Form 20-F
Table of Contents
falseFYDepreciation expenses for the years ended December 31, 2021, 2022 and 2023 were RMB6,474, RMB17,319 and RMB12,413, respectively.During the year ended December 31, 2023, the Group’s disposal of a subsidiary resulted in a decrease of RMB4,333 in insurance agency license, and the Group’s acquisition of a subsidiary resulted in an increase of RMB3,879 in insurance brokerage license.Amortization expenses for the years ended December 31, 2021, 2022 and 2023 were RMB950, RMB1,201 and RMB1,227, respectively.Due to the change of business plan in 2023, the management expected to dispose an insurance agency license and an insurance brokerage license. With reference to quoted market prices, the management determined that the fair values of the insurance agency license and the insurance brokerage license were less than their carrying amounts as of December 31, 2023, which resulted that an impairment loss of the insurance agency license of RMB720 and an impairment loss of the insurance brokerage license of RMB1,230 were recognized for the year ended December 31, 2023.Included in short-term investments on the Group’s consolidated balance sheets.Included in long-term investments on the Group’s consolidated balance sheets. 0001778982 2023-01-01 2023-12-31 0001778982 2023-12-31 0001778982 2022-12-31 0001778982 2022-01-01 2022-12-31 0001778982 2021-01-01 2021-12-31 0001778982 2019-12-31 0001778982 2018-11-02 2018-11-02 0001778982 2015-11-02 2015-11-02 0001778982 2018-01-01 2018-12-31 0001778982 2019-01-01 2019-12-31 0001778982 2021-12-31 0001778982 2020-01-01 2020-12-31 0001778982 2020-02-12 0001778982 2020-12-31 0001778982 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM
20-F
 
 
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023.
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell co
m
pany report
     
For the transition period from
     
to
     
Commission file number:
001-39216
 
 
Huize Holding Limited
(Exact Name of Registrant as Specified in Its Charter)
 
 
N/A
(Translation of Registrant’s Name into English)
Cayman Islands
(Jurisdiction of Incorporation or Organization)
49/F, Building T1, Qianhai Financial Centre, Linhai Avenue,
Qianhai
Shenzhen-Hong
Kong Cooperation Zone, Shenzhen 518000
People’s Republic of China
(Address of Principal Executive Offices)
Ronald Tam
49/F, Building T1, Qianhai Financial Centre, Linhai Avenue,
Qianhai
Shenzhen-Hong
Kong Cooperation Zone, Shenzhen 518000
People’s Republic of China
Telephone: +86 755 3689 9088
Email:
tanguohao@huize.com
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
 
 
Securities registered or to be registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Trading
Symbol(s)
 
Name of Each Exchange
On Which Registered
American depositary shares (each representing 20 Class A common shares, par value
US$0.00001 per share)
Class A common shares, par value US$0.00001 per share*
 
HUIZ
 
Nasdaq Global Market
 
*
Not for trading, but only in connection with the listing on the Nasdaq Global Market of American depositary shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
 
 
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
As of December 31, 2023, there were (i) 843,968,206 Class A common shares issued and outstanding, par value US$0.00001 per share (excluding
3,619,900
Class A common shares reserved for issuance under our share incentive plans and
46,867,940
Class A ordinary shares in the form of ADSs that we repurchased under our share repurchase program), and (ii) 150,591,207 Class B common shares issued and outstanding, par value US$0.00001 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer      Accelerated filer    
Non-accelerated
filer
 
         Emerging growth company  
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13 (a) of the Exchange Act. 
 
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. 
Indicate by check mark whether any of those error corrections are restatements that required a recovery
ana
lysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP ☒     International Financial Reporting Standards as issued         Other ☐
    by the International Accounting Standards Board        
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act). ☐ Yes  No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
 
 
 


Table of Contents

TABLE OF CONTENTS

 

INTRODUCTION

     1  

FORWARD-LOOKING INFORMATION

     2  

PART I.

     3  

  

 

Item 1.

   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS      3  
 

Item 2.

   OFFER STATISTICS AND EXPECTED TIMETABLE      3  
 

Item 3.

   KEY INFORMATION      3  
 

Item 4.

   INFORMATION ON THE COMPANY      63  
 

Item 4.A.

   UNRESOLVED STAFF COMMENTS      101  
 

Item 5.

   OPERATING AND FINANCIAL REVIEW AND PROSPECTS      101  
 

Item 6.

   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES      113  
 

Item 7.

   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS      122  
 

Item 8.

   FINANCIAL INFORMATION      124  
 

Item 9.

   THE OFFER AND LISTING      125  
 

Item 10.

   ADDITIONAL INFORMATION      125  
 

Item 11.

   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      142  
 

Item 12.

   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES      142  

PART II

     145  
 

Item 13.

   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES      145  
 

Item 14.

   MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS MATERIAL      145  
 

Item 15.

   CONTROLS AND PROCEDURES      145  
 

Item 16.

   [RESERVED]      147  
 

Item 16.A.

   AUDIT COMMITTEE FINANCIAL EXPERT      147  
 

Item 16.B.

   CODE OF ETHICS      147  
 

Item 16.C.

   PRINCIPAL ACCOUNTANT FEES AND SERVICES      147  
 

Item 16.D.

   EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES      147  
 

Item 16.E.

   PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      147  
 

Item 16.F.

   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT      148  
 

Item 16.G.

   CORPORATE GOVERNANCE      148  
 

Item 16.H.

   MINE SAFETY DISCLOSURE      149  
 

Item 16.I.

   DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS      149  
 

Item 16.J.

   INSIDER TRADING POLICY      149  
 

Item 16.K.

   CYBERSECURITY      149  

PART III

     151  
 

Item 17.

   FINANCIAL STATEMENTS      151  
 

Item 18.

   FINANCIAL STATEMENTS      151  
 

Item 19.

   EXHIBITS      151  

SIGNATURES

     153  

 

i


Table of Contents

INTRODUCTION

In this annual report on Form 20-F, or this annual report, except where the context otherwise requires and for purposes of this annual report only:

 

   

“ADRs” are to the American depositary receipts which may evidence the ADSs;

 

   

“ADSs” are to the American depositary shares, each of which represents 20 Class A common shares;

 

   

“China” or the “PRC” are to the People’s Republic of China, excluding, for the purposes of this annual report only, Hong Kong, Macau and Taiwan;

 

   

“Class A common shares” are to our Class A common shares, par value $0.00001 per share, carrying one vote per share;

 

   

“Class B common shares” are to our Class B common shares, par value $0.00001 per share, carrying 15 votes per share;

 

   

“common shares” are to our Class A common shares and/or our Class B common shares, par value US$0.00001 per share, as the context may require;

 

   

“GWP” are to gross written premiums, which include first year premiums and renewal premiums where applicable;

 

   

“insurer partners” are to the insurance companies we work with who underwrite insurance products on our platform;

 

   

“insurance clients” are to purchasers of insurance products we distribute through our platform; for travel insurance products, travel agencies usually purchase policies for multiple individuals, and we count each purchasing travel agency as an insurance client, and each such individual protected by any single policy as an insured;

 

   

“insured” are to individuals that are insured under insurance policies;

 

   

“our WFOE” are to Zhixuan International Management Consulting (Shenzhen) Co., Ltd.;

 

   

“RMB” and “Renminbi” are to the legal currency of China;

 

   

“US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States;

 

   

“VIE” are to Shenzhen Huiye Tianze Investment Holding Co., Ltd.; and

 

   

“Huize,” “we,” “us,” “our company” and “our” are to Huize Holding Limited, our Cayman Islands holding company and where the context may require, include its subsidiaries, and, in the context of describing our operations and consolidated financial information, its consolidated variable interest entity and the subsidiaries of the consolidated variable interest entity in China.

Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report are made at a rate of RMB7.0999 to US$1.00, the exchange rate in effect as of December 29, 2023, as set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.

 

1


Table of Contents

FORWARD-LOOKING INFORMATION

This annual report contains forward-looking statements that reflect our current expectations and views of future events. These forward-looking statements are made under the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key Information—D. Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:

 

   

our mission, goals and strategies;

 

   

our future business development, financial conditions and results of operations;

 

   

the expected growth of insurance industry in China;

 

   

our expectations regarding demand for and market acceptance of our products and services;

 

   

our expectations regarding our relationships with insurance clients, insurance companies and other partners;

 

   

competition in our industry;

 

   

our proposed use of proceeds; and

 

   

government policies and regulations relating to our industry.

These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Other sections of this annual report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should read thoroughly this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from, or worse than, what we expect. We qualify all of our forward-looking statements by these cautionary statements.

The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we refer to in this annual report and exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect.

 

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PART I.

 

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

 

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

 

ITEM 3.

KEY INFORMATION

Our Holding Company Structure and Contractual Arrangements with the VIE

Huize Holding Limited is not an operating company but rather a Cayman Islands holding company with no equity ownership in its VIE. Our Cayman Islands holding company does not conduct business operations directly. We conduct our operations in China primarily through (i) the VIE with which we have maintained contractual arrangements, and (ii) the VIE’s subsidiaries in China. PRC laws and regulations restrict and impose conditions on foreign direct investment in companies involved in internet-based business and insurance intermediary business. Therefore, we operate such business in China through the variable interest entity, Shenzhen Huiye Tianze Investment Holding Co., Ltd., which we refer to as the VIE in this annual report, and its subsidiaries in China, and rely on contractual arrangements among our WFOE, the VIE and its shareholders to control the business operations of the VIE. Investors in our ADSs thus are not purchasing direct equity interest in our operating entities in China but instead are purchasing equity interest in a Cayman Islands holding company. As used in this annual report, “Huize,” “we,” “us,” “our company” or “our” refers to Huize Holding Limited, and where the context requires, includes its subsidiaries, and, in the context of describing our operations and consolidated financial information, the VIE and its subsidiaries in China.

A series of contractual agreements, including power of attorney, equity pledge agreement, exclusive business cooperation agreement and exclusive option and equity custody agreement, have been entered into by and among our WFOE, the VIE and its shareholders. In particular, through:

 

  (i)

the power of attorney, pursuant to which each shareholder of the VIE irrevocably authorized our WFOE or any person designated by our WFOE to act as its attorney-in-fact to exercise all of its rights as a shareholder of the VIE, and the equity pledge agreement, pursuant to which the shareholders of the VIE have pledged the 100% equity interests in the VIE to our WFOE to guarantee performance by the shareholders of their obligations under the exclusive business cooperation agreement, exclusive option and equity custody agreement and power of attorney, we retain effective control over the VIE;

 

  (ii)

the exclusive business cooperation agreement, pursuant to which our WFOE has the exclusive right to provide the VIE with comprehensive technology and business support as well as the relevant consultations services required by the business of the VIE, or to appoint a third party to provide the VIE with such services, we may receive substantially all economic benefits from the VIE; and

 

  (iii)

the exclusive option and equity custody agreement, pursuant to which each of the shareholders of the VIE has irrevocably granted our WFOE an exclusive option to purchase, or have its designated third party to purchase, at its discretion, all or part of his or its equity interests in the VIE and/or the assets that the VIE holds at a nominal consideration or the lowest price permitted by applicable PRC law, we have the option to purchase the equity interest in and assets of the VIE at low cost.

The VIE is consolidated for accounting purposes; however, neither our Cayman Islands holding company nor the investors in the holding company have an equity ownership or direct investment in the VIE. Our Cayman Island holding company is considered the ultimate primary beneficiary of the VIE and consolidates the VIE and its subsidiaries as required by Accounting Standards Codification topic 810, Consolidation. Accordingly, we treat the VIE as our consolidated entity under U.S. GAAP and we consolidate the financial results of the VIE in our consolidated financial statements in accordance with U.S. GAAP. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure—Contractual Arrangements with The VIE and Its Shareholders.”

 

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Our corporate structure is subject to risks associated with our contractual arrangements with the VIE. Our Cayman Islands holding company that investors own equity interest in may never directly hold equity interests in the businesses that are conducted by the VIE. If the PRC government finds that the agreements that establish the structure for operating our business do not comply with PRC laws and regulations, or if these regulations or their interpretations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiary, the VIE, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIE and, consequently, significantly affect the financial performance of the VIE and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.” In addition, the contractual arrangements may not be as effective as equity ownership in providing us with control over the VIE, and we may incur substantial costs to enforce the terms of the arrangements. Evolvement in the PRC regulations may limit our ability, as a Cayman Islands holding company, to enforce these contractual arrangements. Meanwhile, based on officially published and publicly available judgements, the legality and validity of VIE contractual arrangements have not been tested in a court of law in the PRC. There are very few precedents as to whether contractual arrangements would be judged to form effective control over the relevant variable interest entity through the contractual arrangements, or how contractual arrangements in the context of a variable interest entity should be interpreted or enforced by the PRC courts. Should legal actions become necessary, we cannot guarantee that the court will rule in favor of the enforceability of the variable interest entity contractual arrangements. In the event we are unable to enforce these contractual arrangements, or if we suffer significant delay or other obstacles in the process of enforcing these contractual arrangements, we may not be able to exert effective control over the VIE, and our ability to conduct our business may be materially adversely affected. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We rely on contractual arrangements with the VIE, and its shareholders for our operations in China, which may not be as effective as equity ownership in providing operational control,” and “—The shareholders and directors of the VIE may have potential conflicts of interest with us, and if any such conflicts of interest are not resolved in our favor, our business may be materially and adversely affected.”

The following diagram illustrates our current corporate structure, which includes our significant subsidiaries, the VIE and its material subsidiaries as of the date of this annual report:

 

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LOGO

 

Note:

(1)

Shareholders of Shenzhen Huiye Tianze Investment Holding Co., Ltd., or Huiye Tianze, are: (1) Shenzhen Huidecheng Investment Development Limited Partnership and Shenzhen Huideli Consulting Management Limited Partnership, both as our PRC ESOP holding entities, holding an aggregate of 49.43% shares in Huiye Tianze; (2) PRC holding entities of the shareholders of our Cayman Islands holding company, holding an aggregate of 50.57% shares in Huiye Tianze.

We face various legal and operational risks and uncertainties associated with being based in or having our operations primarily in China and the complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offerings conducted overseas by and foreign investment in China-based issuers, the use of the VIE, anti-monopoly regulatory actions, oversight on cybersecurity and data privacy, which may impact our ability to conduct certain businesses, accept foreign investments, or list on or remain listed on a United States or other foreign exchange. These risks could result in a material adverse change in our operations and the value of our ADSs, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China.”

PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PRC government’s significant oversight and discretion over our business operation could result in a material adverse change in our operations and the value of our ADSs.”

 

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Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We are subject to the changes, interpretation and enforcement of laws and regulations in mainland China.”

The Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act, which was enacted on December 18, 2020 and further amended by the Consolidated Appropriations Act, 2023 signed into law on December 29, 2022, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the Public Company Accounting Oversight Board, or the PCAOB, for two consecutive years, the SEC will prohibit our shares or the ADSs from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In May 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022 and do not expect to be so identified after we file this annual report on Form 20-F for the fiscal year ended December 31, 2023. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 20-F for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections” and “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Our ADSs may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting or prohibition of trading of the ADSs, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of your investment.”

Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our PRC subsidiary, the VIE and its subsidiaries in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiary, the VIE and its subsidiaries have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, the VIE and its subsidiaries in the PRC in all material respects, including, among others, the value-added telecommunications business operating licenses, the insurance intermediary license, the record-filing certificate on insurance adjustment assessment business and the record-filing certificate on the graded protection of information system security. Any failure to obtain or delay in obtaining such permissions or approvals, or a rescission of any such approval if obtained by us, would subject us to sanctions by the applicable PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the evolving enforcement practices of the government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—Failure to obtain, renew or retain licenses, permits or approvals may affect our ability to conduct or expand our business” and “—We may be adversely affected by the complexity, uncertainties and changes in PRC regulations of internet-related businesses and companies, and any lack of requisite approvals, licenses or permits applicable to our business may have a material adverse effect on our business and results of operations.”

 

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Meanwhile, the PRC government has sought to exert more oversight and control over capital raising activities of listed companies that are conducted overseas and/or foreign investment in China-based issuers. In December 2021, the Cyberspace Administration of China, or the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022, and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators that procure internet products and services and network platform operators that conduct data process activities must be subject to the cybersecurity review if their activities affect or may affect national security. The Cybersecurity Review Measures further stipulate that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. On July 7, 2022, the CAC issued the Measures for the Security Assessment of Data Cross-border Transfer, which became effective on September 1, 2022. The Measures for the Security Assessment of Data Cross-border Transfer require that any data processor providing important data collected and generated during operations within the territory of the PRC or personal information that should be subject to security assessment according to law to an overseas recipient shall conduct security assessment. The Measures for the Security Assessment of Data Cross-border Transfer provide certain circumstances, under any of which data processors shall, through the local cyberspace administration at the provincial level, apply to the national cyberspace administration for security assessment of data cross-border transfer. These circumstances include: (i) where a data processor transfers important data overseas; (ii) where a critical information infrastructure operator, or a data processor processing the personal information of more than one million individuals, who, in either case, transfers personal information overseas; (iii) where a data processor who has, since January 1 of the previous year cumulatively transferred overseas the personal information of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals; or (iv) other circumstances under which security assessment of data cross-border transfer is required as prescribed by the national cyberspace administration. On February 17, 2023, China Securities Regulatory Commission, or the CSRC, released several regulations regarding the filing requirements for overseas offerings and listings by domestic companies, including the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and five supporting guidelines, which are collectively referred to as the Overseas Listing Filing Rules. The Overseas Listing Filing Rules formally came into effect on March 31, 2023. According to the Overseas Listing Filing Rules, the overseas offering and listing by a domestic company, whether directly or indirectly, shall be filed with the CSRC. Any failure to obtain or delay in obtaining such approval or completing such procedures could subject us to restrictions and penalties imposed by the CSRC, the CAC or other PRC regulatory authorities, which could include fines and penalties on our operations in China, delays of or restrictions on the repatriation of the proceeds from our offshore offerings into China, or other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.” As of the date of this annual report, we have not been required to file with the CSRC, nor have we been subject to any cybersecurity review initiated by the CAC. If (i) we fail to obtain the approval or complete other filing procedures, (ii) we inadvertently conclude that such approval or filing procedures are not required, while they actually are required, or (iii) we are required to obtain the approval or complete other filing procedures as a result of changes of applicable laws, regulations or interpretations thereof but fail to do so, we may face sanctions by the CSRC or other PRC regulatory authorities, which may include fines and penalties on our operations in China, limitations on our operating privileges in China, restrictions on or prohibition of the payments or remittance of dividends by our subsidiaries in China, restrictions on or delays to our future financing transactions offshore, or other actions that could have a material and adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing” and “—Our business generates and processes a large amount of data, and is subject to complex and evolving Chinese and international laws and regulations regarding privacy, data protection and cybersecurity. Any failure to protect the confidential information of third parties or improper use or disclosure of such data may subject us to liabilities imposed by data privacy and protection laws and regulations, negatively impact our reputation, and deter our clients from using our products and services.”

 

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Cash Flows through Our Organization

We have established stringent controls and procedures for cash flows within our organization. Each transfer of cash between our Cayman Islands holding company and a subsidiary, the VIE or the subsidiaries of the VIE is subject to internal approval. The cash of our group is under the unified management of our finance department, and is dispatched and applied to each operating entity based on the budget and operating conditions of the specific operating entity. Each cash requirement, after raised by an operating entity, is required to go through a three-level review process of our finance department. The funding team of the finance department will allocate the cash to the operating entity after the application for cash requirement is approved by the responsible person in the finance department. To date, we have not had difficulty in transferring cash between our Cayman Islands holding company and a subsidiary, the VIE or the subsidiaries of the VIE. The cash inflows of the Cayman Islands holding company were primarily generated from our initial public offering in February 2020. In 2021, 2022 and 2023, the Cayman Islands holding company transferred cash in the total amount of RMB136.6 million (US$19.2 million) to our PRC subsidiary and the subsidiaries of the VIE through our offshore intermediate holding entities in three methods: (i) Hong Kong Smart Choice Ventures Limited made capital contribution to Zhixuan International Management Consulting (Shenzhen) Co., Ltd., our WFOE, in the amount of RMB129.5 million in 2021, nil in 2022, and nil in 2023; our WFOE and its subsidiary then provided inter-company loan of RMB128.0 million in 2021, RMB6.0 million in 2022, and nil in 2023 to the VIE; (ii) Hong Kong Smart Choice Ventures Limited made direct inter-company loans to the subsidiaries of the VIE, in the amount of nil in 2021, nil in 2022 and RMB0.6 million (US$0.1 million) in 2023; (iii) through cross-border guarantee, where our Hong Kong subsidiary provided guarantee to certain China-based commercial banks or their offshore branches by pledging offshore cash deposits, and the onshore branches of these banks granted loans to the subsidiaries of the VIE, namely, Huize Insurance Brokerage Co., Ltd. and Shenzhen Huize Shidai Technology Co., Ltd., in the amount of RMB14.0 million in 2021, nil in 2022, and nil in 2023. The subsidiaries of the VIE repaid the loan in a total amount of RMB32.7 million in 2021, RMB46.7 million in 2022, and RMB20.0 million (US$2.8 million) in 2023. For the years ended December 31, 2021, 2022 and 2023, no assets other than cash were transferred between our Cayman Islands holding company and a subsidiary, no subsidiaries paid dividends or made other distributions to the Cayman Islands holding company, and no dividends or distributions were paid or made to U.S. investors. We intend to settle service fees under our contractual arrangements with the VIE when there is a business need and as our WFOE sees fit. For details of the financial position, cash flows and results of operations of the VIE and its subsidiaries, see “Item 3. Key Information—Financial Information Related to the Consolidated Variable Interest Entity.”

As a Cayman Islands holding company, we may receive dividends from our PRC subsidiary through Hong Kong Smart Choice Ventures Limited. The Enterprise Income Tax Law of the PRC and its implementing rules, provide that dividends paid by a PRC entity to a nonresident enterprise for income tax purposes is subject to PRC withholding tax at a rate of 10%, subject to reduction by an applicable tax treaty with China.

Dividends paid by our wholly foreign-owned subsidiary in China to our intermediate holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the Hong Kong entity satisfies all the requirements under the Arrangement between China and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the tax authority. If our Hong Kong subsidiary satisfies all the requirements under the tax arrangement and receives approval from the tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at the standard rate of 5%. Effective from November 1, 2015, the above-mentioned approval requirement has been abolished, but a Hong Kong entity is still required to file application package with the tax authority, and settle the overdue taxes if the preferential 5% tax rate is denied based on the subsequent review of the application package by the tax authority. Furthermore, effective from January 1, 2020, a Hong Kong entity is entitled to judge by itself that it meets the conditions for entitlement to such treaty benefits. It could obtain such entitlement by itself at the time of making tax returns, or at the time of making withholding declarations via withholding agents. At the same time, the Hong Kong entity shall collect, gather and retain relevant materials for future reference in accordance with applicable rules, and shall accept the follow-up administration of tax authorities. In addition, there is no assurance that the PRC government will not intervene or impose restrictions on our ability to transfer cash in the future. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We may rely principally on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to pay dividends to us could have a material adverse effect on our ability to conduct our business.”

If our holding company in the Cayman Islands or any of our subsidiaries outside of the mainland of China were deemed to be a “resident enterprise” under the PRC Enterprise Income Tax Law, it would be subject to enterprise income tax on its worldwide income at a rate of 25%. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—If we are classified as a PRC resident enterprise for PRC income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders or ADS holders.”

 

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For purposes of illustration, the following discussion reflects the hypothetical taxes that might be required to be paid within China, assuming that: (i) we have taxable earnings, and (ii) we determine to pay dividends in the future:

 

     Taxation
Scenario(1)
Statutory Tax and
Standard Rate
 

Hypothetical pre-tax earnings(2)

     100

Tax on earnings at statutory rate of 25%(3)

     (25 %) 

Net earnings available for distribution

     75

Withholding tax at standard rate of 10%(4)

     (7.5 %) 

Net distribution to Parent/Shareholders

     67.5

 

Notes:

(1)

For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount, not considering timing differences, is assumed to equal Chinese taxable income.

(2)

Under the terms of the contractual arrangements among our WFOE, the VIE and its Shareholders, our WFOE may charge the VIE for services provided to the VIE. These fees shall be recognized as expenses of the VIE, with a corresponding amount as service income by our WFOE and eliminate in consolidation. For income tax purposes, our WFOE and VIE file income tax returns on a separate company basis. The fees paid are recognized as a tax deduction by the VIE and as income by our WFOE and are tax neutral.

(3)

For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate of 25% would be effective.

(4)

The Enterprise Income Tax Law of the PRC imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of China. A lower withholding income tax rate of 5% is applied if the foreign invested enterprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with China, subject to a qualification review at the time of the distribution. For purposes of this hypothetical example, the table above assumes a maximum tax scenario under which the full withholding tax rate of 10% would be applied.

The table above has been prepared under the assumption that all profits of the VIE will be distributed as fees to our WFOE under tax neutral contractual arrangements. If in the future, the accumulated earnings of the VIE exceed the fees paid to our PRC subsidiaries (or if the current and contemplated fee structure between the intercompany entities is determined to be non-substantive and disallowed by Chinese tax authorities), the VIE could, as a matter of last resort, make a non-deductible transfer to our WFOE for the amounts of the stranded cash in the VIE. This would result in such transfer being non-deductible expenses for the VIE but still taxable income for our WFOE.

Under PRC laws and regulations, we are subject to restrictions on foreign exchange and cross-border cash transfers, including to U.S. investors. Our ability to distribute earnings to the holding company and U.S. investors is also limited. We are a Cayman Islands holding company and we may rely on dividends and other distributions on equity paid by our PRC subsidiary, which in turn relies on consulting and other fees paid to us by the VIE, for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders and service any debt we may incur. When any of our PRC subsidiary incurs debt on its own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Our WFOE, being a foreign-invested enterprise established in China, is required to make appropriations to certain statutory reserves, namely, a general reserve fund, an enterprise expansion fund, a staff welfare fund and a bonus fund, all of which are appropriated from net profit as reported in its PRC statutory accounts. Our WFOE is required to allocate at least 10% of its after-tax profits after making up the previous year’s accumulated losses each year, if any, to a general reserve fund until such fund has reached 50% of its respective registered capital. Appropriations to the enterprise expansion fund and staff welfare and bonus funds are at the discretion of the board of directors of the PRC subsidiary.

Under PRC laws and regulations, our WFOE, the VIE and its subsidiaries are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the consolidated variable interest entity in which we have no legal ownership.

 

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In addition, our WFOE, the VIE and its subsidiaries generate their revenue primarily in Renminbi, which is not freely convertible into other currencies. As a result, any restriction on currency exchange may limit the ability of our PRC subsidiaries to pay dividends to us. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure—We may rely principally on dividends and other distributions on equity paid by our WFOE to fund any cash and financing requirements we may have, and any limitation on the ability of our WFOE to pay dividends to us could have a material adverse effect on our ability to conduct our business,” and “—Government control of currency conversion and future fluctuation of Renminbi exchange rates could have a material adverse effect on our results of operations and financial condition, and may reduce the value of, and dividends payable on, our Shares in foreign currency terms.”

Financial Information Related to the Consolidated Variable Interest Entity

The following tables present the condensed consolidating schedule of financial position for the consolidated variable interest entity and other entities as of the dates presented.

Selected Condensed Consolidated Statements of Income Information

 

    For the Year Ended December 31, 2021     For the Year Ended December 31, 2022     For the Year Ended December 31, 2023  
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 1)
RMB’000
    Consolidated
RMB’000
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 1)
RMB’000
    Consolidated
RMB’000
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 1)
RMB’000
    Consolidated
RMB’000
 

Operating revenue

                                   

Brokerage commission income

    —        865       —        2,231,388       —        2,232,253       —        1,562       —        1,107,090       —        1,108,652       —        19,661       —        1,124,872       —        1,144,533  

Other income

    1,269       —        —        11,494       —        12,763       1,553       —        —        49,223       (1,520     49,256       1,643       926       —        48,450       —        51,019  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating revenue

    1,269       865       —        2,242,882       —        2,245,016       1,553       1,562       —        1,156,313       (1,520     1,157,908       1,643       20,587       —        1,173,322       —        1,195,552  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating costs and expenses

                                    —     

Cost of revenue

    —        (317     —        (1,687,770       (1,688,087     —        (942     —        (705,067     —        (706,009     —        (17,151     —        (711,917     —        (729,068

Other cost

    —        —        —        (2,670       (2,670     —        —        —        (28,282     —        (28,282     —        (1,019     —        (18,919     —        (19,938

Total operating costs

    —        (317     —        (1,690,440     —        (1,690,757     —        (942     —        (733,349     —        (734,291     —        (18,170     —        (730,836     —        (749,006

Selling expenses

    —        (4,268     —        (346,305     —        (350,573     —        (1,250     (1,520     (230,414     1,520       (231,664     —        (2,653     —        (201,608     —        (204,261

General and administrative expenses

    (5,994     (18,751     (52     (172,822     —        (197,619     (4,614     (13,514     (68     (136,519     —        (154,715     (5,996     (12,165     (108     (101,135     —        (119,404

Research and development expenses

    —        —        —        (120,478     —        (120,478     —        —        —        (80,911     —        (80,911     —        —        —        (71,842     —        (71,842
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating costs and expenses

    (5,994     (23,336     (52     (2,330,045     —        (2,359,427     (4,614     (15,706     (1,588     (1,181,193     1,520       (1,201,581     (5,996     (32,988     (108     (1,105,421     —        (1,144,513
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

    (4,725     (22,471     (52     (87,163     —        (114,411     (3,061     (14,144     (1,588     (24,880     —        (43,673     (4,353     (12,401     (108     67,901       —        51,039  

Other income/ (expenses)

                                    —     

Interest (expenses)/ income

    4       840       42       (4,092     —        (3,206     —        525       5       (5,592     —        (5,062     1       1,946       1       841       —        2,789  

Unrealized exchange (loss)/income

    —        (59     —        —        —        (59     —        (84     5       —        —        (79     (1     (435     —        —        —        (436

Investment income

    —        (3,959     —        (1,369     —        (5,328     —        (2,784     —        568       —        (2,216     —        (179     —        (1,477     —        (1,656

Others, net

    —        —        —        12,627       —        12,627       —        257       1,292       17,941       —        19,490       —        1       —        18,400       —        18,401  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before income tax, and share of (loss)/income of equity method investee

    (4,721     (25,649     (10     (79,997     —        (110,377     (3,061     (16,230     (286     (11,963     —        (31,540     (4,353     (11,068     (107     85,665       —        70,137  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

    —        —        —        —        —        —        —        —        —        —        —        —        —        —        —        —        —        —   

Share of income/(loss) of equity method investee

    —        —        —        2,660       —        2,660       —        —        —        (2,200     —        (2,200     —        —        —        417       —        417  

Share of income/(loss) of subsidiaries and VIE

    (102,945     (77,296     (77,286     —        257,527 (i)      —        (28,126     (11,896     (11,610     —        51,632       —        74,541       85,609       85,716       —        (245,866 )(i)      —   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net profit/(loss)

    (107,666     (102,945     (77,296     (77,337     257,527       (107,717     (31,187     (28,126     (11,896     (14,163     51,632       (33,740     70,188       74,541       85,609       86,082       (245,866     70,554  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net profit/(loss) attributable to non-controlling interests

    —        —        —        (51     —        (51     —        —        —        (2,553     —        (2,553     —        —        —        366       —        366  

Net profit/(loss) attributable to Huize Holding Limited

    (107,666     (102,945     (77,296     (77,286     257,527       (107,666     (31,187     (28,126     (11,896     (11,610     51,632       (31,187     70,188       74,541       85,609       85,716       (245,866     70,188  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss)/profit attributable to common shareholders

    (107,666     (102,945     (77,296     (77,286     257,527       (107,666     (31,187     (28,126     (11,896     (11,610     51,632       (31,187     70,188       74,541       85,609       85,716       (245,866     70,188  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net profit/(loss)

    (107,666     (102,945     (77,296     (77,337     257,527       (107,717     (31,187     (28,126     (11,896     (14,163     51,632       (33,740     70,188       74,541       85,609       86,082       (245,866     70,554  

Foreign currency translation adjustment, net of tax

    (5,323     1,742       —        —        (1,742 )(ii)      (5,323     9,600       (14,324     —        —        14,324 (ii)      9,600       3,635       (5,340     —        —        5,340 (ii)      3,635  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss)

    (112,989     (101,203     (77,296     (77,337     255,785       (113,040     (21,587     (42,450     (11,896     (14,163     65,956       (24,140     73,823       69,201       85,609       86,082       (240,526     74,189  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income/(loss) attributable to non-controlling interests

    —        —        —        (51     —        (51     —        —        —        (2,553     —        (2,553     —        —        —        366       —        366  

Comprehensive income/ (loss) attributable to Huize Holding Limited

    (112,989     (101,203     (77,296     (77,286     255,785       (112,989     (21,587     (42,450     (11,896     (11,610     65,956       (21,587     73,823       69,201       85,609       85,716       (240,526     73,823  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Note 1:

(i)

The elimination represents equity pick-up of net profits and losses in the subsidiaries of the parent company, WFOE and the VIE and its subsidiaries.

(ii)

The elimination represents equity pick-up of other comprehensive income in the subsidiaries of the parent company.

 

10


Table of Contents

Selected Condensed Consolidated Balance Sheets Information

 

    As of December 31, 2022     As of December 31, 2023  
    Parent
company
RMB’000
    Subsidiaries
of parent
Company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 2)
RMB’000
    Consolidated
RMB’000
    Parent
company
RMB’000
    Subsidiaries
of parent
Company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 2)
RMB’000
    Consolidated
RMB’000
 

Assets

                       

Current assets

                       

Cash and cash equivalent, net

    5,613       65,124       650       205,781       —        277,168       5,296       84,285       537       159,140       —        249,258  

Restricted cash

    —        43,459       —        55,458       —        98,917       —        —        —        42,307       —        42,307  

Short-term investments

    —        —        —        —        —        —        —        —        —        8,879       —        8,879  

Contract Assets, net

    —        —        —        49,888       —        49,888       —        —        —        41,481       —        41,481  

Accounts receivable, net

    —        429       —        250,238       —        250,667       —        3,142       —        175,152       —        178,294  

Insurance premium receivables, net

    —        —        —        1,792       —        1,792       —        —        —        927       —        927  

Amount due from related parties

    149       —        —        340       —        489       106       —        —        277       —        383  

Deferred costs

    —        —        —        —        —        —        —        —        —        6,147       —        6,147  

Prepaid expense and other receivables, net

    316,172       641       129,005       96,987       (470,987 )(i)      71,818       306,894       2,285       129,011       102,729       (462,135 )(i)      78,784  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

    321,934       109,653       129,655       660,484       (470,987     750,739       312,296       89,712       129,548       537,039       (462,135     606,460  

Non-current assets

                       

Restricted cash

    —        —        —        —        —        —        —        —        —        29,687       —        29,687  

Property, Plant and Equipment, net

    —        385       —        38,133       —        38,518       —        286       —        53,821       —        54,107  

Intangible assets, net

    —        2,647       —        50,851       —        53,498       —        5,296       —        45,447       —        50,743  

Deferred tax assets

    —        —        —        —        —        —        —        —        —        —        —        —   

Long-term investments

    —        11,055       —        66,250       —        77,305       —        10,021       —        66,667       —        76,688  

Investment in subsidiaries

    44,307       237,613       —        —        (281,920 )(ii)      —        118,319       328,410       —        —        (446,729 )(ii)      —   

Investment in VIE

    —        —        107,958       —        (107,958 )(ii)      —        —        —        198,862       —        (198,862 )(ii)      —   

Operating lease right-of-use assets

    —        —        —        162,180       —        162,180       —        534       —        115,412       —        115,946  

Goodwill

    —        —        —        461       —        461       —        —        —        461       —        461  

Contract Assets, net

    —        —        —        6,634       —        6,634       —        —        —        12,495       —        12,495  

Other Assets

    —        —        —        279       —        279       —        419       —        —        —        419  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current assets

    44,307       251,700       107,958       324,788       (389,878     338,875       118,319       344,966       198,862       323,990       (645,591     340,546  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

    366,241       361,353       237,613       985,272       (860,865     1,089,614       430,615       434,678       328,410       861,029       (1,107,726     947,006  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities, and Shareholders’ Equity

                       

Short-term borrowings

    —        —        —        150,000       —        150,000       —        —        —        30,000       —        30,000  

Accounts payable

    —        273       —        261,993       —        262,266       —        7,318       —        204,587       —        211,905  

Insurance premium payables

    —        —        —        27,567       —        27,567       —        —        —        37,514       —        37,514  

Contract liabilities

    3,332       —        —        702       —        4,034       1,783       —        —        945       —        2,728  

Other payables and accrued expenses

    17,892       316,210       —        195,136       (470,987 )(i)      58,251       17,896       307,383       —        171,706       (462,135 )(i)      34,850  

Payroll and welfare payable

    4,138       126       —        39,674       —        43,938       5,583       —        —        50,624       —        56,207  

Income taxes payable

    —        —        —        2,440       —        2,440       —        —        —        2,440       —        2,440  

Operating lease liabilities

    —        —        —        10,075       —        10,075       —        581       —        16,368       —        16,949  

Amount due to related parties

    —        —        —        495       —        495       —        —        —        2,451       —        2,451  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

    25,362       316,609       —        688,082       (470,987     559,066       25,262       315,282       —        516,635       (462,135     395,044  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-current liabilities

                       

Long-term borrowings

    —        —        —        —        —        —        —        —        —        —        —        —   

Deferred tax liabilities

    —        437         12,054         12,491       —        1,077       —        10,971       —        12,048  

Operating lease liabilities

    —        —        —        176,032       —        176,032       —        —        —        129,299       —        129,299  

Payroll and welfare payable

    —        —        —        —        —        —        200       —        —        —        —        200  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total non-current liabilities

    —        437       —        188,086       —        188,523       200       1,077       —        140,270       —        141,547  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

    25,362       317,046         876,168       (470,987     747,589       25,462       316,359       —        656,905       (462,135     536,591  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Shareholders’ equity

                       

Common shares

        129,989       44,766       (174,755 )(ii)        —        —        129,989       44,766       (174,755 )(ii)      —   

Class A common shares

    62       —        —        —        —        62       62       —        —        —        —        62  

Class B common shares

    10       —        —        —        —        10       10       —        —        —        —        10  

Treasury stock

    (15,306     —        —        —        —        (15,306     (28,580     —        —        —        —        (28,580

Additional paid-in capital

    904,935       522,532       515,318       470,553       (1,508,403 )(ii)      904,935       905,958       524,640       517,540       472,775       (1,514,955 )(ii)      905,958  

Accumulated other comprehensive loss

    (17,695     (12,128     —        —        12,128 (ii)      (17,695     (14,060     (17,468     —        —        17,468 (ii)      (14,060

Accumulated (deficit)/equity

    (531,127     (466,097     (407,694     (407,361     1,281,152 (ii)      (531,127     (458,237     (388,853     (319,119     (318,679     1,026,651 (ii)      (458,237
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity attributable to Huize Holding Limited shareholders

    340,879       44,307       237,613       107,958       (389,878     340,879       405,153       118,319       328,410       198,862       (645,591     405,153  

Non-controlling interests

    —        —        —        1,146       —        1,146       —        —        —        5,262       —        5,262  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total shareholders’ equity

    340,879       44,307       237,613       109,104       (389,878     342,025       405,153       118,319       328,410       204,124       (645,591     410,415  

Total liabilities and shareholders’ equity

    366,241       361,353       237,613       985,272       (860,865     1,089,614       430,615       434,678       328,410       861,029       (1,107,726     947,006  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

11


Table of Contents

 

Note 2:

(i)

The elimination mainly represents inter-company loans among the parent company, the subsidiaries of the parent company, WFOE and the VIE.

(ii)

The elimination represents offsetting entries for investment of the parent company against the equities of the subsidiaries of parent company and the VIE.

Selected Condensed Consolidated Cash Flows Information

 

    For the Year Ended December 31, 2021     For the Year Ended December 31, 2022     For the Year Ended December 31, 2023  
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 3)
RMB’000
    Consolidated
RMB’000
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 3)
RMB’000
    Consolidated
RMB’000
    Parent
company
RMB’000
    Subsidiaries
of parent
company
RMB’000
    WFOE
RMB’000
    VIE and its
subsidiaries
RMB’000
    Elimination
(Note 3)
RMB’000
    Consolidated
RMB’000
 

Net cash provided by/(used in) operating activities

    (4,576     (18,487     (10     (152,844     —        (175,917     18,473       (34,064     (382     (69,094     —        (85,067     2,903       (14,971     (112     149,531       —        137,351  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from investing activities:

                                   

Purchase of long-term investment

    —        (11,013     —        (22,601     —        (33,614     —        —        —        (10,000     —        (10,000     —        —        —        —        —        —   

Purchase of short-term investment

    —        —        —        —        —        —        —        —        —        —        —        —        —        —        —        (9,968     —        (9,968

Purchase of property, equipment and intangible assets

    —        (702     —        (37,359     —        (38,061     —        (50     —        (16,773     —        (16,823     —        (434     —        (30,090     —        (30,524

Proceeds from disposal of Properly, equipment and intangible assets

    —        19       —        961       —        980       —        4       —        1,044       —        1,048       —        —        —        955       —        955  

Acquisition of subsidiary, net of cash paid

      (2,487     —        (11,805     —        (14,292     —        —        —        (25,964     —        (25,964     —        (2,441     —        —        —        (2,441

Investment in subsidiaries from parent

    (247     —        —        —        247 (i)      —        —        —        —        —        —        —        —        —        —        —        —        —   

Investment in WFOE from subsidiaries

      (129,504     —        —        129,504 (ii)      —        —        —        —        —        —        —        —        —        —        —        —        —   

Payments of inter-company balances

    (161,216     —        (128,000     (5,050     294,260 (iii)      —        (23,376     —        (6,041     —        29,417 (i)      —        (6     (10,065     —        —        10,071 (iii)      —   

Proceeds from disposal of investments

    —        2,930       —        890         3,820       —        —        —        700         700       —        874       —        —        —        874  

Cash received for disposal of subsidiary

    —        —        —        —        —        —        —        —        —        3,640       —        3,640       —        —        —        1,645       —        1,645  

Advances to a third party

    —        —        —        —        —        —        —        —        —        (26,000     —        (26,000     —        —        —        (23,000     —        (23,000

Repayment from a third Party

    —        —        —        —        —        —        —        —        —        16,000       —        16,000       —        —        —        —        —        —   

Interests received

    —        —        —        —        —        —        —        —        —        876       —        876       —        —        —        1,075       —        1,075  

Others

    —        —        —        241       —        241       —        —        —        237       —        237       —        —        —        361       —        361  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by/(used in) investing activities

    (161,463     (140,757     (128,000     (74,723     424,017       (80,926     (23,376     (46     (6,041     (56,240     29,417       (56,286     (6     (12,066     —        (59,022     10,071       (61,023
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cash flows from financing activities:

                                   

Proceeds from borrowings

    —        —        —        184,000       —        184,000       —        —        —        270,200       —        270,200       —        —        —        37,000       —        37,000  

Repayments of borrowings

    —        —        —        (40,503     —        (40,503     —        —        —        (367,524     —        (367,524     —        —        —        (161,473     —        (161,473

Proceeds from inter-company balances

    —        161,216       5,050       128,000       (294,266 )(iii)      —        —        23,376       —        6,041       (29,417 )(iii)      —        9,461       6       —        604       (10,071 )(iii)      —   

Repurchase of Class A common shares

    (3,003     —        —        —        —        (3,003     (6,659     —        —        —        —        (6,659     (13,392     —        —        —        —        (13,392

Proceeds from exercise of share option

    497       —        —        247       (247 )(i)      497         —        —        —        —        —        560       —        —        —        —        560  

Cash received by subsidiaries from minority shareholders

    —        —        —        900       —        900       —        —        —        2,850       —        2,850       —        —        —        3,750       —        3,750  

Capital injection from subsidiaries

    —        —        129,504       —        (129,504 )(ii)      —        —        —        —        —        —        —        —        —        —        —        —        —   

Net cash provided by/(used in) financing activities

    (2,506     161,216       134,554       272,644       (424,017     141,891       (6,659     23,376       —        (88,433     (29,417     (101,133     (3,371     6       —        (120,119     (10,071     (133,555
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Effect of exchange rate changes on cash and cash equivalents

    (2,381     (2,631     —        —        —        (5,012     884       8,703       —        —        —        9,587       158       2,756       —        —        —        2,914  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net increase in cash and cash equivalents and restricted cash

    (170,926     (659     6,544       45,077       —        (119,964     (10,678     (2,031     (6,423     (213,767     —        (232,899     (316     (24,275     (112     (29,610     —        (54,313

Total cash and cash equivalents and restricted cash at beginning of year

    187,217       111,273       529       429,929       —        728,948       16,291       110,614       7,073       475,006       —        608,984       5,613       108,583       650       261,239       —        376,085  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total cash and cash equivalents and restricted cash at end of year

    16,291       110,614       7,073       475,006       —        608,984       5,613       108,583       650       261,239       —        376,085       5,297       84,308       538       231,629       —        321,772  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Table of Contents

 

Note 3:

(i)

The elimination represents the cash flow from exercise of share option between the parent company and the VIE and its subsidiaries.

(ii)

The elimination represents inter-company capital injections between the subsidiaries of the parent company and WFOE.

(iii)

The elimination mainly represents inter-company loans among the parent company, the subsidiaries of the parent company, WFOE and the VIE.

Selected Consolidated Financial Data

The following selected consolidated statements of comprehensive (loss)/income data for the years ended December 31, 2021, 2022 and 2023, selected consolidated balance sheet data as of December 31, 2022 and 2023, and selected consolidated cash flow data for the years ended December 31, 2021, 2022 and 2023 have been derived from our audited consolidated financial statements included elsewhere in this annual report. The following selected consolidated statements of operations data for the years ended December 31, 2019 and 2020 have been derived from our audited consolidated financial statements not included in this annual report. The following selected consolidated balance sheet data as of December 31, 2019, 2020 and 2021, and selected consolidate cash flow data for the years ended December 31, 2019 and 2020 have been derived from our audited consolidated financial statements that are not included in this annual report. Our historical results do not necessarily indicate results expected for any future periods. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP.

 

     For the Year Ended December 31,  
     2019     2020     2021     2022     2023  
     RMB     RMB     RMB     RMB     RMB     US$  
           (in thousands, except for percentages, share and per share data)  

Summary Consolidated Statements of Comprehensive (Loss)/Income

            

Operating revenue

            

Brokerage income

     982,124       1,215,434       2,232,253       1,108,652       1,144,533       161,204  

Other income