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Yunji(YJ) - 2022 Q4 - Annual Report
YunjiYunji(US:YJ)2023-04-25 16:00

Financial Performance - Total revenues for the company were RMB5,530.3 million, RMB2,155.4 million, and RMB1,154.1 million (US$167.3 million) in 2020, 2021, and 2022, respectively, with a significant decrease in 2022 attributed to COVID-19 impacts [347]. - The company recorded a net loss of RMB138.4 million (US$20.1 million) in 2022, compared to a net income of RMB132.3 million in 2021 and a net loss of RMB151.7 million in 2020 [347]. - Total revenues for 2022 were RMB 1,154,114, a decrease of 46.5% from RMB 2,155,361 in 2021 [363]. - Revenue from sale of merchandise accounted for 83.7% of total revenues in 2022, down from 87.3% in 2020 [363]. - Marketplace revenue contributed 14.8% of total revenues in 2022, compared to 10.8% in 2020 [363]. - Total operating cost and expenses decreased by 42.8% from RMB2,192.4 million in 2021 to RMB1,254.3 million (US$181.9 million) in 2022 [381]. - Revenue from sale of merchandise decreased by 46.3% from RMB1,798.9 million in 2021 to RMB965.8 million (US$140.0 million) in 2022 [380]. - Revenue from the marketplace business decreased by 47.0% from RMB321.8 million in 2021 to RMB170.6 million (US$24.7 million) in 2022 [380]. - Financial expense, net was RMB14.4 million (US$2.1 million) in 2022, compared to financial income, net of RMB80.1 million in 2021 [384]. Cash and Liquidity - As of December 31, 2022, the company had cash, cash equivalents, and restricted cash of RMB456.7 million (US$66.2 million), which is deemed sufficient for navigating uncertainty [362]. - Cash, cash equivalents, and restricted cash at the end of 2022 amounted to RMB 456.7 million (US$66.2 million), down from RMB 629.7 million in 2021 [410]. - Net cash used in operating activities in 2022 was RMB 216.8 million, compared to a net loss of RMB 138.4 million in the same period [413]. - The company anticipates that current cash and cash equivalents will be sufficient to meet working capital requirements for at least the next 12 months [410]. - Net cash generated from investing activities in 2022 was RMB 92.6 million, primarily due to cash received from maturity of short-term investments of RMB651.4 million (US$94.4 million) and cash received from factoring services of RMB102.4 million (US$14.8 million) [414]. Operational Strategy - The company plans to invest in technology and R&D, focusing on big data analytics and AI to enhance operational efficiency and supply chain management capabilities [359]. - The company aims to enhance user engagement and retention through a curated product strategy and community value promotion among members [351]. - The impact of COVID-19 has led to temporary disruptions in operations, but the company has resumed new product launches that were previously stalled due to restrictions [360]. - The company intends to expand its marketing efforts to increase user base and member activities, which is expected to drive revenue growth [357]. Expenses and Cost Management - Cost of revenues for 2022 was RMB 651,578, representing 56.5% of total revenues, a decrease from 71.2% in 2020 [366]. - Fulfillment expenses in 2022 were RMB 160,680, accounting for 13.9% of total revenues [366]. - Sales and marketing expenses for 2022 were RMB 214,783, which is 18.6% of total revenues [366]. - General and administrative expenses in 2022 were RMB 145,857, representing 12.6% of total revenues [366]. Shareholder and Governance - The company has not paid dividends and will not be able to pay dividends until it generates accumulated profits and meets the requirements for statutory reserve funds [418]. - The 2019 Share Incentive Plan allows for the issuance of up to 227,401,861 ordinary shares, with an annual increase of 1% of total issued shares [432]. - The board of directors consists of five members, all of whom meet the independence requirements of the Nasdaq Stock Market Rules [437]. - The audit committee is responsible for overseeing accounting and financial reporting processes, including appointing independent auditors and reviewing financial statements [438]. - The compensation committee reviews and approves compensation for the CEO and other executive officers, ensuring independence from management [439]. Employee and Labor Relations - As of December 31, 2022, the company had a total of 493 employees, a decrease from 655 in 2021 and 1,036 in 2020, reflecting a reduction of approximately 25% from 2021 [446]. - The company has not experienced any major labor disputes in the past and maintains a good working relationship with its employees [449]. - The company participates in various government statutory employee benefit plans, including medical insurance and pension benefits, contributing specified percentages of salaries [449]. Tax and Regulatory Matters - Yunji Inc. is not considered a PRC resident enterprise for tax purposes, as it does not meet the criteria set forth by the SAT [486]. - If determined to be a PRC resident enterprise, a 10% withholding tax may apply to dividends paid to non-resident shareholders [486]. - The company believes it will likely be classified as a Passive Foreign Investment Company (PFIC) for the taxable year ended December 31, 2022 [491]. - U.S. Holders must generally file an annual IRS Form 8621 if they own the ADSs or ordinary shares during any taxable year that the company is a PFIC [498]. Audit and Internal Controls - The company has effective disclosure controls and procedures as of December 31, 2022, ensuring timely and accurate reporting [513]. - The company's internal control over financial reporting was assessed as effective as of December 31, 2022, based on established criteria [537]. - The audit report for the fiscal year ended December 31, 2021, was issued by a registered public accounting firm that the PCAOB could not inspect completely in 2021 [527].