EX-99.2 10 a18-15310_1ex99d2.htm EX-99.2

Exhibit 99.2

 

BITAUTO HOLDINGS LIMITED

 

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

 



 

BITAUTO HOLDINGS LIMITED

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

Page

 

 

 

Report of Independent Registered Public Accounting Firm

 

F- 2

 

 

 

Consolidated Balance Sheets as of December 31, 2016 and 2017

 

F-4 - F-5

 

 

 

Consolidated Statements of Comprehensive Income for the years ended December 31, 2015, 2016 and 2017

 

F-6

 

 

 

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2016 and 2017

 

F-7 - F-8

 

 

 

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2015, 2016 and 2017

 

F-9 - F-11

 

 

 

Notes to Consolidated Financial Statements

 

F-12 - F-71

 

F- 1



 

Report of Independent Registered Public Accounting Firm

 

To the Board of Directors and Shareholders of Bitauto Holdings Limited:

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

 

We have audited the accompanying consolidated balance sheets of Bitauto Holdings Limited and its subsidiaries (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of comprehensive income, cash flows and changes in shareholders’ equity for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

 

Basis for Opinions

 

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15 of the Form 20-F. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

 

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

 

As described in Management’s Annual Report on Internal Control over Financial Reporting, management has excluded Beijing Xinchuang Interactive Advertising Company Limited (“Xinchuang”) from its assessment of internal control over financial reporting as of December 31, 2017 because it was acquired by the Company in a purchase business combination during 2017. We have also excluded Xinchuang from our audit of internal control over financial reporting. Xinchuang is a subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent 0.1% and 0.3%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

 

Definition and Limitations of Internal Control over Financial Reporting

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

F- 2



 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

/s/ PricewaterhouseCoopers Zhong Tian LLP

Beijing, the People’s Republic of China

April 27, 2018

 

We have served as the Company’s auditor since 2015.

 

F- 3



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

 

 

2016

 

2017

 

 

 

Notes

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

2,021,989

 

9,555,027

 

Time deposits

 

 

 

2,000

 

-

 

Restricted cash

 

 

 

5,475,576

 

811,596

 

Accounts receivable, net

 

6

 

2,068,615

 

2,854,410

 

Bills receivable

 

 

 

110,236

 

330,544

 

Prepayments and other receivables

 

7

 

611,675

 

1,103,683

 

Due from related parties

 

25

 

409,091

 

205,031

 

Finance receivables - current portion, net

 

13

 

5,758,275

 

13,253,898

 

Other current assets

 

 

 

17,502

 

3,180

 

Total current assets

 

 

 

16,474,959

 

28,117,369

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Restricted cash

 

 

 

150,000

 

672,736

 

Investment in equity investees

 

9

 

1,447,472

 

1,184,196

 

Property, plant and equipment, net

 

10

 

194,560

 

1,296,196

 

Intangible assets, net

 

11

 

2,342,840

 

1,726,321

 

Deferred tax assets

 

22

 

17,387

 

52,508

 

Goodwill

 

12

 

444,933

 

543,655

 

Finance receivables - non-current portion, net

 

13

 

7,924,760

 

16,537,707

 

Other non-current assets

 

14

 

937,845

 

1,385,044

 

Total non-current assets

 

 

 

13,459,797

 

23,398,363

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

29,934,756

 

51,515,732

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities (including amounts of the consolidated VIEs and subsidiaries of VIEs without recourse to the primary beneficiaries of RMB4,307,570 and RMB3,655,453 as of December 31, 2016 and 2017, respectively)

 

 

 

 

 

 

 

Short term borrowings

 

15

 

5,736,026

 

11,243,614

 

Asset-backed securitization debt

 

16

 

2,799,958

 

6,165,429

 

Accounts payable

 

 

 

1,603,577

 

2,176,627

 

Bills payable

 

 

 

-

 

295,089

 

Income tax payable

 

 

 

132,815

 

172,018

 

Due to related parties

 

25

 

84,447

 

98,241

 

Other payables and accruals

 

18

 

1,597,093

 

2,548,221

 

Total current liabilities

 

 

 

11,953,916

 

22,699,239

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Long term borrowings

 

15

 

1,582,971

 

5,074,273

 

Asset-backed securitization debt

 

16

 

1,630,663

 

2,611,821

 

Convertible debt

 

17

 

859,166

 

707,854

 

Deferred tax liabilities

 

22

 

51,617

 

52,237

 

Other non-current liabilities

 

 

 

94,712

 

132,637

 

Total non-current liabilities

 

 

 

4,219,129

 

8,578,822

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

16,173,045

 

31,278,061

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 4



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS (CONTINUED)

AS OF DECEMBER 31, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

 

 

2016

 

2017

 

 

 

Notes

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

26

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable noncontrolling interests

 

19

 

3,939,646

 

301,953

 

 

 

 

 

 

 

 

 

Bitauto Holdings Limited shareholders’ equity

 

 

 

 

 

 

 

Ordinary shares (US$0.00004 par value;
1,250,000,000 shares authorized as of December 31, 2016 and 2017, respectively; 70,726,025 shares issued and outstanding as of December 31, 2016; 72,739,966 shares issued and outstanding as of December 31, 2017, respectively)

 

 

 

19

 

19

 

Additional paid-in capital

 

 

 

8,903,759

 

12,220,493

 

Treasury shares

 

 

 

(41,888

)

(20,411

)

Statutory reserves

 

 

 

89,841

 

153,538

 

Accumulated other comprehensive income

 

 

 

742,302

 

468,257

 

Accumulated deficit

 

 

 

(150,515

)

(1,493,209

)

Total Bitauto Holdings Limited shareholders’ equity

 

 

 

9,543,518

 

11,328,687

 

Noncontrolling interests

 

 

 

278,547

 

8,607,031

 

Total shareholders’ equity

 

 

 

9,822,065

 

19,935,718

 

 

 

 

 

 

 

 

 

Total liabilities, redeemable noncontrolling interests and shareholders’ equity

 

 

 

29,934,756

 

51,515,732

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 5



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

 

 

2015

 

2016

 

2017

 

 

 

Notes

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

20

 

4,254,195

 

5,772,948

 

8,751,259

 

Cost of revenue

 

 

 

(1,450,744

)

(2,077,979

)

(3,234,680

)

Gross profit

 

 

 

2,803,451

 

3,694,969

 

5,516,579

 

 

 

 

 

 

 

 

 

 

 

Selling and administrative expenses

 

 

 

(3,013,997

)

(3,417,811

)

(6,059,046

)

Product development expenses

 

 

 

(312,100

)

(457,367

)

(565,702

)

Other gains, net

 

21

 

60,508

 

70,981

 

31,576

 

Loss from operations

 

 

 

(462,138

)

(109,228

)

(1,076,593

)

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

24,980

 

41,651

 

93,025

 

Interest expense

 

 

 

(8,140

)

(52,155

)

(92,633

)

Share of results of equity investees

 

 

 

(16,663

)

(25,640

)

(71,866

)

Investment income/(loss)

 

 

 

141,195

 

(45,012

)

(75,097

)

Loss before tax

 

 

 

(320,766

)

(190,384

)

(1,223,164

)

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

22

 

(64,518

)

(147,569

)

(203,824

)

Net loss

 

 

 

(385,284

)

(337,953

)

(1,426,988

)

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to noncontrolling interests

 

 

 

7,898

 

(1,895

)

(147,991

)

Accretion to redeemable noncontrolling interests

 

 

 

113,810

 

205,287

 

332,117

 

Net loss attributable to Bitauto Holdings Limited

 

 

 

(506,992

)

(541,345

)

(1,611,114

)

 

 

 

 

 

 

 

 

 

 

Net loss per share/ADS attributable to ordinary shareholders

 

24

 

 

 

 

 

 

 

Basic

 

 

 

(8.72

)

(8.31

)

(23.01

)

Diluted

 

 

 

(8.72

)

(8.31

)

(23.16

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares/ADSs

 

24

 

 

 

 

 

 

 

Basic

 

 

 

58,142,432

 

65,160,205

 

70,154,910

 

Diluted

 

 

 

58,142,432

 

65,160,205

 

70,154,910

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/(loss)

 

 

 

 

 

 

 

 

 

Foreign currency exchange gains/(losses), net of tax of nil

 

 

 

344,748

 

459,430

 

(353,747

)

 

 

 

 

 

 

 

 

 

 

Total comprehensive (loss)/income, net of tax

 

 

 

(40,536

)

121,477

 

(1,780,735

)

Total comprehensive income/(loss) attributable to noncontrolling interests

 

 

 

7,898

 

(1,692

)

(227,693

)

Accretion to redeemable noncontrolling interests

 

 

 

113,810

 

205,287

 

332,117

 

Total comprehensive loss attributable to Bitauto Holdings Limited

 

 

 

(162,244

)

(82,118

)

(1,885,159

)

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 6



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

2015

 

2016

 

2017

 

 

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

Net loss

 

(385,284

)

(337,953

)

(1,426,988

)

 

 

 

 

 

 

 

 

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

Investment (income)/loss

 

(141,195

)

45,012

 

75,097

 

Gain from adjustment of contingent consideration

 

(17,419

)

-

 

-

 

Unrealized exchange losses/(gains)

 

6,560

 

(3,410

)

(8,375

)

Interest expense

 

-

 

-

 

31,659

 

Depreciation of property, plant and equipment

 

55,459

 

55,859

 

185,344

 

Amortization of intangible assets

 

495,614

 

633,368

 

688,572

 

Deferred income tax

 

(10,940

)

6,863

 

(46,171

)

Share-based compensation

 

120,045

 

76,981

 

1,185,839

 

Write-down of assets

 

280,591

 

-

 

-

 

Losses/(Gains) on disposal of property, plant and equipment

 

375

 

(22,993

)

(14,910

)

Gains on disposal of intangible assets

 

-

 

-

 

(1,520

)

Share of results of equity investees

 

16,663

 

25,640

 

71,866

 

Allowance for doubtful accounts for accounts receivable, and credit losses for finance receivables

 

8,931

 

102,651

 

349,185

 

Allowance for due from related party

 

-

 

-

 

15,000

 

Changes in assets and liabilities, net of effects of acquisitions and disposals:

 

 

 

 

 

 

 

Accounts receivable

 

(384,192

)

(426,800

)

(869,699

)

Bills receivable

 

(42,943

)

37,424

 

(220,308

)

Prepayments and other receivables

 

(154,224

)

(258,732

)

(343,794

)

Due from related parties

 

(95,769

)

30,996

 

29,792

 

Other current assets

 

(47

)

(104,313

)

(17

)

Other non-current assets

 

(19,686

)

(462,033

)

(375,823

)

Accounts payable

 

433,634

 

619,769

 

483,312

 

Income tax payable

 

(16,581

)

9,761

 

30,561

 

Due to related parties

 

35,322

 

35,693

 

25,194

 

Other payables and accruals

 

392,608

 

393,262

 

1,026,485

 

Other non-current liabilities

 

24,361

 

70,351

 

37,925

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

601,883

 

527,396

 

928,226

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 7



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

2015

 

2016

 

2017

 

 

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Placement of time deposits

 

(2,388,478

)

(2,000

)

-

 

Proceeds from maturity of time deposits

 

2,443,311

 

100,000

 

2,000

 

Placement of restricted cash

 

(334,098

)

(6,902,089

)

(3,903,776

)

Proceeds from restricted cash

 

-

 

1,822,631

 

7,828,146

 

Purchase of investments in equity investees

 

(921,130

)

(280,168

)

(120,429

)

Disposal of investments in equity investees

 

-

 

-

 

127,120

 

Purchases of property, plant and equipment

 

(231,850

)

(575,015

)

(1,728,761

)

Purchases of intangible assets

 

(3,607

)

(33,567

)

(26,706

)

Proceeds from disposal of property, plant and equipment

 

42,960

 

67,090

 

242,282

 

Proceeds from disposal of intangible assets

 

-

 

445

 

-

 

Acquisition of finance receivables

 

(3,630,792

)

(13,951,414

)

(24,608,984

)

Collection of finance receivables

 

854,056

 

2,844,009

 

9,135,002

 

Acquisition of subsidiaries, net of cash acquired

 

(6,118

)

(56,513

)

(49,585

)

 

 

 

 

 

 

 

 

Net cash used in investing activities

 

(4,175,746

)

(16,966,591

)

(13,103,691

)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Proceeds from issuance of ordinary shares, net of issuance costs

 

3,370,015

 

977,954

 

-

 

Proceeds from issuance of subsidiary’s ordinary shares, net of issuance costs

 

-

 

-

 

5,528,755

 

Proceeds from issuance of subsidiaries’ redeemable convertible preference shares, net of issuance costs

 

1,537,952

 

2,043,694

 

1,317,450

 

Contribution from noncontrolling interests

 

-

 

-

 

2,995

 

Purchase of noncontrolling interests

 

-

 

-

 

(36,292

)

Proceeds from issuance of convertible debt

 

-

 

991,720

 

-

 

Proceeds from exercise of options

 

5,881

 

20,772

 

26,673

 

Proceeds from borrowings

 

361,084

 

7,775,989

 

23,306,791

 

Repayment of borrowings

 

-

 

(818,076

)

(14,650,880

)

Proceeds from asset-backed securitization debt

 

-

 

5,499,400

 

11,142,486

 

Repayment of asset-backed securitization debt

 

-

 

(1,068,779

)

(6,795,858

)

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

5,274,932

 

15,422,674

 

19,842,120

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

18,332

 

97,636

 

(133,617

)

 

 

 

 

 

 

 

 

Increase/(Decrease) in cash and cash equivalents

 

1,719,401

 

(918,885

)

7,533,038

 

Cash and cash equivalents at beginning of the year

 

1,221,473

 

2,940,874

 

2,021,989

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of the year

 

2,940,874

 

2,021,989

 

9,555,027

 

 

 

 

 

 

 

 

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid for income taxes

 

(92,039

)

(130,946

)

(219,434

)

Cash paid for interest

 

(3,117

)

(71,759

)

(1,118,736

)

 

 

 

 

 

 

 

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares in connection with business cooperation with JD.com, Inc.

 

3,045,268

 

-

 

-

 

Purchases of property, plant and equipment

 

1,537

 

1,240

 

9,471

 

Purchases of intangible assets

 

4,258

 

291

 

708

 

Amounts receivable from exercise of options

 

(797

)

(3,488

)

(58,415

)

Conversion of convertible debt

 

-

 

-

 

158,450

 

Conversion of Yixin preferred shares

 

-

 

-

 

5,323,103

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 8



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

Ordinary shares

 

Treasury shares

 

Additional
paid-in

 

Statutory

 

Accumulated
other
comprehensive

 

Retained

 

Total Bitauto
Holdings
Limited
shareholders’

 

Noncontrolling

 

Total
shareholders’

 

 

 

Share

 

Amount

 

Share

 

Amount

 

capital

 

reserves

 

income

 

earnings

 

equity

 

interests

 

equity

 

 

 

 

 

RMB

 

 

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1, 2015

 

45,575,745.0

 

13

 

1,903,665.5

 

(62,579

)

1,383,503

 

44,357

 

(63,154

)

738,019

 

2,040,159

 

246,855

 

2,287,014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares

 

17,735,549.0

 

4

 

 -

 

 -

 

6,355,197

 

 -

 

 -

 

 -

 

6,355,201

 

 -

 

6,355,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options and RSUs

 

 -

 

 -

 

(179,168.0

)

5,889

 

767

 

 -

 

 -

 

 -

 

6,656

 

 -

 

6,656

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

 -

 

 -

 

 -

 

 -

 

120,045

 

 -

 

 -

 

 -

 

120,045

 

 -

 

120,045

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

(393,182

)

(393,182

)

7,898

 

(385,284

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gains

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

344,748

 

 -

 

344,748

 

 -

 

344,748

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions of subsidiaries

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

10,000

 

10,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of redeemable noncontrolling interests

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

 -

 

(113,810

)

(113,810

)

 -

 

(113,810

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory reserves

 

 -

 

 -

 

 -

 

 -

 

 -

 

12,836

 

 -

 

(12,836

)

 -

 

 -

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015

 

63,311,294.0

 

17

 

1,724,497.5

 

(56,690

)

7,859,512

 

57,193

 

281,594

 

218,191

 

8,359,817

 

264,753

 

8,624,570

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 9



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

Ordinary shares

 

Treasury shares

 

Additional
paid-in

 

Statutory

 

Accumulated
other
comprehensive

 

Retained
earnings/
(Accumulated

 

Total Bitauto
Holdings
Limited
shareholders’

 

Noncontrolling

 

Total
shareholders’

 

 

 

Share

 

Amount

 

Share

 

Amount

 

capital

 

reserves

 

income

 

deficit)

 

equity

 

interests

 

equity

 

 

 

 

 

RMB

 

 

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1, 2016

 

63,311,294.0

 

17

 

1,724,497.5

 

(56,690

)

7,859,512

 

57,193

 

281,594

 

218,191

 

8,359,817

 

264,753

 

8,624,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares

 

7,414,731.0

 

2

 

-

 

-

 

978,331

 

-

 

-

 

-

 

978,333

 

-

 

978,333

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beneficial conversion feature in relation to issuance of convertible debt

 

-

 

-

 

-

 

-

 

185,712

 

-

 

-

 

-

 

185,712

 

-

 

185,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options and RSUs

 

-

 

-

 

(450,311.0

)

14,802

 

8,510

 

-

 

-

 

-

 

23,312

 

-

 

23,312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

-

 

-

 

-

 

-

 

76,981

 

-

 

-

 

-

 

76,981

 

-

 

76,981

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(336,058

)

(336,058

)

(1,895

)

(337,953

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation gains

 

-

 

-

 

-

 

-

 

-

 

-

 

459,430

 

-

 

459,430

 

-

 

459,430

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions of  subsidiaries

 

-

 

-

 

-

 

-

 

-

 

-

 

1,278

 

-

 

1,278

 

15,689

 

16,967

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of redeemable noncontrolling interests

 

-

 

-

 

-

 

-

 

(205,287

)

-

 

-

 

-

 

(205,287

)

-

 

(205,287

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory reserves

 

-

 

-

 

-

 

-

 

-

 

32,648

 

-

 

(32,648

)

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2016

 

70,726,025.0

 

19

 

1,274,186.5

 

(41,888

)

8,903,759

 

89,841

 

742,302

 

(150,515

)

9,543,518

 

278,547

 

9,822,065

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 10



 

BITAUTO HOLDINGS LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

 

 

Ordinary shares

 

Treasury shares

 

Additional
paid-in

 

Statutory

 

Accumulated
other
comprehensive

 

Accumulated

 

Total Bitauto
Holdings Limited
shareholders’

 

Noncontrolling

 

Total
shareholders’

 

 

 

Share

 

Amount

 

Share

 

Amount

 

capital

 

reserves

 

income

 

deficit

 

equity

 

interests

 

equity

 

 

 

 

 

RMB

 

 

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of January 1, 2017

 

70,726,025.0

 

19

 

1,274,186.5

 

(41,888

)

8,903,759

 

89,841

 

742,302

 

(150,515

)

9,543,518

 

278,547

 

9,822,065

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares

 

1,000,000.0

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of options and RSUs

 

-

 

-

 

(653,397.0

)

21,477

 

(2,001

)

-

 

-

 

-

 

19,476

 

-

 

19,476

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation

 

-

 

-

 

-

 

-

 

1,056,653

 

-

 

-

 

-

 

1,056,653

 

129,186

 

1,185,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(1,278,997

)

(1,278,997

)

(147,991

)

(1,426,988

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation losses

 

-

 

-

 

-

 

-

 

-

 

-

 

(274,045

)

-

 

(274,045

)

(79,702

)

(353,747

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Yixin preferred shares to ordinary shares

 

-

 

-

 

-

 

-

 

(947,158

)

-

 

-

 

-

 

(947,158

)

6,270,261

 

5,323,103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from Yixin IPO, net of issuance costs

 

-

 

-

 

-

 

-

 

3,321,055

 

-

 

-

 

-

 

3,321,055

 

2,204,022

 

5,525,077

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction with noncontrolling interests

 

-

 

-

 

-

 

-

 

12,554

 

-

 

-

 

-

 

12,554

 

59,349

 

71,903

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of convertible debt

 

1,013,941.0

 

-

 

-

 

-

 

158,450

 

-

 

-

 

-

 

158,450

 

-

 

158,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition of noncontrolling interests in subsidiaries

 

-

 

-

 

-

 

-

 

49,298

 

-

 

-

 

-

 

49,298

 

(109,671

)

(60,373

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of ordinary shares by the Company’s subsidiary

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

3,030

 

3,030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of redeemable noncontrolling interests

 

-

 

-

 

-

 

-

 

(332,117

)

-

 

-

 

-

 

(332,117

)

-

 

(332,117

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statutory reserves

 

-

 

-

 

-

 

-

 

-

 

63,697

 

-

 

(63,697

)

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2017

 

72,739,966.0

 

19

 

620,789.5

 

(20,411

)

12,220,493

 

153,538

 

468,257

 

(1,493,209

)

11,328,687

 

8,607,031

 

19,935,718

 

 

The accompanying notes are an integral part of the consolidated financial statements.

 

F- 11



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

1.                Principal activities and organization

 

Bitauto Holdings Limited (the “Company”) is a limited liability company incorporated and domiciled in the Cayman Islands. The registered office is located at Scotia Centre, George Town, Grand Cayman, Cayman Islands.

 

The Company does not conduct any substanti al operations of its own, but conducts most of its business through its operating subsidiaries, variable interest entities (“VIEs”) and subsidiaries of VIEs established in the People’s Republic of China (the “PRC”). The Company owns the equity interest of its operating subsidiaries, VIEs and subsidiaries of VIEs through its subsidiaries established in Cayman Islands and Hong Kong. The Company, its subsidiaries, VIEs and subsidiaries of VIEs are collectively referred to as the “Group”.

 

The Group is principally engaged in the provision of internet content and marketing services, and transaction services in the automobile industry, including advertising services, subscription services, transaction services and one-stop digital marketing solution services in the PRC.

 

On November 16, 2017, Yixin Group Limited (“Yixin”), the Group’s subsidiary engaging in automobile transaction services, completed its initial public offering (“IPO”) on the Main Board of The Stock Exchange of Hong Kong Limited. After Yixin’s IPO, the Group held 45.2% of the outstanding ordinary shares of Yixin. The Group continues to take control of Yixin and consolidate Yixin as its controlling shareholder through the voting proxy agreement that the Group entered into with certain other shareholders, and recognizes noncontrolling interests reflecting the shares held by the shareholders other than the Group in the consolidated financial statements.

 

F- 12



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

1.                Principal activities and organization (continued)

 

As of December 31, 2017, the Company’s principal subsidiaries, VIEs and subsidiaries of VIEs are as follows:

 

Name

 

Date of
incorporation or
acquisition

 

Place of
operations

 

% equity
interest

 

Bitauto Hong Kong Limited

 

April 27, 2010

 

Hong Kong

 

100

 

Beijing Bitauto Internet Information Company Limited

 

January 20, 2006

 

PRC

 

100

 

Dalian Rongxin Financial Guarantees Company Limited

 

June 6, 2016

 

PRC

 

100

 

Yixin Group Limited (“Yixin”, formerly known as Yixin Capital Limited)

 

November 19, 2014

 

Cayman Islands

 

45.2

 

Yixin Holding Hong Kong Limited (formerly known as Yixin Capital Hongkong Limited)

 

November 27, 2014

 

Hong Kong

 

45.2

 

Xinche Investment (Shanghai) Company Limited

 

January 16, 2015

 

PRC

 

45.2

 

Shanghai Yixin Financing Lease Company Limited

 

August 12, 2014

 

PRC

 

45.2

 

Tianjin Hengtong Jiahe Financing Lease Company Limited

 

May 18, 2015

 

PRC

 

45.2

 

Xinjiang Yin’an Information Technology Company Limited

 

September 6, 2017

 

PRC

 

45.2

 

KKC Holdings Limited (“KKC”)

 

November 10, 2016

 

Cayman Islands

 

45.2

 

KKC Holdings Limited

 

November 10, 2016

 

Hong Kong

 

45.2

 

Beijing KKC Technology Company Limited

 

November 10, 2016

 

PRC

 

45.2

 

Beijing C&I Advertising Company Limited (“CIG”)

 

December 30, 2002

 

PRC

 

75.5

 

Beijing Bitauto Information Technology Company Limited

 

November 30, 2005

 

PRC

 

100

 

Beijing Easy Auto Media Company Limited

 

March 7, 2008

 

PRC

 

100

 

Beijing Bitauto Interactive Advertising Company Limited

 

December 12, 2007

 

PRC

 

100

 

Beijing Xinbao Information Technology Company Limited

 

February 2, 2008

 

PRC

 

100

 

Tianjin  Boyou Information Technology Company Limited (formerly known as Bitauto (Tianjin) Commerce Company Limited)

 

May 16, 2014

 

PRC

 

100

 

Beijing Bit EP Information Technology Company Limited (“Bit EP”)

 

June 3, 2011

 

PRC

 

100

 

Beijing Yixin Information Technology Company Limited

 

January 9, 2015

 

PRC

 

45.2

 

 

F- 13



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

1.                Principal activities and organization (continued)

 

Variable interest entities

 

To comply with the PRC laws and regulations that restrict foreign ownership of companies involved in provision of internet content and other restricted businesses, the Group operates its websites and engages in such restricted businesses in the PRC through certain PRC domestic companies, whose equity interest are held by certain management members of the Company (“nominee shareholders”). The Company obtained control over these PRC domestic companies by entering into a series of contractual agreements with these PRC domestic companies and their respective nominee shareholders. These contractual agreements include loan agreements, irrevocable power of attorney, share pledge agreements, exclusive business cooperation agreements and exclusive option agreements. Through these contractual agreements, the Company is entitled to receive a majority of residual returns and is obligated to absorb a majority of the risk of losses of these PRC domestic companies. Based on these contractual agreements, management concluded that these PRC domestic companies are VIEs of the Company, of which the Company is the primary beneficiary. As such, the Group consolidated financial results of VIEs and subsidiaries of VIEs in the Group’s consolidated financial statements.

 

The summary of these contractual agreements are further described as below.

 

Loan Agreements

 

Pursuant to the relevant loan agreements, the relevant PRC subsidiaries provided interest-free loans to the respective nominee shareholders of the VIEs. The purpose of the loans is to provide capital and/or registered capital to VIEs in order to develop their businesses. The loan agreements have indefinite terms or certain terms that could be extended upon mutual written consent of the parties.

 

Irrevocable Power of Attorney

 

Each nominee shareholder of the VIEs executed an irrevocable power of attorney, appointing the relevant PRC subsidiaries or a person designated by such PRC subsidiaries as his or her attorney-in-fact to attend shareholders’ meetings of the respective VIEs, exercise all the shareholder’s voting rights, including but not limited to the sale, transfer, pledge or disposition of the shareholder’s equity interest in the VIEs, and designate or appoint legal representatives, directors and officers of the relevant VIEs. Each power of attorney remains valid and irrevocable from the date of execution so long as the person remains as the nominee shareholder of the respective VIEs.

 

Share Pledge Agreements

 

Pursuant to the share pledge agreements, the nominee shareholders of the VIEs have pledged all of their equity interest in the relevant VIEs to the relevant PRC subsidiaries as collateral for all of the VIEs’ and nominee shareholders’ payments due to the relevant PRC subsidiaries and to secure their obligations under applicable contractual agreements. Each pledge of shares or equity interest is effective on the date when it is registered with the local administration for industry and commerce and remains effective until all payments due under the relevant exclusive business cooperation agreement or all the obligations under the relevant contractual agreements have been fulfilled by the relevant VIEs. During the term of a pledge, the relevant PRC subsidiaries, the pledgees, may dispose of the pledge if the VIE defaults under the exclusive business cooperation agreement. Each of the relevant PRC subsidiaries also has the right to collect dividends generated by the shares or equity interest pursuant to these pledge agreements. In addition, each nominee shareholder of the relevant VIEs agrees not to transfer or create any new encumbrance adverse to the relevant PRC subsidiaries on the shareholder’s equity interest in such VIEs without prior written consent of the relevant PRC subsidiaries.

 

F- 14



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

1.                Principal activities and organization (continued)

 

Exclusive Business Cooperation Agreement

 

The relevant PRC subsidiaries and relevant VIEs entered into exclusive business cooperation agreements under which the relevant PRC subsidiaries provide the relevant VIEs, on an exclusive basis, with technical, consulting and other services in relation to the respective VIEs’ business. The VIEs shall pay service fees to the relevant PRC subsidiaries determined based on several metrics including the type, value and market price of the services provided by the relevant PRC subsidiaries and the operating conditions of the relevant VIEs. During the terms of the agreements, the relevant VIEs have agreed not to accept any consultation and/or services provided by any third party without the relevant PRC subsidiaries’ prior written consent. The agreements have certain terms that could be extended upon the relevant PRC subsidiaries’ prior written consent, or remain effective unless the relevant PRC subsidiaries terminate them in writing or either the relevant PRC subsidiaries or the relevant VIEs fail to obtain the government’s approval for the renewal of the relevant business license.

 

Exclusive Option Agreements

 

Pursuant to these exclusive option agreements, each of the nominee shareholders of the VIEs irrevocably granted the relevant PRC subsidiaries an exclusive right to purchase, or designate one or more persons to purchase, the equity interest in the relevant VIEs then held by such nominee shareholder of the respective VIEs. The relevant PRC subsidiaries or their designees may purchase such equity interest at any time, once or at multiple times, in part or in whole at their own sole and absolute discretion to the extent permitted by the PRC laws. The agreements have certain terms that could be extended at the relevant PRC subsidiaries’ discretion, or remain effective until all the equity interest held by the nominee shareholders of the VIEs have been transferred or assigned to the relevant PRC subsidiaries or any other persons designated by them.

 

Risks in relations to the VIE structure

 

Based on the advice of the Company’s PRC legal counsel, the ownership structure and contractual agreement of the VIEs and subsidiaries in the PRC do not violate any existing PRC laws and regulations. Therefore, in the opinion of management, (i) the ownership structure of the Company and the VIEs do not violate any existing PRC laws and regulations;(ii) the contractual agreement with VIEs and their nominee shareholders are valid and binding, and will not result in any violation of PRC laws or regulations currently in effect;(iii) the Group’s business operation are in compliance with existing PRC laws and regulations in all material respects.

 

However, there are uncertainties regarding the interpretation and application of current and future PRC laws and regulations, and the PRC government may in the future take a view that is contrary to the above opinion. If the current ownership structure of the Company and its contractual arrangements with the VIEs and their nominee shareholders were found to be in violation of any existing or future PRC laws or regulations, the Group may be subject to penalties, which may include but not to be limited to, revocation of the Group’s business and operating licenses, being required to discontinue or restrict the Group’s operations, or being required to restructure the Group’s ownership structure or operations. These penalties may result in a material and adverse effect on the Group’s ability to conduct its operations. In such cases, the Company may not be able to operate or control the VIEs, which may result in deconsolidation of the VIEs.

 

F- 15



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

1.                Principal activities and organization (continued)

 

Changes in VIE structures

 

In 2017, BBII, CIG and its nominee shareholders entered into an agreement to terminate all of contractual arrangements among them and BBII acquired all of nominee shareholders’ equity interests in CIG. The acquisition was considered as common control transaction and had no impact on the Company’s consolidation of CIG.

 

The following financial information of the VIEs and subsidiaries of VIEs in the PRC was included in the Group’s consolidated financial statements with intercompany transactions eliminated:

 

 

 

As of December 31,

 

 

 

2016

 

2017

 

 

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

6,037,614

 

7,287,858

 

Total liabilities

 

4,338,170

 

3,682,006

 

 

 

 

For the year ended December 31

 

 

 

2015

 

2016

 

2017

 

 

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Revenue

 

4,153,558

 

4,389,398

 

4,419,967

 

Net income/(loss)

 

217,858

 

126,673

 

(111,574

)

 

 

 

For the year ended December 31

 

 

 

2015

 

2016

 

2017

 

 

 

RMB

 

RMB

 

RMB

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

110,226

 

603,227

 

660,690

 

Net cash (used in)/provided by investing activities

 

(301,659

)

(415,610

)

57,568

 

Net cash provided by/(used in) financing activities

 

641,084

 

39,107

 

(426,603

)

 

As of December 31, 2016 and 2017, the total assets of the Group’s VIEs and subsidiaries of VIEs were mainly consisting of cash and cash equivalents, accounts receivable, net, prepayments and other receivables, investment in equity investees, property, plant and equipment, net, and intangible assets, net. As of December 31, 2016 and 2017, the total liabilities of the VIEs and subsidiaries of VIEs were mainly consisting of accounts payable, other payables and accruals. These balances have been reflected in the Group’s consolidated financial statements with intercompany transactions eliminated.

 

In accordance with contractual agreements, the Company has the power to direct activities of the VIEs and subsidiaries of VIEs and can have assets transferred out of the VIEs and subsidiaries of VIEs. Therefore, the Company considers that there is no asset in any of the consolidated VIEs and subsidiaries of VIEs that can be used only to settle obligations of these entities, except for registered capital and PRC statutory reserves. Creditors of the VIEs and subsidiaries of VIEs do not have recourse to the general credit of the Company for any of the liabilities of the consolidated VIEs and subsidiaries of VIEs.

 

Currently, there is no contractual arrangement that requires the Company to provide any additional financial support to VIEs and subsidiaries of VIEs. As the Company conducts its business primarily based on the licenses and approvals held by its VIEs and subsidiaries of VIEs, the Company may provide additional financial support on a discretionary basis in the future.

 

In addition to above variable interest entities the Company consolidated through contractual arrangements, the Company also established a number of asset-backed securitization vehicles to issue debt securities to third party investors. The vehicles are considered variable interest entities in accordance with ASC 810 and the Company are considered primary beneficiary of such variable interest entities. Accordingly, the Company consolidated these asset-backed securitization vehicles. As of December 31, 2016 and 2017, none of asset-backed securitization vehicles are considered individually significant to the Group.

 

F- 16



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

2.                Summary of significant accounting policies

 

(a)            Basis of presentation

 

The consolidated financial statements of the Group are prepared in accordance with accounting principles generally accepted in the United States of America (‘‘U.S. GAAP’’).

 

(b)           Principles of consolidation

 

The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and subsidiaries of VIEs for which the Company is the ultimate primary beneficiary.

 

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 meeting of the board of directors or to govern the financial and operating policies.

 

A VIE is an entity in which the Company, or its subsidiaries, through contractual agreements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore the Company or its subsidiaries are the primary beneficiary of the entity.

 

All transactions and balances among the Company, its subsidiaries, the VIEs and subsidiaries of VIEs have been eliminated upon consolidation. The results of subsidiaries, the VIEs and subsidiaries of VIEs acquired or disposed of during the year are recorded in the consolidated statements of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

 

F- 17



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

2.                Summary of significant accounting policies (continued)

 

(c)            Business combinations and noncontrolling interests

 

The Group accounts for its business combinations using the acquisition method of accounting in accordance with Accounting Standards Codification (‘‘ASC’’) 805 ‘‘Business Combinations’’. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total costs of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the acquiree, the difference is recognized directly in the consolidated statements of 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. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of comprehensive income.

 

In a business combination considered as a step acquisition, the Group remeasures the previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in the consolidated statements of comprehensive income.

 

For the Company’s majority-owned subsidiaries, VIEs and subsidiaries of VIEs, a noncontrolling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Company. Noncontrolling interests are classified as a separate line item in the equity section of the Group’s consolidated balance sheets and have been separately disclosed in the Group’s consolidated statements of comprehensive income to distinguish the interests from that of the Company.

 

(d)           Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires the Group to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant accounting estimates are used for, but not limited to the valuation and recognition of share-based compensation, realization of deferred tax assets, fair value of assets and liabilities acquired in business combinations, assessment for impairment of long-lived assets, investment in equity investees, intangible assets and goodwill, allowance for doubtful accounts for accounts receivable, allowance for credit losses for finance receivables, and useful lives of intangible assets. The Group bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

 

F- 18



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

2.                Summary of significant accounting policies (continued)

 

(e)            Segment reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, and has been identified as the Chief Executive Officer of the Group. The Group managed its business in three segments, namely advertising and subscription business, transaction services business and digital marketing solutions business.

 

(f)             Foreign currency translation

 

The Company, its subsidiaries, VIEs and subsidiaries of VIEs individually determine their functional currency based on the criteria of ASC 830 “Foreign Currency Matters”. The functional currencies of the Company and its subsidiaries outside China are the U.S. dollar (“US$”) and the Hong Kong dollar (“HKD”), and the functional currency of PRC subsidiaries, VIEs and subsidiaries of VIEs is the RMB. Since the Group’s operations are primarily denominated in the RMB, the Group has chosen the RMB as the reporting currency for the consolidated financial statements.

 

Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date. Exchange gains or losses arising from foreign currency transactions are recorded in the consolidated statements of comprehensive income.

 

The financial statements of the entities with non-RMB functional currencies are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities, average exchange rate for the year for income and expense items, and historical exchange rate for equity items. Translation gains or losses arising from the translation are recognized in accumulated other comprehensive income as a component of shareholders’ equity.

 

F- 19



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

2.                Summary of significant accounting policies (continued)

 

(g)           Cash and cash equivalents

 

Cash and cash equivalents comprise cash at banks and on hand, time deposits and highly liquid investments with an original maturity of three months or less.

 

(h)           Time deposits

 

Time deposits comprise highly liquid investments with original maturities of greater than three months, but less than one year.

 

(i)              Restricted cash

 

Cash that is restricted as to withdrawal for use or pledged as security is reported separately on the face of the consolidated balance sheets, and is not included in the total cash and cash equivalents in the consolidated statements of cash flows. The Group held restricted cash of RMB5.63 billion and RMB1.48 billion as of December 31, 2016 and 2017, respectively, which were primarily pledged for bank borrowings. Changes in the restricted cash balances are classified as cash flows from investing activities in the consolidated statements of cash flows as the Group considers restricted cash arising from these activities similar to an investment.

 

(j)              Accounts receivable, net

 

Accounts receivable are amounts due from customers for services performed or merchandise sold in the ordinary course of business. If collection of accounts receivable is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

 

Accounts receivable are recorded net of allowance for doubtful accounts. An allowance for doubtful accounts is recorded in the period when a loss is probable based on an assessment of specific evidence indicating troubled collection, such as the accounts aging, financial conditions of the customer and industry trend.

 

(k)           Bills receivable

 

Bills receivable represent short-term notes receivables issued by reputable financial institutions that entitle the Group to receive the full face amount from the financial institutions at maturity, which generally range from three to six months from the date of issuance.

 

F- 20



 

BITAUTO HOLDINGS LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017

(Amounts in thousands of Renminbi (“RMB”), except for share and per share data)

 

2.                Summary of significant accounting policies (continued)

 

(l)              Investment in equity investees

 

Investment in equity investees represents the Group’s investments in privately-held companies. The Group applies the equity method to account for an equity investment, in common stock or in-substance common stock, according to ASC 323 ‘‘Investment - Equity Method and Joint Ventures’’, over which it has significant influence but does not own a majority equity interest or otherwise control.

 

An investment in in-substance common stock is an investment in an entity that has risk and reward characteristics that are substantially similar to that entity’s common stock. The Group considers subordination, risks and rewards