Discontinued Operations

12 Months Ended

Dec. 31, 2025

(4) Discontinued operations

Disposal of Meidiya and its subsidiaries

A disposal is categorized as a discontinued operation if the disposal group is a component of an entity or group of components that meets the held for sale criteria, is disposed of by sale or other than by sale and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. The results of disposals that qualify as a discontinued operation are presented as such for all reporting periods presented. Results of discontinued operations include all revenues and expenses directly derived from such disposal group; general corporate overhead is not allocated to a discontinued operation. For disposals other than by sale, results of operations of a business would not be recorded as a discontinued operation until the period in which the business is actually disposed of other than by sale.

In January 2025, the Group disposed of 100% equity interests in Guangdong Meidiya Investment Co., Ltd. (“Meidiya”) to a third party for cash consideration of RMB 30,240. Meidiya holds approximately 44.7% of the equity interests of Fanhua Insurance Surveyors & Loss Adjustors Co., Ltd. (“FHISLA”) and its subsidiaries (collectively referred to as the “Disposal Group”). The Disposed Group historically constituted the Group’s claims-adjusting segment, over which the Group exercised control through a series of act-in-concert arrangements. As a result of the divesture, the Group deconsolidated the Disposed Group with effect from January 1, 2025 and no longer conducts any material operations in the claims-adjusting business. Concurrently, the act-in-concert arrangements among Meidiya and the other shareholders of FHISLA were mutually terminated by all parties effective February 1, 2025.

The Company’s sales of the Disposal Group represented a strategic business shift having a major effect on the Group’s operations and financial results. The results of operations for the Disposal Group are presented as discontinued operations on the consolidated statements of income (loss) and comprehensive loss, and assets and liabilities are reflected as “Assets and Liabilities of Discontinued Operations” on the consolidated balance sheets for all periods presented. Amounts for all periods discussed below reflect the results of operations, financial condition and cash flows from the Company’s continuing operations, unless otherwise noted.

On January 1, 2025, the Group calculated a loss resulting from such disposition as follows:

Reconciliation of the carrying amounts of the major classes of assets and liabilities from the discontinued operations in the consolidated balance sheets as of January 1, 2025 is as follow.

		RMB
Consideration			30,240

	As of
	January 1,
	2025
Assets	RMB
Cash and cash equivalents and restricted cash		88,579
Short term investments		52,025
Accounts receivable, net		75,763
Other receivables, net		24,073
Other current assets, net		9,211
Property, plant, and equipment, net		7,306
Other non-current assets, net		6,237
Right of use asset		14,032
Total assets		277,226

Liabilities
Other payable and accrued expenses		92,446
Accrued payroll		41,846
Income tax payable		10,104
Operating lease liabilities		13,538
Deferred tax liabilities		5,481
Total liabilities		163,415
Total net assets of the Disposal Group		113,811
Less: Non-controlling interests of the Disposal Group		(86,801	)
Net assets of the Disposal Group contributable to the Group		27,010
Loss on disposal of the Disposal Group		3,230

The assets and liabilities for discontinued operations of the Disposal Group comprised the following items as of December 31, 2023:

	As of December 31,
	2023
	RMB
Current assets for discontinued operations
Cash and cash equivalents and restricted cash		76,888
Short term investments		54,547
Accounts receivable and contract assets, net		70,516
Other receivables, net		17,789
Other current assets, net		8,588
Total current assets		228,328
Non-current assets for discontinued operations
Restricted bank deposit - non-current		1,527
Property, plant, and equipment, net		8,822
Deferred tax assets		5,000
Other non-current assets, net		6,523
Right of use asset		13,629
Total non-current assets		35,501
Total assets		263,829
Current liabilities for discontinued operations
Other payable and accrued expenses		24,339
Accrued payroll		37,286
Current operating lease liabilities		6,209
Income tax payable		7,912
Total current liabilities		75,746
Non-current liabilities for discontinued operations
Non-current operating lease liability		6,463
Deferred tax liabilities		1,563
Other liabilities		4,505
Total non-current liabilities		12,531
Total liabilities		88,277
Total net assets of the Disposal Group		175,552

The condensed cash flows of Disposal Group were as follows for the fiscal years ended December 31, 2023 and 2024:

	Years end December 31
	2023			2024
	RMB			RMB
Net cash generated from (used in) operating activities		30,963			(11,434	)
Net cash (used in) generated from investing activities		(39,956	)		454
Net cash generated from financing activities		—			22,818

Reconciliation of the major classes of losses from discontinued operations in the consolidated statements of income (loss) and comprehensive income (loss) for the fiscal years ended December 31, 2023 and 2024 is as follow:

	Years ended December 31,
	2023			2024
	RMB			RMB
Major classes of line items constituting pre-tax profit of discontinued operations
Net revenues		437,941			477,054
Operating costs		(276,744	)		(313,085	)
Selling expenses		(98,393	)		(104,289	)
General and administrative expenses		(43,452	)		(48,405	)
Investment income		856
Interest expense, net		(9,315	)		(2,669	)
Others, net		(9,842	)		3,327
Gain from discontinued operations, before income tax		1,051			11,933
Income tax expense		(196	)		(6,761	)
Net income from discontinued operations		855			5,172
Significant non-cash operating items:
Depreciation and amortization		3,431			3,302
Loss (Gain) on disposal of property, plant and equipment		357			(283	)
Significant investing activities:
Purchase of property, plant and equipment		(3,324	)		(3,847	)
Proceeds from disposal of property, plant and equipment		1,024			1,891