Exhibit 99.1
FANGDD NETWORK GROUP LTD.
INDEX TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
F-1
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share and per share data)
| As of December 31, | As of June 30, | |||||||||||||||
| Note | 2023 | 2024 | ||||||||||||||
| RMB | RMB | US$ | ||||||||||||||
| (Note 2.7) | ||||||||||||||||
| Assets | ||||||||||||||||
| Current assets | ||||||||||||||||
| Cash and cash equivalents | 3 | |||||||||||||||
| Restricted cash | 3 | |||||||||||||||
| Short-term investments | 4 | |||||||||||||||
| Accounts receivable, net | 6 | |||||||||||||||
| Prepayments and other assets, net | 7 | |||||||||||||||
| Inventories | ||||||||||||||||
| Total current assets | ||||||||||||||||
| Non-current assets | ||||||||||||||||
| Property, equipment and software, net | 8 | |||||||||||||||
| Right-of-use assets | 5 | |||||||||||||||
| Equity method investments, net | 10 | |||||||||||||||
| Long-term equity investment, net | 11 | |||||||||||||||
| Goodwill, net | 9 | |||||||||||||||
| Other non-current assets | ||||||||||||||||
| Total non-current assets | ||||||||||||||||
| Total assets | ||||||||||||||||
| Liabilities | ||||||||||||||||
| Current liabilities | ||||||||||||||||
| 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 | 13 | |||||||||||||||
| Accrued expenses and other payables (including accrued expenses and other payables of consolidated VIE without recourse to the Company of RMB | 14 | |||||||||||||||
| Income tax payables (including income tax payables of consolidated VIE without recourse to the Company of RMB | ||||||||||||||||
| Lease liabilities (including operating lease liabilities-current of consolidated VIE without recourse to the Company of RMB | 5 | |||||||||||||||
| 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 operating lease liabilities of consolidated VIE without recourse to the Company of RMB | 5 | |||||||||||||||
| Total non-current liabilities | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| Commitments and contingencies | 22 | |||||||||||||||
The accompanying notes are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.
F-2
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(All amounts in thousands, except for share and per share data)
| As of December 31, | As of June 30, | |||||||||||||||
| Note | 2023 | 2024 | ||||||||||||||
| RMB | RMB | US$ | ||||||||||||||
| (Note 2.7) | ||||||||||||||||
| Shareholders’ equity: | ||||||||||||||||
| Class A Ordinary shares (US$ | 17 | |||||||||||||||
| Class B Ordinary shares (US$ | 17 | |||||||||||||||
| Class C Ordinary shares (US$ | 17 | |||||||||||||||
| Additional paid-in capital | ||||||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ( | ) | ||||||||||
| Total Fangdd Network Group Ltd. shareholders’ equity | ||||||||||||||||
| Non-controlling interests | ( | ) | ( | ) | ( | ) | ||||||||||
| Total shareholders’ equity | ||||||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||||||
The accompanying notes are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.
F-3
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(All amounts in thousands, except for share and per share data)
| For the Six Months Ended June 30, | ||||||||||||||||
| Note | 2023 | 2024 | ||||||||||||||
| RMB | RMB | US$ | ||||||||||||||
| (Note 2.7) | ||||||||||||||||
| Revenue | 19 | |||||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ||||||||||
| Gross profit | ||||||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Product development expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ||||||||||
| Income/(loss) from operations | ||||||||||||||||
| Interest/(expense) income, net | ( | ) | ||||||||||||||
| Foreign currency exchange gain, net | ||||||||||||||||
| (Loss)/gain on short-term investments | ( | ) | ||||||||||||||
| Impairment loss for equity method investments | 10 | ( | ) | |||||||||||||
| Share of profit from equity method investees, net of income tax | 10 | |||||||||||||||
| Impairment loss for long-term equity investment | 11 | ( | ) | ( | ) | ( | ) | |||||||||
| Government grants | ||||||||||||||||
| Other income, net | ||||||||||||||||
| Loss on disposal of subsidiaries | ( | ) | — | — | ||||||||||||
| Gain on acquisition of subsidiaries | ||||||||||||||||
| Income before income tax | ||||||||||||||||
| Income tax benefit | 15 | |||||||||||||||
| Net income | ||||||||||||||||
| Net loss attributable to non-controlling interests | ||||||||||||||||
| Net income attributable to Fangdd Network Group Ltd. | ||||||||||||||||
| Net income attributable to ordinary shareholders | ||||||||||||||||
| Net income | ||||||||||||||||
| Other comprehensive income | ||||||||||||||||
| Foreign currency translation adjustment | ||||||||||||||||
| Total comprehensive income, net of tax | ||||||||||||||||
| Total comprehensive loss attributable to non-controlling interests | ||||||||||||||||
| Total comprehensive income attributable to ordinary shareholders | ||||||||||||||||
| Net income per share attributable to ordinary shareholders | ||||||||||||||||
| 20 | * | |||||||||||||||
| Weighted average number of ordinary shares outstanding used in computing net income per share | ||||||||||||||||
| 20 | ||||||||||||||||
| * |
The accompanying notes are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.
F-4
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(All amounts in thousands, except for share and per share data)
| Class
A Ordinary shares | Class
B Ordinary shares | Class C Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income/(loss) | Accumulated (deficit) /income | Total shareholders’ equity attributable to Fangdd Network Group Ltd. | Non- controlling interests | Total
shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | RMB | Shares | RMB | Shares | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | ( | ) | ( | ) | | ( | ) | | ||||||||||||||||||||||||||||||||||||||||
| Net income/(loss) for the period | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contribution from non-controlling shareholder | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of additional interests in subsidiaries | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Disposal of subsidiaries | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| 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 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| US$ (Note 2.7) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
F-5
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)
(All amounts in thousands, except for share and per share data)
| Class
A Ordinary shares | Class
B Ordinary shares | Class C Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income/(loss) | Accumulated (deficit) /income | Total
shareholders’ equity attributable to Fangdd Network Group Ltd. | Non- controlling interests | Total shareholders’ equity | ||||||||||||||||||||||||||||||||||||||||
| Shares | RMB | Shares | RMB | Shares | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Net income/(loss) for the period | — | — | — | ( | ) | |||||||||||||||||||||||||||||||||||||||||||
| Exercise of share options under share-based compensation | * | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Acquisition of subsidiaries with non-controlling interests | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Capital contribution from non-controlling shareholder | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| US$ (Note 2.7) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| * |
The accompanying notes are an integral part of these Unaudited Interim Condensed Consolidated Financial Statements.
F-6
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except for share and per share data)
| For the Six Months Ended June 30, | ||||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Note 2.7) | ||||||||||||
| Cash flows from operating activities | ||||||||||||
| Net income | ||||||||||||
| Adjustments to reconcile net income to net cash used in operating activities | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Share-based compensation expenses | ||||||||||||
| Loss/(gain) on short-term investments | ( | ) | ( | ) | ||||||||
| Impairment loss for long-term equity investment | ||||||||||||
| Impairment loss for equity method investments | ||||||||||||
| Share of profit from equity method investments, net of income tax | ( | ) | ||||||||||
| Allowance for doubtful accounts | ||||||||||||
| Property and equipment written off | ||||||||||||
| Foreign currency exchange gain | ( | ) | ( | ) | ( | ) | ||||||
| Gain on acquisition of subsidiaries | ( | ) | ( | ) | ||||||||
| Changes in operating assets and liabilities | ||||||||||||
| 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 | ( | ) | ( | ) | ( | ) | ||||||
| Return of capital from equity method investees | ||||||||||||
| Cash received from business combination, net of cash acquired | ||||||||||||
| Cash paid for short-term investments | ( | ) | ( | ) | ( | ) | ||||||
| Proceeds from disposal of short-term investments | ||||||||||||
| Net cash provided by investing activities | ||||||||||||
| Cash flows from financing activities | ||||||||||||
| Contribution from non-controlling shareholder | ||||||||||||
| Proceeds from issuance of ordinary shares, net of issuance costs | ||||||||||||
| Proceeds from issuance of convertible promissory note, net of issuance costs | ||||||||||||
| Repayment for short-term bank borrowings | ( | ) | ||||||||||
| Net cash 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-7
Fangdd Network Group Ltd.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(All amounts in thousands, except for share and per share data)
| For the Six Months Ended June 30, | ||||||||||||
| 2023 | 2024 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| (Note 2.7) | ||||||||||||
| Cash, cash equivalents and restricted cash at the beginning of the period | ||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | ||||||||||||
| Cash, cash equivalents and restricted cash | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Restricted cash | ||||||||||||
| Cash, cash equivalents and restricted cash at the end of the period | ||||||||||||
| Supplemental disclosures of cash flow information | ||||||||||||
| Interest paid | ( | ) | ||||||||||
| Income tax paid | ( | ) | ( | ) | ( | ) | ||||||
| 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 Unaudited Interim Condensed Consolidated Financial Statements.
F-8
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED 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 Unaudited Interim Condensed Consolidated Financial Statements include the financial statements of the Company, its subsidiaries, variable interest entity (“VIE”) and the VIE’s subsidiaries.
| (a) | VIE arrangements between the Company’s PRC subsidiaries |
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 Unaudited Interim Condensed 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.
F-9
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (a) | VIE arrangements between the Company’s PRC subsidiaries (continued) |
| ● | 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.
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, (b) 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 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 equity pledges under the equity interest pledge agreement have been registered with the local branches of the Administration for Market Regulation in accordance with the PRC Property Rights Law.
F-10
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (a) | VIE arrangements between the Company’s PRC subsidiaries (continued) |
| ● | 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 reimburse 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 terms of ten years, and the term has been extended by supplementary agreements to November 19, 2033. The term may be extended upon Fangdd Information’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-11
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (a) | VIE arrangements between the Company’s PRC subsidiaries (continued) |
Risks in relation to Shenzhen Fangdd structure
In the opinion of the Group’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 this offering 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-12
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (b) | Summary financial information of the Group’s VIE and its subsidiaries |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Amount due from related parties (Note (i)) | ||||||||
| Prepayments and other current assets | ||||||||
| Inventories | ||||||||
| Total current assets | ||||||||
| Property, equipment and software, net | ||||||||
| Right-of-use assets | ||||||||
| Equity method investments, net | ||||||||
| Long-term equity investment, net | ||||||||
| Other non-current assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| Accounts payable | ||||||||
| Customers’ refundable fees | ||||||||
| Current installments of long-term loans from a related party (Note (ii)) | ||||||||
| Amounts due to related parties (Note (i)) | ||||||||
| Accrued expenses and other payables | ||||||||
| Income tax payables | ||||||||
| Lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Income tax payables | ||||||||
| Lease liabilities | ||||||||
| Long-term loans from a related party excluding current installments (Note (ii)) | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| (i) |
| (ii) |
F-13
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (b) | Summary financial information of the Group’s VIE and its subsidiaries (continued) |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Total revenue | ||||||||
| Net income | ||||||||
| Net cash (used in)/provided by operating activities | ( | ) | ||||||
| Net cash provided by/(used in) 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 period | ||||||||
| Cash, cash equivalents and restricted cash at the end of the period | ||||||||
| (c) | 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 2.21) and any Sales Incentive Income (see Note 2.21) 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income. The funds provided by these independent third parties or equity method investees to the Group to fulfil 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(b)) on the Unaudited Interim Condensed Consolidated Balance Sheets.
F-14
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (c) | Sales commitment arrangements (continued) |
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 Unaudited Interim Condensed 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 income/(loss). 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income as the Group is deemed to be the principal under these arrangements.
For the six months ended June 30, 2023,
the Group earned Sales Incentive Income of RMB
The Group recognized Sales Incentive Income for the six months ended June 30, 2024.
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-15
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 1. | Organization and principal activities (continued) |
| (c) | Sales commitment arrangements (continued) |
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 six months ended June 30, 2023 and 2024, the Group did not enter into any property sales contracts with real estate developers under Self-Commitment Arrangements. 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.
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 Unaudited Interim Condensed 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.
F-16
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies |
2.1 Basis of presentation
The Unaudited Interim Condensed 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”).
2.2 Going concern
The accompanying Unaudited Interim Condensed Consolidated Financial Statements have been prepared assuming that the Group 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 Group’s ability to generate cash flows from operations, and the Group’s ability to arrange adequate financing arrangements.
The Group has experienced recurring losses
from operations. As of June 30, 2024, the Group had an accumulated deficit of RMB
The Group has prepared a future cash flow forecasts, taken the actions of equity financing and the management is of the opinion that the Group will have sufficient unrestricted liquidity for at least the next 12 months from the date of approval of the Unaudited Interim Condensed Consolidated Financial Statements. Among the assumptions made by the management, it is expected that the Group 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 Group 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 Group also intends to 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 Group’s ability to raise the financing needed. The accompanying financial statements do not include any adjustments that might be necessary should the Group 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.
2.3 Principle of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries, which include the Cayman-registered entities, BVI-registered entities, Hong Kong-registered entities and PRC-registered entities directly or indirectly owned by the Company. All transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation. The results of subsidiaries acquired or disposed of are recorded in the consolidated income statements from the effective date of acquisition or up to the effective date of disposal, as appropriate.
A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meetings of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
F-17
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.4 Use of estimates
The preparation of the Unaudited Interim Condensed 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, recognition of goodwill, realization of deferred income tax assets, impairment loss for long-term equity investment and share-based compensation. Actual results may differ materially from those estimates, and as such, differences may be material to the Unaudited Interim Condensed Consolidated Financial Statements.
2.5 Business combinations and non-controlling 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 non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income. During the measurement period, which can be up to one year from the acquisition date, the Group 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income.
For the Company’s non-wholly owned subsidiaries, a non-controlling interest is recognized to reflect the portion of equity that is not attributable, directly or indirectly, to the Company. Consolidated net income in the Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income includes net loss attributable to non-controlling interests when applicable.
2.6 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 gain in the Unaudited Interim
Condensed Consolidated Statements of Operations and Comprehensive Income. Total foreign currency exchange differences were a gain 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 income in the Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income, and the accumulated foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income/(loss) in the Unaudited Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity.
F-18
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.7 Convenience translation
Translations of certain balances in accompanying Unaudited Interim Condensed Consolidated Financial Statements from RMB into US$ as of and for the six months ended June 30, 2024 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.2672 representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on June 28, 2024. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2024, or at any other rate. The US$ convenience translation is not required under U.S. GAAP and all US$ convenience translation amounts in the accompanying Unaudited Interim Condensed Consolidated Financial Statements are unaudited.
2.8 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.
2.9 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.
2.10 Restricted cash
Restricted cash represents as follows:
| (i) | Bank balances of RMB |
| (ii) | As of June 30, 2024, 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 Unaudited Interim Condensed Consolidated Balance Sheets.
2.11 Short-term investments
Short-term investments include investments
in wealth management products issued by certain banks which are redeemable by the Group at any time. The wealth management products are
either unsecured with variable interest rates or fixed interest rate. The Group 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income. For the six
months ended June 30, 2023 and 2024, loss of RMB
F-19
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.12 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
2.13 Loans receivable, net
Loans receivable represents loan originated
or purchased by the Group (see Note 7(a)). 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 30 days to
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, 2023 and June 30,
2024, loan receivables of RMB
2.14 Property, equipment and software, net
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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income.
F-20
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.15 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 six months ended June 30, 2024.
F-21
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.16 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive 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. No impairment charge of equity method investments was recognized for the six months ended June 30, 2024.
2.17 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.
Impairment charge of RMB
2.18 Impairment loss of non-current assets
Property, equipment and software 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 six months ended June 30, 2024.
2.19 Value added taxes
The Group’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
2.20 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.
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.
F-22
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.20 Fair value (continued)
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, accrued expenses and other payables. As of December 31, 2023 and June 30, 2024, the carrying values of these financial instruments approximated to their fair values due to the short-term maturity of these instruments.
2.21 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.
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.
F-23
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.21 Revenue (continued)
Commission income (continued)
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 13) on the Unaudited Interim Condensed 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(c). 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. No franchise income was recognized for the six months ended June 30, 2023 and 2024.
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.
F-24
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.21 Revenue (continued)
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 consist 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 Group are principal shareholders of Shanghai Lianlian. The Group’s services primarily consist of providing support and information to Shanghai Lianlian to identify real estate agents in the Group’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 for the six months ended June 30, 2023 and 2024.
2.22 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.
2.23 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.
2.24 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.
2.25 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 rental expenses and depreciation expenses for offices and equipment for use by these corporate functions of the Group.
F-25
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.26 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 Group’s Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income.
2.27 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 Group 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 Group’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 Group’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 Group’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.
2.28 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Income amounted to
RMB
F-26
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.29 Income tax
Income tax is 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 Group 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 Group’s experience with operating loss and tax credit carryforwards, if any, not expiring.
The Group 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 Group records interest related to unrecognized tax benefits in income tax expense and penalties in general and administrative expenses.
2.30 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. An operating lease 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.
F-27
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.30 Leases (continued)
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 Group elected to measure the lease liability by combining the lease and non-lease components as a single lease component. As such, the Group 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 operating lease right-of-use assets or operating 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 Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive 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
2.31 Net income per share
Basic net income per share is computed by dividing net income 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 have 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 net income per share is calculated by dividing net income 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.
F-28
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.32 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
2.33 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 six months ended June 30, 2023 and 2024, 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-29
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 2. | Summary of significant accounting policies (continued) |
2.34 Recent accounting pronouncements
In March 2023, the FASB issued ASU No. 2023-01, “Leases (Topic 842): Common Control Arrangements”, which amends certain provisions of ASC 842 that apply to arrangements between related parties under common control. In addition, the ASU amends the accounting for leasehold improvements in common-control arrangements for all entities. ASU 2023-01 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any annual or interim period as of the beginning of the related fiscal year. The Company will adopt ASU 2023-01 from January 1, 2024. The Company expects the impact of adoption of this ASU to be immaterial to its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The update will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within segment profit and loss. Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss. The amendments are effective for the Company's annual periods beginning January 1, 2024, and interim periods begin beginning January 1, 2025, with early adoption permitted, and will be applied retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The amendments are effective for the Company’s annual periods beginning January 1, 2025, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact of the adoption of this standard to determine its impact on the Company's disclosures.
F-30
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 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 six months ended June 30, 2023. For the six months ended
June 30, 2024, 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 due 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, 2023 and June 30, 2024, 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.
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(c)). 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 gives internal ratings to financial instruments based on their credit quality and risk characteristics. 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, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| 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 | ||||||||
| Total | ||||||||
The bank deposits with financial institutions
in the PRC are insured by the government authority for up to RMB
F-31
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 3. | Concentration and risk (continued) |
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.
| 4. | Fair value measurement |
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 | ||||||||||||||||
June 30, 2024
| 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. For the six months ended June 30, 2023 and 2024, loss
of RMB
The Group’s short-term investments
as of December 31, 2023 and June 30, 2024 were acquired close to the year/period-end dates and can be instantly redeemed or mature within
There have no transfers between level 1, level 2 and level 3 categories.
F-32
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 5. | Lease |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Right-of-use assets | ||||||||
| Lease liabilities | ||||||||
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Operating lease cost | ||||||||
| Short-term lease cost | ||||||||
| Total | ||||||||
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| 2024 (remining) | ||||||||
| 2025 | ||||||||
| 2026 | ||||||||
| Total undiscounted operating lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Present value of operating lease liabilities | ||||||||
As of June 30, 2024, the weighted-average
remaining lease term on these leases is approximately
| 6. | Accounts receivable, net |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Accounts receivable from real estate developers | ||||||||
| Accounts receivable from individual customers | ||||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
No accounts receivable was pledged as of December 31, 2023 and June 30, 2024.
F-33
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 6. | Accounts receivable, net (continued) |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Provision for the year/period | ||||||||
| Receivables written off for the year/period | ( | ) | ( | ) | ||||
| Balance at the end of the year/period | ||||||||
The provision of allowance for doubtful accounts was included in general and administrative expenses.
| 7. | Prepayments and other assets, net |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Loans receivable, net (Note (a)) | ||||||||
| Security deposits with real estate developers, net (Note(b)) | ||||||||
| Rental and other deposits, net (Note (c)) | ||||||||
| Other receivables (Note (d)) | ||||||||
| Prepayments and other assets, net | ||||||||
| Current Portion | ||||||||
| Total prepayments and other assets, net | ||||||||
(a)
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Secured loans | ||||||||
| Unsecured loans | ||||||||
| Less: allowance for doubtful loans | ( | ) | ( | ) | ||||
| Loans receivable, net | ||||||||
| Current Portion | ||||||||
| Total loans | ||||||||
As of December 31, 2023 and June 30,
2024, 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
F-34
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 7. | Prepayments and other assets, net (continued) |
(a) Loans receivable, net (continued)
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
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Provision for the year/period | ||||||||
| Receivables written off for the year/period | ( | ) | ( | ) | ||||
| Balance at the end of the year/period | ||||||||
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, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| 1-29 days past due | ||||||||
| Over 30 days past due | ||||||||
| Total past due | ||||||||
| Total loans | ||||||||
F-35
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 7. | Prepayments and other assets, net (continued) |
(b)
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Security deposits with real estate developers under Exclusive Sales Contract | ||||||||
| - Without Sales Commitment Arrangement | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Security deposits with real estate developers, net | ||||||||
An allowance for doubtful accounts of
RMB
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Provision for the year/period | ||||||||
| Balance at the end of the year/period | ||||||||
(c)
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Rental and other deposits | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Rental and other deposits, net | ||||||||
An allowance of doubtful accounts of
RMB
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Receivables written off for the year/period | ( | ) | ||||||
| Balance at the end of the year/period | ||||||||
F-36
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 7. | Prepayments and other assets, net (continued) |
(d)
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Provision for the year/period | ||||||||
| Receivables written off for the year/period | ( | ) | ( | ) | ||||
| Balance at the end of the year/period | ||||||||
| 8. | Property, equipment and software, net |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Buildings | ||||||||
| Leasehold improvements | ||||||||
| Furniture and office equipment | ||||||||
| Motor vehicles | ||||||||
| Software | ||||||||
| Total Property, equipment and software | ||||||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Total Property, equipment and software, net | ||||||||
Depreciation and amortization expenses
were RMB
| 9. | Goodwill, net |
| Amount | ||||
| RMB | ||||
| Balance as of January 1, 2023 | ||||
| Impairment loss | ( | ) | ||
| Balance as of December 31, 2023 | ||||
| Additions | ||||
| Balance as of June 30, 2024 | ||||
In March 2022, the Group acquired a
In March 2024, the Group acquired an
In April 2024, the Group acquired a
F-37
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 10. | Equity method investment, net |
| Amount | ||||
| RMB | ||||
| Balance as of January 1, 2023 | ||||
| Share of results | ||||
| Return of capital | ( | ) | ||
| Impairment losses | ( | ) | ||
| Balance as of December 31, 2023 and June 30, 2024 | ||||
During the year ended December 31, 2023 and the six months ended June 30, 2024, 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(c), 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.
During the years ended December 31, 2023 and the six months ended June 30, 2024, 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(c). 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(c), 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.
F-38
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 10. | Equity method investment, net (continued) |
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.
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, 2023 and June 30, 2024 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. The Group does not have any other obligation or commitment to provide any guarantee, loan or other financial support to the limited partnerships.
| Aggregated carrying amount (before impairment loss) of the limited partnerships | Maximum amount of additional capital commitment (Note 22) | Maximum exposures to the losses of the limited partnerships | ||||||||||
| RMB | RMB | RMB | ||||||||||
| Balance as of December 31, 2023 and June 30, 2024 | ||||||||||||
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
No impairment loss was recognized during the six months ended June 30, 2024.
F-39
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 10. | Equity method investment, net (continued) |
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(c).
| As of December 31, | As of June 30, | |||||||
| Name of the limited partnerships | 2023 | 2024 | ||||||
| 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”) | * | |||||||
| Jiuzhen | * | |||||||
| Ningbo Meishan Yunde Investment Limited Partnership (“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”) | * | |||||||
| Hangzhou Honggeng Investment Limited Partnership (“Honggeng”) | * | |||||||
| Jiaxinda | % | % | ||||||
| Shanghai Fangjin Management Limited Partnership (“Fangjin”) | * | |||||||
| Ningbo Meishan Muju Investment Limited Partnership (“Muju”) | * | |||||||
| Name of other equity method investees | ||||||||
| Shenzhen Chenji Zhaozhao Technology Co., Ltd. (“Chenji Zhaozhao”) | ** | |||||||
| Shanghai Tinghaozhu Space Design Co., Ltd. (“Tinghaozhu Space”) | ** | |||||||
| * |
| ** |
F-40
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 10. | Equity method investment, net (continued) |
| For the Year Ended December 31, | For the Six Months Ended June 30, | |||||||||||||||
| 2023 | 2024 | |||||||||||||||
| Name of the Limited Partnership | Capital Investments | Return of Capital | Capital Investments | Return of Capital | ||||||||||||
| RMB | RMB | RMB | RMB | |||||||||||||
| Jiushen | ( | ) | ||||||||||||||
| Longshutianye | ( | ) | ||||||||||||||
| Deyan | ( | ) | ||||||||||||||
| Jiushi | ( | ) | ||||||||||||||
| Name of other equity method investees | ||||||||||||||||
| Chenji Zhaozhao | ( | ) | ||||||||||||||
| Total | ( | ) | ||||||||||||||
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance sheet data: | ||||||||
| Current assets | ||||||||
| Non-current assets | ||||||||
| Total assets | ||||||||
| Current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Operating data: | ||||||||
| Revenue | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
F-41
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 11. | 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.
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
In June 2024, 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
F-42
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 12. | Short-term bank borrowings |
In July 2021, the Group borrowed a one-year
loan of RMB
In August 2022, the Group borrowed a
| 13. | Customers’ refundable fees |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ||||||||
| Cash received from customers | ||||||||
| Cash refunded to customers | ( | ) | ( | ) | ||||
| Revenue recognized | ( | ) | ( | ) | ||||
| Balance at the end of the year/period | ||||||||
Customers’ refundable fees represent the commission income received in advance (see Note 2.21).
| 14. | Accrued expenses and other payables |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Accrual for salary and bonus | ||||||||
| Other taxes and surcharge payable | ||||||||
| Amounts due to franchisees (Note (a)) | ||||||||
| Professional service fee | ||||||||
| Amounts due to third parties under collaborative agreements (Note (b)) | ||||||||
| Accrued expenses | ||||||||
| Receipt in advance | ||||||||
| Others | ||||||||
| Accrued expenses and other payables | ||||||||
| (a) |
| (b) |
F-43
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 15. | 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
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Cayman | ( | ) | ( | ) | ||||
| Hong Kong SAR | ( | ) | ( | ) | ||||
| BVI | ( | ) | ||||||
| PRC, excluding Hong Kong SAR | ||||||||
The Group had minimal current income tax expense for the six months ended June 30, 2023 and 2024, 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.
F-44
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 15. | Taxation (continued) |
| (a) | Income tax (continued) |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Current income tax benefit | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Income before income tax | ||||||||
| Income tax expense 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 | ( | ) | ||||||
| -Late payment surcharge on uncertain tax position | ( | ) | ( | ) | ||||
| -Others (Note (i)) | ||||||||
| ( | ) | ( | ) | |||||
| (i) |
| (b) | Deferred tax assets and liabilities |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| 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 (Note (ii)) | ||||||||
| Estimated accounts payable write-off benefit | ( | ) | ||||||
| Gross deferred tax assets | ||||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | ||||||||
| (ii) |
F-45
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 15. | Taxation (continued) |
| For the Year Ended December 31, | For the Six Months Ended June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ( | ) | ( | ) | ||||
| Changes of valuation allowances | ( | ) | ( | ) | ||||
| Balance at the end of the year/period | ( | ) | ( | ) | ||||
As of June 30, 2024, the
valuation allowance of RMB
The net operating losses carry forwards
of the Company’s PRC subsidiaries amounted to RMB
| For the Year Ended December 31, | For the Six Months Ended June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Balance at the beginning of the year/period | ( | ) | ( | ) | ||||
| Additions | ||||||||
| Balance at the end of the year/period | ( | ) | ( | ) | ||||
As of December 31, 2023 and June 30,
2024, RMB
According to the PRC Tax Administration
and Collection Law, the statute of limitations is
F-46
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 16. | 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, 2023 and June 30, 2024 | ||||||||||||||||
Since the date of incorporation, the
Company has completed
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.
F-47
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 16. | Redeemable convertible preferred shares (continued) |
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.
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).
F-48
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 16. | Redeemable convertible preferred shares (continued) |
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
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.
| 17. | Ordinary shares and Series A-1 convertible preferred |
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 the 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-49
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 17. | Ordinary shares and Series A-1 convertible preferred (continued) |
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 16.
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-50
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 18. | 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, 2023 | ||||||||||||||||
| -Exercised | ( | ) | — | — | ||||||||||||
| -Forfeited | ( | ) | — | — | ||||||||||||
| Outstanding as of June 30, 2023 | ||||||||||||||||
| Exercisable as of June 30, 2023 | ||||||||||||||||
| Outstanding as of January 1, 2024 | ||||||||||||||||
| -Exercised | ( | ) | — | — | ||||||||||||
| -Forfeited | ( | ) | — | — | ||||||||||||
| Outstanding as of June 30, 2024 | ||||||||||||||||
| Exercisable as of June 30, 2024 | ||||||||||||||||
| 2019 | 2021 | |||||||
| Expected volatility | % | % | ||||||
| Risk-free interest rate (per annum) | % | % | ||||||
| Exercise multiple | % | % | ||||||
| Expected dividend yield | % | % | ||||||
| Contractual term (in years) | ||||||||
F-51
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 18. | Share-based compensation (continued) |
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 six months ended June 30, 2023
and 2024, the Group recognized RMB
On April 28, 2020, the Group 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 Group determined that the agreements between the Group 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 June 30, 2024, RMB
| 19. | Revenue information |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| 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-52
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 20. | Net income per share |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Numerator: | ||||||||
| Net income | ||||||||
| Net loss attributable to non-controlling interests | ||||||||
| Denominator: | ||||||||
| Weighted average number of ordinary shares | ||||||||
| Net income per ordinary share | ||||||||
| As of June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Share options to employees | ||||||||
| Total | ||||||||
| 21. | Business combination |
In March 2024, the Group completed the
acquirement of
In April 2024, the Group completed the
acquirement of
In April 2024, the Group completed the
acquirement of
In April 2024, the Group completed the
acquirement of
In April 2024, the Group completed the
acquirement of
F-53
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 22. | Commitments and contingencies |
Capital commitment
As a limited partner of those equity
method investees disclosed in Note 10, 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
The Group has entered into operating
lease agreements for certain offices. Future minimum lease payments under non-cancellable operating leases with initial terms in excess
of
| Lease Commitment | ||||
| RMB | ||||
| Within 1 year | ||||
| Total | ||||
| 23. | Related party balance and transactions |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| 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 (Note 1(c)) | ||||||||
| Muju | ||||||||
| (2) Other income shared with related parties | ||||||||
| Chenji Zhaozhao | ||||||||
| Total | ||||||||
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 six months ended June 30, 2023 and 2024.
During the six months ended June 30, 2023 and 2024, 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-54
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 23. | Related party balance and transactions (continued) |
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.
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| Amounts due to related parties | ||||||||
| (1) Payables for income shared under Non-Group Collaborative Agreements (Note 1(c)) | ||||||||
| Gefei Chengyun (Note (i)) | ||||||||
| Ningbo Meishan Bonded Port Area JiuFeng Investment Partnership (“Jiufeng”) (Note (ii)) | ||||||||
| Jiuchuan (Note (i)) | ||||||||
| Longshutianye (Note (i)) | ||||||||
| Yunde (Note (i)) | ||||||||
| Detong (Note (i)) | ||||||||
| Jiushi (Note (i)) | ||||||||
| (2) Payables for Base Commission Income shared with related parties under Exclusive Sales Contracts without Sales Commitment Arrangement | ||||||||
| Derong (Note (i)) | ||||||||
| Jiushen (Note (i)) | ||||||||
| Jiufeng (Note (ii)) | ||||||||
| (3) Other payables | ||||||||
| Jiushen (Note (i)) | ||||||||
| Shanghai Chongkai Enterprise Management (LLP) (“Chongkai”) (Note (iii)) | ||||||||
| Jiufeng (Note (ii)) | ||||||||
| Total | ||||||||
| (i) |
| (ii) |
| (iii) |
F-55
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 24. | 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 Unaudited Interim Condensed Consolidated Financial Statements. As of June 30, 2024, 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 Unaudited Interim Condensed Consolidated Financial Statements.
| (a) |
| As of December 31, | As of June 30, | |||||||
| 2023 | 2024 | |||||||
| 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 | ||||||||
| Shareholders’ equity | ||||||||
| Class A ordinary shares | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | ||||||||
F-56
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 24. | Parent only financial information (continued) |
| (b) |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| RMB | RMB | |||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Total operating expenses | ( | ) | ( | ) | ||||
| Loss from operations | ( | ) | ( | ) | ||||
| Equity income of subsidiaries and the VIE and VIE’s subsidiaries | ||||||||
| Other income: | ||||||||
| Interest income, net | ||||||||
| Other income, net | ||||||||
| Income before income tax | ||||||||
| Income tax expense | ||||||||
| Net income | ||||||||
| Accretion of Redeemable Convertible Preferred Shares | ||||||||
| Deemed dividend to preferred shareholder | ||||||||
| Net income attributable to ordinary shareholders | ||||||||
| (c) |
| For the Six Months Ended June 30, | ||||||||
| 2023 | 2024 | |||||||
| 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 issuance of convertible bonds, net of issuance costs | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| Net increase/(decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of the period | ||||||||
| Cash and cash equivalents at the end of the period | ||||||||
F-57
Fangdd Network Group Ltd.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(All amounts in thousands, except for share and per share data)
| 25. | Subsequent events |
On July 11, 2024, the Company held
an extraordinary general meeting of shareholders, passed the following resolutions that each
That immediately following the Share
Consolidation, the authorized share capital of the Company be increased from US$
(2) On July 31, 2024, the Company announced intends to terminate the Company’s existing American depositary receipts (the “ADR”) facility and list its Class A ordinary shares for trading on The Nasdaq Stock Market LLC in substitution for the American depositary shares (the “ADS”). In connection with the Substitution Listing, the Company plans to effect share consolidation, on or about August 12, 2024 (Eastern Time).
The Share Consolidation will change
the ratio of the ADSs to the Company’s Class A ordinary shares from
F-58