UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report _______________________
For the transition period from _________________ to _______________________
Commission file number
(Exact Name of Registrant as Specified in Its Charter)
N/A
(Translation of Registrant’s Name into English)
(Jurisdiction of Incorporation or Organization)
1
(Address of Principal Executive Offices)
Chief Executive Officer
2
Phone:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| 4 | ||||
| * |
| * | Not for trading, but only in connection with the listing on the Nasdaq Capital Market of American depository shares, each representing one Class A ordinary share |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
| 1 | Our principal executive offices have been relocated to this address since the submission of our annual report on Form 20-F for the year ended December 31, 2023, originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on April 19, 2024 (the “Original 2023 Form 20-F”). |
| 2 | The address of our company contact person has been changed to this location since the submission of the Original 2023 Form 20-F. |
| 3 | Following the submission of the Original 2023 Form 20-F, we effected a share consolidation on August 12, 2024, consolidating every 5,625 ordinary shares of a par value US$0.0000001 per share of our company into one ordinary share of a par value US$0.0005625 per share. As a result of this share consolidation, each American depositary share now represent one Class A ordinary share of our company, par value US$0.0005625 per share. For detailed information, please refer to our current reports on Form 6-K furnished to the Commission on July 11 and July 31, 2024. |
| 4 | Following the submission of the Original 2023 Form 20-F and on June 13, 2024, the listing of ADSs representing our Class A ordinary shares was transferred from The Nasdaq Global Market to The Nasdaq Capital Market. |
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
As of December 31, 2023,
there were (i)
Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
If this report is an
annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.Yes ☐
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark
whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | |
| Accelerated filer ☐ | Emerging growth company |
If an emerging growth
company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not
to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to
Section 13(a) of the Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark
whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report.
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ | Other ☐ |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
TABLE OF CONTENTS
| Page | ||
| EXPLANATORY NOTE | 1 | |
| ITEM 18. FINANCIAL STATEMENTS | 2 | |
| ITEM 19. EXHIBITS | 2 | |
| SIGNATURES | 5 |
i
EXPLANATORY NOTE
This Amendment No. 1 (“Amendment No. 1”) to our annual report on Form 20-F for the year ended December 31, 2023 originally filed with the U.S. Securities and Exchange Commission on April 19, 2024 (the “Original 2023 Form 20-F”) is being filed solely to remove the language of “and in accordance with auditing standards generally accepted in the United States of America” from the fourth paragraph on page F-2 of the Report of Independent Registered Public Accounting Firm issued by Audit Alliance LLP.
As required by Rule 12b-15 of the Securities and Exchange Act of 1934, as amended, we are also filing as exhibits to Amendment No. 1 the certifications required under Section 302 of the Sarbanes-Oxley Act of 2002.
Other than the matters described above, this Amendment No. 1 does not amend or modify any information included in any of the disclosure presented in the Original 2023 Form 20-F.
The Original 2023 Form 20-F, as amended by this Amendment No. 1, speaks as of the original filing date of the Original 2023 Form 20-F and does not reflect events that may have occurred subsequent to the original filing date of the Original 2023 Form 20-F.
1
ITEM 18. FINANCIAL STATEMENTS
Our consolidated financial statements are included at the end of this annual report.
ITEM 19. EXHIBITS
2
3
| * | Filed herewith |
| ** | Previously filed or furnished with the Original 2023 Form 20-F |
4
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 1 to its annual report on its behalf.
| Fangdd Network Group Ltd. | ||
| By: | /s/ Xi Zeng | |
| Name: | Xi Zeng | |
| Title: | Chief Executive Officer | |
Date: September 13, 2024
5
FANGDD NETWORK GROUP LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors of
Fangdd Network Group Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Fangdd Network Group Ltd. (the “Company”) and its subsidiaries (the “Group”) as of December 31, 2022 and 2023, the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders’ equity, and cash flows for each of the years ended December 31, 2021, 2022 and 2023, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2022 and 2023, and the results of its operations and its cash flows for each of the years ended December 31, 2021, 2022 and 2023, in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern. As discussed in Note 2(b) to the consolidated financial statements, the Group has suffered recurring losses from operations during the years ended December 31, 2022 and 2023 and negative cash flows from operating activities for each of the years ended December 31, 2021, 2022 and 2023, that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2(b). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Group is not required to have, nor we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ | |
| April 19, 2024 |
PCAOB ID Number:
We have served as the Group’s auditor since 2022.
F-2
Fangdd Network Group Ltd.
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data)
| As of December 31, | ||||||||||||
| 2022 | 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Unaudited | ||||||||||||
| (Note 2(g)) | ||||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Short-term investments | ||||||||||||
| Accounts receivable, net | ||||||||||||
| Prepayments and other assets, net | ||||||||||||
| Inventories | ||||||||||||
| Total current assets | ||||||||||||
| Non-current assets | ||||||||||||
| Property, equipment and software, net | ||||||||||||
| Equity method investments, net | ||||||||||||
| Long-term equity investment, net | ||||||||||||
| Goodwill, net | ||||||||||||
| Right-of-use assets | ||||||||||||
| Other non-current assets | ||||||||||||
| Total non-current assets | ||||||||||||
| Total assets | ||||||||||||
| Liabilities | ||||||||||||
| Current liabilities | ||||||||||||
| Short-term bank borrowings (including short-term bank borrowings of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Accounts payable (including accounts payable of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Customers’ refundable fees (including customers’ refundable fees of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Accrued expenses and other payables (including accrued expenses and other payables of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Income tax payables (including income tax payables of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Lease liabilities-current (including lease liabilities-current of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Total current liabilities | ||||||||||||
| Non-current liabilities | ||||||||||||
| Income tax payables (including income tax payables of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Lease liabilities (including lease liabilities of consolidated VIE without recourse to the Company of RMB | ||||||||||||
| Total non-current liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Commitments and contingencies (Note 23) | ||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-3
Fangdd Network Group Ltd.
CONSOLIDATED BALANCE SHEETS (Continued)
(All amounts in thousands, except for share and per share data)
| As of December 31, | ||||||||||||
| 2022 | 2023 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Unaudited | ||||||||||||
| (Note 2(g)) | ||||||||||||
| Shareholders’ Equity: | ||||||||||||
| Class A Ordinary shares (US$ | ||||||||||||
| Class B Ordinary shares (US$ | ||||||||||||
| Class C Ordinary shares (US$ | ||||||||||||
| Additional paid-in capital | ||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||
| Total Fangdd Network Group Ltd. shareholders’ equity | ||||||||||||
| Noncontrolling interests | ( | ) | ( | ) | ( | ) | ||||||
| Total shareholders’ equity | ||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-4
Fangdd Network Group Ltd.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Unaudited | ||||||||||||||||
| (Note 2(g)) | ||||||||||||||||
| Revenue | ||||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Product development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign currency exchange (loss) gain, net | ( | ) | ||||||||||||||
| Gain (Loss) on short-term investments | ) | ( | ) | |||||||||||||
| Impairment loss for long-term equity investment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment loss for equity method investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment loss for non-current assets | ( | ) | ( | ) | ||||||||||||
| Goodwill impairment | ( | ) | ( | ) | ( | ) | ||||||||||
| Government grants | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Share of (loss) profit from equity method investees, net of income tax | ( | ) | ( | ) | ||||||||||||
| Gain on subsidiaries written off | ||||||||||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (expense) benefit | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss (income) attributable to noncontrolling interests | ( | ) | ||||||||||||||
| Net loss attributable to Fangdd Network Group Ltd. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive (loss) income | ||||||||||||||||
| Foreign currency translation adjustment, net of tax | ( | ) | ( | ) | ( | ) | ||||||||||
| Total comprehensive loss, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive loss (income) attributable to noncontrolling interests | ( | ) | ||||||||||||||
| Total comprehensive loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share attributable to ordinary shareholders - | ||||||||||||||||
| ( | ) | ( | ) | ( | ) | ( | ) | |||||||||
| Weighted average number of ordinary shares outstanding used in computing net loss per share - | ||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-5
Fangdd Network Group Ltd.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY
(All amounts in thousands, except for share and per share data)
| Class
A Ordinary shares | Class
B Ordinary shares | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Total
shareholders’ equity attributable to Fangdd Network Group Limited | Noncontrolling interests | Total shareholders’ equity | |||||||||||||||||||||||||||||||||
| Shares | RMB | Shares | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||
| Balance as of January 1, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss for the year | — | — | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Exercise of share options under share- based compensation | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | ||||||||||||||||||||||||||||||||||||||
| Acquisition of additional interests in subsidiaries | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||
| Capital contribution from noncontrolling shareholder | — | — | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments, net of tax | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance as of December 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||
| Total shareholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||
| equity attributable | ||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Ordinary | Class B Ordinary | Class C Ordinary | Additional paid-in | Accumulated other comprehensive | Accumulated | to Fangdd Network Group | Noncontrolling | Total shareholders’ | ||||||||||||||||||||||||||||||||||||||||
| shares | shares | shares | capital | loss | deficit | Limited | interests | equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | RMB | Shares | RMB | Shares | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income for the year | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Exercise of share options under share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of a subsidiary with noncontrolling interests (Note 22) | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
| Capital contribution from noncontrolling shareholder | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Disposal of a subsidiary | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments, net of tax | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
F-6
Fangdd Network Group Ltd.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
(All amounts in thousands, except for share and per share data)
| Total shareholders’ | ||||||||||||||||||||||||||||||||||||||||||||||||
| equity attributable | ||||||||||||||||||||||||||||||||||||||||||||||||
| Class A Ordinary | Class B Ordinary | Class C Ordinary | Additional paid-in | Accumulated other comprehensive | Accumulated | to Fangdd Network Group | Noncontrolling | Total shareholders’ | ||||||||||||||||||||||||||||||||||||||||
| shares | shares | shares | capital | loss | deficit | Limited | interests | equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | RMB | Shares | RMB | Shares | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net (loss) income for the year | — | — | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Exercise of share options under share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Capital contribution from noncontrolling shareholder | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Subsidiaries written off | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of ordinary shares | — | |||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of class B ordinary
shares to class A ordinary shares | ( | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of convertible promissory note | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Conversion of convertible promissory note | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments, net of tax | — | — | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| US$ Unaudited (Note 2(g)) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-7
Fangdd Network Group Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Unaudited | ||||||||||||||||
| (Note 2(g)) | ||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Amortization of right-of-use assets | ||||||||||||||||
| Share-based compensation expenses | ||||||||||||||||
| (Gain) Loss on short-term investments | ( | ) | ( | ) | ||||||||||||
| Impairment loss for non-current assets | ||||||||||||||||
| Goodwill impairment | ||||||||||||||||
| Impairment loss for long-term equity investment | ||||||||||||||||
| Impairment loss for equity method investments | ||||||||||||||||
| Impairment on short-term investments | ||||||||||||||||
| Share of loss (profit) from equity method investments, net of income tax | ) | ( | ) | |||||||||||||
| Allowance (Reversal of allowance) for doubtful accounts | ( | ) | ||||||||||||||
| Loss on disposal of property, equipment and software | ||||||||||||||||
| Foreign currency exchange loss (gain), net | ( | ) | ( | ) | ( | ) | ||||||||||
| Deferred income tax expenses | ||||||||||||||||
| Gain on subsidiaries written off | ( | ) | ( | ) | ||||||||||||
| Changes in operating assets and liabilities, net of effects of acquisition | ||||||||||||||||
| Accounts receivable | ||||||||||||||||
| Prepayments and other assets | ( | ) | ( | ) | ||||||||||||
| Other non-current assets | ( | ) | ) | |||||||||||||
| Accounts payable | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Customers’ refundable fees | ( | ) | ( | ) | ||||||||||||
| Accrued expenses and other payables | ( | ) | ( | ) | ( | ) | ) | |||||||||
| Lease liabilities | ( | ) | ( | ) | ( | ) | ||||||||||
| Income tax payables | ( | ) | ( | ) | ||||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchase of property, equipment and software | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of property, equipment and software | * | * | ||||||||||||||
| Investment in equity method investments | ( | ) | ( | ) | ||||||||||||
| Return of capital from equity method investees | ||||||||||||||||
| Cash paid for business combination, net of cash acquired | ( | ) | ||||||||||||||
| Cash paid for short-term investments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Proceeds from disposal of short-term investments | ||||||||||||||||
| Net cash (used in) provided by investing activities | ( | ) | ( | ) | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from issuance of ordinary shares, net of issuance costs | ||||||||||||||||
| Proceeds from issuance of convertible promissory note, net of issuance costs | ||||||||||||||||
| Contribution from noncontrolling shareholder | ||||||||||||||||
| Cash proceeds from short-term bank borrowings | ||||||||||||||||
| Repayment for short-term bank borrowings | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ( | ) | ||||||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ( | ) | ( | ) | ||||||||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| * |
F-8
Fangdd Network Group Ltd.
CONSOLIDATED STATEMENTS OF CASHFLOWS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||
| RMB | RMB | RMB | US$ | |||||||||||||
| Unaudited | ||||||||||||||||
| (Note 2(g)) | ||||||||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the year | ||||||||||||||||
| Cash, cash equivalents and restricted cash at the end of the year | ||||||||||||||||
| Cash, cash equivalents and restricted cash | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Restricted cash | ||||||||||||||||
| Cash, cash equivalents and restricted cash at the end of the year | ||||||||||||||||
| Supplemental disclosures of cash flow information | ||||||||||||||||
| Interest paid | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax paid | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Cash paid for amounts include in lease liabilities | ( |
) | ( |
) | ( |
) | ||||||||||
| Supplemental disclosure of non-cash investing and financing activities | ||||||||||||||||
| Lease liabilities arising from obtaining right-of-use assets | ||||||||||||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
F-9
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities |
Fangdd Network Group Ltd. (the “Company”) was incorporated in the Cayman Islands on September 19, 2013 as an exempted company with limited liability under the Companies Law (2011 Revision) (as consolidated and revised) of the Cayman Islands. The registered office of the Company is at the offices of Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, P.O. Box 1350, Grand Cayman KY1-1108, Cayman Islands.
The Company is an investment holding company. The Company, through its consolidated subsidiaries, variables interest entity and variables interest entity’s subsidiaries (together, “the Group”) is principally engaged in the provision of real estate information services through its online platform which also offers integrated marketing services for individual customers, real estate developers and agents in the People’s Republic of China (the “PRC”).
The accompanying Consolidated Financial Statements include the financial statements of the Company, its subsidiaries, variable interest entity (“VIE”) and the VIE’s subsidiaries.
Variable interest entity
The Group conducts the business in the PRC through Shenzhen Fangdd Network Technology Co. Ltd. (“Shenzhen Fangdd”), a limited liability company established under the laws of the PRC on October 10, 2011. Shenzhen Fangdd holds the necessary PRC operating licenses for the real estate agency and online business. The equity interests of Shenzhen Fangdd are legally held by individuals who act as nominee equity holders of Shenzhen Fangdd on behalf of Shenzhen Fangdd Information Technology Co. Ltd. (“Fangdd Information”). Shenzhen Fangdd entered into a series of contractual agreements with its legal shareholders and Fangdd Information, including the Business Operation Agreement, Powers of Attorney, Equity Interest Pledge Agreements, Exclusive Option Agreements, Operation Maintenance Service Agreement and Technology Development and Application Service Agreement (collectively, the “Shenzhen Fangdd VIE Agreements”) in March 2014 and were subsequently amended in 2017 and 2023 to reflect the registration of the Equity Interest Pledge Agreements with the relevant registration authority and amended when certain nominee equity holders transferred their nominal shareholdings in Shenzhen Fangdd to other nominee equity holders.
Pursuant to the Shenzhen Fangdd VIE Agreements, the Group, through Fangdd Information, is able to exercise effective control over, bears the risks of, enjoys substantially all of the economic benefits of Shenzhen Fangdd, and has an exclusive option to purchase all or part of the equity interests in Shenzhen Fangdd when and to the extent permitted by PRC law at a nominal price. The Company’s management concluded that Shenzhen Fangdd is a consolidated VIE of the Group and Fangdd Information is the primary beneficiary of Shenzhen Fangdd. As such, the financial results of Shenzhen Fangdd and its subsidiaries are included in the Consolidated Financial Statements of the Company.
The principal terms of the agreements entered into among Shenzhen Fangdd, the nominee equity holders and Fangdd Information are further described below.
| ● | Business Operation Agreement |
Fangdd Information, Shenzhen Fangdd and Shenzhen Fangdd’s shareholders have entered into a business operation agreement, pursuant to which Shenzhen Fangdd and its shareholders undertake not to enter into any transactions that may have material effects on Shenzhen Fangdd’s assets, obligations, rights or business operations without Fangdd Information’s prior written consent.
F-10
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Additionally, Shenzhen Fangdd’s shareholders undertake that, without the Fangdd Information’s prior written consent, they shall not (a) sell, transfer, pledge or otherwise dispose of any rights associated with their equity interests in Shenzhen Fangdd, approve any merger or acquisition of Shenzhen Fangdd, (c) take any actions that may have a material adverse effect on Shenzhen Fangdd’s assets, businesses and liabilities, or sell, transfer, pledge or otherwise dispose or impose other encumbrances of any assets, businesses or income of Shenzhen Fangdd, (d) request Shenzhen Fangdd to declare dividend or make other distribution, (e) amend Shenzhen Fangdd’s articles of association, (f) increase, decrease or otherwise change Shenzhen Fangdd’s registered capital. Fangdd Information may request Shenzhen Fangdd to transfer at any time all the intellectual property rights held by Shenzhen Fangdd to Fangdd Information or any person designated by Fangdd Information. Shenzhen Fangdd and certain of its shareholders, including Yi Duan and Xi Zeng, shall be jointly and severally responsible for the performance of their obligations under this agreement. This agreement has a initial term of ten years, and the term has been extended by a supplementary agreement dated November 20, 2023 to November 19, 2033. The term may be further extended upon Fangdd Information’s unilateral written confirmation prior to the expiry. Shenzhen Fangdd has no right of transfer without Fangdd information’s written confirmation or right of early termination while Fangdd Information may unilaterally transfer its rights and obligations under this agreement to third parties at any time through written notification and may early terminate this agreement via a 30-day prior written notice.
| ● | Powers of Attorney |
Each of the shareholders of Shenzhen Fangdd has issued a power of attorney, irrevocably appointing Mr. Xi Zeng, a director of Fangdd Information, as such shareholder’s attorney-in-fact to exercise all shareholder rights, including, but not limited to, the right to call shareholders’ meeting, the right to vote on all matters of Shenzhen Fangdd that require shareholders’ approval, and the right to dispose of all or part of the shareholder’s equity interest in Shenzhen Fangdd, on behalf of such shareholder. The foregoing authorization is conditioned upon Mr. Xi Zeng’s continuing directorship at Fangdd Information and Fangdd Information’s written consent to such authorization. In the event that Mr. Xi Zeng ceases to serve as a director of Fangdd Information or that Fangdd Information requests the shareholders to terminate the authorization in writing, the power of attorney will terminate immediately and the shareholder shall then appoint any person designated by Fangdd Information as his or her attorney-in-fact to exercise all shareholder rights. Other than the foregoing circumstances, the power of attorney will remain in force until the termination of the business operation agreement and during its effective term, shall not be amended or terminated without consent of Fangdd Information.
| ● | Equity Interest Pledge Agreements |
Each of the shareholders of Shenzhen Fangdd has entered into an equity interest pledge agreement with Fangdd Information and Shenzhen Fangdd, pursuant to which, the shareholders have pledged all of his or her equity interest in Shenzhen Fangdd to Fangdd Information to guarantee the performance by Shenzhen Fangdd and its shareholders of their obligations under the main contracts, which include technology development and application service agreement, the operation maintenance service agreement, the business operation agreement and the exclusive option agreements. Each shareholder of Shenzhen Fangdd agrees that, during the term of the equity interest pledge agreement, he or she will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests without the prior written consent of Fangdd Information. The equity interest pledge agreements remain effective until Shenzhen Fangdd and its shareholders discharge all of their obligations under the main contracts. The Company has registered the equity pledge with the local branches of the Administration for Market Regulation in accordance with the PRC Property Rights Law.
F-11
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| ● | Exclusive Option Agreements |
Fangdd Information, Shenzhen Fangdd and each of the Shenzhen Fangdd’s shareholders have entered into an exclusive option agreement, pursuant to which each of the Shenzhen Fangdd’s shareholders has irrevocably granted Fangdd Information an exclusive option, to the extent permitted by PRC law, to purchase, or have its designated person or persons to purchase, at its discretion all or part of the shareholder’s equity interests in Shenzhen Fangdd or all or part of Shenzhen Fangdd’s assets. The purchase price shall be a nominal price unless where PRC laws and regulations require valuation of the equity interests or the assets, or promulgates other restrictions on the purchase price, or otherwise prohibits purchasing the equity interests or the assets at a nominal price. If the PRC laws and regulations prohibit purchasing the equity interests or the assets at a nominal price, the purchase price shall be equal to the original investment of the equity interests made by such shareholders or the book value of the assets. Where PRC laws and regulations require valuation of the equity interests or the assets or promulgates other restrictions on the purchase price, the purchase price shall be the minimum price permitted under PRC laws and regulations. However, if the minimum price permitted under PRC laws and regulations exceed the original investment of the equity interests or the book value of the assets, Shenzhen Fangdd’s shareholders shall return Fangdd Information the exceeded amount after deducting all taxes and fees paid under PRC laws and regulations. The shareholders of Shenzhen Fangdd undertake, among other things, that they shall not take any actions that may have material effects on Shenzhen Fangdd’s assets, businesses and liabilities, nor shall they appoint or replace any directors, supervisors and officers of Shenzhen Fangdd without Fangdd Information’s prior written consent. These agreements have an initial term of ten years, and the term has been extended by supplementary agreements to November 19, 2033. The term may be extended upon the WFOE’s written confirmation prior to the expiry.
| ● | Operation Maintenance Service Agreement |
Fangdd Information and Shenzhen Fangdd have entered into an operation maintenance service agreement, pursuant to which Fangdd Information has the exclusive right to provide Shenzhen Fangdd with operation maintenance services and marketing services. Without Fangdd Information’s written consent, Shenzhen Fangdd shall not engage any third party to provide the services covered by this agreement. Shenzhen Fangdd agrees to pay service fees on an annual basis and at an amount determined by Fangdd Information after taking into account factors such as the labor cost, facility cost and marketing expenses incurred by Fangdd Information in providing the services. Unless otherwise agreed by both parties, this agreement will remain effective until Fangdd Information ceases business operations.
| ● | Technology Development and Application Service Agreement |
Fangdd Information and Shenzhen Fangdd have entered into a technology development and application service agreement, pursuant to which, Fangdd Information has the exclusive right to provide Shenzhen Fangdd with technology development and application services. Without Fangdd Information’s written consent, Shenzhen Fangdd shall not accept any technology development and application services covered by this agreement from any third party. Shenzhen Fangdd agrees to pay service fees on an annual basis and at an amount determined by Fangdd Information after taking into account multiple factors, such as the labor and time consumed for provision of the service, the type and complexity of the services provided, the difficulties in providing the service, the commercial value of services provided and the market price of comparable services. Unless otherwise agreed by the parties, this agreement will remain effective until Fangdd Information ceases business operations.
F-12
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Risks in relation to Shenzhen Fangdd structure
In the opinion of the Company’s management, the contractual arrangements have resulted in Fangdd Information having the power to direct activities that most significantly impact Shenzhen Fangdd and Shenzhen Fangdd’s subsidiaries, including appointing key management, setting up operating policies, exerting financial controls and transferring profit or assets out of Shenzhen Fangdd and Shenzhen Fangdd’s subsidiaries at its discretion. Fangdd Information considers that it has the right to receive all the benefits and assets of Shenzhen Fangdd and Shenzhen Fangdd’ subsidiaries. As Shenzhen Fangdd and Shenzhen Fangdd’s subsidiaries were established as limited liability companies under the PRC law, their creditors do not have recourse to the general credit of Fangdd Information for the liabilities of Shenzhen Fangdd and VIE’s subsidiaries, and Fangdd Information does not have the obligation to assume the liabilities of Shenzhen Fangdd and VIE’ subsidiaries.
The Group has determined that Shenzhen Fangdd VIE Agreements are in compliance with PRC laws and are legally enforceable.However, uncertainties in the PRC legal system could limit the Group’s ability to enforce Shenzhen Fangdd VIE Agreements.
If the PRC government finds that these contractual arrangements do not comply with its restrictions on foreign investment in the internet business, or if the PRC government otherwise finds that the Group, the VIE, or any of its subsidiaries is in violation of PRC laws or regulations or lack the necessary permits or licenses to operate the business, the relevant PRC regulatory authorities, including but not limited to the Ministry of Industry and Information Technology of the People’s Republic China (“MIIT”), which regulates internet information service companies, would have broad discretion in dealing with such violations, including:
| ● | revoking the business and operating licenses; |
| ● | discontinuing or restricting the operations; |
| ● | imposing fines or confiscating any of the income that they deem to have been obtained through illegal operations; |
| ● | imposing conditions or requirements with which the Group or the PRC subsidiaries and affiliates may not be able to comply; |
| ● | requiring the Company or the PRC subsidiaries and affiliates to restructure the relevant ownership structure or operations; |
| ● | placing restrictions on the right to collect revenues; |
| ● | restricting or prohibiting the use of the proceeds from future offerings to finance the business and operations of the VIE; and |
| ● | taking other regulatory or enforcement actions that could be harmful to the business. |
The imposition of any of these penalties could have a material and adverse effect on the business, financial condition and results of operations. If any of these penalties results in the inability to direct the activities of the VIE that most significantly impact its economic performance, and/or failure to receive the economic benefits from the VIE, the Group may not be able to consolidate the financial results of the VIE and its subsidiaries in Consolidated Financial Statements in accordance with U.S. generally accepted accounting principles.
There is no VIE in which the Group has a variable interest but is not the primary beneficiary. Currently there is no contractual arrangement that could require the Group to provide additional financial support to Shenzhen Fangdd.
F-13
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Amount due from related parties* | ||||||||
| Prepayments and other current assets, net | ||||||||
| Inventories | ||||||||
| Total current assets | ||||||||
| Property, equipment and software, net | ||||||||
| Equity method investments, net | ||||||||
| Long-term equity investment, net | ||||||||
| Right-of-use assets | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| Short-term bank borrowings | ||||||||
| Accounts payable | ||||||||
| Customers’ refundable fees | ||||||||
| Current instalments of long-term loans from a related party** | ||||||||
| Amounts due to related parties* | ||||||||
| Accrued expenses and other payables | ||||||||
| Income tax payables | ||||||||
| Lease liabilities-current | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Income tax payables | ||||||||
| Lease liabilities | ||||||||
| Long-term loans from a related party excluding current instalments** | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| * |
| ** |
F-14
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Total revenue | ||||||||||||
| Net (loss) income | ( | ) | ( | ) | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Net cash (used in) provided by investing activities | ( | ) | ( | ) | ||||||||
| Net cash used in financing activities | ( | ) | ( | ) | ( | ) | ||||||
| Net decrease in cash, cash equivalents and restricted cash | ( | ) | ( | ) | ( | ) | ||||||
| Cash, cash equivalents and restricted cash at the beginning of the year | ||||||||||||
| Cash, cash equivalents and restricted cash at the end of the year | ||||||||||||
Sales Commitment Arrangements
Certain property sales contracts entered
with real estate developers provide the Group with exclusive selling rights for the selected properties for a specific period of time
(the “Exclusive Sales Contracts”), which typically lasts for several months. Certain of these Exclusive Sales Contracts requires
the Group or, in case of tri-party agreements (see below), the Group’s equity method investees to purchase any unsold units of properties
at the end of the exclusive sales period (the “Sales Commitment Arrangements”). Under the Sales Commitment Arrangements, the
real estate developers either enter into project sales contracts with the Group directly (the “Self-Commitment Arrangements”)
or enter into tri-party agreements with the Group and its equity method investees (the “Non-Group Commitment Arrangements”).
The Group, or in case of tri-party agreements, its equity method investees is required to advance real estate developer an initial deposit
prior to the commencement of the exclusive sales period. The amount of initial deposits required is generally determined at a percentage
of the minimum transaction price, as pre-agreed with the real estate developer, of the properties (the “Base Transaction Price”)
to be sold to home purchasers in the market during the exclusive sales period. The amount of deposits advanced by the Group, or its equity
method investees are adjusted throughout the exclusive sales period based on an agreed schedule such that
For Self-Commitment Arrangements, the Group is required under the project sales contracts to advance the deposits and purchase any unsold properties at the Base Transaction Price at the end of exclusive sales period. The Group would either finance the entire deposits with its own fund or by entering into separate collaborative agreements with certain funds providers (the “Self-Commitment Collaborative Agreements”) that, are either independent third parties or the Group’s equity method investees, to fully or partially fund the deposits required. The funds providers provide the Group with the funds required and requested the funds to be designated for use in a specific Self-Commitment Arrangement. Pursuant to the Self-Commitment Collaborative Agreements, the Group is required to share with the funds provider a portion of the Base Commission Income (see note 2(v)) and any Sales Incentive Income (see note 2(v)) earned, based on the agreed profit sharing arrangements. However, the Group does not commit or guarantee them any minimum return. Also, there is no limit on the reward that accrues to either the Group or the funds providers. The amounts of profit shared with the funds providers under the Self-Commitment Collaborative Agreements are recorded in “Cost of revenue” in the consolidated statements of operations and comprehensive (loss) income. The funds provided by these independent third parties or equity method investees to the Company to fulfill the deposits requirement under the Self-Commitment Arrangements are recorded as “Amounts due to third parties under collaborative agreements” or “Amounts due to equity method investees under collaborative agreements”. The deposits advanced by the Group to the property developers, either using entirely its own funds or combining its own funds with funds provided by funds providers, are recorded as “Security deposits with real estate developers” included in “Prepayments and other assets, net” (see note 7(2)) on the Consolidated Balance Sheets.
F-15
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
For Non-Group Commitment Arrangements, the equity method investees of the Group are obliged to pay the deposits required directly to the real estate developers and subject to the commitment to purchase any unsold properties at the Base Transaction Price at the end of exclusive sales period. payable to the equity method investees or deposits with real estate developers were recorded on the Consolidated Balance Sheets in respect of the deposits payments or refund transactions directly made by the funds providers to property developers, as the Group is not the obligator for such deposit payments or the purchase commitment regarding the unsold properties. The Group would enter into separate collaborative agreements (the “Non-Group Collaborative Agreements”) to set out the basis of sharing of the Base Commission Income and any Sales Incentive Income earned, with the equity method investees under the Non-Group Commitment Arrangements. And the Group does not commit or guarantee them any minimum return. Also, there is no limit on the reward that accrues to either the Group or these equity method investees.
Under certain Non-Group Commitment Arrangements
entered into amongst the Group, the equity method investees and real estate developers in 2019 and 2020, the equity method investee (i.e.
fund provider) has the option to withdraw from the arrangement by paying a penalty to the real estate developer at any time during the
term of the arrangement. The withdrawal penalty is based on either not more than
Although the Group is responsible to design and execute the overall sales plan as well as managing and directing its Registered Agents to facilitate the property transactions, the equity method investees do not simply provide financial resources but also participate in these processes through joint evaluation with the Group about the marketability of the specified properties and their pricing strategy. The Non-Group Collaborative Arrangements are accounted for under ASC 808 with costs incurred and revenue generated by the Group and the equity method investees reported in their respective consolidated statements of operations and comprehensive (loss) income. Revenue earned from the real estate developer for property sales contracts with Non-Group Collaborative Agreements simultaneously entered with equity method investees are presented on a gross basis with the Base Commission Income and Sales Incentive Income recognized as “Revenue” and the amounts of profit shared with equity method investees recorded in “Cost of Revenue” in the consolidated statements of operations and comprehensive (loss) income as the Group is deemed to be the principal under these arrangements.
During the year ended December 31, 2022,
the Group earned Sales Incentive Income of RMB
During the year ended December 31, 2023,
the Group earned no Sales Incentive Income for exclusive sales contracts with Sales Commitment Arrangements pursuant to which the Group
shared RMB
The Group believes its key management has sufficient knowledge and experience in the relevant real estate markets and has in place adequate process that guides its selection of projects, negotiation of terms and ongoing monitoring of risks.
F-16
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Prior to entering into a Sales Commitment Arrangement, the Group would assess the marketability of the specified properties, the reasonableness of the Base Transaction Price and other relevant factors. The Group performs such assessment based on the results of its research activities and other factors such as the availability of agents’ resources and has determined that the probability of all properties under such arrangements not being sold within the exclusive sales period is low. The Group believes that the developers enter into such Sales Commitment Arrangement largely due to liquidity consideration in that it could shorten the cash payback period through the receipts of deposits under the arrangement. Also, such Sales Commitment Arrangement may provide higher return to the developer when the properties are sold at a price in excess of the Base Transaction price. Therefore, the Group determines that it is remote that the real estate developers will request the Group, or for Non-Group Commitment Arrangements, the Group’s equity method investees to purchase the unsold properties at the end of exclusive sales period. Management has concluded such assessment is supported by the historical experiences where developers agreed to an extended sales period for a few months in those limited instances where certain properties remained unsold at the end of exclusive sales period.
The Group started entering into the above-mentioned
Sales Commitment Arrangements in 2016. For the years ended December 31, 2021, 2022 and 2023, the Group did not enter into any property
sales contracts with real estate developers under Self-Commitment Arrangements, except for the parking space sale contracts described
below. All new property sales contracts with Sales Commitment Arrangement are entered with the property developers and equity method investees
in tri-party agreements under the Non-Group Commitment Arrangements, pursuant to which the Group’s equity method investees, rather
than the Group, are required to pay the deposits directly to the property developers and obliged to purchase any unsold units of properties
at the end of exclusive sales period. In 2021, the Group entered into certain contracts for the sale of parking spaces with real estate
developers under Self-Commitment Arrangements, pursuant to which the Group had advanced the deposits of RMB
The deposits made by the Group under all the Exclusive Sales Contracts including those under the Self-Commitment Arrangement are recorded as security deposits with real estate developers, net of allowance for doubtful accounts, under current assets on the Consolidated Balance Sheets. The Group assesses the recoverability of the deposits with real estate developers based on a combination of factors, including the contractual terms, the developers’ intention in entering into such arrangements as described above, the continuing assessment of the marketability of the properties during the exclusive sales period and the extended sales period, if any, historical experiences and negotiation results of developers’ action at the end of exclusive sales period, and the market price of similar properties. An allowance for doubtful accounts against the deposits is recorded when any portion of deposits is considered not recoverable.
| 2. | Summary of Significant Accounting Policies |
| (a) | Basis of presentation |
The Consolidated Financial Statements of the Group have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
| (b) | Going concern |
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to generate cash flows from operations, and the Company’s ability to arrange adequate financing arrangements.
The Company has experienced recurring
losses from operations. As of December 31, 2023, the Company had an accumulated deficit of RMB
F-17
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The Company has prepared a future cash flow forecasts and the management is of the opinion that the Company will have sufficient unrestricted liquidity for at least the next 12 months from the date of approval of the Consolidated Financial Statements. Among the assumptions made by the management, it is expected that the Company will continue to reduce its operating expenditure by reducing headcounts and office space. Accordingly, management concludes that it is appropriate to prepare the financial statements on a going concern basis.
The Company has taken positive actions to speed up the collection of accounts receivable, such as litigation, strict developer credit rating management, but the effects of these actions may be limited where the developers have already been in severe finance distress. The Company has taken certain actions and obtained equity financing arrangements (see note 18). The Company also intends to further obtain additional equity or debt financing arrangements; however, the availability and amount of such funding are not certain. Additionally, the strict macroeconomic regulation on real estate market and the tightening of mortgage lending activities have negatively impacted the real estate market and heightened the credit risk associated with developers. The new and resale property transactions are expected to remain vulnerable to macro challenges for an extended period, which may adversely impact the Company’s ability to raise the financing needed. The accompanying financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. If the going concern basis were not appropriate for these financial statements, adjustments would be necessary for the carrying value of assets and liabilities, the reported expenses and the balance sheet classifications used.
| (c) | Principles of Consolidation |
The accompanying Consolidated Financial Statements include the results of the Company, its subsidiaries, VIE and VIE’s subsidiaries.
Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, exercises effective control over the activities that most impact the economic performance, bears the risks of, and enjoys the rewards normally associated with ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity.
All intercompany transactions and balances among the Company, its subsidiaries, VIE and VIE’s subsidiaries have been eliminated upon consolidation.
| (d) | Use of Estimates |
The preparation of the Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported period in the Consolidated Financial Statements and accompanying notes. Actual results could differ from those estimates. Significant accounting estimates include, but not limited to, allowance for accounts, loans and other receivable, realization of deferred income tax assets, impairment loss for long-term equity investment, impairment loss for equity method investments, goodwill impairment and share-based compensation. Actual results may differ materially from those estimates, and as such, differences may be material to the consolidated financial statements.
F-18
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (e) | Business combinations and noncontrolling interests |
The Company accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) 805 “Business Combinations.” The cost of an acquisition is measured as the aggregate of the acquisition date fair value of the assets transferred to the sellers, liabilities incurred by the Company and equity instruments issued by the Company. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets acquired and liabilities assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive (loss) income. During the measurement period, which can be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Subsequent to the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any further adjustments are recorded in the consolidated statements of operations and comprehensive (loss) income.
For the Company’s non-wholly owned subsidiaries, a noncontrolling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company. Consolidated net loss in the consolidated statements of operations and comprehensive (loss) income includes net loss (income) attributable to noncontrolling interests when applicable.
| (f) | Foreign Currency |
The Group’s reporting currency is Renminbi (’‘RMB’’). The functional currency of the Company and the Group’s entities incorporated in the Cayman Island, British Virgin Islands (’‘BVI’’), and Hong Kong (’‘HK’’) is the United States dollars (’‘US$’’). The functional currency of the Group’s PRC subsidiaries, VIE and VIE’s subsidiaries is RMB.
Transactions denominated in currencies
other than the functional currency are remeasured into the functional currency at the exchange rates prevailing at the dates of the transactions.
Monetary assets and liabilities denominated in a foreign currency are remeasured into the functional currency using the applicable exchange
rate at the balance sheet date. The resulting exchange differences are recorded as foreign currency exchange (loss) gain in the consolidated
statements of operations and comprehensive (loss) income. Total foreign currency exchange differences were a loss of RMB
The financial statements of the Company and the Group’s entities incorporated at Cayman Island, BVI and Hong Kong are translated from the functional currency into RMB. Assets and liabilities are translated into RMB using the applicable exchange rates at the balance sheet date. Equity accounts other than earnings (deficit) generated in the current period are translated into RMB using the appropriate historical rates. Revenues, expenses, gains and losses are translated into RMB using the average exchange rates for the relevant period. The resulted foreign currency translation adjustments are recorded as a component of other comprehensive losses in the consolidated statements of operation and comprehensive (loss) income, and the accumulated foreign currency translation adjustments are recorded as a component of accumulated other comprehensive loss in the consolidated statements of changes in shareholders’ equity.
| (g) | Convenience Translation |
Translations of certain balances in accompanying
Consolidated Financial Statements from RMB into US$ as of and for the year ended December 31, 2023 are solely for the convenience of the
readers and were calculated at the rate of US$1.00=RMB
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (h) | Commitments and Contingencies |
In the normal course of business, the Group is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.
| (i) | Cash and Cash Equivalents |
Cash and cash equivalents represent demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use, and which have original maturities of three months or less and are readily convertible to known amounts of cash.
| (j) | Restricted cash |
Restricted cash represents:
i) bank balance of RMB
ii) bank balance of RMB
Cash deposits restricted for use over one year after the balance sheet date are classified as non-current assets in the Consolidated Balance Sheets.
| (k) | Short-term investments |
Short-term investments include investments in wealth management products issued by certain banks which are redeemable by the Company at any time. The wealth management products are either unsecured with variable interest rates or fixed interest rate. The Company measures the short-term investments at fair value using the quoted subscription or redemption prices published by these banks, with unrealized holding gains or losses, net of the related tax effect, excluded from earnings and recorded as a separate component of accumulated other comprehensive loss until realized. Realized gains or losses from the sale of short-term investments are determined on a specific identification basis and are recorded as gain on short-term investments when earned in the consolidated statements of operations and comprehensive (loss) income.
| (l) | Accounts Receivable |
Accounts receivable mainly represent
amounts due from the real estate developers for primary property business and individual customers for secondary property business upon
the completion of their services. Accounts receivables are recorded net of an allowance for doubtful accounts, if any. The Group considers
many factors in assessing the collectability of its accounts receivable, such as the age of the amounts due, the payment history, credit-worthiness
and the financial condition of the debtor. An allowance for doubtful accounts is recorded in the period in which a loss is determined
to be probable. The Group also makes a specific allowance if there is strong evidence indicating that an accounts receivable is likely
to be unrecoverable. Accounts receivable are charged off against the allowance after all means of collection have been exhausted and the
potential for recovery is considered remote. The Group does not have any off-balance-sheet credit exposure. Allowance of RMB
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (m) | Loans receivable, net |
Loans receivable represents loan originated
or purchased by the Group (see note 7). The Group has the intent and the ability to hold such loans for the foreseeable future or until
maturity or payoff. Loans receivable are recorded at unpaid principal balances, net of allowance for loan losses that reflects the Group’s
best estimate of the amounts that will not be collected. The loans receivable portfolio consists of personal loans with term period ranging
from
The allowance for loan losses is determined at a level believed to be reasonable to absorb probable losses inherent in the portfolio as of each balance sheet date. The allowance is provided based on an assessment performed on a portfolio basis. All loans are assessed collectively depending on factors such as delinquency rate, size, and other risk characteristics of the portfolio.
The Group writes off loans receivable and the related allowance when management determines that full repayment of such loan is not probable. The primary factor in making such determination is the estimated recoverable amounts from the delinquent debtor.
As of December 31, 2022 and 2023, loan
receivables of RMB
| (n) | Property, equipment and software |
Property, equipment and software are stated at cost less accumulated depreciation, amortization and impairment. Property, equipment and software are depreciated and amortized at rates sufficient to write off their costs less impairment and residual value if any over their estimated useful lives on a straight-line basis. Leasehold improvements are depreciated on a straight-line basis over the period of the lease or their estimated useful lives, if shorter.
| Category | Estimated useful lives | |
| Buildings | ||
| Leasehold improvements | ||
| Furniture, office equipment | ||
| Motor vehicles | ||
| Software |
Expenditures for repairs and maintenance are expensed as incurred, whereas the costs of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of operations and comprehensive (loss) income.
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (o) | Intangible assets |
Intangible assets mainly include those
intangible assets other than software acquired through business combination. Intangible assets acquired through business combinations
are recognized as assets separate from goodwill if they satisfy either the “contractual-legal” or “separability”
criterion. Intangible assets arising from business combinations are measured at fair value upon acquisition using valuation techniques
such as discounted cash flow analysis and ratio analysis with reference to comparable companies in similar industries under the income
approach. Major assumptions used in determining the fair value of these intangible assets include future growth rates and weighted average
cost of capital.
| Category | Estimated useful lives | |
| Non-competed agreements | ||
| Trademarks |
| (p) | Goodwill |
Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from the acquired entity as a result of the Group’s acquisitions of interests in its subsidiaries. The Group assesses goodwill for impairment in accordance with ASC 350-20 (“ASC 350-20”), “Intangibles–Goodwill and Other: Goodwill”, which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.
Prior to the adoption of ASU 2017-04, “Simplifying the Test for Goodwill Impairment”, on January 1, 2022, the Group has the option to first assess qualitative factors to determine whether it is necessary to perform the two-step test in accordance with ASC 350-20. If the Group believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the two-step quantitative impairment test described above is required. Otherwise, no further testing is required. In the qualitative assessment, the Group considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. In performing the two-step quantitative impairment test, the first step compares the carrying amount of the reporting unit to the fair value of the reporting unit based on either quoted market prices of the ordinary shares or estimated fair value using a combination of the income approach and the market approach. If the fair value of the reporting unit exceeds the carrying value of the reporting unit, goodwill is not impaired and the Group is not required to perform further testing. If the carrying value of the reporting unit exceeds the fair value of the reporting unit, then the Group must perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. The fair value of the reporting unit is allocated to its assets and liabilities in a manner similar to a purchase price allocation in order to determine the implied fair value of the reporting unit goodwill. If the carrying amount of the goodwill is greater than its implied fair value, the excess is recognized as an impairment loss.
In January 2017, the FASB issued Accounting Standards Update No. 2017-04(“ASU 2017-04”), “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” ASU 2017-04 eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The Group adopted the ASU 2017-04 on January 1, 2022.
On and after January 1, 2022, the Group
performed qualitative and quantitative assessment in accordance with ASU 2017-04, there was such goodwill impairment during the years
ended December 31, 2022. As triggered by the cease of Beijing Tuqiang Yunxia Technology Limited (“Tuqiang”) business during
the year ended December 31, 2023, the related goodwill of RMB
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (q) | Equity method investments |
The Group accounts for an equity method investment over which it has significant influence but does not own a majority of the equity interest or otherwise controls and the investments are either common stock or in substance common stock using the equity method. The Group’s share of the investee’s profit and loss is recognized in the consolidated statements of operations and comprehensive (loss) income.
The Group assesses its equity method investments for other-than-temporary impairment by considering factors as well as all relevant and available information including, but not limited to, current economic and market conditions, the operating performance of the companies including current earnings trends, and other Group-specific information such as financing rounds.
During the year ended December 31, 2023,
the Group recognized an impairment loss of RMB
| (r) | Long-term equity investments |
Long-term equity investments, except those accounted for under the equity method or those that result in the consolidation of the investee, that do not have readily determinable fair value are measured and recorded at cost, less impairment, with subsequent adjustments for observable price changes in orderly transactions for identical or similar equity investments of the issuer. Purchased options on these equity investments that are not derivatives are accounted for in a manner consistent with the accounting for the equity investments that do not have readily determinable fair value.
| (s) | Impairment loss of non-current assets |
Property, plant and equipment and intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be fully recoverable or that the useful life is shorter than the Group had originally estimated. When these events occur, the Group evaluates the impairment for the non-current by comparing the carrying value of the assets to an estimate of future undiscounted cash flows expected to be generated from the use of the assets and their eventual disposition. If the sum of the expected future undiscounted cash flows is less than the carrying value of the assets, the Group recognizes an impairment loss based on the excess of the carrying value of the assets over the fair value of the assets. No impairment charge of non-current assets was recognized for the year ended December 31, 2023(see note 8 and 9).
| (t) | Value added taxes |
The Company’s PRC subsidiaries
are subject to value added tax (“VAT”). Revenue from sales of transaction and service is generally subject to VAT at the rate
of
| (u) | Fair Value |
Fair value represents the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.
F-23
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Accounting guidance defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Accounting guidance establishes a three-level fair value hierarchy and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are:
Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2—Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—Unobservable inputs which are supported by little or no market activity.
Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach;
| (2) | income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. |
Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, loans receivable, short-term bank borrowings, accounts payable, customers’ refundable fees, lease liabilities, accrued expenses and other payables. As of December 31, 2022 and 2023, the carrying values of these financial instruments approximated to their fair values due to the short-term maturity of these instruments.
| (v) | Revenue |
In accordance with ASC 606, Revenue from Contracts with Customers, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (1) identify the contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; (5) recognize revenue when (or as) the entity satisfies a performance obligation.
Revenues are recorded net of value-added taxes.
Commission income
Through its platforms and services provided by real estate agents registered as a member in the Group’s platform (the “Registered Agents”), the Group earns commission revenue from real estate developers for sales transactions of primary properties and to a lesser extent from home owners for sales or rental transactions of secondary properties. For services rendered by the Registered Agents in completing the transactions, the Group pays those the agents a commission fee. The real estate developers and home owners are collectively referred as the property owners. For each of the property’s transactions, the Group enters into contracts with the Registered Agents (the “Agents’ Contracts”) and properties owners (the “Properties Sales Contracts”) separately. As Registered Agents are involved in providing the services to the property owners, the Group considers all the relevant facts and circumstances in determining whether it acts as the principal or as an agent in these properties transactions in accordance with ASC 606-10.
F-24
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The Group has determined that it is a principal for the following reasons: (1) the Properties Sales Contract and the Agents’ Contract are negotiated and entered into separately between the Group and the property owners and the Registered Agents, respectively, at the discretion of the Group, and there is no contractual relationship between the property owners and the Registered Agents; (2) the Group negotiates with the property owners the total commission fee to be paid by the properties owners. The Group also determines the commission rate payable to the Registered Agents at its discretion without any involvement of the properties owners; (3) pursuant to the Properties Sales Contracts, the Group is responsible for the sales or leasing of the properties. In particular, the Group is responsible to undertake the sales and marketing activities it considers necessary to induce potential home purchasers to visit the sales center of the property and complete the purchase of properties from the real estate developers. The Group is entitled to a pre-determined commission income upon the signing of the sales agreements between the real estate developers and the home purchasers pursuant to the Properties Sales Contracts. The Group’s project management team carries out a series of activities including sales data analysis, development of project sales strategy, resources allocation, assignment of agents, sales and marketing activities, and monitoring of the entire sales process; (4) the Group monitors Registered Agents’ services and provide them with instructions and guidelines in approaching and serving the home purchasers.
Commission income for sales transactions of primary properties and rental transactions for secondary properties are recognized by the Group upon the signing of the sales and purchase agreements or rental agreements and making the required down payment by the home purchasers or tenants. Commission income for sales transactions of secondary properties are recognized when the transfer over legal title of ownership of the properties between the home owners and home purchasers are complete.
The Group also enters into certain arrangements with real-estate developers pursuant to which potential home purchasers may pay the Group a fixed amount in return for a discount for their purchases of specified properties from the real estate developers. The fees paid by the home purchasers to the Group are fully refundable before the execution of the sales and purchase agreements between the home purchasers and the real estate developers. For these transactions, except for the fees received from the home purchasers, the Group is not entitled to any additional commission from the real estate developers. The Group recognizes commission income in the amount of fees received from the home purchasers when the Group’s services are rendered upon the execution of the sales and purchase agreements between the home purchasers and the real estate developers. Fees received from home purchasers in advance of the revenue recognition are recorded as “Customers’ Refundable Fees” (see note 14) on the Consolidated Balance Sheets.
For primary properties transactions, the Group generally earns a fixed commission rate (“Base Commission”) of the pre-determined properties transaction price (the “Base Transaction Price”) as stated in the Properties Sales Contracts. For certain primary properties transactions, the Group obtains exclusive sales right from real estate developers to sell the properties for a limited period of time and is required to advance certain amount of deposits. Not all of the Exclusive Sales Contracts contains Sales Commitment Arrangement as disclosed in note 1. Pursuant to those Exclusive Sales Contracts with Sales Commitment Arrangement, the Group is permitted to sell the properties in the market at a price above the Base Transaction Price. In addition to the Base Commission, the Group is entitled to an additional income (the “Sales Incentive Income”), determined at a progressive rate on the excess of the actual transaction price over the Base Transaction price. Same as Base Commission income, the Sales Incentive Income is also recognized as revenue upon the signing of the sales and purchase agreements and making the down payment by the home purchasers.
Franchise Income
The Group enters into franchise agreements
with certain third party real estate agency companies located in those cities where the Group does not have an established sales office.
Pursuant to these franchise agreements, the Group grants the franchisees with the right to use the Group’s brands, access of listings
in the Group’s platform and other resources in return for a franchise fee. For franchise agreements entered from 2018 onward, franchise
fee is determined at an agreed fixed amount over a period of time and are recognized by the Group on a straight-line basis over the contractual
period. During the years ended December 31, 2021, 2022 and 2023, the Group recognized franchise income of RMB
F-25
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Financial service income
The Group provides lending financial services to home purchasers, Registered Agents and the Group’s employees who meet the Group’s credit assessment requirements. Financial services income from loans receivable is recognized using the effective interest rate method.
Other value-added services
Other value-added services are recognized as revenue on a straight-line basis over which the services are rendered, they mainly represent subscription fee earned by offering Registered Agents with a suite of marketing and business technology products and services for use in a specified period of time so as to assist them growing and managing their businesses.
Loans facilitation services
Loans facilitation services are recognized as revenue when the relevant loans agreements were signed and the related loans were drawn down by the home purchasers. Loans facilitation services primarily consists of the services to facilitate the home purchasers, Registered Agents and other market participants borrowing from the financial institutions in the property transactions.
Parking space transaction facilitating services
Parking space transaction facilitating services are recognized as revenue when services are rendered to facilitate the appointment of real estate agents by Shanghai Lianlian Digital Technology Co., Ltd. (“Shanghai Lianlian”, known as Shenzhen Jinyiyun Supply Chain Technology Co., Ltd. before (“Shenzhen Jinyiyun”)), a related party, as agents for Shanghai Lianlian’s parking space transactions. Certain directors and management of the Company are principal shareholders of Shanghai Lianlian. The Company’s services primarily consist of providing support and information to Shanghai Lianlian to identify real estate agents in the Company’s platform and introduction of agents for Shanghai Lianlian’s parking space transactions. The service fee is chargeable to the real estate agent and revenue is recognized upon signing of the relevant agency agreement. such service income was recognized in 2021, 2022 and 2023.
Parking space sales under the self-commitment arrangement
Parking space sales are recognized as revenue when control of the parking space is transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those parking spaces. The control of the parking space transfers at a point in time when the customer obtains the physical possession, the legal title, or the significant risks and rewards of ownership of the assets and the Group has a present right to a payment and the collection of the consideration is probable.
| (w) | Cost of Revenue |
Cost of revenue primarily consists of agents’ commission, sharing of sales incentive income with fund providers, promotion and operational expenses, and salaries and benefits expenses that incurred for properties transactions and parking space transaction facilitating services.
| (x) | Sales and marketing expenses |
Sales and marketing expenses mainly consist of salaries and advertising costs, which consist primarily of online and offline advertisements, are expensed when the services are received.
| (y) | Product development expenses |
Product development expenses primarily consist of salaries and benefits expenses, depreciation of equipment relating to the development of new products or upgrading of existing products and other expenses for the product activity of the Group. The Group expenses product development expenses as incurred.
F-26
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (z) | General and administrative expenses |
General and administrative expenses mainly consist of provision of allowance for doubtful accounts, payroll and related staff costs for corporate functions, as well as other general corporate expenses such as professional service fee, rental expenses and depreciation expenses for offices and equipment for use by these corporate functions of the Group.
| (aa) | Government grants |
Government grants represent amounts granted by local government authorities as an incentive for companies to promote economic development of the local technology industry. Government grants received by the Group were non-refundable and were for the purpose of giving immediate incentive with no future costs or obligations are recognized in earnings in the Company’s consolidated statements of operations and comprehensive (loss) income.
| (bb) | Share-based Compensation |
Share-based awards granted to the employees and directors in the form of share options are subject to service and performance conditions. They are measured at the grant date fair value of the awards, and are recognized as compensation expense using the graded vesting method, net of estimated forfeitures, if and when the Company considers that it is probable that the performance condition will be achieved.
For vested awards, the Group recognizes incremental compensation cost in the period the modification occurs. For awards not being fully vested, the Group recognizes the sum of the incremental compensation cost and the remaining unrecognized compensation cost for the original awards over the remaining requisite service period after modification.
Estimation of the fair market value of the Company’s ordinary shares involves significant assumptions that might not be observable in the market, and a number of complex and subjective variables, including the expected share price volatility (approximated by the volatility of comparable companies), discount rate, risk-free interest rate and subjective judgments regarding the Company’s projected financial and operating results, its unique business risks, the liquidity of its ordinary shares and its operating history and prospects at the time the grants are made. Share-based compensation in relation to the share options is estimated using the Binominal Option Pricing Model. The determination of the fair value of share options is affected by the share price of the Company’s ordinary shares as well as the assumptions regarding a number of complex and subjective variables, including the expected share price volatility, risk-free interest rate, exercise multiple and expected dividend yield. The fair value of these awards was determined with the assistance from a valuation report prepared by an independent valuation firm using management’s estimates and assumptions.
| (cc) | Employee Benefits |
The Company’s subsidiaries, the
VIE and VIE’s subsidiaries in China participate in a government mandated, multi-employer, defined contribution plan, pursuant to
which certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor laws require the entities incorporated
in China to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the monthly basic compensation
of qualified employees. The Group has no further commitments beyond its monthly contribution. The fair value of the employee benefits
liabilities approximates their carrying value due to the short-term nature of these liabilities. Employee social insurance benefits included
as expenses in the accompanying consolidated statements of operations and comprehensive (loss) income amounted to RMB
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (dd) | Income Tax |
Income tax are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company reduces the carrying amounts of deferred tax assets by a valuation allowance, if based on the available evidence, it is “more-likely-than-not” that such assets will not be realized. Accordingly, the need to establish valuation allowances for deferred tax assets is assessed at each reporting period based on a “more-likely-than-not” realization threshold. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of futures profitability, the duration of statutory carryforward periods, the Company’s experience with operating loss and tax credit carryforwards, if any, not expiring.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits in income tax expense and penalties in general and administrative expenses.
| (ee) | Leases |
On January 1, 2022, the Group adopted FASB ASC Topic 842, “Leases,” (“ASC Topic 842”) which requires that a lessee recognize in the consolidated balance sheet a lease liability and a corresponding right-of-use asset, including for those leases that the Group currently classifies as operating leases. The right-of-use asset and the lease liability was initially measured using the present value of the remaining lease payments. ASC Topic 842 was implemented using a modified retrospective approach which resulted in no cumulative-effect adjustment in the opening balance of retained earnings as of January 1, 2022. As a result, the consolidated balance sheet prior to January 1, 2022 was not restated and continues to be reported under FASB ASC Topic 840, “Leases,” (“ASC Topic 840”), which did not require the recognition of a right-of-use asset or lease liability for operating leases. As permitted under ASC Topic 842, the Group adopted the following practical expedients: (1) not to reassess whether an expired or non-lease contract that commenced before January 1, 2022 contained an embedded lease, (2) not to reassess the classification of existing leases, (3) not to determine whether initial direct costs related to existing leases should be capitalized under ASC Topic 842, and (4) not to separate lease and non-lease components.
The Group reviews all relevant contracts to determine if the contract contains a lease at its inception date. A contract contains a lease if the contract conveys to the Group the right to control the use of an underlying asset for a period of time in exchange for consideration. If the Group determines that a contract contains a lease, it recognizes, in the consolidated balance sheets, a lease liability and a corresponding right-of-use asset on the commencement date of the lease. The lease liability is initially measured at the present value of the future lease payments over the lease term using the rate implicit in the lease or, if not readily determinable, the Group’s secured incremental borrowing rate. A right-of-use asset is initially measured at the value of the lease liability minus any lease incentives and initial direct costs incurred plus any prepaid rent.
Each lease liability is measured using the Group’s secured incremental borrowing rate, which is based on an internally developed yield curve using interest rates of debt issued with a similar risk profile as the Group and a duration similar to the lease term. The Group’s leases have remaining terms of one to three years, and some of which include options to terminate the lease upon notice. The Group considers these options when determining the lease term used to calculate the right-of-use asset and the lease liability when the Group is reasonably certain it will exercise such option.
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Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The Group’s operating leases contain both lease components and non-lease components. Non-lease components are distinct elements of a contract that are not related to securing the use of the underlying assets, such as common area maintenance and other management costs. The Company elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Company includes the fixed payments and any payments that depend on a rate or index that relate to the lease and non-lease components in the measurement of the lease liability. Some of the non-lease components are variable in nature and not based on an index or rate, and as a result, are not included in the measurement of the right-of-use assets or lease liability.
Operating lease expense is recognized on a straight-line basis over the lease term and is included in rental and other related expenses in the Group’s consolidated statements of operations and comprehensive (loss) income.
All
of the Group’s leases are classified as operating leases and primarily consist of real estate leases for corporate offices. As
a result of the adoption, the Group recognized approximately RMB
| (ff) | Loss per Share |
Basic loss per share is computed by dividing net loss attributable to ordinary shareholders, considering the accretions to redemption value and the deemed dividend of the preferred shares, by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, any net income is allocated between ordinary shares and other participating securities based on their participating rights. A net loss is not allocated to participating securities when the participating securities does not have contractual obligation to share losses.
The Company’s preferred shares are participating securities as they participate in undistributed earnings on an as-if-converted basis. The preferred shares has no contractual obligation to fund or otherwise absorb the Group’s losses. Accordingly, any undistributed net income is allocated on a pro rata basis to the ordinary shares and preferred shares; whereas any undistributed net loss is allocated to ordinary shares only.
Diluted loss per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the accretion and allocation of net income related to the preferred shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of shares issuable upon the conversion of the preferred shares and convertible loan using the if-converted method, and ordinary shares issuable upon the vest of restricted ordinary shares or exercise of outstanding share option (using the treasury stock method). Ordinary equivalent shares are calculated based on the most advantageous conversion rate or exercise price from the standpoint of the security holder. Ordinary equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive.
(gg) Segment Reporting
The
Group’s chief operating decision maker has been identified as the Chief Executive Officer, who reviews consolidated results when
making decisions about allocating resources and assessing performance of the Group. For the purpose of internal reporting and management’s
operation review, the Group’s Chief Executive Officer and management personnel do not segregate the Group’s business by service
lines. All service categories are viewed as in
F-29
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (hh) | Statutory Reserves |
The Group’s subsidiaries, VIE, and VIE’s subsidiaries established in the PRC are required to make appropriations to certain non-distributable reserve funds.
In
accordance with the laws applicable to the Foreign Investment Enterprises established in the PRC, the Group’s subsidiaries registered
as wholly foreign owned enterprise have to make appropriations from their after-tax profits (as determined under generally accepted accounting
principles in the PRC (’‘PRC GAAP’’)) to non-distributable reserve funds including general reserve fund, enterprise
expansion fund and staff bonus and welfare fund. The appropriation to the general reserve fund must be at least
In
addition, in accordance with the PRC Company Laws, the Group’s VIE and VIE’s subsidiaries, registered as Chinese domestic
companies, must make appropriations from their after-tax profits as determined under the PRC GAAP to non-distributable reserve funds
including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be
The general reserve fund, enterprise expansion fund, statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the registered capital of the respective entity. The staff bonus and welfare fund are liability in nature and is restricted to make payment of special bonuses to employees and for the collective welfare of employees. None of these reserves is allowed to be transferred to the Group by way of cash dividends, loans or advances, nor can they be distributed except under liquidation.
For the years ended December 31, 2021, 2022 and 2023, appropriation was made to the general reserve fund by the Group’s wholly foreign owned PRC subsidiaries, and no appropriation was made to the statutory surplus fund by the Group’s VIE and VIE’s subsidiaries, respectively. appropriation has been made by these companies to discretionary funds.
F-30
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (ii) | Recent Accounting Pronouncements |
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Group is currently evaluating the impact of the new guidance on the consolidated financial statements.
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”, which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. This guidance also requires certain disclosures for equity securities subject to contractual sale restrictions. The new guidance is required to be applied prospectively with any adjustments from the adoption of the amendments recognized in earnings and disclosed on the date of adoption. This guidance is effective for fiscal years beginning after 15 December 2023, including interim periods within those fiscal years. Early adoption is permitted. The Group does not expect that the adoption of this guidance will have a material impact on the financial position, results of operations and cash flows.
In July 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The adoption of this guidance did not have a material impact on its financial position, results of operations and cash flows.
In September 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The Board is issuing the amendments in this Update to enhance the transparency and decision usefulness of income tax disclosures. Investors currently rely on the rate reconciliation table and other disclosures, including total income taxes paid, to evaluate income tax risks and opportunities. While investors find these disclosures helpful, they suggested possible enhancements to better (1) understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities, (2) assess income tax information that affects cash flow forecasts and capital allocation decisions, and (3) identify potential opportunities to increase future cash flows. The Board decided that the amendments should be effective for public business entities for annual periods beginning after December 15, 2024.
| 3. | Concentration and Risk |
Concentration of customers
There
are no customers from whom revenue individually represent more than 10% of the total revenue of the Group for the years ended December
31, 2021, 2022. For the year ended December 31, 2023, the Group adjusted the new property business scale and took actions to cease business
cooperation with high credit risk developers to avoid further losses due to continuous downturn of real estate transactions market, which
resulted in a significant increase of the percentage of two good credit developers’ revenue to the total revenue of the Group being
more than
Concentration of credit risk
Assets that potentially subject the Group to significant concentrations of credit risk primarily consist of cash and cash equivalents, restricted cash, short-term investments, accounts receivable, loans receivable and security deposit with real estate developers included under prepayments and other current assets.
As of December 31, 2021, 2022 and 2023, substantially all of the Group’s cash and cash equivalents, restricted cash and short-term investments were held by reputable financial institutions, located in the PRC and Hong Kong, which management believes are of high credit quality and financially sound based on public available information.
F-31
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Accounts receivable are typically unsecured and are primarily derived from revenue earned from real estate developers. Security deposits with real estate developers are also unsecured and are the advance payment to real estate developers to obtain the exclusive selling right under Exclusive Sales Contracts without Sales Commitment Arrangements (see note 1). The risk with respect to accounts receivable and security deposit with real estate developers are managed by credit evaluations the Group performs on its customers and its ongoing monitoring of outstanding balances.
The Group is exposed to default risk on its loans receivable. The Group assesses the allowance for credit loss related to loans receivable on a quarterly basis, either on an individual or collective basis.
Cash concentration
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| RMB denominated bank deposits with: | ||||||||
| Financial Institutions in the PRC | ||||||||
| HKD denominated bank deposits with: | ||||||||
| Financial Institutions in the Hong Kong | ||||||||
| U.S. dollar denominated bank deposits with: | ||||||||
| Financial Institutions in the Hong Kong | ||||||||
| Financial Institutions in the PRC | ||||||||
The
bank deposits with financial institutions in the PRC are insured by the government authority for up to RMB
Currency risk
The Group’s operational transactions and its assets and liabilities are primarily denominated in RMB, which is not freely convertible into foreign currencies. The value of RMB is subject to changes in central government policies and international economic and political developments that affect the supply and demand of RMB in the foreign exchange market. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (the “PBOC”). Remittances from China in currencies other than RMB by the Group must be processed through the PBOC or other China foreign exchange regulatory bodies and require certain supporting documentation in order to execute the remittance.
Interest rate risk
The Group’s short-term bank borrowings bear interests at fixed rates. If the Group were to renew these loans upon maturity and the related banks only agree to offer variable rate for such renewal, the Group might then be subject to interest rate risk.
F-32
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 4. | Fair value measurement |
December 31, 2022
| Level 1 | Level 2 | Level 3 | Balance at | |||||||||||||
| Inputs | Inputs | Inputs | Fair Value | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Assets | ||||||||||||||||
| Short-term investments | ||||||||||||||||
| -Wealth management products | ||||||||||||||||
| Total Assets | ||||||||||||||||
December 31, 2023
| Level 1 | Level 2 | Level 3 | Balance at | |||||||||||||
| Inputs | Inputs | Inputs | Fair Value | |||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Assets | ||||||||||||||||
| Short-term investments | ||||||||||||||||
| -Wealth management products | ||||||||||||||||
| Total Assets | ||||||||||||||||
The Group values its investments in wealth management products issued by certain banks using quoted subscription or redemption prices published by these banks, and accordingly, the Group classifies the valuation techniques that use these inputs as level 2.
The
Group’s short-term investments as of December 31, 2022 and 2023 were acquired close to the year-end dates and can be instantly
redeemed or mature within
There have no transfers between level 1, level 2 and level 3 categories.
| 5. | Lease |
| As
of December 31, 2022 | As
of December 31, 2023 | |||||||
| RMB | RMB | |||||||
| Right-of-use assets | ||||||||
| Lease liabilities | ||||||||
| As
of December 31, 2022 | As
of December 31, 2023 | |||||||
| RMB | RMB | |||||||
| Operating lease cost | ||||||||
| Short-term lease cost | ||||||||
| Total | ||||||||
F-33
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| As
of December 31, 2022 | As
of December 31, 2023 | |||||||
| RMB | RMB | |||||||
| 2023 | ||||||||
| 2024 | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total undiscounted operating lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | ||||||||
As of December 31, 2023, the weighted-average remaining lease term on these leases is approximately
| 6. | Accounts receivable, net |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Accounts receivable from real estate developers | ||||||||
| Accounts receivable from individual customers | ||||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
As
of December 31, 2022 and 2023, the Group pledged accounts receivable from real estate developers of RMB
| As of December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance at the beginning of the year | ||||||||||||
| Provision (Reversal) for the year | ( | ) | ||||||||||
| Write-off | ( | ) | ( | ) | ( | ) | ||||||
| Balance at the end of the year | ||||||||||||
The provision of allowance for doubtful accounts was included in general and administrative expenses.
F-34
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 7. | Prepayments and other assets, net |
| As of December 31, | ||||||||||
| 2022 | 2023 | |||||||||
| RMB | RMB | |||||||||
| Loans receivable, net | (1) | |||||||||
| Security deposits with real estate developers, net | (2) | |||||||||
| Rental and other deposits, net | (3) | |||||||||
| Other receivables | ||||||||||
| Prepayments and other assets, net | ||||||||||
| Current Portion | ||||||||||
| Total prepayments and other assets, net | ||||||||||
(1)
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Secured loans | ||||||||
| Unsecured loans | ||||||||
| Less: allowance for doubtful loans | ( | ) | ( | ) | ||||
| Loans receivable, net | ||||||||
| Current Portion | ||||||||
| Total loans | ||||||||
As
of December 31, 2022 and 2023, loans receivable are primarily personal loans made to home purchasers, home owners, Registered Agents
and the Group’s employees. These loans have an original term from
On
December 25, 2017, the Group entered into a -year arrangement with an independent third party trust, under which the Group would refer
home owners on their platform to obtain personal loans from the trust. The Group is entitled to a loan facilitation fee ranging from
In
June 2021, the Group lent aggregately RMB
F-35
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| As of December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance at the beginning of the year | ||||||||||||
| Provision (reversal) for the year | ( | ) | ||||||||||
| Written-offs | ( | ) | ( | ) | ||||||||
| Balance at the end of the year | ||||||||||||
The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs periodic evaluation of the adequacy of the allowance. The allowance is based on the Group’s loan loss history, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, composition of the loan portfolio, current economic conditions and other relevant factors. The allowance is calculated at portfolio-level since the loans portfolio is typically of smaller balance homogenous loans and is collectively evaluated for impairment. In estimating the allowance of the loan portfolio, the Group also considers qualitative factors such as current economic conditions and/or events in specific industries and geographical areas, including unemployment levels, trends in real estate values, peer comparisons, and other pertinent factors such as regulatory guidance.
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| 1-29 days past Due | ||||||||
| 30-89 days past Due | ||||||||
| Over 90 days past Due | ||||||||
| Total past Due | ||||||||
| Current | ||||||||
| Total loans | ||||||||
(2)
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Security deposits with real estate developers under Exclusive Sales Contract | ||||||||
| - Without Sales Commitment Arrangement | ||||||||
| - With Sales Commitment Arrangement | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Security deposits with real estate developers, net | ||||||||
An
allowance for doubtful accounts of RMB
An
allowance for doubtful accounts of RMB
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year | ||||||||
| Provision for the year | ||||||||
| Written-offs | ( | ) | — | |||||
| Balance at the end of the year | ||||||||
F-36
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
(3)
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Rental and other deposits | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Rental and other deposits, net | ||||||||
As
of December 31, 2023, an allowance of doubtful accounts of RMB
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year | ||||||||
| Written-offs | ( | ) | ( | ) | ||||
| Balance at the end of the year | ||||||||
(4) Other receivables
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year | ||||||||
| Provision for the year | ||||||||
| Written-offs | ( | ) | ||||||
| Balance at the end of the year | ||||||||
| 8. | Property, equipment and software, net |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Furniture and office equipment | ||||||||
| Motor vehicles | ||||||||
| Software | ||||||||
| Total Property, equipment and software | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Impairment loss | ( | ) | ||||||
| Total Property, equipment and software, net | ||||||||
Depreciation
and amortization expenses were RMB
Impairment loss represents the carrying amounts of property, equipment and software relating to the business of Shanghai Yuancui Information Technology Co., Ltd. (“Yuancui”) which was ceased during the year ended December 31, 2021(see note 22). The related property, equipment and software were disposed through Yuancui’s bankruptcy liquidation during the year ended December 31, 2023.
F-37
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 9. | Intangible assets, net |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Non-competed agreements | ||||||||
| Trademarks | ||||||||
| Total intangible assets | ||||||||
| Less: Accumulated amortization | ( | ) | ||||||
| Impairment loss | ( | ) | ||||||
| Total intangible assets, net | ||||||||
During
the year ended December 31, 2020, the Company acquired intangible assets amounting to RMB
| 10. | Goodwill, net |
| Amount | ||||
| RMB | ||||
| Balance as of January 1, 2022 | ||||
| Additions | ||||
| Balance as of December 31, 2022 | ||||
| Impairment loss | ( | ) | ||
| Balance as of December 31, 2023 | ||||
In
March 2022, the Group acquired a
| 11. | Equity method investment, net |
| Balance as of January 1, 2021 | ||||
| Additions | ||||
| Share of results | ( | ) | ||
| Return of capital | ( | ) | ||
| Impairment losses | ( | ) | ||
| Disposal | ( | ) | ||
| Balance as of December 31, 2021 | ||||
| Additions | ||||
| Share of results | ( | ) | ||
| Return of capital | ( | ) | ||
| Impairment losses | ( | ) | ||
| Balance as of December 31, 2022 | ||||
| Share of results | ||||
| Return of capital | ( | ) | ||
| Impairment losses | ( | ) | ||
| Balance as of December 31, 2023 |
During the years ended December 31, 2021, 2022 and 2023, the Group made certain equity method investments. The Group does not have controlling financial interests over these investees, but it has ability to exercise significant influence over their financial and operating polices.
In connection with the Sales Commitment Arrangements as described in note 1, the Group invested into certain limited partnerships as a limited partner. The Group has determined that given the design of these limited partnerships, they are considered to be unconsolidated VIEs and the Group is not considered to be the primary beneficiary, as further described below.
F-38
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
During the years ended December 31, 2021, 2022 and 2023, the limited partnerships were either involved in or invested by the Group for the purpose of the Sales Commitment Arrangements as a fund provider, details of which are disclosed in note 1. Under these arrangements, an initial deposit is required to be paid to the real estate developers prior to the commencement of the exclusive sales period. The limited partnerships are designed such that the investors (including the Group) would make their respective initial equity capital payments based on the initial deposit requirements. The investors are committed to provide additional capital funding in several tranches based on a funding schedule prepared considering of the forecast sale plan and actual progress of properties sales throughout the exclusive sale period.
The Group has determined that the total equity investment at risk of these limited partnerships is limited to the capital injected in these limited partnerships and does not include the commitments of the partners to contribute additional equity as the funding commitments are not reported as equity in the balance sheet of the limited partnerships. Capital investments of the partners are the only source of funding of these limited partnerships. In addition, the amount of paid-up capital at inception is limited to the funding requirements for the initial stage of the project. The Group has determined that the limited partnerships are VIEs as their total equity investments at risk are not considered to be sufficient to permit the limited partnerships to finance their activities without additional subordinated financial support.
To determine whether the Group is the primary beneficiary of these limited partnerships, the Group has evaluated whether it has both
| (i) | the power to direct the activities of the limited partnerships that most significantly impact their economic performance; and |
| (ii) | the obligation to absorb losses of, or the right to receive benefits from, the limited partnerships that could potentially be significant to these entities. |
The Group determined that the activities that most significantly impact the economic performance of the limited partnerships include: (i) selecting real estate projects, (ii) negotiating the terms of sale commitment arrangement, (iii) monitoring the progress of property sales and (iv) for the limited partnerships under Non-Group Commitment Arrangements as described in note 1, managing the disposal of unsold properties, if any, at the end of the sales period that the limited partnerships are required to purchase from the property developer.
Based on these activities that the Group considered to be most significant, the Group evaluated who has the power to direct them beginning with an assessment of the parties involved in the ownership and governance structure of these limited partnerships. In this regard, each of the limited partnerships is sponsored by an investor that is unrelated to the Group. The investments of the sponsoring investor in the limited partnerships are generally in the form of both limited partnership interest and general partnership interest, with these partnership interests being held by two or more of the sponsoring investor’s-controlled subsidiaries. Under the limited partnership agreement, the general partner can make key management decisions for the limited partnership. In addition, the Group does not have any kick-out right or the unilateral ability to exercise any substantive participating rights. Accordingly, the Group has determined that the power to direct the activities that most significantly impact the economic performance rests with the general partner and the other limited partners that are all under the common control of the sponsoring investor.
The Group’s obligation to absorb losses of, or the right to receive benefits from, the limited partnerships are limited to its committed capital investments or its rights to receive sharing of profit from the limited partnerships based on its proportionate share of the capital contributions.
Based on the analysis above, as the Group does not have the power to direct the activities of limited partnerships that most significantly impact their economic performance, the Group has concluded it is not the primary beneficiary of the limited partnerships established in connection with the Sales Commitment Arrangements. The Group determined that it has significant influence over these limited partnerships and therefore has accounted for its investments under the equity method.
F-39
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The
Group considers, as a limited partner, that its maximum exposures to the losses from the limited partnerships are the maximum loss that
could potentially be recorded through earnings in future periods as a result of its investments and other variable interests in the limited
partnerships, regardless of the probability of the losses actually occurring. The Group’s maximum exposures to the losses from
the limited partnerships as of December 31, 2022 and 2023 are set out below, which represent the aggregated amounts of the carrying amounts
of the investments in limited partnerships and the maximum amount of additional capital commitments as stipulated in the respective partnership
deeds.
| Aggregated carrying amount (before impairment loss) of the limited partnerships | Maximum amount of additional Capital commitment (Note 23) | Maximum exposures to the losses of the limited partnerships | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance as of December 31, 2022 | ||||||||||||
| Balance as of December 31, 2023 | ||||||||||||
Impairment loss
In
considering current property market conditions and the operating performance of the limited partnerships, the Group recognized other-than-temporary
impairment loss of RMB
Disposal
During the year ended December 31, 2021, the other investors of Ningbo Meishan Deyu Investment Limited Partnership (“Deyu”) and Ningbo Meishan Jiuyi Investment Limited Partnership (“Jiuyi”) withdrew all their capital invested after completing the properties sales projects. The Group became the sole investor of Deyu and Jiuyi, which have been accounted for as consolidated subsidiaries of the Group (see note 22). Deyu was cancelled in September, 2022.
F-40
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The
following equity method investees were either involved in or invested by the Group for the purpose of the Sales Commitment Arrangements
as a fund provider or other transactions, details of which are disclosed in note 1.
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| Name of the limited partnerships | ||||||||
| Gefei Chengyun | % | % | ||||||
| Ningbo Meishan Jiushen Investment Limited Partnership (“Jiushen”) | % | % | ||||||
| Tibet Shiguan Business Management Limited Partnership (“Shiguan”) | % | *** | ||||||
| Jiuchuan | % | % | ||||||
| Ningbo Meishan Decheng Investment Limited Partnership (“Decheng”) | % | *** | ||||||
| Yiwu Longshu Tianye Investment Management Limited Partnership (“Longshutianye”) | % | % | ||||||
| Yiwu Longshu Qianli Investment Management Limited Partnership (“Longshuqianli”) | % | *** | ||||||
| Jiuyi | * | * | ||||||
| Jiuzhen | % | *** | ||||||
| Yunde | % | % | ||||||
| Ningbo Meishan Deyan Investment Limited Partnership (“Deyan”) | % | % | ||||||
| Ningbo Meishan Detong Investment Limited Partnership (“Detong”) | % | % | ||||||
| Ningbo Meishan Derong Investment Limited Partnership (“Derong”) | % | % | ||||||
| Jiushi | % | % | ||||||
| Ningbo Meishan Qixing Management Limited Partnership (“Qixing”) | % | % | ||||||
| Shanghai Ruokun Management Limited Partnership (“Ruokun”) | % | *** | ||||||
| Deyu | * | * | ||||||
| Hangzhou Honggeng Investment Limited Partnership (“Honggeng”) | % | *** | ||||||
| Jiaxinda | % | % | ||||||
| Shanghai Fangjin Management Limited Partnership (“Fangjin”） | % | *** | ||||||
| Muju | % | *** | ||||||
| Name of other equity method investees | ||||||||
| Shenzhen Chenji Zhaozhao Technology Co., Ltd(“Chenji Zhaozhao”) | %** | *** | ||||||
| Shanghai Tinghaozhu Space Design Co., Ltd(“Tinghaozhu Space”) | %** | *** | ||||||
| * |
| ** |
| *** |
F-41
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||||||||||||||
| 2021 | 2022 | 2023 | ||||||||||||||||||||||
| Capital | Return of | Capital | Return of | Capital | Return of | |||||||||||||||||||
| Investments | capital | Investments | capital | Investments | capital | |||||||||||||||||||
| Name of the limited partnerships | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||
| Jiushen | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Jiuchuan | ( | ) | ||||||||||||||||||||||
| Longshutianye | ( | ) | ( | ) | ||||||||||||||||||||
| Jiuzhen | ( | ) | ( | ) | ||||||||||||||||||||
| Yunde | ( | ) | ||||||||||||||||||||||
| Deyan | ( | ) | ( | ) | ||||||||||||||||||||
| Detong | ( | ) | ||||||||||||||||||||||
| Derong | ( | ) | ||||||||||||||||||||||
| Jiushi | ( | ) | ( | ) | ||||||||||||||||||||
| Jiaxinda | ( | ) | ||||||||||||||||||||||
| Fangjin | ( | ) | ||||||||||||||||||||||
| Muju | ( | ) | ( | ) | ||||||||||||||||||||
| Name of other equity method investees | ||||||||||||||||||||||||
| Chenji Zhaozhao | ( | ) | ||||||||||||||||||||||
| Tinghaozhu Space | ||||||||||||||||||||||||
| Total | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
F-42
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Balance sheet data: | ||||||||
| Current assets | ||||||||
| Non-current assets | ||||||||
| Total assets | ||||||||
| Current liabilities | ||||||||
| Total liabilities | ||||||||
| Equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
| For the year ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Operating data: | ||||||||||||
| Revenue | ||||||||||||
| Operating (loss)/income | ( | ) | ( | ) | ||||||||
| Net (loss)/income | ( | ) | ( | ) | ||||||||
| 12. | Long-term equity investment, net |
In
accordance with the Capital Injection and Share Transfer Agreement entered between the Group, Chengdu Haofangtong Technology Corporation
Limited (“Haofangtong”) and the existing shareholders of Haofangtong dated July 7, 2018, the Group agreed to acquire
On
September 5, 2018, the Group completed the transaction of subscripting
The
Group has determined that it does not have significant influence in Haofangtong and that there is no readily determinable fair value
of Haofangtong’s shares. The investments in the
In December 2019, the Group determined
that the decline in the fair value of the equity investments in Haofangtong, including the purchase option of additional equity interests,
was other than temporary and an impairment loss of RMB
impairment or adjustment for observable price changes on such investments was recognized for the year ended December 31, 2020.
F-43
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
In December 2021, the Group determined
a further decline in the value of the equity investments in Haofangtong was other than temporary and an impairment loss of RMB
In December 2022, the Group determined
a further decline in the value of the equity investments in Haofangtong was other than temporary and an impairment loss of RMB
In December 2023, the Group determined
a further decline in the value of the equity investments in Haofangtong was other than temporary and an impairment loss of RMB
| 13. | Short-term bank borrowings |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Secured bank loans | ||||||||
| Short-term borrowing | ||||||||
The
weighted average interest rates of bank loans as of December 31, 2022 and 2023 are
In
July 2021, the Group borrowed a one-year loan of RMB
In
September 2022, the Group borrowed a
In
March 2021, the Group borrowed a -year loan of RMB
In
August 2022, the Group borrowed a
F-44
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
In
June 2021, the Group borrowed a -year loan of RMB
The loan agreements with Bank of China, Zhejiang Chouzhou Commercial Bank and Bank of Nanjing contain certain financial and non-financial covenants. As of December 31, 2022 and 2023, the Group was in compliance with the relevant covenants.
| 14. |
| As of December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance at the beginning of the year | ||||||||||||
| Cash received from customers | ||||||||||||
| Cash refunded to customers | ( | ) | ( | ) | ( | ) | ||||||
| Revenue (recognized) reversed | ( | ) | ( | ) | ||||||||
| Balance at the end of the year | ||||||||||||
Customers’ refundable fees represent the commission income received in advance (see note 2(v)).
| 15. | Accrued expenses and other payables |
| As of December 31, | ||||||||||
| 2022 | 2023 | |||||||||
| RMB | RMB | |||||||||
| Accrual for salary and bonus | ||||||||||
| Other taxes and surcharge payable | ||||||||||
| Down payments collected on behalf of secondary property sellers | (1) | |||||||||
| Amounts due to franchisees | (2) | |||||||||
| Professional service fee | ||||||||||
| Amounts due to third parties under collaborative agreements | (3) | |||||||||
| Accrued expenses | ||||||||||
| Receipt in advance | ||||||||||
| Others | ||||||||||
| Accrued expenses and other payables | ||||||||||
| (1) |
| (2) |
| (3) |
F-45
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 16. | Taxation |
| a) | Income tax |
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, the Cayman Islands does not impose a withholding tax on payments of dividends to shareholders.
Hong Kong
Under
the current Hong Kong Inland Revenue Ordinance, the Company’s Hong Kong subsidiary is subject to Hong Kong profits tax at the rate
of
PRC
Under
the Enterprise Income Tax Law (“EIT Law”) in the PRC, domestic companies are subject to EIT at a uniform rate of
Under
the EIT Law and its implementation rules, an enterprise established outside China with a “place of effective management”
within China is considered a China resident enterprise for Chinese enterprise income tax purposes. A China resident enterprise is generally
subject to certain Chinese tax reporting obligations and a uniform
F-46
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Cayman | ( | ) | ( | ) | ( | ) | ||||||
| Hong Kong SAR | ( | ) | ( | ) | ( | ) | ||||||
| BVI | ( | ) | ( | ) | ( | ) | ||||||
| PRC, excluding Hong Kong SAR | ( | ) | ( | ) | ( | ) | ||||||
| ( | ) | ( | ) | ( | ) | |||||||
The Group had minimal current income tax expense for the years ended December 31, 2021, 2022 and 2023, as most of the companies in the Group either made a loss or had tax loss carried forwards to net against taxable income in the respective years.
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Current income tax expense (benefit) | ( | ) | ||||||||||
| Deferred income tax expense | ||||||||||||
| ( | ) | |||||||||||
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Loss before tax | ( | ) | ( | ) | ( | ) | ||||||
| Income tax computed at PRC statutory tax rate | ( | ) | ( | ) | ( | ) | ||||||
| Effect of preferential tax rate* | ( | ) | ||||||||||
| Tax rate differential not subject to PRC income tax | ||||||||||||
| Non-deductible expense | ||||||||||||
| Change in valuation allowance | ||||||||||||
| Additional deduction for research and development expenses | ( | ) | ( | ) | — | |||||||
| Tax-exempted income | ( | ) | ( | ) | — | |||||||
| Late payment surcharge on uncertain tax position | ( | ) | ||||||||||
| Others** | ( | ) | ( | ) | ||||||||
| ( | ) | |||||||||||
| * |
| ** |
F-47
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| b) | Deferred tax assets and liabilities |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Net operating loss carry forward | ||||||||
| Allowance for doubtful accounts | ||||||||
| Payroll and accrued expenses | ||||||||
| Deductible advertisement expenses | ||||||||
| Long-term equity investment impairment | ||||||||
| Intangible assets* | ||||||||
| Estimated accounts payable write-off benefit | ( | ) | ||||||
| Gross deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
| * |
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance at the beginning of the year | ( | ) | ( | ) | ( | ) | ||||||
| Changes of valuation allowances | ( | ) | ( | ) | ( | ) | ||||||
| Balance at the end of the year | ( | ) | ( | ) | ( | ) | ||||||
As
of December 31, 2023, the valuation allowance of RMB
The
net operating losses carry forwards of the Company’s PRC subsidiaries amounted to RMB
F-48
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Beginning balance | ( | ) | ( | ) | ( | ) | ||||||
| Additions | ( | ) | ( | ) | ||||||||
| Ending balance | ( | ) | ( | ) | ( | ) | ||||||
RMB
According
to the PRC Tax Administration and Collection Law, the statute of limitations is
17. Redeemable Convertible Preferred Shares
All of the Redeemable Convertible Preferred Shares were converted to Class A ordinary shares immediately upon the completion of the Company’s initial public offering on November 1, 2019.
| Series
A-2 Preferred Shares | Series
B Preferred Shares | Series
C Preferred Shares | Total | |||||||||||||
| Balance as of January 1, 2019 | ||||||||||||||||
| Redemption value accretion | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Conversion of Redeemable Convertible Preferred Shares to Class A Ordinary Shares | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance as of December 31, 2019, 2020, 2021, 2022 and 2023 | ||||||||||||||||
Since
the date of incorporation, the Company has completed
F-49
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
On
October 25, 2013, the Company entered into a share purchase agreement with the Series A Investors and pursuant to which, the Company
issued
On
June 12, 2014, the Company entered into a share purchase agreement with the Series B Investors and pursuant to which, the Company issued
On
June 30, 2015, the Company entered into a share purchase agreement with the Series C Investors and pursuant to which, the Company issued
On
October 8, 2019, the Company granted an option to acquire
The Company had classified the Series A-2 Preferred Shares, Series B Preferred Shares and Series C Preferred Shares as mezzanine equity in the Consolidated Balance Sheets for periods prior to their conversion to Class A ordinary shares on November 1, 2019 as they were contingently redeemable at the option of the holders after a specified time period.
The Company has determined that conversion and redemption features embedded in the Redeemable Preferred Shares are not required to be bifurcated and accounted for as a derivative, as the economic characteristics and risks of the embedded conversion and redemption features are clearly and closely related to that of the Preferred Shares. The Preferred Shares are not readily convertible into cash as there is not a market mechanism in place for trading of the Company’s shares.
The Company has determined that there was no beneficial conversion feature attributable to any of the Preferred Shares because the initial effective conversion prices of these Preferred Shares were higher than the fair value of the Company’s ordinary shares at the relevant commitment dates.
In addition, the carrying values of the Preferred Shares are accreted from the share issuance dates to the redemption value on the earliest redemption dates. The accretions are recorded against retained earnings, or in the absence of retained earnings, additional charges are recorded by increasing the accumulated deficit.
The rights, preferences and privileges of the Preferred Shares are as follows:
Redemption Rights
At any time on or after June 12, 2019 if there is no Qualified Initial Public Offering (’‘Qualified IPO’’), each of the holders of a majority of the then outstanding Series A-2 Preferred Shares and Series B Preferred Shares may request a redemption of the Preferred Shares of such series.
F-50
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
At any time after the earlier of (a) the fifth anniversary of the commitment date of the series C preferred shares purchase agreement (“Closing Date”) (if there is no Qualified IPO) or (b) any redemption initiated by the holders of Series A-2 Shares or Series B Shares pursuant to above, each of the holders of a majority of the then outstanding Series C Preferred Shares may request a redemption of the Preferred Shares of such series.
The
price at which each Preferred Share shall be redeemed equal to
The Company accretes changes in the redemption value over the period from the date of issuance to the earliest redemption date of the Preferred Shares using effective interest method. Changes in the redemption value are considered to be changes in accounting estimates.
Conversion Rights
Each
Preferred Share is convertible, at the option of the holder, at any time after the date of issuance of such Preferred Shares according
to a conversion ratio, subject to adjustments for dilution, including but not limited to stock splits, stock dividends and capitalization
and certain other events. Each Preferred Share is convertible into a number of ordinary shares determined by dividing the applicable
original issuance price by the conversion price. The conversion price of each Preferred Share is the same as its original issuance price
and no adjustments to conversion price have occurred. At December 31, 2016, 2017 and 2018, each Preferred Share is convertible into
Each
Preferred Share shall automatically be converted into ordinary shares, at the then applicable preferred share conversion price upon (i)
closing of a Qualified Initial Public Offering (’‘Qualified IPO’’) or (ii) each Series B Preferred Share shall
automatically be converted into Ordinary Shares upon the affirmative written consent of the holders of
Voting Rights
Each Preferred Share shall be entitled to that number of votes corresponding to the number of ordinary shares on an as-converted basis. Preferred Shares shall vote together with the holders of Ordinary Shares, and not as a separate class or series with respect to certain specified matters. Otherwise, the holders of Preferred Shares and ordinary shares shall vote together as a single class.
Dividend Rights
No dividends shall be declared or paid on the Ordinary Shares, Series A Preferred Shares and the Series B Shares unless and until a dividend in like amount is paid at the same time on each outstanding Series C Preferred Share calculated on an as-converted basis.
No dividends shall be declared or paid on the Ordinary Shares and Series A Preferred Shares unless and until a dividend in like amount is paid at the same time on each outstanding Series B Preferred Share (calculated on an as-converted basis).
Liquidation Preferences
In
the event of any liquidation including deemed liquidation, dissolution or winding up of the Company, holders of the Preferred Shares
shall be entitled to receive a per share amount equal to
F-51
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The modifications of the rights, preferences and privileges of the Preferred Shares are not considered substantial, and are thus accounted for as a modification rather than an extinguishment of the Preferred Shares. Where there is a transfer of value between ordinary shareholders and Preferred Shares holders as a result of such modifications, the transfer of value is accounted for as deemed dividends, recorded as additions/reductions in accumulated deficit and reductions/additions in the Preferred Shares carrying amounts.
| 18. | Ordinary shares and Series A-1 Convertible Preferred Shares |
Ordinary shares
Upon
incorporation in 2013, the Company’s authorized ordinary shares were
Immediately
prior to the completion of Company’s initial public offering on November 1, 2019, its authorized share capital was changed to US$
Upon
the completion of Company’s initial public offering and exercise of the overallotment options, the Company issued
On
October 14, 2022, the Company’s authorized share capital was changed to US$
Upon
the completion of Company’s the offering on December 8, 2022, the Company issued
On
February 21, 2023,
On
March 3, 2023, the company additionally offered and issued
F-52
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
On February 10, 2023, the Company received a convertible promissory note payment of US$
On March
9, 2023, the Company entered into a note conversion agreement with the holder of the convertible promissory note in a principal amount
of US$
On July
19, 2023, the company was offering to certain investors (i) an aggregate of
On July 21,
2023, the company issued
On July
24, 2023, the company announced that it will change the ratio of the American depositary shares (“ADSs”) representing its
Class A ordinary shares from one (1) ADS representing three hundred and seventy-five (375) Class A ordinary share to one (1) ADS representing
five thousand six hundred and twenty-five (
In respect
of matters requiring the votes of shareholders, the holders of Class B ordinary shares is entitled to
Series A-1 Convertible Preferred Shares
Series A-1 Preferred Shares are not redeemable and are convertible to Ordinary Shares at a 1-to-1 initial conversion ratio at the option of the holder at any time after the date of issuance. The liquidation preference of Series A-1 Preferred Shares is preferable to Ordinary Shares but subordinated to redeemable convertible preferred shares as disclosed in Note 17.
On November 1, 2019, all Series A-1 Convertible Preferred Shares were converted to Class A ordinary shares upon the Company’s completion of IPO.
F-53
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 19. | Share-Based Compensation |
On December 21, 2018, the Group adopted the 2018 Share Incentive Plan (“2018 Plan”).
Under
the 2018 Plan, the Board of Directors has approved that a maximum aggregate number of shares that may be issued pursuant to all awards
granted under the 2018 Plan shall be
All stock
options granted under the 2018 Plan are not exercisable until the consummation of the Group’s IPO and certain of the option granted
to employees are required to render service to the Group in accordance with a stipulated service schedule under which an employee earns
an entitlement to vest in
Prior to the completion of the IPO, the stock options granted to the employees and directors shall be forfeited upon the termination of employment of the employees and directors.
Options granted under the 2018 Plan during the year of 2021, grantees are entitled to vest the option at the end of the first year of completed service.
| Number of shares | Weighted average exercise price | Weighted average remaining contractual term | Weighted average grant date fair value | |||||||||||||
| US$ | US$ | |||||||||||||||
| Outstanding as of January 1, 2021 | ||||||||||||||||
| -Grant to Employees | ||||||||||||||||
| -Exercised | ( | ) | ||||||||||||||
| -Forfeited | ( | ) | ||||||||||||||
| Outstanding as of December 31, 2021 | ||||||||||||||||
| -Exercised | ( | ) | ||||||||||||||
| -Forfeited | ( | ) | ||||||||||||||
| Outstanding as of December 31, 2022 | ||||||||||||||||
| -Exercised | ( | ) | ||||||||||||||
| -Forfeited | ( | ) | ||||||||||||||
| Outstanding as of December 31, 2023 | ||||||||||||||||
| Exercisable as of December 31, 2023 | ||||||||||||||||
| 2019 | 2021 | |||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate (per annum) | % | % | ||||||
| Exercise multiple | ||||||||
| Expected dividend yield | % | % | ||||||
| Contractual term (in years) | ||||||||
F-54
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
The expected volatility was estimated based on the historical volatility of the Company and comparable peer public companies with a time horizon close to the expected term of the Group’s options. The risk-free interest rate was estimated based on the yield to maturity of U.S. treasury bonds denominated in US$ for a term consistent with the expected term of the Group’s options in effect at the option valuation date. The exercise multiple is estimated as the ratio of fair value of underlying shares over the exercise price as of the time the option is exercised, based on a consideration of empirical studies on the actual exercise behavior of employees. The expected dividend yield is zero as the Group has never declared or paid any cash dividends on its shares, and the Group does not anticipate any dividend payments in the foreseeable future. The expected term is the contract life of the option.
For the
years ended December 31, 2021, 2022 and 2023, the Company recognized RMB
On April 28, 2020, the Company and all Grantees entered into certain agreements pursuant to which Grantees agreed not to exercise any stock option, in whole or in part, for a 12-month period commencing from April 28, 2020. There were no other changes to the terms of the relevant stock option grants. The Company determined that the agreements between the Company and the Grantees constitutes a modification to the terms of the option grants with no incremental fair value for the underlying awards. Accordingly, there was no impact on the total compensation cost or the pattern for which the relevant compensation charges are recognized.
As of
December 31, 2023, RMB
| 20. | Revenue information |
| For the year ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Base commission from transactions | ||||||||||||
| Innovation initiatives and other value-added services | ||||||||||||
As the Group generates substantially all of its revenues from customers domiciled in the PRC, no geographical segments are presented. All of the Group’s long-lived assets are located in the PRC.
Innovation initiatives and other value-added services primarily consists of sales incentive income, franchise income, financial services income, loan facilitation services, parking space transaction services, income from software as a service (“SaaS”) platform participants and revenue from other value-added services rendered to the Registered Agents and market participants.
F-55
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 21. | Loss per share |
| For the year ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Numerator: | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Net loss(income) attributable to noncontrolling interests | ( | ) | ||||||||||
| ( | ) | ( | ) | ( | ) | |||||||
| Denominator: | ||||||||||||
| Weighted average number of ordinary shares | ||||||||||||
| Net loss per ordinary share | ||||||||||||
| ( | ) | ( | ) | ( | ) | |||||||
| As of December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| Share options to employees | ||||||||||||
| Total | ||||||||||||
| 22. | Business combination |
Acquisition of Yuancui
Yuancui
mainly engages in the provision of comprehensive operational solution for real estate agencies including application software to manage
their businesses, brand authorization and operation training to real estate agencies. On October 30, 2020, the Company completed the
subscription for newly issued ordinary shares of Yuancui for a cash consideration of RMB
F-56
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| Amount | ||||
| RMB | ||||
| Net assets acquired (i) | ||||
| Identifiable and amortizable intangible assets (note 8) | ||||
| -Non-competed agreements | ||||
| -Trademarks | ||||
| Goodwill | ||||
| Deferred tax liabilities | ( | ) | ||
| Noncontrolling interests (ii) | ( | ) | ||
| Total | ||||
| i. |
| ii. |
Goodwill arising from this acquisition was attributable to the synergies expected from the combined operations of Yuancui and the Company, the assembled workforce and its knowledge and experience in the managing real estate agencies in China in the PRC. The Company did not expect the goodwill recognized to be deductible for income tax purposes.
In June 2021, the Group injected
further cash capital of RMB
In considering property market conditions and the operating performance of Yuancui, the Group ceased all businesses of Yuancui during 2021 and the goodwill recognized from the acquisition was fully impaired.
Acquisition of Deyu and Jiuyi
The Company invested in Jiuyi and Deyu as a limited partner during 2018 and 2019, respectively, in connection with certain properties sales projects under the Sales Commitment Arrangements as described in note 1. During the year ended December 31, 2021, the other investors of Deyu and Jiuyi withdrew all their capital invested after completing the properties sales projects. The Group became the sole investor of Deyu and Jiuyi, which have been accounted for as consolidated subsidiaries of the Group.
| Amount | ||||
| RMB | ||||
| Net assets acquired (Note) | ||||
Note: Net assets acquired primarily included cash and deposits with real estate developers.
In relation to the revaluation of previously held interests, no material gain or loss was recognized by the Company recognized in the consolidated income statements for the year ended December 31, 2022, for the other acquisitions that constitute business combinations.
F-57
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
Acquisition of Tuqiang
Tuqiang
mainly engages in the provision of internet information services for real estate developers and agencies. On March 31, 2022, the Company
completed the acquirement
| Amount | ||||
| RMB | ||||
| Net assets acquired(i) | ( | ) | ||
| Goodwill | ||||
| Noncontrolling interests (ii) | ||||
| Total | ( | ) | ||
| i. |
| ii. |
Goodwill arising from this acquisition was attributable to the synergies expected from the combined operations of Tuqiang and the Company, the assembled workforce and its knowledge and experience in the managing real estate agencies in China in the PRC. The Company did not expect the goodwill recognized to be deductible for income tax purposes.
In considering property market conditions and the operating performance of Tuqiang, the Group ceased all businesses of Tuqiang during 2023 and the goodwill recognized from the acquisition was fully impaired.
| 23. | Commitments and Contingencies |
Capital commitment
As a limited
partner of those equity method investees disclosed in note 11, the Group is committed to make further capital injection into the limited
partnership in accordance with the respective partnership deeds. Such capital investment commitment amounted to RMB
Lease commitment
| Payment Due By December 31, | ||||||||||||
| Total | 2024 | 2025 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Operating lease commitments for lease expense under lease agreements | ||||||||||||
| Total | ||||||||||||
F-58
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 24. | Related Party Balance and Transactions |
| For the year ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Transactions with related parties | ||||||||||||
| (1) Base commission income and Sales incentive income shared with related parties under Self-Commitment and Non-Group Collaborative Agreements (see note 1) | ||||||||||||
| Jiufeng | ||||||||||||
| Jiuzhen | ||||||||||||
| Deyan | ||||||||||||
| Jiushi | ||||||||||||
| Chongkai | ||||||||||||
| Muju | ||||||||||||
| For the year ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| (2) Other income shared with related parties | ||||||||||||
| Chenji Zhaozhao | ||||||||||||
| Tinghaozhu Space | ||||||||||||
Under the respective Non-Group Commitment Agreements, the equity method investees above are parties under tri-party agreements pursuant to which they directly advanced the deposits to the real estate developers for the years ended December 31, 2021, 2022 and 2023.
During the years ended December 31,2021, 2022 and 2023, these related parties entered an Exclusive Sales Contracts which is required to directly advance deposit to the real estate developers while neither the Group nor these related parties is required to purchase any unsold unit of properties at the end of the exclusive sales period.
F-59
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
During the year ended December 31, 2022, the Group borrowed bank loan secured by real estate owned by one of equity method investment of the Group, Jiushi and real estate owned by Suzhou Chaxiaobai Culture & Media Co., Ltd. (“Suzhou Chaxiaobai”). The spouse of a shareholder of the Group is the controlling shareholder of Suzhou Chaxiaobai (see note 13). The loan from Zhejiang Chouzhou Commercial Bank was fully repaid in January, 2023.
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Amounts due to related parties | ||||||||
| (1) Payables for income shared under Non-Group Collaborative Agreements (see note 1) | ||||||||
| Gefei Chengyun | ||||||||
| Jiufeng | ||||||||
| Jiuchuan | ||||||||
| Longshutianye | ||||||||
| Yunde | ||||||||
| Detong | ||||||||
| Qixing | ||||||||
| Jiushi | ||||||||
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| (2) Payables for Base Commission Income shared with related parties under Exclusive Sales Contracts without Sales Commitment Arrangement | ||||||||
| Derong | ||||||||
| Jiushen | ||||||||
| Jiufeng | ||||||||
| (3) Other payables | ||||||||
| Jiushen | ||||||||
| Shanghai Chongkai Enterprise Management (LLP) (“Chongkai”) | ||||||||
| Jiufeng | ||||||||
| Muju | ||||||||
| Jiuzhen | ||||||||
| Chenji Zhaozhao | ||||||||
| Total | ||||||||
Jiuchuan, Decheng, Longshutianye, Longshuqianli, Yunde, Gefei chengyun, Jiushen, Detong, Derong, Qixing, Jiuzhen, Deyan, Jiushi , Muju, Chenji Zhaozhao and Tinghaozhu Space are equity method investees of the Group.
Jiusheng and Jiufeng are subsidiaries of Jiushen.
Chongkai is a company owned by two of the founders and certain management of the Group.
F-60
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 25. | Parent only financial information |
The following condensed parent company financial information of Fangdd Network Group Ltd., has been prepared using the same accounting policies as set out in the accompanying Consolidated Financial Statements. As of December 31, 2023, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable shares or guarantees of Fangdd Network Group Ltd., except for those, which have been separately disclosed in the Consolidated Financial Statements.
| (a) |
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| RMB | RMB | |||||||
| Assets | ||||||||
| Current asset | ||||||||
| Cash and cash equivalents | ||||||||
| Total current asset | ||||||||
| Non-current asset | ||||||||
| Investments in and amounts due from subsidiaries, the VIE and VIE’s subsidiaries | ||||||||
| Total non-current asset | ||||||||
| Total assets | ||||||||
| Liabilities | ||||||||
| Current liability | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total current liability | ||||||||
| Total liabilities | ||||||||
| Equity | ||||||||
| Class A ordinary shares | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
F-61
Fangdd Network Group Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| (b) |
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||
| Equity loss of subsidiaries and the VIE and VIE’s subsidiaries | ( | ) | ( | ) | ( | ) | ||||||
| Other income: | ||||||||||||
| Interest income (expense), net | ( | ) | ||||||||||
| Other income, net | ||||||||||||
| Loss before income tax | ( | ) | ( | ) | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ( | ) | ||||||
| Net loss attributable to ordinary shareholders | ( | ) | ( | ) | ( | ) | ||||||
| (c) |
| For the Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows used in investing activities: | ||||||||||||
| Investments in and amounts due from subsidiaries, the VIE and VIE’s subsidiaries | ( | ) | ( | ) | ||||||||
| Investment in short-term investments | ( | ) | ||||||||||
| Proceeds from redemption of short-term investments | ||||||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Cash flows provided by financing activities: | ||||||||||||
| Proceeds from issuance of ordinary shares, net of issuance costs | ||||||||||||
| Proceeds from issuance of convertible promissory note, net of issuance costs | ||||||||||||
| Net cash provided by financing activities | ||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at the beginning of the year | ||||||||||||
| Cash and cash equivalents at the end of the year | ||||||||||||
F-62