UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
OR
For the fiscal year ended
OR
OR
Date of event requiring this shell company report.........................
For the transition period from to
Commission file number:
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
The People’s Republic of
(Address of principal executive offices)
Telephone: +(
Email:
The People’s Republic of
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
| The | |||
|
|
| ||
|
| The (The 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.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. |
☐ Yes ☒ |
|
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. |
☐ Yes ☒ |
|
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |
☒ |
|
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). |
☒ |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Emerging growth company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
International Financial Reporting Standards as issued by the International Accounting | Other |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. |
☐ Item 17 ☐ Item 18 |
|
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). |
(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
1 | ||
2 | ||
3 | ||
3 | ||
3 | ||
3 | ||
58 | ||
97 | ||
98 | ||
114 | ||
124 | ||
126 | ||
126 | ||
127 | ||
140 | ||
140 | ||
142 | ||
142 | ||
Material Modifications to the Rights of Security Holders and Use of Proceeds | 142 | |
142 | ||
143 | ||
143 | ||
143 | ||
144 | ||
Purchases of Equity Securities by the Issuer and Affiliated Purchasers | 144 | |
144 | ||
144 | ||
144 | ||
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 144 | |
145 | ||
145 | ||
145 | ||
145 | ||
146 | ||
149 | ||
F-1 | ||
i
INTRODUCTION
In this annual report, except where the context otherwise requires and for purposes of this annual report only:
| ● | “ADSs” refer to our American depositary shares, each ADS represents three Class A ordinary shares; |
| ● | “China” or “PRC” refers to the People’s Republic of China; |
| ● | “consolidated affiliated entities” refers to the VIE and its subsidiaries; |
| ● | “gross bookings” refer to the total amount paid by our customers for the travel products that we have delivered and the travel services that we have rendered, including the related taxes, fees and other charges borne by our customers; |
| ● | “shares” or “ordinary shares” refers to our ordinary shares, which include both Class A ordinary shares and Class B ordinary shares; |
| ● | “U.S. GAAP” refers to generally accepted accounting principles in the United States; |
| ● | “VIE” refers to variable interest entity, and “the VIE” refers to Nanjing Tuniu Technology Co., Ltd., or Nanjing Tuniu; |
| ● | “we,” “us,” “our company,” “our,” or “Tuniu” refers to Tuniu Corporation, a Cayman Islands company, its subsidiaries, and, in the context of describing our operations and consolidated financial information, also include the VIE; |
| ● | “RMB” or “Renminbi” refers to the legal currency of mainland China; |
| ● | “$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States; and |
| ● | all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding. |
Our business is primarily conducted in China and almost all of our revenues are denominated in Renminbi. However, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the then current exchange rates, for the convenience of the readers. 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. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. Unless otherwise noted, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.8972 to US$1.00, the noon buying rate in effect as of December 30, 2022.
1
FORWARD-LOOKING INFORMATION
This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to:
| ● | our goals and strategies; |
| ● | the expected growth of the online leisure travel market in China; |
| ● | our expectations regarding demand for our products and services; |
| ● | our expectations regarding our relationships with customers and travel suppliers; |
| ● | our ability to offer competitive travel products and services; |
| ● | our future business development, results of operations and financial condition; |
| ● | competition in our industry in China; |
| ● | relevant government policies and regulations relating to our corporate structure, business and industry; |
| ● | the impact of the COVID-19 on our business operations, the travel industry and the economy of China and elsewhere generally; |
| ● | general economic and business condition in China and elsewhere; and |
| ● | assumptions underlying or related to any of the foregoing. |
We would like to caution you not to place undue reliance on these forward-looking statements and you should read these statements in conjunction with the risk factors disclosed in “Item 3. Key Information—D. Risk Factors.” Those risks are not exhaustive. We operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible for our management to predict all risk factors, 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 from those contained in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements, statements, whether as a result of new information, future events or otherwise, except as required under applicable law.
This annual report also contains statistical data and estimates that we obtained from industry publications and reports generated by government agencies and third-party providers of market intelligence. These industry publications and reports generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are reliable, we have not independently verified the data.
2
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
Tuniu Corporation is not an operating company in China but a Cayman Islands holding company with no equity ownership in the variable interest entity, or VIE. We conduct our business in China through (i) our PRC subsidiaries and (ii) the consolidated affiliated entities with which we have maintained contractual arrangements. PRC laws and regulations restrict and impose conditions on foreign investment in value-added telecommunication services and certain other businesses. Accordingly, we operate these businesses in China through the VIE, and such structure is used to provide investors with exposure to foreign investment in China-based companies where laws and regulations in China prohibit or restrict direct foreign investment in certain operating companies. Revenues contributed by the VIE accounted for 90.6%, 53.6% and 86.5% of our total revenues for the years of 2020, 2021 and 2022, respectively. Holders of our ADSs hold equity interest in Tuniu Corporation, our Cayman Islands holding company, and do not have direct or indirect equity interest in the VIE, and may never directly hold equity interests in the VIE.
A series of contractual agreements, including powers of attorney, equity interest pledge agreements, cooperation agreements, purchase option agreements and shareholders’ voting rights agreements, have been entered into by and among our wholly owned PRC subsidiary, Beijing Tuniu Technology Co., Ltd., or Beijing Tuniu, the VIE and its shareholders. As a result of the contractual arrangements, we are able to direct the activities of and derive economic benefits from the VIE. We are considered the primary beneficiary of the VIE, and we have consolidated the financial results of the VIE in our consolidated financial statements under U.S. GAAP for accounting purposes. Neither we nor our investors has an equity ownership in, direct foreign investment in, or control through such ownership or investment of, the VIE, and the contractual arrangements are not equivalent to an equity ownership in the business of the VIE. For more details of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.”
However, the contractual arrangements may not be as effective as direct ownership and we may incur substantial costs to enforce the terms of the arrangements. There are substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of our rights with respect to our contractual arrangements with the VIE and its shareholders. It is uncertain whether any new PRC laws or regulations relating to VIE structures will be adopted or if adopted, what they would provide. If we or the VIE is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC authorities would have broad discretion to take action in dealing with such violations or failures. The PRC regulatory authorities could disallow the VIE structure, which would likely result in a material adverse change in our operations and cause our ADSs to decline significantly in value or become worthless. Our holding company, our PRC subsidiaries and 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. In addition, these agreements have not been tested in China courts. 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 Related to Our Corporate Structure.”
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. The laws and regulations governing the internet industry in China are relatively new and quickly evolving, hence bringing uncertainties to their interpretation and enforcement. Implementation of industry-wide regulations, including data security or anti-monopoly related 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 Related to Doing Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs.”
3
The PRC regulatory and enforcement regime with regard to data security and privacy is evolving and may be subject to different interpretations or significant changes without prior notice. In the event that any new development requires us to change our business operations relevant to data security, data privacy or cybersecurity in general, we cannot assure you that we can comply with such new requirements in a timely manner or at all. Some recently promulgated rules in this regime include the PRC Data Security Law and the Personal Information Protection Law released in 2021, which posed additional challenges to our cybersecurity and data privacy compliance. The Cybersecurity Review Measures promulgated in December 2021 and the Regulations on the Network Data Security published for public comments in November 2021 imposed potential additional restrictions on China-based overseas-listed companies like us. If future implementing rules of the Cybersecurity Review Measures and the enacted version of the Regulations on the Network Data Security mandate clearance of cybersecurity review and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, or suspension of our non-compliant operations, and materially and adversely affect our business and results of operations and the price of our ADSs. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—Our business generates and processes a large amount of data, and we are required to comply with PRC and other applicable laws relating to privacy and cybersecurity. The improper use or disclosure of data could have a material and adverse effect on our business and prospects.”
In addition, on February 17, 2023, China Securities Regulatory Commission, or the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Overseas Listing Trial Measures, and 5 relevant guidelines, which became effective on March 31, 2023, requiring Chinese domestic companies’ overseas offerings and listings of equity securities be filed with the CSRC. According to the Overseas Listing Trial Measures, if we are deemed as an indirect overseas listed Chinese domestic company but fail to complete the filing procedures with the CSRC for any of our future securities offerings and listings outside of mainland China, including but not limited to follow-on offerings, secondary listings and going-private transactions, or follow any other reporting requirements required thereunder, we may be subject to penalties, sanctions and fines imposed by the CSRC and relevant departments of the State Council, which 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. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of or 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.”
Furthermore, the PRC regulators have promulgated new anti-monopoly and competition laws and regulations and strengthened the enforcement under these laws and regulations. There remain uncertainties as to how the laws, regulations and guidelines recently promulgated will be implemented and whether these laws, regulations and guidelines will have a material impact on our business, financial condition, results of operations and prospects. We cannot assure you that our business operations comply with such regulations and authorities’ requirements in all respects. If any non-compliance is raised by relevant authorities and determined against us, we may be subject to fines and other penalties. See “Item 3. Key Information—Risk Factors— Risks Related to Doing Business in China—Any failure or perceived failure by us to comply with the Platform Economy Anti-Monopoly Guidelines and other anti-monopoly and unfair competition laws and regulations may result in governmental investigations or enforcement actions, litigation or claims against us and could have an adverse effect on our business, financial condition and results of operations.”
Risks and uncertainties arising from the legal system in mainland China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in mainland China, could result in a material adverse change in our operations and the value of our ADSs. With respect to the legal risks associated with being based in and having operations in mainland China, the laws, regulations and the discretion of mainland China governmental authorities discussed in this annual report are expected to apply to mainland China entities and businesses, rather than entities or businesses in Hong Kong and Macau which operate under different sets of laws from mainland China. As of the date of this annual report, regulatory actions related to data security or anti-monopoly concerns in Hong Kong and Macau do not have a material impact on our ability to conduct business, accept foreign investment in the future or continue to list on a United States stock exchange. However, the PRC government may exert influence over our operations in Hong Kong and Macau at any time and new regulatory actions related to data security or anti-monopoly concerns in Hong Kong or Macau may be taken in the future, which may have a material impact on our ability to conduct business, accept foreign investment or continue to list on a United States stock exchange. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China— Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.” 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 continue to offer securities to investors, or cause the value of such securities to significantly decline or be worthless. For a detailed description of risks related to doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.”
4
Permissions Required from the PRC Authorities for Our Operations
We conduct our business in China through our subsidiaries and the consolidated affiliated entities in China. Our operations in China are governed by PRC laws and regulations. After consulting our PRC legal counsel, Fangda Partners, we believe, as of the date of this annual report, except as otherwise stated in “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulations of internet and related business and companies,” our PRC subsidiaries and VIE have obtained all the requisite licenses and permits from the PRC government authorities for the business operations of our PRC subsidiaries and the VIE in China, including, among others, a Value-Added Telecommunication Business Operating License issued by the local bureau of the Ministry of Industry and Information Technology of the PRC, or the MIIT, a Food Business License issued by Jizhou Branch of Tianjin Administration for Market Regulation, Filing Certificates for Operation of Prepacked Food issued by Xuanwu Branch of Nanjing Administration for Market Regulation, Travel Agency Business Licenses issued by the local bureaus of and/or the then Ministry of Tourism, or the Ministry of Culture and Tourism which has replaced the Ministry of Tourism, Approval Documents for Operation of Small-sum Loan Business issued by the Guangzhou Municipal Bureau of Finance, an Insurance Intermediary License is issued by the local bureau of the CBIRC, a Securities and Futures Business Operation License is issued by the CSRC, Insurance Agency Concurrent-business Licenses issued by the CBIRC, and a Hotel Hygiene License, which is issued by the local bureau of the National Health Commission and our PRC subsidiaries, the VIE and the VIE’s subsidiaries have not been denied any permission or approval by any PRC authority as of the date of this annual report. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant 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. If our PRC subsidiaries, the VIE or the VIE’s subsidiaries do not receive or maintain any necessary permissions or approvals, inadvertently conclude that such permissions or approvals are not required, or if applicable laws, regulations, or interpretations change and we are required to obtain such permissions or approvals in the future, we cannot assure you that we will be able to obtain the necessary permissions or approvals in a timely manner, or at all, and such approvals may be rescinded even if obtained. Any such circumstance could subject us to penalties, including fines, suspension of business and revocation of required licenses, significantly limit or completely hinder our ability to continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulations of internet and related business and companies.”
Furthermore, in connection with our previous issuance of securities to foreign investors, under the currently effective PRC laws and regulations, as of the date of this annual report, we are not aware of, after consulting our PRC legal counsel, Fangda Partners, any PRC laws or regulations which explicitly require us to obtain any permission from or complete any filing with the CSRC or go through a cybersecurity review by the CAC, and we, our PRC subsidiaries and the VIE, (i) have not received any requirement from competent PRC authorities to obtain permissions from the CSRC, (ii) have not received any requirement from competent PRC authorities to go through cybersecurity review by the CAC, and (iii) have not received or were denied such requisite permissions by any PRC authority.
However, the PRC government has recently indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of or 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.”
5
The Holding Foreign Companies Accountable Act
Pursuant to the Holding Foreign Companies Accountable Act, or the HFCAA, if the Securities and Exchange Commission, or 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 our 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 do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 20-F. 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 continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, 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. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related 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 Related 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 of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.”
Cash Flows through Our Organization
Tuniu Corporation is a holding company with no operations of its own. We conduct our business in China through our subsidiaries and the consolidated affiliated entities in China. As a result, although other means are available for us to obtain financing at the holding company level, Tuniu Corporation’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and license and service fees paid by the VIE. If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Tuniu Corporation. In addition, our PRC subsidiaries are permitted to pay dividends to Tuniu Corporation only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and VIE are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies. For more details, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Holding Company Structure.”
6
Under PRC laws and regulations, our PRC subsidiaries and VIE are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of mainland China is also subject to examination by the banks designated by State Administration of Foreign Exchange, or the SAFE. Our PRC subsidiaries have not paid dividends and will not be able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds. Furthermore, cash transfers from our PRC subsidiaries and the consolidated affiliated entities to entities outside of mainland China are subject to PRC governmental control on currency conversion. As a result, the funds in our PRC subsidiaries or the consolidated affiliated entities in mainland China may not be available to fund operations or for other use outside of mainland China due to the interventions in, or the imposition of restrictions and limitations on, the ability of our holding company, our subsidiaries, or the consolidated affiliated entities by the PRC government on such currency conversion. As of the date of this annual report, there is not equivalent or similar restriction or limitation in Hong Kong or Macau on cash transfers in, or out of, our Hong Kong entities. However, if certain restrictions or limitations in mainland China were to become applicable to cash transfers in and out of Hong Kong entities in the future, the funds in our Hong Kong entities may not be available to fund operations or for other use outside of Hong Kong. For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—Risk Factors—Risks Related to Doing Business in China—Our subsidiaries and the consolidated affiliated entities in China are subject to restrictions on paying dividends or making other payments to our holding company, which may restrict our ability to satisfy our liquidity requirements” and “Item 3. Key Information—Risk Factors—Risks Related to Doing Business in China—PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control of currency conversion may delay or limit us from using the proceeds of our financing activities, or making additional capital contributions or loans to our PRC subsidiaries and the consolidated affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business.”
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.
| Tax calculation (1) |
| |
Hypothetical pre-tax earnings |
| 100 | % |
Tax on earnings at statutory rate of 25% (2) |
| (25) | % |
Net earnings available for distribution |
| 75 | % |
Withholding tax at standard rate of 10% (3) |
| (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 taxable income in China. |
| (2) | Certain of our subsidiaries qualifies for a 15% preferential income tax rate in China. For purposes of this hypothetical example, the table above reflects a maximum tax scenario under which the full statutory rate would be effective. |
(3) | The PRC Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a foreign invested enterprise to its immediate holding company outside of mainland China. A lower withholding income tax rate of 5% is applied if the FIE’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with mainland 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 would be applied. |
Under PRC law, Tuniu Corporation may provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIE only through loans, subject to satisfaction of applicable government registration and approval requirements. For the years ended December 31, 2020, 2021 and 2022, Tuniu Corporation did not make any capital contribution to our intermediate holding companies and subsidiaries. For the years ended December 31, 2020, 2021 and 2022, our intermediate holding companies and subsidiaries and the consolidated affiliated entities received no capital contribution or loan investment from Tuniu Corporation. VIE and its subsidiaries obtained financing from external banks for their operations with the amount of RMB2.1 million for the year ended December 31, 2022, and repaid RMB199.0 million and RMB284.1 million for the years ended December 31, 2020 and 2021, respectively.
7
Tuniu Corporation has not declared or paid any cash dividends, nor does it has any present plan to pay any cash dividends on our ordinary shares in the foreseeable future. We currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. We currently do not have any plan to require our PRC subsidiaries to distribute their retained earnings and intend to retain them to operate and expand our business in the PRC. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For PRC and United States federal income tax considerations of an investment in our ADSs, see “Item 10. Additional Information—E. Taxation.”
Financial Information Related to the VIE
The following table presents the condensed consolidating schedules of financial position for the VIE and other entities as of the dates presented.
8
Selected Condensed Consolidating Balance Sheets Information
As of December 31, 2021 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| 4,712 |
| 254,173 |
| 761 |
| 89,431 |
| — |
| 349,077 |
Restricted cash |
| — |
| 26,111 |
| — |
| 20,410 |
| — |
| 46,521 |
Short-term investments |
| — |
| 298,201 |
| 11,600 |
| 306,100 |
| — |
| 615,901 |
Accounts receivable, net |
| — |
| — |
| — |
| 111,941 |
| — |
| 111,941 |
Intercompany loan receivables (1) | — | 184,546 | — | — | (184,546) | — | ||||||
Amounts due from Group companies (2) |
| 6,855,545 |
| 3,173,186 |
| 116,142 |
| 424,829 |
| (10,569,702) |
| — |
Amounts due from related parties |
| — |
| 164 |
| — |
| 14,805 |
| — |
| 14,969 |
Prepayments and other current assets |
| 130 |
| 288,526 |
| 1,922 |
| 46,455 |
| — |
| 337,033 |
Total current assets |
| 6,860,387 |
| 4,224,907 |
| 130,425 |
| 1,013,971 |
| (10,754,248) |
| 1,475,442 |
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term investments (3) |
| — |
| 66,000 |
| — |
| 175,947 |
| (40,000) |
| 201,947 |
Property and equipment, net |
| — |
| 56,421 |
| 676 |
| 41,062 |
| — |
| 98,159 |
Intangible assets, net |
| — |
| 2,186 |
| 1,265 |
| 51,925 |
| — |
| 55,376 |
Land use right, net |
| — |
| 94,652 |
| — |
| — |
| — |
| 94,652 |
Operating lease right-of-use assets, net |
| — |
| 20,274 |
| — |
| 27,841 |
| — |
| 48,115 |
Goodwill |
| — |
| 47,388 |
| — |
| 184,619 |
| — |
| 232,007 |
Other non-current assets |
| — |
| 5,343 |
| 2 |
| 86,766 |
| — |
| 92,111 |
Total non-current assets |
| — |
| 292,264 |
| 1,943 |
| 568,160 |
| (40,000) |
| 822,367 |
Total assets |
| 6,860,387 |
| 4,517,171 |
| 132,368 |
| 1,582,131 |
| (10,794,248) |
| 2,297,809 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings (1) |
| — |
| 9,981 |
| — |
| 184,546 |
| (184,546) |
| 9,981 |
Accounts and notes payable |
| — |
| 57,910 |
| — |
| 325,716 |
| — |
| 383,626 |
Amounts due to Group companies (2) |
| — |
| 5,284,262 |
| 13,934 |
| 5,271,506 |
| (10,569,702) |
| — |
Amounts due to related parties |
| — |
| 2,481 |
| — |
| 2,198 |
| — |
| 4,679 |
Salary and welfare payable |
| — |
| 6,603 |
| 2,469 |
| 24,689 |
| — |
| 33,761 |
Taxes payable |
| — |
| 448 |
| 3,443 |
| 4,113 |
| — |
| 8,004 |
Advances from customers |
| — |
| 16,152 |
| — |
| 123,625 |
| — |
| 139,777 |
Operating lease liabilities, current |
| — |
| 12,099 |
| — |
| 4,457 |
| — |
| 16,556 |
Accrued expenses and other current liabilities |
| 8,038 |
| 43,454 |
| 414 |
| 330,723 |
| — |
| 382,629 |
Total current liabilities |
| 8,038 |
| 5,433,390 |
| 20,260 |
| 6,271,573 |
| (10,754,248) |
| 979,013 |
Non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease liabilities, non-current |
| — |
| 14,897 |
| — |
| 23,935 |
| — |
| 38,832 |
Deferred tax liabilities |
| — |
| 2,138 |
| — |
| 10,341 |
| — |
| 12,479 |
Long-term borrowings |
| — |
| 14,344 |
| — |
| — |
| — |
| 14,344 |
Investment deficit in subsidiaries and Affiliated Entities (4) |
| 5,583,205 |
| 4,546,165 |
| 4,658,273 |
| — |
| (14,787,643) |
| — |
Total non-current liabilities |
| 5,583,205 |
| 4,577,544 |
| 4,658,273 |
| 34,276 |
| (14,787,643) |
| 65,655 |
Total liabilities |
| 5,591,243 |
| 10,010,934 |
| 4,678,533 |
| 6,305,849 |
| (25,541,891) |
| 1,044,668 |
Redeemable noncontrolling interests |
| — |
| 27,200 |
| — |
| — |
| — |
| 27,200 |
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Total Tuniu Corporation shareholders’ equity |
| 1,269,144 |
| (5,583,205) |
| (4,546,165) |
| (4,658,273) |
| 14,787,643 |
| 1,269,144 |
Noncontrolling interests (3) |
| — |
| 62,242 |
| — |
| (65,445) |
| (40,000) |
| (43,203) |
Total equity |
| 1,269,144 |
| (5,520,963) |
| (4,546,165) |
| (4,723,718) |
| 14,747,643 |
| 1,225,941 |
Total liabilities, redeemable noncontrolling interests and equity |
| 6,860,387 |
| 4,517,171 |
| 132,368 |
| 1,582,131 |
| (10,794,248) |
| 2,297,809 |
9
As of December 31, 2022 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
ASSETS |
|
|
|
|
|
| ||||||
Current assets: |
|
|
|
|
|
| ||||||
Cash and cash equivalents |
| 1,292 |
| 74,865 |
| 919 |
| 76,759 |
| — |
| 153,835 |
Restricted cash |
| — |
| 42,212 |
| — |
| 1,840 |
| — |
| 44,052 |
Short-term investments |
| — |
| 438,241 |
| 2,700 |
| 283,472 |
| — |
| 724,413 |
Accounts receivable, net |
| — |
| — |
| — |
| 33,644 |
| — |
| 33,644 |
Intercompany loan receivables (1) | — | 187,737 | — | — | (187,737) | — | ||||||
Amounts due from Group companies (2) |
| 7,077,952 |
| 3,401,106 |
| 114,505 |
| 450,135 |
| (11,043,698) |
| — |
Amounts due from related parties |
| — |
| 73 |
| — |
| 957 |
| — |
| 1,030 |
Prepayments and other current assets |
| 151 |
| 202,731 |
| 2,940 |
| 37,172 |
| — |
| 242,994 |
Total current assets |
| 7,079,395 |
| 4,346,965 |
| 121,064 |
| 883,979 |
| (11,231,435) |
| 1,199,968 |
Non-current assets: |
|
|
|
|
|
| ||||||
Long-term investments (3) |
| — |
| 63,871 |
| — |
| 206,691 |
| (40,000) |
| 230,562 |
Property and equipment, net |
| — |
| 52,446 |
| 567 |
| 32,169 |
| — |
| 85,182 |
Intangible assets, net(5) |
| — |
| 77,948 |
| — |
| 26,924 |
| (74,200) |
| 30,672 |
Land use right, net |
| — |
| 92,590 |
| — |
| — |
| — |
| 92,590 |
Operating lease right-of-use assets, net |
| — |
| 5,252 |
| — |
| 27,952 |
| — |
| 33,204 |
Goodwill |
| — |
| 46,536 |
| — |
| 68,125 |
| — |
| 114,661 |
Other non-current assets |
| — |
| 5,119 |
| 2 |
| 85,970 |
| — |
| 91,091 |
Total non-current assets |
| — |
| 343,762 |
| 569 |
| 447,831 |
| (114,200) |
| 677,962 |
Total assets |
| 7,079,395 |
| 4,690,727 |
| 121,633 |
| 1,331,810 |
| (11,345,635) |
| 1,877,930 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings (1) |
| — |
| 7,517 |
| — |
| 187,737 |
| (187,737) |
| 7,517 |
Accounts and notes payable |
| — |
| 71,975 |
| — |
| 189,898 |
| — |
| 261,873 |
Amounts due to Group companies (2) |
| — |
| 5,749,018 |
| 13,934 |
| 5,280,746 |
| (11,043,698) |
| — |
Amounts due to related parties |
| — |
| 2,547 |
| — |
| 2,163 |
| — |
| 4,710 |
Salary and welfare payable |
| — |
| 7,352 |
| 2,349 |
| 16,806 |
| — |
| 26,507 |
Taxes payable |
| — |
| 54 |
| 2,389 |
| 1,604 |
| — |
| 4,047 |
Advances from customers |
| — |
| 20,543 |
| — |
| 78,356 |
| — |
| 98,899 |
Operating lease liabilities, current |
| — |
| 9,680 |
| — |
| 2,759 |
| — |
| 12,439 |
Accrued expenses and other current liabilities |
| 6,559 |
| 30,818 |
| 413 |
| 320,522 |
| — |
| 358,312 |
Total current liabilities |
| 6,559 |
| 5,899,504 |
| 19,085 |
| 6,080,591 |
| (11,231,435) |
| 774,304 |
Non-current liabilities: |
|
|
|
|
|
| ||||||
Operating lease liabilities, non-current |
| — |
| 2,326 |
| — |
| 24,156 |
| — |
| 26,482 |
Deferred tax liabilities |
| — |
| 765 |
| — |
| 6,074 |
| — |
| 6,839 |
Long-term borrowings |
| — |
| 11,959 |
| — |
| — |
| — |
| 11,959 |
Investment deficit in subsidiaries and Affiliated Entities (4) |
| 5,964,812 |
| 4,667,905 |
| 4,696,253 |
| — |
| (15,328,970) |
| — |
Total non-current liabilities |
| 5,964,812 |
| 4,682,955 |
| 4,696,253 |
| 30,230 |
| (15,328,970) |
| 45,280 |
Total liabilities |
| 5,971,371 |
| 10,582,459 |
| 4,715,338 |
| 6,110,821 |
| (26,560,405) |
| 819,584 |
Redeemable noncontrolling interests |
| — |
| 27,200 |
| — |
| — |
| — |
| 27,200 |
Equity |
|
|
|
|
|
| ||||||
Total Tuniu Corporation shareholders’ equity |
| 1,108,024 |
| (5,964,812) |
| (4,593,705) |
| (4,696,253) |
| 15,254,770 |
| 1,108,024 |
Noncontrolling interests (3) |
| — |
| 45,880 |
| — |
| (82,758) |
| (40,000) |
| (76,878) |
Total equity |
| 1,108,024 |
| (5,918,932) |
| (4,593,705) |
| (4,779,011) |
| 15,214,770 |
| 1,031,146 |
Total liabilities, redeemable noncontrolling interests and equity |
| 7,079,395 |
| 4,690,727 |
| 121,633 |
| 1,331,810 |
| (11,345,635) |
| 1,877,930 |
Selected Condensed Consolidating Statements of Comprehensive Loss Information
10
For the Year Ended December 31, 2020 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenues |
| — |
| 42,122 |
| — |
| 408,137 |
| — |
| 450,259 |
Intra-Group revenues (5) |
| — |
| 22,093 |
| 15,355 |
| 77,565 |
| (115,013) |
| — |
Total revenues |
| — |
| 64,215 |
| 15,355 |
| 485,702 |
| (115,013) |
| 450,259 |
Total costs and expenses (5) |
| (4,293) |
| (862,243) |
| (38,747) |
| (996,345) |
| 110,574 |
| (1,791,054) |
Loss from operations |
| (4,293) |
| (798,028) |
| (23,392) |
| (510,643) |
| (4,439) |
| (1,340,795) |
Other income/(expenses) (5) |
| (1,691) |
| 24,927 |
| 798 |
| (38,746) |
| 4,439 |
| (10,273) |
Investment in loss from subsidiaries and Affiliated Entities (4) |
| (1,301,972) |
| (532,000) |
| (509,406) |
| — |
| 2,343,378 |
| — |
Loss before income tax expense |
| (1,307,956) |
| (1,305,101) |
| (532,000) |
| (549,389) |
| 2,343,378 |
| (1,351,068) |
Income tax (expense)/benefit |
| — |
| (2,151) |
| — |
| 8,792 |
| — |
| 6,641 |
Equity in income of unrelated affiliates |
| — |
| 797 |
| — |
| — |
| — |
| 797 |
Net loss |
| (1,307,956) |
| (1,306,455) |
| (532,000) |
| (540,597) |
| 2,343,378 |
| (1,343,630) |
Net loss attributable to noncontrolling interests |
| — |
| (4,483) |
| — |
| (31,191) |
| — |
| (35,674) |
Net loss attributable to Tuniu Corporation |
| (1,307,956) |
| (1,301,972) |
| (532,000) |
| (509,406) |
| 2,343,378 |
| (1,307,956) |
For the Year Ended December 31, 2021 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenues |
| — |
| 197,876 |
| — |
| 228,472 |
| — |
| 426,348 |
Intra-Group revenues (5) |
| — |
| 15,339 |
| 24,134 |
| 21,117 |
| (60,590) |
| — |
Total revenues |
| — |
| 213,215 |
| 24,134 |
| 249,589 |
| (60,590) |
| 426,348 |
Total costs and expenses (5) |
| (3,688) |
| (307,287) |
| (25,841) |
| (325,803) |
| 54,732 |
| (607,887) |
Loss from operations |
| (3,688) |
| (94,072) |
| (1,707) |
| (76,214) |
| (5,858) |
| (181,539) |
Other income (5) |
| 6,996 |
| 12,291 |
| 922 |
| 26,408 |
| 5,858 |
| 52,475 |
Investment in loss from subsidiaries and Affiliated Entities (4) |
| (124,832) |
| (43,643) |
| (42,858) |
| — |
| 211,333 |
| — |
Loss before income tax expense |
| (121,524) |
| (125,424) |
| (43,643) |
| (49,806) |
| 211,333 |
| (129,064) |
Income tax (expense)/benefit |
| — |
| (1,799) |
| — |
| 1,669 |
| — |
| (130) |
Equity in income of unrelated affiliates |
| — |
| 726 |
| — |
| — |
| — |
| 726 |
Net loss |
| (121,524) |
| (126,497) |
| (43,643) |
| (48,137) |
| 211,333 |
| (128,468) |
Net loss attributable to noncontrolling interests |
| — |
| (1,665) |
| — |
| (5,279) |
| — |
| (6,944) |
Net loss attributable to Tuniu Corporation |
| (121,524) |
| (124,832) |
| (43,643) |
| (42,858) |
| 211,333 |
| (121,524) |
11
For the Year Ended December 31, 2022 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
Third-party revenues |
| — |
| 24,700 |
| — |
| 158,920 |
| — |
| 183,620 |
Intra-Group revenues (5) |
| — |
| 6,366 |
| 10,348 |
| 105,600 |
| (122,314) |
| — |
Total revenues |
| — |
| 31,066 |
| 10,348 |
| 264,520 |
| (122,314) |
| 183,620 |
Total costs and expenses (5) |
| (3,593) |
| (118,547) |
| (20,194) |
| (298,226) |
| 46,726 |
| (393,834) |
Loss from operations |
| (3,593) |
| (87,481) |
| (9,846) |
| (33,706) |
| (75,588) |
| (210,214) |
Other income/(expenses) (5) |
| 8,797 |
| 8,667 |
| 287 |
| (12,944) |
| 1,388 |
| 6,195 |
Investment in loss from subsidiaries and Affiliated Entities (4) |
| (198,586) |
| (121,785) |
| (38,026) |
| — |
| 358,397 |
| — |
Loss before income tax expense |
| (193,382) |
| (200,599) |
| (47,585) |
| (46,650) |
| 284,197 |
| (204,019) |
Income tax (expense)/benefit |
| — |
| (437) |
| — |
| 1,168 |
| — |
| 731 |
Equity in income/(loss) of unrelated affiliates |
| — |
| 1,187 |
| — |
| (895) |
| — |
| 292 |
Net loss |
| (193,382) |
| (199,849) |
| (47,585) |
| (46,377) |
| 284,197 |
| (202,996) |
Net loss attributable to noncontrolling interests |
| — |
| (1,263) |
| — |
| (8,351) |
| — |
| (9,614) |
Net loss attributable to Tuniu Corporation |
| (193,382) |
| (198,586) |
| (47,585) |
| (38,026) |
| 284,197 |
| (193,382) |
Selected Condensed Consolidating Cash Flows Information
| For the Year Ended December 31, 2020 | |||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
(in RMB thousands) | ||||||||||||
Net cash (used in)/provided by transactions with intra-Group entities | — | (50,124) | 20,656 | 29,468 | — | — | ||||||
Net cash used in transactions with external parties | (4,779) | (399,187) | (30,072) | (879,077) | — | (1,313,115) | ||||||
Net cash (used in)/provided by operating activities |
| (4,779) |
| (449,311) |
| (9,416) |
| (849,609) |
| — |
| (1,313,115) |
Receipts of repayment from/(loans to) Group companies, net |
| — |
| 30,732 |
| 102,723 |
| — |
| (133,455) |
| — |
Other investing activities |
| 5,292 |
| 344,824 |
| (93,000) |
| 901,947 |
| — |
| 1,159,063 |
Net cash provided by/(used in) investing activities |
| 5,292 |
| 375,556 |
| 9,723 |
| 901,947 |
| (133,455) |
| 1,159,063 |
Repayment of loan from Group companies, net |
| — |
| — |
| — |
| (133,455) |
| 133,455 |
| — |
Other financing activities |
| (250) |
| (10,296) |
| — |
| (199,000) |
| — |
| (209,546) |
Net cash (used in)/provided by financing activities |
| (250) |
| (10,296) |
| — |
| (332,455) |
| 133,455 |
| (209,546) |
For the Year Ended December 31, 2021 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
Net cash (used in)/provided by transactions with intra-Group companies | — | (20,636) | — | 20,636 | — | — | ||||||
Net cash used in transactions with external parties | (2,341) | (12,906) | (30) | (211,065) | — | (226,342) | ||||||
Net cash used in operating activities |
| (2,341) |
| (33,542) |
| (30) |
| (190,429) |
| — |
| (226,342) |
Receipts of repayment from/(loans to) Group companies, net |
| — |
| 83,908 |
| (92,007) |
| — |
| 8,099 |
| — |
Other investing activities |
| 6,020 |
| 194,939 |
| 91,400 |
| 411,467 |
| — |
| 703,826 |
Net cash provided by/(used in) investing activities |
| 6,020 |
| 278,847 |
| (607) |
| 411,467 |
| 8,099 |
| 703,826 |
Borrowings under loan from Group companies, net |
| — |
| — |
| — |
| 8,099 |
| (8,099) |
| — |
Other financing activities |
| 373 |
| (60,835) |
| — |
| (284,100) |
| — |
| (344,562) |
Net cash provided by/(used in) financing activities |
| 373 |
| (60,835) |
| — |
| (276,001) |
| (8,099) |
| (344,562) |
12
For the Year Ended December 31, 2022 | ||||||||||||
Primary | VIE and | |||||||||||
Tuniu | Other | Beneficiary of | its | Eliminating | Consolidated | |||||||
| Corporation |
| Subsidiaries |
| VIE |
| Subsidiaries |
| Adjustments |
| Totals | |
| (in RMB thousands) | |||||||||||
Net cash provided by/(used in) transactions within Group companies | — | (12,896) | 20,067 | 70,829 | (78,000) | — | ||||||
Net cash used in transactions with external parties | (2,205) | 36,615 | (28,839) | (148,562) | — | (142,991) | ||||||
Net cash used in operating activities |
| (2,205) |
| (54,281) |
| (8,772) |
| (77,733) |
| (78,000) |
| (142,991) |
Receipts of repayment from/(loans to) Group companies, net |
| 70 |
| 128,626 |
| (92,007) |
| — |
| (36,689) |
| — |
Purchase of intangible assets within Group companies | — | (78,000) | — | — | 78,000 | — | ||||||
Other investing activities |
| (1,059) |
| (232,150) |
| 100,300 |
| 81,081 |
| — |
| (51,828) |
Net cash (used in)/provided by investing activities |
| (989) |
| (181,524) |
| 8,293 |
| 81,081 |
| 41,311 |
| (51,828) |
Borrowings under loan from Group companies, net |
| — |
| — |
| — |
| (36,689) |
| 36,689 |
| — |
Other financing activities |
| 46 |
| (2,632) |
| — |
| 2,100 |
| — |
| (486) |
Net cash provided by/(used in) financing activities |
| 46 |
| (2,632) |
| — |
| (34,589) |
| 36,689 |
| (486) |
| (1) | It represents the elimination of intercompany loan provided by other subsidiaries to VIE and its subsidiaries. |
| (2) | It represents the elimination of the intercompany balances among Tuniu Corporation, other subsidiaries, primary beneficiary of VIE, and VIE and its subsidiaries. |
| (3) | The VIE invested in a subsidiary of other subsidiaries and measured at cost and such investment is eliminated with noncontrolling interests of other subsidiaries. |
| (4) | It represents the elimination of the investments among Tuniu Corporation, other subsidiaries, primary beneficiary of VIE, and VIE and its subsidiaries. |
| (5) | It represents the elimination of the intercompany transactions at the consolidation level, as follows: |
Charges to the VIE
| (i) | Technology consulting service fees and group management fees charged by other subsidiaries and the primary beneficiary of the VIE to the VIE and its subsidiaries, in aggregate amounting to RMB12.8 million, RMB16.3 million and RMB6.2 million for the years ended 2020, 2021 and 2022, respectively. These charges are recognized as operating expenses by the VIE and its subsidiaries. |
| (ii) | Revenue was recognized by other subsidiaries for interest on loans to the VIE and its subsidiaries, in the amounts of RMB4.4 million, RMB5.9 million and RMB1.4 million for the years ended 2020, 2021 and 2022, respectively. These charges are recognized as interest expense by the VIE and its subsidiaries. |
Charges by the VIE
| (i) | Royalty fees charged by the VIE and its subsidiaries to other subsidiaries and the primary beneficiary of the VIE for the usage of software owned by VIE and its Subsidiaries in the amounts of RMB77.6 million, RMB21.1 million and RMB27.6 million for the years ended 2020, 2021 and 2022, respectively. These charges are recognized as operating expenses by the other subsidiaries and the primary beneficiary of the VIE. |
Charges between other entities
| (i) | Group management fees charged by the primary beneficiary of the VIE to other subsidiaries in the Group. |
13
Purchase of intangible assets from VIE
| (i) | Software copyrights transferred from the VIE and its subsidiaries to other subsidiaries amounting to RMB78.0 million for the year ended 2022. These software copyrights are recognized as intangible assets by the other subsidiaries and subsequently amorttized on a straight-line basis over their estimated useful lives of 5 years. |
Transfers of Cash Within the Tuniu Group
Transfer of cash do not necessarily equal amounts charged, due to the timing of payments. The following is a summary of cash transfers that have occurred between our subsidiaries and the VIE and its subsidiaries (in thousands):
| As of December 31, | |||||
2020 | 2021 | 2022 | ||||
| RMB |
| RMB |
| RMB | |
Cash paid by our subsidiaries to the VIE and its subsidiaries for royalties |
| 29,468 |
| 22,000 |
| 5,776 |
Cash paid by the VIE and its subsidiaries to our subsidiaries under service agreements | — | (1,364) | (8,169) | |||
Cash paid by the VIE and its subsidiaries to our subsidiaries for intra-Group financing |
| (133,455) |
| — |
| (36,759) |
Cash received by the VIE and its subsidiaries from our subsidiaries for intra-Group financing | — |
| 8,099 |
| — | |
Cash paid by our subsidiaries to the VIE and its subsidiaries for purchase of intangible assets |
| — |
| — |
| (78,000) |
A.[Reserved]
B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the Offer and Use of Proceeds
Not applicable.
14
D.Risk Factors
Summary of Risk Factors
Investing in our ADSs involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our ADSs. Below is a summary of material risks we face, organized under relevant headings. The operational risks associated with being based in and having operations in the mainland China could also apply to operations in Hong Kong and Macau. While entities and businesses in Hong Kong and Macau operate under different sets of laws from the mainland China, the legal risks associated with being based in and having operations in the mainland China could apply to our operations in Hong Kong and Macau, if the laws applicable to the Chinese mainland become applicable to entities and businesses in Hong Kong and Macau in the future. These risks are discussed more fully in Item 3. Key Information—D. Risk Factors.
Risks Related to Our Corporate Structure
| ● | Tuniu Corporation is a Cayman Islands holding company with no equity ownership in the VIE, and we conduct our operations in China primarily through (i) our PRC subsidiaries and (ii) the VIE with which we have maintained contractual arrangements. Holders of our ADSs hold equity interest in Tuniu Corporation, our Cayman Islands holding company, and do not have direct or indirect equity interest in the VIE. If the PRC government finds that the agreements that establish the structure for operating some of our business operations in China do not comply with PRC regulations relating to the relevant industries, or if these regulations or the interpretation of existing regulations change in the future, we and the VIE could be subject to severe penalties, or be forced to relinquish our interest in those operations. Our holding company in the Cayman Islands, the VIE, and investors of Tuniu 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 more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We rely on contractual arrangements with Nanjing Tuniu and its shareholders for the operation of our business, which may not be as effective as direct ownership. If Nanjing Tuniu or its shareholders fail to perform their obligations under these contractual arrangements, we may have to resort to litigation or arbitration to enforce our rights, which may be time-consuming, unpredictable, expensive and damaging to our operations and reputation. If we are unable to direct the activities of and derive economic benefits from the VIE, we would not be able to continue to consolidate the financial results of the consolidated affiliated entities with our financial results.” |
| ● | Substantial uncertainties and restrictions exist with respect to the interpretation and application of PRC laws and regulations relating to restrictions on foreign investment in value-added telecommunications and travel companies in China. If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC laws and regulations, we could be subject to severe penalties, including shutting down of our online platform, and our ADSs may decline in value or become worthless. |
| ● | Substantial uncertainties exist with respect to the interpretation and implementation of adopted PRC Foreign Investment Law and its implementation rules and how they may impact the viability of our current corporate structure, corporate governance and business operations. |
Risks Related to Doing Business in China
| ● | 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 Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulations of internet and related business and companies.” The approval of or 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. Any failure to obtain or delay in obtaining such approval for our offshore offerings, or a rescission of obtained approval, would subject us to sanctions imposed by the CSRC or other PRC government authorities. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The approval of or 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.” |
15
| ● | 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 fully investigate auditors located 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. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related 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 Related 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 of the ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.” |
| ● | The 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. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight over our business operation could result in a material adverse change in our operations and the value of our ADSs.” |
| ● | PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control of currency conversion may delay or limit us from using the proceeds of our financing activities, or making additional capital contributions or loans to our PRC subsidiaries and the consolidated affiliated entities, which could materially and adversely affect our liquidity and our ability to fund and expand our business. |
Risks Related to Our Business and Industry
| ● | Our business operation, financial condition, results of operations and cash flows have been and may continue to be materially and adversely affected by the COVID-19 outbreak and spread. |
| ● | Declines or disruptions in the leisure travel industry may materially and adversely affect our business and results of operations. |
| ● | We face risks related to natural disasters and health epidemics. |
| ● | If we do not continue to provide competitive travel products and services, we may not be able to attract new customers or retain existing customers, and our business, financial condition and results of operations could suffer. |
| ● | Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing customers and attract new customers, which may materially and adversely affect our business, financial condition and results of operations. |
| ● | We have incurred losses in the past and will likely incur losses in the future. |
| ● | We face intense competition and may not be able to compete successfully against existing and new competitors. |
| ● | Our business generates and processes a large amount of data, and we are required to comply with PRC and other applicable laws relating to privacy and cybersecurity. The improper use or disclosure of data could have a material and adverse effect on our business and prospects. |
| ● | If we are unable to maintain existing relationships with travel suppliers, or develop relationships with new travel suppliers on favorable terms or terms similar to those we currently have, our business and results of operations may suffer. |
| ● | We may be subject to legal or administrative proceedings regarding our travel products and services, information provided on our online platform or other aspects of our business operations, which may be time-consuming to defend and affect our reputation. |
Risks Related to our ADSs and Class A Ordinary Shares
| ● | Our ADSs may be delisted from the Nasdaq Global Market as a result of our failure of meeting the Nasdaq Global Market continued listing requirements. |
| ● | The trading prices of our ADSs have fluctuated and may continue to be volatile regardless of our operating performance. |
| ● | Our dual class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial. |
| ● | The sale or availability for sale of substantial amounts of our Class A ordinary shares and/or ADSs could adversely affect their market price. |
16
Risks Related to Our Corporate Structure
Substantial uncertainties and restrictions exist with respect to the interpretation and application of PRC laws and regulations relating to restrictions on foreign investment in value-added telecommunications and travel companies in China. If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRC laws and regulations, we could be subject to severe penalties, including shutting down of our online platform, and our ADSs may decline in value or become worthless.
Foreign ownership of Internet-based businesses is subject to significant restrictions under current PRC laws and regulations. The PRC government r