an increase in input V AT to be deducted along with our continuous purchase
of assets and services to support our research and development as well as other operating
activities, offset by V AT output associated with our revenue generation.
Inventories
Our inventories primarily consist of (i) finished goods, which primarily consist of
processing hardware that is in final testing stage, (ii) working in progress, which primarily
consists of processing hardware that is in the early stage of manufacturing, and (iii) raw
materials, which primarily consist of electronic components and materials.
FINANCIAL INFORMATION
– 431 –


--- page 442 ---
The following table sets forth the breakdown of our inventories as of the dates indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Inventories
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861,842 100,675 359,755 287,918
Working in progress /H1118/H1118/H1118/H1118/H1118/H1118/H111857,208 267,271 431,649 424,210
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,845 11,309 22,763 8,447
Contract fulfillment costs /H1118/H1118/H1118159 1,687 1,455 909
Inventories, gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,054 380,942 815,622 721,484
Less: provision for
impairment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(17,142) (17,410) (24,724) (18,385)
Total inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118113,912 363,532 790,898 703,099
Our inventories increased from RMB113.9 million as of December 31, 2021 to RMB363.5
million as of December 31, 2022 and further to RMB790.9 million as of December 31, 2023
primarily driven by (i) our strategic decision to increase our inventory level to meet the
growing downstream demands for processing hardware from customers and (ii) our strategy to
further accumulate and store a secure supply of inventory to counteract the cyclical nature of
the automotive industry, especially the global auto-part supply shortage in 2021 and 2022. Our
inventories further decreased to RMB703.1 million as of June 30, 2024 primarily driven by the
consumption of our processing hardware in line with our business operation.
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we recorded provision for
impairment of inventories of RMB17.1 million, RMB17.4 million, RMB24.7 million and
RMB18.4 million, respectively. Inventories are stated at the lower of cost and net realizable
value. Inventory cost mainly comprises bill of materials for processing hardware and peripheral
devices. Net realizable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make the sale. We
assess impairment to inventories from time to time during the Track Record Period and may
make provision to write down our inventories to the net realizable value if the inventories
become expired or damaged, or their prices went down, and their realizable value substantially
decreases.
FINANCIAL INFORMATION
– 432 –


--- page 443 ---
The following table sets forth our inventory turnover days for the Track Record Period:
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2024
Inventory turnover days (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118192 313 461 694
Note:
(1) Calculated using the average of opening balance and closing balance of the inventories for such period
divided by cost of sales for the relevant period and multiplied by the number of days during such period.
Our inventory turnover days increased from 192 days in 2021, to 313 days in 2022, to 461
days in 2023, and further to 694 days for the six months ended June 30, 2024, primarily
because we build up inventory levels to (i) address the demands from downstream OEMs and
(ii) proactively manage the potential supply chain shortage risk for auto parts of the automotive
industry. As we continue to scale our business at rapid pace, it is essential for us to
preemptively stock up inventories to ensure sufficient supply to meet the growing downstream
demands for the years to come, especially taking into account of the lengthy production lead
time for processing hardware. The increase in inventory turnover days to 694 days for the six
months ended June 30, 2024 was mainly driven by relatively high average opening and closing
balance of the inventories for the six months ended June 30, 2024 due to the aforesaid
inventory build-up. Such inventory balance cannot decrease significantly within six months
because of the lengthy production lead-time as well as time required before consuming finished
goods. The increase in inventory turnover days for the six months ended June 30, 2024 was also
attributable to slower occurrence of cost of sales during the first half of the year. According to
CIC, the first half, in particular the first quarter, of each year is usually not a peak season for
vehicle sales due to seasonal influence, which affects the delivery volume of product solutions
as well as related cost of sales. These factors are reflected in the revenue mix change for the
six months ended June 30, 2024 compared to the year ended December 31, 2023. An increase
in revenue from licenses and services as a percentage of total revenue in the first half of 2024
is resulting in a higher gross profit margin and a proportionately lower cost of sales, leading
to an increase in inventory turnover days for the six months ended June 30, 2024. Nonetheless,
with the gradual phasing out of the global auto-part supply shortage, we do not expect our
inventory levels to increase significantly going forward.
FINANCIAL INFORMATION
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--- page 444 ---
The following table sets forth the aging analysis of our inventories as of the dates
indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Up to one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118112,633 338,931 714,078 379,193
One to two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,806 24,976 71,386 330,664
Over two years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,615 17,035 30,158 11,627
Inventories, gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,054 380,942 815,622 721,484
Substantially all of our inventories are aged within two years. Having considered (i) our
comprehensive automotive solutions portfolio ranging from ADAS to AD solutions, which
requires processing hardware of varying sophistication, (ii) the relatively long production
lead-time for processing hardware, (iii) the multiple phases of manufacturing process involved,
(iv) our strategy to preemptively increase inventory level to counteract cyclical nature of the
automotive industry and to ensure sufficient supply to meet the growing downstream demands
for the years to come, and (v) our continuous efforts in product and supply chain management,
we are of the view that we have made sufficient impairment provision for inventories during
the Track Record Period and there is no material risk that our existing inventories cannot be
recovered or will become obsolete.
As of August 31, 2024, RMB74.3 million of inventories, accounting for 10.6% of the
RMB703.1 million inventories as of June 30, 2024, had been subsequently utilized.
Trade and Note Receivables
Our trade and note receivables primarily represent (i) trade receivables in relation to our
ordinary course of business and (ii) note receivables in relation to payments from our
customers in the form of bank acceptance notes. The following table sets forth a breakdown of
our trade and note receivables by nature as of the dates indicated.
FINANCIAL INFORMATION
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As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Non-current:
Trade receivables
Third party debtors /H1118/H1118/H1118/H1118/H1118/H1118– – – 24,755
Total trade and note
receivables, gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 24,755
Less: Credit loss allowance /H1118/H1118 – – – (2,423)
Total non-current trade and
note receivables, net /H1118/H1118/H1118/H1118/H1118– – – 22,332
Current:
Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,350 68,666 3,434 560
Trade receivables
Third party debtors /H1118/H1118/H1118/H1118/H1118/H1118169,332 336,385 504,820 716,167
Related parties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,390 38,440 76,190 64,937
Total trade and note
receivables, gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,072 443,491 584,444 781,664
Less: Credit loss allowance /H1118/H1118(10,717) (22,819) (43,353) (94,063)
Total current trade and
note receivables, net /H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 687,601
Total trade and note
receivables, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 709,933
Our trade and note receivables increased from RMB169.4 million as of December 31,
2021 to RMB420.7 million as of December 31, 2022, and further to RMB541.1 million as of
December 31, 2023. The increase from 2021 to 2023 was primarily due to the expansion of our
business operations that leads to higher trade receivables. We recorded RMB68.7 million note
receivables as of December 31, 2022 because we accepted bank acceptance notes from some
customers in 2022 and all such notes have been cashed in 2023. Our trade and note receivables
increased to RMB709.9 million as of June 30, 2024 as a combined effect of new additions
within credit period for the revenue recognized in the first half year of 2024, and some of the
receivables recorded in prior year for balancing payments with longer credit period. We
recorded non-current trade receivables of RMB24.8 million as of June 30, 2024 relating to
certain contracts where miscellaneous final payments were linked to certain long-term
performance milestones of customers such as SOPs but no later than a mutually agreed time.
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we recorded loss allowance
for trade and note receivables of RMB10.7 million, RMB22.8 million, RMB43.4 million and
RMB96.5 million, respectively. Trade receivables are written off when there is no reasonable
expectation of recovery. Indicators that there is no reasonable expectation of recovery include,
among others, the failure of a debtor to engage in a repayment plan with us and indicators of
FINANCIAL INFORMATION
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severe financial difficulty. We have performed impairment analysis on trade and note
receivables to measure the expected credit losses, and we believe that we have made sufficient
impairment allowance on trade receivables during the Track Record Period. For details on
impairment provisions for trade and note receivables, see Note 3.1(b)(ii) to the Accountant’s
Report set out in Appendix I to this Prospectus.
Having considered that (i) the trade receivables balances were mainly due from customers
with ongoing business relationships with us, (ii) there were no material ongoing disputes with
such customers, (iii) these customers had been making continuous subsequent repayment to us
and their historical repayment patterns were generally consistent during the Track Record
Period, and (iv) we have continuously carried out stringent credit management policy and
increased effort in trade receivables collection, we are of the view that there is no material
recoverability issue for our trade and note receivables.
The following table sets forth the aging analysis of our trade and note receivables as of
the dates indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Up to six months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,741 381,618 451,029 498,034
Six months to one year /H1118/H1118/H1118/H111819,416 25,306 71,117 212,339
Over one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,915 36,567 62,298 96,046
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,072 443,491 584,444 806,419
The following table sets forth the turnover days of our trade and note receivables for the
periods indicated.
For the Y ear Ended December 31,
For the Six
Months Ended
June 30,
2021 2022 2023 2024
Total trade and note
receivables turnover
days /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118122 119 113 122
Note:
(1) Trade and note receivables turnover days for a period equal the average of the opening and closing trade
and note receivables balance (net of allowance) divided by revenue for the relevant period and
multiplied by the number of days during such period.
FINANCIAL INFORMATION
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Our trade and note receivables turnover days decreased from 122 days in 2021 to 119 days
in 2022, and to 113 days in 2023, as a result of our management of trade receivables and
enhanced collection efforts. For instance, we started to closely monitor collection progress of
trade receivables, follow up with customers regularly on outstanding amounts, and evaluate
employee performance based on collection progress. If the recoverability of our trade
receivables becomes lower than expected, we may make impairment allowance on trade
receivables. Our trade and note receivables turnover days increased to 122 days for the six
months ended June 30, 2024, as a result of addition of trade receivables with relatively longer
ages where final payments were linked to certain long-term performance milestones of
customers such as SOP but no later than a mutually agreed time.
As of August 31, 2024, RMB115.8 million, or 16.3% of our trade and note receivables as
of June 30, 2024 had been subsequently settled.
Term Deposits
Our term deposits were RMB1,284.3 million, RMB1,204.4 million, nil and nil,
respectively, as of December 31, 2021, 2022 and 2023 and June 30, 2024. Our term deposits
are denominated in USD and were cleared to nil as of December 31, 2023, primarily due to
maturity of term deposits at period end in accordance with our cash management plan.
Restricted Cash
Our restricted cash was RMB18.4 million, RMB8.6 million, RMB717.8 million and
RMB735.0 million, respectively, as of December 31, 2021, 2022 and 2023 and June 30, 2024.
The substantial increase in restricted cash as of December 31, 2023 resulted primarily from
restricted cash held pursuant to certain financial restrictive clause in relation to the convertible
loan from CARIAD.
Cash and Cash Equivalents
Our cash and cash equivalents were RMB8,050.0 million, RMB6,608.7 million,
RMB11,359.6 million and RMB10,452.4 million, respectively, as of December 31, 2021, 2022
and 2023 and June 30, 2024. The fluctuation of our cash and cash equivalents positions at each
period end was primarily due to the use of cash to support operating activities and cash
outflows from investing activities. For details, see “— Liquidity and Capital Resources —
Cash Flows.”
Liabilities
Lease Liabilities
Lease liabilities represent the present value of outstanding lease payments under our lease
agreements. We recorded non-current lease liabilities of RMB77.3 million, RMB154.2 million,
RMB112.3 million and RMB89.0 million, respectively, as of December 31, 2021, 2022 and
2023 and June 30, 2024. We recorded current lease liabilities of RMB38.2 million, RMB50.6
million, RMB52.0 million and RMB43.9 million, respectively, as of December 31, 2021, 2022
and 2023 and June 30, 2024.
FINANCIAL INFORMATION
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Borrowings
Our borrowings represent loans from a commercial bank in China. Our borrowings
increased from nil as of December 31, 2021 to RMB12.5 million as of December 31, 2022, to
RMB112.8 million as of December 31, 2023, and further to RMB243.9 million as of June 30,
2024, mainly due to additional bank loans obtained for office building construction purposes.
Other non-current liabilities
Our other non-current liabilities increased from RMB7.6 million as of December 31, 2021
to RMB15.7 million as of December 31, 2022 and further to RMB62.0 million as of December
31, 2023, mainly due to an increase in financial subsidies granted that would be subsequently
recognized as other income. Our other non-current liabilities decreased to RMB47.6 million as
of June 30, 2024, mainly due to recognition of financial subsidies granted as other income
during the first half of 2024.
Trade Payables
Our trade payables primarily include payables for certain third-party service fees incurred
during the ordinary course of our business. Our trade payables are relatively small as compared
to our overall business scale primarily because we typically prepay or pay upon order for
suppliers who provide essential inventories or services. Our trade payables amounted to
RMB8.0 million, RMB3.8 million, RMB11.2 million and RMB13.6 million as of December 31,
2021, 2022 and 2023 and June 30, 2024, respectively.
The following table sets forth the aging analysis of our trade payables as of the dates
indicated.
As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Up to six months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,752 3,435 10,647 12,672
Six months to one year /H1118/H1118/H1118/H1118/H111818 33 262 708
Over one year /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118270 354 255 268
Total trade payables /H1118/H1118/H1118/H1118/H1118/H11188,040 3,822 11,164 13,648
FINANCIAL INFORMATION
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The following table sets forth our trade payables turnover days for the periods indicated.
For the Y ear Ended December 31,
For the Six
Months Ended
June 30,
2021 2022 2023 2024
Trade payables turnover
days /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 286 1 2
Note:
(1) Trade payables turnover days is calculated using the average of the opening and closing trade payables
balance divided by cost of sales for the relevant period and multiplied by the number of days during such
period.
Our Directors confirm that we did not have any material defaults on payments of trade
payables during the Track Record Period and up to the Latest Practicable Date.
As of August 31, 2024, RMB11.4 million, or 83.7% of our trade payables as of June 30,
2024 had been subsequently settled.
Contract Liabilities
Our contract liabilities primarily comprise payments received in advance of revenue
recognition from automotive solutions. Our contract liabilities amounted to RMB5.5 million as
of December 31, 2021, RMB63.1 million as of December 31, 2022, RMB24.9 million as of
December 31, 2023, and RMB12.1 million as of June 30, 2024.
As of August 31, 2024, RMB5.8 million, or 47.6% of our contract liabilities as of June
30, 2024 had been subsequently settled.
Employee Benefit Obligations
Our employee benefit obligations represent wages and salaries, housing funds, medical
insurances and other social insurance, employee leave entitlement, bonus plans and termination
benefits. Our employee benefit obligations increased from RMB242.4 million as of December
31, 2021 to RMB304.3 million as of December 31, 2022, and further to RMB384.0 million as
of December 31, 2023 in line with our business expansion. Our employee benefit obligations
subsequently decreased to RMB250.7 million as of June 30, 2024, primarily driven by payment
of employee benefits such as year-end bonuses during the first half of 2024.
Accruals and Other Payables
Accruals and other payables consist of (i) tax liabilities, and (ii) other payables, including
payables for purchase of intangible assets and third-party services and deposit in relation to our
research and development activities, payables to certain former investors for preferred shares
repurchase before Track Record Period, and others. The following table sets forth our accruals
and other payables as of the dates indicated.
FINANCIAL INFORMATION
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As of December 31,
As of
June 30,
2021 2022 2023 2024
(RMB in thousands)
Accruals and other payables
Tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,794 32,444 142,618 37,929
Other payables
Payables for purchase of
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118165,068 142,413 171,559 30,749
Payables for third-party
service fees and deposit /H1118 49,753 74,539 173,775 173,571
Payables for construction
in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 3,812 30,803 10,500
Accrued warranty
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,500 2,490 3,768 4,620
Payables to certain former
investors for preferred
shares repurchase before
Track Record Period /H1118/H1118/H11189,433 10,304 583 587
Payables for purchase of
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118— — — 8,960
Accrued Listing expense /H1118/H1118 — — — 1,297
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,965 12,243 17,338 16,099
Total accruals and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118270,525 278,245 540,444 284,312
Our accruals and other payables remained relatively stable at RMB270.5 million as of
December 31, 2021 and RMB278.2 million as of December 31, 2022. Our accruals and other
payables increased from RMB278.2 million as of December 31, 2022 to RMB540.4 million as
of December 31, 2023, primarily due to (i) an increase in tax liabilities from RMB32.4 million
as of December 31, 2022 to RMB142.6 million as of the same date in 2023 and (ii) an increase
in payables for third-party service fees and deposit from RMB74.5 million as of December 31,
2022 to RMB173.8 million as of the same date in 2023, primarily driven by manufacturing of
certain discretionary prototype processing hardware supplied by Supplier A to support our
research and development. For details on the background and transaction amount of Supplier
A, see “Business — Our Suppliers.” Our accruals and other payables decreased from
RMB540.4 million as of December 31, 2023 to RMB284.3 million as of June 30, 2024,
primarily due to (i) a decrease in tax liabilities from RMB142.6 million as of December 31,
2023 to RMB37.9 million as of June 30, 2024 attributable to payment of taxes during the first
half of 2024; (ii) a decrease of payables for purchase of intangible assets from RMB171.6
million to RMB30.7 million attributable to payment for intellectual properties; and (iii) a
decrease in payables for construction in progress from RMB30.8 million as of December 31,
2023 to RMB10.5 million as of June 30, 2024.
FINANCIAL INFORMATION
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Preferred Shares and Other Financial Liabilities at Fair V alue through Profit or Loss
Our preferred shares and other financial liabilities at fair value through profit or loss
primarily consist of preferred shares and convertible loan. See Note 28 of the Accountant’s
Report included in Appendix I to this Prospectus. As of December 31, 2021, 2022 and 2023 and
June 30, 2024, we recorded preferred shares and other financial liabilities at fair value through
profit or loss of RMB18,341.2 million, RMB26,451.3 million, RMB39,239.6 million and
RMB43,782.7 million, respectively. Preferred shares and other financial liabilities at fair value
through profit or loss will increase as our valuation increases. Upon the Global Offering, such
preferred shares will be reclassified from financial liabilities to equity as a result of the
automatic conversion into ordinary shares.
Current Assets and Liabilities
The following table sets forth our current assets and current liabilities as of the dates
indicated.
As of December 31, As of June 30,
As of
August 31,
2021 2022 2023 2024 2024
(unaudited)
(RMB in thousands)
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118113,912 363,532 790,898 703,099 673,481
Prepayments and
other current
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118282,992 206,452 136,729 173,735 212,059
Trade and note
receivables /H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 687,601 807,872
Financial assets at
fair value through
profit or loss /H1118/H1118/H1118/H1118— — — — 2,494,703
Term deposits /H1118/H1118/H1118/H1118/H11181,284,293 1,204,365 — — —
Restricted cash /H1118/H1118/H1118/H111812,856 2 709,716 726,865 730,402
Cash and cash
equivalents /H1118/H1118/H1118/H1118/H11188,050,034 6,608,657 11,359,641 10,452,449 7,374,664
Total current assets /H1118 9,913,442 8,803,680 13,538,075 12,743,749 12,293,181
Current liabilities
Trade payables /H1118/H1118/H1118/H11188,040 3,822 11,164 13,648 22,637
Contract liabilities /H1118/H1118 5,546 63,079 24,875 12,143 19,344
Lease liabilities /H1118/H1118/H1118/H111838,248 50,615 52,010 43,944 51,399
Employee benefit
obligations /H1118/H1118/H1118/H1118/H1118242,418 304,333 384,042 250,657 267,527
Accruals and other
payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118270,525 278,245 540,444 284,312 274,384
FINANCIAL INFORMATION
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As of December 31, As of June 30,
As of
August 31,
2021 2022 2023 2024 2024
(unaudited)
(RMB in thousands)
Preferred shares and
other financial
liabilities at fair
value through profit
or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195 26,451,328 39,239,578 43,782,659 42,935,951
Total current
liabilities /H1118/H1118/H1118/H1118/H1118/H111818,905,972 27,151,422 40,252,113 44,387,363 43,571,242
Net current
liabilities /H1118/H1118/H1118/H1118/H1118/H1118(8,992,530) (18,347,742) (26,714,038) (31,643,614) (31,278,061)
Our net current liabilities increased from RMB8,992.5 million as of December 31, 2021
to RMB18,347.7 million as of December 31, 2022, primarily due to the increase in current
liabilities as well as the decrease in current assets. The increase in current liabilities was
primarily attributable to an increase in preferred shares and other financial liabilities at fair
value through profit or loss from RMB18,341.2 million as of December 31, 2021 to
RMB26,451.3 million as of December 31, 2022, as a result of fair value of our business. The
decrease in total current assets was primarily attributable to a decrease in our cash and cash
equivalents from RMB8,050.0 million as of December 31, 2021 to RMB6,608.7 million as of
December 31, 2022, as a result of use of cash to support our overall operations.
Our net current liabilities increased from RMB18,347.7 million as of December 31, 2022
to RMB26,714.0 million as of December 31, 2023, primarily because the increase in our
current liabilities outpaced the increase in our current assets. The increase in our current
liabilities was primarily attributable to an increase in preferred shares and other financial
liabilities at fair value through profit or loss from RMB26,451.3 million as of December 31,
2022 to RMB39,239.6 million as of December 31, 2023 as a result of fair value of our business.
Such an increase was partially offset by an increase in cash and cash equivalents from
RMB6,608.7 million as of December 31, 2022 to RMB11,359.6 million as of December 31,
2023.
Our net current liabilities increased from RMB26,714.0 million as of December 31, 2023
to RMB31,643.6 million as of June 30, 2024, primarily the increase in current liabilities as well
as the decrease in current assets. The increase in current liabilities was primarily attributable
to an increase in preferred shares and other financial liabilities at fair value through profit or
loss from RMB39,239.6 million as of December 31, 2023 to RMB43,782.7 million as of June
30, 2024, as a result of an increase in fair value of our business. The decrease in total current
assets was primarily attributable to a decrease in our cash and cash equivalents from
RMB11,359.6 million as of December 31, 2023 to RMB10,452.4 million as of June 30, 2024,
as a result of use of cash to support our overall operations.
FINANCIAL INFORMATION
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Our net current liabilities decreased from RMB31,643.6 million as of June 30, 2024 to
RMB31,278.1 million as of August 31, 2024, primarily due to a decrease in current liabilities,
partially offset by a decrease in current assets. The decrease in current assets was primarily
attributable to a decrease in our cash and cash equivalents as a result of use of cash to support
our overall operations. The decrease in current liabilities was primarily attributable to a
decrease in preferred shares and other financial liabilities at fair value through profit or loss
from RMB43,782.7 million as of June 30, 2024 to RMB42,936.0 million as of August 31, 2024
due to changes in fair value of preferred shares, reflecting the growing possibility of
termination of related preferential rights as this Global Offering becomes more likely.
Considering the cash and cash equivalents as well as the net operating cash outflow during the
Track Record Period, we are of the view that our total cash balance is sufficient to cover our
cash needs for operating activities and provides adequate liquidity for our expansion and
growth strategies. As such, we believe that we possess sufficient working capital to finance our
operations, after taking into account the financial resources available to us.
KEY OPERATING DATA
The following tables set forth our key operating data as of the dates or for the periods
indicated:
As of December 31, As of June 30,
2021 2022 2023 2023 2024
OEM customer base (1) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814 20 23 20 25
Cumulative number of OEM customer (2),
of which: 9 12 12 12 12
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111845666
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 9 10 10 10
Cumulative number of tier-one supplier
customer (3), of which: 76 98 124 113 133
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868 89 108 100 117
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 40 61 54 64
Cumulative number of design-wins for
car models, net of terminated
projects
(4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844 101 210 151 275
Cumulative number of car models for
which we achieved SOP (4) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 56 109 71 131
OEM customers who contributed revenue
for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869995
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812444
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111868875
Tier-one supplier customers who
contributed revenue for the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861 60 68 52 46
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853 52 48 35 35
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815 28 43 33 24
Notes:
(1) OEM customer base includes OEMs who select our product solutions directly and those who select our
product solutions through tier-one supplier customers. Amongst these OEM customer base, we
recognize OEMs who directly engage us for businesses as our OEM customers. Nonetheless, the number
of OEM customer base is a key operating metric in guiding our operations as OEMs typically have the
ultimately discretion in selecting providers of ADAS and AD solutions.
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(2) Represents the number of our OEM customers that directly select our product solutions and contributed
revenue as of the dates indicated; and “product solutions” and “license and services” lines represent the
number of OEM customer that we cooperated with and contributed revenue under the corresponding
model as of the dates indicated. An OEM customer may procure our solutions through both models, for
better solution performance or other reasons.
(3) Represents the number of our tier-one supplier customers as of the dates indicated; and “product
solutions” and “license and services” lines represent the number of tier-one supplier customer that we
cooperated with under the corresponding model as of the dates indicated. A tier-one supplier customer
may procure our solutions through both models, for better solution performance or other reasons.
(4) We obtained 16, 56, 145 and 199 design-wins for new energy vehicles (NEVs, comprising battery
electric vehicles, plug-in hybrid electric vehicles and fuel cell electric vehicles) accumulatively, and 28,
45, 65 and 76 design-wins for non-NEVs accumulatively, as of December 31, 2021, 2022 and 2023 and
June 30, 2024, respectively. We target all passenger vehicles, irrespective of whether they are NEVs or
non-NEVs, that can be equipped with ADAS and AD solutions.
(5) SOP refers to start of production, which indicates a project has progressed from contract stage to mass
production stage.
For the Y ear Ended December 31,
For the Six Months
Ended June 30,
2021 2022 2023 2023 2024
(RMB in thousands, except as indicated otherwise)
Revenue from OEM customers (1), of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111888 48,074 221,182 74,945 94,109
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118148,709 258,585 747,572 52,793 424,397
Revenue from tier-one supplier (1) customers,
of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118158,887 266,964 283,442 115,929 127,508
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111842,348 178,803 209,197 94,530 260,874
Average OEM customer value (2)(3) , of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111888 24,037 55,295 18,736 23,527
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,785 32,323 93,447 7,542 84,879
Average tier-one supplier customer value (3)(4) ,
of which:
Product solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,998 5,134 5,905 3,312 3,643
License and services /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,823 6,386 4,865 2,865 10,870
Delivery volume of processing hardware
for the period (million units) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181.0 1.5 2.1 0.7 1
Automotive product solutions average selling
price (5) (RMB/unit) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118208 213 239 256 231
Number of license and services contracts with
revenue recorded for the period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111853 66 83 59 41
Notes:
(1) Revenue derived from OEM and tier-one supplier customers includes revenue derived from such
customers from mass-produced projects. During the Track Record Period, we also generated revenue
from (i) pre-mass-produced projects of OEM and tier-one supplier customers, (ii) projects with
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customers who are neither OEMs nor tier-one suppliers but primarily focus on the automotive industry
(such as ecosystem partners, see “Business — Our Customers — Our Ecosystem Partners”), and (iii)
projects with customers who are neither OEMs nor tier-one suppliers and whose primary focus is not
automotive industry.
(2) Average OEM customer value refers to revenue generated from OEM customers during the year/period
divided by the number of OEM customers that directly engage us and contributed revenue during the
respective year/period. A total of one, two, four, four and four OEM customers directly engage us and
contributed revenue for product solutions and a total of six, eight, eight, seven and five OEM customers
directly engage us and contributed revenue for license and services in 2021, 2022 and 2023 and for the
six months ended June 30, 2023 and 2024, respectively.
(3) The contract amount of license and services as well as the corresponding revenue recognized during the
year/period vary significantly, depending on multiple factors such as, among others, the complexity and
variety of license and service provided, the specific demands of customers, the number of personnel and
amount of required and length of services. Similarly, the contract amount of our automotive product
solutions as well as the corresponding revenue recognized during the year/period also vary significantly
depending on OEMs’ and tier-one suppliers’ own production schedule as well as downstream demand
of the underlying vehicle models. This wide variation causes the average customer value to fluctuate
significantly from period to period because average customer value is heavily influenced by outliers or
extreme values, making the results anomalous. Therefore, the calculation is presented here for indication
only.
(4) Average tier-one supplier customer value refers to revenue generated from tier-one supplier customers
during the year/period divided by the number of tier-one supplier customers that directly engage us and
contributed revenue during the respective year/period. A total of 53, 52, 48, 35 and 35 tier-one supplier
customers directly engage us and contributed revenue for product solutions and a total of 15, 28, 43, 33
and 24 tier-one supplier customers directly engage us and contributed revenue for license and services
in 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively.
(5) Automotive product solutions average selling price for the year equals revenues derived from product
solutions divided by the delivery volume of processing hardware integrated with algorithms and
software during the respective year.
OEM Customer Base
Our OEM customer base amounted to 14, 20, 23 and 25 as of December 31, 2021, 2022
and 2023 and June 30, 2024, respectively. The increase during the Track Record Period was
primarily due to our continuous efforts in expanding our customer base as well as increased
collaborations with existing customers through launching, updating and commercializing our
automotive solutions. The growth rate of our OEM customer base slowed down during the
Track Record Period as we have already effectively covered the majority of OEM customers
in China. According to CIC, there are a total of 30 OEMs with average monthly sale volume
of more than 100 passenger vehicles for the six months ended June 30, 2024 and we have
covered 83.3% of such OEMs as of June 30, 2024.
Cumulative Number of OEM Customers
Our cumulative number of OEM customers for product solutions amounted to four, five,
six and six, and our cumulative number of OEM customers for license and services amounted
to seven, nine, 10 and 10 as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively. The increase during the Track Record Period was in line with our business
expansion and commercialization efforts. The growth rate of our cumulative number of OEM
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customers slowed down during the Track Record Period as we have already effectively covered
the majority of OEM customers in China. Moreover, some OEMs prefer procuring autonomous
driving solutions through tier-one suppliers, thus resulting a slowed down growth of OEM
customers.
Cumulative Number of Tier-one Supplier Customers
Our cumulative number of tier-one supplier customers for product solutions amounted to
68, 89, 108 and 117, and our cumulative number of tier-one supplier customers for license and
services amounted to 20, 40, 61 and 64 as of December 31, 2021, 2022 and 2023 and June 30,
2024, respectively. The increase during the Track Record Period was primarily driven by our
expansion of the new OEM customer base and increased collaborations with existing OEM
customers on new vehicle models, leading to expanded collaborations with various new
tier-one supplier customers. According to CIC, it is an industry norm for an OEM to engage
different tier-one suppliers for different automotive solutions and for different vehicle models.
Cumulative Number of Design-wins for Car Models, net of Terminated Projects
As a result of our increased customer bases and deepened collaborations with existing
customers, we have cumulatively obtained design-wins for 44, 101, 210 and 275 car models,
net of terminated projects, as of December 31, 2021, 2022 and 2023 and June 30, 2024,
respectively.
Cumulative Number of Car Models for which We Achieved SOP
Furthermore, benefiting from our continuous efforts in assisting our OEM customers to
achieve mass production, the cumulative number of car models for which we achieved SOP
amounted to 27, 56, 109 and 131 as of December 31, 2021, 2022 and 2023, and June 30, 2024,
respectively.
Average Customer Value
Our average OEM customer value by product solutions amounted to RMB88 thousand,
RMB24.0 million, RMB55.3 million, RMB18.7 million and RMB23.5 million in 2021, 2022
and 2023 and for the six months ended June 30, 2023 and 2024, respectively. Meanwhile, our
average OEM customer value by license and services amounted to RMB24.8 million, RMB32.3
million, RMB93.4 million, RMB7.5 million and RMB84.9 million in 2021, 2022 and 2023 and
for the six months ended June 30, 2023 and 2024, respectively. The average OEM customer
value per product solutions, amounting to RMB88 thousand in 2021, was primarily due to the
early-stage development of our production solutions and the pre-mass production phase of our
core products. The increase during the Track Record Period was mainly due to (i) the
completion of early sales ramp-up, resulting in increased demands for our automotive product
solutions and license and services, and (ii) continuous improvement of existing solutions to
boost system performance and efficiency and the introduction of new AD solutions with
advanced features, leading to higher pricing premium. The significant increase in average OEM
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customer value for license and services in 2023 and for the six months ended June 30, 2024
was mainly attributed by our an intellectual property license agreement entered with
CARIZON in the second half of 2023.
Our average tier-one supplier customer value by product solutions amounted to RMB3.0
million, RMB5.1 million, RMB5.9 million, RMB3.3 million and RMB3.6 million in 2021,
2022 and 2023 and for the six months ended June 30, 2023 and 2024, respectively. The increase
of average customer value for product solutions was mainly due to (i) the completion of early
sales ramp-up, resulting in increased demands for our automotive product solutions and license
and services, and (ii) continuous improvement of existing solutions to boost system
performance and efficiency and the introduction of new AD solutions with advanced features,
leading to higher prices premium. Our average tier-one supplier customer value by license and
services decreased from RMB6.4 million in 2022 to RMB4.9 million in 2023. With the
advancement from ADAS to AD technology, OEMs are now increasingly involved in the ADAS
and AD solution development process. This shift has led to some of our high-value AD license
and services being directly utilized by OEMs, whilst our tier-one supplier customers are
inclined to addressing agile development needs or assembly-oriented development for OEM
customers. Consequently, we engaged in a number of relatively standard license and service
projects with relatively low contract value with tier-one supplier customers during such year.
Our average tier-one supplier customer value by license and services increased from RMB2.9
million for the six months ended June 30, 2023 to RMB10.9 million for the six months ended
June 30, 2024, primarily as a result of entering into a license agreement with a tier-one supplier
customer during the second quarter of 2024.
Delivery Volume of Processing Hardware
Our delivery volume of processing hardware amounted to 1.0 million units, 1.5 million
units, 2.1 million units, 0.7 million units and 1.0 million units in 2021, 2022 and 2023 and for
the six months ended June 30, 2023 and 2024, respectively. The increase during the Track
Record Period was primarily due to increased rapid development and robust growth in the
downstream smart vehicles market, which drove the increase in demand for product solutions
as well as our expansion of the customer base.
Automotive Product Solutions Average Selling Price
Our automotive product solutions average selling price increased from RMB208 per unit
of processing hardware in 2021 to RMB239 per unit of processing hardware in 2023, primarily
due to increased revenue contribution from Horizon Pilot, which has a higher average selling
price than Horizon Mono. The automotive product solutions average selling price decreased
from RMB256 per unit of processing hardware for the six months ended June 30, 2023 to
RMB231 per unit of processing hardware for the six months ended June 30, 2024, mainly due
to our strategic decision to lower the pricing of automotive product solutions to obtain
additional market shares.
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Number of License and Services Contracts with Revenue Recorded for the Y ear/Period
In 2021, 2022 and 2023 and for the six months ended June 30, 2023 and 2024, a total of
53, 66, 83, 59 and 41 contracts generated license and services revenue, respectively. The
increase in contract number from 2021 to 2023 was primarily driven by (i) significant growth
in the smart vehicle industry, which is expected to drive increasing demand for licenses and
services related to automotive solutions, and (ii) increasing demand from OEMs and tier-one
suppliers for licenses of algorithms, various development tools, and technical services to
design and tailor their ADAS and AD solutions. The number of license and service contracts
with revenue recorded for the period decreased from 59 for the six months ended June 30, 2023
to 41 for the six months ended June 30, 2024, but with an increase in revenue derived from
license and services from RMB152.7 million from the six months ended June 30, 2023 to
RMB690.8 million for the six months ended June 30, 2024. The number of license and services
contracts may fluctuate from period to period depending on the complexity of the underlying
contracts, thereby impacting both value per contract and the total number of contracts.
KEY FINANCIAL RATIO
The following table sets forth our key financial ratios as of the dates or for the periods
indicated.
For the Y ear Ended/As of December 31,
For the
Six Months
Ended/As of
June 30,
2021 2022 2023 2024
Revenue growth /H1118/H1118/H1118N/A(1) 94.1% 71.3% 151.6%
Gross profit growth /H1118 N/A(1) 89.6% 74.3% 226.0%
Gross margin /H1118/H1118/H1118/H1118/H111870.9% 69.3% 70.5% 79.0%
Net loss margin /H1118/H1118/H1118(442.1%) (962.9%) (434.3%) (545.5%)
Adjusted net loss
margin (non-IFRS
measure) /H1118/H1118/H1118/H1118/H1118/H1118(236.4%) (208.8%) (105.4%) (86.0%)
Return on assets /H1118/H1118(19.5%) (88.1%) (42.5%) (34.1%)
Current ratio /H1118/H1118/H1118/H1118/H111852.4% 32.4% 33.6% 28.7%
Quick ratio /H1118/H1118/H1118/H1118/H1118/H111851.8% 31.1% 31.7% 27.1%
Note:
(1) Labeled as “N/A” as the financial information for the year ended December 31, 2020 was not within the
Track Record Period.
See “— Description of Selected Items of Our Consolidated Statements of Profit or Loss.”
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LIQUIDITY AND CAPITAL RESOURCES
Overview
During the Track Record Period, we relied on capital contributions by our shareholders
as the major sources of liquidity. We also generated cash from our sales of automotive
solutions. After the Global Offering, we intend to finance our future capital requirements
through equity financing activities and debt financing activities in a balanced manner. We do
not anticipate any changes to the availability of financing to fund our operation in the future.
As our business develops and expands, we expect to improve our operating cash flows through
increasing sales revenue of existing commercialized solutions, launching new solutions,
optimizing cost structure and improving operating efficiency.
Cash Flows
The following table sets forth a summary of our cash flows for the periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Net cash used in operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,111,016) (1,557,285) (1,744,508) (1,165,996) (725,954)
Net cash generated from/(used
in) investing activities /H1118/H1118/H1118(1,384,168) (214,506) (667,286) 20,486 (526,129)
Net cash generated from/(used
in) financing activities /H1118/H1118/H11186,299,413 212,412 7,218,868 (18,334) 284,734
Net increase/(decrease) in cash
and cash equivalents /H1118/H1118/H1118/H11183,804,229 (1,559,379) 4,807,074 (1,163,844) (967,349)
Cash and cash equivalents at
the beginning of the period /H1118 4,296,055 8,050,034 6,608,657 6,608,657 11,359,641
Effects of exchange rate
changes on cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(50,250) 118,002 (56,090) (4,675) 60,157
Cash and cash equivalents at
the end of the period /H1118/H1118/H11188,050,034 6,608,657 11,359,641 5,440,138 10,452,449
Operating Activities
We had negative cash flows from our operating activities during the Track Record Period.
We expect to improve our net operating cash flows through (i) increasing revenue by expanding
our OEM and tier-one supplier customer base; (ii) upgrading and commercializing existing
solutions, and launching new solutions to bring more value to our customers, which in turn
would drive further revenue growth; (iii) optimizing cost structure and improving operating
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efficiency to maintain operating expenses at a reasonable level comparable to our revenue
scale; and (iv) improving working capital efficiency through enhanced receivables collection,
better inventory management to ensure sufficient supply to meet the growing downstream
demands, and effective and prudent utilization of financial resources. See “— Path to
Profitability” for details. Considering the cash and cash equivalents as well as the net operating
cash outflow during the Track Record Period, we are of the view that our total cash balance
is sufficient to cover our cash needs for operating activities and provides adequate liquidity for
our expansion and growth strategies. As such, we believe that we possess sufficient working
capital to finance our operations, after taking into account the financial resources available to
us.
For the six months ended June 30, 2024, our net cash used in operating activities was
RMB726.0 million, which was primarily attributable to our loss before income tax of
RMB5,089.0 million, as adjusted by non-cash and non-operating items, which primarily
comprised (i) fair value changes of preferred shares and other financial liabilities of
RMB4,012.7 million, (ii) share based payments of RMB236.6 million, (iii) share of net losses
of investments accounted for using the equity method of RMB181.6 million, (iv) amortization
of intangible assets of RMB141.6 million, and (v) elimination of unrealized profits and losses
from downstream transactions of RMB113.3 million. The amount was further adjusted by
changes in working capital, primarily including increase in trade and note receivables of
RMB223.6 million, decrease in other operating liabilities of RMB160.3 million and decrease
in other payables of RMB122.8 million, partially offset by decrease in inventories of RMB78.2
million.
In 2023, our net cash used in operating activities was RMB1,744.5 million, which was
primarily attributable to our loss before income tax of RMB6,744.1 million, as adjusted by
non-cash and non-operating items, which primarily comprised (i) fair value changes of
preferred shares and other financial liabilities of RMB4,760.4 million, (ii) share based
payments of RMB341.8 million, (iii) elimination of unrealized profits and losses from
downstream transactions of RMB297.3 million and (iv) amortization of intangible assets of
RMB228.3 million. The amount was further adjusted by changes in working capital, primarily
including increase in restricted cash of RMB709.2 million and increase in inventories of
RMB434.7 million, partially offset by increase in other payables of RMB260.7 million.
In 2022, our net cash used in operating activities was RMB1,557.3 million, which was
primarily attributable to our loss before income tax of RMB8,724.7 million, as adjusted by
non-cash and non-operating items, which primarily comprised (i) fair value changes of
preferred shares and other financial liabilities of RMB6,655.4 million, (ii) net foreign exchange
differences of RMB264.7 million and (iii) share based payments of RMB173.7 million. The
amount was further adjusted by changes in working capital, primarily including increase in
inventories of RMB249.9 million and increase in trade and note receivables of RMB264.2
million, partially offset by increase in other operating liabilities of RMB64.4 million.
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In 2021, our net cash used in operating activities was RMB1,111.0 million, which was
primarily attributable to our loss before income tax of RMB2,090.2 million, as adjusted by
non-cash and non-operating items, which primarily comprised (i) fair value changes of
preferred shares and other financial liabilities of RMB764.0 million and (ii) share-based
payments of RMB196.4 million. The amount was further adjusted by changes in working
capital, primarily including increase in operating assets of RMB233.1 million and increase in
inventories of RMB88.9 million, partially offset by increase in other operating liabilities of
RMB141.3 million.
Investing Activities
Net cash used in investing activities was RMB526.1 million for the six months ended June
30, 2024, which was primarily due to (i) payments for financial assets at fair value through
profit or loss of RMB5,404.2 million, (ii) payment for intangible assets of RMB271.1 million
and (iii) payments for land-use right, property, plant and equipment of RMB241.9 million,
partially offset by proceeds from sale of financial assets at fair value through profit or loss of
RMB5,421.3 million.
Net cash used in investing activities was RMB667.3 million in 2023, which was primarily
due to (i) payments for financial assets at fair value through profit or loss of RMB4,399.8
million, (ii) purchase of investments accounted for using the equity method of RMB1,453.0
million, and (iii) placement of term deposits of RMB367.6 million, partially offset by (i)
proceeds from sale of financial assets at fair value through profit or loss of RMB4,410.1
million, and (ii) term deposits matured of RMB1,596.9 million.
Net cash used in investing activities was RMB214.5 million in 2022, which was primarily
due to (i) payments for financial assets at fair value through profit or loss of RMB4,948.7
million, (ii) placement of term deposits of RMB3,791.4 million, and (iii) payment of intangible
assets of RMB352.8 million, partially offset by (i) proceeds from sale of financial assets at fair
value through profit or loss of RMB4,944.1 million, and (ii) term deposits matured of
RMB4,201.3 million.
Net cash used in investing activities was RMB1,384.2 million in 2021, which was
primarily due to (i) payments for financial assets at fair value through profit or loss of
RMB1,305.4 million and (ii) placement of term deposits of RMB1,291.8 million, partially
offset by (i) proceeds from sale of financial assets at fair value through profit or loss of
RMB1,295.6 million, and (ii) term deposits matured of RMB155.4 million.
Financing Activities
Net cash generated from financing activities was RMB284.7 million for the six months
ended June 30, 2024, which was mainly due to proceeds from issuance of preferred shares of
RMB185.2 million and proceeds from borrowings of RMB131.1 million, partially offset by
principal elements of lease payments of RMB26.3 million.
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Net cash generated from financing activities was RMB7,218.9 million in 2023, which was
due to proceeds from issues of preferred shares liabilities of RMB7,188.6 million.
Net cash generated from financing activities was RMB212.4 million in 2022, which was
primarily due to proceeds from issues of preferred shares liabilities of RMB254.8 million, and
partially offset by principal elements of lease payments of RMB41.3 million.
Net cash generated from financing activities was RMB6,299.4 million in 2021, which was
primarily due to proceeds from issues of preferred shares liabilities of RMB6,348.2 million,
and partially offset by principal elements of lease payments of RMB32.2 million.
Working Capital Sufficiency
Our Directors are of the opinion that, taking into account the following financial
resources available to us described below, we have sufficient working capital for our present
requirement and for at least the next 12 months from the date of this Prospectus:
 cash and cash equivalents;
 available equity financing and bank facilities; and
 the estimated net proceeds from the Global Offering.
After making reasonable inquiries of our management about our working capital, nothing
has come to the Joint Sponsors’ attention that would reasonably cause the Joint Sponsors to cast
doubt on the Directors’ view.
CAPITAL EXPENDITURES
Our capital expenditures primarily include our property, plant and equipment, land use
right and intangible assets. The following table sets forth our capital expenditures for the
periods indicated.
For the Y ear Ended December 31, For the Six Months Ended June 30,
2021 2022 2023 2023 2024
(unaudited)
(RMB in thousands)
Payments for land-use
right, property, plant
and equipment /H1118/H1118/H1118/H1118174,213 196,450 259,446 58,215 241,948
Payments for intangible
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,817 352,765 194,526 141,419 271,075
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118224,030 549,215 453,972 199,634 513,023
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We expect to finance our capital expenditures through our cash and cash equivalents, our
existing bank borrowings and the net proceeds from the Global Offering. Our current capital
expenditure plans for any future period are subject to change, and we may adjust our capital
expenditures according to our future cash flows, our results of operations and financial
condition, our business plans, market conditions and various other factors. See also “Future
Plans and Use of Proceeds — Use of Proceeds.”
INDEBTEDNESS
The following table sets forth the breakdown of financial indebtedness as of the dates
indicated.
As of December 31,
As of
June 30,
As of
August 31,
2021 2022 2023 2024 2024
(unaudited)
(RMB in thousands)
Current
Lease liabilities /H1118/H1118/H1118/H111838,248 50,615 52,010 43,944 51,399
Preferred shares and
other financial
liabilities at FVPL 18,341,195 26,451,328 39,239,578 43,782,659 42,935,951
Non-current
Lease liabilities /H1118/H1118/H1118/H111877,266 154,176 112,346 88,963 91,444
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118— 12,515 112,844 243,895 265,391
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,456,709 26,668,634 39,516,778 44,159,461 43,344,185
Lease Liabilities
Lease liabilities represent the present value of outstanding lease payments under our lease
agreements. See also “— Discussion of Selected Items from our Consolidated Statements of
Financial Position — Liabilities — Lease liabilities.”
Borrowings
Our borrowings represent bank loans from a commercial bank in China. See also “—
Discussion of Selected Items from our Consolidated Statements of Financial Position —
Liabilities — Borrowings.”
As of August 31, 2024, we had bank facilities of RMB579.1 million which remained
unutilized.
FINANCIAL INFORMATION
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Our Directors confirm that as of the Latest Practicable Date, there was no material
covenant on any of our 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
we 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.
Preferred Shares and Other Financial Liabilities at Fair Value through Profit or Loss
Our preferred shares and other financial liabilities at fair value through profit or loss
primarily consist of preferred shares and convertible loan. See also “Discussion of Selected
Items from our Consolidated Statements of Financial Position — Liabilities — Preferred
Shares and Other Financial Liabilities at Fair Value through Profit or Loss.”
If we were to be required to redeem all such preferred shares, the aggregate redemption
price shall be (i) 100% of each series stated issue price with a compounded rate of ten percent
(10%) per annum return, plus (ii) any accrued but unpaid dividends on each applicable
preferred shares. As of June 30, 2024, we had a total of 7,798,405,226 preferred shares issued
and outstanding and the aggregate consideration at which our preferred shares issued equaled
US$2,361 million. If we were required to redeem our convertible loan, the aggregate
redemption price shall be the outstanding principal amount of the convertible loan, together
with all accrued and unpaid interest. For details, see Note 28 to the Accountant’s Report set out
in Appendix I to this Prospectus. The redemption of the preferred shares and convertible loan,
if triggered, could have a negative impact on our cash and liquidity position and financial
condition. See “Risk Factors — Risks Related to our Financial Prospects — Fair value changes
of preferred shares and other financial liabilities and related valuation uncertainty may
materially affect our results of operations and financial condition.”
In June, D-Robotics adopted the WVR structure and issued 43,940,218 class A ordinary
shares to the Company’s founders, 87,500,000 class A ordinary shares to D-GUA Brother LP,
the employee stock ownership platform of D-Robotics, 43,940,218 series A1 preferred shares
to D-Gua International Limited, an employee trust and 83,695,656 series A1 preferred shares
to certain investors. Before and after such issuance of shares, Horizon Together Holding Ltd.
(“Horizon Together”), a wholly owned subsidiary of the Company, holds 600,000,000 class B
ordinary shares of D-Robotics.
Based on an acting-in-concert agreement between Horizon Together and D-GUA Brother
LP, together with a power of attorney granted from the Company’s founders to Horizon
Together on the matter of appointment of the board members of D-Robotics, the Group
continues to control D-Robotics as it is exposed to and has the rights to the variable return from
D-Robotics through its holding of 69.84% issued share capital, and the ability to affect
D-Robotics’ return through its controlling of 72.23% of the voting rights in D-Robotics and
right to appoint the majority of the board members of D-Robotics.
FINANCIAL INFORMATION
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Based on the Company’s current assessment, the preferred share issued to investors would
be recognized as “preferred shares and other financial liabilities at fair value through profit or
loss” and the class A ordinary shares issued to the Company’s Founders would be recorded and
presented as non-controlling interest in the Group’s consolidated financial statements. Any
excess of the fair value over the issuance price of the instruments issued would be recorded as
share based payment expenses in the Group’s consolidated financial statements.
Shares issued to the employee stock ownership platform and the employee trust have no
impact to the Group’s consolidated financial statements on the issuance date, because these
shares are reserved for future share-based arrangement to employees and still under the
Group’s control and are not entitled to any economic rights and interests yet, and therefore
shall be treated as treasury stocks of D-Robotics. Related share-based compensation shall be
recognized when related shares are granted to the relevant grantees based on relevant terms.
Except as discussed above, we had no outstanding indebtedness or any loan capital issued
and outstanding or agreed to be issued, bank overdrafts, loans or similar indebtedness,
liabilities under acceptances (other than normal trade bills), acceptance credits, debentures,
mortgages, charges, finance lease or hire purchase commitments, guarantees or other
contingent liabilities or any covenant in connection therewith as of August 31, 2024, being our
indebtedness statement date. After due and careful consideration, our Directors confirm that
there had been no material change in our indebtedness since August 31, 2024, and up to the
Latest Practicable Date.
CONTRACTUAL OBLIGATIONS
Capital Expenditure Related Commitments
Our capital commitments are related to capital expenditure on property, plant and
equipment, intangible assets as well as investments in unlisted companies to be incurred but not
yet recorded as liabilities. Our capital expenditure contracted for but not yet incurred as of
December 31, 2021, 2022 and 2023 and June 30, 2024 was RMB22.7 million, RMB87.7
million, RMB72.1 million and RMB68.1 million, respectively. We expect to satisfy our capital
commitments using cash from operations, net proceeds to be received from the Global Offering
and bank borrowings available to us.
Operating Commitments
Our operating commitments are related to our inventory investment and other operating
expenditures. Our operating expenditure contracted for but not yet incurred as of December 31,
2021, 2022 and 2023 and June 30, 2024 was RMB158.3 million, RMB362.5 million,
RMB188.7 million and RMB137.4 million, respectively. We expect to satisfy our operating
commitments using our cash and cash equivalents, net proceeds to be received from the Global
Offering and bank borrowings available to us.
FINANCIAL INFORMATION
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Commitments In Respect Of Associates and Joint Ventures
Our commitments in respect of associates and joint ventures are capital contribution
commitments undertaken by us in accordance with related investment agreements or joint
venture agreements. Such commitments as of December 31, 2021, 2022 and 2023 and June 30,
2024 was RMB14.8 million, RMB15.3 million, RMB1,730.9 million and RMB2,098.4 million,
respectively. We expect to satisfy our commitments in respect of associates and joint ventures
using our cash and cash equivalents, net proceeds to be received from the Global Offering and
bank borrowings available to us.
CONTINGENT LIABILITIES
As of December 31, 2021, 2022 and 2023 and June 30, 2024, we did not have any material
contingent liabilities. As of the Latest Practicable Date, there had been no material changes or
arrangements to our contingent liabilities.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
transactions.
RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time. Our Directors
confirm that all material related party transactions during the Track Record Period were
conducted on an arm’s-length basis, and would not distort our results of operations over the
Track Record Period or make our historical results over the Track Record Period not reflective
of our expectations for our future performance. Except for the RMB1.6 million amounts due
from CARIZON primarily reflecting supports provided to CARIZON during its early
establishment phase, all our related party transactions are trade in nature. See “Discussion of
Selected Items from Our Consolidated Statements of Financial Positions — Assets —
Prepayments and Other Assets.” We expect to settle the non-trade related party balance with
CARIZON prior to the Global Offering. See Note 34 of the Accountant’s Report included in
Appendix I to this Prospectus.
QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISKS
We are exposed to a variety of market and other financial risks, including market risk,
credit risk and liquidity risk. We manage and monitor these exposures to ensure appropriate
measures are implemented on a timely and effective manner.
FINANCIAL INFORMATION
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Market Risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognized assets
and liabilities are denominated in a currency that is not the respective functional currency of
our subsidiaries. Our functional currency outside mainland China are USD whereas the
functional currency of the subsidiaries operating in mainland China is RMB. We manage our
foreign exchange risk by performing regular reviews of our Group’s net foreign exchange
exposures and trying to minimize these exposures through natural hedges, wherever possible.
The value of the Renminbi against the U.S. dollar and other currencies has fluctuated
significantly in the past, and may in the future continue to do so, affected by, among other
things, changes in political and economic conditions and the foreign exchange policy adopted
by the PRC government. We recorded other comprehensive income from currency translation
differences of RMB270.2 million in 2021, and other comprehensive loss from current
translation differences of RMB898.2 million, RMB371.9 million, RMB931.7 million and
RMB208.1 million in 2022 and 2023 and for the six months ended June 30, 2023 and 2024,
respectively, due to the fluctuations of U.S. dollar/RMB exchange rate when translating results
and financial positions of the Company and its subsidiaries outside mainland China from their
functional currency U.S. dollar into our presentation currency RMB. The results and financial
position of all the Group’s entities that have a functional currency different from the
presentation currency are translated into the presentation currency and all resulting exchange
differences are recognized in other comprehensive income or loss. The accumulative
translation adjustments related to subsidiaries with same functional currency as the Company
are presented as part of items of other comprehensive income that will not be reclassified to
profit or loss. For details, see “Risk Factors — Risks Related to Our Business and Industry —
We face exposure to foreign currency exchange rate fluctuations, and such fluctuations could
adversely affect our financing arrangements, business operations, results of operations, and
financial condition.”
Interest rate risk
Except for cash and cash equivalents, restricted cash, term deposits and long-term
borrowings, the Group has no significant interest-bearing assets and borrowings.
The directors of our Company do not anticipate significant impact to interest-bearing
assets and borrowings resulted from the changes in interest rate because the interest rates of
the above-mentioned interest-bearing assets and borrowings are not expected to change
significantly.
FINANCIAL INFORMATION
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Price risk
Our exposure to equity securities price risk arises from investments in unlisted companies
held by our Group and classified in the balance sheet as at fair value through profit or loss
(FVPL).
To manage its price risk arising from investments in equity securities, we diversify our
portfolio. Each investment is managed by our senior management individually. The sensitivity
analysis is performed by our management, see Note 3.3 of Appendix I for details.
We also mainly invest in low-risk wealth management products and the proposed
investment must not interfere with our daily operation and business prospects. We make
investment decisions related to wealth management products on a case-by-case basis after
thoroughly considering a number of factors, including but not limited to macroeconomic
environment, general market conditions and the expected profit or potential loss of the
instrument.
Credit Risk
Credit risk arises from cash and cash equivalents, restricted cash, term deposits, as well
as trade and note receivables and other receivables. The carrying amount of each class of the
above financial assets represents our Group’s maximum exposure to credit risk in relation to
the corresponding class of financial assets.
To manage risk from trade and note receivables, 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. Trade and notes receivables have
been grouped based on shared credit risk characteristics and aging to measure the expected
credit losses. Trade and note receivables are written off when there is no reasonable
expectation of recovery. Impairment losses on trade and notes receivables are presented as net
impairment losses within operating profit. Subsequent recoveries of amounts previously
written off are credited against the same line item. For other receivables, management makes
periodic collective assessments as well as individual assessment on the recoverability of other
receivables based on historical settlement records and past experiences.
Cash and cash equivalents, restricted cash, term deposits are mainly placed with reputable
Chinese and international financial institutions. There has been no recent history of default in
relation to these financial institutions. The expected credit loss is not material.
Liquidity Risk
We intend to maintain sufficient cash and cash equivalents. Due to the dynamic nature of
the underlying business, our policy is to regularly monitor our liquidity risk and to maintain
adequate liquid assets such as cash and cash equivalents and term deposits or to retain adequate
financing arrangements to meet our liquidity requirements.
FINANCIAL INFORMATION
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DIVIDENDS
We have never declared or paid regular cash dividends on our Shares. Any declaration and
payment as well as the amount of dividends will be subject to our Articles and the Cayman
Companies Act. We currently do not have any dividend policy to guide our dividends
declaration or payments. Our board of directors has the discretion to pay interim dividends and
to recommend to Shareholders to pay final dividends, and will depend on a number of factors,
including our earnings, capital requirements, overall financial condition and contractual
restrictions. We may by ordinary resolution resolve to declare dividends in any currency and
authorize payment of the dividends out of the funds of the Company that are lawfully available,
provided that (i) no dividends shall exceed the amount recommended by our Board and (ii) no
dividends shall be paid except out of the realized or unrealized profits of the Company, out of
the share premium account or as otherwise permitted by law. As advised by our Cayman Islands
legal advisors, under the Cayman Companies Act, a Cayman Islands company may pay a
dividend out of either profits and/or a share premium account, provided that in no
circumstances may a dividend be paid if this would result in the company being unable to pay
its debts as they fall due in the ordinary course of business. In light of our accumulated losses
as disclosed in this Prospectus, it is unlikely that we will be eligible to pay a dividend out of
our profits in the foreseeable future. We may, however, pay a dividend out of our share
premium account unless the payment of such a dividend would result in our Company being
unable to pay our debts as they fall due in the ordinary course of business. There is no
assurance that dividends of any amount will be declared to be distributed in any year. As
advised by our Cayman Islands legal advisors, we are a holding company incorporated under
the laws of the Cayman Islands, pursuant to which, the financial position of net liabilities does
not prohibit us from declaring and paying dividends to our Shareholders, as dividends may still
be declared and paid out of our share premium account notwithstanding our profitability,
provided that our memorandum and articles of association do not prohibit such payment and
our Company is able to pay its debts as they fall due in the ordinary course of business
immediately after such payment.
If we pay dividends in the future, in order for us to distribute dividends to our
Shareholders, we will rely to some extent on any dividends distributed by our PRC
subsidiaries. Any dividend distributions from our PRC subsidiaries to us will be subject to PRC
withholding tax. In addition, regulations in the PRC currently permit payment of dividends of
a PRC company only out of accumulated distributable after-tax profits as determined in
accordance with its articles of association and the accounting standards and regulations in
China. See “Risk Factors — Risks Related to Doing Business in China” in this Prospectus.
DISTRIBUTABLE RESERVES
As of June 30, 2024, our Company had no retained earnings that were available for
distribution to our equity shareholders.
FINANCIAL INFORMATION
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LISTING EXPENSES
The total listing expenses payable by our Company are estimated to be approximately
HK$258.7 million (or approximately RMB235.5 million) assuming the Over-allotment Option
is not exercised and based on an Offer Price of HK$3.86 (being the mid-point of our Offer Price
range of HK$3.73 to HK$3.99 per Offer Share), accounting for approximately 4.94% of gross
IPO proceeds. Among such estimated total listing expenses, (i) underwriting-related expenses,
including underwriting commission, are expected to be approximately HK$171.4 million, and
(ii) non-underwriting-related expenses of approximately HK$87.2 million, comprising (a) fees
and expenses of legal advisers and Reporting Accountant of approximately HK$46.0 million
and (b) other fees and expenses of approximately HK$41.2 million.
Among the total listing expenses payable of HK$258.7 million, HK$78.9 million is
expected to be expensed through the statement of profit or loss and the remaining amount of
HK$179.8 million is directly attributable to the issue of shares and deducted from equity. As
of June 30, 2024, we incurred listing expenses of HK$46.8 million expensed through the
statement of profit or loss and expected HK$32.1 million to be charged to the statement of
profit or loss after the Track Record Period.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE ASSETS
The following is an illustrative and pro forma statement of our adjusted consolidated net
tangible assets as of June 30, 2024, which has been prepared in accordance with Rule 4.29 of
the Listing Rules for the purpose of illustrating the effect of the Global Offering as if it had
taken place on June 30, 2024 and is based on our consolidated tangible assets less liabilities
as of June 30, 2024, as set out in Appendix II to this Prospectus.
The unaudited pro forma statement of adjusted net tangible assets has been prepared for
illustrative purposes only and, because of its hypothetical nature, it may not give a true picture
of the consolidated net tangible assets of the Group had the Global Offering been completed
as of June 30, 2024 or any future date. It is prepared based on the consolidated net tangible
assets of the Group attributable to the owners of the Company as of June 30, 2024 as derived
from the Accountant’s Report, set out in Appendix I to this Prospectus and adjusted as
described below.
FINANCIAL INFORMATION
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--- page 471 ---
Unadjusted
audited
consolidated net
tangible
liabilities
attributable to
the owners of
our Company as
of June 30,
2024 (1)
Estimated net
proceeds from
the Global
Offering (2)
Estimated
impact related to
the conversion of
preferred shares
into Class B
ordinary shares
upon Listing (3)
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of
our Company
Unaudited pro
forma adjusted
consolidated net
tangible assets per
share
(RMB in thousands) RMB (4) HK$(5)
Based on the Offer Price
of HK$3.73 per share /H1118 (30,099,453) 4,414,522 37,789,020 12,104,089 0.93 1.02
Based on the Offer Price
of HK$3.99 per share /H1118 (30,099,453) 4,724,034 37,789,020 12,413,601 0.95 1.04
Notes:
(1) The unaudited consolidated net tangible liabilities attributable to the owners of our Company as of June 30,
2024 is extracted from the Accountant’s Report set forth in Appendix I to this Prospectus, which is based on
the unaudited consolidated net liabilities attributable to the owners of our Company as of June 30, 2024 of
RMB29,815,921,000 with an adjustment for the intangible assets as of June 30, 2024 of RMB283,532,000.
(2) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HK$3.73 and
HK$3.99 per Offer Share, after deduction of the estimated underwriting fees and other related expenses
payable by our Company (excluding RMB42,618,000 which had been charged to the consolidated statements
of comprehensive income up to June 30, 2024), without taking into account any shares which may be issued
upon the exercise of the Over-allotment Option.
(3) Upon the Listing and the completion of the Global Offering, all of the preferred shares issued by our Company
will be automatically converted into Class B ordinary shares. Upon conversion, these preferred shares will be
reclassified from liabilities to equity, while the convertible loan issued to CARIAD will still be recorded as
liabilities.
(4) The unaudited pro forma adjusted consolidated net tangible liabilities per share are on the basis that
13,029,866,082 shares are in issue, assuming the Global Offering, the conversions of preferred shares and issue
of Class B ordinary shares pursuant to the 2018 Share Incentive Plan had been completed on June 30, 2024,
without taking into account any shares which may fall to be issued upon the conversion of the convertible loan
issued to CARIAD and the exercise of the Over-allotment Option.
(5) For the purpose of this unaudited pro forma adjusted net tangible assets, the balance stated in Renminbi is
converted into Hong Kong dollars at a rate of HK$1.00 to RMB0.91042. No representation is made that
Renminbi amounts have been, could have been or may be converted to Hong Kong dollars, or vice versa, at
that rate.
(6) No adjustments have been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to June 30, 2024.
FINANCIAL INFORMATION
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(7) The unaudited pro forma financial information presented above has not taken into account the conversion of
the convertible loan issued to CARIAD. Assuming the Global Offering and the conversion of the convertible
loan issued to CARIAD had been completed as at June 30, 2024, the unaudited pro forma adjusted net tangible
assets per share is calculated as follows:
Unadjusted
audited
consolidated net
tangible
liabilities
attributable to
the owners of
our Company as
of June 30,
2024 (i)
Estimated net
proceeds from
the Global
Offering (ii)
Estimated impact
related to the
conversions of
preferred shares
and convertible
loan into
Class B ordinary
shares upon
Listing (iii)
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of
our Company
Unaudited pro forma
adjusted consolidated
net tangible assets
per share
(RMB in thousands) RMB (iv) HK$(v)
Based on the Offer Price
of HK$3.73 per share /H1118 (30,099,453) 4,414,522 43,782,659 18,097,728 1.19 1.31
Based on the Offer Price
of HK$3.99 per share /H1118 (30,099,453) 4,724,034 43,782,659 18,407,240 1.22 1.34
Notes:
(i) The unaudited consolidated net tangible liabilities attributable to the owners of our Company as of June
30, 2024 is extracted from the Accountant’s Report set forth in Appendix I to this Prospectus, which is
based on the unaudited consolidated net liabilities attributable to the owners of our Company as of June
30, 2024 of RMB29,815,921,000 with an adjustment for the intangible assets as of June 30, 2024 of
RMB283,532,000.
(ii) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HK$3.73
and HK$3.99 per Offer Share, after deduction of the estimated underwriting fees and other related
expenses payable by our Company (excluding RMB42,618,000 which had been charged to the
consolidated statements of comprehensive income up to June 30, 2024), without taking into account any
shares which may be issued upon the exercise of the Over-allotment Option.
(iii) Upon the Listing and the completion of the Global Offering, i) all of the preferred shares issued by our
Company will be automatically converted into Class B ordinary shares, and ii) assuming the carrying
amounts of all convertible loan issued by our Company will be converted into Class B ordinary shares,
without taking into account the 9.9% threshold as disclosed in the section headed “History,
Reorganization and Corporate Structure — Convertible Loan” of this Prospectus. Upon conversion,
these preferred shares and convertible loan will be reclassified from liabilities to equity.
Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro forma
adjusted consolidated net tangible assets attributable to the owners of our Company will be increased
by RMB43,782,659,000 (representing the carrying amounts of preferred shares and the convertible
loan).
Based on the indicative Offer Price of HK$3.73 per Offer Share, a total of 9,936,612,032 Class B
ordinary shares (7,798,405,226 shares related to the preferred shares and 2,138,206,806 shares related
to the convertible loan, without taking into account the 9.9% threshold as disclosed in the section headed
“History, Reorganization and Corporate Structure — Convertible Loan” of this Prospectus) will be
issued upon the conversion.
Based on the indicative Offer Price of HK$3.99 per Offer Share, A total of 9,797,280,261 Class B
ordinary shares (7,798,405,226 shares related to the preferred shares and 1,998,875,035 shares related
to the convertible loan, without taking into account the 9.9% threshold as disclosed in the section headed
“History, Reorganization and Corporate Structure — Convertible Loan” of this Prospectus) will be
issued upon the conversion.
FINANCIAL INFORMATION
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(iv) The unaudited pro forma adjusted consolidated net tangible liabilities per share are determined after the
adjustments and the conversion as described in note (ii) and (iii) above, and on the basis that
15,168,072,888 and 15,028,741,117 shares are in issue based on the indicative Offer Price of HK$3.73
and HK$3.99 per Offer Share, being the low-end and high-end of the indicative Offer Prices,
respectively, assuming the Global Offering, the conversions of preferred shares and convertible loan into
Class B ordinary shares and issue of Class B ordinary shares pursuant to the 2018 Share Incentive Plan
had been completed on June 30, 2024, without taking into account any shares which may fall to be
issued upon the exercise of the Over-allotment Option.
(v) For the purpose of this unaudited pro forma adjusted net tangible assets, the balance stated in Renminbi
is converted into Hong Kong dollars at a rate of HK$1.00 to RMB0.91042. No representation is made
that Renminbi amounts have been, could have been or may be converted to Hong Kong dollars, or vice
versa, at that rate.
NO MATERIAL ADVERSE CHANGE
Our Directors confirm that, up to the date of Prospectus, there has been no material
adverse change in our financial, operational or trading position since June 30, 2024, being the
date on which the latest audited consolidated financial information of our Group was prepared
in Appendix I in this Prospectus, and there had been no event since June 30, 2024 that would
materially affect the information shown in the Accountant’s Report set out in Appendix I to this
Prospectus.
DISCLOSURE REQUIRED UNDER THE LISTING RULES
Our Directors confirm that, as of the Latest Practicable Date, except for the convertible
loan entered into with V olkswagen Group wherein the termination of Dr. Yu’s employment or
controlling interest may trigger CARIAD’s redemption right, there was no other circumstance
that would give rise to a disclosure requirement under Rules 13.13 to 13.19 of the Listing
Rules. For details of the convertible loan, please see “History, Reorganization and Corporate
Structure — Convertible Loan.”
FINANCIAL INFORMATION
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FUTURE PLANS
Please see “Business — Our Growth Strategies” for a detailed description of our future
plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds from the Global Offering of approximately
HK$4,972.1 million, after deducting underwriting commissions, fees and estimated expenses
payable by us in connection with the Global Offering, assuming no Over-allotment Option is
exercised and an Offer Price of HK$3.86 per Offer Share, being the midpoint of the indicative
Offer Price range stated in this Prospectus.
In line with our strategies, we intend to use the net proceeds for the following purposes,
subject to changes in light of our evolving business needs and changing market conditions:
 Approximately 70%, or approximately HK$3,480.4 million, of the net proceeds will
be allocated over the next five years for research and development purposes,
including ADAS and AD solution and technology pillars. We believe such
investment allows us to expand our solutions portfolio by improving the existing
ADAS and AD solutions and developing new AD solutions with advanced features
to capitalize on the positive industry tailwind:
/H18537Approximately 20%, or approximately HK$994.4 million, of the net proceeds
will be allocated for the development and commercialization of new generation
of AD solution, of which:
 Approximately 10%, or approximately HK$497.2 million, of the net
proceeds will be allocated over the next five years to retain, expand and
strengthen our R&D team. We plan to attract and retain R&D talents in
the fields of, among others, perception algorithms, dynamic trajectory
planning, motion control, software integration, simulation and testing,
thereby continuously enhancing our R&D capabilities in AD solution; and
 Approximately 10%, or approximately HK$497.2 million, of the net
proceeds will be allocated over the next five years to fund (i)
procurements from third-party IT vendors for large-scale model
iterations, and (ii) expenses for testing various functional modules at the
vehicle level and for validation using generally accepted evaluation
systems for AD solution.
We plan to continuously develop our AD solution to better meet the demands
in all scenarios, including urban, highway, parking, human-vehicle interaction
and co-driving scenarios and more. Our goal is to provide our customers with
a safer, more efficient, and more comfortable driving experience.
FUTURE PLANS AND USE OF PROCEEDS
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/H18537Approximately 15%, or approximately HK$745.8 million, of the net proceeds
will be allocated to continuously utilize the latest technology to improve our
existing ADAS and AD solutions, of which:
 Approximately 5%, or approximately HK$248.6 million, of the net
proceeds will be allocated over the next five years to adapt to a wider
range of peripheral hardware then available in the market to enhance the
performance of our solutions. For instance, we plan to enhance the
perception capabilities of Horizon Mono by integrating higher resolution
cameras, thereby achieving longer detection distance and better
identification of obstacles. We also intend to enhance the perception
capabilities of Horizon Pilot by integrating LiDAR with processing
hardware to enable urban NOA and other functions;
 Approximately 5%, or approximately HK$248.6 million, of the net
proceeds will be allocated over the next five years to fund development,
adaption and validation initiatives necessary to continuously optimize the
cost structure of our ADAS and AD solution offerings. Our goal is to
deliver higher value to our customers. For instance, we intend to focus on
initiatives that enable us to achieve better compatibility with various
vehicle models, higher energy efficiency to accommodate different
operating conditions, and enhanced module integration and peripheral
device diversification to optimize costs at system level; and
 Approximately 5%, or approximately HK$248.6 million, of the net
proceeds will be allocated over the next five years to meet additional
safety regulatory requirements to enter into overseas markets and to
achieve safety qualifications such as Euro-NCAP and C-NCAP.
/H18537Approximately 20%, or approximately HK$994.4 million, of the net proceeds
will be allocated for the development of our next generation processing
hardware, of which:
 Approximately 15%, or approximately HK$745.8 million, of the net
proceeds will be allocated over the next five years to achieve superior
performance and efficiency on the next-generation processing hardware.
In particular, we plan to allocate (i) approximately 6%, or approximately
HK$298.3 million, of the net proceeds to retain, expand and strengthen
our R&D team to attract and retain top talents in hardware design, (ii)
approximately 6.75%, or approximately HK$335.6 million, of the net
proceeds to fund procurement of essential intellectual properties required
in hardware design process, and (iii) approximately 2.25%, or
approximately HK$111.9 million, of the net proceeds to fund the
expenses incurred by third parties during hardware manufacturing and
testing process; and
FUTURE PLANS AND USE OF PROCEEDS
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--- page 476 ---
 Approximately 5%, or approximately HK$248.6 million, of the net
proceeds will be allocated over the next five years to cover testing and
validation expenses necessary to continuously build a platform-based
processing hardware portfolio that supports various solutions ranging
from ADAS to AD, thereby reducing customer development costs, and
meet comprehensive safety requirement.
/H18537Approximately 15%, or approximately HK$745.8 million, of the net proceeds
will be allocated for the development and upgrades of our technology pillars,
including algorithms, BPU, OpenExplorer, TogetheROS, and AIDI, to build a
highly open, flexible and compatible platform, further enriching our
ecosystem, of which:
 Approximately 12%, or approximately HK$596.6 million, of the net
proceeds will be allocated over the next five years to retain, expand and
strengthen our R&D team. We plan to attract and retain R&D talents in
the fields of, among others, algorithms, compilers, toolchains and
middleware to further strengthen our R&D capabilities; and
 Approximately 3%, or approximately HK$149.2 million, of the net
proceeds will be allocated over the next five years to acquire necessary
intellectual properties and other intangible assets. We intend to fund the
procurement of essential intellectual properties and intangible assets such
as software development kits for algorithm development, data
visualization, data analysis, numerical computation and programming
language tailored for enterprise-level application development.
With respect to R&D talents to be hired, we expect to recruit (i) approximately 10
experienced R&D talents each year with over 10 years of work experience, holding
advanced degrees from prestigious domestic and international institutions who are
supposed to be distinguished technical experts or management professionals; and
(ii) approximately 200 new hires, the vast majority of whom shall hold master’s
degree or above in the areas of algorithms, software and/or hardware from
prestigious domestic or international institutions.
 Approximately 10%, or approximately HK$497.2 million, of the net proceeds will
be allocated over the next five years for sales and marketing related expenses, of
which:
o Approximately 4%, or approximately HK$198.9 million, of the net proceeds
will be allocated over the next five years to support the expansion of our
overseas clients. We plan to (i) establish a sales and customer service team with
global vision and overseas experience and (ii) fund targeted initiatives for
overseas customer engagement, such as, among others, setting up overseas
offices, conducting customer visits, exploring global partnership opportunities
and organizing localized marketing events;
FUTURE PLANS AND USE OF PROCEEDS
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--- page 477 ---
o Approximately 3%, or approximately HK$149.2 million, of the net proceeds
will be allocated over the next five years to strengthen our marketing activities
in China, including advertising, market promotion, and brand building. We
plan to use the proceeds to fund industry exhibitions, product launch events,
test-driving activities, marketing research or survey projects and other
marketing related activities; and
o Approximately 3%, or approximately HK$149.2 million, of the net proceeds
will be allocated over the next five years to improve our sales and customer
service processes to enhance customer satisfaction and loyalty. We plan to
direct the proceeds towards providing resources required by our sales team in
order to provide better coverage for and deepen our collaborations with key
customers.
We do not expect the number of sales and marketing staffs to increase significantly.
With respect to sales and marketing staffs to be hired, we would focus on recruiting
talents with global vision and overseas experience. We believe such investments in
sales and marketing will allow us to win additional mass production contracts with
existing and new customers.
 Approximately 10%, or approximately HK$497.2 million, of the net proceeds will
be allocated over the next five years for future strategic investment into our joint
ventures, particularly CARIZON, thus broadening and strengthening our technology
capabilities. We plan to fund a portion of our capital commitments in our joint
ventures with net proceeds from the Global Offering. We are of the view that such
investment can enable us to access to global OEM orders through our joint venture
partners, share the costs and risks associated with developing new technologies,
facilitate faster innovation and development of advanced features and accelerate our
learning curve for developing, implementing new technologies by learning from our
joint venture partners’ know-hows and best practices and gain deeper insights into
operations of OEMs, which would enable us to better serve global partners; and
 Approximately 10%, or approximately HK$497.2 million, will be allocated for
general corporate purposes and working capital needs.
If the Offer Price is set at HK$3.99 per Offer Share, being the high end of the indicative
Offer Price range, the net proceeds from the Global Offering will increase by approximately
HK$170.0 million. If the Offer Price is set at HK$3.73 per Offer Share, being the low end of
the indicative Offer Price range, the net proceeds from the Global Offering will decrease by
approximately HK$170.0 million. Offer Price may be fixed at a higher or lower level compared
to the midpoint of the indicative Offer Price range stated in this Prospectus.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 478 ---
If the Over-allotment Option is exercised in full, the net proceeds that we will receive will
be approximately HK$5,729.1 million, assuming an Offer Price of HK$3.86 per Offer Share
(being the midpoint of the indicative Offer Price range). In the event that the Over-allotment
Option is exercised in full, we intend to apply the additional net proceeds to the
aforementioned purposes in the proportions stated above.
To the extent that our net proceeds are not sufficient to fund the purposes set out above,
we intend to fund the balance through a variety of means, including cash available on hands,
bank loans and other borrowings.
If the net proceeds of the Global Offering are not immediately used for the purposes
described above, to the extent permitted by the relevant laws and regulations, we will only
deposit the net 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 applicable laws and regulations in other jurisdictions, as long as it is deemed to
be in the best interests of the Company. We will comply with all disclosure requirements under
the Listing Rules if there is any change to the above proposed use of proceeds.
FUTURE PLANS AND USE OF PROCEEDS
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--- page 479 ---
HONG KONG UNDERWRITERS
Goldman Sachs (Asia) L.L.C.
Morgan Stanley Asia Limited
China Securities (International) Corporate Finance Company Limited
CLSA Limited
Deutsche Bank AG, Hong Kong Branch
The Hongkong and Shanghai Banking Corporation Limited
CMB International Capital Limited
China Galaxy International Securities (Hong Kong) Co., Limited
BOCOM International Securities Limited
CCB International Capital Limited
ICBC International Securities Limited
Futu Securities International (Hong Kong) Limited
CEB International Capital Corporation Limited
DBS Asia Capital Limited
GF Securities (Hong Kong) Brokerage Limited
SDICS International Securities (Hong Kong) Limited
ABCI Securities Company Limited
BOCI Asia Limited
Celestial Securities 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 Overall
Coordinators (for themselves and on behalf of the Underwriters) and the Company, the Global
Offering will not proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 135,511,200
Hong Kong Offer Shares and the International Offering of initially 1,219,595,400 International
Offer Shares, subject, in each case, to reallocation on the basis as described in the section
headed “Structure of the Global Offering” in this Prospectus as well as to the Over-allotment
Option (in the case of the International Offering).
UNDERWRITING
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--- page 480 ---
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
The Hong Kong Underwriting Agreement was entered into on October 15, 2024. Pursuant
to the Hong Kong Underwriting Agreement, the Company is offering the Hong Kong Offer
Shares for subscription on the terms and conditions set out in this prospectus and the Hong
Kong Underwriting Agreement at the Offer Price.
Subject to (a) the Listing Committee granting approval for the listing of, and permission
to deal in, the Class B Ordinary Shares in issue and to be issued pursuant to the Global Offering
(including any additional Class B Ordinary Shares that may be issued pursuant to the exercise
of the Over-allotment Option) and the Class B Ordinary Shares that may be issued upon
conversion of the Class A Ordinary Shares on the Main Board of the Stock Exchange and such
approval not having been withdrawn 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, 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
The Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the
Hong Kong Underwriters) shall be entitled, in their sole and absolute discretion, by giving
notice to the Company and the Controlling Shareholders to terminate the Hong Kong
Underwriting Agreement with immediate effect if any of the following event or events occur
at any time prior to 8:00 a.m. on the Listing Date:
(a) there develops, occurs, exists or come into force:
(i) any event, or series of events, or circumstances, in the nature of force majeure
(including, without limitation, any acts of government, declaration of a local,
national, regional or international emergency or war, calamity, crisis,
epidemic, pandemic, outbreaks, mutation or aggravation of diseases
(including, without limitation, COVID-19, Severe Acute Respiratory
Syndrome (SARS), swine or avian flu, H5N1, H1N1, H7N9, Ebola virus,
Middle East respiratory syndrome and such related/mutated forms),
comprehensive sanctions, strikes, labour disputes, lock-outs, other industrial
UNDERWRITING
– 470 –


--- page 481 ---
actions, fire, explosion, flooding, earthquake, tsunami, volcanic eruption, riots,
rebellion, civil commotion, public disorder, acts of war, outbreak or escalation
of hostilities (whether or not war is declared), acts of God or acts of terrorism
(whether or not responsibility has been claimed), paralysis in government
operations, interruptions or delay in transportation), aircraft collision in or
affecting the Cayman Islands, British Virgin Islands, Hong Kong, the PRC, the
United States, the United Kingdom, the European Union (or any member
thereof), Singapore, or any other jurisdiction relevant to the Group or any
member of the Group or the Global Offering (each a “ Relevant Jurisdiction ”
and collectively, the “ Relevant Jurisdictions ”); or
(ii) any change or development involving a prospective change, or any event or
circumstances or series of events likely to result in any change or development
involving a prospective change, in any local, national, regional or international
financial, economic, political, military, industrial, legal, fiscal, regulatory,
currency, credit or market matters or conditions, equity securities or exchange
control or any monetary or trading settlement system or other financial markets
(including, without limitation, conditions in the stock and bond markets,
money and foreign exchange markets, the interbank markets and credit
markets), in or affecting any of the Relevant Jurisdictions; or
(iii) any moratorium, suspension or restriction (including, without limitation, any
imposition of or requirement for any minimum or maximum price limit or price
range) in or on trading in securities generally on the Hong Kong Stock
Exchange, the New York Stock Exchange, the NASDAQ Global Market, the
London Stock Exchange, the Shanghai Stock Exchange, the Shenzhen Stock
Exchange the Tokyo Stock Exchange or the Singapore Stock Exchange; or
(iv) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other authority), New York (imposed at the U.S. Federal or New York State
level or by any other authority), London, the PRC, the European Union (or any
member thereof) or any of the other Relevant Jurisdictions (declared by the
relevant authorities) or any disruption in commercial banking or foreign
exchange trading or securities settlement or clearance services, procedures or
matters in or affecting any of the Relevant Jurisdictions; or
(v) any new law or regulation or any event or circumstances likely to result in
change or development involving a prospective change in existing laws or
regulations or any change or development involving a prospective change in
the interpretation or application thereof by any authority in or affecting any of
the Relevant Jurisdictions; or
UNDERWRITING
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--- page 482 ---
(vi) the imposition of economic sanctions, or the withdrawal of trading privileges,
in whatever form, directly or indirectly, by, or for, any of the Relevant
Jurisdictions; or
(vii) any change or development involving a prospective change or amendment in
or affecting taxation or foreign exchange control, currency exchange rates or
foreign investment regulations (including, without limitation, a devaluation of
the United States dollar, the Hong Kong dollar or RMB against any foreign
currencies, a change in the system under which the value of the Hong Kong
dollar is linked to that of the United States dollar or RMB is linked to any
foreign currency or currencies), or the implementation of any exchange
control, in any of the Relevant Jurisdictions or affecting an investment in the
Offer Shares; or
(viii) other than with the prior written consent of the Joint Sponsors and the Overall
Coordinators (for themselves and on behalf of the Hong Kong Underwriters),
the issue or requirement to issue by the Company of a supplement or
amendment to this Prospectus, the preliminary offering circular, the offering
circular 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 the Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies (the “ CSRC
Filing Rules ”) or Provisions on Strengthening Confidentiality and Archives
Administration of Overseas Securities Offering and Listing by Domestic
Companies (the “ CSRC Archive Rules ”, together with the CSRC Filing Rules,
the “ CSRC Rules ”) or upon any requirement or request of the Hong Kong
Stock Exchange, the SFC and/or the CSRC; or
(ix) any valid demand by creditors for repayment of indebtedness in respect of
which the Company or any of the members of the Group is liable prior to its
stated maturity, or an order or petition for the winding up or liquidation of any
member of the Group or any composition or arrangement made by any member
of the Group with its creditors or a scheme of arrangement entered into by any
member of the Group or any resolution for the winding-up of any member of
the Group or the appointment of a provisional liquidator, receiver or manager
over all or part of the assets or undertaking of any member of the Group or
anything analogous thereto occurring in respect of any member of the Group;
or
(x) 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 Director or senior management of the Company;
or
UNDERWRITING
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--- page 483 ---
(xi) any contravention by any member of the Group or any Director of any
applicable laws or regulations, the Listing Rules or the CSRC Rules; or
(xii) any non-compliance of this Prospectus (or any other documents used in
connection with the contemplated subscription and sale of the Offer Shares),
the CSRC filings or any aspect of the Global Offering with the Listing Rules,
the CSRC Rules or any other applicable laws or regulations; or
(xiii) any change or prospective change or development, or a materialization of, any
of the risks set out in the section headed “Risk Factors” in this Prospectus; or
which, individually or in the aggregate, in the sole and absolute opinion of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters):
(1) has or will have or may have a material adverse effect on the assets, liabilities,
business, general affairs, management, prospects, shareholders’ equity, profits,
losses, earnings, results of operations, performance, position or condition,
financial or otherwise, of the Group taken as a whole or to any present or
prospective shareholder of the Company in its capacity as such; or
(2) has or will have or may have a material adverse effect on the success or
marketability of the Global Offering or the level of applications for or the
distribution of the Offer Shares under the Hong Kong Public Offering or the
level of interest under the International Offering; or
(3) makes or will make or may make it inadvisable, inexpedient, impracticable or
incapable for the Hong Kong Public Offering and/or the International Offering
to proceed 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
Related Documents (as defined below); or
(4) has or will have or may have the effect of making any part of the Hong Kong
Underwriting Agreement (including underwriting) incapable of performance in
accordance with its terms or preventing or delaying 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 Joint Sponsors and the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) that:
(i) any statement contained in this Prospectus, the formal notice of the Company,
the CSRC filings and/or any notices, announcements, advertisements,
communications or other documents (including any announcement, circular,
document or other communication pursuant to the Hong Kong Underwriting
UNDERWRITING
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--- page 484 ---
Agreement) 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 “ Offering Related Documents ”) was, when it was issued, or has
become, untrue, incorrect, inaccurate, incomplete in any material respects or
misleading or deceptive, or that any estimate, forecast, expression of opinion,
intention or expectation contained in any of such documents is not fair and
honest and based on reasonable grounds or reasonable assumptions; or
(ii) any matter has arisen or has been discovered which would, had it arisen or been
discovered immediately before the date of this Prospectus, constitute a material
omission from, or misstatement in, any of the Offering Related Documents; or
(iii) there is a breach of, or any event or circumstance rendering untrue, incorrect,
incomplete or misleading in any respect any of the warranties given by (i) the
Company or any of the Controlling Shareholders in the Hong Kong
Underwriting Agreement or the International Underwriting Agreement or (ii)
any cornerstone investor in the relevant Cornerstone Investment Agreement, as
applicable; or
(iv) there is a material breach of any of the obligations imposed upon (i) the
Company or any of the Controlling Shareholders under the Hong Kong
Underwriting Agreement or the International Underwriting Agreement, or (ii)
any cornerstone investor under the relevant Cornerstone Investment
Agreement, as applicable; or
(v) there is an event, act or omission which gives or is likely to give rise to any
liability of the Company or any of the Controlling Shareholders pursuant to the
indemnities given by any of them under the Hong Kong Underwriting
Agreement or the International Underwriting Agreement, as applicable; or
(vi) there is any material adverse change or likely to be any prospective material
adverse change; or
(vii) the approval of the Hong Kong Stock Exchange of the listing of, and
permission to deal in, the Class B Ordinary 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 date of the Listing, or if granted, the
approval is subsequently withdrawn, cancelled, qualified (other than by
customary conditions), revoked or withheld; or
UNDERWRITING
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--- page 485 ---
(viii) any person (other than any of the Joint Sponsors and the Overall Coordinators)
has withdrawn its consent to the issue of this Prospectus or the CSRC Filings
with the inclusion of its reports, letters and/or opinions (as the case may be)
and references to its name included in the form and context in which it
respectively appears; or
(ix) the Company withdraws the Offering Related Documents or the Global
Offering; or
(x) there is a prohibition on the Company and/or any of the Underwriters for
whatever reason from offering, allotting, issuing or selling any of the Offer
Shares pursuant to the terms of the Global Offering; or
(xi) any Director or member of senior management of the Company is vacating his
or her office, is being charged with an indictable offence or is prohibited by
operation of law or otherwise disqualified from taking part in the management
or taking directorship of a company or there is the commencement by any
authority of any investigation or other action against any Director or member
of senior management of the Company in his or her capacity as such or any
member of the Group or an announcement by any authority that it intends to
commence any such investigation or take any such action; or
(xii) a material portion of the orders placed or confirmed in the bookbuilding
process, or of the investment commitments made by cornerstone investors
under the Cornerstone Investment Agreements have been withdrawn,
terminated or cancelled, or any cornerstone investment agreement is
terminated, which in the sole and absolute opinion of the Joint Sponsors and
the Overall Coordinators (for themselves and on behalf of the Hong Kong
Underwriters) has a material adverse effect on the success of the Global
Offering; or
(xiii) a notification by HKSCC to any of the Joint Sponsors or the Overall
Coordinators that any Hong Kong Offer Share(s) shall be reallocated from the
Hong Kong Public Offering to the International Offering due to a money
settlement failure as described in the section headed “How to Apply for Hong
Kong Offer Shares — C. Circumstances in Which You Will Not Be Allocated
Hong Kong Offer Shares — 5. If there is money settlement failure for allotted
Hong Kong Offer Shares” in this Prospectus.
Indemnity
The Company has agreed to indemnify each of the Joint Sponsors, the Joint Global
Coordinators, the Overall Coordinators, the Joint Bookrunners, the Joint Lead Managers, Hong
Kong Underwriters and the Capital Market Intermediaries for certain losses which they may
suffer or incur, including losses arising from their performance of their obligations under the
Hong Kong Underwriting Agreement and any breach by any of the Company and the
Controlling Shareholders of the Hong Kong Underwriting Agreement.
UNDERWRITING
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--- page 486 ---
LOCK-UP ARRANGEMENTS
(A) Undertakings by the Company to the Stock Exchange pursuant to the Listing Rules
Pursuant to Rule 10.08 of the Listing Rules, the Company has undertaken to the Stock
Exchange that no further Shares or securities convertible into equity securities of the Company
(whether or not of a class already listed) may be issued by the Company or form the subject
of 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 (including any Class B Ordinary Shares which may be
issued pursuant to the exercise of the Over-allotment Option), and (b) under any of the other
circumstances provided under Rule 10.08 of the Listing Rules.
(B) Undertakings by the Controlling Shareholders to the Stock Exchange pursuant to the
Listing Rules
Pursuant to Rule 10.07 of the Listing Rules, each of the Controlling Shareholders has
undertaken to the Stock Exchange and the Company that, it will not and will procure that the
relevant registered holder(s) will not without the prior written consent of the Stock Exchange
or unless otherwise in compliance with the applicable requirement of the Listing Rules:
(1) in the period commencing on the date by reference to which disclosure of its holding
of Shares 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 Shares in respect of which it is shown by this
prospectus to be the beneficial owner (the “ Relevant Securities ”) (save for a pledge
or charge of any Relevant Securities as security in favour of an authorized institution
(as defined in the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for
a bona fide commercial loan in accordance with Note 2 to Rule 10.07(2) of the
Listing Rules, or a share lending arrangement entered into by them pursuant to Rule
10.07(3) of the Listing Rules); or
(2) in the period of six months commencing from the expiry of 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 such Shares referred
to in (1) above if, immediately following such disposal, or upon the exercise or
enforcement of such options, rights, interests or encumbrances, it would cease to be
a Controlling Shareholder of the Company.
UNDERWRITING
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--- page 487 ---
Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, each of the Controlling
Shareholders has undertaken to the Stock Exchange and the Company that during the First
Six-Month Period and six months following the First Six-Month Period:
(1) if it pledges or charges any Shares beneficially owned by it in favor of an authorized
institution (as defined in the Banking Ordinance) for a bona fide commercial loan
pursuant to Note 2 to Rule 10.07(2) of the Listing Rules, it will immediately inform
the Company of such pledge or charge together with the number of Shares so
pledged or charged; and
(2) if it receives indications, either verbal or written, from the pledgee or chargee that
any of the pledged or charged Shares will be disposed of, it will immediately inform
the Company of such indications.
Our Company will inform the Stock Exchange as soon as it has been informed of the
matters referred to in paragraphs (1) and (2) above (if any) by any of the Controlling
Shareholders and disclose such matters by way of an announcement as soon as possible in
accordance with the relevant Listing Rules.
(C) Undertakings by the Company pursuant to the Hong Kong Underwriting Agreement
The Company hereby undertakes to each of the Joint Sponsors, the Overall Coordinators,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capital Market Intermediaries that, except for (a) the issue, offer or sale
of the Offer Shares by the Company pursuant to the Global Offering (including pursuant to any
exercise of the Over-Allotment Option) and (b) the issue of Class B Ordinary Shares by the
Company pursuant to the Post-IPO Share Incentive Plan, at any time during the period
commencing on the date of the Hong Kong Underwriting Agreement and ending on, and
including, the date that is six months after the Listing Date (the “First Six-Month Period”), it
will not, unless in compliance with the requirements of the Listing Rules:
(1) allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract or agree
to allot, issue or sell, 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, any Shares or 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 Shares
or other securities of the Company or any interest in any of the foregoing), or
deposit any Shares or other securities of the Company with a depositary in
connection with the issue of depositary receipts; or
UNDERWRITING
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--- page 488 ---
(2) enter into any swap, derivative or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any Shares or
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
Shares or other securities of the Company); or
(3) enter into any transaction with the same economic effect as any transaction specified
in paragraphs (1) or (2) above; or
(4) offer to, or agree to, or effect any transaction specified in paragraphs (1), (2) or (3)
above or announce any intention to do so,
in each case, whether any of the transactions specified in paragraphs (1), (2) or (3) above is
to be settled by delivery of Shares or other equity securities of the Company, as applicable, or
in cash or otherwise (whether or not the issue of such Shares or other shares or equity securities
will be completed within the First Six-Month Period).
In the event that, during the period of six months commencing on the date on which the
First Six-month Period expires (the “ Second Six-Month Period ”), the Company enters into
any of the transactions specified in paragraphs (1), (2) or (3) above or offers or agrees or
contracts to, or announces or publicly discloses any intention to, effect any such transaction,
the Company shall take all reasonable steps to ensure that it will not create a disorderly or false
market in the Class B Ordinary Shares or other securities of the Company provided that such
transaction shall be in compliance with the Listing Rules. The Controlling Shareholders
undertakes to each of the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters
and the Capital Market Intermediaries to procure the Company to comply with the undertakings
in this sub-section.
(D) Undertakings by the Controlling Shareholders pursuant to the Hong Kong
Underwriting Agreement
Each of the Controlling Shareholders has undertaken to each of the Company, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Manager, the Hong Kong Underwriters and the Capital Market Intermediaries that,
unless in compliance with the requirements of the Listing Rules:
(1) it will not and will procure that the relevant registered holders(s) will not, at any
time during the First Six-Month Period,
(a) sell, offer to sell, contract or agree to sell, 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
UNDERWRITING
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--- page 489 ---
transfer or dispose of or create an encumbrance over, either directly or
indirectly, conditionally or unconditionally, any Shares or other securities of
the Company or any interest therein (including, but not limited to, any
securities convertible into or exchangeable or exercisable for or that represent
the right to receive, or any warrants or other rights to purchase, any Shares)
beneficially owned by him or it as of the Listing Date (the “ Controlling
Shareholders’ Locked-up Securities ”), or deposit any Shares or other
securities of the Company 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 of any Controlling
Shareholders’ Locked-up Securities, or
(c) enter into any transaction with the same economic effect as any transaction
specified in sub-paragraphs (a) or (b) above, or
(d) offer or agree or contract to, or announce or publicly discloses any intention to,
effect any transaction specified in sub-paragraphs (a), (b) or (c) above,
in each case, whether any of the transactions specified in sub-paragraphs (a), (b) or
(c) above is to be settled by delivery of the Shares or other securities of the
Company or in cash or otherwise and whether or not the issue of such Shares or
other securities will be completed within the First Six-Month Period;
(2) it will not, and will procure that the relevant registered holder(s) will not, during the
Second Six-Month Period, enter into any of the transactions specified in sub-
paragraphs (a), (b) or (c) above, or offer or agree or contract to, or announce or
publicly disclose any intention to, effect any such transaction if, immediately
following any such transaction, it will cease to be a “controlling shareholder” (as the
term is defined in the Listing Rules) of the Company;
(3) until the expiry of the Second Six-Month Period, if it enters into any of the
transactions specified in sub-paragraphs (a), (b) or (c) above, or offer or agree or
contract to, or announce or publicly disclose any intention to, effect any such
transaction, it will take all reasonable steps to ensure that it will not create a
disorderly or false market in the securities of the Company; and
at any time within the period commencing on the date of this Agreement and ending on the date
which is 12 months after the Listing Date, it will (i) upon any pledge or charge by it or the
relevant registered holder(s) in favour of an authorized institution (as defined in the Banking
Ordinance) of any Shares or other securities of the Company (or interests therein) beneficially
owned by it for a bona fide commercial loan, immediately inform the Company in writing of
such pledge or charge together with the number of Shares or other securities of the Company
so pledged or charged; and (ii) upon any indication received by it or the relevant registered
UNDERWRITING
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--- page 490 ---
holder(s), either verbal or written, from any pledgee or chargee that any of the pledged or
charged Shares or other securities of the Company (or interests therein) will be disposed of,
immediately inform the Company of such indications. The Company undertakes to each of the
Joint Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Hong Kong Underwriters and the Capital Market
Intermediaries that it shall, upon receiving such information from any of the Controlling
Shareholders, as soon as practicable, notify the Stock Exchange and make an announcement in
accordance with the Listing Rules.
(E) Undertakings by all of our Shareholders as of the date of this Prospectus pursuant to
Lock-up Undertakings
Each of our Shareholders as of the date of this Prospectus has undertaken to the Company,
the Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the
Underwriters in connection with the Global Offering) that, subject to certain limited exceptions
(such as use of the Locked-up Securities (as defined below) as security (including a charge or
a pledge) for a bona fide commercial loan), during the period commencing from (and be
inclusive of) the Listing Date and ending on the date that is six months from the Listing Date
(the “ Lock-up Period ”), it will not and will procure that its affiliates will not:
(1) sell, offer to sell, contract or agree to sell, pledge, mortgage, charge, hypothecate,
lend, grant or sell any option, warrant or other 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, either directly or indirectly, conditionally or
unconditionally, any Shares held by any one of the Shareholders immediately upon
Listing or any interest in any Shares (including, without limitation, any securities
convertible into or exchangeable or exercisable for or that represent the right to
receive, or any warrant, option or other right to purchase, any Shares or securities
of the Company or any interest therein) held by such Shareholder that were
subscribed and/or acquired prior to the Global Offering (collectively referred to as
the “ Locked-up Securities ”);
(2) enter into any swap or other arrangement that transfers to another person, in whole
or in part, any of the economic consequences of ownership of any of the Locked-up
Securities;
(3) enter into any transaction with the same economic effect as any transaction specified
in paragraphs (1) or (2) above; or
(4) offer to or contract to or agree to or publicly disclose that it will or may enter into
any transaction described in paragraphs (1), (2) or (3) above,
in each case, whether any such transaction described in paragraphs (1), (2) or (3) above
is to be settled by delivery of such Shares or such other securities of the Company, in cash
or otherwise (whether or not the settlement or delivery of such Shares or such other
securities of the Company will be completed within the Lock-up Period).
UNDERWRITING
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--- page 491 ---
Please refer to the section headed “History, Reorganization and Corporate Structure —
Capitalization” for the full list of our Shareholders as of the date of this Prospectus.
JOINT SPONSORS’ AND HONG KONG UNDERWRITERS’ INTERESTS IN THE
COMPANY
As of the Latest Practicable Date, Beijing Chunlin Equity Investment Center (Limited
Partnership) (ᛆҳ༟ʕː(Υྫ)), China Securities (International) Finance
Company Limited (ҳ(਷ყ)ʮ̡) and JSC International Investment Fund SPC
acting for and on behalf of Shan Xin SP were interested in approximately 0.26%, 0.24% and
0.24% of the issued share capital of our Company, respectively. For details, see notes 9 and 11
to the section headed “History, Reorganization and Corporate Structure — Capitalization.”
Save as disclosed above and other than pursuant to the Hong Kong Underwriting
Agreement and, if applicable, the Stock Borrowing Agreement, as of the Latest Practicable
Date, none of the Joint Sponsors or 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. Further, see the section headed “Statutory and General Information — E. Other
Information — 3. The Joint Sponsors and Joint Sponsors’ fees” in Appendix IV to this
Prospectus for the Joint Sponsors’ independence declaration pursuant to Rule 3A.07 of the
Listing Rules.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the 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, the Company and the Controlling
Shareholders expect to enter into the International Underwriting Agreement with, amongst
others, the International Underwriters on 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 or purchasers for, or themselves to subscribe for or purchase, 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, the Global Offering will not proceed. See the section headed “Structure of
the Global Offering — The International Offering” in this Prospectus.
UNDERWRITING
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--- page 492 ---
Over-allotment Option
The Company is expected to grant to the International Underwriters the Over-allotment
Option, exercisable by the Overall Coordinators (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 the Company may be required to issue up
to an aggregate of 203,265,600 Class B Ordinary 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 in the International Offering, if any. See the section headed “Structure
of the Global Offering — Over-allotment Option” in this prospectus.
Commissions and Expenses
All Capital Market Intermediaries participating in the Global Offering will receive an
aggregate underwriting commission equal to (a) 3.0% of the aggregate Offer Price payable in
respect of all of the Offer Shares (including any Offer Shares that may be issued pursuant to
the exercise of the Over-allotment Option) (the “Gross Proceeds”), assuming that the Gross
Proceeds are above US$500 million and up to US$700 million; or (b) 2.0% of the Gross
Proceeds, assuming that the Gross Proceeds are above US$700 million and up to US$1 billion
(the “Underwriting Commission”). In addition, the Company may, in its sole discretion, pay to
all Capital Market Intermediaries an incentive fee in an aggregate of up to 1.5% of the Gross
Proceeds (the “Discretionary Fee”).
Assuming the Discretionary Fees are paid in full, the ratio of the fixed amount of the
Underwriting Commission payable to all Capital Market Intermediaries (the “Fixed Fees”) and
Discretionary Fees payable to all Capital Market Intermediaries is approximately (a) 62:38,
assuming that the Gross Proceeds are above US$500 million and up to US$700 million; or (b)
53:47, assuming that the Gross Proceeds are above US$700 million and up to US$1 billion. For
any unsubscribed Hong Kong Offer Shares reallocated to the International Offering, we will
pay the underwriting commission at the rate applicable to the International Offering to the
relevant International Underwriters (but not the Hong Kong Underwriters).
The aggregate amount of sponsor fee payable by our Company to each of the Joint
Sponsors is US$500,000.
The aggregate underwriting commissions and fees together with the Stock Exchange
listing fees, the SFC transaction levy, the AFRC transaction levy and the Stock Exchange
trading fee, legal and other professional fees and printing and all other expenses relating to the
Global Offering are estimated to be approximately HK$258.7 million (assuming an Offer Price
of HK$3.86 per Offer Share (which is the mid-point of the Offer Price range), the full payment
of the discretionary incentive fee and the Over-allotment Option is not exercised) and will be
paid by the Company.
UNDERWRITING
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--- page 493 ---
ACTIVITIES BY SYNDICATE MEMBERS
The Underwriters (also known as, 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 the Company
and/or persons and entities with relationships with the 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 Class B Ordinary Shares, the activities of the Syndicate Members and
their affiliates could include acting as agent for buyers and sellers of the Class B Ordinary
Shares, entering into transactions with those buyers and sellers in a principal capacity,
including as a lender to initial purchasers of the Class B Ordinary Shares (which financing may
be secured by the Class B Ordinary Shares) in the Global Offering, proprietary trading in the
Class B Ordinary 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
Class B Ordinary 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 Class B Ordinary Shares, which
may have a negative impact on the trading price of the Class B Ordinary 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 Class B Ordinary
Shares, in baskets of securities or indices including the Class B Ordinary Shares, in units of
funds that may purchase the Class B Ordinary Shares, or in derivatives related to any of the
foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the Class B Ordinary 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 Class B Ordinary
Shares in most cases.
UNDERWRITING
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--- page 494 ---
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” in this Prospectus. Such
activities may affect the market price or value of the Class B Ordinary Shares, the liquidity or
trading volume in the Class B Ordinary Shares and the volatility of the price of the Class B
Ordinary 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 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, lending and other services to
the 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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--- page 495 ---
THE GLOBAL OFFERING
This Prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering.
The listing of the Class B Ordinary Shares on the Stock Exchange is sponsored by the
Joint Sponsors. The Joint Sponsors have made an application on behalf of the Company to the
Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Class
B Ordinary Shares in issue (including the Class B Ordinary Shares on conversion of the
Preferred Shares) and to be issued as mentioned in this Prospectus; and the Class B Ordinary
Shares that are issuable upon conversion of the Class A Ordinary Shares.
1,355,106,600 Offer Shares will initially be made available under the Global Offering
comprising:
(a) the Hong Kong Public Offering of initially 135,511,200 Class B Ordinary Shares
(subject to reallocation) in Hong Kong as described in the paragraph headed “— The
Hong Kong Public Offering” below; and
(b) the International Offering of initially 1,219,595,400 Class B Ordinary Shares
(subject to reallocation and the Over-allotment Option) (i) in the United States
solely to QIBs in reliance on Rule 144A or another exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act
and (ii) outside the United States (including to professional and institutional
investors within Hong Kong) in offshore transactions in reliance on Regulation S, as
described in paragraph headed “— The International Offering” 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 10.4% 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 will
represent approximately 11.8% of the total Shares in issue immediately following the
completion of the Global Offering.
References in this prospectus to applications, application monies or the procedure for
applications relate solely to the Hong Kong Public Offering.
STRUCTURE OF THE GLOBAL OFFERING
– 485 –


--- page 496 ---
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares initially offered
The Company is initially offering 135,511,200 Offer Shares for subscription by the public
in Hong Kong at the Offer Price, representing approximately 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
paragraph headed “— Conditions of the Global Offering” below.
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 (to the nearest board lot and with any odd lots being allocated to Pool
A) into two pools: 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.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 497 ---
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 67,755,600 Hong Kong
Offer Shares is liable to be rejected.
Reallocation and Clawback
The allocation of the Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. 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 Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares offered under the Global Offering if the
International Offer Shares are fully subscribed or oversubscribed and certain prescribed total
demand levels under the Hong Kong Public Offering are reached.
We have applied for, and the Stock Exchange has granted us, a waiver from strict
compliance with Paragraph 4.2 of Practice Note 18 of the Listing Rules to the effect as further
described below (the “ Alternative Clawback Mechanism ”). 135,511,200 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.
If the number of Offer Shares validly applied for under the Hong Kong Public Offering
represents (a) 13 times or more but less than 46 times, (b) 46 times or more but less than 92
times and (c) 92 times or more of the total number of Offer Shares initially available under the
Hong Kong Public Offering, then Offer Shares will be reallocated to the Hong Kong Public
Offering from the International Offering. As a result of such reallocation, the total number of
Offer Shares available under the Hong Kong Public Offering will be increased to 203,266,200
Offer Shares (in the case of (a)), 271,021,800 Offer Shares (in the case of (b)) and 542,043,000
Offer Shares (in the case of (c)), representing approximately 15.0%, approximately 20.0% and
approximately 40.0% of the total number of Offer Shares initially available under the Global
Offering, respectively (assuming the Over-allotment Option is not exercised).
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 498 ---
In addition, the Overall Coordinators may allocate Offer Shares from the International
Offer Shares to the Hong Kong Public Offering to satisfy valid applications under the Hong
Kong Public Offering. In accordance with the guidance in chapter 4.14 of the Guide for New
Listing Applicants issued by the Stock Exchange, 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
oversubscribed as to less than 13 times of the number of Hong Kong Offer Shares initially
available under the Hong Kong Public Offering, the maximum total number of Offer Shares
that may be allocated to the Hong Kong Public Offering following such reallocation (the
“Allocation Cap ”) shall be not more than double the initial allocation to the Hong Kong Public
Offering (i.e. 271,021,800 Offer Shares) and the final Offer Price shall be fixed at the bottom
end of the indicative price range (i.e. HK$3.73 per Offer Share).
If the Hong Kong Public Offering is not fully subscribed, the Overall Coordinators may
reallocate all or any unsubscribed Hong Kong Offer Shares to the International Offering, in
such proportions as the Overall Coordinators deem appropriate.
The Offer Shares to be offered in the Hong Kong Public Offering and the Offer Shares
to be offered in the International Offering may, in certain circumstances, be reallocated
between these offerings at the discretion of the Overall Coordinators, subject to the Alternative
Clawback Mechanism and the Allocation Cap (as applicable).
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 Wednesday, October 23, 2024.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an
undertaking and confirmation in the application submitted by him that he and any person(s) for
whose benefit he 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 has been or will be placed or allocated International Offer Shares under the International
Offering.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum Offer Price of HK$3.99 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$2,418.14 for
one board lot of 600 Class B Ordinary Shares. If the Offer Price, as finally determined in the
manner described in the paragraph headed “— Pricing and Allocation” below, is less than the
maximum Offer Price of HK$3.99 per Offer 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
(subject to application channels), without interest. Further details are set out in the section
headed “How to Apply for Hong Kong Offer Shares” in this Prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 499 ---
THE INTERNATIONAL OFFERING
Number of Offer Shares initially offered
The International Offering will consist of an offering of initially 1,219,595,400 Class B
Ordinary 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 9.4% 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 to QIBs in the
United States as well as institutional and professional investors and other investors anticipated
to have a sizable 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 the paragraph headed “— Pricing
and Allocation” below and based on 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 Offer
Shares and/or hold or sell its Offer Shares after the Listing. Such allocation is intended to result
in a distribution of the Offer 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 Overall Coordinators (for themselves 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 Overall Coordinators 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 pursuant to the International Offering may
change as a result of the clawback arrangement described in the paragraph headed “— The
Hong Kong Public Offering — Reallocation” 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.
STRUCTURE OF THE GLOBAL OFFERING
– 489 –


--- page 500 ---
OVER-ALLOTMENT OPTION
In connection with the Global Offering, the Company is expected to grant the
Over-allotment Option to the International Underwriters.
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Overall Coordinators (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 the Company to issue up to an aggregate of 203,265,600
additional Class B Ordinary Shares, representing not more than 15.0% 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 in the International Offering, if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued
pursuant thereto will represent approximately 1.5% of the total Shares in issue immediately
following the completion of the Global Offering and the full exercise of the Over-allotment
Option. If the Over-allotment Option is exercised, an announcement will be made.
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 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 Class B Ordinary 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 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 any person acting for it) and in what the Stabilizing
Manager reasonably regards as the best interest of the 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-allocating for the purpose of preventing or
minimizing any reduction in the market price of the Class B Ordinary Shares, (b) selling or
agreeing to sell the Class B Ordinary 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 Class B Ordinary
STRUCTURE OF THE GLOBAL OFFERING
– 490 –


--- page 501 ---
Shares, (c) purchasing, or agreeing to purchase, the Class B Ordinary 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 Class B Ordinary Shares for the sole
purpose of preventing or minimizing any reduction in the market price of the Class B Ordinary
Shares, (e) selling or agreeing to sell any Class B Ordinary 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) as a result of effecting transactions to stabilize or maintain the market price of the
Class B Ordinary Shares, the Stabilizing Manager (or any person acting for it) may,
in connection with the stabilizing action, maintain a long position in the Class B
Ordinary Shares;
(b) there is no certainty as to the extent to which and the time or period for which the
Stabilizing Manager (or any person acting for it) will maintain such a long position;
(c) liquidation of any such long position by the Stabilizing Manager (or any person
acting for it) and selling in the open market may have an adverse impact on the
market price of the Class B Ordinary Shares;
(d) no stabilizing action can be taken to support the price of the Class B Ordinary Shares
for longer than the stabilization period, which will begin on the Listing Date, and is
expected to expire on Wednesday, November 20, 2024, being 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 Class B
Ordinary Shares, and therefore the price of the Class B Ordinary Shares, could fall;
(e) the price of the Class B Ordinary 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.
The 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.
STRUCTURE OF THE GLOBAL OFFERING
– 491 –


--- page 502 ---
Over-Allocation
Following any over-allocation of Class B Ordinary Shares in connection with the Global
Offering, the Stabilizing Manager (or any person acting for it) may cover such over-allocations
by, among other methods, exercising the Over-allotment Option in full or in part, by using
Class B Ordinary Shares purchased by the Stabilizing Manager (or any person acting for it) in
the secondary market at prices that do not exceed the Offer Price or through the Stock
Borrowing Agreement as detailed below or a combination of these means.
STOCK BORROWING AGREEMENT
In order to facilitate the settlement of over-allocations, if any, in connection with the
Global Offering, the Stabilizing Manager (or any person acting for it) may choose to borrow
up to 203,265,600 Class B Ordinary Shares (being the maximum number of Class B Ordinary
Shares which may be issued pursuant to the exercise of the Over-allotment Option) from HOPE
Robotics Holdings Inc. and Evolution Special Opportunity Fund I, L.P. (each a “ Lender ” and
collectively the “ Lenders ”), pursuant to the stock borrowing agreement, which is expected to
be entered into between the Stabilizing Manager (or any person acting for it) and each of the
Lenders on or about the Price Determination Date (the “ Stock Borrowing Agreement ”).
The same number of Class B Ordinary Shares so borrowed must be returned to the
Lenders or their respective nominees, as the case may be, on or before the third business day
following the earlier of (a) the last day for exercising the Over-allotment Option and (b) the
day on which the Over-allotment Option is exercised in full.
The Class B Ordinary Shares borrowing arrangement described above will be effected in
compliance with all applicable laws, rules and regulatory requirements. No payment will be
made to the Lenders by the Stabilizing Manager (or any person acting for it) in relation to such
Class B Ordinary Shares borrowing arrangement.
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
Tuesday, October 22, 2024 and, in any event, no later than 12:00 noon on Tuesday, October 22,
2024, by agreement between the Overall Coordinators (for themselves and on behalf of the
Underwriters) and the Company, and the number of Offer Shares to be allocated under the
various offerings will be determined shortly thereafter.
STRUCTURE OF THE GLOBAL OFFERING
– 492 –


--- page 503 ---
The Offer Price will not be more than HK$3.99 per Offer Share and is expected to be not
less than HK$3.73 per Offer Share, unless otherwise announced, as further explained below.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum Offer Price of HK$3.99 per Offer 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$2,418.14 for one board
lot of 600 Class B Ordinary 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 lower end of the
price range 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 Overall Coordinators (for themselves and 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 the
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, the 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 the Company and the Stock Exchange at
https://www.horizon.auto and www.hkexnews.hk , respectively, notices of the reduction.
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. 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 Overall Coordinators (for themselves
and on behalf of the Underwriters), the Company, will be fixed within such revised Offer Price
range. In the absence of any such notice and supplemental prospectus so published, the number
of Offer Shares will not be reduced and/or the Offer Price, if agreed upon by the Overall
Coordinators (for themselves and on behalf of the Underwriters) and the Company, will under
no circumstances be set outside the Offer Price range as stated in this prospectus.
Before submitting applications for the Hong Kong Offer Shares, applicants should
therefore 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.
STRUCTURE OF THE GLOBAL OFFERING
– 493 –


--- page 504 ---
If, after the issue of this prospectus and before the commencement of dealings in our
Class B Ordinary Shares, there is any change to the offer size due to change in the number of
Offer Shares initially offered in the Global Offering (other than pursuant to the reallocation
mechanism as disclosed in this prospectus), or change to the Offer Price falling outside the
indicative Offer Price range as stated in this prospectus, or if the Company becomes aware that
there has been a significant change affecting any matter contained in this prospectus or a
significant new matter has arisen, the inclusion of information in respect of which would have
been required to be in this prospectus if it had arisen before this prospectus was issued, as
prescribed under Rule 11.13 of the Listing Rules, we are required to cancel the Global Offering
and relaunch the offer and issue a supplemental prospectus or a new 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” in
this Prospectus.
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 Overall Coordinators (for themselves and on behalf of the
Underwriters) and the Company agreeing on the Offer Price.
The Company and the Controlling Shareholders expect to enter into the International
Underwriting Agreement relating to the International Offering on 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 Class B Ordinary Shares in issue and to be issued pursuant to the Global
Offering (including any Class B Ordinary Shares which may be issued pursuant to
the exercise of the Over-allotment Option) and the Class B Ordinary Shares that may
be issued upon conversion of the Class A Ordinary Shares, on the Main Board of the
Stock Exchange and such approval not subsequently having been withdrawn or
revoked prior to the Listing Date;
(b) the Offer Price having been agreed between the Overall Coordinators (for
themselves on behalf of the Underwriters) and the Company;
STRUCTURE OF THE GLOBAL OFFERING
– 494 –


--- page 505 ---
(c) the execution and delivery of the International Underwriting Agreement on or about
the Price Determination Date; and
(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 Overall Coordinators (for
themselves and on behalf of the Underwriters) on or before 12:00 noon on Tuesday, October
22, 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 the Company on the
websites of the Company and the Stock Exchange at https://www.horizon.auto 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. Despatch/Collection of 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).
Share certificates for the Offer Shares will only become valid at 8:00 a.m. Thursday,
October 24, 2024, provided that the Global Offering has become unconditional in all respects
at or before that time.
DEALINGS IN THE CLASS B ORDINARY SHARES
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Thursday, October 24, 2024, it is expected that dealings in the Class B
Ordinary Shares on the Stock Exchange will commence at 9:00 a.m. on Thursday, October 24,
2024.
The Class B Ordinary Shares will be traded in board lots of 600 Class B Ordinary Shares
each and the stock code of the Class B Ordinary Shares will be 9660.
STRUCTURE OF THE GLOBAL OFFERING
– 495 –


--- page 506 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering and below are the procedures for application.
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 https://www.horizon.auto.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 have a Hong Kong address (for the HK eIPO White Form service only) ;
 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; and
 are not a legal or natural person of the PRC (except qualified domestic institutional
investors).
Unless permitted by the Listing Rules or any relevant waivers that have been granted by
the Stock Exchange, you cannot apply for any Hong Kong Offer Shares if you or the person(s)
for whose benefit you are applying for:
 are an existing beneficial owner of Shares and/or any of our subsidiaries; or
 are a director or chief executive of the Company and/or any of our subsidiaries;
 are a close associate of any of the above persons; or
 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
– 496 –


--- page 507 ---
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on Wednesday, October 16,
2024 and end at 12:00 noon on Monday, October 21, 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
HK eIPO
White Form
service /H1118/H1118/H1118/H1118/H1118
www.hkeipo.hk
Investors who would
like to receive a
physical Share
certificate. Hong
Kong Offer Shares
successfully applied
for will be allotted
and issued in your
own name.
From 9:00 a.m. on
Wednesday, October
16, 2024 to 11:30
a.m. on Monday,
October 21, 2024,
Hong Kong time.
The latest time for
completing full
payment of
application monies
will be 12:00 noon
on Monday, October
21, 2024, Hong
Kong time.
HKSCC EIPO
channel /H1118/H1118/H1118/H1118
Your 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
Investors who would
not like to receive a
physical 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
– 497 –


--- page 508 ---
The HK eIPO White Form 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 HK eIPO White Form service, once you complete
payment in respect of any application instructions given by you or for your benefit through the
HK eIPO White Form 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 HK eIPO White
Form service more than once and obtaining different payment reference numbers without
effecting full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the HK eIPO White Form service, you are deemed to have
authorized the HK eIPO White Form Service Provider to apply on the terms and conditions
in this prospectus, as supplemented and amended by the terms and conditions of the HK eIPO
White Form 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 the 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
– 498 –


--- page 509 ---
3. Information Required to Apply
You must provide the following information with your application:
For Individual 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 HK eIPO White Form service, you are required to provide a valid
e-mail address, a contact telephone number and a Hong Kong address. You 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. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
(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 a public
offer. 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 account holders on FINI is capped at 4 in accordance with market
practice.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 499 –


--- page 510 ---
(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.
(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 the HKSCC EIPO channel, and making an application under
a power of attorney, we and the Overall Coordinators, as our agent, 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 /H1118/H1118/H1118/H1118/H1118/H1118600 Hong Kong Offer Shares
Permitted number
of Hong Kong
Offer Shares for
application and
amount payable
on application/
successful
allotment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
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.
The maximum Offer Price is HK$3.99 per Hong Kong Offer
Share. If you are applying through the HKSCC EIPO channel,
you are required to pre-fund 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
– 500 –


--- page 511 ---
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 HK eIPO White Form service,
you may refer to the table below for the amount payable for the
number of Hong Kong Offer Shares you have selected. You must
pay the respective maximum amount payable on application in
full upon application for Hong Kong Offer Shares.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
600 2,418.14 18,000 72,544.31 300,000 1,209,071.75 9,000,000 36,272,152.36
1,200 4,836.29 21,000 84,635.02 450,000 1,813,607.62 10,500,000 42,317,511.08
1,800 7,254.43 24,000 96,725.74 600,000 2,418,143.49 12,000,000 48,362,869.80
2,400 9,672.57 27,000 108,816.46 750,000 3,022,679.37 13,500,000 54,408,228.53
3,000 12,090.72 30,000 120,907.17 900,000 3,627,215.24 15,000,000 60,453,587.26
3,600 14,508.86 45,000 181,360.76 1,050,000 4,231,751.11 30,000,000 120,907,174.50
4,200 16,927.01 60,000 241,814.35 1,200,000 4,836,286.98 45,000,000 181,360,761.76
4,800 19,345.15 75,000 302,267.94 1,350,000 5,440,822.86 60,000,000 241,814,349.00
5,400 21,763.29 90,000 362,721.53 1,500,000 6,045,358.73 67,755,600
(1) 273,071,271.75
6,000 24,181.44 105,000 423,175.11 3,000,000 12,090,717.46
9,000 36,272.15 120,000 483,628.70 4,500,000 18,136,076.18
12,000 48,362.87 135,000 544,082.28 6,000,000 24,181,434.90
15,000 60,453.59 150,000 604,535.88 7,500,000 30,226,793.63
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer
Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as
defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made through
the application channel of the HK eIPO White Form Service Provider) while the SFC transaction levy, the
Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 512 ---
5. Multiple Applications Prohibited
You 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. Application 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 HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected.
If you have made an application through the HK eIPO White Form service or HKSCC EIPO
channel, you or the person(s) for whose benefit you have made the application shall not apply
further for any Offer Shares in the Global Offering.
The Hong Kong Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names and identification document numbers
according to the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications
issued by the Federation of Share Registrars Limited.
Since applications are subject to personal information collection statements,
identification document numbers displayed are redacted.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form 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 HK eIPO
White Form service (or as the case may be, the agreement you entered into with
your broker or custodian), and agree to be bound by them;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 513 ---
(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;
(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
1, the Hong Kong Share Registrar and HKSCC will
not be liable for any information and representations not in this Prospectus and any
supplement to it;
(vii) undertake and confirm that you or the person(s) for whose benefit you have made
the application have not applied for or taken up, or indicated an interest for, and will
not apply for or take up, or indicate an interest for, any International Offer Shares
nor participated in the International Offering;
(viii) 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 Hong Kong Share
Registrar, the receiving banks, 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;
(ix) 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;
(x) 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
1 Relevant Persons would include the Joint Sponsors, the Joint Global Coordinators, the Overall Coordinators,
the Joint Bookrunners, the Joint Lead Managers, the Underwriters, the Capital Market Intermediaries, any of
their 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 514 ---
evidenced by the notification of the result of the ballot by the Hong Kong 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;
(xi) confirm that you are aware of the situations specified in the paragraph headed “—
C. Circumstances In Which You Will Not Be Allocated Hong Kong Offer Shares” in
this section;
(xii) 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;
(xiii) represent, warrant and undertake that (a) you understand that the Hong Kong Offer
Shares have not been and will not be registered under the U.S. Securities Act and
(b) you and any person for whose benefit you are applying for the Hong Kong Offer
Shares 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;
(xiv) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, our Memorandum and Articles, the Cayman
Companies Act 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;
(xv) 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
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;
(xvi) warrant that the information you have provided is true and accurate;
(xvii) 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;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 515 ---
(xviii) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xix) authorize (a) us to place your name(s) or the name of HKSCC Nominees on our
register of members as the holder(s) of any Hong Kong Offer Shares allocated to you
and such other registers as required under our Memorandum and Articles; and (b) us
and/or our agents to send any Share certificate(s) and/or any e-Auto Refund payment
instructions and/or any refund check(s) to you or the first-named applicant for joint
applications by ordinary post at your own risk to the address stated on the
application, unless you have fulfilled the criteria mentioned in “— D.
Despatch/Collection of Share Certificates and Refund of Application Monies” below
to collect the Share certificate(s) and/or refund check(s) in person;
(xx) 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;
(xxi) (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 HK eIPO White Form Service Provider or by any one as your agent or by any
other person; and
(xxii) (if you are making the application as an agent for the benefit of another person)
warrant that (a) 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 the HK
eIPO White Form Service Provider and (b) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
For the avoidance of doubt, we and all other parties involved in the preparation of this
prospectus acknowledge that each applicant and HKSCC Participant 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 516 ---
B. PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
Website /H1118/H1118/H1118From the “Allotment Results” page at
www.hkeipo.hk/IPOResult (or
www.tricor.com.hk/ipo/result )
with a “search by ID” function
24 hours, from 11:00 p.m.
on Wednesday, October
23, 2024 to 12:00
midnight Tuesday,
October 29, 2024 (Hong
Kong time).The full list of (i) wholly or partially
successful applicants using the HK eIPO
White Form service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally allotted
to them, among other things, will be
displayed at www.hkeipo.hk/IPOResult
or www.tricor.com.hk/ipo/result .
The Stock Exchange’s website at
www.hkexnews.hk and our website at
https://www.horizon.auto which will
provide links to the above mentioned
websites of the Hong Kong Share
Registrar.
No later than 11:00 p.m.
on Wednesday, October
23, 2024 (Hong Kong
time).
Telephone /H1118/H1118+852 3691 8488 — the allocation results
telephone enquiry line provided by the
Hong Kong Share Registrar.
between 9:00 a.m. and
6:00 p.m., from
Thursday, October 24,
2024 to Tuesday,
October 29, 2024 (Hong
Kong time) on a
business day.
For those applying through HKSCC EIPO channel, you may also check with your broker
or custodian from 6:00 p.m. on Tuesday, October 22, 2024 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 517 ---
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Tuesday, October 22, 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 Global 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 https://www.horizon.auto by no later than 11:00 p.m.
on Wednesday, October 23, 2024 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
You 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:
Your 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 Hong Kong 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 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. You may refer to
the paragraph headed “— A. Application 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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--- page 518 ---
 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 Hong Kong Offer 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 the Hong Kong Offer Shares, the receiving
banks will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Shares 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 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 Global 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 Hong Kong 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. DESPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the Share certificates will be deposited into CCASS as described
below).
No temporary document of title will be issued in respect of the Class B Ordinary Shares.
No receipt will be issued for sums paid on application.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 519 ---
Share certificates will only become valid at 8:00 a.m. on Thursday, October 24, 2024
(Hong Kong time), provided that the Global Offering has become unconditional and the right
of termination described in the section headed “Underwriting” has not been exercised.
Investors who trade Class B Ordinary Shares prior to the receipt of Share certificates or the
Share certificates becoming valid do so entirely at their own risk.
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of Share certificate 2
For application
of 1,000,000
Hong Kong
Offer Shares
or more /H1118/H1118/H1118/H1118/H1118/H1118
Collection in person from the
Hong Kong Share Registrar,
Tricor Investor Services
Limited, at 17/F, Far East
Finance Centre, 16 Harcourt
Road, Hong Kong, or any other
place notified by us
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
Time: from 9:00 a.m. to 1:00
p.m. on Thursday, October 24,
2024 (Hong Kong time), or any
other date notified by us
No action by you is required
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
2 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
Wednesday, October 23, 2024 rendering it impossible for the relevant Share certificates to be despatched to
HKSCC in a timely manner, the Company shall procure the Hong Kong Share Registrar to arrange for delivery
of the supporting documents and Share certificates in accordance with the contingency arrangements as agreed
between them. You may refer to “— E. Bad Weather Arrangements” in this section.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 520 ---
HK eIPO White Form service HKSCC EIPO channel
Both individuals and authorised
representatives must produce,
at the time of collection,
evidence of identity acceptable
to the Hong Kong Share
Registrar
Note: If you do not collect your
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
For application
of less than
1,000,000 Hong
Kong Offer
Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118
Your Share certificate(s) will be
sent to the address specified in
your application instructions by
ordinary post at your own risk
Date: Wednesday, October 23,
2024
Refund mechanism for surplus application monies paid by you
Date /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Thursday, October 24, 2024 Subject to the arrangement
between you and your broker
or custodian
Responsible
party /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Hong Kong Share Registrar Your broker or custodian
Application
monies paid
through single
bank account /H1118/H1118
HK eIPO White Form e-Auto
Refund payment instructions to
your designated bank account
Your broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
between you and it
Application
monies paid
through
multiple bank
accounts /H1118/H1118/H1118/H1118/H1118/H1118
Refund cheque(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 521 ---
E. BAD WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Monday, October 21, 2024 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 Extreme Conditions,
(collectively, “ Bad Weather Signals ”), in force in Hong Kong at any time between 9:00 a.m.
and 12:00 noon on Monday, October 21, 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 Bad 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 https://www.horizon.auto of the revised timetable.
If a Bad Weather Signal is hoisted on Wednesday, October 23, 2024, the Hong Kong 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 Thursday,
October 24, 2024.
If a Bad Weather Signal is hoisted on Wednesday, October 23, 2024, for application of
less than 1,000,000 Hong Kong Offer Shares, the despatch of physical Share certificates will
be made by ordinary post when the post office re-opens after the Bad Weather Signal is lowered
or cancelled (e.g. in the afternoon of Wednesday, October 23, 2024 or on Thursday, October
24, 2024).
If a Bad Weather Signal is hoisted on Thursday, October 24, 2024, for application of
1,000,000 Hong Kong Offer Shares or more, physical Share certificates will be available for
collection in person at the Hong Kong Share Registrar’s office after the Bad Weather Signal
is lowered or cancelled (e.g. in the afternoon of Thursday, October 24, 2024 or on Friday,
October 25, 2024).
Prospective investors should be aware that if they choose to receive physical Share
certificates issued in their own name, there may be a delay in receiving the Share
certificates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
–5 1 1–


--- page 522 ---
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the Class B
Ordinary Shares on the Stock Exchange and we comply with the stock admission requirements
of HKSCC, the Class B Ordinary 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 Class B Ordinary Shares or any other date HKSCC chooses. Settlement of
transactions between Exchange Participants (as defined in the Listing Rules) is required to take
place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Class B Ordinary Shares to be
admitted into CCASS.
You should seek the advice of your broker or other professional adviser 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 Hong Kong 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 Hong Kong
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 Hong Kong 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 Hong Kong
Share Registrar.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 523 ---
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 Hong Kong 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 despatch of 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 Hong Kong Share Registrar immediately of any inaccuracies in the personal
data supplied.
3. Purposes
Your personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund cheque and HK eIPO White Form e-Auto
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
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 Class B Ordinary Shares and
identifying any duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Class B Ordinary 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 Class B Ordinary
Shares;
 disclosing relevant information to facilitate claims on entitlements; and
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 513 –


--- page 524 ---
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the Hong Kong Share Registrar to discharge their obligations to
applicants and holders of the Class B Ordinary Shares and/or regulators and/or any
other purposes to which applicants and holders of the Class B Ordinary Shares may
from time to time agree.
4. Transfer of personal data
Personal data held by the Company and the Hong Kong Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but the
Company and the Hong Kong 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 Hong Kong Share Registrar, in each case 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
Hong Kong Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, 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 Hong Kong 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).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 525 ---
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 Hong Kong 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 Hong Kong Share
Registrar have the right to charge a reasonable fee for the processing of such requests. All
requests for access to data or correction of data should be addressed to the Company and the
Hong Kong 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 Hong Kong Share Registrar for the attention of the privacy
compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 515 –


--- page 526 ---
The following is the text of a report set out on pages I-1 to I-3, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants,
Hong Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed
to the directors of the Company and to the Joint Sponsors pursuant to the requirements of
HKSIR 200 Accountants’ Reports on Historical Financial Information in Investment Circulars
issued by the Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF HORIZON ROBOTICS AND GOLDMAN SACHS (ASIA) L.L.C.,
MORGAN STANLEY ASIA LIMITED AND CHINA SECURITIES (INTERNATIONAL)
CORPORATE FINANCE COMPANY LIMITED
Introduction
We report on the historical financial information of Horizon Robotics (the “Company”)
and its subsidiaries (together, the “Group”) set out on pages I-4 to I-91, which comprises the
consolidated statements of financial position as at December 31, 2021, 2022 and 2023 and June
30, 2024, the company statements of financial position as at December 31, 2021, 2022 and
2023 and June 30, 2024, and the consolidated statements of profit or loss, the consolidated
statements of comprehensive income, the consolidated statements of changes in equity and the
consolidated statements of cash flows for each of the years ended December 31, 2021, 2022
and 2023 and the six months ended June 30, 2024 (the “Track Record Period”) and 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-91
forms an integral part of this report, which has been prepared for inclusion in the prospectus
of the Company dated October 16, 2024 (the “Prospectus”) in connection with the initial listing
of shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation set out
in Note 2 to the Historical Financial Information, and for such internal control as the directors
determine is necessary to enable the preparation of Historical Financial Information that is free
from material misstatement, whether due to fraud or error.
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200, Accountants’ Reports on Historical
Financial Information in Investment Circulars issued by the Hong Kong Institute of Certified
Public Accountants (“HKICPA”). This standard requires that we comply with ethical standards
and plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
APPENDIX I ACCOUNTANT’S REPORT
– I-1 –


--- page 527 ---
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountant’s judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers 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, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountant’s report, a true and fair view of the financial position of the Company as at
December 31, 2021, 2022 and 2023 and June 30, 2024 and the consolidated financial position
of the Group as at December 31, 2021, 2022 and 2023 and June 30, 2024 and of its consolidated
financial performance and its consolidated cash flows for the Track Record Period in
accordance with the basis of preparation set out in Note 2 to the Historical Financial
Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of profit or loss, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the six months ended June 30, 2023 and other explanatory
information (the “Stub Period Comparative Financial Information”). The directors of the
Company are responsible for the preparation of the Stub Period Comparative Financial
Information in accordance with the basis of preparation set out in Note 2 to the Historical
Financial Information. Our responsibility is to express a conclusion on the Stub Period
Comparative Financial Information based on our review. We conducted our review in
accordance with International Standard on Review Engagements 2410, Review of Interim
Financial Information Performed by the Independent Auditor of the Entity issued by the
International Auditing and Assurance Standards Board (“IAASB”). A review consists of
making inquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than
an audit conducted in accordance with International Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on
our review, nothing has come to our attention that causes us to believe that the Stub Period
Comparative Financial Information, for the purposes of the accountant’s report, is not
prepared, in all material respects, in accordance with the basis of preparation set out in Note
2 to the Historical Financial Information.
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 528 ---
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and the Companies (Winding Up
and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to Note 31 to the Historical Financial Information which states that no dividends
have been paid by Horizon Robotics in respect of the Track Record Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, October 16, 2024
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 529 ---
I 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
accountant’s report.
The financial statements of the Group for the Track Record Period, on which the
Historical Financial Information is based, were audited by PricewaterhouseCoopers in
accordance with International Standards on Auditing issued by the International Auditing and
Assurance Standards Board (the “Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 530 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Notes
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Revenue from contracts
with customers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 466,720 905,676 1,551,607 371,491 934,599
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 (135,734) (277,963) (457,297) (144,879) (195,861)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118330,986 627,713 1,094,310 226,612 738,738
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189 (1,143,642) (1,879,888) (2,366,255) (1,048,991) (1,419,656)
Administrative expenses /H1118/H1118/H1118/H1118/H1118/H1118/H11189 (319,003) (373,909) (443,366) (214,997) (243,144)
Selling and marketing expenses /H1118/H11189 (211,390) (298,500) (327,249) (142,728) (198,421)
Net impairment losses on
financial assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1(b) (5,098) (13,039) (20,793) (7,164) (53,237)
Other income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187 14,483 43,662 66,222 13,227 34,109
Other (losses)/gains – net /H1118/H1118/H1118/H1118/H1118/H11188 (1,669) (238,055) (33,391) (63,274) 36,193
Operating loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,335,333) (2,132,016) (2,030,522) (1,237,315) (1,105,418)
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 28,239 104,528 167,473 87,268 214,552
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 (16,592) (7,548) (8,651) (4,585) (3,789)
Finance income – net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,647 96,980 158,822 82,683 210,763
Share of results of investments
accounted for using the
equity method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 (2,530) (34,298) (112,074) (16,803) (181,633)
Fair value changes of preferred
shares and other financial
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 (763,984) (6,655,367) (4,760,354) (713,566) (4,012,726)
Loss before income tax /H1118/H1118/H1118/H1118/H1118/H1118(2,090,200) (8,724,701) (6,744,128) (1,885,001) (5,089,014)
Income tax benefit/(expense) /H1118/H1118/H1118/H111814 26,650 4,273 5,075 (3,490) (9,091)
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118(2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Loss is attributable to:
Owners of Horizon Robotics /H1118/H1118/H1118 (2,061,293) (8,719,410) (6,739,021) (1,888,475) (5,098,088)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118(2,257) (1,018) (32) (16) (17)
Loss per share for loss
attributable to the ordinary
equity holders of the Company
(expressed in RMB per share):
Basic and diluted loss per share /H111815 (0.81) (3.35) (2.50) (0.71) (1.81)
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 531 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Notes
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118(2,063,550) (8,720,428) (6,739,053) (1,888,491) (5,098,105)
Other comprehensive
income/(loss)
Items that will not be reclassified
to profit or loss
Currency translation differences /H1118 270,243 (898,171) (371,859) (931,652) (208,038)
Effects of changes in credit risk
for financial liabilities
designated as at fair value
through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 257,022 406,335 (457,686) (4,208) (85,118)
Other comprehensive
income/(loss) for the
year/period, net of nil tax /H1118/H1118/H1118 527,265 (491,836) (829,545) (935,860) (293,156)
Total comprehensive loss for
the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,536,285) (9,212,264) (7,568,598) (2,824,351) (5,391,261)
Total comprehensive loss for the
year/period is attributable to:
Owners of Horizon Robotics /H1118/H1118/H1118 (1,534,028) (9,211,246) (7,568,566) (2,824,335) (5,391,244)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118(2,257) (1,018) (32) (16) (17)
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 532 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at December 31,
As at
June 30,
Notes 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment /H1118/H1118/H1118/H1118/H1118/H111816 123,866 220,945 433,261 578,432
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 170,984 258,357 217,369 191,268
Deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 79,944 88,916 99,967 100,648
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818 197,440 319,075 302,906 283,532
Investments accounted for using the
equity method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 27,082 64,034 1,107,659 853,495
Financial assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.3 46,338 68,838 80,825 85,639
Restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819, 23 5,512 8,564 8,098 8,116
Prepayments and other non-current
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821 32,279 62,819 85,713 107,885
Total non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118683,445 1,091,548 2,335,798 2,209,015
Current assets
Inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 113,912 363,532 790,898 703,099
Prepayments and other current assets /H1118 21 282,992 206,452 136,729 173,735
Trade and note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820 169,355 420,672 541,091 687,601
Term deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 1,284,293 1,204,365 – –
Restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819, 23 12,856 2 709,716 726,865
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111823 8,050,034 6,608,657 11,359,641 10,452,449
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,913,442 8,803,680 13,538,075 12,743,749
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,596,887 9,895,228 15,873,873 14,952,764
LIABILITIES
Non-current liabilities
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 77,266 154,176 112,346 88,963
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829 – 12,515 112,844 243,895
Other non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H111827 7,570 15,652 61,954 47,603
Total non-current liabilities /H1118/H1118/H1118/H1118/H1118/H111884,836 182,343 287,144 380,461
APPENDIX I ACCOUNTANT’S REPORT
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--- page 533 ---
As at December 31,
As at
June 30,
Notes 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current liabilities
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 8,040 3,822 11,164 13,648
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186 5,546 63,079 24,875 12,143
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 38,248 50,615 52,010 43,944
Employee benefit obligations /H1118/H1118/H1118/H1118/H1118/H1118242,418 304,333 384,042 250,657
Accruals and other payables /H1118/H1118/H1118/H1118/H1118/H1118/H111827 270,525 278,245 540,444 284,312
Preferred shares and other financial
liabilities at FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 18,341,195 26,451,328 39,239,578 43,782,659
Total current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,905,972 27,151,422 40,252,113 44,387,363
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,990,808 27,333,765 40,539,257 44,767,824
Net current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,992,530) (18,347,742) (26,714,038) (31,643,614)
Net liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,393,921) (17,438,537) (24,665,384) (29,815,060)
EQUITY
Deficits attributable to owners
of Horizon Robotics
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 39 39 39 39
Share premium /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 124,120 146,257 146,257 146,257
Other reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 1,594,424 1,247,509 759,842 707,286
Accumulated losses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,112,754) (18,832,267) (25,571,415) (30,669,503)
(8,394,171) (17,438,462) (24,665,277) (29,815,921)
Non-controlling interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118250 (75) (107) 861
Total deficits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,393,921) (17,438,537) (24,665,384) (29,815,060)
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 534 ---
COMPANY STATEMENTS OF FINANCIAL POSITION
As at December 31,
As at
June 30,
Notes 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Investment in subsidiaries /H1118/H1118/H111812(b) 10,669,860 14,620,167 19,820,050 21,583,338
Financial assets at fair value
through profit or loss /H1118/H1118/H1118/H1118/H11183.3 14,452 27,251 33,183 38,347
Total non-current assets /H1118/H1118/H111810,684,312 14,647,418 19,853,233 21,621,685
Current assets
Commitment derivative /H1118/H1118/H1118/H1118/H111821(i) – 13,017 – –
Deferred listing expenses /H1118/H1118/H111821 – – – 3,667
Cash and cash equivalents /H1118/H1118/H111823 3,157,367 731,660 3,235,568 1,852,581
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H11183,157,367 744,677 3,235,568 1,856,248
Total assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,841,679 15,392,095 23,088,801 23,477,933
LIABILITIES
Current liabilities
Preferred shares and other
financial liabilities at
FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 18,341,195 26,451,328 39,239,578 43,597,362
Accruals and other payables /H111827 16,560 16,099 2,722 25,833
Total current liabilities /H1118/H1118/H1118/H111818,357,755 26,467,427 39,242,300 43,623,195
Total liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,357,755 26,467,427 39,242,300 43,623,195
Net liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,516,076) (11,075,332) (16,153,499) (20,145,262)
EQUITY
Deficits attributable to
owners
of Horizon Robotics
Share capital /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 39 39 39 39
Share premium /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824 124,120 146,257 146,257 146,257
Other reserves /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111825 1,369,604 1,563,148 1,284,408 1,305,198
Accumulated losses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,009,839) (12,784,776) (17,584,203) (21,596,756)
Total deficits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,516,076) (11,075,332) (16,153,499) (20,145,262)
APPENDIX I ACCOUNTANT’S REPORT
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Deficits attributable to owners of Horizon Robotics
Notes
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
deficits
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at January 1,
2021 (Unaudited) /H1118/H1118/H1118/H1118 39 99,593 895,281 (8,051,425) (7,056,512) 10,539 (7,045,973)
Loss for the year /H1118/H1118/H1118/H1118/H1118/H1118– – – (2,061,293) (2,061,293) (2,257) (2,063,550)
Effects of changes in credit
risk for financial
liabilities designated as
at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111828 – – 257,022 – 257,022 – 257,022
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 270,243 – 270,243 – 270,243
Total comprehensive loss
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 527,265 (2,061,293) (1,534,028) (2,257) (1,536,285)
Transactions with owners
in their capacity as
owners:
Share-based payments /H1118/H1118/H111824, 26 – 24,527 171,842 – 196,369 – 196,369
Appropriations to PRC
statutory reserves /H1118/H1118/H1118/H1118 – – 36 (36) – – –
Disposal of a subsidiary /H1118/H1118 – – – – – (8,032) (8,032)
Balance at December 31,
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 124,120 1,594,424 (10,112,754) (8,394,171) 250 (8,393,921)
Balance at January 1,
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 124,120 1,594,424 (10,112,754) (8,394,171) 250 (8,393,921)
Loss for the year /H1118/H1118/H1118/H1118/H1118/H1118– – – (8,719,410) (8,719,410) (1,018) (8,720,428)
Effects of changes in credit
risk for financial
liabilities designated as
at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111828 – – 406,335 – 406,335 – 406,335
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (898,171) – (898,171) – (898,171)
Total comprehensive loss
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (491,836) (8,719,410) (9,211,246) (1,018) (9,212,264)
APPENDIX I ACCOUNTANT’S REPORT
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Deficits attributable to owners of Horizon Robotics
Notes
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
deficits
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Transactions with owners
in their capacity as
owners:
Share-based payments /H1118/H1118/H111824, 26 – 22,137 151,561 – 173,698 – 173,698
Appropriations to PRC
statutory reserves /H1118/H1118/H1118/H1118 – – 103 (103) – – –
Purchase of non-controlling
interests /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (6,743) – (6,743) 693 (6,050)
Balance at December 31,
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 1,247,509 (18,832,267) (17,438,462) (75) (17,438,537)
Balance at January 1,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 1,247,509 (18,832,267) (17,438,462) (75) (17,438,537)
Loss for the year /H1118/H1118/H1118/H1118/H1118/H1118– – – (6,739,021) (6,739,021) (32) (6,739,053)
Effects of changes in credit
risk for financial
liabilities designated as
at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111828 – – (457,686) – (457,686) – (457,686)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (371,859) – (371,859) – (371,859)
Total comprehensive loss
for the year /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (829,545) (6,739,021) (7,568,566) (32) (7,568,598)
Transactions with owners
in their capacity as
owners:
Share-based payments /H1118/H1118/H111824, 26 – – 341,751 – 341,751 – 341,751
Appropriations to PRC
statutory reserves /H1118/H1118/H1118/H1118 – – 127 (127) – – –
Balance at December 31,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 759,842 (25,571,415) (24,665,277) (107) (24,665,384)
Balance at January 1,
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 759,842 (25,571,415) (24,665,277) (107) (24,665,384)
Loss for the period /H1118/H1118/H1118/H1118/H1118 – – – (5,098,088) (5,098,088) (17) (5,098,105)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 537 ---
Deficits attributable to owners of Horizon Robotics
Notes
Share
capital
Share
premium
Other
reserves
Accumulated
losses Total
Non-
controlling
interests
Total
deficits
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Effects of changes in credit
risk for financial
liabilities designated as
at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111828 – – (85,118) – (85,118) – (85,118)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (208,038) – (208,038) – (208,038)
Total comprehensive loss
for the period /H1118/H1118/H1118/H1118/H1118/H1118– – (293,156) (5,098,088) (5,391,244) (17) (5,391,261)
Transactions with owners
in their capacity as
owners:
Share-based payments /H1118/H1118/H111826 – – 236,639 – 236,639 – 236,639
Deemed investment arising
from share-based
payments to Joint
ventures’ employee /H1118/H1118/H111813 – – 3,961 – 3,961 – 3,961
Capital contributions from
non-controlling interests
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – – – 985 985
Balance at June 30, 2024 /H1118 39 146,257 707,286 (30,669,503) (29,815,921) 861 (29,815,060)
Balance at January 1,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 1,247,509 (18,832,267) (17,438,462) (75) (17,438,537)
Loss for the period /H1118/H1118/H1118/H1118/H1118 – – – (1,888,475) (1,888,475) (16) (1,888,491)
Effects of changes in credit
risk for financial
liabilities designated as
at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111828 – – (4,208) – (4,208) – (4,208)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (931,652) – (931,652) – (931,652)
Total comprehensive loss
for the period
(unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (935,860) (1,888,475) (2,824,335) (16) (2,824,351)
Transactions with owners
in their capacity as
owners:
Share-based payments /H1118/H1118/H111826 – – 178,931 – 178,931 – 178,931
Balance at June 30, 2023
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H111839 146,257 490,580 (20,720,742) (20,083,866) (91) (20,083,957)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 538 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended December 31,
Six months ended
June 30,
Notes 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating
activities
Cash used in operating
activities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,133,855) (1,651,838) (1,904,994) (1,237,172) (933,614)
Interest received /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,860 98,074 167,473 73,601 214,549
Income taxes paid /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21) (3,521) (6,987) (2,425) (6,889)
Net cash outflow from
operating activities /H1118/H1118/H1118/H1118/H1118/H1118(1,111,016) (1,557,285) (1,744,508) (1,165,996) (725,954)
Cash flows from investing
activities
Payments for land-use right,
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(174,213) (196,450) (259,446) (58,215) (241,948)
Payments for intangible assets /H1118 (49,817) (352,765) (194,526) (141,419) (271,075)
Purchase of investments
accounted for using the
equity method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 (15,691) (71,250) (1,453,000) (102,000) (31,420)
Payments for financial assets
at fair value through profit
or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.3 (1,305,420) (4,948,737) (4,399,778) (2,370,000) (5,404,154)
Placement of term deposits /H1118/H1118/H1118 (1,291,776) (3,791,355) (367,604) (67,604) –
Proceeds from disposal of a
subsidiary, net of cash
disposed /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,345––––
Proceeds from sale of property,
plant and equipment /H1118/H1118/H1118/H1118/H1118/H1118364 686 92 76 1,136
Proceeds from sale of financial
assets at fair value through
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.3 1,295,620 4,944,096 4,410,095 2,112,758 5,421,332
Term deposits matured /H1118/H1118/H1118/H1118/H1118155,420 4,201,269 1,596,881 646,890 –
Net cash outflow from
investing activities /H1118/H1118/H1118/H1118/H1118/H1118(1,384,168) (214,506) (667,286) 20,486 (526,129)
APPENDIX I ACCOUNTANT’S REPORT
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--- page 539 ---
Y ear ended December 31,
Six months ended
June 30,
Notes 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from financing
activities
Proceeds from issuance of
preferred shares and other
financial liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H111828 6,348,190 254,796 7,188,574 – 185,192
Payments for share purchase
from a non-controlling
interests shareholder /H1118/H1118/H1118/H1118/H1118 – (6,050) – – –
Capital contributions from
non-controlling interests
shareholders /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 9 8 5
Payments to certain former
investors for preferred
shares repurchase before
January 1, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827 – – (9,895) (9,895) –
Payment for listing expenses /H1118/H1118 –––– (2,375)
Payments for transaction cost
for issuance of preferred
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 (11,881) ––––
Principal elements of lease
payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 (32,185) (41,301) (51,489) (25,038) (26,330)
Interest elements of lease
payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817 (4,711) (7,548) (8,651) (4,585) (3,789)
Proceeds from borrowings /H1118/H1118/H111829 – 12,515 100,329 21,184 131,051
Net cash inflow/(outflow)
from financing activities /H1118/H1118 6,299,413 212,412 7,218,868 (18,334) 284,734
Net increase/(decrease) in
cash and cash equivalents /H1118 3,804,229 (1,559,379) 4,807,074 (1,163,844) (967,349)
Cash and cash equivalents at
the beginning of the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,296,055 8,050,034 6,608,657 6,608,657 11,359,641
Effects of exchange rate
changes on cash and cash
equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(50,250) 118,002 (56,090) (4,675) 60,157
Cash and cash equivalents at
the end of the year/period /H1118/H1118 8,050,034 6,608,657 11,359,641 5,440,138 10,452,449
APPENDIX I ACCOUNTANT’S REPORT
– I-14 –


--- page 540 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 GENERAL INFORMATION
Horizon Robotics (the “Company”) was incorporated in the Cayman Islands on July 21, 2015, as an exempted
company with limited liability under the Companies Act (Cap. 22, Law 3 of 1961 as consolidated and revised) of the
Cayman Islands. The address of the Company’s registered office is Maples Corporate Services Limited, PO Box 309,
Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
The Company is an investment holding company. The Company and its subsidiaries (collectively referred to
as the “Group”) are principally engaged in providing automotive solutions for passenger vehicles with proprietary
software and hardware. The Group also provides non-automotive solutions to enable device manufacturers to design
and manufacture devices and appliances with enhanced levels of intelligence.
The Company’s principal subsidiaries during the Track Record Period and as at the date of this report are set
out in Note 12.
2 BASIS OF PREPARATION
The Historical Financial Information of the Group has been prepared in accordance with all applicable IFRS
Accounting Standards issued by the International Accounting Standards Board (“IFRS Accounting Standards”). The
Historical Financial Information has been prepared under the historical cost convention, as modified by the
revaluation of convertible redeemable preferred shares, other financial liabilities at fair value through profit or loss,
and financial assets at fair value through profit or loss (“FVPL”).
The preparation of Historical Financial Information in conformity with IFRS Accounting Standards requires
the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process
of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas
where assumptions and estimates are significant to the Historical Financial Information are disclosed in Note 4 below.
2.1 Going concern
During the six months ended June 30, 2024, the Group reported a net loss of approximately RMB5,098,105,000
and a net operating cash outflow of approximately RMB725,954,000. As at June 30, 2024, the Group sustained a net
liability position of approximately RMB29,815,060,000 and a net current liability position of approximately
RMB31,643,614,000, primarily attributable to the presentation of the preferred shares and other financial liabilities
at FVPL of approximately RMB43,782,659,000 as current liabilities. Upon the completion of a qualified initial public
offering (Note 28), all of the preferred shares will be automatically converted into ordinary shares.
The Group’s source of finance and working capital mainly derived from issuance of preferred shares and
convertible loan. And with regard to the liquidity risk associated with the preferred shares and the convertible loan,
although presented as current liabilities due to the adoption of “Amendments to IAS 1 — Classification of Liabilities
as Current or Non-current” (see Note 2.2), the earliest redemption date of these financial liabilities is December 31,
2026 (see Note 3.1(c)). Management of the Group has prepared a cash flow projection covering a period of not less
than 12 months from June 30, 2024. Based on the projection prepared by management, the directors of the Company
believe that the Group will have sufficient working capital to finance its operations and to meet its financial
obligations as and when they fall due in the 12 months from June 30, 2024. Consequently, the Historical Financial
Information has been prepared on a going concern basis.
2.2 New Standards and amendments to standards not yet adopted
Standards and amendments to standards that have been issued but not yet effective and not been early adopted
by the Group during the Track Record Period are as follows:
Standards and amendments
Effective for accounting
periods beginning on or after
Amendments to IFRS 10 and IAS 28 ‘Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture’ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
To be determined
Amendments to IAS 21 ‘Lack of Exchange ability’ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2025
APPENDIX I ACCOUNTANT’S REPORT
– I-15 –


--- page 541 ---
Standards and amendments
Effective for accounting
periods beginning on or after
Amendments to IFRS 9 and IFRS 7, ‘Amendments to the Classification
and Measurement of Financial Instruments’ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
1 January 2026
Annual Improvements – V olume 11 IFRS accounting standards /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2026
IFRS 18, ‘Presentation and Disclosure in Financial Statements’ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2027
IFRS 19, ’Subsidiaries without Public Accountability: Disclosures’ /H1118/H1118/H1118/H1118/H1118/H1118/H11181 January 2027
The Group has already commenced an assessment of the impact of these new or revised standards and
amendments and no significant impact on the financial performance and positions of the Group is expected when they
become effective.
Amendments to IAS 12 “International Tax Reform — Pillar Two Model Rules” were issued on 23 May 2023
which are effective upon issuance and require retrospective application. The amendments provide a temporary
exception from deferred tax accounting for the income tax arising from tax law enacted or substantively enacted to
implement the Pillar Two model rules published by the Organisation for Economic Co-operation and Development
(“OECD”). The Group applies the IAS 12 exception to recognising and disclosing information about deferred tax
assets and liabilities related to Pillar Two income taxes. As at 30 June 2024, the Group mainly operates in the
Mainland of China, in which the legislation is not yet substantively enacted or enacted. Therefore, the Group has no
related current tax exposure and it is estimated that the Group’s income tax would not be materially different when
related legislation is enacted.
3 FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk,
interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance. Risk management is carried out by the senior management of the Group.
3.1 Financial risk factors
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognized assets and liabilities
are denominated in a currency that is not the respective functional currency of the Group’s subsidiaries. The
functional currency of the Company and its subsidiaries outside Mainland China are US$ whereas functional
currency of the subsidiaries operate in Mainland China is RMB. The Group manages its foreign exchange risk
by performing regular reviews of the Group’s net foreign exchange exposures and tries to minimize these
exposures through natural hedges, wherever possible.
The foreign currency assets and liabilities of the Group entities are certain cash and cash equivalents,
term deposits and receivables and payables denominated in foreign currencies of respective group entities that
are exposed to foreign currency risk. The foreign exchange risk the Group is facing mainly comes from
movements in the USD/RMB. During the Track Record Period, the Group did not have any derivative financial
instrument for which hedging accounting was applied.
If USD had strengthened by 5% against RMB with all other variables held constant, loss before income
tax for the year/period would have been approximately RMB29,659,000, RMB47,859,000 and RMB1,277,000
higher and RMB444,000 lower for the year ended December 31, 2021, 2022 and 2023 and the six months
ended June 30, 2024 respectively.
(ii) Interest rate risk
Except for cash and cash equivalents, restricted cash, term deposits and long-term borrowings, the
Group has no significant interest-bearing assets and borrowings.
The directors of the Company do not anticipate significant impact to interest-bearing assets and
borrowings resulted from the changes in interest rate because the interest rates of the above-mentioned
interest-bearing assets and borrowings are not expected to change significantly.
APPENDIX I ACCOUNTANT’S REPORT
– I-16 –


--- page 542 ---
(iii) Price risk
The Group’s exposure to equity securities price risk arises from investments in unlisted companies held
by the Group and classified in the statement of financial position as financial assets at fair value through profit
or loss.
To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio.
Each investment is managed by senior management of the Group individually. The sensitivity analysis is
performed by management, see Note 3.3 for details.
The Group also mainly invests in low-risk wealth management products and the proposed investment
must not interfere with the Group’s daily operation and business prospects. The Group makes investment
decisions related to wealth management products on a case-by-case basis after thoroughly considering a
number of factors, including but not limited to macroeconomic environment, general market conditions and the
expected profit or potential loss of the investment.
(b) Credit risk
Credit risk arises from cash and cash equivalents, restricted cash, term deposits, as well as trade and note
receivables and other receivables. The carrying amount of each class of the above financial assets represents the
Group’s maximum exposure to credit risk in relation to the corresponding class of financial assets.
(i) Risk management
To manage this risk, cash and cash equivalents, restricted cash and term deposits are mainly placed with
state-owned or reputable financial institutions which are all high-credit-quality financial institutions.
To manage risk from trade receivables, 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. Trade receivables have been grouped based on shared credit risk characteristics and
aging to measure the expected credit losses. Trade receivables are written off when there is no reasonable
expectation of recovery. Impairment losses on trade and note receivables are presented as net impairment
losses within operating profit. Subsequent recoveries of amounts previously written off are credited against the
same line item.
For note receivables and other receivables, management makes periodic collective assessments as well
as individual assessment on the recoverability of note receivables and other receivables based on historical
settlement records and past experiences.
(ii) Impairment of financial assets
The Group has three types of financial assets that are subject to the expected credit loss model:
 Cash and cash equivalents, restricted cash, term deposits;
 Trade and note receivables; and
 Other receivables.
Cash and cash equivalents, restricted cash, term deposits are mainly placed with reputable Chinese and
international financial institutions. There has been no recent history of default in relation to these financial
institutions. The expected credit loss was not material.
While the bank acceptance note receivables are also subject to the impairment requirements of IFRS 9,
the expected credit loss was immaterial.
Credit risk of trade receivables
The Group applies the IFRS 9 simplified approach to measure expected credit losses which uses
a lifetime expected loss allowance for all trade receivables.
APPENDIX I ACCOUNTANT’S REPORT
– I-17 –


--- page 543 ---
To measure the expected credit losses, trade receivables have been grouped based on shared credit
risk characteristics and the days outstanding of the trade receivables.
The expected loss rates are based on the historical payment profiles of sales over a period of 27
months, 39 months, 51 months and 63 months before January 1, 2021, 2022, 2023 and 2024 respectively
and the corresponding historical credit losses experienced within these periods. The historical loss rates
are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The Group has identified the Gross Domestic Products
(“GDP”) of the People’s Republic of China (“PRC”) to be the most relevant factors, and accordingly
adjusts the historical loss rates based on expected changes in these factors.
Trade receivables are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to
engage in a repayment plan with the Group, and indicators of severe financial difficulty.
On that basis, the loss allowance as at December 31, 2021, 2022 and 2023 and June 30, 2024 were
determined as follows for trade receivables:
As at December 31, 2021, the loss allowance of individually impaired trade receivables and
grouped trade receivables are determined as follows:
Individual Trade receivables
Expected credit
loss rate Loss allowance Reason
RMB’000 RMB’000
Trade receivables /H1118/H1118 606 100.00% (606) The likelihood
of recovery
As at
December 31,
2021
Up to
3 months
3t o
6 months
6t o
9 months
9t o
12 months
Over
12 months Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Expected loss rate /H1118/H1118 1.43% 3.73% 9.34% 12.04% 21.89% –
Gross carrying
amount – trade
receivables /H1118/H1118/H1118/H111898,589 30,802 19,009 407 28,915 177,722
Loss allowance /H1118/H1118/H11181,413 1,149 1,776 49 6,330 10,717
As at December 31, 2022, the loss allowance of individually impaired trade receivables and
grouped trade receivables are determined as follows:
Individual Trade receivables
Expected credit
loss rate Loss allowance Reason
RMB’000 RMB’000
Trade receivables /H1118/H1118 811 100.00% (811) The likelihood
of recovery
As at
December 31,
2022
Up to
3 months
3t o
6 months
6t o
9 months
9t o
12 months
Over
12 months Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Expected loss rate /H1118/H1118 2.24% 4.77% 10.52% 15.66% 31.12% –
Gross carrying
amount – trade
receivables /H1118/H1118/H1118/H1118245,507 67,445 23,863 1,443 36,567 374,825
Loss allowance /H1118/H1118/H11185,490 3,214 2,510 226 11,380 22,820
APPENDIX I ACCOUNTANT’S REPORT
– I-18 –


--- page 544 ---
As at December 31, 2023, the loss allowance of individually impaired trade receivables and
grouped trade receivables are determined as follows:
Individual Trade receivables
Expected credit
loss rate Loss allowance Reason
RMB’000 RMB’000
Trade receivables /H1118/H1118 47 100.00% (47) The likelihood
of recovery
As at
December 31,
2023
Up to
3 months
3t o
6 months
6t o
9 months
9t o
12 months
Over
12 months Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Expected loss rate /H1118/H1118 2.37% 4.55% 11.11% 13.33% 36.39% –
Gross carrying
amount – trade
receivables /H1118/H1118/H1118/H1118358,432 89,163 61,020 10,097 62,298 581,010
Loss allowance /H1118/H1118/H11188,495 4,060 6,779 1,346 22,673 43,353
As at June 30, 2024, the loss allowance of grouped trade receivables are determined as follows:
Individual Trade receivables
Expected credit
loss rate Loss allowance Reason
RMB’000 RMB’000
Trade receivables /H1118/H1118 37,517 100.00% (37,517) The likelihood
of recovery
As at June 30, 2024
Up to 3
months
3t o6
months
6t o9
months
9t o1 2
months
Over 12
months Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Expected loss rate /H1118/H1118 2.45% 4.55% 10.02% 12.58% 34.93% –
Gross carrying
amount – trade
receivables /H1118/H1118/H1118/H1118434,589 59,090 162,674 42,771 69,546 768,670
Loss allowance /H1118/H1118/H111810,632 2,691 16,299 5,382 24,293 59,297
The loss allowances for trade receivables for years ended December 31, 2021, 2022 and 2023 and
six months ended June 30, 2024 reconcile to the opening loss allowances as follows:
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Opening loss
allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118(6,195) (10,717) (22,820) (43,353)
Increase in the loss
allowance recognised
in profit or loss
during the
year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,128) (12,914) (20,580) (53,461)
Receivables written off
during the
year/period as
uncollectible /H1118/H1118/H1118/H1118/H1118/H1118606 811 47 328
Closing loss
allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118(10,717) (22,820) (43,353) (96,486)
APPENDIX I ACCOUNTANT’S REPORT
– I-19 –


--- page 545 ---
Credit risk of other receivables
Other receivables at the end of each of the periods are mainly comprised of rental and other
deposits, amounts due from related party and others. The Group considers the probability of default
upon initial recognition of asset and whether there has been significant increase in credit risk on an
ongoing basis throughout each of the periods. To assess whether there is a significant increase in credit
risk, the Group compares risk of a default occurring on the assets as of the reporting date with the risk
of default as of the date of initial recognition. Especially the following indicators are incorporated:
 actual or expected significant adverse changes in business, financial or economic
conditions that are expected to cause a significant change to the debtor’s ability to meet its
obligations;
 actual or expected significant changes in the operating results of the debtor; and
 significant changes in the expected performance and behaviour of the debtor, including
changes in the payment status of debtor.
Regardless of the analysis above, a significant increase in credit risk is presumed if a debtor is
more than 30 days past due in making a contractual payment.
If the credit risk of the asset is in line with original expectations, the Group categorizes the asset
as performing and recognizes 12 months expected credit losses (Stage 1). If a significant credit risk of
the asset has occurred compared to original expectations or the credit is impaired, the asset is
categorized as underperforming or non-performing and lifetime expected credit losses are recognised
(Stages 2 and 3):
On that basis, the loss allowances of other receivables as at December 31, 2021, 2022 and 2023
and June 30, 2024 were determined as follows:
Internal credit
rating
Expected credit
loss rate
Gross carrying
amount Loss allowance
RMB’000 RMB’000
December 31, 2021 /H1118/H1118/H1118Performing 0.02% 16,414 3
December 31, 2022 /H1118/H1118/H1118Performing 0.49% 26,367 128
December 31, 2023 /H1118/H1118/H1118Performing 0.84% 40,471 341
June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118Performing 0.47% 24,744 117
The loss allowances for other receivables for years ended December 31, 2021, 2022 and 2023 and
six months ended June 30, 2024 reconcile to the opening loss allowances as follows:
Y ear ended December 31,
Six months ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Opening loss
allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118(33) (3) (128) (341)
Reverse/(Increase) in
the allowance
recognised in profit
or loss during the
period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830 (125) (213) 224
Closing loss
allowance /H1118/H1118/H1118/H1118/H1118/H1118/H1118(3) (128) (341) (117)
(c) Liquidity risk
The Group intends to maintain sufficient cash and cash equivalents. Due to the dynamic nature of the
underlying business, the policy of the Group is to regularly monitor the Group’s liquidity risk and to maintain
adequate liquid assets such as cash and cash equivalents and term deposits or to retain adequate financing
arrangements to meet the Group’s liquidity requirements.
APPENDIX I ACCOUNTANT’S REPORT
– I-20 –


--- page 546 ---
The tables below analyse the Group’s non-derivative financial liabilities that will be settled into relevant
maturity groupings based on the remaining period at each balance sheet date to their contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant.
Less than 1 year
Between 1 and
2 years
Between 2 and
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2021
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,040 – – 8,040
Accruals and other payables
(excluding non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118254,231 – – 254,231
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,307 36,290 47,610 125,207
Preferred shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 18,994,305 – 18,994,305
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118303,578 19,030,595 47,610 19,381,783
Less than 1 year
Between 1 and
2 years
Between 2 and
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2022
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,822 – – 3,822
Accruals and other payables
(excluding non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118243,311 – – 243,311
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111857,889 54,396 111,456 223,741
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118325 325 13,003 13,653
Preferred shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,079,493 – – 21,079,493
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,384,840 54,721 124,459 21,564,020
Less than 1
year
Between 1 and
2 years
Between 2 and
5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2023
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,164––– 1 1,164
Accruals and other payables
(excluding non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118394,05 8––– 394,058
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111858,891 55,084 62,723 – 176,698
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,934 2,934 66,852 53,930 126,650
Preferred shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 30,576,904 – 30,576,904
Convertible loan (ii) /H1118/H1118/H1118/H1118/H1118/H1118– – 7,140,017 – 7,140,017
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118467,047 58,018 37,846,496 53,930 38,425,491
Less than 1
year
Between 1 and
2 years
Between 2 and
5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At June 30, 2024
Trade payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,64 8––– 13,648
Accruals and other payables
(excluding non-financial
liabilities) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118241,76 3––– 241,763
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111847,573 55,576 36,598 – 139,747
APPENDIX I ACCOUNTANT’S REPORT
– I-21 –


--- page 547 ---
Less than 1
year
Between 1 and
2 years
Between 2 and
5 years Over 5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,934 15,722 89,669 165,548 276,873
Preferred shares (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 31,065,789 – 31,065,789
Convertible loan (ii) /H1118/H1118/H1118/H1118/H1118/H1118– – 7,184,474 – 7,184,474
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118308,918 71,298 38,376,530 165,548 38,922,294
(i) The liquidity risk of preferred shares is the original issue price of preferred shares plus the respective
predetermined interest (the “Redemption Amount”), assuming that no consummation of a qualified
initial public offering of the Company’s shares before December 25, 2023, and the holders of the
preferred shares request the Company to redeem all of the preferred shares (the “redemption event”). On
December 7, 2023, with the effects of the amendments of Memorandum and Articles, the assumption of
occurrence of redemption event has been changed to on December 31, 2026. Regarding to the preferred
shares issued by D-Robotics, the amount disclosed subject to liquidity risk is the Redemption Amount,
assuming that no consummation of a qualified initial public offering of D-Robotics’ shares before June
25, 2029, and the holders of the preferred shares request D-Robotics to redeem all of the preferred
shares.
(ii) The liquidity risk of convertible loan is the principal amount of the convertible loan plus the respective
predetermined interest, assuming that no consummation of a qualified initial public offering of the
Company’s shares before December 31, 2026 and triggered the redemption event on December 31, 2026.
3.2 Capital management
(a) Risk management
The Group’s objectives when managing capital are to:
 safeguard their ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders, and
 maintain an optimal capital structure to reduce the cost of capital.
The Group monitors capital (including share capital, other reserves, preferred shares and other financial
liabilities on an as-if-converted basis) by regularly reviewing the capital structure. The Group may adjust the amount
of dividends paid to shareholders, return capital to shareholders, issue new shares or repurchase the Company’s
shares. In the opinion of the directors of the Company, the Group’s capital risk is low.
3.3 Fair value estimation
(a) Financial instruments carried at fair value
(i) Fair value hierarchy
This section explains the judgments and estimates made in determining the fair values of the financial
instruments that are recognised and measured at fair value in the financial statements. To provide an indication
about the reliability of the inputs used in determining fair value, the Group has classified its financial
instruments into the three levels prescribed under the accounting standards. An explanation of each level
follows underneath the table.
APPENDIX I ACCOUNTANT’S REPORT
– I-22 –


--- page 548 ---
The following table presents the Group’s assets and liabilities that were measured at fair value as at
December 31, 2021 and 2022 and 2023 and June 30, 2024:
At December 31, 2021 Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at FVPL
Investments in unlisted
companies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 46,338 46,338
Total financial assets /H1118/H1118/H1118/H1118/H1118– – 46,338 46,338
Financial liabilities
Preferred shares and other
financial liabilities at FVPL
Preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 18,341,195 18,341,195
Total financial liabilities /H1118/H1118/H1118 – – 18,341,195 18,341,195
At December 31, 2022 Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at FVPL
Investments in unlisted
companies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 68,838 68,838
Commitment derivative /H1118/H1118/H1118 – – 13,017 13,017
Total financial assets /H1118/H1118/H1118/H1118/H1118– – 81,855 81,855
Financial liabilities
Preferred shares and
other financial liabilities
at FVPL
Preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 26,451,328 26,451,328
Total financial liabilities /H1118/H1118/H1118 –– 26,451,328 26,451,328
At December 31, 2023 Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at FVPL
Investments in unlisted
companies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 80,825 80,825
Total financial assets /H1118/H1118/H1118/H1118/H1118– – 80,825 80,825
Financial liabilities
Preferred shares and
other financial liabilities
at FVPL
Preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 33,509,674 33,509,674
Convertible loan /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,729,904 5,729,904
Total financial liabilities /H1118/H1118/H1118 – – 39,239,578 39,239,578
APPENDIX I ACCOUNTANT’S REPORT
– I-23 –


--- page 549 ---
At June 30, 2024 Level 1 Level 2 Level 3 Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at FVPL
Investments in unlisted
companies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 85,639 85,639
Total financial assets /H1118/H1118/H1118/H1118/H1118– – 85,639 85,639
Financial liabilities
Preferred shares and
other financial liabilities
at FVPL
Preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 37,789,020 37,789,020
Convertible loan /H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,993,639 5,993,639
Total financial liabilities /H1118/H1118/H1118 – – 43,782,659 43,782,659
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as at the end of
the reporting period.
There were no transfers between levels 1 and 2 for recurring fair value measurements during the period
presented.
Level 1: The fair value of financial instruments traded in active markets (such as publicly traded
derivatives, and equity securities) is based on quoted market prices at the end of the reporting
period. The quoted market price used for financial assets held by the Group is the current bid
price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an active market (for example,
over-the-counter derivatives) is determined using valuation techniques which maximise the
use of observable market data and rely as little as possible on entity-specific estimates. If all
significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument
is included in level 3. This is the case for unlisted equity securities.
The level 3 instruments mainly include investment in unlisted companies and commitment derivative,
as well as the financial liabilities at fair value through profit or loss, including the preferred shares and
convertible loan. As these instruments are not trade in an active market, their fair values have been determined
using various applicable methodologies.
(ii) V aluation techniques used to determine fair values and process
Specific valuation techniques used to value financial instruments include:
 the use of quoted market prices or dealer quotes for similar instruments;
 the discounted cash flow model and unobservable inputs mainly including assumptions of
expected future cash flows and discount rate;
 the latest round financing, i.e. the prior transaction price or the third-party pricing; and
 a combination of observable and unobservable inputs, including risk-free rate, expected volatility,
discount rate for lack of marketability (“DLOM”), market multiples, etc.
APPENDIX I ACCOUNTANT’S REPORT
– I-24 –


--- page 550 ---
The Group has a team that manages the valuation exercise of level 3 instruments for financial reporting
purposes. The team manages the valuation exercise of the financial instruments on a case-by-case basis. At
least once every year, the team would use valuation techniques to determine the fair value of the Group’s level
3 instruments. External valuation experts will be involved when necessary.
(iii) Fair value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 financial assets at FVPL for the years ended
December 31, 2021, 2022 and 2023 and six months ended June 30, 2024:
The Group
Investments in
unlisted companies
Wealth
management
products
Commitment
derivative
RMB’000 RMB’000 RMB’000
Balance as at January 1, 2021
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,889 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,420 1,292,000 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (1,295,620) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,906) 3,620 –
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(65) – –
Balance as at December 31, 2021 /H1118/H1118/H1118/H1118/H111846,338 – –
Includes unrealised losses recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 (8,906) – –
Balance as at January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111846,338 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821,877 4,926,860 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (4,944,096) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(837) 17,236 13,316
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,460 – (299)
Balance as at December 31, 2022 /H1118/H1118/H1118/H1118/H111868,838 – 13,017
Includes unrealised losses recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 (837) – 13,316
Balance as at January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111868,838 – 13,017
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,000 4,391,778 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (4,410,095) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,511 18,317 (12,976)
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118476 – (41)
Balance as at December 31, 2023 /H1118/H1118/H1118/H1118/H111880,825 – –
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 3,511 – –
Balance as at January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111880,825 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,500 5,402,654 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (5,421,332) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,104 18,678 –
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 1 0––
Balance as at June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885,639 – –
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 3,104 – –
APPENDIX I ACCOUNTANT’S REPORT
– I-25 –


--- page 551 ---
The Company
Investments in
unlisted companies
Wealth
management
products
Commitment
derivative
RMB’000 RMB’000 RMB’000
Balance as at January 1, 2021
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,134 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,920 – –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(537) – –
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(65) – –
Balance as at December 31, 2021 /H1118/H1118/H1118/H1118/H111814,452 – –
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 (537) – –
Balance as at January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H111814,452 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,377 – –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118962 – 13,316
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,460 – (299)
Balance as at December 31, 2022 /H1118/H1118/H1118/H1118/H111827,251 – 13,017
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 962 – 13,316
Balance as at January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H111827,251 – 13,017
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 71,778 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (71,898) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,456 120 (12,976)
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118476 – (41)
Balance as at December 31, 2023 /H1118/H1118/H1118/H1118/H111833,183 – –
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 5,456 – –
Balance as at January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H111833,183 – –
Acquisitions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 808,314 –
Disposal /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (809,785) –
Changes in fair value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,954 1,471 –
Foreign currency translation recorded in
other comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 1 0––
Balance as at June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,347 – –
Includes unrealised gains recognised in
profit or loss attributable to balances
held at the end of the reporting period /H1118/H1118 4,954 – –
The changes of preferred shares and other financial liabilities at FVPL and the valuation techniques and
significant unobservable inputs for the years ended December 31, 2021, 2022 and 2023 and six months ended
June 30, 2024 have been disclosed in Note 28.
APPENDIX I ACCOUNTANT’S REPORT
– I-26 –


--- page 552 ---
(iv) V aluation inputs and relationships to fair value of financial assets
The following table summarises the quantitative information about the significant unobservable inputs
used in level 3 fair value:
Fair Value Range of inputs
Description
As at December 31,
As at
June 30, Significant
unobservable
inputs
As at December 31,
As at
June 30,
Relationship of
unobservable
inputs to fair
values2021 2022 2023 2024 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Investments in
unlisted
companies /H1118/H1118/H1118
46,338 68,838 80,825 85,639 DLOM 4.6%-
12.0%
6.0%-
23.5%
5.1%-
22.2%
5.0%-
20.7%
The higher the
DLOM, the
lower the fair
value
V olatility 36.6%-
61.2%
42.2%-
75.7%
38.8%-
65.0%
37.2%-
87.9%
The higher the
volatility, the
higher the fair
value
Commitment
derivative /H1118/H1118/H1118/H1118
– 13,017 – – Risk-free rate N/A 4.73% 4.79% N/A The higher the
risk-free interest
rate, the lower
the fair value
If the fair values of the investments in unlisted companies held by the Group had been 10%
higher/lower, loss for the years ended December 31, 2021, 2022 and 2023 and six months ended June 30, 2024
would have been approximately RMB466,000 lower/higher, RMB2,081,000 lower/higher, RMB1,151,000
lower/higher and RMB443,000 lower/higher, respectively.
The Company performed sensitivity test to changes in unobservable inputs in determining the fair value
of commitment derivatives. The changes in unobservable input including risk free rate will result in a
significantly higher or lower fair value measurement. If the risk free rate had been 10% higher, loss for the
years ended December 31, 2022 and 2023 would have been approximately RMB24,466,000 higher and
RMB24,574,000 lower, respectively. If the risk free rate had been 10% lower, loss for the years ended
December 31, 2022 and 2023 would have been approximately RMB24,694,000 lower and RMB24,803,000
higher, respectively.
(b) Financial instruments carried at other than fair value
The carrying amounts of the Group’s financial assets carried at other than fair value, including cash and cash
equivalents, restricted cash, term deposits, trade and note receivables, and other receivables, and the Group’s
financial liabilities carried at other than fair value, including trade payables, other payables and accruals, borrowings
and lease liabilities, approximate to their fair values as of December 31, 2021, 2022 and 2023 and June 30, 2024.
4 CRITICAL ESTIMATES AND JUDGMENT
The preparation of financial statements requires the use of accounting estimates which, by definition, will
seldom equal the actual results. Management also needs to exercise judgment in applying the Group’s accounting
policies.
Estimates and judgements are continually evaluated. They are based on historical experience and other factors,
including expectations of future events that may have a financial impact on the entity and that are believed to be
reasonable under the circumstances.
(a) Fair value of financial assets at FVPL
The fair value of financial instruments that are not traded in an active market is determined using valuation
techniques. The Group uses its judgement to select a variety of methods and make assumptions that are mainly based
on market conditions existing at the end of each reporting period. For details of the key assumptions used and the
impact of changes to these assumptions, see Note 3.3.
APPENDIX I ACCOUNTANT’S REPORT
– I-27 –


--- page 553 ---
(b) Fair value of financial liabilities at FVPL
Preferred shares and other financial liabilities at FVPL are not traded in an active market and the respective
fair value are determined by using valuation techniques. The discounted cash flow method was used to determine the
total equity value of the Company and the Back-solved method was used to determine the total equity value of
D-Robotics, the option-pricing method, equity allocation model and forward pricing model were adopted to
determine the fair value of the financial instruments. Key assumptions such as discount rate, risk-free interest rate,
DLOM and expected volatility based on the Group’s best estimates are disclosed in Note 28.
(c) Credit loss allowances for receivables
The expected credit loss of trade and note receivables, and other receivables are based on assumptions about
risk of default and expected loss rates. The Group uses judgement in making these assumptions and selecting the
inputs to calculate the loss allowances, based on the Group’s past history, existing market conditions as well as
forward looking estimates at the end of each reporting period. Details of the key assumptions and inputs used are
disclosed in Note 3.1.
(d) Share-based payment expenses
The Group granted options and restricted share units (“RSU”) to employees. The fair value of the options is
determined using the binomial option pricing model at the grant date, and is expected to be expensed over the
respective vesting periods. Significant assumptions, including, underlying equity value, risk-free interest rate,
expected volatility, dividend yield, and terms, are made by the directors with reference to valuation reports prepared
by a third-party valuer (Note 26).
The fair value of RSUs at the grant date was determined by reference to the fair value of the underlying
ordinary shares on the dates of grant. The discounted cash flow method was used to determine the total equity value
of the Company and the equity allocation model was adopted to determine the fair value of the ordinary shares. Key
assumptions, such as discount rate, risk-free interest rate, volatility and DLOM are disclosed in Note 26.
(e) Current and deferred income tax
The Group recognises deferred tax assets based on estimates that is probable to generate sufficient taxable
profits in the foreseeable future against which the deductible losses will be utilised. The recognition of deferred tax
assets mainly involved management’s judgements and estimations about the timing and the amount of taxable profits
of the companies who had tax losses.
5 SEGMENT INFORMATION
The Group’s business activities, for which discrete financial statements are available, are regularly reviewed
and evaluated by the chief operating decision maker (“CODM”). The CODM, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer
of the Group that makes strategic decisions.
The CODM reviews the Group’s internal reporting in order to assess performance, allocate resources, and
determine the operating segments based on these reports. The Group has the following reportable segments for the
Track Record Period:
 Automotive solutions; and
 Non-Automotive solutions
The CODM assesses the performance of the operating segments mainly based on segment revenue and gross
profit of each operating segment. The research and development expenses, administrative expenses and selling and
marketing expenses are common costs incurred for these operating segments as a whole and therefore, they are not
included in the measure of the segments’ performance which is used by the CODM as a basis for the purpose of
resource allocation and assessment of segment performance. Net impairment losses on financial assets, other income,
other losses, net, finance income, finance cost, share of results of investments accounted for using the equity method,
fair value losses of preferred shares and other financial liabilities and income tax expense are not allocated to
individual operating segment, either.
APPENDIX I ACCOUNTANT’S REPORT
– I-28 –


--- page 554 ---
There were no material inter-segment sales during the years ended December 31, 2021, 2022 and 2023 and the
six months ended June 30, 2023 and 2024. The revenues from external customers reported to the CODM are measured
in a manner consistent with that applied in the consolidated statement of profit or loss.
Other information, together with the segment information, provided to the CODM, is measured in a manner
consistent with that applied in these consolidated statements of financial position. There was no segment assets or
segment liabilities information provided to the CODM.
The segment information provided to the CODM for the reportable segments for the Track Record Period is
as follows:
Y ear ended December 31, 2021
Automotive
solutions
Non-Automotive
solutions Total
RMB’000 RMB’000 RMB’000
Segment revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118410,164 56,556 466,720
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(81,599) (54,135) (135,734)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118328,565 2,421 330,986
Y ear ended December 31, 2022
Automotive
solutions
Non-Automotive
solutions Total
RMB’000 RMB’000 RMB’000
Segment revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118801,138 104,538 905,676
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(179,719) (98,244) (277,963)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118621,419 6,294 627,713
Y ear ended December 31, 2023
Automotive
solutions
Non-Automotive
solutions Total
RMB’000 RMB’000 RMB’000
Segment revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,470,364 81,243 1,551,607
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(386,652) (70,645) (457,297)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,083,712 10,598 1,094,310
Six months ended June 30, 2023
Automotive
solutions
Non-Automotive
solutions Total
RMB’000 RMB’000 RMB’000
(Unaudited) (Unaudited) (Unaudited)
Segment revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118345,004 26,487 371,491
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(122,496) (22,383) (144,879)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,508 4,104 226,612
Six months ended June 30, 2024
Automotive
solutions
Non-Automotive
solutions Total
RMB’000 RMB’000 RMB’000
Segment revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118913,094 21,505 934,599
Cost of sales /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(178,161) (17,700) (195,861)
Gross profit /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118734,933 3,805 738,738
APPENDIX I ACCOUNTANT’S REPORT
– I-29 –


--- page 555 ---
As at December 31, 2021, 2022 and 2023 and June 30, 2024 substantially all of the non-current assets of the
Group were located in the mainland China. Therefore, no geographical segments are presented.
6 REVENUE FROM CONTRACTS WITH CUSTOMERS
(a) Disaggregation of revenue from contracts with customers
In the following table, revenue of the Group from contracts with customers is disaggregated by revenue source
and by timing of revenue recognition. The table also includes a reconciliation to the segment information (Note 5).
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Automotive solutions /H1118/H1118/H1118410,164 801,138 1,470,364 345,004 913,094
Product solutions /H1118/H1118/H1118/H1118/H1118208,083 319,312 506,386 192,298 222,264
License and services /H1118/H1118/H1118202,081 481,826 963,978 152,706 690,830
Non-Automotive
solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,556 104,538 81,243 26,487 21,505
Total Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466,720 905,676 1,551,607 371,491 934,599
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Automotive solutions /H1118/H1118/H1118410,164 801,138 1,470,364 345,004 913,094
At a point in time /H1118/H1118/H1118/H1118360,929 678,654 1,271,858 247,609 846,820
Over time /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111849,235 122,484 198,506 97,395 66,274
Non-Automotive
solutions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,556 104,538 81,243 26,487 21,505
At a point in time /H1118/H1118/H1118/H111856,556 104,538 81,243 26,487 21,505
Total Revenue /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118466,720 905,676 1,551,607 371,491 934,599
No geographical segment information is presented as the majority of the revenue and operating losses of the
Group are derived within mainland China and the majority of the operating assets of the Group are located in the
mainland China, which is considered as one geographic location with similar risks and returns.
The major customers which contributed more than 10% of total revenue of the Group for the years ended
December 31, 2021, 2022 and 2023 and six months ended June 30, 2023 and 2024 are listed as below:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
Percentage of revenue
from the major
customers to the total
revenue of the Group
Customer A /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 40.43% – 37.62%
Customer B /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824.68% 16.04% 12.49% 19.82% 10.46%
Customer C /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185.78% 11.24% 5.31% 15.83% 2.13%
Customer D /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811.15% 1.01% 0.78% 1.47% 0.51%
Customer E /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 9.69% 2.51% 4.35% 22.85%
Customer F /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189.65% 3.58% 3.64% 13.06% 0.38%
APPENDIX I ACCOUNTANT’S REPORT
– I-30 –


--- page 556 ---
(b) Contract liabilities
During the Track Record Period, the additions to the contract liabilities were primarily due to cash collections
in advance of fulfilling performance obligations, while the reductions to the contract liabilities were primarily due
to the recognition of revenues upon fulfilment of performance obligations.
As at
January 1, As at December 31, As at June 30,
2021 2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Contract liabilities /H1118/H1118/H1118/H1118/H1118/H11188,554 5,546 63,079 24,875 12,143
The following table shows how much of the revenue, which was included in the contract liabilities at the
beginning of the period, recognized during the Track Record Period relates to carried-forward contract liabilities:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue recognized that
was included in the
contract liability
balance at the
beginning of the year /H1118/H1118 2,095 916 58,547 37,740 19,390
(c) Transaction price allocated to the unsatisfied performance obligations
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Aggregate amount of transaction
price allocated to contracts that
are partially or fully unsatisfied /H1118 64,846 355,807 592,940 390,946
Management expects that the unsatisfied obligations of RMB55,027,000, RMB291,645,000, RMB565,105,000
and RMB332,526,000 as of 31 December 2021, 2022 and 2023 and June 30, 2024, respectively will be recognised
as revenue during the next twelve months. The remaining unsatisfied obligations will be recognized in one to three
year(s).
(d) Accounting policies and significant judgments
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e., when control of the
goods or services underlying the particular performance obligation is transferred to the customer.
Control is transferred over time and revenue is recognised over time by reference to the progress towards
complete satisfaction of the relevant performance obligation if one of the following criteria is met:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates and enhances an asset that the customer controls as the Group performs; or
 does not create an asset with an alternative use to the Group and the Group has an enforceable right to
payment for performance completed to date.
APPENDIX I ACCOUNTANT’S REPORT
– I-31 –


--- page 557 ---
If control of the goods and services transfers over time, revenue is recognized over the period of the contract
by reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is
recognized at a point in time when the customer obtains control of the goods and services.
Contracts with customers may include multiple performance obligations. For such arrangements, at the
contract inception date, the Company allocates revenue to each performance obligation based on its relative
standalone selling price. The Company determines standalone selling prices based on the prices charged to customers
if it is directly observable. If the standalone selling price is not directly observable, the contractually stated price is
believed to best reflect the relative standalone selling price of performance obligations in a contract considering the
Company’s customary business practices. Assumptions and estimations have been made in estimating the relative
selling price of each distinct performance obligation, and changes in judgments on these assumptions and estimates
may impact the revenue recognition.
When either party to a contract has performed, the Company presents the contract in the statement of financial
position as a contract asset or a contract liability, depending on the relationship between the entity’s performance and
the customer’s payment.
A contract asset is the Company’s right to consideration in exchange for goods and services that the Company
has transferred to a customer. A receivable is recorded when the Company has an unconditional right to consideration.
A right to consideration is unconditional if only the passage of time is required before payment of that consideration
is due.
If a customer pays consideration or the Company has a right to an amount of consideration that is
unconditional, before the Company transfers a good or service to the customer, the Company presents the contract
liability when the payment is made, or a receivable is recorded (whichever is earlier). A contract liability is the
Company’s obligation to transfer goods or services to a customer for which the Company has received consideration
(or an amount of consideration is due) from the customer.
Revenue is recorded net of value-added taxes. During the Track Record Period, the Group generated revenues
from sales of automotive (including advanced driver assistance system (ADAS), autonomous driving (AD) and
in-cabin) product solutions, license arrangements and provision of design and technical services to customers in
automotive business and provision of non-automotive solutions.
(i) Automotive solutions — product solutions
The Group sells automotive product solutions, which combines its self-developed processing hardware with
proprietary algorithms and software.
Revenue from sales of automotive product solutions is recognized upon the acceptance of promised product
solutions by customers in an amount that reflects the consideration the Group expects to receive in exchange for those
product solutions. Revenue is recognized net of discounts and any taxes collected from customers.
The Group generally offers assurance-type warranties to customers and such warranties are not considered a
distinct performance obligation to customers. The Group accounts for the warranty in accordance with IAS 37 and
the estimated warranty cost was not material for the Track Record Period. (Note 27)
(ii) Automotive solutions — license and services
The Group licenses its customers with a right to use its algorithms and software. Licenses are at times sold
along with training services and post-contract service (“PCS”). The training services and the PCS each is considered
as a distinct performance obligation and they are not material during the Track Record Period.
The licenses granted by the Group are right to use licenses. Therefore revenue from license arrangements is
recognized when the algorithms, or the software is made available to the customer and the customer is able to use
and benefit from the license. Revenue from training services is recognized over the training period. PCS revenue is
recognized ratably over the service period.
The Group provides customers design and technical services to help them integrate the Group’s solutions into
their vehicles and design specific features.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 558 ---
For contracts pursuant to which the Group has an enforceable right to payment for performance completed to
date, or when the customer simultaneously receives and consumes the benefits provided by the Group’s performance
as the Group performs, design and technical services revenue is recognized over a period of time based on the
progress towards complete satisfaction in the contracts using input method, which is determined as the proportion of
the costs incurred for the work performed to date relative to the estimated total costs to complete the contract, to the
extent that the amount can be measured reliably and its recovery is considered probable. For other design and
technical services contracts, revenue is recognized upon customers’ acceptance of the service outcome.
(iii) Non-automotive solutions
The Group also offers non-automotive product solutions that combine the Group’s processing hardware and
algorithms. Related revenues are recognized upon the acceptance of promised product solutions by customers.
(iv) Practical expedients and exemptions
The effect of a significant financing component has not been adjusted for in contracts where the Group expects,
at contract inception date, that the period between when the Group transfers a promised good or service to the
customer and when the customer pays for that good or service will be one year or less.
The Group elected to expense the incremental costs of obtaining a contract with a customer as incurred when
the expected amortization period is one year or less.
7 OTHER INCOME
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Financial subsidies /H1118/H1118/H1118/H1118/H111810,810 30,503 50,238 8,474 20,669
Tax refund /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,673 13,159 15,984 4,753 13,440
14,483 43,662 66,222 13,227 34,109
8 OTHER (LOSS)/GAINS, NET
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fair value changes of
financial assets at
FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(5,286) 29,715 8,852 121 21,782
Net foreign exchange
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,080 (264,660) (40,334) (63,158) 11,149
Donations /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,415) – (672) – –
(Losses)/gains on disposal
of subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,142) – 623 – –
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111894 (3,110) (1,860) (237) 3,262
(1,669) (238,055) (33,391) (63,274) 36,193
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 559 ---
9 EXPENSES BY NATURE
The expenses charged to cost of sales, selling and marketing expenses, administrative expenses and research
and development expenses are analyzed below:
Notes
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Employee benefit expenses /H1118/H111811 1,067,542 1,602,640 2,014,058 968,008 1,118,164
Depreciation and
amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816, 18 151,199 291,316 356,373 170,685 222,317
Cost of inventories sold /H1118/H1118/H1118/H111822 122,883 240,279 392,101 129,694 180,019
Technical service fee /H1118/H1118/H1118/H1118/H1118/H1118115,202 183,414 265,717 87,719 219,460
Professional service and other
consulting fee /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100,533 120,135 77,835 29,029 38,623
Marketing, conference and
traveling expenses /H1118/H1118/H1118/H1118/H1118/H111889,790 83,957 95,365 29,493 55,229
Outsourcing fee /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111866,987 224,522 197,749 104,228 122,569
Tape-out fee and consumables
used /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111862,525 37,549 136,516 14,862 34,200
Utilities, property
management and
administrative expenses /H1118/H1118/H1118 20,781 29,001 28,603 11,309 14,551
Listing expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 1,780 – 40,838
Other expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,327 17,447 28,070 6,568 11,112
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,809,769 2,830,260 3,594,167 1,551,595 2,057,082
10 FINANCE INCOME, NET
Y ear ended December 31, Six months ended June 30,
Notes 2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Finance income
Interest income from financial
assets held for cash
management purposes /H1118/H1118/H1118/H1118 28,239 104,528 167,473 87,268 214,552
Finance income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,239 104,528 167,473 87,268 214,552
Finance costs
Interest for lease liabilities /H1118/H111817 (4,711) (7,548) (8,651) (4,585) (3,789)
Finance charges paid for
issuance of preferred
shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 (11,881) ––––
Finance cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(16,592) (7,548) (8,651) (4,585) (3,789)
Net finance income /H1118/H1118/H1118/H1118/H1118/H111811,647 96,980 158,822 82,683 210,763
Interest income on financial assets at amortised cost held for cash management purposes is calculated using
the effective interest method.
APPENDIX I ACCOUNTANT’S REPORT
– I-34 –


--- page 560 ---
11 EMPLOYEE BENEFIT EXPENSE (INCLUDING DIRECTORS’ REMUNERATIONS)
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and
bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118728,727 1,169,812 1,372,307 657,516 703,508
Share-based payments /H1118/H1118/H1118196,369 173,698 341,751 178,931 236,639
Pension costs – defined
contribution plans /H1118/H1118/H1118/H111849,624 96,365 116,649 53,518 62,766
Housing fund, medical
insurance and other
social insurance /H1118/H1118/H1118/H1118/H1118/H111872,520 128,790 165,079 76,382 89,672
Other employee benefits /H1118/H111820,302 33,975 18,272 1,661 25,579
Total employee benefit
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,067,542 1,602,640 2,014,058 968,008 1,118,164
(a) Five highest paid individuals
The five individuals whose emoluments were the highest in the Group for the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024 include 3, 2, 1, 1 and 1 directors respectively, whose
emoluments are disclosed in the Note 35. The emoluments payable to the remaining 2, 3, 4, 4 and 4 individuals during
the respective period are as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Wages, salaries and
bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,977 22,642 45,515 23,255 20,454
Share-based payments (i) /H1118 8,308 7,325 127,244 85,301 51,106
Pension costs – defined
contribution plans /H1118/H1118/H1118/H1118171 238 267 129 165
Housing fund, medical
insurance and other
social insurance /H1118/H1118/H1118/H1118/H1118/H1118158 246 377 182 289
Other employee benefits /H1118/H1118 209 226 680 309 341
Total employee benefit
expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,823 30,677 174,083 109,176 72,355
APPENDIX I ACCOUNTANT’S REPORT
– I-35 –


--- page 561 ---
The emoluments fell within the following bands:
Number of individuals
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
Emolument bands
(in HK$)
HK$5,000,001 –
HK$5,500,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––1–
HK$6,000,001 –
HK$6,500,000 /H1118/H1118/H1118/H1118/H1118/H1118/H11181–––1
HK$6,500,001 –
HK$7,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118–––1–
HK$8,000,001 –
HK$8,500,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118––1––
HK$8,500,001 –
HK$9,000,000 /H1118/H1118/H1118/H1118/H1118/H1118/H1118––1––
HK$9,500,001 –
HK$10,000,000 /H1118/H1118/H1118/H1118/H1118/H1118–1–––
HK$10,500,001 –
HK$11,000,000 /H1118/H1118/H1118/H1118/H1118/H11181––––
HK$11,500,001 –
HK$12,000,000 /H1118/H1118/H1118/H1118/H1118/H1118–1–––
HK$12,500,001 –
HK$13,000,000 /H1118/H1118/H1118/H1118/H1118/H1118–1–––
HK$18,500,001 –
HK$19,000,000 /H1118/H1118/H1118/H1118/H1118/H1118––––1
HK$21,500,001 –
HK$22,000,000 /H1118/H1118/H1118/H1118/H1118––––1
HK$28,000,001 –
HK$28,500,000 /H1118/H1118/H1118/H1118/H1118/H1118–––1–
HK$32,000,001 –
HK$32,500,000 /H1118/H1118/H1118/H1118/H1118––––1
HK$54,500,001 –
HK$55,000,000 /H1118/H1118/H1118/H1118/H1118/H1118––1––
HK$78,000,001 –
HK$78,500,000 /H1118/H1118/H1118/H1118/H1118/H1118–––1–
HK$120,000,001 –
HK$120,500,000 /H1118/H1118/H1118/H1118/H1118––1––
23444
(i) Represents the amount recognized as an expense during the Track Record Period in accordance with
IFRS 2 Share-based Payment.
APPENDIX I ACCOUNTANT’S REPORT
– I-36 –


--- page 562 ---
12 SUBSIDIARIES
(a) Subsidiaries of the Group
The Company’s principal subsidiaries during the Track Record Period are set out below. Unless otherwise
stated, they have share capital solely held by the Group, and the proportion of ownership interests held equals the
voting rights held by the Group. The country/region of incorporation or registration is also their principal place of
business.
Name of entity
Effective interest held
Date and place of
incorporation/
establishment and
kind of legal entity
Issued/registered
share capital
Principal
activities
Place of
Operation Note
As at
December 31,
As at
June 30,
As at
the date
of this
report2021 2022 2023 2024
Directly held by
the Company:
Horizon Robotics
Holdings
Limited /H1118/H1118/H1118/H1118/H1118
100 100 100 100 100 August 6, 2015/
Hong Kong,
PRC/limited
liability
company
HK$1 Holding
company
Hong Kong,
PRC
(i)
Horizon Together
Holding Ltd.
(“Horizon
Together”) /H1118/H1118/H1118/H1118
– 100 100 100 100 August 29, 2022/
Cayman
Islands/limited
liability
company
US$1 Holding
company
Cayman
Islands
(viii)
Indirectly held by
the Company:
Beijing Horizon
Information
Technology Co.,
Ltd. ( ̏ԯή̻ᇞ
ʮ
̡)/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
100 100 100 100 100 December 28,
2015/PRC/
limited liability
company
US$1,500,000,000 Development
of software
products and
provision of
related
services
Beijing,
PRC
(ii)
Shanghai Anting
Horizon Zhineng
Transportation
Technology Co.,
Ltd. (ή
̻ᇞ౽ঐʹஷҦ
ʮ̡) /H1118/H1118/H1118
100 100 100 100 100 March 24, 2017/
PRC/limited
liability
company
US$220,000,000 Development
of software
products and
provision of
related
services
Shanghai,
PRC
(iii)
Nanjing Horizon
Information
Technology Co.,
Ltd.
(ࢹڦ
ʮ̡) /H1118/H1118
100 100 100 100 100 March 30, 2017/
PRC/limited
liability
company
US$220,000,000 Development
of software
products and
provision of
related
services
Nanjing,
PRC
(iv)
Beijing Horizon
Robotics
Technology
Research and
Development
Co., Ltd. ( ̏ԯή
̻ᇞዚኜɛҦஔ
ʮ̡
* /H1118
100 100 100 100 100 July 14, 2015/
PRC/limited
liability
company
RMB8,000,000,000 Sales of
software
products and
provision of
related
services
Beijing,
PRC
(v)
Shenzhen Horizon
Robotics
Technology Co.,
Ltd. ( ଉέή̻ᇞ
ࠢ
ʮ̡) /H1118/H1118/H1118/H1118/H1118/H1118
100 100 100 100 100 July 2, 2015/
PRC/limited
liability
company
RMB1,500,000,000 Sales of
software
products and
provision of
related
services
Shenzhen,
PRC
(vi)
APPENDIX I ACCOUNTANT’S REPORT
– I-37 –


--- page 563 ---
Name of entity
Effective interest held
Date and place of
incorporation/
establishment and
kind of legal entity
Issued/registered
share capital
Principal
activities
Place of
Operation Note
As at
December 31,
As at
June 30,
As at
the date
of this
report2021 2022 2023 2024
Horizon Journey
(Shanghai)
Technology Co.,
Ltd.
(೻(ɪ
ऎ)ʮ
̡)
* /H1118/H1118/H1118/H1118/H1118/H1118/H1118
100 100 100 100 100 March 26, 2018/
PRC/limited
liability
company
RMB4,000,000,000 Research and
development
of
technology
Shanghai,
PRC
(vii)
D-Robotics
** /H1118/H1118/H1118– – 100 99.93 99.93 September 27,
2023/Cayman
Islands/limited
liability
company
US$1 Holding
company
Cayman
Islands
(ix)
* Previously these subsidiaries were controlled by the Company through a series of contractual arrangements
(collectively, the “Contractual Arrangements”). During the years ended December 31, 2021 and 2022, they
became wholly-owned subsidiaries of the Company through equity transfers and termination of the Contractual
Arrangements.
** On June 25, 2024 D-Robotics, which was set up to streamline and operates the Group’s non-automotive
business, issued the following shares (the “D-Robotics Financing”):
 43,940,218 class A ordinary shares of D-Robotics to three entities controlled by the three founders of
the Company (Note 26(c));
 87,500,000 class A ordinary shares of D-Robotics to D-GUA Brother LP (the “D-Robotics ESOP
Platform”), the employee stock ownership platform of D-Robotics’ with D-GUA Brother, Inc., a
company solely owned by Dr. Kai Yu, as the general partner;
 83,695,656 series A1 preferred shares of D-Robotics to certain investors (Note 28 (a));
 43,940,218 series A1 preferred shares of D-Robotics to D-Gua International Limited (the “D-Robotics
Employee Trust”), a company of which the Company’s CEO Dr. Kai Yu is the sole director;
Prior to and after the D-Robotics Financing, the Company, through its directly owned subsidiary Horizon
Together, holds 600,000,000 class B ordinary shares of D-Robotics. Concurrently with the D-Robotics
Financing, D-Robotics also adopted the weighted voting rights (“WVR”) structure with each class A ordinary
share entitling the holder to exercise ten votes and each class B ordinary share and preferred share entitling
the holder to exercise one vote on any resolutions tabled at D-Robotics’ general meetings.
According to the acknowledgement letter issued respectively by D-Robotics ESOP Platform and D-Robotics
Employee Trust, the aforementioned shares of D-Robotics issued to D-Robotics ESOP Platform and
D-Robotics Employee Trust are reserved for future share-based payment arrangements of D-Robotics.
D-Robotics ESOP Platform and D-Robotics Employee Trust are only holding and managing these instruments
on behalf of D-Robotics and the related instruments are within the D-Robotics’ control until they are granted
and vested unconditionally according to D-Robotics’ future approved share-based payment arrangements.
Moreover, according to the Amended and Restated Memorandum and Articles of Association of D-Robotics,
shares issued to D-Robotics ESOP Platform shall bear no economic rights and interests until they are granted
and shares issued to D-Robotics Employee Trust are not entitled to any economic rights and interests until they
are fully paid.
On June 25, 2024, Horizon Together entered into an Acting-in-Concert Agreement with D-GUA Brother LP,
pursuant to which, D-GUA Brother LP shall act in accordance with the instructions of Horizon Together with
regard to any matter that is submitted to vote by shareholders of D-Robotics. The Acting-in-Concert Agreement
shall take effective from June 25, 2024, and remain in full force and effect unless terminated in writing by
Horizon Together and D-GUA Brother LP. Together with the voting rights directly held through Horizon
Together, the Company controls over 70% of the shareholder voting rights of D-Robotics.
APPENDIX I ACCOUNTANT’S REPORT
– I-38 –


--- page 564 ---
According to the Amended and Restated Memorandum and Articles of Association of D-robotics, the founders
of the Company have the right to appoint 4 out of 6 directors. Concurrently, the founders of the Company
jointly granted Horizon Together power of attorney and appointed Horizon Together as their attorney-in-fact
to appoint 4 directors in the board of directors of D-Robotics. The Power of Attorney shall remain in full force
and effect unless Horizon Together’s shareholding in D-Robotics is reduced to less than 50% or earlier revoked
pursuant to applicable laws. As a result, the Company has the right to appoint the majority of the board
members of D-Robotics.
Based on the above arrangements, following the D-Robotics Financing, the Group continues to control
D-Robotics as it is exposed to and has the rights to the variable return from D-Robotics through its legally
holding of 99.93% of equity interests (which excludes the liability-classified preferred shares, the D-Robotics
ESOP Platform and the unpaid ordinary shares issued to the founders), and the ability to affect D-Robotics’
return through its power by controlling over 70% of the shareholder voting rights and right to appoint the
majority of the board members of D-Robotics.
The English names of certain subsidiaries referred herein represent the directors’ best effort at translating the
Chinese names of these companies as no English names have been registered.
The statutory auditors of these companies for the Track Record Period were as follows:
(i) The financial statements were audited by Sinno International CPA for the years ended December 31,
2021 and 2022. The financial statements were audited by Mapleton CPA & Co. for the years ended
December 31, 2023.
(ii) The financial statements were audited by Beijing Yongqin Accountant Firm Co., Ltd. for the years ended
December 31, 2021, 2022 and 2023.
(iii) The financial statements were audited by Beijing Jinruiyongda Accountants LLP. for the years ended
December 31, 2021, 2022 and 2023.
(iv) The financial statements were audited by Jiangsu Tianning Accountant Firm Co., Ltd for the years ended
December 31, 2021, 2022 and 2023.
(v) The financial statements were audited by Beijing Yongqin Accountant Firm Co., Ltd. for the years ended
December 31, 2021, 2022 and 2023.
(vi) The financial statements were audited by Shenzhen Yongming Accountant Firm Co., Ltd. for the years
ended December 31, 2021, 2022 and 2023.
(vii) The financial statements were audited by Beijing Jinruiyongda Accountants LLP. for the years ended
December 31, 2021, 2022 and 2023.
(viii) No audited financial statements were issued for the company as it is not required to issue audited
financial statements under the statutory requirements of its place of incorporation.
(ix) No audited financial statements were issued for the company as it is not required to issue audited
financial statements under the statutory requirements of its place of incorporation.
All companies comprising the Group have adopted December 31 as their financial year end date.
(b) Investments in subsidiaries — the Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Investments in subsidiaries (i) /H1118/H1118/H1118/H111810,196,669 13,973,278 18,831,410 20,370,965
– Equity investments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118184,489 278,140 346,600 391,520
– Amounts due from subsidiaries /H1118/H111810,012,180 13,695,138 18,484,810 19,979,445
Deemed investments relating to
share-based payments (ii) /H1118/H1118/H1118/H1118/H1118/H1118473,191 646,889 988,640 1,212,373
10,669,860 14,620,167 19,820,050 21,583,338
APPENDIX I ACCOUNTANT’S REPORT
– I-39 –


--- page 565 ---
(i) The Company invested US$28,936,000 (RMB184,489,000), US$39,936,000 (RMB278,140,000),
US$48,936,000 (RMB346,600,000) and US$54,936,000 (RMB391,520,000) share capital to its directly-
owned subsidiaries as at December 31, 2021, 2022 and 2023 and June 30, 2024, respectively. The
remaining are receivables due from its subsidiaries that the Company has determined not requiring
repayment from these subsidiaries. These balances are in substance part of the Company’s net
investment in these subsidiaries.
(ii) The Company granted share options and RSUs directly to the employees of its subsidiaries and did not
charge the relevant costs to the subsidiaries. In the consolidated financial statements, this transaction is
treated as an equity-settled share-based payment expenses. In the separate financial statements of the
Company, such amounts are recorded as part of the investments in the subsidiaries.
13 INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
The amounts of investments accounted for using the equity method recognized in the consolidated statements
of financial position are as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Associates /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,697 47,716 19,780 30,963
Joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,385 16,318 1,087,879 822,532
27,082 64,034 1,107,659 853,495
The movements of investments in associates and joint ventures during the Track Record Period are as below:
Y ears ended December 31,
Six months ended
June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
At the beginning of the year/period /H1118 13,921 27,082 64,034 1,107,659
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111815,691 71,250 1,453,000 35,381
Share of results of associates and
joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,530) (34,298) (112,074) (181,633)
Elimination of unrealized profits and
losses from downstream
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (297,301) (113,305)
Currency translation differences /H1118/H1118/H1118 – – – 5,393
At the end of the year/period /H1118/H1118/H1118/H111827,082 64,034 1,107,659 853,495
The associates and joint ventures of the Group have been accounted by using the equity method based on the
financial information of the associates and joint ventures prepared under the accounting policies consistent with the
Group.
The Company grants RSUs to the employees of its joint ventures and does not charge the relevant costs to these
joint ventures. In the separate financial statement, the Company capitalizes the grant date fair value of related RSUs
as additional cost of investment in these joint ventures. In consolidated financial statements, as other joint venturers
do not provide an equivalent contribution into the joint venture, the Company records all related share-based payment
expenses when applying equity method accounting during the six months ended June 30, 2024.
APPENDIX I ACCOUNTANT’S REPORT
– I-40 –


--- page 566 ---
(i) Commitments in respect of associates and joint ventures:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Commitments – joint ventures
Commitment to provide funding
for joint ventures’ capital
commitments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,719 13,719 1,729,334 1,988,669
Commitments – associates
Commitment to provide funding
for associates’ capital
commitments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,100 1,600 1,600 109,740
14,819 15,319 1,730,934 2,098,409
Besides the above-mentioned commitments, there are no commitments and contingent liabilities relating to the
Group’s interests in associates and joint ventures.
(ii) Summarised financial information of material joint venture:
In November 2023, Carizon (Beijing) Technology Co., Ltd (“CARIZON”) was established pursuant to a joint
venture agreement (the “Joint Venture Agreement”) entered into between CARIAD Estonia AS (“CARIAD”), an
affiliate of V olkswagen Group (“V olkswagen”) and Horizon Together Holding Ltd. (“Horizon Together”), a
subsidiary of the Company, dated November 17, 2022. Pursuant to the Joint Venture Agreement, Horizon Together
and CARIAD holds 40% and 60% of the equity interest in CARIZON, respectively. The total registered capital of
CARIZON is RMB6,757,000,000, of which Horizon Together shall contribute RMB2,703,000,000. As at June 30,
2024, Horizon Together has contributed share capital of RMB1,351,000,000. And it shall pay the second instalment
of RMB811,000,000 in the year 2024, and the third instalment of RMB541,000,000 in the year 2025. Neither
CARIAD or Horizon Together may transfer equity interests in CARIZON without the other party’s prior written
consent, subject to customary right of first offer, right of first refusal and transfer among affiliates conditions. At any
time after January 1, 2027, CARIAD has the right but not the obligation, at its discretion, to make an offer to Horizon
Together to purchase all but not less than all of the equity interest held by Horizon Together as of the date of the offer
at fair market value.
CARIZON engages in the business of research and development, manufacture of autonomous driving
application software and self-driving systems, and it also provides aftersales services, training, consulting, testing
and technical services relating to its products.
As decisions about activities significantly affecting CARIZON’s returns require the unanimous consent of
Horizon Together and CARIAD, CARIZON is jointly controlled by both parties and therefore the Group applied
equity method to account for its investment in CARIZON.
In December 2023, April 2024, and June 2024, the Group entered into agreements with CARIZON to provide
various IP licenses and technical services, and product solutions. For the year ended December 31, 2023, the Group
recorded RMB750,000,000 and RMB174,000,000 revenues from the licenses and services delivered to CARIZON,
respectively. For the six months ended June 30, 2024, the Group recorded RMB455,800,000, RMB423,000,
RMB883,000 revenues from the licenses, services, and product solutions delivered to CARIZON. The licenses were
recognized as intangible assets at cost by CARIZON and are being amortized on straight-line basis over its estimated
useful life of three years, while the technical services are recorded as research and development expenses in its
statement of profit or loss by CARIZON. The product solutions were recognized as property, plant and equipment
at cost by CARIZON and are being depreciated on straight-line basis over its estimated useful life of 2 years. For
the year ended December 31, 2023 and the six months ended June 30, 2024, RMB296,704,000 and RMB105,236,000
unrealised gains from the abovementioned transactions with CARIZON, being 40% of the change of relevant
intangible assets’ net carrying amount on the statement of financial position of CARIZON for the period ended
December 31, 2023 and June 30, 2024, and RMB222,000 unrealised gains from abovementioned transactions with
CARIZON, being 40% of the change of relevant property, plant and equipment net carrying amount on the statement
of financial position of CARIZON for the period ended June 30, 2024, are eliminated to the extent of the Group’s
interest in CARIZON.
APPENDIX I ACCOUNTANT’S REPORT
– I-41 –


--- page 567 ---
In addition to the registered capital of CARIZON, Horizon Together and CARIAD each undertakes to make
further contributions (the “Further Contributions”) to CARIZON by instalment in accordance with the Joint Venture
Agreement. The amount of the Further Contributions that Horizon Together undertakes to pay is calculated based on
the actual receipts by the Group for specified IPs licensed to CARIZON multiplied by specific ratios. And CARIAD
shall further contribute such amounts proportionately to keep relative shareholding percentage between the two
parties unchanged. As of June 30, 2024, the Group’s commitment of the Further Contributions is RMB610,200,000.
The tables below provide summarised financial information of CARIZON. The information disclosed reflects
the amounts presented in the financial statements of CARIZON. They have been amended to reflect adjustments made
by the Company when using the equity method before inter-company eliminations.
Y ear ended
December 31, 2023
As at
June 30, 2024
RMB’000 RMB’000
Gross amounts of the material joint venture
Current assets
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,320,766 1,624,997
Prepayments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,111 20,443
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,440
Total current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,398,877 1,648,880
Non-current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118848,006 1,237,086
Current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(90,371) (109,460)
Non-current liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (35,871)
Net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,156,512 2,740,635
Interest income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131 18,211
Depreciation and amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(21,848) (207,842)
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(221,488) (418,667)
Total comprehensive loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(221,488) (418,667)
Reconciliation to carrying amount:
Opening net assets at 1 January /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 3,156,512
Capital injection /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,378,000 2,790
Loss for the year/period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(221,488) (418,667)
Closing net assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,156,512 2,740,635
Group’s share in % /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111840% 40%
Group’s share in RMB /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,262,605 1,096,254
Elimination of unrealized profits or losses from downstream
transactions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(296,704) (402,162)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 5,393
Carrying amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118965,901 699,485
(iii) Individually immaterial associates and joint ventures
In addition to the interests in joint ventures disclosed above, the group also has interests in a number of
individually immaterial associates and joint ventures that are accounted for using the equity method.
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Aggregate carrying amount of
individually immaterial associates
and joint ventures /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111827,082 64,034 141,758 154,010
Aggregate amounts of the Group’s
share of Loss for the year/period /H1118 (2,530) (34,298) (23,479) (12,492)
APPENDIX I ACCOUNTANT’S REPORT
– I-42 –


--- page 568 ---
14 INCOME TAX (EXPENSE)/BENEFIT
The income tax benefit of the Group during the Track Record Period is analysed as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income tax /H1118/H1118/H1118/H1118/H1118(11) (4,699) (5,976) (3,593) (9,772)
Deferred income tax
(Note 30) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,661 8,972 11,051 103 681
Income tax
(expense)/benefit /H1118/H1118/H1118/H1118/H111826,650 4,273 5,075 (3,490) (9,091)
The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions
in which members of the Group are domiciled and operate.
(i) Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain.
Additionally, upon payments of dividends by the Company in the Cayman Islands to its shareholders, no Cayman
Islands withholding tax will be imposed.
(ii) Hong Kong
Under the current Hong Kong Inland Revenue Ordinance, from the year of assessment 2018/2019 onwards, the
subsidiaries in Hong Kong are subject to profits tax at the rate of 8.25% on assessable profits up to HK$2 million,
and 16.5% on any part of assessable profits over HK$2 million. The payments of dividends by these companies to
their shareholders are not subject to any Hong Kong withholding tax.
(iii) PRC corporate income tax
Under the PRC Enterprise Income Tax Law (“EIT Law”), the standard enterprise income tax rate is 25%.
Preferential tax treatments are granted to entities qualify as “Software Enterprises”, “Key Software Enterprises”
and/or “High and New Technology Enterprises” (“HNTEs”).
The aforementioned preferential tax rates are subject to annual review by the relevant tax authorities in
mainland China. Five major subsidiaries of the Company were entitled to a preferential corporate income tax rate of
15%. During the Track Record Period they have obtained their High and New Technology Enterprises (“HNTE”)
status, and hence they are entitled to a preferential tax rate of 15% for a three-year period. This status is subject to
a requirement that they reapply for HNTE status every three years. The Company will apply for the renewal of the
HNTE status for all of these subsidiaries, and the Company believes it is more likely than not that each of these
subsidiaries will continue to qualify as a HNTE after the three-year period. Therefore, deferred tax of these entities
were calculated at a rate of 15% starting from the year when they were accredited as HNTEs.
All other major mainland China incorporated entities of the Company were subject to a 25% income tax rate
for all the years presented.
According to the relevant laws and regulations promulgated by the State Taxation Administration of the PRC,
enterprises engaging in research and development activities are entitled to claim 175% from 2018 onwards
(subsequently raised to 200% from 2022 onwards) of their research and development expenses incurred as tax
deductible expenses when determining their assessable profits for that year (the “Super Deduction”).
APPENDIX I ACCOUNTANT’S REPORT
– I-43 –


--- page 569 ---
The income tax on the Group’s loss before income tax differs from the theoretical amount that would arise
using the enacted tax rate applicable to losses of the subsidiaries as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Loss before income tax /H1118/H1118(2,090,200) (8,724,701) (6,744,128) (1,885,001) (5,089,014)
Income tax calculated at
PRC statutory income
tax rate (25%) /H1118/H1118/H1118/H1118/H1118/H1118/H1118(522,550) (2,181,175) (1,686,032) (471,251) (1,272,254)
Tax effect of:
- Effect of different tax
rates in other
jurisdictions /H1118/H1118/H1118/H1118/H1118/H1118/H1118205,160 1,711,835 1,227,408 199,890 1,060,666
- Preferential income tax
rates applicable to
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118127,956 200,571 173,430 101,740 85,673
- Expense not deductible
for tax purposes (b) /H1118/H111821,047 22,737 53,424 29,499 32,139
- Tax losses and other
temporary difference
not recognized as
deferred tax assets
(a) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118222,767 414,130 475,953 282,285 322,128
- Super deduction for
research and
development /H1118/H1118/H1118/H1118/H1118/H1118(81,030) (172,371) (249,258) (138,673) (219,261)
Income tax
expense/(benefit) /H1118/H1118/H1118/H1118/H1118(26,650) (4,273) (5,075) 3,490 9,091
(a) The Group only recognizes deferred income tax assets for cumulative tax losses if it is probable that
future taxable amounts will be available to utilize those tax losses. The Company anticipated that it was
more likely than not that RMB12,927,737,000 net operating losses from PRC entities would not be
utilized based on its estimate of the operating performance of these PRC entities. RMB392,338,000 net
operating losses of entities not qualified as HNTEs are expected to expire during periods between the
six months ended June 30, 2024 and the year ending December 31, 2030. And RMB12,535,399,000 net
operating losses of those of entities qualified as HNTEs are expected to expire during periods between
the six months ended June 30, 2024 and the year ending December 31, 2035.
(b) The “expense not deductible for tax purpose” mainly comprises share-based payment expenses relating
to the share-based awards granted by the Company to the employees of the Company’s PRC
subsidiaries. These share-based payment expenses were non-deductible for tax purpose during the Track
Record Period according to the applicable tax regulations.
APPENDIX I ACCOUNTANT’S REPORT
– I-44 –


--- page 570 ---
15 LOSS PER SHARE
The basic loss per share is calculated by dividing the loss attributable to ordinary shareholders of the Company
by the weighted average number of outstanding ordinary shares issued during the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
(Unaudited)
Loss attributable to
ordinary shareholders of
the Company
(RMB’000) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,061,293) (8,719,410) (6,739,021) (1,888,475) (5,098,088)
Weighted average number
of ordinary shares in
issue-basic and diluted
(in “000”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,537,306 2,606,337 2,700,123 2,673,580 2,813,597
Loss per share (expressed
in RMB per share)-basic
and diluted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(0.81) (3.35) (2.50) (0.71) (1.81)
Basic and diluted loss per ordinary share is computed using the weighted average number of ordinary shares
outstanding during the year. Both Class A, Class B ordinary shares and vested RSUs are included in the calculation
of the weighted average number of ordinary shares outstanding.
The Company has four categories of dilutive potential ordinary shares: preferred shares, convertible loan,
unvested RSU, and share options. As the Group incurred losses for the years ended December 31, 2021, 2022 and
2023 and the six months ended June 30, 2023 and 2024, the dilutive potential ordinary shares were not included in
the calculation of diluted loss per share as their inclusion would be anti-dilutive. Accordingly, diluted loss per share
for the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024 are the
same as basic loss per share of the respective years.
16 PROPERTY, PLANT AND EQUIPMENT
Computers
and
electronic
equipment
Leasehold
improvements
Vehicles and
vehicle
devices
Office
furniture and
equipment
Construction
in Progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2021
(Unaudited)
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118135,844 26,118 13,353 5,825 – 181,140
Accumulated
depreciation /H1118/H1118/H1118/H1118/H1118/H1118(74,305) (7,169) (4,917) (2,312) – (88,703)
Net book amount /H1118/H1118/H1118/H111861,539 18,949 8,436 3,513 – 92,437
Y ear ended
December 31, 2021
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861,539 18,949 8,436 3,513 – 92,437
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111856,784 5,481 11,627 317 4,877 79,086
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(376) (26) (22) (284) – (708)
Depreciation charge /H1118/H1118(36,638) (5,932) (3,369) (1,049) – (46,988)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H111856 – (8) (9) – 39
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H111881,365 18,472 16,664 2,488 4,877 123,866
APPENDIX I ACCOUNTANT’S REPORT
– I-45 –


--- page 571 ---
Computers
and
electronic
equipment
Leasehold
improvements
Vehicles and
vehicle
devices
Office
furniture and
equipment
Construction
in Progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118190,914 31,208 24,924 5,703 4,877 257,626
Accumulated
depreciation /H1118/H1118/H1118/H1118/H1118(109,549) (12,736) (8,260) (3,215) – (133,760)
Net book amount /H1118/H1118/H111881,365 18,472 16,664 2,488 4,877 123,866
Y ear ended
December 31, 2022
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111881,365 18,472 16,664 2,488 4,877 123,866
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111882,526 22,516 15,213 3,561 36,812 160,628
Increase in capitalized
interest /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 1 0 1 0
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(102) – (433) (258) – (793)
Depreciation charge /H1118/H1118(44,010) (10,978) (6,563) (1,386) – (62,937)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H111873 – 85 13 – 171
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118119,852 30,010 24,966 4,418 41,699 220,945
At December 31, 2022
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118272,290 53,724 37,754 8,452 41,699 413,919
Accumulated
depreciation /H1118/H1118/H1118/H1118/H1118(152,438) (23,714) (12,788) (4,034) – (192,974)
Net book amount /H1118/H1118/H1118119,852 30,010 24,966 4,418 41,699 220,945
Y ear ended
December 31, 2023
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118119,852 30,010 24,966 4,418 41,699 220,945
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118116,603 1,143 20,942 797 154,295 293,780
Increase in capitalized
interest /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 1,304 1,304
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,710) – (4,829) (5) – (6,544)
Depreciation charge /H1118/H1118(56,096) (12,021) (6,705) (1,440) – (76,262)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H111824 – 11 3 – 38
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118178,673 19,132 34,385 3,773 197,298 433,261
At December 31, 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118378,116 54,867 48,499 9,185 197,298 687,965
Accumulated
depreciation /H1118/H1118/H1118/H1118/H1118(199,443) (35,735) (14,114) (5,412) – (254,704)
Net book amount /H1118/H1118/H1118178,673 19,132 34,385 3,773 197,298 433,261
APPENDIX I ACCOUNTANT’S REPORT
– I-46 –


--- page 572 ---
Computers
and
electronic
equipment
Leasehold
improvements
Vehicles and
vehicle
devices
Office
furniture and
equipment
Construction
in Progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Six months ended
June 30, 2024
Opening net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118178,673 19,132 34,385 3,773 197,298 433,261
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111882,973 2,366 21,817 138 89,597 196,891
Increase in capitalized
interest /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–––– 2,361 2,361
Disposals /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(20) – (32) – – (52)
Depreciation charge /H1118/H1118(41,376) (6,067) (5,921) (686) – (54,050)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H11181 8–21– 2 1
Closing net book
amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118220,268 15,431 50,251 3,226 289,256 578,432
At June 30, 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118460,782 57,233 70,223 9,326 289,256 886,820
Accumulated
depreciation /H1118/H1118/H1118/H1118/H1118(240,514) (41,802) (19,972) (6,100) – (308,388)
Net book amount /H1118/H1118/H1118220,268 15,431 50,251 3,226 289,256 578,432
Property, plant, and equipment are stated at historical cost less depreciation and accumulated impairment
losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is
derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting
period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their
residual values, over their estimated useful lives or, in the case of leasehold improvements, the shorter lease term as
follows:
 Computer and electronic equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183-5 years
 Leasehold improvements /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Shorter of the lease terms or 5 years
 Vehicles and vehicle devices /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
 Office furniture and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included
in consolidated statement of profit or loss.
APPENDIX I ACCOUNTANT’S REPORT
– I-47 –


--- page 573 ---
17 LEASES
This note provides information for leases where the Group is a lessee.
(i) Amounts recognised in the consolidated statement of financial position
The consolidated statement of financial position shows the following amounts relating to leases:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets
Land-use right /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111869,707 68,311 66,915 66,217
Office buildings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100,519 188,379 135,934 106,285
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118758 1,667 14,520 18,766
170,984 258,357 217,369 191,268
Lease liabilities
Current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111838,248 50,615 52,010 43,944
Non-current /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,266 154,176 112,346 88,963
115,514 204,791 164,356 132,907
During the year ended December 31, 2021, the Group obtained a land-use-right at the cost of RMB69,823,000.
The land-use right was mortgaged as collaterals for the Group’s borrowings (Note 29).
Additions to office buildings leases during the years ended December 31, 2021, 2022 and 2023 and the six
months ended June 30, 2023 and 2024 were RMB52,155,000, RMB75,493,000, RMB1,486,000, RMB11,000 and
RMB12,761,000 respectively. Additions to others during the years ended December 31, 2021, 2022 and 2023 and the
six months ended June 30, 2023 and 2024 were RMB779,000, RMB1,480,000, RMB14,264,000, RMB1,382,000 and
RMB7,960,000 respectively.
Modifications to office buildings leases during the year ended December 31, 2022 and the six months ended
June 30, 2024 were RMB54,792,000 and RMB(8,776,000). There’s no significant modification for the years ended
December 31, 2023 and 2021 and six months ended June 30, 2023.
(ii) Amounts recognized in the consolidated statements of profit or loss
The consolidated statements of profit or loss and the consolidated statements of cash flows contain the
following amounts relating to leases:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Depreciation charge of
right-of-use assets
Land-use right /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118116 1,396 1,396 698 698
Office buildings /H1118/H1118/H1118/H1118/H1118/H1118/H111829,924 41,940 49,346 24,586 22,927
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 571 1,411 450 3,714
30,062 43,907 52,153 25,734 27,339
APPENDIX I ACCOUNTANT’S REPORT
– I-48 –


--- page 574 ---
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Interest expense (included
in finance cost) /H1118/H1118/H1118/H1118/H1118/H11184,711 7,548 8,651 4,585 3,789
Expense relating to short-
term leases not included
in lease liabilities /H1118/H1118/H1118/H1118/H11183,904 4,647 3,910 1,915 1,994
The total cash outflows for lease payments during the years ended 31 December 2021, 2022 and 2023 and the
six months ended June 30, 2023 and 2024 were RMB110,859,000, RMB53,657,000, RMB64,285,000,
RMB31,652,000 and RMB32,232,000 respectively.
(iii) The Group’s leasing activities and how these are accounted for
The Group leases properties, offices, land-use right and automobile leases as lessee. Lease contracts are
typically made for fixed periods from 1 to 50 years. They are stated at cost less accumulated depreciation and
accumulated impairment losses.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset
is available for use by the Group.
Contracts may contain both lease and non-lease components. The Group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices. Lease terms are negotiated
on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose
any covenants other than the security interests in the leased assets that are held by the lessor. Leased assets may not
be used as security for borrowing purposes.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities
include the net present value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable
 variable lease payments that are based on an index or a rate, initially measured using the index or rate
as at the commencement date
 amounts expected to be payable by the Group under residual value guarantees
 the exercise price of a purchase option if the Group is reasonably certain to exercise that option
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising that
option, and
 lease payments to be made under reasonably certain extension options are also included in the
measurement of lease liabilities.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases of the Group, the lessee’s incremental borrowing rate is used, being
the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value
to the right-of-use asset in a similar economic environment with similar terms, security and conditions.
Right-of-use assets are measured at cost comprising the following:
 the amount of the initial measurement of lease liability
 any lease payments made at or before the commencement date less any lease incentives received, and
 any initial direct costs.
APPENDIX I ACCOUNTANT’S REPORT
– I-49 –


--- page 575 ---
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on
a straight-line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset’s useful life.
Payments associated with short-term leases and all leases of low-value assets are recognised on a straight-line
basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less without a
purchase option.
The Group’s lease payments are deductible upon payment for tax purposes. In accounting for the deferred tax
relating to the lease, the Group separately accounts for the deferred taxation on the taxable temporary difference and
the deductible temporary difference, which upon initial recognition are equal and offset to zero. Deferred tax is
recognised on subsequent changes to the taxable and temporary differences.
18 INTANGIBLE ASSETS
Licensed
technology Computer software Total
RMB’000 RMB’000 RMB’000
At January 1, 2021 (Unaudited)
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118179,864 59,804 239,668
Accumulated amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(101,059) (29,464) (130,523)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,805 30,340 109,145
Y ear ended December 31, 2021
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111878,805 30,340 109,145
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118130,962 33,983 164,945
Amortization charge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(57,046) (19,604) (76,650)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118152,721 44,719 197,440
At December 31, 2021
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118310,826 93,787 404,613
Accumulated amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(158,105) (49,068) (207,173)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118152,721 44,719 197,440
Y ear ended December 31, 2022
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118152,721 44,719 197,440
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118219,559 88,197 307,756
Amortization charge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(129,838) (56,283) (186,121)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118242,442 76,633 319,075
At December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118530,386 181,984 712,370
Accumulated amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(287,944) (105,351) (393,295)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118242,442 76,633 319,075
Y ear ended December 31, 2023
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118242,442 76,633 319,075
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118143,767 68,380 212,147
Amortization charge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(160,459) (67,857) (228,316)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118225,750 77,156 302,906
At December 31, 2023
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118674,153 250,364 924,517
Accumulated amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(448,403) (173,208) (621,611)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118225,750 77,156 302,906
APPENDIX I ACCOUNTANT’S REPORT
– I-50 –


--- page 576 ---
Licensed
technology Computer software Total
RMB’000 RMB’000 RMB’000
Six months ended June 30, 2024
Opening net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118225,750 77,156 302,906
Additions /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118110,713 11,507 122,220
Amortization charge /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(109,348) (32,246) (141,594)
Closing net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,115 56,417 283,532
At June 30, 2024
Cost /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118784,866 261,871 1,046,737
Accumulated amortization /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(557,751) (205,454) (763,205)
Net book amount /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,115 56,417 283,532
Amortization expenses have been charged to the consolidated statements of profit or loss as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Research and development
expenses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111876,030 181,106 222,599 107,678 140,980
Administrative expenses /H1118/H1118 620 5,015 5,712 962 611
Selling and marketing
expense /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––523
Total amortization
expenses charged to
profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H111876,650 186,121 228,316 108,642 141,594
(i) Licensed technology
Separately acquired licensed technologies are shown at historical cost. They have limited useful lives and are
subsequently carried at cost less accumulated amortisation and impairment losses.
(ii) Computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire the specific
software.
(iii) Research and development
Research expenditure is recognized as an expense as incurred. Costs incurred on development projects
(relating to the design and testing of new and improved products) are recognized as intangible assets when the
following criteria are met:
 It is technically feasible to complete the software product so that it will be available for use;
 Management intends to complete the software product and use or sell it;
 There is an ability to use or sell the software product;
 It can be demonstrated how the software product will generate probable future economic benefits;
 Adequate technical, financial and other resources to complete the development and to use or sell the
software product are available; and
 The expenditure attributable to the software product during its development can be reliably measured.
APPENDIX I ACCOUNTANT’S REPORT
– I-51 –


--- page 577 ---
Directly attributable costs that are capitalized as part of the software product include the software development
employee costs and an appropriate portion of relevant overheads.
Other development expenditures that do not meet these criteria are recognized as an expense as incurred.
Development costs previously recognized as an expense are not recognized as an asset in a subsequent period.
(iv) Amortisation methods and periods
The Group amortises intangible assets with a limited useful life using the straight-line method over the
following periods:
 Licensed technology /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183-5 years
 Computer software /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183-5 years
19 FINANCIAL INSTRUMENTS BY CATEGORY
The detail information of financial instruments by category during Track Record Period is as below:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets measured at FVPL:
Investments in unlisted
companies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111846,338 68,838 80,825 85,639
Commitment derivative /H1118/H1118/H1118/H1118/H1118/H1118/H1118– 13,017 – –
Financial assets measured at
amortized cost:
Trade and note receivables /H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 709,933
Other receivables and other
current and
non-current assets (excluding
deductible input V AT) /H1118/H1118/H1118/H1118/H1118/H1118/H111816,414 26,367 40,471 24,744
Term deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,284,293 1,204,365 – –
Restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,368 8,566 717,814 734,981
Cash and cash equivalents /H1118/H1118/H1118/H1118/H11188,050,034 6,608,657 11,359,641 10,452,449
9,584,802 8,350,482 12,739,842 12,007,746
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Financial liabilities
Financial liabilities at amortised
cost:
Trade payables and accruals and
other payables (excluding
non-financial liabilities) /H1118/H1118/H1118/H1118/H1118262,271 247,133 405,222 255,411
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118115,514 204,791 164,356 132,907
Borrowings /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,515 112,844 243,895
Financial liabilities at fair value
through
profit or loss:
Preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195 26,451,328 33,509,674 37,789,020
Convertible loan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,729,904 5,993,639
18,718,980 26,915,767 39,922,000 44,414,872
APPENDIX I ACCOUNTANT’S REPORT
– I-52 –


--- page 578 ---
20 TRADE AND NOTE RECEIV ABLES
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Trade receivables
Third party debtors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 24,755
Total trade and note receivables,
gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 24,755
Less: Credit loss allowance /H1118/H1118/H1118/H1118/H1118/H1118– – – (2,423)
Total non-current trade and note
receivables, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 22,332
Current:
Note receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,350 68,666 3,434 560
Trade receivables
Third party debtors /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118169,332 336,385 504,820 716,167
Related parties /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,390 38,440 76,190 64,937
Total trade and note receivables,
gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,072 443,491 584,444 781,664
Less: Credit loss allowance /H1118/H1118/H1118/H1118/H1118/H1118(10,717) (22,819) (43,353) (94,063)
Total current trade and note
receivables, net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 687,601
Total trade and note receivables,
net /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118169,355 420,672 541,091 709,933
The aging analysis of trade and note receivables based on revenue recognition date is as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Up to 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118100,939 314,173 361,866 438,944
3 to 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111830,802 67,445 89,163 59,090
6 to 9 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111819,009 23,863 61,020 169,568
9 to 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118407 1,443 10,097 42,771
Over 12 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828,915 36,567 62,298 96,046
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118180,072 443,491 584,444 806,419
The Group’s credit risk management is disclosed in Note 3.1 to the consolidated statement of financial
position.
21 PREPAYMENTS, OTHER CURRENT ASSETS AND OTHER NON-CURRENT ASSETS
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current:
Rental deposits /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,359 17,067 16,856 17,590
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,627 2,058 1,544 1,392
Prepayments for property, plant
and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,151 6,266 12,826 10,445
Prepayments for intangible assets /H1118 142 4,027 2,824 4,286
Prepayments for construction in
progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 33,401 61 13,423
APPENDIX I ACCOUNTANT’S REPORT
– I-53 –


--- page 579 ---
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Prepaid bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 51,602 38,417
Trade receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 24,755
Less: Credit loss allowance /H1118/H1118/H1118/H1118/H1118– – – (2,423)
Total prepayments and other non-
current assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832,279 62,819 85,713 107,885
Current:
Input V AT to be deducted /H1118/H1118/H1118/H1118/H1118/H111861,449 32,169 23,345 73,424
Prepayments to suppliers /H1118/H1118/H1118/H1118/H1118/H1118221,118 154,152 65,284 64,629
Prepaid bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 26,370 26,370
Rental and other deposits /H1118/H1118/H1118/H1118/H1118/H111880 399 1,332 2,840
Other receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118348 6,843 2,356 1,350
Amounts due from a related party /H1118 – – 18,383 1,572
Deferred listing expense /H1118/H1118/H1118/H1118/H1118/H1118– – – 3,667
Commitment derivative (i) /H1118/H1118/H1118/H1118/H1118– 13,017 – –
Less: Credit loss allowance /H1118/H1118/H1118/H1118/H1118/H1118(3) (128) (341) (117)
Total prepayments and other current
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118282,992 206,452 136,729 173,735
Total prepayments, other current
assets and other non-current
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118315,271 269,271 222,442 281,620
Total prepayments, other current assets and other assets are mainly denominated in RMB.
(i) The Company’s commitment derivative represents its commitment to issue convertible loan to CARIAD
at a predetermined loan amount commencing from sign-off of corresponding agreements till the
Company received the loan amount. The commitment is accounted for as a derivative and recorded as
a financial asset at FVPL.
22 INVENTORIES
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Finished goods /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111861,842 100,675 359,755 287,918
Working in progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111857,208 267,271 431,649 424,210
Raw materials /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,845 11,309 22,763 8,447
Contract fulfilment costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118159 1,687 1,455 909
Inventories, gross /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118131,054 380,942 815,622 721,484
Less: provision for impairment /H1118/H1118/H1118/H1118(17,142) (17,410) (24,724) (18,385)
113,912 363,532 790,898 703,099
The provision for impairment of inventories recorded as cost of sales during the years ended December 31,
2021, 2022, and 2023 and the six months ended June 30, 2023 and 2024 were RMB4,896,000, RMB369,000,
RMB7,314,000, RMB4,000 and RMB9,699,000, respectively.
The reversal of provision for impairment of inventories recorded as cost of sales during the years ended
December 31, 2021, 2022, and 2023 and the six months ended June 30, 2023 and 2024 were RMB1,088,000,
RMB101,000, nil, nil and RMB105,000, respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-54 –


--- page 580 ---
During the years ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2023 and 2024,
the cost of inventories sold included in “cost of sales” amounted to RMB119,075,000, RMB240,011,000,
RMB384,787,000, RMB129,690,000 and RMB170,425,000 respectively.
Inventories are stated at the lower of cost and net realisable value. Cost mainly comprises bill of materials for
processing hardware. Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
23 CASH AND CASH EQUIV ALENTS, RESTRICTED CASH AND TERM DEPOSITS
The Group
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Cash at banks /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,352,695 7,821,588 12,077,455 11,187,430
Less: restricted cash /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(18,368) (8,566) (717,814) (734,981)
Less: term deposits with initial term
of over three months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,284,293) (1,204,365) – –
Cash and cash equivalents /H1118/H1118/H1118/H1118/H1118/H1118/H11188,050,034 6,608,657 11,359,641 10,452,449
Balances per consolidated
statement of cash flows /H1118/H1118/H1118/H1118/H1118/H11188,050,034 6,608,657 11,359,641 10,452,449
The Group
Cash and cash equivalents are denominated in:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
RMB /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,064,881 4,851,799 4,231,031 4,234,827
US$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,985,064 1,756,766 7,128,517 6,217,542
HK$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111889 92 93 80
8,050,034 6,608,657 11,359,641 10,452,449
Restricted cash is denominated in:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
RMB /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,055 5,425 5,423 5,423
US$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,313 3,141 712,391 729,558
18,368 8,566 717,814 734,981
The restricted cash balance as at December 31, 2023 and June 30, 2024 mainly included a US$100,000,000
deposit in an escrow account set up according to the Joint Venture Agreement with CARIAD in order to secure and
compensate CARIAD if the Group commits any material breach of the Joint Venture Agreement until the completion
of a Qualified IPO.
APPENDIX I ACCOUNTANT’S REPORT
– I-55 –


--- page 581 ---
Term deposits is denominated in:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
US$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,284,293 1,204,365 – –
1,284,293 1,204,365 – –
The Company
Cash and cash equivalents are denominated in:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
RMB /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118170,413 7,260 43,153 154,108
US$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,986,910 724,355 3,192,369 1,698,426
HK$ /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111844 45 46 47
3,157,367 731,660 3,235,568 1,852,581
24 SHARE CAPITAL AND SHARE PREMIUM
Share capital
Class A ordinary shares Class B ordinary shares
Number Nominal value Number Nominal value
USD USD
Authorised, US$0.0000025 each
(a):
At January 1, 2021, December 31,
2021, 2022 and 2023 and
June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,350,582,688 5,876 9,271,123,237 23,178
Class A ordinary shares Class B ordinary shares
Number Amount Number Amount
RMB’000 RMB’000
Issued and fully paid,
US$0.0000025 each (b):
At January 1, 2021 (Unaudited) /H1118/H11182,350,582,688 38 80,821,352 1
Transfer of shares among
shareholders (b)(ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(18,174,122) – 18,174,122 –
At December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,332,408,566 38 98,995,474 1
Transfer of shares among
shareholders (b)(iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(26,476,041) – 26,476,041 –
At December 31, 2022 and 2023
and June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,305,932,525 38 125,471,515 1
APPENDIX I ACCOUNTANT’S REPORT
– I-56 –


--- page 582 ---
Share premium
RMB’000
At January 1, 2021 (Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111899,593
Transfer of shares among shareholders (b)(ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111824,527
At December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118124,120
Transfer of shares among shareholders (b)(iii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,137
At December 31, 2022 and 2023 and June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118146,257
(a) Authorized
During the Track Record Period, the authorized ordinary shares include 2,350,582,688 Class A ordinary shares
of par value US$0.0000025 each, and 9,271,123,237 Class B ordinary shares of par value US$0.0000025 each. Each
Class A ordinary share carries ten (10) votes at meetings of shareholders while each Class B ordinary share is entitled
to one (1) vote. Each Class A ordinary share is convertible into one (1) Class B ordinary share at any time by the
holder thereof, and Class B ordinary shares are not convertible into Class A ordinary shares or preferred shares under
any circumstances. Upon any transfer of Class A ordinary shares by a holder thereof to any person or entity which
is not an affiliate of such person, such Class A ordinary shares shall be automatically and immediately converted the
equal number of Class B ordinary shares.
Share Splits
Prior to the Track Record Period, the Company underwent two share splits. On December 11, 2017, the
Company effected a 4-for-1 share split of all the issued and unissued ordinary shares and redeemable convertible
preferred shares. On December 25, 2018, the Company effected another 10-for-1 share split of all issued and unissued
ordinary shares and redeemable convertible preferred shares. After the two share splits, all information related to the
Company’s ordinary shares, redeemable convertible preferred shares and share-based awards has been retroactively
adjusted to give effect to the share splits.
(b) Issued and fully paid share capital
(i) In March 2019, the Company issued 200,000,000 Class B ordinary shares to one of the founders, which
were reserved for the future exercise of certain options granted to employees. These ordinary shares
were not considered outstanding from accounting perspective and are disclosed as treasury shares and
deducted from contributed equity. On December 1, 2021, these reserved ordinary shares were cancelled
by the Company.
(ii) In October 2021, 18,174,122 Class A ordinary shares held by a founder were transferred to an investor.
These transferred Class A ordinary shares were automatically converted to Class B ordinary shares. The
RMB24,527,000 excess of the transaction price over the fair value of the Class A ordinary shares, with
reference to a third-party valuation report, was considered compensatory in nature in exchange for
service of the founder, and therefore was recognized as share-based payment expense and credited to
share premium.
(iii) In April 2021, the founders of the Company agreed to transfer 26,476,041 Class A ordinary shares then
held by them to an investor. The RMB22,137,000 excess of the transaction price over the fair value of
the Class A ordinary shares, with reference to a third-party valuation report, on the date of the agreement
was considered compensatory in nature in exchange for service of the founders, and therefore was
recognized as share-based payment expense and credited to other reserve. In April 2022, the transfer of
these 26,476,041 Class A ordinary shares were completed, related other reserve was then transferred to
share premium.
APPENDIX I ACCOUNTANT’S REPORT
– I-57 –


--- page 583 ---
25 OTHER RESERVES
Share-based
payments
Changes in the
fair value
attributable to
credit risk
changes
Statutory
reserves
Currency
Translation
differences
Repurchase
of non-
controlling
interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118187,610 304,672 1,198 401,801 – 895,281
Share-based payments
– Share Incentive
Plans (Note 26(a)) /H1118/H1118149,705 –––– 149,705
Share-based payments
– Transfer of
founders’ ordinary
shares
(Note 24(b)(iii)) /H1118/H1118/H111822,13 7–––– 22,137
Fair value changes on
convertible
redeemable preferred
shares due to own
credit risk (Note 28) /H1118 – 257,022 – – – 257,022
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118– – – 270,243 – 270,243
Appropriations to
statutory reserves /H1118/H1118/H1118/H1118–– 3 6–– 3 6
As at December 31,
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118359,452 561,694 1,234 672,044 – 1,594,424
Share-based payments
– Share Incentive
Plans (Note 26(a)) /H1118/H1118173,698 –––– 173,698
Share-based payments
– Transfer of
founders’ ordinary
shares
(Note 24(b)(iii))) /H1118/H1118/H1118(22,137) –––– (22,137)
Fair value changes on
convertible
redeemable preferred
shares due to own
credit risk (Note 28) /H1118 – 406,335 – – – 406,335
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118– – – (898,171) – (898,171)
Appropriations to
statutory reserves /H1118/H1118/H1118/H1118–– 1 0 3–– 1 0 3
Purchase of non-
controlling interests /H1118/H1118 –––– (6,743) (6,743)
As at December 31,
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118511,013 968,029 1,337 (226,127) (6,743) 1,247,509
APPENDIX I ACCOUNTANT’S REPORT
– I-58 –


--- page 584 ---
Share-based
payments
Changes in the
fair value
attributable to
credit risk
changes
Statutory
reserves
Currency
Translation
differences
Repurchase
of non-
controlling
interests Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Share-based payments
– Share Incentive
Plans (Note 26(a)) /H1118/H1118341,751 –––– 341,751
Fair value changes on
convertible
redeemable preferred
shares due to own
credit risk (Note 28) /H1118 – (457,686) – – – (457,686)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118– – – (371,859) – (371,859)
Appropriations to
statutory reserves /H1118/H1118/H1118/H1118–– 1 2 7–– 1 2 7
As at December 31,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118852,764 510,343 1,464 (597,986) (6,743) 759,842
Share-based payments –
Share Incentive Plans
(Note 26(a)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118223,733 –––– 223,733
Share-based payments to
Joint ventures’
employees (Note 13) /H1118/H11183,961–––– 3,961
Share-based payments –
Warrant of D-Robotics
issued to founders
(Note 26(c)) /H1118/H1118/H1118/H1118/H1118/H1118/H111812,906 –––– 12,906
Fair value changes on
convertible redeemable
preferred shares due to
own credit risk
(Note 28) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– (85,118) – – – (85,118)
Currency translation
differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (208,038) – (208,038)
As at June 30, 2024 /H1118/H1118/H11181,093,364 425,225 1,464 (806,024) (6,743) 707,286
APPENDIX I ACCOUNTANT’S REPORT
– I-59 –


--- page 585 ---
The Company
Share-based
payments
Changes in the fair
value attributable
to credit risk
change
Currency
translation
differences Total
RMB’000 RMB’000 RMB’000 RMB’000
As at January 1, 2021
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118187,610 304,672 269,041 761,323
Share-based payments – Share
Incentive Plans (Note 26(a)) /H1118/H1118/H1118149,705 – – 149,705
Share-based payments – Transfer
of founders’ ordinary shares
(Note 24(b)(iii)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,137 – – 22,137
Fair value changes on convertible
redeemable preferred shares due
to own credit risk (Note 28) /H1118/H1118/H1118 – 257,022 – 257,022
Currency translation differences /H1118/H1118 – – 179,417 179,417
As at December 31, 2021 /H1118/H1118/H1118/H1118/H1118359,452 561,694 448,458 1,369,604
Share-based payments – Share
Incentive Plans (Note 26(a)) /H1118/H1118/H1118173,698 – – 173,698
Share-based payments – Transfer
of founders’ ordinary shares
(Note 24(b)(iii)) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(22,137) – – (22,137)
Fair value changes on convertible
redeemable preferred shares due
to own credit risk (Note 28) /H1118/H1118/H1118 – 406,335 – 406,335
Currency translation differences /H1118/H1118 – – (364,352) (364,352)
As at December 31, 2022 /H1118/H1118/H1118/H1118/H1118511,013 968,029 84,106 1,563,148
Share-based payments – Share
Incentive Plans (Note 26(a)) /H1118/H1118/H1118341,751 – – 341,751
Fair value changes on convertible
redeemable preferred shares due
to own credit risk (Note 28) /H1118/H1118/H1118 – (457,686) – (457,686)
Currency translation differences /H1118/H1118 – – (162,805) (162,805)
As at December 31, 2023 /H1118/H1118/H1118/H1118/H1118852,764 510,343 (78,699) 1,284,408
As at January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118852,764 510,343 (78,699) 1,284,408
Share-based payments – Share
Incentive Plans (Note 26(a)) /H1118/H1118/H1118223,733 – – 223,733
Share-based payments to Joint
ventures’ employees (Note 13) /H1118 3,961 – – 3,961
Fair value changes on convertible
redeemable preferred shares due
to own credit risk (Note 28) /H1118/H1118/H1118 – (85,118) – (85,118)
Currency translation differences /H1118/H1118 – – (121,786) (121,786)
As at June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,080,458 425,225 (200,485) 1,305,198
APPENDIX I ACCOUNTANT’S REPORT
– I-60 –


--- page 586 ---
26 SHARE-BASED PAYMENTS
Total expenses arising from share-based payment transactions recognised during the Track Record Period were
as follows:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Share Incentive Plans (a) /H1118 149,705 173,698 341,751 178,931 223,733
Transfer of founders’
ordinary shares (b) /H1118/H1118/H1118/H111846,66 4––––
Warrant of D-Robotics
issued to founders (c) /H1118/H1118 –––– 12,906
196,369 173,698 341,751 178,931 236,639
(a) Share Incentive Plans
In November 2015, the Company adopted the 2015 share incentive plan (the “2015 Share Incentive Plan”). On
November 16, 2018, the 2018 share incentive plan (the “2018 Share Incentive Plan”) was adopted by the Company
to replace the 2015 Share Incentive Plan. As of June 30, 2024, the maximum number of shares that may be issued
under the 2018 Share Incentive plan was 1,516,134,974 Class B ordinary shares.
Under the 2015 Share Incentive Plan and the 2018 Share Incentive Plan, the Company have granted share
options and RSUs to relevant directors and employees of the Company. The fair value of the services received in
exchange for the grant of equity instruments (share options and RSUs) is recognised as an expense in the consolidated
statements of profit or loss with a corresponding increase in other reserve.
The total amount to be expensed is determined by reference to the fair value of the options and RSUs granted:
 including any market performance conditions,
 excluding the impact of any service and non-market performance vesting conditions, and
 including the impact of any non-vesting conditions.
The total expense is recognised over the vesting period, which is the period over which all of the specified
vesting conditions are to be satisfied. At the end of each reporting period, the Group revises its estimates of the
number of shares that are expected to vest based on the service conditions. The expected retention rate of grantees
was 94%, 92%, 92%, 92% and 92% respectively in 2021, 2022 and 2023 and six months ended June 30, 2023 and
2024. The Company recognises the impact of the revision to original estimates, if any, in profit or loss, with a
corresponding adjustment to equity.
When the share options are exercised or the RSUs are settled, the Company issues new ordinary shares. The
proceeds received net of any directly attributable transaction costs are credited to share capital and share premium.
Most of options and RSUs vest over a one-year or four-year requisite service period, depending on the terms
of each award agreement. And granted options and RSUs generally follow one of the three vesting schedules
(“Schedule A”, “Schedule B”, “Schedule C”) below:
 Schedule A: 25% of the awards vest upon each of the four anniversaries of vesting commencement date;
 Schedule B: 50% of the awards vest upon the second anniversary of vesting commencement date, and
25% of the awards vest upon the third and fourth anniversary respectively;
 Schedule C: 100% of the awards vest on the first anniversary of vesting commencement date.
APPENDIX I ACCOUNTANT’S REPORT
– I-61 –


--- page 587 ---
Set out below are summaries of options granted under the 2018 Share Incentive Plan:
Weighted Average
exercise price per
share option
Number of
options
Weighted-average
remaining
contract life
Weighted average
fair value of
options granted
during the period
US$ US$
Outstanding at January 1, 2021
(Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.11 378,086,175 6.52
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.39 33,653,560 0.09
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.41 (9,283,810)
Outstanding at December 31, 2021 /H1118 0.13 402,455,925 5.75
Exercisable as of December 31,
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.09 316,741,063
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.47 4,570,000 0.08
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.40 (4,075,000)
Outstanding at December 31, 2022 /H1118 0.13 402,950,925 4.77
Exercisable as of December 31,
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.11 367,420,775
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–– –
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.39 (3,416,450)
Outstanding at December 31, 2023 /H1118 0.13 399,534,475 3.74
Exercisable as of December 31,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.12 391,540,725
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–– –
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.45 (30,000)
Outstanding at June 30, 2024 /H1118/H1118/H1118/H1118/H11180.13 399,504,475 3.49
Exercisable as of June 30, 2024 /H1118/H1118/H11180.12 392,436,975
Share options outstanding at the end of the year/period have the following expiry date and exercise prices:
Number of share options
Grant Date Expiry date
Exercise price per
share option
December 31,
2021
December 31,
2022
December 31,
2023
June 30,
2024
US$
2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182025 0.000025 128,875,150 128,875,150 128,875,150 128,875,150
2016 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182026 0.000025-0.0625 46,726,740 46,726,740 46,726,740 46,726,740
2017 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182027 0.000025-0.09175 19,706,960 19,706,960 19,706,960 19,706,960
2018 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182028 0.00025-0.302 89,377,415 88,972,415 88,972,415 88,972,415
2019 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182029 0.001-0.3777 71,518,600 70,403,600 70,017,800 70,017,800
2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182030 0.05408-0.3777 17,140,000 16,465,000 16,084,350 16,084,350
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182031 0.10249-0.4677 29,111,060 27,831,060 25,771,060 25,771,060
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182032 0.4677 – 3,970,000 3,380,000 3,350,000
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118402,455,925 402,950,925 399,534,475 399,504,475
APPENDIX I ACCOUNTANT’S REPORT
– I-62 –


--- page 588 ---
Set out below are summaries of RSUs granted under the 2018 Share Incentive Plan:
Number of RSUs
Weighted-average
remaining
contract life
Weighted average
fair value of
RSUs granted
during the period
US$
Outstanding at January 1, 2021 (Unaudited) /H1118/H1118/H1118/H1118239,826,085 8.57
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111882,172,450 0.25
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,567,966)
Outstanding at December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118313,430,569 8.13
Exercisable as of December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118137,225,581
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118178,928,963 0.26
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(24,836,470)
Outstanding at December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118467,523,062 7.84
Exercisable as of December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118216,935,459
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118215,740,216 0.37
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(22,701,502)
Outstanding at December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118660,561,776 7.58
Exercisable as of December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118342,725,801
Granted /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118204,865,641 0.56
Forfeited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(8,964,474)
Outstanding at June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118856,462,943 7.54
Exercisable as of June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118437,376,765
RSUs outstanding at the end of the year/period have the following expiry date:
Number of RSUs
Grant Date Expiry date
December 31,
2021
December 31,
2022
December 31,
2023
June 30,
2024
2015 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182025 ––––
2016 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182026 7,967,430 7,967,430 7,967,430 7,967,430
2017 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182027 ––––
2018 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182028 89,478,400 89,478,400 89,478,400 89,478,400
2019 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182029 20,013,439 19,863,439 19,713,439 19,713,439
2020 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182030 116,848,850 110,264,700 109,128,138 108,816,819
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182031 79,122,450 76,530,965 71,322,215 71,272,215
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182032 – 163,418,128 151,189,468 147,232,303
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182033 – – 211,762,686 209,862,696
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182034 – – – 202,119,641
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118313,430,569 467,523,062 660,561,776 856,462,943
Fair value of options and RSUs granted
The directors have used the discounted cash flow method to determine the underlying equity fair value of the
Company and adopted the equity allocation model to determine the fair value of the underlying ordinary shares. Key
assumptions, such as projections of future performance, are determined by the directors with best estimate.
Based on fair value of the underlying ordinary shares, the directors use binomial model to determine the fair
value of the share options as of the grant date.
APPENDIX I ACCOUNTANT’S REPORT
– I-63 –


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Key assumptions used by directors are set as below:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181%~2% 1%~2% N/A N/A
Contractual term (in years) /H1118/H1118/H1118/H1118/H1118/H111810 10 N/A N/A
V olatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111832.2%~32.7% 36.7%~37.2% N/A N/A
Expected dividend yield /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180% 0% N/A N/A
The fair value of RSUs at the grant date was determined by reference to the fair value of the underlying
ordinary shares on the dates of grant.
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Fair value of underlying ordinary
shares (US$) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.25~0.26 0.26~0.37 0.37~0.47 0.47~0.55
Key assumptions used by directors to estimate the underlying ordinary shares’ fair value are set as below:
Y ear ended December 31,
Six months
ended June 30,
2021 2022 2023 2024
Discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821% 20% 20% 20%
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11180.26%-0.73% 2.94%-4.11% 3.73%-4.40% 4.45%-5.45%
DLOM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188.0% 5.5%-10.0% 8.0%-9.5% 4.0%
V olatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
45.78%-
50.50%
41.38%-
47.17%
40.77%-
48.79% 36.69%-41.72%
(b) Transfer of founders’ ordinary shares
The Group recognized share-based payment expenses in 2021 arising from certain ordinary shares transfer
between founders and certain investors. For details, please see Note 24 (b) (ii) & (iii).
(c) Warrant of D-Robotics issued to founders
On June 25, 2024, during the D-Robotics Financing, 43,940,218 class A ordinary shares of D-Robotics were
issued to the three founders of the Company. According to the Amended and Restated Memorandum of Association
of D-Robotics, all these shares shall bear the interests, rights and privileges, provided that the unpaid shares shall
not be entitled to any economic rights and/or interests (including the right to claim or receive any dividend, the right
to claim or receive any distribution or otherwise any property upon the winding up, liquidation, bankruptcy or
insolvency or dissolution of the D-Robotics).
As of June 30, 2024, among the class A ordinary shares of D-Robotics issued to the three founders of the
Company, 413,435 shares have been fully paid at price specified in the share purchase agreement dated June 25, 2024.
For the remaining unpaid shares, founders have the right to pay the consideration for these shares at the same price
specified in share purchase agreement at any time to entitle the economic rights and interests of these unpaid shares.
Founders have been in-substance granted a warrant without any condition to buy 43,526,783 class A ordinary shares
of D-Robotics at the predetermined subscription price on June 25, 2024. The Group recognized share-based payment
expenses of RMB 12,906,000 at the grant date fair value of the warrant which is derived using the Black-Scholes
model. Significant assumptions including, 56.58% expected volatility and 4.25% risk-free interest rate are made by
the directors with reference to a third-party valuation report.
APPENDIX I ACCOUNTANT’S REPORT
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27 TRADE PAYABLES, ACCRUALS, OTHER PAYABLES AND OTHER NON-CURRENT LIABILITIES
The Group
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current liabilities
Trade payables (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,040 3,822 11,164 13,648
Tax liabilities
– Income tax payable /H1118/H1118/H1118/H1118/H1118/H1118/H11183 1,181 170 3,068
– Other taxes payable /H1118/H1118/H1118/H1118/H1118/H1118/H111813,791 31,263 142,448 34,861
Other payables
– Payables for purchase of
intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118165,068 142,413 171,559 30,749
– Payables for third-party
service fees and deposit /H1118/H1118/H1118/H111849,753 74,539 173,775 173,571
– Payables to certain former
investors for preferred shares
repurchase before Track
Record Period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,433 10,304 583 587
– Payables for construction in
progress /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812 3,812 30,803 10,500
− Payables for purchase of
property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 8,960
– Accrued warranty liabilities /H1118/H1118 2,500 2,490 3,768 4,620
− Accrued listing expenses /H1118/H1118/H1118 – – – 1,297
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111829,965 12,243 17,338 16,099
Total trade payables and accruals
and other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118278,565 282,067 551,608 297,960
(i) The aging analysis of the trade payables based on purchase date were as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Up to 3 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,635 3,381 10,647 11,807
3 to 6 months /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118117 54 – 865
6 months to 1 year /H1118/H1118/H1118/H1118/H1118/H1118/H111818 33 262 708
1 to 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182 5 9 1 1 91 21 4
Over 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811 235 243 254
Total trade payables /H1118/H1118/H1118/H1118/H1118/H11188,040 3,822 11,164 13,648
APPENDIX I ACCOUNTANT’S REPORT
– I-65 –


--- page 591 ---
The Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Current liabilities
Other payables
– Payables for third-party
service fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,680 4,304 712 14,380
– Amounts due to subsidiaries /H1118 – – – 8,654
– Accrued listing expense /H1118/H1118/H1118/H1118– – – 1,297
– Payables to certain former
investors for preferred shares
repurchase before Track
Record Period /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,433 10,304 583 587
– Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118447 1,491 1,427 915
Total trade payables and accruals
and other payables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816,560 16,099 2,722 25,833
The Group
Other non-current liabilities
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Deferred income in relation to
financial subsidies /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,570 15,652 61,954 47,603
28 PREFERRED SHARES AND OTHER FINANCIAL LIABILITIES AT FVPL
The Group and the Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Preferred shares (a)
The Company (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195 26,451,328 33,509,674 37,603,723
D-Robotics (ii) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 185,297
Convertible loan (b) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 5,729,904 5,993,639
18,341,195 26,451,328 39,239,578 43,782,659
(a) Preferred shares
(i) Preferred shares of the Company
Since the date of incorporation, the Company has completed several rounds of financing by issuing preferred
shares to investors.
APPENDIX I ACCOUNTANT’S REPORT
– I-66 –


--- page 592 ---
The details of the issuance are set out in the table below (after taking into consideration of share splits):
Issue price
per share
Number of
shares as of
January 1,
2021
Number of
shares as of
June 30, 2024
Total
consideration
received by
June 30, 2024
US$ US$’000
(Unaudited)
Series Seed-1 Preferred Shares /H1118/H1118/H1118/H11180.02 820,000,000 820,000,000 12,551
Series Seed-2 Preferred Shares /H1118/H1118/H1118/H11180.03 80,000,000 80,000,000 2,400
Series A Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H11180.06 614,300,320 614,300,320 39,302
Series A1 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.09 547,100,600 547,100,600 50,214
Series A3 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.10 404,327,650 404,327,650 40,805
Series A5 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.10 97,570,490 97,570,490 10,000
Series B1 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.25 1,244,898,062 1,244,898,062 313,739
Series B2 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.30 247,532,056 247,532,056 74,405
Series B3 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.38 105,904,158 105,904,158 38,936
Series C Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H11180.47 1,162,309,965 3,353,574,611 1,568,460
Series D Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H11180.74 – 283,197,279 210,000
5,323,943,301 7,798,405,226 2,360,812
The details of the movements of number of preferred shares issued during the Track Record Period are as
follows:
Number of shares
Opening as of January 1, 2021 (unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,323,943,301
Issuance of Series C preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,105,739,361
Outstanding as of December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,429,682,662
Opening as of January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,429,682,662
Issuance of Series C preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885,525,285
Outstanding as of December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,515,207,947
Opening as of January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,515,207,947
Issuance of Series D preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118283,197,279
Outstanding as of December 31, 2023 and June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11187,798,405,226
The key terms of the preferred shares issued by the Company are as follows:
Conversion rights
Unless converted earlier pursuant to the provisions with respect to automatic conversion as set out below,
preferred shares shall be convertible, at the option of the holder thereof, at any time into such number of fully paid
Class B ordinary shares at an initial conversion ratio of 1:1, and thereafter shall be subject to adjustment and
readjustment from time to time for (a) share splits and combinations, (b) ordinary share dividends and distributions,
(c) other dividends, (d) reorganizations, mergers, consolidations, reclassifications, exchanges, substitution, (e)
dilutive issuance.
Each preferred share shall automatically be converted, based on the then-effective conversion price, without
the payment of any additional consideration, into fully-paid Class B ordinary shares upon the earlier of (i) the
consummation of the qualified initial public offering (“Qualified IPO”), or (ii) the date specified by the written
consent of at least two-thirds (2/3) of the voting power of the then outstanding preferred shares of each class with
respect to conversion of each class.
APPENDIX I ACCOUNTANT’S REPORT
– I-67 –


--- page 593 ---
Redemption rights
Preferred shareholders may redeem of all or any part of the then outstanding shares held, at any time after the
occurrence of (i) the failure by the Company to consummate a Qualified IPO prior to December 31, 2026, (ii) any
occurrence of a material breach or violation of the transaction documents or relevant laws or (iii) occurrence of any
other factors, which has resulted in the Company’s chief executive officer terminating his employment relationship
with the Group or losing control of the Company.
The redemption price of each share to be redeemed shall equal to (i) 100% of each series stated issue price
with a compounded rate of ten percent (10%) per annum return, plus (ii) any accrued but unpaid dividends on each
applicable preferred shares.
Under the redemption, the redemption price will be paid to the preferred shareholders in the following order:
first to holders of Series D preferred shares, second to holders of Series C preferred shares, third to holders of Series
B1/B2/B3/B4 preferred shares, fourth to holders of Series A1/A2/A3/A4/A5 preferred shares, fifth to holders of
Series A preferred shares, and lastly to holders of Series Seed-1/Seed-2 preferred shares.
V oting rights
Each preferred share has voting rights equivalent to the number of Class B ordinary shares into which such
preferred shares could be then convertible.
Dividend rights
Each preferred shareholder shall be entitled to receive the dividends at a simple annual rate of eight percent
(8%) on pro-rata basis according to the relative number of shares held by them on an as-converted basis, only when,
as and if declared by the Board of Directors and shall be non-cumulative. The distribution sequence should be in the
following order: first to holders of Series D preferred shares, second to holders of Series C preferred shares, third
to holders of B1/B2/B3/B4 preferred shares, fourth to holders of Series A1/A2/A3/A4/A5 preferred shares, fifth to
holders of Series A preferred shares, sixth to holders of Series Seed-1/Seed-2 preferred shares and lastly to holders
of ordinary shareholders.
Liquidation preference
In the event of any liquidation or deemed liquidation, dissolution, winding up of the Company, either voluntary
or involuntary, the assets and funds of the Company legally available for distribution to the shareholders shall be
distributed to shareholders in the following manner and order:
Each preferred shareholder shall be entitled to receive, prior and in preference to any distribution of any of
the assets or funds of the Company to the holders of any previous preferred shares and ordinary shares, the amount
equal to one hundred and ten percent (110%) of the original issue price on each preferred shares, plus all declared
but unpaid dividends thereon up to the date of liquidation. The liquidation preference amount will be paid in the
following order: first to holders of Series D preferred shares, second to holders of Series C preferred shares, third
to holders of Series B1/B2/B3/B4 preferred shares, fourth to holders of Series A1/A2/A3/A4/A5 preferred shares,
fifth to holders of Series A preferred shares, and lastly to holders of Series Seed-1/Seed-2 preferred shares. After
distributing or paying in full the liquidation preference amount to all of the preferred shareholders, the remaining
assets of the Company available for distribution, if any, shall distributed to the holders of ordinary shares and the
preferred shareholders on a pro rata basis, based on the number of ordinary shares then held by each shareholder on
an as-converted basis. If the value of the remaining assets of the Company is less than aggregate liquidation
preference amount payable to the holders of a particular series of preferred shares, then the remaining assets of the
Company shall be distributed pro rata amongst the holders of all outstanding preferred shares of that series.
Deemed Liquidation Events
Deemed Liquidation Events (as defined in the Company’s memorandum and articles of association) include:
(1) any consolidation, amalgamation, scheme of arrangement or merger of the Company and/or its subsidiaries with
or into any other person or other reorganization in which the shareholders of the Company and/or its subsidiaries
immediately prior to such consolidation, amalgamation, merger, scheme of arrangement or reorganization own less
APPENDIX I ACCOUNTANT’S REPORT
– I-68 –


--- page 594 ---
than fifty percent (50%) of the voting power of the surviving company immediately after such transaction; or (2) a
sale, transfer, lease or other disposition of all or substantially all of the assets of the Company and/or its subsidiaries;
or (3) exclusive and irrevocable licensing of all or substantially all of the Company and/or its subsidiaries’
intellectual property to a third party.
A Deemed Liquidation Event shall be deemed to be a liquidation, dissolution or winding up of the Company,
and any proceeds, whether in cash or properties, resulting from a Deemed Liquidation Event shall be distributed.
The Group does not bifurcate any embedded derivatives from the host instruments and designates the entire
preferred share instruments as financial liabilities at fair value through profit or loss with the changes in the fair value
recorded in the consolidated statements of profit or loss and the component of fair value changes relating to the
Company’s own credit risk is recognised in other comprehensive income. Amounts recorded in other comprehensive
income related to credit risk are not subject to recycling in profit or loss but are transferred to retaining earnings when
realized. Any directly attributable transaction costs are expensed as incurred.
The preferred shares issued by the Company have been presented as current liabilities as the preferred shares
may be converted into ordinary shares at the option of the preferred shareholders at any time, and the conversion
option doesn’t meet the definition of equity instrument.
(ii) Preferred shares of D-Robotics
On June 25, 2024, the Company’s subsidiary D-Robotics also has completed external financing by issuing
preferred shares to investors.
The details of the issuance are set out in the table below:
Issue price
per share
Number of
shares as of
January 1,
2021
Number of
shares as of
June 30, 2024
Total
consideration
received by
June 30, 2024
US$ US$’000
(Unaudited)
Series A1 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H11180.33 – 77,717,395 26,000
– 77,717,395 26,000
The details of the movements of number of preferred shares issued by D-Robotics during the Track Record
Period are as follows:
D-Robotics Number of shares
Opening as of January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Issuance of Series A1 preferred shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,717,395
Outstanding as of June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111877,717,395
The key terms of the preferred shares issued by D-Robotics are as follows:
Conversion rights
Unless converted earlier pursuant to the provisions with respect to automatic conversion as set out below,
preferred shares shall be convertible, at the option of the holder thereof, at any time into such number of fully paid
Class B ordinary shares at an initial conversion ratio of 1:1, and thereafter shall be subject to adjustment and
readjustment from time to time for (a) share splits and combinations, (b) ordinary share dividends and distributions,
(c) other dividends, (d) reorganizations, mergers, consolidations, reclassifications, exchanges, substitution, (e)
dilutive issuance.
APPENDIX I ACCOUNTANT’S REPORT
– I-69 –


--- page 595 ---
Each preferred share shall automatically be converted, based on the then-effective conversion price, without
the payment of any additional consideration, into fully-paid Class B ordinary shares upon the earlier of (i) the
consummation of the qualified initial public offering of D-Robotics (“Qualified IPO of D-Robotics”), or (ii) the date
specified by the written consent or agreement of at least two-thirds (2/3) of the voting power of the then outstanding
preferred shares.
Redemption rights
Preferred shareholders may redeem of all or any part of the then outstanding shares held, at any time after the
occurrence of (i) the failure by D-Robotics to consummate a Qualified IPO prior to June 25, 2029, (ii) any occurrence
of a material breach or violation of the transaction documents or relevant laws, (iii) occurrence of any other factors,
which has resulted in the Kai Yu losing control of D-Robotics, or (iv) any share required to be redeemed by any
preferred shareholders of D-Robotics.
The redemption price of each share to be redeemed shall equal to (i) 100% of each series stated issue price
with a compounded rate of ten percent (10%) per annum return, plus (ii) any accrued or declared but unpaid dividends
on each applicable preferred shares.
V oting rights
Each preferred share has voting rights equivalent to the number of Class B ordinary shares into which such
preferred shares could be then convertible.
Dividend rights
Each preferred shareholder shall be entitled to receive, when, as and if declared by the Board of D-Robotics,
out of any assets of D-Robotics legally available therefor, such dividends as may be declared from time to time by
the Board of D-Robotics.
Liquidation preference
In the event of any liquidation or deemed liquidation, dissolution, termination or winding up of D-Robotics,
whether voluntary or involuntary, all assets and funds of D-Robotics legally available for distribution to shareholders
in the following manner and order:
Each preferred shareholder shall be entitled to receive, prior and in preference to any distribution of any of
the assets or funds of the D-Robotics to the holders of any ordinary shares, the amount equal to one hundred and ten
percent (110%) of the original issue price on each preferred shares, plus all declared but unpaid dividends thereon
up to the date of liquidation. The liquidation preference amount will be paid firstly to holders of Series A1 preferred
shares. After distributing or paying in full the liquidation preference amount to all of the preferred shareholders, the
remaining assets of the D-Robotics available for distribution, if any, shall distributed to the holders of ordinary shares
and the preferred shareholders on a pro rata basis, based on the number of ordinary shares then held by each
shareholder on an as-converted basis. If the value of the remaining assets of the D-Robotics is less than aggregate
liquidation preference amount payable to the holders of series A1 preferred shares, then the remaining assets of the
D-Robotics shall be distributed pro rata amongst the holders of all outstanding preferred shares of that series.
Deemed Liquidation Event
Deemed Liquidation Events (as defined in the D-Robotics’ memorandum and articles of association) include:
(1) any consolidation, amalgamation, scheme of arrangement or merger of any D-Robotics or its subsidiaries with or
into any other Person or other reorganization in which the shareholders of D-Robotics immediately prior to such
consolidation, amalgamation, merger, scheme of arrangement or reorganization own less than fifty percent (50%) of
D-Robotics’ voting power in the aggregate immediately after such consolidation, merger, amalgamation, scheme of
arrangement or reorganization, or any transaction or series of related transactions to which D-Robotics is a party in
which in excess of fifty percent (50%) of D-Robotics’ voting power is transferred; or (2) a sale, transfer, lease or other
disposition of all or substantially all of the assets of the Company and/or its subsidiaries; or (3) exclusive and
irrevocable licensing of all or substantially all of the Company and/or its subsidiaries’ intellectual property to a third
party.
APPENDIX I ACCOUNTANT’S REPORT
– I-70 –


--- page 596 ---
The preferred shares issued by D-Robotics have been presented as current liabilities as the preferred shares
may be converted into ordinary shares at the option of the preferred shareholders at any time, and the conversion
option doesn’t meet the definition of equity instrument.
The movements of the preferred shares carrying amount are set out as below:
The Company
RMB’000
At January 1, 2021 (Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,833,371
Issuance of Series C Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,348,190
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118763,984
Change in fair value through other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(257,022)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(347,328)
At December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195
At January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195
Issuance of Series C Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118254,796
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11186,655,367
Change in fair value through other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(406,335)
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,606,305
At December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,451,328
At January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,451,328
Issuance of Series D Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,494,494
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11184,695,950
Change in fair value through other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118457,686
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118410,216
At December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,509,674
At January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,509,674
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183,785,414
Change in fair value through other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111885,118
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118223,517
At June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,603,723
D-Robotics
RMB’000
At January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Issuance of Series A1 Preferred Shares /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118185,192
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Change in fair value through other comprehensive income /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118105
At June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118185,297
(b) Convertible loan
In November 2022, the Company entered into an agreement to issue a convertible loan with the principal
amount of US$924,855,000 with CARIAD, which is also a Series D preferred share investor. The convertible loan
has a repayment term of three years from the closing date (“Maturity date”) and with an interest rate of 2% for the
first two annum and an 5% for the remaining annum.
APPENDIX I ACCOUNTANT’S REPORT
– I-71 –


--- page 597 ---
Pursuant to the agreement, at any time after the date of closing and prior to the repayment in full, the
convertible loan shall be automatically and mandatorily converted into the relevant equity interests in the Company
when any of the following events occurs:
 In the event the Company consummates a Qualified IPO prior to the Maturity Date, upon the closing
of the Qualified IPO, all the principal amount and accrued interest (the “Conversion Amount”) shall be
automatically and mandatorily converted into Class B Ordinary shares of the Company at a conversion
price equal to the final per share offer price for the Qualified IPO, subject to the total beneficial interests
cap of CARIAD in the Company being 9.90% upon Listing. The Company will repay the remaining
Conversion Amount by cash on the Listing date, if any.
 In the event the Company fails to consummate a Qualified IPO but one or more rounds of Qualified
Financing occurs prior to the Maturity Date, on the Maturity Date, the convertible loan shall be
automatically and mandatorily converted into the same class of shares issued by the Company to the
investors in the Qualified Financing at a conversion price equal to the price per share for the relevant
class of shares.
 In the event neither a Qualified IPO nor a Qualified Financing occurs prior to the Maturity Date, on the
Maturity Date, the convertible loan shall be automatically and mandatorily converted into the most
senior series shares at a conversion price which implies a pre-determined valuation agreed by both
parties.
Qualified Financing means a bona fide equity financing of the Company that takes place after the closing of
the share purchase transaction under the Series D Preferred Share Purchase Agreement, the amount of total proceeds
to the Company from which shall be no less than US$350,000,000 and at least US$100,000,000 of such total proceeds
shall be invested by a single external investor.
The lender has rights to ask the Company to repay all outstanding and unpaid principal amount when some
default event occurs. Therefore, the Company does not have the unconditional right to avoid delivering cash to settle
the loan.
The Group does not bifurcate any embedded derivatives from the host instruments and designates the entire
convertible loan as financial liabilities at fair value through profit or loss with the changes in the fair value recorded
in the consolidated statements of profit or loss and the component of fair value changes relating to the Company’s
own credit risk is recognised in other comprehensive income.
In December 2023, the closing conditions of the convertible loan agreement have been satisfied and the
Company received the total cash consideration of US$800,000,000 from the lender.
The movements of the convertible loan carrying amount are set out as below:
RMB’000
At January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118–
Issuance of convertible loan /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,694,080
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111864,404
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(28,580)
At December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,729,904
At January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,729,904
Change in fair value through profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118227,312
Currency translation differences /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111836,423
At June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,993,639
APPENDIX I ACCOUNTANT’S REPORT
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--- page 598 ---
(c) Fair value measurements
Fair value of the preferred shares
The Group applied the discounted cash flow method to determine the underlying equity value of the
Company, applied the Back-solved method to determine the underlying equity value of D-Robotics and
adopted equity allocation model to determine the fair value of the convertible redeemable preferred shares.
Key assumptions are set as below:
The Company
As at December 31, As at June 30,
2021 2022 2023 2024
Discount rate /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111821% 20% 20% 20%
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H11180.73% 4.11% 4.01% 5.20%
DLOM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188.0% 10.0% 8.0% 4.0%
V olatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111850.50% 47.17% 41.26% 38.20%
D-Robotics
As at December 31, As at June 30,
2021 2022 2023 2024
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118N/A N/A N/A 4.33%
DLOM /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A N/A N/A 12.4%
V olatility /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A N/A N/A 56.77%
Discount rate (post-tax) was estimated by weighted average cost of capital as at each valuation date.
Management estimated the risk-free interest rate based on the yield to maturity of U.S. treasury bonds
denominated in US$ with maturity close to expected liquidation date/redemption date as at the valuation date.
The DLOM was estimated based on the option-pricing method. Under option-pricing method, the cost of put
option, which can hedge the price change before the privately held share can be sold, was considered as a basis
to determine the lack of marketability discount. V olatility was estimated based on annualized standard
deviation of the daily return embedded in historical stock prices of comparable companies with a time horizon
close to the expected term. In addition to the assumptions adopted above, the Company’s and D-Robotics’
projections of future performance were also factored into the determination of the fair value of preferred shares
on each valuation date.
The Company performed sensitivity test to changes in unobservable inputs in determining the fair value
of the preferred shares. The changes in unobservable inputs including discount rate will result in a significantly
higher or lower fair value measurement. The increase in the fair value of the preferred shares would increase
the loss of fair value change of preferred shares and other financial liabilities in the consolidated income
statements. When performing the sensitivity test, management applied an increase or decrease to each
unobservable input, which represents management’s assessment of reasonably possible change to these
unobservable inputs.
If the Company’s and D-Robotics’ key valuation assumptions used to determine the fair value of the
preferred shares had increased/decreased certain percentage, the estimated fair value changes from carrying
amount ended December 31, 2021, 2022 and 2023 and the six months ended June 30, 2024 respectively listed
in below table (assuming the change of key assumptions would not have significant impact on fair value
change attributable to credit risk).
The Company
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Discount rate + 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(1,487,507) (2,147,973) (2,653,152) (3,261,250)
Discount rate - 1% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,717,626 2,483,544 3,051,033 3,753,907
APPENDIX I ACCOUNTANT’S REPORT
– I-73 –


--- page 599 ---
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Risk-free interest rate + 10% /H1118/H1118/H1118/H1118/H1118(2,123) (22,382) (20,733) (15,996)
Risk-free interest rate - 10% /H1118/H1118/H1118/H1118/H11182,149 22,584 20,987 16,195
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
DLOM + 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(161,463) (283,926) (289,834) (156,181)
DLOM - 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118161,450 283,858 289,834 156,181
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
V olatility + 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(43,432) (47,212) (12,350) (3,587)
V olatility - 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111841,605 41,972 4,389 (2,301)
D-Robotics
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Risk-free interest rate + 10% /H1118/H1118/H1118/H1118/H1118N/A N/A N/A (1,797)
Risk-free interest rate - 10% /H1118/H1118/H1118/H1118/H1118N/A N/A N/A 1,823
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
DLOM + 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A N/A N/A (2,611)
DLOM - 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A N/A N/A 2,611
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
V olatility + 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – (4,606)
V olatility - 10% /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 4,105
Fair value of the convertible loan
The Company estimated the fair value using the scenario analysis method with key assumptions as
follows:
As at December 31, As at June 30,
2021 2022 2023 2024
Risk-free interest rate /H1118/H1118/H1118/H1118/H1118/H1118N/A N/A 4.02% 4.71%
Bond yield /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118N/A N/A 11.13% 11.73%
The changes in unobservable input including bond yield will result in a significantly higher or lower fair
value measurement. If the bond yield had been 10% higher, loss for the year ended December 31, 2023 and
six months ended June 30, 2024 would have been approximately RMB114,496,000 and RMB106,545,000
lower. If the bond yield had been 10% lower, loss for the year ended December 31, 2023 and six months ended
June 30, 2024 would have been approximately RMB121,652,000 and RMB113,648,000 higher.
APPENDIX I ACCOUNTANT’S REPORT
– I-74 –


--- page 600 ---
29 BORROWINGS
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Non-current
Bank loan – secured /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,515 112,844 243,895
A subsidiary of the Company entered into a bank loan agreement in December 2022. Under this loan
agreement, the bank agreed to lend RMB844,500,000 to this subsidiary for a construction project, with a land use
right mortgaged as the collateral for the loan (Note 17(i)). The loan period is from December 15, 2022 until December
14, 2037, and all drawdowns shall be made by December 14, 2025. The interest rate is reset on January 1 of each
year during the loan period. The interests are paid quarterly, while the principal will be paid in instalments as agreed
starting from June 15, 2026 until the end of the loan period.
As at the end of each reporting period, the Group’s borrowings were repayable as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Less than 2 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 10,000
Between 2 and 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 12,515 60,000 75,000
Over 5 years /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 52,844 158,895
– 12,515 112,844 243,895
As at December 31, 2022 and 2023 and June 30, 2024, the weighted average effective interest rate for
borrowings was 2.70%, 2.60% and 2.52%, respectively.
30 DEFERRED INCOME TAX
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current
income tax recoverable against current income tax liabilities and when the deferred income tax assets and liabilities
relate to income tax levied by the same taxation authority on either the same taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
The following amounts, determined after appropriate offsetting, are shown in the consolidated statement of
financial position:
(i) Deferred tax assets
The balance comprises temporary differences attributable to:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Lease liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,853 22,699 18,941 14,805
Tax losses carried forward /H1118/H1118/H1118/H1118/H1118/H1118/H111880,050 88,714 99,537 102,509
Total gross deferred tax assets /H1118/H1118/H111892,903 111,413 118,478 117,314
Deferred tax assets:
– to be realized within 12 months /H1118 4,137 5,355 5,502 4,622
– to be realized after 12 months /H1118/H1118 88,766 106,058 112,976 112,692
Set-off of deferred tax assets
pursuant to set-off provisions /H1118/H1118/H1118(12,959) (22,497) (18,511) (16,666)
Net deferred tax assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111879,944 88,916 99,967 100,648
APPENDIX I ACCOUNTANT’S REPORT
– I-75 –


--- page 601 ---
(ii) Deferred tax liabilities
The balance comprises temporary differences attributable to:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Right-of-use assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,072 20,855 17,173 14,624
Financial assets measured at fair
value /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11181,887 1,642 1,338 2,042
Total gross deferred tax liabilities /H1118 12,959 22,497 18,511 16,666
Set-off of deferred tax liabilities
pursuant to set-off provisions /H1118/H1118/H1118(12,959) (22,497) (18,511) (16,666)
Net deferred tax liabilities /H1118/H1118/H1118/H1118/H1118/H1118––––
(iii) The movement on the carrying amount of deferred income tax assets is as follows:
Lease liabilities
Tax losses carried
forward Total
RMB’000 RMB’000 RMB’000
At January 1, 2021 (Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,533 54,151 66,684
Credited to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118320 25,899 26,219
At December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,853 80,050 92,903
At January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111812,853 80,050 92,903
Credited to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,846 8,664 18,510
At December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,699 88,714 111,413
At January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,699 88,714 111,413
Credited/(charged) to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,758) 10,823 7,065
At December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,941 99,537 118,478
At January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,941 99,537 118,478
Charged to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(4,136) 2,972 (1,164)
At June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,805 102,509 117,314
(iv) The movement on the carrying amount of deferred income tax liabilities is as follows:
Right-of-use assets
Financial assets
measured at FVPL Total
RMB’000 RMB’000 RMB’000
At January 1, 2021 (Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810,252 3,149 13,401
Charged/(credited) to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118820 (1,262) (442)
At December 31, 2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,072 1,887 12,959
At January 1, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,072 1,887 12,959
Charged/(credited) to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11189,783 (245) 9,538
At December 31, 2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,855 1,642 22,497
At January 1, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111820,855 1,642 22,497
Credited to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,682) (304) (3,986)
At December 31, 2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,173 1,338 18,511
At January 1, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111817,173 1,338 18,511
Credited to profit or loss /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,549) 704 (1,845)
At June 30, 2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111814,624 2,042 16,666
APPENDIX I ACCOUNTANT’S REPORT
– I-76 –


--- page 602 ---
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realization of
the related tax benefit through the future taxable profits is probable.
31 DIVIDENDS
No dividend has been paid or declared by the Company during each of the years ended December 31, 2021,
2022 and 2023 and the six months ended June 30, 2023 and 2024.
32 CASH FLOW INFORMATION
(a) Cash used in operating activities
Note Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Loss before income tax /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(2,090,200) (8,724,701) (6,744,128) (1,885,001) (5,089,014)
Adjustments for
Depreciation of property, plant and
equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111816 46,988 62,937 76,262 36,341 54,050
Amortisation of intangible assets /H1118/H1118/H111818 76,650 186,121 228,316 108,642 141,594
Depreciation of right-of-use assets /H1118/H111817 30,062 43,907 52,153 25,734 27,339
Provision for impairment of financial
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11183.1(b) 5,098 13,039 20,793 7,164 53,237
Provision for impairment of
inventories /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822 3,808 268 7,314 4 9,594
Share based payments /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826 196,369 173,698 341,751 178,931 236,639
Fair value changes of financial assets
at FVPL /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 5,286 (29,715) (8,852) (121) (21,782)
Losses/(gains) on disposal of
subsidiaries /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188 3,142 – (623) – –
Share of net losses of investments
accounted for using the equity
method /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 2,530 34,298 112,074 16,803 181,633
Elimination of unrealised profits and
losses from downstream
transactions with equity method
investees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813 – – 297,301 801 113,305
Fair value changes of preferred
shares and other financial
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111828 763,984 6,655,367 4,760,354 713,566 4,012,726
Losses on disposal of property, plant
and equipment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118344 238 1,912 62 (40)
Finance costs /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111810 16,592 7,548 8,651 4,585 3,789
Net foreign exchange differences /H1118/H1118/H11188 (11,080) 264,660 40,334 63,158 (11,149)
Change in operating assets and
liabilities:
Decrease/(increase) in trade and note
receivables /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(33,165) (264,230) (141,000) 97,395 (223,583)
Decrease/(increase) in inventories /H1118/H1118 (88,893) (249,888) (434,680) (452,794) 78,205
(Increase)/decrease in restricted cash /H1118 (14,409) 9,802 (709,248) (132) (17,167)
(Increase)/decrease in other operating
assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(238,463) 46,241 (9,181) (25,941) 18,632
(Decrease)/increase in trade payables /H1118 40 (4,218) 7,342 37,113 1,900
(Decrease)/increase in other payables /H1118 75,977 95,381 260,718 (23,471) (122,822)
(Decrease)/increase in contract
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118(3,008) 57,533 (38,204) (30,300) (12,732)
(Decrease)/increase in other operating
liabilities /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118141,332 64,429 126,133 (38,535) (160,308)
Cash used in operating activities /H1118/H1118/H1118 (1,111,016) (1,557,285) (1,744,508) (1,165,996) (725,954)
APPENDIX I ACCOUNTANT’S REPORT
– I-77 –


--- page 603 ---
(b) Non-cash investing activities
There were no material non-cash investing transactions for the years ended December 31, 2021, 2022 and 2023
and six months ended June 30, 2023 and 2024.
(c) Reconciliation of liabilities generated from financing activities
Preferred
shares
Convertible
loan Lease liabilities Borrowings Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Liabilities from financing
activities as at January 1,
2021 (Unaudited) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111811,833,371 – 94,899 – 11,928,270
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H11186,348,190 – (36,896) – 6,311,294
Changes in fair values /H1118/H1118/H1118/H1118/H1118/H1118506,96 2––– 506,962
Other changes (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 57,645 – 57,645
Currency translation differences /H1118 (347,328) – (134) – (347,462)
Liabilities from financing
activities as at December 31,
2021 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111818,341,195 – 115,514 – 18,456,709
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118254,796 – (48,849) 12,515 218,462
Changes in fair values /H1118/H1118/H1118/H1118/H1118/H11186,249,03 2––– 6,249,032
Other changes (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 138,529 – 138,529
Currency translation differences /H11181,606,305 – (403) – 1,605,902
Liabilities from financing
activities as at December 31,
2022 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,451,328 – 204,791 12,515 26,668,634
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H11181,494,494 5,694,080 (60,140) 100,329 7,228,763
Changes in fair values /H1118/H1118/H1118/H1118/H1118/H11185,153,636 64,404 – – 5,218,040
Other changes (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 19,370 – 19,370
Currency translation differences /H1118 410,216 (28,580) 335 – 381,971
Liabilities from financing
activities as at December 31,
2023 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111833,509,674 5,729,904 164,356 112,844 39,516,778
Financing cash flows /H1118/H1118/H1118/H1118/H1118/H1118/H1118185,192 – (30,119) 131,051 286,124
Changes in fair values /H1118/H1118/H1118/H1118/H1118/H11183,870,532 227,311 – – 4,097,843
Other changes (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – (1,429) – (1,429)
Currency translation differences /H1118 223,622 36,423 99 – 260,144
Liabilities from financing
activities as at June 30,
2024 /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111837,789,020 5,993,638 132,907 243,895 44,159,460
(i) Other changes mainly include new leases, early termination and interest accruals.
APPENDIX I ACCOUNTANT’S REPORT
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33 COMMITMENTS
(a) Capital commitments
Significant capital expenditures contracted for at the end of the reporting period but not recognised as
liabilities yet are as follows:
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Property, plant and equipment /H1118/H1118/H1118/H111817,093 23,585 38,167 57,344
Intangible assets /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,621 64,085 33,920 8,157
Investment /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – – 2,592
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111822,714 87,670 72,087 68,093
(b) Operating commitments
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Inventory procurement /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118145,165 255,020 103,070 55,012
Others /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111813,094 107,456 85,636 82,416
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118158,259 362,476 188,706 137,428
For commitments in respect of associates and joint ventures, please see Note 13 (i).
34 RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability directly or indirectly, to control the other party
or exercise significant influence over the other party in making financial and operational decisions. Parties are also
considered to be related if they are subjected to common control. Members of key management and their close family
members of the Group are also considered as related parties.
The following significant transactions were carried out between the Group and its related parties during the
periods presented. In the opinion of the directors of the Company, 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.
(a) 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:
Company Relationship
SAIC Motor Co., Ltd, and its subsidiaries (“SHAIC”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Shareholder of the Company
SPACE and its subsidiaries (“SPACE”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118An Associate of the Company
Continental Smart Core Technology (Shanghai) Co., Ltd (“CSC”) /H1118/H1118/H1118/H1118An Associate of the Company
Nanjing Yuxin Technology Co., Ltd. (“NYX”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118An Associate of the Company
Carizon (Beijing) Technology Co., Ltd. (“CARIZON”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A Joint venture of the Company
Chongqing Juchuangzhixing Technology Co., Ltd. (“JC”) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118An Associate of the Company
APPENDIX I ACCOUNTANT’S REPORT
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--- page 605 ---
(b) Significant transactions with related parties
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Sales to related parties
Product solutions, license
and services to SHAIC /H1118 26,955 101,817 82,422 58,821 19,870
Product solutions, license
and services to CSC /H1118/H1118/H1118 – 3,398 8,458 5,211 33,019
Product solutions, license
and services to
CARIZON /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 924,000 – 457,106
License and services to
JC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 3,437 3,361 1,050
Product solutions, license
and services to NYX /H1118/H1118/H1118 –––– 2 3 4
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111826,955 105,215 1,018,317 67,393 511,279
The transactions with CSC for the year ended December 31, 2023 and the six months ended June 30, 2023 and
2024 include RMB597,000, RMB801,000 and RMB7,847,000 profits from downstream transactions eliminated when
applying equity method accounting.
The transactions with CARIZON for the year ended December 31, 2023 and the six months ended June 30,
2024 include RMB296,704,000 and RMB105,458,000 profits from downstream transactions eliminated when
applying equity method accounting.
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Purchases from related
parties
Products and services from
SPACE /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,005––––
Services from NYX /H1118/H1118/H1118/H1118/H1118– 48,232 29,076 18,065 18,599
Services from JC /H1118/H1118/H1118/H1118/H1118/H1118– – 36,140 24,301 18,365
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11182,005 48,232 65,216 42,366 36,964
(c) Y ear/period end balances with related parties
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Account receivables due from
related parties
Due from SHAIC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,390 37,098 20,998 41,539
Due from CSC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,342 4,262 14,642
Due from CARIZON /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 50,850 7,594
Due from JC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 80 1,162
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11188,390 38,440 76,190 64,937
APPENDIX I ACCOUNTANT’S REPORT
– I-80 –


--- page 606 ---
As at December 31, As at June 30,
2021 2022 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000
Other receivables due from related
parties
Due from CARIZON /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 18,383 1,572
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 18,383 1,572
Other payables due to related parties
Due to NYX /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,318 5,268 6,579
Due to JC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 6,614 5,698
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 7,318 11,882 12,277
Contract liabilities due to related
parties
Due to SHAIC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118140 53,053 924 662
Due to CSC /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 4 5 3––
Due to CARIZON /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– – 17,775 –
Due to NYX /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118––– 4 6
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118140 53,506 18,699 708
The balances with related parties are all trade in nature, except for the other receivables due from CARIZON
as at December 31, 2023 and June 30, 2024. The other receivables due from CARIZON are the Group’s advance
payments on behalf of CARIZON and have been settled as at the date of this report.
(d) Key management personnel compensation
The compensations to key management personnel as directors are shown below:
Y ear ended December 31, Six months ended June 30,
2021 2022 2023 2023 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Director fees /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118446 493 498 247 249
Wages, salaries and
bonuses /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H11185,030 12,581 8,064 3,146 5,537
Share-based payments (i) /H1118 63,941 14,630 7,525 3,692 7,161
Pension costs-defined
contribution plans /H1118/H1118/H1118/H1118275 299 319 154 135
Housing fund, medical
insurance and other
social insurance /H1118/H1118/H1118/H1118/H1118/H1118372 373 377 240 189
Other employee benefits /H1118/H1118 165 193 228 105 169
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H111870,229 28,569 17,011 7,584 13,440
(i) Represents the amount recognized as expense during the Track Record Period in accordance with IFRS
2 Share-based Payment.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 607 ---
35 BENEFITS AND INTERESTS OF DIRECTORS
The remuneration of every director during the Track Record Period is set out below:
For the year ended December 31, 2021:
Name of Directors Director fees
Wages and
salaries
Discretionary
bonuses
Share-based
compensation
expenses (a)
Social security
costs, housing
benefits
and other
employee
welfare Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Dr. Kai Yu (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 510 – 41,474 133 42,117
Dr. Chang Huang (ii) /H1118/H1118/H1118/H1118– 485 – 3,756 146 4,387
Ms. Feiwen Tao (iii) /H1118/H1118/H1118/H1118– 1,085 – 1,434 203 2,722
Mr. Feng Zhou (iv) /H1118/H1118/H1118/H1118/H1118– 1,504 228 11,761 161 13,654
Mr. Yufeng Zhang (v) /H1118/H1118/H1118/H1118– 801 417 5,244 169 6,631
Mr. Jin’an Feng (vi) /H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Liang Li (vii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Qin Liu (viii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Zuoyi Wu (ix) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Xin Zhang (x) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Ya-Qin Zhang (xi) /H1118/H1118/H1118446 – – 272 – 718
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118446 4,385 645 63,941 812 70,229
For the year ended December 31, 2022:
Name of Directors Director fees
Wages and
salaries
Discretionary
bonuses
Share-based
compensation
expenses (a)
Social security
costs, housing
benefits
and other
employee
welfare Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Dr. Kai Yu (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 688 – – 176 864
Dr. Chang Huang (ii) /H1118/H1118/H1118/H1118– 426 – – 154 580
Ms. Feiwen Tao (iii) /H1118/H1118/H1118/H1118– 1,165 – – 199 1,364
Mr. Feng Zhou (iv) /H1118/H1118/H1118/H1118/H1118– 1,447 – 8,291 152 9,890
Mr. Yufeng Zhang (v) /H1118/H1118/H1118/H1118– 997 7,858 6,206 184 15,245
Mr. Jin’an Feng (vi) /H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Liang Li (vii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Qin Liu (viii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Zuoyi Wu (ix) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Juehui Zhang (xii) /H1118/H1118/H1118– –––– –
Mr. Xin Zhang (x) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Ya-Qin Zhang (xi) /H1118/H1118/H1118493 – – 133 – 626
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118493 4,723 7,858 14,630 865 28,569
APPENDIX I ACCOUNTANT’S REPORT
– I-82 –


--- page 608 ---
For the year ended December 31, 2023:
Name of Directors Director fees
Wages and
salaries
Discretionary
bonuses
Share-based
compensation
expenses (a)
Social security
costs, housing
benefits
and other
employee
welfare Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Dr. Kai Yu (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,506 – – 189 1,695
Dr. Chang Huang (ii) /H1118/H1118/H1118/H1118– 1,226 – – 167 1,393
Ms. Feiwen Tao (iii) /H1118/H1118/H1118/H1118– 1,597 – – 195 1,792
Mr. Feng Zhou (iv) /H1118/H1118/H1118/H1118/H1118– 1,516 – 16 159 1,691
Mr. Yufeng Zhang (v) /H1118/H1118/H1118/H1118– 1,734 485 7,440 214 9,873
Mr. Liang Li (vii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Qin Liu (viii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. André Stoffels (xiii) /H1118/H1118 – –––– –
Dr. Juehui Zhang (xii) /H1118/H1118/H1118– –––– –
Mr. Xin Zhang (x) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Ya-Qin Zhang (xi) /H1118/H1118/H1118498 – – 69 – 567
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118498 7,579 485 7,525 924 17,011
For the six months ended June 30, 2023 (unaudited):
Name of Directors Director fees
Wages and
salaries
Discretionary
bonuses
Share-based
compensation
expenses (a)
Social security
costs, housing
benefits
and other
employee
welfare Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Dr. Kai Yu (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 474 – – 97 571
Dr. Chang Huang (ii) /H1118/H1118/H1118/H1118– 303 – – 86 389
Ms. Feiwen Tao (iii) /H1118/H1118/H1118/H1118– 649 – – 99 748
Mr. Feng Zhou (iv) /H1118/H1118/H1118/H1118/H1118– 745 – 11 110 866
Mr. Yufeng Zhang (v) /H1118/H1118/H1118/H1118– 765 210 3,644 107 4,726
Mr. Liang Li (vii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Qin Liu (viii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. André Stoffels (xiii) /H1118/H1118 – –––– –
Dr. Juehui Zhang (xii) /H1118/H1118/H1118– –––– –
Mr. Xin Zhang (x) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Ya-Qin Zhang (xi) /H1118/H1118/H1118247 – – 37 – 284
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118247 2,936 210 3,692 499 7,584
For the six months ended June 30, 2024:
Name of Directors Director fees
Wages and
salaries
Discretionary
bonuses
Share-based
compensation
expenses (a)
Social security
costs, housing
benefits
and other
employee
welfare Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Dr. Kai Yu (i) /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118– 1,238 – – 131 1,369
Dr. Chang Huang (ii) /H1118/H1118/H1118/H1118– 1,070 – – 118 1,188
Ms. Feiwen Tao (iii) /H1118/H1118/H1118/H1118– 1,274 – – 129 1,403
Dr. Liming Chen (xiv) /H1118/H1118/H1118– 731 114 2,224 – 3,069
Mr. Yufeng Zhang (v) /H1118/H1118/H1118/H1118– 1,012 98 4,844 115 6,069
Mr. Liang Li (vii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Mr. Qin Liu (viii) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. André Stoffels (xiii) /H1118/H1118 – –––– –
Dr. Juehui Zhang (xii) /H1118/H1118/H1118– –––– –
Mr. Xin Zhang (x) /H1118/H1118/H1118/H1118/H1118/H1118– –––– –
Dr. Ya-Qin Zhang (xi) /H1118/H1118/H1118249 – – 93 – 342
Total /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118249 5,325 212 7,161 493 13,440
APPENDIX I ACCOUNTANT’S REPORT
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--- page 609 ---
(a) Represents the amount recognized as an expense during the Track Record Period in accordance with
IFRS 2 Share-based Payment.
(i) Dr. Kai Yu was appointed as a director of the Company on July 21, 2015 and re-designated as an
executive director on March 18, 2024.
(ii) Dr. Chang Huang was appointed as a director of the Company on November 1, 2017 and re-designated
as an executive director on March 18, 2024.
(iii) Ms. Feiwen Tao was appointed as a director of the Company on September 7, 2017 and re-designated
as an executive director on March 18, 2024.
(iv) Mr. Feng Zhou was appointed as a director of the Company on August 13, 2018 and resigned from
directorship on March 8, 2023.
(v) Mr. Yufeng Zhang was appointed as a director of the Company on May 20, 2020 and resigned from
directorship on March 17, 2024.
(vi) Mr. Jin’an Feng was appointed as a director of the Company on November 3, 2020 and resigned from
directorship on January 20, 2022.
(vii) Mr. Liang Li was appointed as a director of the Company on November 1, 2017 and re-designated as
a non-executive director on March 18, 2024.
(viii) Mr. Qin Liu was appointed as a director of the Company on October 15, 2015 and re-designated as a
non-executive director on March 18, 2024.
(ix) Mr. Zuoyi Wu was appointed as a director of the Company on August 13, 2018 and resigned from
directorship on November 14, 2022.
(x) Mr. Xin Zhang was appointed as a director of the Company on February 8, 2021.
(xi) Dr. Ya-Qin Zhang was appointed as a director of the Company on January 23, 2020 and re-designated
as an independent non-executive director on March 18, 2024.
(xii) Dr. Juehui Zhang was appointed as a director of the Company on January 20, 2022 and re-designated
as a non-executive director on March 18, 2024.
(xiii) Dr. André Stoffels was appointed as a director of the Company on December 7, 2023 and re-designated
as a non-executive director on March 18, 2024.
(xiv) Dr. Liming Chen was appointed as an executive director of the Company on March 18, 2024.
36 EVENTS OCCURRING AFTER THE REPORTING PERIOD
On August 5, 2024, the Group further invested RMB109,240,000 into one of its associates and increased its
direct equity interest in this associate from 30.58% to 47.03% pursuance to an amended Joint Venture Contract dated
May 30, 2024. As decisions about activities significantly affecting the investee’s returns will require the unanimous
consent of the Group and the other majority shareholder of the investee, upon the completion of this additional
investment, the investee became a joint venture of the Group.
In order to incentivize the Founders to continue to lead the Company to greater business success as well as
further align their interests with the Company and the other Shareholders, on July 26, 2024 and pursuant to the 2018
Share Incentive Plan, restricted share units representing 71,933,093, 3,610,633 and 1,564,378 Class B Ordinary
Shares were granted to Dr. Kai Yu, Dr. Chang Huang and Ms. Feiwen Tao, respectively, with 25% of the restricted
share units to be vested at the end of each year after the date of grant upon their continuous service.
On August 10, the Company issued an aggregate of 1,444,950,216 Class B Ordinary Shares to its employee
shareholding platforms, namely Pirates Gold Holding Limited, Pirates Silver Holding Limited and Pirates Bronze
Holding Limited.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 610 ---
On October 11, 2024, an amendment to the convertible loan agreement was entered into between the Company
and CARIAD to mainly amend arrangement with respect to the conversion mechanism of the convertible loan and
the interest rates. The convertible loan will continue to be classified as financial liability at fair value through profit
or loss upon the effectiveness of the amendment agreement.
Except these four events, there have been no material events subsequent to the Track Record Period.
37 SUMMARY OF OTHER ACCOUNTING POLICIES
37.1 Principles of consolidation and equity accounting
(i) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group
controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with
the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated
statement of profit or loss, statement of comprehensive income, statement of changes in equity and statement of
financial position respectively.
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This
is generally the case where the Group holds between 20% and 50% of the voting rights or has board seats.
Investments in associates are accounted for using the equity method of accounting (see (iv) below), after initially
being recognised at cost.
(iii) Joint ventures
Under IFRS 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations
or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than
the legal structure of the joint arrangement. The Group has assessed the nature of its joint arrangement and
determined it to be joint ventures. Interests in joint ventures are accounted for using the equity method (see (iv)
below), after initially being recognised at cost in the consolidated statement of financial position.
(iv) Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter
to recognise the Group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the
Group’s share of movements in other comprehensive income of the investee in other comprehensive income.
Dividends received or receivable from associates and joint ventures are recognised as a reduction in the carrying
amount of the investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the
extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides
evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been
changed where necessary to ensure consistency with the policies adopted by the Group.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 611 ---
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in Note 13.
37.2 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost includes direct attributable costs
of investment. The results of subsidiaries are accounted for by the Company on the basis of dividend received and
receivable.
Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these
investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is
declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount
in the consolidated financial statements of the investee’s net assets including goodwill in the financial statements.
37.3 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of
the primary economic environment in which the entity operates (‘the functional currency’). The functional currency
of the Company and its subsidiaries outside the Chinese mainland are US$ as their key activities and transactions are
denominated in US$. The Company’s primary subsidiaries are incorporated in the PRC Chinese mainland and for
these subsidiaries, RMB is the functional currency. As the major operations of the Group during the Track Record
Period are within the Chinese mainland, the Group determined to present its Historical Financial Information in RMB
(unless otherwise stated).
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are
generally recognised in consolidated statements of profit or loss as part of the “other (losses)/gains, net”.
Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange
rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair
value are reported as part of the fair value gain or loss. For example, translation differences on non-monetary assets
and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the
fair value gain or loss.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
 assets and liabilities for each statement of financial position presented are translated at the closing rate
at the date of that statement of financial position,
 income and expenses for each statement of profit or loss and statement of comprehensive income are
translated at average exchange rates (unless this is not a reasonable approximation of the cumulative
effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the dates of the transactions), and
 all resulting exchange differences are recognised in other comprehensive income or loss.
The Group has monetary items that are receivables from or payables to foreign operations. The items for which
settlements are neither planned nor likely to occur in the foreseeable future are, in substance, part of the Group’s net
investment in foreign operations. Such monetary items include long-term receivables or loans. They do not include
trade receivables or trade payables. On consolidation, foreign exchange gains or losses arising from the exchange of
any net investment in foreign entities, are recognised in the consolidated statement of comprehensive income. When
a foreign operation is disposed, the related foreign exchange gains or losses are reclassified into consolidated
statements of profit or loss as part of the “other (losses)/gains, net”. The accumulative translation adjustments related
to subsidiaries with same functional currency as the Company are presented as part of items of other comprehensive
income that will not be reclassified to profit or loss.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 612 ---
37.4 Impairment of non-financial assets
Non-financial assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other
assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered an
impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
As of December 31, 2021, 2022 and 2023 and June 30, 2024, non-financial assets of the Group mainly include
leased office buildings, land use right, office building under construction, computer and electronic equipment, and
licensed technologies and software. These non-financial assets are mainly used in or will be used in the Group’s
research and development activities and daily operations and do not generate independent cashflows by themselves.
The Group operates the business as a whole, focusing on research and development of proprietary software and
hardware and providing automotive solutions for passenger vehicles and non-automotive solutions, and does not
maintain manufacturing facilities or develop manufacturing capacity by itself. There is significant vertical integration
of the design, research and development, supply chain management, sales, supporting and other daily operation
functions across the whole Group for optimizations, therefore, the Group is determined as one single cash generating
unit (“CGU”) for impairment testing purpose. As these non-financial assets are centralized managed at the Group
level and cannot generate cash flow independently, they are considered at Group level for impairment testing. As the
fair value less cost of disposal exceeds the carrying amount of the CGU with sufficient headroom at each year/period
end of the Track Record Period, no impairment of these non-financial assets is considered necessary.
37.5 Investments and other financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through OCI or through profit or loss), and
 those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets
changes.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group
commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and
rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at FVPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs
of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their
cash flows are solely payment of principal and interest.
APPENDIX I ACCOUNTANT’S REPORT
– I-87 –


--- page 613 ---
 Debt instruments
Subsequent measurement of debt instruments depends on the group’s business model for managing the
asset and the cash flow characteristics of the asset. There are three measurement categories into which the
group classifies its debt instruments:
– Amortised cost: Assets that are held for collection of contractual cash flows, where those cash
flows represent solely payments of principal and interest, are measured at amortised cost. Interest
income from these financial assets is included in finance income using the effective interest rate
method. Any gain or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment
losses are presented as separate line item in the statement of profit or loss.
– FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial
assets, where the assets’ cash flows represent solely payments of principal and interest, are
measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the
recognition of impairment gains or losses, interest income and foreign exchange gains and losses,
which are recognised in profit or loss. When the financial asset is derecognised, the cumulative
gain or loss previously recognised in OCI is reclassified from equity to profit or loss and
recognised in other gains/(losses). Interest income from these financial assets is included in
finance income using the effective interest rate method. Foreign exchange gains and losses are
presented in other gains/(losses), and impairment expenses are presented as separate line item in
the statement of profit or loss.
– FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL.
A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit
or loss and presented net within other gains/(losses) in the period in which it arises.
During the Track Record Period, no amount is recognised in respect of financial assets at FVOCI.
 Equity instruments
The Group subsequently measures all equity investments at fair value. Changes in the fair value of
financial assets at FVPL are recognised in other gains/(losses) in the consolidated statement of profit or loss
as applicable.
(iv) Impairment
The Group assesses on a forward-looking basis the expected credit loss associated with its debt instruments
carried at amortised cost. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
37.6 Trade and note receivables, net
Trade and note receivables are amounts due from customers for goods sold or services performed in the
ordinary course of business. If collection of trade and note receivables is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as current assets. If not, they are presented as
non-current assets.
Trade and note receivables are recognised initially at the amount of consideration that is unconditional unless
they contain significant financing components, when they are recognised at fair value. The Group holds the trade and
note receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently
at amortised cost using the effective interest method. See Note 3.1(b) for a description of the Group’s impairment
policies.
37.7 Cash and cash equivalents and term deposits
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three months
or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
Bank deposits with initial terms of over three months are presented as term deposits on the consolidated
statement of financial positions.
APPENDIX I ACCOUNTANT’S REPORT
– I-88 –


--- page 614 ---
37.8 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax,
from the proceeds.
Preferred shares are classified as financial liabilities based on the respective contract terms.
37.9 Trade, accruals and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the periods
presented which are unpaid. Trade, accruals and other payables are presented as current liabilities unless payment is
not due within 12 months after the reporting period. They are recognised initially at their fair value and subsequently
measured at amortised cost using the effective interest method.
37.10 Current and deferred income tax
The income tax expense for the period presented is the tax payable on the current period’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses.
Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at
the end of the reporting period in the countries where the company and its subsidiaries and associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures its tax balances either based on the most likely
amount or the expected value, depending on which method provides a better prediction of the resolution of the
uncertainty.
Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between
the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax
is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a
business combination that at the time of the transaction affects neither accounting nor taxable profit or loss and does
not give rise to equal taxable and deductible temporary differences. Deferred income tax is determined using tax rates
(and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised only if it is probable that future taxable amounts will be available to utilise
those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount
and tax bases of investments in foreign operations where the company is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets
and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax
liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in consolidated statement of profit or loss, except to the extent that it
relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised
in other comprehensive income or directly in equity, respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-89 –


--- page 615 ---
37.11 Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the related service are recognised in
respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be
paid when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the
consolidated statement of financial position.
(ii) Pension obligations
The Group participates in various defined contribution retirement benefit plans which are available to all
relevant employees. These plans are generally funded through payments to schemes established by governments. A
defined contribution plan is a pension plan under which the Group pays contributions on a mandatory, contractual
or voluntary basis into a separate fund. The Group has no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employees the benefits relating to employee services in the current
and prior years. The Group’s contributions to the defined contribution plans are expensed as incurred and not reduced
by contributions forfeited by those employees who leave the plans prior to vesting fully in the contributions.
(iii) Housing funds, medical insurances and other social insurances
The employees of the Group in the PRC are entitled to participate in various government-supervised housing
funds, medical insurance and other employee social insurance plan. The Group contributes on a monthly basis to
these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The Group’s
liability in respect of these funds is limited to the contributions payable in each period. Contributions to the housing
funds, medical insurances and other social insurances are expensed as incurred.
(iv) Employee leave entitlement
Employee entitlement to annual leave is recognized when they have accrued to employees. A provision is made
for the estimated liability for annual leave as a result of services rendered by employees up to the statement of
financial position date. Employee entitlement to sick leave and maternity leave are not recognized until the time of
leave.
(v) Bonus plans
The expected cost of bonuses is recognized as a liability when the Group has a present legal or constructive
obligation for payment of bonus as a result of services rendered by employees and a reliable estimate of the obligation
can be made. Liabilities for bonus plans are expected to be settled within 1 year and are measured at the amounts
expected to be paid when they are settled.
(vi) Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement
date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises
termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of
those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and
involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the
termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling
due more than 12 months after the end of the reporting period are discounted to present value.
37.12 Provisions
Provisions for legal claims, warranties and make good obligations are recognised when the Group has a present
legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required
to settle the obligation and the amount can be reliably estimated. Provisions are not recognised for future operating
losses. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement
is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the same class of obligations may be small.
APPENDIX I ACCOUNTANT’S REPORT
– I-90 –


--- page 616 ---
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at the end of the reporting period. The discount rate used to determine the present value
is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
liability. The increase in the provision due to the passage of time is recognised as interest expense.
37.13 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the
grant will be received and the Group will comply with all attached conditions.
Where the grants related to an expense item, it is recognised as income on a systematic basis over the period
that the costs, which it is intended to compensate, are expensed. Where the grants related to an asset, the fair value
is credited to a deferred income account and is released to the statement of profit or loss over the expected useful
life of the relevant asset on straight-line basis.
37.14 Interest income
Interest income is presented as finance income where it is earned from financial assets that are held for cash
management purposes. Any other interest income is included in other gains.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial
asset except for financial assets that subsequently become credit-impaired. For credit-impaired financial assets the
effective interest rate is applied to the net carrying amount of the financial asset (after deduction of the loss
allowance).
III SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company in respect of any period subsequent to
June 30, 2024 and up to the date of this report. No dividend or distribution has been declared or made by the Company
or any of the companies now comprising the Group in respect of any period subsequent to June 30, 2024 .
APPENDIX I ACCOUNTANT’S REPORT
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--- page 617 ---
The information set out in this Appendix does not form part of the “Accountant’ s Report”
from PricewaterhouseCoopers, Certified Public Accountants, Hong Kong, the reporting
accountant of the Company, as set out in Appendix I in this prospectus, and is included herein
for illustrative purposes only.
The unaudited pro forma financial information should be read in conjunction with the
section headed “Financial Information” and “Appendix I — Accountant’ s Report.”
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED NET TANGIBLE
ASSETS
The following is an illustrative statement of the unaudited pro forma adjusted
consolidated net tangible assets which has been prepared in accordance with Rule 4.29 of the
Listing Rules for the purpose of illustrating the effect of the Global Offering as if it had taken
place on June 30, 2024 and based on the consolidated net tangible liabilities attributable to the
owners of the Company as at June 30, 2024 as shown in the Accountant’s Report, the text of
which is set out in Appendix I to this prospectus, and adjusted as described below.
This unaudited pro forma adjusted consolidated net tangible assets has been prepared for
illustrative purposes only and, because of its hypothetical nature, it may not give a true picture
of the financial position of the Group had the Global Offering been completed as at June 30,
2024 or at any future date.
Unadjusted
audited
consolidated net
tangible
liabilities
attributable to
the owners of
the Company as
at June 30, 2024
Estimated net
proceeds from
the Global
Offering
Estimated
impact related to
the conversion of
Preferred Shares
into Class B
ordinary shares
upon Listing
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of
the Company
Unaudited pro
forma adjusted
consolidated net
tangible assets per
share
Note 1 Note 2 Note 3 Note 4 Note 5
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
Based on the Offer Price
of HK$3.73 per share /H1118 (30,099,453) 4,414,522 37,789,020 12,104,089 0.93 1.02
Based on the Offer Price
of HK$3.99 per share /H1118 (30,099,453) 4,724,034 37,789,020 12,413,601 0.95 1.04
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 618 ---
Notes:
(1) The unaudited consolidated net tangible liabilities attributable to the owners of the Company as at June 30,
2024 is extracted from the Accountant’s Report set forth in Appendix I to the prospectus, which is based on
the unaudited consolidated net liabilities attributable to the owners of the Company as at June 30, 2024 of
RMB29,815,921,000 with an adjustment for the intangible assets as at June 30, 2024 of RMB283,532,000.
(2) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HK$3.73 and
HK$3.99 per Offer Share, after deduction of the estimated underwriting fees and other related expenses
payable by the Company (excluding RMB42,618,000 which had been charged to the consolidated statements
of comprehensive income up to June 30, 2024), without taking into account any shares which may be issued
upon the exercise of the Over-allotment Option.
(3) Upon the Listing and the completion of the Global Offering, all of the Preferred Shares issued by the Company
will be automatically converted into Class B ordinary shares. Upon conversion, these Preferred Shares will be
reclassified from liabilities to equity, while the Convertible Loan issued to CARIAD will still be recorded as
liabilities.
(4) The unaudited pro forma adjusted consolidated net tangible liabilities per share are on the basis that
13,029,866,082 shares are in issue, assuming the Global Offering, the conversions of Preferred Shares and
issue of Class B ordinary shares pursuant to the 2018 Share Incentive Plan had been completed on June 30,
2024, without taking into account any shares which may fall to be issued upon the conversion of the
convertible loan issued to CARIAD and the exercise of the Over-Allotment Option.
(5) For the purpose of this unaudited pro forma adjusted net tangible assets, the balance stated in Renminbi is
converted into Hong Kong dollars at a rate of HK$1.00 to RMB0.91042. No representation is made that
Renminbi amounts have been, could have been or may be converted to Hong Kong dollars, or vice versa, at
that rate.
(6) No adjustments have been made to the unaudited pro forma adjusted consolidated net tangible assets to reflect
any trading results or other transactions of the Group entered into subsequent to June 30, 2024.
(7) The unaudited pro forma financial information presented above has not taken into account the conversion of
the Convertible Loan issued to CARIAD. Assuming the Global Offering and the conversion of the Convertible
Loan issued to CARIAD had been completed as at June 30, 2024, the unaudited pro forma adjusted net tangible
assets per share is calculated as follows:
Unadjusted
audited
consolidated net
tangible
liabilities
attributable to
the owners of
the Company as
at June 30, 2024
Estimated net
proceeds from
the Global
Offering
Estimated
impact related to
the conversions
of Preferred
Shares and
Convertible
Loan into
Class B ordinary
shares upon
Listing
Unaudited pro
forma adjusted
consolidated net
tangible assets
attributable to
the owners of
the Company
Unaudited pro
forma adjusted
consolidated net
tangible assets per
share
Note (i) Note (ii) Note (iii) Note (iv) Note (v)
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
Based on the Offer
Price of HK$3.73
per share /H1118/H1118/H1118/H1118/H1118/H1118(30,099,453) 4,414,522 43,782,659 18,097,728 1.19 1.31
Based on the Offer
Price of HK$3.99
per share /H1118/H1118/H1118/H1118/H1118/H1118(30,099,453) 4,724,034 43,782,659 18,407,240 1.22 1.34
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 619 ---
Notes:
(i) The unaudited consolidated net tangible liabilities attributable to the owners of the Company as at June
30, 2024 is extracted from the Accountant’s Report set forth in Appendix I to the prospectus, which is
based on the unaudited consolidated net liabilities attributable to the owners of the Company as at June
30, 2024 of RMB29,815,921,000 with an adjustment for the intangible assets as at June 30, 2024 of
RMB283,532,000.
(ii) The estimated net proceeds from the Global Offering are based on the indicative Offer Price of HK$3.73
and HK$3.99 per Offer Share, after deduction of the estimated underwriting fees and other related
expenses payable by the Company (excluding RMB42,618,000 which had been charged to the
consolidated statements of comprehensive income up to June 30, 2024), without taking into account any
shares which may be issued upon the exercise of the Over-allotment Option.
(iii) Upon the Listing and the completion of the Global Offering, i) all of the Preferred Shares issued by the
Company will be automatically converted into Class B ordinary shares, and ii) assuming the carrying
amounts of all Convertible Loan issued by the Company will be converted into Class B ordinary shares,
without taking into account the 9.9% threshold as disclosed in the section headed “History,
Reorganization and Corporate Structure — Convertible Loan” of this Prospectus. Upon conversion,
these Preferred Shares and Convertible Loan will be reclassified from liabilities to equity.
Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro forma
adjusted consolidated net tangible assets attributable to the owners of the Company will be increased
by RMB43,782,659,000 (representing the carrying amounts of Preferred Shares and the Convertible
Loan).
Based on the indicative Offer Price of HK$3.73 per Offer Share, a total of 9,936,612,032 Class B
ordinary shares (7,798,405,226 shares related to the Preferred Shares and 2,138,206,806 shares related
to the Convertible Loan, without taking into account the 9.9% threshold as disclosed in the section
headed “History, Reorganization and Corporate Structure — Convertible Loan” of this Prospectus) will
be issued upon the conversion.
Based on the indicative Offer Price of HK$3.99 per Offer Share, a total of 9,797,280,261 Class B
ordinary shares (7,798,405,226 shares related to the Preferred Shares and 1,998,875,035 shares related
to the Convertible Loan, without taking into account the 9.9% threshold as disclosed in the section
headed “History, Reorganization and Corporate Structure — Convertible Loan” of this Prospectus) will
be issued upon the conversion.
(iv) The unaudited pro forma adjusted consolidated net tangible liabilities per share are determined after the
adjustments and the conversion as described in note (ii) and (iii) above and on the basis that
15,168,072,888 and 15,028,741,117 shares are in issue based on the indicative Offer Price of HK$3.73
and HK$3.99 per Offer Share, being the low-end and high-end of the indicative Offer Prices,
respectively, assuming the Global Offering, the conversions of Preferred Shares and Convertible Loan
into Class B ordinary shares and issue of Class B ordinary shares pursuant to the 2018 Share Incentive
Plan had been completed on June 30, 2024, without taking into account any shares which may fall to
be issued upon the exercise of the Over-Allotment Option.
(v) For the purpose of this unaudited pro forma adjusted net tangible assets, the balance stated in Renminbi
is converted into Hong Kong dollars at a rate of HK$1.00 to RMB0.91042. No representation is made
that Renminbi amounts have been, could have been or may be converted to Hong Kong dollars, or vice
versa, at that rate.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 620 ---
B. REPORT FROM THE REPORTING ACCOUNTANT ON UNAUDITED PRO
FORMA FINANCIAL INFORMATION
The following is the text of a report received from PricewaterhouseCoopers, Certified
Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Horizon Robotics
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of Horizon Robotics (the “Company”) and its subsidiaries
(collectively, 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 of the Group as at June 30, 2024
and related notes (the “Unaudited Pro Forma Financial Information”) as set out on pages II-1
to II-3 of the Company’s prospectus dated October 16, 2024 (the “Prospectus”), in connection
with the proposed initial public offering of the shares of the Company (the “Proposed Initial
Public Offering”). 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-3 of the
Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the Proposed Initial Public Offering on the Group’s financial position
as at June 30, 2024 as if the Proposed Initial Public Offering had taken place at June 30, 2024.
As part of this process, information about the Group’s financial position has been extracted by
the Directors from the Group’s financial information for the period ended June 30, 2024, on
which an accountant’s report has been published.
Directors’ Responsibility 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 (“HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 621 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behaviour.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial Statements, or Other
Assurance or Related Services Engagements , issued by the HKICPA, which requires the firm
to design, implement and operate a system of quality management including policies or
procedures regarding compliance with ethical requirements, professional standards and
applicable legal and regulatory requirements.
Reporting Accountant’s Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Unaudited Pro Forma 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 accountant plans and performs 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 a prospectus is
solely to illustrate the impact of a significant event or transaction on unadjusted financial
information of the entity as if the event had occurred or the transaction had been undertaken
at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any
assurance that the actual outcome of the Proposed Initial Public Offering at June 30, 2024
would have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 622 ---
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 accountant’s judgment, having regard to
the reporting accountant’s understanding of the nature of the company, the event or transaction
in respect of which the 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.
Our work has not been carried out in accordance with auditing standards or other
standards and practices generally accepted in the United States of America or auditing
standards of the Public Company Accounting Oversight Board (United States) or standards and
practices of any professional body in any other overseas jurisdiction and accordingly should
not be relied upon as if it had been carried out in accordance with those standards and practices.
Opinion
In our opinion:
 the Unaudited Pro Forma Financial Information has been properly compiled by the
Directors on the basis stated;
 such basis is consistent with the accounting policies of the Group; and
 the adjustments are appropriate for the purposes of the Unaudited Pro Forma
Financial Information as disclosed pursuant to paragraph 4.29(1) of the Listing
Rules.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, October 16, 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-6 –


--- page 623 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of the Cayman Companies Act. The
Company was incorporated in the Cayman Islands as an exempted company with limited
liability on July 21, 2015 under the Cayman Companies Act. The Company’s constitutional
documents consist of its Memorandum and Articles of Association.
SUMMARY OF THE CONSTITUTION OF THE COMPANY
1 Memorandum of Association
The Memorandum of Association of the Company was conditionally adopted on October
8, 2024 and states, inter alia , that the liability of the members of the Company is limited, that
the objects for which the Company is established are unrestricted and the Company shall have
full power and authority to carry out any object not prohibited by the Companies Act or any
other law of the Cayman Islands.
The Memorandum of Association is on display on the websites of the Stock Exchange and
the Company as specified in Appendix V in the section headed “Documents Delivered to the
Registrar of Companies and Available on Display”.
2 Articles of Association
The Articles of Association of the Company were conditionally adopted on October 8,
2024 and include provisions to the following effect:
2.1 Classes of Shares
(a) Share capital
The share capital of the Company consists of Class A Ordinary Shares and Class B
Ordinary Shares. The capital of the Company at the date of adoption of the Articles is
US$50,000 divided into 2,124,389,270 Class A Ordinary Shares of US$0.0000025 each
and 17,875,610,730 Class B Ordinary Shares of US$0.0000025 each.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-1 –


--- page 624 ---
(b) Weighted voting rights
Subject to the provisions of the Articles of Association, weighted voting rights must
attach only to the Class A Ordinary Shares and confer on the holders of the Class A
Ordinary Shares enhanced voting power on resolutions tabled at the Company’s general
meetings only. In all other respects, the rights attached to the Class A Ordinary Shares
must otherwise be the same as the rights attached to the Class B Ordinary Shares. On any
resolution tabled at the Company’s general meetings, each Class A Ordinary Share shall
entitle its holder to ten votes and each Class B Ordinary Share shall entitle its holder to
one vote, provided that each Class A Ordinary Share and each Class B Ordinary Share
shall entitle its holder to one vote on a poll at a general meeting in respect of a resolution
on the following matters:
(i) any amendment to the Memorandum of Association or the Articles of
Association, including the variation of the rights attached to any class of
shares;
(ii) the appointment, election or removal of any independent non-executive
Director;
(iii) the appointment or removal of the auditors; or
(iv) the voluntary winding-up of the Company.
Notwithstanding the foregoing, where a holder of Class A Ordinary Shares is
permitted by the Stock Exchange from time to time to exercise more than one vote per
share when voting on a resolution to amend the Memorandum of Association or the
Articles of Association, any holder of Class A Ordinary Shares may elect to exercise such
number of votes per share as is permitted by the Stock Exchange, up to the maximum
number of votes attached to each Class A Ordinary Share as set out in the Articles of
Association.
The Company shall not take any action (including the issue or repurchase of shares
of any class) that would result in (i) the aggregate number of votes entitled to be cast by
all holders of Class B Ordinary Shares (for the avoidance of doubt, excluding those who
are also holders of Class A Ordinary Shares) present at a general meeting to be less than
10% of the votes entitled to be cast by all members at a general meeting (with voting
rights attaching to treasury shares excluded); or (ii) an increase in the proportion of Class
A Ordinary Shares to the total number of shares in issue.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-2 –


--- page 625 ---
(c) Restrictions on issue of shares with weighted voting rights
No further Class A Ordinary Shares shall be allotted, issued or granted by the
Company, except with the approval of the Stock Exchange and pursuant to (i) an offer to
subscribe for shares in the Company made to all the members of the Company pro rata
(apart from fractional entitlements) to their existing holdings; (ii) a pro rata issue of
shares to all the members of the Company by way of scrip dividends; or (iii) a share
subdivision or other similar capital reorganisation, provided that each member of the
Company shall be entitled to subscribe for or be issued shares in the same class as the
shares then held by him, and further provided that the proposed allotment or issuance will
not result in an increase in the proportion of Class A Ordinary Shares in issue, so that:
(A) if, under a pro rata offer, any holder of Class A Ordinary Shares does not take
up any part of the Class A Ordinary Shares or the rights thereto offered to him,
such untaken shares or rights shall only be transferred to another person on the
basis that such transferred rights will only entitle the transferee to an
equivalent number of Class B Ordinary Shares; and
(B) to the extent that rights to Class B Ordinary Shares in a pro rata offer are not
taken up in their entirety (including, but not limited to, where the pro rata
offering is not fully underwritten), the number of Class A Ordinary Shares that
shall be allotted, issued or granted in such pro rata offer shall be reduced
proportionately,
and where necessary, the holders of Class A Ordinary Shares shall use their best
endeavours to enable the Company to comply with this requirement.
(d) Reduction of shares with weighted voting rights on repurchase of shares
In the event the Company reduces the number of Shares in issue (after deducting
treasury shares) (e.g. through a purchase of its own Shares), the holders of Class A
Ordinary Shares shall reduce their weighted voting rights in the Company proportionately
(for example through conversion of a portion of their shareholding with those rights into
Shares without those rights), if the reduction in the number of Shares in issue (after
deducting treasury shares) would otherwise result in an increase in the proportion of Class
A Ordinary Shares.
(e) Prohibition on variation of terms of shares with weighted voting rights
The Company must not change the terms of the Class A Ordinary Shares to increase
the weighted voting rights attached to that class. If the Company wishes to change the
terms of the Class A Ordinary Shares to reduce those rights it may do so but must, in
addition to complying with any requirements under law, first obtain the prior approval of
the Stock Exchange and, if approval is granted, must announce the change.
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-3 –


--- page 626 ---
(f) Conversion of Class B Ordinary Shares
Each Class A Ordinary Share is convertible into one Class B Ordinary Share at any
time by the holder thereof, such right to be exercisable by the holder of the Class A
Ordinary Share delivering a written notice to the Company that such holder elects to
convert a specified number of Class A Ordinary Shares into Class B Shares.
(g) Qualification of holders of shares with weighted voting rights
Class A Ordinary Shares shall only be held by the WVR Beneficiaries, or (a) a
partnership of which a WVR Beneficiary is a partner and the terms of which must
expressly specify that the voting rights attached to any and all Class A Ordinary Shares
held by such partnership are solely dictated by the WVR Beneficiary; (b) a trust of which
a WVR Beneficiary is a beneficiary and that meets the following conditions: (i) the WVR
Beneficiary must in substance retain an element of control of the trust and any immediate
holding companies of, and retain a beneficial interest in any and all of the Class A
Ordinary Shares held by such trust; and (ii) the purpose of the trust must be for estate
planning and/or tax planning purposes; or (c) a private company or other vehicle
wholly-owned and wholly controlled by the WVR Beneficiary or by a trust referred to in
(b) above (a “ Founder Holding Vehicle ”). Subject to the Listing Rules or other
applicable laws and regulations, each Class A Ordinary Share shall be automatically
converted into one Class B Ordinary Share upon the occurrence of any of the following
events:
(i) the death of the holder of such Class A Ordinary Share (or, where the holder
is a Founder Holding Vehicle, the death of the WVR Beneficiary holding and
controlling such Founder Holding Vehicle);
(ii) the holder of such Class A Ordinary Share ceasing to be a Director or a Founder
Holding Vehicle for any reason;
(iii) the holder of such Class A Ordinary Share (or, where the holder is a Founder
Holding Vehicle, the WVR Beneficiary holding and controlling such vehicle)
being deemed by the Stock Exchange to be incapacitated for the purpose of
performing his duties as a Director;
(iv) the holder of such Class A Ordinary Share (or, where the holder is a Founder
Holding Vehicle, the WVR Beneficiary holding and controlling such vehicle)
being deemed by the Stock Exchange to no longer meet the requirements of a
director set out in the Listing Rules; or
(v) the transfer to another person of the beneficial ownership of, or economic
interest in, such Class A Ordinary Share or the control over the voting rights
attached to such Class A Ordinary Share (through voting proxies or otherwise),
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-4 –


--- page 627 ---
including where the Founder Holding Vehicle holding such Class A Ordinary
Share no longer complies with Rule 8A.18(2) of the Listing Rules (in which
event the Company and such Founder Holding Vehicle or the WVR Beneficiary
holding and controlling such vehicle shall notify the Stock Exchange of the
details of the non-compliance as soon as practicable), other than (A) the grant
of any lien, mortgage, charge or other encumbrance over such Class A Ordinary
Share which does not result in the transfer of the legal title or beneficial
ownership of, or the voting rights attached to, such Class A Ordinary Share,
until the same is transferred upon the enforcement of such lien, mortgage,
charge or other encumbrance, and (B) a transfer of the legal title to such Class
A Ordinary Share by a WVR Beneficiary to Founder Holding Vehicle
wholly-owned and wholly controlled by such WVR Beneficiary, or by a
Founder Holding Vehicle to the WVR Beneficiary holding and controlling it or
another Founder Holding Vehicle wholly-owned and wholly controlled by such
WVR Beneficiary.
(h) Cessation of weighted voting rights
All of the Class A Ordinary Shares in the authorised share capital shall be
automatically re-designated into Class B Ordinary Shares in the event none of the holders
of Class A Ordinary Shares at the time of initial listing of the Company’s shares on the
Stock Exchange have beneficial ownership of Class A Ordinary Shares, and no further
Class A Ordinary Shares shall be issued by the Company.
(i) Shares to rank pari passu
Save and except for the rights, preferences, privileges and restrictions set out in this
paragraph 2.1, the Class A Ordinary Shares and the Class B Ordinary Shares shall rank
pari passu in all other respects and shall have the same rights, preferences, privileges and
restrictions.
2.2 Directors
(a) Number of Directors
The number of Directors shall not be less than two, and at least one-third of the
Directors shall be independent non-executive Directors.
(b) Power to allot and issue shares
Subject to the provisions of the Memorandum of Association, the Articles of
Association, compliance with the Listing Rules and the Code on Takeovers and Mergers
and Share Buy-back issued by the Securities and Futures Commission of Hong Kong and
any direction that may be given by the Company in general meeting, and without
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-5 –


--- page 628 ---
prejudice to any rights attached to any existing shares, the Directors may allot, issue,
grant options over or otherwise dispose of shares with or without preferred, deferred or
other rights or restrictions, whether in regard to dividend or other distribution, voting,
return of capital or otherwise and to such persons, at such times and on such other terms
as the Directors think proper, provided however that (a) no new class of shares with
voting rights superior to those of Class B Ordinary Shares shall be created, and (b) any
variation in the relative rights as between different classes of shares shall not result in the
creation of a new class of shares with voting rights superior to those of Class B Ordinary
Shares.
(c) Power to dispose of the assets of the Company or any subsidiary
Subject to the provisions of the Companies Act, the Memorandum and Articles of
Association and to any directions given by special resolution, the business of the
Company shall be managed by the Directors who may exercise all the powers of the
Company. No alteration of the Memorandum and Articles of Association and no such
direction shall invalidate any prior act of the Directors which would have been valid if
that alteration had not been made or that direction had not been given.
(d) Compensation or payment for loss of office
There are no provisions in the Articles of Association relating to compensation or
payment for loss of office of a Director.
(e) Loans to Directors
There are no provisions in the Articles of Association relating to making of loans to
Directors.
(f) Financial assistance to purchase shares
There are no provisions in the Articles of Association relating to the giving of
financial assistance by the Company to purchase shares in the Company or its
subsidiaries.
(g) Disclosure of interest in contracts with the Company or any of its subsidiaries
No person shall be disqualified from the office of Director or alternate Director or
prevented by such office from contracting with the Company, either as vendor, purchaser
or otherwise, nor shall any such contract or any contract or transaction entered into by or
on behalf of the Company in which any Director or alternate Director shall be in any way
interested be or be liable to be avoided, nor shall any Director or alternate Director so
contracting or being so interested be liable to account to the Company for any profit
realised by or arising in connection with any such contract or transaction by reason of
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-6 –


--- page 629 ---
such Director or alternate Director holding office or of the fiduciary relationship thereby
established, provided that the nature of the interest of any Director or any alternate
Director in any such contract or transaction shall be disclosed by them at or prior to its
consideration and any vote thereon.
A Director shall not be entitled to vote on (nor shall the Director be counted in the
quorum in relation to) any resolution of the Directors in respect of any contract or
arrangement or any other proposal in which the Director or any of his close associates has
any material interest, and if he shall do so his vote shall not be counted (nor shall he be
counted in the quorum for the resolution), but this prohibition shall not apply to any of
the following matters, namely:
(i) the giving to such Director or any of his close associates of any security or
indemnity in respect of money lent or obligations incurred or undertaken by
him or any of them at the request of or for the benefit of the Company or any
of its subsidiaries;
(ii) the giving of any security or indemnity to a third party in respect of a debt or
obligation of the Company or any of its subsidiaries for which the Director or
any of his close associates has himself/themselves assumed responsibility in
whole or in part and whether alone or jointly under a guarantee or indemnity
or by the giving of security;
(iii) any proposal concerning an offer of shares, debentures or other securities of or
by the Company or any other company which the Company may promote or be
interested in for subscription or purchase where the Director or any of his close
associates is/are or is/are to be interested as a participant in the underwriting
or sub-underwriting of the offer;
(iv) any proposal or arrangement concerning the benefit of employees of the
Company or any of its subsidiaries including:
(A) the adoption, modification or operation of any employees’ share scheme
or any share incentive scheme or share option scheme under which the
Director or any of his close associates may benefit; or
(B) the adoption, modification or operation of a pension fund or retirement,
death or disability benefits scheme which relates to the Director, his close
associates and employees of the Company or any of its subsidiaries and
does not provide in respect of any Director or any of his close associates,
as such any privilege or advantage not generally accorded to the class of
persons to which such scheme or fund relates; and
APPENDIX III SUMMARY OF THE CONSTITUTION OF OUR COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– III-7 –


--- page 630 ---
(v) any contract or arrangement in which the Director or any of his close associates
is/are interested in the same manner as other holders of shares or debentures or
other securities of the Company by virtue only of their interest in shares or
debentures or other securities of the Company.
(h) Remuneration
The remuneration to be paid to the Directors, if any, shall be such remuneration as
the Directors shall determine. The Directors shall also be entitled to be paid all travelling,
hotel and other expenses properly incurred by them in connection with their attendance
at meetings of Directors or committees of Directors, or general meetings of the Company,
or separate meetings of the holders of any class of shares or debentures of the Company,
or otherwise in connection with the business of the Company or the discharge of their
duties as a Director, or to receive a fixed allowance in respect thereof as may be
determined by the Directors, or a combination partly of one such method and partly the
other.
The Directors may approve additional remuneration to any Director for any services
which in the opinion of the Directors go beyond that Director’s ordinary routine work as
a Director. Any fees paid to a Director who is also counsel, attorney or solicitor to the
Company, or otherwise serves it in a professional capacity shall be in addition to their
remuneration as a Director.
(i) Retirement, appointment and removal
The Company may by ordinary resolution appoint any person to be a Director, either
to fill a vacancy or as an additional Director.
The Company may by ordinary resolution remove any Director (including a
managing or other executive Director) before the expiration of such Director’s term of
office, notwithstanding anything in the Articles of Association or in any agreement
between the Company and such Director, and may by ordinary resolution elect another
person in their stead. Nothing shall be taken as depriving a Director so removed of
compensation or damages payable to such Director in respect of the termination of his
appointment as Director or of any other appointment or office as a result of the
termination of his appointment as Director.
The Directors may appoint any person to be a Director, either to fill a vacancy or as
an additional Director provided that the appointment does not cause the number of
Directors to exceed any number fixed by or in accordance with the Articles of Association
as the maximum number of Directors. Any Director so appointed shall hold office only
until the first annual general meeting of the Company after such Director’s appointment
and shall then be eligible for re-election at that meeting.
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There is no shareholding qualification for Directors nor is there any specified age
limit for Directors.
The office of a Director shall be vacated if:
(i) the Director gives notice in writing to the Company that he resigns the office
of Director;
(ii) the Director is absent (for the avoidance of doubt, without being represented
by proxy or an alternate Director appointed by him) for a continuous period of
12 months without special leave of absence from the Directors, and the
Directors pass a resolution that he has by reason of such absence vacated
office;
(iii) the Director dies, becomes bankrupt or makes any arrangement or composition
with his creditors generally; or
(iv) the Director is found to be or becomes of unsound mind.
At every annual general meeting of the Company one-third of the Directors for the
time being, or, if their number is not three or a multiple of three, then the number nearest
to, but not less than, one-third, shall retire from office by rotation, provided that every
Director (including those appointed for a specific term) shall be subject to retirement by
rotation at least once every three years. A retiring Director shall retain office until the
close of the meeting at which he retires and shall be eligible for re-election at such
meeting. The Company at any annual general meeting at which any Directors retire may
fill the vacated office by electing a like number of persons to be Directors.
(j) Borrowing powers
The Directors may exercise all the powers of the Company to borrow money and to
mortgage or charge its undertaking, property and assets (present and future) and uncalled
capital or any part thereof and to issue debentures, debenture stock, mortgages, bonds and
other such securities whether outright or as security for any debt, liability or obligation
of the Company or of any third party.
2.3 Alteration to constitutional documents
No alteration or amendment to the Memorandum or Articles of Association may be made
except by special resolution.
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2.4 V ariation of rights of existing shares or classes of shares
If at any time the share capital of the Company is divided into different classes of shares,
all or any of the rights attached to any class for the time being issued (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not the Company
is being wound up, be varied only with (in addition to a special resolution to amend the
Memorandum or the Articles) the consent in writing of the holders of not less than
three-fourths of the voting rights of the issued shares of that class, or with the approval of a
resolution passed by a majority of not less than three-fourths of the votes cast at a separate
meeting of the holders of the shares of that class. For so long as any Class A Ordinary Share
is in issue and unless such change is otherwise required by law or the Listing Rules, (a) any
change to the composition of the board of Directors set out in paragraph 2.2(a) above; (b) any
change in the proportion of votes required to pass a resolution of the members, whether as an
ordinary resolution or a special resolution or in respect of particular matters or generally; (c)
any variation to the number of votes attached to a share of any class, except any such variation
arising from a conversion of a Class A Ordinary Share into a Class B Ordinary Share pursuant
to paragraph 2.1(f) or paragraph 2.1(g) above; and (d) any change to the matters in respect of
which each Class A Ordinary Share and each Class B Ordinary Share shall entitle its holder to
one vote on a poll at a general meeting as described in paragraph 2.1(b), to the quorum
requirements for meetings of Directors or to this provision, shall require the consent in writing
of the holders of not less than three-fourths in nominal value of the issued Class A Ordinary
Shares. To any such separate meeting all the provisions of the Articles of Association relating
to general meetings shall apply mutatis mutandis , except that the necessary quorum shall be
one or more persons holding or representing by proxy or duly authorised representative at least
one-third of the voting rights of the issued shares of that class.
The rights conferred upon the holders of shares of any class shall not, unless otherwise
expressly provided in the rights attaching to or the terms of issue of the shares of that class,
be deemed to be varied by the creation or issue of further shares ranking pari passu therewith.
2.5 Alteration of capital
The Company may by ordinary resolution:
(a) increase its share capital by such sum as the ordinary resolution shall prescribe and
with such rights, priorities and privileges annexed thereto, as the Company in
general meeting may determine;
(b) consolidate and divide all or any of its share capital into shares of larger amount than
its existing shares. On any consolidation of fully paid shares and division into shares
of larger amount, the Directors may settle any difficulty which may arise as they
think expedient and in particular (but without prejudice to the generality of the
foregoing) may as between the holders of shares to be consolidated determine which
particular shares are to be consolidated into each consolidated share, and if it shall
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happen that any person shall become entitled to fractions of a consolidated share or
shares, such fractions may be sold by some person appointed by the Directors for
that purpose and the person so appointed may transfer the shares so sold to the
purchasers thereof and the validity of such transfer shall not be questioned, and so
that the net proceeds of such sale (after deduction of the expenses of such sale) may
either be distributed among the persons who would otherwise be entitled to a
fraction or fractions of a consolidated share or shares rateably in accordance with
their rights and interests or may be paid to the Company for the Company’s benefit;
(c) by subdivision of its existing shares or any of them divide the whole or any part of
its share capital into shares of smaller amount than is fixed by the Memorandum of
Association or into shares without par value; and
(d) cancel any shares that at the date of the passing of the ordinary resolution have not
been taken or agreed to be taken by any person and diminish the amount of its share
capital by the amount of the shares so cancelled.
The Company may by special resolution reduce its share capital or any capital redemption
reserve fund, subject to the provisions of the Companies Act.
2.6 Special resolution — majority required
A “special resolution” is defined in the Articles of Association to have the same meaning
as in the Companies Act, for which purpose, the requisite majority shall be not less than
three-fourths of the votes of such members of the Company as, being entitled to do so, vote in
person or, in the case of corporations, by their duly authorised representatives or, where proxies
are allowed, by proxy at a general meeting of which notice specifying the intention to propose
the resolution as a special resolution has been duly given and includes a special resolution
approved in writing by all of the members of the Company entitled to vote at a general meeting
of the Company in one or more instruments each signed by one or more of such members, and
the effective date of the special resolution so adopted shall be the date on which the instrument
or the last of such instruments (if more than one) is executed.
In contrast, an “ordinary resolution” is defined in the Articles of Association to mean a
resolution passed by a simple majority of the votes of such members of the Company as, being
entitled to do so, vote in person or, in the case of corporations, by their duly authorised
representatives or, where proxies are allowed, by proxy at a general meeting held in accordance
with the Articles of Association and includes an ordinary resolution approved in writing by all
the members of the Company aforesaid.
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2.7 V oting rights
Subject to paragraph 2.1(b) above and any rights or restrictions attached to any shares, at
any general meeting every member of the Company present in person (or, in the case of a
member being a corporation, by its duly authorised representative) or by proxy shall have (a)
the right to speak; (b) one vote on a show of hands; and (c) one vote for every share of which
he is the holder on a poll.
Where any member is, under the Listing Rules, required to abstain from voting on any
particular resolution or restricted to voting only for or only against any particular resolution,
any votes cast by or on behalf of such member in contravention of such requirement or
restriction shall not be counted.
In the case of joint holders the vote of the senior holder who tenders a vote, whether in
person or by proxy (or in the case of a corporation or other non-natural person, by its duly
authorised representative or proxy) shall be accepted to the exclusion of the votes of the other
joint holders, and seniority shall be determined by the order in which the names of the holders
stand in the register of members of the Company.
A member of unsound mind, or in respect of whom an order has been made by any court
having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by their
committee, receiver, curator bonis, or other person on such member’s behalf appointed by that
court, and any such committee, receiver, curator bonis or other person may vote by proxy.
No person shall be counted in a quorum or be entitled to vote at any general meeting
unless he is registered as a member on the record date for such meeting, nor unless all calls
or other monies then payable by him in respect of shares have been paid.
At any general meeting a resolution put to the vote of the meeting shall be decided by way
of a poll save that the chairperson of the meeting may allow a resolution which relates purely
to a procedural or administrative matter as prescribed under the Listing Rules to be voted on
by a show of hands.
Any corporation or other non-natural person which is a member of the Company may in
accordance with its constitutional documents, or in the absence of such provision by resolution
of its directors or other governing body, authorise such person as it thinks fit to act as its
representative at any meeting of the Company or of any class of members, and the person so
authorised shall be entitled to exercise the same powers as the corporation could exercise if it
were an individual member.
If a recognised clearing house (or its nominee(s)) is a member of the Company it may
authorise such person or persons as it thinks fit to act as its representative(s) at any general
meeting of the Company or at any general meeting of any class of members of the Company,
provided that, if more than one person is so authorised, the authorisation shall specify the
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number and class of shares in respect of which each such person is so authorised. A person
authorised pursuant to this provision shall be entitled to exercise the same rights and powers
on behalf of the recognised clearing house (or its nominee(s)) which that person represents as
that recognised clearing house (or its nominee(s)) could exercise as if such person were an
individual member of the Company holding the number and class of shares specified in such
authorisation, including the right to speak and, where a show of hands is allowed, the right to
vote individually on a show of hands.
2.8 Annual general meetings and extraordinary general meetings
The Company shall hold a general meeting as its annual general meeting for each
financial year within six months (or such other period as may be permitted by the Listing Rules
or the Stock Exchange) after the end of such financial year. An annual general meeting shall
be specified as such in the notices calling it.
The Directors may call general meetings, and they shall on a members’ requisition
forthwith proceed to convene an extraordinary general meeting of the Company. A members’
requisition is a requisition of one or more members holding at the date of deposit of the
requisition not less than 10% of the voting rights, on a one vote per share basis, of the issued
shares which as at that date carry the right to vote at an extraordinary general meetings of the
Company (with voting rights attaching to treasury shares excluded) and add resolutions to the
meeting agenda. The members’ requisition must state the objects and the resolutions to be
added to the agenda of the meeting and must be signed by the requisitionists and deposited at
the principal office of the Company in Hong Kong or, in the event the Company ceases to have
such a principal office, the registered office of the Company, and may consist of several
documents in like form each signed by one or more requisitionists. If there are no Directors as
at the date of the deposit of the members’ requisition or if the Directors do not within 21 days
from the date of the deposit of the members’ requisition duly proceed to convene a general
meeting to be held within a further 21 days, the requisitionists, or any of them representing
more than one-half of the total voting rights of all the requisitionists, may themselves convene
a general meeting, but any meeting so convened shall be held no later than the day which falls
three months after the expiration of the said 21-day period. A general meeting convened by
requisitionists shall be convened in the same manner as nearly as possible as that in which
general meetings are to be convened by Directors.
2.9 Accounts and audit
The Directors shall cause proper books of account to be kept with respect to all sums of
money received and expended by the Company and the matters in respect of which the receipt
or expenditure takes place, all sales and purchases of goods by the Company and the assets and
liabilities of the Company. Such books of account must be retained for a minimum period of
five years from the date on which they are prepared. Proper books shall not be deemed to be
kept if there are not kept such books of account as are necessary to give a true and fair view
of the state of the Company’s affairs and to explain its transactions.
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The Directors shall determine whether and to what extent and at what times and places
and under what conditions or regulations the accounts and books of the Company or any of
them shall be open to the inspection of members of the Company not being Directors, and no
member (not being a Director) shall have any right of inspecting any account or book or
document of the Company except as conferred by the Companies Act or authorised by the
Directors or by the Company in general meeting.
The Directors shall cause to be prepared and to be laid before the Company at every
annual general meeting a profit and loss account for the period since the preceding account,
together with a balance sheet as at the date to which the profit and loss account is made up,
a Directors’ report with respect to the profit or loss of the Company for the period covered by
the profit and loss account and the state of the Company’s affairs as at the end of such period,
an auditors’ report on such accounts and such other reports and accounts as may be required
by law.
2.10 Auditors
The Company shall at every annual general meeting by ordinary resolution appoint an
auditor or auditors of the Company who shall hold office until the next annual general meeting.
The Company may by ordinary resolution remove an auditor before the expiration of his period
of office. No person may be appointed as an auditor of the Company unless such person is
independent of the Company. The remuneration of the auditors shall be fixed by the Company
at the annual general meeting at which they are appointed by ordinary resolution, or in the
manner specified in such resolution.
2.11 Notice of meetings and business to be conducted thereat
An annual general meeting shall be called by not less than 21 days’ notice and any
extraordinary general meeting shall be called by not less than 14 days’ notice, which shall be
exclusive of the day on which it is served or deemed to be served and of the day for which it
is given. The notice convening an annual general meeting shall specify the meeting as such,
and the notice convening a meeting to pass a special resolution shall specify the intention to
propose the resolution as a special resolution. Every notice shall specify the place, the day and
the hour of the meeting, particulars of the resolutions and the general nature of the business to
be conducted at the meeting. Notwithstanding the foregoing, a general meeting of the Company
shall, whether or not the notice specified has been given and whether or not the provisions of
the Articles of Association regarding general meetings have been complied with, be deemed to
have been duly convened if it is so agreed:
(a) in the case of an annual general meeting, by all members of the Company entitled
to attend and vote at the meeting; and
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(b) in the case of an extraordinary general meeting, by a majority in number of the
members having a right to attend and vote at the meeting, together holding not less
than 95% in par value of the shares giving that right.
If, after the notice of a general meeting has been sent but before the meeting is held, or
after the adjournment of a general meeting but before the adjourned meeting is held (whether
or not notice of the adjourned meeting is required), the Directors, in their absolute discretion,
consider that it is impractical or unreasonable for any reason to hold a general meeting on the
date or at the time and place specified in the notice calling such meeting, they may change or
postpone the meeting to another date, time and place.
The Directors also have the power to provide in every notice calling a general meeting
that in the event of a gale warning or a black rainstorm warning is in force at any time on the
day of the general meeting (unless such warning is cancelled at least a minimum period of time
prior to the general meeting as the Directors may specify in the relevant notice), the meeting
shall be postponed without further notice to be reconvened on a later date.
Where a general meeting is postponed:
(a) the Company shall endeavour to cause a notice of such postponement, which shall
set out the reason for the postponement in accordance with the Listing Rules, to be
placed on the Company’s website and published on the Stock Exchange’s website as
soon as practicable, provided that failure to place or publish such notice shall not
affect the automatic postponement of a general meeting due to a gale warning or
black rainstorm warning being in force on the day of the general meeting;
(b) the Directors shall fix the date, time and place for the reconvened meeting and at
least seven clear days’ notice shall be given for the reconvened meeting; and such
notice shall specify the date, time and place at which the postponed meeting will be
reconvened and the date and time by which proxies shall be submitted in order to
be valid at such reconvened meeting (provided that any proxy submitted for the
original meeting shall continue to be valid for the reconvened meeting unless
revoked or replaced by a new proxy); and
(c) only the business set out in the notice of the original meeting shall be transacted at
the reconvened meeting, and notice given for the reconvened meeting does not need
to specify the business to be transacted at the reconvened meeting, nor shall any
accompanying documents be required to be recirculated. Where any new business is
to be transacted at such reconvened meeting, the Company shall give a fresh notice
for such reconvened meeting in accordance with the Articles of Association.
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2.12 Transfer of shares
Transfers of shares may be effected by an instrument of transfer, which shall be in writing
and in any standard form of transfer as prescribed by the Stock Exchange or such other form
as the Directors may approve. The instrument of transfer shall be executed by or on behalf of
the transferor and, unless the Directors otherwise determine, the transferee, and the transferor
shall be deemed to remain the holder of the share until the name of the transferee is entered
in the register of members of the Company.
The Directors may decline to register any transfer of any share which is not fully paid up
or on which the Company has a lien. The Directors may also decline to register any transfer
of any shares unless:
(a) the instrument of transfer is lodged with the Company accompanied by the
certificate for the shares to which it relates (which shall upon the registration of the
transfer be cancelled) and such other evidence as the Directors may reasonably
require to show the right of the transferor to make the transfer;
(b) the instrument of transfer is in respect of only one class of shares;
(c) the instrument of transfer is properly stamped (in circumstances where stamping is
required);
(d) in the case of a transfer to joint holders, the number of joint holders to whom the
share is to be transferred does not exceed four;
(e) the shares concerned are free of any lien in favour of the Company; and
(f) a fee of such amount not exceeding the maximum amount as the Stock Exchange
may from time to time determine to be payable (or such lesser sum as the Directors
may from time to time require) is paid to the Company in respect thereof.
If the Directors refuse to register a transfer of any share they shall notify the transferor
and the transferee within two months of such refusal.
The registration of transfers shall be suspended during such periods as the register of
members of the Company is closed. The Directors may, on at least 10 business days’ notice (or
on at least 6 business days’ notice in the case of a rights issue) being given by advertisement
published on the Stock Exchange’s website, or, subject to the Listing Rules, in the manner in
which notices may be served by the Company by electronic means as provided in the Articles
of Association or by advertisement published in the newspapers, close the register of members
at such times and for such periods as the Directors may from time to time determine, provided
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that the register of members shall not be closed for more than 30 days in any year (or such
longer period as the members of the Company may by ordinary resolution determine, provided
that such period shall not be extended beyond 60 days in any year).
2.13 Power of the Company to purchase its own shares
Subject to the provisions of the Companies Act, the Company may purchase its own
shares provided that (a) the manner of purchase has first been authorised by the members of
the Company by ordinary resolution, and (b) any such purchase shall only be made in
accordance with any relevant code, rules or regulations issued by the Stock Exchange or the
Securities and Futures Commission of Hong Kong from time to time in force.
2.14 Power of any subsidiary of the Company to own shares
There are no provisions in the Articles of Association relating to the ownership of shares
by a subsidiary.
2.15 Dividends and other methods of distribution
Subject to the Companies Act and the Articles of Association, the Company may by
ordinary resolution resolve to pay dividends and other distributions on shares in issue and
authorise payment of the dividends or other distributions out of the funds of the Company
lawfully available therefor, provided no dividends shall exceed the amount recommended by
the Directors. No dividend or other distribution shall be paid except out of the realised or
unreleased profits of the Company, out of the share premium account or as otherwise permitted
by law.
The Directors may from time to time pay to the members of the Company such interim
dividends as appear to the Directors to be justified by the profits of the Company. The Directors
may in addition from time to time declare and pay special dividends on shares of such amounts
and on such dates as they think fit.
Except as otherwise provided by the rights attached to any shares, all dividends and other
distributions shall be paid according to the amounts paid up on the shares that a member holds
during any portion or portions of the period in respect of which the dividend is paid. For this
purpose no amount paid up on a share in advance of calls shall be treated as paid up on the
share.
The Directors may deduct from any dividends or other distribution payable to any
member of the Company all sums of money (if any) then payable by the member to the
Company on account of calls or otherwise. The Directors may retain any dividends or other
monies payable on or in respect of a share upon which the Company has a lien, and may apply
the same in or towards satisfaction of the debts, liabilities or engagements in respect of which
the lien exists.
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No dividend shall carry interest against the Company. Except as otherwise provided by
the rights attached to any shares, dividends and other distributions may be paid in any currency.
Whenever the Directors or the Company in general meeting have resolved that a dividend
be paid or declared on the share capital of the Company, the Directors may further resolve: (a)
that such dividend be satisfied wholly or in part in the form of an allotment of shares credited
as fully paid up on the basis that the shares so allotted are to be of the same class as the class
already held by the allottee, provided that the members of the Company entitled thereto will
be entitled to elect to receive such dividend (or part thereof) in cash in lieu of such allotment;
or (b) that the members of the Company entitled to such dividend will be entitled to elect to
receive an allotment of shares credited as fully paid up in lieu of the whole or such part of the
dividend as the Directors may think fit on the basis that the shares so allotted are to be of the
same class as the class already held by the allottee. The Company may upon the
recommendation of the Directors by ordinary resolution resolve in respect of any one particular
dividend of the Company that notwithstanding the foregoing a dividend may be satisfied
wholly in the form of an allotment of shares credited as fully paid without offering any right
to members of the Company to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, interest or other monies payable in cash in respect of shares may be paid
by wire transfer to the holder or by cheque or warrant sent through the post directed to the
registered address of the holder or, in the case of joint holders, to the registered address of the
holder who is first named on the register of members of the Company or to such person and
to such address as the holder or joint holders may in writing direct. Every such cheque or
warrant shall be made payable to the order of the person to whom it is sent. Any one of two
or more joint holders may give effectual receipts for any dividends, other distributions,
bonuses, or other monies payable in respect of the shares held by them as joint holders.
Any dividend or other distribution which remains unclaimed after a period of six years
from the date on which such dividend or distribution becomes payable shall be forfeited and
shall revert to the Company.
The Directors, with the sanction of the members of the Company by ordinary resolution,
may resolve that any dividend or other distribution be paid wholly or partly by the distribution
of specific assets, and in particular (but without limitation) by the distribution of shares,
debentures, or securities of any other company or in any one or more of such ways, and where
any difficulty arises in regard to such distribution, the Directors may settle it as they think
expedient, and in particular may disregard fractional entitlements, round the same up or down
or provide that the same shall accrue to the benefit of the Company, and may fix the value for
distribution of such specific assets or any part thereof and may determine that cash payments
shall be made to any members of the Company upon the basis of the value so fixed in order
to adjust the rights of all members, and may vest any such specific assets in trustees as may
seem expedient to the Directors.
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2.16 Proxies
A member of the Company entitled to attend and vote at a general meeting of the
Company shall be entitled to appoint another person who must be an individual as his proxy
to attend and vote instead of him and a proxy so appointed shall have the same right as the
member to speak at the meeting. V otes may be given either personally or by proxy. A proxy
need not be a member of the Company. A member may appoint any number of proxies to attend
in his stead at any one general meeting or at any one class meeting.
The instrument appointing a proxy shall be in writing and shall be executed under the
hand of the appointor or of his attorney duly authorised in writing, or, if the appointor is a
corporation or other non-natural person, under the hand of its duly authorised representative.
The Directors shall, in the notice convening any meeting or adjourned meeting, or in an
instrument of proxy sent out by the Company, specify the manner (including by electronic
means) by which the instrument appointing a proxy shall be deposited and the place and the
time (being not later than the time appointed for the commencement of the meeting or
adjourned meeting to which the proxy relates) at which the instrument appointing a proxy shall
be deposited.
The instrument appointing a proxy may be in any usual or common form (or such other
form as the Directors may approve) and may be expressed to be for a particular meeting or any
adjournment thereof or generally until revoked.
2.17 Calls on shares and forfeiture of shares
Subject to the terms of the allotment and issue of any shares, the Directors may make calls
upon the members of the Company in respect of any monies unpaid on their shares (whether
in respect of par value or premium), and each member of the Company shall (subject to
receiving at least 14 clear days’ notice specifying the times or times of payment) pay to the
Company at the time or times so specified the amount called on his shares. A call may be
revoked or postponed, in whole or in part, as the Directors may determine. A call may be
required to be paid by instalments. A person upon whom a call is made shall remain liable for
calls made upon him, notwithstanding the subsequent transfer of the shares in respect of which
the call was made.
A call shall be deemed to have been made at the time when the resolution of the Directors
authorising the call was passed. The joint holders of a share shall be jointly and severally liable
to pay all calls and instalments due in respect of such share.
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If a call remains unpaid after it has become due and payable, the person from whom it is
due shall pay interest on the amount unpaid from the day it became due and payable until it
is paid at such rate as the Directors may determine (and in addition all expenses that have been
incurred by the Company by reason of such non-payment), but the Directors may waive
payment of the interest or expenses wholly or in part.
If any call or instalment of a call remains unpaid after it has become due and payable, the
Directors may give to the person from whom it is due not less than 14 clear days’ notice
requiring payment of the amount unpaid together with any interest which may have accrued
and any expenses incurred by the Company by reason of such non-payment. The notice shall
specify where payment is to be made and shall state if the notice is not complied with the
shares in respect of which the call was made will be liable to be forfeited.
If such notice is not complied with, any share in respect of which it was given may, before
the payment required by the notice has been made, be forfeited by a resolution of the Directors.
Such forfeiture shall include all dividends, other distributions or other monies payable in
respect of the forfeited shares and not paid before the forfeiture.
A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and in
such manner as the Directors think fit.
A person any of whose shares have been forfeited shall cease to be a member of the
Company in respect of the forfeited shares and shall surrender to the Company for cancellation
the certificate for the shares forfeited and shall remain liable to pay to the Company all monies
which at the date of forfeiture were payable by him to the Company in respect of the shares,
together with interest at such rate as the Directors may determine, but that person’s liability
shall cease if and when the Company shall have received payment in full of all monies due and
payable by them in respect of those shares.
2.18 Inspection of register of members
The Company shall maintain or cause to be maintained the register of members of the
Company in accordance with the Companies Act. The Directors may, on giving 10 business
days’ notice (or 6 business days’ notice in the case of a rights issue) by advertisement published
on the Stock Exchange’s website or, subject to the Listing Rules, in the manner in which
notices may be served by the Company by electronic means as provided in the Articles of
Association or by advertisement published in the newspapers, close the register of members at
such times and for such periods as the Directors may determine, either generally or in respect
of any class of shares, provided that the register shall not be closed for more than 30 days in
any year (or such longer period as the members of the Company may by ordinary resolution
determine, provided that such period shall not be extended beyond 60 days in any year).
Except when the register is closed, the register of members shall during business hours
be kept open for inspection by any member of the Company without charge.
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2.19 Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present. Two
members of the Company holding not less than 10% of the total voting power of the Company
present in person or by proxy, or if a corporation or other non-natural person by its duly
authorised representative or proxy, shall be a quorum unless the Company has only one
member entitled to vote at such general meeting in which case the quorum shall be that one
member present in person or by proxy, or in the case of a corporation or other non-natural
person by its duly authorised representative or proxy.
The quorum for a separate general meeting of the holders of a separate class of shares of
the Company is described in paragraph 2.4 above.
2.20 Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles of Association concerning the rights of minority
shareholders in relation to fraud or oppression.
2.21 Procedure on liquidation
Subject to the Companies Act, the Company may by special resolution resolve that the
Company be wound up voluntarily.
Subject to the rights attaching to any shares, in a winding up:
(a) if the assets available for distribution amongst the members of the Company shall
be insufficient to repay the whole of the Company’s paid-up capital, such assets
shall be distributed so that, as nearly as may be, the losses shall be borne by the
members of the Company in proportion to the capital paid up, or which ought to
have been paid up, on the shares held by them at the commencement of the winding
up;
(b) if the assets available for distribution amongst the members of the Company shall
be more than sufficient to repay the whole of the Company’s paid up capital at the
commencement of the winding up, the surplus shall be distributed amongst the
members of the Company in proportion to the capital paid up on the shares held by
them at the commencement of the winding up.
If the Company shall be wound up, the liquidator may with the approval of a special
resolution of the Company and any other approval required by the Companies Act, divide
amongst the members of the Company in kind the whole or any part of the assets of the
Company (whether such assets shall consist of property of the same kind or not) and may, for
that purpose, value any assets and determine how the division shall be carried out as between
the members or different classes of members of the Company. The liquidator may, with the like
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approval, vest the whole or any part of such assets in trustees upon such trusts for the benefit
of the members of the Company as the liquidator, with the like approval, shall think fit, but so
that no member of the Company shall be compelled to accept any assets, shares or other
securities in respect of which there is a liability.
2.22 Untraceable members
The Company shall be entitled to sell any shares of a member of the Company or the
shares to which a person is entitled by virtue of transmission on death or bankruptcy or
operation of law if: (a) all cheques or warrants, not being less than three in number, for any
sums payable in cash to the holder of such shares have remained uncashed for a period of 12
years; (b) the Company has not during that time or before the expiry of the three month period
referred to in (d) below received any indication of the whereabouts or existence of the member;
(c) during the 12-year period, at least three dividends in respect of the shares in question have
become payable and no dividend during that period has been claimed by the member; and (d)
upon expiry of the 12-year period, the Company has caused an advertisement to be published
in the newspapers or, subject to the Listing Rules, by electronic communication in the manner
in which notices may be served by the Company by electronic means as provided in the Articles
of Association, giving notice of its intention to sell such shares and a period of three months
has elapsed since such advertisement and the Stock Exchange has been notified of such
intention. The net proceeds of any such sale shall belong to the Company and upon receipt by
the Company of such net proceeds it shall become indebted to the former member for an
amount equal to such net proceeds.
SUMMARY OF CAYMAN ISLANDS COMPANY LA W AND TAXATION
3 Introduction
The Companies Act is derived, to a large extent, from the older Companies Acts of
England, although there are significant differences between the Companies Act and the current
Companies Act of England. Set out below is a summary of certain provisions of the Companies
Act, although this does not purport to contain all applicable qualifications and exceptions or
to be a complete review of all matters of corporate law and taxation which may differ from
equivalent provisions in jurisdictions with which interested parties may be more familiar.
4 Incorporation
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on July 21, 2015 under the Companies Act. As such, its operations must be
conducted mainly outside the Cayman Islands. The Company is required to file an annual
return each year with the Registrar of Companies of the Cayman Islands and pay a fee which
is based on the size of its authorised share capital.
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5 Share Capital
The Companies Act permits a company to issue ordinary shares, preference shares,
redeemable shares or any combination thereof.
The Companies Act provides that where a company issues shares at a premium, whether
for cash or otherwise, a sum equal to the aggregate amount of the value of the premia on those
shares shall be transferred to an account called the “share premium account”. At the option of
a company, these provisions may not apply to premia on shares of that company allotted
pursuant to any arrangement in consideration of the acquisition or cancellation of shares in any
other company and issued at a premium. The Companies Act provides that the share premium
account may be applied by a company, subject to the provisions, if any, of its memorandum and
articles of association, in such manner as the company may from time to time determine
including, but without limitation:
(a) paying distributions or dividends to members;
(b) paying up unissued shares of the company to be issued to members as fully paid
bonus shares;
(c) in the redemption and repurchase of shares (subject to the provisions of section 37
of the Companies Act);
(d) writing-off the preliminary expenses of the company;
(e) writing-off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company; and
(f) providing for the premium payable on redemption or purchase of any shares or
debentures of the company.
No distribution or dividend may be paid to members out of the share premium account
unless immediately following the date on which the distribution or dividend is proposed to be
paid the company will be able to pay its debts as they fall due in the ordinary course of
business.
The Companies Act provides that, subject to confirmation by the Grand Court of the
Cayman Islands, a company limited by shares or a company limited by guarantee and having
a share capital may, if so authorised by its articles of association, by special resolution reduce
its share capital in any way.
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Subject to the detailed provisions of the Companies Act, a company limited by shares or
a company limited by guarantee and having a share capital may, if so authorised by its articles
of association, issue shares which are to be redeemed or are liable to be redeemed at the option
of the company or a shareholder. In addition, such a company may, if authorised to do so by
its articles of association, purchase its own shares, including any redeemable shares. The
manner of such a purchase must be authorised either by the articles of association or by an
ordinary resolution of the company. The articles of association may provide that the manner of
purchase may be determined by the directors of the company. At no time may a company
redeem or purchase its shares unless they are fully paid. A company may not redeem or
purchase any of its shares if, as a result of the redemption or purchase, there would no longer
be any member of the company holding shares. A payment out of capital by a company for the
redemption or purchase of its own shares is not lawful unless immediately following the date
on which the payment is proposed to be made, the company shall be able to pay its debts as
they fall due in the ordinary course of business.
There is no statutory restriction in the Cayman Islands on the provision of financial
assistance by a company for the purchase of, or subscription for, its own or its holding
company’s shares. Accordingly, a company may provide financial assistance if the directors of
the company consider, in discharging their duties of care and to act in good faith, for a proper
purpose and in the interests of the company, that such assistance can properly be given. Such
assistance should be on an arm’s-length basis.
6 Dividends and Distributions
With the exception of section 34 of the Companies Act, there are no statutory provisions
relating to the payment of dividends. Based upon English case law which is likely to be
persuasive in the Cayman Islands in this area, dividends may be paid only out of profits. In
addition, section 34 of the Companies Act permits, subject to a solvency test and the
provisions, if any, of the company’s memorandum and articles of association, the payment of
dividends and distributions out of the share premium account (see paragraph 5 above for
details).
7 Shareholders’ Suits
The Cayman Islands courts can be expected to follow English case law precedents. The
rule in Foss v. Harbottle (and the exceptions thereto which permit a minority shareholder to
commence a class action against or derivative actions in the name of the company to challenge
(a) an act which is ultra vires the company or illegal, (b) an act which constitutes a fraud
against the minority where the wrongdoers are themselves in control of the company, and (c)
an action which requires a resolution with a qualified (or special) majority which has not been
obtained) has been applied and followed by the courts in the Cayman Islands.
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8 Protection of Minorities
In the case of a company (not being a bank) having a share capital divided into shares,
the Grand Court of the Cayman Islands may, on the application of members holding not less
than one-fifth of the shares of the company in issue, appoint an inspector to examine into the
affairs of the company and to report thereon in such manner as the Grand Court shall direct.
Any shareholder of a company may petition the Grand Court of the Cayman Islands which
may make a winding up order if the court is of the opinion that it is just and equitable that the
company should be wound up.
Claims against a company by its shareholders must, as a general rule, be based on the
general laws of contract or tort applicable in the Cayman Islands or their individual rights as
shareholders as established by the company’s memorandum and articles of association.
The English common law rule that the majority will not be permitted to commit a fraud
on the minority has been applied and followed by the courts of the Cayman Islands.
9 Disposal of Assets
The Companies Act contains no specific restrictions on the powers of directors to dispose
of assets of a company. As a matter of general law, in the exercise of those powers, the directors
must discharge their duties of care and to act in good faith, for a proper purpose and in the
interests of the company.
10 Accounting and Auditing Requirements
The Companies Act requires that a company shall cause to be kept proper books of
account with respect to:
(a) all sums of money received and expended by the company and the matters in respect
of which the receipt and expenditure takes place;
(b) all sales and purchases of goods by the company; and
(c) the assets and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such books
as are necessary to give a true and fair view of the state of the company’s affairs and to explain
its transactions.
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11 Register of Members
An exempted company may, subject to the provisions of its articles of association,
maintain its principal register of members and any branch registers at such locations, whether
within or without the Cayman Islands, as its directors may from time to time think fit. There
is no requirement under the Companies Act for an exempted company to make any returns of
members to the Registrar of Companies of the Cayman Islands. The names and addresses of the
members are, accordingly, not a matter of public record and are not available for public
inspection.
12 Inspection of Books and Records
Members of a company will have no general right under the Companies Act to inspect or
obtain copies of the register of members or corporate records of the company. They will,
however, have such rights as may be set out in the company’s articles of association.
13 Special Resolutions
The Companies Act provides that a resolution is a special resolution when it has been
passed by a majority of at least two-thirds of such members as, being entitled to do so, vote
in person or, where proxies are allowed, by proxy at a general meeting of which notice
specifying the intention to propose the resolution as a special resolution has been duly given,
except that a company may in its articles of association specify that the required majority shall
be a number greater than two-thirds, and may additionally so provide that such majority (being
not less than two-thirds) may differ as between matters required to be approved by a special
resolution. Written resolutions signed by all the members entitled to vote for the time being of
the company may take effect as special resolutions if this is authorised by the articles of
association of the company.
14 Subsidiary Owning Shares in Parent
The Companies Act does not prohibit a Cayman Islands company acquiring and holding
shares in its parent company provided its objects so permit. The directors of any subsidiary
making such acquisition must discharge their duties of care and to act in good faith, for a
proper purpose and in the interests of the subsidiary.
15 Mergers and Consolidations
The Companies Act permits mergers and consolidations between Cayman Islands
companies and between Cayman Islands companies and non-Cayman Islands companies. For
these purposes, (a) “merger” means the merging of two or more constituent companies and the
vesting of their undertaking, property and liabilities in one of such companies as the surviving
company, and (b) “consolidation” means the combination of two or more constituent
companies into a consolidated company and the vesting of the undertaking, property and
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liabilities of such companies to the consolidated company. In order to effect such a merger or
consolidation, the directors of each constituent company must approve a written plan of merger
or consolidation, which must then be authorised by (a) a special resolution of each constituent
company and (b) such other authorisation, if any, as may be specified in such constituent
company’s articles of association. The written plan of merger or consolidation must be filed
with the Registrar of Companies of the Cayman Islands together with a declaration as to the
solvency of the consolidated or surviving company, a list of the assets and liabilities of each
constituent company and an undertaking that a copy of the certificate of merger or
consolidation will be given to the members and creditors of each constituent company and that
notification of the merger or consolidation will be published in the Cayman Islands Gazette.
Dissenting shareholders have the right to be paid the fair value of their shares (which, if not
agreed between the parties, will be determined by the Cayman Islands court) if they follow the
required procedures, subject to certain exceptions. Court approval is not required for a merger
or consolidation which is effected in compliance with these statutory procedures.
16 Reconstructions
There are statutory provisions which facilitate reconstructions and amalgamations
approved by (a) 75% in value of shareholders, or (b) a majority in number representing 75%
in value of creditors, depending on the circumstances, as are present at a meeting called for
such purpose and thereafter sanctioned by the Grand Court of the Cayman Islands. Whilst a
dissenting shareholder would have the right to express to the Grand Court his view that the
transaction for which approval is sought would not provide the shareholders with a fair value
for their shares, the Grand Court is unlikely to disapprove the transaction on that ground alone
in the absence of evidence of fraud or bad faith on behalf of management and if the transaction
were approved and consummated the dissenting shareholder would have no rights comparable
to the appraisal rights (i.e. the right to receive payment in cash for the judicially determined
value of his shares) ordinarily available, for example, to dissenting shareholders of United
States corporations.
17 Take-overs
Where an offer is made by a company for the shares of another company and, within four
months of the offer, the holders of not less than 90% of the shares which are the subject of the
offer accept, the offeror may at any time within two months after the expiration of the said four
months, by notice require the dissenting shareholders to transfer their shares on the terms of
the offer. A dissenting shareholder may apply to the Grand Court of the Cayman Islands within
one month of the notice objecting to the transfer. The burden is on the dissenting shareholder
to show that the Grand Court should exercise its discretion, which it will be unlikely to do
unless there is evidence of fraud or bad faith or collusion as between the offeror and the holders
of the shares who have accepted the offer as a means of unfairly forcing out minority
shareholders.
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18 Indemnification
Cayman Islands law does not limit the extent to which a company’s articles of association
may provide for indemnification of officers and directors, except to the extent any such
provision may be held by the Cayman Islands courts to be contrary to public policy (e.g. for
purporting to provide indemnification against the consequences of committing a crime).
19 Restructuring
A company may present a petition to the Grand Court of the Cayman Islands for the
appointment of a restructuring officer on the grounds that the company:
(a) is or is likely to become unable to pay its debts; and
(b) intends to present a compromise or arrangement to its creditors (or classes thereof)
either pursuant to the Companies Act, the law of a foreign country or by way of a
consensual restructuring.
The Grand Court may, among other things, make an order appointing a restructuring
officer upon hearing of such petition, with such powers and to carry out such functions as the
court may order. At any time (i) after the presentation of a petition for the appointment of a
restructuring officer but before an order for the appointment of a restructuring officer has been
made, and (ii) when an order for the appointment of a restructuring officer is made, until such
order has been discharged, no suit, action or other proceedings (other than criminal
proceedings) shall be proceeded with or commenced against the company, no resolution to
wind up the company shall be passed, and no winding up petition may be presented against the
company, except with the leave of the court. However, notwithstanding the presentation of a
petition for the appointment of a restructuring officer or the appointment of a restructuring
officer, a creditor who has security over the whole or part of the assets of the company is
entitled to enforce the security without the leave of the court and without reference to the
restructuring officer appointed.
20 Liquidation
A company may be placed in liquidation compulsorily by an order of the court, or
voluntarily (a) by a special resolution of its members if the company is solvent, or (b) by an
ordinary resolution of its members if the company is insolvent. The liquidator’s duties are to
collect the assets of the company (including the amount (if any) due from the contributories
(shareholders)), settle the list of creditors and discharge the company’s liability to them,
rateably if insufficient assets exist to discharge the liabilities in full, and to settle the list of
contributories and divide the surplus assets (if any) amongst them in accordance with the rights
attaching to the shares.
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21 Stamp Duty on Transfers
No stamp duty is payable in the Cayman Islands on transfers of shares of Cayman Islands
companies except those which hold interests in land in the Cayman Islands.
22 Taxation
Pursuant to section 6 of the Tax Concessions Act (As Revised) of the Cayman Islands, the
Company may obtain an undertaking from the Financial Secretary of the Cayman Islands:
(a) that no law which is enacted in the Cayman Islands imposing any tax to be levied
on profits, income, gains or appreciations shall apply to the Company or its
operations; and
(b) in addition, that no tax to be levied on profits, income, gains or appreciations or
which is in the nature of litigation or inheritance tax shall be payable:
(i) on or in respect of the shares, debentures or other obligations of the Company;
or
(ii) by way of the withholding in whole or in part of any relevant payment as
defined in section 6(3) of the Tax Concessions Act (As Revised).
The Cayman Islands currently levy no taxes on individuals or corporations based upon
profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax
or estate duty. There are no other taxes likely to be material to the Company levied by the
Government of the Cayman Islands save certain stamp duties which may be applicable, from
time to time, on certain instruments executed in or brought within the jurisdiction of the
Cayman Islands. The Cayman Islands are not party to any double tax treaties that are applicable
to any payments made by or to the Company.
23 Exchange Control
There are no exchange control regulations or currency restrictions in the Cayman Islands.
24 General
Maples and Calder (Hong Kong) LLP, the Company’s legal advisers on Cayman Islands
law, have sent to the Company a letter of advice summarising aspects of Cayman Islands
company law. This letter, together with a copy of the Companies Act, is on display on the
websites as referred to in the section headed “Documents Delivered to the Registrar of
Companies and Available on Display” in Appendix V . Any person wishing to have a detailed
summary of Cayman Islands company law or advice on the differences between it and the laws
of any jurisdiction with which he/she is more familiar is recommended to seek independent
legal advice.
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A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation of Our Company
Our Company was incorporated in the Cayman Islands under the Companies Act as an
exempted company with limited liability on July 21, 2015. Our registered office is at Maples
Corporate Services Limited, PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman
Islands. Accordingly, our Company’s corporate structure and Articles of Association are
subject to the relevant laws of the Cayman Islands. A summary of our Articles of Association
is set out in the section headed “Summary of the Constitution of our Company” in Appendix
III to this Prospectus.
Our headquarters and principal places of business in the PRC are at Block A, Building No.
2, Fenghao East Road No. 9, Haidian District, Beijing, PRC and No. 1868, Yunjuan South
Road, Lin-gang Special Area, China (Shanghai) Pilot Free Trade Zone. We have been
registered as a non-Hong Kong company under Part 16 of the Companies Ordinance with the
Registrar of Companies in Hong Kong. Ms. Ka Man So has been appointed as the authorized
representative of our Company for the acceptance of service of process in Hong Kong. The
address for service of process is 5/F, Manulife Place, 348 Kwun Tong Road, Kowloon, Hong
Kong.
2. Changes in the Share Capital of Our Company
The following sets out the changes in the share capital of our Company during the two
years immediately preceding the date of this Prospectus:
 On December 7, 2023, we issued 269,711,694 series D preferred shares to CARIAD
Estonia AS.
 On December 28, 2023, we issued 13,485,585 series D preferred shares to SAIC
QIJUN I Holdings Limited.
 On August 10, we issued an aggregate of 1,444,950,216 Class B Ordinary Shares to
our employee shareholding platforms, namely Pirates Gold Holding Limited, Pirates
Silver Holding Limited and Pirates Bronze Holding Limited.
Save as disclosed in the section headed “History, Reorganization and Corporate
Structure”, there has been no alternation in our share capital of our Company within the two
years immediately preceding the date of this Prospectus.
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3. Changes in the Share Capital of Our Subsidiaries
A summary of the corporate information and the particulars of our subsidiaries are set out
in the Accountants’ Report in Appendix I to this Prospectus.
The following sets out the changes in the share capital of the Company’s subsidiaries
during the two years immediately preceding the date of this Prospectus:
 On November 24, 2022, Horizon Shanghai increased its share capital from
RMB1,200 million to RMB4,000 million.
 On November 30, 2022, Horizon Nanjing increased its share capital from RMB138
million to RMB350 million.
 On February 9, 2023, Beijing Horizon Robotics increased its share capital from
RMB2,000 million to RMB8,000 million.
 On May 11, 2023, Chengdu Horizon Journey Technology Co., Ltd. (ּ
ʮ̡) increased its share capital from RMB70 million to RMB170
million.
 On September 7, 2023, Horizon Shenzhen increased its share capital from RMB580
million to RMB1,500 million.
 On September 27, 2023, D-Robotics was incorporated in the Cayman Islands as a
limited liability company with one issued share at a par value of US$1.00.
 On December 25, 2023, Ningbo Horizon Sateng Technology Co., Ltd. (ή̻ᇞ
ʮ̡) was established as a limited liability company in the PRC with
an initial registered capital of US$300 million.
 On October 24, 2023, D-Robotics Holding Limited was incorporated in Hong Kong
as a limited liability company with a share capital of HK$1 divided into one share
of HK$1.00 each.
 On January 16, 2024, Shenzhen D-Robotics Co., Ltd. (ʮ̡)
was established as a limited liability company in the PRC with an initial registered
capital of RMB200 million.
 On February 27, 2024, Horizon Journey Together Limited was incorporated in Hong
Kong as a limited liability company with a share capital of HK$1 divided into 1
shares of HK$1.00 each.
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 On March 27, 2024, Nanjing D-Robotics Co., Ltd. (ʮ̡)
was established as a limited liability company in the PRC with an initial registered
capital of RMB2 million.
 On March 27, 2024, Beijing D-Robotics Co., Ltd. (ʮ̡) was
established as a limited liability company in the PRC with an initial registered
capital of RMB5 million.
 On April 18, 2024, Shanghai D-Robotics Co., Ltd. (ʮ̡)
was established as a limited liability company in the PRC with an initial registered
capital of RMB100 million.
 On June 16, 2024, one ordinary share with a par value of US$1.00 of D-Robotics
was divided and re-designated into 100,000 class B ordinary shares with a par value
of US$0.00001 each.
 On June 25, 2024, 131,440,218 class A ordinary shares, 599,900,000 class B
ordinary shares and 127,635,874 series A1 preferred shares of D-Robotics were
issued at a par value of US$0.00001 each to relevant shareholders.
Save as disclosed above and the section headed “History, Reorganization and Corporate
Structure”, there had been no other alterations of share capital of our subsidiaries within the
two years preceding the date of this Prospectus.
4. Resolutions of our Shareholders
Pursuant to an extraordinary Shareholders’ meeting on October 8, 2024, our Shareholders
resolved that, among others:
(a) the Memorandum and Articles of Association were approved and adopted
conditional upon Listing;
(b) the terms of the Post-IPO Share Incentive Plan were approved and adopted, and will
come into effect upon Listing;
(c) the Global Offering and the Over-allotment Option were approved;
(d) all issued Class A Ordinary Shares other than those held by the controlled entities
of Dr. Yu and Dr. Huang, and all of the Preferred Shares be re-designated and
re-classified as Class B Ordinary Shares, and the authorized share capital of the
Company shall be US$50,000 divided into 2,124,389,270 Class A Ordinary Shares
of US$0.0000025 par value each and 17,875,610,730 Class B Ordinary Shares of
US$0.0000025 par value each and the issued share capital of the Company shall be
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US$34,337.53 divided into 2,124,389,270 Class A Ordinary Shares of
US$0.0000025 par value each and 11,610,622,012 Class B Ordinary Shares of
US$0.0000025 par value each, in each case to be effective on the Listing Date;
(e) a general unconditional mandate was given to our Directors to exercise all the
powers of our Company to (i) allot, issue and deal with Class B Ordinary Shares or
securities convertible into Class B Ordinary Shares and to make or grant offers or
agreements or options (including any warrants, bonds, notes and debentures
conferring any rights to subscribe for or otherwise receive Class B Ordinary Shares)
and (ii) sell and/or transfer Class B Ordinary Shares out of treasury that are held as
treasury shares which might require Class B Ordinary Shares to be allotted, issued,
or dealt with, or to be sold and/or transferred out of treasury that are held as treasury
shares, other than pursuant to the Global Offering or pursuant to a rights issue or
pursuant to the exercise of any subscription rights attaching to any warrants or any
option scheme or similar arrangement which may be allotted and issued by our
Company from time to time on a specific authority granted by the Shareholders in
general meeting or, pursuant to the allotment and issue of Class B Ordinary Shares
in lieu of the whole or part of a dividend on Class B Ordinary Shares in accordance
with the Articles, Class B Ordinary Shares not exceed 20% of the number of the
Shares in issue (excluding any treasury shares) immediately following completion of
the Global Offering, such mandate to remain in effect until the conclusion of the
next annual general meeting of our Company, or the expiration of the period within
which the next annual general meeting of our Company is required to be held by the
Articles or any applicable laws, or until revoked or varied by an ordinary resolution
of Shareholders in general meeting, whichever is the earliest;
(f) a general unconditional mandate (the “ Repurchase Mandate ”) was given to our
Directors to exercise all the powers of our Company to repurchase Class B Ordinary
Shares on the Stock Exchange or on any other stock exchange on which the
securities of our Company may be listed and which is recognised by the SFC and the
Stock Exchange for this purpose, such number of Shares shall not exceed 10% of the
total number of Shares in issue immediately following the completion of the Global
Offering, excluding any treasury shares or Class B Ordinary Shares to be sold, or
issued and allotted pursuant to the exercise of the Over-allotment Option; and
(g) the Repurchase Mandate was extended by the addition to the number of the Shares
which may be allotted, or agreed conditionally or unconditionally to be allotted and
issued by our Directors pursuant to such general mandate of an amount representing
the number of Shares repurchased by the Company pursuant to the mandate to
purchase shares referred to in paragraph (f) above, provided that such amount shall
not exceed 10% of the total number of the Shares in issue (excluding any treasury
shares) immediately following the completion of the Global Offering, excluding any
Class B Ordinary Shares to be sold, or issued and allotted pursuant to the exercise
of the Over-allotment Option.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-4 –


--- page 656 ---
5. Repurchases of Our Own Securities
(a) Provisions of the Listing Rules
The Listing Rules permit companies with a primary listing on the Stock Exchange to
repurchase their securities on the Stock Exchange subject to certain restrictions, the more
important of which are summarized below:
(i) Shareholders’ approval
All proposed repurchases of shares (which must be fully paid up) by a company with
a primary listing on the Stock Exchange must be approved in advance by an ordinary
resolution of the Shareholders in general meeting, either by way of general mandate or by
specific approval of a particular transaction.
Pursuant to an extraordinary Shareholders’ meeting dated October 8, 2024, the
Repurchase Mandate was given to the Directors authorizing any repurchase by our
Company of Class B Ordinary Shares on the Stock Exchange or on any other stock
exchange on which the securities may be listed and which is recognized by the SFC and
the Stock Exchange for this purpose, of not more than 10% of the number of Shares in
issue (excluding any treasury shares) immediately following the completion of the Global
Offering but excluding any Class B Ordinary Shares which may be issued pursuant to the
exercise of the Over-allotment Option until the conclusion of our next annual general
meeting, or the date by which our next annual general meeting is required by the Articles
of Association or any applicable law to be held, or the passing of an ordinary resolution
by the Shareholders revoking or varying the authority given to the Directors, whichever
occurs first.
(ii) Source of funds
Repurchases must be funded out of funds legally available for the purpose in
accordance with our Articles and the applicable laws of Hong Kong and the Cayman
Islands. A listed company may not repurchase its own securities on the Stock Exchange
for a consideration other than cash or for settlement otherwise than in accordance with the
trading rules of the Stock Exchange from time to time. As a matter of Cayman Islands law,
any repurchases by the Company may be made out of profits or out of the proceeds of a
new issue of shares made for the purpose of the repurchase or from sums standing to the
credit of our share premium account or out of capital, if so authorised by the Articles of
Association and subject to the Cayman Companies Act. Any premium payable on the
repurchase over the par value of the shares to be repurchased must have been provided
for out of profits or from sums standing to the credit of our share premium account or out
of capital, if so authorised by the Articles of Association and subject to the Cayman
Companies Act.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-5 –


--- page 657 ---
(iii) Trading restrictions
The total number of Class B Ordinary Shares which our Company may repurchase
is up to 10% of the total number of our Shares in issue (excluding any treasury shares)
immediately after the completion of the Global Offering (but not taking into account any
Class B Ordinary Shares which may be issued pursuant to the exercise of the
Over-allotment Option). Our Company may not issue new Shares, or a sale or transfer of
any treasury shares, or announce a proposed issue of new Shares, or a sale or transfer of
any treasury shares for a period of 30 days immediately following a share repurchase
without the prior approval of the Stock Exchange. For the avoidance of doubt, this
restriction will not apply to (i) a new issue of Shares, or a sale or transfer of treasury
shares under a capitalization issue, (ii) a grant of share awards or options under a share
scheme that complies with Chapter 17 of the Listing Rules or a new issue of Shares or
a transfer of treasury shares upon vesting or exercise of share awards or options under the
share scheme that complies with Chapter 17 of the Listing Rules, and (iii) a new issue of
Shares or a transfer of treasury shares pursuant to the exercise of warrants, share options
or similar instruments requiring the issuer to issue securities which were outstanding prior
to the repurchase. Our Company is also prohibited from repurchasing Class B Ordinary
Shares on the Stock Exchange if the repurchase would result in the number of listed Class
B Ordinary Shares which are in the hands of the public falling below the relevant
prescribed minimum percentage as required by the Stock Exchange. Our Company is
required to procure that the broker appointed by our Company to effect a repurchase of
Class B Ordinary Shares discloses to the Stock Exchange such information with respect
to the repurchase as the Stock Exchange may require. As required by the prevailing
requirements of the Listing Rules, an issuer shall not purchase its shares on the Stock
Exchange if the purchase price is higher by 5% or more than the average closing market
price for the five preceding trading days on which its shares were traded on the Stock
Exchange.
(iv) Status of repurchased Class B Ordinary Shares
Following a repurchase of Class B Ordinary Shares, the Company may cancel any
repurchased Class B Ordinary Shares and/or hold them as treasury shares subject to,
among others, market conditions and its capital management needs at the relevant time of
the repurchases, which may change due to evolving circumstances.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-6 –


--- page 658 ---
(v) Suspension of repurchase
Pursuant to the Listing Rules, our Company may not make any repurchases of Class
B Ordinary Shares after inside information has come to its knowledge until the
information is made publicly available. In particular, under the requirements of the
Listing Rules in force as of the date hereof, during the period of 30 days immediately
preceding the earlier of:
(i) the date of the Board meeting (as such date is first notified to the Stock
Exchange in accordance with the Listing Rules) for the approval of our
Company’s results for any year, half year, quarterly or any other interim period
(whether or not required under the Listing Rules); and
(ii) the deadline for our Company to publish an announcement of our Company’s
results for any year or half-year under the Listing Rules, or quarterly or any
other interim period (whether or not required under the Listing Rules), and in
each case ending on the date of the results announcement, our Company may
not repurchase Class B Ordinary Shares on the Stock Exchange unless the
circumstances are exceptional.
In addition, the Stock Exchange may prohibit a repurchase of securities on the Stock
Exchange if a listed company has breached the Listing Rules.
The Company may not purchase any of its Class B Ordinary Shares on the Stock
Exchange for a period of 30 days after any sale or transfer of any treasury shares on the
Stock Exchange, without the prior approval of the Stock Exchange.
(vi) Procedural and reporting requirements
As required by the Listing Rules, repurchases of Shares on the Stock Exchange or
otherwise must be reported to the Stock Exchange not later than 30 minutes before the
earlier of the commencement of the morning trading session or any pre-opening session
on the Stock Exchange business day following any day on which our Company may make
a purchase of Shares. The report must state the total number of Shares purchased the
previous day, the purchase price per Share or the highest and lowest prices paid for such
purchases, and whether the purchased Shares are cancelled following settlement of any
such purchase or held as treasury shares, and where applicable, the reasons for any
deviation from the intention statement previously disclosed by the Company. In addition,
our Company’s annual report is required to disclose details regarding repurchases of
Shares made during the year, including a monthly breakdown of the number of shares
repurchased, the purchase price per Share or the highest and lowest price paid for all such
purchases, where relevant, and the aggregate prices paid.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-7 –


--- page 659 ---
(vii) Connected parties
A company is prohibited from knowingly repurchasing securities on the Stock
Exchange from a core connected person (as defined in the Listing Rules) and a core
connected person shall not knowingly sell its securities to the company on the Stock
Exchange.
(b) Reasons and impact for repurchases
The Directors believe that it is in the best interests of our Company and Shareholders for
the Directors to have general authority from the Shareholders to enable the Directors to
repurchase Class B Ordinary Shares in the market. Such repurchases may, depending on market
conditions and funding arrangements at the time, lead to an enhancement of the net asset value
per Share and/or earnings per Share and will only be made where the Directors believe that
such repurchases will benefit our Company and our Shareholders.
(c) Funding of repurchases
In repurchasing securities, our Company may only apply funds legally available for such
purpose in accordance with the Articles, the Listing Rules and the applicable laws and
regulations of Hong Kong.
On the basis of the current financial position as disclosed in this Prospectus and taking
into account the current working capital position, the Directors consider that, if the Repurchase
Mandate were to be exercised in full, it might have a material adverse effect on the working
capital and/or the gearing position of our Company as compared with the position disclosed in
this Prospectus. The Directors, however, do not propose to exercise the Repurchase Mandate
to such an extent as would, in the circumstances, have a material adverse effect on the working
capital requirements or the gearing levels of our Company which in the opinion of the Directors
are from time to time appropriate for our Company.
(d) Interim measures
For any treasury shares of the Company deposited with CCASS pending resale on the
Stock Exchange, the Company shall, upon approval by the Board, implement the below interim
measures which include (without limitation):
(i) procuring its broker not to give any instructions to HKSCC to vote at general
meetings for the treasury shares deposited with CCASS;
(ii) in the case of dividends or distributions (if any and where applicable), withdrawing
the treasury shares from CCASS, and either re-register them in its own name as
treasury shares or cancel them, in each case before the relevant record date for the
dividend or distributions; or
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-8 –


--- page 660 ---
(iii) taking any other measures to ensure that it will not exercise any Shareholders’ rights
or receive any entitlements which would otherwise be suspended under the
applicable laws if those Shares were registered in its own name as treasury shares.
(e) General
The Company did not hold any treasury shares as of the Latest Practicable Date and will
not hold any treasury shares upon Listing. To the best knowledge of the Directors, neither the
explanatory statement contained herein nor the proposed share repurchase has unusual features.
None of the Directors or, to the best of their knowledge having made all reasonable
enquiries, any of their close associates currently intends to sell any Shares to our Company.
The Directors have undertaken that, so far as the same may be applicable, they will
exercise the Repurchase Mandate in accordance with the Listing Rules and the applicable laws
and regulations in the Cayman Islands.
Any repurchase of Shares that results in the number of Shares held by the public being
reduced to less than such minimum percentage prescribed by the Stock Exchange could only
be implemented if the Stock Exchange agreed to waive the Listing Rules requirements
regarding the public shareholding referred to above. It is believed that a waiver of this
provision would not normally be granted other than in exceptional circumstances.
If, as a result of any repurchase of Shares, a Shareholder’s proportionate interest in the
voting rights of our Company increases, such increase will be treated as an acquisition for the
purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting
in concert could obtain or consolidate control of our Company and become obliged to make a
mandatory offer in accordance with Rule 26 of the Takeovers Code.
Save as aforesaid, our Directors are not aware of any consequences which would arise
under the Takeovers Code as a consequence of any repurchases pursuant to the general mandate
to repurchase Shares.
No core connected person has notified our Company that he or she has a present intention
to sell Shares to our Company, or has undertaken not to do so, if the Repurchase Mandate is
exercised.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-9 –


--- page 661 ---
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within the two years preceding the date of this Prospectus that are
or may be material:
(a) the cornerstone investment agreement dated October 14, 2024 entered into among
our Company, Alisoft China Holding Limited, Goldman Sachs (Asia) L.L.C.,
Morgan Stanley Asia Limited, China Securities (International) Corporate Finance
Company Limited and CLSA Limited, pursuant to which Alisoft China Holding
Limited agreed to subscribe for Class B Ordinary Shares at the Offer Price in the
aggregate amount of Hong Kong dollar equivalent of US$50,000,000;
(b) the cornerstone investment agreement dated October 14, 2024 entered into among
our Company, Baidu (Hong Kong) Limited, Goldman Sachs (Asia) L.L.C., Morgan
Stanley Asia Limited, China Securities (International) Corporate Finance Company
Limited and CLSA Limited, pursuant to which Baidu (Hong Kong) Limited agreed
to subscribe for Class B Ordinary Shares at the Offer Price in the aggregate amount
of Hong Kong dollar equivalent of US$50,000,000;
(c) the cornerstone investment agreement dated October 14, 2024 entered into among
our Company, PARTICIPATIONS 1, Goldman Sachs (Asia) L.L.C., Morgan Stanley
Asia Limited, China Securities (International) Corporate Finance Company Limited
and CLSA Limited, pursuant to which PARTICIPATIONS 1 agreed to subscribe for
Class B Ordinary Shares at the Offer Price in the aggregate amount of Hong Kong
dollar equivalent of US$9,898,000;
(d) the cornerstone investment agreement dated October 14, 2024 entered into among
our Company, JSC International Investment Fund SPC (acting for and on behalf of
Ning Bo Yong Ning Gao Xin SP), Goldman Sachs (Asia) L.L.C., Morgan Stanley
Asia Limited, China Securities (International) Corporate Finance Company Limited
and CLSA Limited, pursuant to which JSC International Investment Fund SPC
(acting for and on behalf of Ning Bo Yong Ning Gao Xin SP) agreed to subscribe
for Class B Ordinary Shares at the Offer Price in the aggregate amount of Hong
Kong dollar equivalent of US$109,898,000; and
(e) the Hong Kong Underwriting Agreement.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 662 ---
2. Intellectual Property Rights of our Group
(a) Trademarks
As of the Latest Practicable Date, our Group had registered the following trademarks
which we consider to be material to our Group’s business:
No. Trademark Registered Owner
Registration
Number
Places of
Registration
1.
 Beijing Horizon
Robotics
18735871 PRC
2.
 Beijing Horizon
Robotics
18735874 PRC
3.
 Beijing Horizon
Robotics
18735876 PRC
4.
 Beijing Horizon
Robotics
37633590 PRC
5.
 Beijing Horizon
Robotics
37777840 PRC
6.
 Beijing Horizon
Robotics
37784258 PRC
7.
 Beijing Horizon
Robotics
35062115 PRC
8.
 Horizon Hong Kong 305878568 Hong Kong
9.
 Beijing Horizon
Robotics
18735878 PRC
10.
 Beijing Horizon
Robotics
18735881 PRC
11.
 Beijing Horizon
Robotics
18735883 PRC
12.
 Beijing Horizon
Robotics
37645915 PRC
13.
 Beijing Horizon
Robotics
37773180 PRC
14.
 Beijing Horizon
Robotics
37773299 PRC
15.
 Horizon Hong Kong 305750488 Hong Kong
16.
 Horizon Hong Kong 305750497 Hong Kong
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-11 –


--- page 663 ---
No. Trademark Registered Owner
Registration
Number
Places of
Registration
17.
 Beijing Horizon
Robotics
18735864 PRC
18.
 Beijing Horizon
Robotics
18735867 PRC
19.
 Beijing Horizon
Robotics
18735869 PRC
20.
 Beijing Horizon
Robotics
37643714 PRC
21.
 Beijing Horizon
Robotics
37791017 PRC
22.
 Beijing Horizon
Robotics
37781914 PRC
23.
 Beijing Horizon
Robotics
71822128 PRC
24.
 Beijing Horizon
Robotics
71801740 PRC
25.
 Horizon Hong Kong 306308613 Hong Kong
26.
 Beijing Horizon
Robotics
33987566 PRC
27.
 Beijing Horizon
Robotics
33987567 PRC
28.
 Horizon Hong Kong 305750659 Hong Kong
29.
 Beijing Horizon
Robotics
40769781 PRC
30.
 Beijing Horizon
Robotics
40793331 PRC
31.
 Beijing Horizon
Robotics
27757566 PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 664 ---
No. Trademark Registered Owner
Registration
Number
Places of
Registration
32.
 Beijing Horizon
Robotics
27751490 PRC
33.
 Beijing Horizon
Robotics
60257989 PRC
34.
 Beijing Horizon
Robotics
60258023 PRC
35.
 Beijing Horizon
Robotics
27877161 PRC
36.
 Beijing Horizon
Robotics
27870823 PRC
37.
 Horizon Hong Kong 305750433 Hong Kong
38.
 Beijing Horizon
Robotics
27761830 PRC
39.
 Beijing Horizon
Robotics
27752418 PRC
40.
 Beijing Horizon
Robotics
30050569 PRC
41.
 Horizon Hong Kong 305750398 Hong Kong
42.
 Beijing Horizon
Robotics
41716224 PRC
43.
 Beijing Horizon
Robotics
41738145 PRC
44.
 Horizon Hong Kong 305868523 Hong Kong
45.
 Beijing Horizon
Robotics
49613963 PRC
46.
 Beijing Horizon
Robotics
49614055 PRC
47.
 Horizon Hong Kong 305750505 Hong Kong
48.
 Beijing Horizon
Robotics
49622489 PRC
49.
 Beijing Horizon
Robotics
49614047 PRC
50.
 Horizon Hong Kong 305750514 Hong Kong
51.
 Beijing Horizon
Robotics
50120876 PRC
52.
 Beijing Horizon
Robotics
50149559 PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 665 ---
No. Trademark Registered Owner
Registration
Number
Places of
Registration
53.
 Beijing Horizon
Robotics
64491419 PRC
54.
 Beijing Horizon
Robotics
64490874 PRC
55.
 Beijing Horizon
Robotics
33267750 PRC
56.
 Beijing Horizon
Robotics
33267753 PRC
57.
 Horizon Hong Kong 305750569 Hong Kong
58.
 Beijing Horizon
Robotics
56500388 PRC
59.
 Beijing Horizon
Robotics
56492617 PRC
60.
 Beijing Horizon
Robotics
69041787 PRC
61.
 Beijing Horizon
Robotics
69044724 PRC
62.
 Beijing Horizon
Robotics
69063904 PRC
63.
 Beijing Horizon
Robotics
69059125 PRC
64.
 Beijing Horizon
Robotics
67215319 PRC
65.
 Beijing Horizon
Robotics
62400481 PRC
66.
 Beijing Horizon
Robotics
64054687 PRC
67.
 Beijing Horizon
Robotics
64054700 PRC
68.
 Beijing Horizon
Robotics
64063135 PRC
69.
 Beijing Horizon
Robotics
64039022 PRC
70.
 Beijing Horizon
Robotics
40702362 PRC
71.
 Beijing Horizon
Robotics
40705742 PRC
72.
 Horizon Hong Kong 305750640 Hong Kong
73.
 Beijing Horizon
Robotics
40694529 PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 666 ---
No. Trademark Registered Owner
Registration
Number
Places of
Registration
74.
 Beijing Horizon
Robotics
40705867 PRC
75.
 Beijing Horizon
Robotics
40698223 PRC
76.
 Beijing Horizon
Robotics
40701684 PRC
77.
 Horizon Hong Kong 305750622 Hong Kong
As of the Latest Practicable Date, our Group had applied for the registration of the
following trademarks which we consider to be material to our Group’s business:
No. Trademark Registered Owner
Application
Number
Places of
Registration
1.
 Horizon Hong Kong 305750479 Hong Kong
2.
 Beijing Horizon
Robotics
56344219 PRC
3.
 Beijing Horizon
Robotics
71812215 PRC
4.
 Beijing Horizon
Robotics
74026264 PRC
5.
 Horizon Hong Kong 305750415 Hong Kong
6.
 Horizon Hong Kong 306501258 Hong Kong
(b) Patents
As of the Latest Practicable Date, we are the owner of the following material patents,
details of which are as follows:
No. Patent Description Registered Owner
Place of
Registration
1.eཥɿண௪ձπ
Ꮇʧሯ
Horizon Shanghai PRC
2.ձༀໄeཥ
ɿண௪ձπᎷʧሯ
Horizon Anting PRC
3.ձༀໄeཥɿ
ண௪ձπᎷʧሯ
Horizon Shanghai PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 667 ---
No. Patent Description Registered Owner
Place of
Registration
4.eༀໄձԓሿ Horizon Anting PRC
5.ձༀ
ໄeཥɿண௪ձʧሯ
Horizon Anting PRC
6.ࠇ
ၑዚ̙ᛘπᎷʧሯ
Horizon Shanghai PRC
7.˙
ձༀໄeண௪ձʧሯ
Horizon Hangzhou PRC
8.˙
ձༀໄeண௪ձʧሯ
Horizon Hangzhou Japan
9.eༀ
ၑዚ̙ᛘπᎷʧሯ
Horizon Hangzhou PRC
10.ʿ
ༀໄ
Horizon Hangzhou PRC
11.ʿ
ༀໄ
Horizon Hangzhou Japan
12.ձༀໄe
πᎷʧሯeཥɿண௪
Horizon Hangzhou PRC
13.ၑዚ̙
ᛘπᎷʧሯeཥɿண௪
Horizon Hangzhou PRC
14.eༀໄeʧሯ˸
ʿཥɿண௪
Beijing Horizon Robotics PRC
15.ʿༀໄ Beijing Horizon Robotics PRC
16.eༀໄeཥɿ
ண௪ʿπᎷʧሯ
Horizon Shanghai PRC
17.ʿༀ
ໄ
Beijing Horizon Robotics PRC
18.ʿༀໄ Beijing Horizon Robotics PRC
19.ʿ
ༀໄ
Beijing Horizon Robotics PRC
20.ʿༀໄ Beijing Horizon Robotics PRC
21.ʿ
ༀໄ
Beijing Horizon Robotics PRC
22.eༀໄձཥɿண௪ Beijing Horizon Robotics PRC
23.ձༀໄ Beijing Horizon Robotics PRC
24.ձༀໄe
πᎷʧሯeཥɿண௪
Beijing Horizon Robotics PRC
25.ձༀ
ໄeπᎷʧሯeཥɿண௪
Beijing Horizon Robotics PRC
26.ࢹڦ
ձༀໄ
Horizon Information PRC
27.֛
ʿༀໄ
Beijing Horizon Robotics PRC
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 668 ---
No. Patent Description Registered Owner
Place of
Registration
28.ձༀໄe
πᎷʧሯeཥɿண௪
Beijing Horizon Robotics PRC
29.ձༀໄe
πᎷʧሯeཥɿண௪
Horizon Anting PRC
30.ʿༀໄ Beijing Horizon Robotics PRC
31.ʿ
ༀໄ
Beijing Horizon Robotics PRC
32.eༀໄeཥɿ
ண௪ʿԓሿ
Horizon Nanjing PRC
33.ชጳሳਜਹᅰኽ
ج
Horizon Nanjing PRC
34.ʿༀໄ Beijing Horizon Robotics PRC
35.˿
ʿༀໄ
Beijing Horizon Robotics PRC
36.eༀໄձཥ
ɿண௪
Beijing Horizon Robotics PRC
37.eༀໄձཥ
ɿண௪
Beijing Horizon Robotics United
States
38.eༀໄձཥ
ɿண௪
Beijing Horizon Robotics Japan
39.eༀໄձཥ
ɿண௪
Beijing Horizon Robotics Taiwan
40.eༀໄձཥ
ɿண௪
Beijing Horizon Robotics South Korea
41.ձᅰኽᏨ಻ཥ༩ Horizon Information South Korea
42.ٙ
ʿༀໄ
Horizon Shanghai Japan
43.eༀໄeཥɿண௪
˸ʿʧሯ
Beijing Horizon Robotics United
States
44.ʿༀໄeཥ
ɿண௪ձπᎷʧሯ
Horizon Shanghai PRC
45.ʿༀໄeཥ
ɿண௪ձπᎷʧሯ
Horizon Shanghai United
States
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 669 ---
(c) Copyrights
As of the Latest Practicable Date, we owned the following copyrights which we consider
to be material to our business:
No. Copyright Name Registered Owner
Place of
Registration
1.΃ԉ
ӻ୕
Horizon Shenzhen PRC
2. Іਗቷትͷॆʿ̙ൖʷሜ༊ழ΁ Horizon Shenzhen PRC
3.࿒္಻̨̻ Beijing Horizon Robotics PRC
4. ή̻ᇞJourney2ӻ
୕
Beijing Horizon Robotics PRC
5.಻൙ӻ୕ Horizon Information PRC
6.͍ӻ୕ Nanjing Development PRC
7.ਪᕚ၍ଣ̨̻ Beijing Horizon Robotics PRC
8.ʈՈᗡழ΁ Beijing Horizon Robotics PRC
9. ൴ॴቷትӻ୕ Horizon Shanghai PRC
10.ӻ୕ Horizon Shanghai PRC
11. Horizon Robotics ᅺႦ Beijing Horizon Robotics PRC
12.ɽ໘ྡҖ Beijing Horizon Robotics PRC
(d) Domain Name
As of the Latest Practicable Date, we had registered the following domain names which
we consider to be material to our business:
No. Domain Name Registered Owner
Registration
Date Expiry Date
1. horizon.cc Horizon Information 2020-12-10 2029-12-10
2. horizon.auto Horizon Information 2024-04-01 2025-10-27
Save as disclosed above, as of the Latest Practicable Date, there were no other intellectual
property rights which are or may be material in relation to our business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 670 ---
C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL
SHAREHOLDERS
1. Disclosure of Interests
(a) Interests and short positions of our Directors in the share capital of our Company and
its associated corporations following completion of the Global Offering
Save as disclosed in the section headed “Substantial Shareholders” and below,
immediately following the completion of the Global Offering (assuming that the Over-
allotment Option is not exercised), so far as our Directors are aware, none of our Directors and
chief executive has any interests and short positions in our Shares, underlying Shares or
debentures of our Company or any of our associated corporations (within the meaning of Part
XV of the SFO) (i) which will have to be notified to us and the Stock Exchange pursuant to
Divisions 7 and 8 of Part XV of the SFO (including interests and short positions in which they
are taken or deemed to have under such provisions of the SFO), or (ii) which will be required,
pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (iii)
which will be required to be notified to us and the Stock Exchange pursuant to the Model Code
for Securities Transactions by Directors of Listed Issuers (“ Model Code ”) contained in the
Listing Rules:
Our Company
Name
Capacity/Nature of
interest
Number and
Class of Shares
interested in
Approximate
percentage of
shareholding in the
relevant class of
Shares in our
Company
immediately
following the
completion of the
Global Offering
Approximate
percentage of
shareholding in the
total issued share
capital of our
Company
immediately
following the
completion of
Global Offering
Dr. Yu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial owner (1) 71,933,093
Class B
Ordinary
Shares
0.66% 0.55%
Dr. Huang /H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial owner
(1) 3,610,633
Class B
Ordinary
Shares
0.03% 0.03%
Ms. Tao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Beneficial owner
(1) 1,564,378
Class B
Ordinary
Shares
0.01% 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 671 ---
Name
Capacity/Nature of
interest
Number and
Class of Shares
interested in
Approximate
percentage of
shareholding in the
relevant class of
Shares in our
Company
immediately
following the
completion of the
Global Offering
Approximate
percentage of
shareholding in the
total issued share
capital of our
Company
immediately
following the
completion of
Global Offering
Interest in
controlled
corporation,
founder and
beneficiary of a
trust
(2)
169,543,255
Class B
Ordinary
Shares
1.55% 1.30%
Dr. Liming Chen /H1118/H1118Beneficial owner
(1) 12,339,416
Class B
Ordinary
Shares
0.11% 0.09%
Dr. Ya-Qin Zhang /H1118/H1118Beneficial owner
(1) 847,236
Class B
Ordinary
Shares
0.01% 0.01%
Notes:
1. Immediately following the completion of the Global Offering (assuming that the Over-allotment Option is not
exercised), Dr. Yu, Dr. Huang, Ms. Tao, Dr. Liming Chen and Dr. Ya-Qin Zhang is entitled to receive up to
71,933,093, 3,610,633, 1,564,378 Class B Ordinary Shares, 12,339,416 Class B Ordinary Shares and 847,236
Class B Ordinary Shares, respectively, pursuant to the share awards granted to him or her under the 2018 Share
Incentive Plan, subject to the terms and conditions of such share awards.
2. Immediately following the completion of the Global Offering (assuming that the Over-allotment Option is not
exercised), the entire interest of 169,543,255 Class B Ordinary Shares is held by HOPE Robotics Holdings
Inc., which is held by Venus Robotics Limited as to 99% and Kai Robotics, Inc. as to 1%. Kai Robotics, Inc.
is wholly-owned by Ms. Tao. Venus Robotics Limited is wholly-owned by the trustee of TAO Trust, the family
trust established by Ms. Tao (as settlor) for the benefit of Ms. Tao and her family. Ms. Tao is deemed to be
interested in the 169,543,255 Class B Ordinary Shares held by HOPE Robotics Holdings Inc. under the SFO.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 672 ---
Associated Corporations
We set forth below interests and short positions of our Directors in the share capital of
D-Robotics, one of our subsidiaries and an associated corporation following the completion of
the Global Offering:
Name
Capacity/Nature of
interest
Number and
class of shares
interested in
Approximate
percentage of
shareholding in the
relevant class of
shares in
D-Robotics
immediately
following the
completion of the
Global Offering
Approximate
percentage of
shareholding in the
total issued share
capital of
D-Robotics
immediately
following the
completion of
Global Offering
Dr. Yu /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in
controlled
entity
(1)
120,707,295
class A
ordinary shares
91.83% 14.05%
600,000,000
class B
ordinary shares
82.46% 69.84%
Dr. Huang /H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in
controlled
entity
(2)
7,485,326
class A
ordinary shares
5.69% 0.87%
Ms. Tao /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Interest in
controlled
entity
(3)
3,247,597
class A
ordinary shares
2.47% 0.38%
Mr. Qin Liu /H1118/H1118/H1118/H1118/H1118/H1118Interest in
controlled
entity
(4)
14,945,653
series A1
preferred shares
2.05%
(5) 1.74%
Notes:
(1) entities controlled by Dr. Yu hold a total of 120,707,295 class A ordinary shares in D-Robotics. Horizon
Together Holding Ltd., a wholly owned subsidiary of the Company, holds 600,000,000 class B ordinary shares
of D-Robotics. Therefore, Dr. Yu is deemed to be interested in 120,707,295 class A ordinary shares and
600,000,000 class B ordinary shares in D-Robotics under the SFO.
(2) a shareholding vehicle wholly owned by Dr. Huang holds 7,485,326 class A ordinary shares and Dr. Huang is
therefore deemed to be interested in the 7,485,326 class A ordinary shares in D-Robotics under the SFO.
(3) a shareholding vehicle wholly owned by Ms. Tao holds 3,247,597 class A ordinary shares and Ms. Tao is
therefore deemed to be interested in the 3,247,597 class A ordinary shares in D-Robotics under the SFO.
(4) 5Y Capital Evolution Fund II, L.P. and 5Y Capital Evolution Fund II Co-Investment, L.P. hold an aggregate
of 14,945,653 series A1 preferred shares in D-Robotics. Both 5Y Capital Evolution Fund II, L.P. and 5Y
Capital Evolution Fund II Co-Investment, L.P. are controlled by their general partner 5Y Capital GP Limited.
Mr. Qin Liu is entitled to exercise or control the exercise of one-half of the voting power of all issued shares
in 5Y Capital GP Limited at its general meeting. Therefore, Mr. Liu Qin is deemed to be interested in
14,945,653 series A1 preferred shares in D-Robotics under the SFO.
(5) assuming each series A1 preferred shares is converted into one class B ordinary shares.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 673 ---
(b) Interests of the substantial shareholders in the Shares
Save as disclosed in “Substantial Shareholders”, immediately following the completion of
the Global Offering and without taking into account any Shares which may be issued pursuant
to the exercise of the Over-allotment Option, our Directors are not aware of any other person
(not being a Director or chief executive of our Company) who will have an interest or short
position in our Shares or the underlying Shares which would fall to be disclosed to us and the
Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who is,
directly or indirectly, interested in 10% or more of the issued voting shares of our Company.
(c) Interests of the substantial shareholders in other members of our Group
As of the Latest Practicable Date, our Directors are not aware of any persons who would,
immediately following the completion of the Global Offering, be directly or indirectly
interested in 10% or more of the issued voting shares of the following member of our Group
(other than our Company).
2. Particulars of Service Contracts
(a) Executive Directors
Each of the executive Directors has entered into a service contract with our Company
under which they agreed to act as executive Directors for an initial term of three years
commencing from the Listing Date, which may be terminated by not less than three months’
notice in writing served by either the executive Director or our Company.
The appointments of the executive Directors are subject to the provisions of retirement
and rotation of Directors under the Articles.
(b) Non-executive Director and Independent Non-executive Directors
Each of the non-executive Directors and the independent non-executive Directors has
signed an appointment letter with our Company for a term of three years with effect from the
Listing Date. The appointments are subject to the provisions of retirement and rotation of
Directors under the Articles.
3. Director’s Remuneration
Save as disclosed in “Directors and Senior Management” and Note 11 to the Accountants’
Report set out in Appendix I to this Prospectus for the three financial years ended December
31, 2021, 2022 and 2023 and the six months ended June 30, 2024, none of our Directors
received other remunerations of benefits in kind from us.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 674 ---
4. Disclaimers
Save as disclosed in this Prospectus:
(a) none of the Directors or chief executive of our Company has any interest or short
positions in the Shares, underlying Shares or debentures of our Company or any
associated corporation (within the meaning of Part XV of the SFO) which will have
to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of Part
XV of the SFO (including interests and short positions which he is 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 into the register referred to in that section, or
which will be required to be notified to us and the Stock Exchange pursuant to the
Model Code, in each case once our Class B Ordinary Shares are listed on the Stock
Exchange;
(b) none of our Directors is aware of any person (not being a Director or chief executive
of our Company) who will, immediately following the completion of the Global
Offering (without taking into account any Class B Ordinary Shares which may be
allotted and issued pursuant to the exercise of the Over-allotment Option), have an
interest or short position in our Shares or underlying Shares which would fall to be
disclosed to us under the provisions of Divisions 2 and 3 of Part XV of the SFO or
who is interested, directly or indirectly, in 10% or more of the issued voting shares
of any member of our Group;
(c) none of our Directors, their respective close associates (as defined under the Listing
Rules) or Shareholders who own more than 5% of the number of issued shares of our
Company have any interests in the five largest customers or the five largest suppliers
of our Group; and
(d) none of our Directors or any of the parties listed in “Qualifications of Experts” of
this Appendix is:
(i) interested in our promotion, or in any assets which have been, within two years
immediately preceding the date of this Prospectus, acquired or disposed of by
or leased to us, or are proposed to be acquired or disposed of by or leased to
any member of our Group; or
(ii) materially interested in any contract or arrangement subsisting at the date of
this Prospectus which is significant in relation to our business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 675 ---
D. SHARE INCENTIVE PLANS
1. 2018 Share Incentive Plan
The following is a summary of the principal terms of the 2018 Share Incentive Plan,
which was adopted by the Company in November 2018. The 2018 Share Incentive Plan is not
subject to Chapter 17 of the Listing Rules as it does not involve any further grant of awards
by the Company after the Listing.
(a) Purpose
The purposes of the 2018 Share Incentive Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide additional
incentives to selected employees, Directors and consultants and to promote the success of
the Company’s business by offering these individuals or entities an opportunity to acquire
a proprietary interest in the success of the Company, or to increase this interest by
permitting them to acquire Shares of the Company.
(b) Eligible Participants
Only employees, Directors, and consultants, or trusts or companies established in
connection with any employee benefit plan of the Company for the benefit of an
employee, Director or consultant, shall be eligible for the grant of awards. Options may
be granted to employees only. Awards other than options may be granted to employees,
Directors and consultants.
(c) Types of Awards
The 2018 Share Incentive Plan provides for the grant of options, restricted share
awards and restricted share units (“RSUs”).
(d) Duration
Unless otherwise determined by the Board, the term of the 2018 Share Incentive
Plan shall be ten years commencing on the date of its adoption.
(e) Administration
The 2018 Share Incentive Plan shall be administered by the Board or such other
person approved and appointed by the Board (the “Administrator”). Subject to applicable
law, the Administrator may delegate limited authority to specified officers of the
Company to execute on behalf of the Company any instrument required to effect an award
previously granted by the Administrator.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 676 ---
(f) Maximum Number of Shares
The maximum aggregate number of shares that may be issued under the 2018 Share
Incentive Plan shall not exceed such number of shares as determined and approved by the
members and the Board from time to time (as appropriately adjusted for subsequent share
splits, share dividends and the like). As of the Latest Practicable Date, the maximum
aggregate number of Class B Ordinary Shares that may be issued under the 2018 Share
Incentive Plan is 1,516,134,974.
(g) Performance Target
The awards may be subject to performance goals or other criteria as set forth at the
sole discretion of the Administrator.
(h) Restricted Period
The Restricted Period shall commence on the grant date and end at the time or times
set forth on a schedule established by the Administrator in the applicable award
agreement (the “Restricted Period”); provided, however, that notwithstanding any such
vesting dates, the Administrator may in its sole discretion accelerate the vesting of any
restricted award at any time and for any reason.
(i) Options
(i) Exercise price
Each option agreement shall specify the exercise price. The exercise price of
an option shall be determined by the Administrator in its sole discretion which may
be a fixed or variable price related to the fair market value of the shares on the date
of grant, provided, however, that the exercise price may be not less than the fair
market value on the date of grant, without compliance with Section 409A of the U.S.
Internal Revenue Code of 1986 (the “Code”), or the optionee’s consent; provided
further, that the exercise price of any option granted to any individual who, upon the
date of grant, owns shares possessing more than ten percent (10%) of the total
combined voting power of all classes of shares of the Company may not be less than
one-hundred and ten percent (110%) of fair market value on the date of grant.
Notwithstanding anything to the contrary in the foregoing, in the event of a
transaction described in Section 424(a) of the Code, options may be issued at an
exercise price other than as required by the foregoing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 677 ---
(ii) Vesting schedule
Fifty percent (50%) of the optioned shares shall vest on the first vesting date
(such day to be deemed to be the last day of the month, when necessary), and
remaining 50% optioned shares shall vest in equal annual installments over the
following two (2) years, subject to the optionee’s continuing to be an employee,
Director, or consultant through these dates. Before or after execution of the option
agreement, the vesting schedule may be modified or changed by the Administrator
in its sole discretion as it deems necessary or appropriate where new agreement
between the Company and the optionee shall be entered into regarding the said
modification or change.
(iii) Term of Option
The option agreement shall specify the term of the option; provided, however,
that the term shall not exceed ten (10) years from the date of grant; and further
provided that any option shall not be exercisable for more than five (5) years from
the date of grant if such option are granted to certain individual who, upon the date
of grant, owns shares possessing more than ten percent (10%) of the total combined
voting power of all classes of shares of the Company. Subject to the preceding
sentence, the Administrator in its sole discretion shall determine when an option is
to expire.
(j) RSUs
(i) General
The terms and conditions of a grant of RSUs shall be reflected in an award
agreement. No Shares shall be issued at the time a RSU is granted, and the Company
will not be required to set aside funds for the payment of any such award. A
participant shall have no voting rights with respect to any RSU granted hereunder.
To the extent provided in an award agreement, the holder of RSUs shall be entitled
to be credited with dividend equivalent payments (upon the payment by the
Company of dividends on Shares) either in cash or, at the sole discretion of the
Administrator, in Shares having a fair market value equal to the amount of such
dividends (and interest may, at the sole discretion of the Administrator, be credited
on the amount of cash dividend equivalents at a rate and subject to such terms as
provided by the Administrator), which accumulated dividend equivalents (and
interest thereon, if applicable) shall be payable to the participant upon the release of
restrictions on such RSUs, and if such RSUs are forfeited, the participant shall have
no right to such dividend equivalent payments.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 678 ---
(ii) Restrictions on RSUs
RSUs awarded to a participant shall be subject to (a) forfeiture until the
expiration of the Restricted Period and satisfaction of any applicable performance
goals during such period, to the extent provided in the applicable award agreement,
and to the extent such RSUs are forfeited, all rights of the participant to such RSUs
shall terminate without further obligation on the part of the Company and (b) such
other terms and conditions as may be set forth in the applicable award agreement.
(iii) Settlement of RSUs
Upon the expiration of the Restricted Period with respect to any outstanding
RSUs, the Company shall deliver to the Participant, or his or her beneficiary,
without charge, one Share for each outstanding RSU and any dividend equivalent
payments credited to the participant’s account with respect to such RSUs and the
interest thereon, if any; provided, however, that if explicitly provided in the award
agreement, the Administrator may, in its sole discretion, elect to pay part cash or part
cash and part Shares in lieu of delivering only Shares for vested RSUs. If a cash
payment is made in lieu of delivering Shares, the amount of such payment shall be
equal to the fair market value of the Shares as of the date on which the Restricted
Period lapsed.
(k) Restrictions on Transfer
Unless otherwise determined by the Administrator and so provided in the applicable
option agreement, restricted share purchase agreement or share award agreement (or be
amended to provide), no award shall be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner (whether by operation of law or otherwise) other
than certain circumstances stipulated in the Share Incentive Plan. The administrator may
in its sole discretion make an award transferable only under certain conditions.
(l) Change in Control
In the event of a change in control, unless the option agreement, restricted share
purchase agreement or share award agreement provides otherwise, each outstanding
option shall be assumed or an equivalent option shall be substituted by, and each right of
the Company to repurchase, redeem or reacquire Shares upon termination of a purchaser’s
relationship as an employee, Director, or Consultant shall be assigned to, the successor
corporation or a parent or subsidiary of the successor corporation.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 679 ---
Outstanding Awards
(a) Options
As of the date of this Prospectus, our Company had granted outstanding options
under the 2018 Share Incentive Plan to 537 grantees to subscribe for an aggregate of
395,046,975 Class B Ordinary Shares, representing approximately 3.03% of the total
issued share capital immediately after completion of the Global Offering (assuming the
Over-allotment Option is not exercised), among which all options were held by our
employees or former employees including one connected person, and none of the option
was held by Directors, members of senior management, consultants or other connected
persons of the Company. These options were granted with nil consideration between June
2015 and July 2024 with exercise prices ranging from US$0.000025 to US$0.4677. The
exercise period for all the options is a period from the ending of the vesting period to ten
years after the grant date. The vesting periods of the options are one year or four years
from the grant date. As of the date of this Prospectus, 393,619,475 Class B Ordinary
Shares underlying the options have been vested.
We set forth below the details of the outstanding options granted pursuant to the
2018 Share Incentive Plan to our connected persons and other grantees who had been
granted options to subscribe for an aggregated number of 11,000,000 or more Class B
Ordinary Shares as of the date of this Prospectus:
Name of
Grantee
Position held
at our
Company Address
Exercise
Price
Number of
Class B
Ordinary
Shares subject
to the options
granted Dates of Grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering (2)
(US$ per
Share)
Connected Person
Yufeng Zhang
(ࢤ1)
Vice president
and former
Director
2-302, 34-3-3
Xinjiekouwai Street,
Xicheng District
Beijing PRC
from 0.0625
to 0.3777
11,000,000 from April 11,
2017 to
January 15,
2021
4 years 0.08%
Other grantees who had been granted options to subscribe for an aggregated number of 11,000,000 or more Class B Ordinary Shares
Yinan Yu
(ی)
Vice President Room 1312, Building
2, Jindian Garden,
Wenhuiyuan Road,
Haidian District
from
0.000025
to $0.3777
51,771,640 From July 20,
2015 to
January 15,
2021
4 years 0.40%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 680 ---
Name of
Grantee
Position held
at our
Company Address
Exercise
Price
Number of
Class B
Ordinary
Shares subject
to the options
granted Dates of Grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering (2)
(US$ per
Share)
Jian Zhang
(ੵ਄)
Chief
Technical
Expert
Room 802, Building
9, Dahezhuang
Garden, Suzhou
Street
from
0.000025
to $0.3777
22,700,040 From November
1, 2015 to
October 15,
2020
1 year or
4 years
0.17%
Zhitai Zheng
(इ)
Former
Employee
Room 1908, Building
31, Yuzhong West
Lane, Xicheng
District
0.001 20,000,000 October 15,
2019
4 years 0.15%
Lisen Mu
(ጒኇಌ)
Senior
Technical
Expert
Apartment 2B26A,
Chaoting, Wangjing,
Chaoyang District
from
0.000025
to $0.3777
18,851,000 From July 14,
2015 to
January 15,
2021
1 year or 4
years
0.14%
Siyuan Hu
(ధ)
Human
Resources
Director
7th Floor, Building 4,
Fanggu Garden,
Fangzhuang, Fengtai
District
from
0.0000025
to $0.4677
12,611,778 From August 3,
2015 to July
15, 2024
1 year or 4
years
0.10%
Yangjiayi Pan
(ɓ)
Senior
Director of
Investment
and
Financing
Unit 1701, Building 7,
5th North Hive
Road
0.102 11,900,000 April 16, 2018 4 years 0.09%
Total 148,834,458 1.14%
Notes:
(1) Yufeng Zhang served as our Director from May 2020 to March 2024.
(2) Assuming no exercise of the Over-allotment Option.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 681 ---
We set forth below the information on the options granted to the other grantees who
had been granted options to subscribe for an aggregated number of less than 11,000,000
Class B Ordinary Shares as of the date of this Prospectus.
Range of the
number of
Class B
Ordinary
Shares subject
to the options
granted
Total
number of
grantees Exercise Price
Aggregated
number of
Class B
Ordinary
Shares
subject to
the options
granted Dates of grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering
(1)
(US$ per Share)
7,500,000 to
10,999,999
4 0.000025
0.0625
0.102
0.302
0.3777
39,756,507 September 1, 2015
September 14, 2015
October 13, 2015
February 29, 2016
March 10, 2016
February 1, 2017
April 16, 2018
October 15, 2018
October 15, 2020
1 year or
4 years
0.31%
5,000,000 to
7,499,999
5 0.000025
0.0625
0.25
0.3777
30,378,480 August 25, 2015
September 10, 2015
November 23, 2015
March 10, 2016
July 2, 2016
February 1, 2017
July 16, 2018
July 15, 2019
January 15, 2021
1 year or
4 years
0.23%
2,500,000 to
4,999,999
7 0.000025
0.03
0.102
0.302
0.3777
25,775,000 June 11, 2015
December 31, 2015
March 2, 2016
March 25, 2016
May 12, 2016
February 1, 2017
January 15, 2018
April 16, 2018
July 16, 2018
October 15, 2018
July 15, 2019
April 15, 2020
4 years 0.20%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 682 ---
Range of the
number of
Class B
Ordinary
Shares subject
to the options
granted
Total
number of
grantees Exercise Price
Aggregated
number of
Class B
Ordinary
Shares
subject to
the options
granted Dates of grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering
(1)
(US$ per Share)
less than
2,500,000
514 0.000025
0.030000
0.054080
0.062500
0.076500
0.091750
0.102000
0.102490
0.250000
0.302000
0.377700
0.467700
150,302,530 From July 21, 2015
to January 15,
2022
1 year or
4 years
1.15%
Total 530 246,212,517 1.89%
Note:
(1) Assuming no exercise of the Over-allotment Option.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 683 ---
(b) RSUs
As of the date of this Prospectus, our Company had granted outstanding share
awards under the 2018 Share Incentive Plan to 2,527 grantees to subscribe for an
aggregate of 1,049,903,241 Class B Ordinary Shares, representing approximately 8.06%
of the total issued share capital immediately after completion of the Global Offering
(assuming the Over-allotment Option is not exercised), among which all share awards
were held by our employees or former employees including four connected persons, and
none of the share awards were held by other Directors, members of senior management,
consultants or other connected persons of the Company. These share awards were granted
with nominal consideration and the vesting periods of which are one year or four years
from the grant date. As of the date of this Prospectus, 462,651,346 Class B Ordinary
Shares underlying the share awards have been vested. We set forth below details of the
outstanding RSUs granted to seven connected persons and other grantees:
Name of
Grantee
Position held
at our
Company Address
Number of
Class B
Ordinary
Shares
subject to the
share awards
granted Date of Grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering (3)
Dr. Yu Chairman of
the Board,
executive
Director and
chief
executive
officer
Suite 7,
Shangyuanjunting
Olympic Village
Street
Chaoyang District
Beijing
PRC
71,933,093 July 26, 2024 4 years 0.55%
Dr. Huang Executive
Director and
chief
technology
officer
Building 51
No. 11 Anxiang
Road
Konggang Street
Shunyi District
Beijing
PRC
3,610,633 July 26, 2024 4 years 0.03%
Ms. Tao Executive
Director and
chief
operating
officer
Unit 2, Building 4
Tianyuexishan,
No. 9 East
Fengxiu Road
Haidian District
Beijing
PRC
1,564,378 July 26, 2024 4 years 0.01%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 684 ---
Name of
Grantee
Position held
at our
Company Address
Number of
Class B
Ordinary
Shares
subject to the
share awards
granted Date of Grant
Vesting
Period
Approximate
percentage of
shareholding
immediately
following
completion of
the Global
Offering (3)
Liming Chen
(׼)
Executive
Director and
president
Lane 377 Zhuxin
Road Minhang
District Shanghai
PRC
12,339,416 from
December 25,
2021 to
April 25,
2024
1 year or
4 years
0.09%
Ya-Qin Zhang
(ੵԭා)
Independent
non-executive
Director
Ziyuhuafu Chaoyang
District Beijing
PRC
847,236 January 23,
2020
4 years 0.01%
Yufeng Zhang
(ࢤ)
1)
Vice president
and former
Director
2-302, 34-3-3
Xinjiekouwai
Street, Xicheng
District Beijing
PRC
19,174,860 from April 15,
2019 to
July 15, 2024
1 year or
4 years
0.15%
Feng Zhou
(ࢤ)
2)
Former Director Room 401, Unit 4
Block 38
Hushu Xincun
Hangzhou
Zhengjiang
PRC
22,305,190 from April 15,
2020 to
January 15,
2022
1 year or
4 years
0.17%
Subtotal 131,774,806 1.01%
Other grantees – – 918,128,435 from April 5,
2016 to
July 15,
2024
1 year or
4 years
7.05%
Total 1,049,903,241 8.06%
Notes:
1. Yufeng Zhang served as our Director from May 2020 to March 2024.
2. Feng Zhou served as our Director from August 2018 to March 2023.
3. Assuming the Over-allotment Option is not exercised.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 685 ---
Dilution Effect and Impact on Earnings per Share
As of the date of this Prospectus, all Class B Ordinary Shares granted under the 2018
Share Incentive Plan have been issued to employee shareholding platforms set up by our
Company with independent professional trustee companies. Accordingly, there will not be
any dilution effect on the shareholdings of our Shareholders nor any impact on the
earnings per share arising from the full vesting or exercise of the outstanding options and
share awards after Listing.
2. Post-IPO Share Incentive Plan
A summary of the principal terms of the Post-IPO Share Incentive Plan conditionally
approved and adopted in compliance with Chapter 17 of the Listing Rules by an extraordinary
general meeting of our Shareholders on October 8, 2024 is as follows.
(a) Purpose
The purpose of the Post-IPO Share Incentive Plan is to incentivize and reward the Eligible
Participants (as defined below) for their contribution to the Group and to align their interests
with that of our Company so as to encourage them to work towards enhancing the value of our
Company.
(b) Eligible Participants
The Board (which expression shall, for the purpose of this paragraph, include the Board
or such duly authorized person(s) by the Board) may, at its absolute discretion, offer to grant
an option or a share award to subscribe for such number of Class B Ordinary Shares as the
Board may determine to (a) an employee (whether full time or part-time) or a director of our
Company or any of its subsidiaries (the “Eligible Employee(s)”) and (b) a consultant who
provides services to the Group on a continuing and recurring basis in its ordinary and usual
course of business which are material to the long term growth of the Group (“Service
Provider(s)”), and (c) directors and employees of the holding companies, fellow subsidiaries
or associated companies of the Company (together with the Eligible Employees and Service
Providers hereinafter referred as the “Eligible Participant(s)”).
For the avoidance of doubt, Service Providers shall exclude placing agents or financial
advisers providing advisory services for fundraising, mergers or acquisitions, and any
professional service providers such as auditors or valuers.
The eligibility of any Eligible Employees shall be determined by the Board from time to
time on the basis of the Board’s opinion as to, among others, the participant’s individual
performance, time commitment, responsibilities or employment conditions according to the
prevailing market practice and industry standard, the length of engagement with the Group and
the actual or potential contribution to the development and growth of the Group.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 686 ---
The eligibility of any Service Providers shall be determined by the Board from time to
time on the basis of the Board’s opinion as to, among others, their contribution to the
development and growth of the Group, the prevailing market practice and industry standard,
the actual degree of involvement in and/or cooperation with the Group and length of
collaborative relationship the Service Providers has established with the Group, and the amount
of support, assistance, guidance, advice, efforts and contributions the Service Providers has
exerted and given towards the success of the Group, and/or whether the person is regarded as
a valuable consultant of the Group, taking into account the knowledge, experience,
qualification, expertise and reputation of the Service Providers or other relevant factors
(including without limitation technical know-how, market competitiveness, synergy between
him/her and the Group and his/her strategic value).
(c) Maximum number of Shares
(i) Subject to paragraphs (iv) and (v) below, the total number of Class B Ordinary
Shares which may be issued upon exercise of all options and share awards to be
granted under the Post-IPO Share Incentive Plan shall not in aggregate exceed 5.0%
of the total number of Shares in issue (but excluding any treasury shares) on the day
on which trading of the Class B Ordinary Shares commences on the Stock Exchange
(the “Plan Mandate Limit”). Options and share awards lapsed in accordance with the
terms of the Post-IPO Share Incentive Plan will not be counted for the purpose of
calculating the Plan Mandate Limit. The Company may issue new Class B Ordinary
Shares or utilize treasury shares (if any) to satisfy grants of the options and share
awards under the Post-IPO Share Incentive Plan.
(ii) Subject to paragraph (i) above, within the Plan Mandate Limit, the total number of
Class B Ordinary Shares which may be issued upon exercise of all options and share
awards to be granted to Service Providers shall not exceed 1.0% of the total number
of Shares in issue (but excluding any treasury shares) on the day on which trading
of the Class B Ordinary Shares commences on the Stock Exchange (the “Service
Providers Sublimit”).
(iii) Subject to paragraph (iv) below, the Plan Mandate Limit and the Service Providers
Sublimit may be refreshed at any time after three years from the date of
Shareholders’ approval for the last refreshment (or the date on which the Post-IPO
Share Incentive Plan is adopted, as the case may be) by approval of its Shareholders
in general meeting provided that (1) any controlling shareholders and their
associates (or if there is no controlling shareholder, directors (excluding
independent non-executive directors) and the chief executive of our Company and
their respective associates) must abstain from voting in favor of the relevant
resolution at the general meeting; and (2) our Company must comply with the
requirements under Rules 13.39(6), 13.39(7), 13.40, 13.41 and 13.42 of the Listing
Rules. The requirements under (1) and (2) of this paragraph do not apply if the
refreshment is made immediately after an issue of securities by our Company to the
Shareholders on a pro rata basis as set out in Rule 13.36(2)(a) of the Listing Rules
such that the unused part of the plan mandate (as a percentage of Shares in issue)
upon refreshment is the same as the unused part of the plan mandate immediately
before the issue of securities, rounded to the nearest whole Share.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 687 ---
(iv) The total number of Class B Ordinary Shares which may be issued upon exercise of
all options and share awards to be granted under the Post-IPO Share Incentive Plan
and any other plans of our Company under the plan mandate as refreshed must not
exceed 10% of the total number of Shares in issue (but excluding any treasury
shares) as at the date of approval of the refreshed plan mandate.
(v) Without prejudice to paragraph (iv) above, our Company may seek separate
Shareholders’ approval in a general meeting to grant options and/or share awards
beyond the Plan Mandate Limit to participants specifically identified by our
Company before such approval is sought. In such event, our Company must send a
circular to its Shareholders containing a general description of the specified
participants, the number and terms of options and/or share awards to be granted, the
purpose of granting options and/or share awards to the specified participants with an
explanation as to how the terms of the options and/or share awards will serve such
purpose and all other information required under the Listing Rules.
(d) Maximum entitlement of a grantee
Where any grant of options or share awards to a participant would result in the Class B
Ordinary Shares issued and to be issued upon exercise of all options and/or share awards
granted and to be granted to such participant (excluding any options and share awards lapsed
in accordance with the terms of the Post-IPO Share Incentive Plan) in the 12-month period up
to and including the date of such grant representing in aggregate over 1% of the Shares in issue
(but excluding any treasury shares), such grant must be separately approved by the
Shareholders in general meeting with such participant and his/her close associates (or his/her
associates if the participant is a connected person) abstaining from voting. The number and
terms (including the exercise price) of options and/or share awards to be granted to such
participant must be fixed before Shareholders’ approval.
(e) Grant and exercise of options and share awards
The Board or such duly authorized person(s) by the Board may in its absolute discretion
specify such event, time limit or conditions (if any) as it thinks fit when making such offer to
the Eligible Participants, including, without limitation, conditions as to performance criteria
(such as growth rate of revenue, earnings per share and/or total shareholders’ return) to be
satisfied or achieved by the Eligible Participants and/or our Company and/or the Group which
must be satisfied before an option or a share award can be exercised.
An offer of the grant of an option or a share award shall be made to any Eligible
Participants by letter in such form as the Board or such duly authorized person(s) by the Board
may from time to time determine specifying the number of Class B Ordinary Shares, the
vesting period, the subscription price, the option period, the date by which the grant must be
accepted and further requiring the Eligible Participants to hold the option or share award on the
terms on which it is to be granted and to be bound by the provisions of the Post-IPO Share
Incentive Plan. An option or a share award shall be deemed to have been granted and accepted
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-36 –


--- page 688 ---
and to have taken effect when the duplicate letter comprising acceptance of the offer of the
grant of the option or share award duly signed by the grantee together with a payment to our
Company and/or any of its subsidiaries of HK$1 (or the equivalent of HK$1 in the local
currency of any jurisdiction where our Company and/or its subsidiaries operate, as the Board
or such duly authorized person(s) by the Board may in its absolute discretion determine) by
way of consideration for the grant thereof is received by our Company within the time period
specified in the offer of the grant of the option or share award.
An option or a share award shall be personal to the grantee and shall not be assignable
and no grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest
in favor of any third party over or in relation to any option or share award. Any breach of the
foregoing by the grantee shall entitle our Company to cancel any outstanding entitlement of
such grantee.
An option may be exercised in accordance with the terms of the Post-IPO Share Incentive
Plan at any time during a period to be determined and notified by the Board to each grantee,
which period may commence on a day falling at least 12 months after the date upon which the
offer for the grant of options is made but shall end in any event not later than 10 years from
the date on which an option is offered to a participant, subject to the provisions for early
termination under the Post-IPO Share Incentive Plan. The minimum period for which an option
or a share award must be held before it can be vested or exercised (if applicable) shall be 12
months from the date of grant of such option or share award, except that any options or share
awards granted to an Eligible Employee may be subject to a short vesting period, including
where:
(i) grants of “make-whole” options or a share awards to new Eligible Employee(s) to
replace options or share awards such Eligible Participant(s) forfeited when leaving
their previous employers;
(ii) grants to an Eligible Participant whose employment is terminated due to death or
disability or event of force majeure;
(iii) grants of options or share awards which are subject to fulfilment of performance
targets as determined in the conditions of his/her grant;
(iv) grants of options or share awards the timing of which is determined by
administrative or compliance requirements, in which case the vesting date may be
adjusted to take account of the time from which the options or share awards would
have been granted if not for such administrative or compliance requirements;
(v) grants of options or share awards with a mixed vesting schedule such as the options
or share awards vest evenly over a period of 12 months; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-37 –


--- page 689 ---
(vi) grants of options or share awards with a total vesting and holding period of more
than 12 months, such as where the options or share awards may vest by several
batches with the first batch to vest within 12 months of the grant date and the last
batch to vest 12 months after the date of grant of such options or share awards.
(f) Subscription price
The amount payable for each Class B Ordinary Share to be subscribed for under an option
(the “Subscription Price”) in the event of the option being exercised shall be determined by the
Board or such duly authorized person(s) by the Board at its absolute discretion, which shall be
not less than the highest of:
(i) the nominal value of a Class B Ordinary Share;
(ii) the closing price of the Class B Ordinary Shares as stated in the Stock Exchange’s
daily quotations sheet on the date of grant, which must be a business day; and
(iii) the average closing price of the Class B Ordinary Shares as stated in the Stock
Exchange’s daily quotations sheets for the five business days immediately preceding
the date of grant.
The amount payable for each Class B Ordinary Share to be subscribed for under a share
award (the “Purchase Price”) shall be determined by the Board or such duly authorized
person(s) by the Board at its absolute discretion, based on considerations such as the prevailing
closing price of the Class B Ordinary Shares, the purpose of the share award and the
contribution of the Eligible Participant.
(g) Options and share awards granted to connected persons
(i) Any grant of options or share awards to a director, chief executive or substantial
shareholder of the Company, or any of their associates must be approved by the
independent non-executive Director (excluding any independent non-executive
Director who is the grantee of the options or share awards. Any grant of options or
share awards to a director who is a WVR Beneficiary shall subject to prior
recommendation of the Corporate Governance Committee under Rule 8A.30(4) of
the Listing Rules.
(ii) Where any grant of share awards (excluding grant of options) to a director (other
than an independent non-executive Director) or chief executive of the Company, or
any of their associates would result in the shares issued and to be issued in respect
of all share awards granted (excluding any share awards lapsed in accordance with
the terms of the Post-IPO Share Incentive Plan) to such person in the 12-month
period up to and including the date of such grant, representing in aggregate over
0.1% of the total number of Shares in issue (but excluding any treasury shares), such
further grant of share awards must be approved by the Shareholders at a general
meeting of our Company, with voting to be taken by way of poll.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-38 –


--- page 690 ---
(iii) Where any grant of options or share awards to an independent non-executive
Director or a substantial shareholder of our Company or any of their respective
associates would result in the Shares issued and to be issued in respect of all options
and awards granted (excluding any options lapsed in accordance with the terms of
the Post-IPO Share Incentive Plan) under the Post-IPO Share Incentive Plan and any
other plans of our Company to such person in the 12-month period up to and
including the date of such grant representing in aggregate over 0.1% of the total
number of Shares in issue (but excluding any treasury shares), such further grant of
options or share awards must be approved by the Shareholders at a general meeting
of our Company, with voting to be taken by way of poll.
Our Company shall send a circular to the Shareholders containing all information as
required under the Listing Rules in this regard. The grantee, his/her associates and all core
connected persons (as defined in the Listing Rules) of our Company shall abstain from voting
(except where any core connected person intends to vote against the proposed grant and his/her
intention to do so has been stated in the aforesaid circular). Any change in the terms of an
option or a share award granted to a Director, a chief executive, a substantial shareholder of
our Company or an independent non-executive Director or any of their respective associates is
also required to be approved by Shareholders in the aforesaid manner if the initial grant of the
options or share awards requires such approval.
(h) Restriction of grant of options and share awards
No option or share awards shall be offered or granted:
(i) to any Eligible Participant after a price sensitive event has occurred or a price
sensitive matter has been the subject of a decision, until (and including) the trading
day after the relevant price sensitive or inside information has been announced in
accordance with the applicable provisions of law or the Listing Rules;
(ii) to any Eligible Participant during the period commencing one month immediately
before the following (whichever is earlier):
(a) the date of the board meeting (as such date is first notified to the Stock
Exchange in accordance with the Listing Rules) for the approval of our
Company’s annual, quarterly (if any) or half-yearly results; and
(b) the deadline for our Company to publish an announcement of its annual,
quarterly (if any) or half-yearly results;
and ending on the date of the results announcement. No option or share award shall be
granted during any period of delay in the publication of a results announcement;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-39 –


--- page 691 ---
(iii) to any Director (except where the Subscription Price is to be determined by the
Board or such duly authorized person(s) by the Board at the time of exercise of the
option):
(a) during the period of 60 days immediately preceding the publication of the
annual results of our Company or, if shorter, the period from the end of the
relevant financial year up to the publication date of the results; or
(b) during the period of 30 days immediately preceding the publication of the
quarterly (if any) or half-yearly results or, if shorter, the period from the end
of the relevant quarterly or half-year period up to the publication date of the
results.
(i) Lapse of options and share awards
Any option or share award shall elapse automatically and not be exercisable on the
earliest of:
(i) the expiry of the option period or other applicable exercisable periods under the
Post-IPO Share Incentive Plan;
(ii) the expiry of the periods or the occurrence of the relevant event referred to in
paragraphs (l)(i) and (l)(iii) below;
(iii) subject as provide in the Post-IPO Share Incentive Plan, the date of the
commencement of the winding-up of our Company;
(iv) the date on which the grantee commits a breach of relevant clauses that rights are
personal to the grantee; or
(v) the occurrence or non-occurrence of any event, expiry of any period, or non-
satisfaction of any condition, as specified in the letter containing the offer or grant
of the relevant option or share award.
(j) V oting and dividend rights
No grantee shall enjoy any of the rights of a Shareholder (including but not limited to
voting, dividend, transfer rights or any other rights attached to a Class B Ordinary Share) by
virtue of the grant of an option or a share award pursuant to the Post-IPO Share Incentive Plan,
unless and until the registration of the grantee (or such other person as may succeed to the
grantee’s title by operation of applicable laws and in compliance with the terms of the Post-IPO
Share Incentive Plan) as the holder thereof.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-40 –


--- page 692 ---
For the avoidance of doubt, the trustee holding unvested Class B Ordinary Shares under
the Post-IPO Share Incentive Plan, whether directly or indirectly, shall abstain from voting on
matters that require Shareholders’ approval under the Listing Rules, unless otherwise required
by law to vote in accordance with the beneficial owner’s direction and such a direction is given.
(k) Effects of alterations in the capital structure of our Company
In the event of a capitalization issue, rights issue, subdivision or consolidation of Class
B Ordinary Shares or reduction of capital of our Company whilst an option or a share award
remains outstanding, such corresponding adjustment (if any) certified by the auditors for the
time being of or an independent financial adviser to our Company as fair and reasonable will
be made to (a) the number of Class B Ordinary Shares to which the option or the share award
relates, so far as outstanding, and/or (b) the Subscription Price of any outstanding option and
the Purchase Price of any share awards, provided that (i) any such alteration shall give a
grantee the same proportion of the issued share capital (rounded to the nearest whole Class B
Ordinary Share) to which the grantee was entitled prior to such alteration; (ii) any such
adjustments shall be made on the basis that the aggregate Subscription Price and Purchase Price
payable by a grantee on the full exercise of any option or share award shall remain as nearly
as possible the same as it was before such event; and (iii) no adjustment shall be made the
effect of which would be to enable a Class B Ordinary Share to be issued at less than its
nominal value. In addition, in respect of any such adjustments, other than any adjustment made
on a capitalization issue, such auditors or independent financial adviser must confirm to the
Board in writing that the adjustments comply with the relevant provisions of the Listing Rules
(or any guideline or supplementary guideline as may be issued by the Stock Exchange from
time to time).
(l) Rights on ceasing employment, death, or dismissal
(i) If the grantee of an option or a share award is an employee and ceases to be an
employee for any reason other than death, or for serious misconduct or other
grounds referred to in sub-paragraph (iii) below before exercising his/her option or
share award in full, the option or share award (to the extent not already exercised)
will lapse automatically on the date of cessation of his/her employment or
engagement with the Group.
(ii) If the grantee of an option or a share award is an employee and ceases to be an
employee by reason of his/her death, before exercising the option or share award in
full, his/her legal personal representative(s), or, as appropriate, the grantee may
exercise the option or share award (to the extent not already exercised) in whole or
in part within a period of 12 months following the date of death of the grantee.
(iii) If the grantee of an option or a share award is an employee and ceases to be an
employee by reason that he has been guilty of serious misconduct or has committed
any act of bankruptcy or has become insolvent or has made any arrangement or
composition with his/her creditors generally, or has been convicted of any criminal
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-41 –


--- page 693 ---
offense involving his/her integrity or honesty or (if so determined by the Board) on
any other ground on which an employer would be entitled to terminate his/her
employment summarily, his/her option or share award will lapse automatically on
the date of cessation of his/her employment with the Group.
(m) Rights on takeover and plans of compromise or arrangement
If a general or partial offer (whether by way of take-over offer, share repurchase offer or
otherwise in like manner other than by way of a plan of arrangement) is made to all the holders
of Class B Ordinary Shares (or all such holders other than the offeror and/or any person
controlled by the offeror and/or any person acting in association or in concert with the offeror)
our Company shall use its best endeavors to procure that such offer is extended to all the
grantees (on the same terms mutatis mutandis, and assuming that they will become, by the
exercise in full of the options and/or share awards granted to them, Shareholders of our
Company). If such offer becomes or is declared unconditional, the grantee (or his/her legal
personal representative(s)) shall be entitled to exercise the grantee’s outstanding entitlement in
full at any time within 14 days after the date on which such general offer becomes or is
declared unconditional.
(n) Rights on a voluntary winding-up
In the event of an effective resolution being passed for the voluntary winding-up of our
Company or an order of the court being made for the winding-up of our Company, notice
thereof shall be given by our Company to grantees with options and/or share awards
outstanding in full or in part at such date. If a grantee immediately prior to such event had any
outstanding entitlement, the grantee (or his legal personal representative(s)) may by notice in
writing to our Company within 21 days after the date of such resolution elect to be treated as
if the entitlement had been exercised immediately before the passing of such resolution either
to its full extent or to the extent specified in the notice, such notice to be accompanied by a
remittance for the full amount of the aggregate Subscription Price or Purchase Price for the
Class B Ordinary Shares in respect of which the notice is given, whereupon the grantee shall
be duly transferred with the relevant Class B Ordinary Shares (or treated as such by our
Company) and entitled to receive out of the assets available in the liquidation pari passu with
the holders of Class B Ordinary Shares such sum as would have been received in respect of the
Shares that are the subject of such election.
(o) Ranking of Shares
The Class B Ordinary Shares underlying the options and the share awards to be allotted
and issued, or transferred (in the case of any treasury shares), will be subject to all the
provisions of the Articles of Association of our Company for the time being in force and will
rank pari passu with the fully paid Class B Ordinary Shares in issue on the date on which such
Class B Ordinary Shares are registered in the name of the Eligible Participants on the
Company’s register of members and accordingly will entitle the holders to participate in all
dividends and other distributions paid or made on or after the date on which such Class B
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-42 –


--- page 694 ---
Ordinary Shares are registered in the name of the Eligible Participants on the Company’s
register of members other than any dividend or other distribution previously declared or
recommended or resolved to be paid or made if the record date therefor falls before the date
of such transfer.
(p) Duration
The Post-IPO Share Incentive Plan shall be valid and effective for a period of 10 years
commencing on the date when the Post-IPO Share Incentive Plan becomes unconditional, after
which period no further options or share awards will be granted by the provisions of the
Post-IPO Share Incentive Plan, but the provisions of the Post-IPO Share Incentive Plan shall
remain in full force and effect to the extent necessary to give effect to the exercise of any
options or share awards granted prior thereto or otherwise as may be required in accordance
with the provisions of the Post-IPO Share Incentive Plan.
(q) Alteration of the Plan
The Board may subject to the rules of the Post-IPO Share Incentive Plan amend any of
the provisions of the Post-IPO Share Incentive Plan at any time (but not so as to affect
adversely any rights which have accrued to any grantee at that date).
Any alterations to the terms and conditions of the Post-IPO Share Incentive Plan which
are of a material nature, and any change to the terms of any options or share awards granted
to the advantage of Eligible Participants, shall be subject to the approval of the Shareholders
in general meeting and, where required under the Listing Rules, the Stock Exchange.
Any change to the terms of options or share awards granted to an Eligible Participant
must be approved by the Board, the remuneration committee, the independent non-executive
Directors and/or the Shareholders (as the case may be) if the initial grant of the options or share
awards was approved by the Board, the remuneration committee, the independent non-
executive Directors and/or the Shareholders (as the case may be). Such requirement does not
apply where the alterations take effect automatically under the existing terms of the Post-IPO
Share Incentive Plan.
(r) Cancelation of options and share awards
Any cancelation of options or share awards granted may be effected on such terms as may
be agreed with the relevant grantee, as the Board may in its absolute discretion sees fit and in
a manner that complies with all applicable legal requirements for such cancelation. Where our
Company cancels options and/or share awards granted to a participant and makes a new grant
to the same participant, such new grant may only be made under the Post-IPO Share Share
Incentive Plan with available Plan Mandate Limit approved by the Shareholders. The options
or share awards canceled will be regarded as utilized for the purpose of calculating the Plan
Mandate Limit.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-43 –


--- page 695 ---
(s) Clawback
The Board may, at its absolute discretion, determine such malus and/or clawback
provisions to be applied to an option and a share award or an offer of grant so as to provide,
upon the occurrence of the applicable malus and/or clawback event(s) such as serious
misconduct, a material misstatement in our Company’s financial statements and fraud. If the
Board exercises its discretion under this paragraph, it will give the relevant grantee written
notice of such determination and the Board’s interpretation of and determination pursuant to
this paragraph shall be final, conclusive and binding.
(t) Termination
Our Company by resolution in general meeting or the Board may at any time terminate
the operation of the Post-IPO Share Incentive Plan and in such event no further options or share
awards will be offered but the provisions of the Post-IPO Share Incentive Plan shall remain in
full force in all other respects. All options and share awards granted prior to such termination
shall continue to be valid and exercisable in accordance with the terms of the Post-IPO Share
Incentive Plan.
(u) V alue of option and share awards
Our Directors consider it inappropriate to disclose the value of options and/or share
awards which may be granted under the Post-IPO Share Incentive Plan as if they had been
granted as of the Latest Practicable Date. Any such valuation will have to be made on the basis
of a certain option and/or share awards pricing model or other method that depends on various
assumptions including the exercise price, the exercise period, interest rate, expected volatility
and other variables. As no options or share awards have been granted, certain variables are not
available for calculating the value of options or share awards. Our Directors believe that any
calculation of the value of options and share awards granted as of the Latest Practicable Date
would be based on a number of speculative assumptions that are not meaningful and would be
misleading to investors.
(v) General
As of the Latest Practicable Date, no options or share awards had been granted or agreed
to be granted under the Post-IPO Share Incentive Plan.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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E. OTHER INFORMATION
1. Litigation
As of the Latest Practicable Date, we are not aware of any other litigation or arbitration
proceedings of material importance pending or threatened against us or any of our Directors
that could have a material adverse effect on our financial condition or results of operations.
2. No Material Adverse Change
The Directors confirm that there has been no material change in the financial or trading
position or prospects of our Group since June 30, 2024 (being the date to which the latest
audited consolidated financial statements of our Group were prepared) and up to the date of
this Prospectus.
3. The Joint Sponsors and Joint Sponsors’ fees
The Joint Sponsors are independent from our Company pursuant to Rule 3A.07 of the
Listing Rules. The fee payable by our Company to the Joint Sponsors to act as sponsor to our
Company in connection with the Global Offering is US$500,000 each.
4. Preliminary expenses
We have not incurred any material preliminary expenses.
5. Promoter
Our Company has no promoter for the purpose of the Listing Rules.
6. Qualification of Experts
The following are the qualifications of the experts who have given opinion or advice
which are contained in this Prospectus:
Name Qualification
Goldman Sachs (Asia) L.L.C. /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A licensed corporation to conduct Type 1
(dealing in securities), Type 4 (advising
on securities), Type 5 (advising on
futures contracts), Type 6 (advising on
corporate finance) and Type 9 (asset
management) regulated activities under
the SFO
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Name Qualification
Morgan Stanley Asia Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118A licensed corporation to conduct Type 1
(dealing in securities), Type 4 (advising
on securities), Type 5 (advising on
futures contracts), Type 6 (advising on
corporate finance) and Type 9 (asset
management) regulated activities under
the SFO
China Securities (International) Corporate
Finance Company Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
A licensed corporation to conduct Type 1
(dealing in securities) and Type 6
(advising on corporate finance) regulated
activities under the SFO
King & Wood Mallesons /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Legal adviser to our Company as to PRC
laws
Maples and Calder (Hong Kong) LLP /H1118/H1118/H1118Legal adviser to our Company as to
Cayman Islands laws
PricewaterhouseCoopers /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118Certified Public Accountants under
Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong)
and Registered Public Interest Entity
Auditor under Accounting and Financial
Reporting Council Ordinance (Chapter
588 of the Laws of Hong Kong)
China Insights Industry Consultancy
Limited /H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118/H1118
Industry consultant
7. Consent of Experts
Each of the experts named above has given and has not withdrawn its respective written
consent to the issue of this Prospectus with the inclusion of its report and/or letter and/or
opinion and/or the references to its name included in this Prospectus in the form and context
in which it is respectively included.
8. Binding Effect
This Prospectus shall have the effect, if an application is made in pursuance of this
Prospectus, of rendering all persons concerned bound by all of the provisions (other than the
penal provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance insofar as applicable.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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9. Bilingual prospectus
The English and Chinese language versions of this Prospectus are being published
separately in reliance upon the exemption provided by section 4 of the Companies (Exemption
Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the
Laws of Hong Kong).
F. MISCELLANEOUS
Save as otherwise disclosed in this Prospectus:
(a) within the two years preceding the date of this Prospectus: (i) we have not issued nor
agreed to issue any share or loan capital fully or partly paid either for cash or for
a consideration other than cash; and (ii) no commissions, discounts, brokerage fee
or other special terms have been granted in connection with the issue or sale of any
shares of our Company;
(b) no share or loan capital of our Company is under option or is agreed conditionally
or unconditionally to be put under option;
(c) we have not issued nor agreed to issue any founder shares, management shares or
deferred shares;
(d) there are no arrangements under which future dividends are waived or agreed to be
waived;
(e) there are no contracts for hire or hire purchase of plant to or by us for a period of
over one year which are substantial in relation to our business;
(f) there have been no interruptions in our business which may have or have had a
significant effect on our financial position in the last 12 months;
(g) there are no restrictions affecting the remittance of profits or repatriation of capital
by us into Hong Kong from outside Hong Kong; and
(h) no part of the equity or debt securities of our Company, if any, is currently listed on
or dealt in on any stock exchange or trading system, and no such listing or
permission to list on any stock exchange other than the Hong Kong Stock Exchange
is currently being or agreed to be sought.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to the copy of this Prospectus delivered to the Registrar of
Companies in Hong Kong for registration were, among other documents:
(a) the written consents referred to in the section headed “Statutory and General
Information — E. Other Information — 7. Consent of Experts” in Appendix IV to
this Prospectus; and
(b) a copy of each of the material contracts referred to in the section headed “Statutory
and General Information — B. Further Information about our business — 1.
Summary of Material Contracts” in Appendix IV to this Prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be available on display on the Company’s website
(https://www.horizon.auto ) and the Stock Exchange’s website ( https://www.hkexnews.hk )
up to and including the date which is 14 days from the date of this Prospectus:
(a) the Memorandum and Articles of Association of our Company;
(b) the audited consolidated financial statements of our Company for the three financial
years ended December 31, 2021, 2022 and 2023 and the six months ended June 30,
2024;
(c) the Accountant’s Report from PricewaterhouseCoopers, the text of which is set out
in Appendix I to this Prospectus;
(d) the report on the unaudited pro forma financial information from
PricewaterhouseCoopers, the text of which is set out in Appendix II to this
Prospectus;
(e) the legal opinion issued by King & Wood Mallesons, our PRC Legal Adviser in
respect of general matters and property interests of our Group in the PRC;
(f) the letter of advice from Maples and Calder (Hong Kong) LLP, our legal adviser as
to the laws of the Cayman Islands, summarizing certain aspects of the Cayman
Companies Act referred to in Appendix III to this Prospectus;
(g) the report issued by China Insights Industry Consultancy Limited, a summary of
which is set forth in the section headed “Industry Overview”;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND A V AILABLE ON DISPLAY
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(h) the material contracts referred to in the section entitled “Statutory And General
Information — B. Further Information about Our Business — 1. Summary of
Material Contracts” in Appendix IV to this Prospectus;
(i) the written consents referred to in the section entitled “Statutory and general
information — E. Other Information — 7. Consent of Experts” in Appendix IV to
this Prospectus;
(j) the service contracts and the letters of appointment with our Directors referred to in
the section headed “Statutory and General Information — C. Further Information
about Our Directors and Substantial Shareholders — 2. Particulars of Service
Contracts” in Appendix IV to this Prospectus;
(k) the terms of the Share Incentive Plans; and
(l) the Cayman Companies Act.
DOCUMENT A V AILABLE FOR INSPECTION
A copy of a list of grantees under the 2018 Share Incentive Plan, containing all details as
required under the Listing Rules and the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, will be available for inspection at the office of Davis Polk & Wardwell
at 10/F, The Hong Kong Club Building, 3A Chater Road, Central, Hong Kong during normal
business hours up to and including the date which is 14 days from the date of this Prospectus.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND A V AILABLE ON DISPLAY
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Horizon Robotics
